Angling Direct (LSE:ANG) — Final results

0:02 Good morning, and welcome to the ANGLING DIRECT PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question, press send. Company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Andy Torrance, CEO and Steve Crow, CFO. Good morning. Hi. Good morning, everybody. Thank you for taking the time to join us this morning. We're very pleased to present another strong set of results for ANGLING DIRECT, particularly the fact that we've continued to grow both sales and margin having annualized what was very much a boom year globally for for fishing and and and angling, Periods of prolonged furlough, the socially distanced benefits of general increasing

1:03 understanding of the well-being benefits of of angling have certainly been a boom in in our trade in the past couple of years. And to have actually annualized what was, across the world, a bumper year for ANGLING, we're we're really very pleased to be able to report both sales and gross margin growth, in in this f y twenty two, period. Strategically, in the year, we made very significant, progress with the successful opening of our European distribution center, ahead of this spring season, allowing us to dramatically improve the quality of the service that we can deliver to our customers in Mainland Europe, which is a a large, fragmented, and equally unsophisticated trading opportunity for us to take share and ramp up our business in Mainland Europe in the months ahead. So very good to be able to report that that distribution center went live and has been dispatching parcels to customers since the March 1.

2:05 And thirdly, the third big point we'd like to stress this morning is we have been proactively using our market leadership to leverage our relationship with suppliers in order to build stock ahead of this coming summer fishing season, which will give us some comfort and indeed some confidence that we'll be able to support all channels with further growth, be it in The UK or in Europe, be it bricks and mortar or online. On slide two, our our overview of our year is lifted from from our r and s, and we'll cover a lot more of this in in in more detail as we go through the pack. But just a few things for me to to pull out initially. 7.2% sales growth with a good strong performance from our stores as there's there's clearly been lockdown COVID restricted store closures in in this year as there was indeed in the prior year, but there were a bit of different durations and indeed different times within the the fishing season. So quite difficult to actually pull out and understand exactly what did happen. But, clearly, it's great to see customers back in our stores, as as they've had the opportunity, to get back onto the high street. Our store's growing by just short of 20%, and just over 14%, from the like for like estate.

3:31 Not surprisingly, with that channel shift, our online revenues did reduce by 4.3%, given the channel shift and indeed the post Brexit drag on our European business, which we'll come back to in a moment. However, that slight decline in total online business masks the fact that very pleasingly, despite there being few lost trading days in stores in FY '22, our UK online business grew by 2.7% with a very encouraging improvement in online conversion by further 45 basis points increase in online conversion in The UK. A 250 basis point improvement in gross margin, which was a combination of pricing, some improvements in terms, further improvements in shrink, and indeed continued further 25% growth in our Advancer, own brand product range.

4:28 When you add our sales growth, combine our sales growth with that improvement in gross margin and indeed some further underlying, gains in in cost efficiencies, our EBITDA increased. Pre IFRS 16. EBITDA increased by just over 30% to £5,200,000, slightly ahead of the analysts' expectation. In terms of operational highlights, three big things. The European distribution center, as I've just mentioned, we have launched, our, fishing tackle app, the first, trading app, that we're aware of, in The UK and Europe. And indeed, we opened four new stores, within The UK. On the next slide, we've just sought to, illustrate some of those points. Graphically, on the left hand side, you can see total revenue progression there to 72,500,000.

5:24 The bottom left hand side does, though, show the European post Brexit drag on that total number. Our total European business went back by just over 39% As a result of Brexit port disruptions, some of our lead times into Europe went up from sort of three days to, in some cases, as much as four weeks at one point with the ports and customs disruption. We're unable to dispatch much sought after UK bait brands into Europe post Brexit because they now are classed as animal feeds and need at least two veterinary certificates even for a a small pack, of bait. All of our European dispatches, are now or or did until the distribution center opened, come with a €6 per parcel admin fee charged by our carriers, by the sort of, could argue, a car teller. Carriers and unavoidable admin fee we've had to pay on all parcels. So as as a result of that, our European conversion rate fell away quite sharply, minus 39%.

6:34 But we have invested to protect the trade in our native language sites. We have a Dutch, German, and French native language site and protected the trade on there to the point that the native language sites went backwards by 22% post Brexit. And I'll obviously talk a lot more about Europe as we go through having overcome all of those obstacles with the opening of the new distribution center. Profitability in the central block there, you can see our gross margin moving forward by 250 bps. Steve will give a bit more detail on that later on in the presentation. You can see our EBITDA bottom bottom center there forward to £5,200,000.

7:19 Top right, the channel switch, good to see some like for like growth back into our UK store estate where we now have 42 stores. And bottom right hand side, UK web conversion moving moving up up from 5.9% to 6.4%, a combination of improved site speed, improved search relevance. We've been working hard to use AI to improve relevance, but also an improvement as the year went on in terms of product availability, range availability of customers, all contributing to an improvement in web conversion. On the left hand side on the following page, we thought it useful to show some year on two year growth trends. You can see both store and our total online sales. Store sales going forward, 38.4% year on two years, and indeed our total online revenue year on two year on FY '20 by 33.9%.

8:15 On the right hand side, again, we just thought it would be useful for investors just to have a look at the underlying profitability of the business as that's progressed forward, excluding any government support. We're not anticipating any government support in in our current trading year now. And the year we're reporting on here, government support actually reduced by £600,000 in the year. So we thought it important actually just to show that both in terms of the actual EBITDA and the EBITDA ratio those two graphs. Over the page on slides five and slides six, I could talk about these all day. We have a fairly limited time. This we seek here to try and update yourselves on the strategic progress we've made against the priorities that we actually outlined when we met investors twelve months ago in in May last year.

9:08 At the top there, in terms of international growth, this is a major growth opportunity for us. The just as a reminder, we believe the easily addressable European market in our five target territories of Germany, France, The Netherlands, Austria, and Belgium is at least three times the size of the of The UK market. We have a very low share there. We have an even lower share with that post Brexit drag. Opening the new distribution center, which is is owned by a new subsidiary that we incorporated last year, ADNL, BB, allows us to dramatically, improve the customer experience in that we can now, for the first time ever, actually do, express delivery to the whole of Germany, the whole of The Netherlands, Belgium,

10:00 and the vast majority of France and indeed several other. We we now distribute to 23 European countries, but with a focus on those five key markets. We've been able to now start to deliver bait again, which is really important to our customers in terms of completing the basket. We have 18,000 SKUs in stock in the Dutch distribution center. About a third of those are actually new from from 12 new suppliers and very much focused upon the slight variance in the style of fishing, particularly in Central Europe and Eastern Europe. Anglers are are very keen on predator fishing. So, again, for the first time, we've been able to stock products that we don't stock here in The UK and actually target those to specific European markets all when you when you look at that reduced lead time and reduced costs. So we now have a much lower free delivery threshold. We have a much lower delivery charge for those customers that that don't hit that threshold because we no longer, of course, pay those export administration costs. So we're very excited about this. It was a huge project for a business of our size. We're we're still quite a modestly resourced business.

11:17 And despite COVID restrictions, which which lingered some time in The Netherlands, actually, we we weren't able to travel freely to The Netherlands while we when we took this distribution center on. And indeed, the

11:31 most of you will be aware, we suffered an unfortunate cyber attack last November just as just as our systems team were at the peak of the development requirements for this distribution center. I was very pleased to be able to get that open well ahead of the season. It's now fully operational and has been dispatching, since since the March 1, and is already, achieving pre Brexit, volumes, through that distribution center. In terms of digital, as I mentioned, you know, it is important to us that we continue to have market leading omnichannel digital capabilities. We're very happy for our customers to move between our websites and our stores as they wish, as well as being able to trade in what is five websites now because we also have a .eu site.

12:21 It's really important that our customers can access some really rich digital content, inspiration, advice, learning articles, the blog, and and and what have you. That is all multilingual. We have a policy of everything that happens in The UK. It's followed up very quickly on all of our international sites. We're particularly pleased to launch this first in in tackle market mobile app, which allows our customers to take all that digital content and indeed be able to trade from the riverbank, from the fishery. We we released it in November last year. Unfortunately, that did coincide with the cyber attack. It was it was a good app, but it wasn't good enough, I felt, to be able to really start to push it. We put the development on hold in order to concentrate on the international project, especially with the pressures that the cyber attack bought. So that meant that phase two of our app development wasn't actually released, until April this year. So, just to give you some sort of context to that between launch last November and the end of March this year, we had about a thousand downloads.

13:26 That was very much a soft launch. We're now starting to actively market the app since phase two has got has been released, and we've gone from having a good app to what I think is a very good app. And as of this weekend, we now have around 10,000 downloads, some very good reviews, and we're already at sort of low to mid single digit participation of our online business in The UK. It's already going through the app. That's really good for our customers. It's actually very good for us in that our customers that interact with us through the app. We avoid all those sort of Google Ad charges which are associated through clicking through on the on on the main website. So very pleased to be able to make some progress there. Phase three development is underway, and we're very excited with the opportunities that phase three brings us to allow us to merge the app content with we we have a priority subscription model.

14:21 We have nearly nine and a half thousand subscribers now who pay an annual fee for free express delivery. It's about 15% of our monthly orders. The opportunity to merge that subscription model with our app to start also to drive some user generated content, some community content, we're very excited about that forming a really good and solid bridge between our between our stores and our web content. Moving on to stores, we our new store operations director has been with us just over a year now, making really good progress professionalizing our store operation. He's restructured his team. We have a much better balance now retailers that fish and anglers that that that work in a retail business. And and we need both, and that's a really important blend. But the contemporizing of our store operation means that our customers are getting even better service and the contribution that our stores make overall to the businesses is is also significantly improved. Store EBITDA margin has gone up by 420 bps to 13.8% of their sales pre pre group overheads. We've actually installed in all of our stores now for four counters, which allows us to we've commenced a deployment project, which allows us to ensure our store colleagues are installed and our customers need them to be.

15:46 And and the store team are very focused on assisted selling, making sure they get the service that they deserve when we're in they're they're in store. I think there's there's an awful lot more to come from that team in the years ahead. Over the page on slide six, our commercial team, we changed our commercial director partway through the year. The the new incumbents made it made a great job really getting behind, our customer focused, category management processes. We've also strengthened our commercial team with we've been very lucky to take on a very experienced European commercial manager. He used to be the director of sales of one of large Europe's largest fish and tackle brands. He comes to us with a wealth of knowledge and a really rich and useful network over there in Europe. We've also taken on a head of own brands who's doing a great job developing our Advancer range.

16:47 Advanta sales, this is our own brand range. Sales went ahead by just shy of 25%, in the year, which we're pretty pleased with in the context of overall company growth of 7.2. That's a 5.6% penetration of total sales up from 4.8 in the prior year, and indeed, only two point eight two years ago. So we've roughly doubled penetration within two years. We'd we've done a lot of work to rebrand and contemporize the range. One of the biggest frustrations from our perspective of supply chain disruption has been less about our ability to get ahold of stock, but actually the fact that product do out this doesn't get talked about so much, I don't think. Product development lead times have increased. So our ability to these are these are factories we can't we still can't visit largely in China. And indeed, the lead times given demands on factory capacity for new products is pushed right out. So we had hoped to launch the new Advancer range extension this spring and also Advancer Pro, which is a slightly more technical, higher spec range of products and that the the the differentiation between the two allows us just to pitch more appropriately to different sorts of customers.

18:01 We'd hope to fully launch those this spring. Unfortunately, some of those lines won't be with us until later on, in fact, getting onto the autumn. So that is all still opportunity to come. Products that we have had, particularly our new reels, which are obviously quite small cube, high value, and all the benefits that that brings have sold really well with really good feedback from both our our customers and colleagues alike. In terms of communities and sustainability, our our purpose is to get everyone fishing. So not surprisingly, we're working very hard on engagement, inclusivity, sustainability within fishing. We're in the second year of our partnership our exclusive partnership with the ANGLING Trust. We're a key supporter and indeed have now adopted Tackling Minds, the mental health charity, as our national charity there. They're at the forefront of NHS social prescribing of fishing for for, mainly mental health, but also more broader well-being, benefits.

19:05 We've had an exceptional response to a, a well-being survey that we've done in conjunction with ANGLING RISKING University. The output from that survey is currently being academically and peer reviewed, which will mean, indeed, that will be the first large scale peer reviewed survey about the benefits of ANGLING, and and we're very excited about the opportunities for for grants for quite large scale public health interventions to improve the participation in ANGLING for the sort of general well-being in coming years. In terms of organizational capability, an awful lot of work on our IT infrastructure and resilience. Our new European entity, of course, needed new trading systems, new supply chain systems, new accounting systems, and that has been the main use of our development teams in the year gone by. And I think they they've they've done a cracking job. We were distracted by cyber attack in November. A couple of very quick points to make about that.

20:12 It was in November, one of our quietest trading months, which was was was the best thing about it, really. We avoided peak trading. It was unfortunate that the timing was around the development time for the distribution. So the new distribution center and for the app. So we did the the the app development did suffer as a result of that. We lost about eight days trade on our websites and about half, three quarters of a day in in store. This thankfully, we were we were well insured. We'd actually increased our insurance coverage during the prior year. All of our direct costs associated with legal costs, recovery costs, forensic cyber security analysis, and and and post reviews has have all been directly covered by our insurer.

21:04 It's credit to our teams and the work they did on the IT infrastructure that actually

21:08 allowed them to rebuild, particularly our web systems. Post the attack, it was very destructive attack in its nature. There was a very candid request for for a ransom, which on the advice we were given didn't appear to be a credible request given the the the destructive nature of the attack. We didn't actually pay the perpetrator any money at all. Our biggest issue was regaining control of our public facing side of our websites and our social media. That was sort of really quite unfortunate and and really quite difficult to do. We were we were let down, I have to use my words quite carefully, by a third party providers and security, and we became the victim of an eSIM swap, which allowed the perpetrator then to gain access to our systems despite us having what we'd been advised very appropriate multifactor authentication on on on all of our systems. So I should expect that's all been thoroughly reviewed and learned from. And whilst I don't believe any, if you look at the number of businesses that are getting these sort of attacks now, nobody is immune at all from this.

22:21 I think we are now in a in a having learned some some important lessons in a far better state, post, attack than pre. In terms of our board, our govern governance and effectiveness of our board continues to to strengthen. We have appointed post period end Chris Keane to the board. Chris will also join our auditcom. He's a very experienced group financial officer, chief group chief financial officer with a very high and an impressive pedigree in specialist retailing,

22:57 both online and in digital, both in The UK and abroad. Recently, you'll have also seen that Dilis Mobby, one of our existing nonexecs, has signaled that she'd like to step down from the board at our forthcoming AGM. Dilis has been on the board for a couple of years now. She specializes in helping and consulting with businesses on their purpose and helping businesses codify their purpose into their strategy. Delis has helped us tremendously with that. She's very busy. Her business, you know, is is is is much in demand. And I think in terms of her

23:32 demands on her time personally, she's she's decided this is a a a good time to step away. So we thank her very much for the effort that that she's put in, and we part on on very good terms. We're very much advanced in in appointing Dilice's replacement. I hope to be able to announce that shortly. We're very focused on and very excited about some of the specific skill sets that that individual brings to the board, especially in the context of where ANGLING DIRECT is at the moment in its in its life cycle. I'll hand over now to Steve who's gonna just go through the financial overview section in a little bit more detail. Thanks, Andy. I'll bounce through a few of the key points. I think we've got some pre submitted questions later where I can take some more detail.

24:20 On Slide eight, there's three things I sort of draw out. Top left hand, you will notice The UK sales growth rate still over double digit despite annualizing against a very challenging comp year where we have the benefits of folks on furlough, the staycation type environment. So particularly pleasing to deliver that 10.5% growth and that's around 45% on a two year basis. The gross margin drawn out in sort of the red dots further down the page. So your two fifty basis points progression made up of around 130 basis points pricing and buying. The strength of our stock position, strength of our relationships enabled us to trade quite hard in terms of securing a disproportionate share of the market stock and then use our sort of multichannel approach to price that accordingly.

25:20 Around 30 basis points in terms that is largely linked to volume progression. So in a short market stock the opportunity to really sort change what I'd call fundamental base prices was challenging but the team were successful in terms of leveraging that stock positioning and leveraging that volume arena to deliver 30 basis points there. Around 20 points from Advantage, so growth of own brand, maintaining that broadly maintaining the differential in margin between

25:51 the two, little bit of pressure because of carriage costs in terms of container costs coming out of the Far East and 20 basis points further on shrinkage where we continue to sort of improve and challenge our internal processes around compliance. There's a bit more in terms of mix, a reduction in our previous annual AD rewards card etcetera. But broadly those are the four key facets of that. I think it's worth noting the 36.7 the half and half split, we were up in the 37s in the first half that moderated in the second where we were just a smidge below 36%. So plays out for the full year at 36.7 a half two basis we were nudging slightly beneath that 36%.

26:38 Final point I'll make just bottom left hand corner, the European EBITDA that is a pre IFRS 16 EBITDA so it's comparable with 5.2 and he quoted earlier. That's made up of two facets so it's got a what I call a direct trading loss around £300,000 which is a response to the admin cost, the export cost, the increase customer basket, the change in mix of the basket and around 400,000 of setup costs I. E. Costs that directly hit the income statement that related to legal professional consultancy

27:16 startup costs relative to the premises and the people that we've employed in Europe. Over the page on nine, the income statement. On a this is presented as you'll see it under an IFRS basis. So the EBITDA on an IFRS basis is 10.1%. So healthy double digit performance there at 160 basis points progression.

27:46 The other aspect there is again some reasonable progress on net profit and earnings per share that level of progression is below the progression at the EBITDA level primarily because of the tax charge. So we're now the beneficiary of our deferred tax balances looking to reverse at 25%. So there's quite a drag on the in year relative tax rate. So if refer to the RNS there's more in my CFO statement about bridging that effective tax rate. On Page 10, that's just the IFRS 16 reconciliation. So folks can see the difference between the pre and post basis, obviously that's a cocktail of the maturity of the lease relative to the interest charge relative to the depreciation and also the restoration provision basis of accounting versus the pre IFRS 16 dilapidations.

28:43 We expect that to sort of normalize more around the sort of the 100,000 mark moving forward, but again not a material difference to

28:50 that profit before tax level. On 17 on the balance sheet, two key points here. So the capital expenditure in the year both on tangible and intangibles cumulatively was around GBP 2,200,000. That GBP 2,200,000 had a couple of one offs in it. So it had around GBP 300,000 for the fit out of the European distribution center and it also had around GBP 300,000 where we took the opportunity to accelerate and settle the leases for our semi automated picking system in our UK distribution center. So hence they now become a owned asset rather than a right of use asset. So net of those two is about 1.6 of around which 1.2 was broadly on the store estate.

29:44 The working cap position, you'll notice there around a 30% increase in the inventory value. I think Andy sort of referenced our approach to stock is worth referencing around CHF 1,200,000 of that growth is for our own brand stock investment.

30:02 We tend to stock up earlier in own brand Chinese New Year makes it sort of an imperative to get things on the sea before Chinese New Year. So further deeper investment there and we only had around CHF 300,000 relating to the European distribution center that we were in the process of starting to build those stock levels. So post the year end we've had about a further CHF 2,200,000 investment into European working capital which isn't reflected in this balance sheet number of 16.3% you'll see there. You'll note the cash balance of 16.6%. Again in the RNS we've referenced the April position that is lower reflecting the now settlement of that investment into the European working cap position.

30:55 Over on 12, the cash flow. So again, highlighting there the strong EBITDA performance giving us a strong building point for the cash position. Then the investment into working cap primarily being the stock dynamic I've just referenced on the previous slide. The only other feature just to reference is of the CHF 2,200,000 of CapEx that we have capitalized on the balance sheet in the year around CHF 400,000 that is going be settled in cash this year. Hence the cash flow in 2023 will be sort of north of CHF 2,000,000 reflecting that overhang of around GBP 400,000. Still a very, very healthy cash position as I referenced that is pre the investment into European working cap, which we'll obviously see the impact of as we go through the current year.

31:47 I'll hand back to Andy for the business review. Thank you. I'm gonna move through these pages reasonably quickly because I do want to leave us enough time to respond to some of the questions that have come through but this page is is probably worth running a little bit of time. You you can see the photos there on the right hand side. Our wholly owned EU subsidiary, AGNL, was incorporated on the fifteenth of September last year. Now employs eight in country colleagues, including, as I said, a very experienced European commercial manager. We require acquired the lease for this distribution center in in in January. We actually we we did manage to visit under fairly restricted circumstances. We actually took the building over with a a hit by a FaceTime walk around on on actual lease assignment day with with the landlord.

32:39 It is a purpose built distribution center, 3,900 square meters. It's in Benlow, the southern part of the The Netherlands. It's about twenty minutes from the German border and is ideally placed to allow us to very quickly access a huge proportion of our target market on those five key territories that we're particularly focused on and allowing us, in most cases, to deliver next day. There's room there for for several years significant capacity for several years growth, we believe, to release 2027. We will be looking at the prospect of introducing some automation of a similar style and nature to to that we already have here in in The UK. There is no automation investment in there at the moment. It's it's not really right to do until we manage to ramp the volumes up, which is not surprisingly something we're really focused on as things stand.

33:42 Significantly better customer experience for the various reasons I've already outlined, not least express delivery, improved ranges, lower free delivery thresholds, lower delivery charges for those people that don't meet that threshold, the ability to sell beta gain, and indeed around a third of those 18,000 SKUs are are new to to our business and particularly targeted at the European customer. First, parcels went out on the March 1, and early volumes have already returned to pre Brexit levels, bearing in mind that our German website was the first international website we opened, is is just over three years old now. As we start to work on ramping utilization of this facility up, in terms of business development, we're now starting to focus on validating the case for true omnichannel.

34:39 So at the moment, this distribution center only services our websites. We're looking very closely at investigating the potential for bricks and mortar. In The UK, we're very clear that the ANGLING DIRECT offer is truly omnichannel, and and our customers like to to move between the channels as they wish. Clearly, our customers in Europe won't have that full ANGLING DIRECT experience until we have some bricks and mortar stores. And given the community of localized nature of ANGLING regardless of which country you're in, I think this will be an important step. We are looking to validate that. We're not going to do anything rash. We will be very careful. We're we're sort of very conscious that that that UK retailers in the past had their fingers burnt here, but I think building our business, building our brands locally through our our digital websites, this distribution center is absolutely the right first step.

35:38 We'll be able to talk to to yourselves and investors in a lot more detail about the next steps when we get together at the interims later on in the year. Over the page, there's bit more detail on store performance. The green dot sheet, the lime colored dot sheet you see there are the four stores we opened in the year, three of which to to new catchments in Cheltenham, in Ipswich, and in Southampton, the one in Southampton being the first on the South Coast. It's a hedge end. And those of you that know that part of the world, it's the m twenty seven, the m three, a twenty seven all comes together. Very, very high footfall location, bringing anglers from all across the South Coast and and it's already establishing itself as one of our busiest stores. The fourth, bit of an infill in in Redditch in Southwest Of Birmingham. Birmingham being a cultivation sort of more than big enough to to to handle two ANGLING DIRECT stores.

36:32 We talked, I think, at the interims of the half year about the fact we've recited one store, a sitting one store move from a a very dilapidated, very old building to a far better trade Park site, and we're very pleased with the 40% growth that that store's already delivered and with with with more 42 stores at the end of the period then, albeit that three of those four new stores opened in quarter four. There was when the pandemic first started a bit of a hiatus in in property development, and we saw that in terms of the availability of new stores. They were all squeezed in towards the end of the period. I anticipate a similar number of new stores in this year ahead as that pipeline has now started to to free up. We will be focused on on unserved catchments. We still use the ANGLING license data to help inform where those stores should be.

37:25 Probably a little bit more of a northern bias for our new store opening program in in this year ahead. Over the page from that, you see the breakdown and and detail behind our digital performance, and this is one of you can see both in the in The UK sites and indeed our European sites, visitor numbers declining as as the pandemic restrictions fell away, as stores were open and a lot more people very happy to go and visit stores. So not surprisingly to see that visitor numbers decline. In terms of conversion rate, there's a a tale of two two different conversions here. You could see that healthy improvement in UK conversion driven by speed. We we use also use some software now called Algolia, which means our searches are far more relevant.

38:14 We focus on trading up and increasing basket sizes. In Europe, not surprisingly, as well as visitors falling away, the visitors that did come to us when they realized the lead times and realized the absence of bait and some of the cost involved, not surprisingly, European conversion rate dropped by 92 bps down to to around 1.9%. And thereby lies the challenge to the teams in the year ahead. We very much take the approach of taking our very successful UK online metrics and closing the gap from from from the European start up metrics towards The UK, and that's that's how we'll start to grow a profitable online business in Europe. Good to see ATV.

39:00 The results of our focus on upselling ATV increased by 5.9%, £74.99 in the year. And also worth pointing out that warehouse efficiency improved by 50 bps coming down from three and a half percent of sales down to 3% of sales here in The UK and thereby providing a a target for our new colleagues in in in Europe. Slide 17 just outlines a little bit more detail around the progress we're making in terms of of sustainability. Have a very active environmental project group, which is chaired by our founder and chairman, Martin Page. Not surprisingly, very much supporting the ANGLING TRUST's anglers against pollution campaign, which is very focused on the the welfare of fish and fisheries.

39:50 But equally, we're working hard on energy saving measures and reduction in our carbon footprint. Over 2,700,000 meters of customer fishing line being recycled now, which seems to be capturing people's imaginations, and it's it's sort of accelerating all the time. We've made some changes to our waste recycling contractors so we can track waste far more carefully with a with a an ambition to radically reduce the amount that goes to to to landfill. We've now given away over 22,000 free starter fishing kits to to young people under the age of 16, And and indeed recently held our first on the bank get kids fishing events quite local to here. In Norwich, it's a bit of a trial event. It went down exceptionally well. We've had some excellent feedback from customers for life, and we plan to hold some more of those events utilizing our qualified, angling trust, qualified angling coaches, across the country, as the year goes on. Well-being and mental health, we've spoken about the work we do with angling and risking, and we should look forward to seeing that emerge shortly. In terms of priorities for the year ahead, not surprisingly, we're looking to ramp up and looking for material growth in our our European operations.

41:10 We will invest in digital marketing. We will invest in pricing margin in order to gain share quite quickly and ramp that business up. I don't think that's too surprising. As I mentioned, we seek to validate the case to initiate an omnichannel bricks and mortar strategy to potentially, once validated, complement that that digital offering. In terms of digital, I think we've talked about the fact that our working title here is my AD, the fact that we want to look at the next phase of of app development. We will drive the take up of the app. We believe there's some significant customer benefits there. We think it will certainly capture people's imaginations and allow us to utilize some of the features of an app in in terms of bridging between our omnichannel and digital offerings with sort of localized offers, local community content, local user generated content for our store teams to engage with with their customers locally. In terms of stores, the the team there very much capitalizing on on behavioral change coupled with better colleague deployment.

42:21 We we we're not immune from wage inflation. The national living wage increased by 6.6 However, we're probably only partway through some of the work we're doing on best practice deployment. So we do have some opportunity as we deploy to assist our customers better actually to drive more efficiencies within our stores at the same time. Commercially, continue to leverage our our market leading position to ensure we stay in a good position. Stock wise, we are, as Steve pointed out, we do have more stock than we had this time last year. A lot of that stock is delayed stock from last summer. I think supply chain disruption is is likely to continue for some time. But bearing in mind, we consciously committed to forward orders with our suppliers. Our suppliers like to work with us. We we, you know, we have used the strength of our balance sheet in order to be able to ensure that we we fulfill our commitments to suppliers.

43:23 Relative to our competitors, I don't think we've ever been in a stronger position. Stock wise and indeed our stock availability to customers is better than it's been for some time. Watch out for newly rebranded and extended advance our own brands and and an increasing participation there as well. In terms of current trading outlook, we reported in the r and s that q one of this FY '23, this new sales year growth of 5.4%, which we're we're pretty pleased with given that in the prior period, so quarter one in f y twenty two, was just as the bulk of which was locked down, actually, was closed down. And therefore, the towards the end of of April in particular last year, we actually had some record weeks as the stores reopened. So that 5.4% includes just annualizing some of the largest weeks from last year, which traditionally our larger weeks come later in in the year.

44:25 Given the work we've done on the foundations of the business over these last couple of years, we are, as a board, still committed to our growth plan. We will continue to invest to strengthen market leading position with a focus on gaining share across The UK and Europe. Having said that, this year is gonna be tough. I don't think anybody is is any consumer business of any form is immune from inflationary cost pressures on the cost of living crisis that that, you know, we're all starting to feel and and indeed gets reported so so widely. We're we're not immune from that. However, having having said that, we have our two busiest quarters ahead. We are a market leader. We have a strong balance sheet. We have a very strong and healthy cash balance.

45:14 We have a better stock position than we've that we've had for some time. And in a fragmented and consolidating market, I the the point I wanted to emphasize really was it's the strongest, best run market leading businesses that that really stand to weather that storm better and indeed potentially benefit as the markets continue to consolidate both in The UK and in Europe. We are on track to meet current year market expectations. Obviously, if that changes, we will report as as appropriate. The other thing to mention, I think, in terms of board changes, we we've already covered. That was also r and s quite recently, and we will make an announcement quite shortly in terms of the list of all these replacements.

46:05 In summary, you know, we we have a solid platform here in The UK. We are six, seven times larger than our nearest competitor in a in a business that is stronger than it's ever been. We have, through the work that we've done in Europe, overcome the drag that Brexit unfortunately put on what was otherwise very rapidly growing European business. That door is now open to us again, and we're very encouraged by the the early results. We'll obviously report on European trading results in in in more detail at the interim. But lots more to go at online bricks and mortar in The UK in Europe.

46:56 So I think that was that was probably it from a presentation or point of view. That's that's fantastic. With with a reasonable amount of time for questions. Fantastic. Thank you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. Just want the team take a few moments to review those questions submitted today. I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard on the Investor Meet company platform. Perhaps before we go into some of the live question, we did receive a number of pre submitted questions from investors. If I may just start this session with those. First question reads, when are you likely to pay a dividend? This is a is a question that we are occasionally asked.

47:43 The board does hold the matter under review. We have we have no plans to pay a dividend as things stand. I think the overwhelming view for most of our shareholders is that, you we know, we clearly have a healthy cash balance. However, you know, we are not short of ideas of how to invest that cash wisely to continue the profitable growth of the business. And indeed, you know, I think shareholders accept accept and appreciate that this is a time to to to to take some comfort from the amount of cash we have. So we we have no plans in the near term to to pay dividends. Fantastic. Thank you. The next question reads consensus estimates for the current year is for growth in revenue of £9,500,000 13.1%.

48:33 Your EBITDA pre IFRS 16 is forecast to decline by £900,000 17.3%. Given that margin expanding due to own brand sales becoming a large part of the sales mix, how can this be the case? Steve? Think there's three sort of key look throughs on that. So worth just reminding ourselves this year '22 had 900,000 of direct government support. So that was split 700,000 for property restart grants which are not going to recur and one could argue we were a disproportionate beneficiary given our you can see it in the IFRS 16 adjustment. The amount of annual rent we incur even being shut for two point five months debate how much that condensed sales rather than reduced sales and that we are clearly a beneficiary for that. But around GBP 200,000 of furlough on top of that GBP 700,000 restart grants, we were able to trade the stores on a call and collect basis for the lockdown period this year. Therefore our furlough claim was actually pretty modest And in terms of topping up the furlough claim, very negligible in terms of the cost of the business.

49:54 We have no anticipation of that recurring, notwithstanding I'm making the point that you've got to make a judgment on how much it condensed rather than reduce the sales. There's an indirect cost this year in terms of the way the government has now introduced the business rates regime where they cap rates relief for an organization at a 110,000 that impacts us as a multi site retailer. So the drag year on year is around 380,400 thousand pounds that we are going to have as an incremental cost versus this year from the change in the way the rates are structured, business rates are structured. And then layered on top of that we've obviously got the headwind of the National Living Wage and the NI increment, put those two together that's around £300,000 So it takes us sort of if you like substantially backwards from which we've sort of looked at how we can grow that back.

50:52 Linked to that there is a we obviously have been a beneficiary in terms of the customer landscape, the stock landscape. Our medium term target has always been to deliver a margin of 36. We haven't committed to a 36 recurring. We've always said that is a couple of years hence from where we are. Indeed the guidance that Andy referred to as the margin mixing down to around thirty five two in the analysts numbers, that's a cocktail of some investment into Europe and then a UK book sort of hovering around the 35.5 mark. So still sort of on that progression towards a medium term 36% that in a normalized environment we've signposted.

51:42 Thank you very much. Next one we have here is please can you reconcile the current guidance of 4,300,000 of EBITDA in full year 2023 with the fundamental performance of the business. You've historically discussed maintaining gross margins around 36% given the top line growth and even reflecting conservative levels of costs related to the European start up. Why do you expect profits to decline year on year? I think hopefully, two substantially dealt with that. I think just worth referencing in 2023, Europe losses, we're expecting to be broadly comparable, slightly more than FY 2022 on the basis we're effectively swapping out fixed operational costs that we're looking to leverage from growing that book against setup costs. So if you said it had GBP 700,000 of loss in 2022 and something around that mark slightly north of that for 2023 then Europe isn't a drag on the year on year comparison.

52:39 Fantastic. Thank you. Can you discuss the declining cash balances since year end? Is this normal seasonality? Or are you investing in extra inventory? What is the correct level of cash for this business given onethree of the market cap is held in cash? At what point would you consider a dividend or buyback? And I know you've just touched on that in the first question. I'll deal with that. So cash balance is low. We are in S that £13,400,000 that's an extra £2,200,000 into Europe after the year end. What's the right level of working cap for this business? We are expecting to modestly grow the working cap of the business not by the level of the European investments. So we are looking to continue to challenge The UK business on how we can in a normalized supply market bring that working cap down. We're sort of targeting a growth of around GBP 1,000,000 a year as we continue to invest in broadly four new store sites a year.

53:37 The right level of working cap for the business is about a CHF 4,000,000 to 5,000,000 swing on working cap throughout the year. So the peak of the working cap is in quarter four. And then the relative cash hold against that, in my mind, one month purchase is around GBP 4,000,000 to GBP 5,000,000. A level of comfort against a working cap position could be something like one month's worth of purchase, so GBP 4,000,000 to 5,000,000. Fantastic. Can you discuss the 5.4% revenue growth in Q1? Given expectation of a 10% for full year 2023, what will drive the acceleration in growth this year? Please can you reference how we should expect growth trends to spill between online and store?

54:22 And how do you think about market share gains? I'll attempt to do that in a very short So period of we have always looked at half one being the tougher comp in terms of coming out of the gain of the lockdown period. So in the 82%, we've got in our mind somewhere around the 5% is the right sort of market challenging yourself to deliver on a full year growth that gets you to the 82%. That does rely on some very strong European growth as you'd expect in the second half. So north of 250% growth in the second half around the European business. Overall for The UK business, we're still targeting around a 5% growth mark. That mix is still developing in terms of how we see how retail patterns play out. But on the basis we're looking for folks to be channel agnostic, target of 5% would still be reasonable.

55:25 In terms of market share, The UK market is worth around CHF $550,000,000, we were nudging up to about 13% for the year to FY 2022 off around a 70,000,000 book. So keeping doing a 5% growth rate would give us more of that share of $550,000,000 market. Andy's referenced the European market size, taking us to around the $8,000,000 mark for this year is an infinitesimal share of that market. That's fantastic. And we probably got time just for a couple more questions. I know you've got a hard stop. But the next one, Ruiz, can you provide a bit more detail on European business and how sales trends have been since opening the new DC?

56:11 I know some of which you've touched on throughout the presentation, but please can you remind us what you're expecting this to be profitability and how much CapEx and working capital investment should we expect in '23? Okay. Well well, hopefully, we've given the detail on on where the European business where where we believe our customer experience is doing dramatically and indeed has dramatically improved already. Sales trends since we've we've opened it, as I said, we're back to pre Brexit volumes. We have seen a slight reduction in in the run rate of average transaction value, but that's not surprising at all given the fact that we now sell bait, which is tends to be lower value, higher margin in the mix. And indeed, our free delivery threshold is we've been able to drop back down now that we have a Central European base. In terms of when we expect to be profitable CapEx and working cap, Steve? Yes. I think we've always targeted around FY twenty twenty five to be profitable. FY twenty twenty four is our target breakeven year.

57:11 That requires somewhere around sort of north of GBP 16,000,000 of sales to do that. In terms of CapEx, as I said, our CapEx has largely gone in, in the FY 2022 year. We are paying cash £100,000 of that, that is a spillover into 2023. The actual the investment beyond 2022 is actually relatively modest in terms of there's very little hardware requirement, a bit of further systems development around the websites. And then we've got to think harder as we go into 2024, 2025 and potential automation of that distribution center, which obviously would be incremental CapEx. Guys, think we've got time for a very one last quick question, if I may, and then we'll just wrap up.

57:58 We've had a couple of questions that have come through on this basis. I know you have discussed it in the meeting, but if there's anything further to add, please can you discuss corporate governance and ANGLING DIRECT, given the accounting issues and the cyber attack last year, how to ensure that internal processes are appropriate? I I I think in general, you know, we we've worked very hard, Steve and I. This is our sort of second annual reporting cycle. We've been in the business around two and a half years now. And I think the board everybody on the board has done a great job in encouraging us and supporting us to professionalize the organization. We have taken some steps recently to to strengthen the board with Chris Keane's arrival. We have a new colleague joining us shortly. Our our chair and founder is now our non exec chairman, which is sort of in entirely appropriate. He he holds the reins on our culture, and he's sort of very supportive and useful guidance for me as you'd expect as in as in when necessary.

58:54 The I think we've probably covered the cyber attack in terms of the accounting issues as the as the as the question has been phrased. We were actually approached by our auditor after our audit sign off meeting where we were signed off with a clean bill of health. And at very short notice, a little bit of their own internal process had raised a question which wasn't originally raised with us by the auditors that involved us doing a tiny little bit of work and, unfortunately, meant our results presentation. Not like several other businesses recently, it's had to be put backwards for which we can only apologize, but it was a matter that was sort of out of our control and far more closely aligned to our auditors' internal processes than our own. So so I'm very, very satisfied that the governance of the of the company goes from strength to strength.

59:48 That's fantastic. Thank you very much, indeed. I was just coming up to the time. Thank you, Adeel, for addressing those questions you can from investors. Of course, the company review all questions submitted today, we're published responses where appropriate to do so on the investor meet company platform. Andy, perhaps just before redirecting investors to provide you with their feedback, which I do know is particularly important, can I ask just for a few final closing comments, please? Yes. For sure. I mean, again, thank you to everybody for taking the time to join us today. I think we have covered all of the questions pretty much. I the point I'd just like to emphasize, you know, ANGLING DIRECT is a clear market leader. And despite having to cope with the the ebbs and flows of of pandemics and certain other issues in the last couple of years, We have continued to grow the business both in terms of its top line and indeed of its its profitability.

1:00:34 At the same time, developing the infrastructure and strengthening the foundations, have allowed us to achieve that really strong market leading position. As we go into another season, there's clearly, all sorts of, uncertainty in the consumer world. But I would just like to remind everybody, we operate in a very fragmented market, and we approach that as market leaders with with the best bunch of colleagues, the best customer experience, the best range is really sharp prices, market leading digital technologies, all coupled with a very strong balance sheet, a good healthy cash balance, and in a stronger stock position than the business has been in for many, many years. So whilst we're not immune from the challenges ahead in a consolidating fragmented market, the board feels and myself are very confident in in the future that what the future holds for ANGLING DIRECT in terms of our ambition to be the number one, go to European destination, for everything fish and tackle. And, thank you again for your time. Fantastic. Andy, Steve, thanks for updating investors today. Can I please ask investors not to close this session? It should be automatically redirected to provide your feedback in order the team can better understand your views and expectations.

1:01:51 This will only take a few moments to complete. I'm sure it'll be greatly valued by the company. On behalf of the management team of ANGLING DIRECT PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all.