Smiths News The Bertrams Consortium Media Preliminary Results · 2014-03-26 · Preliminary Results...

Preliminary Results 16 October 2013

Smiths News

Bertrams

The Consortium

Media


Highlights

2

Group sales, £1,810.8m up 0.4%

Underlying PBT, £53.0m up 11.6% including acquisitions

Free cash flow, £32.6m up 19.8%

Strong financial performance

Smiths News:

- £800m pa of revenue awarded to 2019 and beyond

- £8.7m efficiencies achieved, on track for £20m 3 year target

Bertrams:

- International sales +30.2%, digital sales +38.0%

- Wordery delivering £15m of annualised sales

The Consortium:

- Strong pro forma profit growth +15.3%

- New management team in place

Group: 29% of profits outside of newspaper and magazine wholesaling

On track to deliver 50% of profits from outside of newspaper and magazine

wholesaling by 2016

Underlying EPS 22.4p, up 12.6%

Full year dividend 9.3p, up 8.1%

In line with FY13 market expectations

Growing shareholder returns

Group Financial Update Nick Gresham

Chief Financial Officer


Cautionary statement

4

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’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘targets’, ‘may’, ‘will’, ‘continue’, ‘project’ and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of Smiths News PLC’s future performance and relate to events and depend on circumstances that may occur in the future and are therefore subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the industry; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this presentation. Unless otherwise required by applicable law, regulation or accounting standard, Smiths News PLC undertakes no responsibility to publicly update any of its forward-looking statements whether as a result of new information, future developments or otherwise. Nothing in this presentation should be construed as a profit forecast or profit estimate. This presentation may contain earnings enhancement statements which are not intended to be profit forecasts and so should not be interpreted to mean that earnings per share will necessarily be greater than those for the relevant preceding financial period. The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of Smiths News PLC. For more detailed information, please see the preliminary announcement for the year ended 31 August 2013 which can be found on the Investor Relations section of the Smiths News PLC website – www.smithsnews.co.uk. However, the contents of Smiths News PLC’s website are not incorporated into and do not form part of this presentation. The financial information contained within is presented on an underlying basis excluding non-recurring and other items. Definitions Underlying 2013 and 2012 results exclude non-recurring items and amortisation of acquired intangibles and includes the results from acquisitions. Pro forma is the contribution of acquired businesses to the results of the Group as if the acquisitions had been made at the beginning of the period. Like for like revenues exclude the impact of gains and losses, including contracts, new business and acquisitions reported in the current or prior year total sales. Free cash flow is cash flow excluding the following; payment of the dividend, acquisitions and disposals, the proceeds on the disposal of freehold properties, repayments of obligations under finance leases, the repayment of bank loans, EBT share purchase, and cash flows relating to non-recurring and other items. Net debt is calculated as total debt less cash and cash equivalents. Total debt includes loans and borrowings, overdrafts and obligations under finance leases.


Group performance

5

£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%

DPS 9.3p 8.6p 8.1%

Figures quoted are on an underlying basis * Pro forma profit growth


Smiths News income statement

6

£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 revenues positively impacting total revenue change

Ongoing cost savings support profit level


Bertrams income statement

7


Total revenue 187.9 174.3 7.8%* (0.6%)




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 diverse sales mix

Platform for continued growth

* Includes acquisitions and new business segments


The Consortium income statement

8

£m FY 2013

4 months FY 2012

12 month pro forma change*

12 month pro forma

LFL

Total revenue 63.8 26.5 (0.3%) 2.6%





Cost ratio (29.6%) (24.9%) (40 bps)

Operating margin 11.6% 13.6%** 160 bps

* Indicates growth on a full year period including part year pre-acquisition ** 4 month FY2012 operating margin of 13.6% benefits from peak seasonality, with a more reflective 12 month proforma operating margin at 10.0%

Strong underlying profit growth

Delivering above investment case returns


Media income statement

9


Total revenue 29.9 32.4 (7.8%) 1.9%





Cost ratio (38.8%) (36.7%) (210 bps)

Operating margin 6.7% 5.6% 110 bps

Continuing business base revenues of £26.0m, operating profit of £1.9m


Non recurring and other items

10

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 taxation (9.8) (8.6)

Cash impact of non-recurring £5.9m


Free cash flow

11

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 cash flow 32.6 27.2

Free cash flow expected to grow year on year


Net debt and pension

12

£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 2.5x, an improvement of 12 bps

Total committed facilities of £174m are provided by a strong Syndicate of 5 UK banks

Refinancing discussions underway and planned to be finalised by February 2014

Smiths News defined benefit pension £23m deficit as at 19 June 2013 (down from £50m deficit in March 2009)

Smiths News contributions £4.1m per annum through to March 2019 (down from £5.8m per annum)

Smiths News Group


Smiths News Business Update Mark Cashmore

Group Chief Executive


Smiths News - strategy and highlights

14

FY13 Highlights

£1,529.3m

£40.0m +2.5%

-2.6%

Revenue

Operating profit

2.5% profit growth to £40.0m

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 £20m 3 year target

Annualised new revenues

FY13 £45m: NI and Manchester Evening News

FY14 £10m: Liverpool Echo and Martin Lavell


-12

-10

-8

-6

-4

-2

0

Smiths News LFL sales

Newspapers and magazines – sales analysis

15

0.6% impact of TV listings

One shot and partworks seasonality

Strong daily market

Total newspaper revenues up 1.3%

5.8%

10.4% 9.6%

3.2%

Newspapers Magazines

2.8% 2.1%

5.8%

Underlying LFL run rate (4.6%) : Total revenue (2.6%)

1.9%

-9.0% FY2011

-6.6% FY2012

-9.9% FY2013

Proportional impact of part works and one-shots on total magazine category

Like for like sales

Partworks/one-shots

-8.1% -6.7%

%

-9.2%

2.3%

Reported

-5

-4

-3

-2

-1

0

Smiths News LFL sales

-2.5% FY2011

-2.1% FY2012

-2.7% FY2013

-2.1%

%

-2.5% -2.7%

-0.8% -2.3%

+1.5%

Bertrams Business Update Mark Cashmore



Bertrams - strategy and highlights

17

FY13 Highlights

Investing in growing sectors:

£20m pro forma acquired international sales

£5m future investment in DawsonEra

Internet 30% of total sales

Wordery continues to grow:

£15m annualised revenues

Over 1 million books sold

Wordery.com launched September 2013

£187.9m

£7.2m +6.1%

+7.8%

Revenue

Operating profit


-6

-4

-2

0

2

4

6

8

10

12

14

16

18

20 Bertrams – sales analysis

18

Strong internet sales driving UK wholesale growth

International +30.2% YOY, now 26% of revenue

Total sales up 7.8%

Outperformed UK consumer market

UK Wholesale +2.2% LFL

46%

26%

24%

4%

-2.3% FY2011

+6.3% FY2012

-0.6% FY2013

5.8%

-2.3% -1.4%

10.4% 9.6%

Public and academic libraries

-9.8% LFL

Academic eBooks +38.0% LFL

International -0.9% LFL

2.8%

Bertrams LFL sales Sales by segment

TBC%

5.8%

-4.4%

The Consortium Business Update Mark Cashmore



The Consortium - strategy and highlights

20

FY13 Highlights

Pro forma 12 month profit growth 15%

Gross margin up by 200 bps

Scottish Framework Agreement secured

Targeting share of wallet opportunity: web, CRM, telesales

Integration progressing well

New management team

£63.8m

£7.4m +15.3%*

-0.3%*

Revenue

Operating profit

* Pro forma growth


-6

-4

-2

0

2

4

6

8

10

12

14

16

18

20The Consortium – sales analysis

21

Core sales LFL +3.1%

Care performing strongly +10.4%

LFL sales +2.6%

Education LFL sales +6.4% over peak period

Education +2.4% LFL

76%

11% 8%

6%

+5.8% FY2011

+4.8% FY2012

+2.6% FY2013

5.8%

-2.3%

9.6%

Early years +4.3% LFL

Care +10.4% LFL

-3.5%

Other -2.6% LFL

3.2%

The Consortium LFL sales Sales by segment

[1.0%]

* Core sales represent education, care and early years

Media Business Update Mark Cashmore



Media - strategy and highlights

23

FY13 Highlights

New/renewed print contracts:

Global contract win with United Airlines

New digital contracts:

8,000 iPads deployed

Entry into US market

Disposal of MMC

£29.9m

£2.0m +11.1%

-7.8%

Revenue

Operating profit

Summary and Outlook Mark Cashmore



Creating a platform for growth

25

Implemented a Group Executive structure and governance model

Increased management bandwidth

Smiths News £800m annual / £6.2bn total revenue visibility to 2019 and beyond

Bertrams, Consortium, DMD contract wins

5 acquisitions (£170m revenue) all delivering above expected returns

Integration and synergy benefits realised

DawsonEra, Wordery, The Consortium websites

£5m over next 3 years

29% profits outside of newspapers and magazines

On track for 50% target by 2016

Focussed management

Contract security

Digital and Internet opportunities

Diversified portfolio

Successful acquisitions

Improved pension deficit and net debt:EBITDA ratio

Refinancing on track for February 2014 Financial strength


Strong shareholder returns

26

•PBT of £53.0m, up 11.6%

•Cash generative - £32.6m FCF, up 19.8%

Strong profit and cash growth

•EPS of 22.4p, up 12.6%

•Full year dividend 9.3p, up 8.1%

Returning value to shareholders

• Continued investment in top line growth and new revenues

• On-going efficiency reducing the cost base

Outlook FY14

•50% of profit outside newspapers and magazine wholesaling by 2016

On track with strategic ambition

£53.0m PBT

22.4p EPS

9.3p DPS

Appendices

Smiths News

Bertrams

The Consortium

Media


Financial KPIs

28

£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 Debt 98.5 100.5 63.3 48.0 49.5

Figures quoted are on an underlying basis


Income statement

29

£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) (3.7) (3.1) (2.1) (3.2)

Profit before tax 41.9 36.6 32.1 28.1 18.4

Income tax expense (10.8) (9.1) (10.2) (6.9) (0.7)

Profit after tax 31.1 27.5 21.9 21.2 17.7

Earnings per share

Statutory

- basic

- diluted

Underlying

- basic

-diluted

17.1p

16.0p

22.4p

21.1p

15.2p

14.7p

19.9p

19.3p

12.1p

11.9p

15.5p

15.3p

11.7p

11.5p

14.6p

14.4p

9.9p

9.9p

13.8p

13.8p


Balance sheet

30

£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 assets 171.3 164.9 145.2 138.2 145.9

Total assets 289.0 276.1 221.1 181.2 190.8

Other current liabilities (206.1) (200.3) (194.8) (188.8) (198.3)

Borrowings (106.8) (103.1) (65.2) (48.8) (49.4)

Retirement benefit (23.3) (36.0) (36.3) - -

Other non current liabilities (9.7) (14.3) (12.2) (6.0) (11.5)

Total liabilities (345.9) (353.7) (308.5) (243.6) (259.2)

Total net liabilities (56.9) (77.6) (87.4) (62.4) (68.4)

* Restated in respect of retirement benefit obligations


Cash flow

31

£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) (4.9) (2.6) (2.9)

Taxation (10.5) (8.0) (1.7) (5.9) (5.6)

Pension funding (6.5) (6.8) (6.2) (6.4) (5.7)

Other 2.6 1.4 0.2 0.9 (0.6)

Free cash flow 32.6 27.2 22.5 20.4 23.7


Net debt

32

£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 - - -

Other (3.6) (1.1) (0.9) 0.4 (3.8)

Closing net debt (98.5) (100.5) (63.3) (48.0) (49.5)

Decrease/(Increase) in debt 2.0 (37.2) (15.3) 1.5 (5.5)


Taxation

33

£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

corporation tax (2.6) (1.6) (0.5) (1.4) (2.4)

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 (0.3) - - 0.3 (0.8)

Total tax on profit 12.1 11.4 10.4 8.6 5.7

Effective tax rate 22.8% 24.0% 26.9% 24.6% 18.7%

Non recurring items (1.3) (2.3) (0.2) (1.7) (5.0)

Tax on profit after non -recurring 10.8 9.1 10.2 6.9 0.7

Effective statutory tax rate 25.8% 24.9% 31.8% 24.0% 3.8%


34

£m FY 2013 FY 2012 FY 2011 FY 2010 FY 2009

Land and buildings

within one year

in second to fifth year

beyond fifth year

8.1

26.2

26.7

10.0

28.9

29.6

9.9

29.3

27.4

8.8

28.7

29.5

8.7

28.9

24.7

Total 61.0 68.5 66.6 67.0 62.3

Equipment and vehicles

within one year


beyond fifth year

1.6

1.6

-

1.3

1.8

-

1.6

1.9

-

1.0

0.8

-

1.3

0.7

-

Total 3.2 3.1 3.5 1.8 2.0

Total

within one year


beyond fifth year

9.7

27.8

26.7

11.3

30.7

29.6

11.5

31.0

27.4

9.8

29.5

29.5

10.0

29.6

24.7

Total 64.2 71.6 70.1 68.8 64.3

Lease commitments


Defined benefit schemes

35

£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 schemes (23.1) (36.0) (36.3) - -

Experience adjustments on scheme liabilities (1.4) (1.0) (4.1) (1.4) 12.5

Experience adjustments on scheme assets 27.9 34.0 (45.8) 39.1 (39.6)

The Pension Trust

Deficit £23m at 19 June 2013

Contributions agreed at £4.1m per annum

Managed through Liability Driven Investment Scheme

Closed to further accruals

Schedule of contributions recognised on the balance sheet

Other defined benefit schemes

£0.7m contributions in FY 2013 (FY 2012: £0.6m)


Restatement of retirement benefit obligation

36

The Group will adopt IAS19 (Revised) in its financial year ending 31 August 2013. This will involve a change in accounting policy to reflect pension interest in the income statement to be calculated on the net balance sheet position at the beginning of the period

Non-cash pension charge estimated to be £1.0m in FY14

Comparatives for FY13 will be restated to also reflect a non-cash charge of £1.0m (compared to a £1.5m non-cash credit shown under the current policy)

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 financial statements, we have recognised the present value of the schedule of contributions as a liability of £20.3m and a resulting tax asset of £4.3m on our balance sheet at 31 August 2013. We have also restated our prior year financial statements recognising a liability of £34.0m and resulting deferred tax asset of £8.2m at 31 August 2012 and £36.3m liability and deferred tax asset of £9.1m as at 31 August 2011.

There is no impact on earnings, cash flows (including tax payments) or covenants.

Group balance sheet 31 August 2012 31 August 2011

£m Previously reported

Impact of pension liability

recognition

Restated

Previously reported

Impact of pension liability

recognition

Restated

Deferred tax asset 2.4 8.2 10.6 3.0 9.1 12.1

Retirement benefit obligation (2.0) (34.0) (36.0) - (36.3) (36.3)

Total net liabilities (51.8) (25.8) (77.6) (60.2) (27.2) (87.4)

Retained earnings 222.5 (25.8) 196.7 214.9 (27.2) 187.7

Total equity deficit (51.8) (25.8) (77.6) (60.2) (27.2) (87.4)

Free cashflow 27.2 - 27.2 22.5 - 22.5


Contingent liability

37

£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 of the total WHS Group potential reversionary leases, whereby a lease liability could revert back to WH Smith is the assignee were to fail.

Date post:	27-May-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Smiths News The Bertrams Consortium Media Preliminary Results · 2014-03-26 · Preliminary Results...

Documents