Annual Results 200102

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(No Transcript)
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Annual Results 2001/02
Howard Dodd
Group Finance Director
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2001/02 Group Performance
Sales
5,332.2m
2.0
Profit
638.7m
9.9
(before tax and exceptionals)
Basic EPS
49.9 p
9.9
(before exceptionals)
Basic EPS
45.9 p
25.1
(after exceptionals)
Final Dividend
19.3 p
Total Dividend
27.4 p
4.2
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Group Trading Performance
(before exceptionals)
Salesm
Profitm
Boots Retail
4,303.1
572.1
2.5
1.0
Boots Retail International
40.3
(24.1)
-4.3
Boots Healthcare International
407.3
66.7
12.9
13.2
Halfords
528.7
54.3
4.0
29.6
Group Costs / Other
52.8
(43.5)
-54.5
TOTAL
5,332.2
625.5
2.0
7.8
Includes inter-segmental elimination
Local exchange rates
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Boots Retail - Trading Performance
(before exceptionals)
Salesm
Profitm
Boots The Chemists
4,070.6
629.0
2.0
5.0
4,303.1
572.1
TOTAL
2.5
1.0
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Boots The Chemists - Sales Growth
growth
6
5
4.1
4
3
2.0
2
1
0.3
0
99/00
00/01
01/02
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Boots The Chemists - Sales Analysis
growth
3.5
3
2.5
1.3
2.0
2
1.5
1
0.7
0.5
0
Inflation
Store SpaceChanges
Like for Like
BTC TotalSales
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Boots The Chemists - Sales Market Performance
Year
H1
H2
Health and Beauty
5.6
3.9
4.8
0.1 -0.4 0.2
Market Shares
- Health Beauty counter sales - Healthcare -
Beauty
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Boots The Chemists - Sales Market Performance
Year
H1
H2
Health and Beauty
5.6
3.9
4.8
0.1 -0.4 0.2
Market Shares
- Health Beauty counter sales - Healthcare -
Beauty
Photo / Baby / Food
-3.6
-4.4
-4.0
Leisure
-31.8
-43.7
-36.7
TOTAL
2.9
1.0
2.0
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Boots The Chemists - Movement in Gross Margin
change
0.6
0.4
0.4
0.5
0.2
0
-0.2
-0.4
-0.4
-0.6
99/00
00/01
01/02
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Boots The Chemists - Operating Margin
of sales
15.5
15.0
14.0
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Wellbeing Services - Trading Performance
(before exceptionals)
Salesm
Profitm
Boots The Chemists
4,070.6
629.0
2.0
5.0
Internet ventures
1.5
(23.8)
4,303.1
572.1
TOTAL
2.5
1.0
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Boots Opticians

• Sales 204.7m 4.4
• Operating Profit 9.4m 113.6
• Second half sales growth rate 9.9
• LASIK sales reach 9m and were trading at
  breakevenby year end

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Health Beauty Services

• Sales 26.3m, increase of 17.8m
• Operating loss 42.5m - due to start up costs
• Stores opened 24 Dentalcare 19 Footcare
  8 Health Beauty Services Centres 45
  Hearingcare Centres 1 Wellbeing Centre

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Health Beauty Services

• Development / central costs 19.3m
• 6m occupancy costs absorbed
• 44 operating loss in stores opened in last 12
  months - Dentalcare - Health Beauty Services
  Centres

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Boots Retail - Trading Performance
(before exceptionals)
Salesm
Profitm
Boots The Chemists
4,070.6
629.0
2.0
5.0
204.7
9.4
Boots Opticians
4.4
113.6
26.3
(42.5)
Health Beauty Services
1.5
(23.8)
Internet ventures
4,303.1
572.1
TOTAL
2.5
1.0
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Boots Retail International
Salesm
Profitm
Boots Retail International
40.3
(24.1)
-4.3

• Comparable sales growth 3.8
• Losses before exceptional items reduced by 45

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Boots Healthcare International
(before exceptionals)
m
Sales
Cough / Cold Analgesics Skincare Other
77.5 99.0 184.5 46.3
1.2
6.7
28.5
3.3
TOTAL Sales
407.3
12.9
Operating Profit
66.7
13.2
Total Brand Investment
113.0
19.2
At local exchange rates
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Halfords

• April announcement of intention to demerge or
  sell Halfords
• Sales 528.7m 4.0
• Like for like sales growth 5.6
• Operating Profit 54.3m 29.6

After adjusting for Garage Services
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Cost Savings Programme
01/02 PL
00/01 PL
Annual Savings Rate
Further Savings
m
Cost of goods
5
26
46
21
Operating costs
81
168
204
87
TOTAL savings
86
194
250
108
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Cost Savings Programme
Annual Savings
m
Cost of goods
46
Head office
90
Store efficiency savings
71
Category Management
29
Supply chain
14
TOTAL Cost Savings
250
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Cost Programme over 2 years
m
10
11
13
25
168
31
Other
LASIK/Hearingcare
43
Wellbeing
Internet
45
NewSpace
91
Clearasil
24
BTC
14
5
CostProgramme
BCMRoval /UK ThirdParty
BRIJapan /NetherlandsExit
Inflation
HalfordsGarageStoreCosts
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Exceptional Items
H1
Year
H2
m

• Operating exceptionals - BTC - bootsphoto.com
• Loss on disposal of businesses - BRI - Japan
  - BHI - French brands - Halfords - Garage
  servicing
• Loss on disposal of fixed assets

(6.0)(10.4)
(6.0)(10.4)
--
(8.5)(10.2)(2.3) (1.4)
(8.0)(10.2)(2.3) (6.0)
0.5-- (4.6)
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Pension Costs (for Boots Pension Scheme)
SSAP24
FRS17
m
02/03
01/02
02/03
01/02
72
73
Operating Profit
5
33
(12)
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Financing
-
-
Profit before tax
5
33
60
78
FRS17 Valuation surplus before tax
170m
25
Net Interest Receivable
00/01
01/02
m
Net Interest Receivable
13.2

• Movement versus 00/01
• Interest rate swap income
• Net short term interest receivable

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Group Cash Flow
m
00/01
01/02
664
Operating activities
722
(273)
Acquisitions/disposals
4
(222)
Capital expenditure
(172)
(167)
Tax paid
(139)
(224)
Dividends paid
(235)
0
Share buy-back
(36)
36
Other
112
(186)
Net cash flow
256
(410)
Net debt
(146)
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Capital Expenditure
m
01/02
00/01
Boots The Chemists - stores - supply chain
and support Boots Opticians and services Boots
Healthcare International Boots Retail
International Halfords TOTAL
4165 34 10 3 19 172
7160 39 8 7 37 222
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(No Transcript)
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Business Review
Steve Russell
Chief Executive
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Business Review - Driving Top Line Growth
Strategic Momentum

• Substantial organisational change
• Tackled key strategic issues

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Business Review - Driving Top Line Growth
Review Points
BRI - strategic development
Q3
BTC - trial formats
Q4
Pure Beauty progress
Q4
Wellbeing Services
Q4
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Business Review - Driving Top Line Growth
Strategic Issues Tackled

• BRI - Profitable model developed
• BHI - Growth plans in place
• Halfords - Disposal announced
• Other ventures - Losses reduced

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Business Review - Driving Top Line Growth
Boots Retail - Platform for Growth

• Last 3 years - competitive environment
• Priorities - maintain market shares - drive
  efficiency - grow margins
• Key objective - Invest for top line growth

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Business Review - Driving Top Line Growth
Boots Retail - Driving Top Line Growth

• Developing new products and content
• Improving the shopping experience
• Driving retailing excellence
• Developing Health Beauty Services

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Business Review - Driving Top Line Growth
Boots Retail - Driving Top Line Growth
m
02/03 01/02
Capital Revenue ( including 17m write-offs
)
126 67 113 60

Investment doubled
Investment doubled
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Business Review - Driving Top Line Growth
New Products and Content

• Wellbeing
• - Complete Health Beauty offer
• - Product innovation
• - Drive Health Beauty sales

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Business Review - Driving Top Line Growth
New Products and Content

• Accelerating innovation- Essentials- Time
  Delay- Mediterranean- No7 Vitamins

Image No7 vitamins
Target - increase own brand Health Beauty
sales from 34.5 to 35.5 by March 2003
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Business Review - Driving Top Line Growth
New Products and Content

• Further growth opportunities - Cosmetics - Food
  - Lunchtime - Baby - refocus - Beauty
  accessories

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Business Review - Driving Top Line Growth
New Products and Content

• Longer term opportunities - Primary Healthcare

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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Store Formats
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Store Formats

• Where the customer values choice and advice

Stores (circa)
Sales
Experience 50 15Destination 200 30
Local Destination 400 20
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Store Formats

• Where the customer values choice and advice

Stores (circa)
Sales
Experience 50 15Destination 200 30
Local Destination 400 20

• Where the customer need is convenience

Stores (circa)
Sales
Local Chemist 5One stop 100 15
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Business Review - Driving Top Line Growth
Improving the Shopping Experience

• Recent focus on largest stores
• Store investment programme - 2002/03 - 30m
  capital - 7m revenue - 17m write off - 300
  stores - London priority
• Major programme - 170m investment - 70m
  write off

Target - to refit 300 stores by March 2003
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Image Product Beacon
Image Product Beacon

• Core format trials
• Positive elements - Carousel dispensary -
  Open sell cosmetics - Skincare department -
  Product beacons

Brand sales by 10 to 15
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Image Product Beacon
Image Product Beacon

• Core format trials
• Positive elements - Carousel dispensary -
  Open sell cosmetics - Skincare department -
  Product beacons
• Good customer response
• Store operations initiatives
• Sales increases up to 10
• Payback in about 3 years

Brand sales by 10 to 15
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Image Galileo store interior
Sainsbury Trial
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Business Review - Driving Top Line Growth
Improving the Shopping Experience
Image Pure Beauty Store Interior
Pure Beauty Trial
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Business Review - Driving Top Line Growth
Improving the Shopping Experience

• Store Portfolio Outlook - Right number of
  stores - Potential Sainsbury impact - Normal
  floorspace change expected

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Business Review - Driving Top Line Growth
Driving Retail Excellence

• Operational excellence
• On-shelf availability
• Substantial supply chain programme - categories
  - logistics - stores

Target - 98 availability on key lines by
December 2002
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Business Review - Driving Top Line Growth
Developing Health Beauty Services

• Services will be part of the Boots Wellbeing
  offer - profitable in their own right - not a
  short term driver of growth
• Profitable services - today - laser eye surgery,
  laser hair removal, travel clinics, beauty
  services
• Profitable services - future - Footcare,
  Hearingcare - Dentalcare - professional staff
  issue addressed

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Business Review - Driving Top Line Growth
Developing Health Beauty Services

• Dental Services - Model

Yr 1
Yr 2
Yr 3
Yr 4
Sales
250
750
1250
1500
Practice operating profit
(500)
(150)
250
400
Build costs
500
-
-
-
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Business Review - Driving Top Line Growth
Developing Health Beauty Services

• Halo effect on product sales - impact on store
  sales 1.5 to 2.5
• Lower losses expected
• Boots Opticians

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Business Review - Driving Top Line Growth
Investment Summary 2002/03
m
Capital
Revenue
( including asset write off )
Developing new products and content Improving the
shopping experience Driving retailing
excellence Developing Health Beauty Services
56 55 2 0 113
1 56 54 15 126
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Business Review - Driving Top Line Growth
Increasing Business Efficiency

• Restructure internal operations - outsource IS
  T function - review logistics operation -
  review of manufacturing capacity

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Business Review - Driving Top Line Growth
Focus on Growth

• Clear priorities and programmes
• Organisation and capability
• New team in place

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Business Review - Driving Top Line Growth
Focus on Growth - 2002/03 ( Guidance )

• Sales growth accelerating
• Gross margin level maintained
• Increased BTC capital expenditure, returningto
  normal levels
• Excluding pension costs, impact of investment
  programmewill be broadly neutral

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Business Review - Driving Top Line Growth
Focus on Growth - 2002/03

• BHI and BRI on track
• Boots Retail is our main focus
• Profitable sales growth the key objective
• Build on the momentum in the business

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Annual Results 2001/2002