Smiths News Plc · LSE:SNWS
Smiths News — H1 2013 Earnings Presentation
38 slides from Smiths News's earnings presentation, Apr 17, 2013
Slide 1: Interim Results
Smiths News The Bertrams Consortium Media & Marketing Interim Results 17 April 2013
Slide 2: Highlights
Highlights Group sales, £905m up 1% Strong financial Underlying PBT, £24.9m up 16% including acquisitions performance Free cash flow, £10.2m up 70% Profit growth in all divisions 27% of profits outside of N&M wholesaling (H112: 17%) Smiths News: Strategic targets on - Over £350m pa of re
Slide 3: Group Financial Update
Group Financial Update Nick Gresham Chief Financial Officer
Slide 4: Cautionary statement
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’
Slide 5: Group performance
Group performance £m Feb 2013 Feb 2012 Change Smiths News operating profit 19.7 19.2 2.6% Bertrams operating profit 3.5 3.2 7.6% The Consortium operating profit 2.9 - 9.1%* Media and Marketing operating profit 0.9 0.8 6.2% Group operating profit 26.9 23.2 16.0% Net finance charges (2.0) (1.7) Group
Slide 6: Non recurring and other items
Non recurring and other items Smiths News Group £m Feb 2013 Feb 2012 Integration costs (0.5) (0.9) Network reorganisation costs (1.0) (0.9) Acquisition costs (2.1) - Amortisation of acquired intangibles (1.4) (0.9) Total before taxation (5.0) (2.7) Taxation 0.4 0.4 Total after taxation (4.6) (2.3) 6
Slide 7: Free cash flow
Free cash flow Smiths News Group £m Feb 2013 Feb 2012 Operating profit 26.9 23.2 Depreciation and amortisation 3.7 3.3 EBITDA 30.6 26.5 Working capital (7.2) (13.2) Capital expenditure (3.7) (0.4) Net interest (2.1) (1.4) Taxation (5.0) (3.0) Pension funding (3.1) (3.1) Other 0.7 0.6 Free cash flow
Slide 8: Net debt
Net debt Smiths News Group £m 28 Feb 2013 31 Aug 2012 29 Feb 2012 Opening net debt (100.5) (63.3) (63.3) Free cash flow 10.2 27.2 6.0 Dividend (10.6) (14.9) (9.8) Non recurring items (2.2) (10.3) (4.8) Acquisitions (3.4) (37.1) - Other (2.9) (2.1) (2.1) Closing net debt (109.4) (100.5) (74.0) Net
Slide 9: Smiths News Business Update
Smiths News Business Update Mark Cashmore Group Chief Executive Interim Results 17 April 2013
Slide 10: Smiths News - strategy and highlights
Smiths News - strategy and highlights HY13 Highlights Revenue 1. 2.6% profit growth to £19.7m £761.1m -3.0% 2. £4m efficiencies achieved – on track for £20m 3 year target 3. Contract extensions: £350m pa (23%) of revenue now awarded to 2019 Operating profit News International: 13% of revenue secur
Slide 11: Newspapers and magazines – sales analysis
Newspapers and magazines – sales analysis Newspapers Magazines Smiths News LFL sales Smiths News LFL sales 10.4% % % 0 9.6% 0 -2.5% -1.2% -3.1% -3.9% -6.7% -7.8% -8.4% -8.3% -1 5.8% -2 Weeklies/monthlies 5.8% Partworks/one-shots -4 -2 3.2% Proportional impact of part works and one-shots 2.8% -6 2.1%
Slide 12: Bertrams Business Update
Bertrams Business Update Mark Cashmore Group Chief Executive
Slide 13: Bertrams - strategy and highlights
Bertrams - strategy and highlights HY13 Highlights Revenue 1. Total LFL sales +2.8% 2. Exclusive WHSmith Online contract to 2016 £98.3m +7.0% 3. Launch of Wordery into direct to consumer market 4. European acquisitions: Operating profit £20m of revenue Consolidation of European footprint £3.5m +
Slide 14: Direct to consumer
Direct to consumer A top seller on Amazon, eBay and Play.com 99% positive customer feedback Delivering to 50 countries worldwide Wordery website launch for Christmas trading 14 Interim Results 17 April 2013
Slide 15: Bertrams - strategy and highlights
Bertrams - strategy and highlights HY13 Highlights Revenue 1. Total LFL sales +2.8% 2. Exclusive WHSmith Online contract to 2016 £98.3m +7.0% 3. Launch of Wordery into direct to consumer market 4. European acquisitions: Operating profit £20m of revenue Consolidation of European footprint £3.5m +
Slide 16: Bertrams – sales analysis
20 Bertrams – sales analysis 18 16 14 Bertrams LFL sales Sales by segment 12 10 10.4% 9.6% 8 International 6 5.8% (+4.3% LFL) 24% 5.8% 4 3.2% 2 2.8% 47% 2.1% 0 UK Wholesale -2.3% 25% Public and academic (+2.3% LFL) -2 -2.3% -1.4% libraries +2.8% 4% -4 -2.3% +2.1% +10.4% (-2.7% LFL) 2011 2012 2012 20
Slide 17: The Consortium Business Update
The Consortium Business Update Mark Cashmore Group Chief Executive
Slide 18: The Consortium - strategy and highlights
The Consortium - strategy and highlights HY13 Highlights Revenue 1. Smooth integration into the Group £30.5m +3.2%* 2. Growth in all core segments 3. WMS integration progressing well Operating profit 4. Investing in multi-channel: web, CRM, telesales 5. Scottish framework agreement £2.9m +9.1%* 6. S
Slide 19: The Consortium – sales analysis
20 18 The Consortium – sales analysis 16 14 The Consortium YOY sales 12 Sales by segment 10 9.6% 8 Other 8.2% (-15.5% LFL) 6 5.8% 5.8% Early years 4 12% 3.2% (+2.6% LFL) 8% 2 1.5% 3.2% 1.5% Care 0 6% -3.5% -2.3% -1.4% (+18.4% LFL) 74% -2 5.8% +1.5% +8.2% +3.2% 2013 Education 2011 2012 2012 -4 (+4.8%
Slide 20: Media & Marketing Business Update
Media & Marketing Business Update Mark Cashmore Group Chief Executive
Slide 21: Media & Marketing - strategy and highlights
Media & Marketing - strategy and highlights HY13 Highlights Revenue 1. New/renewed print contracts: £14.8m -2.6%* Seamless integration of BMI into BA contract Global contract win with United Airlines 2. New digital contracts: Operating profit 7,000 iPads deployed Launched Digiredoo – digital
Slide 22: Summary and Outlook
Summary and Outlook Mark Cashmore Group Chief Executive
Slide 23: Strong shareholder returns
Strong shareholder returns Strong profit and cash growth • PBT of £24.9m, up 16% • Cash generative - £10.2m FCF, up 70% Returning value to shareholders £24.9m PBT • EPS of 10.3p, up 16% • Interim dividend 3.0p, up 7% Outlook 10.3p EPS • On track to meet full year market expectations: • Continued inv
Slide 24: Appendices
Smiths News The Bertrams Consortium Media & Marketing Appendices
Slide 25: Smiths News income statement
Smiths News income statement £m Feb 2013 Feb 2012 Change LFL Total revenue 761.1 784.3 (3.0%) (5.0%) Gross profit 62.1 65.9 Operating costs (42.4) (46.7) Operating profit 19.7 19.2 2.6% Gross margin 8.2% 8.4% (20 bps) Cost ratio (5.6%) (6.0%) 40 bps Operating margin 2.6% 2.4% 20 bps 25 Interim Resul
Slide 26: Bertrams income statement
Bertrams income statement £m Feb 2013 Feb 2012 Change LFL Total revenue 98.3 91.9 7.0% 2.8% Gross profit 18.7 16.8 Operating costs (15.2) (13.6) Operating profit 3.5 3.2 7.6% Gross margin 19.0% 18.3% 70 bps Cost ratio (15.5%) (14.8%) (60 bps) Operating margin 3.6% 3.5% 10 bps 26 Interim Results 17 A
Slide 27: The Consortium income statement
The Consortium income statement £m Feb 2013 Feb 2012 Change LFL Total revenue 30.5 - 3.2%* 3.3%* Gross profit 12.0 - Operating costs (9.1) - Operating profit 2.9 - 9.1%* Gross margin 39.3% 200 bps Cost ratio (29.8%) (150 bps) Operating margin 9.5% 50 bps * Indicates profit growth on a pre-acquisitio
Slide 28: Media and marketing income statement
Media and marketing income statement £m Feb 2013 Feb 2012 Change LFL Total revenue 14.8 15.3* (2.6%) (0.3%) Gross profit 6.6 6.5 1.5% Operating costs (5.7) (5.7) 0.0% Operating profit 0.9 0.8 6.2% Gross margin 44.6% 42.5% 210 bps Cost ratio (38.5%) (37.3%) (120 bps) Operating margin 6.1% 5.2% 90 bps
Slide 29: Financial KPIs
Financial KPIs £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Revenue 904.7 1,803.9 1,734.4 1,829.6 1,326.0 Profit before tax 24.9 47.5 38.6 35.0 30.5 EPS 10.3p 19.9p 15.5p 14.6p 13.8p Free cash flow 10.2 27.2 22.5 20.4 23.7 DPS 3.0p 8.6p 8.0p 7.4p 6.8p Net Debt 109.4 100.5 63.3 48.0 49.5 Figures quoted
Slide 30: Income statement
Income statement £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Revenue 904.7 1,803.9 1,734.4 1,829.6 1,326.0 Operating profit before non recurring items 26.9 51.2 41.7 37.1 32.4 Non recurring items (5.0) (10.9) (6.5) (6.9) (10.8) Operating profit 21.9 40.3 35.2 30.2 21.6 Net finance charges (2.0) (3.7)
Slide 31: Sales mix and LFL
Sales mix and LFL 32 75 1800 27 83 82 139 1600 174 133 1400 61 Total revenue £m 662 54 1200 560 583 15 1000 31 509 42 800 98 600 255 929 935 953 400 703 200 464 0 HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Revenue growth 1% 4% (5%) 38% 7% Newspapers Magazines Books Other SN Education & Care Media & Mar
Slide 32: Balance sheet
Balance sheet £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Intangible assets 66.7 67.1 36.9 12.7 12.7 Property, plant & equipment 23.3 24.5 18.7 21.0 21.1 Other non current assets 6.7 6.3 7.0 5.3 6.8 Total non current assets 96.7 97.9 62.6 39.0 40.6 Cash 10.1 5.1 4.2 4.0 4.3 Other current assets 158.7
Slide 33: Cash flow
Cash flow £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Operating profit 26.9 51.2 41.7 37.1 32.4 Depreciation and amortisation 3.7 6.9 6.8 7.3 6.7 EBITDA 30.6 58.1 48.5 44.4 39.1 Working capital (7.2) (9.1) (10.3) (1.4) 4.6 Capital expenditure (3.7) (5.1) (3.1) (8.6) (5.2) Net interest (2.1) (3.3) (4.
Slide 34: Net debt
Net debt £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Opening net debt (100.5) (63.3) (48.0) (49.5) (44.0) Free cash flow 10.2 27.2 22.5 20.4 23.7 Dividend (10.6) (14.9) (13.8) (12.6) (12.0) Non recurring items (2.2) (10.3) (5.2) (6.7) (1.2) Acquisitions (3.4) (38.1) (17.9) - (12.2) Disposals - 1.0 -
Slide 35: Taxation
Taxation £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Current tax 6.9 13.6 11.3 9.8 9.5 Adj in respect of prior year UK (0.3) (1.6) (0.5) (1.4) (2.4) corporation tax Total current tax charge 6.6 12.0 10.8 8.4 7.1 Deferred tax – current year (0.4) (0.6) (0.4) (0.1) (0.6) Deferred tax – prior year - - -
Slide 36: Lease commitments
Lease commitments £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Land and buildings within one year 8.4 10.0 9.9 8.8 8.7 in second to fifth year 25.8 28.9 29.3 28.7 28.9 beyond fifth year 27.2 29.6 27.4 29.5 24.7 Total 61.4 68.5 66.6 67.0 62.3 Equipment and vehicles within one year 2.0 1.3 1.6 1.0 1.3 i
Slide 37: Defined benefit schemes
Defined benefit schemes HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Scheme assets 469.3 433.1 375.1 408.6 357.4 Scheme liabilities (417.7) (395.3) (348.3) (367.4) (338.1) Total Surplus 51.6 37.8 26.8 41.2 19.3 Asset limit on Smiths News scheme (54.4) (40.3) (26.8) (41.2) (19.3) IAS 19 balance per financ
Slide 38: Contingent liability
Contingent liability £m HY 2013 FY 2012 FY 2011 FY 2010 FY 2009 No. of Reversionary leases 47 59 90 105 122 Contingent liability 9.6 10.9 13.9 21.2 26.6 Maximum annual liability 5.0 5.0 5.0 5.0 5.0 Under the terms of the 2006 Demerger Agreement, Smith News has a contingent liability for 35% of any o