19 March 2024
Wickes Group plc - Full Year
Results 2023
for the
52 weeks to 30 December 2023
Robust sales performance with
adjusted PBT ahead of market expectations
Financial Highlights
•
|
Total revenue of £1,553.8m in line
with prior year (2022: £1,559.0m) reflecting LFL1 sales
-0.3%
|
•
|
Strong productivity gains of £22m
offsetting cost inflation (excl. energy) in line with
guidance
|
•
|
Statutory profit before tax: £41.1m
(2022 £40.3m)
|
•
|
Adjusted profit before tax after
SaaS impact2: £52.0m, ahead of consensus
|
•
|
Net cash position of £97.5m (2022
£99.5m), after £10.1m of share buybacks; Average cash across the
year of £154.9m (2022 £153.6m)
|
•
|
Final dividend of 7.3p, giving a
total of 10.9p for the full year, in line with guidance
|
•
|
£10.1m of £25.0m share buyback
programme completed by year end3
|
Strategic Highlights
•
|
Strong TradePro sales growth +11%,
driven by significant expansion in TradePro members to 881k (2022:
746k)
|
•
|
Record highs for customer
satisfaction scores across all channels (stores, Click &
Collect and Home Delivery), underpinning market share
position
|
•
|
Accelerated H2 sales growth of +24%
in Wickes Lifestyle Kitchens range since highly successful relaunch
to gain share of the volume kitchen market
|
•
|
Three new stores opened, in
Chelmsford, Widnes and Torquay, creating c. 90 new jobs
|
•
|
Store refit programme delivering
strong sales uplifts and ROCE with 11 refits completed
|
•
|
New Customer Experience Centre and
field service tech platforms driving increased lead conversion,
greater efficiencies and 92% Net Promoter Score in Design &
Installation4
|
•
|
Successfully broadening customer
appeal for home improvers with more than 1 in 4 Wickes shoppers
female5
|
•
|
Entry into energy-saving solutions
with Solar Fast acquisition (see separate RNS also released
today)
|
NB. Retail6 refers to the
revenue stream formerly described as Core. Design &
Installation4 refers to the revenue stream formerly
described as DIFM or Do-it-for-me.
Current Trading & Outlook
In the first 11 weeks of 2024 Retail
sales are in line with last year. As previously noted, the consumer
environment for larger purchases continues to be challenging with
weaker leads in the market for Design & Installation, resulting
in new orders down single digits year on year.
We maintain good cost control and
have productivity plans in place for 2024, however these will not
offset fully the cost headwinds from the scale of increases in
National Minimum Wage and business rates. Wickes' balanced business
model and proven growth strategy affords the Group resilience in
the current uncertain environment and leaves us well positioned for
growth in the longer term. We are comfortable with consensus
expectations for adjusted PBT after SaaS impact for
FY247.
We will issue a Q1 trading update in
May. We also plan to hold an investor insight event in May, focused
on TradePro, with further details to follow in due
course.
David Wood, Chief Executive of Wickes,
commented:
"This has been another year of strong progress for Wickes. Our
robust trading performance, targeted investment programme and
disciplined cost control have delivered profits ahead of
expectations.
"In the current economic environment, our unrivalled focus on
providing great value and service has underpinned this performance.
With this, I would like to thank each of my colleagues for their
continued dedication and support, enabling us to achieve record
customer satisfaction.
"I
am also delighted to announce our acquisition of Solar Fast, which
gives Wickes a majority stake in a leading operator in the emerging
and exciting market for energy saving solutions. This acquisition
enables us to rapidly accelerate our Design & Installation
growth lever, capitalising on our expertise in installing major
home improvement projects."
Summary of full year financial results
£m
|
52 weeks to
31 Dec 2022
|
52 weeks to
30 Dec 2023
|
Change
|
Statutory revenue
|
1,562.4
|
1,553.8
|
(0.6)%
|
Statutory gross profit
Gross profit margin
|
572.2
36.6%
|
565.0
36.4%
|
(1.3)%
-0.3ppts
|
Statutory operating
profit
Operating profit margin
|
68.8
4.4%
|
62.9
4.0%
|
(8.6)%
-0.4ppts
|
Statutory profit before
tax
|
40.3
|
41.1
|
2.0%
|
Adjusted8 revenue
Retail
Design & Installation
|
1,559.0
1,187.9
371.1
|
1,553.8
1,189.1
364.7
|
(0.3)%
0.1%
(1.7)%
|
Adjusted8 gross profit
Gross profit margin
|
567.1
36.4%
|
568.1
36.6%
|
0.2%
+0.2ppts
|
Adjusted8 operating
profit
Adjusted operating profit margin
|
103.9
6.7%
|
73.8
4.7%
|
(29.0)%
-1.9ppts
|
Adjusted8 profit before tax before SaaS
impact
|
75.4
|
59.5
|
(21.1)%
|
Adjusted8 profit before tax after SaaS
impact
|
75.4
|
52.0
|
(31.0)%
|
Adjusted8 basic earnings per
share
|
23.8p
|
15.1p
|
(36.6)%
|
Basic earnings per share
|
12.6p
|
11.8p
|
(6.3)%
|
Full year dividend
|
10.9p
|
10.9p
|
N/A
|
Investor & Analyst meeting
A presentation for investors and
analysts will be held today at 8.30am (UK time), followed by a
Q&A with the Wickes management team. A live webcast can be
accessed at: https://brrmedia.news/WIX_FY23
A recording of the webcast will be
available on the Wickes Group plc website later today:
https://wickesplc.co.uk
This announcement should be read in
conjunction with the announcement regarding the acquisition of a
majority stake in leading solar installations business Solar Fast,
which has also been released today.
Enquiries
Investors and Analysts
Holly Grainger
Director of Investor
Relations
+44 (0)7341 680426
holly.grainger@wickes.co.uk
|
Media
Lucy Legh, Will Smith
PR Advisers to Wickes
+44 (0)203 805 4822
wickes@headlandconsultancy.com
|
About Wickes
Wickes is a digitally-led, service-enabled home improvement
retailer, delivering choice, convenience, value and best-in-class
service to customers across the United Kingdom, making it well
placed to outperform its growing markets. In response to gradual
structural shifts in its markets over recent years, Wickes has a
balanced business focusing on three key customer journeys -
TradePro, DIY (together reported as Retail) and our project-based
Design & Installation division.
Wickes operates from its network of 229 right-sized stores,
which support nationwide fulfilment from convenient locations
throughout the United Kingdom, and through its digital channels
including its website, TradePro mobile app for trade members, and
Wickes DIY app. These digital channels allow customers to research
and order an extended range of Wickes products and services,
arrange virtual and in-person design consultations, and organise
convenient Home Delivery or Click-and-Collect.
Forward looking statements
This announcement has been prepared
by Wickes Group Plc. To the extent it includes forward-looking
statements, these statements are based on current plans, estimates,
targets and projections, and are subject to inherent risks,
uncertainties and other factors which could cause actual results to
differ materially from the future results expressed or implied by
such forward-looking statements. Neither Wickes Group Plc, nor any
of its officers, Directors or employees, provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this announcement will actually occur. Wickes Group Plc does not
undertake any obligation, other than in accordance with our legal
and regulatory obligations, to update or revise any forward-looking
or other statement, whether as a result of new information, future
developments or otherwise.
Business review
We delivered a robust sales
performance in 2023, benefitting from a great value- and
service-led proposition and underpinned by our balanced business
model. We continued to achieve market share gains9 in
our Retail business, driven by impressive growth in membership of
the TradePro scheme and volume growth in a number of strategically
important categories. Our Design & Installation delivered sales
were slightly down for the full year with sales declines in the
second half reflecting the more challenging market environment for
big ticket projects and the normalisation of our post-Covid order
book.
As expected, overall profitability
declined versus 2022, reflecting a market with softer demand and
high cost inflation. Nonetheless our productivity programme enabled
us to offset all cost increases other than energy and as a result
we were able to deliver adjusted PBT ahead of
expectations.
Market
The UK home improvement sector
represents a large and attractive market of c.£27bn10
and we have a relatively small market share of c.6% presenting us
with a significant opportunity for long term growth. The market has
grown at c.2.5% on average over the past ten years, driven by the
high average age of the UK's housing stock, the rising number of UK
households and increasing home ownership. People are also spending
more time in their homes as a result of the rise of hybrid working,
while there is an increasing trend of consumers investing in their
homes for improved energy efficiency.
The cost of living crisis has led to
pressure on consumer spending in the UK, due to rising mortgage
rates and rental costs, as well as continued inflation across
energy, food and fuel. Whilst on average the Wickes customer base
tends to be slightly older and more affluent than the UK average,
these cost of living pressures have nonetheless had an impact on
our business. High levels of interest rates have suppressed UK
housing transactions, which are often a trigger to undertake major
home improvement projects, although this is typically partially
offset by renovations to properties in which consumers decide to
stay for longer. Our exposure to new build housing is very
limited.
The high cost of energy has
motivated consumers to seek out ways to improve the energy
efficiency of their homes. The average household energy efficiency
rating for England and Wales is band D11 and the UK's
28.6m homes are among the least energy efficient in Europe, losing
heat up to three times faster than in continental
Europe12. At Wickes we recognise how important climate
change is and we are committed to helping our customers to improve
the sustainability of their homes, to save money on their energy
bills and to reduce their carbon footprint.
The February 2024 report from our
proprietary Mood of the Nation survey shows that UK consumers are
increasingly planning to put more money into savings or to
undertake smaller home improvement projects over the next year,
rather than undertaking large projects like a new kitchen or
bathroom. The survey also shows that local trade professionals
remain very busy, with more than 50% of tradespeople having a
pipeline of work over three months and 1 in 4 having a pipeline of
work of more than 12 months.
Strategic progress
We have continued to build on the
strong operational progress made since demerger, in developing and
extending our growth levers. These contribute to an improvement in
our products and services, saving our customers time and money.
Continued investment in these growth levers will drive further
market share growth in the coming years.
In 2023, we have taken a number of
actions to respond to more challenging market conditions such as
investing in new ranges for customers looking to undertake small
home refreshes, including our paint range, curtain poles and
shelving. We have also seen a step change in sales of our
relaunched Wickes Lifestyle Kitchens range13, which
appeals particularly to customers with a lower budget. This range
now includes a free design service which has proven popular with
both landlords and homeowners.
We have continued to invest in our
low-cost, right-sized stores. We refitted another 11 stores in
2023, showcasing our full offer of kitchens and bathrooms, and
taking the proportion of stores in the new format to 77%. We
continue to see strong returns and sales uplifts in our refitted
stores.
The refit programme also enables us
to upgrade the efficiency of multi-channel order pick and despatch,
which drives sales densities and underpins our 30-minute Click
& Collect promise. All these initiatives are reflected in our
customer satisfaction metrics, which have risen in all areas of the
business: Self Serve in store, Click & Collect, Home Delivery
and Design & Installation.
We opened three new stores in 2023,
in Chelmsford, Widnes and Torquay. We are pleased with the initial
performance of the new store opening programme, relative to our
expectations and returns criteria.
LFL sales across the Group were
-0.3% compared to 2022. Within this, Retail saw three consecutive
quarters of positive LFL sales growth, driven by a positive volume
performance from Q2 onwards. Design & Installation experienced
a positive first half but a weaker second half, as a result of a
softer market environment for large consumer purchases and the
normalisation of our post-Covid order book.
Selling price inflation slowed
throughout the year, driven by lower commodity costs such as
timber. Price inflation was slightly negative by year end and we
expect inflation to be broadly flat in 2024. We continue to work
closely with our suppliers to maintain price leadership and our
gross margins improved slightly year-on-year.
We faced significant cost headwinds
this year with materially higher energy costs, an increase in the
National Minimum Wage of 9.8% and general inflationary pressures
across the business. However the successful implementation of our
productivity plan helped to offset these headwinds, with the
exception of energy. Further investment in energy saving
initiatives, such as LED lighting and centralised heating controls,
has helped reduce the impact of rising energy costs.
Winning for Trade
Our TradePro membership scheme
showed increasing momentum in 2023 with 135,000 new customers
enrolling, taking our total membership to 881,000. Local traders
continue to switch to Wickes for its strong value credentials and
simple discount scheme, as well as the convenience of our 30-minute
Click-and-Collect service. The scheme saves both time and money for
local traders, who benefit from our standard 10% discount across
the store, regardless of spend level.
Our TradePro app has been further
improved with new account features including digital receipts, a
filter to show pricing excluding VAT, and project planning
functionality. We run regular communications programmes using our
Missions Motivation Engine (MME) which uses machine learning to
further personalise the customer experience, driving engagement and
incremental sales. We have launched a new loyalty scheme, TradePro
Rewards, which aims to build deeper relationships with our most
strategically valuable customers (worth ten times the value of an
equivalent DIY customer) and to increase the frequency with which
they shop and the amount they spend.
Sales from TradePro members in the
year increased by 11% compared to 2022. A 19% growth in the number
of active customers was partially offset by a slight decline in
average basket size as tradespeople have been managing their
material quantities more carefully.
Accelerating Design & Installation
Design & Installation delivered
sales decreased by 1.7% over the year. The first half saw strong
sales growth as we successfully worked through the elevated order
book from the Covid period. However in the second half we
experienced a more challenging market environment for larger ticket
purchases, as well as delays in Order Fulfilment as a result of a
new software implementation, which has since been
resolved.
We have seen increased attachment
rates of customers choosing to use Wickes to fit their kitchen and
bathroom products, which leads to incremental spend on tiling,
flooring and joinery, increasing the overall project value.
Targeted recruitment of installer teams remains strong and we now
have more than 3,000 installer teams offering nationwide
coverage.
We continue to digitise our
installation service, with installers now using our field service
management software (FSM). This software systemises each of our
steps along the installation process, reducing manual activity and
potential human error. Alongside many other benefits, this has
increased the speed of the customer journey.
Our new Customer Experience Centre
is now live for all new installation customers, giving every
project a named individual who will coordinate and manage
communication between the customers, installers and product
delivery teams. This has reduced the number of incoming queries as
well as the average time to installation and this highly positive
outcome for new customers has been reflected in a Net Promoter
Score of 92%.
Wickes Lifestyle Kitchens has
performed well since its relaunch with sales in the second half
+24%. The range is designed to better serve the high-volume market
for lower price point kitchens and offers significant opportunities
for further growth. Customers are now able to use our free design
service for a Wickes Lifestyle Kitchen and this has proven popular
with both homeowners and landlords.
Whilst leads in our showrooms have
slowed significantly during 2023, as a result of the more
challenging market conditions, our conversion rates continue to
strengthen, underpinned by our unique customer
proposition.
DIY Category Wins
We continue to strive for the best
possible range, price and availability for our customers. Our
right-sized stores sell a carefully curated range of c.9,000 SKUs
and we are constantly reviewing the range to ensure that each
product category is meeting expectations. This year we have
conducted 17 range reviews across categories including decorating,
flooring, electrical, hardware and roofing. We have also added
innovation for smaller projects on lower budgets, such as paint
ranges, curtain poles and shelving. Customers remain interested in
making their homes more energy efficient and we have responded with
new products, in the lighting category in particular. Categories
which have seen strong volume growth this year include shelving
& storage, power tools and paint.
We have successfully broadened our
brand proposition, from our heritage in trade and heavy-end DIY to
now address a younger and more female customer base. The proportion
of Wickes' DIY customers who are female has increased from just 16%
in 2019 to 27% in 20235, following our proactive
marketing to women, including developing rich online and social
media content to help develop DIY skills and bring DIY to life in a
relevant way.
Digital capability
We are investing further in our
digital capabilities to deliver an integrated multi-channel
shopping experience for our customers.
We use our predictive MME to deliver
tailored content to customers to help them complete their home
improvement missions and this is driving significant revenues. We
have a comprehensive suite of MME-led programmes of marketing
emails and app notifications, all of which are optimised for
timing, audience and content for our different customer profiles,
with incrementality measured against control groups.
We have also used technology to
improve our fulfilment capability and modernise our order
management solutions. This has enabled the rollout of our very
popular 30-minute Click & Collect service, which has resulted
in a 6.7% growth in Click & Collect sales this year and record
customer satisfaction levels.
In 2023, we increased our range of
digital payment options by implementing both Apple Pay and Google
Pay for online transactions (already in use in stores). This has
increased our conversion rates by speeding up the check-out process
for customers. We have also accessed the growing Buy Now Pay Later
('BNPL') market by adding Klarna to our online payment options,
which has brought incremental revenue opportunities and access to a
younger customer demographic.
Store investment
Investment in our store network
continues, to modernise the stores, increase our showroom space and
create additional fulfilment space for Click & Collect and Home
Delivery. 11 store refits were successfully completed during 2023.
Our refit programme continues to deliver c.25% ROCE with strong
sales uplifts, in particular in Design & Installation. The
programme continues, with 77% of the network now in our new
format.
Our new store opening programme is
gathering momentum, with three new stores opened during 2023 in
Chelmsford, Widnes and Torquay. We have an exciting pipeline of new
stores planned for the coming years, as we target an overall estate
of 250 stores over the medium term.
During 2023, we closed four stores
(Wigan, Loughborough, Paignton K&B and Darlington) which were
not meeting our returns criteria. We therefore ended the year with
229 stores.
Enhanced store service model
Our '4C' model aims to meet our
customers' needs through all four of our store network journeys:
Self Serve, Assisted Selling, Order Fulfilment and the Design &
Installation showrooms. Our approach offers a seamless shopping
experience for customers and ensures that our store estate works
hard for us. We have made changes to the store estate to increase
back of house capacity for Click & Collect and Home Delivery
Order Fulfilment, while reducing the impact on customers in the
store. We have also transitioned to a new delivery partner which
has helped to improve customer satisfaction.
This continued focus on how best to
serve our customers has resulted in record customer satisfaction
scores ('CSAT') in 2023. Self Serve customers who rate Wickes as
'excellent' or 'good' has increased by 4 percentage points ('ppts')
year-on-year to 85%, whilst CSAT for our Click & Collect and
Home Delivery14 services has improved by 1ppt and 2ppts
respectively. CSAT also continues to trend upwards in Design &
Installation, with the key Lead to Order part of the process up
1ppt this year to a record 86%.
A
winning culture
The Wickes culture has evolved over
the past fifty years to become a modern, inclusive workplace where
all colleagues can feel at home and have the opportunity to grow
their skills and develop their career. We continue to engage with
colleagues so that they are informed, inspired and motivated to
play their part in delivering our strategy through exceptional
levels of customer service. This year we have enabled all store
managers to work flexibly and have introduced a number of cost of
living initiatives to help colleagues.
Our annual colleague engagement
survey seeks both quantitative and qualitative feedback from
colleagues on a range of subjects and assesses overall colleague
engagement. In 2023, our colleague engagement score was
79%,15 which indicates a strong level of colleague
engagement with the business.
Responsible Business Strategy update
2023 was the first full year of
delivering our Responsible Business Strategy, Built to Last. This
has been a year of integrating the strategy across our business and
our supply chain, with continued progress made across all three
pillars of the strategy and our foundation topics.
The health and safety of our
colleagues and customers remains our number one priority and is one
of the key foundations of our Responsible Business Strategy. In
2023, we demonstrated a continued reduction in injury numbers
across the business and an improved performance in our Accident
Frequency rate and number of lost time incidents, following a
number of very strong years of pleasing performance.
We are committed to reduce the
impact of the packaging we use in our own brand products, and we
have removed 115 tonnes (annually) of plastic packaging, which is a
reduction of 7% like-for-like volume compared with 2022.
People
Inclusion and diversity remains
central to our people strategy through our 'Feel at Home'
colleague-led inclusion and diversity programme. Following a
successful trial, we are launching a new flexible working approach
to all store management roles. Our 2023 Gender and Ethnicity Pay
Gap report shows continued improvement in our gender pay gap, and a
favourable ethnicity pay gap result.
Our Early Careers offering continues
to focus on attracting and developing the skills our business needs
for the future. In the year, we supported 280 individuals into
Early Career placements, with 248 of these enrolled on an
apprenticeship programme.
We employed on average 7,919 people
in 2023, compared to an average headcount of 8,340 in 2022. As a
result of the new supply chain logistics contract which went live
in January, 339 colleagues transferred to the logistics
supplier under the TUPE regulations. In 2023, we opened three new
stores (Chelmsford, Widnes, and Torquay) and closed four (Wigan,
Loughborough, Paignton K&B and Darlington). When we need to
close stores, we take all reasonable steps to support our
colleagues who are affected with securing alternative employment
with Wickes.
We launched a new two-year charity
partnership with The Brain Tumour Charity and in 2023, with the
generosity of our colleagues, customers and suppliers, we raised
£728,000 towards our £2 million target. All of our stores
participated in the Wickes Community programme during the year,
supporting around 1,500 projects across our local
communities.
Environment
After receiving validation from the
SBTi for our near term science-based targets ('SBT') in 2022, we
have made significant progress towards achieving our Scope 1 and 2
SBTs by switching to a 100% renewable electricity contract from
April 2023 onwards. During 2023, we achieved a 36.9% reduction in
Scope 1 and 2 emissions compared to 2021. We are collaborating
closely with our strategic suppliers to work towards achieving our
two Scope 3 SBTs, and a meaningful proportion of our suppliers now
have their own SBTi-validated targets.
For our second CDP (Carbon
Disclosure Project) Climate submission we successfully increased
our rating from a B- to a B, and for our first-ever CDP Forests
submission, we were pleased to achieve a rating of C. We are
continuing to work to understand our nature impacts and by the end
of 2023 we stopped sourcing compost containing peat. Timber remains
a significant part of our business and in 2023 we once again
achieved a level of 99.8% of the timber sold having either an FSC
or PEFC Chain of Custody certificate, confirming that it had been
responsibly sourced.
Homes
In line with our purpose to make the
nation feel house proud, and supporting our customers with the
increased cost of living, we want to help our customers save energy
and reduce the carbon footprint of their homes. We launched new
product ranges to expand our offer, and we now offer solar PV
products, air source heat pumps and charging kits for electric
vehicles. We also provide information and guidance on our customer
website and in-store to help our customers make informed choices on
how to save energy, with a particular focus on the significant
benefits of good insulation.
The acquisition of Solar Fast gives
us a majority stake in a leading, nationwide operator in the
emerging and exciting market for energy saving solutions. The
market for domestic solar installations in the UK is growing from
an estimated c.£1.1bn in 2024 to c.£1.5bn per year by
202816 and is a fragmented market with no clear brand
leader. This acquisition enables us to rapidly accelerate our
Design & Installation growth lever, capitalising on our
expertise in installing major home improvement projects. The Wickes
brand has been trusted by home improvers for over 50 years and with
Solar Fast as part of our proposition we will be perfectly placed
to support them with their energy saving plans and to help them
feel house proud.
Financial review
Our financial results have
demonstrated a robust performance in challenging market
conditions.
Revenue of £1,553.8m reflects flat
LFL sales growth for the year. The first half saw strong sales
growth across the business whereas the second half was affected by
the softer market environment for Design & Installation in
particular. Gross margin increased by 19 basis points, reflecting a
more stable inflationary environment, careful management of price
and promotions, and productivity in distribution costs.
Despite a strong productivity
programme, significant increases in operating costs, including
higher energy prices and the 9.7% increase in the National Minimum
Wage, meant that adjusted profit before tax on a pre-SaaS basis
declined by 21.1% to £59.5m (2022: £75.4m). On a post-SaaS basis,
adjusted profit before tax was £52.0m, which was ahead of market
consensus. Statutory profit before tax increased by 2.0% to £41.1m
(2022: £40.3m) reflecting lower adjusting items as the separation
from Travis Perkins Plc reached its conclusion and lower net
impairment charges.
There was £97.5m of cash on balance
sheet at the year end (2022: £99.5m), after £10.1m of share buyback
activity. Average cash through the year was £154.9m (2022:
£153.6m).
Revenue
Adjusted revenue for the 52 weeks to
30 December 2023 was £1,553.8m (2022: £1,559.0m), a decrease of
0.3% on the prior year. Net selling area was flat year on year as
new store openings in Chelmsford, Widnes and Torquay were offset
with closures of some older stores. Full year LFL sales were
-0.3%.
Retail revenue - sales from products
sold to DIY customers and local trade professionals - increased by
0.1% to £1,189.1m (2022: £1,187.9m). Retail LFL revenue increased
by 0.1%, with three consecutive quarters of positive LFL
performance from the second quarter onwards. This performance was
driven by positive volume growth in the second half, with marginal
selling price deflation towards the end of the year.
Our TradePro business continues to
perform strongly, with double digit sales increases in the year.
This is driven by increasing membership numbers, as local traders
continue to choose Wickes to save them time and save them
money.
Sales performance was strongest in
the interior paint, decorative accessories and flooring
categories. The Wickes Lifestyle Kitchens range also had a
strong sales contribution following its relaunch during the
year.
Wickes remains highly competitive on
price, with weekly benchmarking of thousands of items to ensure we
are competitive on the lines that matter most. Our strategy is to
offer everyday low pricing with limited use of targeted promotions
so that our customers can rely on consistent and transparent
pricing.
Design & Installation delivered
revenue - sales from projects sold by our showroom design
consultants - were £364.7m (2022: £371.1m), a decrease of 1.7%. The
first half was notable for strong delivered sales as we
successfully worked through the elevated order book from the
pandemic period. The second half was characterised by a more
challenging market environment for larger ticket purchases and
delays in Order Fulfilment as a result of a new software
implementation, which has since been resolved. LFL sales for
the full year decreased by 1.7%.
The attachment rate of customers
choosing to use Wickes installation continues to be strong, driving
increased average order values.
The order book has continued to
normalise from its pandemic peak and ended the year close to normal
levels. Whilst the level of new leads in the market has been
subdued throughout the second half, cancellations remain at normal,
low levels.
Statutory revenue decreased by 0.6%
to £1,553.8m (2022: £1,562.4m).
Gross profit
Adjusted gross profit for the full
year was £568.1m, in line with the prior year (2022: £567.1m).
Adjusted gross profit margin increased by 19 basis points,
primarily reflecting the impact of a more stable inflationary
environment (particularly in the second half) and careful
management of range, price and promotions.
Distribution costs, taken within
gross profit, were lower as a percentage of sales year-on-year
following a number of initiatives to improve productivity,
including the consolidation of warehouse capacity and the
outsourcing of some of our logistics operations.
Statutory gross profit decreased to
£565.0m (2022: £572.2m) primarily reflecting the revised
presentation for the prior year of net unrealised gains and losses
on remeasurement of foreign exchange derivatives held at fair value
relating to economic hedges. In 2022, these net unrealised gains
and losses were presented in net finance costs, whereas in 2023
these amounts have been presented in cost of sales, in order to
reflect that these foreign currency derivatives are entered into to
mitigate the foreign exchange volatility arising from our purchase
of inventory. The effect of these adjustments has been to reduce
cost of sales in 2022 by £1.7m and to increase net finance costs by
the same amount, as described in note 4.
Operating profit
Adjusted operating profit of £73.8m
decreased by 29.0% year on year (2022: £103.9m) and the adjusted
operating profit margin decreased to 4.7% (2022: 6.7%). The decline
in operating margin reflects the impact of pressure on operating
costs due to wage inflation, rising energy prices and other
inflationary factors as described above, coinciding with an
environment of weaker consumer demand. These cost increases were
partly mitigated by productivity gains of £22m which offset
inflationary cost increases except energy costs.
Statutory operating profit decreased
by 8.6% to £62.9m (2022: £68.8m).
Net finance costs
Adjusted net finance costs were
£21.8m (2022: £28.5m). The improvement in net finance costs relates
primarily to the higher interest income received on our cash
deposits, which is an offset to the IFRS16 interest charges due on
store leases, which were little changed year-on-year.
Adjusted profit before tax
Adjusted profit before tax for the
full year, after the impact of SaaS, was £52.0m (2022: £75.4m), a
decline of 31.0% year-on-year.
Adjusting items
Pre-tax adjusting item charges were
£10.9m (2022: £35.1m). These comprise a reversal of non-cash
right-of-use asset impairment charges of £(3.7)m (2022: nil), which
partially offset non-cash right-of-use asset impairment charges of
£2.7m (2022: £15.4m); IT separation project costs of £8.8m (2022:
£24.4m) representing the final charges in relation to the
separation from our former parent company Travis Perkins Plc; and
net unrealised foreign exchange losses of £3.1m (2022: £1.7m
gain).
Profit before tax
Profit before tax for 2023 increased
to £41.4m (2022: £40.3m) reflecting lower adjusting items as the IT
separation project concluded and lower net impairment charges,
offset by the reduction in adjusted profit before tax as described
above.
Tax
The tax charge for the year was
£11.3m compared to £8.4m in 2022. The underlying effective tax rate
(before adjusting items) for the full year was 26.7% (2022: 20.2%).
This was driven primarily by the increase in UK corporation tax
rates from 19% to 25%, effective from 1 April 2023.
Tax credit on adjusting items was
£2.6m (2022: £6.8m).
Capital expenditure
Capital expenditure in 2023 was
broadly in line with our expectations at £38.2m (2022:
£40.4m).
The largest component of capex was
£20.4m investment in the store estate (2022: £24.7m), of which
refits were £12.9m, new stores £5.8m and other store capex across
the estate £1.7m. There was £6.1m investment in our digital
capabilities (2022: £9.3m), as we continue to develop our
multi-channel offer.
The reduction in capex year on year
is due principally to a high proportion of our IT investment now
being directed towards SaaS platforms which, in line with our
accounting policies, must be expensed (see note on Alternative
Performance Measures for details). SaaS project expenses of £7.8m
were incurred in 2023 (2022: nil).
We expect capital expenditure for
2024 to be c.£30m driven by continued investment in the store
estate and further IT capital expenditure as we continue to enhance
our operating systems and customer experience. In addition we
expect to invest c.£10m in SaaS IT projects, which will be expensed
through the income statement.
Cash / net debt
Net cash at year end was £97.5m
(2022: £99.5m), broadly flat year-on-year. This cash balance is
stated after the execution of £10.1m of share buybacks. Average
cash across the year was £154.9m (2022: £153.6m).
Operating profit excluding
impairment decreased year-on-year, resulting in cash flows from
operations decreasing to £177.0m (2022: £189.1m). Cash flows
related to working capital movements were £2.6m (2022: £(28.7)m),
with the material cash outflow in 2022 driven by a large stock
build. The increased interest received of £7.2m (2022: £1.9m)
reflected higher prevailing interest rates available for cash on
deposit. Cash outflows from financing activities of £150.4m (2022:
£141.9m) include £111.7m (2022: £109.7m) related to lease
liabilities, £27.4m dividend payments (2022: £31.2m) and £10.1m of
share buybacks (2022: nil).
The inventory position of £195.5m
(2022: £201.6m) reflects the planned reduction of stock during the
year to more normal levels following the stock build in 2022. Stock
turn remained healthy at 4.3x.
IFRS16 net debt reduced to £578.3m
(2022: £591.8m), reflecting the maturity profile of our leasehold
store portfolio. IFRS16 leverage was 3.3x (2022: 2.9x).
Dividend
The Board has recommended a final
dividend of 7.3p per share, in line with prior guidance, which will
be paid on 6 June 2024 to Shareholders on the register at the close
of business on 26 April 2024. This will bring the full year
dividend for 2023 to 10.9p. The proposed final dividend is subject
to the approval of Shareholders at this year's Annual General
Meeting.
The shares will be quoted
ex-dividend on 25 April 2024. Shareholders in the UK may elect to
reinvest their dividend in the Dividend Reinvestment Plan (DRIP).
The last date for receipt of DRIP elections and revocations will be
15 May 2024.
Updated technical guidance
The following represents guidance
for the full year 2024:
•
|
Net interest costs of
£20m-25m
|
•
|
Adjusted tax rate 25-26%
|
•
|
Capex of
c.£30m17
|
•
|
Remainder of current £25m share
buyback programme expected to be completed by 30 September
2024
|
•
|
Based on current expectations
dividend expected to be maintained at 10.9p
|
•
|
Cash at year end expected to be
lower as a result of share buyback and Solar Fast
acquisition
|
Appendix
LFL
sales growth
|
Retail
|
Design &
Installation18
|
Total
|
Quarter 1 (13 weeks to 1
April)
|
(4.4)%
|
6.2%
|
(1.8)%
|
Quarter 2 (13 weeks to 1
July)
|
2.3%
|
5.3%
|
3.0%
|
Quarter 3 (13 weeks to 30
September)
|
1.1%
|
(5.5)%
|
(0.5)%
|
Quarter 4 (13 weeks to 30
December)
|
1.2%
|
(13.7)%
|
(2.6)%
|
Full
year (52 weeks to 30
December)
|
0.1%
|
(1.7)%
|
(0.3)%
|
Adjusted EBITDA
Adjusted EBITDA is defined as
Earnings before Interest, Tax, Depreciation and Amortisation and
before adjusting items. Adjusting items are defined as those items
of income and expenditure that are material in size or unusual in
nature or incidence, and in the current year such items relate to
separation and demerger costs and certain store impairments, as set
out in more detail in note 9. Removal of such adjusting items
allows the reader to understand the impact of these non-recurring
items separately from the performance of the underlying
business.
Calculation of adjusted EBITDA
|
2022
|
2023
|
Adjusted operating profit
|
103.9
|
73.8
|
Add back depreciation of property,
plant and equipment
|
20.1
|
21.1
|
Add back depreciation of right of
use assets
|
77.7
|
74.2
|
Add back amortisation
|
5.2
|
6.6
|
Adjusted EBITDA
|
206.9
|
175.7
|
Net debt / adjusted EBITDA
|
2.9x
|
3.3x
|
Footnotes
1) For a definition of like-for-like
('LFL') sales, see note 3
2) SaaS IT investment costs are those
costs incurred which relate to 'software as a service' solutions
that are immediately expensed under the Group's accounting policies
and do not result in an intangible asset. See note on Alternative
Performance Measures for further information.
3) Remaining £2.4m of the initial
£12.5m programme completed by Feb-24
4) Design & Installation formerly
described as DIFM or Do-it-for-me. Design & Installation
revenue relates to projects such as kitchens and bathrooms, sold by
our showroom Design Consultants. Revenue is recognised when
delivery and installation (where applicable) is
complete.
5) Wickes proprietary customer data
2023
6) Retail formerly described as Core.
Retail revenue relates to products sold directly to customers (both
DIY and local trade), in stores or online
7) Consensus PBT after SaaS impact
for FY24 is £43.6m as at 8 March 2024
8) Adjusted measures represent
results on an IFRS basis and exclude adjusting items including, but
not limited to, significant restructurings, incremental costs
relating to corporate transactions, significant write downs or
impairments (or impairment reversals) of current and non-current
assets, the associated costs of separating the business from the
former parent company's IT systems, net unrealised gains and losses
on remeasurement of foreign exchange derivatives held at fair
value, the effect of changes in corporation tax rates on deferred
tax balances, and in the comparative period a reclaim of overpaid
VAT relating to prior years. See note 2 of the financial statements
and both the Reconciliation of Alternative Performance Measures
note and the Alternative Performance Measures note for a detailed
explanation of these items.
9) Source: GfK GB point of sale data,
sourced from GfK DIY Category Reporting December 2023
10) Source: GfK, Mintel and Wickes
estimates
11) ONS Energy efficiency of housing
in England and Wales 2023
12) Decarbonising Buildings: Insights
from Across Europe, published by the Grantham Institute - Climate
Change and the Environment at Imperial College London, December
2022
13) Sales of Wickes Lifestyle
Kitchens which include a design element are classified as Design
& Installation revenues, whereas Self Serve purchases of the
Wickes Lifestyle Kitchen range are classified as Retail
revenues.
14) Home Delivery refers to customer
deliveries fulfilled from stores
15) The colleague engagement score is
an average score in response to the main engagement questions
covering respondents' likelihood to recommend Wickes as a place to
work, likelihood to recommend Wickes' products or services,
likelihood to remain at Wickes and overall job satisfaction. These
engagement questions form part of a wider annual colleague
survey.
16) Source: Wood Mackenzie UK PV
Capacity Forecast
17) Excludes impact of expensed SaaS
IT investment costs
18) Design & Installation LFL
sales for Q3 were revised from -4.4% to -5.5%.
Consolidated income statement and other
comprehensive income
(£m)
|
Notes
|
52 weeks ended 30 December 2023
|
52 weeks ended 31 December 2022
(Re-presented*)
|
Revenue
|
3
|
1,553.8
|
1,562.4
|
Cost of sales
|
|
(988.8)
|
(990.2)
|
Gross profit
|
|
565.0
|
572.2
|
Selling costs
|
|
(341.6)
|
(347.9)
|
Administrative expenses
|
|
(160.5)
|
(155.5)
|
Operating profit
|
|
62.9
|
68.8
|
Net finance costs
|
4
|
(21.8)
|
(28.5)
|
Profit before tax
|
|
41.1
|
40.3
|
Tax
|
6
|
(11.3)
|
(8.4)
|
Profit for the period and total comprehensive
income
|
|
29.8
|
31.9
|
|
|
|
|
Profit for the period attributable to owners of
the parent company
|
|
29.8
|
31.9
|
|
|
|
|
Earnings per share
|
|
|
|
Basic
|
7
|
11.8p
|
12.6p
|
Diluted
|
7
|
11.7p
|
12.5p
|
|
|
|
|
Adjusted
results1
|
|
|
|
Adjusted revenue
|
5
|
1,553.8
|
1,559.0
|
Adjusted gross profit
|
5
|
568.1
|
567.1
|
Adjusted operating profit
|
5
|
73.8
|
103.9
|
Adjusted profit before tax
|
5
|
52.0
|
75.4
|
Adjusted profit after tax
|
5
|
38.1
|
60.2
|
Adjusted basic earnings per share
|
7
|
15.1p
|
23.8p
|
Adjusted diluted earnings per share
|
7
|
14.9p
|
23.7p
|
1 Defined in note 5.
* For details of re-presentation please see note
4.
Consolidated balance sheet
(£m)
|
|
As at
30 December
2023
|
As at
31 December
2022
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
|
8.4
|
8.4
|
Other intangible assets
|
|
14.3
|
16.6
|
Property, plant and equipment
|
|
123.2
|
114.9
|
Right-of-use assets
|
|
537.1
|
542.4
|
Deferred tax asset
|
|
23.0
|
22.7
|
Total non-current assets
|
|
706.0
|
705.0
|
Current assets
|
|
|
|
Inventories
|
|
195.5
|
201.6
|
Trade and other receivables
|
|
74.1
|
87.4
|
Corporation tax
|
|
-
|
8.4
|
Derivative financial instruments
|
|
-
|
2.6
|
Cash and cash equivalents
|
|
97.5
|
99.5
|
Total current assets
|
|
367.1
|
399.5
|
Total assets
|
|
1,073.1
|
1,104.5
|
|
|
|
|
Equity and Liabilities
|
|
|
|
Capital and reserves
|
|
|
|
Issued share capital
|
|
25.2
|
26.0
|
Capital redemption reserve
|
|
0.8
|
-
|
EBT share reserve
|
|
(0.7)
|
(0.7)
|
Other reserves
|
|
(785.7)
|
(785.7)
|
Retained earnings
|
|
923.7
|
924.8
|
Total equity
|
|
163.3
|
164.4
|
Non-current liabilities
|
|
|
|
Lease liabilities
|
|
596.0
|
610.4
|
Long-term provisions
|
|
2.3
|
1.8
|
Total non-current liabilities
|
|
598.3
|
612.2
|
Current liabilities
|
|
|
|
Lease liabilities
|
|
79.8
|
80.9
|
Trade and other payables
|
|
219.1
|
237.7
|
Corporation tax
|
|
1.6
|
-
|
Derivative financial instruments
|
|
0.7
|
0.2
|
Short-term provisions
|
|
10.3
|
9.1
|
Total current liabilities
|
|
311.5
|
327.9
|
Total liabilities
|
|
909.8
|
940.1
|
Total equity and liabilities
|
|
1,073.1
|
1,104.5
|
The consolidated financial statements of Wickes
Group Plc, registered number 12189061, were approved by the Board
of Directors on 18 March 2024 and signed
on its behalf by:
David Wood
|
Mark George
|
Chief Executive Officer
|
Chief Financial Officer
|
Consolidated statement of changes in
equity
(£m)
|
Notes
|
Issued
share
capital
|
Capital redemption reserve
|
EBT
Share
reserve
|
Other
reserves
|
Retained
earnings
|
Total
equity
|
At 1 January 2022
|
|
26.0
|
-
|
(0.8)
|
(785.7)
|
921.3
|
160.8
|
|
|
|
|
|
|
|
|
Profit for the period and other comprehensive
income
|
|
-
|
-
|
-
|
-
|
31.9
|
31.9
|
Dividends paid
|
9
|
-
|
-
|
-
|
-
|
(31.2)
|
(31.2)
|
Equity-settled share-based payments
|
|
-
|
-
|
0.1
|
-
|
4.3
|
4.4
|
Tax on equity-settled share-based
payments
|
|
-
|
-
|
-
|
-
|
(1.5)
|
(1.5)
|
At 31 December 2022
|
|
26.0
|
-
|
(0.7)
|
(785.7)
|
924.8
|
164.4
|
|
|
|
|
|
|
|
|
Profit for the period and other comprehensive
income
|
|
-
|
-
|
-
|
-
|
29.8
|
29.8
|
Dividends paid
|
9
|
-
|
-
|
-
|
-
|
(27.4)
|
(27.4)
|
Share buyback and cancellation
|
|
(0.8)
|
0.8
|
-
|
-
|
(10.1)
|
(10.1)
|
Purchase of own shares
|
|
-
|
-
|
(0.2)
|
-
|
-
|
(0.2)
|
Equity-settled share-based payments
|
|
-
|
-
|
0.2
|
-
|
5.4
|
5.6
|
Tax on equity-settled share-based
payments
|
|
-
|
-
|
-
|
-
|
1.2
|
1.2
|
At 30 December 2023
|
|
25.2
|
0.8
|
(0.7)
|
(785.7)
|
923.7
|
163.3
|
Consolidated cash flow statement
(£m)
|
Notes
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
(Re-presented*)
|
Cash flows from operating activities
|
|
|
|
Operating profit
|
|
62.9
|
68.8
|
Adjustments for:
|
|
|
|
Amortisation of other intangible
assets
|
|
6.6
|
5.2
|
Depreciation of property, plant and
equipment
|
|
21.1
|
20.1
|
Depreciation of right-of-use assets
|
|
74.2
|
77.7
|
Impairment of property, plant and
equipment
|
|
-
|
0.4
|
Impairment of right-of-use assets
|
|
2.7
|
15.4
|
Reversal of impairment of right-of-use
assets
|
|
(3.7)
|
-
|
Losses/(gains) on terminations of
leases
|
|
0.1
|
(1.8)
|
Write-off of intangible assets
|
|
1.5
|
-
|
Losses on disposal of other intangible
assets
|
|
0.3
|
-
|
Losses on disposal of property, plant and
equipment
|
|
2.6
|
0.6
|
Derivative fair value losses/(gains)
|
|
3.1
|
(1.7)
|
Share-based payments
|
|
5.6
|
4.4
|
Operating cash flows
|
|
177.0
|
189.1
|
|
|
|
|
Movements in working capital:
|
|
|
|
Decrease/(increase) in inventories
|
|
6.1
|
(13.4)
|
Decrease/(increase) in trade and other
receivables
|
|
13.4
|
(9.9)
|
Decrease in trade and other payables
|
|
(18.6)
|
(4.1)
|
Increase/(decrease) in provisions
|
|
1.7
|
(1.3)
|
Cash generated from operations
|
|
179.6
|
160.4
|
Income taxes paid
|
|
(0.3)
|
(4.3)
|
Net cash inflow from operating
activities
|
|
179.3
|
156.1
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Purchases of property, plant and
equipment
|
|
(32.1)
|
(31.1)
|
Development costs of computer
software
|
|
(6.1)
|
(9.3)
|
Proceeds on disposal of property, plant and
equipment
|
|
0.1
|
0.4
|
Interest received
|
|
7.2
|
1.9
|
Net cash outflow from investing
activities
|
|
(30.9)
|
(38.1)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Interest paid
|
|
(1.0)
|
(1.0)
|
Interest on lease liabilities
|
|
(28.2)
|
(29.4)
|
Payment of principal of lease
liabilities
|
|
(84.3)
|
(82.4)
|
Lease incentives received
|
|
0.8
|
2.1
|
Own shares purchased for share
schemes
|
|
(0.2)
|
-
|
Share buyback
|
|
(10.1)
|
-
|
Dividends paid to equity holders of the
Parent
|
9
|
(27.4)
|
(31.2)
|
Net cash outflow from financing
activities
|
|
(150.4)
|
(141.9)
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
(2.0)
|
(23.9)
|
Cash and cash equivalents at the beginning of
the period
|
|
99.5
|
123.4
|
Cash and cash equivalents at the end of the
period
|
|
97.5
|
99.5
|
|
|
|
|
Adjusting items
|
5
|
|
|
Adjusting items paid included in the cash
flow
|
|
10.4
|
21.7
|
Total pre-tax Adjusting items
|
|
10.9
|
35.1
|
*For details of re-presentation please see note
4. Additionally, the comparative cash flows have been re-presented
to include interest paid and interest on lease liabilities as a
financing rather than an operating cash flow. The change in
presentation represents a voluntary change in accounting policy in
line with IAS 8 and represents a more relevant grouping of cash
flows in line with the nature of the business. This re-presentation
increases the net cash inflow from operating activities and
increases the net cash outflow from financing activities for the 52
weeks ended 31 December 2022 by £30.4m. No change has been made to
the total cash flow for the comparative period.
Notes to the financial statements
1 General information and accounting policies
The Group's principal accounting policies are
set out in the Annual Report and Accounts, which is available from
19 March 2024 on the Company's website www.wickes.co.uk
2 Statutory accounts
The financial information set out above does not
constitute the company's statutory accounts for the financial years
ended 30 December 2023 or 31 December 2022 but is derived from
those accounts. Statutory accounts for 31 December 2022 have been
delivered to the registrar of companies, and those for 30 December
2023 will be delivered in due course.
The auditor has reported on those accounts;
their reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention
by way of emphasis without qualifying their report and (iii) did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
3 Revenue
The Group has one operating segment in
accordance with IFRS 8 'Operating Segments', which is the retail of
home improvement products and services, both in stores and
online.
The Chief Operating Decision Maker is the
Executive Board of Directors. Internal management reports
are reviewed by them on a regular basis. Performance of the
segment is assessed based on a number of financial and
non-financial KPIs as well as on profit before taxation.
The Group identifies two distinct revenue
streams within its operating segment which are analysed
below.
Both revenue streams operate entirely in the
United Kingdom. The Group's revenue is driven by a large number of
individual small value transactions and as a result, Group revenue
is not reliant on a major customer or group of
customers.
Adjusted
Revenue
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Retail (product revenue)
|
1,189.1
|
1,187.9
|
Design & Installation (project
revenue)
|
364.7
|
371.1
|
|
1,553.8
|
1,559.0
|
Revenue reconciliation
and like-for-like adjusted revenue
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Adjusted revenue
|
1,553.8
|
1,559.0
|
Network change
|
(7.8)
|
(1.0)
|
Adjusted revenue (like-for-like
basis)
|
1,546.0
|
1,558.0
|
Prior period adjusted revenue
|
1,559.0
|
1,534.9
|
Prior period network change
|
(8.0)
|
(5.1)
|
Prior period other movements
|
-
|
(24.5)
|
Prior period adjusted revenue (like-for-like
basis)
|
1,551.0
|
1,505.3
|
(Decrease)/increase arising on a like-for-like
basis
|
(5.0)
|
52.7
|
Like-for-like adjusted revenue (%)
|
(0.3)%
|
3.5%
|
Calculating like-for-like revenue enables
management to monitor the performance trend of the business
period-on-period. It also gives management a good indication of the
health of the business compared to competitors.
Like-for-like revenue is a measure of sales
performance for two successive periods. Stores contribute
to like-for-like revenue once they have been trading for more
than twelve months. Revenue included in like-for-like revenue
is for the equivalent times in both periods being compared. When
stores close, revenue is excluded from the prior period figures for
the months equivalent to the post closure period in the
current period. These movements are explained by the Network change
amounts. The Network change number varies year on year as it
represents a different number of stores.
The comparative period other movements reflects
the impact of the period ended 1 January 2022 being a 53 week
period, in comparison to the period ended 31 December 2022, being a
52 week period. The extra week is presented separately to enable
direct comparison.
4 Net finance costs
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
(Re-presentation*)
|
Finance income
|
|
|
Interest receivable
|
7.5
|
1.9
|
|
7.5
|
1.9
|
Finance costs
|
|
|
Interest on lease liabilities
|
(28.2)
|
(29.4)
|
Amortisation of loan arrangement fees
|
(0.3)
|
(0.3)
|
Commitment fee on revolving credit
facilities
|
(0.7)
|
(0.7)
|
Other interest
|
(0.1)
|
-
|
|
(29.3)
|
(30.4)
|
Net finance costs
|
(21.8)
|
(28.5)
|
* For details of re-presentation please see
below.
Prior period re-presentation
In the year ended 30 December 2023 the Directors
have reconsidered the presentation of net unrealised gains and
losses on remeasurement of foreign exchange derivatives held
at fair value relating to economic hedges.
Previously, in the Income Statement for the
period ended 31 December 2022, the net unrealised gains and losses
on remeasurement of foreign exchange derivatives held at fair value
were presented in net finance costs. In the current period, these
amounts have been presented in cost of sales to reflect that these
foreign currency derivatives are entered into to mitigate the
foreign exchange volatility arising from the Group's purchase of
inventory.
The effect of these adjustments is that the
reported costs of sales for the period ending 31 December 2022 has
decreased by £1.7 million and the reported net finance costs has
increased by £1.7 million. The revised presentation has no effect
on reported profit before tax, net assets, or adjusted measures of
performance for any period presented (see note 5 for a
reconciliation of adjusted measures).
5 Reconciliation of alternative profit
measures
Adjusted profit measures are an alternative
performance measure used by the Board to monitor the operating
performance of the Group. Adjusting items are those items of income
and expenditure that, by reference to the Group, are material in
size or unusual in nature or incidence and that in the judgement of
the Directors should be disclosed separately on the face of the
financial statements to ensure both that the reader has a proper
understanding of the Group's financial performance and that there
is comparability of financial performance between
periods.
Items of income or expense that are considered
by the Directors for designation as adjusting items include, but
are not limited to, significant restructurings, incremental costs
relating to corporate transactions, significant write downs or
impairments (and reversals) of current and non-current assets, the
costs of separating the business from the former parent company
Travis Perkins Plc's IT systems, the effect of changes in
corporation tax rates on deferred tax balances, net unrealised
gains and losses on remeasurement of foreign exchange derivatives
held at fair value, and in the previous period a VAT reclaim
relating to overpaid output VAT in prior periods.
(£m)
|
52 weeks ended 30
December 2023
|
Revenue
|
Gross profit
|
Operating profit
|
Profit before tax
|
Profit after tax
|
Statutory performance measures
|
1,553.8
|
565.0
|
62.9
|
41.1
|
29.8
|
Derivative fair value losses
|
-
|
3.1
|
3.1
|
3.1
|
3.1
|
Right-of-use asset
impairment charge
|
-
|
-
|
2.7
|
2.7
|
2.7
|
Reversal of impairment of right-of-use asset
recognised in prior periods
|
-
|
-
|
(3.7)
|
(3.7)
|
(3.7)
|
IT separation project costs
|
-
|
-
|
8.8
|
8.8
|
8.8
|
Tax on adjusting items
|
-
|
-
|
-
|
-
|
(2.6)
|
Total adjustments to statutory performance
measures
|
-
|
3.1
|
10.9
|
10.9
|
8.3
|
Adjusted performance measures
|
1,553.8
|
568.1
|
73.8
|
52.0
|
38.1
|
(£m)
|
52 weeks ended 31
December 2022 (Re-presented*)
|
Revenue
|
Gross profit
|
Operating profit
|
Profit before tax
|
Profit after tax
|
Statutory performance measures
|
1,562.4
|
572.2
|
68.8
|
40.3
|
31.9
|
Output VAT reclaim
|
(3.4)
|
(3.4)
|
(3.4)
|
(3.4)
|
(3.4)
|
Derivative fair value gains
|
-
|
(1.7)
|
(1.7)
|
(1.7)
|
(1.7)
|
Property, plant and equipment impairment
charge
|
-
|
-
|
0.4
|
0.4
|
0.4
|
Right-of-use asset
impairment charge
|
-
|
-
|
15.4
|
15.4
|
15.4
|
IT separation project costs
|
-
|
-
|
24.4
|
24.4
|
24.4
|
Tax on adjusting items
|
-
|
-
|
-
|
-
|
(6.8)
|
Total adjustments to statutory performance
measures
|
(3.4)
|
(5.1)
|
35.1
|
35.1
|
28.3
|
Adjusted performance measures
|
1,559.0
|
567.1
|
103.9
|
75.4
|
60.2
|
* For details of re-presentation please see note
4.
Right-of-use asset and property, plant and equipment
impairment charges and reversals
In the period ended 30 December 2023, 5 stores
were identified as impaired with a resulting impairment charge of
£2.7m, and 5 were identified as having an impairment reversal of
£3.7m, both to right of use assets. Given the size of gross store
impairment charge and reversal, this impairment charge and reversal
are included within adjusting items. Future revisions to these
impairments will also be recognised within adjusting
items.
In the period ended 31 December 2022, 20 stores
were identified as impaired with a resulting impairment charge of
£15.4m to right of use assets and £0.4m to property, plant and
equipment.
IT separation project costs
IT separation project costs are the costs
incurred to enable the Wickes Group to operate an IT environment
independent of Travis Perkins Plc. These include the
following; the cost of creating standalone versions of existing
systems, the cost of transferring data from Travis Perkins Plc to
standalone systems, the cost of upgrading legacy systems
including moving to 'Software as a Service' solutions and the costs
of transitioning the IT and support function into the Wickes
environment including the project management costs of all the
above. Costs related to the maintenance and licensing of existing
systems are included in adjusted profit as these costs will
continue after the separation project is concluded. Where costs
meet the definition of an intangible asset they have been
capitalised, and future amortisation will be included
in adjusted profit.
Derivative fair value movements
The Group recognises the potential for high
levels of foreign exchange rate volatility and looks to mitigate
its economic impact on financial performance by hedging planned
future foreign currency purchases using foreign currency
derivatives. The Group does not take advantage of the hedge
accounting rules provided for in IFRS 9 since that standard
requires certain stringent criteria to be met to hedge account,
which, in the circumstances of the Group, are considered by the
Board to not bring any significant economic benefit. As a result,
IFRS requires that fair value gains or losses on these derivatives
be recognised in the Income Statement.
In order to reflect the economic outcome of the
forward contracts (derivatives), the impact of fair value movement
on the derivatives has been removed in the underlying results.
During the 52 weeks ended 30 December 2023 this adjustment was a
net loss of £3.1m (52 weeks ended 31 December 2022: gain
of £1.7m).
Output VAT reclaim
A claim for output VAT overpaid during the
period from Q3 2018 to Q4 2021 was lodged with HMRC in August 2022.
The claim arose due to output VAT being paid in error on zero and
reduced rate products. Given the claim related to the three years
prior to the comparative period, the £3.4m credit was reflected in
adjusting items. There was no such claim in the 52 weeks ended
30 December 2023.
Adjusted profit before tax and before incremental impact
of SAAS accounting
(£m)
|
52 weeks ended
30 December
2023
|
Adjusted profit before tax
|
52.0
|
SAAS IT investment costs charged to the income
statement that were previously expected to be
capitalised
|
7.8
|
Amortisation that would have been charged to the
income statement if such costs had been capitalised
|
(0.3)
|
Adjusted profit before tax and before
incremental impact of SAAS accounting
|
59.5
|
Software as a service ("SAAS") IT costs are
amounts invested to improve the Group's IT systems and which are
delivered using SAAS solutions. These costs are expensed
immediately under IAS38 on the premise that the Company does not
'control' the asset and therefore does not qualify for
capitalisation as an intangible asset. From a strategic
perspective investment in technology, and specifically SAAS
expenditure, is one of the Company's core growth levers and
represents a long term investment in the business, with an
expectation of generating future returns.
In the current period, in order to present a
performance measure that aligns with original market expectations
of performance, the directors have presented an adjusted profit
before tax and before incremental impact of SAAS accounting as an
alternative performance measure. This alternative performance
measure reinstates the expenditure as an intangible asset, and then
amortises it over its expected economic useful
life.
The amounts reflected in the APM, which cannot
be derived directly from the disclosures in the Financial
Statements, represent the SAAS IT investment costs charged to the
Income Statement during the period, against which a notional
amortisation charge has been calculated. The notional amortisation
charge has been calculated by applying the Company's amortisation
policy for intangible fixed assets.
The APM set out above is therefore intended to
enable users to understand the impact of our latest expectation of
the nature of IT costs, and how these will be accounted for, on
guidance previously issued. Future forecasts will be prepared based
on our latest expectation of the nature of IT costs, meaning that
this APM will not be provided after this year.
The comparative adjusted profit before tax and
before incremental impact of SAAS accounting figure for the prior
period would equal adjusted profit before tax as the incremental
impact of SAAS accounting was nil in the prior period.
6 Taxation
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Current tax
|
|
|
UK corporation tax expense
|
10.4
|
6.2
|
UK corporation tax adjustment in respect of
prior periods
|
0.1
|
(3.7)
|
Total current tax charge
|
10.5
|
2.5
|
|
|
|
Deferred tax
|
|
|
Deferred tax movement in period
|
(0.4)
|
0.6
|
Effect of change in tax rate
|
-
|
0.2
|
Adjustments in respect of prior
periods
|
1.2
|
5.1
|
Total deferred tax charge
|
0.8
|
5.9
|
Total tax charge
|
11.3
|
8.4
|
The differences between the total tax charge and
the amount calculated by applying the standard rate of UK
corporation tax of 23.5% (52 weeks ended 31 December 2022: 19.0%)
to the profit before tax for the Group are as
follows:
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Profit before taxation
|
41.1
|
40.3
|
Tax at the standard corporation tax
rate
|
9.7
|
7.7
|
Effects of:
|
|
|
Depreciation of non-qualifying
property
|
0.9
|
1.0
|
Tax effect of non-taxable income and
non-deductible expenses
|
(1.2)
|
(0.3)
|
Adjustment to prior period
|
1.3
|
1.4
|
Effect of share based payments
|
1.1
|
(0.2)
|
Other
|
(0.4)
|
0.2
|
Impact of superdeduction
|
(0.1)
|
(1.4)
|
Total tax charge
|
11.3
|
8.4
|
The effective tax rate for the period is 27.5%
(52 weeks ended 31 December 2022: 20.8%). The effective tax rate
for the period was higher than the standard
rate primarily due to an adjustment in respect of prior
periods relating to leases, and is expected to reverse in
future periods. This adjustment and its tax effect do not provide a
guide to the Group's future tax charge.
The underlying effective tax rate (before
adjusting items) for the 52 weeks ended 30 December 2023
is 26.7% (52 weeks ended 31 December 2022: 20.2%). The
underlying effective tax rate can be calculated directly from the
income statement.
7 Earnings per share
Basic earnings per share is calculated by
dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares
outstanding during the 52 week period ended 30 December
2023.
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Profit attributable to the owners of the
Parent
|
29.8
|
31.9
|
(No.)
|
|
|
Weighted average number of ordinary
shares
|
258,667,102
|
259,637,998
|
Adjustment for weighted average number of
ordinary shares held in EBT
|
(6,163,934)
|
(6,941,807)
|
Weighted average number of ordinary shares in
issue
|
252,503,168
|
252,696,191
|
Basic earnings per share (in pence per
share)
|
11.8p
|
12.6p
|
For diluted earnings per share, the weighted
average number of ordinary shares in issue is adjusted to include
all dilutive potential ordinary shares arising from share
options.
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Profit attributable to the owners of the
Parent
|
29.8
|
31.9
|
(No.)
|
|
|
Weighted average number of ordinary shares in
issue
|
252,503,168
|
252,696,191
|
Diluted effect of share options on potential
ordinary shares
|
2,804,387
|
1,698,226
|
Diluted weighted average number of ordinary
shares in issue
|
255,307,555
|
254,394,417
|
Diluted earnings per share (in pence per
share)
|
11.7p
|
12.5p
|
The Directors believe that EPS excluding
Adjusting items ('Adjusted EPS') reflects the underlying
performance of the business before the impact of unusual or one off
events and assists in providing the reader with a consistent view
of the trading performance of the Group.
Reconciliation of profit after taxation to profit after
taxation excluding Adjusting items
('Adjusted profit'):
(£m)
|
52 weeks
ended
30 December
2023
|
52 weeks
ended
31 December
2022
|
Profit attributable to the owners of the parent
from continuing operations
|
29.8
|
31.9
|
Adjusting items before tax
|
10.9
|
35.1
|
Tax on adjusting items
|
(2.6)
|
(6.8)
|
Adjusting items after tax (note 5)
|
8.3
|
28.3
|
Adjusted profit
|
38.1
|
60.2
|
Weighted average number of ordinary shares in
issue
|
252,503,168
|
252,696,191
|
Weighted average number of dilutive ordinary
shares in issue
|
255,307,555
|
254,394,417
|
Adjusted basic earnings per share (in pence per
share)
|
15.1
|
23.8p
|
Adjusted diluted earnings per share (in pence
per share)
|
14.9
|
23.7p
|
8 Movement in net debt
(£m)
|
Cash and cash equivalents
|
Lease
liability
|
Total
|
At 1 January 2022
|
123.4
|
(742.1)
|
(618.7)
|
Decrease in cash and cash equivalents
|
(23.9)
|
-
|
(23.9)
|
Repayment of lease liabilities
|
-
|
111.8
|
111.8
|
Discount unwind on lease liability
|
-
|
(29.4)
|
(29.4)
|
Lease additions
|
-
|
(34.8)
|
(34.8)
|
Lease modifications
|
-
|
(8.2)
|
(8.2)
|
Lease incentives received
|
-
|
(2.1)
|
(2.1)
|
Lease terminations
|
-
|
13.5
|
13.5
|
At 31 December 2022
|
99.5
|
(691.3)
|
(591.8)
|
Decrease in cash and cash equivalents
|
(2.0)
|
-
|
(2.0)
|
Repayment of lease liabilities
|
-
|
112.5
|
112.5
|
Discount unwind on lease liability
|
-
|
(28.2)
|
(28.2)
|
Lease additions
|
-
|
(22.2)
|
(22.2)
|
Lease modifications
|
-
|
(46.0)
|
(46.0)
|
Lease incentives received
|
-
|
(0.8)
|
(0.8)
|
Lease terminations
|
-
|
0.2
|
0.2
|
At 30 December 2023
|
97.5
|
(675.8)
|
(578.3)
|
Balances
(£m)
|
As at
30 December
2023
|
As at
31 December
2022
|
Cash and cash equivalents
|
97.5
|
99.5
|
Current lease liabilities
|
(79.8)
|
(80.9)
|
Non-current lease liabilities
|
(596.0)
|
(610.4)
|
Net debt
|
(578.3)
|
(591.8)
|
9 Dividends
(£m)
|
As at
30 December
2023
|
As at
31 December
2022
|
Amounts recognised in the financial statements
as distributions to equity shareholders
are shown below:
|
|
|
· final dividend
for the 52 weeks ended 31 December 2022 of 7.3 pence
(53 weeks ended 1 January 2022: 8.8
pence)
|
18.3
|
22.1
|
· interim
dividend for the 52 weeks ended 30 December 2023 of 3.6 pence
(52 weeks ended 31 December 2022: 3.6
pence)
|
9.1
|
9.1
|
Total dividend
|
27.4
|
31.2
|
A final dividend of 7.3p is proposed in respect
of the 52 weeks ending 30 December 2023. It will be paid on 6 June
2024 to shareholders on the register at the close of business on 26
April 2024 (the Record Date). The shares will be quoted ex-dividend
on 25 April 2024.
Shareholders may elect to reinvest their
dividend in the Dividend Reinvestment Plan (DRIP). The last date
for receipt of DRIP elections and revocations will be 15 May
2024.
10 Events after the reporting
period
Corporate
transaction
On 18 March 2024, the Group agreed to acquire
51% of the issued share capital of Gas Fast Limited, operator of
leading solar installations company Solar Fast. The business
comprises a core solar panels installation business, in addition to
a smaller business installing gas boilers. The acquisition will
enable the Group to expand its offering into the fast-growing
market for home energy solutions, initially with solar and gas
boilers and, in time, air source heat pumps and other services. The
acquisition is subject to FCA approval. The revenue will be
reported within Design & Installation revenue.
The initial 51% controlling interest will be for
initial consideration of £5.1m (net of cash acquired), with a
further contingent payment, based on an earnings based valuation
multiple, delivered in calendar year 2024. The contingent payment
Is capped at £13.2m.
The Group has an option to buy the remaining 49%
issued share capital for a period of 5 years following completion.
The purchase price is based on a pre-agreed earnings based
valuation multiple at that time.
Revolving
credit facility
After the year end, the Group completed an
"Amend and Extend" of its Rolling Credit Facility, lengthening the
term by a further two years to March 2028, with an option for an
additional one year extension. Total commitments on the facility
remain at £80m, as well as retaining the £20m accordion.