REG - Wickes Group PLC - Interim Results 2024
10/09/2024 07:00
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RNS Number : 5078D Wickes Group PLC 10 September 2024
10 September 2024
Wickes Group plc - Interim Results 2024
for the 26 weeks to 29 June 2024
Resilient performance in H1
FY24 PBT outlook remains unchanged, underpinned by improved trend so far in Q3
Financial Highlights
• Total revenue of £799.9m (H1 2023: £827.7m) down -3.4% year-on-year
• Adjusted gross margin +24bps
• Operational costs flat year-on-year following planned management action taken
to mitigate impact of inflation
• Statutory profit before tax of £22.9m (H1 2023: £21.1m)
• Adjusted profit before tax of £23.4m (H1 2023: £31.1m)
• Net cash position of £152.4m (H1 2023 £190.0m), after net initial payment
for Solar Fast acquisition(1) and £28.9m returned to shareholders
• Interim dividend declared of 3.6p
Strategic Highlights
• Record Retail(2) market share(3) with particular gains in the strategic
categories of decor, garden, tiles & flooring; Positive volume performance
and LFL(4) sales growth in Retail
• Strong TradePro sales growth +14%, with growth in active members(5) of 18% to
541,000 (H1 2023: 459,000). In September the total number of TradePro members
hit the 1 million mark for the first time
• Successful focus on our lower-priced Wickes Lifestyle Kitchens(6) range
driving sales +19%
• Challenging market environment for large purchases led to 17% decline in
Design & Installation(7) delivered sales(8) and high single-digit decline
in ordered sales
• Investment in new stores and refits driving returns, with 3 refits completed
and 2 new stores opened
• Initial roll-out of Wickes Solar, with point-of-sale assets in 50 trial stores
and digital journey live on Wickes website
• Entry into the FTSE4Good index, recognising our Responsible Business Strategy
NB. Retail(2) refers to the revenue stream formerly described as Core. Design
& Installation(7) refers to the revenue stream formerly described as DIFM
or Do-it-for-me.
Current Trading & Outlook
Trading in Q3 so far has seen an improved trend; in Retail, LFL sales growth
has strengthened and Design & Installation is stabilising. Whilst the
market outlook remains uncertain, current trading along with the planned
action taken to mitigate the impact of inflation underpins management's
outlook for adjusted PBT for FY 2024(9). Wickes' proven growth strategy and
balanced business model leaves us well positioned for growth as market
conditions improve. Our Q3 trading update is expected to be released in late
October.
David Wood, Chief Executive of Wickes, commented:
"This first half performance is testament to the hard work of all our
colleagues and demonstrates the strength of our balanced business model. We
achieved further volume growth and record market share gains in Retail, with
TradePro remaining a key differentiator. The market for Design and
Installation remained tough during the half and Wickes was not immune;
nonetheless, we have seen a positive response to our value-led Wickes
Lifestyle Kitchen range, which is growing strongly.
"We are on track for the remainder of the year and have been encouraged by
trading at the start of the second half. Looking further ahead, our
outstanding customer offer, proven growth levers and focus on cost control
leave us well-placed within a home improvement market which continues to offer
significant opportunities."
Summary of interim financial results
£m 26 weeks to 29 June 2024 26 weeks to 1 July 2023(10) Change
Statutory revenue 799.9 827.7 (3.4)%
Retail 633.2 626.8 1.0%
Design & Installation 166.7 200.9 (17.0)%
Statutory gross profit 289.7 294.7 (1.7)%
Gross profit margin 36.2% 35.6% +0.6ppts
Statutory operating profit 34.9 32.0 9.1%
Operating profit margin 4.4% 3.9% +0.5ppts
Statutory profit before tax 22.9 21.1 8.5%
Adjusted(11) gross profit 289.2 297.3 (2.7)%
Gross profit margin 36.2% 35.9% +0.2ppts
Adjusted(11) operating profit 35.1 42.0 (16.4)%
Adjusted operating profit margin 4.4% 5.1% -0.7ppts
Adjusted(11) profit before tax 23.4 31.1 (24.8)%
Adjusted(11) basic earnings per share 7.1p 9.4p (24.5)%
Basic earnings per share 6.9p 6.3p 9.5%
Interim dividend 3.6p 3.6p 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_HY_24
(https://brrmedia.news/WIX_HY_24)
A recording of the webcast will be available on the Wickes Group plc website
later today: https://wickesplc.co.uk (https://wickesplc.co.uk)
Enquiries
Investors and Analysts Media
Holly Grainger Lucy Legh, Will Smith, Eleanor Evans
Director of Investor Relations PR Advisers to Wickes
+44 (0)7341 680426 +44 (0)203 805 4822
holly.grainger@wickes.co.uk 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
Market
The UK home improvement sector represents a large and attractive market of
c.£27bn(12). Within this market we have a significant opportunity for
long-term growth, given our relatively small market share of c.6%. The
challenging trading conditions of the last two years have resulted in
consolidation in the market with the demise of retailers such as Wilko, CTD
Tiles and Carpetright. 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. Specialist DIY
sales are forecast to grow by 16% between 2024 and 2029, according to
Mintel(13) driven by improved confidence and expected improvement in the
housing market. 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 Wickes home improver customer base tends to be slightly older and more
affluent than the UK average, yet these customers have not been immune from
recent cost of living pressures, including rising mortgage rates and rental
costs, as well as continued inflation. High levels of interest rates have also
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
business has very limited exposure to civil engineering or the new build
housing market, given that our customers are mostly home improvers and
independent tradespeople.
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 D(14) 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 Europe(15). 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 May 2024 report from our proprietary Mood
of the Nation survey showed that 15% of home improvers have considered
installing solar panels over the last year.
The August 2024 report from our proprietary Mood of the Nation survey shows
that planned spend by UK consumers on a new kitchen or bathroom remains below
historical norms, but stable over recent months. Demand has been stronger in
the <£4k segment of the kitchens market. Product categories which are
linked to large projects have been more challenging, such as tiles &
flooring. There has been continued interest in DIY but with a focus on
smaller projects, with consumers spending a bit less. Smaller DIY projects
remain the most popular type of DIY work completed in the past year, according
to Mintel(13). The August 2024 Mood of the Nation survey also shows that
local trade professionals remain busy, with around 50% of tradespeople still
having a pipeline of work over three months and around 1 in 4 having a
pipeline of work of more than 12 months. Tradespeople remain thrifty, with
28% being careful with the quantity of materials bought, in response to the
higher cost of materials, compared to 19% in July 2023.
Progress against strategic growth levers
The company's strategy, as outlined at the time of demerger, has delivered
strong operational progress centred around developing and extending the
Group's growth levers. These contribute to an improvement in our products and
services, saving our customers time and money. Continued investment in the
following growth levers will drive further market share growth in the coming
years:
1. Winning for trade
2. Accelerating Design & Installation
3. DIY category wins
4. Digital capability
5. Store investment
6. Enhanced store service model
7. A winning culture
1. Winning for trade
Our TradePro membership scheme continues to attract local traders, who choose
Wickes for its strong value credentials and simple discount scheme, high
quality products, availability on the lines that matter most, as well as the
convenience of our 30-minute Click-and-Collect service.
Total membership of the TradePro scheme surpassed the one million mark in
early September, achieving the target set at the time of demerger. Sales
from TradePro members increased by 14% in H1 2024 compared to H1 2023. An 18%
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.
Customers signing up to TradePro typically demonstrate a positive shift in
buying behaviour, with sales increasing +111% and the number of transactions
increasing 173% in the six months after joining, compared to the 6 months
before(16). There is potential to increase share of wallet over time, as the
average annual spend per active customer is currently c.£1k. We are using
behavioural analytics to understand the drivers of average spending by
decile. Our proprietary and market-leading machine learning model, the
Mission Motivation Engine (MME), drives deeper customer relationships and
extracts greater lifetime value.
2. Accelerating Design & Installation
Design & Installation delivered sales(8) reflected the continued soft
consumer appetite for larger ticket purchases and a stronger comparative in H1
2023, related to the elevated post-Covid order book. LFL sales declined by
18.3%, whereas ordered sales(17) showed a single digit year-on-year decline.
Our ongoing strategic focus on our lower-priced Wickes Lifestyle Kitchens
continues to deliver good results, with sales up 18.8% year-on-year in H1
2024. This range has enabled us to successfully serve the <£4k segment
of the kitchens market, where demand has been strongest. An increasing
proportion of Wickes Lifestyle Kitchens projects now use our free design
service, which has proven popular with both landlords and homeowners.
The strong performance of our Lifestyle range meant that in spite of the
challenging market conditions for large consumer purchases (which resulted in
Design & Installation ordered sales seeing a high single-digit decline),
ordered sales from all Wickes kitchen and bathroom ranges (Bespoke and
Lifestyle combined) and associated installations in H1 2024 was only -4%
compared to H1 2023.
In response to customer feedback about the showroom experience, we have
simplified the customer journey, by ensuring that new customers are able to
interact directly with a Design Consultant as soon as they begin the process,
rather than speaking initially with a Kitchen & Bathroom assistant. In
addition to improving the customer experience, this will also reduce operating
costs.
We have continued to see strong attachment rates for installation, with over
half 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. Wickes offers nationwide installation
services through teams across the country.
The acquisition of a 51% controlling interest in Solar Fast was completed on
21 May, following FCA approval, and is fully consolidated from that date.
The initial roll-out of Wickes Solar includes point-of-sale assets in 50 trial
stores and the digital journey is now live on the Wickes website. We have
seen an encouraging early response, in both leads and conversion. The market
for domestic solar installations in the UK is in long-term growth with the
market estimated to be worth £1.5bn pa by 2028(18). It is a highly
fragmented market with no clear brand leader; with a trusted brand and
significant experience in design and installation services at scale, Wickes is
well-placed to be a market leader in home energy solutions. We have an
option to purchase the remaining 49% of the issued share capital of Solar Fast
during the five years following completion, in tranches of not less than 10%
of the issued share capital, based on a valuation of 6x last twelve months
EBITDA at the time.
3. DIY category wins
Our market share has grown to record levels with increases across numerous
categories, particularly in the DIY categories of decor, garden, tiles &
flooring.
The UK home improvement market has seen ongoing consolidation, following the
demise of Wilko, CTD Tiles and Carpetright. Wickes has continued to gain
market share over this period of consolidation, with notable gains in paint as
well as tiling & flooring. Whilst market demand for large projects has
been challenging and has impacted market demand for related categories such as
tiling & flooring, Wickes' market share has continued to increase.
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. During H1 2024 we have conducted
10 range reviews with a strategic emphasis on introducing new and innovative
products in our core categories as well as consolidating our existing SKUs.
New products introduced in H1 included acoustic wall panels and new garden
trellis and pergola products, with the customer journey improved by new
in-store graphics and packaging.
4. Digital capability
We continue to invest in our digital capabilities to deliver an integrated
multi-channel shopping experience for our customers.
We use our proprietary and market-leading machine learning model Mission
Motivation Engine (MME) to deliver tailored content to customers to help them
complete their home improvement missions and this is driving significant
revenues. Our MME collects data to help us understand who our customers are,
what they browse, what they buy, how and when, in order for us to produce
personalised communications. 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. These
communications predict which products a customer may need and encourage them
to go deeper into their project or mission. Our lifetime value calculator
assesses behavioural data to determine whether each customer is likely to be a
high value customer, to determine their shopper type algorithm and gauge our
marketing efforts accordingly. The MME is a highly effective method of using
first party data to inform personalised communications to thousands of
individual customers.
5. Store investment
Investment in our store network continues, to modernise the stores, improve
our showrooms and create additional fulfilment space.
Our refit programme continues to deliver c.25% ROCE with strong sales uplifts,
particularly from the Design & Installation areas, where we are able to
showcase our full offer of kitchens and bathrooms. The refits enable us to
upgrade the efficiency of multi-channel order pick and despatch, which drives
sales densities and underpins our 30-minute Click & Collect promise and
increases customer satisfaction metrics. 179 stores, or 78% of the network,
are now in our new format. Three store refits were successfully completed
during H1 2024, in Ashford, Burgess Hill and Slough.
Our new store opening programme is progressing well, with two new stores
opened during H1 2024 in Long Eaton and Durham, creating around 60 new jobs.
We have an exciting pipeline of new stores planned for the coming years, as we
target an overall estate of around 250 stores over the medium term.
During H1 2024, we closed two stores (Ashton Gate and Inverness) which were
not meeting our returns criteria. We therefore ended the half year with 229
stores.
Our property plans for 2024 are on track. We are planning a total of seven
refits for the full year and 4 new stores. Our new store in Aberdeen opened
in August and Leamington Spa is due to open in Q4.
6. 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.
Recent changes to the store estate have increased back of house capacity for
Click & Collect and Home Delivery Order Fulfilment, while reducing the
impact on customers in the store.
In response to customer feedback about the showroom experience, we have
simplified the customer journey, by ensuring that new customers are able to
interact directly with a Design Consultant as soon as they begin the process,
rather than speaking initially with a Kitchen & Bathroom assistant. In
addition to improving the customer experience, this will also reduce operating
costs.
7. A winning culture
We are proud of the Wickes culture which over the past fifty years has evolved
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.
As part of our new Colleague Promise, we have rolled out flexible working to
all roles in Support Centre and all store management teams.
Responsible Business Strategy update
During H1 2024 we have continued to focus on integrating our Responsible
Business Strategy 'Built to Last' across our business and 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 H1 2024, we updated our Health & Safety Policy, which is
available on our website, and launched a new incident reporting system across
the business. We also published our Modern Slavery Statement, which sets out
our plans for the year.
In June the progress on our 'Built to Last' strategy was recognised with entry
into the FTSE4Good index.
1. People
As part of our new employer value proposition, called our Colleague Promise,
we have rolled out flexible working to all roles in Support Centre and all
store management teams.
Inclusion and diversity remains central to our people strategy through our
'Feel at Home' colleague-led inclusion and diversity programme. This has
continued to gain recognition externally with Wickes being shortlisted as one
of the top 12 inclusive employers for 2024 at the British LGBT Awards 2024.
Our Head of Inclusion & Diversity has also been recognised as one of the
top 12 LGBT+ Trailblazers and won 'Highly Commended' award in the 'Head of
Diversity of the Year' category at the Rainbow Honours Awards. Furthermore
Wickes has been accredited by the UK government with Committed status in the
Disability Confident scheme, reflecting our aim to offer accessible and fair
recruitment processes to everyone and foster an inclusive environment.
Our two-year charity partnership with The Brain Tumour Charity has now raised
over £1 million, with the generosity of our colleagues, customers and
suppliers, so is making great progress towards the £2 million target by the
end of March 2025. Wickes has been awarded Platinum Level in this year's
Payroll Giving Quality Mark, which recognises and rewards organisations that
encourage charitable giving through payroll giving. The Payroll Giving
Quality Mark is a government-backed accreditation, awarded by the Charities
Aid Foundation, based on the offering and uptake of a Give As You Earn scheme,
as well as the company's support through initiatives such as matched giving or
running events and campaigns.
Though the Wickes Community programme we have supported over 1,300 projects in
local communities across the country.
2. Environment
Wickes is amongst the first signatories to the Global Scope 3 commitment of
EDRA/GHIN, the global trade body for home improvement retailers. These
far-reaching carbon reduction commitments align with our existing
SBTi-validated targets. We are collaborating closely with our strategic
suppliers to work towards achieving our two Scope 3 science-based targets
(SBTs) and a growing number of our suppliers now have their own SBTi-validated
targets.
After receiving validation from the SBTi for our near term SBTs in 2022, we
are re-baselining our targets to take into account business changes in
contracting out some of our distribution activities and improvements to our
methodology. Further to the statement made in our 2023 Annual Report &
Accounts, we are providing an update on our LTIP targets. We expected the work
to rebaseline our SBTs to be completed by the end of August, to allow us to
confirm our ESG-linked LTIP targets. The rebaselining project has been more
complex than anticipated, and as a result we now expect the rebaselining work
to be completed by the end of this calendar year, and we plan to communicate
the 2023-2025 and 2024-2026 ESG-linked LTIP targets at the same time.
We continue to source our electricity via a 100% renewable electricity
contract and have been investing to reduce our energy consumption. Voltage
optimisers have been installed into a number of our stores and we are seeing a
material reduction in the amount of energy consumed at these sites. Our
store in Torquay became the first in the estate to have an air source heat
pump installed and the solar panels at our recently opened store in Aberdeen
were installed by our own business, Solar Fast. Heating controls have been
rolled out across the majority of our stores and store lighting is
progressively being upgraded to LED, which is leading to significant savings
in energy consumption.
All of our garden products are now peat free, after we stopped sourcing
compost containing peat at the start of the year, ahead of the anticipated UK
Government plan to stop the retail sale of all bagged peat compost in England
and Wales.
3. Homes
Following the completion of the Solar Fast acquisition, the initial roll-out
of Wickes Solar includes point-of-sale assets in 50 trial stores and the
digital journey is now live on the Wickes website. The market for domestic
solar installations in the UK is in long-term growth with the market estimated
to be worth £1.5bn pa by 2028(18) and is a highly fragmented market with no
clear brand leader. With a trusted brand and significant experience in
design and installation services at scale, Wickes is well-placed to be a
market leader in home energy solutions.
In order to further help our customers reduce the carbon footprint of their
homes, we are also expanding our online range of air source heat pumps and EV
charging products. We now also offer improved information on our website
as to how our products support sustainability.
In 2023 we met our target of eliminating unnecessary packaging, which
resulted in a 7% like-for-like reduction in primary plastic packaging
year-on-year. Following this success, we introduced and published a
Packaging Materials Policy in 2024, ensuring that we continue to limit the
packaging used on our own-brand products. The policy also supports our work to
achieve our other packaging targets, and deliver improved opportunities for
our customers to recycle packaging.
Financial review
Our financial results have demonstrated the strength of our business model,
delivering a resilient performance in challenging market conditions.
Revenue of £799.9m, including £1.5m contribution by Solar Fast since
completion, reflects a contraction in sales of 3.4% year-on-year. Continued
volume-driven growth in Retail was offset by LFL declines in Design &
Installation. Gross margin increased by 24 basis points, reflecting careful
management of price and promotions.
We faced significant cost headwinds this year with another rise in the
National Minimum Wage as well as more general inflationary pressures across
the business. Our planned productivity initiatives have helped to mitigate
these headwinds, with savings made across a number of areas including
distribution and shrinkage.
Adjusted profit before tax declined to £23.4m (H1 2023: £31.1m) reflecting
the factors noted above. Statutory profit before tax increased by 8.5% to
£22.9m (H1 2023: £21.1m).
There was £152.4m of cash on balance sheet at the end of the period (H1 2023:
£190.0m), after £11.3m of share buybacks and the net initial payment for the
acquisition of a 51% controlling stake in Solar Fast.
Revenue
Revenue for the 26 weeks to 29 June 2024 was £799.9m (H1 2023: £827.7m), a
decrease of 3.4% on the prior year. Net selling area was broadly flat year on
year as new store openings in Long Eaton and Durham were offset with closures
of some older stores. LFL sales for the period were -3.9%.
Retail revenue - sales from products sold to DIY customers and local trade
professionals - increased by 1.0% to £633.2m (H1 2023: £626.8m). Retail LFL
revenue increased by 0.6%, driven by positive volume growth, with selling
prices in mild deflation.
Our TradePro business continues to perform strongly, with sales +14%. This is
driven by increasing numbers of active members, +18% in H1 2024, as local
traders continue to choose Wickes to save them time and save them money. Local
tradespeople remain busy, with healthy pipelines of work.
Our market share has grown to record levels with increases across numerous
categories, particularly in the strategic categories of decor, garden, tiles
& flooring.
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(8) - sales from projects sold by
our showroom design consultants - was £166.7m (H1 2023: £200.9m), a decrease
of 17.0% or 18.3% on a LFL basis. This reflected challenging market
conditions, with a softer market environment for large consumer purchases, as
well as the impact of lapping an elevated post-Covid order book in the prior
period. Ordered sales(17) in H1 2024 saw a single digit LFL decline.
The attachment rate of customers choosing to use Wickes installation continues
to be strong, driving increased average order values.
Statutory revenue decreased by 3.4% to £799.9m (H1 2023: £827.7m).
Gross profit
Adjusted gross profit for H1 2024 was £289.2m, a slight decrease compared to
the prior year (H1 2023: £297.3m). Adjusted gross profit margin increased by
24 basis points, reflecting careful management of range, price and promotions.
Compared to adjusted gross profit, the statutory measure has been affected by
the revised presentation adopted in the prior year to include net unrealised
gains and losses on remeasurement of foreign exchange derivatives held at fair
value relating to economic hedges (H1 2024: £(0.5)m, H1 2023: £2.6m).
Previously, these net unrealised gains and losses were presented in net
finance costs, whereas now 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 increase cost of sales
in H1 2023 by £2.6m and to decrease net finance costs by the same amount, as
described in note 2.
Operating profit
Adjusted operating profit of £35.1m decreased by 16.4% year on year (H1 2023:
£42.0m) and the adjusted operating profit margin decreased to 4.4% (H1 2023:
5.1%). The decline in operating margin reflects the impact of pressure on
operating costs due to wage inflation and other general inflationary factors
as described above, coinciding with an environment of weaker consumer demand.
These increases were partly mitigated by planned productivity initiatives
which yielded gains of £5.1m.
Statutory operating profit increased by 9.1% to £34.9m (H1 2023: £32.0m).
Net finance costs
Adjusted net finance costs were £12.0m (H1 2023: £10.9m).
Adjusted profit before tax
Adjusted profit before tax was £23.4m (H1 2023: £31.1m), a decline of 24.8%
year-on-year, reflecting a period of weak consumer demand combined with
significant cost increases.
Adjusting items
Pre-tax adjusting item charges were £0.5m (H1 2023: £10.0m). These comprise
costs related to the Solar Fast acquisition of £0.7m (H1 2023: nil) and costs
related to the extension of the Revolving Credit Facility of £0.3m (H1 2023:
nil), partially offset by derivative fair value gains on foreign exchange
contracts of £0.5m (H1 2023: losses of £2.6m).
Profit before tax
Profit before tax increased to £22.9m (H1 2023: £21.1m) reflecting the
factors noted above, in addition to IT separation costs incurred in the prior
period related to the demerger from former parent company Travis Perkins.
Tax
The tax charge for the period was £6.0m (H1 2023: £5.1m). The underlying
effective tax rate (before adjusting items) for the period was 25.4% (H1 2023:
23.8%). The increase reflects the full year impact of the 25% corporation
tax rate introduced in April 2023.
Tax credit on adjusting items was £0.1m (H1 2023: tax credit of £2.3m).
Investment and capital expenditure
Capital expenditure was in line with our expectations at £12.1m (H1 2023:
£14.3m).
The largest component of capex was £9.8m investment in the store estate (H1
2023: £7.7m), of which refits were £3.5m, new stores £3.2m and other store
capex across the estate £3.1m. There was £2.3m capex investment in our
digital capabilities (H1 2023: £2.8m), as we continue to develop our
multi-channel offer.
There was a net cash outflow of £5.1m for the acquisition of our 51% stake in
Solar Fast. This comprises the initial aggregate consideration of £7.6m,
representing £5.1m for the equity shares, less a £0.2m negative working
capital adjustment, plus £2.7m for acquired cash, of which £2.5m cash was
repaid by dividend post completion.
We continue to 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
Cash at the end of the period was £152.4m (H1 2023: £190.0m), in line with
our expectations. This cash balance is stated after the execution of £11.3m
of share buybacks and the acquisition of a 51% controlling stake in Solar
Fast.
Operating profit increased year-on-year, resulting in cash flows from
operations of £89.5m (H1 2023: £89.8m). Cash inflows related to working
capital movements were £64.9m (H1 2023: £87.0m), reflecting our normal
seasonal trading pattern of trading peaks in both Retail and Design &
Installation occurring in the first half of the year. Cash outflows from
financing activities of £83.7m (H1 2023: £76.5m) include £51.6m (H1 2023:
£57.8m) related to lease liabilities, £20.0m dividend payments (H1 2023:
£18.4m) and £11.3m of share buybacks (H1 2023: nil).
Inventories decreased slightly to £195.1m (H1 2023: £201.9m) in line with
our expectations.
IFRS16 net debt increased to £548.6m (H1 2023: £480.9m), primarily
reflecting the lower cash balance year-on-year.
Dividend
The Board has recommended an interim dividend of 3.6p per share, which will be
paid on 8 November 2024 to shareholders on the register at the close of
business on 4 October 2024.
The shares will be quoted ex-dividend on 3 October 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 18
October 2024.
Technical guidance
The following represents unchanged guidance for the full year 2024:
• Net interest costs of £20m-25m
• Adjusted tax rate 25-26%
• Capex of c.£30m(19)
• Current £25m share buyback programme expected to be completed by end
September 2024
• Based on current expectations full year dividend expected to be maintained at
10.9p
• Cash at FY 2024 expected to be lower than at FY 2023 as a result of ongoing
share buyback and Solar Fast acquisition
Appendix
LFL sales growth Retail Design & Installation Total
Quarter 1 (13 weeks to 30 March) 1.7% (17.6)% (3.3)%
Quarter 2 (13 weeks to 29 June) (0.2)% (18.9)% (4.4)%
Half year (26 weeks to 29 June) 0.6% (18.3)% (3.9)%
The phasing impact of the Easter peak trading period this year reduced Retail
LFL sales in Q2 by 1.4%.
Risks and Uncertainties
Wickes has a formal risk management process to help the Group reinforce its
short, medium and long term success, safeguard value and enable it to meet and
exceed the expectations of stakeholders.
A detailed explanation of the risks and uncertainties which were identified
for 2023 can be found on pages 75 to 81 of the Annual Report and Accounts
2023. The principal risks and uncertainties comprise:
• Cyber and data security • Climate change
• Business change • People and safety
• Brand integrity and reputation • Commercial and supply chain
• Legal and regulatory compliance • Financial management
• IT operations • Customer experience
• Growth strategy • Stores, distribution and installations
The Board continues to review changes to risks and uncertainties that may
arise, remaining mindful of the external environment.
Footnotes
1) The enterprise value of the 51% stake in Solar Fast was £5.1m. A further
payment was made of £2.7m, representing Wickes' 51% of the cash acquired on
completion, of which £2.5m was subsequently repaid by way of dividend.
2) Retail refers to the revenue stream formerly described as Core. Retail
revenue relates to products sold directly to customers (both DIY and local
trade), in stores or online.
3) Source: GfK GB point of sale data, sourced from GfK DIY Category Reporting
June 2024.
4) For a definition of like-for-like ('LFL') sales, see note 3.
5) Active members of the TradePro scheme are defined as those who have shopped
with us in the last 12 months.
6) 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.
7) Design & Installation refers to the revenue stream 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.
8) Delivered sales refers to the revenue which is recognised when the Group
has satisfied its performance obligation to the customer and the customer has
obtained control of the goods or services being transferred.
9) Consensus PBT for FY24 is £40.4m as at 19 August 2024.
10) For details of the prior period re-presentation, see note 2.
11) 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 and the effect of changes in
corporation tax rates on deferred tax balances. 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.
12) Source: GfK, Mintel and Wickes estimates.
13) Source: Mintel UK DIY Retailing report, June 2024.
14) ONS Energy efficiency of housing in England and Wales 2023.
15) Decarbonising Buildings: Insights from Across Europe, published by the
Grantham Institute - Climate Change and the Environment at Imperial College
London, December 2022.
16) Based on a sample of c.15,000 customers.
17) Ordered sales refers to the value of orders at the point when the order
has been agreed.
18) Source: Wood Mackenzie UK PV Capacity Forecast.
19) Excludes impact of expensed SaaS IT investment costs. These are the
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.
Condensed consolidated income statement and statement of comprehensive income
26 weeks 26 weeks ended 1 July 2023 52 weeks ended 30 December 2023
ended 29 June (re-presented*)
2024
£m
Revenue (note 3) 799.9 827.7 1,553.8
Cost of sales (510.2) (533.0) (988.8)
Gross profit 289.7 294.7 565.0
Selling costs (174.8) (172.7) (341.6)
Administrative expenses (80.0) (90.0) (160.5)
Operating profit 34.9 32.0 62.9
Net finance costs (note 4) (12.0) (10.9) (21.8)
Profit before tax 22.9 21.1 41.1
Tax (note 5) (6.0) (5.1) (11.3)
Profit for the period 16.9 16.0 29.8
Attributable to:
Owners of the parent 16.8 16.0 29.8
Non-controlling interest 0.1 - -
16.9 16.0 29.8
Earnings per ordinary share (note 9)
Basic 6.9p 6.3p 11.8p
Diluted 6.8p 6.3p 11.7p
Total dividend declared per share (note 10) 3.6p 3.6p 10.9p
Adjusted results (note 2 unless stated otherwise)
Adjusted gross profit 289.2 297.3 568.1
Adjusted operating profit 35.1 42.0 73.8
Adjusted profit before tax 23.4 31.1 52.0
Adjusted profit after tax 17.5 23.7 38.1
Adjusted basic earnings per share (note 9) 7.1p 9.4p 15.1p
Adjusted diluted earnings per share (note 9) 7.1p 9.3p 14.9p
* For details of re-presentation please see note 2
Condensed consolidated balance sheet
As at As at As at
29 June 1 July 30 December
£m 2024 2023 2023
ASSETS
Non-current assets
Goodwill 12.6 8.4 8.4
Other intangible assets 13.7 14.7 14.3
Property, plant and equipment 122.5 115.3 123.2
Right-of-use assets 560.5 528.9 537.1
Deferred tax asset 23.9 19.9 23.0
Total non-current assets 733.2 687.2 706.0
Current assets
Inventories 195.1 201.9 195.5
Trade and other receivables (note 7) 78.4 77.4 74.1
Tax assets - 5.0 -
Derivative financial instruments - 0.1 -
Cash and cash equivalents 152.4 190.0 97.5
Total current assets 425.9 474.4 367.1
Total assets 1,159.1 1,161.6 1,073.1
EQUITY AND LIABILITIES
Capital and reserves
Issued share capital (note 8) 24.5 26.0 25.2
Capital redemption reserve 1.5 - 0.8
EBT share reserve (note 8) (0.5) (0.8) (0.7)
Other reserves (785.7) (785.7) (785.7)
Retained earnings 913.6 924.9 923.7
Equity attributable to owners of the parent 153.4 164.4 163.3
Non-controlling interest 0.9 - -
Total equity 154.3 164.4 163.3
Non-current liabilities
Lease liabilities 615.0 592.6 596.0
Long-term provisions 1.8 1.6 2.3
Total non-current liabilities 616.8 594.2 598.3
Current liabilities
Lease liabilities 86.0 78.3 79.8
Derivative financial instruments 0.2 0.4 0.7
Trade and other payables 287.2 313.2 219.1
Tax liabilities 3.7 - 1.6
Short-term provisions 10.9 11.1 10.3
Total current liabilities 388.0 403.0 311.5
Total liabilities 1,004.8 997.2 909.8
Total equity and liabilities 1,159.1 1,161.6 1,073.1
The interim condensed financial statements of Wickes Group plc, registered
number 12189061 were approved by the Board of Directors on 9 September 2024
and signed on its behalf by:
David Wood Mark George
Chief Executive Officer Chief Financial Officer
Condensed consolidated statement of changes in equity
Issued share capital Capital redemption reserve Employee benefit trust share reserves Other reserve Retained earnings Total equity
£m
At 30 December 2023 25.2 0.8 (0.7) (785.7) 923.7 163.3
Total comprehensive income for the period - - - - 16.9 16.9
Dividends paid (note 10) - - - - (17.6) (17.6)
Share buyback and cancellation (0.7) 0.7 - - (11.3) (11.3)
Equity-settled share-based payments - - 0.2 - 1.9 2.1
Owners of the parent 24.5 1.5 (0.5) (785.7) 913.6 153.4
Retained Earnings attributable to non-controlling - - - - 0.9 0.9
interest
At 29 June 2024 24.5 1.5 (0.5) (785.7) 914.5 154.3
Issued share Capital redemption Employee benefit trust share reserves Other reserve Retained earnings Total equity
capital reserve
£m
At 31 December 2022 26.0 - (0.7) (785.7) 924.8 164.4
Total comprehensive income for the period - - - - 16.0 16.0
Dividends paid (note 10) - - - - (18.4) (18.4)
Own shares purchased for share schemes - - (0.2) - - (0.2)
Equity-settled share-based payments - - 0.1 - 2.5 2.6
Owners of the parent 26.0 - (0.8) (785.7) 924.9 164.4
Retained Earnings attributable to non-controlling - - - - - -
interest
At 1 July 2023 26.0 - (0.8) (785.7) 924.9 164.4
Issued share capital Capital redemption Employee benefit trust share reserves Other reserve Retained earnings Total equity
reserve
£m
At 31 December 2022 26.0 - (0.7) (785.7) 924.8 164.4
Total comprehensive income for the period - - - - 29.8 29.8
Dividends paid (note 10) - - - - (27.4) (27.4)
Share buyback and cancellation (0.8) 0.8 - - (10.1) (10.1)
Own shares purchased for share schemes - - (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
Owners of the parent 25.2 0.8 (0.7) (785.7) 923.7 163.3
Retained Earnings attributable to non-controlling - - - - - -
interest
At 30 December 2023 25.2 0.8 (0.7) (785.7) 923.7 163.3
Condensed consolidated cash flow statement
26 weeks 26 weeks ended 52 weeks ended
ended
29 June 1 July 30 December
2024 2023 2023
£m (re-presented*)
Cash flows from operating activities
Operating profit 34.9 32.0 62.9
Adjustments for:
Amortisation of other intangibles assets 3.1 3.2 6.6
Depreciation of property, plant and equipment 11.0 10.3 21.1
Depreciation of right-of-use assets 38.5 36.8 74.2
Impairment of assets - - 2.7
Reversal of impairment of assets - - (3.7)
Losses/(gains) of terminations of leases - - 0.1
Write off of intangible assets - 1.5 1.5
Derivative fair value losses/(gains) (0.5) 2.6 3.1
Share-based payments 2.1 2.6 5.6
Losses on disposal of other intangible assets - - 0.3
Losses/(gains) on disposal of property, plant and equipment 0.4 0.8 2.6
Operating cash flows 89.5 89.8 177.0
Decrease / (increase) in inventories 1.1 (0.3) 6.1
Decrease / (increase) in receivables (3.7) 10.0 13.4
(Decrease) / increase in payables 67.4 75.5 (18.6)
(Decrease) / increase in provisions 0.1 1.8 1.7
Cash generated from operations 154.4 176.8 179.6
Income taxes paid (5.1) 1.1 (0.3)
Net cash inflow from operating activities 149.3 177.9 179.3
Cash flows from investing activities
Purchases of property, plant and equipment (10.4) (11.5) (32.1)
Development of computer software (1.7) (2.8) (6.1)
Proceeds on disposal of property, plant and equipment - - 0.1
Acquisition of business net of cash acquired (note 6) (2.3) - -
Interest received 3.7 3.4 7.2
Net cash outflow from investing activities (10.7) (10.9) (30.9)
Cash flows from financing activities
Repayment of lease liabilities (36.7) (44.0) (84.3)
Interest paid (0.8) (0.5) (1.0)
Interest on lease liabilities (14.9) (13.8) (28.2)
Lease incentives received - 0.4 0.8
Share buyback (11.3) - (10.1)
Dividends paid (note 10) (17.6) (18.4) (27.4)
Dividends paid to non-controlling interest (note 10) (2.4) - -
Own shares purchased for share schemes - (0.2) (0.2)
Net cash outflow from financing activities (83.7) (76.5) (150.4)
Net increase/(decrease) in cash and cash equivalents 54.9 90.5 (2.0)
Cash and cash equivalents at the beginning of the period 97.5 99.5 99.5
Cash and cash equivalents at the end of the period 152.4 190.0 97.5
* For details of re-presentation please see note 2
Notes to the interim financial statements
1 General information and accounting policies
The interim financial statements have been prepared on the historical cost
basis, except that derivative financial instruments, available for sale
investments, contingent consideration and intangible assets arising from
business combinations are stated at their fair value. The condensed interim
financial statements include the accounts of the Company and all its
subsidiaries ("the Group").
Basis of preparation
The financial information for the 26 week periods ended 29 June 2024 and 1
July 2023 is unaudited. The 29 June 2024 information has been reviewed by KPMG
LLP, the Group's auditor, and a copy of their review report appears on page 27
of this interim report. The 1 July 2023 information was also reviewed by KPMG
LLP.
The comparative figures for the 52 weeks ended 30 December 2023 does not
constitute statutory accounts as defined in section 435 of the Companies Act
2006. A copy of the statutory accounts for the 52 week period ended 30
December 2023, as prepared in accordance with UK-adopted international
accounting standards, has been delivered to the Registrar of Companies. The
auditor's report on those accounts was not qualified, did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying the report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK.
The annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards. As required by the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority, the
condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published consolidated financial statements for 52 weeks period
ended 30 December 2023.
Going concern
Based on the Group's liquidity position and cash flow projections, including a
forward looking severe but plausible scenario, the Directors have a reasonable
expectation that the Company and the Group have adequate resources to continue
in operational existence for the duration of the going concern period, being
the 12 month period following the date of approval of these interim financial
statements, and accordingly they continue to adopt the going concern basis of
accounting in preparing the consolidated financial statements, for the period
ended 29 June 2024.
Despite a challenging market backdrop the Group continues to be profitable and
remains cash generative. At 29 June 2024, cash and cash equivalents stood at
£152.4m. In addition, the Group had available an undrawn committed Revolving
Credit Facility (RCF) of £80m which expires in March 2028, and which is not
forecast to be utilised for a period of at least 12 months.
Net debt stood at £548.6m, relating to lease liabilities of £701.0m included
on the balance sheet under IFRS 16, with £86.0m due within one year. The
Group has no other debt obligations.
Considering whether the Group's financial statements can be prepared on a
going concern basis, the Directors have undertaken a detailed review which
entails assessing the Group's current and projected financial performance and
position, including current assets and liabilities, debt maturity profile,
future commitments and forecast cash flows. In forming their outlook on the
future financial performance, the Directors considered the risk of higher
business volatility arising from the potential negative impact of the general
economic environment.
The Directors' review also included a severe but plausible scenario to assess
the impact of a sales reduction of 6% from 2024's expected outturn and a
margin reduction of 1%, together with increases to energy costs and staff
costs reflecting the current economic uncertainty. Under this severe but
plausible scenario the group retains a significant cash balance and does not
assume utilisation of the RCF: the severe but plausible scenario does show a
covenant breach but, as it does not require use of the facility at any point,
this does not indicate a risk to going concern. Nevertheless, if required
there are further measures that could be taken to assist with covenant
compliance if this was considered necessary, including reducing bonuses and
discretionary spend in the short term.
The Directors remain watchful of ongoing pressures on customers and suppliers
given the current economic environment, and are aware that the Group is
exposed to a number of risks and uncertainties, which could affect the Group's
ability to meet its forecasts. The Directors believe that the Group has the
flexibility to react to changing market conditions and is adequately placed to
manage its business risks successfully.
2 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 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 and net unrealised gains and
losses on remeasurement of foreign exchange derivatives held at fair value.
26 weeks ended 29 June 2024
(£m)
Gross profit Operating Profit before Profit after tax
profit tax
Statutory performance measures 289.7 34.9 22.9 16.9
Derivative fair value gains (0.5) (0.5) (0.5) (0.5)
Solar Fast acquisition costs (note 6) - 0.7 0.7 0.7
Rolling credit facility (RCF) extension costs - - 0.3 0.3
Tax on adjusting items - - - 0.1
Total adjustments to statutory performance measures (0.5) 0.2 0.5 0.6
Adjusted performance measures 289.2 35.1 23.4 17.5
26 weeks ended 1 July 2023 (re-presented*)
(£m)
Gross profit Operating Profit before Profit after tax
profit tax
Statutory performance measures 294.7 32.0 21.1 16.0
Derivative fair value losses 2.6 2.6 2.6 2.6
IT separation project costs - 7.4 7.4 7.4
Tax on adjusting items - - - (2.3)
Total adjustments to statutory performance measures 2.6 10.0 10.0 7.7
Adjusted performance measures 297.3 42.0 31.1 23.7
52 weeks ended 30 December 2023
(£m)
Gross profit Operating Profit before Profit after tax
profit tax
Statutory performance measures 565.0 62.9 41.1 29.8
Derivative fair value gains 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 568.1 73.8 52.0 38.1
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 not to 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 26 weeks ended 29 June 2024 this
adjustment was a net gain of £0.5m (26 weeks ended 1 July 2023: loss of
£2.6m; 52 weeks ended 30 December 2023: loss of £3.1m).
Solar Fast acquisition costs
In the 26 week period ended 29 June 2024, the Group acquired a 51% controlling
interest in Gasfast Limited (see note 6). As part of the acquisition,
incremental fees directly associated with the acquisition were incurred by the
Group. These were predominantly related to professional services and
considered to be one-off in nature.
Rolling credit facility (RCF) extension costs
The Group incurred fees related to the completion of its "Amend and Extend" of
its Rolling Credit Facility during the period, lengthening the term by a
further two years to March 2028, with an option of an additional one year
extension. The Group does not consider corporate transactions such as this to
be required on a regular basis and thus have classified the fees as adjusting.
Right-of-use asset and property, plant and equipment impairment charges and
reversals
In the 26 week period ended 29 June 2024, no impairment charge nor impairment
reversals (26 week period ended 1 July 2023: none) have been recognised within
adjusting items. 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 the gross store impairment charge and reversal,
this impairment charge is included within adjusting items. Future revisions to
these impairments will also be recognised within adjusting items.
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 licencing 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.
*Prior period re-presentation
In the year ended 30 December 2023 the Directors 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 1 July 2023, the net
unrealised gains and losses on remeasurement of foreign exchange derivatives
held at fair value were presented in net finance costs. In the year ended 30
December 2023 and in the 26 week period to 29 June 2024, 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. As a result, the prior period
income statement has been re-presented to report the net unrealised gains and
losses on remeasurement of foreign currency derivatives within cost of sales.
The effect of these adjustments is that the reported cost of sales for the
period ending 1 July 2023 has increased by £2.6m and the reported net finance
costs have decreased by £2.6m. The revised presentation has no effect on
reported profit before tax, cash flows, net assets, or adjusted measures of
performance for any period presented.
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.
26 weeks 26 weeks ended 52 weeks
ended 1 July ended
29 June 2023 30 December
£m 2024 2023
Retail (product sales) 633.2 626.8 1,189.1
Design and Installation (project sales) 166.7 200.9 364.7
799.9 827.7 1,553.8
Revenue reconciliation and like-for-like sales
26 weeks 26 weeks ended 52 weeks
ended 1 July ended
29 June 2023 30 December
£m 2024 2023
Revenue 799.9 827.7 1,553.8
Network change (10.6) (2.7) (7.8)
Revenue generated by business acquired in the period (note 6) (1.5) - -
Revenue (like-for-like basis) 787.8 825.0 1,546.0
Prior period revenue 827.7 822.3 1,559.0
Prior period network change (7.6) (3.3) (8.0)
Prior period revenue (like-for-like basis) 820.1 819.0 1,551.0
Increase/(decrease) arising on a like-for-like basis (32.3) 6.0 (5.0)
Like-for-like Sales Growth (%) (3.9)% 0.7% (0.3)%
Calculating like-for-like revenue enables management to monitor the
performance trend of the underlying business period-on-period. It also gives
management a good indication of the health of the business compared to
competitors.
Like-for-like sales are a measure of underlying sales performance for two
successive periods. Branches and stores contribute to like-for-like sales once
they have been trading for more than 12 months, or for acquisitions once the
results have been fully consolidated for 12 months. Revenue included in
like-for-like sales is for the equivalent times in both periods being
compared. When branches 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.
4 Finance costs
26 weeks 26 weeks 52 weeks
ended ended ended
29 June 1 July 30 December
2024 2023 2023
£m (re-presented*)
Finance income
Interest receivable 3.7 3.4 7.5
3.7 3.4 7.5
Finance costs
Interest on lease liabilities (14.9) (13.8) (28.2)
Amortisation of loan fees (0.2) (0.1) (0.3)
Commitment fee on revolving credit facilities (0.3) (0.4) (0.7)
Revolving credit facility amendment costs (0.3) - -
Other interest - - (0.1)
(15.7) (14.3) (29.3)
Net finance costs (12.0) (10.9) (21.8)
* For details of re-presentation please see note 2
5 Tax
26 weeks 26 weeks 52 weeks
ended ended ended
29 June 1 July 30 December
£m 2024 2023 2023
Current tax
UK corporation tax expense 7.2 2.3 10.4
Adjustments in respect of prior periods (0.1) - 0.1
Total current tax charge 7.1 2.3 10.5
Deferred tax
Deferred tax movement in period (1.1) 2.8 (0.4)
Effect of change in tax rate - 0.2 -
Adjustments in respect of prior periods - (0.2) 1.2
Total deferred tax credit (1.1) 2.8 0.8
Total tax charge 6.0 5.1 11.3
Tax for the interim period is charged on profit before tax, based on the best
estimate of the corporate tax rate for the full financial year. The underlying
effective tax rate (before adjusting items) for the 26 weeks ended 29 June
2024 is 25.4% (26 weeks ended 1 July 2023: 23.8%, 52 weeks ended 30 December
2023: 27.5%).
6 Acquisition of Gasfast Limited (T/A Solar Fast)
On 21 May 2024, the Group completed the acquisition of a 51% controlling
interest in Gasfast Limited ("Gasfast"), the parent company of leading solar
installations company Solar Fast ("Solar Fast"). Taking control of Gasfast
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 group acquired the 51% equity stake from the Solar Fast founders based on
a valuation for 100% of the Business of 7x EBITDA delivered in calendar year
2024, with a minimum valuation for 100% of the Business of £10.0m and a
maximum of £36.0m (excluding adjustments for cash, working capital and debt).
The initial aggregate consideration for acquiring the 51% controlling interest
amounted to £7.6m, representing £5.1m for the equity shares, less a £0.2m
negative working capital adjustment, plus £2.7m for acquired cash, of which
£2.5m cash was repaid by dividend post completion.
Since acquisition, Gasfast has contributed revenue of £1.5m and profit of
£0.1m to the Group's results. Had the acquisition occurred at the start of
the year, management estimates that consolidated revenue would have been
£8.2m, and consolidated profit for the year would have been £0.6m. In
determining these amounts, management has assumed that the fair value
adjustments, determined provisionally, that arose on the date of acquisition
would have been the same if the acquisition had occurred at the start of the
year.
Contingent Consideration
Total consideration is based on 7x EBITDA, as described above. Any contingent
amount due in excess of the initial amount paid is payable in early 2025. At
completion and 29 June 2024, considering the estimated range of full year
outcomes, no contingent consideration is expected to be payable and has
therefore not been recognised.
Acquisition Related Costs
The group incurred acquisition-related costs of £0.7m on legal fees and due
diligence costs. These costs have been included in 'administrative expenses'.
As set out in note 2, these costs are not related to underlying trading and
have therefore been treated as an adjusting item in the disclosed APMs.
Identifiable assets acquired and liabilities assumed
The following table summarises the provisional fair value amounts of assets
acquired and liabilities assumed at the date of acquisition.
£m Provisional fair values
Software 0.1
Brand 0.7
Property, plant and equipment 0.2
Inventories 0.7
Trade and other receivables 0.6
Cash and cash equivalents 5.3
Trade and other payables (0.7)
Deferred tax liability (0.2)
Total identifiable net assets acquired 6.7
Consideration
Enterprise value of 51% shareholding 5.1
Acquired cash / net working capital adjustment((1)) 2.5
Total consideration 7.6
Acquired assets (51%) (3.4)
Goodwill 4.2
(1) £2.5m was subsequently repaid by way of dividend
The cash flow disclosure of 'Acquisition of business net of cash acquired' of
£2.3m represents the £7.6m total consideration, less the Cash and cash
equivalents at completion of £5.3m
Measurement of fair values
The valuation techniques used for measuring the provisional fair value of
material assets acquired were as follows.
Leasehold improvements, plant and equipment Given the nature of these assets, a depreciated replacement cost approach has
been taken, aligning to the groups capitalisation and depreciation policies.
Intangible assets A relief from royalty method was applied to those revenues that Solar Fast is
expected to generate independently over a 2 year period. The period selected
and royalty rate applied reflect the relative immaturity of the Solar Fast
business.
Inventories The carrying value of these assets is considered to represent fair value,
reflecting the estimated selling price, less estimated costs of completion and
sale, and a reasonable profit margin based on the effort required to complete
and sell the inventories.
Trade receivables Trade receivables, representing amounts due from retail customers, totalled
£0.4m. The carrying value of these assets is considered to represent fair
value, and is stated after providing for £0.1m, which was estimated to be
uncollectable at the acquisition date.
Fair values measured on a provisional basis
Given the closeness of the acquisition date to the reporting date, the fair
values have been measured provisionally. If new information obtained within
one year of the date of acquisition about facts and circumstances that existed
at the date of acquisition identifies adjustments to the above amounts, or any
additional provisions that existed at the date of acquisition, then the
accounting for the acquisition will be revised.
Goodwill
Goodwill arising from the acquisition reflects Solar Fast's established
operations and assembled workforce which will allow the Group to enter a new
market quickly, with lower execution risk, as well as to allow the Group to
scale quickly in a segment considered to have a significant near term
opportunity. Given the closeness of the acquisition date, the tax treatment of
goodwill has not yet been determined and will be confirmed by its inclusion in
the annual financial statements.
Measurement of non-controlling interest
For the purposes of the Group's consolidated balance sheet, the Group has
elected to measure the 49% non-controlling interest, which at the acquisition
date amounted to £3.2m as the proportionate share of Solar Fast's
identifiable net assets.
Option to acquire the Non-Controlling Interest
The Group has an option to purchase the remaining 49% of the issued share
capital of the Business. This call only option may be exercised during the
five years by the Group following completion, in tranches of not less than 10%
of the issued share capital, and is based on a valuation of 6x last twelve
months EBITDA at the time.
The EBITDA multiple pricing of the option is considered by the Directors to be
at fair market value, and therefore is not considered to have any intrinsic
value at the date of acquisition or at the reporting period.
To provide a degree of protection to the Group, provisions are in place which
would reduce the purchase price of the non-controlling interest by 25% in the
event that the employee shareholders were to leave the business over the
option period. Given the Group has no contractual obligation or no obligation
through economic compulsion to exercise the option and there is no expectation
in practice that the leaver provisions will be called upon, the potential
discount is not considered to represent a remuneration expense.
7 Trade and other receivables
As at As at As at
29 June 1 July 30 December
£m 2024 2023 2023
Trade receivables 45.6 43.3 33.4
Allowance for expected credit losses (0.8) (2.0) (1.0)
44.8 41.3 32.4
Other receivables 19.8 22.2 26.4
Prepayments and accrued income 13.8 13.9 15.3
78.4 77.4 74.1
Trade receivables primarily represent amounts receivable following the
delivery of goods purchased through finance agreements or the completion of a
Design & Installation project installation and electronic payment
transactions with customers that were not received into the bank at the year
end. Cash received from third parties providing finance to the Group's
customers is recognised in the Cash Flow Statement as an operating cash flow.
A provision for expected credit losses has been recognised at the reporting
date through consideration of the ageing profile and the risk of non-recovery.
The carrying amount of trade receivables, net of expected credit losses, is
considered to be an approximation to its fair value.
Trade receivables on financed sales are ordinarily settled by financing
providers; the Group does not retain consumer credit risk in respect of these
sales. In a small number of cases, despite the Group having fulfilled its
obligations under the installation contract, there may be a technical delay in
receiving final settlement from the finance partner. The Group assesses
whether these delays may result in amounts ultimately not being received and
establishes a credit loss accordingly. Credit risk on credit card transactions
is retained by the card issuer.
Other receivables primarily represent amounts due from suppliers to the Group
for rebates of £16.3m (as at 1 July 2023: £19.6m, as at 30 December 2023:
£24.1m).
8 Share capital
Allotted No. £m
Ordinary shares of 10p:
At 31 December 2022 and 1 July 2023 259,637,998 26.0
Shares cancelled (7,512,623) (0.8)
At 30 December 2023 252,125,375 25.2
Shares cancelled (7,546,896) (0.7)
At 29 June 2024 244,578,479 24.5
During the 26 weeks ended 29 June 2024, 7.5m shares were purchased and then
cancelled by the Group as part of the share buyback programme. The total
consideration of the 26 weeks ended 29 June 2024 of £11.3m was recognised as
a charge in retained earnings. The aggregate nominal value of shares cancelled
and transferred to the capital redemption reserve was £0.7m. Cumulatively,
since the start of the programme to 29 June 2024, 15m shares have been
purchased and then cancelled, for total consideration of £21.4m. There was no
share buyback programme in the comparative period.
10 pence ordinary shares
The Group and Company Shares £m
EBT share reserves
At 31 December 2022 6,818,863 0.7
Shares released to participants (818,140) (0.1)
Own shares purchased for share schemes 170,000 0.2
At 1 July 2023 6,170,723 0.8
Shares released to participants (252,625) (0.1)
At 31 December 2023 5,918,098 0.7
Shares released to participants (939,101) (0.2)
At 29 June 2024 4,978,997 0.5
9 Earnings per share
a) Basic and diluted earnings per share
26 weeks 26 weeks 52 weeks
ended ended ended
29 June 1 July 30 December
£m 2024 2023 2023
Profit attributable to the owners of the parent 16.8 16.0 29.8
No.
Weighted average number of shares in issue 243,675,493 253,180,462 252,503,168
Dilutive effect of share options 2,568,148 2,487,776 2,804,387
Weighted average number of shares for diluted earnings per share 246,243,641 255,668,238 255,307,555
Basic earnings per share 6.9p 6.3p 11.8p
Diluted earnings per share 6.8p 6.3p 11.7p
b) Adjusted earnings per share
Adjusted earnings per share are calculated by excluding the effects of the
adjusting items from earnings.
26 weeks 26 weeks ended 52 weeks ended
ended
29 June 1 July 30 December
£m 2024 2023 2023
Profit attributable to the owners of the parent from continuing operations 16.8 16.0 29.8
Adjusting items before tax 0.5 10.0 10.9
Tax on adjusting items 0.1 (2.3) (2.6)
Adjusting items after tax (note 2) 0.6 7.7 8.3
Earnings for adjusted earnings per share 17.4 23.7 38.1
Adjusted basic earnings per share 7.1p 9.4p 15.1p
Adjusted diluted earnings per share 7.1p 9.3p 14.9p
10 Dividends
The following amounts were recognised in the financial statements as
distributions to equity shareholders of Wickes Group PLC in the following
periods:
26 weeks 26 weeks ended 52 weeks ended
ended
29 June 1 July 30 December
£m 2024 2023 2023
Interim dividend for the 52 weeks ended 30 December 2023 of 3.6 pence (31 - - 9.1
December 2022: 3.6 pence)
Final dividend for the 52 weeks ended 30 December 2023 of 7.3 pence (31 17.6 18.4 18.3
December 2022: 7.3 pence)
An interim dividend of 3.6p is proposed in respect of the 52 weeks ending 28
December 2024. It will be paid on 8 November 2024 to shareholders on the
register at the close of business on 4 October 2024 (the Record Date). The
shares will be quoted ex-dividend on 3 October 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 18 October 2024.
In the post-acquisition period, a dividend was paid by Gasfast of £2.4m to
its non-controlling interest.
11 Borrowings
At the period end, the Group had the following borrowing facilities available:
As at As at As at
29 June 1 July 30 December
£m 2024 2023 2023
Undrawn facilities:
4-year committed revolving credit facility (expires March 2028) 80.0 80.0 80.0
80.0 80.0 80.0
During the period ended 29 June 2024, 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 are £80m, with a further £20m optional
accordion facility.
The Group does not have an overdraft facility as at 29 June 2024 (1 July 2023
and 30 December 2023: no facility)
12 Net debt
26 weeks ended 26 weeks ended 52 weeks ended
29 June 1 July 30 December
£m 2024 2023 2023
Cash and cash equivalents at beginning of the period 97.5 99.5 99.5
(Increase)/decrease in cash and cash equivalents - Other 54.9 90.5 (2.0)
Cash and cash equivalents at period end 152.4 190.0 97.5
Debt at beginning of the period (675.8) (691.3) (691.3)
Cash flows from repayment of lease liabilities 51.6 57.8 112.5
Discount unwind on lease liability (14.9) (13.8) (28.2)
Lease additions (26.8) (11.2) (22.2)
Lease modifications (35.1) (12.0) (46.0)
Lease incentives received - (0.4) (0.8)
Lease terminations - - 0.2
Debt at period end (701.0) (670.9) (675.8)
Net debt at beginning of the period (578.3) (591.8) (591.8)
Net debt at period end (548.6) (480.9) (578.3)
Balances
£m
Cash and cash equivalents 152.4 190.0 97.5
Current lease liabilities (86.0) (78.3) (79.8)
Non-current lease liabilities (615.0) (592.6) (596.0)
Net debt (548.6) (480.9) (578.3)
13 Related party transactions
The Group has a related party relationship with its subsidiaries and with its
Directors. There have been no related party transactions with Directors other
than in respect of remuneration.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
● The condensed set of financial statements has been prepared in
accordance with IAS 34 - Interim Financial Reporting, as adopted for use in
the UK;
● The Interim Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By order of the Board
David Wood Mark George
Chief Executive Chief Financial Officer
9 September 2024 9 September 2024
INDEPENDENT REVIEW REPORT TO WICKES GROUP PLC
Conclusion
We have been engaged by Wickes Group Plc ("the Company") to review the
condensed set of financial statements in the Interim Results 2024 for the 26
weeks ended 29 June 2024 which comprises the Condensed consolidated income
statement and statement of comprehensive income, the Condensed consolidated
balance sheet, the Condensed consolidated statement of changes in equity, the
Condensed consolidated cash flow statement, and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Interim Results
2024 for the 26 weeks ended 29 June 2024 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The Interim Results 2024 is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the Interim Results
2024 in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the Interim Results 2024 financial report in accordance
with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Interim Results 2024 based on our review.
Our conclusion, including our conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Andrew Cawthray
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
9 September 2024
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