Smiths News Plc · LSE:SNWS
Smiths News — FY2018 Earnings Presentation
18 slides from Smiths News's earnings presentation, Nov 6, 2018
Slide 1: Preliminary Results
Preliminary Results 6 November 2018
Slide 2: Headline Results
Headline Results Gary Kennedy Chairman
Slide 3: Financial Headlines
Financial Headlines Var. FY17 Revenue £1,534.3m -3.8% Adjusted PBT £28.4m -40.8% Adjusted EPS 9.3p -40.0% Free cash flow £20.2m -29.6% Net Debt £83.4m -1.6% DPS 3.1p -68.4% Connect Group PLC 3
Slide 4: Challenges in the year
Challenges in the year Performance was affected by five key factors: ► Negative impact of integration at operational level ► Under performance of Tuffnells ► Shortfalls to internal efficiency targets ► Impact on core focus and accountabilities ► Losses and distraction of Pass My Parcel Connect Group
Slide 5: Action underway
Action underway We have actions underway to stabilise and reset core performance: ► Closure of Pass My Parcel and more focused portfolio ► Refreshed Executive Team ► Focused operating unit structure ► Accelerated renewal of Smiths News contracts ► Clear priorities for FY2019 ► Longer term value crea
Slide 6: Group Financial & Business Update
Group Financial & Business Update Tony Grace Chief Financial Officer
Slide 7: Group performance – continuing operations
Group performance – continuing operations £m Adjusted Aug 2018 Aug 2017 Change % Smiths News 35.9 40.4 -11.4% DMD 3.0 2.3 30.4% Tuffnells (5.0) 12.0 -141.7% Group operating profit 33.9 54.7 -38.0% Net finance charges (5.5) (6.7) 17.9% Group PBT 28.4 48.0 -40.8% Tax (5.5) (9.9) 44.4% Group PAT 22.9 3
Slide 8: Adjusting items – continuing operations
Adjusting items – continuing operations £m Aug 2018 Aug 2017 Network and re-organisation costs (3.1) (8.0) Vacant property 0.7 (0.6) Acquisition and disposal costs - 2.2 Pension credit - 0.7 Settlement of interest rate swaps - (0.8) Impairment of intangible assets (46.1) - Pass my Parcel exit costs
Slide 9: Continuing free cash flow
Continuing free cash flow £m Aug 2018 Aug 2017 Operating profit – adjusted 33.9 54.7 Depreciation and amortisation 11.9 11.7 EBITDA 45.8 66.4 Working capital 7.7 0.4 Capital expenditure (8.5) (13.8) Finance lease payments (3.8) (4.2) Net interest and fees (5.8) (4.4) Taxation (6.5) (9.1) Other (0.4)
Slide 10: Net debt
Net debt £m Aug 2018 Aug 2017 Opening net debt (82.1) (141.7) Free cash flow to equity 20.2 28.7 Pension deficit (4.7) (4.8) Dividend paid (24.1) (23.6) Disposal proceeds 12.9 58.2 Discontinued cash flow (8.8) (1.1) Finance lease creditor & 3.2 2.2 other Closing net debt (83.4) (82.1) Net debt : EBI
Slide 11: Jos Opdeweegh, Chief Executive Officer
Jos Opdeweegh Chief Executive Officer
Slide 12: Initial observations
Initial observations ► Two distinct businesses ► Enthusiastic and capable people ► Lacks the granular information to make the right decisions quickly ► Insufficient focus on: ► Turnaround will require time and a structured investment ► Standardisation of processes and procedures ► Principles of cont
Slide 13: Organisational capabilities
Organisational capabilities Support Services Finance & Information Business planning, People Management Administration Technology project management SERVICES SERVICES SLA SLA Revenue Revenue Operating costs Operating costs All other allocable costs All other allocable costs Contribution margin Contr
Slide 14: Immediate priorities 2019
Immediate priorities 2019 1. Tuffnells profitability 4. Efficient head office functions Returning Tuffnells to profitability through a Streamlining head office functions to improve reduction of the cost base, a more sophisticated financial reporting, robust business analytics, pricing methodology an
Slide 15: Initiatives since 1st September
Initiatives since 1st September Organisation structure ► New operating structure, enhancing our focus on the individual needs and opportunities of each business Refreshed Leadership ► Jonathan Bunting – Chief Executive Officer of Smiths News ► Peter Birks – Chief Executive Officer of Tuffnells ► Tim
Slide 16: Q&A
Q&A Jos Opdeweegh Chief Executive Officer
Slide 17: Cautionary statement
Cautionary statement Notes to Editors This document contains certain forward-looking statements with respect to Connect Group PLC’s financial condition, its results of operations and businesses, strategy, plans, objectives and performance. Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’,
Slide 18: Discontinued operations & Adjusted items
Discontinued operations & Adjusted items £m Aug 2018 Aug 2017 Adjusted profit before tax 1.7 2.0 Taxation (0.4) (1.0) Profit from discontinued operations 1.3 1.0 Adjusted items - discontinued (Loss)/profit on disposal of subsidiaries (10.5) 19.0 Acquisition and disposal costs (0.1) (0.3) Amortisatio