Wh Smith Plc · LSE:SMWH

Wh Smith — FY2008 Earnings Presentation

29 slides from Wh Smith's earnings presentation, Oct 9, 2008

  1. Slide 1: WH Smith PLC Preliminary Results 2008

    WH Smith PLC Preliminary Results 2008 9 October 2008 Preliminary Results 2008

  2. Slide 2: Agenda

    WH Smith PLC § Introduction Robert Walker § Financial review Alan Stewart § Business review Kate Swann ­ Travel ­ High Street Preliminary Results 2008

  3. Slide 3: Alan Stewart, Group Finance Director

    Alan Stewart Group Finance Director Preliminary Results 2008

  4. Slide 4: Group financial summary

    Group financial summary Year to Year to Aug 2008 Aug 2007 Change £m £m % Revenue 1,352 1,299 4% Profit before tax and exceptional items1 76 66 15% Profit before tax 76 76 ­ Underlying EPS2 35.3p 29.3p 20% EPS including exceptional items3 35.3p 33.1p 7% Final dividend per share 9.7p 8.1p 20% Total di

  5. Slide 5: Group profit before tax

    Group profit before tax Year to Year to Aug 2008 Aug 2007 Growth £m £m % High Street1 47 44 7% Travel1 41 36 14% Trading operations 88 80 10% Central costs (15) (14) Internal rents 1 1 Operating profit2 74 67 10% Net finance income 2 1 Pension interest ­ (2) Profit before tax2 76 66 15% 1 Stated aft

  6. Slide 6: Profit from trading operations

    Profit from trading operations Year to Year to Aug 2008 Aug 2007 Change £m £m % Revenue 1,352 1,299 4% Gross contribution 632 591 7% Costs (544) (511) (6)% Costs – occupation costs (217) (196) – store costs (207) (194) – other costs (120) (121) Profit from trading operations1 88 80 10% Gross margin

  7. Slide 7: Revenue analysis

    Revenue analysis Year to Year to LFL Aug 2008 Aug 2007 Change Change Revenue £m £m % % High Street 939 961 (2)% (3)% Travel 413 338 22% 1%1 Total revenue 1,352 1,299 4% (2)% Year to H1 H2 Aug 2008 % % % LFL sales by category Books 2% (6)%2 (2)% Stationery ­ ­ ­ News & Impulse (2)% (1)% (1)% Entertai

  8. Slide 8: Group free cash flow

    Group free cash flow Year to Year to Aug 2008 Aug 2007 £m £m Operating profit1 74 67 Depreciation and amortisation 42 41 Working capital 2 9 Capital expenditure (39) (32) Tax (21) (8) Provisions (3) (2) Net interest earned2 2 2 Non cash items 6 4 Free cash flow 63 81 1 Stated before exceptional item

  9. Slide 9: Group net debt movement

    Group net debt movement Year to Year to Aug 2008 Aug 2007 £m £m Free cash flow 63 81 Return of cash to shareholders (90) ­ Dividends paid (21) (17) Acquisitions and associated costs (24) ­ Pension deficit and retirement benefit funding (10) (35) Tax refund and associated interest received 15 14 Purc

  10. Slide 10: Group balance sheet

    Group balance sheet 2008 2007 £m £m Goodwill & other intangible assets 55 35 Property, plant & equipment 177 176 Available for sale investments ­ 4 Working capital (24) (20) Corporation tax (31) (25) Deferred tax 1 3 Provisions (8) (10) Operating assets employed 170 163 Net funds (9) 64 Total net as

  11. Slide 11: Group key indicators

    Group key indicators Year to Year to Aug 2008 Aug 2007 Growth £m £m % Underlying EPS 1 35.3p 29.3p 20% Final dividend per share 9.7p 8.1p 20% Total dividend per share – ordinary 14.3p 11.8p 21% – special 33.0p ­ Free cash flow (£m) 63 81 Fixed charges cover 1.4x 1.4x ROCE – after capitalised lease c

  12. Slide 12: Kate Swann, Group Chief Executive

    Kate Swann Group Chief Executive Preliminary Results 2008

  13. Slide 13: Group – overview

    Group – overview § Strong profit performance across the Group § Good performance from Travel with integration of acquisitions proceeding in line with our plan § Further progress in delivery of High Street strategy § Strong cash generation in both High Street and Travel § Return of £90m of cash to sh

  14. Slide 14: Travel – overview

    Travel – overview § Continued delivery of our strategy with profit up 14% to £41m § Total sales growth of 22% with LFL sales up 1%, 3% excluding tobacco § Underlying gross margin improvement of 50 bps YoY § Further operational performance improvement including tight cost control § Travel now a leadi

  15. Slide 15: Travel strategy

    Travel strategy § Deliver organic growth in existing space by better meeting customer needs § Retailing basics and cost control § More effective use of space § Renew existing contracts § Expand CTN format to new profitable locations and channels § Develop, test and roll out new formats in our catego

  16. Slide 16: Travel – Air

    Travel – Air § In air LFL sales growth of 3% with continued outperformance versus passenger numbers § Further progress with new formats ­ Expansion of books­only store portfolio § Integration of 23 Alpha units proceeding in line with plan ­ Re­branding of units complete, refit programme commences Au

  17. Slide 17: Travel – Rail and Motorways

    Travel ­ Rail and Motorways § In rail LFL sales growth flat § Development of smaller formats § Motorway units continue to perform in line with expectations § 104 units now open in Motorways, 15 still to open Before After Preliminary Results 2008

  18. Slide 18: Travel – Hospitals

    Travel ­ Hospitals § Rapid expansion of Hospital portfolio through acquisition of UNS in March 2008 § WHSmith portfolio increased from 8 units in 7 hospitals to 80 retail units and 8 coffee shops in 69 hospitals § WHSmith now has significant presence in this growing and underdeveloped market § Oppor

  19. Slide 19: Travel business development

    Travel business development § Good progress renewing contracts with 12 contracts renewed covering 36 units § 27 refits completed § 146 new units Acquired Won Air 23 20 Rail/Other ­ 6 Hospital 80 ­ Motorway ­ 17 § 34 further new business wins due to open in 08/09 ­ 15 in Air ­ 6 in Hospitals ­ 13 in

  20. Slide 20: High Street – overview

    High Street – overview § Strategy continues to be delivered in line with our plan § LFL sales down 3% § Strong gross margin performance up by c. 190 bps § Cost savings delivered in line with plan, further £10m of cost savings identified § Continued good cash generation § Post Office rollout complete

  21. Slide 21: High Street strategy

    High Street strategy § Rebuild position as Britain’s most popular stationer, bookseller and newsagent § Retailing basics and cost control § Drive the gross margin by category mix management § Focus on core categories, rebuilding authority as a specialist § Reduce our reliance on entertainment § Use

  22. Slide 22: Category performance

    Category performance § Books: ­ Strategy to rebuild authority remains unchanged ­ 2007 Harry Potter impacted market growth in the 2nd half ­ Further good share performance vs general high street ­ Improved ranges and promotional programme ­ Ongoing focus on in­store execution § Stationery: ­ Core su

  23. Slide 23: Category performance

    Category performance § News and Impulse: ­ Magazine market continues to be challenging ­ Market share in news and magazines stable ­ Further growth from impulse categories ­ Mix management driving gross margin growth § Entertainment: ­ LFL sales down in line with our strategy ­ Further space rebalan

  24. Slide 24: Margin optimisation

    Margin optimisation § Margin growth from category mix management § Additional margin growth from: ­ Better buying terms ­ Improved sourcing ­ Improved mark­down and promotional management ­ Shrinkage control § Mix improvements continue to be a driver of profit growth Preliminary Results 2008

  25. Slide 25: Cost efficiency improvements

    Cost efficiency improvements § Continued successful and focused cost control § In October 2007, targeted £23m savings over next 3 years § Delivered savings of £8m in 2008; in line with schedule § Savings from across the business, including: ­ Closure of off­site stock rooms ­ Supply chain and scanne

  26. Slide 26: Post Offices and other services

    Post Offices and other services § Integration of Post Offices into High Street stores completed ­ 82 Post Offices now open § Bureau de Change opened in further 50 stores during H2 § Agreement to offer DHL services in 400 stores ­ Extends our delivery services offer to a larger group of stores ­ Roll

  27. Slide 27: Christmas 2008

    Christmas 2008 § Challenging consumer environment § Expect a competitive Christmas season § Christmas plan competitive but profitable § Active management of entertainment category and mix continues § Christmas range focused on offering value and choice in our core categories § Flexible management of

  28. Slide 28: Summary

    Summary § Strong profit performance from the Group § Good performance from Travel with significant business expansion § Continued progress in implementing High Street plan § Strong cash generation § Challenging trading environment, however we are well­positioned § Continue to focus on delivering val

  29. Slide 29: WH Smith PLC

    WH Smith PLC Preliminary Results 2008 9 October 2008 Preliminary Results 2008

WH Smith — FY2008 Earnings Presentation on 6ix