DFS Furniture PLC · LSE:DFS
DFS Furniture — H1 2016 Earnings Presentation
29 slides from DFS Furniture's earnings presentation, Mar 23, 2016
Slide 1: Interim results 23 March 2016
Interim results 23 March 2016
Slide 2: Introduction
Introduction Richard Baker dfs
Slide 3: Highlights
Highlights lan Filby dfs
Slide 4: Performance Highlights
Performance Highlights LTM Financials OPERATIONAL Strong growth in Exclusive Brand sales £943.2m Gross sales Two new 10,000 sq. ft. UK & ROI stores +5.4% opened during first half Netherlands encouraging; Spain refit £92.6m Underlying EBITDA complete +7.4% Extension of trials of Sofa Workshop and Dwe
Slide 5: Our Continuing Journey
Our Continuing Journey From a Great British Business … … to World Class DELIVERING ON OUR IPO MESSAGES Above market sales growth Increasing profit margins Strong cash conversion Investing for the future Our plan is wholly on-track delivering earnings growth and cash returns for shareholders while in
Slide 6: Financials
Financials Bill Barnes
Slide 7: Income Statement
Income Statement OVERVIEW H1 2016 H1 2015 FY 20151 LTM 20161 26 weeks 26 weeks 52 weeks 52 weeks (£m) 30-Jan-2016 31-Jan-2015 1-Aug-15 30-Jan-2016 Further consistent growth Gross Sales 461.3 431.2 913.1 943.2 in gross sales and revenues Growth (%) +7.0% +10.5% +7.0% +5.4% Revenue 355.8 332.8 706.1 7
Slide 8: Revenue Trends – Half Year
Revenue Trends – Half Year Y-o-Y CHANNEL CHANNEL CONTRIBUTION TO GROUP REVENUE GROWTH REVENUE (% of total group revenues) GROWTH RATE UK Total +6.4% UK +1.5% +1.8% +1.9% +1.7% +1.0% +6.2% DFS UK LFL +4.4%1 Existing New 2 Web Sofa Workshop & Stores (net) Stores Dwell International +31.2% (ROI, NL, SP
Slide 9: Analysis of the Cost Base
Analysis of the Cost Base Underlying Cost Base LTM Key Components Recent Trends LTM H1 FY15 LTM H1 FY16 Direct cost of furniture sold Annualisation of investment in price now complete Directly variable Stable product margin seen during Inventory latter half of FY15 continues into COS 41.3% 41.9% FY1
Slide 10: Foreign Exchange Rate Exposure
Foreign Exchange Rate Exposure OVERVIEW $1.80 Based on current sourcing, $1.70 DFS average 1¢ change in rate has £0.5m USD:GBP hedging EBITDA impact $1.60 rate $1.50 Balanced partly by positive effect from USD:GBP spot rate shipping and fuel costs $1.40 $1.30 Commercial pressure on all retailers wit
Slide 11: Administrative Cost Trends
Administrative Cost Trends OVERVIEW 40 Share based incentive and 35.3 35 31.9 33.1 bonus charges impact H1 30 2016 25 20.5 (£m) 20 18.3 Additional plc costs 15 of c. £1m to factor 10 into each of FY16 and FY17 5 0 Investment to support FY 2014 FY 2015 LTM H1 FY15 H1 FY16 scale-up of Dwell and Sofa W
Slide 12: Underlying Earnings Per Share
Underlying Earnings Per Share (£m) H1 FY 2016 H1 FY 2015 FY 2015 LTM FY 2016 Underlying EBITDA 31.0 27.6 89.2 92.6 Depreciation & amortisation (9.0) (8.3) (17.0) (17.7) Underlying operating profit 22.0 19.3 72.2 74.9 Net finance expense (5.8) (30.0) (38.9) (14.7) Underlying profit / (loss) before ta
Slide 13: Cash Generation
Cash Generation KEY TRENDS LTM LTM (£m) H1 2016 H1 2015 FY 2015 Adjusted EBITDA1 92.6 86.2 89.2 Significant cash generation Capex (20.7) (18.1) (20.8) Change in Working Capital 1.3 5.7 2.3 Net debt Free Cash Flow2 73.2 73.8 70.7 is 1.7x EBITDA Conversion (% of EBITDA)3 79.0% 85.6% 79.2% Net debt (15
Slide 14: Working Capital
Working Capital KEY TRENDS (£m) H1 2016 H1 2015 FY 2015 Made to order virtually stockless model Inventories 33.9 33.9 28.3 drives negative working capital Trade/Other Receivables 21.5 18.1 25.3 Trade/Other Payables (235.5) (229.4) (215.6) Cash release reflects growth in business Total Working Capita
Slide 15: Capital Investment
Capital Investment KEY TRENDS (£m) H1 2016 H1 2015 FY 2015 Maintenance capex of c.£10m p.a., includes store New store investment 4.4 6.1 7.6 refits and vehicle fleet Store refurbishment 2.6 0.9 2.0 Store refurbishment includes CDC cluster space Web investment 1.0 0.5 1.1 release c.£1m each Other (in
Slide 16: Continued Strong Returns on Capital
Continued Strong Returns on Capital KEY TRENDS +1.4% -0.9% Capital efficient business 22.4% model and disciplined 21.9% +1.6% investment approach Significant growth in £0 operating profit drives increasing returns LTM H1 FY15 Increase in post Increase in lease LTM H1 FY16 New store openings and -tax
Slide 17: Summary: Positive Trends in Financial KPIs
Summary: Positive Trends in Financial KPIs GROSS SALES (£M) ADJUSTED EBITDA (£M) 943.2 92.6 913.1 853.4 89.2 804.3 83.8 82.3 FY 2013 FY 2014 FY 2015 LTM H1 2016 FY 2013 FY 2014 FY 2015 LTM H1 2016 FREE CASH FLOW (£M) CASH CONVERSION (%) LEASE ADJUSTED ROCE (%) 73.8 70.7 73.2 85.6 22.4 79.2 79.0 21.9
Slide 18: Operational Update
Operational Update Ian Filby
Slide 19: Operational Update: DFS Stores
Operational Update: DFS Stores OPERATIONAL UPDATE “SWOOSH” ROLL-OUT Strong trading alongside continued investment Carlisle store flooded – reopened after c. nine weeks “Swoosh” now in around half of stores – generating LFL growth in extended range Continued investment in employee development Executi
Slide 20: Continued Progress in Broadening our Appeal
1 Continued Progress in Broadening our Appeal PARTNERSHIP EXTENSIONS OPERATIONAL UPDATE Multi-year extensions to French Connection and House Beautiful/Country Living agreements Positive trial performance of Sofa Workshop Dillon range has led to its broader introduction into DFS stores SOFA WORKSHOP
Slide 21: DFS UK Store Network Development
2 DFS UK Store Network Development OPERATIONAL UPDATE INTU BROMLEY Opening of Christchurch in September 2015 Kettering due to open in April 2016 Two further small-store trial locations identified and set to open this financial year – Bromley, plus one other near the M25 Continued overall trend of 3-
Slide 22: International Development
3 International Development DFS SPAIN RELAUNCH OPERATIONAL UPDATE Opening of Limerick (ROI) store in December 2015 Netherlands trading encouraging and in line with expectations following Alexandrium opening - one further store planned – ongoing £2m-£3m operational investment per annum Relaunch of DF
Slide 23: Retail Space Release
4 Retail Space Release OPERATIONAL UPDATE SEVEN CDCs NOW OPEN One additional CDC opened since October FY 2013 and seven stores refitted FY 2014 FY 2015 40,000 sq. ft. of retail space released over FY 2016 period Operational efficiencies meeting expectations Positive sales increment, particularly tri
Slide 24: Continued Web Growth
5 Continued Web Growth NEW PRODUCT VIEWER OPERATIONAL UPDATE Continued very strong sales growth Investment in web platform ongoing Online order tracking for all orders improves customer service Use of online to enhance in-store experience Image size increased by over 20% Online channel continues to
Slide 25: Market Growth Drivers Remain Broadly Constant Year-on-Year
6 Market Growth Drivers Remain Broadly Constant Year-on-Year Why People Buy Consumer Confidence Housing Transactions Net Unsecured Lending Upholstery (%)1 ('000s)2 (% change)3 10 500 5 15 450 0 400 (5) 10 350 79% (10) (15) 300 5 (20) 250 (25) 200 0 (30) 150 21% (35) (40) 100 (5) 02 04 06 08 10 12 14
Slide 26: Summary and Outlook
Summary and Outlook SUMMARY Record financial results and all strategic growth initiatives are on track Strong earnings growth and cash generation results in a progressive interim dividend declared OUTLOOK Uncertain potential impact of EU referendum on consumer confidence Current currency weakness to
Slide 27: Appendix
APPENDIX dfs
Slide 28: Appendix – Store Profile
Appendix – Store Profile AS AT 23 MARCH 2016 UK ROI Holland Spain TOTAL Large Format (c. 15,000sq.ft.+) 96 2 1 - 99 Medium Format (c. 10,000sq.ft.) 6 2 1 - 9 Small Format (<5,000sq.ft.) 1 - - - 1 Other (5,000sq.ft.) - - - 1 1 DFS TOTAL 103 4 2 1 110 Standalone 5 - - - 5 DFS Space Conversions 5 - - -
Slide 29: Disclaimer
Disclaimer: This presentation contains statements that constitute forward-looking statements relating to the business, financial performance and results of the Company and the industry in which the Company operates. These statements may be identified by words such as “may”, “will”, “shall”, “anticip