2018 Preliminary Results 28 February 2019 Howdens 2018 Preliminary Results
Andrew Livingston Chief Executive Officer Howdens 2018 Preliminary Results
Sales £1,511m, +7.7%, profit before tax £242.3m* Gr Gross oss margin d devel evelop oped ed in H H2 wi with sa sales m es mom omen entum Per eriod od 11 11 Success ess • Incentives and focus • Lead generation build • Availability (Raunds' distribution) 33 n new ew dep epot ots ( s (2017 17: : 19 19 d dep epot ots) s) Ne New di digi gital tal pl platf atform l rm lau aunche nched d to to raise co rai cons nsumer bran r brand d aw aware arene ness Ne New f format trade rmat trade bo book charge ) *(exc. c. GMP e equa ualisa sation on cha 2 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Depot Dep ot n net etwor work Desi Design In In st stoc ock Qual uality ty pro products ducts Tr Trade f e foc ocussed ssed UK man manuf ufac acturi uring bas ng base Plan anni ning s ng suppo upport rt Ran ange ge leade aders rship Trade rade acco account f t faci acility ty Local cal pri price ces Rigi gid cabi d cabinets ts Empo Empowere red te d teams ams Dedi dicate cated d suppl upply ch y chai ain 3 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Ens Ensure ure hi high gh local cal sto tock av ck avai ailabi ability ty – a a ke key part part of ou our ser servi vice Provi ovide e on online e accessi essibility Speed u Spe d up o p our ur pi picki cking ti ng time mes Impro mprove our r di displ play ay env nviro ronme nment f t for the r their r cust stom omer ers 4 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Inte nteracti ractive Input on ne new p product Ope perati rational al pri priori riti ties Sal Sales and margi and margin trac n tracki king 5 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 6 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Mark Robson Deputy CEO and Chief Financial Officer 7
Highlights Op Operat ating ng profit, £m £m, and and mar argi gin, n, % % Rev Reven enue, e, £m Gross ross pro rofit, , £m, , and m marg rgin, % , % 15.9% HJ UK Cont Europe * GMP equalisation charge 1550 61.7% 950 250 Operating profit 1,511.3 243.9 1500 (3.8)* 34.0 16.7% 63.3% 900 932.2 1450 240.1 1,477.3 1,403.8 234.4 888.4 1400 850 225 31.8 1350 1,372.0 800 1300 1250 750 200 2017 2018 2017 2018 2017 2018 HJ UK: +7.7% Use ses o s of ‘cash ash’, £m £m Net Ne t ca cash, h, £ £m Profit t befo efore e ta tax, £m Pension def Cap ex Dividend Share rep 250 250 250 * GMP equalisation charge 242.3 35.0 Profit before tax 200 (3.8)* 62.2 47.9 150 238.5 232.2 225 225 68.4 68.3 100 241.1 231.3 48.5 50 44.3 30.0 27.5 0 200 200 2017 2018 Dec-17 Dec-18 2017 2018 8 Howdens 2018 Preliminary Results
Revenue 20 2018 8 UK K dep epot rev evenue £1 £1,477.3m • total +7.7% • LFL +6.3% 201 018 Cont ontinent ntal E Eur urop ope depot ot r reve venu nue £ £34.0m 4.0m • France total (€) +4.4% • LFL +4.4% 9 Howdens 2018 Preliminary Results
Profit before tax Group gr p gross ss pr profit t mar argi gin • 2017: 63.3% • 20 2018: 18: 61. 61.7% Profit before tax Gross profit £m £m Gross Volume Profit & mix 44 (revenue) 117 Cost Change pressure/ Change £10.1m Change savings, £6.3m £43.8m etc. Interest, (net) etc. (10) 242.3 1 238.5 932.2 Currency Volume 232.2 Operating 1 & mix Price GMP Costs* (COGS) (revenue) Equalisation (34) 888.4 (55) (10) Charge (4) • • 2017 2018 2017 2018 * includes £8m impact of 53rd week 10 Howdens 2018 Preliminary Results
Operating costs £m Operating costs Change £38.1m GMP equalisation charge 692.1 4 Other 688.3 Growth 4 related Older 9 depots 20 New depots 53 rd week 654.0 9 8 646.5 • 2017 (1) 2017 2018 2018 (1) (1) Reported 11 Howdens 2018 Preliminary Results
Income statement £m 2018 20 2017 Revenue 1,511 1, 11.3 1,403.8 Cost of goods sold (579 579.1) (515.4) Gross profit 93 932. 2.2 888.4 Operating costs (before GMP equalisation charge) (688. 688.3) (654.0) GMP equalisation charge (3 (3.8 .8) - Operating profit 240 40.1 .1 234.4 Net interest (1. 1.6) 6) (2.2) Profit before tax 23 238. 8.5 232.2 Tax (48. 8.1) 1) (47.2) Profit for the period 190 190.4 185.0 12 Howdens 2018 Preliminary Results
Earnings per share and dividends £m 2018 20 2017 • Earnings per share 31. 31.3p 3p 29.9p • Dividend - Final (recommended) 7.9 .9p 7.5p - Full year 11.6p 6p 11.1p 2018 final dividend costing £47.6m 13 Howdens 2018 Preliminary Results
Net cash and cash flow £m 20 2018 2017 Opening net cash 24 241. 1.1 226.6 Operating cash flows before movements in working capital 274.6 4.6 266.6 Working capital (49 49.7 .7) (26.9) Capital expenditure (44.3 4.3) (48.5) Tax paid (45 45.4 .4) (41.8) Dividends (68. 68.3) (68.4) Share repurchases (62. 62.2) 2) (47.9) Pension contribution (16. 16.3) (21.2) Other 1. 1.8 2.6 Closing net cash 231 31.3 241.1 14 Howdens 2018 Preliminary Results
Working capital • Working capital increased £49.7m – stock up £18m – debtors up £48m – creditors up £16m 15 Howdens 2018 Preliminary Results
Return of excess cash to shareholders • Two year share repurchase programmes: - February 2017: £80m - March 2018: £60m - February 2019: £50m Shareholder Returns 2017 2018 2019 Total 48 32 - 80 Feb 2017 programme March 2018 programme - 30 30 60 - - 50* 50 Feb 2019 programme 48 62 Total share repurchases *£50m over 68 68 Dividends two years 116 131 Total shareholder returns 16 Howdens 2018 Preliminary Results
Pension scheme deficit Current service GMP charge + equalisation £m admin cost charge IAS19 basis + interest 4 24 109.3 Change £(73.3)m Asset returns 36.0 46 Net discount rate (105) Contribution (42) • Dec Dec 2017 2018 17 Howdens 2018 Preliminary Results
Current trading & outlook for 2019 • UK sales in first two periods up 4.0%, LFL +2.4% ‒ Adjusted for one fewer trading day up 5.1%, LFL +3.5% • Cost pressures ‒ exit of Dutch & German businesses – digital development – depreciation – growth & inflation – additional depots • Capital expenditure: c.£60m 2019 • Banking arrangements • Brexit planning 18 Howdens 2018 Preliminary Results
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DEPOT EVOLUTION RANGE MANAGEMENT DIGITAL DEVELOPMENT INTERNATIONAL 20 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Depo pot f t format rmat and l and layo ayout ut bro broadl adly y unchanged ed si since e 19 1995 21 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Respo pondi nding g to to chan hangi ging ng re requ quire reme ments nts Space Space max maximi misati ation 18 18 dep epot ot t test est 22 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Respo pondi nding g to to di differe rent nt re requ quire reme ments nts Space Space max maximi misati ation 18 18 dep epot ot t test est 23 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Cre reati ating ng the the be best t en envi viron onmen ent Space max Space maximi misati ation 18 18 dep epot ot t test est 24 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Two Two mod odel el for ormats 25 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Impro mproved di d displ play ay env nviro ronme nment 26 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Op Open en, a accessi essible e of offices f es for or i improved oved con onver versa sation ons 27 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Testi ting g a bro a broade ader r hardw hardware are o offer 28 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Servic ice v vis isib ibilit ility 29 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
30 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Impro mproved d de design gn and and pre presentati ntation n faci aciliti ties 31 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Wareh ehou ouse se – re restructure tructured d the the space pace, impro mproved d pi picki king g times es 32 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
Con onver versi sion on of of 3 ol older er dep epot ots 6 mor ore d e dep epot ots s con onver verted ed by August 33 Howdens 2018 Preliminary Results Howdens 2018 Preliminary Results
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