Interim Results
Smiths News PLC
24 April 2008
Smiths News PLC
Unaudited Interim Results Announcement
for the six months ended 29 February 2008
Smiths News PLC (Smiths News) is the UK's leading newspaper and magazine
wholesaler serving 22,000 retailers across England and Wales
FINANCIAL HIGHLIGHTS (Unaudited)
• Revenue of £618.4m, up 0.6% (2007: £615.0m)
• Operating profit of £17.9m, up 1.7% (2007: £17.6m)
• Profit before tax of £16.1m, up 5.9% (2007: £15.2m)
• Adjusted earnings per share of 7.2p(1), up 4.3% (2007: 6.9p)
• Earnings per share of 7.9p, down 2.5% (2007: 8.1p)
• Interim dividend of 2.2p, up 4.8% (2007: 2.1p)
Commenting on the results, Mark Cashmore, Chief Executive said:
'The business has continued to perform well, despite challenging market
conditions. Revenues and profits have increased and costs have been tightly
managed. This performance demonstrates the resilience and strength of the
business.
'Our financial performance is underpinned by a service offer that continues to
set the benchmark for the industry. Continual improvements remain at the heart
of our strategy and we believe that stronger relationships with retailers will
provide the business with further opportunities and have invested accordingly.
The recent joint venture with Rascal Solutions Ltd boosts our ability in
inventory management and is a further step in this direction.
'We have made good progress on new business, winning additional distribution
contracts in a number of areas as well as exploring wider opportunities for the
business to move into new markets. We have also secured a major contract with
HarperCollins for The Returns Company.
'Overall, trading remains in line with expectations.'
(1) Adjusted to reflect the anticipated full year tax rate of 20% for 2008
(2007:20%)
(2) Like for like revenue growth excludes newspaper and magazine publisher
contract gains
These definitions are applied consistently throughout this Interim Results
Announcement
Enquiries (for 24 April only):
Smiths News PLC
Alan Humphrey Investor Relations 020 7404 5959
Brunswick
Kate Holgate Media Relations 020 7404 5959
Giles Croot
Smiths News PLC's unaudited interim results 2008 are available at
www.smithsnews.co.uk and a copy of the unaudited interim results 2008 will
shortly be available for inspection at the UK Listing Authority, 25 The North
Colonnade, London, E14 5HS.
About Smiths News:
Smiths News is the UK's leading newspaper and magazine wholesaler serving 22,000
retailers across England and Wales. Smiths News also collects and processes
returns, supplies sales information to publishers and provides a range of
services for its retail customers.
Smiths News has an approximate 40 per cent share of the magazine wholesaling
sector and an approximate 36 per cent share of the newspaper wholesaling sector
in the UK.
Smiths News has 44 distribution centres across England and Wales, employing
4,100 staff.
INTERIM MANAGEMENT REPORT
To the members of Smiths News PLC
OPERATIONAL REVIEW
Smiths News continued to make good progress over the first half of the year.
Revenues and profitability grew, despite challenging markets. Revenues of
£618.4m were up 0.6% on 2007 and profit before tax of £16.1m is up 5.9%.
Newspapers performed well with strong price growth in the quality market.
Performance in the magazine market varied by sector. Weekly titles have shown
growth and monthly titles continue to decline though the trend has slowed over
the period.
The core business continues to pursue its strategy of improving efficiency and
service.
Efficiency initiatives throughout the business have delivered savings of £1.7m
and we are increasingly confident of exceeding our target of at least offsetting
the impact of inflation this year. The investments we have made this year and
our further plans for rationalisation in the East Midlands in the second half
will provide further cost saving opportunities for 2008 / 2009.
The strategy of improving service and working more closely with retailers and
publishers is on track. Our service as measured against a range of key
performance indicators has once again improved and a number of independently
conducted surveys confirm our position as the wholesaler with the most efficient
and effective service offer. Our sales based replenishment system has expanded
to encompass more retailers and we have made further investments in our
information systems and data warehouse capability to support our drive for
competitive advantage through service excellence.
In our core markets we secured additional business from News International in
the Peterborough area; from Mail Newspapers in the Derby area, to begin from
July; from Newsquest, a regional press publisher, covering the South Wales area;
plus, the previously announced News International contract wins in South London
and Derby. The annualised sales value of all these contracts is £26m.
In addition, The Returns Company secured a major contract with HarperCollins to
process their book returns for all of the UK. The contract for circa 10 million
units per year is an important next step for the business.
Our recently announced joint venture with Rascal Solutions Limited is a clear
demonstration of our intention to invest in areas that extend our role and bring
our skills to new categories and markets.
To support our wider drive for new revenues we have strengthened the executive
team with the appointment of a Corporate Development Director. The creation of
this role is specifically to identify and develop new revenue opportunities.
In March the Office of Fair Trading announced its intention to publish the
result of its review in late summer of this year. We remain focused on our
strategy and are well positioned to deal with any potential outcome.
In summary, the business continues to perform well despite challenging
conditions. We believe that our strategy of driving service and efficiency in
the core business while exploiting the potential for revenue growth in new and
existing markets remains appropriate.
Overall, trading remains in line with expectations.
FINANCIAL REVIEW
REVENUE
--------------------------------------------------------------------------------
Feb Feb Change Like for
like(2) growth
2008 2007 Fav/(Adv) Fav/(Adv)
£m £m % %
--------------------------------------------------------------------------------
Newspapers 326.6 318.1 2.7% 1.7%
Magazines 265.2 272.4 (2.6%) (2.6%)
Other 26.6 24.5 8.6% 8.6%
--------------------------------------------------------------------------------
Total revenue 618.4 615.0 0.6% -
--------------------------------------------------------------------------------
Total revenues were 0.6% above last year with like for like revenues in line
with last year.
Newspaper revenues of £326.6m were up 2.7% on last year. This included 1% growth
from both a News International contract gain in the Peterborough area and from
Regional press gains in Cambridge, Plymouth and Peterborough. This year has
again seen the continuing trend of value growth in Newspapers, driven by price
increases in the quality market in the first half of the year.
Magazine revenues of £265.2m were down 2.6%, an improved position on the 3.6%
decrease in the underlying sales of last year. There has been continued growth
in the Weekly market, together with a slowdown in the rate of decline in Monthly
magazines. In the first half of the year we have seen publisher price increases
in both the Weekly and Monthly markets.
OPERATING PROFIT
--------------------------------------------------------------------------------
Feb Feb Change
2008 2007 Fav/(Adv)
£m £m %
--------------------------------------------------------------------------------
Gross profit 61.7 63.1 (2.2%)
Gross margin 10.0% 10.3%
Operating costs (43.8) (45.5) 3.7%
--------------------------------------------------------------------------------
Operating profit 17.9 17.6 1.7%
--------------------------------------------------------------------------------
Gross margin reduced from 10.3% last year to 10.0%. This is largely attributable
to a change in the sales mix, with increased sales of lower margin Newspapers.
Operating costs of £43.8m were 3.7% lower than last year. The lower year on year
costs came from a wide range of initiatives across the business that included:
•The consolidation of telephone activity into regional centres, that was
previously carried out in every depot
•Depot rationalisations in Stoke and High Wycombe
•Improved fleet and route configuration
•The closure of the defined benefit pension scheme to future accruals in
May 2007
The cost reductions contributed to an improvement in operating profit of 1.7% to
£17.9m (2007: £17.6m).
PROFIT BEFORE AND AFTER TAX
--------------------------------------------------------------------------------
Feb Feb Change
2008 2007 Fav/(Adv)
£m £m %
--------------------------------------------------------------------------------
Operating profit 17.9 17.6 1.7%
Finance costs (1.8) (2.4)
--------------------------------------------------------------------------------
Profit before tax 16.1 15.2 5.9%
Taxation (2.0) (0.9)
--------------------------------------------------------------------------------
Profit after tax 14.1 14.3 (1.4%)
--------------------------------------------------------------------------------
Finance costs of £1.8m were £0.6m lower than last year, predominantly due to
lower pension finance charges. Profit before tax for 2008 was £16.1m, an
increase of 5.9%.
The income tax charge for the first half represents an effective tax rate of 12%
(2007: 6%) and is based on the UK Corporation tax rate of 30%, adjusted for a
provision release of £2.6m in the period. The prior year charge benefited from a
£4.0m provision release. It is anticipated that the full year effective tax rate
will be around 20%, which is the same rate as last year. Over time it is
expected that the effective tax rate will trend back to the standard rate of
corporation tax.
EARNINGS PER SHARE AND DIVIDEND
--------------------------------------------------------------------------------
Feb Feb Change
2008 2007 Fav/(Adv)
%
--------------------------------------------------------------------------------
Profit after tax (£m) 14.1 14.3
Adjustment to reflect a 20% tax rate (£m) (1.2) (2.1)
--------------------------------------------------------------------------------
Adjusted profit after tax (£m) 12.9 12.2 5.7%
Weighted average number of shares in issue for
basic earnings per share (millions) 179.1 176.9
--------------------------------------------------------------------------------
Basic EPS 7.9p 8.1p (2.5%)
Adjusted EPS 7.2p 6.9p 4.3%
--------------------------------------------------------------------------------
Basic EPS for the period is 7.9p (2007:8.1p). The reduction in basic EPS is
caused by the lower tax rate in the prior year, due to the higher provision
releases. If our 2008 tax charge is adjusted to reflect our anticipated rate for
the full year of 20%, adjusted profit after tax is £12.9m, giving an adjusted
EPS of 7.2p, an increase of 4.3% on last year's tax adjusted figure. Details of
diluted EPS are shown in note 7.
The increase in the weighted average number of shares is due to the allocation
of share trust assets in the prior year as a direct result of the demerger.
The Board has declared an interim dividend of 2.2p per ordinary share, which
represents a 4.8% increase on last year. The dividend will be paid on 12 June
2008 to shareholders registered at the close of business on 23 May 2008 and will
absorb an estimated £3.9m of cash.
FREE CASH FLOW
--------------------------------------------------------------------------------
6 months to 6 months to
29 Feb 2008 28 Feb 2007
£m £m
--------------------------------------------------------------------------------
Profit before interest and tax 17.9 17.6
Depreciation & amortisation 3.0 2.7
Non cash items 0.4 0.5
Working capital (8.0) (3.5)
Movement in tax debtor - 3.0
Capital expenditure (1.3) (1.2)
Tax (2.6) (4.7)
Net interest paid (2.1) (1.6)
Ongoing pension deficit funding (3.0) (3.1)
Movement in provisions (0.1) -
--------------------------------------------------------------------------------
Free cash flow 4.2 9.7
--------------------------------------------------------------------------------
We generated £4.2m of free cash flow at the half year which is less than last
year due to a larger than usual £8.0m outflow of working capital. This outflow
largely relates to timing differences in some customer payments around the
half-year end. However, we expect working capital to be broadly neutral across
the full year.
After payment of last year's final dividend of £7.7m, net debt at 29 February
2008 has increased by £4.4m since 31 August 2007 to £57.1m.
PENSION
The IAS 19 pension surplus on the defined benefit pension scheme has grown to
£50.1m at February 2008, from £9.9m at 31 August 2007.
This growth in the surplus has arisen from:
•£12.3m increase in the assets of the scheme
•£27.9m reduction in liabilities due mainly to the widening spread of AA
Corporate bonds.
As it is uncertain whether the current pension surplus can ever be realised by
the Group, no corresponding asset has been recognised in the balance sheet.
The defined benefit scheme continues to be managed through the Liability Driven
Investment policy, which, on an ongoing basis, minimises volatility through the
hedging of interest and inflation.
In addition, the Company is committed to make annual payments of around £5.4m
per annum into the scheme through to 31 August 2011.
POST BALANCE SHEET EVENTS
Acquisition of 50% of Rascal Solutions Limited
On 20 March 2008 it was announced that a 50% stake had been acquired in Rascal
Solutions Limited, a company that provides store level technology and resources
to a number of major retailers in the news and magazine category. The total
consideration for the acquisition was £3m of which £1m is deferred until 30
October 2008.
Rascal Solutions Limited had net assets of £1.0m at May 2007 and made £0.2m
profit before tax in the year to May 2007. We expect the impact of this
acquisition, after taking into account the increased finance charges, to be
marginally earnings enhancing across the next full year, whilst offering growth
within and beyond the newspaper and magazine categories going forward.
Property transaction
In April 2008, sale and leaseback transactions were entered into over the
Group's five remaining freehold properties for a combined consideration of
£2.3m. This will produce a profit on disposal of circa £1.4m. We expect some of
this profit to be offset in the second half of the year by one-off costs
relating to a re-organisation in the East Midlands. This reorganisation will
help to deliver future cost savings and service improvements.
RISKS
The major potential risk that could have a material impact on the Group's
performance over the remaining six months of the financial year relates to the
current uncertain economic conditions. A potential slowdown in consumer spending
could impact on sales of newspapers and magazines.
Further information on the principal long-term risks and uncertainties of the
Group is included on pages 11 and 12 of our latest annual report.
CAUTIONARY STATEMENT
This Interim Management Report ('IMR') has been prepared solely to provide
additional information to shareholders to assess the Group's strategies and the
potential for those strategies to succeed. The IMR should not be relied on by
any other party or for any other purpose.
The IMR contains certain forward-looking statements. These statements are made
by the directors in good faith based on the information available to them up to
the time of their approval of this report and such statements should be treated
with caution due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking information.
This IMR has been prepared for the Group as a whole and therefore gives greater
emphasis to those matters, which are significant to Smiths News PLC and its
subsidiary undertakings when viewed as a whole.
Condensed Group Income Statement (Unaudited)
For the 6 months ended 29 February 2008
--------------------------------------------------------------------------------
Audited
6 months to 12 months to
£m Note 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
Revenue 3 618.4 615.0 1,232.4
--------------------------------------------------------------------------------
Underlying operating profit 17.9 17.6 36.0
Non-recurring item* - - 5.4
--------------------------------------------------------------------------------
Operating profit 17.9 17.6 41.4
Investment revenues 0.4 0.6 0.7
Finance costs (2.2) (3.0) (5.7)
--------------------------------------------------------------------------------
Profit before tax 3 16.1 15.2 36.4
--------------------------------------------------------------------------------
Underlying income tax expense (2.0) (0.9) (6.1)
Income tax on non-recurring item* - - (1.6)
--------------------------------------------------------------------------------
Income tax expense 5 (2.0) (0.9) (7.7)
--------------------------------------------------------------------------------
Profit for the period 14.1 14.3 28.7
--------------------------------------------------------------------------------
Earnings per share
Basic 7 7.9p 8.1p 16.1p
Diluted 7 7.8p 7.9p 15.8p
Non-GAAP measures
--------------------------------------------------------------------------------
Adjusted earnings per share
Basic 7 7.2p 6.9p 16.1p
Diluted 7 7.1p 6.8p 15.8p
--------------------------------------------------------------------------------
* The Non-recurring item is an actuarial curtailment credit on the defined
benefit pension scheme. There is an associated deferred tax impact on this.
Condensed Group Balance Sheet (Unaudited)
As at 29 February 2008
--------------------------------------------------------------------------------
Audited
£m Note 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
Non-current assets
Intangible assets 3.8 2.1 3.4
Property, plant and equipment 16.8 18.2 18.2
Deferred tax assets 4.4 9.9 6.0
Interest in associate 0.1 0.2 0.2
Derivative financial instruments - 0.5 0.9
--------------------------------------------------------------------------------
25.1 30.9 28.7
--------------------------------------------------------------------------------
Current assets
Inventories 10.8 11.9 11.9
Available for sale investments 0.5 1.1 1.1
Trade and other receivables 57.6 59.8 53.0
Cash and cash equivalents 3.8 11.0 0.4
--------------------------------------------------------------------------------
72.7 83.8 66.4
--------------------------------------------------------------------------------
Total assets 97.8 114.7 95.1
--------------------------------------------------------------------------------
Current liabilities
Trade and other payables (103.6) (107.8) (108.0)
Current tax liabilities (5.5) (8.9) (8.8)
Obligations under finance leases (1.8) (1.3) (1.5)
Bank overdrafts and other borrowings (12.8) (22.9) (5.0)
--------------------------------------------------------------------------------
(123.7) (140.9) (123.3)
--------------------------------------------------------------------------------
Non-current liabilities
Bank loans and other borrowings (44.7) (49.6) (44.6)
Retirement benefit obligation 4 - (20.6) -
Derivative financial instruments (0.2) - -
Deferred tax liabilities (1.6) (2.3) (1.6)
Long-term provisions (0.4) (0.7) (0.5)
Obligations under finance leases (1.6) (1.2) (2.0)
Other non-current liabilities (0.4) (0.6) (0.5)
--------------------------------------------------------------------------------
(48.9) (75.0) (49.2)
--------------------------------------------------------------------------------
Total liabilities (172.6) (215.9) (172.5)
--------------------------------------------------------------------------------
Total net liabilities (74.8) (101.2) (77.4)
--------------------------------------------------------------------------------
Equity
Called up share capital 9 9.1 9.1 9.1
ESOP reserve 9 (3.2) (3.7) (3.7)
Other reserve 9 (280.1) (280.1) (280.1)
Hedging reserve 9 (0.2) 0.5 0.9
Retained earnings 9 199.6 173.0 196.4
--------------------------------------------------------------------------------
Total deficit (74.8) (101.2) (77.4)
--------------------------------------------------------------------------------
Condensed Group Cash Flow Statement (Unaudited)
For the 6 months to 29 February 2008
--------------------------------------------------------------------------------
Audited
6 months to 12 months to
£m Note 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
Net cash from / (used in)
operating activities 8 7.6 (12.5) 9.0
Investing activities
Interest received 0.1 0.6 0.7
Loan repaid by associate - 0.1 0.1
Purchase of property, plant and equipment (0.3) (1.2) (1.4)
Purchase of intangible assets (1.0) - (1.8)
--------------------------------------------------------------------------------
Net cash used in investing activities (1.2) (0.5) (2.4)
--------------------------------------------------------------------------------
Financing activities
Interest paid (2.2) (2.2) (4.5)
Dividend paid (7.7) (7.1) (10.9)
Repayments of obligations
under finance leases (0.9) (0.4) (1.6)
Increase in short term borrowings 7.8 22.9 -
--------------------------------------------------------------------------------
Net cash (used in) / from
financing activities (3.0) 13.2 (17.0)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net increase / (decrease) in
cash and cash equivalents 3.4 0.2 (10.4)
Opening net cash and cash equivalents 0.4 10.8 10.8
--------------------------------------------------------------------------------
Closing net cash and cash equivalents 3.8 11.0 0.4
--------------------------------------------------------------------------------
Condensed Group Statement of Recognised Income and Expenses (Unaudited)
For the 6 months to 29 February 2008
--------------------------------------------------------------------------------
Audited
6 months to 12 months to
£m Note 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
(Loss) / gain on cash flow hedges (1.1) 0.5 0.9
Actuarial gains on defined
benefit pension scheme 4 36.9 1.2 23.5
Effect of asset limit on
defined benefit pension scheme 4 (40.2) - (9.9)
UK deferred tax attributable to
defined benefit pension scheme
liabilities (0.7) (6.4) (8.2)
UK current tax attributable to the
additional defined benefit pension
scheme contributions 1.8 2.0 3.9
--------------------------------------------------------------------------------
Net (expense) / income recognised
directly in equity (3.3) (2.7) 10.2
Profit for the period 14.1 14.3 28.7
--------------------------------------------------------------------------------
Total recognised income for
the period 9 10.8 11.6 38.9
--------------------------------------------------------------------------------
Notes to the Condensed Unaudited Interim Financial Statements
For the 6 months to 29 February 2008
1 General information
These Interim Financial Statements are unaudited and not reviewed.
The information for the year ended 31 August 2007 does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. A copy of the
statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those accounts was not qualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
2 Significant accounting policies
The unaudited condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting', as adopted by the European Union.
The same accounting policies, presentation and methods of computation are
followed in these unaudited condensed financial statements as were applied in
the preparation of the group's financial statements for the year ended 31 August
2007.
3 Segmental analysis of results
Revenue and profit before tax are derived from the one principal activity of the
group, being the wholesaling of newspapers and magazines. The group operates
solely in the UK.
Seasonality has no significant impact within the Newspaper and Magazine markets.
4 Retirement benefit obligation
The pension arrangements for employees are operated through the Smiths News PLC
sections of the WH Smith PLC pension schemes. There is a defined benefit scheme,
WHSmith Pension Trust ('Pension Trust'), and a defined contribution scheme,
WHSmith Retirement Savings Plan. The Smiths News section of the Pension Trust is
closed to future service accruals.
The market value of the assets and the present value of the liabilities in the
defined benefit scheme were:
--------------------------------------------------------------------------------
£m At 29 Feb 2008 At 28 Feb 2007 At 31 Aug 2007
--------------------------------------------------------------------------------
Present value of the obligation (283.4) (343.4) (311.3)
Fair value of plan assets 333.5 322.9 321.2
--------------------------------------------------------------------------------
Surplus / (deficit) in the
pension scheme 50.1 (20.5) 9.9
Amounts not recognised due
to asset limit (50.1) - (9.9)
Retirement medical benefit
liabilities - (0.1) -
--------------------------------------------------------------------------------
Retirement benefit obligation
recognised in balance sheet - (20.6) -
--------------------------------------------------------------------------------
As it is uncertain whether the current pension surplus can ever be realised by
the Group an asset has not been recognised in the balance sheet at 29 February
2008 and 31 August 2007.
Movements in the present value of the defined benefit scheme obligations in the
period were as follows:
--------------------------------------------------------------------------------
6 months to 12 months to
£m 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
At beginning of period (311.3) (334.0) (334.0)
Current service cost (0.1) (1.5) (2.1)
Interest cost (8.6) (8.5) (16.9)
Actuarial gains / (losses) 30.9 (5.4) 21.9
Benefits paid 5.7 6.0 14.4
Plan curtailment - - 5.4
--------------------------------------------------------------------------------
At end of period (283.4) (343.4) (311.3)
--------------------------------------------------------------------------------
Movements in the fair value of defined benefit scheme assets in the year were as
follows:
--------------------------------------------------------------------------------
6 months to 12 months to
£m 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
At beginning of period 321.2 285.0 285.0
Expected return on scheme assets 9.0 7.7 15.7
Actuarial gains 6.0 6.6 1.6
Contributions 3.0 29.6 33.3
Benefits paid (5.7) (6.0) (14.4)
--------------------------------------------------------------------------------
At end of period 333.5 322.9 321.2
--------------------------------------------------------------------------------
5 Income tax expense
The income tax rate for the six-month period is 12% (six months ended 28
February 2007: 6%; Year ended 31 August 2007: 21%). This represents the UK
Corporation tax rate of 30%, adjusted for a provision release of £2.6m (six
months ended 28 February 2007: £4.0m; Year ended 31 August 2007: £4.0m).
6 Dividends
During the interim period, a dividend of 4.3p (2007: 4.0p) per share was paid to
shareholders.
In addition, the directors are recommending an interim dividend in respect of
the period ended 29 February 2008 of 2.2p per ordinary share (2007: 2.1p). This
will be paid on 12 June 2008 to shareholders registered at the close of business
on 23 May 2008 and will absorb an estimated £3.9m of shareholders funds.
7 Earnings per share
--------------------------------------------------------------------------------
6 months to 12 months to
29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
£m £m £m
--------------------------------------------------------------------------------
Profit for the period 14.1 14.3 28.7
Adjustment to reflect a 20% tax rate (1.2) (2.1) -
--------------------------------------------------------------------------------
Adjusted profit for the period 12.9 12.2 28.7
--------------------------------------------------------------------------------
Number Number Number
m m m
--------------------------------------------------------------------------------
Weighted average number of shares
in issue 182.9 182.9 182.9
Shares held by Employee
Benefit Trust (weighted) (3.8) (6.0) (5.1)
Weighted average number of shares
in issue for basic earnings per share 179.1 176.9 177.8
Shares issuable (weighted) 1.8 3.4 3.7
Weighted average number of shares in
issue for diluted earnings per share 180.9 180.3 181.5
--------------------------------------------------------------------------------
Pence Pence Pence
--------------------------------------------------------------------------------
Earnings per share:
Basic 7.9 8.1 16.1
Diluted 7.8 7.9 15.8
Adjusted earnings per share:
Basic 7.2 6.9 16.1
Diluted 7.1 6.8 15.8
--------------------------------------------------------------------------------
8 Net cash inflow / (outflow) from operating activities
--------------------------------------------------------------------------------
6 months to 12 months to
£m 29 Feb 2008 28 Feb 2007 31 Aug 2007
--------------------------------------------------------------------------------
Operating profit 17.9 17.6 41.4
Adjustment for pension funding (3.0) (3.1) (11.6)
Depreciation of property, plant and equipment 2.4 2.2 4.5
Loss on sale of property, plant and equipment - - 0.1
Amortisation of intangible assets 0.6 0.5 1.0
Non cash items 0.4 0.5 0.5
Decrease in inventories 1.1 0.3 0.3
(Increase) / decrease in receivables (4.6) 10.2 17.0
Decrease in payables (4.5) (11.0) (10.9)
Income tax paid (2.6) (4.7) (8.1)
Decrease in provisions (0.1) - (0.2)
--------------------------------------------------------------------------------
Net cash inflow from operating
activities before one-off items 7.6 12.5 34.0
One-off pension funding payment - (25.0) (25.0)
--------------------------------------------------------------------------------
Net cash inflow/ (outflow) from
operating activities 7.6 (12.5) 9.0
--------------------------------------------------------------------------------
9 Reconciliation of movements in equity
------------------------------------------------------------------------------------------
£m Share Other ESOP Translation Retained
Capital Reserve Reserve & Hedging Earnings Total
Reserve
------------------------------------------------------------------------------------------
Balance at 1 September 2006 9.1 (280.1) (7.1) - 170.8 (107.3)
Total recognised income and
expense for the period - - - 0.5 11.1 11.6
Dividends paid - - - - (7.1) (7.1)
Employee share schemes - - 2.6 - (2.6) -
Recognition of share based
payments - - - - 0.5 0.5
Transfer to available for
sale investments - - 0.8 - 0.3 1.1
------------------------------------------------------------------------------------------
Balance at 28 February 2007 9.1 (280.1) (3.7) 0.5 173.0 (101.2)
Total recognised income and
expense for the period - - - 0.4 26.9 27.3
Dividends paid - - - - (3.8) (3.8)
Recognition of share based
payments - - - - 0.3 0.3
------------------------------------------------------------------------------------------
Balance at 31 August 2007 9.1 (280.1) (3.7) 0.9 196.4 (77.4)
Total recognised income and
expense for the period - - - (1.1) 11.9 10.8
Dividends paid - - - - (7.7) (7.7)
Employee share schemes - - 0.5 - (0.5) -
Recognition of share based
payments - - - - 0.1 0.1
Available for sale investments - - - - (0.6) (0.6)
------------------------------------------------------------------------------------------
Balance at 29 February 2008 9.1 (280.1) (3.2) (0.2) 199.6 (74.8)
------------------------------------------------------------------------------------------
10 Contingent Liability
The Group has a potential liability that could crystallise in respect of
previous assignments of leases where the liability could revert to the Group if
the lessee defaulted. Pursuant to the terms of the Demerger Agreement, any such
contingent liability that becomes an actual liability will be apportioned
between Smiths News PLC and WH Smith PLC in the ratio 35:65 (provided that the
actual liability of Smiths News PLC in any 12 month period does not exceed £5m).
The company's share of these leases has an estimated future cumulative gross
rental commitment at 29 February 2008 of £37.6m (At 31 August 2007: £40.9m).
11 Events after the balance sheet date
On 20 March 2008 the Group acquired a 50% interest in Rascal Solutions Ltd.
Total cash consideration was £3m, of which £1m is deferred until 30 October
2008. Directly attributable costs were £0.4m. Given that we did not complete
until 20 March 2008, certain disclosures required by IFRS 3 'Business
Combinations' have not been made as it has not been practical to do so.
In April 2008, sale and leaseback transactions were entered into over the
Group's five remaining freehold properties for a combined consideration of
£2.3m. This will produce a profit on disposal of circa £1.4m.
12 Related party transactions
At the balance sheet date there had been no material changes in the related
party transactions described in the last annual report.
On 20 March 2008 the Group acquired a 50% interest in Rascal Solutions Ltd,
which will be a related party.
13 Responsibility statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting'
- the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
- the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
By order of the Board.
Mark Cashmore Alan Humphrey
Chief Executive Finance Director
24 April 2008 24 April 2008
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago The Renewables Infrastructure Group Limited
- 2 days ago Smurfit Westrock (DI)
- 2 days ago Menhaden Resource Efficiency
- 2 days ago BP