Smiths News (LSE:SNWS) — Audited Preliminary Results for the 52 weeks ended 26 August 2023

0:00 Good afternoon, and welcome to the SMITHS NEWS PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Jonathan Bunting, CEO. Good afternoon, sir.

0:31 Good afternoon. Good afternoon, everyone. Thank you for joining us this afternoon. Paul and I are looking forward to explaining our results today, results that we're particularly pleased with, which we think reflects the progress we've made on a number of fronts. Our headline message is very much one of reliable delivery and that despite the challenging economic environment, SMITHS NEWS continues to generate positive and predictable returns, which benefit all stakeholders. It's a performance we're proud of, and as I've said, we look forward to explaining it in more detail this afternoon. So today's presentation will follow our usual format. I'll cover a summary of the financial highlights. Paul will then talk you through in more detail the financial results before I return to discuss progress on the wider strategy and call out our priorities for the current year.

1:17 As always, we welcome any questions you may have, and we'll take these at the end of the slides. And I'd just like to remind everybody that we will have a version of the presentation available on our own website later today. So starting with the headlines. Well, we've delivered a good performance in all key areas, amounting to a strong overall result despite the pressure of inflation and its particular challenges for the transport and distribution sector. From a financial perspective, we have exceeded market expectations. Adjusted operating profit of 38,800,000 is up 1.8%. Free cash flow of 21,800,000 has again supported a dividend of £10,000,000 and contributed to halving our average net debt to £25,000,000. Turning to core operations.

2:02 Sales have benefited this year from sustained cover price rises, offsetting the impact of continued volume declines. They were further boosted by the FIFA World Men's World Cup taking place this financial year and the publications of several special editions following the sad death of a majesty the queen in September 2022.

2:21 Equally importantly, we have once again achieved our cost efficiencies with them in with them being in excess of £5,000,000, an overall delivery of 5,800,000, of which 4,800,000 were from the distribution operations. This has been a core competence of business now for over a decade, and it's a particularly valuable quality for any business in the current inflationary climate, which takes me to the strategic headline of 65% of our contracts now secured into at least 2029. This is a milestone achievement and absolutely critical to our future planning. We are delighted to have made this progress as it underpins not only our assumptions for cost and revenues and therefore free cash, but also our plans for sustainability people, capital investment, and our important new profit streams. I'll talk later about growth, including the progress of SMITHS NEWS recycle that is now live across our full network and some of the other opportunities we've made progress on that leverage our capabilities and our infrastructure.

3:15 In summary, our performance in FY 2023 is very much a continuation of the path we set out to follow, and the progress on all fronts is reflective of the focus we apply and our determination to put stakeholder interest at the forefront of all we do. And I hand over to Paul who'll discuss our financial results in more detail. Thank you, John, and good afternoon, everyone. Right. If we move to slide five, we'll start with the financial headlines. Revenues increased in the period by naught point 2%, which was ahead of the historic norm of a three to 5% decline. You may recall at the half year, we reported a 1% revenue growth supported by price increases, the royal succession, and the men's football world cup.

4:01 The second half had no material one off impacts, but pricing remained beneficial, albeit not as strong as the second half last year. Adjusted operating profit increased 1.8% to 38,800,000, of which the royal succession contributed naught 700,000. Underlying profit was therefore in line with last year despite the impact of 4,700,000 of inflation, which along with just over 3,000,000 of margin decline was offset by our strong cost out plans and ancillary revenue streams. Adjusted earnings per share remained in line with last year at 10.8p. Average net debt halved from 50,000,000 last year to 25,000,000 this year. This was a result of free cash flow of 21,800,000, which was in line with expectations and the annualization impact of 22,100,000 one off receipts received in the prior year.

4:55 Dividends are proposed at 4.15p, the same as last year, and the business anticipates distributing up to the maximum permitted under our financing agreement of 10,000,000 for the full year. Now to give a little more color to revenues, as we mentioned at the half year, we have benefited from world succession and the men's World Cup collectibles, which overall contributed 1% revenue growth. Excluding these items, underlying revenues were down naught point 8% compared to the historic trend of minus three to 5%. Daily newspapers in particular benefited from ongoing price increases, although these were lower than last year. These price increases had a consequent impact on volumes, which declined 13% compared to a historic norm of nine to 11%.

5:44 There were 26 price increases in the second half of twenty twenty three compared with 37 in the same period last year.

5:52 Increases in the final quarter were 50% down on the prior year. Therefore, we can expect revenue to slowly return to its historic trend as pricing begins to normalize. Magazine revenue and volume decline was in line with previous years. Our collectibles, which now represent 4% of underlying revenue, continue to perform really well, up 43% year on year. These continue to have a higher margin than newspapers and magazines, supporting our overall profit delivery.

6:26 As I outlined earlier, adjusted operating profit increased to 38,800,000 due to the benefit of the royal succession and with cost out plans and ancillary revenues offsetting both the inflation and margin decline. Net finance charges have reduced by naught 500,000 as the extension of our debt facilities last year resulted in lower bank arrangement fee charges. The impact from higher Sonya rates was largely offset by the lower average debt. Profit after tax of 25,600,000 is naught 100,000 lower than last year and includes the impact of the higher UK corporation tax rates. This has no material impact on headline EPS, which is maintained at 10.8p.

7:12 Continuing free cash flow for the year was 21,800,000 and includes a working capital outflow of 4,900,000 compared to naught 0.6 million last year. This outflow was part of our normal working capital cycle with a large customer payment received during the first week of twenty twenty four. Capital expenditure of 3,400,000 is ahead of last year and more closely aligned to our target of circa 4,000,000 per annum as we are now back on track with our depot refurbishment program. Lease payments have reduced naught 300,000 year on year due to the exit of one lease last year and the timing of two renewals. Net interest and fees are significantly lower than in 2022 as we paid 2,900,000 of arrangement fees last year.

8:01 The cash impact of adjusting items were 1,000,000. It's largely related to the cost of an reported m and a, which we discussed at the half year. Finally, as a reminder, the prior year benefited from 22,100,000 of one off receipts. Bank net debt continues to reduce, and the business has generated almost 25,000,000 of cash flow before working capital and dividends. Over the last two years, we have focused on average net debt as a headline measure as reported net debt is impacted by the timing of our working capital cycle. Average net debt have reduced by 64,000,000 or 72% over this period. A consistent level of cash flow of between 20 and 25,000,000 for the last three years allows the business to reduce debt and plan with certainty.

8:52 We've separated our working capital, which this year is a 5,000,000 outflow due to the timing of the receipts just mentioned, but would normally expect a working capital outflow of about 1,000,000. The timing of publisher payments will have a greater impact next year on a reported basis due to the impact of the fifty third week, which I'll cover on the next chart. Underlying cash flow for 2024 is expected to be consistent with last year, and this will enable average net debt to reduce further to circa £15,000,000. However, as we have been highlighting through the last few reporting cycles, reported net debt will be impacted by the inclusion of a fifty third week, which will bring publisher payments of circa 20,000,000 into the last week of the financial year.

9:40 Concluding the financial presentation, we expect the trends of the second half of twenty twenty three to continue with cost out and growth offsetting the headwinds of inflation and margin decline as well as lower prices for the sale of waste paper. As a result, the business intends to maintain performance in 2024 in line with current market expectations. And with that, I'll hand back to John who will provide a strategy update. Thank you, Paul. So in summary, we've achieved a good performance with a clear and sustained focus on the priorities we set out for the year. Indeed, the bullets on this slide are virtually identical to those we presented in May, our interim results. The key elements have not changed, and indeed, it would have been odd had they done so. One of the features of our business is its indeed relative predictability, providing we keep close control of the critical triangle of service, clients, and long term efficiencies, which, as indicated by the green ticks, is exactly what we've done for the remainder of the second half of the year.

10:41 At the half year, we also spoke about our long term strategy and in particular those three elements that we've stated as our critical goals. To remind you of these, they are enhancing our core business so we continue to serve customers with a market leading service proposition that supports operational efficiency and generates reliable profits and cash flow. Secondly, leveraging our capabilities in new and complementary markets, exploring and testing opportunities in an agile way, and backing that approach with appropriately sized investment. And thirdly, delivering for all stakeholders throughout, delivering great service, supporting our people and the investment needs of the business, enhancing our customer and client relationships, and providing attractive returns for our investors underpinned by a strong balance sheet. So let's look at these in turn, starting with enhancing the core.

11:31 As I said earlier, the milestone achievement this year is the securing of the 65% of our publisher contracts through to 2029. At the end of f y twenty twenty two, we had 45% secured, and we're building significant momentum. Today, we've passed the tipping point that provides the surety of our territories and service requirements for the next six years. It's an enviable position for any business, and in our case, enables the planning of efficiencies and network consolidation that underpin our cost saving plans. But it also enables us to plan and develop our graphic our growth profit streams with confidence given that we know which postcode we'll be distributing to and the likely economics. It is also pleasing to have secured a new and additional agreement with NEWS UK for their direct deliveries into London. This new business slots into our existing operations and is a reflection of the way we are working ever closer with our publishers on supply chain efficiency and sustainability.

12:25 Although not shown on this slide because it's relatively new business, it it is equivalent to a further 2.7% of market share. Even more recently, we secured an agreement with with Midlands Newspaper Association to the regional distribution of its titles in The Midlands to a value of circa £5,000,000. Of course, the contracts also give us excellent visibility of likely future cash flows, positioning us well when we come to the renewal of our banking arrangements that come to an end in the summer of twenty twenty five. And finally, I should just confirm that remaining

12:56 contracts are operating well. These include rolling agreements with smaller or regional publishers as well as some larger contracts that we would expect to renew during this financial year. The other key elements of enhancing the core are the twin tracks of service and efficiency, and it is the ability to achieve both without compromise to either that is the vital ingredient of our long term success. On the service side of the equation, our goal is to work with our supply chain partners to make the news and magazine category as easy as possible to execute at store level. We think this is an area where we can continue to use our market leadership, ensuring that our retail customers continue to see the categories of category that their consumers love and is becoming simpler to manage at store level. Bedrock of our retail service is, of course, delivering on time and packing accurately, and we continue to exceed our contractual KPIs in both areas.

13:49 In addition, for a number of our scale retail customers, we have adjusted the commercial model to minimize the risk of shrink. This is an area of growing concern for multiple retailers across many different categories, and it's pleasing that for magazines, we've made this move already. By combining our excellent base delivery with these additional value added services, we make the category easier and more profitable for our retail customers, demonstrating to all supply chain partners that we are the market leader, not only in size, but in vision and commitment too.

14:17 If we turn to efficiency, our approach here is a well developed one with an enviable track record of securing scale savings now for over a decade. In f y twenty two, it was exactly the same. Lower volumes enabled us to remove warehouse activity costs and where appropriate, consolidate delivery routes. In addition, our distribution centers are now almost entirely pure play logistics centers with administration and customer service activity centralized, which gives us not only the advantage of cost efficiencies, but also a more consistent and dedicated customer service. Lastly, as I think many of you will aware, we have two offshore service centers for customer experience, technology, and finance. We continue to work well with our service provider in this area, benefiting from the labor arbitrage, but we can also see an opportunity in the medium term for some automation.

15:04 Looking to the current year, we would expect our savings to be similar to the level of this our historic norm of £5,000,000.

15:14 Turning to leveraging our capabilities. We recognize the importance of developing new and complementary profit streams that use our skills, capacity, and assets. In particular, we have chosen to focus on potential profit streams that play to our proven strengths and competitive advantage rather than seeking to diversify in the purest sense. This time last year, you would have heard me talk about our strategy to enhance the core, add more, and move up the value chain, and our plans to pursue and explore a spectrum of growth opportunities. Since then, we have made progress on each of these, albeit as expected, with some moving at a faster pace than others.

15:49 So taking each in turn, and starting with logistics services, we have again made progress, growing the number of clients for whom we either rent space or provide sortation and delivery services. This provides additional revenue, and we will continue to look for further opportunities to expand this service offer. From a supply chain integration perspective, we spoke last year about how we'd now have The UK's largest home news delivery provider working from our warehouses. That relationship continues to be a mutually beneficial one. The focus for this year, however, will be the successful integration of the NEWS UK direct to retail business in London and the Midland Newspaper Association regional press business. In relation to direct to consumer, in the autumn of twenty twenty two, we made a modest joint venture investment in the launch of Love Media. This is a pay as you go digital service that enables consumers to buy digital copies of newspapers or magazines from their local retail store simply by scanning a QR code.

16:45 Of all the areas of growth, this was the last of market, and it's still very early days. For us, it represents a limited investment and continued experimentation, and watch as a growing market that we are keen to stay close to. For now, it's a complimentary service offer for our publishers and our retailers, and time to work time will tell whether it's a solution that consumers embrace. And then finally, the categories and data. We spoke last year about using the DVD market to demonstrate to our larger retail customers the advantages of using the proven news and magazine supply chain for other categories. Working in partnership with our magazine distributor, Frontline, we have this year added books to that list of products. We ex both we expect both the number of customers and the breadth of categories to increase in the current year. Which brings me neatly to our most advanced new venture in the service expansion area, SMITHS NEWS RECYCLE.

17:36 This is a material new service that was initially aimed at our independent customers. To remind you, the service collects cardboard and plastic waste from our retail customers on a weekly paid for basis. This service backs on to our core delivery and returns capability. The waste is prepared and bailed at our depots and sold to recyclers at a profit. This year, the service has gone from regional to regional trial to a full network.

17:58 We are now also live with 900 local bookmakers. We're also looking in additional waste categories and potential strategic partners that would make this service even more attractive. And in total, we now have 4,000 paying customers who describe the service as flexible, convenient, and excellent value.

18:17 The third element of our strategy is to deliver for all stakeholders. I believe today's results and any of those of the last three years confirm that we are succeeding. Our retailer and publisher services are benchmarking number one. We have the confidence of our publishers to award contract contracts through to 2029. And in relation to shareholders for the second year in succession, we were paying the maximum dividend under our banking agreements. This year, an equivalent yield to 8.5%.

18:44 Net debt and average net debt have reduced materially over the last four years, positioning us well to renew our financial agreements ahead of 2025. And our new profit streams are beginning to flow without risk to our core focus or finances. Turning finally to people in the environment. These were best viewed as part of our ESG strategy and two of our priority objectives. You may recall from this you may recall this graphic from last year when we called out the pillars of environment and people's priorities because they have the most impact on our supply chain and are the primary concerns of our partners in relation to our performance.

19:18 On the environment, we've made progress in reducing fleet and warehouse emissions in FY 2023. And in line with governance best practice, have adopted a science based approach to further target to our further targets. For the period between 2024 and 2028, we have set an absolute reduction target relating to scopes one and two emissions of 4.9% linear per year and a reduction in scope three emissions. So the relevant categories we can control are 32.5% cumulative. In relation to people, we're focused particularly on the benefits of greater diversity and inclusion with training, employee surveys, and the enhancement of our communications and employee networking groups. We are, of course, committed to training developing all of our people, maintaining the long service and industry expertise that underpins our competitive advantage, whilst also appointing new talent and functional expertise that enhances our skill set.

20:10 And finally, our prioritization of the environment and people pillars does not mean the others have been downgraded. And indeed, we continue to work closely with our partners, making contributions to our our communities. And we have established strong governance of our ESG approach. Examples of which would be seen in our science based targets, the achievement of cyber essentials plus certification, and our ongoing investment in health and safety, which is a nonnegotiable priority every day in every location. So looking to the current year, our key priorities are focused once again on the issues we have discussed today. Managing inflation, cost reduction remain critical tasks, and doing this in a way that ensures we maintain service and customer satisfaction. Sustainable cost reductions of circa £5,000,000 are an established goal for which we have an excellent track record in achieving.

20:57 We're in advanced discussions with our publishers for the remaining contracts and would hope to conclude a number of those shortly. And when we look to the longer term, we're targeting further progress on our new revenue streams, knowing these will play an even bigger role in our revenues over time. And finally, we will open discussions with our finance partners to refinance our banking facilities, which currently expire in August 2025, which brings me finally to the outlook for the current financial year, which has started well. Our network changes and operational cost savings are on track, and we're and providing we do not see any further cost spikes, we expect them to offset the impacts of inflation in the year. New revenues are building, which is, of course, good news as our various growth platforms become more established. In summary, we are currently on track to again meet market expectations for the full year.

21:46 That ends the presentation. Paul and I are now happy to take any questions you might have. Jonathan, Paul, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions

22:16 and give responses where appropriate to do so? And I'll pick up from you at the end. No problem. Okay. I'll read out the first question. Can you help us understand in more detail the 5,000,000 of cost savings achieved in the year, the bulk of which was via the network the distribution network and the cost savings planned for the current year and how they will be achieved. Do you want do want to start that? Or Yeah. Just a second. No. No. No problem, Simon. So,

22:43 yes, I mean, it's a proven track record we've got in this area. Where did the where did the cost savings come from? Some come from the fact that we have less volume for our warehouses and and final mile distribution to handle, and therefore, that creates a capacity which we can take out of the system, which reduces our cost base. Some come from the greater centralization of activities and in some cases, outsourcing of activity offshore. And others come from working different with our supply chain partners. And it's probably the it's probably the the last one, which is the area that we'll probably explore more in the coming years than we've explored to to this point. To this point, it's largely been internal cost savings we focused on, whereas I think there is an opportunity in the medium term to focus end to end in terms of the supply chain.

23:29 Thanks, John. The next question, would it be reasonable to assume that the group may look to undertake an early refinance of their facilities in advance of 2025 given solid trading and the most improved balance sheet debt position? Alright. Thanks, Simon, for that question. I mean, I think as John alluded to in our priorities, certainly, will look to we have having those ongoing discussions with our banking partners, and and making sure that we, utilize the fact that this business is a very different business from the one that refinanced last time. So I think it's in a much better

24:00 position, and hope to you know, providing the commercials are right, and that they attracted to us, we'd look to move that forward, in the in the near future. But, yeah, we're under no no no no pressure to refinance. We've got a facility till August 25. So we'll do so if the commercials and the conditions are correct. Absolutely. So just moving. So here's one from Mark. What key performance indicators should shareholders monitor to accurately determine the success of effectively leveraging capabilities?

24:38 Yeah. I mean, I I so it's a really it's a really good question. I mean, I think ultimately, you'll judge us based on the profit that those activities throw off. I think that's how it's gonna be judged. You'll look at the the revenue that we're that we're winning and the margin that that's accruing. So that that is how I would imagine that most shareholders will choose to to judge whether we're making a success of that or not. The only thing I'd add, John, is that we are looking to expand from our from from the the, you know, the capabilities that we have today. So this isn't trying to look at something that's left field or different or, you know, trying about this is trying to improve our skills and capabilities that we currently have today that are under utilized to make sure we could take them to market in the best possible way. So I mean, the the only other thing I would add is we should not lose sight of the fact that whilst some people will have a perception that the news and magazine market is dying, it's actually not. Okay? So we distribute 14,500,000 newspapers every week. We distribute 4,000,000 printed magazines every week. So the market continues to be a large and resilient market as you can see. So what we need to do is make sure we focus on the core and keep running that business appropriately and and throw off the cash in the way that it does.

25:52 And then in a complementary way, enhance that by adding new profit streams to it. But it but that that is the that is the order. That is the priority order. It is not, grow the new profit streams at the expense of the SMITHS NEWS wholesale business. That would be exactly the wrong thing to do and not something we plan to do. Thanks, John. And then the next question I've got is, is there any intention to change the dividend or share buyback policy when the current debt arrangement expires? We think from my perspective, it's about, you know, the order of priorities. We'll we'll we'll look to conclude a refinancing discussion and and make sure we've got really great commercials and reduce the restrictions to a more normal covenant based approach to our financing facility.

26:37 And that may may well hopefully unlock our ability, our options to return to shareholders. And then we'll look at our policy at that point in time. Yeah. Great. This is on here from Simon. Can you tell us a bit about the feedback you get from retailers on your service offering, deliveries and recycling, etcetera, and what else the group could do to leverage this retailer network. Yeah. I mean, as I think I mentioned in the in the presentation, Simon, are are the customers that that use our recycling service actually very complimentary about it. It's very it's a very convenient solution for them, so they can leave their products out seven days a week if they choose to. Many don't. They still choose to leave it out one or two days a week, but they're very complimentary about the flexibility.

27:25 And, with regard to whatever else could we deliver or collect, well, you know, if you walk into any large supermarket and walk down the newspaper and magazine aisle, you can look at adjacent categories that sit there and we're, you know, we're interested in seeing whether we can distribute any of those on behalf of the supermarkets or their manufacturers. And if you walk into an independent convenience store and look at the types of products that they are either selling or recycling, we're happy to support there. So there's a there's a huge array of things we could do. What we're very keen to do is be very focused and make sure that we don't dilute our energy by being too widespread. Yeah. There's a couple here on on on new opportunities, John. One is about, you know, we've we've announced the NEWS UK Yep. Direct to retail win.

28:12 Are there any other potential opportunities from the NEWS and MAG space? And then the second one is about are we cycling about how big do we think that could be Okay. Ahead of the 4,000. No problem. So in terms of the the NEWS UK announcement, I mean, first, I think it's great news. Great news for us. I think it's good news for NEWS UK, and I think it's really good news for the customers that will now stop having two suppliers and will have one going forward, and that and that will be us. So that, I think, is good news. It's actually the last of the the big opportunities, I think, in terms of areas where publishers were going direct to the retailer that we we could do for them. And certainly from a regional press perspective, the recent win again, I think it's probably the the the last of the large opportunities that are out there. There will always be smaller opportunities.

28:57 And where they become available, clearly, we will be competitive in our process to try and secure them. But I think in terms of the big needle movers, those two are probably the last of the two. There's there's one here that's quite nice. I'm not sure I answered the recycle question. Oh, alright. Okay. Sorry. I the question was how big is the Yeah. It's the market. Yeah. It's what are the demographics? Are they they're primarily all small retailers? Are they are they independent? Great great question again. So principally, yes. The the vast majority of our 4,000, so 3,000 of those customers are independent retailers. 1,000 or circa 1,000 are bookmakers. So that's the current mix. How should you think about the available market? Well, we have 12,000 independent customers, but many of them will be contracted to other people and may or may not become available for us to try and persuade to join join our service over time.

29:56 And, of course, if you start to think about bookmakers and news agents or convenience stores, quite often, you'll see them in a parade of shops in in in many different communities. And if it's possible to provide services to that parade of shops, it may well be economic to do so. So that's the way we're starting to think about that opportunity. Thanks, John. There's another one about the dividend restriction clause. I hope hopefully, I've answered that Thank you. As part of the conversation around our refi timing. Another question about free cash flow. Hopefully, the slide, on slide eight, you'll see the breakdown of our free cash flow from adjusted operating profit so so you can see the the outflows there. I've done the recycling one. Just panning down.

30:41 Excuse me a second. There's an issue before about the category of of of magazines. What changes is SMITHS NEWS planning to improve profitability? It says the magazine category, but I think it's news and magazines and Yeah. DTI might be one of them. Yeah. So certainly certainly from a profit profit perspective, if you're a London retailer, you'll you'll you'll have benefited from the decision News UK have have taken there. I think more widely, there are two areas of focus for us. The only way we can improve the profitability of the category for a retailer is either making it simpler to to sell and therefore reducing the labor they associate with the category or adjusting the commercial model so that areas such as shrink no longer damage the p and l from a from a retailer's perspective.

31:26 In both those areas, we are working hard to put plans in place, not only in isolation, but with our publisher clients and our retail customers so that we can continue to see the news and magazine category as a as a category seen in almost all of the big retail outlets you choose to go in in every retail channel. Thanks. There's one here about market expectations for the current year around sales and operating profit. We're gonna have expectation in the market on on a sales perspective, you know, we we would expect to be moving. We reported not point 2% growth, but underlying that we talked about, it was down not point 8% if you if you backed out the the the one off event. We think that's gonna trend more towards three to five, but I'm expecting, like, next year to be very similar to that underlying number this year given the wins that we've made and just announced.

32:16 And then from an operating profit perspective, I think I talked to this year, our operating profit being 38,800,000 with no point 7,000,000 due to the world succession. And therefore, underlying was a 38,100,000, which is in line with last year, and we plan to maintain performance at that level. So there's a there's a question here about what's the the anticipated timeline for the automation of the customer service provision. There is no timeline on that one. We continue to have dedicated colleagues out in our customer service centers who we think do a good job for us. If we can find ways of alleviating pinch points during busy moments, then we'll certainly look at that. But we do not currently have a plan to automate our entire customer service prop proposition.

33:11 So there is no timeline for that. Thank you, John. I'll come back to that one. Crystal ball for this one, Neil. Donald, sorry. So lots of comments on longevity of cash flows given declining print. Can you comment on how many years, decades you expect to see print distribution continuing? David, it's, the $64,000,000 question. I wish I had the answer. I don't. What what I can tell you is that I think it will be a lot longer than many people will get, give it credit for. I think if you look at the data points in terms of the level of distribution we still do, if you look at some of the YouGov's research that was undertaken last year that said two thirds of, UK consumers 55 years or older prefer the printed product to the digital product. Mhmm. That 58% of UK consumers that buy magazines prefer a printed product to a digital product. I think it's here for a while to come, and it is a large and stable market. Just look at the reaction when the queen sadly passed, and we distributed an extra 5,400,000 newspapers in that ten day period. We had a 400% uplift on Hello and Okay magazine. So for many people, it's still print is still an incredibly important part of their of their life. It's how they look it's how they like to unwind. And I think what we're really seeing is at one point in time, thought that digital would kill print,

34:43 and we understand that. But actually, if you look at what's really happening with consumers, consumers are accessing content now both digitally and through print. So increasingly, if you look at how publish publishers are marketing their content, they're giving the consumer the choice. Would you like a blended offer? Would you like to have print sometimes and digital sometimes? And the best example I can give you of that from a sort of personal experience is if I'm short of time, but maybe I've got five minutes, I'm waiting for a meeting to start or something like that, and I want to access the news, I'll do that digitally. But if I've got more time, particularly weekends, and I want to really enjoy reading the newspaper magazine, I always do that through print, always, without question. And I think that that behavior is very similar for lots of people. So I can't tell you how many years it's gonna go on for, how many decades it's going to go on for, but I do think it'd be a lot longer than many people give it credit for.

35:35 Thanks, John. A bit more. A final one here. So what interest cost forecast for 2324, John asked? And also what dividend would management pay out if not constrained by banking facility agreement? I mean, I'll start with the interest cost. Mean, clearly, lot of it would be driven by the underlying interest rates and and and have some new moves. Clearly, we'll continue to pay down our net debt in the short term pay down some of our facility as well. So, you know, we won't have any other arrangement fees in the short term. So I'd this year, providing interest rates will continue to go up, I would've thought, you know, this year's number is a is a reasonable reflection of what we might see. From a dividend point of view, clearly, it'd be the board that decided any dividend that we paid out. But, you know, our current policy, absence of the constraints around the the banking facility, is a two times cover, which would mean we'd distribute up to about 1.3 I'm sorry.

36:30 13,000,000. We've got 13,000,000 instead of the 10,000,000. So that gives you a sort of direction of direction of travel that we could get to. Probably covered that one. Yeah. I think we covered that one about new revenue streams. I think we've covered Dean Dee's question. Yeah. We have the distribution contracts we've already covered off. The future items such as greeting cards that can be added. Good question, Dean. So the questionnaire about whether we would consider greetings cards as an additional category, absolutely, we would. You know, that would be something that we would consider to be complementary to the way that we do business with, actually, all sorts of different retail types. So, yes, we would consider that. Next one, on m and a for for for Mark.

37:17 Will you consider bolt on acquisitions of relevant businesses? It's probably worth, I'll say, what what happened this year in our results and you comment on the future. We know we were looking at an acquisition we mentioned at the half year. We walked away from that because we couldn't make that one work for us from a value point of view. It was part of our our growth initiatives, so part of those five areas that you saw John talk about earlier. And, you know, if if there's things that we've got that could add to our skills and scale in that area, we might look at them. Yeah. I mean, there's nothing more to add. Our our growth strategy is very much a combination of testing it organically and making sure the economics work and there's a real demand for it. And then with a modest degree of investment, making sure that we can add some scale to those. Here we go. I like I always like these questions from the valuation of the of the streamline SMITHS NEWS seems absurdly low given the free cash flow yield of the business to invest misunderstand the size of the opportunity to diversify the business, or do you feel it's related to other concerns?

38:18 I mean, to be honest with you, Mark, your guess is as good as ours. Right? I I agree with you. I think I think, you know, the business is well placed. I think, you know, the the, you know, the past issues along behind this business. This business has delivered against its promises. It's got clear view of the next few years that it articulates to the market. I think it should be better rewarded, that's for shareholders to to to to decide, not for us. Right? Okay. Let's see. There's a question here. What would cause the most heated debate in a in boardroom discussions? I mean, the first thing I said, we don't really have heated debates. We have proper robust debates, but they don't get too heated.

39:05 What are the areas that are most contentious? It's a really good question. I mean, I think, you know, we we are completely aligned on the strategy Mhmm. That we have for the business, and we're aligned on what the key priorities are for the year. And we have and management has a really strong relationship with with with the board. And so yeah. I mean, I I know that's a rather dull answer, but we don't tend to have too many heated debates. We just have rigorous conversations about progress on a variety of topics. Agreed. So with that, answer the acquisition question. And then the final one, is your goal to repay debt completely? If so, how long will that take? That's not our goal. I think this this business would be well suited to, you know, an RCF type facility that matches our insurance working capital flow.

39:59 But, you know, we'll we'll we'll go to market at the right time. And if we get the right facility with the right commercials, you know, we should put something in place that enables this business to distribute to shareholders, you know, an efficient, effective dividend policy going forward. Think that's all the questions. That that is it right now. See. Paul, thank you. And I think you've addressed all those questions you can from investors. And, of course, the company can review all questions submitted today, we'll publish those response on the investor meet company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Jonathan, can I please just ask you for a few closing comments? Yep. Sure. Thank you. So, I mean, firstly, thank you for taking the time to to listen to Paul and I again today.

40:46 If you're an existing investor, I hope you're pleased with the progress we're making and that you feel that we answer every question we possibly can as honest we can, and we're very transparent. If you're not an existing investor, I hope we've given you, food for thought and that you take another look at our, at our stock. We think we're making good progress. This is the fourth year on the trough now. We've delivered good results either in line with expectations or ahead of expectations, and we feel we have momentum. So thanks once again, and no doubt look forward to updating you at the half year. Jonathan, Paul, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of SMITHS NEWS PLC, we'd like to thank you for attending today's presentation.

41:35 Good afternoon to you all.