At the heart of your neighbourhood Interim Results 26 weeks to 31 - - PowerPoint PPT Presentation

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At the heart of your neighbourhood Interim Results 26 weeks to 31 - - PowerPoint PPT Presentation

McColl s Retail Group plc At the heart of your neighbourhood Interim Results 26 weeks to 31 May 2015 IMPORTANT NOTICE This presentation has been prepared by McColl's Retail Group plc (the " Company ") in connection with the


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McColl’s Retail Group plc

Interim Results 26 weeks to 31 May 2015

At the heart of your neighbourhood

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Interim results for the 26 week period ended 31 May 2015 2

IMPORTANT NOTICE

This presentation has been prepared by McColl's Retail Group plc (the "Company") in connection with the publication of the Company’s preliminary results for the 26 weeks ended 31 May 2015. This presentation does not constitute an invitation, offer to sell or any solicitation of any offer to buy or subscribe for any securities in the Company or any of its subsidiaries or associated companies or its or their affiliates (the "Group"). No reliance may be placed for any purpose whatsoever on the completeness or accuracy of the information or opinions contained in this presentation and no member of the Group or any of their respective officers, directors, employees, representatives, agents or advisers take any responsibility for, or accepts any liability in respect of, the accuracy or completeness of such information or opinions. This presentation is directed at and is only being distributed (A) in member states of the European Economic Area to persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC, as amended); (B) in the United Kingdom to persons who have professional experience in matters relating to investments and who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or are high net worth companies, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49(2) of the Order and investment personnel of any of the foregoing (each within the meaning of the Order); and (C) otherwise to persons to whom, or at which, it may otherwise be lawfully made, supplied or directed (each a "Relevant Person"). No other person should act or rely on this presentation and by accepting this presentation you represent, warrant and agree that you are a Relevant Person. This presentation may include statements, estimates, opinions and projections with respect to anticipated future performance of the Group ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from the Group’s current business plan or from public sources which may or may not prove to be correct. Such forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. As a result, recipients of this presentation should not rely on such forward looking statements due to the inherent uncertainty therein. Forward-looking statements speak only as of the date of such statements and, except as required by the Financial Conduct Authority, the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation is not for distribution, directly or indirectly, in whole or in part, in or into the United States of America, Canada, the Republic of South Africa, Australia, Japan or any jurisdiction where it would be unlawful to do so. The distribution of this presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this presentation or any part of it comes should inform themselves about, and observe, any such restrictions.

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Interim results for the 26 week period ended 31 May 2015 3

James Lancaster Chief executive Jonathan Miller Chief financial officer David Thomas Chief operating officer

McColl’s executive team

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Interim results for the 26 week period ended 31 May 2015 4

1 Good progress in a challenging market 2 Financial performance 3 Strategic development 4 Convenience market update 5 Summary

Agenda

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Interim results for the 26 week period ended 31 May 2015 5

Solid financial performance in challenging period for sector Total revenue +3.4% to £459.3m. Adjusted EBITDA +1.9% to £16.2m. On track to achieve results in line with expectations. Interim dividend 3.4p per share. Focussed on growing our convenience store base. 25 new stores acquired and 16 newsagents converted to food and wine. Range and offer improved including food to go. Streamlining of head office and field support.

Good progress in a challenging market

1

Good progress on strategic objectives

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Interim results for the 26 week period ended 31 May 2015 6

Financial highlights

2

£m unless stated

HY 2015 HY 2014 Increase/ (Decrease)

Revenue 459.3 444.2 3.4% Like for like sales (1.9)% 2.1% Operating profit before exceptional items 9.6 10.0 (4.0)% Adjusted EBITDA 16.2 15.9 1.9% Profit after tax 5.9 (3.6) Adjusted earnings per share 6.1p n/a Interim dividend per share 3.4p 1.7p Underlying net debt 35.3 36.3

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Interim results for the 26 week period ended 31 May 2015 7

Increased revenue driving EBITDA growth

2

Summary income statement £m unless stated HY 2015 HY 2014 Revenue 459.3 444.2 3.4% Like for like sales (1.9)% 2.1% Gross profit 110.0 106.4 3.4% Gross profit margin 24.0% 24.0% Administrative expenses (112.2) (108.8) 3.2% Administrative expenses/revenue 24.4% 24.4% Other operating income 11.8 12.4 13.2% Operating profit before exceptional items 9.6 10.0 4.0% Adjusted EBITDA 16.2 15.9 1.9% Adjusted EBITDA margin 3.5% 3.6%

Growth driven by store acquisitions and developments Percentage margin held Continued control of costs

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Interim results for the 26 week period ended 31 May 2015

8

Challenging sales environment

2

Current period sales growth

1.0 3.2

  • 0.5
  • 1.0
  • 1.3
  • 2.5

2.2 5.1 4.3 4.8 3.8 3.1

  • 3.0
  • 2.0
  • 1.0

0.0 1.0 2.0 3.0 4.0 5.0 6.0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 LFL sales growth (adjusted for 53rd week) Total sales growth (adjusted for 53rd week)

% LFL sales in premium and food and wine stores level H1 2015.

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Interim results for the 26 week period ended 31 May 2015 9

Significant uplift in net profit

2

Summary income statement £m HY 2015 HY 2014 Operating profit before exceptional items 9.6 10.0 Net exceptional items (0.6) (6.2) Operating profit 9.0 3.8 Net finance costs (1.4) (7.8) Profit before tax 7.6 (4.0) Taxation (1.7) 0.3 Profit after tax 5.9 (3.7)

Restructuring costs in current period Significant reduction in interest costs HY 2015 effective tax rate 22.6%

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Interim results for the 26 week period ended 31 May 2015 10

Summary cash flow

Cash flow £m HY 2015 HY 2014 Adjusted EBITDA 16.2 15.9 Cash impact of exceptional items (0.6) (0.7) Change in working capital (4.7) 4.6 Operating cash flow 10.9 19.8 Net capital expenditure (10.8) (7.7) Net interest paid (1.3) (5.1) Dividend paid (7.1)

  • Tax

(1.5) (0.5) Net cash generated (9.8) 6.5

2

Prior year inflow from Post office contract and supply chain changes Increase reflects acquisition strategy Final dividend for 2014 paid H1 2015

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Interim results for the 26 week period ended 31 May 2015 11

Summary balance sheet

Summary balance sheet £m unless stated HY 2015 HY 2014 Non-current assets 214.7 201.7 Current assets 93.3 97.9 Current liabilities (117.6) (129.3) Net current liabilities (24.3) (65.4) Net assets 117.2 104.9 Underlying net debt (35.3) (36.3) Underlying net debt: Adjusted EBITDA 0.9x 1.0x Return on capital employed 13.6% N/A

Liabilities impacted by timing of period end

2

Increase in asset value reflecting development strategy

(1) Adjusted EBITDA for the 53 week period ended 30th November 2014 of £37.3m

1

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Interim results for the 26 week period ended 31 May 2015 12

Growing our convenience business

3

566 496 396 284 173 175 90 151 225 333 513 600

Total store base by type

Premium convenience Food and wine Standard convenience Newsagents

November 2013 1,273 stores May 2015 1,333 stores November 2016 1 1,396 stores

(1) 2016 store numbers are targets as at financial year end (November). These are illustrative only and should not be seen as an indication of expected or actual store numbers.

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Interim results for the 26 week period ended 31 May 2015 13

Maintained pace of expansion

3

■ Convenience store expansion

strategy continues to capture market share.

■ 25 new stores acquired. ■ On track to complete 60 in financial

year.

■ Early success with small group

acquisitions.

Multiples

Store numbers 2014 2015

Tesco (Express/One Stop) 2,196 2,347 McColls 719 802 Sainsbury’s Local 585 672 Morrisons 105 153 M&S Simply Food 84 116 Checkers Express (Sandpiper Cl) 22 22 Whistlestop (SSP) 21 20 Waitrose 15 17 Other 10 10 Total 3,757 4,159 Multiples 4,159 8% Symbols 17,020 31% Forecourts 5,464 11% Independents 18,507 37%

2015 UK convenience stores: 47,929

(1) Source: Grocery Retail Structure 2015, IGD Research and William Reed Business Media Limited (as at 31 March 2015).

(1)

Co-ops 2,765 6%

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Interim results for the 26 week period ended 31 May 2015 14

Acquisition case study

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■Acquisition of two Spar stores in Lincolnshire. ■This site averaged £22.6k per week. ■Leasehold £155k cost. ■Payback c. two years. ■Improved look and better ranges. ■Sales already achieving over £26k per week.

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Interim results for the 26 week period ended 31 May 2015 15

New products to existing stores

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■16 newsagents converted to food and wine

format bringing total to 151.

■New small store format chilled range being

developed.

■Beers, wines and spirits into 100 newsagents at

aggressive prices. 55 completed by half year.

■Target sales £300 per week. ■Virtually no additional cost. ■Identifies further Food and Wine opportunities.

Food and Wine Project 100

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Interim results for the 26 week period ended 31 May 2015 16

New products to existing stores

3

Focus on new kids ranges Bulk pack opportunities New E-cigarette gantry New display and ranges

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Interim results for the 26 week period ended 31 May 2015 17

Range extension

3

■Trial extended to existing

convenience store.

■Range learnings about go to live in

premium convenience estate.

■Introduced chilled promotional ends. ■Coffee and snacking modules

installed in 100 stores.

■19 full food to go modules installed. ■Subway franchise trial agreed.

Concept store Food to go

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Interim results for the 26 week period ended 31 May 2015 18

Recent developments

3

New National Living Wage – NMW introduced in 1999, 21yr+ rate was £3.60 – NMW current rate for 21yr+ is £6.50 – NMW will increase on October 1st 2015 for 21yr+ to £6.70 (budgeted) –New NLW will increase on April 1st 2016 for 25yr+ to £7.20 – Plans to increase to £9 by 2020 – Mitigation Sunday Trading regulations 1994 (not Scotland) –Plans to relax Sunday trading hours – Devolve power to Mayors and Local councils – As per Olympics experience – Opposed by KSS, USDAW, ACS

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Interim results for the 26 week period ended 31 May 2015 19

Growing grocery market

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50 100 150 200 250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (1) Source: IGD Research 2015, years are to April

UK grocery forecast to grow 2.5% per annum to £201bn in 2020 from £178bn in 2015. UK grocery sales (1)

£bn

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Interim results for the 26 week period ended 31 May 2015 20

Convenience gaining market share

4

Share of total UK grocery (1)

40.4% 20.0% 21.2% 7.2% 5.0% 6.2% 34.7% 17.8% 22.0% 11.6% 8.6% 4.6%

Superstores and hypermarkets Small supermarkets Convenience Discount Online Other

2015 2020

(1) Source: IGD Research 2015

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Interim results for the 26 week period ended 31 May 2015 21

Convenience outpacing market

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5 10 15 20 25 30 35 40 45 50

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (1) Source: IGD Research 2015 years are to April

£bn

UK convenience forecast to grow 3.2% per annum to £44bn in 2019 from £38bn in 2015. UK convenience sales (1)

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Interim results for the 26 week period ended 31 May 2015 22

Summary: rising to the challenge

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Solid financial performance – Total revenue +3.4%. – Adjusted EBITDA +1.9% to £16.2m. Good strategic progress –837 convenience stores at the period end. – On track to deliver 1000 convenience stores in 2016. Outlook – Challenging trading conditions expected to persist in H2 –Market fundamentals remain strong. – Focus on executing convenience strategy.