Wh Smith Plc · LSE:SMWH
Wh Smith — FY2008 Earnings Presentation
29 slides from Wh Smith's earnings presentation, Oct 9, 2008
Slide 1: WH Smith PLC Preliminary Results 2008
WH Smith PLC Preliminary Results 2008 9 October 2008 Preliminary Results 2008
Slide 2: Agenda
WH Smith PLC § Introduction Robert Walker § Financial review Alan Stewart § Business review Kate Swann Travel High Street Preliminary Results 2008
Slide 3: Alan Stewart, Group Finance Director
Alan Stewart Group Finance Director Preliminary Results 2008
Slide 4: Group financial summary
Group financial summary Year to Year to Aug 2008 Aug 2007 Change £m £m % Revenue 1,352 1,299 4% Profit before tax and exceptional items1 76 66 15% Profit before tax 76 76 Underlying EPS2 35.3p 29.3p 20% EPS including exceptional items3 35.3p 33.1p 7% Final dividend per share 9.7p 8.1p 20% Total di
Slide 5: Group profit before tax
Group profit before tax Year to Year to Aug 2008 Aug 2007 Growth £m £m % High Street1 47 44 7% Travel1 41 36 14% Trading operations 88 80 10% Central costs (15) (14) Internal rents 1 1 Operating profit2 74 67 10% Net finance income 2 1 Pension interest (2) Profit before tax2 76 66 15% 1 Stated aft
Slide 6: Profit from trading operations
Profit from trading operations Year to Year to Aug 2008 Aug 2007 Change £m £m % Revenue 1,352 1,299 4% Gross contribution 632 591 7% Costs (544) (511) (6)% Costs – occupation costs (217) (196) – store costs (207) (194) – other costs (120) (121) Profit from trading operations1 88 80 10% Gross margin
Slide 7: Revenue analysis
Revenue analysis Year to Year to LFL Aug 2008 Aug 2007 Change Change Revenue £m £m % % High Street 939 961 (2)% (3)% Travel 413 338 22% 1%1 Total revenue 1,352 1,299 4% (2)% Year to H1 H2 Aug 2008 % % % LFL sales by category Books 2% (6)%2 (2)% Stationery News & Impulse (2)% (1)% (1)% Entertai
Slide 8: Group free cash flow
Group free cash flow Year to Year to Aug 2008 Aug 2007 £m £m Operating profit1 74 67 Depreciation and amortisation 42 41 Working capital 2 9 Capital expenditure (39) (32) Tax (21) (8) Provisions (3) (2) Net interest earned2 2 2 Non cash items 6 4 Free cash flow 63 81 1 Stated before exceptional item
Slide 9: Group net debt movement
Group net debt movement Year to Year to Aug 2008 Aug 2007 £m £m Free cash flow 63 81 Return of cash to shareholders (90) Dividends paid (21) (17) Acquisitions and associated costs (24) Pension deficit and retirement benefit funding (10) (35) Tax refund and associated interest received 15 14 Purc
Slide 10: Group balance sheet
Group balance sheet 2008 2007 £m £m Goodwill & other intangible assets 55 35 Property, plant & equipment 177 176 Available for sale investments 4 Working capital (24) (20) Corporation tax (31) (25) Deferred tax 1 3 Provisions (8) (10) Operating assets employed 170 163 Net funds (9) 64 Total net as
Slide 11: Group key indicators
Group key indicators Year to Year to Aug 2008 Aug 2007 Growth £m £m % Underlying EPS 1 35.3p 29.3p 20% Final dividend per share 9.7p 8.1p 20% Total dividend per share – ordinary 14.3p 11.8p 21% – special 33.0p Free cash flow (£m) 63 81 Fixed charges cover 1.4x 1.4x ROCE – after capitalised lease c
Slide 12: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Preliminary Results 2008
Slide 13: Group – overview
Group – overview § Strong profit performance across the Group § Good performance from Travel with integration of acquisitions proceeding in line with our plan § Further progress in delivery of High Street strategy § Strong cash generation in both High Street and Travel § Return of £90m of cash to sh
Slide 14: Travel – overview
Travel – overview § Continued delivery of our strategy with profit up 14% to £41m § Total sales growth of 22% with LFL sales up 1%, 3% excluding tobacco § Underlying gross margin improvement of 50 bps YoY § Further operational performance improvement including tight cost control § Travel now a leadi
Slide 15: 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 catego
Slide 16: Travel – Air
Travel – Air § In air LFL sales growth of 3% with continued outperformance versus passenger numbers § Further progress with new formats Expansion of booksonly store portfolio § Integration of 23 Alpha units proceeding in line with plan Rebranding of units complete, refit programme commences Au
Slide 17: Travel – Rail and Motorways
Travel Rail and Motorways § In rail LFL sales growth flat § Development of smaller formats § Motorway units continue to perform in line with expectations § 104 units now open in Motorways, 15 still to open Before After Preliminary Results 2008
Slide 18: Travel – Hospitals
Travel Hospitals § Rapid expansion of Hospital portfolio through acquisition of UNS in March 2008 § WHSmith portfolio increased from 8 units in 7 hospitals to 80 retail units and 8 coffee shops in 69 hospitals § WHSmith now has significant presence in this growing and underdeveloped market § Oppor
Slide 19: Travel business development
Travel business development § Good progress renewing contracts with 12 contracts renewed covering 36 units § 27 refits completed § 146 new units Acquired Won Air 23 20 Rail/Other 6 Hospital 80 Motorway 17 § 34 further new business wins due to open in 08/09 15 in Air 6 in Hospitals 13 in
Slide 20: High Street – overview
High Street – overview § Strategy continues to be delivered in line with our plan § LFL sales down 3% § Strong gross margin performance up by c. 190 bps § Cost savings delivered in line with plan, further £10m of cost savings identified § Continued good cash generation § Post Office rollout complete
Slide 21: High Street strategy
High Street strategy § Rebuild 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 reliance on entertainment § Use
Slide 22: Category performance
Category performance § Books: Strategy to rebuild authority remains unchanged 2007 Harry Potter impacted market growth in the 2nd half Further good share performance vs general high street Improved ranges and promotional programme Ongoing focus on instore execution § Stationery: Core su
Slide 23: Category performance
Category performance § News and Impulse: Magazine market continues to be challenging Market share in news and magazines stable Further growth from impulse categories Mix management driving gross margin growth § Entertainment: LFL sales down in line with our strategy Further space rebalan
Slide 24: Margin optimisation
Margin optimisation § Margin growth from category mix management § Additional margin growth from: Better buying terms Improved sourcing Improved markdown and promotional management Shrinkage control § Mix improvements continue to be a driver of profit growth Preliminary Results 2008
Slide 25: Cost efficiency improvements
Cost efficiency improvements § Continued successful and focused cost control § In October 2007, targeted £23m savings over next 3 years § Delivered savings of £8m in 2008; in line with schedule § Savings from across the business, including: Closure of offsite stock rooms Supply chain and scanne
Slide 26: Post Offices and other services
Post Offices and other services § Integration of Post Offices into High Street stores completed 82 Post Offices now open § Bureau de Change opened in further 50 stores during H2 § Agreement to offer DHL services in 400 stores Extends our delivery services offer to a larger group of stores Roll
Slide 27: Christmas 2008
Christmas 2008 § Challenging consumer environment § Expect a competitive Christmas season § Christmas plan competitive but profitable § Active management of entertainment category and mix continues § Christmas range focused on offering value and choice in our core categories § Flexible management of
Slide 28: Summary
Summary § Strong profit performance from the Group § Good performance from Travel with significant business expansion § Continued progress in implementing High Street plan § Strong cash generation § Challenging trading environment, however we are wellpositioned § Continue to focus on delivering val
Slide 29: WH Smith PLC
WH Smith PLC Preliminary Results 2008 9 October 2008 Preliminary Results 2008