Final Results

RNS Number : 1931B

Smiths News PLC

22 October 2009

 



Smiths News PLC

Preliminary Results Announcement for the year ended 31 August 2009

Smiths News PLC (or "the Group"), the UK's leading wholesaler of newspapers and magazines and a leading wholesaler of books, is pleased to announce preliminary results for the year ended 31 August 2009.

Financial Highlights:

	Aug 2009	Aug 2008		Aug 2009	Aug 2008
	Underlying(1)	Underlying(1)	Change Fav / (Adv)	Statutory	Statutory	Change Fav / (Adv)
Revenue	£1,326.0m	£1,240.6m	6.9%	£1,326.0m	£1,240.6m	6.9%
Profit before tax	£30.5m	£32.5m	(6.2%)	£18.4m	£32.6m	(43.6%)
Earnings per share	13.8p	14.5p	(4.8%)	9.9p	14.8p	(33.1%)
Total dividend	6.8p	6.7p	1.5%	6.8p	6.7p	1.5%
Free cash flow (2)	£23.7m	£21.3m	11.3%
Net Debt (3)	£49.5m	£44.0m	(12.5%)

Operating Highlights:

• Unprecedented level of newspaper and magazine contract gains

  • Circa £459m additional revenue in 2010

  • Market share increased by 16% to 55%

• Early adoption of former Dawson News territories has accelerated market share growth

• Continued strong cost control producing annualised savings of £3.3m

• Acquisition of Bertrams in March 2009, performing ahead of expectations

• Removal of threat of Competition Commission review

Mark Cashmore, Chief Executive commented:

"This has been a truly transformational year for Smiths News, with contract gains worth £459m and the acquisition of Bertrams. 

The implementation of the new contracts has started well but it will require a concerted effort to integrate the former Dawson's depots. We have clear plans to reduce costs and increase efficiencies in these locations, generating significant value for shareholders.

Since acquiring Bertrams the business has performed ahead of our expectations and we believe it has a number of interesting opportunities to pursue in the coming year.  

Our markets remain challenging, but in recent months we have seen a slight improvement in sales trends and we have made a good start to the new financial year. We look forward to reporting another year of progress and believe Smiths News is well positioned for future growth."

The following definitions have been applied consistently throughout this preliminary results announcement:

(1)	Underlying 2009 and 2008 results exclude non-recurring items and amortisation of acquired intangibles.
(2)	Free cash flow is the cash flow excluding the following; payment of the dividend, acquisitions, the proceeds on the disposal of freehold properties, repayments of obligations under finance leases, the repayment of bank loans and non-recurring items.
(3)	Net debt is calculated as total debt less cash and cash equivalents. Total debt includes loans and borrowings, overdrafts and obligations under finance leases.
(4)	Like for like revenue growth excludes magazine and newspaper publisher contract gains during the year, and the annualisation impact of gains made in the prior year.
(5)	Smiths News and Bertrams are also referred to as the Newspaper and Magazine wholesaling segment and the Book wholesaling segment respectively.

Enquiries:

Smiths News PLC
Mark Cashmore, Chief Executive Alan Humphrey, Finance Director	Today: 020 7466 5000 Thereafter: 01793 563641
Buchanan Communications
Mark Edwards / Jeremy Garcia /  Chris McMahon	020 7466 5000

A meeting for analysts will be held at the office of Buchanan Communications, 45 Moorfields, London, EC2Y 9AE on Thursday 22 October commencing at 09.30.

Smiths News PLC's Preliminary Results 2009 are available at www.smithsnews.co.uk.

About Smiths News PLC:

Smiths News PLC comprises Smiths News, the UK's leading wholesaler of newspapers and magazines and Bertrams, a leading UK book wholesaler. The Group was formed on 1 September 2006 following the demerger of WH Smith PLC.

Smiths News distributes newspapers and magazines on behalf of all the major national publishers as well as a large number of regional publishers. The business serves approximately 30,000 customers across England and Wales, supplying large general retailers as well as smaller independent newsagents. Smiths News has an approximate 55% share of the newspaper and magazine wholesaling market in the UK. In addition to its distribution activities, Smiths News collects and processes returns, supplies sales information to publishers and provides a range of services for its retail customers.

Bertrams, which was acquired on 20 March 2009, supplies books to a mix of independent booksellers, on-line and multiple retailers, and libraries. Bertrams has an approximate 45% share of the wholesale book market.

Smiths News PLC operates from 68 distribution centres across England and Wales, and employs 6,100 staff.

OPERATING REVIEW 

Introduction

We are pleased to report another solid set of results in what has been a transformational year for Smiths News. The Group has been successful in securing an unprecedented level of new contract gains in addition to delivering on our broader strategic goals. Operationally, the Group continues to maintain the highest levels of customer service and efficiency and remains the clear market leader.

Underlying profit before tax was £30.5m from revenues of £1.3bn, a sound financial result during turbulent economic conditions. The proposed final dividend of 4.6p represents a total dividend for the year of 6.8p, an increase of 1.5%, and highlights our confidence in the Group's strong cash flows and future prospects.

Strategy

The Group's strategy is to increase value for its shareholders through a combination of growing our core newspaper and magazine distribution business and diversifying into complementary market segments.

This year we made excellent progress towards our strategic goals, including new contract wins that will transform our scale and competitive position, and the acquisition of Bertrams, which is an important first step towards diversifying the Group. In August we took responsibility for 20 depots and associated staff from Dawson News, bringing forward the implementation of our contract wins. The transfer has been implemented with the high standard of service for which we are known. As a consequence, the Group finishes the year materially stronger, with new opportunities for growth and diversification.

In the year ahead, the Group has set out six priorities: 

• To complete the full integration of the 20 depots acquired from Dawson News in August 2009, including the implementation of our SAP information system at all locations. 

• To raise the standards of service in our new depots towards those of our established locations, providing greater consistency of service to customers throughout our network.  

• To maintain tight cost control across the Group, achieving a further like for like reduction in costs.  

• To increase the sales and profitability of Bertrams by leveraging the Group's existing relationships, as well as its expertise in service and efficiency. 

• To research, prepare for and be alive to new business development opportunities that would enhance the Group.
• To invest in our people and increase our pool of market leading talent.

Markets

The newspaper and magazine markets remain tough but continue to perform as anticipated. The economic slowdown has impacted sales volumes in both newspapers and magazines. However, the new contract gains have more than compensated for these declines.

Newspaper sales were marginally ahead of last year after adjusting for promotional discounting on mass market titles. As anticipated, the magazine market performed less strongly with reductions in both volume and value across most market segments. Overall the magazine market value was down 7.6%. Looking ahead we believe conditions will continue to be challenging but fundamentals remain intact as publishers and retailers alike continue to invest in and promote printed product. 

In the period since taking ownership, Bertrams' sales have been broadly flat year on year, compared to a circa 1% decline in the total sales of books to UK consumers. This is a very creditable performance given the disruption resulting from the administration of its previous owner, the Woolworths Group. 

Service and Efficiency

Central to our growth strategy is an on-going improvement in service and efficiency. We continue to offer broader, more efficient systems and practices, which, over the past 12 months, have underpinned our increase in market share. In support of this strategy, is an investment programme focused on our distribution network, IT infrastructure and in the development of new services to customers such as inventory management and Instore merchandising.

On-going investment has also been key to reducing our cost base. For the third year running Smiths News reduced like for like operating costs; this year by £3.3m.

New Contract Gains

Over the past 12 months Smiths News has made unprecedented contract gains that should generate an estimated £459m of additional revenue in 2010. This outstanding result is the culmination of three years operational and strategic progress.

Smiths News successfully won 10 major contracts, growing market share from 39% to 55%, reinforcing its market leading position. 

	Estimated Additional Revenue* £m
News International	85
Telegraph	53
Trinity Mirror	47
Marketforce	44
Frontline Group	58
Seymour	26
Associated Newspapers	65
COMAG	35
Guardian	16
Express	30
Total	459

* based on current sales values 

As a consequence of the contract process, the market has consolidated from three major wholesalers into two, accelerating Smiths News' entry into the new territories to August 2009.

Following the contract awards, Dawson News (having been unsuccessful in renewing the majority of its contracts in the tender process) entered administration. This presented the possibility of an immediate and damaging breakdown of the supply chain in those territories for which we had recently won future contracts. Smiths News was required to take decisive action to ensure the uninterrupted distribution on behalf of publishers, retailers and consumers. 

In order to maintain continuity for customers, Smiths News reached agreement with the Administrator for the £1.5m acquisition of selected assets, taking responsibility for the leases of 20 depots and 1800 associated staff. The agreement took effect from 2 August 2009, bringing forward the distribution to the new territories by up to 18 months. As a consequence of these arrangements, Smiths News have incurred £4.6m of non-recurring costs in the financial year 2008/09. We expect a further circa £5m of non-recurring costs in the current year ahead.

The adoption of the new contract areas in such a short timescale creates a significant integration challenge. There are fundamental differences in the working practices between the two businesses, most notably Smiths News has more efficient and technically enabled processes. Our immediate priority is to reduce the cost of distribution in the new depots by circa £6m per annum to bring it in line with that of the established Smiths News network, whilst also ensuring the standard of service is improved.

In the medium term, tackling the integration issues in one consolidated push will bring forward the opportunity of further efficiencies flowing from an expanded network with consistent process and technology. 

We are only three months into the integration process but are pleased with the response from staff and the support of our industry partners, which have ensured a near seamless handover of the core distribution. As with all large-scale integration programmes there are associated execution risks but we have a clear plan, a strong track record in this area and have prioritised the resources necessary for success.

Bertrams 

On 20 March 2009 the Group announced the acquisition of Bertrams, a leading book wholesaler to independent, on-line and multiple retailers and leading distributor of books to libraries. Bertrams also acts as a primary distributor for a number of small book publishers.  

Since acquisition, we have worked closely with Bertrams management team restoring customer and publisher confidence, with both groups responding enthusiastically to our ownership following a difficult period during the administration of the Woolworths Group.

Normal trading terms with key publishers have resumed with Bertrams stock levels restored to optimum levels. We have also identified a number of opportunities to reduce costs in the base Bertrams business and we continue to work closely with the team in order to improve their operational performance.

In the period since ownership, Bertrams sales were broadly flat, compared to a circa 1% year on year decline in the total sales of books to UK consumers. This was largely driven by a programme of re-stocking to optimum levels to make available the range of books to its traditional markets and from strong sales to internet based retailers and into international markets.  

Bertrams continues to show every indication of being of an excellent strategic fit alongside our existing newspaper and magazine business. We are enthused about a number of commercial opportunities that exist and are committed to utilising Smiths News' strong relationships with publishers and multiple retailers across the UK. 

With the combination of Smiths News operational and market strength and Bertrams vast industry experience, we believe the Bertrams business is well placed to grow.

Business development

The Group will continue to investigate new market opportunities, which are complementary to our skills and competencies and have the potential to deliver demonstrable value to shareholders. 

In the year ahead the emphasis for Smiths News will be on integrating the new acquisition and contract gains with a focus on achieving service and efficiency improvements. Our increased market share will enhance the opportunity to sell value-adding services to retailers and improve our offer to regional press publishers, a market we are targeting for growth.

OFT

On the 24 September 2009 the Office of Fair Trading announced it would not refer the newspaper and magazine supply chain to the Competition Commission. Smiths News fully supports this decision which will allow the industry to focus on more pressing issues at a time of economic uncertainty for many publishers and retailers. The Group's strategy and core business priorities remain unchanged following this decision.

Outlook

After a year of transformational change, the Group has clear priorities for the year ahead.

The implementation of the new contract gains has started well and we are pleased with the performance of Bertrams. We have clear plans to reduce costs in those depots we acquired in August and will maintain our relentless focus on service and efficiency throughout the Group.

Our markets remain challenging, but in recent months there has been a slight improvement in sales trends and we have made a good start to the year. We look forward to reporting another year of progress and believe Smiths News is well positioned for future growth.

FINANCIAL REVIEW

Group revenues of £1.33bn are up 6.9% on last year driven by the acquisition of Bertrams and the new contract gains. Underlying Group profit before tax is £30.5m, generating underlying earnings per share of 13.8p. 

The business continues to drive strong cash flows, with free cash flow of £23.7m this year, which supports an increase in the total dividend for the year to 6.8p per share.

REVENUES

	Aug 2009 £m	Aug 2008 £m	Change Fav/(Adv)	Like-for-like(4) growth Fav/(Adv)
Newspapers	703.3	657.6	6.9%	(2.8%)
Magazines	508.6	527.7	(3.6%)	(7.6%)
Other	60.6	55.3	9.6%	9.6%
Smiths News(5)	1,272.5	1,240.6	2.6%	(4.1%)
Bertrams(5)	53.5	-	-	-
Total Group revenue	1,326.0	1,240.6	6.9%	(4.1%)

Total Group revenues of £1.33bn for the year are up 6.9% on last year. The increase was partly driven by the addition of Bertrams, which contributed £53.5m of revenue during the five month period from the date of acquisition. 

For Smiths News, revenues from newspapers are up 6.9% on the back of contract wins, the largest elements coming from the commencement of the new News International contract in July and from the addition of the former Dawson News business in August. 

Like for like newspaper revenues are down 2.8%. This is largely due to an additional £18m of promotional price discounting within the mass-market titles across the year. If this price discounting is adjusted, underlying newspaper sales would be marginally ahead of last year, with reductions in volumes being more than offset by price increases. 

The magazine market has proved much more vulnerable to the economic downturn experienced this year. Magazine revenues are down 3.6% year on year, despite benefiting from new contract gains in August 2009. Like for like magazine revenues are down 7.6% although we have seen some improvement in sales trends over the last quarter.

Other revenues include income from additional services to publishers and retailers, delivery service charges and contracts relating to Newsworks and Instore, which in total have grown by 9.6% this year.

INCOME STATEMENT EXTRACTS - EXCLUDING NON-RECURRING AND OTHER ITEMS

			Group	Group
	Smiths News (5) £m	Bertrams(5) £m	Aug 2009 £m	Aug 2008 £m	Change Fav/(Adv)
Gross profit	121.2	9.4	130.6	123.5	5.7%
Gross margin	9.5%	17.6%	9.8%	10.0%
Operating costs	(89.5)	(8.7)	(98.2)	(87.5)	(12.2%)
Underlying operating profit	31.7	0.7	32.4	36.0	(10.0%)
Net finance costs	(1.7)	(0.2)	(1.9)	(3.5)	45.7%
Underlying profit before tax	30.0	0.5	30.5	32.5	(6.2%)
Taxation			(5.7)	(6.5)	12.3%
Underlying profit after tax			24.8	26.0	(4.6%)

The increase in Group revenues, partially offset by a weaker gross margin percentage, has resulted in a gross profit of £130.6m being £7.1m above last year. The weaker gross margin is largely due to a negative sales mix in Smiths News, partly offset by a higher gross margin in Bertrams.

Next year we expect any dilution in the Smiths News margin percentage, arising from the contract renewals, to be offset by a full year of Bertrams trading at a higher margin percentage.

Group operating costs of £98.2m are up £10.7m on last year, as a result of servicing new contract gains and the inclusion of Bertrams. Excluding these items, underlying operating costs in Smiths News declined by a further £3.3m this year. Savings have been achieved from a wide range of initiatives across the business, which include network changes in Nottingham and Newport, route optimisation and a reduction in energy usage.

Finance costs of £1.9m are £1.6m lower than last year due to reductions in interest rates and tight cash management.

Smiths News generated underlying profit before tax of £30.0m, a decrease of 7.7%.

Bertrams generated £0.5m of underlying profit before tax in the five months since March, a strong performance given the shortfall of working capital in the business at the time of acquisition and with normal peak trading (October to December) falling outside of this period.

Underlying Group profit before tax for the year is £30.5m, 6.2% lower than last year. This was slightly ahead of expectations despite the backdrop of very demanding and difficult market conditions.

The underlying Group tax charge for the year of £5.7m represents an effective tax rate of 19%. This is lower than the UK standard rate of corporation tax due largely to prior year tax credits of £3.2m. We anticipate that our effective tax rate for 2010 will continue to be lower than the standard rate but that it will trend back to the standard rate of corporation tax for the UK over the next two years.

Underlying Group profit after tax is £24.8m, down 4.6% on last year.

NON-RECURRING AND OTHER ITEMS

	(Loss)/profit before  taxation £m	Taxation     £m	(Loss)/profit  after taxation   £m
The Returns Company	(3.1)	0.8	(2.3)
Cross-currency contract	(1.5)	2.3	0.8
Reversionary leases	(2.5)	0.7	(1.8)
New business reorganisation	(4.6)	1.1	(3.5)
Amortisation of acquired intangibles	(0.4)	0.1	(0.3)
Aug 2009	(12.1)	5.0	(7.1)
Aug 2008	0.1	0.4	0.5

There have been a number of non-recurring items that have impacted our results for the year which together with amortisation of acquired intangibles have been shown as 'non-recurring and other items'.

Since the loss of the WH Smith Retail contract last year, The Returns Company (a returns processing business) has been unable to secure the contracts required to achieve scale. We continue to explore options for The Returns Company. Following a detailed review of the future trading prospects, an impairment charge of £3.1m has been recognised to write down the assets and provide for an onerous lease liability and for other reorganisation costs. 

During the first half of the year the Group invested in a cross-currency forward contract to lower the total cost of borrowing on an after tax cash basis. This contract, which matured on 25 February 2009, took advantage of a cross-currency interest rate differential, whilst fully hedging the potential foreign exchange exposure on an after tax basis. This resulted in a post tax benefit of £0.8m.

Under the terms of the 2006 Demerger Agreement with WH Smith PLC, the Group has a contingent liability for 35% of the former WH Smith Group potential reversionary leases, capped at a maximum of £5m in any twelve month period. During the year a number of leases have reverted, or could now revert and thus a provision of £2.5m has been made to cover this potential liability.

A reorganisation provision of £4.6m has been recognised following contract changes and the exit of Dawsons from the news distribution market. This largely relates to redundancy costs and an onerous lease provision. As the majority of the contract gains took place close to the year end it is expected that further reorganisation costs amounting to circa £5m will be incurred in 2010.

Intangible assets relating to the acquisition of Bertrams will be amortised over their expected economic lives. The charge for the 5 months to 31 August 2009 is £0.4m, for which there is no associated cash impact.

The cash impact of the £7.1m total post tax non-recurring costs charged in the year is £1.2m, with estimated cash spend of £2.3m in 2010. Thereafter, the remaining cash outflow will be incurred across subsequent years at an anticipated rate of less than £1.0m per annum.

Non-recurring items for 2008 totalling £0.1m relate to a £1.4m profit on disposal of five freehold properties offsetting costs of £1.3m relating to the reorganisation of our businesses in the East Midlands and South Wales.

EPS AND DIVIDEND

	Aug 2009	Aug 2008	Aug 2009	Aug 2008
	Underlying	Underlying	Statutory	Statutory
Profit after tax (£m)	24.8	26.0	17.7	26.5
Basic number of shares (millions)	179.5	179.3	179.5	179.3
Basic EPS	13.8p	14.5p	9.9p	14.8p
Dividend per share	6.8p	6.7p	6.8p	6.7p

Underlying profit after tax is £24.8m, which generates underlying basic earnings per share for the year of 13.8p

Profit after tax is £17.7m generating reported earnings per share of 9.9p.

A final dividend for the year of 4.6p has been proposed which is a 2.2% increase on 2008. When added to the interim dividend of 2.2p this gives a total dividend for the year of 6.8p which is up 1.5%. If approved, the final dividend of 4.6p will be paid on 5 February 2010 to shareholders on the register at the close of business on 8 January 2010.

FREE CASH FLOW

	Aug 2009 £m	Aug 2008 £m
Underlying profit before interest and tax	32.4	36.0
Depreciation & Amortisation	6.7	6.1
Working capital	4.6	(3.8)
Capital expenditure	(5.2)	(3.8)
Net Interest paid (6)	(2.9)	(3.5)
Taxation (6)	(5.6)	(3.2)
Ongoing pension funding	(5.7)	(5.9)
Other	(0.6)	(0.6)
Free cash flow (2)	23.7	21.3

The business continues to generate strong cash flows with free cash flow of £23.7m in the year, up £2.4m on the previous year.

The components of working capital have increased significantly across the year as a result of the acquisition of Bertrams and the new contract gains, with current assets at 31 August 2009 increasing to £150.2m (2008: £76.1m) and current liabilities to £213.4m (2008: £126.9m). The net working capital position however is a modest cash inflow of £4.6m. This amount excludes the spend on acquired working capital (see net debt below) but includes normal year end timing differences.

Capital expenditure of £5.2m has largely been invested in network and IT enhancements that will drive future efficiencies and service improvements. It also includes £1.5m, which was spent acquiring certain assets of Dawsons in August 2009. 

(6) Net interest paid and taxation exclude the interest cost and tax benefits arising from the cross-currency contract included within non-recurring items.

NET DEBT

	Aug 2009 £m	Aug 2008 £m
Opening net debt(3)	(44.0)	(52.7)
Free cash flow	23.7	21.3
Dividend paid	(12.0)	(11.7)
Proceeds on disposal of freehold properties	-	2.3
Non-recurring items	(1.2)	0.1
Acquisitions	(12.2)	(2.1)
New finance leases	(3.8)	(1.2)
(Increase)/decrease in net debt (3)	(5.5)	8.7
Closing net debt(3)	(49.5)	(44.0)

Spend on acquisitions in the year is detailed below:

• On 20 March 2009 the Group acquired the business and assets of Bertrams. The cost of the acquisition was £8.6m plus £2.6m of associated costs.

• On 30 October 2008 deferred consideration of £1.0m relating to our 50% investment in Rascal was paid (Rascal provides store level technology and resources to a number of major retailers in the news and magazine category).

Whilst spending £12.2m on acquisitions, the increase in net debt was restricted to £5.5m due to the underlying cash generation of the Group.

BANK FACILITIES

The Group has total committed bank facilities in place of up to £110m as detailed below;

• £40m term loan of which £5m is repayable in June 2010, with the balance repayable in June 2011;

• £50m revolving credit facility which is also repayable in June 2011;

• a committed facility of up to £20m, secured against the debtors of Bertrams. This was put in place at the time of the acquisition of Bertrams and is also repayable in June 2011.

There is an interest rate hedge in place until June 2011 at an all in effective rate of 5.78%, which at 31 August 2009 covered 62 per cent of the term loan.

The Group continues to operate well within its banking covenants.

PENSION

The IAS 19 pension surplus relating to the defined benefit scheme, the WH Smith Pension Trust, at 31 August 2009 is £19.3m (2008: £62.4m), a decrease of £43.1m in the year. This decrease is largely due to the movement in corporate bond yields and the adoption of more conservative assumptions on mortality.

The scheme is closed to further accrual, which would prevent the Group from realising the surplus through a funding holiday or a reduction in contributions. Given the Liability Driven Investment policy adopted by the Pension Trustees, the present value of the economic benefits of the IAS 19 surplus in the pension scheme of £19.3m (2008: £62.4m) available on a reduction in future contributions is nil (2008: £nil). As a result the Group has not recognised the IAS 19 surplus on the balance sheet.

Following completion of the recent triennial valuation the scheme had an actuarial deficit of £50m as at 31 March 2009. A revised deficit funding schedule of £5.8m per annum has been agreed for the next ten years with the trustees. 

This deficit continues to be managed through the Liability Driven Investment ('LDI') policy which seeks to minimise volatility through the hedging of interest and inflation.

INTERIM MANAGEMENT STATEMENT 

The Group will issue its Interim Management Statement on 15 January 2010.

Smiths News PLC

Group Income Statement for the year ended 31 August 2009

				2009				2008
£m	Note	Underlying*	Non-recurring and other items **	Total		Underlying*	Non-recurring and other items **	Total
Continuing operations
Revenue	2	1,326.0	-	1,326.0		1,240.6	-	1,240.6
Operating profit	3	32.4	(10.8)	21.6		36.0	0.1	36.1
Investment revenues	5	1.2	1.4	2.6		0.8	-	0.8
Finance costs	6	(3.1)	(2.7)	(5.8)		(4.3)	-	(4.3)
Profit before tax		30.5	(12.1)	18.4		32.5	0.1	32.6
Income tax expense	7	(5.7)	5.0	(0.7)		(6.5)	0.4	(6.1)
Profit for the year		24.8	(7.1)	17.7		26.0	0.5	26.5

Earnings per share
Basic	9	13.8p		9.9p		14.5p		14.8p
Diluted	9	13.8p		9.9p		14.4p		14.7p
Equity dividends per share	8			6.8p				6.7p

*Before non-recurring and other items.

**Non-recurring and other items are set out in Note 3 

Smiths News PLC

Group Balance Sheet at 31 August 2009

£m	Note	2009	2008
Non-current assets
Intangible assets		12.7	4.1
Property, plant and equipment		21.1	15.5
Investments in joint venture and associate		3.5	3.3
Deferred tax assets		3.3	11.6
Derivative financial instruments		-	0.2
		40.6	34.7
Current assets
Inventories		31.1	12.2
Trade and other receivables		114.8	60.5
Cash and cash equivalents		4.3	3.4
		150.2	76.1
Total assets		190.8	110.8
Current liabilities
Trade and other payables		(191.6)	(113.1)
Current tax liabilities		(1.2)	(6.8)
Obligations under finance leases		(1.5)	(1.4)
Bank loans and other borrowings		(15.1)	(5.0)
Provisions		(3.8)	-
Derivative financial instruments		(0.2)	(0.6)
		(213.4)	(126.9)
Non-current liabilities
Bank loans and other borrowings		(34.3)	(39.7)
Retirement benefit obligation	4	-	-
Deferred tax liabilities		(2.0)	(10.1)
Long-term provisions		(4.6)	(0.7)
Obligations under finance leases		(2.9)	(1.3)
Derivative financial instruments		(1.3)	-
Other non-current liabilities		(0.7)	(0.4)
		(45.8)	(52.2)
Total liabilities		(259.2)	(179.1)
Total net liabilities		(68.4)	(68.3)

£m	Note	2009	2008
Equity
Called up share capital	11	9.1	9.1
ESOP reserve	11	(3.4)	(3.9)
Other reserve	11	(280.1)	(280.1)
Hedging reserve	11	(1.4)	0.3
Retained earnings	11	207.4	206.3
Total equity		(68.4)	(68.3)

The financial statements were approved by the Board of Directors and authorised for issue on 22 October 2009 and were signed on its behalf by:

Mark Cashmore Group Chief Executive

Alan Humphrey Group Finance Director

  Smiths News PLC

Group Cash Flow Statement for the year ended 31 August 2009

£m	Note	2009	2008
Net cash inflow from operating activities	10	31.9	28.7
Investing activities
Interest received		0.1	0.1
Proceeds on disposal of freehold property		-	2.3
Acquisition of investment in joint venture		(1.0)	(2.1)
Acquisition of investment in Bertrams		(11.2)	-
Purchase of property, plant and equipment		(4.0)	(1.8)
Purchase of intangible assets		(1.2)	(2.0)
Net cash used in investing activities		(17.3)	(3.5)
Financing activities
Interest paid		(4.2)	(3.6)
Dividend paid		(12.0)	(11.7)
Repayments of obligations under finance leases		(2.6)	(1.9)
Repayments of borrowings		(5.0)	(5.0)
Increase in bank overdrafts		10.1	-
Net cash used in financing activities		(13.7)	(22.2)
Net increase in cash and cash equivalents		0.9	3.0
Opening net cash and cash equivalents		3.4	0.4
Closing net cash and cash equivalents		4.3	3.4

Smiths News PLC

Group Statement of Recognised Income and Expense for the year ended 31 August 2009

£m	Note	2009	2008
Loss on cash flow hedges		(1.7)	(0.6)
Actuarial (loss)/ gain on defined benefit pension scheme	4	(50.0)	45.9
Effect of asset limit on defined benefit pension scheme	4	43.1	(52.5)
UK deferred tax attributable to defined benefit pension scheme		(1.6)	(1.5)
UK current tax attributable to the additional defined benefit pension scheme contributions		3.4	3.5
Net expense recognised directly in equity		(6.8)	(5.2)
Profit for the year		17.7	26.5
Total recognised income and expense for the year		10.9	21.3

Total recognised income and expense for the year is fully attributable to the equity holders of the parent company.

Smiths News PLC

Notes to the preliminary announcement 

1.    Preparation of the preliminary announcement

(a)    Basis of preparation

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS'), this announcement does not itself contain sufficient information to comply with IFRSs.

The preliminary announcement for the 12 months to 31 August 2009 has been prepared on the basis of the accounting policies set out in the accounting policies section of the Smiths News PLC Annual Report and Financial Statements 2008, with the exception of IFRS 8 'Operating segments' that has been adopted in the year.

The Group meets its day to day working capital requirements through its bank facilities of up to £110m, which do not expire until June 2011. The Group's forecasts, taking into account the board's future expectations of the Group's performance, indicate that there is substantial headroom within these bank facilities and the Group will continue to operate well within the covenants attaching to those facilities. These bank facilities together with renewed long term contracts with all major publishers in the year mean that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Group's cash generation and bank facilities allows it to meet all loan commitments as they fall due as well as managing the negative working capital position. The negative working capital and net liability positions at year end relate to the timing of monthly cash flows which are closely monitored and controlled by management.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the preliminary announcement.

(b)    Preliminary announcement

The financial information set out above does not constitute the Group's statutory accounts for the 12 months ended 31 August 2009 or the 12 months ended 31 August 2008, but is derived from those accounts. The statutory accounts for Smith News PLC for the 12 months ended 31 August 2008 have been delivered to the Registrar of Companies and those for the 12 months ended 31 August 2009 will be delivered following the company's annual general meeting. 

The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006. The auditors' reports on the accounts for the 12 months to 31 August 2008 were unqualified and did not include a statement under Section 237(2) or (3) of the Companies Act 1985.

The Company intends to publish the Annual Report and Financial Statements that comply with IFRSs. The Annual Report and Financial Statements will be available for shareholders in mid December 2009.

2.    Segmental analysis of revenue and results

Adoption of IFRS 8, Operating Segments 

The Group has adopted IFRS 8 Operating Segments in advance of its effective date. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board (the chief operating decision making forum) to allocate resources to the segments and assess their performance. Prior to the acquisition of Bertrams on 20 March 2009 the Group only had one reportable segment.

The information presented to the Board for the purpose of resource allocation and assessment of segment performance is focused on the type of product sold. The principal activities of the Group reported to the Board are split into two categories of products sold:

• Newspaper and Magazine wholesaling (referred to as Smiths News).

• Book wholesaling (referred to as Bertrams).

The following is an analysis of the Group's revenue and results by reportable segment in the year ended 31 August 2009:

Continuing operations
£m		Newspaper & Magazine wholesaling		Book wholesaling		Consolidated
		2009	2008	2009	2008	2009	2008
Revenue		1,272.5	1,240.6	53.5	-	1,326.0	1,240.6
Underlying profit before tax		30.0	32.5	0.5	-	30.5	32.5
Non-recurring and other items before tax		(11.7)	0.1	(0.4)	-	(12.1)	0.1
Profit before tax		18.3	32.6	0.1	-	18.4	32.6

The accounting policies of the reportable segments are the same as the Group's accounting policies.

Segment assets 

£m	2009	2008
Newspaper & Magazine wholesaling	140.2	110.8
Book wholesaling	50.6	-
Consolidated total assets	190.8	110.8

For the purposes of monitoring segment performance and allocating resources between segments, the Group's Board monitor the tangible, intangible and financial assets attributable to each segment. Goodwill and acquired intangible assets have been allocated to the Book wholesaling segment. 

Segment liabilities

£m	2009	2008
Newspaper & Magazine wholesaling	(223.2)	(179.1)
Book wholesaling	(36.0)	-
Consolidated total liabilities	(259.2)	(179.1)

Other segment information 

	Depreciation and amortisation			Additions to non-current assets
£m	2009	2008		2009	2008
Newspaper & Magazine wholesaling	(6.5)	(6.1)		8.7	4.9
Book wholesaling	(0.6)	-		13.3	-
Consolidated total	(7.1)	(6.1)		22.0	4.9

In addition to the depreciation and amortisation reported above, impairment losses of £0.7m (2008: £nil) relating to the reorganisation of The Returns Company were recognised in respect of property, plant and equipment. These impairment losses were attributable to the Newspaper and Magazine wholesaling segment.

The Group operates solely in the UK.

3.    Operating profit

The Group's results are analysed as follows:

			2009			2008
£m	Underlying	Non-recurring and other items	Total	Underlying	Non-recurring and other items	Total
Revenue	1,326.0	-	1,326.0	1240.6	-	1,240.6
Cost of sales	(1,195.4)	-	(1,195.4)	(1,117.1)	-	(1,117.1)
Gross profit	130.6	-	130.6	123.5	-	123.5
Distribution costs	(64.4)	(2.2)	(66.6)	(59.2)	(1.3)	(60.5)
Administrative expenses	(33.8)	(8.6)	(42.4)	(28.3)	-	(28.3)
Profit on disposal of freehold property	-	-	-	-	1.4	1.4
Operating profit	32.4	(10.8)	21.6	36.0	0.1	36.1

The operating profit is stated after charging / (crediting):

£m	2009	2008
Cost of inventories recognised as an expense	1,136.8	1,065.8
Depreciation and amounts written off property, plant & equipment	5.3	4.8
Amortisation of intangible assets	1.8	1.3
Operating lease charges
·          land and buildings	11.7	5.3
·          equipment and vehicles	2.2	2.1
Operating lease rental income – land and buildings	(0.5)	(0.4)
Staff costs	82.2	72.3

The analysis of auditors' remuneration is as follows:

£m			2009	2008
Fees payable to the company's auditors for the audit of the company's annual accounts			-	-
Fees payable to the company's auditors and their associates for other services to the group
The audit of the company's subsidiaries pursuant to legislation			0.2	0.1
Total audit fees			0.2	0.1
Other services pursuant to legislation
Tax services			0.2	-
Corporate finance services			0.1	0.1
Other services			0.1	-
Total non-audit fees			0.4	0.1

Included within tax services are one-off fees associated with the cross-currency contract.

Corporate finance services include the fees associated with the acquisition of Bertrams.

Included within Other services is £63,000 relating to recruitment and remuneration.

Non- recurring and other items 

						2009	2008
£m	TRC Impairment	Cross-currency contract	Re-organisation costs	Reversionary leases	Amortisation of acquired intangibles	Total	Total
Operating (loss)/ profit	(3.1)	(0.2)	(4.6)	(2.5)	(0.4)	(10.8)	0.1
Finance costs/ Investment revenues	-	(1.3)	-	-	-	(1.3)	-
Non-recurring (loss)/ profit before tax	(3.1)	(1.5)	(4.6)	(2.5)	(0.4)	(12.1)	0.1
Income tax credit	0.8	2.3	1.1	0.7	0.1	5.0	0.4
Non-recurring (loss)/ profit after tax	(2.3)	0.8	(3.5)	(1.8)	(0.3)	(7.1)	0.5

The Returns Company ('TRC') Impairment 

Since the loss of the WH Smith Retail contract last year, The Returns Company (a returns processing business) has not been able to secure the contracts required to achieve scale. We continue to explore options for The Returns Company. However, following a detailed review of the future trading prospects of the business, an impairment charge of £3.1m has been recognised to write down the assets and provide for an onerous lease liability and for other reorganisation costs. 

Cross-currency contract 

During the first half year the Group invested in a cross-currency forward contract to lower the total cost of borrowing on an after tax cash basis. This contract, which matured on 25 February 2009, took advantage of a cross-currency interest rate differential, whilst fully hedging the potential foreign exchange exposure on an after tax basis. This resulted in a post tax benefit of £0.8m.

Reorganisation costs

Reorganisation costs of £4.6m have been recognised this year following contract changes. These relate to redundancy and legal costs resulting from the contract gains and an onerous lease provision relating to locations where publisher contracts have been lost.

Reversionary leases 

Under the terms of the 2006 Demerger Agreement with WH Smith PLC, the Group has a contingent liability for 35% of the former WH Smith Group potential reversionary leases, capped at a maximum of £5m in any twelve month period. During the year a number of leases have reverted, or are now expected to revert back, with an estimated liability for the Group of £2.5m on a pre tax basis. 

Amortisation of acquired intangibles 

Intangible assets relating to the acquisition of Bertrams will be amortised over their expected economic lives. The charge to the income statement for the 5 months to 31 August 2009 is £0.4m for which there is no associated cash impact.

The net cash outgoings relating to the post tax non-recurring items of £7.1m is £1.2m in the year, with an estimated spend of £2.3m in 2010, the balance being spread across later years.

Non-recurring costs for 2008 consist of profit on disposal of freehold properties of £1.4m offsetting costs relating to the reorganisation of the East Midlands and South Wales businesses of £1.3m.

4.    Retirement benefit obligation

Pension arrangements for employees are operated through a defined benefit scheme, WH Smith Pension Trust ('Pension Trust'), and a defined contribution scheme, WH Smith Retirement Savings Plan. The most significant is the Pension Trust, which is described in note 4 (a). The scheme is independent of the Company and is administered by a Trustee. The Trustee of the Pension Trust has extensive powers over the pension plan's arrangements, including the ability to determine the levels of contribution.

The amounts recognised in the balance sheet in relation to these plans are as follows:

£m	2009	2008
Present value of the obligation	(338.1)	(320.1)
Fair value of plan assets	357.4	382.5
Surplus	19.3	62.4
Amounts not recognised due to asset limit	(19.3)	(62.4)
Retirement benefit obligation recognised in the balance sheet	-	-

The pension scheme is closed to further accrual. The present value of the economic benefits of the IAS 19 surplus in the pension scheme of £19.3m (2008: £62.4m) available on a reduction of future contributions or a funding holiday is £nil (2008: £nil). As a result the Group has not recognised this IAS 19 surplus on the balance sheet.

(a)    Defined benefit pension scheme

The Pension Trust

The Group has paid £5.4m to the Pension Trust over the course of the year in relation to the agreed pension deficit funding.

In the year ended 31 August 2007 the Pension Trust closed to future service accrual.  

Following completion of the recent triennial valuation the scheme had an actuarial deficit of £50m as at 31 March 2009. A revised deficit funding schedule of £5.8m per annum has been agreed for the next ten years with the trustees. 

This deficit continues to be managed through the Liability Driven Investment ('LDI') policy, which minimises volatility through the hedging of interest and inflation.

The assets are invested such that they are expected to alter in value in line with changes in the pension liability caused by changes in interest and inflation.

The key features of the investment policy are:

• 95% of the Pension Trust's assets are invested in an LDI policy with a leading international institutional fund manager; and 

• 5% of the Pension Trust's assets are used to purchase a portfolio of long-dated equity call options. These represent a notional exposure to underlying equities of some £175m.

The valuation of the defined benefit pension scheme used for the account disclosures are based upon the most recent valuation. Scheme assets are stated at their market value at the relevant reporting date.

The principal long-term assumptions used to calculate scheme liabilities under IAS 19 are: 

%	2009	2008
Rate of increase in salaries	-	-
Rate of increase in pension payments and deferred pensions	3.28	4.07
Discount rate	5.32	6.34
Inflation assumptions	3.28	4.07

The amounts recognised in the income statement were as follows:

£m	2009	2008
Current service cost	(0.1)	(0.1)
Interest cost	(19.9)	(17.4)
Expected return on scheme assets	21.0	18.1
	1.0	0.6

The charge for the current service cost has been included within administrative expenses. Interest cost and expected return on scheme assets have been included within investment revenues.

Movements in the present value of the defined benefit scheme obligation in the year were as follows:

£m	2009	2008
At 1 September	(320.1)	(311.3)
Current service cost	(0.1)	(0.1)
Interest cost	(19.9)	(17.4)
Actuarial losses	(10.4)	(2.7)
Benefits paid	12.4	11.4
At 31 August	(338.1)	(320.1)

Movements in the fair value of defined benefit scheme assets in the year were as follows:

£m	2009	2008
At 1 September	382.5	321.2
Expected return on scheme assets	21.0	18.1
Net actuarial (losses)/ gains	(39.6)	48.6
Contributions	5.9	6.0
Benefits paid	(12.4)	(11.4)
At 31 August	357.4	382.5

An analysis of the defined benefit scheme assets at the balance sheet date is detailed below:

£m	2009	2008
Cash	350.6	318.6
Inflation swaps	(13.6)	51.0
Equity call options	20.4	12.9
	357.4	382.5

The actual return on plan assets was a loss of £18.6m (2008: a gain of £66.7m).

The expected rate of return on these investments, calculated as a weighted average of the expected return on the LDI fund and the equity call options, was 5.26 per cent at 31 August 2009 (5.55 per cent at 31 August 2008).

The mortality assumptions (in years) underlying the value of the accrued liabilities are:

	Male	Female
Life expectancy at age 65
Member currently aged 65	21.3	23.2
Member currently aged 45	23.2	25.0
Life expectancy at age 60
Member currently aged 60	26.0	27.9
Member currently aged 45	27.5	29.4

The mortality assumptions are based on the SAPS mortality tables (as published by the Institute of Actuaries). The mortality rates underlying the table have been decreased by 5% to reflect the Trust's actual experience. A long term mortality improvement assumption of 1% has been included as an overlay to these tables, together with 80% of long cohort for men and 60% of long cohort for women.

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Assumption	Change in assumption	Impact on scheme liabilities
Discount rate	Increase/decrease by 0.5%	Decrease/increase by £24.5m
Rate of inflation	Increase/decrease by 0.5%	Increase/decrease by £32.5m
Rate of mortality	Increase by 1 year	Increase by £11m

No sensitivity has been undertaken for the rate of salary growth as the scheme is closed to future service accrual.

The sensitivity of the present value of the scheme liabilities to changes in the discount rate and rate of inflation are effectively hedged through the Liability Driven Investment policy.

The history of experience adjustments is as follows:

£m	2009	2008	2007	2006	2005
Present value of defined benefit obligation	(338.1)	(320.1)	(311.3)	(334.0)	(967.6)
Fair value of scheme assets	357.4	382.5	321.2	285.0	871.5
Amounts not recognised due to asset limit	(19.3)	(62.4)	(9.9)	-	-
Deficit in the scheme	-	-	-	(49.0)	(96.1)
Experience adjustments on scheme liabilities
Amount (£m)	12.5	3.6	21.9	(16.6)	(114.7)
Percentage of scheme liabilities	4%	1%	7%	(5%)	(12%)
Experience adjustments on scheme assets
Amount (£m)	(39.6)	48.6	1.6	(16.2)	70.8
Percentage of scheme assets	(11%)	13%	1%	(6%)	8%

The cumulative amount of actuarial gains and losses recognised in the statement of recognised income and expense since the adoption of IFRSs is a loss of £13.4m (2008: a gain of £36.6m).

(b)    Defined contribution pension scheme

The pension cost charged to income for the defined contribution scheme, WH Smith Retirement Savings Plan, amounted to £1.6m for the year ended 31 August 2009 (2008: £1.4m).

5.    Investment revenues

£m	2009	2008
Interest on bank deposits	0.1	0.1
Net income on pension scheme (Note 4)	1.1	0.7
Underlying investment revenues	1.2	0.8
Non-recurring item - interest income	1.4	-
Investment revenues	2.6	0.8

The non-recurring item relates to the gain arising from the interest rate differential on the cross-currency contract.

6.    Finance costs

£m	2009	2008
Interest on bank overdrafts and loans	2.8	3.9
Net change in fair value of derivative liabilities designated as fair value through profit and loss	0.1	0.1
Hedge ineffectiveness on the cash flow hedge	-	0.1
Interest payable on finance leases	0.2	0.2
Underlying finance costs	3.1	4.3
Non-recurring item - foreign exchange loss on cross- currency contract	2.7	-
Finance costs	5.8	4.3

The non-recurring item relates to the foreign exchange loss incurred on closing out the cross-currency contract on 25 February 2009.

7.    Income tax expense

£m			2009			2008
	Underlying	Non-recurring and other items	Total	Underlying	Non-recurring and other items	Total
Current tax	9.5	-	9.5	9.6	-	9.6
Current tax - non-recurring items	-	(5.0)	(5.0)	-	(0.4)	(0.4)
Adjustment in respect of prior year UK corporation tax	(2.4)	-	(2.4)	(4.5)	-	(4.5)
Total current tax charge	7.1	(5.0)	2.1	5.1	(0.4)	4.7
Deferred tax - current year	(0.6)	-	(0.6)	1.2	-	1.2
Deferred tax - prior year	(0.8)		(0.8)	0.2	-	0.2
Total tax on profit	5.7	(5.0)	0.7	6.5	(0.4)	6.1
Effective tax rate	19%		4%	20%		19%

The underlying income tax rate for the year is 19%, which represents the UK corporation tax rate of 28%, adjusted for tax credits relating to prior years of £3.2m (2008: £4.3m). The tax relief relating to non-recurring and other items of £5.0m (2008: £0.4m) reduces the effective income tax rate to 4% (2008:19%).

Tax on non-recurring items for the year ended 31 August 2009 represents the UK corporation tax rate of 28% with the exception of a £2.3m tax credit relating to the cross-currency contract (see Note 3).

Tax on non-recurring items for the year ended 31 August 2008 relates to reorganisation costs incurred in the year at the standard rate of UK corporation tax of 29%. There was no tax charge arising on the profit on the sale of freehold properties as it was offset by capital losses brought forward.

It is expected that the effective tax rate will trend back to the standard rate of UK corporation tax over the next two years.

Reconciliation of the tax charge

£m	2009	2008
Profit before tax	18.4	32.6
Tax on profit at the standard rate of UK corporation tax 28% (2008: 29%)	5.2	9.5
Permanent differences	(1.0)	0.1
Share schemes	(0.3)	1.2
Capital profits offset by capital losses	-	(0.4)
Adjustment in respect of prior year UK deferred tax	(0.8)	0.2
Adjustment in respect of prior year UK corporation tax	(2.4)	(4.5)
Total tax charge	0.7	6.1

In addition to the amount charged to the income statement, deferred tax relating to the defined benefit pension scheme amounting to £1.6m (2008: £1.5m) has been recognised directly in equity.

8.    Dividends

Amounts recognised as distributions to equity shareholders in the year are as follows:

£m	2009	2008
Final dividend for the year ended 31 August 2008 of 4.5p (2007: 4.3p) per share	8.0	7.7
Interim dividend for the year ended 31 August 2009 of 2.2p (2008: 2.2p) per share	4.0	4.0
	12.0	11.7

The proposed final dividend for the year ended 31 August 2009 of 4.6p is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed dividend, if approved, will be paid on 5 February 2010 to shareholders on the register at close of business on 8 January 2010.

9.    Earnings per share

	2009	2008
	£m	£m
Profit for the financial year	17.7	26.5
Non-recurring items	7.1	(0.5)
Underlying profit for the financial year	24.8	26.0
	Number m	Number m
Weighted average number of shares in issue	182.9	182.9
Shares held by ESOP (weighted)	(3.4)	(3.6)
Weighted average number of shares in issue for basic earnings per share	179.5	179.3
Shares issuable (weighted)	0.1	1.0
Weighted average number of shares in issue for diluted earnings per share	179.6	180.3
	Pence	Pence
Earnings per share:
Basic	9.9	14.8
Diluted	9.9	14.7
Underlying earnings per share:
Basic	13.8	14.5
Diluted	13.8	14.4

10.    Net cash inflow from operating activities

£m	2009	2008
Operating profit	21.6	36.1
Adjustment for pension funding	(5.7)	(5.9)
Depreciation of property, plant and equipment	5.3	4.8
Profit on sale of property, plant and equipment	-	(1.4)
Amortisation of intangible assets	1.8	1.3
Share based payments	1.0	0.6
Increase in inventories	(10.9)	(0.3)
Increase in receivables	(41.7)	(7.5)
Increase in payables	57.2	4.0
Income tax paid	(4.3)	(3.2)
Increase in provisions	7.6	0.2
Net cash inflow from operating activities	31.9	28.7

11.    Reconciliation of movements in equity

£m	Share Capital	Other Reserve 1	ESOP Reserve	Hedging Reserve	Retained Earnings	Total
Balance at 1 September 2007	9.1	(280.1)	(3.7)	0.9	196.4	(77.4)
Total recognised income and expense for the year	-	-	-	(0.6)	21.9	21.3
Dividends paid	-	-	-	-	(11.7)	(11.7)
Employee share schemes	-	-	0.6	-	(0.6)	-
Recognition of share based payments	-	-	-	-	0.6	0.6
Movement in available for sale investments	-	-	(0.8)	-	(0.3)	(1.1)
Balance at 31 August 2008	9.1	(280.1)	(3.9)	0.3	206.3	(68.3)
Total recognised income and expense for the year	-	-	-	(1.7)	12.6	10.9
Dividends paid	-	-	-	-	(12.0)	(12.0)
Employee share schemes	-	-	0.5	-	(0.5)	-
Recognition of share based payments	-	-	-	-	1.0	1.0
Balance at 31 August 2009	9.1	(280.1)	(3.4)	(1.4)	207.4	(68.4)

1 The 'Other' reserve includes reserves created in relation to the proforma restatement and the demerger of WH Smith PLC.

 

END

 

 

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