Slide 1: 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 2: WH Smith PLC Preliminary Results 2015
WH Smith PLC Preliminary Results 2015 15 October 2015 Preliminary Results 2015
Slide 3: Introduction, financial review, business review, questions
WH Smith PLC Introduction Stephen Clarke Financial review Robert Moorhead Business review Stephen Clarke Questions Preliminary Results 2015
Slide 4: Good performance across the Group
Good performance across the Group Total Group revenue up 1%; like-for-like sales flat Profit before tax up 8% Headline earnings per share up 12% Full year dividend up 13% Travel profit up 10% Travel sales up 9%; like-for-like sales up 4% High Street profit up 2% High Street sales dow
Slide 5: Robert Moorhead, Chief Financial Officer
Robert Moorhead Chief Financial Officer
Slide 6: Group financial summary
Group financial summary Year to Year to Aug 2015 Aug 2014 Change £m £m % Revenue 1,178 1,161 1% Profit from trading operations1 139 131 6% Headline Group profit before tax2 123 114 8% Headline EPS2, 3 87.3p 77.7p 12% Free cash flow (£m) 109 98 11% Total dividend per share 39.4p 35.0p 13% 1 Stated af
Slide 7: Revenue analysis
Revenue analysis Year to Year to Aug 2015 Aug 2014 Change Total revenue £m £m % Travel 521 477 9% High Street 657 684 (4)% Total revenue 1,178 1,161 1% Year to H1 H2 Aug 2015 % % % LFL revenue Travel 3% 5% 4% High Street (4)% (3)% (3)% (2)% 1% -% LFL revenue by category Stationery 1% 3% 2% Books (ex
Slide 8: Group profit before tax
Group profit before tax Year to Year to Aug 2015 Aug 2014 Growth £m £m % Travel trading profit1 80 73 10% High Street trading profit1 59 58 2% Profit from trading operations1 139 131 6% Unallocated central costs (15) (15) Group operating profit2 124 116 7% Net finance cost3 (1) (2) Headline Group pr
Slide 9: Profit from trading operations
Profit from trading operations Year to Year to Aug 2015 Aug 2014 Change £m £m % Revenue 1,178 1,161 1% Gross contribution 680 659 3% Costs (541) (528) Costs – occupation costs (250) (244) – store costs (185) (183) – other costs (106) (101) Profit from trading operations1 139 131 6% Gross margin 57.7
Slide 10: Group free cash flow
Group free cash flow Year to Year to Aug 2015 Aug 2014 £m £m Operating profit1 124 116 Depreciation, amortisation and impairment 38 36 Working capital 6 2 Employers payroll tax on exercised share awards (1) (5) Capital expenditure (39) (32) Net tax paid (23) (21) Net provisions (1) (2) Net interest
Slide 11: Group net funds
Group net funds Year to Year to Aug 2015 Aug 2014 £m £m Free cash flow 109 98 Dividends paid (42) (38) Pension deficit funding (4) (14) Net purchase of own shares for employee share schemes (4) (10) Proceeds from sale and leaseback of equipment 3 - Acquisitions (3) (3) Other / repayment of finance l
Slide 12: Group balance sheet
Group balance sheet 2015 2014 £m £m Goodwill & other intangible assets 59 56 Property, plant & equipment 155 147 Working capital (50) (45) Corporation tax (32) (36) Other assets 9 7 Provisions (4) (5) Operating assets employed 137 124 Net funds 15 22 Total net assets (excluding pensions) 152 146 Pen
Slide 13: Return of cash to shareholders
Return of cash to shareholders Progressive dividend policy, consistent record of growing dividends Supplemented by buybacks and a special dividend £722m returned5 111 £m 92 88 84 84 81 81 2 2 61 3 23 17 4 3 1 1 1 1 Cash dividend paid 2 Buyback announced on 16 October 2014 3 Buyback announced o
Slide 14: Return of cash to shareholders
Return of cash to shareholders Progressive dividend policy, consistent record of growing dividends Supplemented by buybacks and a special dividend £722m returned5 3 1 1 1 - Dividend per Share 1 Cash dividend paid 2 Buyback announced on 16 October 2014 3 Buyback announced on 15 October 2015 4 P
Slide 15: Group key indicators
Group key indicators Year to Year to Growth Aug 2015 Aug 2014 % Headline Group profit before tax (£m) 1 123 114 8% Headline EPS 1,2 87.3p 77.7p 12% Fixed charges cover 1.6x 1.6x Free cash flow (£m) 109 98 ROCE (after capitalised operating leases) 24% 23% Total dividend per share 39.4p 35.0p 13% 1 He
Slide 16: Stephen Clarke, Group Chief Executive
Stephen Clarke Group Chief Executive Preliminary Results 2015
Slide 17: Travel
Travel Preliminary Results 2015
Slide 18: Travel growth driven by good sales performance
Travel growth driven by good sales performance Total sales up 9%; LFL sales up 4% Good profit performance - up 10% to £80m Gross margin improvement of c.50 bps Continue to invest in future growth in UK Store investment programme in key travel locations C. 20 new units expected for the UK
Slide 19: Sales growth in all key channels
Sales growth in all key channels Full Year Full Year Channel LFL sales Total sales UK Air 6% 7% UK Rail 3% 3% UK Hospital 6% 19% International 4% 33% Continued investment in key business initiatives Improvement in UK passenger numbers Varies by location Rent payments increase with other vari
Slide 20: Investment in stores & service supporting growth
Investment in stores & service supporting growth Improvements in store look, fabric and flooring Layouts and product zoning Investing in the customer experience Increased staff numbers and staff training Extended opening hours Preliminary Results 2015
Slide 21: Active space management & range development
Active space management & range development Travel space is expensive and complex to manage Our focus on the productivity of every metre drop in every store delivers real value Ongoing programme of space optimisation by location Significant changes to mix and customer offer by channel Enab
Slide 22: Continued success from range & format development
Continued success from range & format development Preliminary Results 2015
Slide 23: Looking ahead: UK growth
Looking ahead: UK growth Airports continue to forecast passenger growth Continue to open new space Invest in existing stores Active space management Preliminary Results 2015
Slide 24: Continued good performance in International
Continued good performance in International International business is profitable and growing fast Total sales £57m, up 33% vs last year; LFL sales up 4% Profit £5m, up £2m vs last year Sales per passenger continue to outperform previous incumbents by up to 25% 30 new units won in the year,
Slide 25: Now in 28 airports & 20 countries outside the UK
Now in 28 airports & 20 countries outside the UK 200 units now won internationally Preliminary Results 2015
Slide 26: Early success in Sydney
Early success in Sydney Excellent feedback from landlord and customers at Sydney International Airport Preliminary Results 2015
Slide 27: International is an ongoing growth opportunity
International is an ongoing growth opportunity International Travel is a large, growing market WHSmith still a small player with good growth potential Short-term investment for long-term future growth Our broad customer offer and sales per PAX are attractive to overseas landlords Continued
Slide 28: High Street
High Street Preliminary Results 2015
Slide 29: High Street strategy continues to deliver
High Street strategy continues to deliver Good profit performance - up 2% to £59m Profit focused strategy continues to create value LFL sales down 3% Successful active margin management – up 140 bps Delivered cost savings of £11m, in line with plan Continued strong cash generation Cons
Slide 30: Ongoing active space management
Ongoing active space management Space management key to our strategy Optimise return on space Improve margins Cost reductions Third party income Individual store specific space reconfigurations twice a year Maximise the profitability of each individual store Further opportunities goi
Slide 31: Continued margin optimisation
Continued margin optimisation Margin growth of 140 bps for the year Main driver continues to be category mix management – both across and within categories Further margin growth from: Trading terms and Far East sourcing Improved markdown and promotional management Improved shrinkage perf
Slide 32: Further cost efficiencies
Further cost efficiencies Driving cost efficiencies key to our strategy Delivered savings of £11m in the year In line with plan Variable costs and efficiency initiatives Further savings of £20m identified over the next three years Continue to develop pipeline of new initiatives 2015 2016
Slide 33: Impact of National Living Wage across the Group
Impact of National Living Wage across the Group Additional cost 2015/16 a little over £1m for the Group Split 2/3 High Street and 1/3 Travel Incremental annual cost up to 2020 will be £2 - £3m, around 0.5% of total cost base each year However, we will aim to offset at least some of this thro
Slide 34: Stationery performing well
Stationery performing well WHSmith competitive advantage helping to deliver a good performance In house design WHSmith brand / quality Breadth and depth of range Far East sourcing Continue to differentiate WHSmith offer Increased focus on range development, quality and design Very su
Slide 35: Good progress with new 'Brights' format
Good progress with new ‘Brights’ format Stationery ‘Brights’ successfully launched in 88 stores Positive feedback from customers and good sales Extended to a further 50 stores in H2 Results driving overall Stationery sales and margin mix improvements Further rollout after Christmas Prelimi
Slide 36: Evolving the Books category
Evolving the Books category General Retail Market continues to evolve eBooks penetration showing little or no growth Sales in the second half were encouraging driven by better publishing Latest ‘Grey’ novel by EL James Harper Lee ‘Go Set a Watchman’ ‘Colour therapy’ for adults Improvem
Slide 37: Growing Funkypigeon.com
Growing Funkypigeon.com Continued good performance particularly at key events: Christmas, Valentine’s Day, Mother’s Day and Father’s Day Good YoY profit growth Traffic from mobile devices Further investment in customer journey, mobile and apps driving increased conversion rates Funkyparty.
Slide 38: Cardmarket trial still ongoing
Cardmarket trial still ongoing Cardmarket trial of 20 stores launched in November Sales still building; performance varies by store Trading over the coming Christmas period will be key Plan to open additional 10 trial stores before Christmas to test concept further No rollout decision unti
Slide 39: WHSmith LOCAL delivering consistent results
WHSmith LOCAL delivering consistent results Franchise initiative continues to grow 40 stores open Consistently good results across all trial stores Making franchisees incremental profit Potentially good value creating opportunity Since April, 30 contracts signed, giving a total of 80 now
Slide 40: Distinct strategies deliver shareholder value
Distinct strategies deliver shareholder value Group total sales up 1%; like-for-like sales flat LFL sales growth in Travel: further opportunities in UK and International Robust performance from High Street with continued good cash generation and profit growth Group profit before tax up 8%; E
Slide 41: WH Smith PLC
WH Smith PLC Preliminary Results 2015 15 October 2015 Preliminary Results 2015