Here your group should identify what you would consider to be the top two risks faced by TPW, excluding economic disruption related to Covid-19. Then, starting with your base case valuation, your second valuation should assume that these risks materialise in 2024. Assess the financial outcomes for TPW and any actions that management might be able to take to preserve its financial position during this year. Assess if there are any initiatives that the management team of TPW could put in place now to mitigate the financial impact of this scenario.
Valuation-JBH Drivers202120222023202420252026Additional inputs Revenue growth61.2%57.2%45.2%45.2%45.2%Growth from year 53.0% Op cost margin93.6%89.8%87.1%86.3%85.4%84.5%Shares on issue now120.45 Depreciation rate6.6%6.6%6.6%6.6%6.6%6.6%Levered beta1.3 Interest rate2.9%2.9%2.9%2.9%2.9%2.9%Government bond2.43% Payout ratio0.0%10.0%10.0%10.0%20.0%30.0%Risk premium6.50% CA/revenue38.1%36.3%36.0%35.7%35.3%35.0% CL/revenue17.3%17.2%17.0%16.9%16.7%16.6%Market value of equity733 Revenue/net NCA13.5411.9310.8410.8410.8410.84Share price6.09 Other liabs/assets0.47%0.47%0.47%0.47%0.47%0.47% Tax rate26.0%30.0%30.0%30.0%30.0%30.0%Terminal value1077 P/E ratio52.4 Debt/equity8.3%24.4%29.8%20.7%17.8%16.8% Balance Sheet202120222023202420252026 Current assets124.2191298428616887 Gross non-current assets45.368106147208297 Less acc depreciation21.22429374763 Net non-current assets24.14476111161234 Total assets148.32353745397771121 Current liabs (ex debt)56.690141203292420 Debt and lease liabilities728535773100 Other liabilities0.712305 Total liabilities64.3120196263365526 Equity84115178277412595 Profit and Loss Statement202120222023202420252026 Revenue326.3526827120217452535 Operating costs305.3473721103614902143 EBITDA2154106165255392 Depreciation, amortisation1.63571116 EBIT 19.451101158244376 Interest costs0.212223 NPBT19.250100156242373 Taxes515304773112 NPAT143570109169261 Dividends037113478 Retained earnings14316398136183 Free Cash Flow20222023202420252026 EBIT (1 - tax rate) 3571110171263 Depreciation, amortisation3571116 Change in working capital-33-56-68-101-137 Capital expenditures-23-37-42-61-88 Free cash flow for investors FCFF-17-1781954 Interest (1- tax rate)-1-1-1-1-2 Change in debt212541627 Free cash flow for owners FCFE37113478 Levered beta1.31.341.271.251.24 Unlevered beta1.111.111.111.111.11 Debt/equity0.240.300.210.180.17 Equity hurdle rate10.88%11.15%10.69%10.55%10.50% Cash flow plus terminal value3711341156 Present value36822694 Pro forma holding statement REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS: Unit 1, 1-7 Unwins Bridge Road St Peters NSW 2044 TEMPLE & WEBSTER GROUP LTD ABN 69 608 595 660 ASX ANNOUNCEMENT 30 August 2021 Full Year 2021 4E and Annual Report Temple & Webster Group Ltd attaches the 2021 ASX Appendix 4E and Annual Report. This document has been authorised for release by the Board of Directors. About Temple & Webster Temple & Webster is Australia’s leading online retailer of furniture and homewares. Temple & Webster has over 200,000 products on sale from hundreds of suppliers. The business runs an innovative drop-shipping model, whereby products are sent directly to customers by suppliers thereby enabling faster delivery times and reducing the need to hold inventory thereby allowing a larger product range. The drop ship range is complemented by a private label range which is sourced directly by Temple & Webster from overseas suppliers. Temple & Webster is listed on the Australian Securities Exchange under the code TPW. Temple & Webster Group Ltd Appendix 4E Preliminary final report Temple & Webster Group Ltd Appendix 4E Preliminary final report 1. Company details Name of entity: Temple & Webster Group Ltd ABN: 69 608 595 660 Reporting period: For the year ended 30 June 2021 Previous period: For the year ended 30 June 2020 2. Results for announcement to the market $'000 Revenues from ordinary activities Up 85.1% to 326,344 Profit from ordinary activities after tax attributable to the owners of Temple & Webster Group Ltd1 Up 0.3% to 13,953 Profit after tax for the year attributable to the owners of Temple & Webster Group Ltd1 Up 0.3% to 13,953 Dividends There were no dividends paid, recommended or declared during the current financial period. 1Comments Profit after tax for the year on a normalised basis (excluding deferred tax adjustments) was up 165% year on year. Normalised profit after tax is calculated as profit after tax adjusted for any benefits received from the recognition and utilisation of historical tax losses. Further information on the 'Review of operations' is detailed in the Directors' report which forms part of the Annual Report. 3. Net tangible assets Reporting period Previous period Cents(1) Cents(1) Net tangible assets per ordinary security 57.13 18.09 The net tangible assets per ordinary share amount is calculated based on 120,452,928 ordinary shares on issue as at 30 June 2021 and 113,422,884 on issue as at 30 June 2020. (1) Consistent with the Australian Security & Investment Commission interpretation, the Right-of-use asset (AASB 16) and Right of return assets (AASB 15) are intangible assets, and therefore have been excluded from Net tangible assets. 4. Control gained over entities No changes to the group structure have occurred during the current financial year. 5. Loss of control over entities Not applicable. a Appendix 4E 2021 Temple & Webster Group Ltd Appendix 4E Preliminary final report Temple & Webster Group Ltd Appendix 4E Preliminary final report 6. Dividend reinvestment plans Not applicable. 7. Details of associates and joint venture entities Not applicable. 8. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 9. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements have been audited and an unqualified opinion has been issued. 10. Attachments Details of attachments (if any): The Annual Report of Temple & Webster Group Ltd for the year ended 30 June 2021 is attached. 11. Signed Signed ___________________________ Date: 30 August 2021 Stephen Heath Chairperson Sydney b Temple & Webster Group Ltd Temple & Webster Group Ltd Appendix 4E Preliminary final report Annual Report 2021 Contents 2 Summary 4 Chairperson’s Report 6 CEO’s Letter and Operational Review 10 KPI Snapshot & Strategic Priorities Overview 12 Committed to making the world more beautiful 14 Financial Report 2021 15 Directors’ Report 37 Auditor’s Independence Declaration 38 Consolidated Statement of Profit or Loss and Other Comprehensive Income 39 Consolidated Statement of Financial Position 40 Consolidated Statement of Changes in Equity 41 Consolidated Statement of Cash Flows 42 Notes to the Consolidated Financial Statements 69 Directors’ Declaration 70 Independent Auditor’s Report 74 Shareholder Information 77 Corporate Directory 1 Annual Report 2021 Summary Sources: Euromonitor International Limited; Home Furnishings and Homewares System 2020 edition. IBISWorld Online Home Furnishing Sales in Australia Industry Report and Online Household Furniture Sales in Australia Industry Report Jun 20 cash balance excludes proceeds from $40 million placement which took place in July 20. FY21 Revenue $326.3m 85% growth vs pcp FY21 EBITDA $20.5m 141% growth vs pcp June 21 Cash $97.5m FY20 Revenue $176.3m FY20 EBITDA $8.5m June 20 Cash $38.1m 2 Temple & Webster Group Ltd • Temple & Webster is the leading pure play online retailer for furniture & homewares in Australia • Large addressable market with accelerating online adoption • Business is profitable with strong top- line growth, capital light and a debt free balance sheet 3 Annual Report 2021 Chairperson’s Report Dear shareholders, On behalf of the Board of Directors, it gives me great pleasure to present the 2021 Annual Report. Temple & Webster continues to outperform While FY21 was a year that many Australians will remember as one of great change and disruption, it was also a year that reaffirmed the importance of our homes. Government- enforced lockdowns meant that many Australians turned to online shopping, and Temple & Webster was well placed to service the needs of those customers. While many Australians turned to the online channel initially out of necessity, strong year on year growth suggested a more permanent shift up the online shopping adoption curve with full year revenue growing to $326.3 million, up 85% on the prior year. This is off the back of previous years that have also grown very strongly. While industry growth was helped by the tailwinds of consumer discretionary spend moving out of the travel category, pleasingly Temple & Webster also grew its market share by outperforming its peers. This is a testament to the hard work the team has put into strengthening the customer proposition. As much as this growth is impressive, it is worth reiterating that we are still at the start of the journey – a journey which COVID has accelerated. We operate in the large market for furniture and homewares (~$16 billion), where less than 10% has moved online. This is well behind other markets such as the US which is up to 25% online penetration and showing no signs of slowing down. This shift in spend will be driven by millennials as they enter their core furniture and homewares buying years. In addition to our core market, we also operate in the B2B and home improvement markets. These markets significantly increase our total addressable market to more than $30 billion. This market size and consumer trends are the reason why Temple & Webster should be a high growth business for many years to come. Strong balance sheet & Capital Raise During the financial year, we made the strategic decision to strengthen the balance sheet with a $40 million capital raise. As a result of this raise and our record profit, we finished the year with a cash balance of $97.5 million and we remain debt- free. This balance sheet provides us with the flexibility to take advantage of inorganic opportunities which make strategic sense for the Group. While we have no plans for a large program of M&A, we remain open to the right opportunity that aligns to our strategic