Card Factory Plc · LSE:CARD
Card Factory — FY2015 Earnings Presentation
27 slides from Card Factory's earnings presentation, Mar 25, 2015
Slide 1: Preliminary results presentation, year ended 31 January 2015
Compare the quality…….Compare the price Preliminary results presentation Year ended 31 January 2015 25 March 2015
Slide 2: Forward-looking statements
Forward-looking statements This presentation certain forward-looking statements with respect to the financial condition, results of operations, and businesses of Card Factory plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon c
Slide 3: Agenda
Agenda Introduction Geoff Cooper (Chairman) Financial review Darren Bryant (CFO) Strategic update Richard Hayes (CEO) Questions 3
Slide 4: Introduction
Compare the quality…….Compare the price Introduction Geoff Cooper Chairman
Slide 5: Financial review
Compare the quality…….Compare the price Financial review Darren Bryant Chief Financial Officer
Slide 6: Financial highlights
Financial highlights Year-on-year FY15 FY14 change Revenue £353.3m £326.9m +8.1% LFLs +1.8% +3.1% EBITDA £88.2m £80.4m +9.6% Margin 25.0% 24.6% +0.4ppts Operating profit £79.4m £72.9m +8.9% Margin 22.5% 22.3% +0.2ppts Operating cashflow £79.2m £69.0m +14.8% Cash conversion 89.8% 85.8% +4.0ppts Net s
Slide 7: Both brands performing well
Both brands performing well Strong growth in revenue and EBITDA Year-on-year FY15 FY14 change Revenue £337.8m £314.3m +7.5% EBITDA £85.4m £78.7m +8.4% Margin 25.3% 25.1% +0.2ppts Revenue £15.5m £12.6m +23.1% EBITDA £2.8m £1.7m +67.6% Margin 18.0% 13.2% +4.8ppts Notes 1. All figures shown on an under
Slide 8: Card Factory stores
Card Factory stores Sales mix by product category FY15 Sales Mix FY14 Sales Mix 2.2% 2.4% 39.9% 38.5% 57.9% 59.1% Single cards Non-card items Christmas box cards Marginal shift to non-card items with quality and range improvements and continued decline in Christmas box cards category as expected 8
Slide 9: Best-in-class margins
Best-in-class margins Further improvements delivered FY15 Sales to EBITDA Bridge FY14 Sales to EBITDA Bridge Cost of sales Cost of sales £240.0m £223.3m 67.9% 68.3% £88.2m £80.4m 25.0% 24.6% £102.0m £110.3m 31.2% 31.2% £25.1m £23.2m 7.1% 7.1% £15.7m £14.7m 4.4% 4.5% £52.9m £57.3m £56.7m 16.2% £53.7m
Slide 10: Reconciliation to statutory results
Reconciliation to statutory results FY15 FY14 £’m £’m Underlying results EBITDA 88.2 80.4 Depreciation & amortisation (8.8) (7.5) Operating profit 79.4 72.9 Net finance expense (Note 1) (13.9) (40.9) Profit before tax 65.5 32.0 Non-underlying adjustments Gains/losses on forex derivatives not designa
Slide 11: Strong cash generation
Strong cash generation FY15 FY14 £’m £’m Cash inflow from operating activities 84.9 79.1 Corporation tax (9.6) (12.1) Net cash inflow from operating activities 75.3 67.0 Capital expenditure (10.1) (12.0) Deferred consideration (0.8) (0.5) Interest received 0.3 0.5 Net cash outflow from investing act
Slide 12: Capex
Capex Low, predictable and well controlled Predictable recurring annual capex FY15 FY14 £’m £’m – c £7-8m pa One-off strategic projects Gate 4 warehouse / Head Office 0.1 1.7 Limited additional one-off strategic projects Getting Personal - 0.3 – Well invested business EPOS 2.6 3.3 Sub-total 2.7
Slide 13: Senior debt refinancing
Senior debt refinancing New £200m corporate facility Refinancing completed on 30 May 2014 As at 31 January 2015 £’m Senior debt 172.5 Outline terms Other debt/interest 0.1 – 5yr term Debt costs capitalised (2.2) – £180m senior term loan (current margin 2.0%) Total borrowings 170.4 – £7.5m repaya
Slide 14: Dividend
Dividend Progressive policy plus potential for surplus returns Maiden dividend calculated on a proforma basis: £’m Comments Underlying operating profit 79.4 As reported Pro forma calculations - Annualisation of incremental PLC operating costs (0.4) Assuming IPO on 31 January 2014 - Pro forma inter
Slide 15: FY16 outlook
FY16 outlook Four pillars of growth LFL sales growth Targeting medium term LFL growth in line with 5 year average New store openings Targeting 50 net new store openings Business efficiencies Targeting maintenance of underlying EBITDA margins before incremental costs of being a listed company
Slide 16: Financial performance
Financial performance Summary Strong profit margins Strong revenue growth - Consistent track record - Like-for-like store sales - Cost control culture - New store roll out - Business efficiencies - Online development - Incremental PLC costs Strong cash generation Rapidly reducing leverage - Consiste
Slide 17: Strategic update
Compare the quality…….Compare the price Strategic update Richard Hayes Chief Executive Officer
Slide 18: Strategy overview
Strategy overview Four pillars of growth Like-for-like sales growth New store roll out Business efficiencies Online development Consistently strong cash generation and shareholder returns 18
Slide 19: Like-for-like sales growth
Like-for-like sales growth Consistent track record of positive LFLs Ongoing consistent LFL sales growth – 5 year average of +2.5% pa – Targeting similar medium term trend 3.1% 3.2% 2.9% 5 year range Various drivers +1.4% to +3.2% pa – Design Studio innovation 5 year average - Card and non-card p
Slide 20: Stronger Perception for Low Price
Like-for-like sales growth Clear value proposition driving market share gains Clear and substantial gap in Price perception vs. competitors Stronger Perception for Low Price Quality Stronger Perception of Quality Source: OC&C, March 2015 20
Slide 21: New store roll out
New store roll out Proven high returns model continues New stores performing in line with management expectations Consolidating a fragmented market Store numbers FY15 FY14 At start of period 713 664 New store openings 56 50 Competitor adjacencies Closures (5) (1) – Ongoing openings against est
Slide 22: New store roll out
New store roll out Versatile, wide demographic, high returns model Congleton, Cheshire Harrogate, Yorkshire Existing competitors: Clintons, Existing competitors: Clintons, Hallmark, WHSmith, WHSmith, M&S, Paperchase, independent independents Other retailers include B&M, Other retailers inclu
Slide 23: Business efficiencies
Business efficiencies Leveraging our vertically integrated model A strong culture of cost control 25.0% 24.6% 24.5% 23.8% 22.5% 22.3% 22.4% 21.9% Leveraging recent strategic investments EPOS now rolled out to over half store estate Ongoing investment for the future – Adding new capabilities
Slide 24: Online development
Online development A further year of significant progress Excellent headline performance – Turnover up 23.1% to £15.5m – EBITDA up 67.6% to £2.8m New “responsive” website launched Continuing to develop personalised gift range – Vertical integration of certain product lines Improved marketing
Slide 25: Summary
Summary Delivering on our four pillars of growth Like-for-like sales growth New store roll out +1.8% (FY14: +3.1%) 51 net new openings Business efficiencies Online development Further improved best-in-class Getting Personal EBITDA up EBITDA margins to 25.0% 67.6% to £2.8m Consistently strong cash ge
Slide 26: Questions
Compare the quality…….Compare the price Questions
Slide 27: Appendix: H1/H2 performance by brand
Appendix H1/H2 performance by brand YoY YoY FY15(H1) FY14(H1) FY15(H2) FY14(H2) change change Revenue £143.9m £132.5m +8.6% £193.9m £181.8m +6.6% EBITDA £29.4m £27.1m +8.6% £56.0m £51.6m +8.3% Margin 20.4% 20.4% - 28.9% 28.4% +0.5ppts Revenue £5.5m £4.7m +16.4% £10.0m £7.9m +27.1% EBITDA £0.8m £0.4m