Neighbourhood shop Full Year Results Important notice This - - PowerPoint PPT Presentation
Neighbourhood shop Full Year Results Important notice This - - PowerPoint PPT Presentation
Your favourite Neighbourhood shop Full Year Results Important notice This presentation has been prepared by investments and who fall within the definition not be read as guarantees of future McColls Retail Group plc (the company
Full year results for the year ending 24 November 2019
This presentation has been prepared by McColl’s Retail Group plc (the “company”) in connection with the publication of the company’s full year results for the 52 weeks ended 24 November 2019. This presentation does not constitute an invitation, offer to sell or any solicitation of any
- ffer
to buy
- r
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
- n
the completeness
- r
accuracy of the information or opinions contained in this presentation and no member
- f
the group
- r
any
- f
their respective
- fficers,
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- f 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
- ther
assumptions and involve significant risks and uncertainties and should not be read as guarantees
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future performance
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results and will not necessarily be accurate indications
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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
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Important notice
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FY 2019 Highlights
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Full year results for the year ending 24 November 2019
Full year results for the year ending 24 November 2019
Building foundations for success
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- Business stabilised
- Focus on retail execution
- Strengthened leadership team
- Strategic change programme
initiated
- Store optimisation accelerated
- Debt facilities - extension agreed
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Full year results for the year ending 24 November 2019
Re Revenue (£bn bn)
£1.22 £1.22
- 1.
1.8% 8% vs 2018
Ad Adjust sted ed gross ss margin (1
(1)
25.9%
H2 improvement
Ad Adjust sted ed EBIT BITDA A (2
(2) (£
(£m)
£32.1
- 8.
8.1% 1% vs 2018
Ne Net debt (£m)
£94.1
- 4.
4.6% 6% vs 2018
35.0 32.1 2018 2019 1.24 1.22 2018 2019
Financial headlines
5 98.6 94.1 2018 2019 26.0% 25.9% 2018 2019
(1) Before impact of adjusting items (2) Before impact of adjusting items and property gains/losses.
Financial Review
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Full year results for the year ending 24 November 2019
Full year results for the year ending 24 November 2019
Summary income statement
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(£m, unless stated)
2019 2018 Revenue 1,218.7 1,241.5 Like-for-like sales (LFL) (1) +0.0% (1.4)% Adjusted gross profit (2) 315.7 322.5 Adjusted gross profit margin (2) 25.9% 26.0% Adjusted administrative expenses (2) (306.7) (311.4)
- Adj. administrative expenses/revenue (2)
25.2% 25.1% Other operating income 6.3 6.8 Adjusted operating profit (3) 15.3 17.9 Adjusted EBITDA (3) 32.1 35.0 Adjusted EBITDA margin (3) 2.6% 2.8% Adjusted earnings per share (2) 5.6p 6.7p
Improved LFL performance offset by planned store closures and divestments
(1) LFL sales reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery and mobile phone top-up (2) Before impact of adjusting items. (3) Before adjusting items and property gains/losses.
Cost control and store divestments
- ffsetting cost pressures and wage
inflation Strong H2 improvement
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Full year results for the year ending 24 November 2019
LFL improvement
2
8
- 4.0%
- 3.0%
- 2.0%
- 1.0%
0.0% 1.0% 2.0% 3.0% 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Q1 Q2 Q3 Q4 Financial Year
LFL Sales Growth
Full year results for the year ending 24 November 2019
Cash flow (£m)
2019 2018 Adjusted EBITDA (1) 32.1 35.0 Cash impact of exceptional items excluding sale & leaseback (6.1) (13.8) Tax paid (1.2) (4.8) Change in working capital (4.8) 45.4 Operating cash flow 20.0 61.8 Capital expenditure (14.4) (19.7) Interest paid and financing activities (9.3) (9.9) Dividend paid (2.2) (11.9) Net cash generated pre sale & leaseback (5.9) 20.3 Proceeds from sale & leaseback 10.4 22.9 Free Cash Flow 4.5 43.2
Net debt (£m)
2019 2018 Net debt (94.1) (98.6) Net debt:Adjusted EBITDA (1) 2.9x 2.8x
Continued reduction in net debt
2
Sale & leaseback programme following 2016 acquisition complete, funding capex and debt reduction Immediate benefit in 2018 from improved payment terms following transition to new wholesale supplier
(1) Before adjusting items and excluding property gains and losses
Year on year reduction
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Full year results for the year ending 24 November 2019
- Refinance – existing facility extension agreed
- Improvement in working capital – enhanced plan, linked to operating model
- Capital rationing – reduced spend on expansionary capex
- Head office disposal – sale now agreed with relocation planned for July
- Dividend approach – 2019 final dividend suspended, priority to deleverage
Building capital resilience
2
10
Target leverage of 2.0x by end of 2022
Full year results for the year ending 24 November 2019
- Gross margin momentum
– Optimisation of promotions – Improved mix and terms
- Productivity – building on 2019 cost performance with:
– Further store optimisation – Operating model review – Maintenance and energy usage strategy – GNFR review – Supported by new ERP and EPOS
- De-lever balance sheet
Financial priorities for 2020
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Strategic Change Programme
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Full year results for the year ending 24 November 2019
Full year results for the year ending 24 November 2019
Market overview:
Convenience set for continued growth
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Market remains fragmented Convenience continuing to grow
Number of stores: 46,388
Full year results for the year ending 24 November 2019
Market overview:
Meeting the needs of customers
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Need for mission based formats McColl’s addressing key trends in convenience
Full year results for the year ending 24 November 2019
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Strategic change programme
Great place to work
– Market leading customer service – Training and tools to do the job – Listening and responding – Career development, diversity and inclusion
Easy to run stores
– Full understanding of cost to serve e2e – Neutralising external cost inflation – Embracing new technology – Early trial stores to test and learn
Strong customer
- ffer
– Segmented estate that meets the need
- f the communities
we serve – Products, pricing and services – Continual category review programme
Improving
- ur stores
– Accelerated store
- ptimisation
– Refined refresh and acquisition models – Mission based layouts – New maintenance and energy strategy
Your Favourite Neighbourhood Shop
Full year results for the year ending 24 November 2019
Segmenting our store portfolio
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What we are doing:
– Segmenting the estate by format, location, customer and range
Purpose:
– Understand local differentiation – Understand customer missions – Informing stores of the future
Plans for 2020
– Small scale pilot programme – Deploy winners through the estate
Se Segm gment nt 1 To Top Up Se Segm gment nt 2 Fo Food to go Se Segm gment nt 3 Fo For Later
- Located within a
residential area, most have access to parking
- Used as a top up
to cover 1 to 3 days
- Customers lean
more to cupboard staples and cooking from scratch items
- Average store
size is the largest
- f the three
segments
- Food to go and
impulse stores
- High participation
- n tobacco, news,
soft drinks and confectionery
- Customers on
foot with limited or no parking available
- Smaller stores on
average
- Located on a
transient route with parking or within a neighbourhood
- Some competition
- Larger baskets
than food-to-go stores
- Over-index on
chilled beer & wine, meal for tonight and big night in missions
Full year results for the year ending 24 November 2019
Improving category performance
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What we did:
– Estate wide review of BWS range
Outcome:
– Last 12 weeks LFL +3.7% – Outperforming market by 1.7%
Plans for 2020
– All remaining categories to undergo full review – New promotional approach – Ongoing governance streams implemented
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Full year results for the year ending 24 November 2019
Propositional development
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New store format
– Fulfilling growing demand – Coventry trialling new ‘Food to go’ concept – Strong sales of food to eat now
Uber Eats trial
– 9 store trial late 2019 – Expanding reach to younger generation – Diversifying revenue
Further developments under way
Full year results for the year ending 24 November 2019
Morrisons Daily trial
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- 10 trial stores in the North West
– Good customer reaction – Increased top line performance
- Next phase: 20 further stores
– Extending trial nationwide – Q1 2020 – Further testing of the format, developing economics to assess scalability
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Full year results for the year ending 24 November 2019
Improving store operating model
3
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Retail Operating Model
– Support from third parties to deliver improvement plan – Accelerated set up using “hot housing” method – Initial productivity and efficiency gains focused on 4 areas
- Staffing & Scheduling
- Range & Stock
- Process & Routines
- Goods & Services not for re-sale
Initial focus will be on identifying solutions for the areas where the most value can be released
Full year results for the year ending 24 November 2019
2019 accelerated estate
- ptimisation programme
3
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- Closed or sold 120 underperforming
newsagents and smaller convenience stores
- Opened 6 new convenience stores
- Relocated 4 stores to better sites
- Refreshed 23 stores
(including 10 Morrisons Daily trial stores)
Full year results for the year ending 24 November 2019
25 Current Future
Average weekly sales per store (£k)
Improving estate quality
3
22 80 Current Future
Average annual profit per store 2 (£k)
Current – 1,443 stores – 19.6% gross margin to gross sales Future (1) – c1,100 stores – 20% gross margin to gross sales 34% 39% 27%
Category Participation
Grocery & Alcohol Cigs & Tobacco Impulse News & Other 37% 37% 26%
Category Participation
Grocery & Alcohol Cigs & Tobacco Impulse News & Other
52% increase in Avg annual profit 15% increase in Avg weekly sales
Illustrative KPIs
40 basis point mix improvement Grocery & Alcohol become joint largest category Current avg. square footage = 1,369 Future avg. square footage = 1,432
(1) 2019 KPI’s restated for removal of stores identified for sale or closure (2) Not a statutory measure. Profit per store is average annual EBITDA after branch specific cost allocations
Full year results for the year ending 24 November 2019
- Operational progress in 2019, refocussing the business on retail
execution
- Strengthened leadership team launched strategic change
programme
- 2020 a transitional year in medium-term programme for future
growth
- Accelerated store optimisation, improving quality of estate
- Continued focus on cash generation and deleveraging
Customer-led strategy to deliver long term sustainable growth
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Appendix
Full year results for the year ending 24 November 2019
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- No impact on commercial reality or cash
- Significant impact on presentation of financial statements
– Operating lease liability (property leases) brought on to the balance sheet with the respective right of use (ROU) asset – Rent expense replaced by depreciation of the ROU asset and an interest charge on the lease liability
- Initially EBITDA expected to increase, but PBT expected to
decrease as interest is front loaded based on higher liability in the earlier years
- Modified retrospective approach selected. This approach
minimizes impact on future profitability, whilst maximizing implementation efficiencies
- Lease liability is discounted using a rate with a range of 4.4% to
4.8% depending on remaining lease life from date on inception P&L Impact (£m) 2019 IFRS16 Adj. 2019 Post IFRS16 EBITDA 32.1 31.0 63.1 Depreciation (16.8) (23.7) (40.5) Operating Profit 15.3 7.3 22.6 Interest (8.0) (8.9) (16.9) Profit Before Tax 7.3 (1.6) 5.7 Balance Sheet Impact (£m) 2019 IFRS16 Adj. 2019 Post IFRS16 Assets 410.2 197.0 607.2 Liabilities (371.6) (211.0) (582.6) Retailed Earnings (38.7) 14.0 (24.7) Net debt 94.1 211.0 305.1 Leverage 2.9x 4.8x
IFRS 16 – Illustrative impact
Full year results for the year ending 24 November 2019
McColl’s Retail Group plc Jonathan Miller, Chief Executive Robbie Bell, Chief Financial Officer Investor Relations investor.relations@mccolls.co.uk
Contacts
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