Slide 1: 2016 Preliminary Results
2016 PRELIMINARY RESULTS 23 February 2017
Slide 2: Matthew Ingle, Chief Executive Officer
Matthew Ingle Chief Executive Officer
Slide 3: A very successful business
A very successful business Solid year of progress • Increase in revenue and operating profit • good cash generation Investment drive • factories in Howden and Runcorn • distribution centre in Raunds Sales ~8,900 full-time employees Cash Investment 50+ kitchen ranges 450,000+ customer accounts 2016 P
Slide 4: Mark Robson, Deputy CEO and CFO
Mark Robson Deputy CEO and Chief Financial Officer
Slide 5: Business developments
Business developments • 23 new UK depots • Supply – investment in resilience and capacity • 2 depots in northern France and one in south; first depot in Germany • Investment in product, including 7 new kitchen ranges 2016 Preliminary Results 5
Slide 6: Highlights
Highlights Revenue, £m Operating profit, £m, and margin, % Uses of ‘cash’, £m HJ UK Cont Europe 250 Pension def Cap ex Dividend Share rep 18.1% 1307.3 250 1300 25.6 225 18.2% 237.2 200 80.0 1281.7 221.9 45.3 1250 200 150 1220.2 59.9 65.4 16.4 100 1200 175 45.9 1203.8 63.5 50 45.0 35.0 1150 150 0 201
Slide 7: Revenue
Revenue 2016 UK depot revenue £1,281.7m • total +6.5% • LFL +4.2% 2016 continental Europe depot revenue £25.6m • growth reflects expansion of ‘trial’ 2016 Preliminary Results 7
Slide 8: Profit before tax
Profit before tax Group gross profit margin • 2016: 64.2% • 2015: 64.3% £m Profit before tax £m Gross Volume Gross profit Profit & mix (revenue) 55.5 42 Cost pressure/ Change savings, £55.5m Volume etc. & mix (net) Change Price (COGS) 6 839.9 £17.4m (revenue) (15) Interest, 45 Currency etc. (23) 2.1
Slide 9: Operating costs
Operating costs Operating costs £m Change £40.2m Growth related 13 Older 602.7 depots Other 19 4 New depots 12 562.5 • 2015 2016 2016 Preliminary Results 9
Slide 10: Income statement
Income statement £m 2016 2015 Revenue 1307.3 1220.2 Cost of goods sold (467.4) (435.8) Gross profit 839.9 784.4 Operating costs (602.7) (562.5) Operating profit 237.2 221.9 Net interest (0.2) (2.3) Profit before tax 237.0 219.6 Tax (51.4) (44.2) Profit for the period 185.6 175.4 2016 Preliminary Res
Slide 11: Earnings per share and dividend
Earnings per share and dividend £m 2016 2015 Earnings per share 29.5p 27.3p Dividend • final (recommended) 7.4p 7.1p full year 10.7p 9.9p • 2016 final dividend costing £46m 2016 Preliminary Results 11
Slide 12: Net cash and cash flow
Net cash and cash flow £m 2016 2015 Opening net cash 226.1 217.7 Operating cash flows before movements in working capital 265.1 251.9 Working capital 1.5 (19.2) Capital expenditure (63.5) (45.9) Tax paid (28.8) (35.3) Dividends (65.4) (59.9) Share repurchases (80.0) (45.3) Pension contribution (30.6
Slide 13: Working capital
Working capital • Working capital down £1.5m – stock up £6.6m – debtors up £6.4m – creditors up £14.5m 2016 Preliminary Results 13
Slide 14: Return of excess cash to shareholders
Return of excess cash to shareholders • February 2016: – £55m ‘new’ excess cash – £25m still to be returned from 2015 programme • £80m returned in 2016 – along with ordinary dividend payments, 2016 shareholder payments totalled £145m* * Dividend of £65m, £55m from February 2016 announcement, remaind
Slide 15: Pension scheme deficit
Pension scheme deficit Net discount £m rate 220 IAS19 basis Contribution (49) Change £57m Current service Net 106 charge interest Asset 18 1 returns 133 49 • Dec Dec 2015 2016 £30m deficit contribution scheduled for 2017 2016 Preliminary Results 15
Slide 16: Current trading and outlook for 2017
Current trading and outlook for 2017* • Sales in first two periods up 3.6% (UK depots excluding1 trading week) st – softer trading conditions seen in H2 ‘16 continue – prices increased: early signs encouraging • 30 new depots in UK • Cost pressures (biased towards H1): – additional costs: warehousin
Slide 17: Matthew Ingle, Chief Executive Officer
Matthew Ingle Chief Executive Officer
Slide 18: Looking after the builder
Looking after the builder Our business • The builder is the centre of what we do • We supply directly from depots • Our depots have ‘no worries’ about our product • Worthwhile for all concerned • Sustainable for long-term The builder’s reputation is our reputation 2016 Preliminary Results 18
Slide 19: Worthwhile for all concerned
Helping others to do well Future staff Apprentices Current staff Pensioners Builders Worthwhile for Suppliers all concerned Tenants Investors Landlords Homeowners Local communities 2016 Preliminary Results 19
Slide 20: Consistent business model
Consistent business model Local depots • Run by experienced managers • Supplying 50+ ranges of kitchen • Understand builders requirements • A real place with face-to-face service A physical hub providing real service 2016 Preliminary Results 20
Slide 21: In-stock and manager-driven
In-stock and manager-driven Manager is in charge: • Pricing • Discounts • Staff • Stock levels • Storage • Local marketing • Local P&L Incentivised to grow their business 2016 Preliminary Results 21
Slide 22: Focussed on small builder
Focussed on small builder Security for the builder: • Cash flow • Margin • Robust products • Can swap items • Everything is local • Finish job on time We support the builder 2016 Preliminary Results 22
Slide 23: Design and sales
Design and sales Designers go to the home CAD displays in depot All local stock Job started when ready No time lost An efficient sales and design process 2016 Preliminary Results 23
Slide 24: Today's lifestyles
Today’s lifestyles Screen-based Interaction with devices in kitchen New fashions Increasing complexity More aftercare Technology will change the kitchen 2016 Preliminary Results 24
Slide 25: Product introductions
Product introductions Seven new ranges New ranges in 2016 and tested new products 2016 Preliminary Results 25
Slide 26: Product introductions
Product introductions Seven new ranges Three Burford ranges New ranges in 2016 and tested new products 2016 Preliminary Results 26
Slide 27: Product introductions
Product introductions Seven new ranges Three Burford ranges Clerkenwell and Greenwich New ranges in 2016 and tested new products 2016 Preliminary Results 27
Slide 28: Product introductions
Product introductions Seven new ranges Three Burford ranges Clerkenwell and Greenwich New greys New ranges in 2016 and tested new products 2016 Preliminary Results 28
Slide 29: Product introductions
Product introductions Seven new ranges Three Burford ranges Clerkenwell and Greenwich New greys Greenwich Shaker New ranges in 2016 and tested new products 2016 Preliminary Results 29
Slide 30: Product introductions
Product introductions Seven new ranges Three Burford ranges Clerkenwell and Greenwich New greys Greenwich Shaker Granite worktops New ranges in 2016 and tested new products 2016 Preliminary Results 30
Slide 31: Product introductions
Product introductions Seven new ranges Three Burford ranges Clerkenwell and Greenwich New greys Greenwich Shaker Granite worktops Pre-finished doors New ranges in 2016 and tested new products 2016 Preliminary Results 31
Slide 32: Product introductions in 2017
Product introductions in 2017 Twenty one new ranges New colours New designs New cabinet platform Increasing range of accessories Accelerating product introductions 2016 Preliminary Results 32
Slide 33: Plenty of room for more depots
Plenty of room for more depots 642 depots at year end 23 depots opened in 2016 Scope for up to 800 depots Plan to open ~30 depots in 2017 Opened in 2016 2016 Preliminary Results 33
Slide 34: Investing in the future of supply
Investing in the future of supply Three year programme started in 2015 Investing in Howden and Runcorn Additional capacity and disaster recovery New warehouse in Raunds Second warehouse early stage Building for the future 2016 Preliminary Results 34
Slide 35: Investing in the future of supply
Investing in the future of supply First stage 650,000 sq ft at Raunds coming on-stream 2016 Preliminary Results 35
Slide 36: Key trends in 2016
Key trends in 2016 Property tax changes in H1 Consumer sentiment changed in H2 especially in London Weaker exchange rate vs. Euro and dollar • Price increases at end of 2016 • Encouraging response at start of 2017 Quick to respond to market conditions 2016 Preliminary Results 36
Slide 37: Continental Europe
Continental Europe Twenty four depots • 20 depots in France • 2 depots in Belgium • 1 depot in Netherlands • 1 depot in Germany In France • Continue to make progress • Moving to one format and Depots at Feb 2017 pricing structure 2016 Preliminary Results 37
Slide 38: Andy Witts, COO Trade
Andy Witts, COO Trade Product ranges • Rapid introduction of kitchen ranges in 2017 • New depth of cabinets Continual improvement • New screw ranges to meet builders needs • New adjustable legs Autonomy of local managers Continual • Ability to set local pricing and depot margin improvement • Highly
Slide 39: Rob Fenwick, COO Supply
Rob Fenwick, COO Supply Competitive advantage • Supply to meet peak demands • Lowest cost of supply • Capacity and capability to match complexity Building for the future • Replacing national distribution centre • Improving manufacturing assets Strategic planning Competitive, planning for the • Dual
Slide 40: Theresa Keating, Finance Director
Theresa Keating, Finance Director Week 53 in 2017 Debt collection means bad debt <1% of revenue Pension review process Strong and flexible balance sheet • £227m cash at year end • £140m asset-backed lending facility Strong financial structure 2016 Preliminary Results 40
Slide 41: The builder is our brand
The builder is our brand Help the builder Resource the builder Resource our staff 450,000+ accounts 2016 Preliminary Results 41
Slide 42: 2016 Preliminary Results
2016 PRELIMINARY RESULTS 23 February 2017