Interim Results 12 October 2017

Transcription

1 Interim Results 12 October 2017

2 HIGHLIGHTS Financial Highlights Total sales 2.6bn, +2.5%, non tobacco up +7.5% and tobacco down 9.0% due to changes in legislation Like-for-like sales¹ +2.7%, non tobacco like-for-like sales up 7.7%, and tobacco like-for-like sales down 8.7% Operating profit 89.1m, +9% Profit before tax 88.0m, +9% Profit after tax 74.7m, +10% Basic earnings per share up 9% at 4.19 pence Net cash of 165.1m Interim dividend of 0.69 pence per share, up 10% Operational Highlights Our plans to Focus, Drive and Broaden Booker Group continue to make progress Customer satisfaction was strong as we continue to drive choice, price and service for our customers We made good progress on the catering and retail sides of the business with like for like sales to caterers +8.1% and retailers +0.6% Premier, Family Shopper, Londis and Budgens had a good half Chef Direct, Ritter, Classic, Booker Direct and India continue to make progress Internet sales² up 11% to 560m Merger Update On 27 January we announced the planned merger with Tesco PLC to form the UK s leading food business. This combination should improve choice, quality, prices and service for the UK consumer. It should also help the Booker catering, retail and small business customer prosper in a challenging market. Our proposed merger with Tesco is undergoing an in-depth Phase 2 investigation by the Competition and Markets Authority (CMA). Provisional findings are expected to be made public by the CMA by the end of this month, ahead of a final report by the end of the year. It is expected that the merger will complete in early 2018, subject to, amongst other things, the necessary shareholder approvals. During this process Booker will continue to ensure it is Business as Usual. We are excited by the opportunities the merger will create for consumers, our customers, suppliers, colleagues and shareholders. ¹²footnotes see page 24 2

3 PLAN UPDATE

4 Booker Group: growing with professional customers First half sales bn Small Business /Other* 641k bn < bn 0.9 Caterers* 441k Retailers* 117k FY08 H1 FY18 H1 0.3bn 1.2bn Delivered Sales *customers for full year 2016/17 4

5 OUR PLAN (Nov 2005) ACTION RESULTS FOCUS (Nov 05) DRIVE (Apr 06) BROADEN (Apr 07) Focus on Cash Reduce Costs to be most efficient operator Simplify the Business: less is more Improve Customer Satisfaction Choice up Prices down Better service On the way to offering the best choice, prices and service to caterers and retailers and small business via the internet, delivery and cash and carry Be the suppliers preferred route to market in UK New products, services & customers 5

6 FOCUS: On Track Cash 165.1m 100 Stop / Simplify / Standardise Costs 52% of collect, non tobacco sales are self scan 32 improvements actioned saving 135 hours per week per business centre Drive green tickets Delivery to profitable customers fix the mix and more drops per stop Londis and Budgens are on Group systems 6

7 DRIVE: Booker Group is proud to serve independent, group accounts and national chains Half year sales bn RETAIL CATERING & SMALL BUSINESS Independent 1.4bn 0.8bn Group Accounts 0.1bn 0.1bn National Chains 0.1bn 0.1bn TOTAL 1.6bn 1.0bn 7

8 DRIVE CATERING: Independent customers good progress but more to do H1 Caterer Satisfaction % Recommend 89.2% 85.3% 8

9 DRIVE CATERING: CHOICE UP PRICES DOWN BETTER SERVICE Catering delivered sales +20% Chef Central in Norwich, Bournemouth, Leicester 9

10 We are growing Group & National Accounts GROUP ACCOUNTS (Via Booker Wholesale / Makro) (National Accounts via Didcot) Sales +15.2% Sales +33.2% 10

11 DRIVE RETAIL: We can now serve all retailer types % ABC1 Consumers 71% 49% 36% Na Outlets Sales 2016/17 m (inc tobacco) Non Tobacco Sales Change % +3.0%* +21.4% +11.0% +32.0% Improve fresh, stronger own brands, better supply chain Tobacco Legislation: In May 2017 small packs were banned (c.40% of sales), price marked packs banned (c.80% of sales), and plain packaging changes. Tobacco like-for-like sales -8.7% are running in line with wholesale sector performance * excluding, TFR and exited company owned stores 11

12 DRIVE: Joining Forces with and is going well ACTIONS CASH* Stocks / Low Financial Risk Group Costs COSTS Common Supply Chain 25.0% 20.0% Sales % Change Total Sales % Change New tobacco legislation Common Systems Business as Usual 15.0% Improve Fresh 10.0% CUSTOMER CONCEPT New Customers eg. MFG 100m - 200m pa Own Brands Become a Wholesaler / Simple Contract Benefits of Budgens / Londis / Premier eg. Londis delivering fresh to 75 Premier stores 5.0% 0.0% -5.0% -10.0% -15.0% CULTURE Disciplined Retail -20.0% Total Sales YoY % April 2016 YOY % excluding TFR and exited Company Owned Stores Sept 2017 *Cost of acquisition 40m (Sept 2015). Cash generated to September 2017 = c. 48m 12

13 Prices relative to the market DRIVE: PRICES DOWN 3.5% Booker s Pricing vs Cash & Carry Market 3.0% 1.0% 0.5% -1.9% -2.3% -1.4% -1.7% -2.1% -2.2% -2.4% -2.6% -1.6% -1.8% -2.4% -2.5% -2.3% -1.4% -1.5% -2.4% -1.9% -2.1% -1.5% -2.2% -2.9% -3.1% -3.1% -3.1% Source: IRI Research 13

14 DRIVE IS WORKING LFL Sales to Retailers (inc Tobacco) LFL Sales Non Tobacco % Change Year On Year % Change Year On Year FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 H1 FY18 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 H1 FY18 LFL Sales to Caterers (inc Tobacco) TOTAL Sales H1 bn % Change Year On Year FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 H1 FY18 14

15 BROADEN: We continue to develop our digital operations H1 Web Sales 109m 250m 407m 525m 635m 704m 777m 874m 979m 1072m 560m % Change 165% 129% 63% 29% 21% 11% 10% 12% 12% 10% 11% Active Customers 12k 19k 37k 105k 170k 255k 334k 410k 490k 570k 607k Note: Figures exclude Budgens and Londis. Typical Business Centre has 8,000 stock keeping units. Special order line sales are circa 8.2m 15

16 BROADEN: In India we are on track Thane Pune Chandivali Mira Road Surat Goregaon 6 Business Centres 200 Happy Shoppers 16

17 SUSTAINABILITY Four Carbon Trust Standards achieved; Carbon, Waste, Water and Zero Waste to Landfill First company to hold these four Standards and the only food wholesaler to have held the Carbon Standard for ten years. Over 5m litres of oil re-cycled, up 11% on last year Over 28,000 customers re-cycle with the Group Surplus food equivalent to over 480,000 meals donated to local charities in the half year. Over two million meals donated in the last five years. LED lighting now installed in 63 business centres an average overall energy saving of 22%. 17

18 FINANCIAL PERFORMANCE and GUIDANCE

19 FINANCIAL SUMMARY 24 weeks 24 weeks 08-Sep Sep-16 m m % Revenue 2, , % - Tobacco % - Non tobacco 1, , % Operating profit % Profit after tax % Basic earnings per share (pence) % Interim dividend per share (pence) % Net cash

20 PROFITS 24 weeks 24 weeks 08-Sep Sep-16 m m Operating Profit Operating Profit % of Sales 3.4% 3.2% Financing costs (1.1) (0.4) Profit before tax Tax (13.3) (13.2) Profit after tax Tax rate 15.1% 16.3% 20

21 CONSOLIDATED BALANCE SHEET 08-Sep Sep-16 m m Tangible fixed assets Intangible fixed assets Investments Stock Debtors Creditors (742.1) (713.5) Net cash Provisions & tax (29.4) (38.8) Pensions (47.0) (58.5) Net assets

22 CASH FLOW 22

23 GUIDANCE: Dividends The Board is proposing for 2017/18 an interim dividend of 0.69 pence per share On 27 January 2017, it was announced that Booker will merge with Tesco. The Rule 2.7 announcement issued on that day sets out the agreement on future Booker dividends in the context of the proposed merger Booker will continue to accrue dividends in line with its historical ordinary dividend payout ratio until the Effective Date of the merger and will pay a closing dividend reflecting the principles set out in the Rule 2.7 announcement The amount of the closing dividend will be agreed by Tesco and Booker If no agreement is reached then the closing dividend shall be calculated by the formula set out in Appendix 7 of the Rule 2.7 announcement Purely for illustrative purposes: in the event that the Effective Date of the merger is at the end of March 2018, the formula would imply a 3.7 pence per share closing dividend to Booker shareholders in addition, post completion, shareholders holding shares in the enlarged entity would be entitled* to receive any Tesco final dividend for the year ended February 2018 *Assuming that they are shareholders on the record date for the Tesco final dividend 23

24 GUIDANCE Current Trading the Group s non tobacco revenue in the first four weeks of the current half year is ahead of the same period last year Business combination on 27 January 2017, it was announced that it is intended that the Group merges with Tesco PLC. Each Booker Group plc share will be exchanged for Tesco PLC shares plus 42.6 pence. The transaction is subject to clearance from the Competition and Markets Authority and approval by shareholders of both companies Pensions the Booker Pension Scheme is a defined benefit scheme, closed to new members in 2001 and to future accruals for existing members in 2002 Budgens and Londis also have 2 much smaller closed defined benefit schemes at 8 September 2017, the Group had an aggregated net deficit of 47.0m (24 March 2016: 46.9m), comprising assets of 765.0m and liabilities of 812.0m the 2016 Booker Pension Scheme Triennial valuation has been agreed with the Pension Fund Trustee and reflects a Scheme Funding deficit of 41.1m at 31 March We have agreed to contribute 5.4m p.a. into the Scheme for six years from 1 April The next Triennial valuation date is 31 March 2019 the most recent funding valuations of the Budgens and Londis pension schemes were agreed in the year ended 25 March 2016, and no future contributions were required Facilities the Group has a 5 year facility which commenced on 19 August 2015 comprising an unsecured 120.0m RCF the Group complied with its covenants throughout the year Bank interest funds drawn on the revolving credit facility bear floating interest rates linked to LIBOR plus a margin of 0.80% (where borrowings/ EBITDA < 1.0) commitment fee is 0.28% of the unutilised facility Liquidity at 8 September 2017, 165.1m was held in cash and cash equivalents and the Group had undrawn facilities of 120.0m the Group did not draw down on its revolving credit facility in the period to 8 September 2017 Tax Tax of 13.3m on the profit before tax for the 24 weeks ended 8 September 2017 is based on an underlying effect rate of 15.1%, which has been calculated by reference to the projected charge for the full financial year the Group holds tax assets, including those inherited as a result of the acquisition of Budgens and Londis, which continue to be unrecognised as there continues to be uncertainty regarding their recoverability in the individual companies in which they reside depending on the extent to which the Group is able to utilise these assets, the underlying effective rate of tax could remain marginally below the standard rate for the next three years FY18 year end working capital based on our previous experience, the working capital position at 8 September 2017 is temporary due to the timing of the half year date within the calendar month FY18 will be a 53 week year closing on 30 March Based on our previous experience, the impact of this inclusion of the 53 rd week of trading would be a working capital adverse impact due to the inclusion of more month end payment runs of circa 30m to 35m, and a marginal benefit to operating profit (of approximately 2m to 3m) Footnotes to Highlights 1. like-for-like sales is a measure of change in sales from UK operations from prior year to current year. No adjustments to sales are made when individual customers are gained or lost. If a Business Centre is closed, for the twelve months following the closure date the sales of the Business Centre are removed from the prior year comparative. If sales are transferred to a replacement Business Centre in the same vicinity no such adjustment is made. If a Business Centre is opened where none previously existed, all sales for the first twelve months will be excluded. Where a business is acquired, sales are excluded until the anniversary of the acquisition 2. 'Internet sales' are sales made to customers of the Group (excluding sales to customers of Budgens and Londis) where the order is taken via Booker.co.uk 24

25 & Creating the UK s leading food business Business as usual CMA engagement Completion Anticipated early 2018* * Subject to antirust clearance and shareholder approvals 25

26 SUMMARY 24 weeks Ended Net (debt)/cash m Sales Change % Operating Profit m* Interim Dividend per Share p Sep Sep Sep Sep p Sep p Sep p Sep p Sep p Sep p Sep p Sep p Sep p Sep p * before exceptional items 2013 figures have been restated due to the adoption of IAS19 (Revised) Employee Benefits 26

27 DISCLAIMERS This presentation may include oral and written forward-looking statements with respect to certain of Booker Group plc's ( Booker ) plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements sometimes contain words such as anticipate, target, expect, intend, plan, goal, believe, may, might, will, could or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to future events and circumstances which may be beyond Booker s control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, the impact of tax and other legislation and regulations in the jurisdictions in which Booker operates, as well as the other risks and uncertainties set forth in this presentation of interim results for the 24 weeks ended 8 September 2017, released on 12 October As a result, Booker s actual future financial condition, performance and results may differ materially from those expressed or implied by the plans, goals and expectations set forth in any forward-looking statements, and persons receiving this presentation should not place reliance on forward-looking statements. Booker expressly disclaims any obligation or undertaking (except as required by applicable law) to update the forward-looking statements made in this presentation or any other forward-looking statements it may make or to reflect any change in Booker s expectation with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Forward-looking statements made in this presentation are current only as of the date on which such statements are made. All oral or written forward-looking statements attributable to the Directors of Booker or persons acting on their behalf are qualified in their entirety by these cautionary statements. None of the statements in this presentation are, nor are any intended to be, a profit forecast and none should be interpreted to mean that the profits or earnings per share of Booker in the current or any future financial period necessarily is or will be above or below the equivalent figure for any previous period. 27