Headlam Group Plc · LSE:HEAD
Headlam — H1 2017 Earnings Presentation
23 slides from Headlam's earnings presentation, September 2017
Slide 1: Interim Results for the six months ended 30 June 2017
Interim Results for the six months ended 30 June 2017
Slide 2: Company Overview and Business Model
Company Overview and Business Model • Europe's largest distributor of floorcoverings • Distribution link between suppliers and customers of floorcoverings, linking together a global supplier base and extensive customer base in UK and Continental Europe • Grown significantly via organic growth and ac
Slide 3: Selected Company Businesses
Selected Company Businesses
Slide 4: H1 2017 Financial Highlights
H1 2017 Financial Highlights • Total revenue increased by 4.0% to £341.9 million (H1 2016: £328.7 million) • UK like-for-like revenue* growth of 2.1% (H1 2016: 3.4%) and Continental Europe like-for-like revenue* growth of 3.0% (H1 2016: 2.8%) • Gross margin improvement of 103 basis points to 31.06%
Slide 5: Financial Track Record (3 years)
Financial Track Record (3 years) 3
Slide 6: H1 2017 Operational Highlights
H1 2017 Operational Highlights • Two bolt-on acquisitions completed in H1 2017, both adding new geographic locations in the UK and increasing the number of businesses to 61: > Mitchell Carpets Limited, Poole > McMillan Flooring Distributors Limited, Edinburgh and Glasgow • Continued expansion of the
Slide 7: H1 2017 UK Daily Sales
H1 2017 UK Daily Sales* £m * On a like-for-like basis 5
Slide 8: H1 2017 Income Statement
H1 2017 Income Statement Variance H1 2017 H1 2016 H1 2015 H1 2017 v H1 2016 £000 % £000 % £000 % % Revenue 341,868 100 328,673 100 313,546 100 4.0 Cost of sales (235,694) (229,961) (220,428) Gross Profit 106,174 31.1 98,712 30.0 93,118 29.7 7.6 Distribution Costs (65,201) (19.1) (62,150) (18.9) (59,
Slide 9: H1 2017 Revenue Movement
H1 2017 Revenue Movement £000 % £000 % Revenue for the first six months ended 30 June 2016 UK 286,260 87.1 Continental Europe 42,413 12.9 328,673 100.0 Items contributing to growth during the first six months ended 30 June 2017 Like for like UK organic growth 5,993 2.1 Acquistion 1,267 0.4 7,260 2.5
Slide 10: Gross Margin Initiatives and Improvement
Gross Margin Initiatives and Improvement • Focused on delivering gross margin improvement in H1 2017 • Gross margin returned to historic level of 31% through implementing various efficiency initiatives and more effective organisation and streamlining of the Company’s businesses’ practices • Initiati
Slide 11: H1 2017 Movement in Net Expenses
H1 2017 Movement in Net Expenses Total Expenses Distribution Administration £000 % £000 % £000 % Expenses for the prior year period 83,347 62,150 74.57 21,197 25.43 Significant items contributing to the movement: People cost 776 17.87 1,204 63.44 (428) (17.51) Fuel 110 2.53 119 6.27 (9) (0.37) Comme
Slide 12: H1 2017 Underlying Operating Profit Movement
H1 2017 Underlying Operating Profit Movement £000 Operating profit 2016 15,365 Gross margin improvement: Volume benefit 3,705 Pricing benefit 3,374 Effect of acquisitions 383 7,462 Expenses increase: Distribution (2,820) Administration (2,481) Effect on acquisitions (408) Write-off of customer relat
Slide 13: H1 2017 Cash Flow
H1 2017 Cash Flow H1 2017 H1 2016 Variance £000 £000 £000 Cash flow from operating activities Operating profit 17,118 15,365 1,753 Depreciation, amortisation and impairment 3,203 2,389 814 Profit on sale of fixed assets (44) (11) (33) Equity settled share based payments 517 714 (197) 20,794 18,457 2
Slide 14: Balance Sheet as at 30 June 2017
Balance Sheet as at 30 June 2017 H1 2017 *H1 2016 Variance £000 £000 £000 Non-current assets PPE 102,744 104,163 (1,419) Intangible assets 10,673 10,388 285 Deferred tax assets 920 372 548 114,337 114,923 (586) Current assets Inventory 129,709 127,051 2,658 Receivables 131,062 123,645 7,417 Cash 71,
Slide 15: UK Sterling Net Debt Daily Balances
£ Thousands -50,000 -40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 01-Jan 08-Jan 15-Jan 22-Jan 29-Jan 05-Feb 12-Feb 19-Feb 26-Feb 05-Mar 12-Mar 19-Mar 26-Mar 02-Apr 09-Apr 16-Apr 23-Apr 30-Apr 07-May UK sterling bank balance 2015 14-May 21-May 28-May 04-Jun 11-Jun 18-Jun
Slide 16: Distribution Network
Distribution Network All 22 Distribution Hubs/Centres owned freehold or long-leasehold 14
Slide 17: Expansion of Network
Expansion of Network Acquisitions • Two bolt-on acquisitions completed in the period - Mitchell (regional residential and commercial) and McMillan (regional commercial) • Established new locations in Poole and Edinburgh • Total net consideration of £1.9 million • Good pipeline of potential acquisiti
Slide 18: Expansion of Network (continued)
Expansion of Network (continued) Trade Counters • Proven to be a cost-effective way to expand the network and customer base, and improve the service offering: > Typical capex c £100K > Increases product availability > Supports the increasing number of customer collections > 953,428 customer collecti
Slide 19: Current Trading and Outlook
Current Trading and Outlook • Performance typically H2 weighted: > H2 2016 accounted for 52.6% of total revenue and 60.4% of PBT for the year > Highlights the disproportionately positive impact that increased revenue and operational gearing have on profitability • Annual summer refurbishment project
Slide 20: Appendices
APPENDICES
Slide 21: Suppliers
Suppliers • Currently engaged with 107 significant suppliers in 16 countries • Provide them with the greatest coverage and customer penetration for their products across UK and Continental Europe • Suppliers’ products cover a significant proportion of the floorcoverings market including: > Carpet >
Slide 22: Customers
Customers • 5,586,829 customer orders in 2016 (2015: 5,419,074): > UK customer collections 2016: 953,428 (2015: 923,900) • Revenue split between residential and commercial sectors has remained broadly similar over the past few years at c 68% residential • Principal customer is independent retailers,
Slide 23: www.headlam.com
www.headlam.com [email protected]