ScS Group plc Preliminary results for the year ended 27 July 2019 1 - - PowerPoint PPT Presentation
ScS Group plc Preliminary results for the year ended 27 July 2019 1 October 2019 Agenda In Introduction & hig ighli lights Da David id Knig ight Chief Executive Officer Financial Fin l review Chris ris Muir ir Chief Financial
Preliminary results for the year ended 27 July 2019
1 October 2019
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Da David id Knig ight Da David id Knig ight Chief Executive Officer
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Chris ris Muir ir Chief Financial Officer In Introduction & hig ighli lights Fin Financial l review Review of
the year & cu current tr tradin ing
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Like-for-like orders
Two-year: +5.2%
Continued profitable growth and increasing resilience
despite a challenging market
delivery, surveying and upholstery teams
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£322.1m £327.5m £333.3m July 19 July 18 July 17 EBITDA* EPS Gross sales* Dividend***
FY18 – 16.20p FY17 – 14.70p Cash generated from
FY18 – £21.0m FY17 – £19.5m** Gross margin*
FY18 – 45.0% FY17 – 44.0% 23.5p 26.8p 30.3p £16.1m £19.1m £19.7m
*Figures presented are for continuing operations, before exceptional costs ** Excludes £10.6m benefit from timing of year end payment run ***Dividend includes recommended final dividend of 11.20p
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£11.3m £13.8m £16.8m £270.9m £270.9m £274.2m £39.9m £42.8m £42.3m July 19 July 18 July 17
Furniture Increase of £3.3m (+1.2%) Two year increase of £3.3m (+1.2%) Two year CAGR of +0.6% Flooring Decrease of £0.5m (-1.2%) Two year increase of £2.4m (+6.0%) Two year CAGR of +2.9% Online Increase of £3.0m (+21.7%) Two year increase of £5.5m (+48.7%) Two year CAGR +22.1%
Furniture Flooring Online
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Underlying EBITDA from continuing operations
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FY19 EBITDA improved £0.6m (3.0%)* Gross profit increased £2.6m to £149.9m in line with improved sales performance Gross profit margin maintained at 45.0% Distribution costs increased £0.4m due to increased volume of deliveries Marketing expenditure increased £0.3m Payroll costs increased £1.6m, driven by:
(£0.2m) Reduction in other costs mainly driven by lower property related costs
£19.1m £2.6m (£0.4m) (£0.3m) (£1.6m) £19.7m £0.3m
*Figures presented are for continuing operations, before exceptional costs.
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Variable Semi-variable Fixed costs
Flexibility
Proportion of cost variability remained consistent year-on-year Sales are made to order creating a flexible business model 76% of cost base variable with sales 13% semi variable Rent, rates, heat and light 11% of
£m 2019 2018 % Gross sales 333.3 327.5 EBITDA 19.7 19.1 Total costs 313.6 308.4 100% Cost of goods sold (inc. credit) (183.4) (180.2) 58.5% Distribution costs (17.3) (16.9) 5.5% Marketing costs (22.4) (22.1) 7.1% Payroll costs (performance related) (14.6) (14.3) 4.7% Other payroll (32.3) (31.0) 10.3% Other costs (7.4) (7.4) 2.4% Rent, rates, heat and light (36.2) (36.5) 11.5%
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£48.2m (£5.6m) £3.9m (£6.5m) (£1.7m) £57.7m £19.4m
Strong cash flows Free cash flow of £16.0m (2018: £15.2m) EBITDA of £19.4m is £19.7m underlying EBITDA from continuing operations less £0.3m HoF EBITDA and exceptional costs £5.6m capex spend includes £2.1m branch and flooring department improvements, £1.8m for new technology, and £0.4m towards new store in Kirkcaldy £3.9m working capital movement largely due to increased customer deposits and impact of HoF closure (£1.5m) Customer deposits £14.7m (FY18: £12.2m) Negative working capital model Cash or card sales - deposits received at point of order, balance settled before delivery Credit sales - loan provider pays ScS two working days after delivery Majority of suppliers paid at end of month following delivery into our distribution centres
10 £0m £10m £20m £30m £40m £50m £60m 2015 2016 2017 2018 2019
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£57.7m £48.2m £40.1m £22.4m £21.1m
Cash
revolving credit facility to November 2021
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DPS*
Progressive dividend*
dividend per share growth in the last two years
Dividend cover
per share total cash returns since January 2015 IPO Equivalent of 43.5% of 175p IPO issue price Improving security through increasing dividend cover Supported by strong free cash flow
July 19 July 18 July 17 14.7p 16.2p 16.7p 1.60x 1.65x 1.81x
100p 120p 140p 160p 180p 200p 220p 240p 260p
2015 2016 2017 2018 2019
Share price
*Dividend includes recommended final dividend of 11.20p
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+0.5%
Consumer confidence (Overall score) Housing transactions (% movement)
Big ticket sales often heavily affected by consumer confidence EU referendum and impending October Brexit deadline has negatively affected consumer confidence
Source: GfK Consumer Confidence
A house move often triggers purchase of furniture and flooring Since peak in 2016, housing transactions have continued to fall
Source: HMRC UK Property Transaction stats
2016 2017 2018 2019
Floorcoverings Upholstery
2018 – 9.1%
2018 – 2.6% Market share*
*Figures from GlobalData 2018 restated to exclude HoF
1.8% 1.7% 4.1% 14.1%
Gross sales growth
Upholstery market reduced 2.5% from 2016 to 2019 ScS sales increased 7.3% Flooring market reduced 5.5% from 2016 to 2019 ScS sales increased 11.0%
Source: Company/GlobalData
2016 2017 2018 2019 YTD 2016 2017 2018 2019 YTD
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Excellent customer experience with outstanding value, quality and choice
Brands
Long term relationships with leading furniture and flooring brands, supporting well recognised own brands
On key retail parks
High quality stores in prime locations
Online
Rapidly growing sales platform, and
customer research
Service
5-star “Excellent” Trustpilot rating, delivered by our passionate and caring team
Range of price points
From £299 to £5,295 - always an
Easy ways to pay
Long-term interest-free making buying easy
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Improve our ability to attract, recruit, develop and retain the right people
with third party trainers
develop our people
attracting applicants to the business
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Placing customers at the heart of our business
Trustpilot reviews. Currently over 160,000
customer experience:
Trustpilot – TrustScore: Customer satisfaction score:
9.2 9.2 9.2 2019 2018 2017 75 74 77 2017 2018 2019
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Optimising the existing footprint
AOV but maintained gross profit margin
Sales per square foot: Furniture AOV:
£1,575 £1,582 £1,527 2017 2018 2019 £229 £224 £226 2019 2018 2017
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Driving quality and value through our product selection
suppliers
Turnover by country:
UK (57.2%) Far East (38.7%) Europe (4.1%)
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Market share growth opportunity
120 ranges / 5,000 SKUs
‘Just in Time’ customer delivery system Flooring gross sales: Flooring AOV:
£42.3m £42.8m £39.9m 2019 2018 2017 £629 £679 £686 2017 2018 2019
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Creating urgency and driving traffic through a cocktail
influencers Marketing spend
£22.4m £22.1m £22.8m 2019 2018 2017
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Our fastest growing revenue and traffic stream
specialists brought in
market leading website Online gross sales: Website traffic:
£16.8m £13.8m £11.3m 2019 2018 2017 +9% +17% +14% 2017 2018 2019
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strength
the period from 28 July 2019 to 29 September 2019:
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IFRS16 adjustments FY19 £m Exclude rent £m Include depreciation £m Include interest £m Restated FY19 £m Revenue 317.4
Gross profit 149.9
Distribution costs (17.3)
Administration expenses (118.6) 25.6 (23.3)
Operating profit 14.0 25.6 (23.3)
Net finance income/(expense) 0.3
(3.4) PBT 14.3 25.6 (23.3) (3.7) 12.9 EBITDA 19.4 25.6
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