Angling Direct PLC

Good morning and welcome to the Angling Direct PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. 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 can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And then I'd like to hand you over to Steve Crow, CEO. Good morning, sir.

Good morning, everyone. Welcome to our 2024 financial results. And pleased for the first time as CEO to present those results. And also for the first time, we're going to set out our medium term ambitions for the company. And again, we're pleased to do that given we've not previously entertained that. And for the first time, we're going to give some transparency over the way we see the future developing. Excellent. The headlines. So for the 2024 results, delivered record revenues and again strengthened our margins and our cash position and executed our strategy of taking market share and underpin that by continuing to invest in the business. Particularly pleasing is we've reinvigorated the UK growth. Last year, the 2023 year was relatively soft at 1.6%. We're really pleased to deliver 9% growth in the UK business in the 2024 year. That was across both channels, stores and online. The online business returning to growth with the previous year where we regressed. And again, that was a particularly strong performance of 11% growth. In Europe, we've made tangible progress in a challenging market. We've closed the gap on the UK trading metrics and materially reduced the drag on the group EBITDA. In total for the whole group, we've strengthened the margins, the gross and the operating margins. And despite well-publicized headwind on theft, we've continued to move the overall gross margin percentage forward. Operationally, our key success has been around the deployment of our MyAD, which is our repeat purchase and loyalty offer. Again, at the period end, we had about 220,000 members of that, and I'll cover some more detail of that as we move further through the presentation. As I said for the first time, we've set out our medium term objectives for the company, and I'll just cover those in a little bit more detail on this in the next slide. The UK business, we've now got a clear flight path to move that UK business to over 100 million of revenue. We had record revenues in the year of over 77 million in the UK, and we've got a strong pipeline of opportunity to develop that 100 million progress. Against that, we're setting out against that 100 million, at least 6 million of pre IFRS 16 EBITDA. That's over an 85% increase in earnings using the 2023 launch point when Sam and I engaged together in the business. The key component of that is the third objective, where we are going to create Europe's largest fishing club, using my AD as the cornerstone of that. Again, I'll cover in some later slides how we're developing that further in this year. We've had a particularly strong start, as I say, in terms of membership and engagement from that. Fourthly, developing a sustainable European business. The European business, as I said, continues to be a drag on the overall earnings of the group. We still see that as a key opportunity in terms of accessing a scale market that is equally as fragmented as the UK. And to do that, we'll do that with our omni-channel approach, both stores and online. And I'll cover some more detail of that in a moment, how we're looking to do that. Objective five, importantly, deploying the surplus liquidity on the balance sheet, clearly is a suboptimal balance sheet as we sit here today. However, we have got some clear plans in terms of deployment for that cash. crucial to recognise the deployment of that cash is additive to the £6 million ambition that we've set out above in objective two. Objective two can be delivered by self-financing itself over the medium term. The excess liquidity on the balance sheet today in excess of the minimum working capital requirements is there to develop the business beyond the £6 million. And lastly, continuing to grow us as the most responsible employer in the fishing tackle industry. We've made good strides in terms of employee progress, employee engagement and progress in terms of other metrics around carbon intensity and other environmental projects that we're engaging in. the top of the page just to give a bit more color about the uk you know the 100 million revenue the way we're seeing that is roughly a 60 40 split depending on how the market evolves in terms of that engagement from the customer be it digitally or physically we haven't seen a drift towards the digital channel if anything the drift is back towards physical retailing but we retain a a flexible model in terms of how we can scale up and scale down relative to those sort of two channel mixes, but we do see it primarily being in the 60-40 blend between those two channels. EBITDA growth, the 6 million, we see that sort of substantially indexing over the sales growth. Again, I'll let Sam talk later on about how we viewed that in year, but it's important to recognize how the EBITDA ambitions will substantially scale above those of the sales growth ambitions. Overall, that should deliver ex-cash a compelling sort of UK return on capital employed that moves us comfortably into double digits. Europe, as I said, it's about delivering a break-even position for Europe as quickly as possible. In 2025, we will have opened our first store in Utrecht. We need to take the learnings from that store, deploy MyAD into that store, and then review the capacity to roll out that physical store and omnichannel offering more quickly alongside the progress we're making in our digital business, which again, I'll cover a bit more in detail in a moment. Lastly, the surplus cash above the minimum capital working capital requirement. Again, we've got 15.8 million on the balance sheet at the year end. Our house view is we need around 5 million of cash for a sort of flexible approach to our working capital, which leaves over 10 million of excess liquidity that we need to deploy materially into the UK business. That deployment needs to primarily focus on how we're going to move our own brand participation, be that within our own brand or more importantly, partnering with other brands from working capital restructuring and or at the extreme paying goodwill to exclusively access those brands. Finally, we will retain a small element of flexibility around European deployment as the test and learn on the omnichannel approach develops over the next 18 to 24 months. For the first time, now we've published those objectives. We've set out how we're tracking against those and we'll continue to do that at each of the meetings moving forward. So folks can see how we're reviewing our progress against each of those six objectives. You can read there on the screen how we're viewing it. We have got a strong flight path towards the 100 million. As I said, our revenue CAGR 12.6% and a good pipeline of opportunities to continue to develop that. I think it's worth recognising that won't be a linear journey. There's some things we're working on operationally that may accelerate that and we may, you know, we may see some flat spots that then move up again as we develop those opportunities. EBITDA, again, you know, 15.6% improvement on an adjusted EBITDA basis and an improvement in the EBITDA ratio, 550 bits improvement over the last five years. Again, we see a good flight path in terms of how we're moving towards that ambition. MyAD, 220,000 members, as I said, and again, 75% of our revenues are now being transacted by those members through that club. I've got a slide over the page where I'll just explain a bit more about MyAD in terms of what it is and how we're developing it. European business model, headline growth, 36%. We were pleased with that. We continue to balance sales growth with improvement in profitability. The contribution ratio, i.e. sales, less variable costs, improved 750 basis points. And we're closing the metrics on the UK business. And most importantly, the scale of the losses relative to the EBITDA profits of the group continue to move in the right direction with those dropping down to 35% of the group EBITDA from 53 the year before. Cash. We've continued to review how we're going to deploy that. I'll talk later on when I come to the FY25 priorities, how we're spending some of that in the UK on an automated packing solution. That's a seven figure commitment. And post year end, we've completed two small scale acquisition of single site stores. Again, we're... continue to review in detail the supply chain opportunities in terms of working capital or goodwill deployment and we'll look to report further on that as we move through the interims into this time next year. And angling's retail's largest responsible employment, you know, good engagement in terms of store colleagues. We've reduced our lever rate by over three times year on year as we continue to focus on that employee engagement. And, you know, and a particularly pleasing point is the improvement in our carbon intensity ratio where we're continuing to focus on usage and actually we've dropped 14% despite us continuing to roll out the physical estate. Sam? On this slide, we've sort of pictorially set out where we are on MyAD. MyAD is a free to join subscription. It enables anyone who subscribes to access over 600 daily deals where there is preferential pricing relative to what a non-MyAD member would pay for that product. some particularly pleasing statistics around how we how we've deployed that sort of 70 uplift if a product is in my id in terms of sales revenue and similarly around a 60 uplift in the in the cash margin we generate as a as the retailer i think that's a pretty compelling proposition to the suppliers and we continue to work with the supply chain to get them to engage in this And we've had a real success this year and for the first time we've generated around six figures of value from our brand partners paying for physical and digital space to support the MyAD proposition. Alongside that, we continue to deploy monthly Money Can't Buy prizes, which are particularly engaging for the customer base, monthly giveaways and the exclusive MyAD deals and bundles, where we're primarily now running all of our promotional activity through MyAD as the test and learn on that has helped get the engagement in terms of increasing numbers of customers who are looking to sign up to MyAD. How we're going to move that proposition forward later in the year is we are looking at how we personalize the offer of MyAD in terms of using the data points we've got from existing customer transactions and look so that we can actually target individual customer cohorts and then more latterly, individual customers with offers that are sort of contemporary to the way that they're approaching their angling. We're also looking at how we add what we call sort of round benefits package beyond the free subscription. Can we partner with other organizations in terms of them accessing our database in terms of that number of customers and ancillary and products that they'd look to access as well? 24, we've set out the key things that we've delivered in 24. I'll not repeat, I've covered a number of them. On the left-hand side, the customer was primarily around the MyAD proposition that I've just talked about. And the bottom bullet there, we are increasingly focused on this development of new commercial marketing revenues, both selling that digital and physical space and joining that with MyAD. In the UK retail estate, we've had a very successful year in terms of maximizing any customer that comes to us. Our conversion rate in the stores increased by 250 basis points year on year. That was driven by a number of factors which we saw on the slide. The key one being how we've approached our on-shelf labeling, consistency of promotion and consistency of merchandising in the store through a technology solution that we've deployed. And we'll continue to leverage that in 2025. We're also particularly pleased to roll out for the first time in-store services, where again, we've delivered a six-figure number that is very supportive to the growth margin progression in terms of customers being able to access some services, real spooling for any anglers out there, has been a real success for us. The bottom point, retail theft shrinkage has been a challenge for us. That's widely publicized. It's not just a feature that's only impacting Anglin Direct. We've taken a lot of action on that in terms of protocols, in terms of shop layout. cctv customer protocols in terms of having a basket but we also approached it from the flip side which is ensuring that we pick up the gaps from shrinkage very quickly such that we can replenish and not have empty pegs where our stock system may have been telling us we still had one in stock so we don't lose on both sides of the coin UK Digital, really pleased with the return to growth. A number of factors supporting that. We've had a point upgrade of our Magento platform, site speed and search capability. We've moved into some more technology space where we've looked at our recommend and also bought, where we work with a third party to bring that in the second half of the year to look to drive items per basket progression. And finally, as the digital business in terms of the market, the digital market isn't scaling as we perhaps thought it might, there is more aggression in competitors who are digital only in terms of the way they approach their marketing spend. We've again employed some technology solution whereby we look to optimise, real-time optimise, our paid advertising bidding campaigns. For Europe, this continues to be a challenging market. That's primarily from a consumer pricing aspect. There is more intense price competition. And so we've continued to balance our sales progression against our profitability and looking to maximize the metrics that we know we can work on from our experience from the UK business. And again, deploy those technologies that we've successfully managed to embed within our UK digital estate back into our European business. For instance, the German conversion rate is now within two basis points of the UK and NL and France is only 50 basis points behind. Average basket in Germany is now only a euro behind where the UK is and the items per basket are broadly proximate with each other. about a 35% increase in unique customer numbers. So we've looked to scale our customers at the same time we're scaling our revenue ambitions and our advertising ratio in Europe is down by 200 basis points year on year again, looking at how we deploy technology, look how we take the learnings from the UK business back into the European business. In 2024 January, we signed the lease on the Utrecht store, as I mentioned earlier on. We're now trading that store and we're looking to do a grand opening of that later as we move through this month. The key on the European store is to look at the way that we can develop the gross margin of the business to ensure that that gives us a sustainable platform to get confidence to trade out from that store and more widely develop the omnichannel proposition. again we see my ad being a key lever that will deploy my ad into the dutch store and the dutch website later this month commercially We've done a great job in terms of developing our own brand proposition. We've increased the gross margin on that own brand around 16% year on year. We've increased the SKU count and we're looking to engage in more categories where we're confident we can take share and provide a more compelling offer in terms of price versus value and economics back to our own business. outside of own brand we've made some some some particularly impressive progress in terms of how we've managed the working capital focusing on availability through reducing the core skew count down by about 16 but at the same time developing the bought-in margin i'll let sam talk to the margin bridge as we come through the financials in a moment And finally, we are seeing more alignment with some of our key supply partners where we continue to trade together to maximise the returns for both organisations. Communities and sustainability. We've covered the sort of the colleague aspect to that. Outside of that, we're continuing to work with Tackling Minds, who are a organisation who look to support folks who are having some challenges in life through the pastime of angling. We sell all of their merchandise through our web offer in 14 of our stores, and that's returned about £26,000 back to them. And again, we're looking at all of the work we're doing with some of our brand partners around line recycling and other aspects of packaging where we see we are able to lead the charge in terms of having a more environmentally sustainable offer around the packaging of angling equipment. I'll hand back over to Sam for the financials and then I'll cover the FY25 key priorities after we've done the numbers.

Thanks, Steve. Good morning, everyone. So just starting on the first slide there in terms of some financial headlines, we've got a bit more segmental detail on the next couple of slides. But a few headlines just to pull out on this slide. Firstly, being the UK revenue with growth up at 9% versus the previous year at 1.6% in the UK. So really reinvigorating that UK growth. alongside the European sales growth at 36.3%, with the standouts in there being Germany at 48.6% and the Netherlands at 52.2%. Then from an EBITDA perspective, we're seeing strengthening EBITDA margins with UK EBITDA growth on the adjusted basis in the blue box. And just to be clear, the adjusted basis there, the FY23 numbers have been restated to remove the cyberclaim insurance money out of FY23 because it related to an FY22 event. So you can see that we've grown UK EBITDA at 15.6%, over-indexing then against that UK sales growth at 9%. And that's driven by both the gross margin progression, which I'll come on to on the next slide, but then leveraging the lean cost base as well. And European EBITDA has also improved by 19.3%, reducing the losses whilst we continue to take market share. We've also generated cash in the period, despite the continued investment in CapEx and working capital. And as I'll come on and explain, that's through more optimized use of working capital and also building an interest income stream as well. So, As Steve's talked about the medium term targets, I hope this shows we're already delivering against those ambitions in FY24. So just moving then on to a bit more segmental detail. We've introduced here a five-year picture just to show really that we continue to grow out of COVID in terms of sales and gross profit. And you can see in the top chart, particularly shows the reinvigorated UK growth I was just talking about. In terms of UK revenue growth in year, that's obviously underpinned by both new space, but also conversion, which was up 250 basis points in the year. UK online was up, again, underpinned by ATV growth at 7.3%. And that's through optimization of search functionality on the website through the, as Steve said, the upgrade of Magento. And we've also seen an improving IPB picture over H2 as we deployed additional recommend functionality. European growth is underpinned by growth in both active unique customers alongside also improved customer frequency. Moving on to the gross profit, the margin in the UK is up 10 basis points. And so just to kind of talk through the constituent items of that 10 basis points. So first of all, we moved up progression of 70 basis points being own brand at 20 basis points. seeing some upside from the FY23 and early FY24 range review work that was undertaken at another 20 basis points. We've got improved supply terms from the kind of autumn 2022 annual review with suppliers, adds on another 10 basis points. And then we've got two new elements in the margin bridge relating to kind of service-based revenue. Firstly, the commercial marketing, which Steve's already touched on, adding 10 basis points. And then similarly, the new in-store service model, the example being real spooling there, adding on another 10 basis points. So that takes us up 70 basis points, but then is partially offset by higher out-of-season promotional activity in H2, reduced the margin by 30 basis points when trading was tougher, primarily driven by the weather, and higher levels of retail shrink in FY24, again, eroding by 30 basis points to leave us up at 10 basis points year-on-year against the sales growth of 9%. Europe progressed 410 basis points, and that was driven by range optimization and a more gross margin favorable mix. So the growth in both revenue and gross profit on a pound note basis to record levels demonstrates we continue to win market share, both in our core UK business, but also as we continue to build our European presence. Moving on to a bit more depth on EBITDA, and again, you can see here we've introduced a five-year picture to show that as well as continuing to grow sales and gross profit out of COVID, this has also resulted in a delivery of an increasingly robust and sustainable EBITDA return. UK EBITDA growth is over indexed against sales growth in both of the UK trading segments as set on the slide and that's a really important feature as we move forward against the medium term ambitions to make sure that our bottom line growth is over indexing against the top line growth both as discussed before both through the margin progression but also continuing to have a focus on leveraging on the fixed costs. And also, again, excluding the cyber claim, UK central overheads have reduced as a percentage of UK revenue, again, as we stay really focused on leveraging that cost base to support the growth in the business. In Europe, losses improved, as I said before, year on year. And the key measure for us being then how much of our group EBITDA. And we've reduced that by 1,800 basis points to 35.8. So continuing to make some good progress in there, both through the margin, as I've already talked about, but also through improving the variable operating costs, as well as reducing the fixed overheads within the business. So at group level, the growth in sales gross profit has been complemented by the careful cost management and a strong focus on leveraging the existing cost base to grow the EBITDA margin in the year and underpin a sustainable forward path for EBITDA towards our medium term objectives. And finally, just in the financial review section, just on cash flow. So alongside the strengthened EBITDA picture, we continue to generate cash, despite continuing to also invest in CapEx and working capital, particularly around new space. with the key generators within that cash being the increasingly efficient use of working capital, as well as, as I said before, building an interest income stream of around about half a million pounds in H2, which is negated in the bridge by the FRS16 interest charge. The 1 million of working capital generation is largely driven through stock efficiency with our stock holding at year end being 800,000 pounds lower, which actually when you adjust on a like flight basis for the new space impact is actually a 1.3 million pounds improvement year on year. And that's whilst at the same time improving the availability by circa 200 basis points year on year. So we've built sustainable improvement to working capital. You can see we also continue to deploy CapEx investment, most notably in FY24 in terms of new space for the two new stores and one refit. But included in the 2.6 in the bridge there, we've also got around 1.1 million of CapEx where we'll really see the return in FY25 in terms of the early commitment to our store rollout pounds for FY25 alongside the initial CapEx deployment on the automated packaging solution for the UK. So alongside the improved EBITDA picture, our strong cash management has delivered an even stronger balance sheet from which to execute our medium term objectives, as well as giving us a good position from which to deploy the surface liquidity to go beyond those medium term objectives.

Thanks, Sam. I'll talk a bit more now about FY25 in terms of how we're developing our plans for this year and what the balance of the year is left to do. So again, starting on the left-hand side, the UK customer, clearly MyAD remains a focus for if we continue to grow that proposition as we've moved post year end, we've got around 270,000 members as we sit today. So further 50,000 from the year end and that continues to go from strength to strength. Outside of that, we're going to look to develop the capability for our customers to shop our full range of products using the store as that medium to do that. That requires a technology solution deployment. We're reviewing those options today. The key for that is we can optimize our working capital deployment of store versus web and capture what continues to be our strongest channel, our physical footfall channel. For UK retail, you know, the 100 million is clearly supported by growth in our physical estate. And we've made some good early strides in FY25 with three catchments open post year end, two of those being acquisitions, one being a greenfield site. And we're currently reviewing a concession offer where we're working with another retailer to potentially access their space for Anglin Direct to bring its offer inside their store portfolio that is going to be reviewed on a test basis later in the year and we continue to work on that to ensure we can we can update folks further on that as we move to the interim the key for the concession space is it gives us access to those smaller format catchments where we need 650 to 750 000 revenue from a catchment as opposed to where we target usually around a million pound sales catchment through our physical space Alongside that, the further focus on technology in the stores, you know, the living wage continues to be a challenge for our operation. We've made some good work in FY24, you know, sort of facing into that headwind, you know, the signposting of that living wage to continue to increase. We need to get ahead of the curve in terms of taking out store tasks and ensuring colleague time is available to spend with customers. UK Digital, again, we've got some more technology deployment to do in the year. We'll refresh the checkout experience, including tagging real-time customer incentives alongside MyAD or outside of MyAD, as well as looking at our merchant charge options, how we put those in front of the customers in terms of ensuring that we get the least drag on our sales basket from those more frequently used checkout options. Deployment of the automated packing solution, as both of us have referenced earlier, that is a million pounds commitment. We spent around 300,000 of that million in FY24. The balance is to pay this year as we physically locate the kit into the UK. That is around a four-year payback on that. That is obviously taking out colleague time, cardboard, tape, and that four year is net, though the increased cost of energy we'll need to run that solution. We've got the capability to put around 75% of our UK volumes through that capability, and that will increase as we move forward. That's not the capacity of the machine. That's the capacity based on the size of the parcels we actually ship today, i.e. for anyone familiar with a fishing rod, a six foot parcel won't fit into that automated packing solution. And again, we're going to look at further technology, AI retail technologies in terms of how we conflate our real time pricing with our real time digital advertising bidding. There's some more we can learn from others around the outside of the angling industry and continue to look how we develop the gross margin through the deployment of that technology. In Europe, as I said, the key is commencing and learning very quickly around the omnichannel model. We have said that Utrecht will be our trial location. We remain committed to that. We're very clear what success looks like for the team in terms of the metrics we need to see coming out of that store. And we'll stay very, very close to that as we continue to trade that hard over the summer months. Outside of that, we're going to continue to review the digital business in terms of mix, range, pricing to continue to bring those losses down. And alongside that, we're looking at a different fulfillment option for our European business. Currently, we ship from our own distribution center. Now's the time to re-review whether we can use some third-party logistics to unlock some value. We're continuing to work on that currently and through into the second half of the year. Commercially, our own brand, we're at a strong start to FY25 again, leveraging those plans we developed at the back end of 24. We've got more work to do on that and we're excited about what that can deliver for FY25. Alongside that, we are committing to some more physical space. to enhance that own brand proposition. That isn't going to be in our home county of Norfolk. That is going to be somewhere more centrally in the UK. We'll ship straight from the port to that location, which will enable us to have more frequent distribution to our store network to ensure the availability of own brand is optimized, where we sort of index three times that on the digital offer in store with our own brand. So the availability is a critical metric for that offer. We've done a point upgrade of our ERP system again, that we are now fully cloud-based in terms of our infrastructure. That was a key step forward for the business just to ensure we were on a contemporary footing from a resilience and security perspective. And we're going to evaluate, continue to evaluate those opportunities for that scale brand partnership or goodwill model, which we know is crucial to developing the gross margin of this business to drive towards that 6 million ambition. again that does link back to we need to develop that to ensure we can deploy the cash to deliver beyond the six million communities and sustainability we continue to work with the angling trust and and more closely with them in terms of ensuring the health of the sport the the engagement with particularly lapsed anglers as well as new anglers and again tackling mine remains forefront for all our colleagues in terms of supporting the work they do We're going to work even more closely in terms of the amount of waste we send to landfill. That is particularly important as we roll out our store ambitions, whereby it becomes a challenge in terms of building refit and also our own brand, focusing on the packaging aspect of that, continuing to review best practice and influence the wider supply chain on how we engage. The outlook for the numbers, I'll let Sam cover this.

Yes, Q1 growth was at 4% versus the prior year, which is within our kind of planning corridor. Store trading has been stronger than online with much higher pressure on higher ticket items, and they have a higher propensity in the web. The key trading period for us, as in previous years, is really the June, July, August period. So we kind of don't win it or lose it in Q1, but we certainly do win it or lose it over that key trading period. So our focus has very much been on kind of having the right range, availability, et cetera, both in-store and on the web business for that key trading period.

Thanks, Sam. I think that the key part of the 25 outlook for me is, you know, we are well placed. We have a very strong balance sheet. We've got very clear plans. There are consumer headwinds we've observed in the first quarter, but we're well placed to sort of stretch out beyond the competition in terms of that space. And we've got some clear objectives that we're working on to deliver that we think underpins an exciting proposition in terms of value creation beyond where the business is valued at today. That concludes the formal presentation for the 24 annual results.

Steve, Sam, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the top right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, 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 investor dashboard. As you can see, we've received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Thank you. I'll read out the question, take that, and then I'll hand over to Sam as and when it's appropriate. So first question, can you identify the leading UK retailer that you're saying you're trialing space in? Can you expand on what this opportunity entails? I'll start with the second part first. So we are of the belief that you need a smaller footprint in terms of square footage to enable a sub a million pound sales catchment to deliver some sort of compelling high 20% incremental return on capital. That's much more efficient to do that within someone else's space where they can effectively concede space to you, reduce their headline rent without damaging their overall sales capacity of their operation. We've been working on that for a number of months. I'm not able to today say who that retailer is, but I am able to say that we are relatively well advanced with those discussions where both parties recognise the benefits to each other from being able to partner with that. That will form part of our 100 million ambition. It isn't accretive to our 100 million ambition as we stand. It will be a trial operation to make sure it works for both parties, but it certainly opens up the potential for our sites that we bring forward into FY25 at the back end of the year to grow beyond our ambitions. In terms of our consensus numbers that are out there, there's around seven new stores built in for the UK in those consensus numbers. If it were to go to five from this opportunity, that may move us beyond that seven number. Clearly, we've already done three year to date. Next question, thank you for outlining your mid-term targets. Can you please provide a timeframe for delivery of this guidance? So the boards have the view this is a three to five year medium term plan. We're very confident that is an appropriate timeframe whereby three would be over delivery, five would be the outer sort of regions of our ambition. So we will update on that as we move through, but I'd encourage folks to think about it on a three to five year basis. conflated with that that joins up with where we're at on the dividend policy so clearly right now we are not recommending the payment of a dividend we we've reviewed the benefits or otherwise of paying a small dividend our view is we still need to utilize the cash and the earnings capacity of the uk business to generate that six million and deliver beyond it Link to that, again, a number of questions around buyback. Buyback isn't something that we've contemplated previously. We continue to review that. We'll again have a review of that post our AGM this year. As a board, we remain committed to deploying the surplus liquidity and review the buyback policy subsequent to any outcomes in that medium term strategy. Next question, sir.

So the question is you've referenced M&A being more of a feature going forwards in the use of the balance sheet. Please can you provide guidance on an appropriate level of leverage for the group on an IFRS 16 basis? And how would you weigh up cash returns versus M&A from a valuation perspective? Let's take the first part of that first. So obviously there are two sides to that leverage equation. So first from a cash perspective, I think Steve set out before that in terms of the delivery of those medium term objectives, we expect to fund those out of cash we generate. Obviously that may not and probably won't be a linear journey, but kind of, you know, by the time we get to hopefully having delivered those, you know, we will be back up at that having self-funded those, self-funded that growth. From a leverage perspective in terms of the IFRS 16 lease liability, we are at 11.6 million today. If you look at one of our, what we would consider a traditional kind of catchment, that sort of million pound catchment, and also alongside what our usual lease model is, which is a 10-year lease with a five-year break, Based on our normal rent, you'd expect in terms of the additional lease liability on a balance sheet to go up by around about £400,000 per shop. Obviously, that changes depending on the mix of traditional format versus small format. And then as Steve has just touched on in terms of when we start hopefully working with this retailer in terms of utilising some of their space, that should also help that picture as well. From a M&A valuation perspective, Steve and I think we've got a good frame of reference for what we think are true medium term, multiple is for our business. So when we're looking at M&A opportunities through that lens, we'll be also then looking at where the synergistic upsides come through and then where we see that being a compelling return for investors. I'll take five. The next question is, please can we discuss the 4% revenue growth in Q1 2025? Presumably given store openings, this means like-for-like UK store growth is negative and X price in volumes is significantly negative. You referenced a weakening anticipated finish to 2024 in the pre-release. Please can you help us understand whether this is economically driven or how meaningful is the competitive behaviour currently? So I think probably covered some of this in the outlook statement, but just for clarity, the light for light UK store growth is not negative in Q1. Again, similar to the 4%, it sits within our planning corridor, obviously alongside new stores that we opened in FY25 in terms of Cannock, Crewe and Walsall. They obviously augment that overall stores position. The end of 2024 did see a more challenging trading environment and the weather certainly having an impact as we put in the trading statement. And that's been, I'd say, probably a challenging read through to the consumer. But as a reference point, The transaction volumes in Q1 have not gone down year on year. There is some growth there, so they are proving to be resilient. But as I said before, higher ticket items are under pressure.

Thanks, Sam. Next question. Congratulations on the store opening in the Netherlands. Please can you help us understand the investment in CapEx and working capital? This entailed how you balance these investments you make against the revenue opportunity. You see it, the opportunity you see. It didn't seem like you have another store started for FY25 on the continent. So again, from a European store perspective, we target a four-year payback in the UK in terms of the model. When we look to go into new space, we followed that approach again in the Netherlands. In the UK, we usually see fit-out costs around £220,000, something of that magnitude, and then a stock number slightly below £200,000. in in the netherlands we've tried to follow that model we've given a little bit more oxygen in terms of stock in the early years and again just reviewed reviewed the capex spend it was an existing angling location and therefore we tried to optimize uh what was in situ against what we wanted to spend the the key to this Delivering that four year is the gross margin. We're very clear on the gross margin metrics it needs to deliver and hence the ranging of the store is particularly important to that. Again, we do believe it's a million pound catchment. It was an existing angling catchment. So when we're reviewing the trial of the store, We're confident that it should have the footfall that supports the sales volume. Again, the mix, the range and the margin is the key to understand that. Interesting point about the you don't have another store lined up for 25. We've consciously not done that at this stage. We really do want to see the development of that store quite quickly, what we can learn for that. And again, at the back end of the year, if we feel like we've got some compelling metrics, we'll re-review that. an operation that can bring these stores to market quite quick in terms of fit out and ranging. You know, obviously location can be a challenge, but we want to make sure we've got it right before we replicate it. Next one, Sam, do you want to take that?

Please, can you discuss the smaller UK store format and how the economics of this differ in terms of CapEx working capital investment versus revenue opportunity of the existing portfolio? Is it fair to assume you were targeting a footprint of 80 stores in time? So the smaller format is typically a 650 to 750K catchment for us in a kind of circa two and a half, 3,000 square foot store with obviously then a lower rent on a pound note basis. It tends to have a more margin intense range in store and the working capital tends to be around 150,000 pounds. And that's on a gross basis, ignoring any creditor offset. And with a lower fit-out cost, which tends to be driven by the location and the amount of work required depending on location, but should tend to be lower than what we would call a traditional format in terms of that 200,000 Steve was just talking about. And with the smaller format, we're trying to get to a payback of less than four years. So it's a three point something payback on those smaller format stores. And that's kind of really largely driven by that lower working capital, lower fit-out cost. In terms of the portfolio moving forward, in terms of the 80 stores, well, our planning assumption around the medium-term objectives is probably around the 75 mark, but that will be dictated by the mix between the traditional format stores, so more like the million-pound catchment stores, versus the smaller store opportunities and versus this rollout with a leading UK retailer. And we'll also, again, just as another dynamic in there, depending, you know, folks will have seen from the statements that we've completed a couple of small acquisitions post year end. So, you know, the number we do and the makeup of them between the small and traditional formats will also be partially driven by, you know, what opportunities come up within that pipeline as well. Thank you, Norman. question is what percentage of sales come from own brand products in 2024? So internally, we're very much kind of shifting the focus from kind of the sales penetration from own brand to the gross profit penetration of our own brands, given the relative margin delivered through the own brand versus third party products. So in FY24, we were just shy of 9% gross profit penetration. That did over-index against the sales penetration by a greater level than we saw in the previous year. So showing some good progress year on year in FY24. And we're very much hoping to continue that journey into FY25 with some pretty ambitious plans to kind of continue that journey of improving and increasing the gross profit penetration from our own brand.

Thanks, Sam. Next one. You previously said Europe would need to reach at least 10 million of revenue to reach break even. Is this still a fair assumption? And is this level of revenue profitability ensued in the medium term guidance? I think we've always said it's comfortably north of 10 million pounds. on a digital only basis, it could be north of sort of 13 million pound. As we look to compliment that with the omni-channel offer, clearly we see bricks and mortar being able to claw back some of that profitability quite quickly. Within our medium-term guidance, it does require the rollout of more than one store to reach that break-even level. We're not in a position where we're going to publish those number of stores as we continue to work hard on the digital business to bring down those losses. It is worth reminding ourselves that we are looking at a revised operational model that could take some gearing out of the fixed costs of that business, which may prove a material component of reducing those losses to the digital business. Number 11, how do you define the medium term in years in relation to your financial objectives? I think I covered that one earlier on with saying, you know, sort of three to five is our bookends on that.

The next one is, could you help us bridge the gap from today's UK EBITDA to the targeted £6 million of UK EBITDA in the mid-term, i.e. sales growth versus gross margin versus operating leverage, etc.? Firstly, in terms of sales growth from today's – well, from the FY24 sales, we'd need to deliver a growth rate somewhere of a high single-digit growth rate year-on-year. to get to the $100 million, which then obviously flows through to the great and $6 million medium-term objective. The key bit, which I touched on before there, is really then this over-indexing that sales growth into EBITDA growth. And that will be underpinned both by the margin progression and by leveraging the cost base. So in terms of the gross margin, we probably need to be north of 37.5% based on the current kind of view of kind of the cost headwinds ahead. And obviously it's very important that we continue to leverage the cost base in that time as well. That gross margin progression from where we are today is really going to be underpinned by continued delivery and progress on our own brand, supported by, again, continuing that range review work, working ever more closely with brand partners and suppliers, as well as then to developing these new revenue streams that we've touched on before that featuring this year's margin bridge around the commercial marketing income and the in-store service revenue model. Yeah, next question is, could you provide a breakdown of your FY24 CapEx and also provide some guidance on what CapEx would look like in a steady state store portfolio? So I touched on this before, but just to give a little bit more color on it. So the 2.6 in a year included the 1.1, as I said before, where we'll start to see returns on that in FY25, which is the early fit outs on Canuck and Utrecht and also the initial payments towards the automated packaging machine. The balance of 1.5 related to the two new sites in Cardiff and Gould and also the reef in Cardiff alongside some additional investments. Give you a few examples there around carbon reduction, where we've continued to retrospectively roll out some LED lighting into some stores. and also deploy some capex into more energy-efficient fridges and freezers, which form kind of a key part of our energy usage across the portfolio. And then we've also deployed in this year some capex into some of the proactive action we've taken to try and mitigate some of that shrink impact in the retail estate. In terms of then capex for the business in that steady state store portfolio, our current planning assumption around there is kind of around about the half a million pounds mark in terms of what that would look like on a steady state basis. Thanks, Sam.

Next one, can you speak on your remarks regarding brand acquisitions? Is vertical integration a goal? Would you sell these brands if acquired also via other retailers and online platforms or exclusively via MyR&D? So I think the way we're thinking about this is, We need to work more closely with certain brands to ensure that we can get some more robustness within our gross margin. There are a number of brands who are comfortable that their higher end product is continually discounted. We don't see that as sustainable in the market and we don't see it as being a healthy position for the market to be in. Vertical integration is not a goal. We see it as one option. There is the capability for us to work exclusively with some brands in terms of bringing product to the UK and both sharing the benefits of the pricing and reliability of supply integrity. We are not discounting buying a brand if the opportunity arises, nor do we see that as the only lever we've got in terms of developing those ambitions further. Were we to buy a brand, We've not set out a blueprint on what we would and wouldn't do. I don't see exclusive supply through AD as being the only option. There are other retailers that we respect and admire in terms of the way they develop their business. And clearly, we'd review that opportunity at the right time.

um next question yeah can you quantify the seven figure investment in the automated uk packages solution over what time frame will this project be completed and can you quantify the expected efficiency gains so i think we've probably touched on some of this already but just just to make sure it's clear so the investment overall is about 1.1 million pounds and we will deliver that project this year into the uk distribution center in rackheath um as steve said we think about 75 the packages will go through there that's not capacity that's just um a function of some of the the outsized packages we we send out like steve said kind of a six foot rod being a classic example and we think that'll also then give us kind of the support further scaling and resilience of our uk web business as we move forward into future years Our investment case on the packing machine was around about a four-year payback in terms of savings, such as kind of less packaging and tape, et cetera, lower carriage as we pay for the exact cube we're sending out, and then offset by obviously some slightly higher energy costs we think we get back to our four-year payback. So a compelling investment for us. Thanks, Sam.

We have time for just one more question. How do you ensure a seamless and engaging customer experience across both digital and physical stores? What feedback have you received from customers regarding this? In terms of an engaging customer experience across both, clearly that plays to how we are offering the MyAD offers, so the customer can access those both digitally and physically. Currently, we see about a 33% crossover between those customers who use our physical and digital estate. We haven't annualised the anniversary of when we launched MyAD, so that data point continues to develop. As we go through the year, as I said, that review of customer cohort and then personalization for individual customer will play an increasing important component of that. In terms of feedback today, particularly the pieces around the monthly competitions, the monthly money can't buy competitions, are the strongest positive feedback about how guys are seeing why it's an interesting proposition to engage in. You know, we'll continue to work with the supply chain in terms of broadening out that offer. And we're excited about moving that, you know, ultimately through the 300,000 members plus as we scale through the next sort of 18 months. Two minutes to go. That concludes the Q&A session. And I'll hand back to the guys.

Steve, Sam, thank you very much for answering all those questions you can from investors. And of course, the company can review all questions submitted today and will publish those responses on the Invest to Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Steve, could I please just ask you for a few closing comments?

Yeah, thanks for everyone's time today. We've tried to up the quality and the level of information we've provided in the debt. Hopefully that is helpful to everyone. We've got some pretty exciting plans for FY25. We've laid out the medium term objectives. They directly flow together and we look forward to delivering those and updating you guys later in the year as we go to the interim results.

Steve, Sam, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will 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 and good afternoon to you all.