Smiths News PLC · LSE:SNWS
Smiths News — H1 2009 Earnings Presentation
31 slides from Smiths News's earnings presentation, Apr 23, 2009
Slide 1: Interim Results 23 April 2009
Interim Results 23 April 2009 Mark Cashmore Interim Results April 2008 Chief Executive
Slide 2: Agenda
Agenda Highlights Mark Cashmore Financials Alan Humphrey Business update Mark Cashmore Questions Interim Results April 2009
Slide 3: Highlights
Highlights Financials PBT £15.3m (2008: £16.1m) Revenue £610m (2008: £618m) Free cash flow £6.1m (2008: £4.2m) Dividend 2.2p (2008: 2.2p) News distribution Cost savings of £1.6m Industry leading service proposition Solid performance in very difficult market conditions Interim Results A
Slide 4: Highlights – post period end
Highlights – post period end Contracts New contract gains - £322m per annum inc News International Frontline/Seymour £84m Mail £65m COMAG £35m Telegraph £53m £5bn secured over lifetime of contracts Acquisition of Bertrams Interim Results April 2009 Revenue £139m : EBITDA £3.3m Total
Slide 5: Financial performance
Financial performance Alan Humphrey Interim Results April 2008 Finance Director
Slide 6: Financial summary
Financial summary Underlying1 Change Feb 2009 Feb 2008 Fav/(Adv) £m £m % Revenue 609.5 618.4 (1.4) Profit before tax 15.3 16.1 (5.0) Earnings per share 7.6p 7.9p (3.8) Free cash flow 6.1 4.2 45.2 Interim Results April 2009 Dividend per share 2.2p 2.2p - 1 Underlying results exclude non-recurring ite
Slide 7: Revenue
Revenue Change Like for like Feb 2009 Feb 2008 Fav/(Adv) growth1 £m £m % % Newspapers 335.6 326.6 2.8 (2.0) Magazines 243.9 265.2 (8.0) (8.0) Other 30.0 26.6 12.8 12.8 Total revenue 609.5 618.4 (1.4) (4.0) Interim Results April 2009 1Like for like revenue growth excludes major newspaper and magazine
Slide 8: Income statement
Income statement Underlying1 Underlying1 Fav/(Adv) Feb 2009 Feb 2008 Year to Aug Change £m £m 2008 % £m Revenue 609.5 618.4 (1.4) 1240.6 Gross profit 58.6 61.7 (5.0) 123.5 Net operating costs (42.2) (43.8) 3.7 (87.5) Operating profit 16.4 17.9 (8.4) 36.0 Finance costs (1.1) (1.8) 38.9 (3.5) Interim
Slide 9: Earnings and dividend per share
Earnings and dividend per share Underlying1 Feb Feb 2009 2008 Change £m £m % Profit before tax 15.3 16.1 (5.0) Taxation (1.6) (2.0) Tax rate 11% 12% Profit after tax 13.7 14.1 (2.8) No of shares 179.4m 179.1m Interim Results April 2009 Earnings per share 7.6p 7.9p (3.8) Dividend per share 2.2p 2.2p
Slide 10: Non-recurring items
Non-recurring items Cross TRC Currency Total Impairment Contract Feb 2009 £m £m £m Loss before tax (3.1) (1.5) (4.6) Taxation credit 0.8 2.3 3.1 (Loss)/profit after tax (2.3) 0.8 (1.5) Interim Results April 2009
Slide 11: Free cash flow
Free cash flow Feb 2009 Feb 2008 Year to Aug 2008 £m £m £m Profit before interest and tax 16.4 17.9 36.1 Depreciation and amortisation 2.9 3.0 6.1 Working capital (4.7) (8.0) (3.8) Capital expenditure (1.0) (1.3) (3.8) Net interest paid (1.5) (2.1) (3.5) Taxation (2.9) (2.6) (3.2) Non cash & other i
Slide 12: Net debt movement
Net debt movement 12 Months to Feb 2009 £m Opening net debt – Feb 2008 (57.1) Free cash flow 23.3 Dividend (12.1) Acquisition of Rascal (3.1) Cross currency contract (1.5) Disposal of Freehold properties 2.3 New finance leases (1.5) Reduction in net debt 7.4 Interim Results April 2009 Closing net de
Slide 13: Enlarged group banking facilities
Enlarged group banking facilities £m Term Loan 45 Revolving credit facility 50 Bertrams asset backed facility 20 Total 115 • The Smiths News term loan and revolving credit facility carry an interest rate of LIBOR +75bps • 75% of Smiths News term loan is hedged at a rate of 5.13% Interim Results Apri
Slide 14: Pension
Pension Change Feb 2009 Aug 2008 £m £m £m Fav/(Adv) Scheme assets 339.0 382.5 (43.5) Scheme liabilities (262.8) (320.1) 57.3 Surplus 76.2 62.4 13.8 Interim Results April 2009 Asset cap (76.2) (62.4) (13.8) IAS 19 balance per accounts - - -
Slide 15: Financial summary
Financial summary Underlying1 Change Feb 2009 Feb 2008 Fav/(Adv) £m £m % Revenue 609.5 618.4 (1.4) Profit before tax 15.3 16.1 (5.0) Earnings per share 7.6p 7.9p (3.8) Free cash flow 6.1 4.2 45.2 Interim Results April 2009 Dividend per share 2.2p 2.2p - 1 Underlying results exclude non-recurring ite
Slide 16: Business update
Business update Mark Cashmore Interim Results April 2008
Slide 17: Trading
Trading As anticipated, market conditions are very difficult Newspaper sales up 2.8% driven by price increases and contract gains Magazine sales down (8.0%) with weak sales of monthlies and partworks Underlying sales are in line with our expectations Interim Results April 2009 Newspaper &
Slide 18: Business priorities update
Business priorities update Service and efficiency remain our top priorities Cost savings delivered ahead of plan New depot opened in Newport News International implementation on track Rascal investment performing to plan Interim Results April 2009 The Returns Company – impairment charge
Slide 19: OFT
OFT Wholesalers released from Newspaper Code Decision in line with our expectations Consultation period to follow No change to our strategy and direction Interim Results April 2009
Slide 20: Contract highlights
Contract highlights Revenue Market Share Publisher Total Gain Existing New Effective Date £m £m % % News International 220 85 24 39 Jul-09 Frontline 203 58 39 55 Apr-10 Seymour 85 26 38 55 Apr-10 COMAG 138 35 40 55 Jan-11 Mail 212 65 40 57 Nov-10 Telegraph 136 53 39 63 Autumn-09 Interim Results Apri
Slide 21: Territory maps – current footprint
Territory maps Current footprint Areas of operation prior to News International contract award Interim Results April 2009
Slide 22: Territory maps – NI gain (July 2009)
Current footprint Territory maps NI gain (July 2009) New territories resulting from News International contract Brighton Bristol Coventry Harlow Interim Results April 2009 Luton Swindon Warrington
Slide 23: Territory maps – additional contract gains
Current footprint Territory maps NI gain (July 2009) Additional contract gains New contract areas Brighton Bristol Coventry Harlow / Luton Swindon Warrington Bournemouth / Salisbury Exeter / Barnstaple Interim Results April 2009 Taunton / Yeovil Lincoln / Mansfield Shrewsbury / Aberystwyth Southampt
Slide 24: Territory maps – future footprint
Territory maps Future footprint Market share: Magazines: Current 40% New 49% Newspapers: Current 36% New 47% No of customers: New 6,700 Interim Results April 2009 Total 29,600 Revenues: New £322m per annum (incl NI)
Slide 25: Bertrams – acquisition overview
Bertrams – acquisition overview Major acquisition driving value for shareholders Strong commercial and cultural fit Total consideration of £8.6m plus £7m working capital Key financials: Sales £139m EBITDA £3.3m Interim Results April 2009 Respected management team Opportunities for gr
Slide 26: Bertrams – leading market position
Bertrams – leading market position UK’s longest established major book wholesaler Diversified customer base Excellent booktrade relationships Government backed library service contracts Modern and purpose-built distribution centre in Norwich Interim Results April 2009 Supplies 14% of all
Slide 27: Bertrams - opportunities and synergies
Bertrams - opportunities and synergies Enlarged group focused on service excellence and efficiency Commercial opportunities include: – Building on relationships with key publishers and retailers – Expanding products and services to respective customer groups – Combined knowledge of time sensitiv
Slide 28: Summary and outlook
Summary and outlook Challenging market conditions to continue Performance in line with expectation Business remains strongly cash generative Dividend maintained Significant strategic progress Major contract gains Interim Results April 2009 Acquisition of Bertrams Opportunities for fu
Slide 29: Interim Results April 2009
Interim Results 23 April 2009 Mark Cashmore Interim Results April 2008 Chief Executive
Slide 30: Appendix - Bertrams operational footprint
Appendix 1 - Bertrams operational footprint Leeds • Used for the library services operation Norwich • Used for wholesale and distribution and corporate head office Leeds • Warehouse is able to cope with processing over 200,000 units a day • The warehouse design is Interim Results April 2009 Norwich
Slide 31: Appendix - Bertrams divisional overview
Appendix 2 - Bertrams divisional overview Books Library Services Publisher Services Books Library Services Publisher Services • One of the UK’s leading book • Largest public library supply • Provides warehousing and wholesaler business in the UK. distribution for publishers • Capability to source an