Your favourite Neighbourhood shop Full Year Results
Important notice This presentation has been prepared by investments and who fall within the definition not be read as guarantees of future McColl’s Retail Group plc (the “ company ”) of “investment professionals” in Article 19(5) performance or results and will not in connection with the publication of the of the Financial Services and Markets Act necessarily be accurate indications of company’s full year results for the 52 weeks 2000 (Financial Promotion) Order 2005 (the whether or not such results will be achieved. ended 24 November 2019. “ Order ”) or are high net worth companies, As a result, recipients of this presentation, unincorporated associations or partnerships should not rely on such forward-looking This presentation does not constitute an or trustees of high value trusts as described in statements due to the inherent uncertainty invitation, offer to sell or any solicitation of Article 49(2) of the Order and investment therein. Forward-looking statements speak any offer to buy or subscribe for any personnel of any of the foregoing (each only as of the date such statements and, securities in the company or any of its within the meaning of the Order); and (C) except as required by the Financial Conduct subsidiaries or associated companies or its or otherwise to persons to whom, or at which, it Authority, the London Stock Exchange or their affiliates (the “ group ”). may otherwise be lawfully made, supplied or applicable law, the company undertakes no No reliance may be placed for any purpose directed (each a “ Relevant Person ”). No obligation to update or revise publicly any whatsoever on the completeness or other person should act or rely on this forward-looking statements, whether as a accuracy of the information or opinions presentation and by accepting this result of new information, future events or contained in this presentation and no presentation you represent, warrant and otherwise. member of the group or any of their agree that you are a Relevant Person. This presentation is not for distribution, directly respective officers, directors, employees, This presentation may include statements, or indirectly, in whole or in part, in or into the representatives, agents or advisers take any estimates, opinions and projections with United States of America, Canada, the responsibility for, or accepts any liability in respect to anticipated future performance Republic of South Africa, Australia, Japan or respect of, the accuracy or completeness of of the group (“ forward-looking statements ”) any jurisdiction where it would be unlawful to such information. which reflect various assumptions do so. The distribution of this presentation or This presentation is directed at and is only concerning anticipated results taken from any information contained in it may be being distributed (A) in member states of the the group’s current business plan or from restricted by law in certain jurisdictions, and European Economic Area to persons who public sources which may or may not prove any person into whose possession any are “qualified investors” within the meaning to be correct. Such forward-looking document containing this presentation or of Article 2(1)e of the Prospectus Directive statements reflect current expectations any part of it should inform themselves (Directive 2003/71/EC, as amended); (B) in based on the current business plan and about, and observe, any such restrictions. the United Kingdom to persons who have various other assumptions and involve professional experience in matters relating to significant risks and uncertainties and should 2 Full year results for the year ending 24 November 2019
1 FY 2019 Highlights Full year results for the year ending 24 November 2019
Building foundations for success 1 • Business stabilised • Focus on retail execution • Strengthened leadership team • Strategic change programme initiated • Store optimisation accelerated • Debt facilities - extension agreed 4 Full year results for the year ending 24 November 2019
Financial headlines Revenue (£bn Re bn) 2019 1.22 £1.22 £1.22 2018 1.24 -1. 1.8% 8% vs 2018 ss margin (1 (1) Ad Adjust sted ed gross 2019 25.9% 25.9% 2018 26.0% H2 improvement (2) (£ A (2 Adjust Ad sted ed EBIT BITDA (£m) 2019 32.1 £32.1 2018 35.0 -8. 8.1% 1% vs 2018 Ne Net debt (£m) 2019 £94.1 94.1 2018 98.6 -4. 4.6% 6% vs 2018 (1) Before impact of adjusting items 5 Full year results for the year ending 24 November 2019 (2) Before impact of adjusting items and property gains/losses.
2 Financial Review Full year results for the year ending 24 November 2019
Summary income statement 2 (£m, unless stated) 2019 2018 Improved LFL performance offset by Revenue 1,218.7 1,241.5 planned store closures and divestments Like-for-like sales (LFL) (1) +0.0% (1.4)% Adjusted gross profit (2) 315.7 322.5 Adjusted gross profit margin (2) 25.9% 26.0% Strong H2 improvement Adjusted administrative expenses (2) (306.7) (311.4) Cost control and store divestments Adj. administrative expenses/revenue (2) 25.2% 25.1% offsetting cost pressures and wage inflation Other operating income 6.3 6.8 Adjusted operating profit (3) 15.3 17.9 Adjusted EBITDA (3) 32.1 35.0 Adjusted EBITDA margin (3) 2.6% 2.8% Adjusted earnings per share (2) 5.6p 6.7p (1) LFL sales reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery and mobile phone top-up (2) Before impact of adjusting items. (3) Before adjusting items and property gains/losses. 7 Full year results for the year ending 24 November 2019
LFL improvement 2 LFL Sales Growth 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Q1 Q2 Q3 Q4 Financial Year 8 Full year results for the year ending 24 November 2019
Continued reduction in net debt 2 Cash flow (£m) 2019 2018 Adjusted EBITDA (1) 32.1 35.0 Cash impact of exceptional items excluding (6.1) (13.8) sale & leaseback Tax paid (1.2) (4.8) Immediate benefit in 2018 from improved Change in working capital (4.8) 45.4 payment terms following transition to new wholesale supplier Operating cash flow 20.0 61.8 Capital expenditure (14.4) (19.7) Interest paid and financing activities (9.3) (9.9) Dividend paid (2.2) (11.9) Net cash generated pre sale & leaseback (5.9) 20.3 Sale & leaseback programme following 2016 Proceeds from sale & leaseback 10.4 22.9 acquisition complete, funding capex and debt reduction Free Cash Flow 4.5 43.2 Net debt (£m) 2019 2018 Net debt (94.1) (98.6) Year on year reduction Net debt:Adjusted EBITDA (1) 2.9x 2.8x 9 (1) Before adjusting items and excluding property gains and losses Full year results for the year ending 24 November 2019
Building capital resilience 2 • Refinance – existing facility extension agreed • Improvement in working capital – enhanced plan, linked to operating model • Capital rationing – reduced spend on expansionary capex • Head office disposal – sale now agreed with relocation planned for July • Dividend approach – 2019 final dividend suspended, priority to deleverage Target leverage of 2.0x by end of 2022 10 Full year results for the year ending 24 November 2019
Financial priorities for 2020 2 • Gross margin momentum – Optimisation of promotions – Improved mix and terms • Productivity – building on 2019 cost performance with: – Further store optimisation – Operating model review – Maintenance and energy usage strategy – GNFR review – Supported by new ERP and EPOS • De-lever balance sheet 11 Full year results for the year ending 24 November 2019
3 Strategic Change Programme Full year results for the year ending 24 November 2019
Market overview: 3 Convenience set for continued growth Convenience continuing to grow Market remains fragmented Number of stores: 46,388 13 Full year results for the year ending 24 November 2019
Market overview: 3 Meeting the needs of customers Need for mission based formats McColl’s addressing key trends in convenience 14 Full year results for the year ending 24 November 2019
Strategic change programme 3 Your Favourite Neighbourhood Shop Strong customer Easy to Improving Great place offer run stores our stores to work – Segmented estate – Full understanding of – Accelerated store – Market leading that meets the need cost to serve e2e optimisation customer service of the communities – Neutralising external – Refined refresh and – Training and tools to we serve cost inflation acquisition models do the job – Products, pricing and – Embracing new – Mission based layouts – Listening and services technology responding – New maintenance – Continual category – Early trial stores to test and energy strategy – Career development, review programme and learn diversity and inclusion 15 Full year results for the year ending 24 November 2019
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