Angling Direct PLC

Good morning, ladies and gentlemen, and welcome to the Angling Direct PLC four-year results investor presentation. And my apologies for the slight delay in this morning's meeting. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab, just situated on the right-hand corner of your screen. Type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. It gives me great pleasure to hand over to CEO Andy Torrance. Good morning.

uh good morning good morning everybody thank you for joining us today um we're going to work through our um prelims results uh deck this morning it is available up on our website for those of you that haven't had a chance um to look i'll make a start and then hand over to my colleague uh steve crow our cfo um as and when necessary Given that Anglin was clearly one of those sectors that benefited from the pandemic, which is quite a strange thing to sort of reflect on, but clearly given the nature of lockdowns and extended furlough and what have you, Anglin did go through a couple of boom years. And in that context, we're very pleased in this first full year without any restrictions to have continued to grow the group with total growth growth in sales revenues of 2.2%. We believe we've taken share in this time, which is very encouraging. Our total business transactions in the UK were up 7% during the period. And based on the feedback that we received from various suppliers and across the industry, we're very confident that Anglin Direct continues to take market share during what's obviously quite a difficult time in the consumer landscape. With that in mind, it's been a very difficult year for us to forecast. We are encouraging existing investors and indeed potentially investors to look slightly beyond the headlines because there's been an awful lot going on within the dynamics of the financial results in this past year. As an example, during quarter one, we did see quite a significant channel shift away from online back to our retail stores. That reflects that in the prior year, we were actually annualising the final lockdown, lockdown three, which saw Our stores closed for the final time. Obviously, they were fully open in this period, and that saw some quite natural shift back into stores. During quarter two, we had a very difficult May, as the very tragic situation in Ukraine quite clearly ramped up and became more and more serious, not least for our consumers in Central and Eastern Europe. Energy bills and what felt like a continual adverse news flow for our customers in terms of inflation, the potential for energy costs during the winter we've just gone through, actually meant that Q2 with May in particular was quite a difficult time for us. The other factor that's been at play during the year was a very, very dry August, which particularly affects angling. We don't like to reflect on the weather particularly, but certainly during August, for those of you that remember, water levels became very low, which does affect the quality of fishing and obviously the quality, therefore, of our business in that period. There's been quite a significant recovery in the fishing tackle supply chain during this 12-month period. We don't believe it's fully recovered. We believe it's still really quite choppy, but quite a significant glut of stock post the pandemic, as obviously Far East factories all got back to work and supply chains started to recover, saw a significant glut of stock hit the market. That had quite an impact from the sort of summer into our quieter into autumn and winter period. And whilst it was good news for Angling Direct as we have the best quality stock file we've had for some time and indeed record-breaking levels of product availability as we go into this new season. What we did see in the winter was an awful lot of our competitors seeking to liquidate stock in order to generate cash. That causes discounting in the marketplace and obviously angling direct. We do make a virtue of, as well as having the best ranges and the best service and the best websites, the best stores, we also have the best prices. And it's clearly important that we maintain that position we did say that we would invest margin in order to continue to consolidate the market in order to continue to take share and indeed we've done that and we'll come back to a little bit more detail on that as we go through the deck The other factor, I think, just to bear in mind as you're reviewing the results, we've seen a complete unwind of any government COVID support. And that is illustrated in the deck, particularly its impact on EBITDA and also a greater than anticipated year one startup loss within Europe. We always plan to make a loss. But given the pressure on the consumers was at least as great, if not more adverse to our customers in Europe, we didn't get as far of the growth curve as we anticipated. And again, we'll come back to that in a little bit more detail as we get through the deck, all of those factors impacting on the show's results. Over the page then on the next slide, if we could, please. The FY23 overview is taken from the R&S. As we said, total group sales of 2.2%. We saw strong store sales of 6.8%, driven in the main by new space. This is encouraging on one hand in the sense that the three new stores we opened were clearly in unserved catchments. They got off to a very good start. We opened a couple of stores up in the North East. in Washington, Stockton-on-Tees. We finally got a good site that we're really encouraged by in Coventry. And indeed, since the period end, we've also opened our first store outside of England, albeit in Cardiff, our first store in Wales. We're on site at the moment in Goul, which is a store we hope to get open or we will get open in time for this forthcoming Springbank holiday weekend. So 6.8% growth in sales, flat like for like store growth, which was a reflection of perhaps a reduced frequency of angling during obviously some quite difficult times in terms of the pounds in people's pockets. A reduction in footfall, though, more than made up by some really, really strong conversion in store. as all the work that the store teams have done on rotoring, selling skills, and indeed helped by, as I said, really record on-shelf availability, all helps to convert footfall into our stores, into transactions, which is very, very encouraging. Our online sales did decrease across the whole year, partly because of that channel shift in Q1. Worth remembering, though, that our UK business is now 57% greater than it was three years ago pre-COVID. Our EU sales grew by 32%. We slowed that down slightly in half, too, in order to make sure that any future growth was working from a good, profitable foundation. We spent a lot of time in the winter working on the range, working on our pricing strategy, working on our supplier strategy, and we're very encouraged by the start that we've gone off to We'll come back to that in a short while, but a very encouraging start, both in terms of growth and indeed an improvement in gross margin in Europe as the fishing season has gone off to a good start over there this spring. We invested gross margin, as we said. Steve will come back and give a bit of a breakdown as to quite how that was all spent in a short while. Positive operating cash flow means we have been able to invest, but we've also been able to protect our balance sheet with a good, strong net cash position of £14.1 million at the period end. Operationally, we opened our new distribution center in Venlo, a big project for an organization of our size. It opened on the 1st of March, and all of our EU business has been dispatching from there in the southern part of the Netherlands since. We do need to work on the profitability and the growth acceleration in there, which is is the key to unlocking some very, very attractive markets. We're making good progress there. We'll come back to it. Three new stores I've mentioned. Our own brand sales in advance. Growth in that range continues, as it has done in the last few years, to outpace the growth of the company. 24% increase in our brand sales, with penetration now at 6.8% of total, which is 120 basis sales. points improvement year on year. We've almost certainly come back to it, but we now have over 55,000 downloads of our app. This is a unique trading app, unique in the tackle market. We don't believe anybody else has one either in the UK or indeed across Europe. Lots more exciting developments on that to come in the next couple of months. At one point, orders through the app were peaking at around 11% of the total online order bank, which is very encouraging. Not only is that a great innovation for our customers, but it also allows us to avoid Google ad costs as well. transactions directly through the app don't attract those. The final point there on that page, we have been successful in our search for a new CFO. Sam Coatman joins the company on the 5th of June. We're very excited to have him on board. He's a very capable, versatile individual, lots of relevant experience, both in the private sector and the public sector, both in the UK and internationally, and he's worked in some very challenging circumstances. So, absolutely convinced he'll make a great addition to the team and we plan to appoint him onto the board at the conclusion of the company's AGM on the 22nd of June. Over the page We have graphs, which I think speak for themselves. You can see in the top left-hand corner, continued growth trajectory for the whole group, 74.1 million of sales there. We've also tried to illustrate through the various EBITDA graphs on there that the core UK business, and especially their net of the unwinding of any government COVID support, is clearly... built on solid foundations and indeed more than capable of supporting the EU startup losses, some of which were anticipated, some of which we are making good progress on fixing. A little bit on strategic progress over the page on slide four. These are the priorities we set out and indeed shared on this forum 12 months ago. International growth, a major strategic step for the business and a significant growth opportunity. The distribution centre is now open and obviously we're starting to see improving efficiencies on the utilisation of that asset volume continues to grow. positive margin accretion. We're now trading on approximately between 400 and 500 basis points improvements as we started this season versus the period just gone by. That's been as a result of changing the way we market to customers, working on our pricing strategies, working very closely with our suppliers both here in the UK and indeed their peers in Europe to make sure that we have a good structural foundation for the profitable growth that we're very much looking forward to. Quarter one in this new period, we've grown in our target territories by over 60%, which again is very encouraging. We worked hard to evaluate omnichannel opportunities, bricks and mortar stores to complement our existing websites. We're very clear that we have some more work to do on the profitability of the online business. As I say, that's making really good progress. The Angling Direct offer will only be at its best for our customers when that's complemented by bricks and mortar stores. We do intend to trial the economics of a bricks and mortar offering and we should hope to announce that in the not too distant future by opening at least one, maybe two stores in the next few months over in the EU. In terms of digital, we mentioned the 55,000 downloads. We're now making significant progress in the development of our web trading team. It's a multi-country web trading team, very data-led. We've invested in some software that allows us to look very closely at our competitors and indeed just make sure that in very real time we maintain the competitive advantages that a business the size of only direct with its digital capability brings to market. My ID is something that launches on the first week of June this year. It is an omni-channel customer loyalty app-based account based offering to our customers. Very much in development in this year gone by. I'll say a little bit more about it when we come to look at the priorities for the year ahead. In terms of stores, three new stores, as I've mentioned, all got off to a very good start, all in unserved catchments. It shows us that there are still opportunities to be had there. We've seen very much, very encouraging growth in conversion. The conversion of footfall into transactions in store as the benefits of our assisted selling program, which all of our store colleagues have gone through and went through at the beginning of the year. The work that we've done on daily rotoring and indeed the work we've done on shelf availability within our supply chain, all paying big benefits there. We have launched our AD coaching appointments process whereby our customers, be they beginners or indeed very competent and capable anglers, can make an appointment to spend some one-to-one time in store with our angling trust qualified coaches, of which we have two in each store, which again is a unique experience. thing for Angling Direct. We're also very excited by some of the paid for services that we've launched and indeed we see some good opportunity for those going forward which we'll cover off again as we go through the presentation. Over the page, if we could have the next slide, in terms of our commercial team, we introduced category management to this team a couple of years ago, and we're very much now getting into this as part of the rhythm and routine within the category and trading teams within Direct. We're continually deepening the retail experience and expertise within that team, and our promotional planning and execution programmes are far more smooth, far more real-time, far more relevant to our customers, and we're definitely starting to see the benefits there. Supply team have been focused on product availability and on ensuring we get efficient use of our working capital. Really, really good, record-breaking availability for our customers as we started this new season and indeed the quality of our stock file, the proportion of our supply and product depth that is The proportion of our stock holding to which the upper quartile of our sales is in a higher proportion than we've ever seen. The cost of obsolescence is going down all the time. And indeed, we're recovering more and more on the fairly modest amount of customer returns that we get. In terms of organisational capability, most of our efforts have been concentrated on speed, resilience, efficiency. We are facing some real cost challenges which are not dissimilar to anybody in the retail space at the moment. It becomes more important than ever for us to focus on spending to save by straightening out our systems and our processes. And we've made some good progress there. And in terms of organisational capability, in terms of corporate governance, two new independent non-exec directors joined the board during this period. Chris Keane, a very accomplished, very experienced Group CFO, is also now the chair of our audit committee. And slightly later in the year, Nicky Murphy, again, who owns, founded and owns a very successful multi-agency, multi-discipline marketing agency. Again, very active and making a great contribution to the board. um sam coteman i've mentioned in terms of communities and sustainability we're very proud of our ongoing support of the tackling minds a mental health charity that provides angling as a therapy on prescription from the nhs they are they have grown dramatically not surprisingly in the last 12 to 18 months and angling direct has been a partner with that organization since the very beginning and very very proud to continue with that we've also made significant progress in terms of how we track our carbon reduction waste reduction and indeed recycling hubs throughout of our stores there's a lot more information in the appendices for you to see there in terms of sustainability progress. The next section is the financial review, the numbers which I'll hand over to Steve.

Thanks Andy. I'll do my best not to repeat anything Andy's already covered in his thorough overview. So the P&L account is there on the left and Worth pointing out sort of the UK business on its own grew just over 1.5%, 1.6% growth in the UK business. And the one I wanted to touch on most is the gross profit. So you can see there 34.8 is a 190 basis points reduction year on year. The UK on its own was 170 basis points reduction. So Europe had a minor gearing on that. you'd expect with the overall lower gross margin that comes through that European online business for the year to 23. The characterisation of that UK degradation in the margin was around sort of 100 basis points of cost of goods inflation from suppliers that we weren't able to successfully negotiate away. We think, you know, 100 basis points is actually a a pretty decent job in terms of what we were able to do as stock came back into the market in terms of our scale and ability to negotiate that away. Offsetting that 100 bps of headwind on cost of goods, we did some good work in terms of our optimisation of our sell-through of discontinued lines Andy alluded to, that was worth about 30 basis points positively. The digitisation of our returns process last year paid dividends Another 35 basis points accretion from that. Around 10 basis points from Advanta. Historically, we'd always talked about that being sort of 10 to 20 basis points. As we went through the summer, we were able to use the Advanta brand more as a promotional opportunity than we had done historically as pressure was on sort of wider branded margin that help us drove the 24% growth but similarly we were still able to maintain a very healthy differentiation in terms of branded product versus our own brand where we sort of kept that broadly around the 10% mark difference between the two products. Outside of those, there was a little bit of mixed benefit around 20 basis points and some other odds and ends, which leaves us broadly as 150 basis points of drag from pure price investment that we consciously made back into the UK. That left the UK margin sitting around 35.3. We've always talked as a management team about having a medium term target of the UK of 36. 35.3 is sort of levelling out as where we believe the sort of the bottom of that is right now. And we've seen some green shoots early in 24 in terms of that stabilising as there is less irrational behaviour in the market around discounting being prevalent in Q1. Outside of that, I'll talk at a headline and we'll come on to the segment analysis. We have given some more comprehensive segmental analysis this time in the statements. So folks are able to see how the European business and the UK business indeed is cut up both at a profit before tax and EBITDA pre and post IFRS 16 basis. So you'll see there on a post IFRS 16 basis, our EBITDA margin went down from 10.1 to 6.2. And on a pre IFRS 16 basis down from 7.2 to 3. We've discussed one of the key drivers being the UK margin in terms of that 170 basis points degradation on around 71 million of sales. And then outside of that, as Andy touched on earlier, The increased European loss is around sort of 450,000 year on year, as well as the reduced direct government support, which is where we were the recipients of some property grants and some modest amount of furlough income in the prior year. That took us down to a PBT level where we are still positive at a PBT level despite the investment in those European losses and the tax charges as you would expect as moderated and coming back more in line with what folks would perhaps expect to see in terms of a percentage basis of profit. Earnings per share, as you can see, again, dropped away in line broadly where we've gone on a net profit basis also. Over the page. Thank you. At the top there, you'll see sort of the UK, the UK 1.6%. I talked about in terms of the, what we've called there, the native website countryside, which are our target markets of Germany, France, and the Netherlands. We had some, some, some, some, different experiences in terms of growth rate. Germany was around a 29% growth rate, France around 10%, and the Netherlands around 120%. Germany remains our key focus. That is the most sort of accessible market, and we believe that to have a market size of around £800 million sterling. Further down, you'll see in the green box, the own brand sales, which Andy touched on earlier. And again, you can see the penetration rate increased to 6.8%. We as a team believe that's still got potential to be a mid-teens penetration number as we throw ourselves forward to the medium term. Over the page on nine, we can... So the gross margin, I've talked about the UK gross margin and the reduction down to the 35.3. The European margin at 23.3 reflects the startup of the European business. So it's not a light for light comparison with 22. The 23 margin is 11 months worth of what we'd call the curated range for Europe, which is still evolving and reflects some pretty aggressive pricing, particularly in half one as we look to get up the growth curve. And as Andy said, we moderated that in half two as we look to sort of more finely balanced margin versus the pace of the scaling of the turnover line. Overall, the group gross margin 34.8. We've always said as a management team, we believe 36 to be the medium term target. I think reflecting on that, that has now got more pressure on it given where we are with costs, particularly cost pressures from inflation, particularly around the living wage, which was around nearly 7% for the year to 23 and is close to 10% for the year to January 24. Looking further down, you'll see there in terms of the... I've split the UK stores EBITDA out and the UK online EBITDA out. Both of those remain double-digit channels in terms of EBITDA percents. It's important to frame that. We still need those to grow by a couple of hundred basis points respectively each. However, we've always said we trade what we call the head office costs at around 7% of turnover. So bang on 5 million. They got to that level. I think the challenge is to sort of protect that ratio as we see more pressure coming through the cost line outside of the head office and in particular in terms of where we can take the margin growth. Overall, the UK EBITDA still above 3 million at 3.1 million, having come down from five. And again, we've split out there the European journey where we've invested year on year in those losses, as Andy said, heavier than we anticipated as we started it out and bridge back down to the 2.2 that we talked about as the headline number. Over the page, the balance sheet, net assets are 37.3. You know, it would have As of this morning, we're trading at a discount of 32% of market cap versus our cash and stock balance. It's a very robust balance sheet relative to the valuation. The cash balance there of 14.1%. We've worked hard to sort of protect that to give investors confidence that we are resilient, we are sustainable. I think conflating that with what are our plans to do with that? We've got it pretty clear in our mind around the UK market consolidation. There are still opportunities, particularly in the physical bricks and mortar space. We've always said there's about 50 catchments that can stand a £1 million Angling Direct store. And we've also sort of done some more research into, we believe there's around 30 catchments that can stand north of a £700,000 turnover store, which gives us some good optionality in terms of deploying that cash relative to the sort of the trial that we're going to put in in Europe that Andy alluded to earlier on. On the inventory line, that has progressed up to 17.8. It's worth noting on that, that has got 2.3 million in it for our European distribution centre. We had around 300,000, I call it on the water, at the year end last year on its way over to Venlo. So it's about a 2 million build in terms of that gross stock value year on year. And the UK has actually come down half a million pounds despite us putting the three new stores in. as we've worked harder on optimising, particularly in store, our ranges and the depth and the optimisation of that inventory. And there is still some more material value to go at in the year to 24 in terms of that working capital optimisation. Over the pay, the cash flow, just to give a flavour of how we took our 16.6 down to our 14.1. It is worth noting the first bullet point, excluding the European EBITDA losses and the European working capital investment, we would have been cash generative. So whilst the UK result in itself was a material drop year on year, that is still a cash generative segment. The 2.5 million we consumed in terms of cash, we've set it out there. You can see the UK working capital blob, the 466, was actually very modest. And had sales been slightly richer in Q4, we'd have negated some of that with a bit of trade creditor coverage. We'd had a higher replenishment rating, quarter four. I think that gives us the confidence that we can take that forward into 24 with some more value to come from that. The European working cap point is the point I made on the previous slide. You can see obviously that doesn't persist again into 24. We've ranged that operation to stand around sort of 9 to 10 million of sales annually. as it stands currently. And then outside of that, the capital expenditure, we've said it out there, what our spend rate was on. And in terms of how we're thinking about the current year, we would expect a number broadly similar, if not slightly reduced, on what we're presenting in the year to 23.

notwithstanding we need we need to uh decide how we're going to do these trials in europe in terms of the physical bricks and water um and at that point i will hand back to andy for the business review uh section three's got a fair amount of detail in it over and above the things we've we've talked through so far i'm going to go through it reasonably quickly i think we've covered most of the key points we are getting quite a few questions and i do want to make sure we've got time to answer those questions when we get to the end Slide 30 now is just a little bit more about stores. We continue to roll back into our legacy estates, all the improvements that we're making in space allocation, micro-emergency, hands-on displays. particularly customer messaging we don't plan a significant we don't need a significant full-on refit program but we are very keen to just make sure that our store estate stays contemporary and indeed there are stores that we are proud of and possibly worth mentioning the sadly we had a fire in one of our stores our reading store was quite badly damaged by fire you Indeed, the first week of this new financial period at the beginning of February, it is all insured. And indeed, we're working hard to get that store reopened as soon as possible. You can see the new stores in the year just gone by on the map there. And probably worth talking a little bit here about services. We've started now to... We've launched reel re-spooling, so the removal and re-spooling of line onto customers' fishing reels. A lot of our customers, depending on the type of fishing they do, deploy more than one reel at a time. They have a collection of reels, all of which need their line replacing. periodically to make sure they get their best performance for their fishing. It's not a great, it's a bit of a chore. It's not a particularly easy thing to do. Our store teams are very skilled at doing it and we've started to offer that as a chargeable service. We launched it in Easter this year and so far have spawned an exceptionally good margin, over 5,000 reels for our customers. We've also started now to source own brand bulk lines in order to radically transform the economics of that particular basket by also selling own brand line as well as the spalling service at the same time. Over the page, a little bit more on digital. You can see, despite this channel switch, the number of visitors did go up. We believe we've seen a lot more comparison shopping. I think there was definitely, perhaps in this period, in May in particular last year, as the consumer news flow got more and more difficult, we believe several of our customers delayed replacing particularly capital items, so rods, reels, bivvies, sleeping, camping equipment, et cetera, et cetera. But indeed, those that were looking to replace, I think, have gone for a far more price comparative approach to their research, so number of visitors increased on the UK website to reflect that. Still very strong conversion, despite that increasing number of visitors. ATV held up pretty well, which is partly a function of those capital replacement items, but actually a slightly lower mix of the consumable items, such as bait and terminal tackle, the things on the end of a customer's line, which reflects perhaps a slight So your average angle will take again driven by their economic circumstances. ROAS remaining strong as our reach continues to grow with a 17% increase in our customer database growth. Over the page in the EU, not surprisingly, some significant growth in website visitors, significant efforts in half two, as we said, in regrouping. It became obvious as we went through halfway. that the profit impact driven by the growth in Europe and by our spend on digital marketing to acquire customers and indeed some very aggressive promotions that we were running, it wasn't going to get us up the growth curve perhaps at the rate we'd initially anticipated. We did slow that down in the second half to look again at the sort of profitable foundations of our business in Europe. And I'm very pleased that The work that's gone on there has meant that Europe's got off to a great start in the first quarter of this year. 60% growth in our target markets, our German, Dutch and French websites. Germany in particular, very encouraging with growth of nearer 80%. And all of that business on the mix between 400 and 500 basis points improvement in margins. We see further opportunities to mix that margin up as our customers are tempted to trial angling direct perhaps for the first time. All of our service indicators are very encouraging. We start to see customers come back to us now and indeed they're starting to shop across a much broader range of our products and then perhaps repeat purchase in order to buy those consumables as they've got back into their fishing this spring, all of which helps mix the margin up in the right direction. That brings us on to looking forward. So slide 17, setting out our priorities for the year ahead. Obviously, internationally, it's very much still up there. Very, very attractive markets. As a reminder, we believe the combined market of our French, German and Dutch native language websites to be in the region of 1.8%. billion, so at least three times the size of the U.K. alone. It's a very fragmented market. And indeed, the angling, that is an addressable market with angling very, very similar to the way people fish in the U.K. So, the angling direct omnichannel offer, we believe, very attractive to consumers over there. In this year ahead, we're targeting a material reduction in year one losses. We're very pleased to report we're on track to achieve that. We will be trialling bricks and mortar, but we won't be doing anything too reckless until we're confident that the online model is growing and growing with ongoing sustainable profitability. Digitally, MyAD, as I mentioned, launches in the beginning of next month, at the beginning of June. This is an app-based omni-channel loyalty scheme. It's designed to allow our customers to access a preferential price file, whether they shop with us on online, but particularly when they shop with us in-store. The fact that we haven't had a loyalty scheme for some time now means we don't have as much data as we would like on our store-based customers. We don't have a great deal of visibility yet on how often our customers shop with us in-store and indeed how often they shop between our stores and our websites. The fact that customers will open a my idea account it will ping when they go into one of our stores it will allow them to access preferential products um that we will have selected based uh initially on on um generic opportunities but uh more and more so on our customers um personal shopping history it will allow us for the first time to get really good quality data um both for bricks and mortar and for our digital estate, which is a big step forward for us. In conjunction with this, we're looking forward to announcing very shortly, this is a bit commercially sensitive, so I can't give you too many details today, but we're about to sign an exclusive with a provider of some very interesting mobile functionality, which will also allow us to start to access a lot more data about where our customers go fishing and indeed the frequency of where they fish. So we'll have complete visibility right from customers that go online to research and indirect through their online transactions, through which stores, how often, what they buy in terms of bricks and mortar, and then indeed the geographies and the frequency with which they actually go fishing. So a much more customer data-led approach to our digital ambitions in the year ahead. In terms of stores, I've already mentioned the new in-store services, which we will embed. There will be other added value services that we will launch in the not too distant future. We're going to trial a slightly smaller store format. We believe that we've always said the scope for around 50, 1 million plus total. turnover stores within the UK. We're up to 46 now. We'll open a small number of those stores this year, but we're also going to trial a slightly smaller store format within those catchment. So, to stand a £1 million turnover, we believe there's another 30-store opportunity, putting the total portfolio opportunity, frankly, in direct in the UK at around 80 stores. We need to continue to work hard on labour efficiency. We're not immune from the impacts of the increases in national living wage. We made some good progress that on last year, but actually in conjunction with embedding our direct selling model and indeed improvements in customer rotary, labour efficiency is something we believe we can still make some good progress. progress on and indeed our store colleagues will be very heavily involved with the sign up and engagements of the of my ad because it is a a truly on the channel um uh facility for our customers that genuinely bridges our websites and our stores Our commercial team will continue to focus on developing our margin. We're highly encouraged by the great deep partnerships we're making, particularly with some of our largest suppliers, the ongoing range development within both our stores and online, both in the UK and in Europe. It's just something that's becoming business as usual within our commercial teams. Their experience and their process and the tools and the data which we give them to do their job is improving all the time. We're putting a lot of effort into commercial marketing in the year ahead. We, I think, are now organized well enough and have the data and indeed the customer reach to be able to encourage our suppliers to work with us to promote by taking space in stores, by taking promotional ends, by taking social media and indeed web-based. advertising and branding opportunities. Our suppliers are increasingly and enthusiastically engaged in that programme, and we've seen some, again, some quite significant material income from that in the year ahead. We are launching this weekend, in fact, in time for the half-term bank holiday, a new own-brand range, a second own-brand range to complement Advanta. Discover is a new range focused upon supporting new anglers. There's a lot of well-founded belief that when people try angling for the first time, when they go fishing for the first time, the biggest factor that's slightly not surprising, it sounds obvious when you say it, that's likely to encourage them to go for a second time, is that they actually catch a fish. So Discover is good quality, well-designed, straightforward fishing tackle for the first angler with margins at least as good, if not better, Advanta that will encourage anglers to get into fishing as a new pastime and hopefully as a new passion. Interestingly, it will also allow us to reposition Advanta towards those because Advanta is very well specced, very good quality and exceptionally good value. We'll be able to reposition Advanta more closely towards our enthusiast customers, our regular anglers, and actually move on from perhaps a perception that some people can get about our own brands as being entry-level and not of great quality, which indeed Advanta isn't. Our next slide, we've just sought to set out our investment case, our incoming and surely to be appointed new CEO. Steve's going to take you through this one.

Yeah, again, I'll try to avoid repetition where I can. So top left, the most recent data in terms of what the belief is of the UK angling market, so around 550 million. We see we've got about 13% of that with We are much more mature digitally in terms of that market, but there is still an amount to go at. And as Andy's alluded to in the physical space, there is much more of a land grab in terms of how much more we can take at that target market. And outside of that, the real growth play being Europe. Our key territories we're looking at around 1.8 billion, Germany, France, Netherlands, a little bit of Austria and Belgium thrown in there together with those. We're eight times bigger than our next largest competitor in the UK right now. We have got significantly different purchasing power and we are starting to see some green shoots on that in terms of coming through the margin, particularly at the back end of last year, early into this year. And that does play to the final point on that part about deepening our relationships with the supply chain, the record product availability. We are becoming increasingly sophisticated in terms of the way we deal with that supply chain. Over on the top right-hand corner, track record of delivering strategic goals. So, you know, three years ago when Andy joined, we are 47% bigger in the UK right now than we were three years ago. Again, slightly linked to the bottom left-hand point on there, you know, we would have been talking to you three years ago about a UK margin just over 31%. We're talking about 35.3 right now, having consciously invested in price to make sure we kept our foot on the pace of market share gain in the current year. That shows the capability we've got to make choices around how we invest or don't invest that given the scale we've achieved. European distribution is a significant capability. We're now in a position to leverage. It is a game changer in terms of post-Brexit, in terms of all the issues that brought in terms of duty, carriage and legislation around what you can and can't import, particularly bait in our sector, which requires some complex veterinary certification. And sustainability and ESG, you know, we have included in the appendix to folks' interest. We are doing more and more in terms of the E and we are strengthening our S and G as we go. In my comments I've picked up in terms of how particularly we're looking at governance, you know, we've upped, again, we've thought more carefully about the type of individuals we want to bring in as non-executive directors and the way we've approached risk in terms of risk management is becoming much more sophisticated in terms of how we adopt that as a board and how we embed that further down the organisation. UK quality of earnings. We talked earlier on about having a number north of 3 million. Three years ago, we were losing money at the pre-IFRS 16 level in the UK. We've built that by over 3.5 million in the last three years. There is more to go at that. We are starting to build a rump of EBITDA that underpins the wider growth strategy outside of the UK. That is built on that gross margin flight path that we've talked about. Again, you know how we develop that now from the sort of 35 three and upwards. We've got some clear, clear thoughts on that. And again, you know, we've always said medium term 36. We are very close to that. We recognize we need a little bit more than that right now, given some of the cost pressures. But we've got some clear vision on how we are going to do that. Both the stores and online piece within the UK do contribute and our double-digit EBITDA percentage. Now one isn't subsidising the other, it is worth sort of bringing that out. It is a true omni-channel model and both elements of the omni-model are delivering. And as I've demonstrated earlier, we are starting to leverage that group cost base now in terms of that, getting that to a relatively compelling ratio in terms of percentage to sales. The bottom right-hand box, I talked about the balance sheet earlier on. We've got 14 million in cash. If we deployed nine of that and we deployed it all into stores, a cocktail of finishing off that million pound estate and then looking towards the 700, on broadly average spends that we'd be looking at, there's another 3 million the UK a bit dark that can come from simply deploying 9, 10 million of that cash just into stores. So from a valuation perspective, just doing what we're doing and deploying that cash gives a very compelling story relative to the current trading price. of the operation. That which is the second point, you know, it gives us the ability to roll out that UK and try what we're doing in Europe. We are still generating cash. We should generate cash this year.

And we have got further working capital opportunity, as I said earlier on, outside of what we've delivered, modest amount we've delivered this year in the UK stock market.

And then I think in terms of current trading and outlook, we remain very focused on profitable growth, very focused on taking share over the short and medium term, both in UK and in Europe. We're very pleased to have been able to report that in Q1, our total share Group turnover has increased by 11%. And indeed, that is growth across all channels, including accelerated growth within Europe. Early indications in May is that that continues to be the case. So an encouraging start to the new year. We are, though, facing some very real cross-price cost inflation challenges in this year. We remain vigilant to those. But with that start to the year in mind, with inflation, cognizant of the developments that we made within the business, especially during last autumn through the winter, and indeed some very new, innovative and unique initiatives for our customers that we're about to launch as this fishing season really gets going. We believe that we will continue to take share. We will see a significant significant reduction in the drag on European performance as that market, very attractive market, really starts to open up to us. Coverage, I believe, has us at 83 million pound group sales this year with a pre-IFRS16 EBITDA of 2.7 million, and we remain confident that that's appropriate. Probably worth finishing to say, now that we've been successful in the search for our new CFO, that will trigger some changes to our board. Our current chairman and founder, Martin Page, will step down after the conclusion of the AGM on the 22nd of June. We're delighted that Martin will remain on the board as a non-exec director. Equally, I'm very pleased to be able to continue my association with the business. I'm going to become the new non-executive I don't plan to take up any other executive roles. I'm very happy, delighted to be able to continue to support Angling Direct, a business that I believe has still got huge opportunities and is very much on course to continue to profitably grow. Steve, I know and I'm very, very confident we'll make a great CEO, very ambitious for the company and I'm really looking forward to working with this new board as we take the business forward. I think that concludes our presentation. We have had quite a few questions.

That's great. Andy, let me just jump in just to give you a moment just to get ready for those questions. But ladies and gentlemen, thank you very much indeed for your questions. If I could ask you to continue to submit those, just using the Q&A tab on the right-hand corner of your screen. I'd just like to also remind you that a recording of today's presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investing Meat Company dashboard. Andy, Steve, as you rightly said, you received a number of questions ahead of today's event. You've also received a number of questions throughout today's event from Steve and from Mark, from Peter. So thank you to you all for your engagement this morning. Perhaps if I may, and I know you've touched on a lot of these subjects, and I am mindful of the time as well, but let's get through as many of these as we can. But the first question, a number of questions around this, is when are you likely to pay a dividend?

We discuss this regularly at the board. Obviously, we're very conscious we do have a lot of cash at the moment. A good proportion of that cash was raised as we went into the pandemic in order to secure the business through a very uncertain time. Having that cash, of course, means that the business, as well as being better governed and better accounted for than it's ever been, is probably more financially secure than at any time in its history as well. So we're conscious that that cash needs to be deployed. We do, though, have no shortage of opportunities to deploy it in the next few months and years. And therefore, we don't plan to make any dividend payments anytime soon. But it is obviously something the board holds under consideration. under consideration.

Thank you. You talked about the new central distribution centre. How much revenue can the UK central distribution centre support before significant investments are needed?

Okay, our new distribution centre obviously is the one in the EU that has many, many years of growth capacity within it. Here in the UK, it is all about how we utilise our current building. We're not going to run out of space anytime soon. We are considering and we do have the opportunity for some further automation, which makes even better and more efficient use of the space we have here in Norwich.

Thank you. What is the white space available in number of stores revenue in the UK to grow brick and mortar?

Yeah, I think we answered this one in the presentation. We believe there's up to 80 store opportunities in the UK in total. And between, if you take the smaller store catchments that we're starting to focus on now, between 700,000 and a million turnover, a million plus turnover, around 80 stores split. 50 of a million plan plus stores with perhaps another 30 catchments with those slightly smaller, more margin intensive, lower capital intensive, lower working capital intensive stores as they start to come online.

Thank you. Keeping the theme around stores, what is the target number of stores, keeping in mind profitable growth without kind of rising sales?

Well, there's still over 1,000 independent fishing tackle shops in the UK. Our medium-term target is indeed the 80 that I just referred to. But with that number of independents in a largely unsophisticated, with the to respect um competitor set um we we believe at least eight is eminently achievable that's great thank you um what's the payback time on opening a new store um i'll take that one so we target less than four years um

Obviously, we haven't had four years without COVID implications. So I can't sit here and say to you every single one is doing less than four years. But what I can say is we have got some who have significantly outperformed that. Every month we review what we call the rolling payback of each of the stores. So it's front and centre of mind and the target remains to be beneath us.

Thank you. I know you have touched on a number of these things, but just for the avoidance of any doubt, are you considering opening brick and mortar stores in Europe? And if so, what's the plan?

Yes, we will do. We will trial some store formats. I think it's important we prove the economics of bricks and mortar in Europe. And we also properly understand the opportunity that bricks and mortar has to extend and accelerate our brand reach out to new customers. Online participation in Europe is lower than it is here in the UK, which in itself is an opportunity. However, it does mean that it's a little bit harder to reach people digitally. So that, I suggest that bricks and mortar has an important role to play to complement our online stores. We still have the potential to acquire, I think it's one of the later questions, businesses, particularly in Europe, and that is also under consideration. Obviously, in order to make sure we get the best utilisation of any cash, it's important that we don't overpay and that we negotiate appropriately with any potential vendors, and those discussions are sort of ongoing.

And what level of revenues do you need to achieve a break even in Europe?

If we just take the offline solution that we've got right now, so we've always said online solution, north of 16 million, we've always said, and we're sort of remaining committed to that sort of level.

That's great. Thank you. A number of questions in the live chat from a number of people regarding capital allocation. What is your plan with the significant net cash position and how do you prioritise own store openings versus store acquisitions, online marketing or even potentially share buybacks?

I'll take that one. So we've sort of talked about the store profile, what opportunity that presents. I think how we look at that relative to what we're going to deploy against the online business, you know, we... We are more mature in terms of the market share we've got in the online business, so it is much more difficult to be persuasive around in terms of investing EBITDA back into that channel. We need that delivering north of 13% on a pre-IFRS 16 basis, on a standalone basis. We've got more work to do that. Scaling... channel won't cure that problem and therefore investing in marketing is difficult on its own to see as a solution to do that in terms of the working cap as well the UK business in terms of the online business is probably at a stock level now that doesn't need material investment in terms of that working cap piece so the cash in the UK is largely going to be against the store portfolio as we talked about How do we look at that vis-a-vis Europe? We've talked about a trial. The working cap is broadly where it needs to be in Europe. We need to prove those quickly, those European stores. This balance sheet will give us some flexibility to accelerate that if those prove to be successful in the early trial. How do we look at share buybacks? Obviously, we've talked about that as a board. A smaller male might give... might give an indication you get a short-term bounce on the share price, but we're not really, as a management team, looking at short-term bounce in the share price. This is about delivering sustainable earnings from a scalable business. So we don't see the share buyback right now as the right solution in terms of deploying that.

That's great. Thank you. What is your long-term goal on pre-IFRS 16 EBITDA margin?

We've always said 7% on a pre-basis. Cost pressure is a challenge in that. We've always said you do 7% off 36 gross margin. Part drag from Europe. We all saw Europe as part of the Omni solution, i.e. mixture of bricks and mortar versus online in relatively equal proportions. We're still around the 7%. We need to work harder on the margin being above 36 to come back to that sort of level.

Thank you. Let's just turn to the next question regarding Advanta. What can you realistically achieve with Advanta as a percentage of total sales? And can you briefly speak to the margin difference of Advanta products to third party ones?

Yeah, we've always said total penetration of our sales for Advanta or the own brand's sort of stable of brands to be mid-teen, so around 14%, 15%. We're about halfway along that journey as things stand. Those products tend to attract margins of between 10% and 15% points greater than the branded equivalent. We've had particular success in the year gone by with Advanta Ombrand Reels, Ombrand Poles, Ombrand Barrows we've launched recently. We've managed to get our Ombrand team back into China really quite quickly as China's now started to open up and we're very excited about the new Discover range and various other new product introductions that will come during the course of this season.

Okay, turning to tech, I guess, are any significant IT investments needed to achieve your omnichannel setups?

Not significant new. I think we've got to continue to contemporize what we've got, both in terms of our sort of cloud architecture versus on-premises architecture and continuing to scale our ERP in terms of the point upgrades that the vendor offers. And we've got the optimization of the DC to think about in terms of, is there any more automation we can deploy in that? So we're not seeing that as a... as a sort of seven-digit number outside of what we've presented in terms of this year's numbers to scale that. I think we're trying to operate within that 2 million capex. We're trying to operate within those EBITDA percentage margins that we talked about earlier on. And we see it as appropriate to sort of frame our ambitions on IT within those.

That's great. Thank you. Andy, Steve, I am mindful of time. I know we did start late, so I've let it go through the hour. Are you happy to take maybe a couple more questions and then obviously I'll make all the questions available post today's call? Yes. That's great. Thank you. Maybe another conversation around margin profiles. Can you speak to the margin profiles of brick and mortar versus online briefly?

Yeah, usually around rule of thumb is around the 250 basis points difference between the two reflecting the capital goods mix versus the bait and consumables mix, i.e. richer bait and consumables mix in the store. That difference in the UK was around 290 bits this year, reflecting a slightly heavier mix of capital items in the online business back to the point we were talking about about folks shopping harder in the sort of more challenged money in pocket times.

Okay, thank you. I might just jump to a question on corporate governance, just to change the theme a little bit. But Steve, I think you called out the strengthening of corporate governance in your prepared marks. Can you just expand on what needs to be strengthened in this regard?

Yeah, I think it might. I mentioned it earlier, how we're embedding risk, how we look at embedding risk, driving that further down the organisation in terms of it being front and centre for everyone's mind, not just the board's mind, not just the operating board's mind, is what we've been focused on and continue to be focused on. And I also think I referred to the change in skill set of the NEDs we've got on board.

Well, look, thank you very much indeed. And I'm mindful you've got follow-on meetings from today and we're through the time. Steve, Andy, I know investor feedback will be important to you both and I'll shortly redirect everybody on the call to give you their thoughts and expectations and their feedback. But before doing so, I wonder if I may, Andy, just hand back to you just for a few closing comments just to wrap up with. And as I say, I'll then redirect investors to give you their feedback.

Yes, thank you very much. And thank you, everybody, for making yourselves available to us today. We'll do our very best to answer any more outstanding questions, as Mark said. So Angling Direct is nearly 50% bigger than it was three years ago, having gone through all the turbulence of COVID and what have you. We clearly have some opportunities left both in the UK in terms of continuing to take market share, particularly in our bricks and mortar estate, and as we continue to grow the innovation and exciting developments ahead for our customers online. Alongside that, we've obviously got a big opportunity to unlock the very attractive and even bigger markets in Europe, and we're delighted that we're starting to get some traction there, both in terms of sales growth and also improved profitability. The business now is more financially secure than it's ever been, has a better stock position than it's ever been. And we continue to strengthen both the management team and indeed the board as we look forward to continuing to grow the business profitably towards our ambition to become Europe's number one largest and most profitable fishing tackle retailer across Europe. So thank you very much for your time. Thank you.

That's great. Andy, Steve, thank you once again for updating investors. Could I please ask those on the call not to close this session, as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Angling Direct PLC, we'd like to thank you for attending today's presentation. Good morning to you all.