ScS — FY2020 Earnings Presentation
24 slides from ScS's earnings presentation, Sep 29, 2020
Slide 1: Preliminary results for the year ended 25 July 2020
ScS Group plc Preliminary results for the year ended 25 July 2020 29 September 2020
Slide 2: Agenda
Agenda Highlights and review of David Knight the year Chief Executive Officer Financial review Chris Muir Chief Financial Officer Our business and current David Knight trading 2 2
Slide 3: Highlights
Highlights RESILIENT PERFORMANCE IN UNPRECEDENTED CONDITIONS Order intake Period Weeks Date vs prior year Pre-lockdown 1 to 34 28 July 2019 to 21 March 2020 (4.2%) Lockdown 35 to 43 22 March to 23 May 2020 (92.5%) Post-lockdown 44 to 52 24 May to 25 July 2020 92.2% Full year 1 to 52 28 July 2019 to
Slide 4: COVID-19: Our actions
COVID-19 Our actions • All stores and distribution centres closed on 23 March • Our customers – contacted over 25,000 with orders • Our people • Over 1,400 furloughed - paid 100% of salaries and average commission • Team of 150 supporting the business • Increased communications • Our partners • Paid
Slide 5: COVID-19: Our re-opening
COVID-19 Our re-opening • Comprehensive restart plan • Opened ahead of our competition • Making our customers and colleagues feel safe • Appointment system • Marketing plan • Continued brand awareness sponsorships • Instant ‘call to action’ on re-opening The result • Order intake growth of 92.2% in
Slide 6: Financial review
Financial review 6
Slide 7: Financial highlights
Financial highlights Gross sales* EBITDA* EPS* July 20 £268.1m £7.2m 4.3p July 19 £333.3m £19.7m 30.3p July 18 £327.5m £19.1m 26.8p Gross margin Cash generated from operating activities 44.6% £39.5m FY19 – 45.0% FY19 – £24.1m FY18 – 45.0% FY18 – £21.0m *Figures presented are for continuing operation
Slide 8: Gross sales from continuing operations
Gross sales from continuing operations 7% 5% 4% 11% 13% 13% 2020 2019 2018 82% 82% 83% In-store furniture In-store flooring Online Channel 2020 2019 Var. Var. % £m In-store furniture 219.0 274.2 (55.2) (20.1) In-store flooring 30.0 42.3 (12.3) (29.2) Online 19.1 16.8 2.3 13.6 Total 268.1 333.3 (65.2
Slide 9: Underlying EBITDA from continuing operations
Underlying EBITDA from continuing operations* £7.2m FY20 EBITDA declined by £12.5m (£30.3m) £19.7m Gross profit decreased £30.3m to £119.6m as a result of the temporary closure of our distribution centres Gross profit margin fell slightly to 44.6% due to the £8.4m £0.7m increasingly promotional offe
Slide 10: Flexible cost base
Flexible cost base Flexibility 72% Sales are made to order creating a flexible business model 72% of cost base variable with sales £m 2020 2019 % 15% semi variable Gross sales 268.1 333.3 Rent, rates, heat and light 13% of EBITDA 7.2 19.7 overall cost base Total costs 260.9 313.6 100% As would be ex
Slide 11: Cash flow
Cash flow Negative working capital model £32.3m Cash or card sales - deposits received at point of (£4.3m) order, balance settled before delivery (£5.2m) (£1.5m) £82.3m Credit sales - loan provider pays ScS two working days after delivery Majority of suppliers paid at end of month following delivery
Slide 12: Resilience
Resilience Cash £80m £82.3m £70m £60m • No debt with significant cash position £57.7m £50m • Over the last 12 months the cash balance* £48.2m varied as follows: £40m - Average £54.6m £40.1m £30m - Lowest point £34.8m - Highest point £82.3m £20m £22.4m • Further protection from £20.0m committed £10m
Slide 13: Our business
Our business 13
Slide 14: Key ingredients
Key ingredients Excellent customer experience with outstanding value, quality and choice Range of price points Easy ways to pay From £299 to £5,295 - always an offer or deal available 0% Long-term interest-free making buying affordable Brands Service Long term relationships with leading “Excellent”
Slide 15: The market – our position
The market – our position Upholstery Floorcoverings Market share 9.8% 2.8% 2019 – 9.4% 2019 – 2.5% Gross sales growth Upholstery market reduced 22.7% from 2018 to 2020 2017 4.1% ScS sales decreased 16.3% 2018 1.7% 2019 1.8% Flooring market reduced 28.5% from 2018 to 2020 2020 -19.5% ScS sales decrea
Slide 16: The market – future opportunities
The market – future opportunities Furniture Product by country: UK (57.3%) • Value led proposition Far East (39.4%) • Opportunity to take market share Europe (3.3%) • Majority of product manufactured in the UK Measured as a % of turnover Flooring • Widened product offering • Improvements to customer
Slide 17: Our people
Our people Improve our ability to attract, recruit, develop and retain the right people • Commitment to our people throughout the year • Investment in development of our colleagues • Significantly improved staff retention • Highest ever number of annual job applications • Recruitment ongoing of over
Slide 18: Our customers
Our customers Placing customers at the heart of our business Trustpilot – TrustScore: • ‘Excellent’ Trustpilot rating – over 230,000 reviews 2020 4.7 2019 4.6 2018 4.6 • Customer journey improvements Customer satisfaction score: • Centralised customer experience operations 2020 80 • 7 day operation
Slide 19: Our marketing
Our marketing Increased brand awareness with strong ‘call to action’ Marketing spend • Clear focus and message on our value offer 2020 £20.4m • Push urgency – “ends soon” 2019 £22.4m 2018 £22.1m • Strong relationships with advertisers allowed management and deferral of spend • Increased digital mark
Slide 20: Our website
Our website New site launched and significant continued growth Online gross sales: • Increased product range including online exclusives 2020 £19.1m • New site launched 26th July 2019 £16.8m 2018 £13.8m • Significant improvement in load speed • Mobile optimised Website traffic: • Improved user exper
Slide 21: Summary and current trading
Summary and current trading FY20 – Resilient performance in unprecedented conditions • Power of our value offer • Only 5.9% order intake reduction - 60 lost trading days • Demonstrated cost control • Underlying EBITDA of £7.2m • Strength of our team • Underlying cash flows from operating activities
Slide 22: Appendices
Appendices 22
Slide 23: IFRS 16 'Leases' P&L proforma
IFRS 16 ‘Leases’ P&L proforma IFRS16 adjustments FY20 Exclude Include Include COVID-19 Impairment FY20 IFRS 16 rent depreciation interest related rent IAS 17 £m £m £m £m concessions £m Revenue 268.1 - - - - - 268.1 Gross profit 119.6 - - - - - 119.6 Distribution costs (17.0) 3.0 (2.6) - - - (17.4) A
Slide 24: Network
Network a ScS ‘Sora + CARPET + SPECIALIST Our stores and distribution centres @ Stores © Distribution