Slide 1: Preliminary Results
Smiths News The Bertrams Consortium Media Preliminary Results 16 October 2013
Slide 2: Highlights
Highlights Group sales, £1,810.8m up 0.4% Strong financial Underlying PBT, £53.0m up 11.6% including acquisitions performance Free cash flow, £32.6m up 19.8% Smiths News: - £800m pa of revenue awarded to 2019 and beyond - £8.7m efficiencies achieved, on track for £20m 3 year target On track
Slide 3: Group Financial Update
Group Financial Update Nick Gresham Chief Financial Officer
Slide 4: Cautionary statement
Cautionary statement Cautionary Statement This presentation 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’, ‘pl
Slide 5: Group performance
Group performance £m FY 2013 FY 2012 Change Smiths News 40.0 39.0 2.5% Bertrams 7.2 6.8 6.1% The Consortium 7.4 3.6 15.3%* Media 2.0 1.8 11.1% Group operating profit 56.5 51.2 10.4% Net finance charges (3.5) (3.7) Group PBT 53.0 47.5 11.6% Tax (12.1) (11.4) Group PAT 40.9 36.1 EPS 22.4p 19.9p 12.6%
Slide 6: Smiths News income statement
Smiths News income statement £m FY 2013 FY 2012 Change LFL Total revenue 1.529.3 1,570.7 (2.6%) (4.6%) Gross profit 125.5 133.2 Operating costs (85.5) (94.2) Operating profit 40.0 39.0 2.5% Gross margin 8.2% 8.5% (30 bps) Cost ratio (5.6%) (6.0%) 40 bps Operating margin 2.6% 2.5% 10 bps New revenu
Slide 7: Bertrams income statement
Bertrams income statement £m FY 2013 FY 2012 Change LFL Total revenue 187.9 174.3 7.8%* (0.6%) Gross profit 36.9 33.1 Operating costs (29.7) (26.3) Operating profit 7.2 6.8 6.1% Gross margin 19.6% 19.0% 60 bps Cost ratio (15.8%) (15.1%) (70 bps) Operating margin 3.8% 3.9% (10 bps) Increasingly div
Slide 8: The Consortium income statement
The Consortium income statement £m 4 months 12 month 12 month FY 2013 FY 2012 pro forma pro forma change* LFL Total revenue 63.8 26.5 (0.3%) 2.6% Gross profit 26.3 10.2 Operating costs (18.9) (6.6) Operating profit 7.4 3.6 15.3% Gross margin 41.2% 38.5% 200 bps Cost ratio (29.6%) (24.9%) (40 bps) Op
Slide 9: Media income statement
Media income statement £m FY 2013 FY 2012 Change LFL Total revenue 29.9 32.4 (7.8%) 1.9% Gross profit 13.6 13.7 Operating costs (11.6) (11.9) Operating profit 2.0 1.8 11.1% Gross margin 45.5% 42.3% 320 bps Cost ratio (38.8%) (36.7%) (210 bps) Operating margin 6.7% 5.6% 110 bps Continuing business
Slide 10: Non recurring and other items
Non recurring and other items Smiths News Group £m FY 2013 FY 2012 Integration costs (1.1) (2.7) Network reorganisation costs (3.3) (2.0) Acquisition costs (3.7) (4.6) Amortisation of acquired intangibles (2.8) (2.1) Other (0.2) 0.5 Total before taxation (11.1) (10.9) Taxation 1.3 2.3 Total after ta
Slide 11: Free cash flow
Free cash flow Smiths News Group £m FY 2013 FY 2012 Operating profit 56.5 51.2 Depreciation and amortisation 7.6 6.9 Underlying EBITDA 64.1 58.1 Working capital (5.0) (9.1) Capital expenditure (7.9) (5.1) Net interest (4.2) (3.3) Taxation (10.5) (8.0) Pension funding (6.5) (6.8) Other 2.6 1.4 Free c
Slide 12: Net debt and pension
Net debt and pension Smiths News Group £m 31 Aug 2013 31 Aug 2012 Opening net debt (100.5) (63.3) Free cash flow 32.6 27.2 Dividend (16.0) (14.9) Non recurring items (5.9) (10.3) Acquisitions (5.1) (37.1) Other (3.6) (2.1) Closing net debt (98.5) (100.5) Net debt: EBITDA 1.47x versus covenant of 2
Slide 13: Smiths News Business Update
Smiths News Business Update Mark Cashmore Group Chief Executive Preliminary Results 16 October 2013
Slide 14: Smiths News - strategy and highlights
Smiths News - strategy and highlights FY13 Highlights Revenue 2.5% profit growth to £40.0m £1,529.3m -2.6% Contract extensions: £800m pa (53%) of revenue now awarded to 2019 and beyond NI, Marketforce, Mail, COMAG, Telegraph £8.7m efficiencies achieved – on track for Operating profit £20m 3
Slide 15: 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% -2.1% -2.7% -6.7% -8.1% -9.2% -1 5.8% -2 Like for like sales 5.8% Partworks/one-shots -4 -2 3.2% Proportional impact of part works and one-shots 2.8% -6 2.1% on total m
Slide 16: Bertrams Business Update
Bertrams Business Update Mark Cashmore Group Chief Executive
Slide 17: Bertrams - strategy and highlights
Bertrams - strategy and highlights FY13 Highlights Revenue Investing in growing sectors: £20m pro forma acquired £187.9m +7.8% international sales £5m future investment in DawsonEra Internet 30% of total sales Wordery continues to grow: Operating profit £15m annualised revenues Over 1
Slide 18: 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% -0.9% LFL 5.8% 26% 4 2 46% 2.8% TBC% 0 UK Wholesale -4.4% Public and academic 24% +2.2% LFL -2 -2.3% -1.4% libraries 4% -4 -9.8% LFL -2.3% +6.3% -0.6% Academic eBooks -6 FY2011 FY2012 FY
Slide 19: The Consortium Business Update
The Consortium Business Update Mark Cashmore Group Chief Executive
Slide 20: The Consortium - strategy and highlights
The Consortium - strategy and highlights FY13 Highlights Revenue Pro forma 12 month profit growth 15% Gross margin up by 200 bps £63.8m -0.3%* Scottish Framework Agreement secured Targeting share of wallet opportunity: web, CRM, telesales Operating profit Integration progressing well New
Slide 21: The Consortium – sales analysis
20 18 The Consortium – sales analysis 16 14 The Consortium LFL sales 12 Sales by segment 10 9.6% 8 Other -2.6% LFL 6 5.8% Early years 11% 4 8% 3.2% +4.3% LFL 2 6% [1.0%] Care 0 +10.4% LFL 76% -3.5% -2.3% -2 Education +5.8% +4.8% +2.6% -4 FY2011 FY2012 FY2013 +2.4% LFL -6 LFL sales +2.6% Core sal
Slide 22: Media Business Update
Media Business Update Mark Cashmore Group Chief Executive
Slide 23: Media - strategy and highlights
Media - strategy and highlights FY13 Highlights Revenue New/renewed print contracts: Global contract win with United Airlines £29.9m -7.8% New digital contracts: 8,000 iPads deployed Operating profit Entry into US market Disposal of MMC £2.0m +11.1% 23 Preliminary Results 16 October 2013
Slide 24: Summary and Outlook
Summary and Outlook Mark Cashmore Group Chief Executive
Slide 25: Creating a platform for growth
Creating a platform for growth Smiths News £800m annual / £6.2bn total revenue visibility to 2019 and beyond Contract security Bertrams, Consortium, DMD contract wins 5 acquisitions (£170m revenue) all delivering above expected returns Successful acquisitions Integration and synergy benefits
Slide 26: Strong shareholder returns
Strong shareholder returns Strong profit and cash growth • PBT of £53.0m, up 11.6% • Cash generative - £32.6m FCF, up 19.8% £53.0m PBT Returning value to shareholders • EPS of 22.4p, up 12.6% • Full year dividend 9.3p, up 8.1% 22.4p EPS Outlook FY14 • Continued investment in top line growth and new
Slide 27: Appendices
Smiths News The Bertrams Consortium Media Appendices
Slide 28: Financial KPIs
Financial KPIs £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Revenue 1,810.8 1,803.9 1,734.4 1,829.6 1,326.0 Profit before tax 53.0 47.5 38.6 35.0 30.5 Profit after tax 40.9 36.1 28.2 26.4 24.8 EPS 22.4p 19.9p 15.5p 14.6p 13.8p Free cash flow 32.6 27.2 22.5 20.4 23.7 DPS 9.3p 8.6p 8.0p 7.4p 6.8p Net De
Slide 29: Income statement
Income statement £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Revenue 1,810.8 1,803.9 1,734.4 1,829.6 1,326.0 Operating profit before non recurring items 56.5 51.2 41.7 37.1 32.4 Non-recurring items (10.9) (10.9) (6.5) (6.9) (10.8) Operating profit 45.6 40.3 35.2 30.2 21.6 Net finance charges (3.7) (3
Slide 30: Balance sheet
Balance sheet £m FY 2013 FY 2012* FY 2011* FY 2010 FY 2009 Intangible assets 68.2 67.1 36.9 12.7 12.7 Property, plant & equipment 26.6 24.5 18.7 21.0 21.1 Other non current assets 12.8 14.5 16.1 5.3 6.8 Total non current assets 107.6 106.1 71.7 39.0 40.6 Cash 10.1 5.1 4.2 4.0 4.3 Other current asset
Slide 31: Cash flow
Cash flow £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Operating profit 56.5 51.2 41.7 37.1 32.4 Depreciation and amortisation 7.6 6.9 6.8 7.3 6.7 EBITDA 64.1 58.1 48.5 44.4 39.1 Working capital (5.0) (9.1) (10.3) (1.4) 4.6 Capital expenditure (7.9) (5.1) (3.1) (8.6) (5.2) Net interest (4.2) (3.3) (4.
Slide 32: Net debt
Net debt £m FY 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 32.6 27.2 22.5 20.4 23.7 Dividend (16.0) (14.9) (13.8) (12.6) (12.0) Non recurring items (5.9) (10.3) (5.2) (6.7) (1.2) Acquisitions (5.1) (38.1) (17.9) - (12.2) Disposals - 1.0 -
Slide 33: Taxation
Taxation £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Current tax 15.7 13.6 11.3 9.8 9.5 Adj in respect of prior year UK (2.6) (1.6) (0.5) (1.4) (2.4) corporation tax Total current tax charge 13.1 12.0 10.8 8.4 7.1 Deferred tax – current year (0.7) (0.6) (0.4) (0.1) (0.6) Deferred tax – prior year (0.
Slide 34: Lease commitments
Lease commitments £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Land and buildings within one year 8.1 10.0 9.9 8.8 8.7 in second to fifth year 26.2 28.9 29.3 28.7 28.9 beyond fifth year 26.7 29.6 27.4 29.5 24.7 Total 61.0 68.5 66.6 67.0 62.3 Equipment and vehicles within one year 1.6 1.3 1.6 1.0 1.3 i
Slide 35: Defined benefit schemes
Defined benefit schemes £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 Present value of defined benefit obligation (419.2) (395.3) (348.3) (367.4) (338.1) Fair value of assets 469.6 433.1 375.1 408.6 357.4 Amounts not recognised due to asset limit (73.5) (73.8) (63.1) (41.2) (19.3) Net deficit in the sc
Slide 36: Restatement of retirement benefit obligation
Restatement of retirement benefit obligation During the year the Group reconsidered its accounting for deficit contributions of pension schemes and has amended its accounting to reflect future agreed deficit contributions as an IFRIC14 liability on the balance sheet. Accordingly in the 2013 fina
Slide 37: Contingent liability
Contingent liability £m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 No. of Reversionary leases 35 59 90 105 122 Contingent liability 8.4 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