Interim Results - Connect Group · Interim Results 24 April 2012 Cautionary statement 5 Forward-looking statements This presentation contains certain forward-looking statements with

Interim Results 24 April 2012

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Highlights Mark Cashmore

Group Chief Executive



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



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.


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%


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


33% operating profit growth reflects addition of Dawson Books

8

Bertrams Group income statement


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)


Media and Marketing profitable and cash generative

9


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)


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)


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


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



Business coverage

14

Newspapers and magazines Books Media and Marketing

The Consortium Outlook

http://www.theconsortiumonlinecatalogue.co.uk/education/The_Consortium_Education_Furniture_and_Fittings/


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%


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%


Newspapers and magazines commentary

17

£5m efficiencies on track

Network consolidation

Systems upgrade

People investment

Positive OFT conclusion


-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%


Books – strategic progress

19

£3.8m synergies by 2014

Rushden into Norwich

New senior team

e-books progress

Internet fulfilment


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


The Consortium

21


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


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


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


25

Profit growth 4 out of 5 years

Growing profitability

40% profit growth FY12 driven by WMS acquisition

Opportunities for further growth


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


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


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


Highly fragmented

c30% of the market is the 5 PSBOs

Long tail of private specialist players

Regionalised competition

The Consortium:

– national reach

– scalable model



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


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



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

http://www.theconsortiumonlinecatalogue.co.uk/education/The_Consortium_Education_Furniture_and_Fittings/


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


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


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


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


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


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


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



Appendices



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


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


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%


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


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%


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)


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


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)


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%


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


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


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


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


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.



Documents

Interim Results - Connect Group · Interim Results 24 April 2012 Cautionary statement 5 Forward-looking statements This presentation contains certain forward-looking statements with