Angling Direct PLC

Good morning, ladies and gentlemen, and welcome to the Anglin Direct PLC final results investor presentation. Throughout this presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor meet company dashboard and we'll send you an email to notify you when they're ready for you to review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll and would be most grateful if you could give that your kind attention. And I'd now like to hand over to Andy Torrance, CEO and Steve Crow, CFO from Anglin Direct. Good morning to you both.

Good morning. Good morning, everybody. Thank you for joining us this morning. We're going to run through our presentation and obviously take questions towards the end. I thought it'd be useful actually just to introduce ourselves. I'm Andy Torrance. I'm the CEO here at Angling Direct. I joined the business in October 2020. 2019 as a non-exec director and succeeded as CEO early in February last year, so just over a first year. My background is very much in specialist retailing. My previous position was COO at Holland & Barrett. Prior to there, I was the COO in the first non-family management team at Dunelm and prior to that, several years as the store operations supply chain director at Halfords.

My colleague, Steve Crow. Good morning. I'm Steve Crow. I'm the CFO. I've been with the business 16 months now. My background is primarily financial services and then more latterly, private equity in the fintech sector.

Great. So if we could have the next slide then, please. We'll work through the presentation. There's quite a bit of detail here. You'll find it on our investor website. A lot of the points hopefully speak for themselves, so I'm not going to read all the detail and all of the slides, just pick out what I think are the most pertinent things as we go through. But really, there's three things we'd like to leave you with at the end of the next hour or so, three key messages. Firstly, we set... ourselves a challenge, or I challenged the organisation very early last year not to let the pandemic stall this business. It's a great story and it's very impressive growth to date. We have traded continually through the pandemic. About half of Angling Direct's turnover was online before the pandemic started. And thanks to some prior investment in the distribution centre here in Norwich, we were able to very confidently continue to transact safely through all of the various lockdowns and all the various restrictions. Hopefully, we share the optimism of the rest of the country that we appear to be getting through the worst of the pandemic now, but I think it's really quite clear that we've demonstrated We're a much stronger and much more resilient business now. And, you know, we can take whatever restrictions or further issues that the pandemic throw at us, not least because, thankfully and very helpfully, the government acknowledged very early on that phishing is a really very good activity. It was one of the first activities to be released and allowed again during lockdown one. Second point, I think we've really clearly shown that we can continue to grow this business at pace, but not only grow it at pace, start to deliver some underpinning, good quality, sustainable EBITDA growth at the same time. And thirdly, despite all the, I guess, unexpected changes, crisis management, for want of a better phrase, that's been thrown at the business in the last 12 months. I'm really personally very, very happy with the way that the organisation has responded and really pleased with the fact that not only have we managed to trade very successfully and we're very very pleased with the numbers in black and white. We've also made some huge steps forwards in terms of contemporising and professionalising the business, actually building a much more solid and confident foundation for the business to continue to grow going forward. So if we could flick over to the next slide. This is the overview of our financial year that ended at the end of January 2021. This is lifted directly from the R&S. Steve will cover some of the numbers in a bit more detail as we get through the presentation, but there's just a few things I'd like to highlight off this A very, very pleasing 27% growth in group sales. If you take the roundings of the numbers away, that's slightly greater growth rate, in fact, than the prior year, but that's two straight years now of around 27%. Our growth hasn't slowed at all, despite, in fact, that our stores lost over 30% of their available trading days last year. And despite that, our like-for-like stores were only 8% down compared to being completely closed for 30% of the day. So very good and very pleasing that we've continued the momentum of the business going forward. Web sales were up 40%. Web visitors to the UK website increased by a huge 50%, perhaps not surprisingly because of lockdown and furlough, the increased opportunity to browse. But what is really, really encouraging for us is despite that, Huge increase in web traffic and web footfall. Our conversion rate held up in the UK at what we believe is a very encouraging 5.9% and delivered growth to the UK website of 61% in the year. Perhaps the big story, though, and our overriding objective in the year was to show that we can improve the margins. There's a 300 basis point improvement in our gross margin, our gross trading margin in the year, made up of a combination of smarter trading, improved shrinkage, and indeed a lower cost of sell-through of products associated with previous acquisitions. If you'd like to turn the page on slide three, you can see those numbers in graphical form. On the top left-hand side, you can see our total revenue continues to grow with another substantial year, as we mentioned. On the bottom left-hand side, you can see the growth of our native website country revenue. And that's just as a reminder for those of you that aren't that familiar, we also have a German website, a French website, and a Dutch website. Our German sales grew by 28%, our French by 39%, and our Dutch by 44%. Our total international sales last year were 4.3 million pounds sterling, which is 12.4% of our total online business. In the central block there, you can see the huge step forwards. In fact, not just improving on FY20, but also a considerable improvement on FY19, an improvement in our gross margin to 34.2%, which is an improvement of 300 bps in the year. If you combine that big slug of revenue growth with a big improvements and healthy improvements in gross margins, but also some improvements in particularly the efficiency of our web fulfillment, which we're really pleased in. We'll cover in a bit more detail in a moment. Combine those three things together and you can see that drops straight through to a pre IFRS 16 EBITDA performance of £4 million, which I'm told is an increase of 958% on the prior year. On the top right-hand side, you can see the massive increase in visitors to the UK website and UK web conversion holding steady. at 5.9%. Our international web conversion also increased by 90 basis points to 2.8% as we continue to acquire new customers on our international sites. I'm very pleased that that number starts to get closer and closer to our very successful UK metric, a 68% increase in visitors to our international websites in the period. The next slide. It's a bit of a contextual slide, really. We've taken the opportunity in the year to just review our strategy, to refine it slightly. It hasn't radically changed. But obviously, as we've taken learnings from the year we've had and got to grips with the business, started to understand some of the drivers of the business, it felt the appropriate thing to to refine things here our purpose as it's stated there is to inspiring everyone to get outdoors and enjoy an exceptional fishing experience um for us inspiration isn't just about the stimulus of of of some great fishing locations and the actual experience it is inspiration as well through the ease of access making uh the ability for everyone to get out and have a go at fishing or improve their fishing, very easy and straightforward. It is about inspiring everyone. Angling Direct sets out to appeal to people of all backgrounds and all abilities, regardless of age, gender, whether you're new to angling or indeed a very, very seasoned and capable angler in your own right. It is about getting outdoors. It sounds obvious, but quite clearly, especially in this last year, the general well-being and increasingly clear mental health well-being benefits of getting outdoor I think are becoming more and more obvious to everyone and it is about helping our customers enjoy an exceptional fishing experience and for that frankly is very specific to the individual whether it's starting something for new whether it's starting to fish for a different species fish in a different geography improve on your personal best or indeed start to enter competitions it's a very personal thing but who whoever you are, wherever you've come from, as far as we're concerned, for us it's about helping you get that exceptional experience. We've restated our ambition, it's very much to become Europe's first choice omnichannel fishing tackle destination, as we said, for all anglers, regardless of their experience or ability. That ambition and that purpose are prompted by four strategic pillars and it's probably worth just Again, contextualizing. In terms of product authority, the first pillar, Angling Direct will always be a category killer. It is our clear intention to have the very best, broadest, deepest ranges covering all the major fishing disciplines. And we will always be very, very keen on price. In terms of customer experience, this is, you know, we are a specialist industry. niche retailer. Customer experience is absolutely at the heart of everything we do. Our business will grow by creating loyal customers, by driving conversion, and indeed prompting recognition. Inspiration and advice, we've probably already covered, but it is about one of our founding philosophies. is about making fishing accessible and easily acceptable to everyone. In terms of responsibility, I guess, as anybody would expect as market leaders, this is becoming increasingly important to us to not just be seen to be acting responsibly, but genuinely doing so, actively engaging in the fishing community. and increasingly playing our part in leading the thinking environmentally and sustainably within our markets. Over the page, the next couple of pages try to set out some of the progress we've made strategically in terms of tangible achievements in the last 12 months. They're headed on the left-hand side by what we titled sort of areas of initial focus. So these are the things we set out at the beginning of the year to address. I'm just going to pick a few out. I think they speak for themselves, and there's a bit more detail in the numbers later on. In terms of operational excellence, this is about trading agility, trading a bit more smartly. It's about looking at our fulfillment capacity and efficiency, and indeed ensuring that we're at the forefront of of available technology. We did in the year considerably lower the amount of discounting we meant to do. I think it's important as market leader that we take a lead in ensuring the stability in the marketplace. We now target our promotions far more closely to selling through the sort of tail of perhaps slower moving products. In our distribution centre, we approve wage efficiency by 240 basis points to 3.6% of sales. And that alone is a a cost avoided of the best part of £800,000 within the year. In terms of return on capital, for us, this was all about looking very closely at store contribution. We're very, very conscious our stores need to earn their keep. looking at our stock turn, the quality of our stock, and indeed our Advanta, which is our own brand range, growing that brand within our business. I'm delighted to report that the Advanta own brand sales increased by 122% within the year. which is a participation up from 2.8% to 4.8% of sales. And we believe there's certainly more to go. We obviously get the margin benefit of improving that mix, and we're looking to see that move on again this year. Stock turn improved to 3.6% from a prior year. of two, sorry, 3.6 times from a prior year of 2.8 times. So an improving stock turn and improving quality of the stock that we're keeping. In terms of customer segmentation, what we've done in this year is actually established what I call a sort of classical category sale, category management strategy. We've restructured our buying and supply chain teams into categories that are customer segmented. They're organized along the lines of the classic key phishing disciplines, and also very focused on ensuring that we look to serve all customer types, whether you're a beginner, a generalist, an enthusiast, or indeed committed. I'm not sure we've seen the benefits of that yet. It's a work in progress. And as per the plan, we've put in place the structures. We've made some key hires into this team. We've done a lot of work improving the data available to that team. And we expect the benefits of that restructure to flow in this current period in FY22 and indeed 23. In terms of digital capability, in the prior period, we did upgrade our web platform. And in this year that we're looking and reviewing at the moment, this was the year that we were able to successfully deploy various bits of new customer-facing functionality designed to grow baskets, to improve conversion, to trade towards margin. So in the year, we were able to introduce features such as customers who searched on this, type of product, also search these similar items. Customers that bought this also bought this. We can now do e-gift cards, reserve and collect. We have specific pages for beginners, for different fish species, for our Advanta own brand. And indeed, in the sort of Monday last week, in fact, we did launch a new search methodology, which is underpinned by AI, artificial intelligence, which gives a much, much quicker search. far more personalized search a far more relevant search which we're um very very excited and encouraged about um over the page on slide six uh you can see we we had a very close look at our store catchment so i know we've had some questions in in this area we open four stores in the year we started to think very closely based on some of the customer and category management data we have about the macro and micro space allocations within those stores we've changed the way we message and improve the way we message to customers within those stores and we are going to start over the course of the next 12 to 18 months rolling back some of the learnings from those new stores as we've identified some of the opportunities that gives us. We have reviewed all of our still catchments. Under Steve's stewardship, we've raised the investment hurdle for new stores. We're very clear now that we can improve on our ingoing capex, we can improve on our ingoing stockholdings, we can improve on our ingoing people costs. So we are expecting the paybacks of our nearest stores to continue to improve. It is clear to me that we've got, there are at least 50 locations in catchments in the UK that will stand a turnover at least 1 million stores. We're up to 39 stores now, so it's fairly clear that there's more stores to go at. As the economics of our newer stores improves, you could argue that we could push that on, but we'll only do so when we're convinced we're getting an appropriate return on our capex. In terms of international growth, This, I think, is a real game-changing opportunity for us. We are focused now on five key countries, Germany, France, and the Netherlands, where we already have native language websites. We get a very nice halo effect from our German website into Austria, and perhaps not surprisingly, from our Dutch and French websites into Belgium. So Austria and Belgium make up the fourth and fifth countries. key territory for us. The metrics of these websites continue to improve, as I mentioned earlier. We have got a little bit of headwind at the moment here post-Brexit. I'm sure you're all aware of the disruption at the borders, for example, considerably impacted in customer lead times. And we are having to, or we have, or we did last December review our metrics for free delivery and indeed the cost of delivery into Europe as we are now having to absorb the associated customs charges post-Brexit of going B2C into Europe. This is an area where, as we've emerged from the pandemic, a lot more of our management attention and thinking, evaluation, we are working with some specialists to help us work this through as it's becoming increasingly obvious that we need, sooner rather than later, an in-region fulfillment option. And we hope to take that forward in this next year or so. In terms of organizational capability, I've mentioned that we made some key hires into our category management team. In the year gone by, we've also made key hires into IT, into web development. We've significantly strengthened our finance team and more recently also the leadership of store operations, all of which I think is not that surprising in a business that's growing as fast as ours. It's important that we invest in good quality people ahead of the curve in order to ensure that we keep the encouraging momentum of the business alive. In terms of colleagues and communities, We're very, very excited about a partnership we now have with the Angling Trust. That's a two-year exclusive agreement to sponsor their Get Fishing campaign. That's designed through Bankside and coaching activities to get tens of thousands of people potentially fishing for the first time. And we will be providing not just our financial support, but also resources of our own. We now have over 80 Angling Trust certified angling coaches, at least two in each of our stores. They will also be involved in those events. And final points on this one as well. We're also very proud to have supported Tackling Minds charity up in the Northwest, who you could well have seen a fair bit about on TV, radio and indeed the press in the last few weeks. Tackling Minds is the first charity charitable provider to actually support the new NHS social prescribing initiative which is actually now prescribing amongst other things angling as a great thing to do to support people that need help with their mental health so we will continue to be very active and positive supporters there. If you want to go to the next slide, this is a section on a bit more detail on a financial overview, which I'll hand over to Steve to take you through.

Thanks, Andy. I'll attempt not to repeat any of the detail that Andy's already given. I think that there's a couple of key takeaways from this slide. So you'll note the gross margin increment of 300 basis points year on year towards the foot of the page there. I think that there are some key facets in terms of what's driven that, which Andy's alluded to. In particular, the own brand sales, so that the penetration rate there has incremented the margin about 30 basis points. And the business is looking to go on a journey with further penetration of those own brand sales, which can further help increment our gross margin position. um pleasingly our second half gross margin was 34.9 against the first half of 33.5 which shows the progress we're making in terms of trading the business differently and and smarter it is worth noting that um in the second half of the year we have uh aligned with the category management um project and and uh initiative I've taken a 50 basis points decrement to the margin where we've identified ranges that we are potentially going to exit from the business in financial year 22. And we've taken the full cost of that within our 21 numbers. Just beneath that, the people cost, so that whilst the growth in pound notes was modest, the actual ratio in terms of the percentage to sales continues to decrease as we're able to further gear our online business, in particular the distribution centre and the wage colleague ratio that Andy referred to earlier on. And at the foot of the page, the advertising cost, we've driven that down to 4.5% of online sales this year. That's a strong achievement in terms of maintaining an appropriate balance between the investment we're putting in paid advertising to generate stronger traffic, in particular on the native site relative to the UK. And indeed, we see that now in a corridor that's at a sustainable level in terms of what the business needs to deliver from a medium term financial objective. We go on to the next slide. I've set out the income statement for folks there to see. Again, just, you know, the key standout again is the gross profit number, the 23 million that we've driven, you know, with a good slice of that coming from the 300 basis points. It's worth noting that the online margin incremented 370 basis points to 33.2 and the store margin increased 260 basis points to 35.3. And pleasingly, we're seeing the gap narrowing as we're looking at how we trade the business and using the online business, not as a sort of secondary component of the overall business, but standing in its own right from a ranging and a sell-through perspective. The gap, as you'll note, has gone down to 210 basis points in terms of channel versus channel. And we can see a strong path to reduce that further in FY22 and beyond. The EBITDA margin there of 8.5 versus 1.2, that is on a post IFRS 16 basis. On a pre IFRS 16 basis, that's a 680 basis points progression. And 300 of that is from the margin, 160 from costs. And it is worth just drawing out. We did take 1.5 million of direct government help in the year FY21, which was £900,000. of job retention scheme monies and 600,000 of retail property grant scheme monies. That was 220 basis points on a standalone basis. Again, it is just worth acknowledging those were costs that we were reimbursed for that we directly incurred whilst we were unable to trade fully in our store footprint. Over the page, is the IFRS 16 reconciliation. I won't dwell on that other than to say you can see at the profit before tax level, it's broadly neutral. It's less than 10 basis points on that as a percentage of overall sales margin. But it's worth just pointing out the gearing effect that IFRS 16 continues to have on the reported EBITDA number. Over the page on 11, the balance sheet. So, you know, strong progression in terms of the robustness of the balance sheet, underpinned by the placing that we did back in June, where that cash balance, you know, retains that broadly £5 million that was raised. The key story from the balance sheet really is the inventory position. So around a million pounds reduction year on year, as we focused on ranging, as I mentioned earlier. and in terms of how we are looking at an appropriate level of stock in terms of hold level depth that we're deploying. Indeed, the distribution centre pleasingly has gone up to around six times stock turn, which we're feeling is a much more appropriate level for the range of stock that it holds. A medium term target for hold, we feel, could be around the four times. That's unlikely to be achieved in the next couple of years as we continue to look at the own brand penetration where we need to hold greater volumes of stock over the winter quarter as we source that from the Far East ahead of Chinese New Year. On to 12, slide 12, if I may, please. I've bridged the cash position there. You'll note that I pulled out on the far green blob right-hand side the raise money. Pre the raise money, we were still cash positive the first time, which was particularly pleasing. underpinned by that strong EBITDA performance, but also the working capital benefit we were able to realise through those reviewing of stocking and processes. Indeed, the EBITDA and the working cap benefit more than outweighed the capex in terms of investment for the business. So around the sort of the 1.7 mark that I've highlighted in the red box in the middle of the graph. Over the slide, I'll hand back to Andy to pick up the business review for anything we've not touched on, Andy.

Okay, thank you very much. These next few slides just go into a little bit more detail. Again, I think we've probably covered on most of the points, and I want to leave some time to be able to get through your questions in a short while. On this slide 14, then, I think we've covered most of those things. We haven't spoke too much about our reaction time, to COVID. As I say, we're hopefully as optimistic as most people that we're through the worst of that. The business, as I mentioned earlier, I think was very agile and responded really exceptionally well. Obviously, our initial reaction was to ensure that our customers and our colleagues in whatever we do are able to do so in a safe way. So our continued safe operation was our initial point of focus. We very quickly moved on to focusing on our cash situation and indeed our stock situation. So very pleasing with the way that the business responded to that. Steve mentioned we did raise additional cash from our shareholders in June last year. and continue to remain very grateful for their support in that matter. Once the stores had reopened in June, the balance of the year very much for us was sort of optimising our trading position and ensuring that we continue to make all this progress on the strategic point. Probably the only page point on this slide 14 we haven't mentioned, we did take the opportunity during the winter to invest a modest amount of cash into our distribution centre which increased its capacity by around 80% in terms of storage time, storage opportunity, which clearly gives us further headroom for growth into the future. Over the page on slide 15, we have our store portfolio map. You can see the green spots there of the four stores that we opened in the year, a couple of infills in the Midlands in Leicester and Northampton, a store up in the northwest in Warrington and also in the southwest in in bristol since the start of the new period we have actually opened a further a 39th store in redditch which complements our existing store in birmingham on the other side of birmingham which birmingham is a conurbation more than capable of standing to angling direct and indeed we've also recited our store in sittingbourne which was a very small and slightly unloved um, store down, uh, in Kent there, which we've moved just over the road into a much more modern building, put in our sort of most recent contemporary layouts. And we've, we've already more than doubled, um, the turnover there. We're, we're, we're very pleased. Uh, this does also refer to, uh, a key appointment we've made within store operations, uh, somebody that brings to the organization, uh, a lot of, um, specialist retail sales experience, uh, One of the, I think, big opportunities for us, we have undoubtedly one of, if not the best sort of cadre of store colleagues in terms of their enthusiasm, their confidence, their almost without exception, exceptionally capable anglers. And I think there's an opportunity to balance that, get the balance right. I'm not an angler. My colleague, Steve, is a very enthusiastic angler. And I think it's about getting the balance right between an absolute specialism that is vital to our customer concept, but also the more contemporary retailing and trading skills. So ironically, with our stores being closed for a as I mentioned earlier, over 30% of the year, and they're very busy when the stores have actually been open, our opportunity to work on the in-store behaviors, the capability of our store teams to sell across or sell up through the basket, sell across to better margin products is something that I think we're only just scraping the surface of. And I do believe there's a lot of opportunity to come there. Slide 16, over the page, has a lot of our digital KPIs you can see on the left hand side there again quantifying website visitor numbers conversion numbers very strong both in the uk and in europe on the right hand side you can see our average basket online went down 40 basis points which we were actually very pleased with when you consider that for a large part of the year our traditional bricks and mortar retail customers were being pushed online perhaps for the first time so you have the mix effect of a slightly lower traditionally slightly lower atv more associated with angling consumables in bricks and mortar onto our online website you can see uh as steve mentioned our return on on uk advertising spend went up very healthily to a really encouraging 1660 and indeed our social media followers jumped up again Our social media following across Facebook, Instagram, Twitter, et cetera, et cetera, being head and shoulders above anybody else in our marketplace. The bottom right-hand side, you can see the volatility of web sales across the year. Those spikes were really very exciting and very encouraging. They brought challenges of their own. I guess the most encouraging thing, it shows we do have the capacity to to flow through considerably larger levels of business through the facility that we have here in Norwich. The following slide is around sustainability. Again, as you'd expect in a business of our size, This is something that we increasingly turn our attention to. It is at the heart of the founding philosophies of our business. We established in the year an environmental steering group. We are large supporters of the Anglican Trust's Anglican Alliance. pollution campaign and indeed some very successful energy saving measures here in the distribution centre and across the store estate were put into place under review. In terms of reducing waste, believe it or not, we have now actually recycled over £1.2 million of meters of old fishing line, which has been recycled into various things, traffic cones and the like, and we'll continue to actively back that. An 80k saving in packaging materials used in our web store as well represents a big step forward in terms of reuse and recycling of packaging. Moving down, we've now given over 12,000 free whip kits. These are starter kits for younger people, for the under 16, so encouraging them to have a go. And that's something we'll continue to do, particularly around the school holidays. As I mentioned, very excited about the Get Fishing campaign and indeed our work, not just in our angling communities, but also with our colleagues here within the business where we have actually run wellbeing and mental health workshops throughout the year, which is something that is very important to us and we will continue to do in the year ahead. Over the page, I've just tried to outline our key priorities for the year ahead. We, under digital, and again, I'll just pick a few of these out, we have rolled out a priority subscription model, which has had some very encouraging take-up initially. We expect to grow that. This clearly drives loyalty and repeat purchase for an annual subscription. Our customers are able to access free priority delivery. And indeed, we will be launching a mobile app later on this summer, which again, especially for anglers out on the bank, gives them a far more contemporary opportunity to actually engage with Angling Direct on the go. In store, I think we've talked about rolling back some of the learnings we're making about space allocation off the back of our customer segmentation and category management processes. Internationally, our focus is very much turning to in-region fulfillment. It's a very compelling market in Europe. It's highly fragmented, very similar to the UK in that nature. And there isn't any significant competition out in mainland Europe that has the sort of contemporary customer offers that we have here in Angling Direct. So we're very committed to this. as an opportunity. We do, though, in order to be able to offer priority delivery, next day delivery, in order to be able to avoid what is now sort of a considerable headwind of customs administration and everything that that entails, we do need to establish some sort of in-region fulfillment. And an awful lot of our time and evaluation and thinking at the moment is very much focused on that. um commercially embedding and driving the benefits of category management we've already spoken about we expect to see that in the year ahead and indeed in terms of community and sustainability we have a very active program there we're about to launch a late participation scheme which allows us to work with the owners of various fisheries around the country particularly focused on catchments where there isn't a nearby bricks and mortar angling direct presence. We will be able to go and talk to anglers about our environmental credentials and indeed our approach to fish care and welfare. Over the slide then, in summary, hopefully we've covered all of the points on here. I mentioned three big call-outs at the beginning of the presentation. I hope you'd agree, we're very pleased with the progress that the company's made in this last 12 months. We haven't let the pandemic stall either our financial progress or indeed our strategic thinking and our strategic development of the business. I think we are starting now to clearly demonstrate that not only is this business capable of continuing to grow at pace, we're also capable of growing profitably, demonstrating ever-developing and increasingly better quality EBITDA, and importantly, despite having to manage all of the issues around the tragic nature and the difficulties of the pandemic. We've also been able to make some real strides forward in terms of governance, in terms of the way that we're contemporising and professionalising the business to ensure it retains its momentum and market-leading performance going forward. Over the page, in terms of current trading and outlook for the business, we know we fully appreciate everybody's, despite all the uncertainties and what's going to be some interesting annualizations of those spikes last year, everybody's keen to understand current trading and outlook. Our first quarter of this year has been very strong. Our total sales up significantly. 54% so that does reflect sort of the overlap of lockdown one and lockdown three as I'm sure you're aware our online sales have been up 42% our store sales in this first quarter up 75% and that in quarter one We're very encouraged with that. Our stores in this quarter have been open for three weeks. In quarter one of the last financial year, they were open for seven weeks. So that puts a bit of context perhaps around that store number in particular. We are very focused internationally. We'll continue to invest. digitally to acquire new customers across those five key territories of Germany, France, the Netherlands, Belgium, and Australia. And assuming there are further no lockdowns and no further significant restrictions, very confident that the group's well-placed to deliver profitable growth in revenues, albeit potentially at a slightly lower rate. than the prior year as the amount of government support is significantly lower within the year we find ourselves in now. We have reinstated financial guidance for FY22. We are on track to meet current year market expectations. We only have one analyst writing research on us at the moment and they've put us on a £72.5 million revenue and a £5.7 million pre-IFRS 16 EBITDA. Our cash balance at the end of April, still very healthy at £15.5 million. And indeed, we have announced some recent changes to our board at the conclusion of our AGM Our current executive chairman and founder, Martin Page, who's still a shareholder within the business, is going to be moving into a more traditional non-executive chair role. He's still very committed to the business. He's very passionate about angling and making sure angling is accessible to everybody. Very active campaigner for the environmental care as well within angling. Additionally, Darren Bailey, my predecessor, previous CEO, will also stand down at the forthcoming Annual General Meeting. Darren has been exceptionally supportive and very accessible to me in this last 12 months, and I think it's clear to the Board now that it's a good time for Darren to step back from the business, which allows us to appointed new completely independent non-executive director and we've commenced the search process for that individual with a clear focus on international credentials and indeed as you'd expect digital credentials as well to bring that influence and experience to the board. And that concludes the formal part of the presentation. Thank you for your time. I think we're going to have a go at some of the Q&As.

Absolutely. Thank you very much indeed for your presentation and for updating investors. Ladies and gentlemen, please continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. But just while the company take a few moments to review those investor questions submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your InvestorMeet company dashboard. I'd also like to remind you that feedback, your feedback, is important to the company. And immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Andy, Steve, before we look at the questions that have come in during the live event, investors have the ability to pre-submit questions. And we've got six just to quickly run through, if I may. The first one reads as follows. What is the outlook looking like for demand for angling and therefore angling products for the remainder of this year and into next?

I think we probably just referred to it, really. Business is very encouraging at the moment. We've had a very strong first quarter. It would be dishonest, though, to say that, you know, there's a little bit of uncertainty here because we have got to annualise huge growth last summer when the country came out, eventually came out of that first lockdown. And we are starting to see some of that annualisation now. If you remember... golf and tennis and indeed fishing were the first three activities in lockdown one to be allowed and that happened the government announced that in the middle of May last year and they did that about three weeks before they allowed bricks and mortar stores to reopen so This time last year, we started to see some even bigger increases in our online business as people prepared themselves to get back out on the bank. So we are starting to see that. Having said that, it's increasingly starting to look very much like another staycation summer. Sales of environment agency licenses continue to grow. And indeed, the amount of coverage in the news and on mainstream media recently, in particular about the real benefits of being outside to general well-being and indeed, particularly mental health, I think are all strong drivers of what promises to be another exciting fishing season.

Thank you very much indeed. Next question reads as follows. Andy, you've now had your feet under the desk for about a year with Martin moving to a non-exec role. How do you see the evolution of the company changing? What are your three key strategic priorities for the next three years? I know you touched a little on this, but wondered if you could expand slightly.

Yeah, yeah. Well, hopefully the audience will glean a lot from the presentation. But I think in practice, Martin's changing role isn't in practice going to change too much. He'll still be readily accessible to us. I think our strategy has evolved slightly and is becoming clearer and clearer all the time. Hopefully you've taken from our presentation that we see Europe as a potentially game-changing opportunity. a very clear opportunity for us to expand our reach there. Having said that, it's really important and we're very, very conscious that we don't do anything too reckless there. We need to think those steps through very clearly. We need to evaluate those next steps and be very clear on what we're seeking to achieve, what it's likely to cost us and what sort of paybacks we're gonna get. And at the same time, we continue to ensure that the UK business the sort of engine driver, the core business that gives us the sort of right, if you like, to go and invest more in Europe, continues to fire on all cylinders. So we will continue to invest in terms of our digital marketing spend in order to acquire new customers in Europe as well as in the UK. And we will continue to focus on ensuring we get a good return for our investments, whether they're in bricks and mortar or indeed digitally wherever. whatever channel and whatever geography that we focus on.

Thank you. Just to give you a break, questions for Steve here, I guess. Gross margin was about 34% for last year. What figure do you aspire to in the medium term?

Thanks. I'll just clarify something. In terms of our broker guidance right now, the 5.7 million that Andy referred to is on a post IFRS 16 basis. The pre IFRS 16 number is 3.8 million. That's an 8% upgrade on the broker's pre IFRS 16 number. And within that, upgrade to 3.8 million pre-IFRS 16, but he's got us in for 34.9% gross margin, which And indeed, Andy and I have always had an ambition to achieve a minimum of 36% gross margin in the medium term, which we feel we need to underpin an EBITDA ratio of around 7% to 10%, which is a pre-IFRS 16 EBITDA ratio. So we're plotting a path to that 36% within the medium term as a minimum.

That's great. Thank you. We've got a couple more questions here. You give the market value of the UK at 570 million in 2015, growing at 0% to 1% CAGR. What are the equivalent market sizes for the five European markets? What share of sales do you see Europe being in five years' time?

Yeah, I'll tell you that one to give Andy a break. The key territories of Germany, France, and the Netherlands is about 1.8 billion across those three, France and Germany being the largest two, estimated around 800 million sterling. With the native websites, you get the halo effect across Austria and Belgium, which we think added on to those three initial ones, takes it to about 1.9 billion market. In terms of where we're going to take the business market share-wise, until we've answered the question on in-region fulfillment, we don't have a clear view on that right now. The economics have continued. continuing to trade on a native site with the frictional costs of Brexit in terms of the carrier charges, we wouldn't see huge incremental growth if we weren't able to change the operational model that we're going to deploy.

That's great. There was a question that's coming from Peter C. Thank you, Peter, regarding expectations for your own label. And there was also pre-submitted questions, which I've put together, I guess. The question reads, own label is growing and is now at 4.8% of sales. What share of sales will it represent in five years' time? And is the share of sales it represents bigger or smaller online?

I think this is a really interesting one, and it's often asked and it's subject to a fair bit of debate here internally. Obviously, where the business is growing as fast as ours is growing, actually to hold the participation steady in itself represents quite a considerable growth each year of these Advanta-owned brand sales. We had really good success last year, I think, in effectively – not quite, but almost doubling that participation, 122% growth, basically by backing the product with stock. It sounds a little bit naff to say, but these are angling products designed by anglers for anglers. They are genuinely designed by our people here. We don't buy things off the shelf and just put them in a different box. We're very confident that these are good quality products. They're keenly priced. We've had some initial traction by backing them with good stock. We're going to do some work on packaging and marketing in this year and indeed looking to expand the range outwards. I think... We can see a pathway through to sort of mid-teens in the next two to three years. There is a little bit of evidence of some businesses – there's a competitor, in fact, out in Europe that pushed this too far. I don't think this is a business where our own brand can be in the sort of 40% or 50%. There's a lot of evidence that anglers – stick with a brand that they perhaps had particularly good results with so um i i our initial focus is to move um fairly rapidly to to mid-teens by continuing to develop the range and importantly making sure those those products um stay stay stay relevant um yeah that's that's that's

Perfect. Thank you. The final pre-submitted question, I'll just bring up the map in case it's any use to you, is previously we've seen 50 as the ceiling for the number of UK-based stores. Is that still your current view?

Broadly, the answer to that is yes. I wouldn't use the word ceiling. Certainly, the Environment Agency makes available all of its catchment data for where it's selling fishing licenses. And that's really, really useful for understanding where anglers live in sort of concentrations. What that doesn't tell you so much, though, is about the types of fishing where you don't need an angling, sea fishing, saltwater fishing, for example. You don't need a license. And as you can see on the map, there are some catchments there where we're not represented. We're not represented at the moment in the northeast, but we hope to be shortly. We don't really have any stores on the south coast or in South Wales. all areas that have got high populations where we know there are sort of healthy fishing communities. So those catchments certainly exist. 50 is the number that we're using at the moment in terms of our current model. If you started to look at catchments where we felt you could support a store of maybe £750,000 a year, that number goes up really quite considerably. So having said that we, we're very clear that, um, our investment hurdle in bricks and mortar has gone up. We are very clear that, uh, any investment we make in bricks and mortar, um, has to, um, uh, earn its keep and pay its way and get an acceptable return. Also equally clear that angling direct is a genuine omni-channel business. You know, fishing is very localized. It's very community-based, um, anglers, um, Certainly really value the opportunity to mix with other anglers, to spend time with our store colleagues in store. Local knowledge is a genuine real thing about what to fish and where to fish and what times of the year to do it. So our bricks and mortars remain certainly in the UK a key feature of our strategy going forward. Around 50 stores. We opened four stores last year. We'll probably do another four stores this year. I don't anticipate us opening 10 stores again in a single year like we did in years gone by.

That's great. Well, thank you very much indeed. And thank you to those investors that pre-submitted those questions. Now that takes care of those pre-submitted questions. Now, perhaps I could just ask you to look at the Q&A tab. Could I ask you please to read out the questions, perhaps who it's from and give a response where it's appropriate to do so. And then I'll pick up for you from the end.

Okay. So the first question is from Raghavan. S. Raghavan, thank you very much. What is your expectation for future UK physical store growth? I think we've probably just covered that. And secondly, do you expect to have physical stores in Europe? I... I wouldn't rule out physical stores in Europe. I think over the last few years, we've had huge success of extending our reach and acquiring new customers in Europe digitally. I think that is a way of establishing the angling directors clearly participating within those markets. I think over a period of time, as our share starts to grow and our in-country fulfillment materializes, that then the opportunity to open physical stores in Europe sort of clearly exists. It's a very fragmented market over there, but we've no plans to do bricks and mortar in the near future. Do we sell it? Chris A, thank you very much. Do you sell into the Republic of Ireland? We do, but it isn't one of our focus territories. The fishing in the Republic tends to be slightly different. It's very fly and game fishing focused, which whilst we do deal with that discipline within the UK, it's probably our smallest fishing category. The next question, Andy M., thank you. Can you give some idea of the competition in the marketplace and how do you protect your market leading position? The UK and the European markets, as I've mentioned, is very fragmented. I think the last time, and data is quite tricky to come by, but in the UK, when the last big survey was done, it was believed there was nearly 2,000 fishing tackle stores in the UK. They're largely characterized as being single site operations. The vast majority of them don't trade online, although some do and increasingly do. An awful lot of them are independently owned. The demographic of the owners suggests that they are potentially approaching a point where they might be considering the future of their business. And indeed, I don't think it would be unfair to say that Angling Direct contributes to some extent to the consolidation of the market. We, in terms of protecting our market leading position, we just set out to be the very best at what we do. As I mentioned in the strategic pillars, we are looking to offer the widest ranges, covering the key disciplines. We invest very carefully to ensure that we have good stock availability. And that is all underpinned by brilliant experience in store, driven by our store colleagues, and indeed the sort of very best digital technologies for people that choose to interact with us online.

um just trying to read these ahead do you want to take one of the next yeah yeah so chris i do have access to any data about lifetime value per customer or average sales per customer per annum so we certainly do have data in terms of um customer repeat visits in terms of how frequently individual customers are visiting us online it it it It's important to note that in store there, we don't have a way of capturing who individual customers are and how transient they are between the web or the stores. So we do look at the frequency. It's one of our sort of key target areas for 22 and beyond. If you did the maths on the online page, which is, you know, visits times conversion divided by, divided by the number of orders, gets you to a frequency of about two. And it was at two again this year. Indeed, we're looking at how we turn a huge number of one-time visitors into the twos, threes, fours and fives. And we're seeing some green shoots in terms of modest progression in the first half of this year on that. Do you want me to do the next one? So next one from Steve G. Are you able to segment individual customers within the customer database according to their phishing type, visit frequency to store and web and understand their relative profitability and also to communicate according to their phishing type? So in terms of can we see who is coming for what? Yes, we can. Can we see what they're buying? Yes, we can. Are we segmenting our customer reporting internally about the relative profitability? We're not. We are looking at the repeat profitability. visit driving profitability. We're performing an exercise now just to confirm our thesis around the more frequently you visit, the more profitable you are, because actually there's very little evidence that customers who come to you through a paid channel then revert to an organic channel post being a paid customer. And indeed, anyone who starts as an organic customer is equally as likely to become a paid customer, paid advertising customer, as they are continuing on the organic channel. So from a customer lifetime value, we don't consider traditional customer lifetime value an appropriate way to look at the profitability of a customer. It's that blend of how we deploy our advertising spend relative to the frequency of that customer returning to us.

Another one from Steve G. Thank you. What are the key actions to build brand awareness? For example, working with phishing influencers and advertising. This is a key part of our strategy, reaching out to an increasing number of customers to convince them to invest. to sample and triangling direct, whether it's one of our stores or online, is a key plank of our strategy going forward. We do invest in digital marketing quite considerably. If you take the opportunity to try our new search, we'd love you to try the new search. You will see if you go onto Google, we do tend to pop up at the top or very near the top on the vast majority of thousands of key search words within Angling. We do have a very active Team AD social media network, which is our Team AD platform. uh social media guys are are both genders various ages different fishing enthusiasms different abilities which is it makes for very entertaining uh material and they they have huge following and engagement we do actually also employ native speakers to do all of the marketing and social media on our german french and and dutch websites and of course the work that we our partnership with the angling trust is is is sort of genuine we both share quite considerable reach out into the angling community and indeed i think our customers are increasingly and quite rightfully expecting us to take the lead in various initiatives not just our own commercial things and and that is very much expected and increasingly appreciated and acknowledged not just by our customers but also within the angling trade john H, thank you very much, is Norwich a logical location for a distribution hub? I guess if you started with a clean sheet of paper, the answer is probably not. But we have a very established base here in Norwich. Our first store over 20 years ago, our Norwich store just down the road, is still within our top five stores. We also have in the other direction, out towards the Norfolk Broads, which is a huge angling area, stores in Roxham and Beckles, and a very loyal, committed colleague base here, particularly in the distribution centre here in Norwich. our broader organization though is is is spread out across the uk one of the advantages we had in lockdown was that i think the organization already takes a very progressive uh view of uh flexible and uh locational sort of flexibility for for working so we have we have uh marketing managers live as far as bristol product managers in in redditch i live in the midlands uh our own brand team live in Lincolnshire. So it might not be where we'd start out again, but I think we are doing everything to optimise the location we have here. Do you want to pick up the next one, Steve?

Yeah. Why is the European online conversion rate below the UK conversion rate? I think there's two facets to that. Undoubtedly, you see a journey as you go along. So if we step back in time, the UK conversion rate goes on that journey as you build your customer following, your customer advocacy, and your customer recognition. But also, because we fulfill the European websites from the UK website, um dc we haven't done a huge amount of work specifically tailoring the european range and that's something we're conscious we need to dovetail with our thoughts in terms of european fulfillment where we'd expect to increment that conversion rate further and see further progression towards it closing on the uk

Peter D submitted a question. What scope do you see for rent savings as leases come up for renewal? And could you also describe your lease length profile? Again, it's a frequently asked question. Frustratingly, I don't personally see too much evidence of retail rents specifically resetting, if I'm perfectly honest. Having said that, Angling Direct doesn't tend to target traditional retail parks or, indeed, traditional busy retail high streets. We are a destination location. We've had a lot of success on stores, on trade parks, for example, where we co-locate with businesses such as Screwfix or Machine Mart, where the rental profile is somewhat different. That particular rental market is quite buoyant. So, we're not expecting to see, or certainly our modelling, we are not assuming within our modelling, any significant changes to rental levels going forward. In terms of lease lengthies, we always negotiate into the leases that we take up some flexibility to allow us to break that lease at an appropriate time. Obviously, Angling Direct having opened so many stores in the last two to three years means that an awful lot of our leases are actually at the beginning of their life. We don't have many maturing leases at all. So we're not entirely sure what the specific average lease length is unless we're

Yeah, so there's more disclosure in the annual report, which will come out in the next week or so. But we haven't got any that come to the end of their life within two years. And indeed, that's one of the accounting policy judgments we've got to make for IFRS 16 in terms of how do we reflect ongoing lease commitments whereby we're coming towards the end of an actual lease.

Yeah. S Raghavan, who are your key competitors in the UK and Europe and what is the basis of composition price slash stock availability slash speed of delivery? To be perfectly honest, I think as we've covered, the vast majority of competition is very, very fragmented, largely independent, one single unit competitors. There are some, I think the largest competitors sort of organised chain that's not been subsumed within a much bigger business is probably three or four stores at most. Our next nearest competitor in the UK we estimate to be about an eighth of the size of Angling Direct, so that really does sort of show the distance between us. The basis of competition, price, stock, availability, and speed of delivery. I guess all of the above is the slightly flippant answer. There has traditionally been a fair amount of discounting within the angling market. It's really quite stable at the moment. We obviously have, as market leader, we have a bit of a role to play in stabilizing prices. And hopefully, you've got the impression from this presentation that we're a bit more thoughtful now about how we price and promote. Stock availability alongside a lot of consumer businesses at the moment all over the world. We are seeing some scarcity in shipping, which has had an implication for shipping costs. Factory capacity, particularly in the Far East, is is under pressure as as western economies start to recover and demand um perhaps becomes a little bit more certain so stock availability is always a challenge but as you know with our our position and the amount of focus as a management team we place on on stock and indeed our healthy balance sheet uh allows us to ensure i believe we get at least our fair share if not our more than our fair share of the stock as is sort of quite appropriate. We are the largest customer in the UK by some way of the vast majority of our suppliers and indeed increasingly so in Europe. Do you want to take the next one, Steve? Online advertising?

Yeah, if returns on online advertising are so good, why not invest another million and seize the market leadership position across Europe before a competitor emerges? So I think... on the slide that sets out the digital metrics, folks might be able to spot that our return on advertising spend 19 to 20 in the UK actually went down. And that is where we did look to be more aggressive in terms of word set deployment. And we actually ended up bidding against ourselves where you're already top of the paid positioning on Google. You can get diseconomies in terms of what you're spending relative to others. And it is quite a fine balance. I think with respect to the European aspect, there is a tight rope to tread. We are losing money in Europe. We were a loss-making business last year. We're conscious we needed to strike some balance between growth and loss-making. We are deploying double the amount of advertising spend into Europe in terms of a ratio percentage that we do here. into the UK and continually review that corridor of what's an appropriate amount of money to be losing to continue to get quality growth in that European customer book.

And I think the final question is another one from Peter C. What share do the big non-specialists like Amazon and Decathlon have versus the independents? It's very difficult to say. Amazon clearly, just like just every other market, are clearly active in Angli, as are Decathlon in their big superstores. There is very little market share information or formalized market share information. So it's largely a matter of I think the most important message around markets and market sizes and shares, I think, for the takeaway from today is it is clear that angling is going through somewhat of a renaissance here in the UK and in Europe. We're hearing very good intelligence. It's a bit of a global phenomenon. The Australian market, the U.S. market are as equally buoyant. There's an awful lot going for Angli at the moment. We talked about the fact that the number of Angli licenses is increasing, the proportion that is increasing. for younger people and for female people is outgrowing the total, which is great for future participation and for the market. The general, society's general awareness of the benefits of angling as a pastime for people's social, mental, and general wellbeing is sort of becoming clearer and clearer. And I think as the idea of staycation sort of firms up in in in the vast majority of people's minds for the year ahead clearly angling is going through some of a renaissance and um i think angling direct is is you know we're very very confident that angling direct um in in all that it's achieved and the position it has in the market and its continuing opportunities is really really well placed um to take care um to to take some benefit from that regardless of whether it's in the bricks and mortar or the digital

channel and regardless whether it's in in uk and europe andy steve thank you very much indeed for being so comprehensive i think you've taken on pretty much every question and we've gone way through the time and thank you for being so generous and addressing all those questions i was going to ask you for a few words to wrap up andy but i think you've just ended on a perfect note so What I may do is thank you once again for your time today and for Steve's time. And if I could please ask investors not to close this session, as what we'll now do is now automatically redirect you for the opportunity to provide feedback in order, of course, that the management team can better understand your views and expectations. This will only take a few moments and I'm sure will be greatly valued by the company. On behalf of the management team of Anglian Direct, I'd like to thank you very much indeed for attending today's presentation. That now concludes today's session. Thank you for attending and good morning to you all.