Angling Direct : Final Results 2023

17 May 2022

Angling Direct plc

("Angling Direct" the "Company" or the "Group")

Full Year Results

Record revenues in a year of significant strategic advancement

Angling Direct plc (AIM: ANG), the leading omni-channel specialist fishing tackle and equipment retailer, is pleased to announce its Full Year results for the 12 months ended 31 January 2022 ("FY22").

Financial Highlights

Given the fluctuating sales patterns as a result of lockdowns and pandemic-related restrictions in the current and previous comparator periods, our commentary below also presents headline financial metrics on a two-year basis, showing a third column for the year ended 31 January 2020 ("FY 2020").

					FY 2022 Growth
	£m	FY 2022	FY 2021	FY 2020	on FY 2021	on FY 2020
	Revenue	72.5	67.6	53.2	7.2%	36.3%
	Online Sales	33.8	35.3	25.2	(4.3)%	33.9%
	- of which UK Online Sales	31.1	30.3	18.8	2.7%	65.8%
	Retail store Sales	38.7	32.3	27.9	19.9%	38.4%
	Gross Profit	26.6	23.1	16.6	15.1%	60.2%
	Gross margin %	36.7%	34.2%	31.2%	250bps	550bps
	EBITDA (pre IFRS-16)	5.2	4.0	(0.5)	30.6%	N/A
	Profit before tax	4.0	2.7	(1.5)	50.6%	N/A
	Basic EPS	3.98p	3.36p	(2.01)	18.5%	N/A

Operational Highlights

• Significant progress made on the development of Company's European distribution centre which opened post period end and is now fully operational
• UK conversion increased to 6.4% (+45bps) - driven by improved customer journey utilising AI to improve search relevance and ease of use
• Improved buying and pricing through rigorous category management leading to enhanced product margins
• Four new stores opened (Cheltenham, Ipswich, Redditch, Southampton) in strategically located, high density fishing catchments, bringing store estate total to 42 at period end (FY21: 38)
• To further improve instore experience, the Company deployed 81 Angling Trust qualified angling coaches, re-structured our field management team and began to utilise newly installed footfall counters to re-allocate labour spend to match customer demand
• Launched web trading app in the UK, the only one of its kind serving angling customers with encouraging initial feedback
• Continued to proactively invest in our capability and capacity to support our growth - appointing a new Commercial Director and welcoming new colleagues into our European expansion team
• Growing contribution from higher margin own brand Advanta range, with 24.9% sales growth

Outlook

• Q1 FY23 sales growth of 5.4% having annualised significant prior year post lockdown peaks
• As a result of the strong foundations built over the course of the last two years, the Board remains committed to its growth plan and will continue to invest in order to strengthen the Company's market leading position and gain market share both within the UK and Europe
• Despite sales growth in Q1, our industry is not immune to the inflationary cost pressures being experienced and the associated impact on consumer confidence
• European distribution centre officially opened 1 March 2022, on time and on budget and is despatching to customers across the EU
• On track to meet current year market expectations*
• Cash at 30 April £13.4m
• Chris Keen has joined the Board as Independent Non-Executive Director, experienced international CFO, strengthens Audit Committee.

Andy Torrance, CEO of Angling Direct, said:

"The last twelve months have marked a period of significant progress for Angling Direct, both online and in store, in the UK as well as continuing our focus on key European territories. I am proud that despite all the headwinds our teams faced last year, we were able to continue to progress on all of our key strategic and operational priorities.

Post year end, we were pleased to also see the opening of our new in-region fulfilment centre in Venlo, The Netherlands. We see a significant opportunity to continue to grow our market share through establishing our presence in Europe and this new facility will help to accelerate delivery of our strategic plans in a more efficient manner and ideally position us to become Europe's first choice omni-channel fishing tackle destination for all anglers, regardless of their experience or ability.

Whilst trading in the new financial year to date has seen growth broadly in line with our expectations, our business is subject to the same pressures and challenges as many others. However, the strategic and operational progress the Group made last year means we are able to continue investing appropriately to strengthen our market leading position and gain market share both within the UK and Europe. As a result, we remain cautiously optimistic for the future and the Board remains committed to its growth plan."

*Angling Direct believes that current market expectations for the year ending 31 January 2023 are revenue of £82.0 million and pre-IFRS 16 EBITDA of £4.3 million.

For further information please contact:
Angling Direct plc	+44 (0)	1603 258658
Andy Torrance, Chief Executive Officer
Steven Crowe, Chief Financial Officer
Singer Capital Markets - NOMAD and Broker	+44 (0)	20 7496 3000
Peter Steel, Alex Bond (Corporate Finance)
Tom Salvesen (Corporate Broking)
FTI Consulting - Financial PR	+44 (0)	20 3727 1000
Alex Beagley	[e-mail]
Sam Macpherson
Alice Newlyn

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

About Angling Direct

Angling Direct is the leading omni-channel specialist fishing tackle retailer in the UK. The Company sells fishing tackle products and related equipment through its network of retail stores, located strategically throughout the UK as well as through its leading digital platform (https://www.anglingdirect.co.uk, .de, .fr and .nl) and other third-party websites.

Angling Direct is committed to supporting its active customer base and widening access to the angling community through its passionate colleagues, store-based qualified coaches, social media reach and ADTV YouTube channel. The Company currently sells over 20,000 fishing tackle products, including capital items, consumables, luggage and clothing. Angling Direct also owns and sells fishing tackle products under its own brand 'Advanta', which was formally launched in March 2016.

From 1986 to 2002, the Company's founders acquired interests in a number of small independent fishing tackle shops in Norfolk and, in 2002, they acquired a significant premise in Norwich, which was branded Angling Direct. Since 2002, the Company has continued to acquire or open new stores, taking the total number up to 42 retail stores. In 2015, the Company opened a 2,800 sq. metres central distribution centre in Rackheath, Norfolk, where the Company's head office is also located. In January 2022 Angling Direct acquired an additional 3,900 sq. metres distribution centre in Venlo, Netherlands to service its established, and rapidly growing, presence in Europe with native language websites set up in key regions to address demand.

Chairman's Statement

Introduction and Board changes

I am pleased to present yet another successful performance, both in terms of the robust financial results, significant operational improvements and in making positive differences through our continued focus on our purpose and experiential culture.

As the 2022 financial year began COVID-19 was still having a major impact, indeed it is still, with the continued sad loss of lives, lockdown store closures and shortages of materials and products. Fortunately, since April 2021 the Group's retail stores have remained open and a new normal began to unfold as the year progressed, however, Brexit continued to present challenges to many UK businesses, including ourselves. More recently a dreadful situation has arisen with Russia's invasion of Ukraine and our thoughts are with all the people affected by this.

We are passionate about getting everyone fishing and Angling Direct operates in a specialist niche sector and one highly regarded for its wellbeing benefits of time spent outside beside the water. Our business has continued to grow, helping the Group to deliver record sales, not only because of continuous improvements to our processes and efficiencies but very much due to our strength of purpose, and desire to get everyone enjoying a successful and accessible fishing experience.

There were two changes to the Board during the year. Darren Bailey, the Group's previous CEO, stepped down as a Non-Executive Director at the AGM on 23 June 2021. Once again, I offer my heartfelt thanks for everything he has done for the Company over the years. At the same time, in view of my confidence in the experience and dedication shown by our Executive Directors, Andy Torrance and Steve Crowe, I stepped down as an Executive and moved to Non-Executive Chairman.

Post period end, we were pleased to welcome Chris Keen to the Board as an Independent Non-Executive Director. His extensive financial and omni-channel leadership experience, particularly in the retail sector, will be invaluable as we strengthen our Board and look to achieve further progress in 2022.

Financial overview

The Group achieved a record revenue of £72.5m in the financial year to 31 January 2022 (2021: £67.6m, up 7.2%).

Whilst stores were affected by forced closure at the beginning of the year, store sales were £38.7m (2021: £32.3m) and, reflecting the large increase against the prior year when stores were closed for a much longer period, our total online sales decreased by 4.3% to £33.8m from £35.3m. Within this, UK Online increased by 2.7% to £31.1m from £30.3m.

With continuing efficiencies, despite shortages of some products, the Group delivered a pre-tax profit of £4.0m (2021: £2.7m) and a 250bps improvement in gross margin to 36.7%. The Group ended the year with a strong balance sheet and net cash of £16.6m as at 31 January 2022.

Operational progress

The Group maintained a strong emphasis on profitable growth, stock shrinkage and cash retention. In addition, there has been a particular emphasis on stock and product/sector categorisation (right product in the right location) and we continue to increase distribution efficiencies and capacity. We also reviewed labour to turnover ratios and improved efficiencies to provide store colleagues with more sales and customer time.

We continued our online ecommerce development to obtain benefits from ongoing inhouse improvements and to enhance customer online experience. To this end we developed and launched the Angling Direct app.

We opened four new stores in the year, taking our total to 42 stores, and relocated another into better premises, while also refitting and updating in the wider estate, constantly aiming to improve the customer experience.

A major achievement in the year was incorporating our European subsidiary in the Netherlands, locating and securing a European Distribution Centre site and embarking on the fit out. Post the year end, this new facility successfully commenced distribution to our European customers, helping to negate the issues brought by Brexit while delivering on our strategy to drive our European expansion.

These initiatives will have a positive impact on the Group's operating efficiency in the years ahead as we continually drive for further improvements to develop our offering and broaden our customer reach.

People and community

We strongly believe that we can and should help improve the lives of everyone who engages with us. As such, we aim to not just enhance the lives of anglers and colleagues, but also to have a positive impact on our suppliers, shareholders, local communities, wider society, and the environment.

Our incredible team of colleagues share our vision and passion to deliver the very best experience to anyone that interacts with Angling Direct.

Our customers love being in our stores, on our website and social media outlets socialising, learning and receiving top-quality fishing advice and assistance. We equally relish both the visits to buy and the platonic, to use Arthur Ransome's words.

Ours is a passion to introduce the benefits of fishing to as many people as possible, through promotion, coaching, education and advice. We now have qualified angling coaches in all our stores and are also teamed with the Angling Trust and their "Get fishing" campaign. We endorse evidence that fishing is a great way to improve all round wellbeing and we support bodies set up to encourage those with disabilities, of any kind, to benefit from fishing.

Looking ahead

In concluding, as in the previous year, it has been another year of great difficulty, turmoil and sadness for the whole world, and we are respectful that many individuals and business have experienced a material impact. However, Angling Direct has a clear purpose, a robust operational framework and growing reach which has allowed the Group to deliver another year of sound financial results.

The World continues to be faced with many major challenges at this time the impact of which are difficult to predict. The Board continues to monitor these evolving situations closely and will take the required steps to deliver on our promises to colleagues and customers. I am excited by continued opportunities for growth which lie ahead for the Group, within both our stores and online customer offerings. The opening of our new distribution centre in Europe facilitates the acceleration of European growth strategy, whilst continued investment in our UK infrastructure will allow us to continue to grow market share domestically.

On the direct issues where we can make a difference to the company, our customers and the angling world, I am so grateful and in awe of the way that everyone at Angling Direct works together as one "Team AD" to rise to and overcome the challenges, to delivering strong results for the year, and to ensuring the company is well placed to move forwards on its incredible journey, a journey full of purpose, ambition and passion.

Martyn Page

Non-Executive Chairman

16 May 2022

Chief Executive's Review

'Having a clear engaging purpose and bold ambition has allowed us to take significant strategic steps, whilst tactically growing and strengthening our market leading position'

Introduction

FY22 was in many ways another unprecedented year with further pandemic restrictions continuing to both underpin the logic for, but also test the flexibility of our omni-channel business model as we annualised exceptional prior year sales growth. I'm very pleased to report that not only has our amazing 'Team AD' been able to maintain our strong sales record, with total sales increasing by 7.2% to £72.5m, but they have also risen to the challenge and ensured that we made solid strategic progress across the business to deliver profitable growth, especially as we begin to execute our plans to accelerate European sales which currently account for less than 4% of Group revenue. I would like to thank all my colleagues for their exceptional commitment, ongoing resilience, and above all, their forward-looking enthusiasm again during this year.

As the UK market leader with a purpose of Getting Everyone Fishing, Angling Direct is uniquely placed to deliver further improved growth within the thriving and significant European fishing tackle market as people of all backgrounds discover the restorative pleasure, challenge and wellbeing benefits of angling.

This is my second full financial year as CEO. After a first year focused upon optimising the core business return and the initial challenges of the pandemic, our ambition in this period was to continue to profitably grow market share in the UK whilst simultaneously commencing execution of our plan to expand and trade more efficiently in the significant and highly fragmented European market. As a result of our strong balance sheet, we continued to invest in order to strengthen the Group, to align with its purpose and strategic growth ambition. In addition to establishing our dedicated European warehouse in the Netherlands, we focused on developing our customer offer, protecting and improving our profit margins, and securing stock supply to ensure that our investments generate a sustainable return for all stakeholders.

It was a pleasure to see customers returning to our stores and our strong growth was driven by robust store sales as COVID-19 trading restrictions eased during FY22. 70 store trading days were lost to COVID-19 trading restrictions in the year, compared to 134 in FY21. Total store sales increased 19.9% against FY21 and 38.4% on a two-year basis, including £0.7m sales from the four new stores opened in the year, three of which were in the final quarter. As expected, given the

annualisation of non-comparable trading restrictions, total online sales declined modestly by 4.3% (there were large periods of FY21 where the business was only able to sell online which distorted sales channel mix for the year as a whole) but grew on a two-year basis by 33.9%. Pleasingly, given this expected channel shift, UK online sales (representing 92% of total online sales) increased by 2.7% as we continued to develop our platforms to drive increases in both conversion rate and average transaction values. We acted early to mitigate against Brexit related increased export costs and this, combined with increased fulfilment times and range restrictions, meant that our total European sales reduced by 39.3%, declining 21.8% in our key territories of Germany, France and the Netherlands.

We continued to maintain a disciplined trading approach, promoting all that Angling Direct has to offer, coupled with a structured approach to pricing and inventory management achieving a 250bps improvement in gross margin and a 15.1% gross profit improvement on the prior year to £26.6m. Consequently, profit before tax improved 50.6% against FY21 to £4.0m. Strong trading, balanced by deeper stock investment, meant operating cashflow remained positive but declined year on year by 31.4% to £4.8m.

As previously reported, we suffered a malicious and disruptive cyber-attack in November 2021, in the midst of our European systems development project. After over 18 months of pandemic response, the Angling Team dug deep into their reserves and demonstrated again what a resilient and dedicated team they are. Thankful for earlier investments made in our systems infrastructure, once access and control were re-established, we were able to quickly re-build our web platforms [and resume trading to minimise disruption]. We have since provided all of the required information to the Information Commissioner's Office and they have closed their investigation with no action taken. Further, we have thoroughly reviewed our security protocols and made necessary changes but, as with all other businesses, we remain ever vigilant to this threat. I would like to thank our loyal customers for their patience and understanding during the disruption caused at this time.

Whilst the impacts of the pandemic are still being felt and significant consumer confidence and global security uncertainty persists, I am pleased that we have remained focused on our clear purpose and strategic opportunities across the breadth of our business. In particular, the opening of our new European distribution centre in the Netherlands is a significant step towards facilitating the full Angling Direct omni-channel offering within this highly attractive and sizeable market. I am confident that the investments we have made, and will continue to make, mean we are well positioned to get even more people fishing and continue to deliver sustainable, profitable growth.

Business review

Focused strategic progress in another turbulent year

We set out to maintain our UK growth momentum and protect margins, as well as activating plans for efficient European expansion, whilst wanting to remain agile to navigating challenges brought about by the pandemic, particularly our response to ongoing supply chain uncertainty. We have continued to focus on driving operational excellence, return on capital, and improving our customers' experience whichever sales channel they choose.

Operational excellence

Our investment in A.I. driven web search software has allowed our customers to experience increased site speed and improved search relevance. To drive customer loyalty and repeat purchase, we introduced AD+, our priority delivery subscription scheme, attracting 9,311 subscribers in its first year. Q4 saw the soft launch of our web trading App, which we believe is the first of its kind for the sector, allowing customers to access our full product range and rich content from the bankside. We have embedded a new email marketing platform driving 50%+ growth in email channel revenue. These initiatives, along with an ongoing drive to develop fresh relevant digital content, meant our UK online conversion rate improved by 45bps to 6.38%.

We continued to promote not only our everyday price competitiveness but also to highlight the breadth of our ranges, the quality of our service and customer inspiration. Our own brand (higher margin) Advanta grew by 24.9%.

To drive market share gains in the EU, improve our customer offer, and overcome post Brexit trading restrictions and increased costs, a key priority was to establish in region European fulfilment. We incorporated a new trading subsidiary ADNL BV which allowed us to complete a lease for a new distribution centre in Venlo, south Netherlands. After a huge organisational effort this facility opened in March 2022, ahead of the Spring fishing season with the majority of set up capital falling within this financial period.

In the UK distribution centre, our colleagues continued to work flexibly in response to COVID related store closures shifting channel demand. Streamlined goods in, increased packing bench capacity, multi skilling and ongoing review of operating practices improved labour cost distribution efficiency by 50bps, to 3.0% for the full year. We utilised recently increased pallet storage capacity to secure forward stocks of key lines, in particular our own brand Advanta range.