Wickes Group plc

Good morning and thank you for taking the time to join us today. And I'd also like to welcome everyone who is watching via the webcast. I'm here with our CFO, Mark George, and we are delighted to share with you our results for the six months to the end of June. We'll spend the next 20 minutes or so taking you through the performance of the business and the broader market trends, as well as highlighting the great progress we are making on executing our strategic plans. I am pleased to report we delivered a resilient performance in the first half and made record market share gains in our retail business, which comprises of local trade and DIY. I'd like to take this opportunity to thank all of my 8,000 colleagues for their incredible work in delivering these results and helping the nation feel House Proud. In a challenging market, our outperformance is a clear demonstration that our uniquely balanced business model and strategic growth levers continue to deliver and position us well looking forwards. We continue to see great success with our TradePro scheme with sales up 14% and this week we're celebrating hitting our target of 1 million members. In our design and installation business, we're encouraged by the success of our lifestyle kitchens performance with sales up 19% in the half. And of course, we've added a new arm to our design and installation business. The recent acquisition of Solarfast gives us an opportunity to build market leadership in the rapidly growing home energy solutions market. And in the half, we've begun our initial rollout of Wix Solar in 50 trial stores and online. Our new store refit programme is progressing well and we're delivering returns and we've opened two new stores and undertaken three refits in the first half with more to come before the end of the year. We've returned 28.9 million to shareholders and today confirm that we've maintained our interim dividend at 3.6 pence and I'm absolutely delighted that the great work we're doing across our built to last responsible business strategy has resulted in us gaining entry into the FTSE for good index. In Q3 so far, we've been encouraged by the improved performance in both retail and design installation. We've taken planned actions to mitigate the impact of inflation, which along with our improved current trading means that our overall outlook for adjusted PBT remains unchanged. I'll now hand over to Mark to take you through the numbers in a little more detail.

Thank you, David, and good morning, everyone. As David mentioned, we've made a good start to 2024, and we've got some of the headlines here on this slide. Revenue was 800 million in the first half. Retail was in positive like-for-like, and that's been positive now in like-for-like terms for about a year, so that's really encouraging. Design and installation, delivered sales have been in decline, reflecting a tough market conditions for big ticket items. Gross margin was a little higher, 24 basis points higher year on year, with really careful management of pricing and promotions. And this stable gross margin, along with tight cost management, has helped us support our profit levels. We've delivered adjusted profit before tax of 23.4 million in the half. we continue to operate with a strong balance sheet. And we ended the half with 152 million of cash. And this enables us to deliver good returns to shareholders. So in line with our capital allocation policy, we're maintaining the interim dividend at 3.6 pence. And we're continuing with the share buyback, which is now nearing completion. So just turning to the P&L. Trading conditions in 2024 so far have been rather similar to 2023. There's been no inflation in our top line. In fact, actually, there's been deflation, which we'll come on to in a moment. But there's still been a lot of inflation in our cost base. So in light of this, the profitability in the first half of 2024 has been resilient. Revenue on a like for like basis in total was down 3.9%. The slightly higher gross margin meant that margin in pound notes terms were down only 2.7%. Operating costs have been tightly managed. And despite the inflation in energy and in wages, overall, we spent the same amount on operating costs this half as we did the same half in 2023. So the fall in profit before tax year on year was driven purely from the flow through of lower sales. And that, in turn, has come purely from the reduction in sales of design and installation. So let's break that down a little bit more into detail. So you can see here, retail and design and installation sales in the half. First of all, retail, a good sustained period of positive volume growth now. So record market share demonstrating that our model is working. The positive light for light that we're seeing is driven by volume. You can see in the table there, the first half we had deflation of around 3% and volume growth of just more than that, and hence the 0.6% growth in light for light. Also worth noting the Easter effect. So it reduced our Q2 numbers by about 1.4%. If you took that phasing out, we'd have been in growth for both Q1 and Q2. And the real driver behind our retail success in the first half has been TradePro. You can see there an 18% growth in the number of active TradePro members shopping with us, 14% growth in TradePro sales. So really very strong performance again from TradePro. Now the design and installation side of our business, it has been tougher. The market environment for bigger ticket projects has been soft, as you all know. So just to work through the numbers a little bit, our delivered sales, in addition to ordered sales being slightly lower in the first half year on year, high single digit decline in ordered sales, we were also lapping a period of strong delivered sales in H1 last year, where we were working through the elevated order book that we had. in that post-COVID period. So the two things coming together has resulted in the big decline there that you can see in delivered sales. But as David mentioned, on the value end of our range, we're doing very well. So Wicks Lifestyle Kitchens up 19%. And as you know, some of the sales go into design and installation if they've had a design component from one of our design consultants. And the remainder of the sales will go into retail. So this profit bridge shows the sale shape coming through really clearly. Now, in this bridge, we take distribution costs out of gross margin, which for statutory reasons are in gross margin. But here, we show them as a cost. So the margin that we see here is the pure trading margin. And you can see that we've increased the trading margin in retail. We've had a slight increase in sales and a slight improvement in gross margin rate, and hence the improvement in retail margin. The decline in design and installation sales inevitably drops through to a decline in trading margin. And you can see that here. In addition, we've got higher consumer credit costs year on year with the introduction of more interest-free credit options for our customers. But on costs, we're delivering productivity plans in line with our expectations really well, and they're offsetting the cost inflation. These are initiatives in distribution, in store productivity, and lower stock loss and shrinkage through the stores. So some really great initiatives from across the business. We continue to invest in technology and customer service, and this will be good for customers, but also good for operating costs in the future. And then the other bucket here is a combination of lower property programme costs and colleague bonus. So the adjusted profit number of 23.4 million is a good result in light of the inflation and significant pressure on the design and installation business that we've been seeing. Turning now to the balance sheet. So we continue to operate with a strong balance sheet and we ended the half with 152 million pounds of cash So the starting point for that, of course, is the strong profit number, which is always the basis for positive cash flow. We then have the usual at-back for depreciation, and then the significant inflow for working capital of 65 million. Now, you'll recall that we have a seasonal shape, which always means we have positive inflows in the first half, and they unwind in the second half. And that will happen again in the second half of 24. We've got capex of 12 million in the first half, and that's broadly in line with our outlook for 30 million for the year as a whole. And you can see the solar fast acquisition of 5.1 million in there as well. But the strong balance sheet that I described has enabled us to deliver good returns to shareholders. And you can see a combination there of the dividend, the final year dividend from last year, which was paid in H1, plus the buyback. We've delivered 29 million of cash back to shareholders. So I'll end with some comments on outlook and guidance. So far in Q3, trading has been on an improved trend. And David will say a little bit more about that in a moment. we're continuing to outperform the market and the most recent market share data shows a very strong performance by Wix. So current trading plus the productivity plans that we have underpin our outlook on profit for the year and we remain comfortable with market consensus for PBT for FY24. Now, I've also provided some technical guidance there for you. I'm not going to take you through it because it's completely unchanged from the start of the year. So to summarise, to wrap up, the business is continuing to perform well. Even in a tough environment, we're performing well, resilient profit, and really importantly, growing market share. The retail side of the business continues to perform well. It's been more challenging in design and installation, but that is now stabilising as well. Good cost management has minimised the drop in profit year on year and will stand us in very good stead to grow profit as the wider economic environment improves. With that, I'll hand back to David.

DAVID ROTHERY- Thank you, Mark.