Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — FY2020 Earnings Presentation
24 slides from Theworks.co.uk's earnings presentation, Aug 27, 2020
Slide 1: What will you discover? Preliminary Results
What will you discover? Preliminary Results 52 Weeks ended 26 April 2020 27 August 2020 Ga |e ce BEST BIG COMPANIES
Slide 2: Agenda
Agenda • Highlights Gavin Peck (CEO) • Financial Review Stephen Alldridge (Interim CFO) • Business Review Gavin Peck (CEO) 1
Slide 3: Highlights
BESTBIG | COMPANIES TO WORK FOR 2020 Highlights Acrylic Pain its TheWorks.co.uk a ne ee . ei a WITCHER ANDRZEJ SAPKOWSKI
Slide 4: Creditable full year performance
• Creditable full year performance • Positive LFL sales momentum from Christmas continued through to COVID-19 lockdown • Proactive action taken to refocus our strategy at the turn of the year • COVID-19 has had a significant impact but building blocks in place to emerge as a stronger business • New
Slide 5: Financial Review
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Slide 6: Impairment trigger – non cash impairments treated as adjusting
• Pre IFRS 16 Adjusted EBITDA £10.8m vs. FY19 £13.9m • Factors impacting FY20 financial result • Trading - disappointing H1 followed by much stronger Christmas period and start to H2 LFL sales growth % Q1 (2.5%) Q2 (4.4%) H1 (3.6%) Q3 1.3% Q4* 13.7% H2 4.3% Full Year 0.7% * Stores and online up unti
Slide 7: Adjusted, pre IFRS 16 results
• Objective: distinguish financial Adjusted, pre IFRS 16 results FY20 FY19 Change performance of underlying business £'m £'m from the large changes caused by Revenue 225.0 217.5 3.5% Gross Profit 37.0 42.6 (13.1%) • COVID-19 (impairment) Gross Profit Margin 16.5% 19.6% (3.1%) Pre IFRS 16 Adjusted EB
Slide 8: LFL sales and total sales analysis
FY20 £m FY19 £m Var £m Var % LFL sales pre lockdown 218.6 217.0 1.5 0.7% LFL sales during lockdown 4.9 17.7 (12.8) (72.4%) Total LFL sales 223.5 234.7 (11.3) (4.8%) Sales from new/closed stores 31.2 11.7 19.5 167.5% Total Gross Sales 254.6 246.4 8.3 3.4% Turnover 225.0 217.5 7.6 3.5% • Positive over
Slide 9: Product gross margin FY20
Product gross margin FY20 FY19 Var Var £m £m £m % Revenue 225.0 217.5 7.6 3.5% Cost of goods sold 86.1 81.2 4.8 6.0% Product gross margin 139.0 136.2 2.7 2.0% Product gross margin % 61.8% 62.6% (0.9%) • Increased proportion of overseas sourced stock and proportion of stock sourced directly ex factor
Slide 10: Pre IFRS 16 Adjusted EBITDA analysis FY20
Pre IFRS 16 Adjusted EBITDA FY20 % of FY19 % of Increase Increase analysis £'m revenue £'m revenue £m (%) Revenue 225.0 217.5 7.6 3.5 Cost of goods sold 86.1 38.2 81.2 37.4 4.8 6.0 Store payroll 42.1 18.7 37.2 17.1 4.9 13.2 Store property costs 45.3 20.1 42.2 19.4 3.1 7.4 Other direct costs 14.5 6.5
Slide 11: Capital expenditure
FY20 FY19 Increase £'m £'m £'m New stores and relocations 4.8 5.0 0.2 IT hardware and software 0.4 0.7 0.3 Web development 0.8 1.0 0.2 Store refits and rebrands 1.4 0.4 (1.0) Other 1.3 1.3 0.0 Total capital expenditure 8.7 8.5 (0.2) Capital expenditure on finance lease 0.0 (0.3) (0.3) Net capital ex
Slide 12: Summary cashflow analysis
Summary cashflow analysis FY20 FY19 Variance £m £m £m Cashflow pre-working capital 9.2 10.6 (1.4) Working capital (8.1) (0.3) (7.8) Capex (8.7) (8.2) (0.5) Tax paid (1.0) (1.2) 0.2 Interest (0.2) (1.4) 1.1 IPO financing cashflows 0.0 (2.7) 2.7 Dividends (2.3) (0.8) (1.5) Cashflow before RCF drawdown
Slide 13: IFRS 16 FY20 P&L impact
FY20 P&L IMPACT £'m Removal of operating lease charges 23.3 Right of use asset depreciation (20.2) Lease liability interest charge (4.0) Impact on adjusted PBT (0.9) Treated as adjusting: Impairment of RoUA (2.8) PBT impact (3.7) • Impact on adjusted profit of broadly similar magnitude to previous g
Slide 14: Adjusting items and impairments
FY20 FY19 Increase £'m £'m £'m Impairment of goodwill 16.2 0.0 (16.2) Impairment of IFRS 16 RoUA 3.3 0.0 (3.8) Other impairment charges 0.0 0.1 (0.4) Total impairment 19.5 0.1 (20.4) Provision for duty payment 0.8 0.0 (0.8) Termination salary costs 0.1 0.0 (0.1) IPO related costs 0.0 3.9 3.9 Relocat
Slide 15: Business Review
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Slide 16: Four pillar growth strategy
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Slide 17: New store rollout strategy
• Continued track record of delivery ‒ Net 37 opened for the full year ‒ Payback running at around one year pre COVID-19 • Refocused new store opening strategy announced at the turn of the year ‒ Focus on driving improvement and profitability of existing estate – over 100 lease events in FY21 ‒ Targ
Slide 18: Like-for-like sales performance
• +0.7% LFLs for the full year (to 22 March) a creditable performance – Challenging consumer backdrop – Absence of a Mega Trend (trading against Squishies in H1 FY19) • Improved performance over second half – positive in stores and online ‒ Comps eased (no Mega Trend in H2 FY19) ‒ 9th record Christm
Slide 19: Multi-channel and online
• Continues to be a key differentiator in the value retail sector • A year of putting in place the building blocks for future growth ‒ Propositional changes to increase online Average Ticket Price ‒ Embedded 3rd party fulfilment relationship Successful delivery of peak 2019 Driving productivitie
Slide 20: Margin enhancement and cost control
• Further improvement in underlying product margins held back by – FX headwind – Promotional activity in H1 • Increased focus on cost control given H1 performance (and then COVID-19) • Good savings made in a number of areas – Retail distribution costs (e.g. change in picking process) ‒ Property cost
Slide 21: COVID-19 response and lockdown trading
• All stores closed on Monday 23 March, reopening in a phased manner from 15 June • Accelerated development of our online channel – Reduced promotional and marketing activity – step change in profitability – Worked collaboratively with fulfilment partner to increase capacity during lockdown – Furthe
Slide 22: Current trading and outlook
• Total sales down 26%, primarily reflecting closure of stores for the first seven weeks • Sales well ahead of expectations since stores reopened with LFLs +0.7% in the 10 weeks to Sunday 23 August – Stores sales high single digit decline – strong growth in ATV offsetting subdued retail footfall – O
Slide 23: Summary: Creditable full year performance
• Creditable full year performance • Positive LFL sales momentum from Christmas continued through to COVID-19 lockdown • Proactive action taken to refocus our strategy at the turn of the year • COVID-19 has had a significant impact but building blocks in place to emerge as a stronger business • New
Slide 24: Questions
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