Virgin Wines Uk Plc · LSE:VINO
Virgin Wines Uk — FY2022 Earnings Presentation
24 slides from Virgin Wines Uk's earnings presentation, Oct 26, 2022
Slide 1: FY22 Annual Results
FY22 Annual Results October 2022 A resilient, stable and disciplined business delivering outstanding quality, service and value
Slide 2: The year in review
1 The year in review Our resilient and robust business model has continued to deliver in rapidly changing times. Five key pillars of focus: One. Low-cost customer acquisition delivering high levels of payback Two. A focus on delivering industry leading levels of profit Three. High customer and sales
Slide 3: The year in review continued: Financial highlights
2 The year in review continued Financial highlights » We have delivered industry leading levels of profit at 9% adj EBITDA » We maintained our low cost, highly disciplined approach to customer acquisition » We delivered 105k new customers at a lower CPA than in FY21 (£13.22 v £13.49) In a very diffe
Slide 4: The year in review continued: Operational highlights
3 The year in review continued Operational highlights » The Commercial team delivered an exciting new partnership with Moonpig as well as ‘re-starting’ our trading relationship with LNER and Avanti WestCoast, whilst adding Great Western Railways to our travel partners » Our outstanding people adapte
Slide 5: Group Income Statement
4 Group Income Statement Audited Audited Disciplined approach ensuring the FY22 FY21 Change Growth Group delivers profit in all market £’m £’m £’m % conditions Revenue 69.2 73.6 -4.4 -6.0% Gross Profit 21.7 23.3 -1.6 -6.9% Gross Profit % 31.4% 31.6% -0.2% -0.8% Operating expenses 15.5 16.3 -0.8 -4.9
Slide 6: Group Balance Sheet
Audited 1 July Audited 2 July 5 Group Balance Sheet 2022 2021 £’m £’m ASSETS Non-current assets » Strong Balance Sheet and no debt Intangible assets 11.1 10.8 Property, plant and equipment 0.4 0.2 » Net assets up £4.5m 25% to £22.1m Right of use assets 3.3 2.9 Deferred tax asset 0.4 1.1 » WineBank d
Slide 7: Group Cash Flow
Audited Audited 1 July 2 July 6 2022 2021 Group Cash Flow £’m £’m Profit before taxation 5.1 1.7 Adjustments for: Ability to deploy cash to fund Depreciation and amortisation 1.0 0.8 opportunities and de-risk Share based payment expense 0.1 Net finance costs 0.1 1.0 Cash generated used to accelerate
Slide 8: EBITDA bridge FY21-FY22
7 EBITDA bridge FY21-FY22 » Increased investment in new customer acquisition » High level of discretionary variable cost enables the Group to manage margin and profitability in more challenging trading conditions Industry leading £7.0m EBITDA margins £6.2m Adjusted EBITDA margin 9.5% 9.0% 8.5% 6.3%
Slide 9: Key earnings drivers
8 Key earnings drivers Revenue by cohort FY22 £20.4m £13.0m £20.0m FY21 £22.8m £15.7m £21.0m FY20 £22.9m £16.3m FY19 £20.9m £14.2m Pre FY15 FY16-19 FY20-21 Payback - X return Product margins - % Repeat customer Net contribution - % 5 years ( ) 10 years ( ) 40 24 7 39 38.4% 23 38.1% 6 38 37.0% 22 5 3
Slide 10: Customer acquisition
9 Customer acquisition Highlights Cost per recruit ( ) and » 105k new customers acquired Number of new customer acquired - ‘000 Net investment per new recruit ( ) - £s 18 » Cost per acquisition £13.22 140 14 » Net cost per acquisition increased to £13.61 as market 120 12 conditions became more chall
Slide 11: Customer acquisition continued: Partnerships
10 Customer acquisition continued Partnerships » Continued focus on the partnership channel driving 55% of all new recruits » Key partners include British Gas, Rail Delivery Group, Currys and O2 Priority Moments » Over 350 different partners delivered new customers over the 12-month period » A disap
Slide 12: Customer base
11 Customer base Active customers - ‘000s Sales retention rate - % The strength of the customer 200 175 120 base was shown over the 150 100 80 past year as our customers 125 100 60 showed their loyalty and 75 50 40 stickiness, even in a more 25 20 0 0 challenging environment FY19 FY20 FY21 FY22 FY19
Slide 13: DTC sales and subscription schemes: WineBank
12 DTC sales and subscription schemes A unique set of consumer propositions WineBank WineBank revenue - £m WineBank deposits - £m Spread the cost of buying wine 40 35 8 7 and earn 20% interest on your 30 6 25 5 deposits plus free delivery on every 20 4 15 3 order 10 2 5 1 0 0 » Our premier service w
Slide 14: DTC sales and subscription schemes: Wine Plan
13 DTC sales and subscription schemes A unique set of consumer propositions Wine Plan – The hassle-free way to enjoy a bottle of outstanding wine every week whilst going on a voyage of discovery Subscription schemes are vital to » Wine Plan always under more pressure in times of lower consumer the s
Slide 15: DTC sales and subscription schemes: Beers, Spirits and Gifts
14 DTC sales and subscription schemes A unique set of consumer propositions Beers and Spirits » Given the change in the economic climate focus has been on promoting the categories to the existing customer base image(s) » BeerSave and SpiritSave propositions launched to reward existing customers on a
Slide 16: Commercial sales
15 Commercial sales One of the key areas of focus for business growth is the opportunity we see for the development of our Commercial channel » Continued to drive new partnerships including a major initiative with Moonpig » Store-in-store concept with ‘Virgin Wines at Moonpig’ receiving heavy promin
Slide 17: Unique open source buying model
16 Unique open source buying model The way we source and buy wine is a key component in our business model that helps maintain margins, Su pp li e r s deliver better value and increase customer loyalty data » A data driven model that allows us to make better tasting wine through customer reviews and
Slide 18: Unique open source buying model continued
17 Unique open source buying model continued Our unique model means... » Customers come back to us time and again to re-order the wines they love » We are able to price our wines based on the quality and value rather than a market price » We are in control of the label design, the bottle shape, the
Slide 19: Our people
18 Our people Social A fun, supportive and inclusive place where people are proud to work Diversity and inclusion Cost of living pay increase » Launched a project to benchmark and improve » Acutely aware of the inflationary landscape we how inclusive we are as a company are all living in » Invited p
Slide 20: Sustainability
19 Sustainability Environmental ambition Strive to continuously reduce our emissions and operate in an environmentally thoughtful manner We are certified Roadmap and key GHG reporting Carbon Neutral focus areas UK bottling » Compiled first Scope 3 » Achieved ‘PAS 2060 standard’ » Being carbon neutra
Slide 21: FY23 strategic priorities
20 FY23 strategic priorities 1. Drive customer acquisition through increased 3. Grow the WineBank membership through strategic partnerships conversion and retention » Most productive way to deliver high quality customers at low » WineBank scheme currently has 130k members and is the main cost is thr
Slide 22: FY23 outlook
21 FY23 outlook Q1 Trading » A positive YOY performance during August was tempered by a softer September » Death of the Queen and desisting from marketing over the 10-day period of mourning impacted sales Current landscape » Continued pressure on consumers’ disposable income » Lower frequency of ord
Slide 23: FY23 outlook: Summary
22 FY23 outlook Summary » We have great faith in the robust and disciplined nature of our business model » We have new partnerships in place to drive customer acquisition and commercial revenue » We have a loyal customer base underpinned by the popularity of our WineBank scheme and the relationships
Slide 24: Thank you
Thank you FY23 Outlook Q1 Trading A steady start, including a positive YOY performance during August was empered by a softer September Death of the Queen and desisting from marketing over the 10-day period of mourning impacted sales Current landscape Continued pressure on consumers disposable income