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 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. 2 Interim results for the 26 week period ended 31 May 2015
McColl’s executive team James Lancaster Jonathan Miller David Thomas Chief executive Chief financial officer Chief operating officer 3 Interim results for the 26 week period ended 31 May 2015
Agenda 1 Good progress in a challenging market 2 Financial performance 3 Strategic development 4 Convenience market update 5 Summary 4 Interim results for the 26 week period ended 31 May 2015
1 Good progress in a challenging market 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. Good progress on strategic objectives 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. 5 Interim results for the 26 week period ended 31 May 2015
2 Financial highlights £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 6 Interim results for the 26 week period ended 31 May 2015
2 Increased revenue driving EBITDA growth Summary income statement HY 2015 HY 2014 £m unless stated Growth driven by store acquisitions Revenue 459.3 444.2 3.4% and developments Like for like sales (1.9)% 2.1% Gross profit 110.0 106.4 3.4% Percentage margin held Gross profit margin 24.0% 24.0% Administrative expenses (112.2) (108.8) 3.2% Continued control of costs Administrative expenses/revenue 24.4% 24.4% Other operating income 11.8 12.4 13.2% Operating profit before 9.6 10.0 4.0% exceptional items Adjusted EBITDA 16.2 15.9 1.9% Adjusted EBITDA margin 3.5% 3.6% 7 Interim results for the 26 week period ended 31 May 2015
2 Challenging sales environment Current period sales growth % 6.0 5.0 5.1 4.8 4.0 4.3 3.8 3.0 3.2 3.1 2.0 2.2 1.0 1.0 0.0 -0.5 -1.0 -1.3 -1.0 -2.0 -2.5 -3.0 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. 8 Interim results for the 26 week period ended 31 May 2015
2 Significant uplift in net profit Summary income statement HY 2015 HY 2014 £m Operating profit before exceptional items 9.6 10.0 Restructuring costs in current period Net exceptional items (0.6) (6.2) Operating profit 9.0 3.8 Significant reduction in interest costs Net finance costs (1.4) (7.8) Profit before tax 7.6 (4.0) Taxation (1.7) 0.3 HY 2015 effective tax rate 22.6% Profit after tax 5.9 (3.7) 9 Interim results for the 26 week period ended 31 May 2015
2 Summary cash flow Cash flow HY 2015 HY 2014 £m Adjusted EBITDA 16.2 15.9 Cash impact of exceptional items (0.6) (0.7) Prior year inflow from Post office Change in working capital (4.7) 4.6 contract and supply chain changes Operating cash flow 10.9 19.8 Increase reflects acquisition strategy Net capital expenditure (10.8) (7.7) Net interest paid (1.3) (5.1) Final dividend for 2014 paid H1 2015 Dividend paid (7.1) - Tax (1.5) (0.5) Net cash generated (9.8) 6.5 10 Interim results for the 26 week period ended 31 May 2015
2 Summary balance sheet Summary balance sheet HY 2015 HY 2014 £m unless stated Increase in asset value reflecting development strategy Non-current assets 214.7 201.7 Current assets 93.3 97.9 Liabilities impacted by timing of Current liabilities (117.6) (129.3) period end Net current liabilities (24.3) (65.4) Net assets 117.2 104.9 Underlying net debt (35.3) (36.3) 1 Underlying net debt: Adjusted EBITDA 0.9x 1.0x Return on capital employed 13.6% N/A (1) Adjusted EBITDA for the 53 week period ended 30 th November 2014 of £37.3m 11 Interim results for the 26 week period ended 31 May 2015
3 Growing our convenience business November 2016 1 November 2013 May 2015 1,396 stores 1,273 stores 1,333 stores 333 600 513 Premium convenience 90 Food and wine 151 284 Standard convenience 225 173 Newsagents 175 566 496 396 Total store base by type (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. 12 Interim results for the 26 week period ended 31 May 2015
3 Maintained pace of expansion 2015 UK convenience stores: 47,929 (1) ■ Convenience store expansion strategy continues to capture Co-ops 2,765 Forecourts 5,464 6% market share. 11% Multiples 4,159 8% ■ 25 new stores acquired. Symbols 17,020 Independents 31% 18,507 37% ■ On track to complete 60 in financial year. Store numbers Multiples ■ Early success with small group 2014 2015 acquisitions. 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 (1) Source: Grocery Retail Structure 2015, IGD Research and William Reed Business Media Limited (as at 31 March 2015). 13 Interim results for the 26 week period ended 31 May 2015
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