Interim Results 24 April 2012
Interim Results 24 April 2012
Highlights Mark Cashmore
Group Chief Executive
Interim Results 24 April 2012
Highlights
3
Overall Group sales £893m, up 2.4%
Underlying PBT £21.5m, up 12%
Free cash flow £6.0m, up 140%
Strong financial performance
Smiths News profits up 5%; LFL sales down 3.7%
On track to deliver £5m efficiencies
Bertrams Group profits up 33%; LFL sales up 2.1% Resilience in core businesses
Dawson head office closedown complete
£2.5m yr1 targeted efficiencies on track
Rushden migration to Norwich complete early May
Dawson integration on track
Leading educational and care products distributor
Adding £64m of revenue and £7.0m EBITDA FY12 pro forma
Immediately earnings enhancing
Acquisition of The Consortium for EV of £44m
Earnings per share 8.9p, up 14%
Interim dividend 2.8p, up 8%
On track to meet full year market expectations Continued strong returns
Group Financial Update Nick Gresham
Chief Financial Officer
Interim Results 24 April 2012
Cautionary statement
5
Forward-looking statements This presentation contains certain forward-looking statements with respect to Smiths News PLC’s and/or The Consortium’s financial condition, 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 and statements other than statements of historical fact, identify forward-looking statements. These forward-looking statements are not guarantees of 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 announcement and are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Unless otherwise required by applicable law, regulation or accounting standard, neither Smiths News PLC nor The Consortium undertake responsibility to publicly update any of these forward-looking statements whether as a result of new information, future developments or otherwise. Not a profit forecast 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. Synergies The proposals referred to in this presentation represent Smiths News PLC’s current intentions and are subject to on-going review as Smiths News PLC becomes more familiar with the operational detail of The Consortium’s business following completion of the acquisition. It should therefore be noted that the expected synergies referred to in this presentation relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. As a result the synergies referred to in this presentation may not be achieved and those achieved could be materially different from those estimated. Website 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 half-year ended 29 February 2012 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.
Interim Results 24 April 2012
Solid Group performance with Group PBT up 12%
6 Figures quoted on an underlying basis
£m Feb 2012 Feb 2011 Change
Smiths News operating profit 19.2 18.3 4.9%
Bertrams Group operating profit 3.2 2.4 33.3%
Media and Marketing 0.8 - -
Group operating profit 23.2 20.7 12.1%
Net finance charges (1.7) (1.5) (13.3)%
Group PBT 21.5 19.2 12.0%
Tax (5.4) (5.1) (5.9%)
Group PAT 16.1 14.1 14.2%
EPS 8.9p 7.8p 14.1%
DPS 2.8p 2.6p 7.7%
Interim Results 24 April 2012
Stronger revenues and ongoing cost efficiency underpins 5% operating profit growth
7
Smiths News income statement
£m Feb 2012 Feb 2011 Change LFL
Newspapers 466.2 462.9 0.7% (1.2%)
Magazines 277.6 295.6 (6.1%) (7.8%)
Other 40.5 40.3 0.5%
Total revenue 784.3 798.8 (1.8%) (3.7%)
Gross profit 65.9 68.8 (4.2%)
Operating costs (46.7) (50.5) 7.5%
Operating profit 19.2 18.3 4.9%
Gross margin 8.4% 8.6% (20 bps)
Cost ratio (6.0%) (6.3%) 30 bps
Operating margin 2.4% 2.3% 10 bps
Interim Results 24 April 2012
33% operating profit growth reflects addition of Dawson Books
8
Bertrams Group income statement
£m Feb 2012 Feb 2011 Change LFL
Total revenue 91.9 73.5 25.0% 2.1%
Gross profit 16.8 12.0 40%
Operating costs (13.6) (9.6) (41.7%)
Operating profit 3.2 2.4 33.3%
Gross margin 18.3% 16.3% 200 bps
Cost ratio (14.8%) (13.1%) (170 bps)
Operating margin 3.5% 3.3% 20 bps
Bertrams trading revenues £69.2m (HY11: £73.5m) : Dawson Books revenues £22.7m (HY11: £22.5m)
Bertrams trading operating profit £2.4m (HY11: £2.4m) : Dawson Books operating profit £0.8m (HY11: £0.8m)
Interim Results 24 April 2012
Media and Marketing profitable and cash generative
9
£m Feb 2012 Feb 2011 Change LFL
Total revenue 17.0 - - -
Gross profit 4.1 - -
Operating costs (3.3) - -
Operating profit 0.8 - -
Gross margin 24.1% - -
Cost ratio (19.4%) - -
Operating margin 4.7% - -
Combined DMD and DMS income statements
• DMD/DMS revenues £17.0m (HY11 £16.1m) • DMD/DMS operating profits £0.8m (HY11 £0.7m)
Interim Results 24 April 2012
Non recurring and other items
10
Smiths News Group
£m Feb 2012 Feb 2011
Integration costs (0.9) -
Network reorganisation costs (0.9) -
Amortisation of acquired intangibles (0.9) (0.5)
Total before taxation (2.7) (0.5)
Taxation 0.4 0.1
Total after taxation (2.3) (0.4)
Interim Results 24 April 2012
Cash generative
11
Smiths News Group
£m Feb 2012 Feb 2011
Operating profit 23.2 20.7
Depreciation and amortisation 3.3 3.6
EBITDA 26.5 24.3
Working capital (13.2) (17.5)
Capital expenditure (0.4) (1.5)
Net interest (1.4) (1.5)
Taxation (3.0) 1.3
Pension funding (3.1) (3.1)
Other 0.6 0.5
Free cash flow 6.0 2.5
Interim Results 24 April 2012
Maintaining low gearing
£m Feb 2012 Feb 2011
Opening net debt (63.3) (48.0)
Free cash flow 6.0 2.5
Dividend (9.8) (9.1)
Non recurring items (4.8) (1.7)
New finance leases (1.3) (0.7)
Share purchase (0.8) -
Closing net debt (74.0) (57.0)
12
Net debt: EBITDA 1.4x
Total finance facility of £135m through to November 2014
£35m invoice financing gives £170m of available funds
Smiths News Group
Business Update Mark Cashmore
Group Chief Executive
Interim Results 24 April 2012
Business coverage
14
Newspapers and magazines Books Media and Marketing
The Consortium Outlook
Interim Results 24 April 2012
Newspapers and magazines - markets
15
Magazines
LFL sales down 6.8%
Core titles broadly flat with H1 2011
One shot and partworks, up 1%
Opportunity in H2 - Olympics, Euro 2012 and Diamond Jubilee
Newspapers
LFL sales down 1.2%
Continued improving trend
Strong cover price rises
Sunday market activity – neutral impact on Smiths News
-5
-4
-3
-2
-1
0
Smiths News LFL sales
-12
-10
-8
-6
-4
-2
0
Smiths News LFL sales
0.7%
-2.3%
-1.8% 1.0%
-4.0%
2010
-9.9%
2011
H1
-7.6%
2011
H2
-6.8%
2012
H1
Proportional impact of part works and one-shots on total magazine category
Weeklies/monthlies
Partworks/one-shots
-7.8% -5.8% -7.6% -4.7%
-4.2%
2010
-3.0%
2011
H1
-2.0%
2011
H2
-1.2%
2012
H1
-2.0% -1.2%
% %
% -3.0% -4.2%
Interim Results 24 April 2012
Sales run rate well within strategic forecasts
% Change H1 2012 FY 2011
Newspapers (1.2) (2.5)
Magazines (6.8) (9.0)
Reported total (3.4) (5.2)
Excluding partworks / one shots (0.3) 1.1
Underlying run rate (3.7) (4.1)
16
Medium term strategic forecast -3% : -5%
Interim Results 24 April 2012
Newspapers and magazines commentary
17
£5m efficiencies on track
Network consolidation
Systems upgrade
People investment
Positive OFT conclusion
Interim Results 24 April 2012
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
Books – sales by sector
18
50% year on year growth of e-books
UK academic sales flat
International opportunity remains
Focus moving to sales growth
Sales performance
Bertrams Group
Total sales up 25%
Total LFL sales up 2.1%
UK consumer market, down 8.4%
Public Library sales recovering
Academic Libraries
International (-3.1% LFL)
UK Wholesale (+0.8% LFL)
49%
21%
13%
15%
Public Libraries (+13% LFL)
e-books 6.8%
2010 -3.0%
2011
H1
-1.4%
2011 H2
2.1%
2012
H1
6.8%
-3.0% -1.4%
2.1%
%
Bertrams Group LFL sales
3%
Interim Results 24 April 2012
Books – strategic progress
19
£3.8m synergies by 2014
Rushden into Norwich
New senior team
e-books progress
Internet fulfilment
Interim Results 24 April 2012
Media and Marketing
20
Sales £17m - profit £0.8m
Print contract wins
Ryanair, Cathay Pacific
Digital contract wins
BA, Jetstar, Thai Airways
DMS contract wins Daily Mail, Instore, Sainsburys, Morrisons
Interim Results 24 April 2012
The Consortium
21
Interim Results 24 April 2012
Transaction meets stated strategic aim
22
Using core skills to consolidate position as a leading specialist distributor
Clearly defined acquisition criteria successfully achieved
Specialist distribution
Sustainable revenue growth
Fragmented supplier and customer base
Market leading position
Service and efficiency important to business model
Non-newspaper and magazine profits in excess of 30%
Core skills
Effective change
management and
integration
Service excellence
Process and operational excellence
Leveraging technology
Strategic focus
Interim Results 24 April 2012
Consideration value £38m: £32m day 1, debt financed
Enterprise value of £44m: pro forma EV/EBITDA 6.3x, post synergy EV/EBITDA 5.5x
Acquired from management incentivised through 16% lock-in
Transaction summary
23
Leading educational and
care products distributor
Value for Smiths News
shareholders
£64m of revenue and £7.0m of EBITDA
1.3p pro forma EPS accretive
A cash generative business, with low investment intensity
Generates returns significantly above the cost of capital
Interim Results 24 April 2012
24
Revenue by segment
Distributor in the large and growing education and care markets
Catalogue and web based sales
Over 25,000 customers
Product range of 40,000 SKUs
Strong service and delivery proposition
Focus on customer service
Award winning management team
Revenue by category
The Consortium is a leading distributor of consumable products
Education
Early Years
Care
Stationery
Art and craft
Furniture
Cleaning
Exercise books
Teaching curriculum
Other Early years, literacy, maths
Export Office
Interim Results 24 April 2012
25
Profit growth 4 out of 5 years
Growing profitability
40% profit growth FY12 driven by WMS acquisition
Opportunities for further growth
Interim Results 24 April 2012
Schools market
Schools supply and services
Addressable market
Education market
£38bn Total day to day spend on resources
£4.5bn All learning resources and services spend
£1bn
Day-to-day spend on consumables inc. stationery, cleaning and exercise books, etc
Significant headroom in the addressable market
Strong market fundamentals
Education market is large and structurally growing
Long term growth drivers:
6.2% of GDP
£1bn addressable market
6% market share with growth
opportunities
2.6% future annual growth forecast
Cross party strategic priority
Continued pupil growth
Funding per pupil
26
Interim Results 24 April 2012
Care market
Total consumables
market
Addressable market
Total consumable spend on domiciliary and residential care
Significant headroom in the current market Market is large and structurally growing
Residential elderly care is growing in importance
Long term growth drivers:
£16bn Domiciliary and residential care market (private and public)
£400m
£160m Consumable spend on residential care
Cross party strategic priority
Ageing population
Opportunity in domiciliary care
1.2% elderly care spend of GDP
£160m current market
3% market share with growth
opportunities
3.3% long term growth forecast
27
Interim Results 24 April 2012
The Consortium’s proposition
28
Limited supplier reliance
c.600 suppliers
40,000 SKUs
Suppliers include Staedtler, Acco, SCA Tissue, Newell Rubbermaid, Hamelin
10% of supply comes from overseas which presents an opportunity
Speed of supply supports working capital efficiency
Suppliers Specialist distributors Local authorities /
schools
Interim Results 24 April 2012
Highly fragmented
c30% of the market is the 5 PSBOs
Long tail of private specialist players
Regionalised competition
The Consortium:
– national reach
– scalable model
The Consortium’s proposition
Suppliers Specialist distributors Local authorities /
schools
Legend – The Consortium’s share
High
Medium
Low
Wales
South West South East
East of England
East Midlands
West Midlands
Yorkshire & Humberside
North East
North West
LDN
29
Findel
The Consortium
YPO
ESPO
Kent CS Hampshire
Hertfordshire
Over 250 private sector businesses
Interim Results 24 April 2012
Strong own brand portfolio
One stop shop offering
Framework contacts with Local Authorities
Schools have buying autonomy
80% catalogue, 20% online
Relationship driven
Strong service proposition
The Consortium’s proposition
Suppliers Specialist distributors Local authorities /
schools
Price match guarantee
Free next day delivery
Massive choice of major brands
Budget ranges
No quibble refunds
Friendly award winning customer service
Why order your school supplies from The Consortium?
30
Interim Results 24 April 2012
Compelling growth strategy
31
Bolt ons
Proven potential through the acquisition of West Mercia Supplies
Fragmented distributor base a key opportunity
Future synergy opportunities
Grow current penetration of schools, private care homes and nurseries
Capitalise on a consistently growing market
Market share
Share of wallet
Grow share of wallet with current customers
Field sales and relationship driven
Improved service and one stop shop offering
Adjacencies Wider healthcare market e.g. GPs, cosmetic healthcare
Other public services e.g. police and ambulance
Not for profit sector
Interim Results 24 April 2012
16% of Consideration locked in
4m shares will be issued to the Vendors in December 2013 subject to the achievement of performance targets
1.3p immediately EPS accretive and growing
An immediately earnings accretive acquisition
FY12 consensus pre-acquisition
Pro forma post-acquisition
% accretion
PBT 43.0 48.0 12%
PAT 32.0 35.0 9%
Number of shares 184m 188m1
EPS 17.4p 18.7p 7%
1. Share price assumption 90p
32
Interim Results 24 April 2012
Changing Group profit mix
33
Pre-acquisition Post-acquisition
FY12 Consensus * Pro-forma
£m Turnover EBITDA % mix Turnover EBITDA % mix
Smiths News 1,552 46 83% 1,552 46 74%
Bertrams 179 8 15% 179 8 13%
Media and marketing 33 1 2% 33 1 2%
Education and care division
- - 64 7 11%
Total Smiths News Group 1,764 55 1,828 62
Depreciation (8) (9)
Operating profit 1,764 47 1,828 53
Finance costs (4) (5)
Group PBT 43 48
FY12 post-acquisition pro forma profit increasing 12% to £48m
FY14 non-news and mags profit in excess of 30%
* FY12 consensus based on the market consensus as at 20 April 2012
Interim Results 24 April 2012
Net debt £m
ND/EBITDA Interest cover
Fixed charge cover
HY12 Net debt pre-acquisition 74.0 1.4x 14.2x 3.8x
Acquisition costs 40.3
HY12 Net debt post-acquisition 114.3 1.9x 11.9x 3.5x
Capital structure remains strong
Cash consideration and costs of £40.3m
Funded from existing bank facilities
Operating well within covenants
34
Interim Results 24 April 2012
Acquisition summary
35
Acquisition of a market leader with strong headroom for growth
Adding £64m revenue and £7m profit to the Group
Management locked in and incentivised to deliver the business plan
In line with our stated strategy and capitalises on our core skills
Reinforces our position as a leading player in chosen specialist distribution markets
Strong market fundamentals
Tangible share of wallet opportunities
Ability to grow acquisitively demonstrated by West Mercia Supplies
Meets strategic aim
Tangible growth opportunities in
large and growing markets
Excellent anchor acquisition
Immediate 7% EPS accretion
Returns in excess of the cost of capital
Delivering Group strategic aim of non-newspaper and magazine profits in excess of 30% by 2014
Value creation
Interim Results 24 April 2012
Future strategic direction
36
Markets
Business Units
Growth Plans
Smiths News
Instore
Rascal
Bertrams
Dawson Books
DMD
DMS
The Consortium
West Mercia Supplies
Newspaper and Magazine Distribution
Physical and Digital Book Distributor
Media and Marketing Fulfilment
Education and Care
Consumables
Revenue Network Process Organic
UK International
Digital
Airline and rail IFE
UK fulfilment
Share of wallet Market share Adjacencies
Bolt ons
Group Leading Specialist Distributor
Interim Results 24 April 2012
Group summary and outlook
37
Strong financial performance
All key targets achieved
Further sales and efficiency
opportunities in H2
On track to meet FY12 market expectations
The Consortium acquisition a strategic milestone
Interim Results 24 April 2012
Interim Results 24 April 2012
Appendix: Financial KPIs
40
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Revenue 893.2 1,734.4 1,829.6 1,326.0 1,240.6
Profit before tax 21.5 38.6 35.0 30.5 32.5
EPS 8.9p 15.5p 14.6p 13.8p 14.5p
Free cash flow 6.0 22.5 20.4 23.7 21.4
DPS 2.8p 8.0p 7.4p 6.8p 6.7p
Net Debt 74.0 63.3 48.0 49.5 44.0
Profits and earnings per share reported on an underlying basis
Interim Results 24 April 2012
Appendix: Operational KPIs
41
Smiths News HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Newspaper pack accuracy 99.8% 99.8% 99.8% 99.8% 99.8%
Magazine pack accuracy 99.7% 99.6% 99.6% 99.7% 99.6%
On time delivery 97.3% 97.6% 97.2% 97.0% 96.3%
Newspaper returns
collection time 99.0% 98.9% 98.8% 99.8% 98.3%
Magazine returns
processing accuracy 100% 100% 100% 99.9% 99.9%
Number of depots 53 53 58 66 44
Number of employees 5,000 5,100 5,300 6,100 4,100
Number of customers 30k 30k 30k 30k 22k
Interim Results 24 April 2012
Appendix: Operational KPIs
42
Bertrams HY 2012 FY 2011 FY 2010 FY 2009
Number of titles in stock 220k 220k 180k 165k
Availability of titles in core range
89.0% 88.0% 94.4% 94.1%
On–shelf stock integrity 99.6% 99.6% 99.8% 99.8%
Same day despatch 100% 100% 100% 100%
Delivered next day 97.5% 97.0% 98.7% 98.2%
Interim Results 24 April 2012
Appendix: Income statement
43
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Revenue 893.2 1,734.4 1,829.6 1,326.0 1,240.6
Operating profit before non recurring items 23.2 41.7 37.1 32.4 36.0
Non recurring items (2.7) (6.5) (6.9) (10.8) 0.1
Operating profit 20.5 35.2 30.2 21.6 36.1
Net finance charges (1.7) (3.1) (2.1) (3.2) (3.5)
Profit before tax 18.8 32.1 28.1 18.4 32.6
Income tax expense (5.0) (10.2) (6.9) (0.7) (6.1)
Profit after tax 13.8 21.9 21.2 17.7 26.5
Earnings per share
Statutory
- basic
- diluted
Underlying
- basic
-diluted
7.6p
7.5p
8.9p
8.7p
12.1p
11.9p
15.5p
15.3p
11.7p
11.5p
14.6p
14.4p
9.9p
9.9p
13.8p
13.8p
14.8p
14.7p
14.5p
14.4p
Interim Results 24 April 2012
Appendix: Sales mix and LFL
44
Like for like sales H1 2012 H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 H2 2008 H1 2008
Newspapers (1.2%) (2.0%) (3.0%) (4.1%) (4.3%) (3.5%) (2.0%) 0.5% 1.7%
Magazines (7.8%) (7.6%) (9.9%) (4.9%) (3.1%) (7.0%) (8.0%) (2.4%) (2.6%)
Books 2.1% (1.4%) (3.0%) 1.8% 10.9% (2.2%)
Total revenue £m
Revenue growth 38% 7% 1%
935.7
(5%) 2%
Interim Results 24 April 2012
Appendix: Balance sheet
45
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Non current assets
Intangible assets 35.9 36.9 12.7 12.7 4.1
Property, plant & equipment 17.8 18.7 21.0 21.1 15.5
Deferred tax assets 2.1 3.0 1.6 3.3 11.6
Other non current assets 4.1 4.0 3.7 3.5 3.5
Total non current assets 59.9 62.6 39.0 40.6 34.7
Current assets 148.7 149.4 142.2 150.2 76.1
Total assets 208.6 212.0 181.2 190.8 110.8
Current liabilities (221.1) (220.8) (237.6) (213.4) (126.9)
Non current liabilities
Bank loans and other borrowings (39.0) (39.2) - (34.3) (39.7)
Deferred tax liabilities (2.9) (4.1) (1.9) (2.0) (10.1)
Other non current liabilities (4.4) (8.1) (4.1) (9.5) (2.4)
Total liabilities (267.4) (272.2) (243.6) (259.2) (179.1)
Total net liabilities (58.8) (60.2) (62.4) (68.4) (68.3)
Interim Results 24 April 2012
Appendix: Cash flow
46
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Operating profit 23.2 41.7 37.1 32.4 36.1
Depreciation and amortisation 3.3 6.8 7.3 6.7 6.1
EBITDA 26.5 48.5 44.4 39.1 42.2
Working capital (13.2) (10.3) (1.4) 4.6 (3.0)
Capital expenditure (0.4) (3.1) (8.6) (5.2) (3.8)
Net interest (1.4) (4.9) (2.6) (2.9) (3.5)
Taxation (3.0) (1.7) (5.9) (5.6) (3.2)
Pension funding (3.1) (6.2) (6.4) (5.7) (5.9)
Other 0.6 0.2 0.9 (0.6) (1.4)
Free cash flow 6.0 22.5 20.4 23.7 21.4
Interim Results 24 April 2012
Appendix: Net debt
47
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Opening net debt (63.3) (48.0) (49.5) (44.0) (52.7)
Free cash flow 6.0 22.5 20.4 23.7 21.4
Dividend (9.8) (13.8) (12.6) (12.0) (11.7)
Non recurring items (4.8) (5.2) (6.7) (1.2) -
Acquisitions - (17.9) - (12.2) (2.1)
Disposal of freeholds - - - - 2.3
New finance leases (1.3) (0.6) 0.4 (3.8) (1.2)
Share purchase (0.8) (0.3) - - -
Decrease/(Increase) in debt (10.7) (15.3) 1.5 (5.5) 8.7
Closing net debt (74.0) (63.3) (48.0) (49.5) (44.0)
Interim Results 24 April 2012
Appendix: Taxation
48
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Current tax 6.3 11.3 9.8 9.5 9.6
Adj in respect of prior year UK
corporation tax (0.4) (0.5) (1.4) (2.4) (4.5)
Total current tax charge 5.9 10.8 8.4 7.1 5.1
Deferred tax – current year (0.6) (0.4) (0.1) (0.6) 1.2
Deferred tax – prior year 0.1 - 0.3 (0.8) 0.2
Total tax on profit 5.4 10.4 8.6 5.7 6.5
Effective tax rate 25% 27% 25% 19% 20%
Non recurring items (0.4) (0.2) (1.7) (5.0) (0.4)
Tax on profit after non
recurring 5.0 10.2 6.9 0.7 6.1
Effective statutory tax rate 27% 32% 24% 4% 19%
Interim Results 24 April 2012
Appendix: Lease commitments
49
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
Land and buildings
within one year
in second to fifth year
beyond fifth year
9.7
27.3
26.9
9.9
29.3
27.4
8.8
28.7
29.5
8.7
28.9
24.7
6.1
18.9
18.5
Total 63.9 66.6 67.0 62.3 43.5
Equipment and vehicles
within one year
in second to fifth year
beyond fifth year
1.3
1.9
-
1.6
1.7
-
1.0
0.8
-
1.3
0.7
-
1.4
1.6
-
Total 3.2 3.3 1.8 2.0 3.0
Total
within one year
in second to fifth year
beyond fifth year
11.0
29.2
26.9
11.5
31.0
27.4
9.8
29.5
29.5
10.0
29.6
24.7
7.5
20.5
18.5
Total 67.1 69.9 68.8 64.3 46.5
Interim Results 24 April 2012
Appendix: Defined benefit scheme
50
HY 2012
FY 2011
FY 2010
FY 2009 FY 2008
Scheme assets 434.8 375.1 408.6 357.4 382.5
Scheme liabilities (365.6) (348.3) (367.4) (338.1) (320.1)
Surplus 69.2 26.8 41.2 19.3 62.4
Asset cap (69.2) (26.8) (41.2) (19.3) (62.4)
IAS 19 balance per accounts - - - - -
Actuarial deficit £50m at 31 March 2009
Contributions agreed at £5.8m per annum
Managed through Liability Driven Investment Scheme
Closed to further accruals
Interim Results 24 April 2012
Appendix: Contingent liability
51
£m HY 2012 FY 2011 FY 2010 FY 2009 FY 2008
No. of Reversionary leases 74 90 105 122 136
Contingent liability 12.5 13.9 21.2 26.6 34.4
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.
Interim Results 24 April 2012