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 Interim Results 2015
WH Smith PLC Interim Results 2015 16 April 2015 Interim Results 2015
Slide 3: Agenda
WH Smith PLC Introduction Stephen Clarke Financial review Robert Moorhead Business review Stephen Clarke Questions Interim Results 2015
Slide 4: Continuing to create shareholder value
Continuing to create shareholder value Good performance across the Group Headline profit before tax up 4% Headline EPS up 10% Interim dividend increase of 12% Distinct strategies for each business continue to deliver UK Travel returns to like-for-like sales growth; further progress inter
Slide 5: Robert Moorhead, Chief Financial Officer
Robert Moorhead Chief Financial Officer Interim Results 2015
Slide 6: Group financial summary
Group financial summary 6 mths to 6 mths to Feb 2015 Feb 2014 Change £m £m % Revenue 611 613 -% Profit from trading operations1 82 79 4% Headline Group profit before tax2 73 70 4% Headline EPS2, 3 51.7p 47.1p 10% Free cash flow (£m) 55 53 4% Interim dividend per share 12.1p 10.8p 12% 1 Stated after
Slide 7: Group profit before tax
Group profit before tax 6 mths to 6 mths to Feb 2015 Feb 2014 Growth £m £m % Travel trading profit 1 32 30 7% High Street trading profit1 50 49 2% Profit from trading operations 1 82 79 4% Unallocated central costs (8) (8) Group operating profit 74 71 4% Net finance cost 2 (1) (1) Headline Group pro
Slide 8: Revenue analysis
Revenue analysis 6 mths to 6 mths to LFL Feb 2015 Feb 2014 Change Change Revenue £m £m % % Travel 237 221 7% 3% High Street 374 392 (5)% (4)% Total revenue 611 613 - (2)% 6 mths to 12 mths to Feb 2015 Aug 2014 LFL sales by category % % Stationery 1% (1)% Books (excl. e-readers) (4)% (6)% News & Impu
Slide 9: Profit from trading operations
Profit from trading operations 6 mths to 6 mths to Feb 2015 Feb 2014 Change £m £m % Revenue 611 613 -% Gross contribution 350 344 Costs (268) (265) Costs – occupation costs (123) (119) – store costs (95) (96) – other costs (50) (50) Profit from trading operations1 82 79 4% Gross margin 57.3% 56.1% 1
Slide 10: Group free cash flow
Group free cash flow 6 mths to 6 mths to Feb 2015 Feb 2014 £m £m Operating profit 74 71 Depreciation, amortisation and impairment 19 18 Working capital (8) (4) Employers payroll tax on exercised share awards (1) (5) Net capital expenditure (21) (19) Net tax paid (10) (9) Net movement on provisions -
Slide 11: Group net funds
Group net funds 6 mths to 6 mths to Feb 2015 Feb 2014 £m £m Free cash flow 55 53 Dividends paid (28) (26) Pension deficit and retirement benefit funding (3) (7) Net purchase of own shares for employee share schemes (2) (9) Purchase of own shares for cancellation (24) (21) Acquisitions (3) (2) Other
Slide 12: Group balance sheet
Group balance sheet Feb Aug 2015 2014 £m £m Goodwill & other intangible assets 59 56 Property, plant & equipment 155 147 Working capital (36) (45) Corporation tax (38) (36) Other assets 8 7 Provisions (5) (5) Operating assets employed 143 124 Net funds 10 22 Total net assets (excluding pensions) 153
Slide 13: Return of cash to shareholders
Return of cash to shareholders Continue to invest in the business – capex of £38m for this year Consistent record of growing dividends supplemented by buybacks and a special dividend Returned £641m to shareholders 111 92 88 84 84 81 57 2 61 50 50 50 55 50 35 33 14 12 23 11 10 11 17 8 9 7 6 26
Slide 14: Group key indicators
Group key indicators 6 mths to 6 mths to Growth Feb 2015 Feb 2014 % Headline Group profit before tax (£m)1 73 70 4% Headline EPS2 51.7p 47.1p 10% Fixed charges cover 1.8x 1.8x ROCE (after capitalised operating leases) 13% 13% Free cash flow (£m) 55 53 Interim dividend per share 12.1p 10.8p 12% 1 Hea
Slide 15: Stephen Clarke, Group Chief Executive
Stephen Clarke Group Chief Executive Interim Results 2015
Slide 16: Distinct strategies, common focus
Distinct strategies, common focus Distinct strategies for each business continue to deliver Some common areas of focus and expertise Active space management Sustainable efficiency initiatives Cash generation and reinvestment in the business Develop and trial new formats for future growth
Slide 17: Travel
Travel Interim Results 2015
Slide 18: Travel performing well
Travel performing well Good profit performance - up 7% to £32m Total sales up 7%; LFL sales up 3% Gross margin improvement of c.50 bps Continue to invest in future growth in UK and internationally 25 new units planned for the UK this year Store investment programme in key travel location
Slide 19: UK like-for-like sales growth in all key channels
UK like-for-like sales growth in all key channels Full year H1 H1 Channel LFL sales LFL sales Total sales (12 months to (6 months to (6 months to August 2014) February 2015) February 2015) Air 2% 4% 5% Rail (2)% 1% 1% Hospital 2% 5% 18% Improvement in UK passenger numbers Continues to be highly
Slide 20: Investment in stores supporting growth
Investment in stores supporting growth Ongoing store investment programme in air, rail and hospitals Improvements in store look, fabric and flooring Layouts and product zoning Increased staff numbers and staff training Extended opening hours Interim 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 development
Continued success from range development Food to Go, Liverpool Street Station Headphone range, Victoria Interim Results 2015
Slide 23: Continued success from range development
Continued success from range development Souvenir range Premium confectionery range Larger range of souvenirs in big airport stores for overseas customers Continue to see good growth; further opportunities to develop offer Interim Results 2015
Slide 24: Looking ahead: UK growth
Looking ahead: UK growth Airports’ forecasts indicate passenger number growth Continue to open new space Investment in existing stores Active space management Interim Results 2015
Slide 25: Continued good performance in International
Continued good performance in International International business is profitable and growing fast Sales per passenger continue to outperform previous incumbents 155 stores now open internationally Won additional 15 new units 4 new units won in Sydney International Airport, plus retained ou
Slide 26: Momentum in International development
Momentum in International development 185 units now won internationally Now operate in 26 airports and 20 countries outside of the UK Interim Results 2015
Slide 27: Strengthening our position in Australia
Strengthening our position in Australia Sydney International Airport T1 Interim Results 2015
Slide 28: 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 Our broad customer offer and sales per PAX are attractive to overseas landlords Continued focus on the emerging hubs Australia and South Ea
Slide 29: High Street
High Street Interim Results 2015
Slide 30: High Street strategy continues to deliver
High Street strategy continues to deliver Good profit performance - up 2% to £50m for the half Profit focused strategy continues to create value LFL sales down 4% Successful active margin management – up 180 bps Delivered cost savings of £6m, in line with plan Continued strong cash gener
Slide 31: 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 32: Continued margin optimisation
Continued margin optimisation Margin growth of 180 bps for the half 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 33: Further cost efficiencies
Further cost efficiencies Driving cost efficiencies key to our strategy Delivered savings of £6m in the half In line with plan Variable costs and efficiency initiatives Expect savings of £11m for the full year Continue to develop pipeline of new initiatives Interim Results 2015
Slide 34: Differentiating our Stationery offer
Differentiating our Stationery offer Very fragmented market WHSmith competitive advantage WHSmith brand / quality Breadth and depth of range In house design Far East sourcing Increased focus on range development, quality and design Differentiate further WHSmith offer on the high stre
Slide 35: New Stationery initiatives
New Stationery initiatives Extended ranges front of store ‘Stationery Brights’ Initial trial in 60 largest stores Results driving Stationery sales and margin mix Further extension to 50 stores in second half Cardmarket trial of 20 stores launched in November Performance varies by store;
Slide 36: Evolving the Books category
Evolving the Books category General Retail Market continues to be challenging, despite a stronger December Publishing continues to be the main driver Kids books remains the most resilient category Fiction is benefiting from better publishing Non-Fiction publishing relatively weak Improve
Slide 37: Growing Funkypigeon.com
Growing Funkypigeon.com Strong performance from Funkypigeon.com at Christmas and Valentine’s day Continue to grow volume and share of traffic Increased conversion across mobile devices Good YoY profit growth Further investment planned: website, mobile, apps, products Successfully launche
Slide 38: WHSmith LOCAL trial delivering consistent results
WHSmith LOCAL trial delivering consistent results Franchise initiative continues to grow 22 trial stores open Consistently good results across all trial stores Making franchisees incremental profit Further 28 contracts signed, giving a total of 50 now signed Signing up new franchisees is
Slide 39: Focused on value creation for shareholders
Focused on value creation for shareholders Good performance from the Group Distinct strategies for High Street and Travel are delivering shareholder value Like-for-like sales growth in Travel: further opportunities for growth in both the UK and internationally Robust performance from High St
Slide 40: WH Smith PLC
WH Smith PLC Interim Results 2015 16 April 2015 Interim Results 2015