Slides
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22 May 2025 H1 FY25 Interim Results
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Stephan Borchert CEO H1 FY25 Interim Results 2
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Highlights • Pepco delivering on objectives - H1 EBITDA growth of +11% ahead of sales growth, with trading momentum continuing into Q3 • Action plan in place to improve Poundland performance. Board actively exploring Poundland separation options with exit expected by end of FY25 • Strong balance sheet with €150m improvement in net debt (pre IFRS 16) position in LTM to €279m (0.6x leverage) • FY25 guidance for Pepco and Dealz maintained, but weaker outlook for Poundland 3
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Clear strategic framework to deliver on growth ambitions Refocus and digitise Pepco’s customer proposition to drive LFL • Back to basics • Defend kidswear; grow essentials • Leverage digital to drive customer engagement Simplify and streamline the Group portfolio • Focus on Pepco as core growth driver • Shift away from FMCG Continue to grow our topline through measured expansion in CEE • Grow in existing markets • Carefully explore new CEE opportunities • Entrench Poland market position Win in Western Europe • Maximise opportunity in Iberia and Italy • Controlled store expansion • Exit Pepco Plus Upgrade our core operating platform • Improve end-to- end value chain • Build fit-for-future technology landscape 4
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‘New Pepco’ is delivering on objectives set out at CMD *New Pepco = Pepco + PGS + corporate costs Revenue growth 9% High single-digit growth Gross margin % EBITDA growth (IFRS 16) EBIT growth (IFRS 16) 48% 9% 6% Flat y-o-y High single-digit growth High single-digit growth H1 FY25 FY25 guidance New Pepco* Positive LFL momentum Store growth in H1 +2.3% in H1 FY25 1.4% 3.6% Q1 Q2 Q3 to date 106 net openings CEE WE 90 16 5
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Pepco Poland acceleration a key priority for Group • Getting Poland – our largest market - back on track is a key priority • Focus on store refits/relocations, where necessary, and operational excellence to drive LFL • Disciplined expansion in existing CEE markets will continue, as we explore new market opportunities (3.3%) (2.7%) Q1 FY25 Q2 FY25 Q3 FY25 to date 2.6% 5.5% Q1 FY25 Q2 FY25 Q3 FY25 to date Poland LFL in FY25 CEE (excl Poland) LFL in FY25 Higher maturity Lower maturityMedium maturity CEE market maturity levels Potential other CEE markets Poland LFL lagging other CEE markets 6
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Momentum for Pepco Western Europe * Sales versus the prior year for stores converted from Pepco Plus to standard store (Clothing + GM sales) • 16 new stores opened in Western Europe during H1 FY25 • 60-70 WE openings planned across FY25 and FY26 Iberia and Italy are focus markets 2 200 6 20 Spain Ital erman ree e ort gal • LFL driven by price focus, growing brand awareness and driving good NPS scores • Gross profit 25% higher y-o-y in Western Europe in H1 FY25 8.0% 12.9% Q1 FY25 Q2 FY25 Q3 FY25 to date Positive WE LFL in FY25 • Exit of ep o ‘ l s’ b end of FY25, in line with plan to shift away from FMCG • Majorit of 12 ‘ l s’ stores to be converted to standard stores • Store EBITDA % uplift of >14ppt of converted stores Initial FMCG conversions encouraging +45% Converted stores sales growth y-o-y* 53 Store conversions to date 7
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Data & digital will be increasingly leveraged to drive LFL Loyalty & CRM Digital customer engagement Ecommerce Grow customer lifetime value through young families’ life stage and be ond with targeted CRM Drive even greater convenience for time-poor young families through omni-channel offer Build digital shop window and engagement to s pport ep o’s pri e-leading value proposition and drive digitally influenced store sales (DISS) ✓ ✓ ✓ LFL sales Digitally influenced store sales Traffic to store Loyalty & CRM Frequency Basket size & cross shop 8
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Dealz: Solid progress continues in H1 • Dealz carving a strong reputation for international branded FMCG goods at the best prices in Poland • Solid H1 results: • Revenues up 14% y-o-y • Gross margin of 33.7%, up 150bps y-o-y • EBITDA (IFRS 16) up 25% • 13 new stores opened; with 344 at end of H1 • Business increasingly self-sufficient across its management team and supply chain • Dealz being managed to optimise value 9
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Poundland action plan in place to improve performance • Poundland is well-positioned for recovery under revitalised leadership • Business is currently working on an action plan to improve performance including: • Rationalising in-store customer offer • Simpler price points • Refining distribution network • Poundland remains a key player in UK&I discount retail, serving over 20 million customers annually Group’s ultimate ambition is to shift away from FMCG 10 • Board continues to actively explore separation options for Poundland business with an exit expected by end of FY25 • Process is advancing • A further update will be provided at the appropriate time Update: Poundland separation from Group
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Willem Eelman CFO H1 FY25 Interim Results 11
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12 H1 FY25 financial highlights Revenue € , m +4.3% Gross Margin €1, 5m +43.3% EBITDA IFRS 16 € 60m (5.5%) LFL (0.7%) Underlying PBT €117m (32.8%) Net debt €279m (35%) Revenue €2,171m +9.3% Gross Margin (%) +47.3% +180bps Gross Margin(%) +34.5% (430bps) Revenue €9 5m (6.5%) EBITDA IFRS 16 € 0m +11.1% EBITDA IFRS 16 €15m +25.0% Gross Margin(%) +33.7% +150bps Revenue €1 2m +13.8% EBITDA IFRS 16 €22m (74.7%) Note: All growth figures as reported H1 FY25 financial highlights
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13 €2,171m €9 5m €1 2m Revenues € , m H1 FY25 y-o-y revenue growth by segment Pepco Group Poundland Dealz Pepco +9.3% +13.8% +4.3% (6.5%)(7.3%) (2.5%) +2.9% (0.7%) (0.7%) (4.6%) +2.3% H1 FY25 (3.2%) LFL revenue growth in H1 FY25 H1 FY24 Note: Total Revenue growth figures as reported H1 FY25 Group revenue by segment Note: LFL calculated at constant currency
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14 H1 FY24 H1 FY25 36 21 • Group gross margin up 20bps to 43.3% • Pepco and Dealz gross margin driven by normalisation of supply chain following Red Sea challenges in prior period • Product margin and mix improving • Poundland impacted by clearance of old stock Revenue (EUR m) Underlying EBITDA (EUR m) 45.5% 47.3% 285 396 93 1,986 2,171 185 1,986 1,54 2,171 440 396 87 Gross Margin 33.7% 34.5% 38.8% 32.2% H1 FY24 H1 FY25 H1 FY24 H1 FY25 (430bps) +180bps +150bps Gross margin expansion in Pepco and Dealz
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15 Gross margin improved by 140bps before Poundland impact 1 5 1.3% 43.1% 1H FY24 Product Margin Category Mix Freight, Duty & Other Net Markdown FX GM% before Poundland impact Poundland 43.3% 1H FY25 44.5% Note: H1 FY24 Gross margin of 43.1% includes Poundland. The 130bps Poundland impact is the -430bps shown on the previous slide. Pepco & Dealz
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16 H1 FY24 H1 FY25 H1 FY24 H1 FY25 36 21 Revenue (EUR m) Underlying EBITDA (EUR m) €440m €396m 285 396 93 87 1,054 1,986 440 396 87 Underlying EBITDA IFRS 16 (EUR m) H1 FY24 H1 FY25 €87m €12m €15m €22m +25.0% €487m €460m Note: Total EBITDA figures include Group Services which is not shown as a separate segment (74.7)% H1 FY24 H1 FY25 +11.1% (5.5%) Segmental EBITDA: Strong performance of Pepco offsetting significant decline in Poundland
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533 593 136 154 222 237 0 0 H1 FY24 H1 FY25 Store Costs Distribution Costs SG&A Expenses bb Operating cost growth of 10% +10.4% 984 891 Store costs include labour, property and other store costs. Note: Pepco SG&A costs include consumption tax reclassification of approximately €10m. Excluding this impact, Operating Costs grew by 9.3%. • Total store costs grew 11% driven by store labour costs and store openings • Double-digit volume growth at Pepco resulted in higher investment in store handling hours • High wage inflation, particularly in CEE • New store openings (<12 months) represent 4% of the total 11% store cost growth • Distribution cost increase of 13% driven by strong volume growth and increased trading space at Pepco Operating costs driven by higher volumes, new stores and wage inflation 17
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Tight control on SG&A, with investments in strategic initiatives 18 Opco SG&A costs in line with prior year; Central costs driven by strategic projects Lower SG&A as % of sales through better cost control Note: ep o S &A osts in l de ons mption tax re lassifi ation of approximatel €10m, whi h is shown separatel in the hart on the left. Excluding the reclassification of the consumption tax, SG&A costs in reased b €5m ear on ear (+2.1%) *SG&A as % of Revenue excludes the consumption tax reclassification to show like-for-like versus prior year period 133 133 10 56 50 11 12 22 32 222 237 H1 FY24 H1 FY25 Pepco Consumption Tax Poundland Dealz Central 6.7% 6.1% 5.3% 5.0% 6.9% 6.7% 6.9% 6.8%* H1 FY24 H1 FY25 Pepco Poundland Dealz +6.8% (10bps)
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Closing cash up €120m over last 12 months 19 Gross Debt Leverage Net Debt Pre-IFRS 16 €650m €429m 1.0x €620m €279m 0.6x
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‘BB-’ rating ‘Ba ’ rating ‘BB’ rating Public credit ratings from all 3 rating agencies Term Loan B Corporate Bond €250m Expiry € 90m € 75m 6m Euribor + 1.5% 6m Euribor + 1.15% 7.25% April 2026 April 2027/8 June 2028 Facility CouponAmount 20 H1 FY24 H1 FY25 1.0x 0.6x Net debt (pre-IFRS 16) 279 429 RCF Drawn €250m €0m € 75m Financing: Healthy balance sheet, with reduction in leverage Leverage €150m improvement
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FY24 pro-forma FY25 ‘New ep o’(1) Revenues €3,853m(2) High single-digit growth Gross margin % EBITDA (IFRS 16) EBIT (IFRS 16) 47.5%(3) €767m(4) €391m(5) Flat y-o-y High single-digit growth High single-digit growth Poundland EBITDA (IFRS 16) €153m €0m to €20m EBIT (IFRS 16) (€3m) (€120m) to (€140m) Dealz EBITDA (IFRS 16) (€8m) Near breakevenEBIT (IFRS 16) €24m Strong growth (1) New Pepco equals Pepco plus PGS plus CO. (2) Reported revenue for Pepco as of p.30/157 AR 2024. (3) Gross profit of Group (€2,706m) less gross profit of Poundland (€774m) less gross profit of Dealz (€102m) as of p.1, 24 and 25/38 of FY 2024 earnings release. (4) EBITDA of Group (€944m) less EBITDA of Poundland (€153m) less EBITDA of Dealz (€24m) as of p.1, 24 and 25/38 of FY 2024 earnings release. (5) EBIT of Group (€380m) adding back operating loss of Poundland (€3m) and operating loss of Dealz (€8m) as of p.22/38 of FY 2024 earnings release. All numbers on an underlying basis Updated guidance for FY25 NEW 21
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Stephan Borchert CEO H1 FY25 Interim Results 22
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‘New Pepco’ medium-term ambition from FY26 (1) New Pepco equals Pepco plus PGS plus CO. (2) Free cash flow is defined as cash generated by operations, deducted with tax paid, capex like items, and IFRS 16 cash flows. Revenue growth of at least 7% CAGR; EBITDA growth of at least 9% CAGR Gross margin of c. 48% Around 250 net new stores p.a. Greater than €200m free cash flow; Capex of €160m to €180m p.a. Leverage no higher than 1.5x (pre IFRS 16) 23
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Summary • Pepco and Dealz delivering on objectives • Board actively exploring Poundland separation options - exit expected by end of FY25 • Strong balance sheet with €150m y-o-y improvement in H1 net debt • Focus on shareholder returns with €200m share buyback capability during FY25 – FY27 Executing at pace against new strategic framework, with strong focus on sustainable value creation 24
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Q&A 25
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Appendix 26
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H1 FY25 H1 FY24 Change % (constant currency) Change % (actual currency) EUR m Revenue 3,338 3,200 +2.9% +4.3% Like-for like revenue (%) (0.7%) (2.5%) n/a n/a Gross profit 1,445 1,378 3.5% 4.9% Gross profit margin (%) 43.3% 43.1% 30bps 20bps Underlying EBITDA 460 487 (5.9%) (5.5%) Underlying EBITDA margin (%) 13.8% 15.2% (130bps) (140bps) Depreciation and amortisation (292) (262) 10.1% 11.5% Net financial expense (50) (51) (2.0%) (2.0%) Underlying PBT 117 174 (31.3%) (32.8%) Non-underlying items (247) (30) 710.0% 723.3% Reported PBT (130) 144 - - Tax (25) (40) (32.8%) (37.5%) Reported PAT on cont. ops Basic EPS (cents) on cont. ops Discontinued Operations (155) (26.9) 4 104 18.1 (51) - - - - - - Profit and loss summary • First half P&L heavily impacted by performance in Poundland • Group gross profit margin up 20bps driven by Pepco • EBITDA margin down 140bps due to inflationary pressures and sales deleverage • PBT impacted by additional depreciation from store growth and previous spend on refits • Non-underlying items reflect Poundland impairment and FMCG exit in Spain 27
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Change %H1 FY25 H1 FY24 Cash Flow Summary • Operating ash flow of €5 m de reased b €12 m ear-on- year, impacted by lower EBITDA coupled with a deterioration in working capital • Free cash flow is in line with the prior HY, primarily due to a €102m red tion in apex • Net debt (pre-IFRS16) of €279m was €150m lower than prior HY, refle ting € 0m RCF repa ment in the H2 FY24 and improving ash position (+€120m) Underlying EBITDA pre-IFRS 16 235 278 (15.5%) Working capital - IFRS16 (141) (56) 151.8% Working capital – pre-IFRS 16 movements 3 (3) (200.0%) Tax paid (43) (36) 19.4% Operating Cash Flow 54 182 (70.3%) Non-underlying items (8) (31) (74.2%) Capex (53) (155) (65.8%) Free Cash Flow (unlevered) (7) (4) 75.0% Net interest paid (23) (23) 0.0% Financing activities - (90) (100.0%) Proceeds from sale of property, plant and equipment - 2 (100.0%) Discontinued items - (13) (100.0%) Net cash flow (30) (128) (76.6%) Effect of exchange rate fluctuations on cash held 8 19 (57.9%) Cash and cash equivalents at beginning of period 363 330 10.0% Cash and cash equivalents at end of period 341 221 54.3% Net debt (pre-IFRS 16) 279 429 (35.0%) Leverage (pre-IFRS 16, x EBITDA) 0.6x 1.0x (0.4x) EUR m 28
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31 Mar 2025 31 Mar 2024 Change • Healthy balance sheet, with a reduction in leverage year on year, and a strong financial covenant position • Additions to Property, Plant and Eq ipment (“ E”) reduced vs prior HY, highlighting focus on controlled growth • o ndland’s performan e, impairments totalling €2 m recognised in the period • Inventory increased to €1,12 m in H1 FY25, representing an increase in stock days from 101 to 117 EUR m Assets Property, plant and equipment 634 783 (19.0%) Right of Use Asset 1,163 1,244 (6.5%) Goodwill and other intangible assets 36 857 (95.8%) Trade and other receivables 75 98 (23.5%) Derivative financial instruments 32 79 (59.5%) Deferred tax asset 125 114 9.6% Inventories 1,128 966 16.8% Cash and cash equivalents 341 221 54.3% Total assets 3,534 4,363 (19.0%) Liabilities Trade and other payables 1,156 1,080 6.8% Dividends payable 36 - n/a Lease liabilities 1,335 1,308 2.1% Borrowings 615 641 (4.1%) Derivative financial instruments 48 101 (52.5%) Provisions 20 37 (45.9%) Total liabilities 3,210 3,167 1.3% Net assets 324 1,197 (72.9%) Balance Sheet Summary 29
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30 H1 FY25 capex spend of €53m driven by new stores and refits 3 0 New store Store refits Maintenance IT & other 54% 12% 30% 4% Store refits 146 gross new stores opened in H1 FY25 ( 101 net openings) Core infrastructure investment in IT and supply chain Maintenance capex – largely store upkeep
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31 31 Store coverage map Stores Stores Hungary PEPCO POUNDLAND DEALZ Poland Pepco 1367 Dealz 344 Poundland 741 United Kingdom Pepco 171 Pepco 63 Pepco 481 Pepco 154 Pepco 317 Pepco 262 Pepco 159 Bulgaria Latvia Slovakia Serbia Romania Czechia Hungary Spain Italy Croatia Lithuania Ireland Germany Slovenia Estonia Greece Portugal Bosnia & Herzegovina Pepco 63 Pepco 40 Pepco 38 Pepco 44 Pepco 131 Pepco 20 Pepco 44 Pepco 95 Pepco 200 Poundland 77 Pepco 238 3,887 818 5,049344 TOTAL
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Focus on Pepco EBITDA (IFRS 16) Gross Profit Revenue & LFL Store Numbers + 6.1% + 11.1% LFL Growth % EBITDA % Sales H1 FY25 H1 FY24 (3.2%) 2.3% + 9.3% 19.9% 20.3% + 13.6%Gross Margin % 47.3% 45.5% H1 FY25 H1 FY24H1 FY25 H1 FY24 H1 FY25 H1 FY24 3,8873,6652,171 1,027 1,986 396 440 904 32
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Focus on Poundland EBITDA (IFRS 16) Gross Profit Revenue & LFL Store Numbers (5.3%) (74.7%) LFL Growth % EBITDA % Sales 818 (0.7%) (6.5%) 8.3% 2.2% (16.9%)Gross Margin % 34.5%38.8% H1 FY25 H1 FY24 H1 FY25 H1 FY24H1 FY25 H1 FY24 H1 FY25 H1 FY24 1,054 985 (7.3%) 864 87 22 409 340 33
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Focus on Dealz EBITDA (IFRS 16) Gross Profit Revenue & LFL Store Numbers + 8.9% + 25.0% LFL Growth % EBITDA % Sales (4.6%) 2.9% + 13.8% 7.4% 8.1% + 19.6%Gross Margin % 33.7% 32.2% H1 FY25 H1 FY24 H1 FY25 H1 FY24H1 FY25 H1 FY24 H1 FY25 H1 FY24 182 316160 15 615112 344 34