Release Date: October 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Angling Direct PLC (LSE:ANG, Financial) reported strong EBITDA growth, outpacing sales growth, indicating efficient cost management and operational improvements.
- The company is on track to achieve its medium-term objectives, including a UK business with GBP100 million in revenues by FY28.
- The MyAD loyalty program has grown significantly, with 75% of revenues now transacted through this scheme, enhancing customer retention and insights.
- Angling Direct PLC has a strong balance sheet with surplus liquidity, allowing for strategic investments and acquisitions to drive future growth.
- The company has made progress in reducing European losses, achieving a positive basket contribution for the first time, and opened its first store in Utrecht, Netherlands, to trial its omni-channel proposition.
Negative Points
- Despite strong first-half performance, the company expects weaker second-half margins due to planned additional costs and investments.
- European digital revenues were down 3.2%, with challenges in the competitive landscape and pricing pressures in key markets like Germany and the Netherlands.
- The company faces ongoing cost pressures, particularly in payroll and premises costs, which could impact future profitability.
- Angling Direct PLC's cash generation was down over 60% year-on-year due to accelerated store rollouts and investments in web and own brand capabilities.
- The company has not yet formed a clear strategy for returning surplus liquidity to shareholders, which may concern investors looking for immediate returns.
Q & A Highlights
Q: Can you explain why you are only comfortable meeting market expectations of FY25 EBITDA GBP3.15 million having delivered GBP2.8 million in H1 2025?
A: Sam Copeman, CFO, explained that while they are slightly behind their internal planning, they have planned for additional costs in the second half, including ongoing costs for a new distribution center and one-off costs for logistics and packaging line adjustments. Stronger trading in August and September provides confidence to proceed with these investments while meeting market guidance.
Q: You spent GBP740,000 on acquisitions in the first half. Can you detail the multiple paid and expected payback on this investment?
A: Sam Copeman stated that the acquisitions were structured as trade and asset deals with modest goodwill linked to pre-acquisition earnings. The payback is targeted below four years, closer to 3.5 years, to achieve quicker maturity in sales.
Q: Can you discuss the jump in CapEx spending in the first half and provide guidance for FY25?
A: Sam Copeman noted that CapEx increased due to accelerated store rollouts and investments in web channel capabilities. The expected CapEx for FY25 is between GBP3.3 million to GBP3.5 million. The 3PL agreement in Europe was about providing optionality and reducing fixed overheads, not just CapEx reduction.
Q: Do you see increasing or decreasing competition in Europe?
A: Steven Crowe, CEO, mentioned that competition remains volatile, particularly in pricing key brands. However, increasing cost pressures are challenging competitors' margins. The UK has seen substantial failures, and similar signs are emerging in the Netherlands and Germany, aligning with UK market trends from five years ago.
Q: Can extra measures be taken to further reduce product theft from stores?
A: Steven Crowe confirmed that additional measures are being trialed, such as body cameras for staff and improved distribution processes for own-brand products. They are also learning from other retailers to further mitigate theft impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
