Slide 1: WH Smith PLC Interim Results 2011
WH Smith PLC Interim Results 2011 14 April 2011 Interim Results 2011
Slide 2: Disclaimer
Disclaimer This document contains forward-looking statements with respect to the operations, performance and financial condition of WH Smith PLC. By their nature, these statements are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those expr
Slide 3: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2011
Slide 4: Introduction, Financial review, Business review, Summary
WH Smith PLC Introduction Kate Swann Financial review Robert Moorhead Business review Kate Swann - Travel Simon Marinker - High Street Stephen Clarke Summary Kate Swann Interim Results 2011
Slide 5: Robert Moorhead, Group Finance Director
Robert Moorhead Group Finance Director Interim Results 2011
Slide 6: Group financial summary
Group financial summary 6 mths to 6 mths to Feb 2011 Feb 2010 Change £m £m % Revenue 686 716 (4)% Profit from trading operations1 72 70 3% Profit before tax 64 62 3% EPS2 35.2p 31.6p 11% Free cash flow (£m) 74 64 16% Interim dividend per share 7.2p 6.1p 18% 1 Stated after directly attributable share
Slide 7: Group profit before tax
Group profit before tax 6 mths to 6 mths to Feb 2011 Feb 2010 Growth £m £m % Travel 1 25 23 9% High Street 1 47 47 - Trading operations 1 72 70 3% Central costs (8) (8) Operating profit 64 62 3% Net finance costs (1) - Pension interest 1 - Profit before tax 64 62 3% 1 Stated after directly attributa
Slide 8: Revenue analysis
Revenue analysis 6 mths to 6 mths to LFL Feb 2011 Feb 2010 Change Change Revenue £m £m % % Travel 213 213 - (3)% High Street 473 503 (6)% (6)% Total revenue 686 716 (4)% (5)% 6 mths to Feb 2011 LFL sales by category % Stationery (2)% Books (3)% News & Impulse (4)% Entertainment (53)% Total (5)% Inte
Slide 9: Profit from trading operations
Profit from trading operations 6 mths to 6 mths to Feb 2011 Feb 2010 Change £m £m % Revenue 686 716 (4)% Gross contribution 352 355 Costs (280) (285) Costs – occupation costs (117) (119) – store costs (104) (106) – other costs (59) (60) Profit from trading operations1 72 70 3% Gross margin 51.3% 49.
Slide 10: Group free cash flow
Group free cash flow 6 mths to 6 mths to Feb 2011 Feb 2010 £m £m Operating profit 64 62 Depreciation and amortisation 19 19 Working capital - 1 Capital expenditure (17) (15) Net tax received / (paid) 5 (6) Provisions (1) - Net interest income - - Non cash items 4 3 Free cash flow 74 64 Interim Resul
Slide 11: Group net funds
Group net funds 6 mths to 6 mths to Feb 2011 Feb 2010 £m £m Free cash flow 74 64 Dividends paid (19) (17) Pension deficit and retirement benefit funding (7) (6) Net purchase of own shares for employee share schemes (7) (4) Purchase of own shares for cancellation (27) (35) Net cash movement 14 2 Clos
Slide 12: Group balance sheet
Group balance sheet Feb Aug 2011 2010 £m £m Goodwill & other intangible assets 55 56 Property, plant & equipment 154 158 Working capital (48) (49) Corporation tax (49) (30) Provisions (8) (8) Other assets 5 4 Operating assets employed 109 131 Net funds 70 56 Total net assets (excluding pensions) 179
Slide 13: Return of cash to shareholders
Return of cash to shareholders • Consistent record of growing dividends • Supplemented by buybacks and a special dividend • Whilst continuing to invest in the business Ordinary Special Financial Dividend 1 Buyback Dividend Total Year £m £m £m £m 2011 29 50 2 79 2010 26 35 61 2009 23 23 2008 21 33 57
Slide 14: Group key indicators
Group key indicators 6 mths to 6 mths to Growth Feb 2011 Feb 2010 % EPS 35.2p 31.6p 11% Fixed charges cover 1.7x 1.7x ROCE 59% 46% Free cash flow (£m) 74 64 Interim dividend per share 7.2p 6.1p 18% Interim Results 2011
Slide 15: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2011
Slide 16: Group – overview
Group – overview Another good profit performance from the Group Strong operating performance continues in both divisions in a challenging environment Travel and High Street continue to make progress with the implementation of their distinct strategies and the development of some newer initiati
Slide 17: Travel – overview
Travel – overview Profit up 9% to £25m, demonstrating strength of model Total sales in line with last year, LFL sales down 3% Gross margin improvement of c.150 bps YoY Costs well controlled Well-positioned for further growth in the UK - Well-placed to benefit from recovery in economy - Spa
Slide 18: Travel – overview: International
Travel – overview International: a further opportunity for WHSmith Existing international stores continue to perform well Additional opportunities identified in non-airport locations 24 units now open internationally, with further 4 units previously announced 12 units recently agreed givin
Slide 19: Simon Marinker, Managing Director, Travel
Simon Marinker Managing Director, Travel Interim Results 2011
Slide 20: Travel – Air
Travel – Air In Air LFL sales down 3% Passenger numbers soft as expected with variability between different airports Medium-term forecasts show return to growth; we are well positioned for the recovery Margin and cost management successful 2 new units opened in H1; further 5 units due to o
Slide 21: Travel – Rail and Motorway
Travel – Rail and Motorway Rail In Rail, LFL sales down 4% LFL London mainline rail down 3%, regional rail down 6% Refit programme completed with 8 mainline units refitted in H1 1 new unit opened in H1; further 5 to open in H2 In addition plan to open 3 units under the Funky Pigeon brand M
Slide 22: Travel – Hospitals and Workplace
Travel – Hospitals and Workplace Hospitals Strong presence in growing and under-developed hospital market with scope for further expansion In Hospital LFL sales up 1% 105 units now open in this channel 3 new units opened in H1; further 6 to open in H2 Anticipate opening c. 10 new units per
Slide 23: Travel – International
Travel – International Opened 24 stores internationally, including 8 stores opened during H1 In each location, we continue to choose the most appropriate operating model Location Channel Date opened No. units Model Copenhagen Air Nov ’08 5 Joint venture Shannon Air Jan ’09 2 Direct Stockholm Air
Slide 24: Travel – International
Travel – International Melbourne Delhi Interim Results 2011
Slide 25: Travel – International: New locations
Travel – International New locations Units previously agreed - 1 unit in Oman opened in April - 1 unit in Sydney opened in April - 2 units in Melbourne 12 further units now agreed - India: 4 hospital units 2 mall units 1 rail unit - Kuwait: 5 units in air Total of 40 units now opened or planne
Slide 26: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2011
Slide 27: High Street – overview
High Street – overview LFL sales down 6%, down 3% excluding Entertainment Market shares encouraging Strong gross margin performance up by c. 180 bps Cost savings of £7m delivered, £1m ahead of plan Continued strong cash generation Interim Results 2011
Slide 28: High Street – overview
High Street – overview Continue to rebalance the mix of business away from Entertainment Stationery: further develop market leading performance - economically attractive with some growth areas Books: market positioning popular mass market bookseller - eBooks News and Magazine : authoritative
Slide 29: Stephen Clarke, Managing Director, High Street
Stephen Clarke Managing Director, High Street Interim Results 2011
Slide 30: Category performance - Stationery
Category performance - Stationery Strategy to build on market-leading position in stationery remains unchanged Good performance in both general and seasonal stationery given difficult weather conditions before Christmas Post-Christmas stock position in line with plan Further progress with ne
Slide 31: Interim Results 2011
> a <ypigeon.. apingna & free delivery —) Pred FirstClass Deiley Interim Results 2011 WHSmith
Slide 32: Category performance - Books
Category performance - Books Market performance continues to vary by sub-category – Non-fiction hardback performance improved YoY – Fiction and Kids annualised strong publishing from 2009/10 Maintained good share performance vs general retail market Market positioning well established Interim
Slide 33: WHSmith and eBooks
WHSmith and eBooks eBooks seeing growth, but no impact detectable on overall market performance – UK eBook market growth of 300% p.a., around 1-2% of total book sales WHSmith core market is lighter book buyers, so less impacted by eBooks eBooks provide incremental opportunity for WHSmith Dev
Slide 34: Category performance - News & Impulse
Category performance News & Impulse Magazine market continues to be challenging Maintained market share in news and magazines Further development of strongly-growing bookazine category Continued development of seasonal confectionery ranges Interim Results 2011
Slide 35: Category performance - Entertainment
Category performance Entertainment LFL sales down in line with our strategy Now accounts for less than 5% of the business Progress with space rebalancing, more planned for H2 - Extend ranges within core categories - Additional services - Improve store efficiency by improving layouts - Increase
Slide 36: Margin optimisation and Cost efficiency
Margin optimisation and Cost efficiency Margin optimisation Margin growth of c.180 bps, delivered through continued focus on category mix management Additional margin growth from: - Better buying terms and improved sourcing - Improved mark-down and promotional management Cost efficiency Delive
Slide 37: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2011
Slide 38: Summary
Summary Good profit performance from the Group in a challenging environment Further strong performance from Travel with opportunities for growth Resilient performance from High Street with high levels of cash generation Highly cash generative Group Good progress with share buyback and Inte
Slide 39: WH Smith PLC
WH Smith PLC Interim Results 2011 14 April 2011 Interim Results 2011