Slide 1: FY22 Results Presentation
FY22 Results Presentation 52 weeks ended 1 May 2022 23 September 2022 us W WORKS
Slide 2: Agenda
Agenda Highlights Gavin Peck (CEO) Financial Review Steve Alldridge (CFO) Business Review Gavin Peck (CEO)
Slide 3: Highlights
Highlights —\
Slide 4: Strong performance as we emerged from the pandemic
Ss Strong performance as we emerged from the pandemic. Successfully navigated global freight and cyber challenges Good progress made on executing “better, not just bigger” strategy Strengthened leadership capability across the business Further strengthened balance sheet and refinanced bank facilitie
Slide 5: Financial Review
yy Financial Review Steve Alldridge, CFO —\
Slide 6: EBITDA £16.6m vs. £4.3m in FY21
+ EBITDA £16.6m vs. £4.3m in FY21 0 First year under new leadership relatively unaffected by COVID Strategic momentum began to leverage inherent strength of proposition, which drove strong sales Record Christmas trading despite sub-optimal stock distribution - due to freight disruption (and incurred
Slide 7: FY22 trading highlights: LFL and total sales
2 year LFL +10.5%, 2 year total sales + 12.7% FY22 trading highlights Ql Q2 Q3 Q4 Pent up demand following re-opening of stores (in Apr 2021) Larger than normal sale (included Christmas 2021 residual stock) ‘Fidget frenzy’ gained momentum at end of Q1 ‘Fidget frenzy’ continued to be notable sales dr
Slide 8: Gross margin
gross margin FY22 FY21 % of % of Variance Variance £m £m revenue revenue £m % Revenue 264.6 180.7 84.0 46.5 Less: Cost of goods sold 107.7 69.0 38.7 56.1 Product gross margin 187.0 59.3 m7 618 45.3 40.5 + Product gross margin decreased 250bps to 59.3% (FY21: 61.8%) * — Freight costs much higher than
Slide 9: Other costs included in cost of sales
cluded in cost of sales FY22 FY21 (restated) % of % of Variance Variance revenue £m revenue £m % Store payroll 436 165 7 208 59 157 Store property and establishment costs 437 165 367 203 7.0 19.1 Store PoS & transaction fees 21 08 14 08 o7 477 Store depreciation 5.0 19 52 29 (0.2) (4.0) Online varia
Slide 10: Distribution and administration costs
osts FY22 FY21 (restated) % of % of Var. Var. £m revenue revenue. £m % Distribution costs 91 34 64 36 27 418 Administration costs 24.0 9.1 19.3 10.7 47 24.5 * Other income immaterial in FY22 + In FY21it comprised £17.1m of COVID reliefs £14.2m rates relief was netted off FY21's property costs i.e. t
Slide 11: Other points: IFRS 16, interest, PBT and tax
oints IFRS 16 + We continue to report the effect of IFRS 16 - allows dialogue with stakeholders to more closely relate to how the business operates + Its effect in FY22 was to increase PBT by £0.9m (FY21: increased BPT by £0.7m) Interest + Cash interest paid was £0.3m (FY21: £0.9m including CLBILS f
Slide 12: FY22 capex was £3.0m
* FY22 capex was £3.0m * Maintained tight control post COVID to strengthen balance sheet + Low new store/relocation capex, mostly funded by landlords * 16store refits and routine maintenance + Began to increase IT capex, e.g. ‘Slimstock' replenishment system development * FY23 capex expected to be a
Slide 13: Cash and liquidity
“Cash and liquidity + Positive cashflow enabled us to further strengthen balance sheet and fund dividend . Strong balance sheet important given market sentiment re future uncertainty . Repaid £7.5m CLBILS term loan; no debt at end of FY22 . Note favourable working capital timing difference (however,
Slide 14: Business Review
yy Business Review Gavin Peck, CEO —\
Slide 15: Our New Purpose
Our New Purpose To nso reading fearing restivty nd play ~mking Ines ore fle. Underpinning this Purpose: Fulfilled by our brand that is: All brought to life by our family of colleagues who are: Helping us to fulfil our ambition of becoming one of the most loved retailers in the UK — the go-to place f
Slide 16: Our "Better, not just Bigger" Strategy
Our “Better, not just Bigger” Strategy @ @ @ KRY Develop our brand and increase customer engagement Enhance our online proposition Optimise our store estate eee Our Colleagues Our ESG Commitments & Drive operational improvements
Slide 17: Develop our Brand and Increase Customer Engagement
Develop our Brand and Increase Customer Engagement Objective: Reach new customers, increase existing customer engagement and evolve external perceptions of The Works. Delivered in FY22: * Purpose defined, with brand evolution developed to support its communication * Further investment in Commercial
Slide 18: Enhance our Online Proposition
SERHENCe our Online Proposition Objective: Increase awareness of our website and make it a more inspiring destination for our customers Delivered in FY22: * Improved fulfilment capacity and delivery capabilities * Further enhanced complementary online ranges * Started optimisation of new platform *
Slide 19: Optimise our Store Estate
e our Store Estate Objective: Create a store environment that can inspire our customers and reflect the communities we serve Delivered in FY22: * Ongoing portfolio management, improving overall estate - 5new stores, 6 relocations, 7 closures * Undertook 16 store refits * |Improved customer experienc
Slide 20: Drive Operational Improvements
‘Drive Operational Improvements Objective: Improve our ways of working to become a better and more modern retailer, whilst ensuring we continue to operate efficiently and in a cost-effective way Delivered in FY22: * Invested in supply chain team and systems * Renewed online fulfilment contract, enab
Slide 21: Our Strategic Enablers
OuFStrategic Enablers eee Our Our Systems Our ESG Colleagues and Data Commitments Maintained status as 13" Best Big Cyber security improvements ESG Steering Committee established Company to work for EPOS replacement selected, with Environmental strategy being New Communication and Rewards rollout in
Slide 22: Current Trading - 20 weeks ended Sept
:Current Trading - 20wks ended 18 Sept * Robust sales performance in light of external trading environment - Total LFLs +0.8% (stores: +4.0%, online -21.7%) * Start of FY23 impacted by two key factors: - As we implemented stronger security following cyber incident in March, sales in May/early June w
Slide 23: Summary
Summary * Strong performance as we emerged from the pandemic. Successfully navigated global freight and cyber challenges * Good progress made on executing “better, not just bigger” strategy * Strengthened leadership capability across the business * Further strengthened balance sheet and refinanced b
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