Slide 1: Interim Results Presentation for the Six Months Ended 30 June 2018
INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 30 JUNE 2018 AUGUST 2018
Slide 2: Company Overview
COMPANY OVERVIEW • Europe’s largest distributor of floorcoverings: ➢ Distribution channel between suppliers and customers of floorcoverings ➢ Linking together a global manufacturing supply base and the most extensive customer base across the UK and Continental Europe • Suppliers: ➢ Global manufactur
Slide 3: Market-Leading Core Business & Business Model
MARKET-LEADING CORE BUSINESS & BUSINESS MODEL • Extensive network and dense geographical footprint: ➢ 67 million cubic feet of warehouse capacity ➢ 64 trade counters / showrooms / specification centres ➢ Multiple businesses and touch-points • Market-leading core business characterised by: ➢ High vol
Slide 4: H1 2018 Financial Highlights
H1 2018 FINANCIAL HIGHLIGHTS • Total revenue increased by 1.0% to £337.5 million (H1 2017 restated 1: £334.3 million) • UK like-for-like revenue2 down of 5.2% (H1 2017: up 2.1%) and Continental Europe like-for-like revenue2 growth of 1.7% (H1 2017: growth of 3.0%) • Gross margin improvement of 113 b
Slide 5: H1 Financial Track Record (5 Years)
H1 FINANCIAL TRACK RECORD (5 YEARS) Revenue £million Underlying Operating Profit £million Underlying Profit before tax £million £337.5m £18.1m £17.7m +1.0% (2017 restated: £334.3m) +1.2% (2017:£17.9m) +0.9% (2017:£17.6m) Basic Earnings Per Share pence Net Cash Position £million 15.9p £16.0m -2.3% (2
Slide 6: 2018 Operational Highlights
2018 OPERATIONAL HIGHLIGHTS • Two acquisitions completed in H1 2018 and a further business added in early H2 2018 • Acquisitions extend reach, improve market position and build upon existing activities • Number of businesses in the UK has increased to 61 in the UK and 4 on the Continent • Latest add
Slide 7: H1 2018 UK Daily Sales
H1 2018 UK DAILY SALES* 2,600k 2,400k 2,200k £ Sales 2,000k 1,800k 1,600k 1,400k Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 2016 2017 2018 *Calculated on a like-for-like revenue basis, being based on activities and businesses that made a full contribution in all the periods and adjust
Slide 8: H1 2018 Income Statement
H1 2018 INCOME STATEMENT Variance H1 H1 2018 H1 2017 2018 V 2017 £000 % £000 % % Revenue 337,489 100.0% 334,273 100.0% 1.0% Cost of sales (227,695) 67.5% (229,316) 68.6% - 0.7% Gross Profit 109,794 32.5% 104,957 31.4% 4.6% Distribution costs (66,090) (19.6%) (63,177) (18.9%) 4.6% Administrative expe
Slide 9: H1 2018 Revenue Movement
H1 2018 REVENUE MOVEMENT £000 £000 £000 UK Europe Total Revenue for six months to 30 June 2017 293,520 48,348 341,868 Restatement for consistency with FY18 categorisation (6,926) (669) (7,595) Restated revenue for six months to 30 June 2017 286,594 47,679 334,273 Split % 85.7% 14.3% Items contributi
Slide 10: Margin Initiatives and Improvement
MARGIN INITIATIVES AND IMPROVEMENT • CONTINUATION OF THE MARGIN ENHANCEMENT FOCUS INITIATED IN 2017 • GROSS MARGIN INCREASED ABOVE HISTORIC LEVEL TO 32.5% THROUGH IMPLEMENTING VARIOUS EFFICIENCY INITIATIVES STREAMLINING OF PROCESSES AND MARGIN ENHANCING ACQUISITIONS • UPDATE ON MARGIN INITIATIVES: ➢
Slide 11: H1 2018 Underlying Operating Profit Movement
H1 2018 UNDERLYING OPERATING PROFIT MOVEMENT £000 Underlying operating profit 2017 17,918 Gross margin improvement Volume benefit (4,561) Pricing benefit 1,861 Effect of acquisitions 7,536 4,836 Expense movement Distribution 875 Administration 1,310 Effect of acquisitions (6,797) Total increase (4,6
Slide 12: H1 2018 Cash Flow Movement
H1 2018 CASH FLOW MOVEMENT Six months ended 30 June 2018 2017 2016 £000 £000 £000 Net cash flow from operating activities Profit before taxation 16,418 16,767 15,111 Depreciation, amortisation and impairment 3,229 3,203 2,389 Profit on sale of property, plant and equipment (24) (44) (11) Net finance
Slide 13: Balance Sheet as at 30 June 2018
BALANCE SHEET AS AT 30 JUNE 2018 H1 2018 H1 2017 £000 £000 Non-current assets PPE 101,836 102,744 Intangible assets 50,085 10,673 Deferred tax assets 460 920 152,381 114,337 Current assets Inventory 136,743 129,709 Receivable 129,560 131,062 Cash 52,560 71,566 318,863 332,337 Total assets 471,244 44
Slide 14: UK Sterling Net Debt Daily Balances
£ Thousands 0 20,000 40,000 60,000 (60,000) (40,000) (20,000) 01-Jan 08-Jan 15-Jan 22-Jan 29-Jan 05-Feb 12-Feb 19-Feb 26-Feb 05-Mar 12-Mar 19-Mar 26-Mar 02-Apr 09-Apr UK sterling bank balance 2016 16-Apr 23-Apr 30-Apr 07-May 14-May 21-May 28-May 04-Jun 11-Jun 18-Jun 25-Jun 02-Jul Date 09-Jul 16-Jul
Slide 15: Expansion of Network
EXPANSION OF NETWORK ACQUISITIONS • Two acquisitions completed during the period building on the Company’s market presence with a third added in early H2 • Dersimo BV, located in the Netherlands and CECO, located in Northern Ireland • Ashmount flooring supplies added during July • Total net consider
Slide 16: Expansion of Network (Continued)
EXPANSION OF NETWORK (CONTINUED) Ipswich • Plans for a new the Distribution Centre submitted to the local planning authority with a decision expected during September 2018 • Construction packages entering the tender process • Current timeline should deliver an operational facility Q1 2020 Trade Coun
Slide 17: Current Trading and Outlook
CURRENT TRADING AND OUTLOOK • Trading in the early part of the second half broadly consistent with H1 • Order intake in August to date is in line with expectations as a result of refurbishment activity in the education sector • Softness in UK market continues to persist and the indications are that
Slide 18: Appendices
APPENDICES 0
Slide 19: Strategic Pillars
STRATEGIC PILLARS WITH THE STRATEGIC AIM OF CREATING VALUE FOR THE BENEFIT OF ALL STAKEHOLDERS DYNAMIC MARGIN CULTURE GROWTH CUSTOMERS MODEL IMPROVEMENT & ETHOS • Continue growing • Customer service • Position at the • Optimise the • Focus on culture to market-leading core and satisfaction at forefr
Slide 20: Investment Case
INVESTMENT CASE SIGNIFICANT BARRIERS TO ENTRY CREATED THROUGH YEARS OF INVESTMENT AND DEVELOPMENT OF OPERATIONAL EXPERTISE 1. MARKET LEADER 2. RELATIONSHIPS 3. CURRENCY EXPOSURES 4. DEGREE OF RESILIENCE 5. DISTRIBUTION NETWORK Market-leading position, Depth and breadth of Management of transactional
Slide 21: www.headlam.com headlamgroup@headlam.com
WWW.HEADLAM.COM HEADLAMGROUP@HEADLAM.COM 20