REG-WICKES GROUP PLC WICKES GROUP PLC: Full Year Results
23/03/2023 07:15
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WICKES GROUP PLC (WIX)
WICKES GROUP PLC: Full Year Results
23-March-2023 / 07:00 GMT/BST
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Wickes Group plc - Full Year Results 2022
for the 52 week period to 31 December 2022
Record sales and further market share gains; well-placed to continue to
outperform the market
Financial Highlights
• Like for Like (‘LFL’) 1 ^^ 1 sales up 3.5% in FY2022, and 22.8% on a
three-year basis
• Total year-on-year revenue growth of 1.8% to a record £1,562.4m
• Further market share gains in Core 2 ^^ 2 , and a strong recovery in
delivered DIFM sales
• Adjusted profit before tax £75.4m, in line with guidance, following a
record £85.0m in 2021
• Statutory profit before tax of £40.3m after absorbing non-recurring
costs of £35.1m
• Net cash position of £99.5m (2021 £123.4m), reflecting the impact of
£24.4m IT separation costs
• IFRS 16 net debt of £591.8m (2021 £618.7m); leverage of 2.9x 3 ^^ 3
• Final dividend of 7.3p, giving a total of 10.9p for the full financial
year in line with guidance
Strategic Highlights
• Digital TradePro membership growth rate accelerated to 18% with 112,000
new customers (2021: 81,000), taking the total to 746,000; TradePro
sales in 2022 increased by 19%
• Successfully broadened our DIY customer appeal through the introduction
of 30 minute click & collect, Klarna payment options, and the launch of
the Wickes eBay store
• Further market share gains in Core, following a record year in 2021,
with Core LFL down 2.0%; three-year LFL of 33.0%
• Strong recovery in DIFM delivered sales, up 26.1% LFL, as we worked
successfully through the order book, which remains ahead of pre Covid
levels
• Delivered over £20m of cost savings from productivity gains and
efficiencies in 2022
• 12 refits completed in 2022; ROCE and sales uplifts remain strong and in
line with expectations
• First new store opened in Q4 in Bolton, with a strong performance in its
first Winter season
• Outlined Science-Based Targets for carbon emissions with approval
received in December 2022, and launched our Sustainable Home Guide to
help customers reduce energy bills and emissions
Capital Allocation Policy
• The Company is reviewing its capital allocation policy and will provide
an update along with its Q2 trading update in July
Current Trading & Outlook
In the first 11 weeks of 2023 trading has been in line with our
expectations. Core sales are moderately behind the same period last year,
with Trade sales in growth and DIY continues to normalise. In DIFM,
delivered sales are slightly ahead year on year due to the elevated order
book; ordered sales are in line with the same period in 2022.
Whilst we are mindful of the macroeconomic backdrop, we remain confident in
our ability to drive further market share gains given the strength of our
proposition and improvements we have made to our offer. We have efficiency
plans in place which will offset inflationary pressures in 2023, with the
exception of energy costs which as previously indicated will be £10m higher
than in 2022. We will issue our next trading update after Easter.
David Wood, Chief Executive, commented:
“This was a period in which we achieved record sales and made further market
share gains. While profit declined, the outcome is still significantly ahead
of the pre-Covid period. Our performance was underpinned by our balanced
business model, digital leadership and ability to offer the best value and
service across Trade, DIFM and DIY. This has been achieved due to the
expertise and dedication of our 8,100 colleagues, and I would like to thank
each of them for their support over the last 12 months.
“Like all businesses we remain watchful of the external consumer
environment. However, we have the right strategy and a compelling offer for
customers, and look to the future with confidence. We will continue to
invest across our distinctive growth levers, and are well-placed to achieve
further market share gains.”
Summary of full year financial results
£m 52 weeks to 53 weeks to Change
31 Dec 2022 1 Jan 2022
Statutory revenue 1,562.4 1,534.9 1.8%
Adjusted* revenue 1,559.0 1,534.9 1.6%
Core 1,187.9 1,234.7 (3.8)%
DIFM 371.1 300.2 23.6%
Adjusted* gross profit 567.1 568.5 (0.2)%
Gross profit % 36.4% 37.0%
Adjusted* operating profit 103.9 116.3 (10.7)%
Adj operating profit % 6.7% 7.6%
Adjusted* profit before tax 75.4 85.0 (11.3)%
Adjusted* basic earnings per share 23.8p 27.2p (12.5)%
Statutory gross profit 570.5 568.5 0.4%
Gross profit % 36.5% 37.0%
Statutory operating profit 67.1 96.7 (30.6)%
Operating profit % 4.3% 6.3%
Statutory profit before tax 40.3 65.4 (38.4)%
Basic earnings per share 12.6p 23.3p (45.9)%
Full Year Dividend 10.9p 10.9p n/c
*Adjusted measures represent results on an IFRS basis and exclude adjusting
items which comprise significant restructurings, significant write downs or
impairments of current and non-current assets, the costs of demerging and
listing the business, the associated costs of separating the business from
the Travis Perkins Group’s IT systems, the impact of unrealised fair value
movements on derivatives through the profit and loss statement, VAT reclaim
and the effect of changes in corporation tax rates on deferred tax balances.
These measures have been explained, reconciled and calculated in note 5.
Adjusted revenue excludes the £3.4m VAT reclaim.
Investor & Analyst meeting
A webcast for investors and analysts will be available today at 8.30am (UK
time), followed by a live Q&A with the Wickes management team. The webcast
can be accessed at: 4 Wickes - Interim Results (brrmedia.co.uk)
A recording of the webcast will be available on the Wickes Group plc website
later today: 5 https://wickesplc.co.uk
Contacts
Wickes Headland
+44 (0) 0203 805 4822
Investor Relations PR Adviser to
Wickes
Andy Hughes +44 (0) 776 736 5360 Lucy Legh, Will Smith
6 investorrelations@wickes.co.uk
7 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 - Local Trade, DIY (together "Core") and Do-it-for-me ("DIFM").
Wickes operates from its network of 230 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 may include statements that are, or may be deemed to be,
forward-looking statements. By their nature forward-looking statements
involve opportunity, risk and uncertainty since they relate to future events
and circumstances, and actual results may differ materially. Any
forward-looking statements in this announcement reflect management's view
with respect to future events as at the date of this announcement.
Business review
Wickes achieved record sales in 2022, benefitting from its market-leading
value proposition and underpinned by its uniquely balanced business model.
Despite lower market volumes we maintained our long track record of
achieving market share gains in our Core business, with the acceleration in
the growth rate of our TradePro customer base a particular feature. DIFM
ordered sales recovered as the year progressed; delivered sales benefited
from the unwind of the order book and came close to matching the level in
2019 on a like-for-like basis.
Market
2022 proved to be a challenging year for the market, driven by
well-documented challenges facing the consumer. The need to combat rising
inflation has seen UK and global interest rates rise, and, as a result,
house price inflation and transaction volumes are now starting to moderate.
Despite this softer economic environment, which we expect to continue in
2023, UK home improvement remains a large and attractive market. The
structural drivers remain intact, which will continue to support market
growth over the medium term. These include behavioural changes brought about
by the pandemic, the need to improve energy efficiency to reduce heating
costs and emissions, and the age and composition of the UK housing stock.
Importantly, at the same time it is worth noting that most homeowners either
remain in work, choose not to be, or are retired. Our exposure to new build,
which may be more cyclical, is very limited.
We continue to believe that behavioural changes post Covid remain
supportive. Many businesses have retained hybrid working practices,
increasing time spent at home, fuelling further desire for homeowners and
tenants to invest in their properties. While some DIY activities were
brought forward into the early phases of the pandemic, some larger projects
- involving our Local Trade and DIFM segments - may have been deferred. The
growth of our TradePro customer base showed continued momentum and
accelerated in 2022, reflecting strong order books across the trade and the
increasing importance of value for money in an inflationary environment.
More recently, the sharp rise in energy prices has seen increased focus on
the energy efficiency of UK housing. Wickes is well-placed to help with the
drive for energy efficiency through the products and services we sell, such
as insulation, lighting and smart meters, and through the advice we offer.
In 2022 we launched our interactive Sustainable House Guide, highlighting
the measures that can be taken in each room of the house (or garden), with a
click through to the relevant products. This complements our online Energy
Saving advice guide, and our work with the Energy Saving Trust (EST) to
verify the financial benefits from each product.
The UK also has the oldest housing stock in northern Europe, with an average
age of 65 years. One third were built before 1945. This is supportive in
itself for structural growth in the RMI (Repair, Maintenance and
Improvement) market, but ongoing government measures taken to improve energy
efficiency are likely to require a multi-year investment in the UK housing
stock. For example, it is estimated that around half of UK housing requires
some form of investment to meet an EPC rating of C or better. Under current
proposals, all UK homes will need to achieve this by 2030, and rental
properties by 2025. Add in an element of likely population growth, and a
trend towards more single person dwellings, and the outlook for the home
improvement market remains bright.
The homeowning demographic into which our Local Trade and DIFM end
propositions face also leave us well placed to continue to take share, as do
our credentials for value, quality and convenience. Although as yet we have
seen little sign of trading down or rising own label participation, our
surveys tell us that customers are becoming more discerning on price and are
shopping around more. We believe that our value credentials, the strength of
the Wickes brand, our simple and clear pricing policy, alongside our 10%
flat rate discount to all TradePro members, stand us in good stead if market
conditions become more challenging.
Operational progress
We are pleased to have made strong operational progress since demerger,
reflected in continued growth in Core market share and a strong recovery in
delivered DIFM sales.
During the year, we demonstrated the flexibility of Wickes’ operating model,
including a number of actions undertaken to respond to more challenging
market conditions, and to drive further efficiencies within the business to
offset increases in our cost base. Our balanced model gives us the agility
to respond to changes in customer demand, leading to efficiencies across
both store and distribution centre fulfilment costs.
We have continued to invest in the customer proposition. We refitted another
12 stores in 2022, showcasing our full offer of kitchens and bathrooms, and
taking the number in the new format to 162. We continue to see strong
returns and sales uplifts in our refitted stores.
Our store refresh programme also continues, with particular focus on the
efficiency of multi-channel order pick and despatch, which drives selling
densities and underpins our 30-minute click & collect promise. We have added
Klarna to our online payment options, and continue to have a very
competitive APR of 4.9% in our DIFM business despite rising base rates. All
these initiatives are reflected in our customer satisfaction metrics, which
have risen in all areas of the business (in-store, click & collect and home
delivery).
LFL sales across the Group were up 3.5% despite very tough comparatives in
our Core business. Core LFL revenue declined by 2.0%, with the second half
stronger as comparatives eased and as sales of energy-saving products helped
our DIY category towards the end of the year. During the year we continued
to prioritise our price leadership by working closely with our suppliers. We
remained committed to managing supply chain inflation responsibly and our
selling price inflation has been significantly less than our cost price
inflation.
The estimated level of selling price inflation for the full year was 13%
(first half 15%, second half 10%), driven mainly by categories such as
timber and cement. Inflationary pressures eased in the second half, with the
timber price declining year on year, and we would expect this trend to
continue into 2023.
Despite the well documented industry shortages in certain categories in the
first half, our strong supplier relationships, curated range and operational
agility served us well to continue to provide customers with the products
they need. Together with our price leadership and own brand credentials, we
believe our strong focus on availability helped to drive increased revenues
and awareness of Wickes, as reflected in our Core market share gains and the
strong performance of TradePro, where both membership and sales increased by
almost 20%.
We entered FY 2022 with an elevated pipeline of DIFM orders due to the
impact of Covid on the ability of our installation teams to deliver projects
in the final quarter of 2021. Despite moderately lower orders over the
course of the year, the successful work through of the order book resulted
in LFL delivered sales increasing by 26.1%. Although there was some
disruption in the first half relating to Covid and the supply of appliances,
these issues faded as the year progressed.
There was another strong performance in bathrooms, where new ranges in
sanitaryware and accessories, and a wider range of pricing options, have
helped to broaden our appeal. Refitted stores also continue to perform
strongly in DIFM due to the welcoming nature of new showroom displays.
We noted in our July trading update that DIFM orders had slowed in early
summer, as customers were taking longer to commit to big ticket purchases.
However, the pace of order decline moderated into Q4, and in the first 11
weeks of 2023 ordered sales are in line with the same period last year.
At the end of 2022, the order book was below the prior year, although still
ahead of pre-Covid levels. Given improvements in product availability and
labour scheduling, we would expect the order book to return to more normal
levels by the end of 2023. This will result in delivered sales being above
ordered sales for the year, although this is expected to stabilise in 2024
and beyond.
Winning for Trade
Our TradePro membership scheme showed increasing momentum in the period. We
enrolled 112,000 customers in the year, taking its total membership to
746,000 as we continued to grow the awareness and appeal of the scheme
through its compelling proposition. Our local trade customers indicate that
they are increasingly conscious of rising material costs and are switching
to Wickes for its strong value credentials and simple discount scheme. We
also believe the recent addition of 30 minute click-and-collect to our
offering has increased the attraction of the scheme during a period where
tradespeople are finding ways to most efficiently use their time whilst
balancing full order books.
We are encouraged that the TradePro members joining the platform during the
year have adopted characteristics in line with previous cohorts using the
platform. Sales from TradePro customers in the year increased by 19%
compared to 2021. Our TradePro customers continue to represent strong
strategic value to Wickes in terms of average order value and frequency of
visit, and we have plans to evolve our offering in 2023 to drive further
loyalty and engagement.
To this end, we are encouraged that the results of our February Mood of the
Nation survey showed that 45% of tradespeople have a pipeline of work for
over three months. Although this is moderately down on the prior year, it
remains healthy by historical standards.
Accelerating DIFM
Developing our digital expertise and continuous innovation of our product
range continues to be a key focus within DIFM. During the year we completed
the major refresh of our kitchen ranges initiated in Autumn 2021,
introducing a number of new ranges and trending colourways during the
period.
Following the introduction of a completely new bathroom range during the
second half of 2021, we continued to introduce new products to our showroom
displays. We have also further improved our end-to-end bathroom service by
driving greater engagement with our design consultants, supported by focused
recruitment of installers with bathroom capabilities. Across kitchens and
bathrooms our installer network continues to grow and now stands at 3,000
teams of independent contractors (March 2021: 2,600), enabling Wickes to
continue to offer market-leading lead times whilst retaining a flexible
approach to capacity.
We continue to see encouraging attachment rates of tiling, flooring and
joinery sales to kitchen and bathroom projects, confirming the opportunity
to increase overall project spend within the home.
DIY Category Wins
As communicated in our July trading update, following the Jubilee weekend in
June, we experienced signs of the DIY market softening from the very high
levels of demand experienced during the pandemic. DIY sales continued to
underperform Local Trade for most of the second half, although towards the
end of the fourth quarter DIY sales started to recover with strong growth in
sales of energy-related products such as insulation, smart meters, lighting
and draught excluders.
We have made it easier for customers to access these products with the
launch of our Sustainable House Guide on our website, with advice on
sustainable living and energy reduction for all rooms in the house with a
click to purchase option for the most important products.
In line with our strategy to capture share in underweight categories, we
have grown market share in key segments such as garden and décor following
recent range reviews. This has included the roll out of our new Crown colour
emulsion paint range to support greater customer choice across different
price points. The continued growth of our extended online range continues to
support range depth whilst our curated range in store lends itself to high
stock turn and limited exposure to highly seasonal lines and markdown
activity across the wider sector.
Within our ready-to-fit kitchen offer, we have launched six new ranges as
part of a rebranding of this offer to Wickes Lifestyle Kitchens. This range
is now offered with an online design option, which enables us to provide an
excellent design service for projects with lower price points than our
showroom ranges, thus allowing us to operate over a broader section of the
market.
Digital developments
Despite the unwinding of Covid influences we have continued to grow the
proportion of our digitally-enabled sales on a year-on-year basis. We
completed a number of enhancements to our digital capabilities in the year,
including greater use of push messaging, personalisation and targeted
campaigns across our digital channels. Underpinned by our predictive
Missions Motivation Engine, which is generating identifiable incremental
sales, we have also stepped up the digital experience for our trade
customers, increasing the levels of engagement throughout the project
journey. Increased use of social campaigns and display marketing has also
grown the awareness of the TradePro mobile app.
We launched our Wickes eBay store during the year with 4,000 lines,
extending our customer reach to a younger audience. We are currently looking
at opportunities with marketplace platforms, including eBay, to extend our
range accessibility to a wider audience of home improvers. We also now offer
Klarna as an online payment solution.
Our digital marketing campaigns have been recognised across the industry
with Wickes receiving a number of prestigious awards. At the recent
Marketing Week Awards Wickes claimed the coveted Grand Prix award, a large
part of which was based on the success of the Mission Motivation Engine.
Wickes also received the awards for Retail and Ecommerce and Best Use of
Segmentation, making it the most decorated brand at the 2022 awards.
Growing our estate of new format stores
12 store refits were completed during the year, including the downsize and
refit of our Maidstone store. In addition to a new format showroom, our
refitted stores also benefit from an improved order fulfilment layout which
increases our home delivery capacity.
Despite the impact of heightened build costs during the year, store
investments continue to deliver sales uplifts of 25% and ROCE of over 25%.
Sales increases by category are very consistent, with over 50% uplift in
DIFM sales and around 10% in Core. We will continue our refit programme in
2023, where possible tied to lease renewals.
Our property team is continuing to review and stress test a number of white
space catchments and we remain confident on the opportunity to expand into
20 new locations over the next five years. Our first new store for some time
opened in Bolton in October, and further openings are planned in 2023.
IT separation
Following initial mobilisation during the previous financial year, 2022 saw
good progress with the transition of technology and processes from our
previous parent Travis Perkins plc. The second half of the year saw new
Finance and HR systems go live, plus a successful migration of our office
collaboration platform. We remain focused on delivery of the separation of
the IT infrastructure in 2023 as planned. All aspects of the programme
continue to be overseen by the Wickes Executive and PLC Boards who monitor
delivery and any operational risk arising.
Responsible Business Strategy update
In 2022, we launched our new Responsible Business Strategy, Built to Last
and this has been a year of strategy development, target setting and action
planning, with significant progress made across all three pillars of the
strategy.
People
Inclusion and Diversity remains central to our people strategy. Our ‘Feel at
Home’ Inclusion & Diversity programme continues to go from strength to
strength and receive national recognition and awards. We were recently
recognised as the no.1 retailer in Stonewall’s Top 100 UK Employers List
2023, ranking no. 11 in the overall list of public, private and third sector
employers. We have also been included again within the Financial Times
Diversity Leaders report, ranking as a top five retailer.
As our charity partnership comes to an end in March 2023 we’re proud to have
achieved our
£2 million fundraising goal for YoungMinds, thanks to the generosity of our
customers, suppliers and colleagues who have been so committed to supporting
young people’s mental health. In the year we have rolled out the Wickes
Community programme to all stores, and to date over 200 stores have
supported 800 projects in their local communities.
Environment
We have worked hard over the last year to embed climate change and
sustainability across the business. For our first-ever CDP (Carbon
Disclosure Project) Climate submission we were pleased to achieve a rating
of B-, placing us in the ‘Management’ category. We also submitted a basic
response for the Timber category survey ahead of our full response next
year.
Towards the end of last year we launched our near-term Science Based
Targets, which are: to reduce absolute scope 1 and 2 emissions by 42% by
2030 (from a 2021 base year); for 45% of our suppliers by emissions
covering purchased goods and services to have science-based targets by 2027;
and to reduce scope 3 Greenhouse Gas (GHG) emissions from the use of sold
products by 42% by 2030 (from a 2021 base year).
Homes
In line with our purpose to make the nation feel house proud, we want to
help customers feel proud of their homes for saving energy and protecting
the environment. To that end, we are focused on providing customers with a
broad range of sustainable and energy efficient products and services to
achieve long term decarbonisation targets and short term relief on the cost
of living. In FY2022 we introduced our ‘Energy Saving Advice’ pages on our
customer website, in conjunction with the Energy Saving Trust, supported by
our interactive Sustainable House Guide. During the year we undertook a
comprehensive programme to taxonomise and label our products into a new set
of categories in order to understand the environmental performance of those
products and assess any gaps in our ranges to support energy efficiency.
Financial review
We are pleased to report another period of sales growth and market share
gains in Core (source: GfK). This builds on our long term track record of
growth, which reflects the effective business model and the investments we
have made in our digital and service propositions. LFL sales for FY2022 were
ahead by 3.5%, with a strong finish to the year in DIFM delivered sales,
and, within Core, strong Local Trade sales over the year. Adjusted operating
profit declined moderately from the record high of 2021, with a lower
adjusted gross margin as a result of inflation and mix factors, plus higher
P&L investment costs in areas such as distribution, refits and IT.
Adjusted profit before tax also declined, despite reduced interest costs
which were primarily a result of lower leasehold debt. Note that from FY2022
onwards we will be excluding unrealised gains and losses from forward
currency contracts from adjusted profit before tax, as these can potentially
be material, are non-cash and do not reflect underlying business
performance.
Statutory profit before tax also declined, reflecting the reduction in
adjusted profit before tax, a full year of IT separation costs, and a
right-of-use asset impairment charge. The business was broadly cash neutral
in the year, other than the expenditure on IT separation.
Adjusted revenue
Adjusted revenue for the 52 weeks to 31 December 2022 was £1,559.0m, an
increase of 1.6% on the prior year. In FY2021, the 53rd week added £24.5m of
sales, so revenue growth on a 52 week basis was 3.2%. With a small net
reduction in floorspace (closure of two stores and a Kitchen and Bathroom
standalone unit, and the opening of a new store at Bolton), full year LFL
sales growth was 3.5%.
Core revenue, encompassing Local Trade and DIY segments, declined by 3.8% to
£1,187.9m, down 2.2% on a 52 week basis. LFL sales declined by 2.0%,
although this improved over the course of the year. This was partly as a
result of weaker one-year sales comparatives as Covid comparatives eased,
but also from some stabilisation in DIY sales, which had softened from June
onwards as a result of the cost of living crisis. Stronger sales of
energy-saving products were a notable feature here. There was also some
impact from very hot weather in late summer, which may have shifted some
activity from Q3 into Q4.
On a three-year basis, Core LFL sales growth was 33.0%, driven by growth in
Trade sales as our TradePro business goes from strength to strength. Looking
ahead, the three-year comparatives become less meaningful as the base year
will include the first Covid lockdown, so this measure will no longer be
provided.
Core sales performance was strongest in a number of areas which have seen
specific range reviews and product development, such as garden, decorative
and SNAF (screws, nails and fittings). The building category also performed
well. Other categories, such as outdoor decking, were affected by a strong
Covid-related performance in 2021.
Selling price inflation for the full year was 13%, moderating as the year
progressed. In the first half, inflation was 15% (H1 2021 3%), as we
experienced the full impact of Covid recovery and the war in Ukraine.
Inflation then moderated in the second half to 10% (H2 2021 11%) as we
started to see some price increases moderate and, in some categories reverse
(e.g.timber). We would expect a lower level of inflation overall in 2023,
although some price inflation remains in energy-intensive categories such as
cement.
Our trading strategy remains to be very competitive on price (even before
the 10% TradePro discount), and in 2022 our selling price inflation was
significantly less than cost price inflation. Historically this strategy has
helped to drive market share gains.
This unprecedented level of price inflation had several implications.
Firstly, industry volumes came under pressure, as consumer spending could
not grow in cash terms as fast as inflation. Our own volume performance,
excluding mix effects, declined by 15% in 2022, although this improved
sharply as the year progressed and in the fourth quarter was down by less
than 5%.
Secondly, our customer surveys show an increasing focus on value for money
and shopping around, especially using digital channels. Projects that have
been priced to a budget may be at risk unless inflation can be managed out
of raw materials inputs. TradePro gives the trade the opportunity to lower
the cost of their materials, and we believe this is one reason why our
TradePro customer growth has accelerated in 2022. As yet, however, we have
not seen a marked increase in the proportion of Wickes branded products
within the mix, although we are well placed to benefit if this does
materialise. Finally, as outlined below, inflation affects both gross margin
and cost ratio measures.
DIFM delivered sales were £371.1m, an increase of 23.6%, as we successfully
worked through the elevated order book. LFL sales increased by 26.1%. The
performance was particularly strong in the fourth quarter, where we
benefited from reaching our target of 3,000 installer teams (March 2022
2,600), as well as some impact in the prior year from Omicron. On a
three-year basis, delivered sales were close to the level reported in 2019,
with LFL sales down 1.3% versus this pre Covid period.
DIFM orders in value terms were slightly down year-on-year, although the
trend improved over the course of the second half. Orders have been
particularly strong in new designs, both in kitchens and bathrooms, and the
attachment rate (flooring, tiling, doors) continues to rise. Our credit
offer, currently at 4.9% APR, remains very attractive. Cancellations remain
at low levels.
At the end of 2022, the order book was below December 2021, but still higher
than 2019. With our installer base now at the optimum level, we see the
order book returning to more normal levels by the end of 2023, which will
provide some benefit to delivered sales in the current year.
Taken together, our growth levers have contributed to a 27% improvement in
sales per square foot since FY2019. For FY2022, this metric improved from
£238 to £247.
Adjusted gross profit
Adjusted gross profit for the full year was £567.1m, in line with the prior
year. Adjusted gross profit margin declined 70bp for the full year (H1 2022
-70bp) as a result of mix effects in Core and selling price inflation below
cost price inflation. Mix effects included the consistent growth of TradePro
(lower percentage margin in trade products, plus the 10% TradePro discount),
and, in the second half, the softening of DIY sales.
Mix effects between Core and DIFM had a limited impact on gross margin.
Inclusive of installation revenue, DIFM overall gross margin percentage is
similar to that within Core.
Distribution costs, taken within gross profit, were flat as a percentage of
sales. Despite inflation in related cost areas, some of these costs are
volume, not value linked, allowing some improvement in ratios. The
proportion of in-store sales also increased, with online sales falling back
slightly as trading patterns normalised post pandemic.
Adjusted operating profit
Adjusted operating profit was £103.9m, down 10.7% on the £116.3m reported in
FY2021. Incremental profit from the strong recovery in DIFM sales was more
than offset by a lower contribution from Core as a result of lower LFL sales
and the reduction in adjusted gross profit margin percentage. The impact of
cost inflation and investment in growth initiatives were also not fully
offset by cost savings of over £20m.
The adjusted operating profit margin was 6.7%, down from 7.6% last year. The
majority of the reduction was driven by the decline in the adjusted gross
margin, as noted above.
The cost to sales ratio 8 ^^ 4 deteriorated by 20bps. Selling costs were
broadly flat, with cost inflation offset by lower transaction numbers and
elimination of the final portion of Covid costs. Adjusted administration
costs were up moderately, with increases in IT, Support Centre salaries, and
annualisation of PLC costs more than offsetting a lower bonus pool.
Net finance costs
Adjusted net finance costs were £28.5m, down from £31.3m last year. There
was a £2m reduction in IFRS16 lease interest as a result of a lower average
lease term, and a £1.8m increase in interest receivable as a result of
higher rates on cash deposits. 2021 net finance costs included an unrealised
gain of £0.7m on forward currency contracts. The corresponding figure for
2022 was £1.7m, but this, and any unrealised gains and losses in future
years, will be taken as adjusting items as explained above. 2021 results
have not been restated as the impact was immaterial.
Adjusted profit before tax
After finance costs adjusted profit before tax for the full year was £75.4m,
a decline of 11.3% on the £85.0m reported in 2021. Excluding unrealised
foreign exchange gains in both years, the decline would have been 10.6%.
Adjusting items
Adjusting items within revenue represent the £3.4m VAT reclaim. Statutory
revenue in FY 2022 was £1,562.4m, compared with adjusted revenue of
£1,559.0m.
Pre-tax adjusting item charges for full year 2022 were £35.1m (FY2021
£19.6m). IT separation costs were in line with expectations at £24.4m, and
there was a non-cash impairment charge of £15.8m. These were partially
offset by the unrealised foreign exchange gain of £1.7m referred to above, a
reclaim of VAT overpaid in previous years of £3.4m and a tax credit of
£6.8m.
Profit before tax
Profit before tax in full year 2022 was £40.3m, compared with £65.4m in the
prior year. The decline reflects the reduction in adjusted profit before tax
and higher adjusting items.
Tax
Tax for the period is charged on profit before tax, based on the forecast
effective tax rate for the full financial year. The underlying effective
tax rate (before adjusting items) for the 52 weeks ended 31 December 2022 is
20.1% (53 weeks ending 1 January 2022 19.4%). In FY2021 the underlying
effective tax rate was lower primarily reflecting a significant deferred
tax credit (£6.7m) arising from changes to the UK corporation tax effective
from 1 April 2023 from 19% to 25%.
Tax on adjusting items in full year 2022 was £6.8m (FY 2021 £9.9m).
Capital expenditure
Capital expenditure in FY2022 totalled £40.4m, slightly below our
expectations at the start of the year but ahead of the £26.5m in 2021.
The main components were £24.7m investment in the store estate (2021
£13.0m), of which refits were £16.2m, the new store in Bolton £1.4m and
other store capex across the estate of £7.1m. Separately, there was a £6.1m
investment in one freehold at Braintree. There was £9.3m investment in our
digital IT capability (2021 £6.1m), as we continue to develop our
multi-channel offer.
We expect FY2023 capital expenditure once again to be £40-45m. Although we
are not expecting to acquire further freeholds in FY2023, IT capital
expenditure will step up further during the year as we continue to enhance
our customer experience and operating systems.
Cash / net debt
Net cash as at 31 December 2022 was £99.5m, down from £123.4m in the prior
year. Operating profit was broadly equal to the capex investment, working
capital movement and dividend outflows, and the net movement in cash overall
was therefore driven by the £24.4m of IT separation costs. As expected, net
cash has also moderated from the £166.5m reported at the half year stage, as
the latter is a seasonally high figure benefitting from the sell through of
seasonal stock, the build up of deferred income from the DIFM Winter Sale,
and is also struck before payment of the second half dividend.
The inventory position of £201.6m compared with £188.2m in the prior year.
The increase resulted from the impact of product inflation, which more than
offset the reduction in stock volumes. Despite lower Core sales and the
stock rebuild at the end of 2021, which has seen an improvement in
availability, stock turn remained healthy at 4.5x.
IFRS 16 net debt reduced to £591.8m (FY2021 £618.7m), driven by a fall in
lease liabilities to £691.3m (FY2021 £742.1m) due to the low level of lease
renewals during the period, partly offset by the lower cash balance.
On a last twelve month basis, IFRS 16 leverage was 2.90x compared with our
target of being consistently below 2.75x.
Dividend
The Board has declared a final dividend of 7.3p per share, in line with
prior guidance, which will be paid on 7 June 2023 to shareholders on the
register at the close of business on 21 April 2023. This will bring the full
year dividend for FY2022 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 20 April 2023. 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
16 May 2023.
Capital allocation policy
The company plans to announce a revised capital allocation policy at the
time of its Q2 trading update in July.
Updated technical guidance
The following represents full year guidance for FY2023:
• Full year interest charge of c£26m;
• Full year adjusted tax rate 24-25%;
• Capex of around £40-45m;
• IT separation costs expected to be c£5m (within adjusting items).
Appendix
2022 1 Year Like for Like Sales Growth 3 Year Like for Like Sales
% Growth %
Core DIFM Total Core DIFM Total
Quarter 1 (11.0)% 28.4% (4.0)% 34.8% (7.9)% 20.6%
(13 weeks to 2
Apr)
Quarter 2 (0.2)% 30.9% 5.4% 38.2% (5.1)% 26.2%
(13 weeks to 2
July)
Quarter 3 0.0% 12.2% 2.6% 27.3% (1.7)% 19.2%
(13 weeks to 1
Oct)
Quarter 4 5.2% 34.9% 11.5% 32.4% 11.7% 25.9%
(13 weeks to 31
Dec)
Full year (2.0)% 26.1% 3.5% 33.0% (1.3)% 22.8%
(52 weeks to 31
Dec)
Note: DIFM represents delivered sales
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 5. 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.
Adjusted EBITDA is calculated as follows: 2022 2021
Adjusted operating profit 103.9 116.3
Add back depreciation of property, plant and
equipment 20.1 19.1
Add back depreciation of right of use assets 77.7 78.1
Add back amortisation 5.2 5.2
Adjusted EBITDA 206.9 218.7
Net debt / adjusted EBITDA 2.9x 2.8x
Consolidated income statement and other comprehensive income
52 weeks ended 31 December 53 weeks ended 1 January
2022 2022
Adjusting Adjusting
items items
(£m) Notes Adjusted (note 5) Total Adjusted (note 5) Total
Revenue 3 1,559.0 3.4 1,562.4 1,534.9 — 1,534.9
Cost of sales (991.9) – (991.9) (966.4) — (966.4)
Gross profit 567.1 3.4 570.5 568.5 — 568.5
Selling costs
(*) (332.1) (15.8) (347.9) (334.9) (0.1) (335.0)
Administrative
expenses (131.1) (24.4) (155.5) (117.3) (19.5) (136.8)
Operating
profit 103.9 (36.8) 67.1 116.3 (19.6) 96.7
Net finance
costs 4 (28.5) 1.7 (26.8) (31.3) — (31.3)
Profit before
tax 75.4 (35.1) 40.3 85.0 (19.6) 65.4
Tax 6 (15.2) 6.8 (8.4) (16.5) 9.9 (6.6)
Profit for the
period and
total
comprehensive
income 60.2 (28.3) 31.9 68.5 (9.7) 58.8
Profit for the
period
attributable
to owners of
the parent
company 60.2 (28.3) 31.9 68.5 (9.7) 58.8
Earnings per
share
Basic 7 12.6p 23.3p
Diluted 7 12.5p 23.3p
Adjusted
earnings per
share
Basic 7 23.8p 27.2p
Diluted 7 23.7p 27.1p
* Impairment charges in 2022 have been presented within Selling Costs.
Impairment charges recorded in 2021 were originally presented within
administrative expenses but have now been reclassified accordingly
Consolidated balance sheet
As at 31 December As at 1 January 2022
(£m) 2022 (Restated*)
Assets
Non-current assets
Goodwill 8.4 8.4
Other intangible assets 16.6 12.5
Property, plant and
equipment 114.9 105.0
Right-of-use assets 542.4 604.6
Deferred tax asset 22.7 30.1
Total non-current assets 705.0 760.6
Current assets
Inventories 201.6 188.2
Trade and other receivables 87.4 77.5
Corporation tax 8.4 6.5
Derivative financial
instruments 2.6 0.7
Cash and cash equivalents 99.5 123.4
Total current assets 399.5 396.3
Total assets 1,104.5 1,156.9
Equity and Liabilities
Capital and reserves
Issued share capital 26.0 26.0
EBT share reserve (0.7) (0.8)
Other reserve (785.7) (785.7)
Retained earnings 924.8 921.3
Total equity 164.4 160.8
Non-current liabilities
Lease liabilities 610.4 660.7
Long-term provisions 1.8 1.2
Total non-current
liabilities 612.2 661.9
Current liabilities
Lease liabilities 80.9 81.4
Trade and other payables 237.7 241.8
Derivative financial
instruments 0.2 -
Short-term provisions 9.1 11.0
Total current liabilities 327.9 334.2
Total liabilities 940.1 996.1
Total equity and liabilities 1,104.5 1,156.9
* For the year ended 1 January 2022, the tax receivable of £6.5m was
disclosed within current trade and other receivables. In accordance with
paragraph 54(n) of IAS 1, ‘Presentation of Financial Statements’, the tax
receivable should have been presented separately on the face of the
consolidated balance sheet. The consolidated balance sheet for the year
ended 1 January 2022 has been restated to separately present the tax
receivable. This adjustment has no impact on the prior year reported profit
or net assets
The consolidated financial statements of Wickes Group Plc, registered number
12189061, were approved by the Board of Directors on 22 March 2023 and
signed on its behalf by:
David Wood Mark George
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity
Issued EBT
share Share Other Retained Total
(£m) Notes capital reserves reserves earnings equity
At 26 December 2020 25.2 – (785.7) 890.3 129.8
Profit for the period and
other comprehensive
income – – – 58.8 58.8
Issue of share capital 0.8 (0.8) – – –
IFRS 16 adoption
adjustments – – – 3.1 3.1
Dividends paid 9 – – – (35.3) (35.3)
Equity-settled
share-based payments – – – 3.8 3.8
Tax on equity-settled
share-based payments – – – 0.6 0.6
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
Consolidated cash flow statement
52 weeks ended 31 53 weeks ended 1
(£m) December 2022 January 2022
Cash flows from operating activities
Operating profit 67.1 96.7
Adjustments for:
Amortisation of other intangible assets 5.2 5.2
Depreciation of property, plant and
equipment 20.1 19.1
Depreciation of right-of-use assets 77.7 78.1
Impairment of property, plant and
equipment 0.4 0.2
Impairment of right-of-use assets 15.4 5.1
Reversal of impairment of right-of-use
assets – (1.0)
Gains on terminations of leases (1.8) (1.6)
Losses on disposal of property, plant
and equipment 0.6 0.6
Foreign exchange – (2.0)
Share-based payments 4.4 3.8
Operating cash flows 189.1 204.2
Movements in working capital:
(Increase) in inventories (13.4) (49.9)
(Increase) in trade and other
receivables (9.9) (7.4)
(Decrease) in trade and other payables (4.1) (0.7)
(Decrease)/increase in provisions (1.3) 1.8
Cash generated from operations 160.4 148.0
Interest paid (1.0) (0.7)
Interest on lease liabilities (29.4) (31.3)
Income taxes paid (4.3) (14.6)
Net cash inflow from operating activities 125.7 101.4
Cash flows from investing activities
Purchases of property, plant and
equipment (31.1) (20.4)
Development costs of computer software (9.3) (6.1)
Proceeds on disposal of property, plant
and equipment 0.4 1.2
Interest received 1.9 0.1
Net repayments from Travis Perkins Plc – 123.5
Net cash (outflow)/inflow from investing
activities (38.1) 98.3
Cash flows from financing activities
Payment of lease liabilities (82.4) (77.8)
Lease incentives received 2.1 0.3
Dividends paid to equity holders of the
Parent (31.2) (5.3)
Net cash outflow from financing
activities (111.5) (82.8)
Net (decrease)/increase in cash and cash
equivalents (23.9) 116.9
Cash and cash equivalents at the
beginning of the period 123.4 6.5
Cash and cash equivalents at the end of
the period 99.5 123.4
Adjusting items
Adjusting items paid included in the cash
flow 21.7 17.9
Total pre-tax Adjusting items 35.1 19.6
Notes
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 23 March 2023 on the Company’s website
9 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 31 December 2022 or 1
January 2022 but is derived from those accounts. Statutory accounts for 1
January 2022 have been delivered to the registrar of companies, and those
for 31 December 2022 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.
Whilst the financial information included in this announcement has been
computed in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 this announcement does not
itself contain sufficient information to comply with international
accounting standards.
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 52 weeks ended 53 weeks ended
(£m) 31 December 2022 1 January 2022
Core (product revenue) 1,187.9 1,234.7
“Do It For Me” (project revenue) 371.1 300.2
1,559.0 1,534.9
Revenue reconciliation and like-for-like 52 weeks ended 31 53 weeks ended 1
adjusted revenue (£m) December 2022 January 2022
Adjusted revenue 1,559.0 1,534.9
Network change (1.0) (0.4)
Other movements (week 53) - (17.6)
Adjusted revenue (like-for-like basis) 1,558.0 1,516.9
Prior period revenue 1,534.9 1,346.9
Prior period network change (5.1) (4.8)
Prior period other movements (24.5) –
Prior period revenue (like-for-like
basis) 1,505.3 1,342.1
Increase arising on a like-for-like basis 52.7 174.8
Like-for-like adjusted revenue (%) 3.5% 13.0%
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.
Other movements (week 53) reflects that the period ended 1 January 2022 was
a 53 week period, whereas the periods ended 31 December 2022 and 26 December
2020 were 52 week periods. The extra week is presented separately to enable
direct comparison.
4 Net finance costs
Finance income and expense recognised within 52 weeks ended 53 weeks ended
adjusted profit (£m) 31 December 2022 1 January 2022
Finance income
Net unrealised gains on remeasurement of
derivatives at fair value – 0.7
Interest receivable 1.9 0.1
1.9 0.8
Finance costs
Interest on lease liabilities (29.4) (31.3)
Amortisation of loan arrangement fees (0.3) (0.1)
Commitment fee on revolving credit
facilities (0.7) (0.6)
Other interest – (0.1)
(30.4) (32.1)
Net finance costs within adjusted profit (28.5) (31.3)
Adjusting items (£m)
Finance income
Net unrealised gains on remeasurement of
derivatives at fair value 1.7 –
Net finance income within adjusting items 1.7 –
Total net finance costs (26.8) (31.3)
The net unrealised gains on remeasurement of foreign currency derivatives
relate to the movement in the fair value of foreign currency forward
contracts. No hedge accounting is applied and all movements in the fair
value of derivatives are recognised in the income statement as net finance
costs.
5 Adjusting items
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, significant write downs or impairments of current and
non-current assets, the costs of demerging and listing the business, the
associated costs of separating the business from Travis Perkins Plc’s IT
systems, the effect of changes in corporation tax rates on deferred tax
balances, net gains on remeasurement of derivatives at fair value, and in
the current period a VAT reclaim relating to overpaid output VAT in prior
periods.
52 weeks ended 53 weeks ended
(£m) 31 December 2022 1 January 2022
Adjusting items – operating
Demerger related costs – 5.3
Property, plant and equipment impairment
charge 0.4 –
Right-of-use asset impairment charge 15.4 1.1
Reversal of impairment of right-of-use
assets recognised in prior periods – (1.0)
IT separation project costs 24.4 14.2
Net unrealised gains on remeasurement of
derivatives at fair value (1.7) –
Output VAT reclaim (3.4) –
Total pre-tax Adjusting items 35.1 19.6
Adjusting items – tax
Tax on adjusting items (6.8) (3.2)
Adjusting items – deferred tax rate change – (6.7)
Total tax on Adjusting items (6.8) (9.9)
Total post-tax Adjusting items 28.3 9.7
Demerger related costs
Demerger related costs are the costs incurred during the process of
demerging the Wickes business from Travis Perkins Plc. Costs predominantly
relate to professional services fees.
Right-of-use asset and property, plant and equipment impairment charges and
reversals
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. Given the size of the total store
impairment charge, and that fact a key contributory to the existence of the
charge is the broader UK macro-economic events impacting many retail
businesses, and not solely the underlying performance of the Group’s
individual stores, this impairment charge is included within adjusting
items. Future revisions to these impairments will also be recognised within
adjusting items.
In the period ended 1 January 2022, an impairment charge of £1.1m was
recognised on stores that had been identified as impaired in previous
periods with the impairment charge included in adjusting items.
Additionally, £1.0m of previously identified impairment charge was reversed
due to the improved performance of the store.
In a portfolio of stores there will be, from time to time, impairments
rising on certain specific stores that do not arise from a broader macro
economic condition but arise from underlying trading performance. Such
impairments are therefore included within adjusted profit. In the current
period, no impairment charges (53 weeks ended 1 January 2022: £4.0m) due to
such impairments are included within adjusted profit.
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.
Net unrealised gains on remeasurement of derivatives at fair value
During the period, the high level of foreign exchange rate volatility
created significant fluctuations in the gains and losses relating to
derivatives at fair value. Recognising that these movements would have
distorted the trading result due to factors outside of management’s control,
and that they may reverse in future periods, a decision was made to treat
these unrealised gains and losses as adjusting on an ongoing basis.
An unrealised gain of £1.7m was recognised in relation to the remeasurement
of derivatives at fair value through the profit and loss account. As such
movements can be significant due to major currency fluctuations and the
timing of the Group’s purchases, it has been classified as an adjusting
item, which was not the case in the prior year period. As the prior period
movement was not considered material to the financial statements, the
comparatives have not been represented.
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 current year, the £3.4m credit has been
reflected in adjusting items. There were no such claims in the 53 weeks
ended 1 January 2022.
Deferred tax rate change
The tax charge includes an adjusting credit of £nil (53 weeks ended 1
January 2022: £6.7m) arising from the increase in the rate of UK corporation
tax effective from 1 April 2023 from 19% to 25%. The legislation enacting
this rate increase was substantively enacted on 24 May 2021.
6 Taxation
52 weeks ended 53 weeks ended
(£m) 31 December 2022 1 January 2022
Current tax
UK corporation tax expense 6.2 12.4
UK corporation tax adjustment to prior
periods (3.7) (0.1)
Total current tax charge 2.5 12.3
Deferred tax
Deferred tax movement in period 0.6 0.7
Other 0.2 -
Effect of change in tax rate - (6.7)
Adjustments in respect of prior periods 5.1 0.3
Total deferred tax credit 5.9 (5.7)
Total tax charge 8.4 6.6
The differences between the total tax charge and the amount calculated by
applying the standard rate of UK corporation tax of 19.0% (53 weeks ended 1
January 2021: 19.0%) to the profit before tax for the Group are as follows:
52 weeks ended 31 53 weeks ended 1
(£m) December 2022 January 2022
Profit before taxation 40.3 65.4
Tax at the standard corporation tax rate 7.7 12.4
Effects of:
Depreciation of non-qualifying property 1.0 0.9
Tax effect of non taxable income and
non deductible expenses (0.3) 0.4
Adjustment to prior period 1.4 0.2
Effect of share based payments (0.2) (0.2)
Change in tax rate - (6.7)
Other 0.2 -
Impact of superdeduction (1.4) (0.4)
Total tax charge 8.4 6.6
The tax charge includes an adjusting credit of £nil (53 weeks ended 1
January 2022: £6.7m) arising from the increase in the rate of UK corporation
tax effective from 1 April 2023 from 19% to 25%. The legislation enacting
this rate increase was substantively enacted on 24 May 2021.
The effective tax rate for the period is 20.8% (53 weeks ended 1 January
2022: 10.1%). The effective tax rate for the period was higher than the
standard rate primarily due to enhanced capital allowance claims made in the
2021 submitted tax computations, which whilst reducing the current tax
charge at 19%, resulted in a deferred tax charge at the future enacted rate
of 25%. The effective tax rate for the 53 weeks ended 1 January 2022 was
affected by the impact of the change in tax rate on the Group’s deferred tax
asset. These events and their 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 31 December 2022 is 20.2% (53 weeks ended 1 January 2021: 19.4%). 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 31 December 2022.
52 weeks ended 31 53 weeks ended
(£m) December 2022 1 January 2022
Profit attributable to the owners of the
Parent 31.9 58.8
(No.)
Weighted average number of ordinary shares 259,637,998 256,163,656
Adjustment for weighted average number of
shares held in EBT (6,941,807) (4,019,733)
Weighted average number of ordinary shares
in issue 252,696,191 252,143,923
Basic earnings per share (in pence per
share) 12.6p 23.3p
For dilutive 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.
52 weeks ended 31 53 weeks ended 1
(£m) December 2022 January 2022
Profit attributable to the owners of the
Parent 31.9 58.8
(No.)
Weighted average number of shares in
issue 252,696,191 252,143,923
Diluted effect of share options on
potential ordinary shares 1,698,226 259,182
Diluted weighted average number of
ordinary shares in issue 254,394,417 252,403,105
Diluted earnings per share (in pence per
share) 12.5p 23.3p
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”):
52 weeks ended 31 53 weeks ended 1
(£m) December 2022 January 2022
Profit attributable to the owners of the
parent from continuing operations 31.9 58.8
Adjusting items before tax 35.1 19.6
Tax on adjusting items (6.8) (3.2)
Adjusting items – deferred tax – (6.7)
Adjusting items after tax (note 5) 28.3 9.7
Adjusted profit 60.2 68.5
Weighted average number of ordinary
shares in issue 252,696,191 252,143,923
Weighted average number of dilutive
ordinary shares in issue 254,394,417 252,403,105
Adjusted basic earnings per share (in
pence per share) 23.8p 27.2p
Adjusted diluted earnings per share (in
pence per share) 23.7p 27.1p
8 Movement in net debt
Cash and cash Lease
(£m) equivalents liability Total
At 26 December 2020 6.5 (790.0) (783.5)
Cashflow
Net repayments from Travis Perkins Plc 123.5 – 123.5
Decrease in cash and cash equivalents –
other (6.6) – (6.6)
Repayment of lease liabilities – 109.1 109.1
Discount unwind on lease liability – (31.3) (31.3)
Lease modifications – (32.5) (32.5)
Lease additions – (3.0) (3.0)
Lease incentives received – (0.3) (0.3)
Lease terminations – 5.9 5.9
At 1 January 2022 123.4 (742.1) (618.7)
Cashflow
Decrease in cash and cash equivalents –
other (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)
Balances As at 1 January
(£m) As at 31 December 2022 2022
Cash and cash equivalents 99.5 123.4
Current lease liabilities (80.9) (81.4)
Non-current lease liabilities (610.4) (660.7)
Net debt (591.8) (618.7)
During the 53 weeks ended 1 January 2022, the Group received a £123.5m cash
settlement of certain intercompany balances owed by Travis Perkins Plc as
part of the pre-Demerger Reorganisation. On settlement of these intercompany
balances the Group derecognised an equivalent amount of the intercompany
receivables due from Travis Perkins Plc.
9 Dividends
As at 31 December As at 1 January
(£m) 2022 2022
Amounts recognised in the financial
statements as distributions to equity
shareholders are shown below:
- final dividend for the 53 weeks ended 1
January 2022 of 8.8 pence (52 weeks ended
26 December 2020: nil pence) 22.1 –
- interim dividend for the 52 weeks ended
31 December 2022 of 3.6 pence (53 weeks
ended 1 January 2022: 2.1 pence) 9.1 5.3
- pre demerger dividend paid to Travis
Perkins Plc - 30.0
Total dividend 31.2 35.3
In the period prior to demerger, a dividend payment of £30.0m was recognised
in the financial statements as a distribution to the former sole
shareholder, Travis Perkins Plc, in the 53 weeks ended 1 January 2022.
The dividend paid to Travis Perkins Plc was as a result of the
reorganisation of the legal structure of the Wickes entities in preparation
for the demerger. The dividend paid was in the form of an intercompany
transfer, as a result no cash payment was made.
A final dividend of 7.3p is proposed in respect of the 52 weeks ending 31
December 2022. It will be paid on 7 June 2023 to shareholders on the
register at the close of business on 21 April 2023 (the Record Date). The
shares will be quoted ex-dividend on 20 April 2023.
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 16 May 2023.
─────────────────────────
10 ^^ 1 For a definition of LFL sales, see note 3
11 ^^ 2 Source: GfK GB PoS data, sourced from GfK DIY Category Reporting
January 2023
12 ^^ 3 Defined as IFRS16 net debt / LTM adjusted EBITDA
13 ^^ 4 cost to sales ratio is the total of Selling costs and
Administrative expenses as a proportion of Revenue
════════════════════════════════════════════════════════════════════════════
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
════════════════════════════════════════════════════════════════════════════
ISIN: GB00BL6C2002
Category Code: FR
TIDM: WIX
LEI Code: 213800IEX9ZXJRAOL133
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 231878
EQS News ID: 1589823
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
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