Smiths News Plc · LSE:SNWS
Smiths News — FY2024 Earnings Presentation
23 slides from Smiths News's earnings presentation, Nov 5, 2024
Slide 1: Full Year Results
Full Year Results November 2024
Slide 2: Headlines
Headlines Jon Bunting Chief Executive Officer
Slide 3: Headlines
Headlines ⚫ FY 2024 trading ahead of expectations* Our vision is to become ⚫ News and magazines business remains resilient, and this asset light, the UK’s leading provider flexible cost base model underpins our strategy to build growth of early morning end to revenues end supply chain solutions ⚫ 91
Slide 4: Financial Performance
Financial Performance Paul Baker Chief Financial Officer
Slide 5: Financial summary
Financial summary Adj Op Profit +£0.3m Adjusted (£m) 2024 2023 Variance Growth activities Revenue 1,103.7 1,091.9 11.8 Cost reduction plans 53rd week of trading Adjusted operating profit 39.1 38.8 0.3 Adjusted earnings per share 10.3 10.8 (0.5p) Average bank net debt Reduced by £13.3m/52.5% Free cas
Slide 6: Revenue
Revenue ⚫ Revenue 1.1% higher than FY2023 - Benefit of 53rd week 1.9% - New contracts 2.3% ⚫ Newspapers continue to be supported by price increases ⚫ Collectables* down 13%, back to pre 2023 levels ⚫ Growth activities +190% but still less than 0.5% of total revenue ⚫ Medium term view still -3%-5% re
Slide 7: Adjusted income statement
Adjusted income statement Operating profit +£0.3m Adjusted (£m) 2024 2023 53rd week Revenue 1,103.7 1,091.9 Growth activities Cost out Inflation remains high Operating profit 39.1 38.8 Operating margin 3.5% 3.6% Net finance charges (5.9) (6.5) Net finance costs £0.6m lower Profit before tax 33.2 32.
Slide 8: Free cash flow
Free cash flow £m 2024 2023 Free cash flow £7.3m Adjusted operating profit 39.1 38.8 Excluding 53rd week cash flow Depreciation and amortisation 8.5 9.2 was £23.0m EBITDA 47.6 48.0 Working capital (17.0) (4.9) Capital expenditure Capital expenditure (4.4) (3.4) Progress of depot refurbishment Lease
Slide 9: Working capital cycle
Working capital cycle Week 52 vs Week 53 bank net debt Week 53 (40) Net outflow of £15m-£20m (30) (£m) (20) Working Capital Maximum in-month swing in (10) FY24 £44m - 10 RCF £40m FY22 FY23 FY24 Designed to allow for peak Week 52 Week 53 debt points 9
Slide 10: Average bank net debt, dividends
Average bank net debt, dividends Average net debt & dividends (£m) 20 ⚫ Consistent cash flow* of £20m-£25m has reduced 90 bank net debt 75 15 Average net debt (£m) 5 ⚫ Absent investment requirements, this enables Dividend (£m) 60 additional distributions 10 45 30 12 ⚫ Proposed ordinary dividend up 2
Slide 11: Capital allocation policy – issued May 2024
Capital allocation policy – issued May 2024 ⚫ Maintaining a strong balance sheet with a Bank Net Debt: Bank EBITDA ratio of less than 1.0x ⚫ Continued investment in both news and magazines business and organic growth ⚫ Payment of sustainable ordinary dividend, maintaining 2x dividend cover ⚫ Discipl
Slide 12: Strategic priorities
Strategic priorities Jon Bunting Chief Executive Officer
Slide 13: Our vision, purpose and capabilities
our vision To consolidate our position as one of the UK’s leading providers of early morning end to end supply chain solutions our purpose Making our customers’ lives easier and more profitable. We provide supply chain solutions that enable them to focus on what they do best. our capabilities Proven
Slide 14: Our strategy
Our strategy 8.4 million deliveries in FY24 ⚫ Support well-established news and magazines business, which remains resilient 7.2 million collections made ⚫ Build out and expand growth into early morning market, utilising existing network and proven capabilities 34 ⚫ Leveraging our flexible and asset-
Slide 15: Resilient news and magazines business model
Resilient news and magazines business model Revenue 1120 ⚫ Security of tenure, with 91%* of revenues secured to 2029 1100 1080 1060 £m 1040 1020 ⚫ Stabilisation of revenue generated from news and 1000 980 magazines business 960 FY21 FY22 FY23 FY24 ⚫ Demonstrates resilience of news and magazines busi
Slide 16: Three-year internal investment programme
Three-year internal investment programme ⚫ Base business capex requirements remain low, at c.£4m per annum ⚫ Short term increase in capital and investment expenditure will see Smiths News investing an additional £2m per annum over the next three years to future proof the business ⚫ Supports the impl
Slide 17: Delivering on a clear strategic vision
Delivering on a clear strategic vision Accelerating strategy to leverage Smiths News’ leading end-to-end early our supply chain and final mile expertise morning Smiths News logistics economics are most competitive between 2am – 10am, creating above average margin returns potential Growth initiatives
Slide 18: Expanding our early morning reach
Expanding our early morning reach Total early morning Our target verticals market size (revenue): £4,900m+* Total market size (revenue) (servable by ambient vans): New £1,300m+* Recycling Final mile categories Total market opportunity (profit): £160m+* *Estimates and data - compiled by CIL Managemen
Slide 19: Case Study: Smiths News Recycle
Case Study: Smiths News Recycle ⚫ Leveraging decades of experience of collecting and processing returns ⚫ Integrated recycling service manages returns of paper, soft plastics and bulky cardboard 28,000 ⚫ Securing above average industry margins through leveraging existing bags collected each week net
Slide 20: Outlook
Outlook ⚫ Refinancing agreement provides greater flexibility to Smiths News remains on implement revised capital allocation policy track to deliver full year ⚫ Ongoing cost-out and sustainable efficiencies results in line with programme continues to deliver savings to plan market expectations ⚫ Thre
Slide 21: Any questions?
Any questions? 21
Slide 22: 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’
Slide 23: smiths
smiths