Wh Smith Plc · LSE:SMWH
Wh Smith — H1 2008 Earnings Presentation
30 slides from Wh Smith's earnings presentation, Apr 17, 2008
Slide 1: WH Smith PLC Interim Results 2008
WH Smith PLC Interim Results 2008 17 April 2008 Interim Results 2008
Slide 2: Agenda
WH Smith PLC § Introduction Robert Walker § Financial review Alan Stewart § Business review Kate Swann – Travel – High Street Interim Results 2008
Slide 3: Alan Stewart, Group Finance Director
Alan Stewart Group Finance Director Interim Results 2008
Slide 4: Group financial summary
Group financial summary 6 mths to 6 mths to Feb 2008 Feb 2007 Change £m £m % Revenue 734 721 2% Profit before tax 64 59 8% Underlying EPS1 26.9p 25.8p 4% Basic EPS2 28.3p 26.7p 6% Interim dividend per share 4.6p 3.7p 24% Special dividend per share 33.0p 1 Underlying EPS: profit after tax and befor
Slide 5: Group profit before tax
Group profit before tax 6 mths to 6 mths to Feb 2008 Feb 2007 Growth £m £m % High Street 1 50 51 (2)% Travel 1 17 15 13% Trading operations 67 66 2% Central costs (7) (7) Internal rents 1 1 Operating profit 61 60 2% Net finance income 3 Pension interest (1) Profit before tax 64 59 8% 1 Stated af
Slide 6: Profit from trading operations
Profit from trading operations 6 mths to 6 mths to Feb 2008 Feb 2007 Change £m £m % Revenue 734 721 2% Gross contribution 340 329 Costs (273) (263) Costs – occupation costs (103) (96) – store costs (105) (103) – other costs (65) (64) Profit from trading operations1 67 66 2% Gross margin 46.3% 45.6%
Slide 7: Revenue analysis
Revenue analysis 6 mths to 6 mths to LFL Feb 2008 Feb 2007 Change Change Revenue £m £m % % High Street 556 565 (2)% (3)% Travel 178 156 14% 1% Total revenue 734 721 2% (2)% 6 mths to Feb 2008 LFL sales by category % Books 2 Stationery News & Impulse (2) Entertainment (15) Total (2) Interim Results
Slide 8: Group free cash flow
Group free cash flow 6 mths to 6 mths to Feb 2008 Feb 2007 £m £m Operating profit 61 60 Depreciation and amortisation 21 21 Working capital (4) (7) Capital expenditure (12) (9) Tax (9) Provisions (1) (1) Net interest income1 3 1 Non cash items 2 1 Free cash flow 61 66 1 Stated before interest rece
Slide 9: Group net funds movement
Group net funds movement 6 mths to 6 mths to Feb 2008 Feb 2007 £m £m Free cash flow 61 66 Return of cash to shareholders (81) (11) Pension deficit funding (5) (30) Tax refund and associated interest received 6 14 Purchase and issue of own shares (2) (11) Demerger costs (5) Sale and leaseback and f
Slide 10: Group balance sheet
Group balance sheet Feb Aug 2008 2007 £m £m Goodwill & other intangible assets 32 35 Property, plant & equipment 169 176 Available for sale investments 2 4 Working capital (11) (20) Corporation tax (43) (25) Deferred tax 1 3 Provisions (9) (10) Operating assets employed 141 163 Net funds 45 64 Total
Slide 11: Current trading
Current trading LFL sales LFL sales 6 mths to 6 weeks to 29 Feb 2008 12 April 2008 High Street (3)% (3)% Travel 1% 1% Travel – excluding tobacco 3% 3% Total revenue (2)% (2)% Interim Results 2008
Slide 12: Group key indicators
Group key indicators 6 mths to 6 mths to Growth Feb 2008 Feb 2007 % Underlying EPS 1 26.9p 25.8p 4% Interim dividend per share 4.6p 3.7p 24% Free cash flow (£m) 61 66 Fixed charges cover 1.8x 1.8x ROCE 43% 38% 1 Underlying EPS: profit after tax and before exceptional items – diluted (diluted weighte
Slide 13: Kate Swann, Group Chief Executive
Kate Swann Group Chief Executive Interim Results 2008
Slide 14: Group – overview
Group – overview § Good profit performance across the Group § Further strong performance from Travel with substantial progress in new business development § Continued delivery of High Street strategy § Strong cash generation in both High Street and Travel § Good progress with return of £90m of cash
Slide 15: Travel – overview
Travel – overview § Further strong performance with profit up 13% to £17m § Total sales growth of 14% § LFL sales growth of 1%, 3% excluding tobacco § Underlying gross margin up driven by category mix management § Costs continue to be tightly controlled § Substantial progress in new business develop
Slide 16: 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
Slide 17: Travel – Air and Rail
Travel – Air and Rail § In air LFL sales growth of 3%; 5% excluding tobacco § In rail LFL sales growth flat; 2% excluding tobacco § Product ranges continue to be improved Extended books chart Souvenir ranges Lottery rollout planned § Further improvements in customer service Interim Results 20
Slide 18: Motorways
Motorways § Performance in motorway units in line with expectations § 89 units now open in this channel 2 new leasehold units opened 2 new leasehold units planned to open in 2008/09 § Agreement reached with RoadChef to open 29 units Plan to open 15 by Autumn 2008 and 14 by Spring 2009 Interim
Slide 19: Travel business development
Travel business development § Good progress renewing contracts with 8 new contracts renewed covering 17 units § 12 refits completed § 25 new units opened 17 in Air 6 in Rail 2 in MSA § 8 further new business wins 2 bookshops in Manchester airport 1 CTN in London City airport 5 units in C
Slide 20: Travel business development – hospitals
Travel business development hospitals § WHSmith existing hospital portfolio 8 units in 7 hospitals § UNS Group Limited acquired in March 72 retail units and 8 coffee shops in 62 hospitals § Hospital channel growing and underdeveloped § Strong combination of UNS sector experience and WHSmith bran
Slide 21: Travel business development – hospitals
Travel business development hospitals Interim Results 2008
Slide 22: Travel business development – expansion in Air
Travel business development – expansion in Air § Acquired 23 units in 11 airports § Strengthens our presence in longterm growth sector § Earnings neutral in 2007/08 § Units converted to WHSmith fascia during this financial year Interim Results 2008
Slide 23: High Street – overview
High Street – overview § Continued successful delivery of strategy § LFL sales down 3% § Strong gross margin performance up by c. 100 bps § H1 cost savings target delivered § Continued good cash generation § Post Office rollout progressing to plan § Opened 5 stores and acquired a further 7 stores to
Slide 24: 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
Slide 25: Category performance
Category performance § Books: sales and gross margin growth YOY Strategy to rebuild authority remains unchanged Further share growth vs general high street Instore execution continues to improve § Stationery: sales flat; gross margin up YOY Continue to focus on core subcategories Improve
Slide 26: Category performance
Category performance § News and Impulse: performance in line with expectations Magazine market remains challenging Market share stable Good growth from impulse categories Gross margin up YOY § Entertainment: strategy continues to be delivered LFL sales down but less than expected Multime
Slide 27: Margin optimisation and cost efficiency
Margin optimisation and cost efficiency § 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 § Continued
Slide 28: Post Office implementation
Post Office implementation § Integration of Post Offices into 77 High Street stores on track Public consultation process completed for all Post Offices 65 now open, remaining 12 to open by Autumn 2008 Performance in line with our expectations § New agreement to open Bureau de Change in further
Slide 29: Summary
Summary § Further good profit progress from the Group § Strong performance from Travel Substantial progress in new business development § Continued improvement on the High Street § Strong cash generation supports return of cash and dividend growth § Tough trading conditions, however we have planne
Slide 30: WH Smith PLC
WH Smith PLC Interim Results 2008 17 April 2008 Interim Results 2008