Smiths News PLC · LSE:SNWS
Smiths News — H1 2007 Earnings Presentation
20 slides from Smiths News's earnings presentation, Apr 26, 2007
Slide 1: Interim Results
Interim Results 26 April 2007 Mark Cashmore Chief Executive
Slide 2: Agenda
Agenda Highlights Mark Cashmore Financial performance Alan Humphrey Business update Mark Cashmore Interim Results 2007 p2
Slide 3: Highlights
Highlights ¾ Industry leading profit and cash performance ¾ Underlying operating profits up by 13.5% to £17.6m ¾ £9.7m free cash flow ¾ Good progress despite challenging market ¾ Cost control – ahead of plan Interim Results 2007 ¾ Service delivery – best in industry ¾ Strategy remains on track p3
Slide 4: Financial Performance
Financial Performance Alan Humphrey Finance Director
Slide 5: Financial Summary
Financial Summary Proforma Feb 2007 Feb 2006 Change £m £m % Revenue 615.0 586.7 4.8% Underlying operating profit(1) 17.6 15.5 13.5% Profit before tax 15.2 13.3 14.3% EPS 8.1p 5.9p 37.3% Dividend per share 2.1p 2.0p(2) 5.0% Interim Results 2007 ¾ February 2006 proforma results: Exclude property profi
Slide 6: Revenue
Revenue Like for like revenue Year to Feb 2007 Feb 2006 Change growth1 Aug 2006 £m £m % % £m Newspapers 318.1 307.7 3.4% 2.5% 628.7 Magazines 272.4 254.5 7.0% (2.5%) 531.6 Other 24.5 24.5 0.0% 0.0% 50.3 Total revenue 615.0 586.7 4.8% 0.3% 1,210.6 ¾ Newspaper revenues include contract gains in Derby
Slide 7: Underlying Operating Profit
Underlying Operating Profit Fav/(Adv) Year to Feb 2007 Feb 2006 Change Aug 2006 £m £m % £m Revenue 615.0 586.7 4.8% 1,210.6 Gross profit 63.1 63.2 (0.2%) 129.1 Net operating costs (45.5) (47.7) 4.6% (96.1) Underlying operating profit (1) 17.6 15.5 13.5% 33.0 Interim Results 2007 Net margin % 2.9% 2.
Slide 8: Profit Before and After Tax
Profit Before and After Tax Proforma Statutory Feb 2007 Feb 2006 Change Feb 2006 Change £m £m % £m % Underlying operating profit (1) 17.6 15.5 13.5% 15.5 13.5% Property profits - - 1.6 Finance costs (2.4) (2.2) (0.8) Profit before tax 15.2 13.3 14.3% 16.3 (6.7%) Taxation (0.9) (3.2) (3.9) Profit aft
Slide 9: Earnings per Share
Earnings per Share Feb EPS 2007 EPS Feb Proforma (£m) 2007 Feb 2006 Profit after tax 14.3 8.1p 5.9p Adjusted taxation (2.1) (1.2p) - Adjusted profit after tax 12.2 6.9p 5.9p Weighted average number of 176.9 172.0 shares (millions) ¾ Tax adjustment to reflect the anticipated tax charge for the full y
Slide 10: Free Cash Flow
Free Cash Flow Year to Feb 2007 Aug 2006 £m £m Profit before interest and tax 17.6 34.3 Depreciation and amortisation 2.7 6.6 Non cash items 0.5 1.2 Working capital (0.5) (8.1) Capital expenditure (1.2) (2.1) Net interest paid (1.6) - Taxation (4.7) (4.4) Ongoing pension funding (3.1) (7.0) Free cas
Slide 11: Net Debt Movement
Net Debt Movement 6 mths to Feb 2007 £m Opening net debt (41.7) ¾ One off £25m payment into pension fund seen as One off pension payment (25.0) part of demerger transactions Proforma opening net debt (66.7) Free cash flow 9.7 ¾ Final dividend payment for Dividend (7.0) 2006 of 4p Closing net debt (6
Slide 12: Balance Sheet Feb 2007
Balance Sheet 28 Feb 2007 £m Fixed assets 21.0 Working capital (35.6) Taxation (1.3) Provisions (0.7) Operating liabilities employed (16.6) Net debt (64.0) Total net liabilities (excluding pensions) (80.6) Pension liability (20.6) ¾ Pension liability reduced by £28.5m from £49.1m at Total net liabil
Slide 13: Business Update
Business Update Mark Cashmore
Slide 14: Delivering the Benefits of Demerger
Delivering the Benefits of Demerger ¾ Focused management ¾ Retailer relationships ¾ New business ¾ Continued investment Interim Results 2007 Benefits being delivered p14
Slide 15: Markets and Revenues
Markets and Revenues H1 September to February ¾ Challenging markets ¾ Newspaper price growth ¾ Weaker magazine sales H2 March to August Outlook ¾ Current trends to continue Interim Results 2007 ¾ Annualisation of contract gains ¾ Impact from margin mix Current trends to continue p15
Slide 16: Cost Control
Cost Control Strong targeted cost control Plymouth New Site ¾ Customer services ¾ Magazine packing efficiencies ¾ Routing software ¾ Network ¾ Head office efficiencies Interim Results 2007 On track to deliver planned savings Clearly targeted improvements p16
Slide 17: Service Delivery
Service Delivery % Depots per Division 100% Good progress continues 80% 60% ¾ KPI performance improved 40% ¾ Customer satisfaction improved 20% 0% ¾ Publisher satisfaction improved P1 P2 P3 P4 P5 P6 P7 05/06 P8 P9 P10 P11 P12 P1 P2 P3 P4 06/07 P5 P6 ¾ Measurement and monitoring increased KPI Complia
Slide 18: OFT Review
OFT Review ¾ OFT Opinion not expected before summer 2007 ¾ Business energy focused on the future ¾ Well placed to respond to change Interim Results 2007 Smiths News Menzies Distribution Dawson News Well placed with leading technology and service p18
Slide 19: Summary and Outlook
Summary and Outlook ¾ Solid results demonstrate inherent strengths of business strategy. ¾ Continue to manage business on basis of limited like for like revenue growth this year. ¾ Well placed to secure new business where opportunities arise. ¾ Board expects current trading conditions to continue an
Slide 20: Questions
Questions