WH Smith PLC · LSE:SMWH
WH Smith — H1 2009 Earnings Presentation
31 slides from WH Smith's earnings presentation, Apr 23, 2009
Slide 1: WH Smith PLC Interim Results 2009
WH Smith PLC Interim Results 2009 23 April 2009 Interim Results 2009
Slide 2: Agenda
WH Smith PLC § Introduction Robert Walker § Financial review Robert Moorhead § Business review Kate Swann Travel High Street Interim Results 2009
Slide 3: Robert Moorhead, Group Finance Director
Robert Moorhead Group Finance Director Interim Results 2009
Slide 4: Group financial summary
Group financial summary 6 mths to 6 mths to Feb 2009 Feb 2008 Change £m £m % Revenue 731 734 Profit from trading operations 67 67 Profit before tax 61 64 (5)% Underlying EPS1 31.2p 26.9p 16% Free cash flow (£m) 67 61 10% Interim dividend per share2 5.4p 4.6p 17% 1 Diluted weighted average number
Slide 5: Group profit before tax
Group profit before tax 6 mths to 6 mths to Feb 2009 Feb 2008 Growth £m £m % Travel 1 20 17 18% High Street 1 47 50 (6)% Trading operations 67 67 Central costs (7) (7) Internal rents 1 1 Operating profit 61 61 Net finance income 3 Profit before tax 61 64 (5)% 1 Stated after directly attributab
Slide 6: Revenue analysis
Revenue analysis 6 mths to 6 mths to LFL Feb 2009 Feb 2008 Change Change Revenue £m £m % % Travel 209 178 17% (1)% High Street 522 556 (6)% (6)% Total revenue 731 734 (5)% 6 mths to Feb 2009 LFL sales by category % Books (3)% Stationery News & Impulse (3)% Entertainment (33)% Total (5)% Interim
Slide 7: Profit from trading operations
Profit from trading operations 6 mths to 6 mths to Feb 2009 Feb 2008 Change £m £m % Revenue 731 734 Gross contribution 351 340 Costs (284) (273) Costs – occupation costs (113) (103) – store costs (109) (105) – other costs (62) (65) Profit from trading operations1 67 67 Gross margin 48.0% 46.3% 1
Slide 8: Group free cash flow
Group free cash flow 6 mths to 6 mths to Feb 2009 Feb 2008 £m £m Operating profit 61 61 Depreciation and amortisation 20 21 Working capital 8 (4) Capital expenditure (13) (12) Tax (11) (9) Provisions (1) (1) Net interest income1 3 Non cash items 3 2 Free cash flow 67 61 1 Stated before interest re
Slide 9: Group net funds and committed facilities
Group net funds and committed facilities £130m 130 110 90 70 £67m £(18)m £m 50 £40m 30 10 £(9)m 10 31 Aug 08 Free Other 28 Feb 09 £90m cash flow cash flows Committed Facilities Interim Results 2009
Slide 10: Group balance sheet
Group balance sheet Feb Aug 2009 2008 £m £m Goodwill & other intangible assets 54 55 Property, plant & equipment 171 177 Working capital (36) (26) Corporation tax (35) (31) Provisions (7) (8) Other assets 7 3 Operating assets employed 154 170 Net funds 40 (9) Total net assets (excluding pensions) 19
Slide 11: Group key indicators
Group key indicators 6 mths to 6 mths to Growth Feb 2009 Feb 2008 % Underlying EPS 1 31.2p 26.9p 16% Fixed charges cover 1.7x 1.8x ROCE 40% 43% Free cash flow (£m) 67 61 10% Interim dividend per share 5.4p 4.6p 17% 1 Diluted weighted average number of shares 2009:154m; 2008:182m) Interim Results 200
Slide 12: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2009
Slide 13: Group – overview
Group – overview § Profit performance across the Group ahead of expectations § Strong profit growth in Travel § Continued progress in delivery of High Street strategy in challenging conditions § Strong balance sheet and highly cash generative Cash balance of £44m and no debt at half year end Com
Slide 14: Travel – summary
Travel – summary § Profit up 18% to £20m, demonstrating strength of model Compelling consumer proposition Strong track record built on operating experience Fundamentals of business model translate successfully to other channels and formats § Sales growth of 17% driven by new business; LFL sale
Slide 15: Travel – market overview
Travel – market overview § Travel operates in a number of different channels § In Air, passenger numbers soft during H1 as expected Expect further passenger reductions in air in H2 and have planned accordingly Medium term air passenger numbers forecast to return to growth § Rail trends remain br
Slide 16: Travel strategy
Travel strategy § Deliver organic growth in existing space by better meeting customer needs § Retailing basics and cost control § More effective use of space § Renew existing contracts § Expand CTN format to new profitable locations and channels § Develop, test and roll out new formats in our cate
Slide 17: Travel – Air and Rail
Travel – Air and Rail § In Air LFL sales down 2% § Continued outperformance versus passenger numbers § In Rail LFL sales down 2% § Responding to changes in customer demand: Enhanced promotional activity Ranging by location Changes to space allocation § Programme to rebrand and refit 23 Alpha
Slide 18: Travel – Air and Rail
Travel – Air and Rail Interim Results 2009
Slide 19: Travel – Motorways and Hospitals
Travel – Motorways and Hospitals § Motorway units continue to perform in line with expectations § 108 units now open in Motorways with a further 10 to convert to the WHSmith brand in H2 § Integration and rebranding of UNS hospital units completed § Opportunity to further increase our presence in th
Slide 20: Travel – Hospitals
Travel Hospitals Interim Results 2009
Slide 21: Travel business development
Travel business development § Good progress renewing contracts with 6 contracts renewed § 13 refits completed § 22 new units opened in H1 Air 14 Rail/Other 2 Hospital 2 Motorway 4 § 24 new units due to open in H2 6 in Air 7 in Hospitals 11 in Motorways Interim Results 2009
Slide 22: High Street – summary
High Street – summary § Continued successful delivery of our strategy in challenging conditions § LFL sales down 6% § Strong gross margin performance up by c. 190 bps § Successful cost savings plan § Continued good cash generation § 6 new stores opened in unserved catchments Interim Results 2009
Slide 23: High Street strategy
High Street strategy § Build on our position as Britain’s most popular stationer, bookseller and newsagent § Retailing basics and cost control § Drive the gross margin by category mix management § Focus on core categories, rebuilding authority as a specialist § Reduce our presence in entertainment
Slide 24: Category performance
Category performance § Books: Strategy to rebuild authority remains unchanged Further good share performance vs general high street Improved ranges and promotional programme Increased focus on Kids Books § Stationery: Continue to focus on core subcategories Improved performance in seaso
Slide 25: Category performance
Category performance Interim Results 2009
Slide 26: Category performance
Category performance § News and Impulse: Magazine market continues to be challenging Market share stable Further growth from impulse categories Mix management driving gross margin growth § Entertainment: LFL sales down as we deliver our strategy Challenging period for supply Further sp
Slide 27: Category performance
Category performance Interim Results 2009
Slide 28: Margin optimisation
Margin optimisation § Margin growth c190 bps from category mix management continues as planned § Additional margin growth from: Better buying terms and improved sourcing Improved markdown and promotional management Shrinkage control § Mix improvements will continue to be a driver of profit gr
Slide 29: Cost efficiency improvements
Cost efficiency improvements § Continued successful and focussed cost control § Delivered savings of £9m § Savings from across the business, including: Variable costs associated with entertainment Staff flexibility programme Supply chain efficiencies Interim Results 2009
Slide 30: Summary
Summary § Good profit performance from the Group § Strong performance from Travel § Continued progress in successfully implementing High Street plan § Challenging trading environment, however we have planned accordingly § Strong balance sheet and cash generation § Interim dividend of 5.4p, up 17% on
Slide 31: WH Smith PLC
WH Smith PLC Interim Results 2009 23 April 2009 Interim Results 2009