Smiths News Plc · LSE:SNWS
Smiths News — FY2020 Earnings Presentation
21 slides from Smiths News's earnings presentation, Nov 12, 2020
Slide 1: Preliminary Results
Preliminary Results 12 November 2020
Slide 2: Jon Bunting, Chief Executive Officer
Jon Bunting Chief Executive Officer
Slide 3: Headlines
Headlines Performance ahead of revised expectations • Resilience of our business model and our markets • Cost control and service delivery maintained throughout • Swift action to limit losses from our ancillary businesses DMD and Instore • Robust final quarter which provides momentum for current yea
Slide 4: Tony Grace, Chief Financial Officer
Tony Grace Chief Financial Officer
Slide 5: Continuing Adjusted Income Statement
Continuing Adjusted Income Statement £m Adjusted FY 2020(1) FY 2019 Change % Revenue 1,164.5 1,303.5 -10.7% Operating profit 35.1 43.6 -19.5% Operating margin 3.0% 3.3% Net finance charges (7.2) (6.0) -18.3% Profit before tax 27.9 37.6 -25.8% Tax (4.2) (9.3) 54.8% Profit after tax 23.7 28.3 -16.3% E
Slide 6: Adjusting items – continuing
Adjusting items – continuing £m Adjusted FY 2020 FY 2019 restated Network and re-organisation costs (6.8) (5.9) Asset impairment (6.4) - Pensions (0.9) (2.0) Other 0.1 0.6 Total before tax and interest (14.0) (7.3) Finance income – deferred consideration 0.9 - Total before taxation (13.1) (7.3) Taxa
Slide 7: Free cash flow - continuing
Free cash flow - continuing £m FY 2020 FY 2019 restated Operating profit – adjusted 35.1 43.6 Depreciation and amortisation 10.6 5.2 EBITDA (including IFRS16) 45.7 48.8 Working capital (5.7) (0.7) Capital expenditure (7.0) (2.8) Lease payments (6.8) (1.5) Net interest and fees (6.5) (5.1) Taxation (
Slide 8: Net debt
Net debt £m Adjusted Aug 2020 Aug 2019 Opening net debt (73.9) (83.4) Free cash flow 10.9 33.2 Lease creditor & other 2.5 2.4 Dividend paid (2.4) - Purchase of own shares ESS (0.7) - Disposal costs (3.7) - Discontinued Tuffnells working capital loan (6.5) - Discontinued cash flow (4.9) (26.1) Closin
Slide 9: New three year bank facility of £120m
New three year bank facility of £120m Terms Term Loan A - £45m Total Facility £120m Term Loan B - £35m Revolving Credit Facility - £40m Lenders HSBC, Barclays, Santander, CYBG, AIB, Shawbrook Maturity Three year term to November 2023 Security & Ranking Security over the assets of the principal tradi
Slide 10: Jon Bunting, Chief Executive Officer
Jon Bunting Chief Executive Officer
Slide 11: Strategic milestones
Strategic milestones Sale and leaseback Strategic review Sale of Tuffnells Lockdown trading Central restructure Post-lockdown trading Contracts secured Refinancing Efficiency savings achieved Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020 Nov 2020 11
Slide 12: Guiding principles of lockdown trading
Guiding principles of lockdown trading 1. Safety 2. Service The wellbeing of our Maintaining as full a colleagues and customers is paramount service as possible 3. Capability 4. Sustainability Mitigating actions must Working with our not damage our partners to support long-term capability the supply
Slide 13: Sales performance
Sales performance Newspaper and Magazines Sales Value - Year on Year Change 0% -5% -10% • Lockdown – a short sharp shock -15% • Continuing impact of travel and -20% high street locations -25% -30% • Newspapers less impacted than magazines -35% -40% • Magazines recovering -45% -50% Sep-19 Oct-19 Nov-
Slide 14: EBITDA performance
EBITDA performance EBITDA by Quarter FY20 v FY19 16 14 • Flexibility of operating model 12 10 • Multiple income streams £m 8 • Cost savings and efficiency gains 6 4 • Final quarter improvement as 2 processes and trading stabilise 0 Q1 Q2 Q3 Q4 FY20 FY19 14
Slide 15: Offsetting core margin decline
Offsetting core margin decline 8 7 • Strong track record 6 5 4 • Offsetting 3% – 5% sales decline 3 2 • Final quarter momentum 1 £m 0 -1 • Additional central cost savings -2 -3 -4 -5 -6 -7 Core savings -8 -9 Flex savings -10 -11 Core margin decline -12 COVID-19 margin decline -13 2015 2016 2017 2018
Slide 16: Market leadership
Market leadership Process efficiency • Network optimisation • Lowest cost to serve • Online supply management Category profitability • Simplified process at retailer • New scale retailer opportunities • Home News Delivery Supply chain sustainability • Supply chain planning • Final mile vehicle strat
Slide 17: Capital management strategy
Capital management strategy Context • Market leader with secure contracts • Predictable revenue streams • Cash generative business model • Capital light requirements • Legacy of debt from diversification Objectives • Materially reduce net debt • Minimum of £15m p.a. amortisation • Leverage of less t
Slide 18: Priorities and outlook
Priorities and outlook Operational priorities • Managing through COVID-19 • Sustainable efficiencies sufficient to offset impact of sales declines • Service KPIs that minimise waste and rectification • Maximising sales opportunities Delivering shareholder value • Material reduction of net debt • Cas
Slide 19: Any questions?
Any questions? é
Slide 20: Smiths
smiths @ ® martin lavell ¢ systems
Slide 21: Cautionary statement
Cautionary statement This document contains certain forward-looking statements with respect to Smiths News plc’s financial condition, its results of operations and businesses, strategy, plans, objectives and performance. Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’