Aa Net Income dropped on 27.9% while Revenue increased on 2.9%
17 Apr 2018 • About Aa (
$AA.) • By InTwits
Aa reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Aa has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.4%. At the same time it's a lot of higher than industry average of 2.6%.
- CAPEX is quite volatile: £63m in FY2018, £71m in FY2017, £75m in FY2016, £37m in FY2015, £10m in FY2014
- The company has highly profitable business model: ROIC is 32.3%
- It operates with high leverage: Net Debt/EBITDA is 7.0x while industry average is 2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Aa's Revenue increased on 2.9%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.8 pp from 37.6% to 39.4% in FY2018. During the last 5 years EBITDA Margin bottomed in FY2016 at 37.4% and was growing since that time.
Gross Margin decreased slightly on 0.95 pp from 63.5% to 62.5% in FY2018. Gross Margin declined at -0.58 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.7 pp from 33.1% to 30.4% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2017 at 33.1%.
Net Income margin decreased on 4.9 pp from 16.5% to 11.6% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Aa had CAPEX/Revenue of 6.6%. The company's CAPEX/Revenue increased on 2.8 pp from 3.8% in FY2015 to 6.6% in FY2018. It's average CAPEX/Revenue for the last three years was 7.4%. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 8.0% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.0x and Debt / EBITDA is 7.4x. Net Debt / EBITDA dropped on 0.6x from 7.6x to 7.0x in FY2018. Debt decreased on 2.6% while cash dropped on 28.9%. During the last 5 years Net Debt/EBITDA topped in FY2016 at 8.0x and was declining since that time.
Aa has no short term refinancing risk: cash is higher than short term debt (312.5%).
Financial and operational results
FY ended 31 Jan 2018
Aa ($AA.) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 973.9 | 984.0 | 935.0 | 933.0 | 960.0 | 2.9% |
| Gross Profit | 630.3 | 638.0 | 598.0 | 592.0 | 600.0 | 1.4% |
| SG&A | 259.4 | 313.0 | 302.0 | 309.0 | 292.0 | -5.5% |
| EBITDA | 410.8 | 373.0 | 350.0 | 351.0 | 378.0 | 7.7% |
| Net Income | 153.4 | 69.0 | 6.0 | 154.0 | 111.0 | -27.9% |
Balance Sheet
|
|---|
| Cash | 203.2 | 302.0 | 166.0 | 211.0 | 150.0 | -28.9% |
| Short Term Debt | 12.1 | 35.0 | 40.0 | 47.0 | 48.0 | 2.1% |
| Long Term Debt | 3,359.3 | 3,207.0 | 2,914.0 | 2,819.0 | 2,743.0 | -2.7% |
Cash flow
|
|---|
| Capex | 9.7 | 37.0 | 75.0 | 71.0 | 63.0 | -11.3% |
Ratios
|
|---|
| Revenue growth | 0.6% | 1.0% | -5.0% | -0.2% | 2.9% | |
| EBITDA growth | 14.8% | -9.2% | -6.2% | 0.3% | 7.7% | |
|
|---|
| Gross Margin | 64.7% | 64.8% | 64.0% | 63.5% | 62.5% | -1.0% |
| EBITDA Margin | 42.2% | 37.9% | 37.4% | 37.6% | 39.4% | 1.8% |
| SG&A, % of revenue | 26.6% | 31.8% | 32.3% | 33.1% | 30.4% | -2.7% |
| Net Income Margin | 15.8% | 7.0% | 0.6% | 16.5% | 11.6% | -4.9% |
| CAPEX, % of revenue | 1.0% | 3.8% | 8.0% | 7.6% | 6.6% | -1.0% |
|
|---|
| ROIC | 61.1% | 34.9% | 32.0% | 30.8% | 32.3% | 1.5% |
| Net Debt/EBITDA | 7.7x | 7.9x | 8.0x | 7.6x | 7.0x | -0.6x |
Peers in General Retailers
Below we provide Aa benchmarking against other companies in General Retailers industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Just Eat ($JE.) | | 57.7% | 51.7% | 45.4% | |
| AO World ($AO.) | 40.0% | 23.8% | 25.7% | 17.0% | |
| Mysale Group ($MYSL) | 23.4% | 5.1% | 7.0% | 6.4% | |
| Shoe Zone ($SHOE) | -10.8% | -3.5% | -4.2% | -1.3% | |
| Signet Jewelers Ltd ($SIG) | | 36.3% | 14.2% | -2.2% | -2.4% |
| |
|---|
| Median (9 companies) | 3.4% | 5.1% | 3.5% | -2.2% | 0.5% |
|---|
| Aa ($AA.) | | 1.0% | -5.0% | -0.2% | 2.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Just Eat ($JE.) | 89.7% | 90.2% | 90.6% | 82.4% | |
| French Connection Group ($FCCN) | 47.6% | 46.7% | 46.3% | 45.8% | 45.2% |
| Lotte Shopping Co Ltd ($LOTS) | 31.2% | 30.6% | 32.6% | 42.0% | |
| Signet Jewelers Ltd ($SIG) | 37.5% | 36.2% | 37.3% | 36.8% | 35.0% |
| Stanley Gibbons Group ($SGI) | | 51.5% | 40.3% | 31.6% | |
| |
|---|
| Median (9 companies) | 31.2% | 31.5% | 32.0% | 31.6% | 35.0% |
|---|
| Aa ($AA.) | 64.7% | 64.8% | 64.0% | 63.5% | 62.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Signet Jewelers Ltd ($SIG) | 16.2% | 12.7% | 13.4% | 14.9% | 12.5% |
| Shoe Zone ($SHOE) | 9.3% | 8.4% | 8.5% | 8.1% | |
| Lotte Shopping Co Ltd ($LOTS) | 7.4% | 6.3% | 7.2% | 7.8% | |
| Mysale Group ($MYSL) | 2.3% | -4.7% | 1.8% | 2.0% | |
| Caffyns ($78GL) | 2.0% | 6.5% | 2.2% | 1.9% | 1.6% |
| |
|---|
| Median (9 companies) | 3.5% | 7.4% | 0.4% | 1.9% | 1.6% |
|---|
| Aa ($AA.) | 42.2% | 37.9% | 37.4% | 37.6% | 39.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 6.6% | 3.8% | 5.0% | 4.9% | |
| Signet Jewelers Ltd ($SIG) | 3.6% | 3.8% | 3.5% | 4.3% | 3.8% |
| Shoe Zone ($SHOE) | 1.2% | 1.1% | 2.0% | 3.3% | |
| Just Eat ($JE.) | 3.4% | 2.3% | 2.5% | 2.7% | |
| Caffyns ($78GL) | 3.9% | 1.4% | 1.6% | 2.2% | 2.6% |
| |
|---|
| Median (9 companies) | 1.3% | 1.7% | 1.6% | 2.2% | 2.6% |
|---|
| Aa ($AA.) | 1.0% | 3.8% | 8.0% | 7.6% | 6.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Shoe Zone ($SHOE) | 34.2% | 30.0% | 30.6% | 30.7% | |
| Signet Jewelers Ltd ($SIG) | 20.4% | 15.5% | 15.2% | 16.0% | 13.0% |
| Caffyns ($78GL) | 11.1% | 37.3% | 10.4% | 7.1% | 5.5% |
| Lotte Shopping Co Ltd ($LOTS) | 3.8% | 2.6% | 2.3% | 1.9% | |
| Mysale Group ($MYSL) | 10.0% | -19.0% | 0.3% | -0.0% | |
| |
|---|
| Median (10 companies) | 6.9% | 6.8% | 0.3% | -0.0% | 5.5% |
|---|
| Aa ($AA.) | 61.1% | 34.9% | 32.0% | 30.8% | 32.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lotte Shopping Co Ltd ($LOTS) | 5.2x | 6.7x | 7.1x | 3.5x | |
| Caffyns ($78GL) | 3.0x | 0.7x | 2.2x | 2.2x | 4.0x |
| Signet Jewelers Ltd ($SIG) | -0.3x | 1.7x | 1.4x | 1.4x | 0.6x |
| Shoe Zone ($SHOE) | -0.6x | -1.0x | -1.1x | -0.9x | |
| Mysale Group ($MYSL) | -14.4x | | -6.0x | -1.7x | |
| |
|---|
| Median (5 companies) | -0.6x | -0.7x | 0.2x | 1.4x | 2.3x |
|---|
| Aa ($AA.) | 7.7x | 7.9x | 8.0x | 7.6x | 7.0x |
