Trusted
delivery.
Annual Report and Accounts 2024
Welcome to our Annual Report and Accounts 2024
Total Statutory Revenue
£1,103.7m
Adjusted Operating Profit
£39.1m
Adjusted Profit after Tax
£24.7m
Headline results
A good performance on key measures
Delivering on
expectations and
opportunity.
The highlights of the year are testament to the balance we have struck
between short- and longer-term goals. Our key financial measures are
ahead of expectations… and we have growing new profit streams that
leverage our competencies and competitive advantage.
Jonathan Bunting
Chief Executive Officer
Statutory Profit after Tax
£25.5m
Adjusted Earnings per Share
10.3p
Free Cash Flow
£7.3m
Average Net Debt
£11.7m
Bank Net Debt
£11.0m
Dividend per Share
7.15p
Read more
→ Business model
04
→ KPIs
14
Smiths News plc | Annual Report and Accounts 2024
Strategic Report
Spotlight on Smiths News plc 02
Vision, Strategy and Business Model 04
Smiths News Recycle 08
Chairman’s Statement 12
Key Performance Indicators 14
CEO's Report 18
CEO's Stakeholder Q&A 20
Stakeholder Engagement
and S172 Statement 22
Sustainability Committee Report 32
Sustainability Report including TCFD 34
Financial Review 60
Viability Statement 64
Risk Management 66
Governance
Chairman’s Statement on Corporate
Governance 72
Corporate Governance Report 74
Board of Directors 76
Audit Committee Report 86
Nominations Committee Report 94
Directors’ Remuneration Report 98
Directors’ Report – Other
Statutory Disclosures 118
Directors’ Responsibilities 122
Financial Statements
Independent Auditor’s Report
to the Members of Smiths News plc 123
Group Income Statement 130
Group Statement of
Comprehensive Income 131
Group Balance Sheet 132
Group Statement of
Changes in Equity 133
Group Cash Flow Statement 134
Notes to the Accounts 135
Company Balance Sheet 163
Company Statement of
Changes in Equity 164
Notes to the Company Balance Sheet 165
Glossary 168
Shareholder Information 170
Read more about us on our website
→ www.smithsnews.co.uk
A message from our CEO
18
Our vision and strategy
04
Driving colleague engagement
26
Progress on sustainability
32
Growing new profits
06
Rewarding shareholders
12
55%
Our market share of
UK newspapers and
magazines
99%
Of unsold
newspapers and
magazines recycled
Listening to our stakeholders
22
Strategic Report Governance Financial Statements
01
For over 200 years we have been
delivering the daily news across
the UK. Our scale, experience
and expertise in the sector is
unparalleled, but today we
are expanding our horizons,
working towards our vision to
consolidate our position as one
of the UK’s leading providers of
early morning, end to end, supply
chain solutions.
In this snapshot, we explain who
we are and what we do…
The UK’s largest news wholesaler.
With 55% market share, Smiths News plc is
the UK’s largest newspaper and magazine
wholesaler, serving approximately 22,400 retail
outlets in England and Wales. Every morning,
we deliver to thousands of retailers, from corner
shops to large superstores, ensuring that
newspapers and magazines are widely available
to all.
Bespoke network
Using a hub and spoke configuration, we have
34 depots across England and Wales, providing
wide coverage and efficient capability. Our
regional ‘super hubs’ operate round the clock,
supported by smaller depots and overnight
distribution centres which make the ‘final mile’
distributions to approximately 22,400 retailers.
This configuration is continually reviewed for
optimum efficiency, flexibility and resilience.
Critically, the network offers a unique capability
to reach thousands of customers every day, with
an early morning delivery and collection service
that is flexible, efficient and highly reliable.
Delivering
solutions now
and for the future.
Scale logistics
At the core of our logistics operation is our
ability to receive, pick, pack and deliver supplies
from a variety of suppliers, in the tightest of time
windows. We do this at scale, processing an
average of 2 million newspapers every day and
3.9 million magazines every week.
To achieve this, our network is set up to receive
supplies round the clock, with the less time
sensitive products prepared in advance of
the overnight newspapers. By consolidating
supplies from all of the leading publishers in the
UK we provide an efficient and cost effective
logistics solution for all parties.
Early morning deliveries
At Smiths News we work to uniquely
challenging delivery windows. As a result, we
have unparalleled early morning capability, with
over 90% of our deliveries being completed
by 6.30am. All our deliveries are tracked and
recorded to provide quality assurance across
the supply chain.
Recycling capability
Every morning, we collect yesterday’s unsold
newspapers and out of date magazines, using
onsite facilities that sort and process these
returns for recycling. Our new venture Smiths
News Recycle extends our capabilities to
cardboard and plastic – it is proving to be a
popular service with retailers and a growing
opportunity to use our capabilities in a new
market.
c.160k
Tracked deliveries
each week
End to end solutions
Our logistics expertise is supported by
technology and processes that provide a
comprehensive solution, for our suppliers and
customers. This includes demand forecasting,
core deliveries, sales-based replenishment, the
collection and recycling of any unsold copies
and instore support when required. All our
services are backed by transparent KPIs that
ensure the same high-quality service in every
corner of our network.
Market insight
Our supply and invoice systems give us a
complete view of the market, with the most
comprehensive data set of anyone in the
industry. We use this information to forecast
sales trends and help publishers and retailers
respond to fluctuating demand. This market
insight is critical to our added value role and is
one factor that distinguishes our service from
that of other wholesalers and carriers.
Who we are
What we do
The newspaper lifecycle
means today’s editions are
out of date within a matter
of hours.
We’re proud to serve
our customers and their
communities every day
of the year.
02
Smiths News plc | Annual Report and Accounts 2024
Spotlight on Smiths News plc
Adjacent businesses
We have a range of adjacent
businesses that leverage our
capabilities in complementary
markets.
Smiths News Recycle
Our fast-growing recycling service offering daily
collections of plastic and cardboard waste.
DMD
A specialist supplier of printed and digital
media to airlines and travel points in the UK and
worldwide.
Instore
Working with suppliers and retailers Instore
specialises in field-based merchandising, supply
chain auditing and compliance solutions.
Martin Lavell
Martin Lavell supplies newspapers and
magazines directly to large corporate and public
sector organisations.
Key
Hub Spoke
Where we are
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Our Values
c.5m
Number of newspaper
distributed each week
99%
Of unsold newspapers
and magazines are recycled
24
Hours we operate a day
Read more
→ Sustainability and people 34
Strategic Report
Governance Financial Statements
03
Vision
This year we have taken the time to restate our vision and purpose
to reflect the progress of the business and the opportunities to expand
in complementary markets.
To consolidate our position as one of the UK’s leading providers of early morning
end to end supply chain solutions.
Our vision statement describes the direction we are headed. It is grounded in our business model
and competitive advantage, and as such it acts as a compass bearing for our strategy and plans.
Its constituent parts reflect the full scope of our competencies and our belief in their potential to
foster growth.
The UK’s leading provider
Already the UK’s largest and leading UK news
wholesaler, we are a scale logistics provider with
the capability and ambition to expand from our
core business. Reaching approximately 22,400
customers every day, we have an extremely
high drop density and frequency of delivery. Our
network provides efficient coverage of England
and Wales, and our technology means we
can support physical deliveries with tracking,
invoicing and data management.
Early morning capability
Early morning delivery is our specialism:
working overnight and round the clock to reach
customers before 7.00am for both deliveries and
collections. What’s more, we do this for small and
large retailers, in urban and rural areas, and on
weekdays and weekends. It’s a unique capability
that other logistics providers cannot match.
End to end services
Our role is not limited to daily deliveries and
collections. Rather, we offer a complete range
of services that includes invoicing, customer
experience, instore support, recycling and
replenishment. Linking suppliers to customers
we have an ‘end to end’ capability that sets us
apart from traditional logistics providers.
Supply chain solutions
We are committed to long-term partnerships
and working across our supply chains to make
them more efficient, sustainable and profitable
for all parties. We plan to continue investing and
innovating in a way that enhances our role and
supports our vision of adding value in all that
we do.
Established
expertise,
consistently
value adding.
Our vision, strategy and business model are founded on our long-
established leadership in news wholesaling but is also focused on
the future. With renewed long-term contracts and strong underlying
finances, we have the capability and means to grow ‘from’ our core
– fully maintaining the qualities that have served us well, while also
fostering new opportunities that fit our capabilities and culture.
Purpose
Making our customers’ lives easier and
more profitable. We provide supply chain
solutions that enable them to focus on
what they do best.
Our purpose statement describes the role
we play and the difference we make to our
customers and the wider supply chain. It
dovetails to our vision, business model and
values, and reflects the benefits we bring to our
customers and trading partners.
Making our customers' lives easier
Meeting customer needs is central to our role
and purpose. With a range of services, we
simplify the complexity of managing supplies,
forecasting demand and handling returns. And
it’s this added value which cements our role in
our chosen supply chains.
More profitable
By simplifying complexity, we also make our
categories more profitable for our customers,
standardising processes and reducing instore
handling costs. Our market oversight means we
can anticipate demand and help customers to
maximise sales throughout the year.
Focusing on what they do best
Our aim is to be an essential partner for all our
customers, allowing them to concentrate on
running their business without time-consuming
administration or the need for detailed category
expertise. With daily deliveries and thousands
of potential product lines our services help our
customers manage their supplies and ranges
with ease.
Our Vision
To consolidate our position
as one of the UK’s leading
providers of early morning
end to end supply chain
solutions.
Our Purpose
Making our customers’ lives
easier and more profitable.
We provide supply chain
solutions that enable them
focus on what they do best.
04
Smiths News plc | Annual Report and Accounts 2024
Vision, Strategy and Business Model
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Strategic Report
Governance Financial Statements
05
Strategy
Our strategy is clear and
uncomplicated. It has two
distinct but interconnected
threads that ensure we make
the best of our leadership today,
while also building for the future.
News wholesaling
The wholesaling of newspapers and magazines
is what we term our ‘core’ business. With 55%
market share and over 200 years’ experience,
we are the clear market leader in this specialist
field. We recognise that sales of printed news
products are in long-term decline, but these
trends are gradual, and our share of the market
still supports over £1 billion of revenues. Our
long-term contracts also provide enviable
security and visibility, not only of our likely future
revenues and cash flows but also of our network
requirements and other investment needs.
Our strategy is therefore long established,
backed by track record of tangible delivery.
We aim to maintain our market leadership with
a combination of unmatched service, industry
innovation and scale efficiency that makes
Smiths News an essential partner for our
publishers and retail customers. In addition,
we will pursue tactical opportunities that deliver
useful additional revenues, making a helpful
contribution to overheads without distraction
from our contractual commitments.
New and adjacent markets
The skills and competencies required for
news wholesaling are increasingly applicable
to growing adjacent opportunities and entry
into other new and emerging markets. Our
strategy for growth is firmly focused on those
opportunities for which we have inherent
competitive advantage, founded on our
capabilities in early morning distribution and
our skill set in providing supply chain solutions
for complex to manage categories and essential
services.
Having identified a range of potential
opportunities, we are currently applying a
robust selection methodology, including
real-world trials and testing, before committing
to investing at greater scale. This approach not
only ensures we have the evidence to help make
sound decisions, it also provides reassurance
that the avenues we choose to follow are
compatible with our core business model and
customer needs.
Growth Methodology
We have adopted a prudent but progressive
approach to growth.
In tangible terms, this means our strategy
and methodology are intended to evolve
our business model over time, as opposed
to diversifying in radically new or tangential
directions. In practice, we are most attracted to
markets, such as the growing demand for early
morning distribution and reverse logistics, that
play directly to our strengths.
Having conducted extensive research, the
strategic opportunities we are now exploring are
all based on material industry requirements and
consumer and trends. It is clear that there is no
shortage of exciting directions to take. Our goal
in applying a strict selection methodology is to
refine these to fewer propositions, identifying
those with the greatest potential for scale and
long term competitive advantage.
The methodology that will guide our investment
decisions includes:
• Focusing on our proven skills and capabilities
• Evaluating the results of test and trials
• Ensuring there is no compromise or
distraction to the core business
• Leveraging our industry relationships
• Using our spare capacity to support cost
advantage
• Building scale to embed our offer and
enhance competitive advantage
By applying these principles, our plan is not only
to increase the contribution from new revenues,
but to build a portfolio of compatible business
activities that offer sustainable competitive
advantage. While our primary focus is to build
from within, we remain open to funding modest
bolt-on acquisitions where these would add
scale, skills and synergies.
06
Smiths News plc | Annual Report and Accounts 2024
Vision, Strategy and Business Model continued
In allocating supplies, our market insight
means that we can respond to fluctuations
in demand and achieve optimum availability
without excess waste.
Asset-light
Our long-established network of final mile
contactors means that we have the flexibility
to respond to changing demand without the
burden of high fixed costs. Furthermore, we
can test and trial new opportunities with limited
capital investment, working with our contactors
who then share in the benefits these new
initiatives bring.
Value adding
At Smiths News we do much more than mere
delivery and collection. Our range of services
provide extensive added value to customers and
suppliers, helping them to run their business
more efficiently and profitably. We work closely
with all the major players and industry bodies
to ensure our service propositions makes
meaningful difference, thereby embedding our
role and value across the supply chain.
Extensive and growing capability
Our business model – in tandem with our vision
and purpose - is built on extensive capabilities
that are integral to our role and market
leadership.
As we look to the future, we plan to apply these
skills and competencies to more adjacent and
emerging markets, growing ‘from’ our core in
way that enhances our prospects and creates
new competitive advantage.
Business Model
Our business model is strong
and well established, founded on
sector expertise and value adding
services. With an asset-light, final
mile, contractor model we have
the ability to flex our service in
response to demand and are not
burdened with the high fixed
costs of a large fleet. From a
trading perspective, the invoicing
and payment cycle promotes
positive cash generation, and we
operate with low levels of debt.
An essential supply chain partner
As the UK’s largest news wholesaler, we have
long-term contracts that provide security and
visibility of revenue streams. Building on this
core capability, we are growing in adjacent
markets that play to our strengths in early
morning distribution and end to end logistics.
Integral to our business model is a long
term commitment to meeting the needs of
all stakeholders, balancing investment and
innovation that benefits customers, suppliers
and our people, with attractive returns for
our investors.
Our logistics capability supports a shared route to
market that delivers outstanding service, tangible
efficiencies and added value for both suppliers
and customers. All this is achieved in the tightest
of time windows 364 days of the year.
Outstanding service
As an essential partner in our supply chains
we work to shared objectives and promote full
transparency of performance. In doing so, we
track and measure the flow of products from
receipt at our depots to customer deliveries
and, ultimately, the returns and recycling of any
unsold supplies. The standards we set are high,
encompassing on-time delivery, processing
accuracy and data integrity. Suppliers
and customers are provided with detailed
information and our entire service is backed
by comprehensive communication and
extensive KPIs.
Eficiency
As the UK’s largest news wholesaler, we serve
all the major publishers, reaching thousands
of customers in a way that ensures costs are
shared across the supply chain. In fulfilling
these complex logistics, we have developed a
capability to reach retailers of all sizes in both
urban and rural areas – thereby ensuring the
widespread and timely availability that is an
essential component of our contracts.
Our capabilities
Early morning specialist
Every day we reach
approximately 22,400
customers, typically before
6.30am, with reliable deliveries
and collections that are
essential for their businesses.
Network coverage
The density and frequency of
our daily deliveries is second
to none – we cover urban
and rural areas, using flexible
routing that accommodates
variations in volume while
optimising efficiency.
Returns logistics
Alongside our daily deliveries
we collect unsold and recyclate
waste products for return and
recycling. We have in-house
capability to sort, process and
audit products of high value as
well as ensuring sustainable
disposal.
Assured KPIs
We track and monitor every
step of the logistics process –
from receipt of goods to returns
and recycling – and share
performance with transparent
reporting to suppliers and key
customers.
Category management
With a comprehensive view
of sales and returns, our
systems adjust the supplies
of over 3,000 product lines
on a daily basis. This helps to
maximise sales and simplifies
the management of complex
categories for our customers.
Instore support
We have capability to provide
in-store merchandising,
sales promotion and stock
auditing. We also have access
to specialist high traffic flow
outlets such as those at
airports and travel points.
Strategic Report
Governance Financial Statements
07
Convenience
and efficiency
for our clients.
Smiths News Recycle is a new and innovative
service that, in just over two years, has grown from
a regional trial to more than 5,000 customers across
our full network.
Meeting a clear gap in the market, we offer a daily collection of cardboard
and soft plastic recycling, tailored to the needs of small and medium-
sized retailers who typically struggle with storage space and need a
regular, flexible, collection. This fits with our competencies and provides
customers with a simple solution provided by a trusted partner.
It’s the leading example of our strategy to experiment and trial new
business opportunities that build ‘from’ our core skills and competencies,
making further investment as and when we are confident that greater
scale can be supported.
Smiths News Recycle
08
Smiths News plc | Annual Report and Accounts 2024
Helping customers save time
and money
Smiths News Recycle helps customers save time
and money and frees up space instore. And key
to its popularity is the simplicity, convenience and
assurance that the service offers.
Simplicity
• Participating retailers are provided with
recycling bags
• The filled bags are left in an agreed location
for pick up along with newspaper and
magazine returns
• Collections are made the following morning,
typically before the store opens
Convenience
• Collections are made every day
• Customers can have as many bags and
pick-ups as they wish
• Flexible collections mean there is no need
to book slots
Assurance
• There is single low-cost weekly fee and no
lengthy contract to sign
• The waste is sorted and recycled through
accredited partners
• Customer support is available online and
through our call centres
Leveraging our competencies
The launch and rapid growth of Smiths
News Recycle has been built on our existing
infrastructure and customer footprint. In
particular, the daily collections are integrated
to the newspaper delivery routes and our
depots already have in-house waste sortation
facilities. Customer sign-up, invoicing and
communication can also be handled within
existing systems.
This in-house advantage has allowed us to test
processes and increase scale and with a limited
initial investment. As a result, the service is
already making a positive contribution to profits
and fits perfectly with our overall vision to be a
leading provider of early morning, end to end,
supply chain solutions.
Key to our success has
been keeping the offer
simple, and expanding after
trailing and testing new
ideas, so that we learn what
works and what doesn’t fit
our model.
1.
Customers receive
bags for pre-sorting
waste
3.
Collections are made
early morning as
part of our news
deliveries
2.
Waste is left in the
marked bags outside
of stores
4.
Our depots sort
and consolidate the
waste into bulk
consignments
5.
We work with
specialist recyclers to
dispose of the waste
sustainably
Growing demand for recycling
solutions
The demand for recycling solutions is growing
rapidly, driven by legislation and greater
awareness of our environmental responsibilities.
Larger retailers, such as supermarkets have
specialist partners to manage a range of high
volume and complex waste categories. Smaller
businesses, however, require a simpler solution
that’s focused on fewer categories and smaller
daily volumes.
In this environment Smiths news Recycle has
a clear strategy for growth. We are targeting
small and medium sized customers whose
primary concern is assured removal of their
packaging and plastic waste. This fits with our
competencies and provides customers with a
simple solution provided by a trusted partner.
Since launching Smiths News Recycle, we have
focused primarily on our existing customers, but
we are now looking to broaden our horizons.
Already we have a significant number of
bookmakers using the service and we are
assessing enquiries from several other
customer opportunities that would fit with
our delivery footprint.
Investing for greater scale
As the business grows, we are investing to
improve efficiency, ensuring we can quickly sort
and process the waste for our end recycling
partners. We are now handling over 21,000
bags of waste every week and are planning
for greater volumes as more customers come
on board.
This year we have invested in 1,000 storage
magnums to help separate and handle waste
on pallets in our depots. New state of the art
waste compactors have also been installed at
Birmingham, the original launch site for Smiths
News Recycle. The compactors will give us
greater on-site processing capacity as well as
ensuring we can operate with our trademark
efficiency. Subject to successful trials, we plan
for these to be rolled out to other distribution
centre hubs.
What our customers say
Customers are delighted with our core service;
they say it is simple, reliable and fairly priced.
Our six week free trial period for new customers
provides a no risk sign up and helps them to
confirm if the service fits their needs.
How the service
model works
Phil White
General Manager Smiths News Recycle
Strategic Report
Governance Financial Statements
09
Established in 2000, Instore is our
award-winning merchandising and field
marketing business. For over two decades
we’ve been working with retailers,
suppliers and publishers, providing field-
based merchandising and retailer-focused
marketing and compliance solutions.
Starting life as a specialist in newspaper and magazines,
Instore now has expertise and brand reputation in supporting
a much broader range of categories. These include greetings
cards, confectionary, books, DVDs, snacks and other express
and kiosk products.
We operate across the UK and our retail customers include,
among others, WH Smith, Sainsbury’s, Tesco, Lidl, Morrisons,
B&M and Home Bargains. Supplier clients include leading
national publishers, confectionary brands, stationery,
greeting cards and health and beauty suppliers.
While merchandising and field marketing are Instore’s
flagship services, we supplement these with promotional
compliance and sales reporting. We take pride in offering a
comprehensive and flexible service that meets fast-changing
needs of our customers and express categories in particular
– whether that be tactical support for promotions or longer-
term solutions for brand awareness.
This year, Instore supported Topps in the merchandising of
their 2024 UEFA European Football Championship sticker
and trading card collections. Helped by our proactive
presence ensuring excellent display and availability across
multiple retail footprints, sales of the collection were up by
23% on plan, a tangible success, not only for the publisher
client, but for customers, retailers and Smiths News too.
Instore has the experience and expertise to deliver cost-
effective and value adding solutions.
Instore fits squarely with our vision and purpose, making
customers lives easier, helping to increase their profitability
and supporting end to end supply chain solutions.
Supporting
customer
profitability.
Instore
10
Smiths News plc | Annual Report and Accounts 2024
DMD is a leading travel hub and airside
service provider, specialising in the supply
and placement of newspapers, magazines
and digital media. Drawing on 35 years’
experience we work with publishers,
airlines and major travel operators across
the globe.
Providing a comprehensive supply chain solution, we
enable publishers to reach valuable out-of-home audiences
in locations that are complex to serve. These include
international airports and rail terminals, airside lounges,
and even the supply of on-board copies for complimentary
distribution.
Making this process easy for our customers, our expert
teams manage the entire process, from content sourcing
and delivery to central invoicing across territories and media
formats in one seamless service – whether that be local to
the UK or a fully global operation.
As such, we now operate in 20 countries, either supplying
directly or using established local partners. Our clients
include a wide range of major international publishers as
well as leading airlines such as Emirates and Thai Airways. In
addition, we supply Eurostar, and major UK airports such as
Heathrow and Gatwick.
This year we were pleased to extend our agreement with
Emirates airline. Supporting its reputation for outstanding
customer service, Emirates trusts DMD to supply its flagship
flights from Dubai with a range of magazines sourced from
nine different countries. In addition, we supply copies to
a further 30 Emirates’ first and business class lounges in
15 countries.
Our contract with Emirates demonstrates how we work
to enable simple solutions across a complex supply chain.
Delivering high
value supply
chain solution.
DMD
20
Number of countries we operate
in, either supplying directly or using
established local partners
30
Number of first and business class
lounges we supply for Emirates
airline
11
Strategic Report Governance Financial Statements
I’m pleased to report that Smiths
News has once again returned
a good financial performance,
while making operational
progress that will help to ensure
we maintain our leadership and
continue to meet the needs of all
stakeholders.
This disciplined execution of our plans is
characteristic of our business, reflecting our
determination to focus on what we do best
while leveraging our core competencies in
adjacent opportunities. In doing so, we have
embedded the progress of recent years,
enabling us to look to the future with a
confidence that is built on tangible success.
From a financial perspective, our results this
year have exceeded market expectations. In
line with our business model, performance is
founded on a programme of robust cost control,
helping to offset the decline in core volumes and
ongoing inflationary headwinds. Additional sales
from the men’s 2024 UEFA European Football
Championships and a growing contribution
from new revenues have also provided a
notable benefit. As a consequence, our
headline measures continue to show
year-on-year progress.
Adjusted operating profit of £39.1m is up 0.8%
(FY2023: £38.8m) from revenue of £1,103.7m
that was up by 1.1% (FY2023: £1,091.9m).
Statutory Operating Profit of £40.0m was up
4.4% (FY2023: £38.3m). Free Cash Flow of
£7.3m (FY2023: £21.8m) is impacted by the
timing of payments at year end, as is Bank
Net Debt of £11m (FY2023: £4.2m). In this
respect, a more representative measure of
our strengthening balance sheet is the 53.2%
reduction in Average Bank Net Debt to £11.7m
(FY2023: £25.0m).
These investments will also help to facilitate
our growth in adjacent opportunities. Our
strategy in this regard is clear: we believe our
competencies can be leveraged in new markets
and that this is best achieved by growing
‘from’ our core, rather than more speculative
diversification.
The progress of our recycling service, from
start up to circa 5,000 customers, is testament
to this approach and we are confident that
more opportunities can be developed that
match our early morning delivery capabilities.
While we believe that many opportunities can
be developed from within, we remain open
to the possibility of building scale with
appropriate bolt-on acquisitions that meet
robust investment criteria for delivering
shareholder value.
In May 2024 we announced our renewed
banking facilities with arrangements that are
a watershed in our journey to remove the
burden of excessive debts and provide greater
flexibility to our operations. Not only do the
new arrangements confirm our commitment to
a strong balance sheet, they allow for greater
flexibility in both investment and distributions to
shareholders. This is a significant achievement
from where we were five years ago and one
from which all stakeholders will benefit.
In line with these objectives, a final ordinary
dividend of 3.40p is recommended to be paid
in February 2025 (FY2023: 2.75p) bringing
the total ordinary dividend in the year to 5.15p
(FY2023: 4.15p). The Board is also proposing
payment of a further special dividend of 2.0p,
to be paid alongside the final dividend in
February 2025.
David Blackwood
Chairman
Behind these headlines sits a mix of revenue
and cost variations that reflect the nature of our
markets and operational model. Importantly,
sales of newspapers and magazines continue to
deliver substantial revenue and cash flows and
although volumes are structurally challenged,
they are relatively stable and predictable.
This year, our revenue has been boosted by
continued strong cover price rises helping to
mitigate the impact of volume declines. Sales
of higher margin one-shots and collectibles
were also robust, with trading card and sticker
collections adding to the growth.
In seeking operating cost saving, we remain
committed to finding sustainable efficiencies
that help to keep pace with the structural
decline in sales, but without impacting our
service standards. Achieving this balance is vital
to maintaining the trust of our trading partners
and, indeed, increasingly our efficiency plans are
collaborative across the supply chain. This year
we have made further changes to our network
and to local delivery configurations that are a
proportionate response to the acknowledged
long-term trends in the industry. Inflationary
impacts on our base distribution costs are a
further component and we remain mindful that
the underlying variables are likely to remain
under pressure for some time.
Moving forward, the renewal of our publisher
contracts means we have enviable clarity on
our network and core distribution footprint,
through to the end of the decade. As the
market leader we never take this security for
granted, recognising that our contracts – and
our reputation - are founded on maintaining the
high standards of service that our customers
expect. This is why we continue to invest in
technology, new services and infrastructure to
position Smiths News as an essential supply
chain partner and a benchmark of excellence
and efficiency.
A good performance,
highlighting our core
competencies and
future potential.
Chairman's Statement
As we accelerate our pursuit
of new revenues, we can
be sure that the skills,
competencies and culture
that have brought us to
where are today, are equally
compatible with those we
need for the future.
12
Smiths News plc | Annual Report and Accounts 2024
As a consequence of the refinancing, we have
revised our capital allocation policy to better
support our objectives and, in particular, the
balancing of the needs of all stakeholders.
The combination of our previously announced
intention to invest an additional £6.0m over the
next three years in the business’s systems and
technology and our facilities, together with an
additional payment of a special dividend, is a
clear example of our commitment to providing
attractive cash returns while meeting the
ongoing needs of the business.
In writing this overview of our year, I’m
conscious that it’s not possible to list every
element of the incremental and strategic
headway which we have made, let alone the
commitment involved in delivering the day-to-
day service that is the hallmark of our business.
In that respect, the scope and detail within the
body of this Annual Report is one of the clearest
demonstrations of the efforts of our colleagues
to drive improvement. In seeking to do their best
every day they continue to make progress in
areas such as sustainability, people and talent,
cyber security, health & safety and several more
that I could list. As always, their experience and
expertise are the vital catalyst in the advances
we make and the opportunities we find for
the future.
Looking ahead, it will be clear that we are
now embarking on a new strategic phase. The
core challenges remain, but our ability to meet
these has been demonstrated and the financial
foundations on which we can build outward
from the core are stronger than ever. As we
accelerate our pursuit of new revenues, we can
be sure that the skills, competencies and culture
that have brought us to where we are today, are
equally compatible with those we need for
the future.
Finally, I would like to thank my colleagues on
the Board and Executive Team for their support
and constructive feedback in the year. In
January 2025, following our AGM, Denise Collis
will step down from the Board after nine years
of service; we will miss her contribution and
wise counsel. As we move forward as a Board,
it is vital that we maintain the combination of
teamwork and challenge that has served us
well during my tenure, striving always to find the
improvements – small and large – that make
the difference for all our stakeholders. With this
assured, I am excited for the year ahead and
confident of reporting on further success.
David Blackwood
Chairman
4 November 2024
Online Investor
Zone
Keeping our shareholders
informed
The investor zone on our
website provides shareholders
with a wealth of information
on the Company and its
performance.
→ www.smithsnews.co.uk/
investor-zone/
It includes a range of useful
tools to keep up to date with
the value of your investment.
Results and Presentations
Our latest results and
presentations, available
in PDF format as well as
webcast video and audio.
Dividends
Information on our historic
dividends, a calendar for
future payments and a tool to
analyse values.
Share Price and Calculators
Information on our share
price and a range of tools
help to chart and analyse
movements.
Regulatory News
Copies of any company
announcements to the
London Stock Exchange’s
Regulated News Service.
Key Dates
Upcoming dates in the
Company’s financial calendar.
Research
The latest research articles
and publications on Smiths
News PLC.
The investor zone also
includes details of our
registrar and information on
the market consensus of our
expected key performance
metrics.
Enquiries
For any specific enquiries
concerning Investor Relations,
please email:
→ investor.relations@
smithsnews.co.uk
Adjusted Operating Profit
£39.1m
Adjusted Profit after Tax
£24.7m
Statutory Profit after Tax
£25.5m
Free Cash Flow
£7.3m
Average Net Debt
£11.7m
Bank Net Debt
£11.0m
Strategic Report
Governance Financial Statements
13
Meeting stakeholder needs
When measuring our performance, we take
a holistic approach to meeting the needs of
our stakeholders. Indeed, we believe their
expectations are united in a virtuous circle
of service excellence, consistent and reliable
results, investment that supports future
opportunity and support for our people who are
essential to everything we achieve. This means
we set targets that focus on both our immediate
and ongoing requirements in the core, while
also striving for challenging goals that will
bolster our longer-term prospects.
Service excellence
Service and efficiency are critical components
of success, not only in meeting the requirements
of our customers, but more widely in supporting
our supplier contracts and reputation as
industry leader. Strong service KPIs also help
to control costs by avoiding unnecessary
duplication.
Consistent and reliable results
From a financial perspective, we seek to
maintain a strong balancing sheet, with a
transparent capital allocation policy that
provides attractive returns to our shareholders
while simultaneously meeting the investment
needs of the business.
Investing for the future
Our business model has a strong cash
conversion profile, which we allocate across the
needs of all stakeholders, including investment
in the core news wholesaling business, and
new adjacent opportunities that fit our skills
and capabilities. Our focus on organic growth
recognises that, over time, we can further
strengthen our business model with more
diversified revenue streams.
People
Supporting our people in their skills and careers
is fundamental to our success. Across our supply
chains we work with clients and customers to
make progress in areas such as sustainability,
health & safety and industry-wide solutions that
are appropriate for a shared route to market.
Key Performance
Indicators
Our KPIs encompass the most critical measures
of the Company’s success and future prospects.
In pursuing them we believe they meet the
needs of all stakeholders, balancing attractive
financial returns with investment in the business
and its people.
Measuring our
performance.
The financial KPIs reflect our goal of maintaining
strong underlying finances, including a prudent
approach to debt and the payment of attractive
dividends subject to performance and in line
with our capital allocation policy.
Non-financial KPIs reflect the key performance
measures of our service to customers and
industry partners. In addition, we include
measures that give attention and visibility to
workplace safety, colleague engagement and
customer satisfaction.
An analysis of the Company’s financial and
non-financial performance, including discussion
and explanations of year-on-year movements,
can be found in the various sections of Strategic
Report on pages 1 to 71.
Our non-financial metrics continue to perform
at an exceptionally high overall standard,
and comfortably within our contractual
requirements. This year, delivery and collection
times have been marginally impacted by the
rescheduling of some publisher arrival times and
consequent changes to route configurations,
also impacting customer satisfaction. The
movements in the measures for health and
Safety are within the statistical tolerances
we would expect from year to year, while the
colleague satisfaction measure is new and not
comparable to previous measures. As regards
Greenhouse Gas Emissions, we have now
established mid-term targets in line with a 55%
reduction in emissions over a 10 year period to
2033, with progress having been made in the
year in reducing site gas emissions as part of
our depot refurbishment programme. However,
Scope 3 SECR emission have increased in the
year due to increased mileage and a higher
Defra-applied calculation rate.
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KPI
Scorecard
Nonetheless, we continue to work to improve
absolute performance in all areas, while still
seeking new and sustainable cost efficiencies in
our operation. Further details of these measures
and actions we are taking can be found in the
CEO report (see page 18) and the Sustainability
report (see page 34).
Our non-financial metrics continue to perform
at an exceptionally high overall standard,
and comfortably within our contractual
requirements. This year, delivery and collection
times have been marginally impacted by the
rescheduling of some publisher arrival times and
consequent changes to route configurations,
also impacting customer satisfaction. The
movements in the measures for health and
Safety are within the statistical tolerances
we would expect from year to year, while the
colleague satisfaction measure is new and not
comparable to previous measures. As regards
Greenhouse Gas Emissions, we have now
established mid-term targets in line with a 55%
reduction in emissions over a 10 year period to
2033, with progress having been made in the
year in reducing site gas emissions as part of
our depot refurbishment programme. However,
Scope 3 SECR emission have increased in the
year due to increased mileage and a higher
Defra-applied calculation rate. Nonetheless,
we continue to work to improve absolute
performance in all areas, while still seeking
new and sustainable cost efficiencies in our
operation. Further details of these measures
and actions we are taking can be found in the
CEO report (see page 18) and the Sustainability
report (see page 34).
14
Smiths News plc | Annual Report and Accounts 2024
KPIs
Non-financial KPIs
Customer Pack Accuracy %
99.7%
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Returns Processing Accuracy %
99.95%
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Colleague Engagement
(Net promoter score) *
62%
Colleague Engagement
(Net promotor score) *
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Health and Safety
(Lost time incidents per 100k hours) No.
0.38
Health & Safety (Lost time incidents frequency rate, per 100,000 hours)
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Required Delivery Time %
92.4%
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Returns Collections %
96.3%
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Customer Satisfaction
(Net promoter score)
25
Customer satisfaction
(Net promotor score)
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Health and Safety
(RIDDORs) No.
5
Target
FY2024
FY2023
FY2022
FY2021
FY2020
Greenhouse Gas Emissions
+2%
Target
FY2024
FY2023
FY2022
FY2021
FY2020
98.0%
99.7%
99.7%
99.7%
99.7%
99.3%
99.5%
99.95%
99.95%
99.96%
99.9%
99.9%
N/A
0.38
0.33
0.25
0.32
N/A
N/A
5
4
2
11
7
90.0%
92.4%
93.3%
92.4%
95.1%
96.8%
25
25
28.1
27
28
N/A
4.96%
+2%
N/A
N/A
N/A
N/A
98.0%
96.3%
96.9%
97.3%
98.4%
98.2%
62%
62%
7.1
7.0
7.0
6.0
Daily returns collections ensure that sales data
(supplies minus returns) is processed within
tight time windows, supporting sales forecasting
and accurate invoicing.
Arrival at the scheduled time is a key service
measure for customers and publishers and
aligns to our contractual obligations.
Pack accuracy ensures customer supplies and
invoicing are aligned, minimising queries and
administrative corrections.
Unsold copies are credited to customers, so
accuracy is vital for credits and invoicing to both
retailers and publishers.
Surveying a statistically representative selection
of 300 customers every month, we track our
service performance across a range of factors
to ensure quality, accuracy and timeliness of
deliveries. The net promoter score is an annual
average of the overall headline indicator.
Working productively together is central to our
values. The engagement of colleagues underpins
our performance at every level of the business. In
FY2024, the Company appointed a new partner
to conduct engagement surveys which has
necessitated adopting a new rating mechanism
and target. Furthermore, during the year two
surveys were conducted: one in October 2023
(score 57) and in the second in April 2024 (score
66), resulting in an average score for the year
of 62, establishing a new benchmark target in
which to assess future performance.
We measure ‘lost time incidents’ as the
most comprehensive and accurate capture
of reportable occurrences that impact our
operations. By measuring these as a percentage
of operating hours, we can benchmark to
other organisations and allow for growth or
contraction of our activities.
We monitor RIDDORs to learn from every major
incident, ensuring we take action to reduce the
possibility of recurrence.
As part of our sustainability strategy, we have
committed to a science-based target reduction
in total equivalent greenhouse gas emissions
within Scopes 1, 2 and (classes 1, 4 and 6 of)
Scope 3 of 4.96% per year, representing an
overall reduction of 55% by the end of FY2033.
Further details can be found in the TCFD report
on page 34. This was introduced as a new KPI
at the beginning of FY2024 given our TCFD
commitments and targets, noting that it similarly
represents a performance measure within our
in-flight LTIP awards. Further details can also
be found in the Directors’ Remuneration report
on page 98.
* In FY2024 the Company will be appointing a new partner to conduct the colleague engagement survey; appropriate targets will be set during
the course of the year in the light of lessons learned from its implementation. Further details can be found in the People report on page 24.
Strategic Report
Governance Financial Statements
15
Financial KPIs
Total Statutory Revenue
£1,103.7m
FY2024
FY2023
FY2022
FY2021
FY2020
Statutory Profit after Tax
£25.5m
FY2024
FY2023
FY2022
FY2021
FY2020
Free Cash Flow
£7.3m
FY2024
FY2023
FY2022
FY2021
FY2020
Statutory earnings per Share
10.6p
FY2024
FY2023
FY2022
FY2021
FY2020
Adjusted Operating Profit
£39.1m
FY2024
FY2023
FY2022
FY2021
FY2020
Adjusted Profit after Tax
£24.7m
FY2024
FY2023
FY2022
FY2021
FY2020
Average Bank Net Debt
£11.7m
FY2024
FY2023
FY2022
FY2021
FY2020
Adjusted Earnings per Share
10.3p
FY2024
FY2023
FY2022
FY2021
FY2020
Bank Net Debt
£11.0m
FY2024
FY2023
FY2022
FY2021
FY2020
£1,103.7m
£1,091.9m
£1,089.3m
£1,109.6m
£1,164.5m
£25.5m
£25.1m
£23.4m
£26.3m
£12.0m
10.6p
10.6p
9.8p
10.8p
4.9p
10.3p
10.8p
10.8p
10.8p
9.7p
£39.1m
£38.8m
£38.1m
£39.6m
£35.1m
£11.7m
£25.0m
£49.9m
£82.6m
£98.8m
£11.0m
£4.2m
£14.2m
£53.2m
£79.7m
£24.7m
£25.6m
£25.7m
£26.3m
£23.7m
£7.3m
£21.8m
£48.2m
£24.0m
£10.9m
Adjusted profit before tax measures the
profitability of the Company, excluding
significant and non-recurring one-off costs,
including those not related to the Company’s
ordinary activities.
Adjusted operating profit is defined as operating
profit from continuing operations, excluding
the impact of adjusting items (defined above).
This is the headline measure of the Company’s
performance and is the key management
incentive metric.
Statutory revenue measures the extent to
which core sales and other revenues are within
our planning assumptions and longer-term
strategic forecasts.
Statutory profit before tax measures the
absolute profitability of continuing operations
after any disposals.
Average Bank Net Debt impacts the level of
interest we pay and is the measure which most
accurately reflects the ongoing borrowing of
the Company as it removes the potentially
misrepresentative influence of period end
variations caused by publisher and retailer
payment schedules.
Free cash flow measures the cash available
to the business, which can be used for
investments, dividends and the reduction
of debt.
Earnings per share measures the profit per
share of the Company and is used by investors
when comparing performance to other similar
businesses.
Adjusted earnings per share measures the profit
per share of the Company, excluding the same
adjusted items as in Adjusted Profit Before Tax.
Bank Net Debt impacts the level of interest we
pay and is a covenant measure of our financing
agreements.
16
Smiths News plc | Annual Report and Accounts 2024
KPIs continued
Dividend per Share
7.15p
FY2024
FY2023
FY2022
FY2021
FY2020
Profit from growth of new revenue
initiatives
£2.0m
FY2024
FY2023
FY2022
FY2021
FY2020
£2.0m
£0.7m
N/A
N/A
N/A
7.15p
4.15p
4.15p
1.5p
Nil
Dividend per share measures the profit
per share of the Company and is used by
investors when comparing performance to
other similar businesses.
In recognition of the increasing strategic
imperative to diversify and explore new revenue
opportunities within our core markets and
other adjacent categories, a new financial KPI
is being introduced from FY2024 to represent
the profit generated from growth of new
revenue initiatives. This measure has also been
introduced within our in-flight LTIP awards,
further details of which can be found in the
Directors’ Remuneration report on page 98.
The financial KPIs are discussed in further detail
in the Financial Review on page 60.
Strategic Report
Governance Financial Statements
17
Another year of progress
For the last five years I’ve been delighted to
report on the continuing good performance of
our business, combining a steady improvement
to our underlying finances alongside investment
that has facilitated opportunities for adjacent
growth. This year continues the positive
trend, with results that again surpass market
expectations and strategic momentum which
embeds our progress and secures our core
business for the foreseeable future.
The highlights of the year are testament to the
balance we have struck between short- and
longer-term goals. Our key financial measures
of profit, cash and dividends are all positive
and ahead of expectations; our new financing
arrangements confirm our commitment to
low debt and attractive dividends; our major
contracts are agreed through to at least 2029;
and we have growing new profit streams that
leverage our competencies and competitive
advantage. All this speaks to the discipline
and focus which we have maintained in our
operations and our plans for future growth.
As always, our results are made possible by
the coordinated efforts of our people and our
industry partners. I want, therefore, to first
pay tribute to their essential roles, not only
in the year, but in the transformation of our
longer-term prospects. Indeed, the broader
conversations I have had with colleagues,
customers and suppliers throughout these last
12 months have reinforced to me, the critical
importance of involving all our stakeholders in
shaping our future.
Jonathan Bunting
Chief Executive Officer
Vision and Purpose
This is why I believe that refreshing our vision
and purpose statements is a vital step in
guiding the strategic choices that will doubtless
determine our progress over the next five years.
Elsewhere in this report, we have described
these statements in detail, but it’s worth
expanding a little on the underlying convictions
that have shaped them.
Our vision statement seeks to encompass our
leadership in news distribution but not restrict
our ambition to these traditional core markets.
In doing so, it recognises that we are already a
leading early morning distributor; indeed, some
might argue we are ‘the’ leading provider, for no
other logistics partner reaches as many retail
customers in such tight time windows every
day. But our vision also speaks to the value
adding services and solutions we bring to both
customers and suppliers. Critically, it indicates
that these competencies are as applicable to
other established and new emerging markets,
as they are to newspapers and magazines.
Meanwhile our purpose statement, in describing
why we exist, highlights the tangible benefits
we bring to our chosen supply chains. I believe
it is vital, when looking at future opportunities,
that we stay true to this philosophy of making
a difference to our customers’ profitability and
operating models. We need to provide them not
only with great service, but solutions that make
their lives easier, helping them to satisfy their
customer needs and meet the requirements of
new and ever-changing legislation.
Our vision is to consolidate
our position as one of the
UK’s leading providers of
early morning, end to end,
supply chain solutions.
CEO's report
As always, our results
are made possible by the
coordinated efforts of our
people and our industry
partners. The growth of
our new profit streams
is pleasing, but we are
ambitious and confident
that more can be achieved.
Perhaps most importantly, underlying both
statements is the belief that we have the
capability to grow ‘from’ our core rather than
needing to diversify in its crudest sense. We
already have the infrastructure, skills and
competencies to prosper in new markets. Our
challenge is to choose the right ones and build
scale that amplifies our abilities and advantage.
This ‘from the inside-out’ approach resonates
with our commitment to funding investment
without undue risk to the attractive cash returns
that shareholders have come to expect from our
ongoing business model.
18
Smiths News plc | Annual Report and Accounts 2024
Eficiency and investment
When leading a business with such an
established model, it is sometimes all too easy to
take ongoing achievements for granted. This year
we have made over 8.3 million daily deliveries,
and much the same number for collections and
reprocessing of returns. It is a huge challenge
that requires coordination, skill and no small
amount of graft every day of the year.
Yet in meeting it, the operations and central
teams have once again fulfilled the most
demanding of service standards while securing
cost savings of £5.6m that have helped to offset
the impacts of falling volumes and inflationary
pressures. Efficiency gains remain a central plank
of our strategy and we will continue to review our
network and routing on an ongoing basis.
Indeed, this is why we are making an investment
of £6.0m over the next three years in the
business’s systems and technology and our
facilities. The technology programme includes
new warehouse management and transport
management systems, customer-facing software
and improvements to our data storage. These
upgrades will enhance our capabilities not only
in wholesaling newspapers and magazines
but also in pursuing new profit streams in our
targeted markets.
Pursuit of new revenues
The growth of our new profit streams is
pleasing, but we are ambitious and confident
that more can be achieved.
To date, we have focused on trialling and
testing a broad range of possibilities – and,
as should be expected, some paths have
proved more successful than others. Along the
way, we have learned a great deal about the
avenues which best fit our skills and operating
model. This means we now better evaluate
which opportunities will make a welcome but
ultimately limited contribution, and those with
the potential to justify greater investment.
The growth of Smiths News Recycle is the
leading example of this careful and customer-
focused approach.
Having learned what works and what is
valued we can now more confidently target
our expansion plans. We can also be more
certain that the investments we are making will
improve both the efficiency and attractiveness
of our offer. Furthermore, we have confirmed
by evidence and experience, that recycling and
reverse logistics are large and growing markets
in which we have the potential to operate at
greater scale.
Looking ahead, we will continue to evaluate
opportunities that diversify our revenues, but
without risk to our contracted responsibilities.
Our goal, over time, is to establish a range
of products and services that complement
the news wholesaling business and are
consistent with the ambitions set out in our
vision and purpose.
Thanking our people and partners
Every year, in leading the business, one of
my most engaging tasks is listening to the
suggestions and occasional concerns of
colleagues. Invariably, it is a constructive
learning process that confirms the depth of
experience and commitment that we rely on
every day.
Our industry partners play a vital role too.
Their productive engagement, in both long-
term change and short-term challenge, speaks
to the trust and maturity of our commercial
relationships.
And so, in closing, I’d like to thank once
again our people, partners, and indeed all
our stakeholders, for their contributions to
our success. With their continued support,
I’m looking forward to another successful
year ahead.
Jonathan Bunting
Chief Executive Officer
4 November 2024
Vision, Purpose and
Capabilities
Our Vision
To consolidate our position
as one of the UK’s leading
providers of early morning end
to end supply chain solutions.
Our Purpose
Making our customers’ lives
easier and more profitable. We
provide supply chain solutions
that enable them focus on
what they do best.
Our Capabilities
Proven expertise in
warehousing, reverse logistics
and early morning final mile
services across our extensive
high-density UK delivery
network.
Celebrating success
News wholesaling
A robust performance across our profit,
sales, service and efficiency measures
New profit streams
Growing contribution to £2.0m p.a.
Refinancing
Reducing interest costs and increasing
flexibility for both investment and
investor returns
Contract awards
All our key publisher agreements secured
to at least 2029
Growing investor returns
Total annual dividend of 5.1p (up 23% )
and a further special dividend of 2.0p
Strong balance sheet
Average Bank Net Debt reduced to
£11.7m (down 53%)
People
Improved engagement scores with
investment in talent, diversity and facilities
Strategic Report
Governance Financial Statements
19
Cost savings
Can we continue to make cost
savings of circa £5m each year?
Our track record of making sustainable
efficiencies suggests that we can continue to
adapt proactively to the structural decline of
newspaper and magazine volumes. In securing
cost savings, it helps that sales trends are
typically gradual and that we have long-term
certainty of our network footprint.
Fixed annual targets are not always compatible
with meeting our service KPIs so while we
always remain focused, we do need to be
flexible in our approach. In doing so, and by
working across the supply chain, I’m confident
that we can continue to make substantial
savings over the lifetime of our contracts.
Our conversations with
stakeholders played
a central role in our
refreshing our vision and
purpose statements.
CEO's Stakeholder Q & A
Our conversations with
stakeholders played
a central role in our
refreshing our vision and
purpose statements.
Growth
Which areas do you think growth will
come from and why ?
We plan to focus our growth strategy on
early morning and adjacent markets in which
our existing capabilities will make a difference
to customers and support a sustainable
competitive advantage. We believe there are
a range of opportunities to build from within,
in tandem with making investments and
acquisitions to build scale. While we remain
open to a range of possibilities, there are some
broad categories worth highlighting.
Early morning distribution: the demand for
early morning delivery is growing and meeting
it requires particular skills, many of which we
already possess.
Reverse logistics: as Smiths News Recycle
has demonstrated, managing the complexities
of reverse logistics fits neatly with our profile
and capabilities.
New categories
Reaching approximately 22,400 customers
every day there is an opportunity to add
adjacent products to our daily deliveries. Our
category management and just-in-time abilities,
together with integrated invoicing also means
we can provide simple end-to-end solutions for
our largest retailers.
As CEO of Smiths News, talking
to our stakeholders is one of my
top priorities. And it’s interesting
that the questions I’m most
often asked are very similar,
whether they be from colleagues,
customers or investors.
In many ways, this helps to confirm that
there’s no major conflict in their aspirations
and expectations – and that by balancing our
financial and strategic goals we are following a
path that meets the needs of all parties.
Set out below are some of the most frequent
questions and topics of discussion.
20
Smiths News plc | Annual Report and Accounts 2024
By balancing our financial
and strategic goals we are
meeting the needs of all
our stakeholders.
Supply chain eficiency
Can we shape and influence greater
efficiency across the news supply
chain?
As the key consolidator of the industry supply
chain we have a unique role to play in facilitating
efficiencies for all stakeholders. This year for
example, we worked with several of the major
publishers to review the trunking and arrival
times across our entire network, reducing the
potential for costly re-runs due to misaligned
timings. With 55% market share we are
equally important to critical targets such as
sales forecasting, sustainability and returns
processing accuracy.
Attractive returns
What clarity can you give investors on
your plans for future dividends, and
potentially other ways to return cash
or influence attractive shareholder returns?
The reduction in our debt, and the renewal of
our banking facilities, has allowed us to review
and refresh our capital allocation policy this
year. Our overall objective remains unchanged
in seeking to meet the long-term needs of all
stakeholders.
This means we will continue to balance
investment in the business with a prudent
approach to debt and a commitment to the
attractive cash returns that our shareholders
expect from our business model. Should
there be excess funds, beyond the cover we
deem appropriate, and the investment needs
of the business, then we would look to make
distributions to shareholders and will consider
the most appropriate way to do this at the time.
This year’s special dividend of 2.0p is an
example of our commitment to maintaining
these strong returns, subject always to the
necessary caveats of meeting performance
expectations and reasonable assumptions on
future market conditions.
People
What plans do we have to attract,
retain and reward talented people?
As a large employer, we offer extensive
support and career opportunities for colleagues,
from warehouse apprenticeships to professional
qualifications and senior management
development. Our growth plans will also create
new career pathways, that we believe will excite
and motivate many of our people. In some
cases, we will doubtless need to recruit new
skills and experience, strengthening our overall
capabilities in tandem with our ambition.
One of our virtues is our inclusive culture that
supports the career progression of everyone
with the ambition and ability to take on more
responsibility. Indeed, we know it’s a key reason
that colleagues stay with us and something new
starters comment on early in their tenure. We’re
rightly proud of our people and will continue to
invest to support them, ensuring they share in
the opportunities for growth and success.
Investment
What investment will be needed to
ensure we are equipped to succeed?
As with any scale business there is an
ongoing requirement to keep the basic building
blocks of our offer up to date. This includes
areas such as network infrastructure, health and
safety, sustainability, and people.
In addition, we are making an investment of
£6.0m over the next three years in the business’s
systems and technology and our facilities. This
will maintain our industry leadership and ensure
we can continue adding value to customers and
suppliers in line with our vision and purpose.
Importantly, it will also facilitate the efficiency
gains we need to make on an ongoing basis.
But it’s slightly misleading to see these
investments as being purely for our news
wholesaling operation. The combination of
refreshed infrastructure and new systems
will enhance our capabilities in adjacent
markets too, as well supporting our ambition
to provide end to end solutions across our
chosen supply chains.
Supporting customers
How can you help retailers with sales,
profitability and ease of doing
business?
We recognise that it’s important to work
across the supply chain to further improve the
profitability of what remains a complex category
to manage in-store. As digital expands, we must
focus on making it even easier for our retailers
to sell traditional printed products. By making
the process simple, we optimise sales, reduce
labour costs, and improve the overall profit
contribution of the category.
Initiatives such as Smiths News Recycle can
help too, making it easy for small and medium
sized customers to manage waste that is
otherwise time consuming and demanding of
storage space.
Strategic Report
Governance Financial Statements
21
This section of the Strategic
Report, and the pages to which it
refers, comprise the Company’s
section 172(1) statement and
explain how the directors have
engaged with our stakeholders
during the year and how the
Board has had regard to the
outcomes of these engagements
when making significant
decisions as well as developing
future strategies, policies and
performance measures.
When making decisions for the Company we
understand the need to consider the views
of relevant and impacted parties, and that it
may be necessary to take account of differing
views and balance these across any competing
interests. The Board strives to balance
competing interests in a fair and transparent
manner in the best interests of the Company as
a whole, having regard for the realisation that
conflicting positions may exist between the
long-term and short-term good of the Company,
between shareholders and colleagues or even
between groups of shareholders with different
investment criteria and agendas.
This requires the Board to balance any
competing interests and to take account of
the various views when making decisions,
while remaining mindful of the need, at all
times, to ensure the long-term sustainable
success of the Company and to generate
value for shareholders, while contributing
to wider society. The Board considers both
existing and emerging risks associated with
each stakeholder group as part of the risk
management process (see Risk Management
report on pages 66 to 71). The engagement
with stakeholders, including the methods used,
decisions taken, impact on our business as
well as how the Board has exercised its
oversight are summarised in this report.
Stakeholder engagement and S172 Statement
Delivering for all
our stakeholders.
Communities and regulators
We provide availability of newspapers
and magazines to thousands of local
communities across the UK, representing
a 55% market share.
We support the print sector through its
NewstrAID charity. Smiths News also remains
the anchor sponsor of ‘Pass It On’, the
registered charity first started by the Company
in 2017 which helps to address the issues and
challenges of homelessness within the UK.
We engage with various regulatory bodies
across the supply chain to ensure we comply
with our regulatory and legislative obligations.
Colleagues
We have over 1,400 colleagues operating from
sites in England and Wales. In addition, we
have c.150 outsourced colleagues based at
two sites in Noida and Pune (India) providing
staffing at the Shared Service Centre (SSC).
Who are our Stakeholders?
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Shareholders and lenders
62.9% of our issued shares are held by ten
shareholders, with just over 41% held by our
largest four investors. Our banking agreements
are held with a syndicate of two lenders.
Customers and suppliers
Our suppliers are made up of the national
publishers/distributors in the United Kingdom
as well as a significant proportion of regional
publishers across our territories through long-
term contracts.
Customers include approximately 22,400 news
outlets, ranging from large supermarkets to
high street retailers and independent stores.
Our business model incorporates c.680 self-
employed distribution subcontractors who are
engaged to provide services to support our
operations and deliver daily to our customers.
In addition to our newspaper and magazine
publisher suppliers, we have a further network
of suppliers who provide assorted goods and
services to the Company.
22
Smiths News plc | Annual Report and Accounts 2024
Section 172 Duties of the Board
Various means of engagement are conducted
with stakeholders by both the Board and the
Executive Team, with the outcomes discussed
together, ensuring a common understanding
of the feedback received and the position of all
stakeholders The focus of these engagements
is directed to those stakeholders potentially
impacted by impending decisions of the Board,
with all Directors displaying an unwavering
commitment to their primary duty to act in good
faith and in a way which is likely to promote the
success of the Company and is to the benefit of
its members as a whole.
The Board takes responsibility for the long-
term success of the Company which includes
determining, promoting and monitoring the
Company’s culture, values and strategy, as well
as seeking to ensure that by discharging this
responsibility all stakeholders are impacted
positively. The Board has determined as
significant those issues relating to strategy,
transformation, restructuring, corporate
development and capital allocation, each of
which thereby warrant specific consideration.
That said, the Board remains cognisant of the
fact that other issues may be considered as
equal priorities by key stakeholder groups and
therefore these other areas so identified from
time to time may equally be included in the
Board’s deliberations and decision-making
processes.
Information is received by the Board through
a number of engagement processes, thus
enabling the Board to determine relevant issues
which may arise from our key stakeholders. In
the following pages we have set out in detail
in respect of each stakeholder group both the
methods of engagement as well as those parties
responsible for the engagement process, with
the Board continuing to monitor the progress
made in response to stakeholder input and
to review the engagement mechanisms to
ensure they remain relevant and deliver the
desired outcomes.
Capital allocation
policy
Our capital allocation policy aims to
provide clarity on the allocation of available
capital to fund investment in the business
alongside the payment of dividends or
other distributions to shareholders.
The overarching objective of our policy
is to ensure we meet the needs of all
stakeholders, which we believe is best
achieved by:
• Maintaining a strong balance sheet with
a Bank Net Debt: adjusted EBITDA ratio
of less than 1.0x
• Continued investment in both news and
magazines business and organic growth
• Payment of sustainable ordinary
dividend, maintaining 2x dividend cover
• Disciplined approach to inorganic
growth, focused on bolt-on acquisitions
with clear accretive returns to enhance
shareholder value
• Further returns to shareholders when
appropriate
More information on our policies and all
the latest announcements of interest to
shareholders can be found on the investor
section of our website at
→ www.smithsnews.co.uk/investor-zone/.
Strategic Report
Governance Financial Statements
23
Stakeholder engagement and S172 Statement continued
Shareholders and Lenders
Engagement
• One-on-one engagements with our largest
institutional shareholders.
• Virtual investor briefings to retail shareholders
(e.g. Investor Meet webinars).
• Ad hoc meetings with new shareholders,
non-holders and existing shareholders,
representing in excess of 50% of our issued
share capital.
• Ahead of our AGM, we regularly engage
with proxy advisory voting agencies (such
as ISS, IVIS and PIRC) and some of our
larger institutional investors regarding
their respective voting intentions/
recommendations on resolutions being put
forward at the forthcoming AGM and any
synopsis of the Company’s disclosures in the
prior period Annual Report.
• The AGM itself also facilitates one-on-one
engagement with investors, facilitating
a formal Q&A session together with an
opportunity for informal discussions with the
Board, both before and after the AGM.
• Business performance updates to the
syndicate of lenders ensured confidence and
financial stability in ongoing business delivery
and improving balance sheet strength.
• Discussions initiated in Q2 FY2024 regarding
new refinancing terms led to the successful
refinancing with two of the Company’s
lending syndicate (Santander and HSBC).
Information provided to Board
• Board members participated in engagements
and shared feedback with members who did
not attend in person.
• Investor relations reports and roadshow
feedback.
• Proxy ratings and reports (ISS, IVIS and PIRC).
• Reports on specific engagements:
– Financial stability and investment returns
– Long-term sustainability
– Corporate responsibility
– Capital Allocation Policy considerations,
including DPS, EPS and TSR performance
metrics
– Ongoing investment and capital expenditure
planning
– Free cash flow and Bank net debt analysis.
Who engaged?
Shareholder engagements continue to be a
shared responsibility across all Directors of the
Board, supported by specialist consultants,
a review of which led to the appointment of
new communication consultants in the year to
support management with a range of corporate
communication services.
The refinancing team was made up of internal
colleagues supported by external legal advice
as required.
Why this engagement is important
to our business
The Company’s engagement with our largest
institutional shareholders and virtual investor
briefings to retail shareholders helped to define
the Company’s new Capital Allocation Policy
and to promote a healthy understanding of
what metrics and developments are of most
importance to these stakeholders. In particular,
it has helped to secure stakeholder views on
the Company’s growth and diversification
strategy, with particular regard to inorganic
bolt-on growth opportunities and the scale of
investment in both core business and organic
growth.
Engagement Highlights
Refinancing
Completed in May 2024 and
new Capital Allocation Policy
announced.
New Committee
Establishment of stand-alone
Board Sustainability Committee.
24
Smiths News plc | Annual Report and Accounts 2024
Feedback Decision Link to Strategy
Shareholders were keen to
understand anticipated new
growth streams alongside
the recycling reverse logistics
operation (growth vs income
stock) as well as current business
performance and outlook following
publication of our preliminary
financial results in November 2023
and interim financial results in
May 2024.
The Board determined that most shareholders supported
the growth strategy comprising both organic and inorganic
growth, with a focus on possible bolt-on acquisitions
where they represent clear accretive returns to enhance
shareholder value.
Taking into account the views
of shareholders enables us to
promote a stable long-term
investor base as well as attracting
new investors to the register. It
aligns the Company with investors
whose expectations are supported
by our growth and diversification
strategy.
Several questions related to the
refinancing completed in May
2024 including its impact on
capital allocation.
The refinancing was completed in May 2024 with two of
the Company’s lending syndicate (Santander and HSBC),
comprising a £40m revolving credit facility with an additional
£10m uncommitted accordion facility, available initially on a
three-year term at an improved competitive margin of 2.45%
per annum over SONIA (a 155bps improvement from the
previous agreement) and with the option at each of the first
and second anniversaries to extend maturity on the same
financial terms, with lender consent, upon new three-year
maturity periods. Importantly, the revised terms removed
the cap on dividends and distributions and facilitated the
Board being able to endorse a new Capital Allocation Policy.
This policy was defined to a large extent by the outcome of
these engagements and promoted a healthy understanding
of what metrics and initiatives are considered of most
importance to shareholders.
The successful refinancing and
approval of our new Capital
Allocation Policy supports the
Board’s mandate to advocate a
strong balance sheet, payment
of sustainable ordinary dividends
(maintaining 2x dividend cover),
continued investment in the core
business as well as both organic
and inorganic growth initiatives.
There were strong levels of
support for the Company adopting
a Board sub-committee dedicated
to ESG related matters in order
to improve transparency and
accountability in this area.
In January 2024, the Board approved a mandate to establish
a Sustainability Committee delegated by the Board and,
accordingly, for its terms of reference to be agreed and
published in short order. The Sustainability Committee has
since met quarterly to review key focus areas, action insights
and recommendations, and KPI performance levels.
These engagements facilitated
the Company developing a better
understanding of areas of interest
(e.g. ESG and diversity-related
matters) to the proxy advisory
voting agencies and our larger
institutional investors, each of
which supported our Sustainability
strategy.
Strategic Report
Governance Financial Statements
25
Colleagues
Engagement
Board members undertook two separate
night visits at our Worcester and Hemel
Hempstead depots, as well as two specialist
‘breakfast briefing’ sessions which provided
an opportunity outside of the formal meeting
environment for the Board to ‘walk the floor’
and meet colleagues, review operational
processes and better understand the issues
and challenges with some of the business’
operational processes e.g. SN Recycle volumes
and the issue of recyclate contamination. This
subsequently led to a discreet workstream with
consultants who were engaged to help review
the process map of recycle activities within our
hubs and to recommend process improvements
and efficiencies.
• Colleague surveys and questionnaires -
please see details of surveys undertaken
and outcomes in the Sustainability report
on page 34.
• Colleague engagement forums, National
Engagement Forum and designated
workforce engagement director.
• Specialist Colleague Consultation Forums,
representing a standing team of 12
colleagues from across the business and
trained by ACAS, to provide a platform for
formal consultation in discussions around
significant business change or material
changes proposed in relation to employee
benefits.
• Remuneration engagement by the Chair
of the Remuneration Committee.
• Networking groups.
• Communications via the Company’s intranet,
inviting feedback and dialogue. In the year,
over 648,000 visits were made by colleagues
to our Company intranet (SmithsZone),
representing a 30% increase on FY2023.
• Town Hall meetings – including three
recorded videos of key messages to
colleagues, focusing on key business themes
to showcase the business, generating
enhanced engagement and presenting
an opportunity for Q&As.
• Training opportunities.
• Our colleague newsletter ‘Our News’ in
physical and electronic format.
Information provided to Board
• Colleague engagement survey results with
commentary on specific outcomes.
• Colleague engagement forum views and
outputs reported back to the Board by the
designated workforce engagement director,
both in formal reports and verbally.
• Verbal feedback on the outcome of
the Remuneration Committee Chair’s
engagement.
• Various network update reports (please see
the Sustainability report on page 34).
• Training reports (please see the Sustainability
report on page 34).
Who engaged?
All Board members participated in the two
separate night visits as well as the two
‘breakfast briefing’ sessions (topics included
business updates from each of the Commercial
Team and People Services).
Michael Holt (as the Board’s designated
workforce engagement director) met quarterly
with the National Engagement Forum to
ensure colleagues are given a voice in respect
of matters material to our people and to
share business updates and gain colleague
feedback and insight. In addition, informal
site engagement discussions were held,
either in person or remotely. Separately, the
Remuneration Committee Chair engaged with
colleagues specifically in relation to highlighting
Directors’ remuneration in a listed-plc
environment and related governance matters.
Our all-colleague Town Hall meetings are
recorded and produced quarterly and further
supported in person by members of the
Executive Team at each of our largest sites to
help ensure that colleagues are able to build a
rapport with senior leaders and can freely feel
able to engage in two-way dialogue, with their
questions being answered in real time.
Why this engagement is important to our
business
Enables the Board and the Executive Team to
meet directly with colleagues and to explain
important aspects of the business and those
decisions which may impact colleagues,
whilst also providing an opportunity to receive
feedback, answer questions and understand
what is important to our colleagues.
Engagement Highlights
Development and roll out of a new
vision and purpose statement.
Further network groups
established.
Leadership development
programme.
Network and distribution centre
rationalisation undertaken in
consultation with colleagues,
resulting in closure of our Reading
and Taunton depots.
Stakeholder engagement and S172 Statement continued
26
Smiths News plc | Annual Report and Accounts 2024
Feedback Decision Link to Strategy
The October 2023 colleague
engagement survey identified
three areas where actions would
support an increase in colleague
engagement levels, encompassing
the Company’s future growth
strategy and diversification
ambitions, its vision and purpose,
and the development of career
opportunities for all colleagues.
Development and roll out of a new vision and purpose
statement and communications, increased sharing of
information around both our growth ambitions and
successes with our growth agenda and greater visibility of
development opportunities within the business.
Through our surveys we
encourage colleagues to share
their needs and articulate how
we can best support them, thus
maintaining an engaged workforce
where colleagues can experience
real opportunities for development
and a long and rewarding career.
Enhanced visibility and
understanding of both the
Company’s vision and purpose.
Utilisation of the data available to
drive change in specific areas and
the success of our ‘Women in
News’ networking group supported
the establishment of further
network groups.
A further two network groups have been established
supporting colleagues with disabilities and mental health
and caring responsibilities.
Successes have included the introduction of an enhanced
maternity policy, a new managers and colleague menopause
guide, a carers’ policy (including five paid days for foster
parent training activity) and a review of support for
workplace adjustments.
Supports an inclusive culture
which demonstrates our Company
values and where colleagues feel
acknowledged and respected.
The Commercial and People
Services breakfast briefings to
the Board facilitated a review of
operational processes and an
increased understanding of the
issues and challenges faced daily
by our colleagues with respect
to some of our Growth initiatives
e.g. SN Recycle volumes and
contamination.
This subsequently led to a discreet workstream with
engaged consultants to review the process map of
recycle activities in our hubs and to recommend process
improvements and efficiencies which are now the subject of
ongoing implementation at trial.
Growth and Diversification
strategy strengthened.
Colleagues value development
opportunities.
5 active apprenticeship programmes in progress, across
areas such as Marketing, Payroll and Operational
Management.
Leadership development continues to be a focus with our
third cohort of leaders starting our 12-month leadership
development programme built around a suite of blended
learning solutions.
Our strategic goals can only be
achieved through a talented and
motivated workforce.
Strategic Report
Governance Financial Statements
27
Stakeholder engagement and S172 Statement continued
Customers and Suppliers (inclusive of the largest
publishers, retail customers and suppliers)
Engagement
• Monthly Customer Satisfaction Surveys (250)
for both Independent and Multiple Retailers.
• C.61,000 Customer Service calls per month
to resolve customer queries and promote
SNapp self-service.
• Annual survey and quarterly director review
meetings with publishers.
• Retail Director Quarterly Review Meetings.
• Periodic engagements with Suppliers,
with prioritisation based on contract type
and spend.
• New Company Facebook page, driving
more of our Growth initiatives directly to our
retailers as well as promoting ‘job of the week’
for the recruitment team.
• The Fed – making use of our relationship with
industry association ‘The Fed’, increasing
Smiths News’ branding and goodwill in
the industry through advertisements and
engagement opportunities.
• Lord Mayor’s Parade – 11 colleagues
attended the November 2023 parade through
Greater London as part of the Lord Mayor’s
parade, promoting the Smiths News brand.
Information provided to Board
• Operational reports are submitted to the
Board monthly showing performance against
KPIs (including customer satisfaction score).
Who engaged?
Customer service team, Procurement team,
account managers and executive management.
Why this engagement is important to our
business
Enabled us to obtain feedback on the standard
of service delivered to our customers and
identify opportunities to improve the service.
Encouraged the use of our dedicated self-help
app (SNapp) and reduced the volume of paper-
based content being sent to retailers in favour
of electronic versions, thus reducing cost and
supporting our sustainability agenda.
Maintaining a positive relationship across
our supply chain supports the stability of our
business and underpins value, while allowing
us to ensure that we work with our suppliers
in a mutually beneficial manner.
Engagement Highlights
Successfully secured 91% of our
contracted publisher revenues
through to 2029 (this includes
the signing of a Head of Terms
for a new five-year commercial
agreement with Reach plc, which
commenced in October 2024,
subject to contract).
Closer working relationship with
Publishers to develop a strategy
for the collective reduction of
Scope 3 emissions.
Development of growth and
diversification strategy, with the
introduction of new suppliers
and customers.
Feedback Decision Link to Strategy
Satisfaction with and increase
in the volume of customers
using SNapp.
Progressed with new developments in the self-help app
(SNapp) to support our paperless ambition and reduce the
amount of paper being printed across the depots for onward
distribution to retailers.
Supports a sustainability strategy
as well as non-financial KPIs.
Engagement with all our major
retail customers, newspaper
publishers and magazines
distributors twice yearly on our
sustainability agendas as well as
with the PPA and NPA (industry
forums) around sustainability-
measures led to feedback that
more information sharing around
emissions would assist all parties
to drive the reduction of Scope 3
emissions.
Closer working relationship and sharing of Scope 3
emissions data and strategy to collectively reduce our
footprint on the environment.
Supports Sustainability agenda.
Follow up reviews with suppliers
after tender processes has
indicated that they value feedback
received regardless of whether
they are successful in the tender
process.
Procurement team will look to continue and enhance the
feedback process, including to unsuccessful bidders, so
as to build and maintain relationships with a view to be the
company of choice to work with in the future and to provide
a positive experience even if the tender was unsuccessful.
This supports our approach of
building a diverse and inclusive
supply chain base and to ensure
we receive value for money.
28
Smiths News plc | Annual Report and Accounts 2024
As one of the longest standing businesses
in the UK news industry we’re proud
to actively support its leading charity
NewstrAID. The charity (first established
in 1839) offers crucial welfare support
for individuals who are or have been
employed in the selling and distribution
of newspapers and magazines and who
find themselves facing financial and
emotional hardship.
Every year, NewstrAID provides regular assistance to
individuals in hardship whose circumstances are unlikely
to improve, (such as the elderly or those unable to work
due to long-term disability) and one off Samaritan grants
for those facing unexpected temporary hardship, such as
short term care expenses. In addition, the charity provides
a comprehensive mental health wellbeing programme with
support from trained psychotherapists and counsellors.
In supporting the charity, we encourage colleagues to
become actively involved and have volunteers on the several
regional committees. Activities range from fundraising
to community liaison and welfare visits. Furthermore,
and crucial to NewstrAID’s fundraising, we facilitate and
administer the payments for its supporter lottery which
last year raised over £1m. The Company made an addition
£10,000 contribution in corporate sponsorship.
This year, one of our most active volunteers, was recognised
with the charity’s ‘Service Excellence Award’. Lidia Popa from
our Birmingham distribution centre has been instrumental
in raising awareness of the support NewstrAid provides,
ensuring that all colleagues, regardless of their primary
language, understand the services available to them. Her
dedication has materially increased the visibility to the
charity’s work within our teams.
Helping our
industry
colleagues.
NewstrAID
Strategic Report
Governance Financial Statements
29
Community and regulators
Engagement
• Monthly Customer Satisfaction Surveys
(250) Individual colleague engagements with
charities of choice under the umbrella of our
‘We Care’ charity and community network
group, which coordinates CSR charity and
community activities.
• Colleague participation in Pass It On.
• NewstrAID promotion and funding.
Information provided to Board
Regular community engagement updates are
provided to the Sustainability Committee and
the Board.
Who engaged?
Various colleagues at individual charity level and
Pass It On as well as Company representative to
NewstrAID.
Why this engagement is important to our
business
Helps the Company to have a positive impact
on its local communities by supporting charities
and community groups, drives usage of our
colleague ‘volunteer day’ benefit and manages
charitable requests.
Engagement Highlights
Revised Sustainability KPIs.
Volunteering and charity
networking group established.
Pass It On continues to support
homelessness, with Smiths News
as anchor supporter.
Feedback Decision Link to Strategy
Positive feedback on value of
Volunteering Policy.
Formalisation of policy and update of the way in which
volunteer days are reflected and recorded in payment
processes.
This supports our sustainability
strategy and framework
(Community pillar) and our
company ethics.
Transparency required for
charitable giving.
Terms of reference approved for establishment of the ‘We
Care’ network group including finance and budgetary
controls and guidelines for charitable awards and support for
colleague initiatives.
This supports our sustainability
strategy and framework
(Community pillar) and our
Company ethics.
Designated Workforce Engagement
Director and National Colleague
Engagement Forum
The Board continues to assess its approach
to engagement within the workplace, mindful
of the UK Corporate Governance Code
measures. To facilitate this process, the Board
has designated a non-executive director
with specific responsibility for workforce
engagement. The role is a critical link in our
communication and feedback chain and is
currently held by Michael Holt, whose deep
experience in the distribution and logistics
sector is especially relevant to this engagement.
The Board remains of the opinion that the
designated non-executive director with specific
responsibility for workforce engagement
remains the most effective means of colleague
engagement at the Company.
Michael has held the position since its inception
in 2019, working closely with our People team
and the National Colleague Engagement Forum,
which is a representative group from across the
business. He reports on his interactions, raising
issues and conveying the breadth and strength
of views to the Board.
The formal remit of the designated Workforce
Engagement Director includes:
• Gathering the opinions of a broad cross
section of our workforce
• Seeking to understand the concerns and
views of our workforce and articulating these
to the Board
• Ensuring that appropriate steps are taken
to consider the impact of proposals and
developments on our workforce
• Where appropriate and relevant, providing
operational and commercial updates and
feedback from the Board to our workforce.
The nature of the engagements and outcomes
are summarised below:
• The National Colleague Engagement forum
continues to be held on a quarterly basis
with a blend of physical and virtual meetings.
The structure of the forum is designed to
have representatives from each department
in the business who bring items from their
teams that could be of national interest and
which may not be able to be resolved at local
forum meetings.
• The meeting remains largely a top down,
information sharing approach with issues
and questions raised by the colleagues at
the end of the meeting. The forum was last
refreshed two years ago and in this time
some of our representatives have stood
down / resigned from the business and the
structure of the business has also undergone
several changes. As a consequence of this, it
has been decided to again refresh the Forum
by providing additional training to our current
and potentially new representatives and to
promote and encourage awareness of the
Forum through our all-colleague Town Hall
meetings.
The following subjects were discussed
at meetings:
• Depot refurbishment update
• Business Update – Half year and full year
• What Matters Survey
• Benefits Survey
• EveryoneIN – Network Groups
Stakeholder engagement and S172 Statement continued
30
Smiths News plc | Annual Report and Accounts 2024
Stakeholder engagement continued
Smiths News is proud to sponsor
Pass It On, a charity that
provides tangible assistance
for homeless people in cities
across the UK. Now in its eighth
year, Pass It On began life as
in-house initiative, and with our
support it has grown to become
an independent entity. We
continue to provide, resources,
logistics, warehousing, colleague
volunteering, and fundraising
support.
“Pass It On is on all about providing tangible
support that goes directly to those in need,”
explained Jonathan Bunting, CEO of Smiths
News and trustee of the charity. “The crisis of
homelessness in the UK is complex, with many
organisations playing vital roles in, for example,
campaigning or providing mental health
services. We aim to complement that good work
by addressing some of the immediate needs
of living on the streets, primarily by distributing
care packages that include items such as
sleeping bags, toiletries or sunscreen.”
Colleagues across Smiths News are inspired
and motivated by the hands-on aspect of Pass
It On, adds Jonathan. “I’ve no doubt that our
company-wide engagement stems from the fact
that we visit these city streets every day and see
first-hand the scale of the problem.”
This year Pass It On visited Manchester,
London, Birmingham, Liverpool, Newcastle
and Wolverhampton. It was the charity’s most
comprehensive and impactful year so far,
distributing clothing, sanitary product and
sleeping bags to over 600 homeless people on
each of our four seasonal campaigns.
Looking ahead, we are already working with
Pass It On to coordinate its next winter care
pack distribution. Together we plan for it to be
even more impactful, helping the charity to grow
and make an even bigger difference to the those
living in challenging circumstances.
Making a
difference to
those in need.
Pass It On
31
Strategic Report
Governance Financial Statements
Chairman’s introduction
The Company has continued to
develop its Sustainability agenda
throughout FY2024, including the
decision to create a stand-alone
Board sub-committee dedicated
to Sustainability, of which I have
been appointed chairman. The
Committee sat for the first time in
April 2024 and will have regular
meetings every quarter.
The engagement at Board level has been
supportive and fulsome, with the formation
of the sub-committee further enabling the
Board to ensure strategic decisions are
taken with knowledge of the associated
sustainability impact.
As part of this process the Board has
undertaken training sessions to better
understand the complexities of sustainability,
not least of which has been associated with
the technicalities of both emissions data
and the complex and developing reporting
requirements. To assist me in my role as
chairman of the Committee I have completed
a seven-week, part time specialist training
course (ESG and Sustainable Financial
Strategy at the University of Oxford Said
Business School) which reinforced some
of the grounding principles that we touch
upon in our discussions.
I am pleased to report that FY2024 has seen
a reduction in our Scope 1 and 2 emissions
(Scope 1 FY2023: 1,554.9 tCO
2
e vs FY2024:
1,358.8 tCO
2
e (13% reduction) and Scope 2
FY2023: 854.10 tCO
2
e vs FY2024: 813.4 tCO
2
e
(5% reduction)), which is primarily driven by
our move to electric energy sources. We have
transitioned our depots from gas to renewable
electricity, given that the purchase of ‘green
gas’ was not considered to be economical for
our business. Our depot refurbishment roll
out has taken our environmental impact into
consideration at every point and this approach
is also to be applied to the imminent refit at
our head office in Swindon. Other key areas of
progress in the year have included the reduction
in our IT data centre utilisation (which has
saved energy) as well as the conversion of our
in-house motor fleet (which now includes 96%
hybrid vehicles).
Paul Baker
Chief Financial Officer and
Sustainability Committee Chair
The transition of forklift trucks used in our
depots from diesel to electric is well underway,
with the goal to be fully electric by 2026. To
understand what it will take to enable us to
reach a point where our sites are considered
to be net zero we undertook an exercise with
a third party and had an in-depth report
completed on our Birmingham depot. This
was a very insightful exercise for us as we now
better understand what ‘net zero’ looks like for
our business and it has also highlighted areas
we could take to reduce emissions and these
are now being evaluated and will be deployed
across our network as part of our transitional
planning.
During FY2024 we also spent some
considerable time and effort further
understanding our sustainability reporting
data. As a consequence, we have realised that
to ensure that we are able to produce reliable
data on a consistent and timely basis we will
need to refine both our processes and systems.
In FY2025, we will therefore continue with an
in-depth analysis of our underlying processes
and data interrogation, acknowledging that the
work done during FY2024 has highlighted some
shortcomings which will need to be further
investigated and remediated. What is clear for
our business, is that our emissions are driven
by ‘miles on the road’ which is itself expected to
be impacted by our cost containment initiatives
and growth strategies. For example, the closure
of depots as part of our cost-out programme,
while making economic sense, can increase
overall emissions with the impact of increased
mileage travelled by our sub-contractor
drivers being greater than the reduction
in site emissions.
Partly as a consequence of this in-depth
analysis of our data, but also because as
a business we have moved on from the
starting point at which we first developed our
Sustainability strategy and framework, we have
reviewed our metrics and targets for FY2025.
This exercise has also been informed by
developments within the regulatory frameworks,
not least the TCFD and forthcoming Transition
Planning Disclosures, each introduced or
amended since we developed our framework
back in FY2022.
Sustainability Committee
32
Smiths News plc | Annual Report and Accounts 2024
The publication of the IFRS-S1 and S2 reporting
standards, while not yet adopted in the UK,
are likely to inform the UK Sustainability
Reporting Standards (SRS) as well as the wider
Sustainability Reporting Framework (SDR)
anticipated to be introduced by the FCA in the
near future and thus, as part of our forward-
looking planning, we have considered the SASB
reporting standards specific to our business.
We have also sought to understand the external
reporting requirements of the various rating
agencies that provide ESG scoring of corporates
and the impact that these scores may have on
our business. The outcome of this review has
been that, whilst, we have maintained our five
Sustainability pillars, we have agreed revised
KPIs and metrics that are more transparent,
easily understandable, auditable and better
comparable. More detail about the pillars,
metrics and targets can be found in our
Sustainability report on page 34.
This year has also seen us working with our
supply chain partners to improve our collective
understanding of our Scope 3 emissions in
an endeavour to align our approach with that
of the newspaper and magazine publishers
which are, of course, the largest contributors
of emissions within our supply chain, to ensure
that together we can reduce output emission
levels. We undertook a number of engagements
with publishers and industry bodies to better
understand external requirements for the
delivery of Sustainability reporting across the
News & Magazine supply chain as well as to
communicate our strategy and performance.
I am happy to report that this has led to a
positive dialogue and enhanced understanding
of our respective positions, with a commitment
to build on this step in the FY2025 period.
In addition, the magazine publishers have
launched ‘PPA: Action Net Zero Pathway,
focusing on the reduction of Scope 1 and 2
emissions, supply chain transparency and
demonstrating solutions to external partners
and consumers, including a commitment to
providing data to support our own Scope 3
reporting.
We continue to track both the participation
rate and scores resulting from our colleague
engagement surveys and we continue to act
on comments and feedback received.
Further details on this can be found in our
Stakeholder Engagement report as well as
in the body of this report below. The issue of
Board diversity is covered in some detail in the
Corporate Governance report on page 72.
Finally, our contribution to our broader
communities remains important to us and I am
pleased to report that this year we have made
good progress with the ‘We Care’ network
group, the development of our volunteer
programme, charitable funding and the support
for community causes. Once again, more
information in this regard can be found in the
body of this Sustainability report.
During 2025 we will make further progress on
our transition planning alongside delivering
against our KPIs and medium-term Science
Based Targets. I look forward to reporting on
these next year.
Activity in FY2024
The Committee was established in April
2024 with the objective being to oversees
the Company’s Environmental, Social
and Governance strategy and to monitor
progress against our sustainability key
performance indicators. The detailed roles and
responsibilities of the Committee can be found
in the Terms of Reference which are published
on our website.
Approval
This report was approved by the Sustainability
Committee and signed on its behalf by:
Paul Baker
Sustainability Committee Chair
4 November 2024
Composition and attendance
1
Members throughout
the year
Committee member
since Meeting attendance
Paul Baker – Chair 23 April 2024 2/2
David Blackwood 23 April 2024 2/2
Jonathan Bunting 23 April 2024 2/2
Denise Collis 23 April 2024 2/2
Michael Holt 23 April 2024 2/2
Deborah Rabey 23 April 2024 2/2
Mark Whiteling 23 April 2024 2/2
1 The maximum number of meetings held during the year that each director could attend is shown next to the number attended.
The Committee was formed in 2024 and met twice during the year, with all Committee members attending all meetings.
Key matters
addressed by the
Committee
April 2024
• Establishment of Committee, approval
of terms of reference for
recommendation to the Board and
confirmation of workplan
• Sustainability pillars progress report
against targets and consideration of
action plans to achieve targets for the
balance of the year
• Review of how a sustainability-led
culture is embedded across our business
• Consideration of the reliability of data
and how this is shared consistently both
internally and externally
July 2024
• Review of metrics and targets for
FY2025
• Consideration of engagement with
publishers to align on Scope 3 emissions
data and reporting requirements
Strategic Report
Governance Financial Statements
33
Our Sustainability Pillars
Governance Environment
People
Community Responsible
partnerships
Compliant and
transparent
reporting
Reduction of Scope
1 & 2 emissions
Reduction of Scope
3 emissions
Improving own
packaging
compliance and
diversion of waste
from landfill
Driving colleague
engagement
Development and
training
Diversity and
inclusion
Support good causes
through volunteering
and financial
contribution
Compliance with
supplier code
Data protection
Our Sustainability
Strategy
In 2021, we established
our sustainability strategy,
conducting a materiality
assessment that pinpointed
five strategic pillars to guide
our actions, enabling effective
resource allocation, targeted
initiatives, and systematic
progress monitoring within
each area.
These strategic pillars directly address 11 of the
17 United Nations Sustainable Development
Goals, reinforcing our commitment to fostering
enduring prosperity for both humanity and the
planet. Each pillar is managed by a member of
the Sustainability Steering Committee (please
see the Corporate Governance report page 72)
for further information), who is responsible for
developing specific objectives and KPIs that are
cascaded to operational teams to drive progress
in the respective area.
In FY2024, in light of the significant
regulatory changes on the horizon and using
the lessons we have learnt over the past
two years, we reviewed and updated our
sustainability strategy.
Our pillars remain the same, but we have
revised the metrics we use to track performance
across each pillar, streamlining them from 18
to 10 honed metrics to make them smarter -
improving clarity, measurability, and auditability.
This is key to ensuring further alignment to the
requirements of IFRS.
Our strategic pillars
drive our actions and
commitment to prosperity,
humanity and the planet.
34
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report
Our Sustainability Strategy
Governance Environment
People
Community Responsible
partnerships
Objective:
Compliant and transparent
reporting
Mitigation of emissions
through an overall
reduction in energy
consumption coupled
with a transition to
renewable energy and the
management of waste.
Supporting colleagues
by driving engagement,
development & training and
diversity & inclusion.
Contribute to the
communities in which
we operate through both
charitable donations and
colleague-led volunteering
and community
engagement.
Responsible partnerships
through ethical sourcing,
a sustainable supply
chain and secure data
management.
KPIs:
1.
Increase external rating
measured against London
Stock Exchange score
(FY23: 86%)
2.
Reduction of emissions:
Scope 1 & 2: an absolute
reduction of 55% by 2033
3.
Reduction of emissions:
Scope 3 (categories 1, 4 &
6): an absolute reduction
of 55% by 2033
4.
Understand scope to
improve own packaging
compliance (based on
regulatory packaging data)
with 100% diversion of
waste from landfill
5.
Engagement - Maintain
strong participation rate
of above 75% for each
engagement survey and
drive engagement through
improvement in colleague
engagement score by 1 –
3% over next 12 months
6.
Development and
Training - Support a skilled
workforce through increase
access to development
opportunities, with a year-
on-year increase in the
% colleagues accessing
e-learning non-mandatory
courses and demonstrate
a skilled workforce through
mandatory certification
above 95% for non-PC
users and 98% for PC users
7.
Diversity & Inclusion -
Support a diverse and
inclusive workforce by
achieving a 30% increase
in the number of colleagues
from minority groups
recruited into Leadership
positions over the next
5 years
8.
Support good causes
through YoY increase
in volunteer days and
activities and financial
contributions to charities
9.
95% of non-trade suppliers
that go through the
procurement process, to be
registered with our supplier
management portal and
signed up with our Supplier
Code
10.
Protection of data with
98% of PC user colleagues
with current certification
security/data protection
awareness supported
by two anti-phishing
campaigns within the year
Related risks:
8 5
6
8 4 2
6 1
3
5
7
Risks:
1
Cyber security
2
Macroeconomic uncertainty
3
Changes to retailer’s commercial
environment
4
Acquisition and retention of labour
5
Growth initiatives
6
Sustainability & climate change
7
Major newspaper titles exit the market
or move to digital only editions
8
Legal and regulatory compliance
Strategic Report
Governance Financial Statements
35
People
The expertise and skills of our colleagues
are integral to the execution of our business
strategy. We prioritise cultivating a safe,
supportive, and collaborative work environment,
underpinned by six core values. These values
have been carefully selected for their tangible
impact on our daily work experiences and
are designed to serve as practical guiding
principles, shaping our approach and reinforcing
our long-term vision. Our values enable us to
sustain an inclusive work culture that values
individuals for their unique qualities and
contributions, not just the work they do.
Diversity & Inclusion
Embracing diversity is key to staying
competitive in today's global marketplace.
Having a diverse workforce brings various
benefits, such as a wider range of perspectives
and ideas, increased innovation and creativity,
better problem-solving, improved decision-
making, and a more inclusive work environment.
Governance
Effective governance is dependent on accurate
data. At Smiths News this remains paramount,
and continual improvements are sought in
the way that we collect, analyse and present
such data. This year we have refreshed our
risk management approach to cover not only
climate-related risks, as we are required to do in
line with TCFD reporting, but also risks across
all our sustainability pillars. Further detail can be
found in the risk section below. Going forward,
we will continue to prioritise our ‘People and
Environment’ workstreams, as we believe they
best reflect the areas where we can have the
most impact for the greater good.
In FY2024, to further embed management
of sustainability within the business we
established a stand-alone Sustainability
Committee in support of our commitment
to our sustainability agenda and to ensure we
meet the highest expectations for governance
and compliance.
Governance – Compliant and transparent reporting KPI:1
Ambition Measure/KPI Progress
Compliant and
transparent reporting
London Stock Exchange Group
Governance score of > 85%
82%
People – Diversity and inclusion KPI:7
Ambition Measure/KPI Progress
Support a diverse and
inclusive workforce
30% increase in the number
of colleagues from minority
group recruited into Leadership
positions over the next 5 years
(FY2021–2026)
Gender 22% vs Target 43%
(36% achieved against 5-year
baseline Target)
Ethnicity – 11% vs Target of 10%
(11% achieved against 5-year
baseline Target)
In support of this we have set a target to
increase the proportion of leadership from
ethnic minority backgrounds. Our D&I data-
gathering exercise indicates that within our
business diversity decreases with seniority, so
we believe that it is important that the targets
we set ourselves are specific to the leadership
group rather than the whole organisation.
We are also focused on the development of a
future talent pipeline, with 33% of the current
Executive Team being female.
Effective oversight of sustainability has seen
us move from a dedicated sustainability report
in Board meetings to the formation of the
Sustainability Committee which supports the
Board to ensure oversight of the Company’s
Environmental, Social and Governance
strategy while monitoring progress against
key performance indicators.
The Committee has approved terms of
reference and has met twice during the year
following its establishment in April 2024. For
more information pertaining to the governance
of our wider sustainability approach please see
the Corporate Governance Report on page 72,
or for specific climate governance please see
the Climate Governance section below.
We recognise that good governance means
being transparent with our stakeholders.
Considering this, we have established a KPI to
improve our external disclosure rating from the
London Stock Exchange Group, as seen in the
table to the right.
We consider ratings from different agencies
and proxy voting opinions, acknowledging the
use of various elements and metrics for scoring.
We have chosen to use the Refinitive Score
LSE software as our performance measure.
This doesn't mean it is the only correct
methodology, but we find it to be an objective
and practical target with clear metrics for
guiding our progress.
Please refer to our Corporate Governance and
Nominations Committee reports on pages 72
and 94 respectively for more information of
diversity at a Board level. In this regard, the
Board acknowledges that, despite our best
endeavours, we still fall some way short of the
set targets under UKLR:6.6.6R(9) and considers
it to be unlikely for the Board to be able to meet
these targets in the short to medium term.
36
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Creative
Be imaginative,
adventurous and curious.
Develop inspirational ideas
and innovative solutions.
Open
Share your thoughts
freely and always
stay open to new ideas.
Listen to others, be
positive and engage in
communications.
Trusted
Safe, reliable and
responsible. Take pride in
our work and do the right
thing for our customers
and each other.
Fair
Be inclusive, honest and
respectful to everyone,
whatever their role
or experience.
Friendly
Have fun and be helpful.
Enjoy working together to
deliver great performance.
Quick
Make informed
decisions and act quickly.
Be agile in the way we
work together and deliver
for our customers.
Our Values
Our Values guide the way we work together
and help to set our ambition and strategy.
They are reflective of our hands on and
pragmatic culture, and as such are relevant
to improving performance today and shaping
the solutions of tomorrow.
C
r
e
a
t
i
v
e
O
p
e
n
F
a
i
r
Q
u
i
c
k
F
r
i
e
n
d
l
y
T
r
u
s
t
e
d
Strategic Report
Governance Financial Statements
37
Gender composition: 31 August 2024 Headcount
Gender Male % Female % Total
All employees 832 59.9 556 40.06 1,388
Board of Directors 5 71 2 29 7
Executive Team 4 57 3 43 7
Executive Team and other
Senior Managers
16 73 6 27 22
Gender composition: 26 August 2023 Headcount
Gender Male % Female % Total
All employees 882 59 607 41 1,489
Board of Directors 5 71 2 29 7
Executive Team 4 57 3 43 7
Executive Team and other
Senior Managers
15 71 6 29 21
Gender composition and pay
gap reporting
The Company is dedicated to achieving gender
equality in the workplace and is actively working
to improve the gender balance over time. In
a broader sense, we aim to create a work
environment that offers fair compensation to all
employees and ensures that each colleague has
access to personal development opportunities,
along with the necessary support to advance
their careers. The gender composition as of
31 August 2024, and the equivalent data for the
prior year can be seen in the table on the right.
Gender pay gap data* is communicated and
made fully accessible to colleagues and other
stakeholders, including publication on the
relevant Government websites. The Company
will update its gender pay gap report in due
course, in line with the required reporting
timetable and no later than 4 April each year
– details will be published on the Company’s
website at → www.smithsnews.co.uk/investor-
zone/. Our previous year (2023) detailed
report is available to view and download on
the Company’s website at → Smiths_News_
gender_pay_gap_2023.pdf
* Calculated on the defined snapshot date of 5 April 2022 and published before 4 April 2023 as required by Government reporting rules.
Supporting diversity
We know that strict adherence to the UK
Christian Calendar and cultural norms
might deter certain demographics from
joining or feeling at home in our business.
That’s why we’ve developed policies
that allow us to accommodate differing
religious beliefs by adjusting shift and
break times (for example, during Ramadan)
and ensuring the provision of multifaith
spaces in our recent depot refurbishments.
Our flexible bank holiday scheme also
means colleagues swap statutory holidays
for days that fit better with their faiths
and communities. Overall, we try to
accommodate all reasonable requests
to support the diversity of cultures that
reflects our business today.
38
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
How we are supporting our people
We are committed to advancing a robust
inclusion strategy grounded in data, colleague
representation, and education, bolstered
by the dedicated efforts of our Inclusion
Manager. As part of our unwavering focus on
inclusion and diversity, we strive to ensure that
every colleague feels valued within Smiths
News. This year, we successfully expanded
and integrated our networking groups,
culminating in the launch of our Mind Matters
network group and Pride in News network.
Concurrently, we have actively pursued
inclusive accreditation opportunities, such as
fostering-friendly initiatives. Recognising the
importance of understanding the demographics
of our workforce, we have driven awareness
campaigns to encourage colleagues to disclose
demographic information. In line with this,
we have initiated a comprehensive review of
our Diversity and Inclusion (D&I) data, with a
proposal to refresh this by FY2025, ensuring
its relevance and depth for meaningful analysis
and actionable insights. To bolster our data
collection processes, we are implementing a
voluntary, self-reporting mechanism for new
colleagues to provide information on ethnic
origin, nationality, sexuality, religion, disability
considerations, and gender identity. Moreover,
we are actively promoting the completion
of personal and sensitive data by existing
colleagues within our People IT platform.
This additional insight is important for us
when we are considering the suitability of our
engagement topics and channels, the fairness
of promotion opportunities and identification
of potential ethnicity and gender pay gaps.
We continue to audit this data, focusing on
the accuracy of data and statistics, current
status and observations, key findings and
recommendations.
Our 'EveryoneIn' programme, which includes
multiple national initiatives and promotes
awareness through a set calendar of D&I
events (e.g. National Inclusion Week, Black
History Month, Pride, Ramadan, etc.), has been
refreshed with a new structure. This includes
increased organisational representation and
a formalised approach, enabling improved
cross-network links and collaborative working
initiatives. We remain committed to fostering
an inclusive culture, with various D&I groups
involving our colleagues to ensure ongoing
education and information on a wide range
of topics, such as mental health, inclusive
leadership, and awareness campaigns
throughout the year. We now have 43 network
members (excluding our Executive Team
members) across a number of Groups.
Network groups
Group Name
Discussions and Achievements
Women in News (WIN)
Date of establishment:
March 2023
Number of formal meetings
18
• Gender, flexibility and parity are embraced and
championed, and everyone has equal access
to all opportunities.
• Embedding of maternity and menopause support/
awareness.
• Free period products introduced at all sites.
• Ongoing awareness and comms, including International
Women’s Day and guest speakers.
Minds Matter
Date of establishment:
November 2023
Number of formal meetings
8
• Male suicide awareness video for International
Men’s Day.
• Providing feedback and guidance to absence project
and reasonable adjustments reviews.
• Supporting with investigation into quality of service
provided by Health Assured, including through
conducting test calls.
• Ongoing awareness and comms, linking in with Mental
Health Awareness, such as stress awareness month
and mental health awareness week.
• See Health & Safety section for more details, page 43.
Beyond Barriers
Date of establishment:
December 2023
Number of formal meetings
9
• Introduction of new carers policy and support.
• Fostering Friendly accreditation with The Fostering
Network, including five days paid leave for all
foster carers.
• Carers week and wider comms/awareness pieces.
• Neurodiversity celebration week.
Pride News Network
Date of establishment:
May 2024
Number of formal meetings
8
• Launch of new network, with colleague competition
to name (29 suggestions).
• PRIDE comms and activities, including chat mats, quiz
and local celebrations.
Other
Date of establishment:
N/A
Number of formal meetings
N/A
• Broader inclusion and colleague sharing:
• Colleagues coming forward to proactively share
their stories and raise awareness, for instance with
men’s health, coeliac disease, and orthodox Christian
celebrations.
Strategic Report
Governance Financial Statements
39
Workplace responsibility,
whistleblowing and human rights
The Company is committed to responsible
practice throughout the workplace, striving to
ensure a culture that is free from discrimination
and harassment in any form. The Board
regularly reviews these issues, ensuring the
actions and policies described in this report
are applied in practice and that this ambition is
deeply embedded in the culture of the business.
In support of this, we work to embed a culture
and environment in which workplace concerns
can be raised and addressed without fear
of recrimination. We have an independent
whistleblowing process including a hotline
and reporting processes, which now includes
a reporting facility with multiple language
capability that is available 24 hours a day,
7 days a week. This confidential hotline
enables colleagues to anonymously report
any suspected incidences of fraud, bribery,
modern slavery or non-compliance with
Company policies, practices, or breaches of
law. All such incidences are assessed and
categorised according to severity and risk by
the People Services team and an investigating
manager appointed, with the findings reported
to the Audit Committee on completion of the
investigation. This approach is integral to our
policies and procedures, further supported
by training for managers and a zero-tolerance
approach to serious breaches. Regular reviews
ensure that updates are made in response
to business initiatives and legislation; any
significant changes are noted and discussed
with the Executive Team and the Board.
Separately, Health & Safety performance
is reviewed regularly by the Board and the
Executive Team throughout the year.
The Audit Committee received quarterly reports
on incidences of whistleblowing or other
malpractices reported across the business.
A total of seven incidences (down from eight in
the previous year) arose in the reporting period,
but no such instances were material or of
significance to the Company.
Overall, these risk management processes
each aid and improve the identification of,
and mitigating actions to prevent and report,
incidences of suspected fraud, tax evasion,
data breaches, bribery, modern slavery
or other forms of malpractice. See the
Corporate Governance report on page 72
for further details.
The Company supports the human rights of
our colleagues, and our policies are built on
a commitment of mutual respect, fairness,
and integrity. We provide proper and flexible
consideration for individuals with disabilities,
and if an employee develops a disability while
working for the Company, every effort is made
to sustain their employment and offer retraining
for alternative roles if necessary.
In relation to our markets, we have policies for
ethical trading standards and a commitment
to combatting modern slavery, which we
expect our commercial partners to adhere to.
We remain vigilant in our efforts to combat
modern slavery and human trafficking, regularly
reviewing the effectiveness of our procedures
in the areas we consider to be of greatest risk,
including employee recruitment; contractor
appointment and management; procurement;
and outsourcing. Furthermore, we seek to raise
awareness of anti-slavery and human trafficking
through communication of our policies and
guidelines. The Company’s Anti-Slavery and
Human Trafficking Statement (September
2024) is available online → www.smithsnews.
co.uk/wp-content/uploads/Modern_Slavery_
Sep_2024_for_FY25.pdf
Commitment to communication
The strategic and operational choices we
make have an impact across the Company,
influencing the functions and accountabilities of
our colleagues. We believe that well-informed
decision-making necessitates seeking input and
feedback from our colleagues regarding how
strategic initiatives, policies, and procedural
adjustments can influence the efficiency
of operational roles, as well as ensuring the
work environment we create is open and allows
for feedback.
We use several mechanisms internally to
engage and communicate with our colleagues
which are set out in detail in our Stakeholder
Engagement report on page 22.
Each year we undertake several formal
engagement initiatives that provide insight into
the Company performance, risks and policies,
as well as allowing us to gauge our drivers of
performance and our colleague’s alignment to
our values, goals and culture. To support our
activities in this area we have developed KPIs
that focus on employee engagement.
In the last 12 months we launched a new
engagement survey platform, Culture Amp,
which provides enhanced reporting features,
greater consultancy support and cost
savings. The October 2023 survey saw a 79%
participation rate and we received over 2,000
comments. The April 2024 survey saw an
increase to an 88% participation rate, again
with over 2,000 comments received. The results
showed a +14% points for the vision and
purpose section following a communications
programme around the Company’s vision and
purpose. Following the October 2023 survey,
management acted on comments indicating
that more follow through was required leading
to more frequent updates from management
through Town Hall meetings (3 per annum),
SmithsZone (Intranet) and Our News (internal
publication) as well as more robust local and
organisational action planning using Culture
Amp tools. This delivered a +13% points
improvement in the April 2024 survey in the
category ‘belief action will be taken from the
survey’. During the year we also undertook the
first colleague survey for our ancillary business
Instore and introduced new starter and exit
surveys across all of Smiths News.
Please see the Stakeholder Engagement report
on page 22 for more information relating to
our colleague engagements undertaken during
FY2024.
Whistleblowing
Reports
received
Reports investigated
and closed
Outstanding
investigations
FY2024 7 7 0
FY2023 8 8 0
FY2022 5 5 0
40
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Maintaining & retaining our talent
(Training and Development)
As a business we understand the importance
of retaining and developing our colleagues’ skills
and knowledge to ensure we are equipped to
flourish. In providing relevant and accessible
training and development interventions, we
are committed to investing in personal and
professional development, helping to increase
job satisfaction, and reduce employee turnover.
Development & Training KPIs
We have continued to deliver blended
training solutions (combining face-to-face
and online learning) across the business which
has included a review of our e-learning self-
service content.
We are particularly proud of our Trusted
Leadership programme which saw 13
colleagues from across all areas of the business
complete the programme in March 2024
with a further 26 colleagues currently in the
programme. As a direct result six colleagues
have received promotions over the course of the
programmes, with two colleagues enrolled onto
Leadership apprenticeships as an aspirational
add-on to the programme.
Our apprenticeship training has also progressed
well with five apprentices in learning, one
graduated apprentice with a merit and 10
internal support sessions for apprentices
delivered. During Apprenticeship week we held
several drop-in sessions and made available
various resources and materials.
We take a targeted approach to our
sustainability training, focusing on specific
roles responsible for ownership and delivery
of our decarbonisation workstreams. At the
Board and Leadership level, we engage external
experts to conduct targeted training sessions
on ESG topics, such as emissions calculations,
regulations, climate risk identification and
management, as well as the implications and
importance of science-based targets for net-
zero transition. Our Chief Financial Officer, who
chairs our Sustainability Committee, completed
Oxford University’s ESG and Sustainable
Financial Strategy Leadership training to further
integrate sustainability knowledge within the
business and its processes. Within management
and operational functions, we provide upskilling
to roles that are integral to achieving our
reduction strategy.
People – Engagement KPI:5
Ambition Measure/KPI Progress
Supporting colleagues
by driving engagement,
development & training, and
diversity & inclusion
Participation rate and overall
score: participation rate >75%
for each engagement survey
Participation rate: 88%
Improved colleague
engagement score of 1-3%
over next the 18 months
9%-point increase from
October 2023 to April 2024
People – Development and Training KPI:6
Ambition Measure/KPI Progress
Support a skilled workforce
through increased access to
development opportunities
Year on year % increase
of colleagues accessing
e-learning non-mandatory
courses
12%-point increase
Demonstrate a skilled
workforce through
mandatory certification
% of colleagues who
have achieved mandatory
certification: above 90% for
non-PC users and 98% for PC
users.
Non-PC users: 97.1%
PC Users: 98.2%
Trusted Leadership
Working together to improve skills and
share perspectives
Trusted Leadership is our bespoke
programme for aspiring managers in the
business. It focuses on not only skills we
can learn in the classroom, but on applying
them in the workplace. Using a blended
approach, it takes these skills from theory
to practice, giving them relevance in their
practical environment.
And one of its signature strengths is the
mutual encouragement of colleagues
who participate. As a cross functional
programme, Trusted Leadership brings
together diverse roles and experiences
from across the business, encouraging
knowledge sharing and collaboration with
sessions that are open and supportive
– founded on the belief that different
perspectives each have value.
The workshops and expert-led sessions
cover a range of topics such as motivation,
development, inclusion, recruitment, well-
being, project management and much
more. To support these, we use creative
and inspiring teaching techniques to bring
a different dimension and help link the
learning into practical situations.
The most rewarding
aspects of my
involvement
was engaging
with colleagues,
understanding their
journeys, and supporting
each other.
Our first cohort was so popular and
successful that we quickly followed up with
a second intake, and a third programme
will be underway soon. It’s all part of our
commitment to developing skills and
ensuring supportive career paths for those
with the ambition and talent to progress.
The programme has
not just helped me be
better at my job, it has
also given me greater
confidence outside of
work too.
Strategic Report
Governance Financial Statements
41
Fair pay and financial support
We recently conducted our first benefits survey,
with a participation rate of 57% and 669
comments received. We have initiated a review
of the survey data and anticipate compiling a
comprehensive report and action plan during
FY2025. This year, our benefits roadshows
focused on Financial Fitness, providing education
to colleagues on maximizing their income
through our benefits. We conducted sessions
at the three distribution hubs and held calls with
various teams, providing a reference video for
colleagues. Additionally, we introduced new
benefits, including Charles Cameron's free
mortgage advice line, the launch of The Wisdom
Health App, and expanded benefits through
Health Shield (Skin Vision & MyGymDiscounts).
During the COVID-19 pandemic we introduced
our health cash plan which has proved to be
a popular benefit for our colleagues, enabling
them to receive money back for expenditure on
health-related items such as prescriptions, dental
and optical and wellbeing services. The benefit is
provided free of charge to all colleagues and their
children under 18.
Our analysis has shown a 34% increase in
individual claimants of this benefit between
FY2022 and FY2023 with a 33% increase in
the value of claims with those using the benefit
also utilising more of the claimable elements
e.g. dental, optical, physiotherapy, prescription
charges etc. In addition, we continued to support
colleagues in need with the colleague support
fund throughout FY2024.
ESG metrics are included within the personal
objectives of the executive directors and
therefore impact bonus payments. The
Directors’ Remuneration Policy (approved by
shareholders at the 2023 AGM) makes explicit
reference to the inclusion of ESG metrics as an
executive performance measure within the LTIP
scheme which is included in the FY2024-26
LTIP and FY2025–27 awards. In addition, the
Remuneration Committee has continued its
focus on the fairness agenda over the past year,
contributing to a number of the developments in
employee benefits detailed above. Please refer
to our Directors’ Remuneration report on pages
98 to 117 for more information on executive
remuneration and employee engagement
around pay.
Supporting our colleagues through
strategic change
To stay agile and competitive, the Company
adapts its strategy over time, from streamlining
operations to diversifying services. We
carefully consider the impact of these strategic
decisions across all operations. In cases
requiring business rationalisation as part of
cost-cutting efforts, we are committed to fair
and considerate action, minimising impact
through enhanced redundancy packages, early
retirement, re-training, and internal placement.
We also engage local employers to support
colleagues into new roles, train managers
on change management, and offer support
in job applications. We have a formal Union
recognition agreement with Unite and involve
them in change processes. Our Colleague
Consultation Team, representing various
business units, plays a crucial role in change
programs, ensuring meaningful consultation.
This team is entrusted with early access
to change-related information, facilitating
meaningful consultation. Notably, their input
was instrumental in refining the management-
proposed solution for the introduction of flexible
bank holidays and the management of Time Off
in Lieu (TOIL).
Employee turnover
FY2024 FY2023 FY2022
All employees 32.87% 30.30% 38.64%
Board of Directors 0% 0% 33.33%
Executive Team 0% 0% 22.22%
Executive Team and other Senior Managers 4.17% 9.09% 21.28%
Fair pay and financial support
Year Applications
received
Approved
Application
for assistance
Average grant
from Colleague
Support Fund
2023-2024 21 19 £1,171
2022-2023 12 9 £922.22
We also have a colleague forum focused on
enhancing the overall work experience. Their
recent support in a data gathering exercise was
pivotal. We plan to engage with the outcomes of
our recent benefit survey to determine the next
steps for our non-contractual benefits.
Employee Turnover is tracked and internally
reported monthly as a way of monitoring and
tracking the success of our retention initiatives.
We undertake exit interviews with staff who
depart to ensure we capture feedback that can
inform our strategy.
42
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations (RIDDOR)
FY2024 FY2023 FY2022 FY2021
Specified injuries 3 1 0 0
Injuries resulting in over seven
days’ absence from work
2 3 2 11
Dangerous diseases resulting
in over seven days’ absence
from work *
0 0 0 6
All RIDDOR 5 4 2 17
* We have seen a minor increase in RIDDOR reportable incidents however we believe this to be a normalisation after the COVID-19
impacted years.
Health & Safety
We are committed to a culture of attention to
health and safety and take pride in working
together to keep our workplaces safe. This
means adopting positive behaviours, calling out
concerns and encouraging proactive reporting
of all incidents and near misses, without blame
or fear of sanction for doing so. The Company
continues to monitor and manage its reporting
of incidents and accidents, however minor they
may be, with a robust process of investigation
(including root cause analysis and human
factors) before the incident is considered closed.
Using qualified Health & Safety practitioners,
we review all recorded accidents, near misses
and any concerns raised by colleagues in
pursuit of continual improvement to our
processes and performance. We have a zero
exceptions policy to accurately report and
categorise incidents – and every occurrence is
treated as a learning opportunity to be followed
up with training and corrective action. The
result is that we have a strong track record of
limiting accidents in the workplace despite the
physical nature of our operations. In line with
best practice, we have an online Health and
Safety management system supplemented by a
mandated online safety induction training for all
new starters and a health and safety resource
centre on the Company’s intranet providing
easy access to our policies and procedures for
all colleagues.
Fostering a Culture
of Mental Health and
Wellbeing
At Smiths News we believe everyone
should have access to support for their
mental health without fear of stigma. Which
is why we have a range of initiatives and
support mechanisms to help colleagues
who are in need of friendly advice or more
formal assistance.
Mental Health Allies
At the vanguard of mental health and
wellbeing programme, our Mental Health
Allies (MHAs) provide knowledgeable
and safe support to colleagues across the
business. Trained and certified by Mental
Health First Aid England they are a network
of 16 Mental Health First Aiders – and
they’ve quickly become a vital part of our
wider suit of help and assistance
for colleagues.
Critically, our MHAs are proactive in making
themselves accessible to colleagues,
fostering an open and trusted space for
listening and providing knowledgeable
advice from signposting to expert support.
Awareness is also raised through posters at
sites and communication on our colleague
intranet.
To give further confidence and ensure
up-to-date competencies, all our MHAs
must attend quarterly meetings to discuss
updates, training, current themes and
challenges. There are also regular informal
check-ins to keep up to date.
We’re proud of the dedication of our MHAs
in offering professional in-house support.
They have quickly become a trusted
point of contact for colleagues, not only
in times of crisis but also in promoting the
importance of everyday wellbeing.
Mind Matters Network Group
The Mind Matters network group is
dedicated to changing the perception of
mental wellbeing within Smiths News.
Its members provide an inclusive space
where colleagues’ voices are heard and can
influence positive change through insights,
education, and advice. Their goal is to
create an environment where all colleagues
feel secure in seeking support for their
mental wellbeing.
Confidential Helpline
In addition to workplace support, we offer
a free and confidential 24-hour helpline
via our Employee Assistance Programme,
accessible to all colleagues and their direct
family members.
Hearing our colleagues’ voices
Our What Matters engagement survey
helps us to identify any themes and
challenges regarding mental wellbeing
and stress, we use this information when
thinking about planning activity
or producing resources.
The Company continues to monitor and
manage its reporting of incidents and accidents,
however minor they may be, with a robust
process of investigation (including root cause
analysis and human factors) before the incident
is considered closed.
The lost time frequency rate (LTFR - rate of
lost time injuries per 100,000 working hours)
for FY2024 was 0.38 (FY2023: 0.38) against a
target of 0.32. Our total accident frequency rate
(rate of injuries per 100,000 working hours) was
2.29 against a target of 2.5, which reflects a 6%
decrease year-on-year. (FY2022: 2.64, FY2023:
2.44, FY2024: 2.29).
During the year, Smiths News again retained
certification of its OHSMS processes to ISO
45001 standard following three audits from
BSI (British Standards Institution/our certifying
body) which included identifying the needs and
expectations of all interested parties, ensuring
the management system is suitable, with
robust controls in place for all individuals and
organisations impacted by our activities. It is
supplemented by a programme of audits and
inspections. The findings of these have been
used to review and refine our safety strategy
with the Health & Safety team focusing on
culture and risk mitigation.
Strategic Report
Governance Financial Statements
43
Environment
Compliance statement against:
• Taskforce on Climate-related Financial
Disclosures (TCFD) Recommendation
• The Companies (Strategic Report)
(Climate-related Financial Disclosure)
Regulations 2022
In accordance with UKLR:6.6.8G, in assessing
our compliance with the recommendations of
TCFD, we have taken into account both the
guidance for all sectors in Section C of the 2021
version of the TCFD guidance ‘Implementing
the Recommendations of the Task Force on
Climate-related Financial Disclosures’ as well
as other documents of guidance referred to in
UKLR:6.6.9G. We have supplemented this with
a further assessment of the requirements of The
Companies (Strategic Report) (Climate-related
Financial Disclosure Regulations 2022 and
consider the disclosures which we have made in
relation to TCFD to address these requirements.
Based on the guidance noted above, we have
made disclosures that are aligned with the
TCFD core element areas of Governance,
Strategy, Risk Management and Metrics and
Targets. In making these disclosures, we have
complied fully with the required 11 specific
recommended disclosures save for the
following items:
• Strategy recommendations B and C - we
have only partially described the impact
of climate-related risks and opportunities
on our business, strategy, and financial
planning, as well as only partially describing
the resilience of our strategy when taking
into consideration different climate-related
scenarios, including a 2°C or lower scenario.
We acknowledge that further work is required
here to reach the point where all disclosure
requirements are met in full. While we
acknowledge that we could refine the basis of
our assumptions used in scenario planning,
including the development of an analytical
model to more accurately identify the impact
of climate-related risks and opportunities
to our business, strategy and financial
planning and the timelines of such impact
and associated KPIs to manage material
risks, currently we do not have the internal
resources to undertake this further work, nor
do we believe that the forecasted expenditure
of such analytical models is currently justified
nor necessary for us at this time in order to
have a better degree of certainty to be able to
sufficiently assess our climate-related risks,
their magnitude or the associated timelines.
Reducing our emissions and energy
consumption are our priorities, as they are
linked to several climate-related risks which
we have identified.
Environment – Improving packaging compliance
and diversion of waste from landfill KPI:4
Ambition Measure/KPI Progress
Improve own packaging
compliance
Understand scope to improve
own packaging compliance
(based on regulatory packaging
data) with 100% diversion of
waste from landfill
100% diversion of waste from
landfill
Environment – Reduction of emissions: Scope 1 & 2 KPI:2
Ambition Measure/KPI Progress
Reduction of emissions:
Scope 1 & 2
4.96% (of baseline stated in
2022) reduction per year and
an absolute reduction of 55%
by 2033
Baseline number; 2,452 tco
2
e
Environment – Reduction of emissions: Scope 3 KPI:3
Ambition Measure/KPI Progress
Reduction of emissions:
Scope 3
(categories 1, 4 & 6): Medium to
long term target of an absolute
reduction of 55% by 2033
Baseline number; 257,298 tco
2
e
44
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
• Metrics and Targets recommendation A – We
have only partially disclosed the metrics used
by our business to assess climate-related
risks and opportunities in line with our
strategy and risk management processes.
Our current metrics and targets focus on
emissions, energy reduction and waste
management which are also our measures
of mitigation for a number of our identified
climate-related risks. Currently, we believe
that these metrics and targets sufficiently
address the climate-relate risks that
have been identified. As we develop our
decarbonisation pathway and transition plan,
we will consider additional KPIs to support
our overall ambition, if deemed relevant. We
acknowledge that the identification of new
risks or changes to our current risk profile
may also require the introduction of new
targets and KPIs and these will be addressed
as and when the need arises.
As part of the transition planning process which,
as noted above, will be undertaken in FY2025-
2026 we anticipate that we will be able to more
accurately determine what further actions we
will be required to take to reach a point where
we have fully disclosed against all the TCFD
requirements. We believe this approach is
reasonable and proportionate with the current
economic and geo-political environment in
which we operate and the circumstances of
our business, acknowledging that we have
considered all reasonable and supportable
information available to us without incurring
undue cost or effort (IFRS S2 requirement).
Our increasing focus on climate change is
further reflected in our TCFD disclosures,
with some of our highlights in the year being
the progress we have made in the analysis of
our data, which whilst enabling us to identify
certain shortcomings, has also enabled us to
better understand and further develop what
‘net zero’ looks like for our business, including
a better understanding of how this will inform
our transition planning and our further strategic
development. We have also been able to better
understand our risks and opportunities, leading
to a review of our climate-related risks and the
growth of Smiths News Recycle.
A summary appendix of our key disclosures
in relation to the 11 TCFD recommendations is
set out at the end of this TCFD report on pages
58 to 59.
Over the next two years we plan to develop
a decarbonisation pathway to our near-term
target, including understanding the financial
investments required and the impact this
could have on our financial planning and
business processes. This decarbonisation
plan will allow us to further assess the
resilience of our business model and
develop our transition plan. This assessment
can begin only once we have developed
our decarbonisation roadmap and better
understand the decarbonisation levers
available to us.
• Risk Management recommendation A – We
have only partially described our processes
for identifying and assessing climate-related
risks.
During FY2024 we have further enhanced
our risk management processes, including
procuring access to a number of models
linked to our insurance and related processes
which have assisted us in determining both
high risk areas as well as the impact relating
to climate-related events. In addition, the
risks we have identified are considered in
detail as part of our strategy and financial
planning, specifically as the risk process
is directly linked to our going concern and
viability modelling, with decarbonisation risk
and mitigation factored into our medium-term
strategy and financial planning. We feel the
visibility of data that we have at this time to
be sufficient in allowing us to understand
the impact of climate-related risks to our
business and to therefore go a step further
at this time is not warranted. For instance,
we do not envisage that the development
of analytical models to more accurately
quantify the impacts and mitigation measures
against our material climate-related risks
and opportunities will lead to a change in
our corporate activities for the reasons set
out above and we therefore remain satisfied
with our current processes; however, as we
undertake the development of our transitional
planning, should the need arise for further
analysis we will of course look to enhance our
quantitative climate scenario analysis.
Background
As a wholesale business, most of our emissions
arise from the goods we procure (including the
newspapers and magazines that we distribute),
our logistics network and the movement of
products and our people. As such, collaboration
with our suppliers and outsourced logistics
providers is vital in ensuring we effectively
manage our climate-related risks and reduce
our emissions. We have reported our Scope
1 and 2 and partial Scope 3 emissions since
the introduction of the UK Streamlined Energy
and Carbon Reporting and this is our third
year reporting the impacts of our climate-
related risks and opportunities. Our climate risk
reporting is aligned to the TCFD framework,
as required by UKLR:6.6.6R(8), and to the
requirements of the Companies (Strategic
Report) (Climate-related Financial Disclosure)
Regulations 2022. A table has been provided in
the Appendix to map each disclosure element to
relevant sections of this report.
Since FY2021 we have been actively managing
our climate risk and have made significant
progress in our data collection, validation and
reporting processes (including calculating our
full value chain emissions), understanding our
climate-related risks and opportunities and
adapting our corporate governance structure
to ensure we are able to achieve our ambitions.
In FY2022, we set emission reduction targets
aligned to climate science, evidencing our
commitment to reduce our impact and play our
part in mitigating the impacts of climate change.
To build resilience towards potential incoming
legislation, we continually review and adapt
our strategy and processes to ensure they
remains fit for purpose, allowing us to focus our
actions on the areas that we can have
a significant impact.
Strategic Report
Governance Financial Statements
45
Executive Team
All colleagues Sustainability Steering Group Operational Teams
Audit CommitteeSustainability Committee
Remuneration Committee
Board
Board
Frequency: Quarterly meetings, sustainability
including climate risk standing agenda item for
all meetings
Members: All Executive and Non-Executive
Directors
Responsibilities:
• Oversight of the Company’s sustainability
strategy
• Monitoring progress towards sustainability
targets & management of climate related
risks and opportunities
• Mobilising financing to ensure opportunities
are seized and targets are achieved
Engagement
Engagement:
• Updates via Board Paper produced by
the Sustainability Committee and CFO
attendance at meetings covering climate
• Audit Committee quarterly updates on
enterprise risk including sustainability
Sustainability Committee
Frequency: Quarterly meetings, chaired
by CFO
Members: All Executive and Non-Executive
Directors
Responsibilities:
• Oversees sustainability strategy including
climate risk management
• Monitors progress against KPIs
• Review, challenge and approve strategy
proposed by Sustainability Steering Group
Engagement:
• Sustainability Steering Group Progress
Report including updates where changes to
climate risk register take place, presented by
CEO
Remuneration Committee
Frequency: Annual review
Responsibilities:
• Oversee suitability and implementation
of incentives
• Alignment of remuneration policy and
incentives to incorporate ESG
Engagement:
• Annual engagement with Sustainability
Committee and Board to review ESG
incentives
Audit Committee
Frequency: Quarterly meetings
Responsibilities:
• Oversees company risk management process
including
• Reviews and monitors risk registers including
sustainability risks
• Oversees external disclosure
Engagement:
• Sustainability risk register, owned by
Sustainability Committee.
• Meetings attended by CFO who is chair
of Sustainability Steer Co and member of
Sustainability committee
Executive Team
Frequency: Weekly meetings with feedback
from Sustainability Steering Group via
structured reports covering broad climate
agenda
Responsibilities:
• Monitor risk and progress towards
sustainability KPIs
• Embed climate into company culture and
messaging
Engagement:
• Informed - CFO acts a conduit to
Sustainability Committee and Steering Group
Sustainability Steering Group
Frequency: Quarterly meetings, chaired by
CFO (Executive sponsor for Sustainability)
Members: Cross functional group including
operations, procurement, finance, governance,
communications and our people team.
Responsibilities:
• Identification, assessment and mitigation
of climate risks
• Responsibility for management and
operationalisation of climate and
sustainability strategy
• Identification of climate mitigation
• Target setting and monitoring progress
• Identifying investment required for climate
mitigation activities
• Sustainability communication strategy
(internal & external)
• Reporting and disclosure
Engagement:
• KPI progress reports from operational teams
and attendance of sustainability pillar leads
Reports to:
• Sustainability committee quarterly, via
progress report, CFO conduit
• Audit Committee, ad hoc as risk register
changes occur
46
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Key
Communication channel
Climate Governance
Our approach to managing sustainability
combines clear internal responsibilities,
frequent KPI review and, importantly, regular
communication of our performance to
stakeholders. This is aligned to our Company
values and a belief that the pursuit of
sustainability can enhance our services and
partnerships with our suppliers and customers.
Climate risk and sustainability are considered at
all levels of the business.
To equip our Executive and Leadership teams
with the necessary skills to make informed
strategic and investment decisions regarding
sustainability, we offer tailored training utilising
both internal and external resources. More
information is available under the heading
‘Maintaining and Retaining Our Talent’ in this
report. Through a long-term partnership with
EcoAct, we are able to integrate sustainability
knowledge and skills into our Board processes.
In line with best practice guidance, we have
established Sustainability linked incentives at
Leadership level, with the annual LTIP award
now including a sustainability metric. Further
information on this and the percentage of overall
remuneration can be found in the Directors’
Remuneration report on page 98.
Our Board has ultimate responsibility for
sustainability and considers climate risk and
opportunity in strategic decisions and business
plans. It is supported by the newly established
Sustainability Committee and the Audit and
Remuneration Committees. Further information
regarding the terms of reference, mandates
and meetings of these, the Board and its
Committees can be found in the Corporate
Governance report on page 75, whilst details
of our climate governance structure can
be found in the diagram on the previous
page. Since its establishment in FY2024, the
Sustainability Committee has put in place a new
governance mechanism to ensure that internally
and externally the same, verified data set is used
in communications, helping us better to manage
our climate-related reputational risk, as scrutiny
and use of external data by rating agencies
continues to increase. The strategy section of
this report provides further detail on other data
improvement work we have undertaken.
The Sustainability Steering Group is delegated
responsibility for operationalisation of the
Company’s sustainability strategy, identifying and
assessing climate and sustainability risks and
opportunities, assessing progress against KPIs
and shaping the future sustainability strategy.
Further details of our KPIs are outlined in the
relevant sections throughout this report. Since
its inception in FY2021, the Sustainability
Steering Group has set emission reduction
targets aligned to climate science, established a
more thorough and frequent data interrogation
process and cascaded responsibility for
the day-to-day management of activities to
functional roles. This mirrors the way that other
risks are managed within the business. Further
details of this process can be found, in the Risk
Management report on page 66.
It has also provided upskilling and training to the
Board and Executive Team via a combination
of internal updates and use of external experts
to provide context on specialist topics, enabling
empowered and informed decision making to
take place.
We understand the significance of ensuring
that every colleague is informed about and
understands our sustainability strategy and
how their role contributes to its success.
Therefore, we have integrated our goals into our
broader employee engagement strategy, that is
managed by the Sustainability Steering Group.
Climate Risk and Opportunities
We acknowledge that climate change
presents both risks and opportunities to our
business. Our operations may be affected
by physical risks, potentially impeding our
capacity to effectively serve our customers and
communities, and transition risks, which could
escalate operating costs or diminish overall
revenue.
To address these challenges, we employ
two primary approaches. Firstly, we have
established science-aligned emission reduction
targets aimed at mitigating climate change.
Additionally, we leverage our enterprise risk
management system to evaluate and identify
appropriate mitigation measures for risks or
opportunities that hold material significance for
our business, further details of which can be
found in the Risk Management report on pages
66 to 71.
The transition to a low carbon economy also
presents opportunities including resource
efficiency and cost savings. The Company
is harnessing these opportunities and has
identified and established an additional revenue
stream, Smiths News Recycle (see page 08),
which has been established to support retailers
within the local communities in which we
operate to increase their recycling rates and
reduce waste to landfill.
Operational Teams
Frequency: Quarterly meetings, chaired by
CFO (Executive sponsor for Sustainability)
Members: Operational teams to deliver day
to day actions of climate strategy
Responsibilities:
• Management of data used to inform
sustainability strategy
• Identification of risks, escalation to
Sustainability Steering Group
• Implementation of emission reduction
and climate mitigation activities
• Specific climate responsibilities:
– Fleet & Services Director: Scope 1 and 2
emissions management), and oversight of
Scope 3 emissions
– Publisher Service Team: establishing and
leveraging supplier relationships to identify
opportunities for reducing our value chain
emissions
– Site managers and fleet team responsible
for implementation of emission reduction
activities and building climate resilience
Engagement:
• Manage and report data to sustainability
pillar leads
Reports to:
• Sustainability Steering Group quarterly
KPI update
All colleagues
Communication of our sustainability strategy
through internal communication channels
highlights company ambition to our wider
business, clarifying actions that contribute
to target achievement across all pillars.
Strategic Report
Governance Financial Statements
47
Climate Scenario Analysis
To understand and assess our climate related-
risks and opportunities, in line with the TCFD
guidance, in FY2021 we conducted qualitative
climate scenario analysis (CSA) using multiple
carbon scenarios and time horizons. Although
these time horizons challenge our traditional
business planning timeframes, extending our
view out to longer timeframes means we can
start to understand and adapt to risks and
harness opportunities that may require longer
to materialise or realise.
Our CSA process involved stakeholders from
across the business, representing different
functions and split across operational and
leadership roles. The plausible future scenarios
were considered, and a materiality assessment
undertaken to map the impact to business
against importance to stakeholders and prioritise
the most material risks. These risks were then
rated against our risk impact thresholds, as more
fully explained in the Risk Management report
on pages 66 to 71, to understand the severity of
the impact on the business, and the likelihood
that the risk may occur. No updates to the
assessment or the assumptions have taken place
since 2021.
For a full rationale of how these time horizons
align to strategy and wider risk management,
please see page 66 in our Risk Management
report.
The focal question of the assessment was ‘What
climate-related risks and opportunities are
relevant to us as a business?’. We deliberately
kept this broad to ensure we captured all risks
and opportunities for consideration. During this
qualitative assessment we considered the impact
of acute and chronic physical risks (extreme
weather events, temperature increases, flooding
and sea level rise) as well as transition risks
covering market, technology, policy and legal and
reputation.
We identified five climate-related risks as
potentially material to the business, using
the same threshold as our standard risk
management process, these have been
amalgamated as the principal business risk
of ‘sustainability’ in our Group risk register,
which is managed and challenged by the
Audit Committee, the Executive Team, and the
Board. A dedicated sustainability risk register
has been developed and is monitored by the
Sustainability Committee and Sustainability
Steering Group, to ensure general sustainability
and more specifically, climate-related risks and
opportunities are monitored and reassessed
frequently. Further detail of our sustainability risks
can be found in the risk section of this report. As
well as risks we have identified climate-related
opportunities including lowering operating costs
through energy efficiency and diversification of
income streams to offer our customers effective
ways to increase their recycling rates, leading to
the establishment of Smiths News Recycling.
Metrics and Targets
We understand the need for immediate action
but also recognise that longer term action and
commitments are required to ensure progress
continues. In FY2022 we set near-term emission
reductions targets that align with global
scientific consensus, as it puts us on a trajectory
to support limiting global warming below 1.5
o
C.
These targets are aligned to the Science Based
Targets Initiative guidance but have not been
submitted for formal validation. At present our
near-term targets extend to 2033 and cover
our full Scopes 1 and 2 and our most material
Scope 3 emissions. We also have target in
place to send zero waste to landfill from our
own operations.
Our Progress
Since the introduction of the Companies
(Directors' Report) and Limited Liability
Partnerships (Energy and Carbon Report)
Regulations 2018, also referred to as
Streamlined Energy and Carbon Reporting
(SECR) we have reported our Scope 1 and
2 emissions (arising from energy used in our
offices and depots, and fuel used in Company-
owned or operated vehicles) as well as the
emissions from our outsourced contractor
mileage (part of Scope 3). Our emissions
performance can be found in the SECR table
below. Emissions have been calculated in line
with the GHG Protocol Corporate Reporting
Standard and we have used the UK Government
GHG Conversion Factors for Company
Reporting 2024.
SECR Disclosure 2024
3
2023 2022
Emissions from the combustion of fuel or the
operation of any facility, including fugitive emissions
from refrigerants use/tCO
2
e – Scope 1 emissions
1
1,359 1,503 1,536
Emissions resulting from the purchase of electricity,
heat, steam or cooling by the Company for its own
use (location-based) / tCO
2
e – Scope 2 emissions
1
813 876 916
Total gross emissions / tCO
2
e 2,172 2,379 2,452
tCO
2
e per £ million turnover 1.97 2.2 2.3
tCO
2
e per FTE 2.04 1.6 1.5
Energy consumption used to calculate above
emissions/kWh 10,059,957 11,079,725 11,706,928
Estimated emissions from the mileage covered
by our outsourced delivery drivers (tCO
2
e) – Scope
3 emissions
2
10,368.3 9,085 9,343
1 Estimated data equates to 0.2% of consumption for Scope 1 and 3% for Scope 2.
2 Please note that this value covers the emissions from our outsourced mileage which includes delivery contractor mileage and trunking.
Other logistics associated with pre- and post-distribution runs and purchased courier or postage services are not included in this total
but are currently in calculation as they form part of our Scope 3 target boundary.
3 It should be noted that 2024 is a 53-week year.
FY2024 actions Scope
1 and 2:
• Improved data: In controlled buildings,
we have installed half hourly meters
to better understand site energy
usage profile, allowing identification
of behavioural change and training
opportunities to reduce emissions (e.g.
Ensuring minimal baseload when site is
not in operation).
• Refurbishment: HVAC and lighting
upgrade at our Swindon Head Office.
• Electrification buildings: transitioned
our Stockport distribution centre from
natural gas to electric heating, which is
on a renewable tariff.
• Electrification of vehicles: successfully
transitioned our entire company car
fleet to electric, with a split of 83%
plug-in hybrid and 17% full electric and
increased the proportion of electric
forklifts in our depots and warehouses.
Our move away from diesel also means
we have reduced particulate matter
associated with diesel cars.
Electric chargers installed at 14% of
our sites.
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Sustainability Report continued
Climate Scenario Analysis
Time Horizons Carbon Scenarios Considered & Description Assumptions
Short: 2028
Medium: 2033
Long: 2033+
IEA Net-Zero by
2050: 1.5
o
C aligned
Early implementation of societal actions and
policy towards a low carbon economy, resulting
in the limitation of global warming in line with the
aspirational Paris 1.5°C increase.
Selected as higher transition risk in this scenario.
• Population: 45% increase
• Fossil fuel price peaks in 2030
• Advanced economies reach net zero in 2045
• Transition reliant on energy sector
• Reliant on rapid deployment of available
technologies as well as technologies that are
not yet on the market
• Smiths News emissions reduce in line with
SBT trajectory
RCP 8.5: high carbon
(>3
o
C)
Failure to implement change and limited policies
to address global warming.
Selected as highest impact from physical risk.
• High population growth
• Strong reliance on fossil fuels
• Slow technological progress
Strategic Report
Governance Financial Statements
49
Scope 1 and 2
In FY2024 Smiths News’ total Scope 1 and 2
location-based emissions came to 2,172 tCO
2
e,
a 9% decrease compared with our previous
financial year and a 11% reduction since our
FY2022 baseline. We achieved a 17% reduction
in the emission from our natural gas usage, and
a 4% reduction in emissions from our Company
car fleet. Extra resource has been dedicated to
emissions management to allow us to increase
the granularity of and frequency with which we
collate, report and interrogate data at different
management levels. This has enabled us to
better understand our data and clearly identify
action areas. See the strategy section for details
of emission reduction activities as required
by SECR.
Scope 3
While it was our intention to report on the
Scope 3 emissions that sit within the boundary
of our target (categories 1, 4 and 6) as against
our FY2022 baseline, the timing has been
delayed due to a data extract problem which is
being remedied. We understand that our largest
emission source is from our purchased goods
and services.
To influence reductions in this area we will
continue to focus on obtaining primary data
from suppliers, that will enable us to transition
from weight based reporting to supplier specific
emissions. We believe this can be attributed to
a combination of purchasing a lower volume of
newspapers and magazines and an increase in
the use of recycled papers. We will continue the
engagement with suppliers to better understand
and further refine the recycled content data to
improve the accuracy of our calculations.
Our second largest source of emissions arises
from our outsourced logistics network where
we are also looking to further refine and
understand the data to enable us to better
understand both the source of the emissions as
well as identify opportunities to engage with our
logistics network with a view to reducing these
emissions where possible.
It is anticipated that our Scope 3 (categories
1, 4 and 6) emissions data will only become
available after the publication of this report.
Strategy
Our strategy has been influenced by climate-
related risks and opportunities, from setting
targets, establishing a sub-committee of the
Board dedicated to Sustainability matters,
including climate (see Corporate Governance
report on page 74), investing resource on
improving our climate-related data and
deploying capital to reduce our emissions and
managing our climate risks.
To gain a deeper understanding, we have
increased the frequency of our data integration
and reporting. Previously an annual activity, the
Sustainability Steering Group now analyses the
data from our SECR report monthly and report
to the Board quarterly.
Since setting our targets in FY2022, our focus
has been on emissions reduction across our
buildings and fleet, as this helps us to mitigate
two of the five climate-related risks we have
identified including:
1) reduced reliance on fossil fuels, reducing
exposure to energy blackout and price volatility
within the market and 2) reducing fleet
emissions to reduce the impact of ultra-low
emission zones.
We have also adapted our strategy to harness
opportunities including the establishment of
Smiths News Recycle (see page 8 for further
details).
The next phase of our work is to develop a
transition plan that allows us to meet our near
term SBT and consider the impact of climate
risk in more detail. In preparation for this we
have, in partnership with Savills, undertaken
a net-zero assessment at our Birmingham depot
to understand the feasibility and investment
required to reach net-zero at this site. Whilst
each site is unique in its usage, the reduction
initiatives identified in this assessment are
applicable to our other depot sites.
In addition, we have completed energy audits
at our head office in Swindon and our
distribution centres in Hemel Hempstead and
Taunton as part of our compliance with Phase
3 of the UK Government’s Energy Saving
Opportunities Scheme.
The results of these assessments show there
are several levers we could use to reduce our
emissions and reduce our climate risk including:
1. Energy efficiency: Upgrades to our
lighting and heating equipment and
installation of additional smart control
systems – automatic lighting, radiator
controls and power quality monitoring.
2. Employee behaviour and awareness:
decrease temperature settings and
understand baseload outside of operational
hours.
3. Switch to low carbon energy: Transition
to alternative energy sources including gas
boilers to electric and installation of solar
PV or heat pumps and continue to convert
our forklift trucks to electric to build on the
success of transitioning our entire company
car fleet to EV/hybrid by the end of FY2023.
We will use the results of these audits to assess
the suitability of actions across our portfolio
and develop a longer-term transition plan
that will layout our strategy and investment
required to achieve our near-term emission
reduction targets.
Scope 3 – value chain emissions
Our experience with Scope 3 emissions
management has underscored the need for
collaborative action to drive change. The
effectiveness of our emissions reduction
hinges on the participation of our colleagues,
outsourced delivery drivers, and the publishers
we collaborate with. A significant portion of
our focus this year has been directed towards
engaging with our suppliers, especially the
publishers responsible for the majority of our
Scope 3 category 1 emissions and evaluating
the influence of our consolidation strategy on
our overall emissions profile.
Across FY2024, we have undertaken various
activities that influence our Scope 3 emissions
in different ways.
Internal activities:
• Hosted internal workshops with operational
teams to enhance Scope 3 understanding,
empowering operational roles to identify data
improvements, enabling the replacement of
estimated emissions with actual data.
50
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Publisher actions:
• Engaging with suppliers to communicate
the Smiths News ESG strategy to better
understand publishers’ strategy, including
understanding current emissions profile,
plans to reduce emissions and climate-
related risks and opportunities.
• Initiated dialogue with publishers on
deforestation risk in their supply chain and
FSC certification (or equivalent) ambitions.
• Applying lessons learnt by publishers to our
own data challenges.
• Supported publishers with their verification
process by providing access to our raw data
and calculations to be considered as part of
their Scope 3 verification process.
• Identified opportunities for route
consolidation:
– Continue to track volume of unsold
items across our newspaper publishers
and magazine distributors to identify
opportunities to consolidate routes and our
distribution activities.
– Collaboration with supply chain partners
upon announcement of the merger of DMG
Media and News UK print operations, to
supporting our publishers in reducing overall
mileage when delivering to our depots, in
turn driving reduction in our own upstream
Scope 3 emissions.
Supporting our
colleagues with
volunteering
As part of our ‘We Care’ scheme, Volunteer
Time allows all Smiths News colleagues
to apply for up to two days of paid leave
to support worthwhile causes within their
community.
We understand that many colleagues
regularly volunteer their own time with
local charities and communities that are
important to them. In supporting these
efforts, Volunteer Time gives colleagues the
flexibility to take additional paid leave as
and when it is most needed.
Case study:
This year our Talent Team volunteered
at Phoenix Enterprises, a local charity
that provides vital support for over 100
vulnerable adults in Swindon with mental
health issues, learning difficulties and
physical disabilities. The team helped to
collate language leaflets, build boxes and
assembled support leaflets.
The volunteering day
gave me an opportunity
to work alongside some
of the people that are
supported by the charity,
not just learning more
about the charity and
the support it gives, but
importantly for me, also
practically helping them
in delivering their task
for the day.
Outsourced logistics:
• Promoted the transition of our outsourced
delivery vehicles to newer models, including
EURO 6 engines, and encouraged the shift
from diesel to alternative fuels like LNG,
hybrid, or fully electric options.
• Analysed the effect of our consolidation
strategy on our outsourced delivery
emissions, integrating this into our emission
reduction roadmap (transition plan).
In FY2025, we will continue to engage with
our suppliers to increase collaboration
and availability of primary data as well as
investigating additional methods to move
away from spend based calculations for our
purchased goods and services.
Strategic Report
Governance Financial Statements
51
Responsible
partnerships
Supplier management
We have continued to work closely with
our suppliers and customers as we pursue
sustainable ways of working and to align our
sustainability objectives. To manage risk in this
area we have established a KPI to ensure that
we can track our supplier adherence to our
supplier code.
To advance our sustainability goals, we
continue to work closely with our suppliers
and customers, with a focus on aligning our
sustainability objectives. Our supplier code,
ethical trading policy, and modern slavery
policies undergo annual reviews, and we
have recorded no compliance issues or
concerns. Our audits indicate that over 98%
of our non-trade suppliers meet the required
procurement standards. The Company remains
actively engaged in monitoring and enhancing
supply chain standards, leading the way in
best practices and adopting the voluntary
codes of the Press Distribution Forum (PDF),
which operates under a service charter with a
complaints process benefiting all members.
Stage 1 pre-complaints across all news
wholesalers in the UK reduced from 244 in
FY2022 to 137 in FY2023, with those related
to Smiths News decreasing from 63 to 43 in
the same period. Most formal complaints were
linked to delivery timeliness, driven by seasonal
weather-related issues leading to an increase
in call centre inquiries, naturally resulting
in a rise in complaints. We are dedicated to
resolving issues before they escalate to formal
complaints, with recent PDF analysis showing
that the average time to conclude a complaint
comfortably meets the 28-day deadline, with
Smiths News averaging 14 days (compared to
10 days in FY2022). With a 55% market share,
Smiths News accounted for 31% of industry
breaches under the Charter, up from 28%
in FY2022.
Additionally, beyond the PDF Charter
requirements, Smiths News continues to
implement an automatic service failure payment
scheme in cases where the daily news is
delivered over two hours late, irrespective of
inbound delivery times that may be beyond
our control. This scheme, exceeding the PDF
Charter and our contractual obligations,
continues to be well received by retailers and
their representative trade bodies.
Ensuring responsible standards in our supply
chain is a focal point of our procurement
policies. All preferred suppliers must adhere
to our supplier code, modern slavery, and
anti-bribery policies, and demonstrate their
commitment to upholding these standards.
Further information is available on our website
under ‘Working Responsibly - Smiths News’.
Data and cybersecurity
In today's digital landscape, the significance
of cybersecurity for our business cannot
be overstated. As we increasingly rely on
digital systems to store sensitive information,
conduct transactions, and communicate with
clients and partners, the need to protect our
data and systems from cyber threats has
become paramount. A strong cybersecurity
posture not only safeguards our company's
valuable assets and maintains the trust of our
stakeholders, but it also ensures continuity
of operations and minimises the risk of costly
data breaches and regulatory penalties. By
prioritising cybersecurity, we demonstrate our
commitment to upholding the integrity of our
business, fostering a secure environment for our
employees, clients, and partners, and sustaining
our reputation in the marketplace.
Throughout the year, we have consistently
enhanced the security measures across
our business.
This includes bolstering the security of internal
datacentre systems, cloud services, and end
user devices.
The implementation of new antivirus and
network filtering solutions has provided
added protection against modern threats,
and advancements in security vulnerability
management have facilitated the deployment of
crucial updates. The business has successfully
rolled out a modern network architecture,
featuring next-generation firewalls, further
fortifying our network protection capabilities.
We are dedicated to an ongoing program
of security improvements, including the
implementation of reinforced safeguards
for critical assets and stringent control over
resource access. Furthermore, a comprehensive
update of Business Continuity plans has
been executed. While we achieved 'Cyber
Essentials Plus' accreditation from the National
Cyber Security Centre during FY2023, we
did not recertify in FY2024 as our focus was
on multiple hardening activities. We intend
to pursue recertification once these activities
are completed. Our security incident response
has proven effective, and the insights gained
have been integrated into our processes and
technology. This is key to continually improving
response capability and strengthening of
existing controls.
Responsible partnerships – Compliance with supplier code KPI:9
Ambition KPI Progress
Responsible partnerships
through ethical sourcing and
a sustainable supply chain
95% of non-trade suppliers*
registered on our procurement
system and that have agreed
to our supplier code of
conduct
98%
* Non-trade suppliers do not include publishers
Responsible partnerships – Data protection and cyber security KPI:10
Ambition KPI Progress
Responsible partnerships
through secure data
management
Protection of data: % of
PC User Colleagues with
current certification security/
data protection awareness
supported by two anti-
phishing campaigns within
the year
95.65%
52
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Showing colleagues
and communities that
‘We Care’
In September 2024 we launched ‘We Care’
– a new scheme to support our colleagues’
fundraising and volunteering efforts.
The initiative is powered by passionate
colleagues from all corners of our business.
The scheme aims to support charity
partnerships, fundraising and volunteering
efforts – bringing these together to make a
real difference to their communities
‘We Care’ is founded on three clear
objectives.
• Supporting local communities and
community groups
• Promoting a culture of ‘giving back
• Encouraging colleagues to access our
volunteer time policy
In addition, the ‘We Care’ scheme manages
charitable requests accessing our
colleague matching pot and helping direct
our wider charity campaigns.
Case study:
Adam Clayden, Newport Warehouse
Manager, has worked tirelessly to fundraise
for Noah’s Ark and Epilepsy UK. Following
the launch of the scheme, we enhanced
Adam’s fundraising efforts with a further
donation of £150.
The support from friends
and family for our
fundraising efforts for
Noah's Ark and Epilepsy
UK has been truly
heartwarming.
Community
Smiths News makes an active and substantial
contribution to thousands of communities
throughout the UK by ensuring widespread
availability of news and information, including
remote rural locations that would not typically
receive a regular delivery of many other
products.
‘We Care’ serves as our charity and
community forum, comprising colleagues from
various departments across the Company.
This colleague-led group is dedicated to
coordinating CSR charity and community
initiatives throughout Smiths News. The primary
goal of We Care is to facilitate a positive impact
on our local communities by providing support
to charities and community groups. It oversees
all charitable requests, including the colleague
matching pot funded by the Company and
the six-month charity focus, and operates two
working groups focusing on Volunteering and
Charity respectively.
Additionally, the forum actively promotes the
use of our volunteer day benefit, collaborating
with local councils to explore available
resources and opportunities, and maintaining
our commitment to contributing both financially
and through the dedicated time of our
colleagues. Specifically, we extend support to
NewstrAID, the industry-specific charity for
publishing professionals, and Pass It On.
For more information and case studies on our
community engagement please refer to our
Stakeholder Engagement report on page 22.
Community – Supporting good causes KPI:8
Ambition KPI Progress
Contribute to the
communities in which
we operate through both
charitable donations,
Colleague led volunteering
and Community
engagement financial
contribution to charity
Increase number of volunteer
days and financial contribution
to charity
Volunteer days/sessions:
32 vs 12 in FY2023
Financial contribution £25,550
Strategic Report
Governance Financial Statements
53
Risk Description Classification Rating Change Controls and mitigations
Increase in extreme weather events (Acute)
Risk event
Increased temperature and frequency of extreme
weather events such as flooding or more extreme heat
days. This can create dry ground conditions increasing
the risk of a product fire at our depots or flooding,
inhibiting or delaying people and vehicle access to our
locations. Also leads to more energy consumption to
ensure a safe operational environment.
Causes
An increase in the frequency of extreme weather events
is believed to be driven by human activities, such as
the burning of fossil fuels causing long-term shifts in
temperatures and weather patterns commonly referred
to as climate change.
Impacts
Service interruptions to our depots, data centres and
offices prevent the Company from serving its customers.
Increased investment required to make our depots more
resilient to the effects of an increase in extreme weather
events.
Increased costs arising from replacing equipment
and repairing depot infrastructure where mitigation
measures have only been partially successful or
unsuccessful.
Increase in temperatures leading to more energy
consumption (greater use of air conditioning in depots,
data centre and offices) and increased costs to ensure
safe operational environment.
Potential
Impacts:
Reputational
impact due to
inability to service
customers.
Increased
operating costs to
reroute logistics
and repair
damage.
Impact Rating:
Moderate
Stable
Review of depot network and
relocation where deemed necessary
using public flood assessments
and insurance data and preparation
and monitoring, to ensure cooling
equipment hired and deployed
during critical periods.
Material time
horizon:
Medium to long
term
Likelihood:
Possible 10% to
30% chance
Carbon
scenario:
High
Risk rating and
response:
4 - Accept
Decreasing paper supply and/or increasing raw
material or prices of paper
Risk event
Availability of paper supply for publishers and printers
impact physical copy availability and risk sharply
increasing cover prices, presenting pressure on
consumer purchase decisions.
Causes
Deforestation causing natural resource depletion and
disruption to paper supply chain through environmental
lobby actions.
Impacts
Due to restrictions on the supply of newsprint,
publishers reduce the quantity of physical copies
available for distribution to retailers and consumers
leading to reduction in range of titles available. This in
turn reduces the Company's revenue and profitability
as fixed costs of final distribution cannot all together
be mitigated by reducing volumes.
Potential
Impacts:
Increased
operating costs.
Reduced revenue.
Reputational
damage.
Impact Rating:
w
Serious
Stable
Monitor of paper supply chain
availability and costings through our
Procurement team.
Quarterly update to the
Sustainability Steering Group of any
significant changes.
Material time
horizon:
Medium to long
Likelihood:
Unlikely <10%
chance
Carbon
scenario:
High carbon &
IEA net-zero
Risk rating &
response:
3 - accept
Climate Risk: Physical
Sustainability Risks
In FY2024, we enhanced our sustainability risk reporting framework to encompass a comprehensive
range of elements beyond the climate-related disclosures mandated by the Task Force on
Climate-related Financial Disclosures (TCFD). Our reporting now includes an in-depth analysis
of the additional four pillars integral to our sustainability strategy. Detailed information regarding
these risks, their respective assessments, and the mitigation strategies we have implemented are
presented in the following tables.
Key
Change:
Increasing
Stable
New Risk
Impact:
Moderate
w
Serious
Critical
54
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Risk Description Classification Rating Change Controls and mitigations
Decreasing fuel availability and/or increasing fuel
prices (Market)
Risk event
Availability of diesel and/or petrol decreases, thereby
sharply increasing prices.
Causes
Recent macro events have caused markets to have
been volatile and while currently these have stabilised
we continue to monitor. Increased competition for
resource locally as fuel stations convert to EV charging
stations.
Impacts
Increase in operational costs (including payments
to delivery contractors) to reflect higher fuel costs
impacting Company profitability.
Fuel shortages could prevent deliveries being made to
customers, impacting contractual KPIs with publishers,
damaging the Company’s reputation and relationships.
Potential
Impacts:
Increased
operating costs.
Reduced revenue.
Reputational
damage.
Impact Rating:
w
Serious
Stable
Fuel availability and price trends are
monitored by our operations teams
and strategies developed to counter
threats and maximise opportunities.
Material time
horizon: Medium
to long
Likelihood:
Unlikely <10%
chance
Carbon
scenario:
IEA net-zero
Risk rating &
response:
3 - accept
Impact of extension of low emission zones across
major UK local authorities (Policy and legal):
Risk event
Emissions and air quality targets introduced in UK
towns and cities e.g. ULEZ in London.
Causes
Local Authority Legislation.
Impact
Increased distribution costs for final mile delivery results
in higher operation costs for the Company.
Longer term, the capital costs of using electric
vehicles would require the Company's distribution
model to be reassessed.
Supply to some customers may also prove economically
or operationally unviable, reducing our revenue and
profitability.
Potential
Impacts: .
Increased
operating costs.
Reduced revenue.
Impact Rating:
Moderate
Stable
Monitored by our operational teams
and reported to the Sustainability
Steering Committee.
Adaptation of our distribution
model through consolidation of last
mile delivery routes to minimise
operational costs.
Technology development (and
EV mileage range) may improve
economics and operational
utilisation of electric vehicles.
Colleagues with a company car
are now required to transition to
hybrid or electric vehicle when the
current fixed lease period expires,
supporting use in clean air zones.
Material time
horizon:
Short to medium
Likelihood:
Possible 10% to
30% chance
Carbon
scenario:
Low carbon
scenario and BAU
Risk rating &
response:
4 - Accept
Potential for energy supply limitation/blackouts
(Market)
Risk event
Energy demand exceeds supply during peak times
such as periods of extreme cold or hot weather,
resulting in energy rationing including blackouts.
Causes
Insufficient UK energy capacity to meet demand at peak
times as insufficient new power generation capability
replaces retired plant.
Impact
Energy rationing and/or blackouts could cause service
interruptions to our depots, data centres and offices
prevent the company from serving its customers.
Increased investment required in our depots to enable
them to withstand service interruption e.g. on-site back-
up generation.
Potential
Impacts:
Increased capital
expenditure.
Reduced revenue.
Impact Rating:
Moderate
Stable
Preparation and monitoring, to
ensure access to generators and
financial provision to operate during
critical periods.
Material time
horizon: Short to
medium
Likelihood:
Unlikely <10%
chance
Carbon
scenario:
Low carbon
scenario and BAU
Risk rating &
response:
2 - Accept
Climate Risk: Transition Risks
Strategic Report
Governance Financial Statements
55
Risk Description Classification Rating Change Controls and mitigations
Increasing regulatory requirements and reputational
risk (policy and legal)
Risk event
Increasing regulatory requirements / reporting
obligations.
Causes
Increasing demand for regulatory control and oversight
to support ESG agenda.
Impact
Increased reputational risk and compliance costs.
Potential
Impacts:
Reduced revenue
from reputational
damage.
Reduced access
to capital.
Increases
operating costs
from fines and
penalties.
Impact Rating:
Moderate
New
Risk
Compliance with current
regulations.
Monitoring of trends, developments,
and pending legislation.
Engagement with stakeholders
to manage perception and
expectations.
Material time
horizon:
Short to medium
Likelihood:
Possible 10% to
30% chance
Carbon
scenario:
Low carbon
scenario and BAU
Risk rating &
response:
4 - Accept
Climate Risk: Transition Risks
Carbon pricing and ofsets
We have considered the risk of carbon pricing and any reliance on carbon offsets to enable us
to meet net zero status. While we appreciate that any aspirational net zero ambition would, of
necessity, include some form of carbon offsets, we are currently in the process of developing our
longer-term decarbonisation strategy and so do not currently have visibility of the impact this could
have on the business. As part of our ongoing work, we will develop a transition plan and assess the
impact of carbon credit purchases as part of this longer-term strategic work.
Non climate sustainability related risks
Risk Description Change
Controls and
mitigations Risk Description
Health and safety deficiencies:
Risk event
Short and / or long-term injuries.
Causes
Incorrect handling, storage, use of machinery,
unsuitable control measures (PPE), building
and other defects, poor training/housekeeping
and/or supervision.
Impact
Injuries to colleagues, loss of work hours,
increased cost and loss of confidence
by colleagues in safe work environment.
Regulatory sanction and fines.
Impact
Rating:
Moderate
Stable
Controls to prevent injury in place, incidents recorded
and investigated, risk assessments carried out, controls to
reduce risk implemented, training, equipment inspected
and maintained, emergency procedures in place to respond
to incidents, ongoing communications, and functional
whistleblowing hotline in place.
Likelihood:
Likely 30% to
70% chance
Risk rating &
response:
4 - Accept
56
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Risk Description Change
Controls and
mitigations Risk Description
Cyber security breach:
Risk event
Cyber security breach.
Causes
Network intrusion (including wireless/remote),
virus / malware / Ransomware.
Physical security breach.
Logical security (account compromise).
Social engineering.
Public websites / customer order entry
system breach.
Hacking as a result of vulnerability
exploitation.
Data exfiltration.
Device theft.
Impact
Loss of data through security breach
impacting reputation. Fines and Regulatory
sanction. Possible fraud.
Impact
Rating:
Critical
Stable
Policy and HR including:
Secure development processes, supplier management
process, Security Awareness Training and Phishing Comms,
secure disposal procedures, log collection and monitoring
processes, mandatory security awareness training
Vulnerability & Patch Management policy updated and
published with timelines for patching.
Technical and Physical controls including:
• Monthly vulnerability scanning, 24/7 targeted protective
monitoring, anti-virus and malware tools, internet and
email filtering, patching process,
• zero-day vulnerability assessment process, extended
endpoint protection,
• CISCO AnyConnect VPN with Firepower IPS, secure
equipment siting, physical entry controls, Bitlocker
Encryption on new laptops , Alert Logic Extended
Endpoint Protection rolled out to EUDs,
• Laptop/Desktop HDD encryption,
• Laptop/Desktops upgraded to Windows 10
(supported O/S),
• Patches deployed to end user devices within 14 days,
• External-facing servers patched within 14 days,
• -MFA implemented for O365 and VPN,
• Maturity assessment against CIS controls version 7.1 with
prioritised control implementation, externally provided
penetration testing upon change to public facing sites and
periodic basis, Annual ITHC program, Backup Resilience
Testing July 2021. CIR retainer in place with NCC.
Likelihood:
Likely 30% to
70% chance
Risk rating &
response:
12 - Accept
Failure to meet diversity targets – loss of
stakeholder support
Risk Event
The business has very low colleague turnover,
with a long-serving workforce with senior
roles predominantly held by white males.
Changing this demographic while maintaining
the goodwill, focus and energy of the current
role holders is challenging particularly as the
number of roles at senior levels reduces.
Cause
Stability of workforce and declining market
means that the numbers of roles at senior
levels are declining reducing the opportunities
for promotions or recruitment of more diverse
talent. Measurement of Inclusion remains
a new concept with most organisations
choosing to use a small part of their overall
engagement survey.
Impact
Reduced ability to create high performing
teams through limited diversity of thought.
Potential risk of discrimination claim, even if
unfounded could be damaging to reputation.
Impact
Rating:
Moderate
Stable
Inclusion Manager engaged, driving strategy and direction.
Launch of network groups working alongside 'EveryoneIn'
to represent diverse thinking, focus and initiatives.
Regular embedded reporting and actions driven from this.
Development of the recruitment team in D&I practices,
driving initiatives such as gender decoding and revised
job adverts.
Likelihood:
Possible 10%
to 30% chance
Risk rating
and response:
4 - Accept
Non climate sustainability related risks continued
Strategic Report
Governance Financial Statements
57
Non-financial and sustainability
information statement and non-
financial key performance indicators
The information required to be included in our
non-financial and sustainability information
statement under sections 414CA and 414CB
of the Companies Act 2006 can be found in the
following places in the Strategic report.
Employment and Social
Information
Information pertaining to the management of worker
relationships, health and job security, training, equality of
gender and diversity, and the wellbeing of employees is set
out in the People section of this Sustainability report.
Human Rights
Information pertaining to the Company’s approach to human
rights is partially address under the Responsible Partnerships
section of this Sustainability report and in our Modern Slavery
Statement which is available on our website
→ www.smithsnews.co.uk/wp-content/uploads/Modern_
Slavery_Sep_2024_for_FY25.pdf
Bribery and Corruption
This topic is addressed in our Audit Committee report as well
as on our website → www.smithsnews.co.uk/wp-content/
uploads/Anti-Bribery_Policy_2024.pdf
→ www.smithsnews.co.uk/wp-content/uploads/SN_
corruption_bribery_Act.pdf
Corporate Governance
Information pertaining to governance structures, corporate
social responsibility and strategy and operations is set out
within the Governance section of this Sustainability report as
well as in the Corporate Governance report.
Environmental
How we evaluate our environmental impact, including
greenhouse gas emissions, waste management, natural
resource and energy usage, and the actions taken to mitigate
negative impacts is set out in the Environmental section of
this Sustainability report.
Taskforce on Climate-related
Financial Disclosures (TCFD)
Recommendation Relevant Section
Companies (Strategic Report)
(Climate-related Financial
Disclosure (CFD)) Regulations Relevant Section
Governance
A Describe the board’s oversight of climate-
related risks and opportunities.
(Full disclosure)
Sustainability report
Corporate Governance
report
A Describe the company’s governance
arrangements in relation to assessing
and managing climate-related risks and
opportunities.
(Full disclosure)
Sustainability report
Corporate Governance
report
B Describe management’s role in assessing
and managing climate-related risks and
opportunities.
(Full Disclosure)
Strategy
A Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long term.
(Full Disclosure)
Sustainability report table A Describe i) the principal climate-
related risks and opportunities arising
in connection with the company’s
operations, and ii) the time periods
by reference to which those risks and
opportunities are assessed.
(Full disclosure)
Sustainability report table
B Describe the impact of climate-
related risks and opportunities on the
organisation’s businesses, strategy, and
financial planning.
(Partial Disclosure)
Sustainability report
table. Impact of risks and
opportunities assessed
but impact on strategy
and financial planning
still under assessment.
B Describe the actual and potential
impacts of the principal climate-
related risks and opportunities on the
company’s business model and strategy.
(Partial disclosure)
Sustainability report
table. Impact of risks and
opportunities assessed
but impact on strategy
and financial planning
still under assessment.
58
Smiths News plc | Annual Report and Accounts 2024
Sustainability Report continued
Taskforce on Climate-related
Financial Disclosures (TCFD)
Recommendation Relevant Section
Companies (Strategic Report)
(Climate-related Financial
Disclosure (CFD)) Regulations Relevant Section
C Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario.
(Partial Disclosure)
Sustainability report.
Activities to manage
emissions disclosed but
resilience of business
model not fully assessed.
C An analysis of the resilience of the
company’s business model and strategy,
taking into account consideration of
different climate-related scenarios.
(Partial disclosure)
Sustainability report
table. Impact of risks and
opportunities assessed
but impact on strategy
and financial planning
still under assessment.
Risk Management
A Describe the organisation’s processes for
identifying and assessing climate-related
risks.
(Partial Disclosure)
Risk Management report.
Sustainability Report.
Assumptions of climate
scenarios used could be
expanded.
All of the 'relevant
section' data for the table
is wrong from here to the
bottom.
A Describe how the company identifies,
assesses, and manages climate-related
risks and opportunities.
(Full Disclosure)
B Describe the organisation’s processes for
managing climate-related risks.
(Full Disclosure)
Sustainability report
table. Impact of risks and
opportunities assessed
but impact on strategy
and financial planning
still under assessment.
Risk Management report
Sustainability report
C Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
(Full Disclosure)
Sustainability report.
Activities to manage
emissions disclosed but
resilience of business
model not fully assessed.
B Describe how processes for identifying,
assessing, and managing climate related
risks are integrated into the Company’s
overall risk management process.
(Partial disclosure)
Sustainability report
Assumptions of climate
scenarios used could be
expanded.
Metrics and Target
A Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management process.
(Partial Disclosure)
Risk Management report.
Sustainability Report.
Assumptions of climate
scenarios used could be
expanded.
A Describe the key performance indicators
used to assess progress against targets
used to manage climate-related risks
and realise climate-related opportunities
and a description of the calculations on
which those key performance indicators
are based.
(Partial Disclosure)
Risk Management report
Sustainability report
Assumptions of climate
scenarios used could be
expanded.
B Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks.
(Full Disclosure)
Sustainability report. N/A Sustainability report
C Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
(Full Disclosure)
Sustainability report. B Describe the targets used by the
Company to manage climate-related
risks and to realise climate-related
opportunities and of performance
against those targets.
(Full Disclosure)
Sustainability report
Strategic Report
Governance Financial Statements
59
Overview
In FY2024 the Company traded
ahead of expectation, continued
to generate good levels of cash
and refinanced its banking
facilities on improved terms,
enabling an update of its capital
allocation policy.
Adjusted Operating Profit of £39.1m (FY2023:
£38.8m) was £0.3m ahead of last year,
benefiting from the men’s UEFA European
Championships collectables, increased
contribution from growth initiatives and the 53rd
trading week. Average net debt was reduced to
£11.7m compared to £25.0m in FY2023. In May
2024, the Company successfully concluded a
refinancing of its banking facilities, reducing
interest charges and enabling an update of its
capital allocation policy. Consequently, the full
year dividend has increased to 5.15p per share
(FY2023: 4.15p per share), representing 2x
adjusted profit after tax, and a further special
dividend is to be paid representing 2.0p
per share.
The Company’s financial results in FY2024
represent 53 weeks of trading, compared to 52
weeks in FY2023 as the reporting year closed
on the last Saturday in August. The additional
week benefited revenue by 1.9%, adjusted
operating profit by £0.9m and did not include
any significant one-off items. From a cash and
net debt perspective, the 53rd week was a net
outflow of £15.7m driven by scheduled calendar
month end publisher payments, part of the
Company’s normal working capital cycle which
we have previously communicated.
Revenues of £1,103.7m (FY2023: £1,091.9m),
were up 1.1% on the prior year, of which 1.9%
related to the 53rd week. The remaining
movement excluding the 53rd week of -0.8%
was below the historic trend of -3% to -5%.
Within Adjusted operating profit, the benefit
of the men’s UEFA European Championships
collectables matched the contribution made
from Royal Succession and the World Cup
in FY2023, and cost out plans of £5.6m more
than offset the net decline in newspaper and
magazines income.
Inflation remains a headwind as do prices
for the sale of waste, but £1.3m increased
contribution from the Company’s growth
activities provides good trajectory going
forward. Adjusted operating profit was £39.1m
(FY2023: £38.8m) up £0.3m from last year and
including a £0.9m benefit of the 53rd week.
While lower average Bank Net Debt helped
drive lower net finance costs (FY2024: £5.9m;
FY2023: £6.5m), Adjusted profit after tax
decreased by £0.9m to £24.7m due to a £1.8m
higher tax charge which included a higher
headline UK rate in FY2024. Adjusted EPS
reduced from 10.8p to 10.3p as a result.
Average Bank Net Debt for the period
decreased by £13.3m (53.2%) from £25.0m
in FY2023 to £11.7m in FY 2024, reflecting
consistent ongoing cash flow generation. Bank
Net Debt of £11.0m was higher than last year
(FY2023: £4.2m) as there was an outflow of
£15.7m in the 53rd week, owing to calendar
month end publisher payments. Bank Net Debt
on 24 August 2024 after 52 weeks was a net
cash position of £4.7m. Free cash flow of £7.3m
(FY2023: £21.8m) was equally impacted and
Free cash flow after 52 weeks would have been
£23.0m, compared to the prior year period of
£21.8m.
Adjusting items after tax were a credit of £0.8m
as they included a £0.6m reduction in the
provision for McColl’s receivables and £0.3m
reversal of impairment on the investment in
Rascal. This compares to a cost of £0.5m
in the prior year driven by £0.6m aborted
acquisition costs.
A final dividend of 3.40p per share (£8.2m) is
proposed by the Board which makes a total full
year dividend of 5.15p (£12.4m) compared to
4.15p in FY2023 (£10.0m). A special dividend
of 2.0p (£4.8m), is also to be paid alongside
the final dividend in February 2025.
Revenue
Revenue was £1,103.7m (FY2023: £1,091.9m),
up 1.1% on the prior year including a 1.9%
benefit from the 53rd week. Excluding the 53rd
week the residual decrease of 0.8% was well
below the historic revenue trend of c.-3% to -5%
and was supported by new contract wins and
cover price increases.
Newspaper revenue increased by 2.5%, and by
1% excluding the impact of the 53rd week and
the Royal Succession in FY2023. Underlying
volume decreases were more than offset by
News UK and Midlands News Association
contract wins and the continuing benefit from
cover price increases, although these continued
to impact volumes.
Magazine revenue was down 2% and this
was 3.2% excluding 53rd week and Royal
Succession. Weekly and Monthly titles both
performed better than expected this year and
a 3% decline is lower than the 10-year average
decline of 6%.
Revenue from collectables however decreased
by 7.3%, despite the men’s UEFA European
Championships and benefit of the 53rd week.
Excluding these items, the decrease was 13%
and included a weaker performance from the
current Pokémon series over the last 12 months.
Operating profit
The increase in Adjusted operating profit of
£0.3m to £39.1m (FY 2023: £38.8m) includes
the following items:
• The benefit of a 53rd week of trading (£0.9m);
• Lower revenue from sale of wastepaper
(£1.1m), driven by a reduction in price and
volumes;
• Increased contribution from strategic growth
lines (£1.3m);
• Depot rationalisation costs of £0.6m in the
prior year which have not reoccurred; and
• Cost reduction plans within depot and
overheads (£5.6m), which partly offset
increases to the cost base driven by inflation
(£4.4m) and net newspaper and magazine
wholesale margin decline (£2.6m).
Profit after tax
Net finance charges of £5.9m (FY2023: £6.5m)
were driven by a lower average net debt and
partially offset by the write-off of unamortised
fees on the previous loan facility of £46.5m
and higher average interest rates. Taxation of
£8.5m (FY2023: £6.7m) was £1.8m higher than
the prior period, driven by the increase in the
corporation tax rate from 19% to 25% from
April 2023. Profit after tax of £24.7m (FY2023:
£25.6m) was £0.9m lower than last year.
Statutory profit after tax of £25.5m was a £0.4m
increase on the prior year (FY2023: £25.1m).
The increase was the net of the £0.9m decrease
in Adjusted profit after tax described above and
a £1.3m difference in adjusting items which
were a £0.5m cost in FY2023 but a £0.8m credit
in FY2024.
60
Smiths News plc | Annual Report and Accounts 2024
Financial Review
Table A: Adjusted results
Group
£m
53 weeks to
31 August 2024
52 weeks to
26 August 2023 Change
Revenue 1,103.7 1,091.9 1.1%
Operating profit 39.1 38.8 0.8%
Net finance costs (5.9) (6.5) (9.2%)
Profit before tax 33.2 32.3 2.8%
Taxation (8.5) (6.7) 26.9%
Effective tax rate 25.6% 20.7% 486bps
Profit after tax 24.7 25.6 (3.5%)
Table B: Statutory results
Group
£m
53 weeks to
31 August 2024
52 weeks to
26 August 2023 Change
Revenue 1,103.7 1,091.9 1.1%
Operating profit 40.0 38.3 4.4%
Net finance costs (5.9) (6.5) (9.2%)
Profit before tax 34.1 31.8 7.2%
Taxation (8.6) (6.7) 28.4%
Effective tax rate 25.2% 21.1% 415bps
Profit attributable to equity shareholders 25.5 25.1 1.6%
Table C: Earnings per share
Adjusted Statutory
53 weeks to
31 August 2024
52 weeks to
26 August 2023
53 weeks to
31 August 2024
52 weeks to
26 August 2023
Earnings attributable to
ordinary shareholders
(£m) 24.7 25.6 25.5 25.1
Basic weighted average
number
of shares (millions) 240.3 237.3 240.3 237. 3
Basic earnings per share 10.3 10.8 10.6 10.6
Diluted weighted
number of shares
(millions) 251.1 249.9 251.1 249.9
Diluted earnings per
share
9.8 10.2 10.2 10.0
Table D: Dividends
53 weeks to
31 August 2024
52 weeks to
26 August 2023
Dividend per share (proposed) 7.15p 4.15p
Dividend per share (recognised) 4.50p 4.15p
Statutory Revenue
£1,103.7m
(FY23: £1,091.9m)
Adjusted Operating Profit
£39.1m
(FY23: £38.8m)
Adjusted Profit after Tax
£24.7m
(FY23: £25.6m)
Dividend per Share
7.15p
(FY23: 4.15p)
Strategic Report
Governance Financial Statements
61
Table E: Adjusting items
£m
53 weeks to
31 August 2024
52 weeks to
26 August 2023
Tuffnells provision 0.2 (0.4)
Network and reorganisation (costs)/credits (0.1) 0.5
Technology transformation costs (0.1) —
Aborted acquisition costs — (0.6)
Impairment reversal in investment in joint ventures 0.3 —
Impairment of receivables – McColl’s 0.6 —
Total before tax 0.9 (0.5)
Taxation (0.1) —
Total after taxation 0.8 (0.5)
Table F: Free cash flow
£m
53 weeks to
31 August 2024
52 weeks to
26 August 2023
Adjusted operating profit 39.1 38.8
Depreciation & amortisation 8.5 9.2
Adjusted EBITDA 47.6 48.0
Working capital movements (17.0) (4.9)
Capital expenditure (4.4) (3.4)
Lease payments (5.9) (6.1)
Net interest and fees (5.0) (5.3)
Taxation (8.5) (6.6)
Other 0.9 1.1
Free cash flow (excluding Adjusting items) 7.7 22.8
Adjusting items (cash effect) (0.4) (1.0)
Free cash flow 7.3 21.8
Table G: Bank Net debt
£m
As at
31 August 2024
As at
26 August 2023
Opening Bank Net Debt (4.2) (14.2)
Free cash flow 7.3 21.8
Dividend paid (10.8) (9.8)
Investment in joint venture — (0.3)
Purchase of shares for employee benefit trust (3.3) (1.7)
Closing Bank Net Debt (11.0) (4.2)
Adjusted Earnings per
Share
10.3p
(FY23: 10.8p)
Average Net Debt
£11.7m
(FY23: £25.0m)
Free Cash Flow
£7.3m
(FY23: £21.8m)
62
Smiths News plc | Annual Report and Accounts 2024
Financial Review continued
Free cash flow (Table F)
Free cash flow of £7.3m was £14.5m lower
than last year (£21.8m) due to the impact of the
53rd week, which was a net outflow of £15.7m.
The 53rd week included payment made to
publishers as part of the Company’s normal
working capital cycle at the end of the calendar
month. Free cash flow excluding the 53rd week
was £23.0m.
The working capital outflow arose largely from
scheduled publisher payments in the 53rd
week. Excluding the outflow in the 53rd week,
there was a working capital outflow of £0.4m
compared to an outflow of £4.9m in the prior
year. The difference was due to the timing of
receivables due from a major supermarket
multiple which are scheduled in calendar
months, with the August 2023 receipt falling into
the first week of FY2024 and the August 2024
receipt falling into the last week of FY2024.
Capital expenditure in the period was £4.4m
(FY2023: £3.4m), an increase of £1.0m due to
depot and office refurbishments during the
summer of FY2024.
Lease payments of £5.9m (FY2023: £6.1m)
decreased by £0.2m driven by network
rationalisation activities which involved the
closure of one site and the downsizing of
another during FY2024, partially offset in the
second half of the year by rent reviews.
Net interest and fees of £5.0m (FY2023: £5.3m)
decreased by £0.3m, due to lower average net
debt and interest earned on deposits partially
offset by the impact of arrangement fees
incurred on refinancing.
Cash tax outflow of £8.5m was a £1.9m increase
on the prior period (FY2023: £6.6m outflow)
owing principally to the full year impact of the
increase in corporation tax rate from 19% to
25% in April 2023.
Other items relate predominantly to the non-
cash share-based payment expense.
The total net cash impact of other Adjusting
items was an £0.4m (FY2023: £1.0m) outflow.
A reconciliation of free cash flow to the net
movement in cash and cash equivalents is given
in the Glossary.
Bank Net Debt (Table G)
Bank Net Debt closed the year at £11.0m
compared to £4.2m at August 2023, an increase
of £6.8m but including a £15.7m outflow in the
53rd week as outlined above. The Company had
a net cash position of £4.7m at the end of the
52nd week on 24 August 2024.
Reported net debt is impacted by the timing
of the Company’s working capital cycle.
The intra-month working capital cash flow cycle
generates a routine and predictable cash swing
within the overall bank facility of £40.0m at the
year end (FY2023: £64.0m). This results in a
predictable fluctuation of net debt during the
month compared to the closing net
debt position.
Average daily bank net debt reduced from
£25.0m in the prior period to £11.7m in the
current period, a reduction of £13.3m (53%) and
reflecting good ongoing cash generation.
Total dividends paid during the year amounted
to £10.8m (FY2023: £9.8m), an increase of
£1.0m. The FY2023 final dividend of £6.7m was
paid in February (FY2023: £6.5m), bringing
the total dividend paid in respect of FY2023
to £10.0m. The Company also paid an interim
dividend in July 2024 of £4.2m (FY2023: £3.3m).
In the prior period the Company invested
£0.3m in Lucid Digital Magazines limited, a
joint venture for retailing single copy electronic
versions of newspapers and magazines under
the trading name LoveMedia.
The Company’s Bank Net Debt: Bank EBITDA
ratio increased to 0.3x (FY2023: 0.1x). The net
outflow in the 53rd week, part of the Company’s
normal working capital cycle, increased
reported Bank Net Debt compared to the prior
year as outlined above. The Bank Net Debt:
Bank EBITDA ratio covenant of 0.3x is within
our main leverage covenant ratio of 2.5x and we
remain within all our other bank covenant tests
at period end.
A reconciliation of Bank Net Debt (which
excludes IFRS 16 lease liabilities and
unamortised arrangement fees) to the balance
sheet and Bank EBITDA (which uses pre-
IFRS16 lease accounting) to the profit and loss
account is provided in the Glossary.
Going concern
Having considered the Company’s banking
facility, the ongoing impact of inflationary
pressures within the macro-economy and the
funding requirements of the Company, the
directors are confident that headroom under the
bank facility remains adequate, future covenant
tests can be met and there is a reasonable
expectation that the business can meet its
liabilities as they fall due for a period of greater
than 12 months (being an assessment period
of 16 months) from the date of approval of
the Financial Statements. For this reason, the
directors continue to adopt the going concern
basis in preparing the financial statements and
no material uncertainty has been identified.
Earnings per share (Table C)
Adjusted basic earnings per share of 10.3p, was
a decrease of 0.5p on the prior year driven by
the decrease in earnings of the business and
an increase in the average number of shares as
a result of the employee benefit trust holding
fewer shares.
Statutory basic earnings per share remained
at 10.6p (FY2023: 10.6p) due to the above
plus higher earnings from the impact of
adjusting items.
Dividends (Table D)
The Board is proposing a final dividend of
3.40p per share (FY2023: 2.75p per share). The
proposed final dividend is subject to approval
by shareholders at the Annual General Meeting
on 16 January 2025 and has not been included
as a liability in these accounts. The Board is also
proposing a special dividend of 2.0p per share.
These dividend recommendations follow the
revised capital allocation policy.
The proposed dividends will be paid on
6 February 2025 to shareholders on the register
at close of business on 10 January 2025.
The ex-dividend date will be 9 January 2025.
Adjusting items (Table E)
Adjusting items before tax was a credit of £0.9m
compared to a net cost of £0.5m in the prior
year period.
In FY2024, the Company reduced the
impairment provision held on the McColl’s
receivable by £0.6m following information
received from the McColl’s administrators,
reversed the remaining impairment held on
the Rascal joint venture of £0.3m and released
provisions made following Tuffnells entering
into administration of £0.2m. These credits were
partially offset by £0.1m of reorganisation costs
in relation to simplifying the Group structure and
£0.1m in respect of implementation costs for
the three-year internal investment programmes
highlighted above.
In the prior period, the Company incurred £0.6m
of costs for due diligence and legal activity
associated with an aborted acquisition and
made £0.4m of provisions following Tuffnells
falling into administration. These costs were
offset by £0.5m of credits relating to provisions
releases which were the result of a contract
renewal with our shared service centre partner.
Further information on these items can be found
in Note 3 to the Group Financial Statements.
Adjusting items are defined in the Glossary
to the Group Financial Statements and
present a further measure of the Company’s
performance. Excluding these items from profit
metrics provides readers with helpful additional
information on the performance of the business
across periods because it is consistent with how
the business performance is planned by, and
reported to, the Board and the Executive Team.
Alternative Performance Measures (APMs)
should be considered in addition to, and are not
intended to be a substitute for, or superior to,
IFRS measurements.
Strategic Report
Governance Financial Statements
63
1. How the Group assesses its
prospects
The Group’s business activities and strategy
are central to assessing its future prospects.
These, together with factors likely to affect its
future development, performance and position,
are set out in the Strategic Report on pages 4
to 71. The financial position of the Group, its
cash flows and liquidity are highlighted in the
Financial Review on pages 60 to 63.
The Group manages its financing via draw-
downs from a revolving credit facility. The
Group’s prospects are assessed primarily
through its business planning process. This
includes an annual review which considers
profitability, the Group’s cash flows, committed
funding and liquidity positions and forecast
future funding requirements over the
assessment period of three years. The most
recent review was approved in September 2024,
and it is part of the Board’s role to consider the
appropriateness of any key assumptions, taking
into account the external environment, current
inflationary pressures in the economy and
business strategy.
2. The assessment period
The directors have determined that a period of
three years to August 2027 is an appropriate
assessment period over which to provide its
viability statement. This period is consistent with
that used for the Group’s corporate planning
process as detailed above and reflects the
directors’ best estimate of the future prospects
of the business, including the nature and
potential impact of the principal and emerging
risks that face the business.
The Board noted in considering the appropriate
assessment period that the Group’s banking
facilities are due to expire in August 2027 with
the option of two one-year extensions and that
publisher contracts covering 91% of revenue
are secured (including, in respect of Reach plc
titles, pursuant to heads of agreement) until
2029. The Board also considered whether there
are specific foreseeable events relating to the
principal and emerging risks that could occur
beyond this three-year period which should
be taken into account when setting the
three-year assessment period and concluded
there were none.
3. Assessment of viability
In generating its plan, the Board has considered
the overall strategy of the Group, the principal
and emerging risks and uncertainties inherent
within the business, as well as making a number
of key strategic planning assumptions which are
noted below:
1. Continued decline in volumes of printed
media during the assessment period offset
by price increases;
2. The impact of inflationary pressures in the
economy, including fuel and energy prices
and their impact on the Company’s delivery
and warehouse cost base;
3. The benefit of cost reduction programmes
in delivery and warehouse costs and in
overheads;
4. The continuing development of new and
ancillary revenues;
5. No major changes in working capital profile;
6. No significant acquisitions or disposals in
the assessment period; and
7. Application of the Company’s current
capital allocation policy.
In making this statement, the directors have
carried out a robust assessment of the Group’s
emerging and principal risks, including those
that could threaten its business model, future
performance, solvency or liquidity, and also
considered the impacts of climate change.
Consideration has been given to the availability
and effectiveness of mitigating actions that
could realistically be taken to avoid or reduce
the impact or occurrence of the underlying risks.
In assessing the likely effectiveness of such
actions, the Board considered the conclusions
from its regular review of risk management
and internal control systems (as described
on page 66).
To make the assessment of viability, ’stress’
scenarios have been tested over and above
those in the Board’s business plans, based upon
a number of the Group’s principal and emerging
risks and uncertainties (as documented on
pages 68 to 71). The scenarios were overlaid
into the business plan to quantify the potential
impact of one or more of these crystallising over
the assessment period.
Whilst each of the principal and emerging risks
on pages 68 to 71 has a potential impact and
has been considered as part of the assessment,
only those that represent severe but plausible
scenarios were selected for modelling through
the business plan. These are shown in the on
the next page.
The scenarios in the table are hypothetical and
severe for the purpose of creating outcomes
that have the ability to threaten the viability of
the Group; however, multiple control measures
are in place to prevent and mitigate any such
occurrences from taking place.
In each of the stress scenarios 1-5, the Group
would be able to continue operating within its
existing debt covenants and liquidity headroom.
Scenario 5 requires such an extreme set of
factors in unison that it is considered to be
a remote likelihood and, therefore, does not
represent a realistic threat to the viability of the
Group but, rather, illustrates the factors that
could result in a covenant or liquidity breach.
The directors considered mitigating factors
that could be deployed to counter the negative
effects of the crystallisation of each of these
scenarios and risks. The main actions that
could be taken in such circumstances include
reducing any non-essential capital expenditure
and operating expenditure on projects, working
capital management to smooth debt peaks
(including supplier finance arrangements),
cancelling discretionary annual bonus
payments, share schemes vestings and EBT
purchases, identifying other cost savings, as
well as not paying dividends.
64
Smiths News plc | Annual Report and Accounts 2024
Viability Statement
Scenario modelled Link to principal risks
Scenario 1
Changes to retailers’ commercial environment
The business plan assumes all major retailers
will continue to stock their current newspaper
and magazine range over the assessment
period. We have modelled a scenario that
reflects one or more supermarket multiples
removing their magazine offering.
Risk 2: Macroeconomic uncertainty and
Risk 3: Changes to retailers’ commercial
environment:
Deterioration in the macroeconomic
environment and the risk of a reduction in sales
space and/or full delisting of newspapers and/
or magazines by our largest retailers.
Scenario 2
Growth and diversification strategy is not executed successfully
The business plan assumes profit from
strategic growth and diversification activities
within the next three years. We have modelled
a scenario in which only 50% of these targets
are met.
Risk 2: Macro-economic uncertainty and
Risk 5: Growth initiatives:
Deterioration in the macro-economic
environment and/or the failure of the news
wholesaling operations to deliver profit
expectations impacts the Company’s ability to
execute growth initiatives.
Scenario 3
Forecast savings targets are not met
The business plan assumes both operational
and overhead savings throughout the period in
Smiths News. We have assumed 33% of these
efficiency savings are not achieved.
Risk 2: Macroeconomic uncertainty
Risk 4: Acquisition and retention of labour and
Risk 5: Growth and diversification:
The risk that inflationary cost increases, the
absence of managerial talent and resources
used for new business growth opportunities
detrimentally affect the execution of planned
cost reduction.
Scenario 4
Increased number of congestion charge zones
The business plan assumes that new
congestion charge zones are implemented
at their historic frequency and impact. We
have modelled an accelerated frequency and
increased fiscal impact.
Risk 6: Sustainability and climate change:
The risk that increasingly stringent air quality
targets make it more costly for the Company
to undertake newspaper and magazine
wholesaling activities and growth initiatives.
Scenario 5
Major newspaper titles exit the market
The business plan assumes all major
newspaper titles will continue over the
assessment period. We have modelled a
scenario that reflects one or more newspapers
removing their paper edition from the market.
Risk 2: Macroeconomic uncertainty
Risk 3: Changes to retailers’ commercial
environment and
Risk 7: Major newspaper titles exit the market
or move to digital only editions:
One or more national newspaper titles exit
the market and/or publications are taken
fully digital, leading to a deterioration in the
Company’s profitability.
Scenario 6
Reverse stress test – revenue loss, margin erosion and cost inflation in combination to create
either a headroom liquidity or covenant breach
This combines an extreme series of factors
in unison to illustrate what would result in a
covenant or liquidity breach of the bank facility
headroom.
Multiple risks: A combination of risks, also
including those relating to Cyber Security and
Legal and Regulatory Compliance, both of
which are inherently uncertain in value.
5. Viability statement
In light of the scenario modelling noted above,
the directors are confident that headroom under
the Group’s banking facilities remains adequate
and covenant tests can be met during the
assessment period. As noted above, in making
this viability statement the directors have also
considered an alternative view by applying
a reverse stress test to the Group’s financial
models. A reverse stress test is where scenarios
are considered that lead to a breach of either
the total available facility or one or more of the
covenants. The directors consider that the risk
of the combination of events leading to such
breaches combined with the Group not being
able to enact mitigating actions is remote.
Taking into account the Group’s current position
and principal risks and emerging risks, the
directors confirm that they have a reasonable
expectation that the Group will remain viable
over the period of assessment to August 2027.
6. Going concern
The Group meets its day-to-day working capital
requirements through its bank facilities of £40m,
with an outstanding term of 34 months to 31
August 2027 with the option of two one-year
extensions.
The Group’s forecasts, taking into account
the Board’s future expectations of the Group’s
performance, indicate that there is sufficient
headroom within the current banking facilities
and the Group will be able to continue to
operate within the covenants during the
assessment period.
Considering the principal and emerging risks
discussed in this report, the directors have a
reasonable expectation that the Group and the
Company can meet its liabilities as they fall due
for a period greater than 12 months (being an
assessment period of 16 months) from the date
of approval of the Group Financial Statements.
Thus, the Group and the Company continue to
adopt the going concern basis in preparing its
consolidated financial statements which are
shown on pages 130 to 169.
Strategic Report
Governance Financial Statements
65
Risk management is an
ever-evolving process and,
in combination with the
Audit Committee, the Board
conducts a robust assessment
of the Company’s principal
and emerging risks and the
effectiveness of the systems and
controls in place to manage these
risks within the established risk
appetite levels established.
Risk Framework
The Audit Committee assists the Board in the
discharge of its duties regarding the Company’s
maintenance of proper systems of risk
management. Assurance over the effectiveness
of these systems is provided through regular
management reporting to the Audit Committee.
We have an established risk management
process to identify both risks and
opportunities through a bottom-up/top-
down approach. This includes a combination
of processes encompassing an analysis of
trends, engagement with key stakeholders,
benchmarking with peers, brainstorming,
comparison against standard risk checklists,
‘cause and effect’ analysis, review of processes
and procedures, and the robust maintenance
of our developed risk management framework
and registers. The risk management process
mirrors the Company’s operating structure, with
each functional area being responsible for the
ongoing communication and feedback of their
existing and emerging risks.
This process comprises the identification,
assessment and effective mitigation of
their functional risks, as well as continuous
monitoring for forthcoming changes and/or
impactful regulatory updates on the horizon.
Risks are plotted on risk maps with descriptions,
owners and mitigating actions using a risk
rating matrix which takes into consideration
both the likelihood of the risk event occurring
and the magnitude of the impact in the event
that the risk event occurs. The final risk rating
matrix used to identify principal risks is based
on the residual risk that the Company faces
after taking into consideration the internal
control environment and related mitigating
actions and controls.
These risk maps are reviewed and challenged
by the Executive Team and Audit Committee
and reconciled against the Company’s risk
appetite. As part of the regular principal risk
process, a review of emerging risks (internal
and external) is also conducted, and a list of
emerging risks is maintained and rolled-forward
to future discussions by the Executive Team
and Audit Committee. Where appropriate, these
emerging risks may be brought into the principal
risk registers. Additional risk management
support is provided by external experts in areas
of technical complexity to complete our bottom-
up and top-down exercises.
See the next page for how risks are classified
by impact and likelihood
Risk management is embedded in all decision-
making processes and captured in our
policies, procedures and delegated authorities,
with ongoing review by the Board and risk
assessments forming part of all
growth initiatives.
Internal Controls
The Audit Committee reviews the business’s
risk management and internal controls
framework, which includes the accepted
three lines of defence referred to above, with
day-to-day business, operational and control
processes falling within the responsibility of
operational management (who constitute the
first line of defence). Executive management
and subject matter experts provide policy
direction and oversight of operations (thereby
representing the second line of defence). Finally,
both the internal and external audit functions
undertake a review of the effectiveness of the
business’s control functions and provide the
third assurance level in respect of Company
disclosures and upon which the Audit
Committee and Board can rely. As such, the
Audit Committee receives updates of the
findings of Internal Audit’s investigations at
every meeting. Whilst it is the responsibility of
functional team leaders to assess and confirm
(as first and second lines of defence) that
controls and processes are being adhered to,
these outputs are continually tested by the
Internal Audit team as part of its annual work
plan, which is agreed with the Audit Committee
and upon which it relies. Compliance with
internal control systems is also further
monitored annually by the completion of a
self-assessment checklist by senior managers
in consultation with their respective operational
teams and this (together with any areas of
concern) is reported to the Audit Committee.
The Company manages risk by operating a three lines of defence risk, control and assurance model.
Operational Management
Management / Subject matter
experts review and assurance Independent assurance
• Key policies and procedures covering the principal areas
of business conduct are approved by the Board and each
business function is required to adhere to these policies.
• Management is responsible for regularly reviewing
its functional operating, financial and sustainability
performance and for preparing and reviewing monthly
reports as appropriate.
• All managers are required to complete an annual internal
control assessment and provide written confirmation of
compliance with Company policies and procedures. This
formal confirmation highlights any control weaknesses or
deficiencies identified.
• Management is responsible for regularly
reviewing the operating, financial and
sustainability performance, including
monthly management accounts.
• Management is responsible for a detailed
assessment of current market conditions.
• All significant functional processes have
Board-approved policies in place against
which conduct and performance are
regularly assessed and measured.
• Internal and external audit.
• Regular reviews and vetting
by external regulatory and
non-regulatory parties, as
required – e.g. ISO certification,
annual insurance assessments,
sustainable development report
assurance and information
security programmes.
66
Smiths News plc | Annual Report and Accounts 2024
Risk Management
Board
Overall responsibility
for Company strategy
and risk management
Approves risk
framework
Determines risk
appetite in line with
strategy
Monitors and reviews
health and safety risks
Executive Team
Formulates risk management
policies in terms of the approved
risk management framework, to
ensure risks are managed within
accepted tolerance levels
Responsible for oversight of
adherence to the Company’s
policies, procedures and
controls, and the facilitation
of the implementation of risk
management practices
Assesses and monitors
risks on an ongoing basis
Business Functions
Hold the ownership, responsibility and accountability for assessing and mitigating risks
as well as implementing risk management policies and procedures
External Audit
Provides external assurance
through processes designed
to detect material errors
and material irregularities
that impact the financial
statements
Internal Audit
Internal audit function
reports directly to the Audit
Committee and is mandated
to perform Company-wide
reviews of key processes,
projects, systems and
controls based on the
Company’s strategy and
principal risks
Risks are classified by impact and likelihood, a description of which
is as follows:
Likelihood:
Description %
Highly likely Event will probably occur in most
circumstances
>70%
Likely Event will occur at some point 30-70%
Possible Event could occur 10% to 30%
Unlikely Event may occur in exceptional
circumstances
<10%
Sustainability
Committee
Monitors and reviews
material environmental
and other sustainable
development risks, including
climate change risks and
opportunities
Audit Committee
Reviews and
monitors the
adequacy and
effectiveness of
the Company’s
internal control and
risk management
processes
Ongoing review
of the principal
risks through the
course of the year
Approves the
annual internal
audit workplan
Impact:
The impact of an identified risk is rated as critical, serious, moderate or
minor, with defined criteria for each rating across financial, commercial,
operational, technical services, health and safety, people and legal/
regulatory categories.
In addition, climate-related physical risks are also classified by further
reference to the duration/term, as follows:
Term:
• Short term – < 2028, particularly with a focus on climate-related
transition risks and policy frameworks.
• Medium term – between 2029 and 2033, particularly with a focus on
climate-related transition risks and policy frameworks aligned to meet
climate goals and some limited physical impacts.
• Long term – > 2033, taking into account climate-related science-based
projections and physical impacts.
Risk management is embedded in all decision-making processes and
captured in our policies, procedures and delegated authorities, with
ongoing review by the Board and risk assessments forming part of all
growth initiatives.
Strategic Report
Governance Financial Statements
67
Furthermore, the Audit Committee’s review
of the risk management and internal controls
framework include:
• a review of the risk profile, our collective
appetite to risk and the internal control
framework, reviewing the processes for
identifying, evaluating and managing the
principal business risks (together with the
emerging risks) that we face, including
those that would threaten the Company’s
business model, future performance,
solvency or liquidity;
• the consideration of updates from the
business and functions, covering current and
anticipated risks, together with corresponding
mitigating actions. These include such
issues as people management, operational
depot processes, procure to pay, payroll
services, cyber security, climate-related risk
events, and the impact of the current high-
inflationary economic pressures;
• a review of operational controls, processes
and systems, together with robust BCP
planning to mitigate a range of service
interruption scenarios;
• a review of payroll controls to ensure that
they are robust and remain fit for purpose
going forward;
• a review of the Company’s banking facilities
signed in May 2024 and the ongoing impact
this has on the Company’s going concern and
viability assessments;
• a review of the Company’s whistleblowing
processes and procedures;
• consideration of the cash management
and treasury policy, with particular focus
on a review of surplus cash held from time
to time; and
• a review of the mitigations and controls
in place to protect the business and the
continued oversight of the effectiveness of
our cyber-risk management plans.
That said, the Company’s risk management
and internal control system is designed only to
manage or mitigate risk rather than to eliminate
it entirely, as taking on manageable net risk is
an inherent part of undertaking the Company’s
commercial activities and can only provide
reasonable (and not absolute) assurance
against material misstatement or loss.
Risk Appetite
A critical element of the Company’s risk
management review is the determination of
the extent to which the Company is willing to
‘accept’ a level of net risk as part of the cost
of ‘doing business’ and delivering against its
strategy. To this end, the Board’s individual and
collective risk appetite is periodically reviewed,
considering changes in the business and the
external environment, as well as emerging
trends and developing risks.
Our risk appetite differs across the respective
principal and emerging risks, with a lower
acceptance appetite (seeking to reduce the risk
profile and mitigating its impact where possible)
for high impact/high likelihood risks and with a
higher acceptance level (potentially accepting
the risk, with limited impact mitigation) for low
impact/low likelihood risks.
Principal Risks
During FY2024 the Board and Audit Committee
each continued to undertake an ongoing
assessment of the principal and emerging risks,
the Board having considered the performance of
the business, its markets, the changing regulatory
and macroeconomic landscape, the Company’s
future strategic direction and ambition as well as
the heightened climate-related risk environment.
In addition, in evaluating the Company’s risk
management and internal control processes,
the Audit Committee has considered both
internal and external audit reports and received
confirmation from management that the
Company’s control frameworks have operated
satisfactorily. The sustainable development
risks considered throughout our business have
been reviewed by the Sustainability Committee.
The directors are therefore of the view that
they have carried out a robust assessment of
the Company’s emerging and principal risks,
including those that could threaten its business
model, future performance, solvency or liquidity.
Emerging Risks
Emerging risks are identified as either a new
or previously unforeseen risk that we are
now adding to our risk registers or a risk that
was already on our radar and which has the
potential to become a principal risk. Most risks
identified as emerging are already reflected on
our functional risk registers with a current risk
rating of ‘serious likelihood’ or above. The Board
has noted that in the execution of its growth
and diversification strategy new emerging risks
have been identified. These emerging risks are
managed through mitigating activities, such
that the residual risk exposure is not considered
significant. All new initiatives are planned in
detail, with contingency and BCP plans in place
and ongoing reviews conducted to evaluate the
project execution against the original plan and
to identify lessons learnt. We will continue to
monitor potential risks relating to our growth and
diversification strategy in the year ahead.
Key Changes in the Year
In line with our usual procedures, a refresh of
the Company’s principal and emerging risks was
conducted at the half and full year, taking into
account changes in our business practices, our
industry sector, the development of our Growth
initiatives and any other market changes across
our business and industry sector, together with
the increasing relevance of climate-related
risks and cyber security incidents across all
sectors and industries (in relation to the former,
considering both transitional and physical-related
risks to both our business and through our
supply chain).
This broad review was conducted through
discussion with a cross-section of the Executive
Team and senior management and the Audit
Committee, who were each asked to consider
the key risks (both in place and emerging)
and the challenges facing the business (by
reference to the existing principal risks), our
current management activities and controls
that help address these risks, and future actions
that may be taken to further mitigate these
risks (where appropriate). The opportunity to
review and refresh the Company’s principal
and emerging risks has resulted in an elevation
of the Growth initiatives principal risk for the
reasons noted in the table below as well as the
identification of potentially a more challenging
macro-economic climate (although the principal
risk has remained stable) due to the continuing
impact of inflationary pressures in the macro-
economy and its potential impact not only
on the demand-side risk inherent in the print
media business but also our ability to maintain
high service performance standards and our
strategic planning programmes. Following
this review, there remains a general alignment
around the nature of risks, the risk ownership,
the direction of travel, any mitigation actions
to reduce the gross risk, and acceptance of
remaining net risk.
Furthermore, in line with TCFD requirements,
during this review process the Board has also
deeply interrogated the nature of climate-
related risks identified by management to date,
with a view to seeking to better understand
the rationale behind both the identification
and classification of these risks. The Board
appreciates that a small number of transitional
and physical-related risks have currently been
identified using a scenario analysis (further
details of which are set out in the Sustainability
report on page 34) which are primarily focused
on the business’s direct operations. The Board
acknowledges that the risk profile of these
climate-related risks may well evolve over
time as we continue engagement with our key
suppliers, customers and stakeholders across
our supply chain and particularly after affording
an opportunity to more fully consider the impact
of these on our business and, more specifically,
on and the wider industry sector. However,
as part of this oversight process, the Board
considered whether the previously established
climate-related risks identified in the prior risk
management assessment should remain as
a principal risk or not. Following a period of
review, it was concluded for now that the risk
should remain of a principal nature given that,
should it ever manifest, it could have a serious
impact on the Company; with the Board noting
its desire to remain actively focused on the
control and mitigation of this risk in any case.
Against this backdrop we have also revisited our
approach to climate-related risks more generally
and have expanded these to include related
risks across all our sustainability pillars – for
these purposes please refer to our Sustainability
report on page 34.
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Smiths News plc | Annual Report and Accounts 2024
Risk Management continued
Key
Increasing
Stable
Principal risks and potential impact Mitigations Strategic link/change
1. Cyber security
Global trends demonstrate a continued high
volume of cyber-attacks against all industry
sectors and that cyber threats continue to
indiscriminately evolve.
To meet the needs of our stakeholders, our IT
infrastructure and data processes need to be
flexible, reliable and secure from cyber-attacks.
Secure infrastructure acts as a deterrent to, and
helps prevent and/or mitigate the impact of,
external cyber-attack, internal threat or supplier-
related breach, which could cause service
interruption and/or the loss of Company and
customer data.
Cyber incidents could lead to major adverse
customer, financial, reputational and regulatory
impacts.
• Defined risk-based approach to the information security
roadmap and technology strategy which is aligned to
the strategic plans.
• Regular tracking of key programmes against spend
targets and delivery dates.
• The Company assesses cyber risk on a day-to-day
basis, using proactive and reactive information security
controls to detect and mitigate common threats.
• Dedicated information security investments and access
to third-party cyber security specialists, including 24/7
security monitoring, incident response and specialist
testing.
• The Company encourages a cyber-aware culture
by undertaking exercises, such as computer-based
training and simulated phishing attacks and regular
communications about specific cyber threats.
• All functions that place reliance on business systems
have established business continuity plans that set out
how to conduct key activities if a system interruption
takes place due to a disruptive event such as a cyber-
attack.
Strategic link
Technology
Change
Despite ongoing investment and
enhancements in the Company’s
IT infrastructure and IT security
the backdrop remains heightened,
leading to a stable risk assessment.
2. Macroeconomic uncertainty
Deterioration in the macro-economic
environment could result in supply-side cost
inflation and/or a reduction in demand-side sales
volumes.
Supply-side macro-economic pressures could
present the Company with additional cost
challenges, e.g. increased competition in the
distribution labour market and/or rises in fuel
and utility prices. Adverse changes to economic
conditions could result in reduced consumer
demand for newspapers and magazines and/or
reduction in titles/editions. These cost increases
and sales pressures present a risk when they
cannot be fully mitigated through increased
prices or other productivity gains.
This could result in deterioration in the level of
profitability in both the short and medium term
and impacts on the Company’s ability to execute
its strategies, including level of debt and liquidity
objectives.
• Annual budgets and forecasts take into account
the current macro-economic environment to set
expectations internally and externally, allowing for or
changing objectives to meet short- and medium-term
financial targets.
• Weekly cost monitoring enables oversight and action on
a timely basis.
• Cover price increases in magazine and newspaper
titles provide some offset against the impact of volume
decline.
• Predictable level of volume decline within the core
business enables cost optimisation planning.
• Use of fixed-term contracts as a hedge against rapidly
rising prices e.g. energy costs.
• The Company continues to be significantly cash
generating to support its strategic priorities.
Strategic link
Costs and efficiencies, Operations
Change
Whilst the UK economy has
returned to growth in 2024 and
inflation is now within the Bank of
England’s target range, increases
in the National Living Wage in
excess of inflation, the tightening
of standards pursuant to the
Employment Rights bill together
with expected increases (with effect
from April 2025) in employers’
national insurance contributions
recently announced by the
Government is expected to add to
the Company’s cost base.
New risk
In light of the above, we have therefore been
able to maintain a stable number of principal
risks but with a reduction in the number of
emerging risks identified by the Board given that
those events previously identified as emerging
were, in fact, already broadly under review either
as part of another principal or emerging risk.
Furthermore, as part of this risk assessment
process, the Company’s ongoing access to
capital has been considered within the context
of the Company’s approach to climate change
and while due consideration to ESG-weighted
funds were included in discussions as part
of this year’s refinancing negotiations, it was
ultimately not pursued at this time given the
additional related reporting requirements,
data collection and associated complexity
and financial costs associated there with
when balanced against maximising access to
general capital opportunities at the time of the
refinancing.
The table below details each principal business
risk, those aspects that would be impacted
were the risk to materialise, our assessment of
the current status of the risk and how each is
mitigated.
Strategic Report
Governance Financial Statements
69
Principal risks and potential impact Mitigations Strategic link/change
3. Changes to retailers’ commercial environment
Our largest retailers (e.g. grocers and symbol
group members) remain under significant
pressure to maximise sales and profitability
by channel within their retail stores and at
associated sale outlets, such as at petrol
forecourt stores. This could result at any time
in a category review of the newspaper and/
or magazine channel, leading to a significant
reduction in newspapers’ and/or magazines’
selling space-in-store (or its location) in favour
of other higher margin products and/or the
delisting of all/particular titles of newspapers
and/or magazines.
A reduction in (or change in location of) sales
space and/or full delisting of newspapers and/
or magazines by our largest retailers (or a high
number of other retailers) could materially
reduce the Company’s revenue, profitability
and cash flow.
• Our EPoS-based returns (EBR) solution has been
introduced in-store with our largest retailers, improving
staff efficiency in managing the magazine category,
thereby reducing cost to the retailer.
• Potential to extend EBR to newspapers in order to
broaden efficiency-benefits to retailers.
• Supply-side shrink activities underway and renewed
focus improve channel profitability and reduce
complexity associated with the category.
• Form stronger partnerships with emerging retailers to
stock magazines and newspapers.
• Expand retail offering to include single copy digital
downloads of newspapers and/or magazines to
supplement physical print and category range in-store.
Strategic link:
Costs and efficiencies
Change
4. Acquisition and retention of labour
Due to competition and constraints in the current
distribution labour market, this could lead to an
increased risk of being unable to recruit and/or
retain warehouse colleagues and support staff.
The same pressures are also being felt in
sourcing and retaining delivery sub-contractors
as well as filling in-house roles within our central
support functions.
A failure to maintain an appropriate level of
resourcing could result in increased costs,
employee disengagement and/or loss of
management focus which underpin our ability
to address the strategic priorities and to deliver
forecasted performance.
• We seek to offer market competitive terms to ensure
talent remains engaged.
• We offer long-term contracts with our sub-contracted
delivery partners.
• We use a variety of platforms to recruit employees and
contractors.
• The level of vacancies across warehouse and delivery
contractors is monitored daily.
• We undertake workforce planning; performance, talent
and succession initiatives; learning and development
programmes; and promote the Company’s culture and
core values.
• Retention plans are reviewed to address key risk areas,
and attrition across the business is regularly monitored.
• Regular surveys are undertaken to monitor the
engagement of colleagues.
Strategic link
People first, Culture and values,
Costs and efficiencies
Change
5. Growth and diversification
A successful growth and diversification strategy
is essential to the long-term success of the
Company.
Implementing new business opportunities in
order to grow the Company’s revenue and profit
streams carries an execution risk to achieving
our vision and purpose.
• Strong project management and governance in
place to sign-off growth initiatives and oversee their
implementation.
• A Growth Business Development Group and Growth
Operations Delivery Steering Committee have been
established to review and control new business
opportunities and then plan and measure the impact of
these opportunities on core operations.
• Experimentation through trials of new business
opportunities has been deployed to assess the demand
and potential economic benefit of such opportunities.
• The Executive Team’s balanced scorecard of key
performance indicators ensures sub-optimal
performance is tracked and monitored on a regular
basis and allows appropriate interventions to be made.
Strategic link
Costs and efficiencies
Change
As Growth initiatives become
a more significant part of our
business, space and capacity
constraints at both our sites and
in our vehicles will likely increase.
In addition, layering in of change
projects such as our investment in
a Warehouse Management System,
and the Operational Excellence
programme may create pressure in
the short-term before improvements
become evident.
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Smiths News plc | Annual Report and Accounts 2024
Risk Management continued
Principal risks and potential impact Mitigations Strategic link/change
6. Sustainability and climate change
– for details of all Sustainability and climate-related risks please refer also to the Sustainability report on page 34.
Our sustainability linked risks extend beyond
the physical and transitional risks associated
with climate change which we have previously
identified, such as a scarcity of resources,
extreme weather events, power outages,
increasing regulation and associated cost in
response to a drive to ‘net zero’ carbon emissions
and the increasingly stringent air quality
emission zones. Regulatory requirements and
reporting obligations on environmental, social
and governance (ESG) matters are increasing
and ongoing investment is required to maintain
a safe working environment and to protect the
Company from cyber-attacks, as well as making
progress in delivering on our diversity and
inclusion ambitions. In common with all major
organisations, there is a risk of reputational
damage and/or loss of revenue if the Company
fails to meet stakeholder expectations across our
sustainability framework.
• Board Sustainability Committee established
(Chaired by the Chief Financial Officer) to consider
and determine the Company’s sustainability strategy
and progress, together with risk environment and
activities and actions.
• Dedicated management Sustainability Steering
Committee established (also chaired by the Chief
Financial Officer) coordinates the Company’s day-to-
day activities and actions in delivering the Company’s
sustainability strategy, including in relation to climate
change.
• Working with suppliers to ensure they share the
Company’s vision to act on sustainability and climate
change.
• Emissions and air quality targets in UK towns and cities
are monitored by a central team in the Operations
function which ensures the Company can fulfil its
obligations to customers and remain compliant with
legal requirements.
• Operational sites are reviewed for their resilience
to extreme weather events, such as flooding, with
upgrades and interventions made where these are
cost-effective. Depots are relocated to new sites (e.g.
during lease break windows) where this represents
a better option than adapting an existing location.
Strategic link:
Cost and efficiencies, Operations,
Sustainability
Change
7. Major newspaper titles exit the market or move to digital only editions
Significant decline in advertising and/or
circulation, together with rising production costs,
could lead to one or more national newspaper
titles exiting the market and/or publications
being taken fully digital. This could lead to
a significant deterioration in the Company’s
profitability and cash flow in both the short and
medium term as well as impacting on its ability
to execute its strategies.
• We seek to ensure full availability of alternative
newspaper titles to maximise substitution opportunities
for customers.
• Partial mitigation against newspaper title closures
is built into our contracts with major publishers.
• Ongoing successful execution of our growth and
diversification strategy provides longer-term mitigation
through alternative profitable revenue streams.
Strategic link
Costs and efficiencies
Change
8. Legal and regulatory compliance
The Company is required to be compliant with
all applicable laws and regulations. Failure to
adhere to these could result in financial penalties,
third party redress, and/or reputational damage.
Key areas of legal and regulatory compliance
include:
• GDPR
• Health and Safety
• Tax compliance
• Environmental legislation
• Employment law
• Changes in laws and regulations are monitored, with
policies and procedures being updated as required.
• Business-wide mandatory training programmes for
higher-risk regulatory areas.
• External experts are used where applicable.
• All major policies are reviewed by the Board or Audit
Committee on an annual basis.
• Operational auditing and monitoring systems for higher
risk areas.
Strategic link
Technology, Sustainability,
Operations
Change
The Audit Committee believes that it has been able to respond quickly and efficiently to the ever-evolving risk environment that the business regularly
faces head on and have deployed effective risk management processes across the Company. Accordingly, the Audit Committee is satisfied (on behalf
of the Board) that it has carried out a robust assessment of the principal and emerging risks that the Company faces (within the scope of the Board’s
risk appetite) as required by the 2018 edition of the UK Corporate Governance Code.
Strategic Report
Governance Financial Statements
71
Chairman’s statement on corporate governance
Dear Shareholder
In this section of our Annual Report, I’m pleased
to be able to report on the Company’s corporate
governance overview and approach, including
how we adhere to, and apply, the principles of
the UK Corporate Governance Code and how
the support of our governance framework and
the work of our committees ultimately help
foster a culture which promotes our purpose
and strategy.
The Board has throughout the year continued
to lead the business with dedication, focus and
integrity, ensuring effective engagement across
all stakeholder groups, considering feedback
in decision-making and striving to make
balanced and considered decisions while, at the
same time, delivering a long-term sustainable
business. During the year we have revisited the
way in which we communicate our strategy
and purpose, revising this in a way which seeks
to encapsulate where our competitive and
economic strengths lie, and providing added
clarity to our colleagues and other stakeholders
– please see page 22. Despite the undiminished
economic challenges and the growing pressure
to reduce our carbon footprint, I firmly believe
that our governance framework, vision and
corporate culture provide the necessary
underpin to enable the Company to achieve
our strategy and purpose and, in doing so,
provide assurance to our stakeholders of our
commitment to accountability, transparency
and responsibility. During the year, we reached
the decision to create a new Board-led
sustainability sub-committee, thus ensuring that
the necessary resources and focus of the Board
are given to our sustainability activities and
strategy. I am pleased to report that this sub-
committee is functioning well and delivering on
its mandate, which is reported on in more detail
in the Sustainability report on page 34.
Looking at the composition of the Board,
particularly in light of the impending retirement
from the Board of Denise Collis (independent
non-executive director and Remuneration
Committee Chair) at the conclusion of the
2025 AGM as she approaches the expiry of her
nine-year term, and our aspiration to increase
the level of Board diversity in a thoughtful and
structured manner aligned with the tenures of
our non-executive directors, I remain acutely
aware of the expectations around gender and
ethnic diversity. I can, therefore, confirm that we
have commenced a recruitment search process
which will seek to identify a suitable candidate
to join the Board, who will contribute positively
to the broad range of competencies, skills and
experiences, particularly as we embrace the
future needs and strategic direction of the
business and, in so doing, also serve to improve
the level of diversity on the Board. In this regard,
I refer you to both the Corporate Governance
report which follows this overview and also in
the Nominations Committee report on page 94
where I talk about these matters in more detail.
Health & safety performance remains a core
focus for the Board, and we continue to monitor
all incidents and accidents as a standing
agenda item at Board meetings. Overall, we
have seen a year-on-year reduction in the
number of injuries and total accident frequency
rate over the last three years, being testament
to our dedication to continuous improvement
in this area (FY2022: 2.64 accident frequency
rate (per 100,000 hours)), FY2023: 2.44, FY2024:
2.29). The slight increase seen this year in
RIDDOR reportable incidents (Reporting of
Injuries, Diseases and Dangerous Occurrences
Regulations) we believe to be a normalisation
after the COVID-19 impacted years and
previous enforced segregation of colleagues.
During FY2025, the Board will continue to
closely monitor health & safety performance.
Whilst focusing on our colleagues, I would like
to again acknowledge the economic challenges
which continue to impact our workforce.
David Blackwood
Chairman
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Smiths News plc | Annual Report and Accounts 2024
In response to this, we have continued to
address benefits and remuneration as part
of our series of engagement activities with
colleagues, with the Company undertaking
a benefits survey for the first time, the survey
results representing both a good response
rate amongst our colleagues and providing
the opportunity for us to use this data in order
to develop an action plan for activities and
further positive engagement during FY2025.
The focus for our benefits briefings (known
as ‘roadshows’) to colleagues throughout the
year was ‘Financial Fitness’, with the Company
seeking to support colleagues for them to
get the most out of the benefits structure and
offerings made available by the Company.
Looking at our latest engagement score for
the business in April 2024 of 66% (which
represents a 9% increase since the previous
engagement survey and the highest score for
the business during my time on the Board) we
are particularly encouraged with the results,
which provide another strong endorsement of
the levels of action and activities undertaken
by management since the last survey.
Supplementing our endeavours focusing on our
colleagues, we have also continued to support
our workforce through our colleague support
fund and more details in this regard can be
found in the Sustainability report on page 34.
As we further develop our growth and
diversification strategy, we have also recognised
the need for technology transformation
across our business platforms to support new
processes and initiatives. To this end, we have
committed funding for the implementation of
new, modern and highly capable systems across
the core business functions of warehouse,
transport and customer management, along
with associated business analytics. These
new platforms are designed to be flexible and
scalable to support growth and efficiencies.
Colleagues and stakeholders will start to see
the positive impact of these investments during
FY2025 and into FY2026 and beyond.
In closing, I would like to extend my gratitude,
and that of the Board, to Denise Collis for her
unstinting support and contribution to Smiths
News, both as a member of the Board and as
Chair of the Remuneration Committee and to
wish her the best for her future endeavours.
Once again, I would also encourage all
shareholders to attend and vote at the
forthcoming AGM, either in person or by using
the various electronic methods of engagement
allowing you to exercise your vote and ensure
your voice is heard. I look forward to seeing you
there. Finally, on behalf of myself and the Board
I would also like to thank everyone connected
with Smiths News for their contribution to
another good and disciplined performance in
the year.
David Blackwood
Chairman
4 November 2024
The Board has continued
to lead the business
with focus and integrity,
ensuring effective
engagement across all
stakeholder groups,
considering feedback
in decision-making and
striving to make balanced
and considered decisions
while delivering a long-
term sustainable business.
Strategic Report
Governance
Financial Statements
73
Corporate governance
Our culture and values
underpin and determine the
way that we do business.
Framework
Governance is not a stand-alone concept
but, rather, it is a holistic approach which
encompasses our structure, principles, systems,
ways of working and methodologies and
our policies and procedures. Together, these
create a framework that underpins our culture
and values and determines the way that we
do business and how we may prioritise our
responsibilities to all our stakeholders.
Leadership and oversight
The Chairman has overall responsibility for the
management and operation of the Board which,
in turn, oversees the Company’s strategy and
operational and financial performance. In doing
so, the Board manages business and process
requirements through a formal schedule of
reserved matters for its decision-making.
A nominated Senior Independent Director (SID)
provides additional support to the Chairman
in the delivery of the Board’s objectives. For
more information on the composition, roles and
responsibilities of the Board and the division
of responsibilities between the Chair/CEO, as
well as to access the internet links referred to
above, please refer to our website (Corporate
Governance - Smiths News) or, if you are
reading this electronically, please click on the
relevant links.
The Board and its Committees receive regular
reports from functions and managing steering
committees from across the business. Detailed
agenda planners are approved annually in
advance and revised monthly to ensure that all
compliance, regulatory and operational matters
are adequately and timeously addressed in
a manner that ensures the Board has full
knowledge and oversight of the Company’s
activities, including the impact of decisions on
all stakeholders.
The Chief Executive Officer leads our business
and oversees daily operations and the
Company’s objectives. The CEO is ably assisted
by the Executive Team which focuses on the
development and implementation of strategy;
financial and operational performance; risk
management; commercial developments; talent
review, diversity & inclusion, and succession
planning; sustainability; and organisational
development.
The Senior Leadership Team, assisted by
functional experts, oversees day-to-day
operational, commercial and functional activity.
Management Sub-committees/Steering
Committees report into the Executive Team and,
in turn, to the Board and its Committees.
They function on a formal basis, comprising
cross-functional membership, led by a
Chairman and adopting terms of reference and
appropriate governance standards and record
keeping. Examples of these sub-committees
include a Business Development & Growth
Committee, Operations Executive and People
Executive Committees, Investment Committee,
Policy Steering Group, Sustainability Steering
Group and various colleague engagement
forums and groups. In addition, we also
engage one-off project teams which function
in a similarly structured manner but which
are established to deal with one-off or
short-term projects.
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Smiths News plc | Annual Report and Accounts 2024
Board
Audit Committee
Oversees our risk management
framework and system of controls
Ensures the accuracy of our financial
statements and non-financial disclosures
Monitors and reviews the effectiveness
of the internal and external auditors
See pages 86 to 93 for report
See our website for full
terms of reference
Remuneration Committee
Determines directors’ and
senior management’s remuneration
strategy and policy
Oversees the implementation
of our remuneration policy
Reviews workforce remuneration,
Related policies and the alignment of
incentives and rewards with culture
See pages 98 to 117 for report
See our website for full
terms of reference
Sustainability Committee
Oversees the Company’s Environmental,
Social and Governance strategy
Monitors progress against key
performance indicators
See pages 32 to 59 for report
See our website for full
terms of reference
Management Sub-Committees/Steering Committees
CEO and Executive Management Team
Day-to-day management of the Company
Disclosure Committee
Monitors and oversees the Company’s
compliance with the Market Abuse
Regulation (as in force in the UK) and
the consideration of inside information
procedures and disclosures
See page 78 for report
See our website for full
terms of reference
Approvals Committee
Responsible for approving
delegated Board matters
Nominations Committee
Makes recommendations to the Board
for executive and non-executive
appointments and succession planning
Promotes employee engagement
and diversity
See pages 94 to 97 for report
See our website for full
terms of reference
75
Financial StatementsStrategic Report
Governance
N
R
S
David Blackwood
Chairman
Year of appointment: 2020
Gender: Male
Ethnic origin: White
Citizenship: British
Disability: None
David has extensive business
and listed company experience,
notably in Finance, Audit and
Risk. David uses his experience
and knowledge to lead the Board
in reviewing and approving
management’s plans for the
development of the Company’s
strategy and operational and
financial performance. As Chair of
the Nominations Committee, David
is also responsible for leading the
assessment of the capabilities
and skills of the executive and
non-executive leadership, and for
longer-term succession planning.
Most recently, David has been a
non-executive director of Dignity
plc (until June 2020), Scapa
Group plc (until April 2021) and
The Go-Ahead Group plc (until
October 2022) where, in respect
of Dignity and Scapa he served as
chair of the audit committee and
as a member of the Go-Ahead
audit committee and, otherwise in
each case, as Senior Independent
Director and as a member of the
nomination and remuneration
committees. He was formerly Chief
Financial Officer of Synthomer plc
where he was employed for seven
years, stepping down in 2015,
prior to which he held a number
of senior roles within Imperial
Chemical Industries plc (ICI).
David has also previously served
as a member of the Cabinet Office
Audit and Risk Committee and on
the Board for Actuarial Standards.
He is a member of the Institute of
Chartered Accountants in England
and Wales (ICAEW) and a Fellow
of the Association of Corporate
Treasurers (ACT).
Other current appointments
None
AP
D
S
Paul Baker
Chief Financial Officer
Year of appointment: 2021
Gender: Male
Ethnic origin: White
Citizenship: British
Disability: None
Paul is a highly experienced senior
executive, with extensive and
relevant financial and business
transformation experience, most
recently as Integration Director
at Compass Group plc. Prior to
that, he held various regional and
divisional Finance Director roles
within each of Compass Group
(2013 to 2021), Iglo Group/Birds
Eye Limited (2011 to 2013) and
Cadbury Schweppes PLC (1997
to 2010).
Other current appointments
None
AP
D
S
Jonathan Bunting
Chief Executive Officer
Year of appointment: 2010
Gender: Male
Ethnic origin: White
Citizenship: British
Disability: None
Jonathan has broad commercial
and operational leadership
skills, combined with extensive
experience gained within the
newspaper and magazine
distribution industry, experience
which is critical for the long term
development and execution of the
Company’s strategic plans.
Jonathan joined WH Smith News
in 1994. He rose through the
organisation in a variety of sales
and marketing managerial roles
before being promoted to the
executive management team
in 2001. In April 2014, Jonathan
became Managing Director of the
Connect News & Media division
and, subsequently, Chief Operating
Officer in September 2017, a
position which spanned wider
group business interests held at
the time, together with Smiths
News. Following his appointment
as Interim Chief Executive
Officer on 5 November 2019, this
appointment was confirmed on 15
June 2020.
Other current appointments
None
Committee key
A
Audit
N
Nominations
R
Remuneration
S
Sustainability
D
Disclosure
AP
Approvals
Chair
Composition,
attendance and
evaluation
Board of directors
After a period of nine years on
the Board, Denise Collis is not
expected to stand for re-election
at the forthcoming AGM in January
2025, having reached the end of a
nine-year period beyond which the
2018 Corporate Governance Code
expects Ms Collis’ independence
requirements to potentially be seen
to be impaired. As a consequence,
the Board has commenced
a search process, led by the
Chairman, for the recruitment of
a suitable candidate who would
be able to join the Board, however
at the time of reporting a suitable
appointment has yet to be made.
Corporate governance continued
76
Smiths News plc | Annual Report and Accounts 2024
D
Stuart Marriner
Company Secretary and
General Counsel
Background and experience
Stuart joined the business
in October 2008 and is
responsible for business,
legal and regulatory support.
Prior to joining the Company,
he had spent four years as
a corporate finance solicitor,
including extensive periods
on secondment with Somerfield
Stores and Punch Taverns.
Stuart was appointed as
Company Secretary and
General Counsel on
1 September 2011 and
continues to lead the legal and
company secretariat teams.
A
N
R
S
Denise Collis
Independent Non-Executive
Director
Year of appointment: 2015
Gender: Female
Ethnic origin: White
Citizenship: British
Disability: None
Denise holds a wealth of business
experience with a particular focus
on people and talent management,
development, retention and reward.
She therefore has the relevant
knowledge and experience
required to lead the Remuneration
Committee, a position she has
also held with SThree PLC (since
September 2016).
Denise was Chief People Officer
at Bupa, the global healthcare
business, from May 2010 until
December 2014. Prior to that,
she was the Group HR Director
for 3i Group plc and a partner at
EY. She has also held senior HR
roles at a number of other leading
organisations including Standard
Chartered Bank and HSBC.
In addition to the appointments
noted above, Denise was also a
non-executive director and chair
of the remuneration committee
for EMIS Group plc from October
2021 until its successful sale to
UnitedHealth Inc in October 2023.
Other current appointments
• SThree PLC, senior independent
non-executive director and chair
of remuneration committee
• British Heart Foundation, chair
of remuneration and people
committee
A
N
R
S
Mark Whiteling
Senior Independent
Non-Executive Director
Year of appointment: 2017
Gender: Male
Ethnic origin: White
Citizenship: British
Disability: None
Mark has gained extensive finance
and operational experience at a
senior level within a number of
diverse businesses. He brings
recent and relevant financial
expertise required to lead the Audit
Committee.
Mark was most recently the Chief
Financial Officer of Interserve
PLC and has previously been the
Deputy Chief Executive Officer
and Chief Financial Officer of
Premier Farnell plc. He was a
non-executive director of Future
plc until December 2014 and the
Senior Independent Director of
Hogg Robinson Group PLC until
July 2018, in both cases acting
as chair of the respective audit
committees as well as serving on
their nomination and remuneration
committees. In addition, Mark has
been Chairman and non-executive
director of Xpediator PLC from
September 2021 until March 2022
and member of its remuneration
committee.
Other current appointments
None
A
N
R
S
Michael Holt
Independent Non-Executive
Director and designated
Colleague Engagement NED
Year of appointment: 2018
Gender: Male
Ethnic origin: White
Citizenship: British
Disability: None
Michael possesses relevant
commercial and operational
experience gained within the
logistics and distribution industries.
With his detailed understanding
of the distribution sector and its
opportunities and challenges,
Michael provides an independent
voice and commercial sounding
board in the development and
execution of the Company’s
strategy and business ambitions.
Michael was formerly Chief
Operating Officer of FedEx
Express, Europe until the end
of September 2018 and held a
number of other senior executive
roles with FedEx Corporation
from 2006, including co-chair of
the Global integration Committee
(responsible for the harmonisation
of physical operations to the terms
and conditions of employment).
Prior to that, Michael held senior
executive roles at a number of
leading logistics organisations
including ANC Group, where he
was instrumental in leading the
turnaround of the business from a
position of loss-making to industry
leading margins and strong profit
recovery prior to its successful sale
to FedEx in 2006.
Other current appointments
None
A
N
R
S
Deborah Rabey
Independent Non-Executive
Director
Year of appointment: 2023
Gender: Female
Ethnic origin: White
Citizenship: British
Disability: None
Deborah possesses a wealth
of experience across supply
chains, global sourcing, change
management and general
marketing, particularly within
the retail sector, having spent 23
years with Tesco PLC (to October
2022), of which 14 years were at
director level positions, notably
as UK Category Director, General
Merchandise. She was most
recently Chief Customer Officer at
Wilko, the mixed-goods retailer.
Other current appointments
None
Strategic Report
Governance
Financial Statements
77
Corporate governance continued
Gender and ethnicity diversity
The Board is a strong supporter of diversity
and inclusion (D&I) across the business and
welcomes D&I being a key focal point of
positive change.
In relation to its own composition, the Board
has noted its current non-compliance with
the requirements under the Listing Rules (see
UKLR:6.6.6R(9) and the FCA Diversity Targets
2022) which are targeted at encouraging
enhanced disclosures and positive action in
relation to gender and ethnic diversity at
Board level.
Despite having successfully met the Board’s
diversity policy of having two female members
on the Board following Deborah Rabey’s
successful appointment in March 2023 and
notwithstanding that recent evaluations
confirm that the Board is, once again, operating
effectively and in accordance with good
corporate governance principles, the Board
acknowledges that meeting the stretching
targets of UKLR:6.6.6R(9) in the short to
medium term is unfortunately likely to prove
challenging given both the current size and
structure of the Board (which is considered
optimal and efficient for a company of our size)
and the general challenges being faced by
the broader corporate market to meet these
common defined targets, which has inevitably
resulted in fierce competition in the recruitment
market for a pool of diverse talent that is
naturally limited by the size, nature, location and
profile of our business.
At the conclusion of FY2024 the Board’s female
representation is noted in the table on the right.
In light of Denise Collis (independent
non-executive director and Remuneration
Committee Chair) retiring from the Board at the
conclusion of the January 2025 AGM, and as
previously mentioned, a recruitment process
targeting suitable diverse candidates has been
commenced and it is envisaged that this may
provide an opportunity to further address
female representation on the Board and also
address the current shortcomings against the
stretching diversity targets of UKLR:6.6.6R(9).
Board attendance
The tables on the right show the attendance
of directors at Board and Committee meetings
held during the year, the independence status,
gender, tenure on the Board and a snapshot of
the skills and expertise of the Board as a whole.
In accordance with the provisions set out in the
2018 edition of the UK Corporate Governance
Code, at the time of his appointment to the
Board as Chairman, David Blackwood was
independent. The Board considers that all
non-executive directors are independent. The
Board has formal procedures for the declaration,
review and authorisation of conflicts of interest
of Board members. Conflicts are considered
and, where appropriate, authorised by the Board
on an annual basis. In addition, directors are
requested to declare any conflicts at the start of
all Board meetings. The Board was satisfied that
none of the directors had any conflict of interest
during the year. For details of current situational
conflicts notified by the directors please see the
Other Statutory Disclosures on page 118.
Board evaluation
Following an externally facilitated Board
evaluation process during FY2022, this year
included an internally facilitated process in
keeping with the three-year external evaluation
cycle, ahead of an expected external evaluation
review of the Board in FY2025. Each member
of the Board was invited to participate in an
online evaluation questionnaire which covered
the performance of both the Board and its
Committees, with the approach having been
benchmarked against industry evaluation
templates and with a focus on areas which
had previously indicated possible scope for
improvement, including Board composition and
diversity, succession planning, risk appetite,
and what successful diversification may look
like for the Company. As part of this evaluation
process, the Board endorsed a number of
action points to promote ongoing continuous
improvements in its way of working and as
part of being able to continue to promote
good corporate governance principles, noting
that succession planning and diversity (likely
heavily influenced by the current tenures of
some of the non-executive directors as they
approach the ‘nine-year independence’ rule
under the provisions of the 2018 edition of
the UK Corporate Governance Code) and
organisational design (specifically, with
reference to capability and business structure
in order to be able to successfully deliver
the Company’s diversification and Growth
strategy) each continue to be areas demanding
increasing attention and identified as being of
particular importance to the Board in the short
to medium term.
Furthermore, taking into consideration the
importance of the current Growth initiatives
together with the Board’s collective ambitions
for diversification within business adjacencies
and the current trajectory of these initiatives,
it was noted that collective behaviours which
manage an appropriate balance of organic
and inorganic opportunities, overlaid with the
Board’s risk appetite could again be an area
of focus/review in FY2025. In addition, the
Chairman held one-to-one discussions with
each Board member and while each director
can discuss any development needs with the
Chair at any time, this annual review process
provided a more formal opportunity in which
to discuss both individual and collective
performance and development needs. In
addition, as part of the review, each director
was encouraged to strengthen and refresh their
business, commercial and regulatory knowledge
by attending any workshops, seminars and
courses relevant to their respective roles, details
of the availability of these are provided regularly
by the Company Secretary. Overall, having
reflected on the evaluation, the Board agreed
that the consistently high scores across all
topics reinforce the generally-held position that
the Board appears to be operating effectively
and in accordance with good corporate
governance principles.
78
Smiths News plc | Annual Report and Accounts 2024
Female representation
2024 2023 2022 2021
Board 29% 29% 17% 17%
Executive Team 33% 33% 33% 22%
Board and Committee meeting attendance
Scheduled Board
meetings
Special Board
meetings
Committee meetings
Audit Nominations Remuneration Sustainability
Number of meetings 10 0 4 2 4 2
David Blackwood 10 0 2 4 2
Denise Collis 10 0 4 2 4 2
Michael Holt 10 0 4 2 4 2
Mark Whiteling 10 0 4 2 4 2
Deborah Rabey 10 0 4 2 4 2
Jonathan Bunting 10 0 2
Paul Baker 10 0 2
Key skills & expertise
Balance of Board
Independent Male 0-2 Years Non-independent Female 3-5 Years >6 Years
Members by gender Tenure
Governance
Risk
Financial
Culture & Values
Health & Safety
Strategy
Distribution / Logistics
People /Talent
Sustainability
IT
Retail & Commercial
Strategic Report
Governance
Financial Statements
79
Corporate governance continued
Director appointments and training
The Board’s director appointment and induction
programme includes a comprehensive
and up-to-date ‘Directors’ Toolkit’, which is
supplemented with governance and business
documentation, one-to-one meetings and on-
site visits to some of the Company’s operational
sites and support locations, as appropriate.
The objective of the induction process is to
enable new appointees to gain the necessary
insight and knowledge required to make as full
and effective a contribution as possible to the
Board upon their appointment and to gain an
understanding of Smiths News’ business and
strategy, culture, risk areas and priorities. The
Company Secretary participates in the induction
process, covering issues such as directors’
duties, share dealing procedures, managing
conflicts of interest and a walk through of key
policies. No director is appointed or nominated
by a stakeholder, with all director appointments
being identified through, and only appointed
following, an extensive external search agency
process.
Selection decisions are based on merit and
the Board strives to ensure that recruitment
activities are fair, transparent and non-
discriminatory. The Board understands the
importance of succession planning which
is an objective process based on merit and
the assessed skills, experience and needs of
the business and the Board at the time, while
seeking to promote and uphold our policies,
including that relating to equality, diversity and
inclusion across multiple criteria. Please see
the Nominations Committee report on pages
94 to 97.
As part of the conditions of their appointment,
all directors are required to resign annually and,
if applicable, to offer themselves for annual
re-election by shareholders at Annual General
Meetings, where letters of appointment for
each non-executive director are also available
for inspection. Set out in the Notice of Annual
General Meeting for 2025 is information on the
skills and experience of each director seeking
re-election.
Training and development are important
objectives of the Board in ensuring both its
ongoing effectiveness and that the Board
represents and possesses the right balance
and combination of skills and knowledge, with
specific skills development identified on an
ongoing basis.
During FY2024 each of the directors, Executive
Team members and selected colleagues
participated in training sessions held in order to
better understand the oversight and reporting
requirements associated with emissions
and energy consumption. Specific training
briefings from both management and external
experts are supplemented by directors sharing
developments and regulatory updates within
their areas of expertise with fellow Board
members. A quarterly newsletter containing a
summary of current topical issues is circulated
and individual directors are encouraged to raise
any specific training needs.
Focus areas in FY2024 included developments
within the sustainability reporting standards, the
onset of artificial intelligence and technology
developments, various discussion papers from
government agencies (e.g. dematerialisation,
share schemes, FRC focus areas (e.g. minimum
standards for audit committees, new listing
regime reform and the FRC’s review of the UK’s
Corporate Governance Code), risk management
as well as shareholder trends and expectations,
annual reporting expectations and new
legislative developments.
The Company Secretary and General Counsel
is responsible for the timely and complete
distribution of information to the Board and all
directors have direct access to the Company
Secretary for advice, including independent
professional advice where appropriate, at the
Company’s expense.
80
Smiths News plc | Annual Report and Accounts 2024
The Board is ultimately responsible for oversight of our Company culture and values set out below. The Board and the Executive Team collectively
recognise the importance of a positive and inclusive culture for our business, putting our values at the forefront of all our stakeholder engagements,
treating everyone with dignity and respect and collectively striving to provide the best possible service in all we do and at all times, in each case
within an environment which allows everyone to develop and grow.
Monitoring and embedding
our culture and values:
• We engage with and listen
to our stakeholders, helping
to identify and address
key themes, issues and
views (see Stakeholder
engagement report on
page 22)
• We challenge and support
management in the
institutionalisation of our
values across the business
• We hold management
accountable for the way
in which the Company
conducts business
We have a system of tools summarised below which help to corroborate and measure how well our values and
culture are embedded throughout our organisation and to assist in determining the effectiveness of our policies
and procedures, to gain a more informed perspective of colleague issues and concerns, to assess the outcomes of
proactive and remedial activities and to ensure insight into the priorities of our stakeholders in general.
Management
oversight
The Board ensures that functional teams within our business are both empowered and
resourced appropriately to support our values and receives regular reports demonstrating
behaviour throughout the Company (e.g. Health & Safety, Internal Audit, sustainability,
whistleblowing, operational and financial performance, risk etc). Please refer also to our
Audit Committee report on page 86.
Policies and
procedures
Our values and culture are supported by a number of policies and procedures including our
Code of Conduct, Conflicts of Interest, Anti-Bribery and Whistleblowing policies, which are
together strengthened by accredited e-learning modules (e.g. anti-bribery and corruption,
money laundering prevention, competition law, data protection and information security
and Dignity and Respect modules). Our Procurement policies (which reference our Modern
Slavery Statement) make clear our expectations for our supply chain network with regard to
business practices and what our suppliers and customers can reciprocally expect from us
in the way that we interact with them. Customer complaints are reviewed and followed up,
with potentially serious matters being brought to the attention of the Board.
Talent and
performance
management
systems
We have a culture and value lens in our performance management system, comprising a
dedicated area of assessment challenging colleagues to consider how their actions align
with our values. For more information on how we measure and report on human capital
metrics please refer to our Sustainability report on page 34 and our Directors’ Remuneration
report on page 98.
Risk management
and Internal Audit
processes
We maintain strict financial discipline and risk management processes throughout the
business and do not tolerate breaches of our rules or procedures, nor do we encourage
short-cuts to be taken. Our Internal Audit function is both independent and accountable and
communicates any concerns about the values and culture to the Board.
Strategy
development
Any impact on our values and culture is considered as part of our strategic development and
the pursuit of diversification and growth opportunities. The Board seeks assurances that our
operational and strategic priorities are aligned with our values and that our business model
and practices remain compatible with our values.
Holding to account Please refer to the detailed section on whistleblowing which is included on page 40 of the
Sustainability report.
Walking the floor Whilst the tools noted above are helpful measures to embed and promote our culture
and values, there is no substitute for ‘walking the floor’ and directly engaging with our
stakeholders. To this end, during the year the Board has undertaken periodic visits to our
operational sites, hosted ‘breakfast briefings’ with functional teams, as well as conducted
direct one-to-one engagements with our largest shareholders, publisher clients, retail
customers and colleagues – see Stakeholder Engagement table on page 22.
Strategic Report
Governance
Financial Statements
81
Corporate governance continued
Culture and Values
Quick
Creative
Trusted
Make informed decisions and act quickly. Be agile
in the way we work together and deliver for our
customers.
Be imaginative, curious and adventurous. Develop
inspirational ideas and innovative solutions.
Safe, reliable and responsible. Take pride in our
work and do the right thing for each other and
our customers.
Open
Friendly
Fair
Share your thoughts freely and stay open to new
ideas. Listen to others, be positive and engage in
communications.
Have fun and be helpful. Enjoy working together
to deliver a great performance.
Be inclusive, honest and respectful to everyone,
whatever their role or experience.
Set out in the Board’s activities for the year below we identify areas where the Board has actively supported our values and addressed our principal risks.
Board Activities in FY2024
Supporting
our Values
Addressing
principal risks
For key, please refer to
pages 69 to 71 of the
Risk Management report
Governance
• reviewed directors’ conflicts of interest
• reviewed terms of reference of Board committees and matters reserved for the Board
• reviewed cyber security preparedness and mock simulation outputs
• reviewed various policies, including the Whistleblowing Policy and procedures manual
(received and reviewed whistleblowing reports and activities)
• approved the interim financial results and the Annual Report & Accounts
• reviewed corporate social responsibility, with specific focus on human capital, customer
relations, climate change and business ethics and overall Sustainability KPIs
• received reports from the Company’s advisers, including its corporate brokers
• monitored engagement with stakeholders, including responses to our 2024 AGM and voting
outcomes
• received updates on the impact to stakeholders of operational and strategic matters
• reviewed the internal evaluation of the Board and its committees
1
2
5
6
8
Finance
• considered and approved our trading statements, half year and full year reports
• oversaw a successful refinancing
• reviewed the treasury and tax functions and performance, including funding, liquidity and
insurance approved and monitored budgets and business plans
• considered the declaration of dividends and the merits of other forms of distribution
• reviewed financing structures and external financing arrangements
• oversaw financial performance, legal and regulatory matters
• revisited and revised regulatory policies relevant to our business operations, including in
relation to tax, capital allocation/ dividend policy, anti-bribery and anti-trust
• considered mitigations to the current inflationary environment
2
5
8
Business Review, Performance and Strategy
• approved and monitored progress against management’s key business imperatives
• considered business growth and development opportunities
• considered and approved a revised capital allocation strategy
• reviewed the sustainability strategy and KPIs for FY2025
• reviewed performance and reward
• reviewed business continuity plans
• considered new publisher contract renewals and terms of market announcements
2
4
5
6
7
8
82
Smiths News plc | Annual Report and Accounts 2024
Creating sustainable value with
our stakeholders (S172 of the
Companies Act 2006)
The Board remains committed to both the
intent and spirit of s172 of the Companies Act
2006, with stakeholder engagement identified
as a priority in the Board’s decision-making
processes and, in doing so, the Board seeks
to consider the interests and competing views
of all relevant parties who may be potentially
impacted. This includes ensuring that the Board
(and each director) has a good understanding
of the views of, and impact on, all stakeholders,
coupled with an unwavering commitment
to their primary duty to act in good faith
and in a way which is likely to promote the
success of the Company and is to the benefit
of its members as a whole. Please refer to
our Stakeholder Engagement/Section 172
report (see page 22) which sets out our key
stakeholders, how we have engaged with them
and the critical feedback which has impacted
our strategic decisions and long-term success.
Board Activities in FY2024
Supporting
our Values
Addressing
principal risks
For key, please refer to
pages 69 to 71 of the
Risk Management report
Audit, Internal Controls and Risk
• reviewed business-wide risks, risk appetite and mitigating actions
• received reports from the Audit Committee Chair
• ongoing assessment of the effectiveness of internal controls and processes
• monitored health and safety strategy and periodic performance through monthly board reports
• monitored cyber security and data protection compliance
• approved the going concern statement and assessment of viability, valuation of investments
and principal and emerging risks
• reviewed performance of the statutory auditor and received and considered recommendation
for their appointment and fees
1
2
3
8
People
• received regular updates from the Remuneration Committee on remuneration and
performance
• considered health and safety related matters, elevated from the Audit Committee in FY2023
• considered and approved various employee share awards (SAYE, LTIP and deferred bonus)
• reviewed employee engagement and employee satisfaction survey results
• supported equality, diversity and inclusion
• received reports on colleague engagement forums and considered ways to refresh the
engagement process, to enhance contributions from participants
• commenced the recruitment process for a new non-executive director
1
4
8
Compliance with the UK Corporate
Governance Code
Compliance statement
The Company confirms that, throughout the
53-week period ended 31 August 2024, it
has complied with all of the principles and
provisions of the 2018 edition of the UK
Corporate Governance Code (the Code). The
application of the Code’s principles by the
Company is set out and evidenced throughout
this Annual Report and the table below includes
cross-references to other parts of the Annual
Report (where relevant) to assist readers with
reviewing our compliance during the reporting
period.
The Board however remains mindful of the
Board diversity requirements under the Listing
Rules (see UKLR:6.6.6R(9) and FCA Diversity
Targets 2022) which are addressed in this
report under the gender and ethnicity diversity
section above.
The Board further notes the terms of a revised
UK Corporate Governance Code 2024,
published by the FRC in January 2024, the
majority of which will apply to the Company
from 31 August 2025. Accordingly, as the new
Code will only apply to financial years beginning
on or after 1 January 2025, for the FY2024
period under review the Company will continue
to report against the 2018 version of the Code.
A copy of the 2018 edition of the Code can
be found on the Financial Reporting Council’s
website at → www.frc.org.uk.
Strategic Report
Governance
Financial Statements
83
Corporate governance continued
Board Leadership and Company Purpose
Principle A
A successful company is led by an effective and entrepreneurial board, whose role is to promote
the long-term sustainable success of the company, generating value for shareholders and
contributing to wider society.
Board of Directors pages 76 to 77
Appointments, Training and Succession page 80
Board evaluation page 78
Principle B
The board should establish the company’s purpose, values and strategy, and satisfy itself that
these and its culture are aligned. All directors must act with integrity, led by example and promote
the desired culture.
Vision, strategy and business model pages
02 to 04
Culture and values page 81
Principle C
The board should ensure that the necessary resources are in place for the company to meet its
objectives and measure performance against them. The board should also establish a framework
of prudent and effective controls, which enable risk to be assessed and managed.
Business Model page 04
Our Governance Framework page 75
Risk Management pages 66 to 71
Principle D
In order for the company to meet its responsibilities to shareholders and stakeholders, the board
should ensure effective engagement with, and encourage participation from, these parties.
Stakeholders page 22
Section 172(1) Statement pages 22 and 83
Principle E
The board should ensure that workforce policies and practices are consistent with the company’s
values and support its long-term sustainable success. The workforce should be able to raise any
matters of concern.
Spotlight on Smiths News page 02
Vision Strategy and Business model pages
02 to 04
Sustainability report (People Pillar) page 34
Whistleblowing Policy page 40
Risk Management report pages 66 to 71
Culture and values page 81
Stakeholder Engagement report page 22
Conflict of Interests page 78
Division of Responsibilities
Principle F
The chair leads the board and is responsible for its overall effectiveness in directing the company.
They should demonstrate objective judgement throughout their tenure and promote a culture
of openness and debate. In addition, the chair facilitates constructive board relations and the
effective contribution of all non- executive directors, and ensures that directors receive accurate,
timely and clear information.
Board Roles and Responsibilities page 74
Chair’s introduction to governance page 72
Board evaluation page 78
Principle G
The board should include an appropriate combination of executive and non-executive (and,
in particular, independent non-executive) directors, such that no one individual or small
group of individuals dominates the board’s decision-making. There should be a clear division
of responsibilities between the leadership of the board and the executive leadership of the
company’s business
Board Roles and Responsibilities page 74
Non-executive directors pages 76 to 77
Principle H
Non-EDs should have sufficient time to meet their board responsibilities. They should provide
constructive challenge, strategic guidance, offer specialist advice and hold management to
account.
Board Roles and Responsibilities page 74
Non-executive directors pages 76 to 77
Principle I
The board, supported by the Company Secretary, should ensure that it has the policies,
processes, information, time and resources it needs in order to function effectively and efficiently.
Our Governance framework page 75
Information flow to the Board page 74
Independence of Directors page 78
Senior Independent Director page 74
Board Meetings page 79
Independent Advice page 80
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Smiths News plc | Annual Report and Accounts 2024
Composition, Succession and Evaluation
Principle J
Appointments to the board should be subject to a formal, rigorous and transparent procedure,
and an effective succession plan should be maintained for board and senior management. Both
appointments and succession plans should be based on merit and objective criteria and, within
this context. should promote diversity of gender, social and ethnic backgrounds, cognitive and
personal strengths.
Succession pages 76 and 78
Inclusion and Diversity page 78
Principle K
The board and its committees should have a combination of skills, experience and knowledge.
Consideration should be given to the length of service of the board as a whole and membership
regularly refreshed.
Board Composition pages 76 to 77
Principle L
Annual evaluation of the board should consider its composition, diversity and how effectively
members work together to achieve objectives. Individual evaluation should demonstrate whether
each director continues to contribute effectively.
Board evaluation page 78
Succession pages 76 and 78
Nominations Committee pages 94 to 97
Audit, Risk and Internal Control
Principle M
The board should establish formal and transparent policies and procedures to ensure the
independence and effectiveness of internal and external audit functions and satisfy itself on the
integrity of financial and narrative statements.
Audit Committee report pages 86 to 93
Principle N
Thel board should present a fair, balanced and understandable assessment of the company’s
position and prospects.
Fair, Balanced and Understandable reporting
page 122
Principle O
The board should establish procedures to manage risk, oversee the internal control framework,
and determine the nature and extent of the principal risks the company is willing to take in order
to achieve its long-term strategic objectives.
Going concern page 63
Viability pages 64 to 65
Risk Management pages 66 to 71
Directors’ Remuneration report pages 98 to 117
Audit Committee pages 86 to 93
Goverance framework page 74
Fair balanced and understandable reporting
page 122
Remuneration
Principle P
Remuneration policies and practices should be designed to support strategy and promote long-
term sustainable success. Executive remuneration should be aligned to company purpose and
values, and be clearly linked to the successful delivery of the company’s long-term strategy.
Directors’ Remuneration report pages 98 to 117
Principle Q
A formal and transparent procedure for developing policy on executive remuneration and
determining director and senior management remuneration should be established. No director
should be involved in deciding their own remuneration outcome.
Directors’ Remuneration report pages 98 to 117
Principle R
Directors should exercise independent judgement and discretion when authorising remuneration
outcomes, taking account of company and individual performance, and wider circumstances.
Directors’ Remuneration report pages 98 to 117
Approval
This report was approved by the Board and signed on its behalf by:
David Blackwood
Chairman
4 November 2024
Strategic Report
Governance
Financial Statements
85
Mark Whiteling
Audit Committee Chair
Cyber Security
Cyber security has remained a particular focus
during the review period, with the Committee
noting the increasing number of cyber-attacks
reported in the media, as well as the heightened
sophistication of the methods being employed.
Incident response and crisis management
in response to false-positive incidents and
attempted cyber-attacks have been held and
we continue to review, test and update our
Cyber Incident Response Plan and to keep
the business preparedness for current and
emerging threats.
In particular, this year has seen the
commencement of a significant investment by
the Company in its technology transformation,
which we believe will not only represent
a significant step change in our business
capability but also deliver enhanced protection
within the sphere of cyber security. Despite
having achieved ‘Cyber Essentials Plus’
accreditation through the National Cyber
Security Centre during FY2023, regrettably we
have not been able to maintain this accreditation
upon renewal in FY2024 as a result of increased
certification requirements, including the
mandatory segregation from the Company’s
network of any unsupported or legacy systems
(including internally-only focused servers)
which the business continues to work through
and remediate, with a continuing aspiration to
secure reaccreditation upon conclusion of this
workstream. Accordingly, we do believe that
improved enterprise security configurations,
server upgrades and the decommissioning of
legacy computer domains which are planned
during the next 12 month cycle will again enable
us to restore this accreditation. Therefore,
the failure to renew Cyber Essentials Plus
certification in FY2024 should not be seen as
a dilution of our commitment to continuing our
focus on cyber security.
The Committee continues to receive detailed
biannual Information Security Reports
from the Technology Director and Head of
Information Security which, in the year, has
included information relating to continual
internal vulnerability scanning, together with
progress against an assurance programme
encompassing specialist testing to validate
the effectiveness of our internal security
controls, identify potential weaknesses and
the identification of any issues to be assessed
for risks which can then be prioritised for
remediation and be managed as part of the
Company’s risk management programme.
Audit Committee Report
Chairman’s introduction
I am pleased to present the Audit Committee’s
report, which provides an overview of the areas
of focus for the Committee during the year as
well as its key activities and the framework
within which it operates.
The Committee’s primary area of responsibility
is to oversee the Company’s corporate financial
reporting and risk environment, including
oversight of the outputs of the external auditor
and assisting the Board with determining
any judgements which may be required. This
remained the key focus of the Committee
during the year.
I believe that the activities of the Committee
during the reporting period have enabled
the non-executive directors to gain a good
understanding of the Company’s strategic
priorities and the risks and challenges we
face, as well as the adequacy and timeliness
of appropriate actions being taken to address
them. This has assisted the Committee in its
review of this Annual Report and Accounts,
including the effectiveness of the Company’s
system of internal control and risk management
(see below).
During the year, an evaluation of the effectiveness
of the Committee was conducted. Further details
can be found in the Corporate Governance report
on page 78.
Composition
The Board is satisfied with the composition
of the Committee and that each of its
members have the required knowledge,
skills and experience to fulfil the duties of
the Committee, having an understanding of
financial, operational and commercial matters
relevant to our industry. Given my qualifications
and my extensive financial experience, I am
considered by the Board to have recent and
relevant experience to chair the Committee in
accordance with the requirements of the 2018
edition of the UK Corporate Governance Code
(see the Corporate Governance report on
pages 76 to 77 for further details of my
qualification and experience).
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Smiths News plc | Annual Report and Accounts 2024
Internal controls
The Committee’s primary responsibility
and focus for the review period remains its
oversight of the Company’s financial reporting
cycle, including the work of the external
auditors, and to assist the Board with any
judgements required in relation to our
biannual financial reporting.
Separately, we have continued to monitor
and review the Company’s internal controls
framework and the output of Internal Audit’s
activities in the year. This has included, in
particular, the consideration of the impact of our
new business propositions as part of our growth
and diversification strategy which, early-on in
the year, were identified as being particularly
reliant on manual processes emanating from
utilising our existing core news and magazine
business’ systems and reporting. Although it has
been acknowledged that a period of ’trial and
test’ and experimentation is sound as part of the
development and testing of these propositions,
the Committee has overseen updates in relation
to the roll out of ‘future fit’ projects which will
look to support these growth initiatives and
ensure robust internal controls are in place, not
only in the core news and magazine business
but also to the new diversification and growth
initiatives which are underway.
This year also saw us review internal audit’s
processes and risk-rating definitions as part
of our risk management framework, which
has resulted in changes which we believe
make the processes more transparent and
understandable to stakeholders and ultimately,
provide greater assurance to the Committee.
Regulatory Developments
The Committee has also considered the
forthcoming changes to the Corporate
Governance Code which have been announced
and, in particular to Provision 29, applicable
from 1 January 2026 (for reporting by the
Company in August 2027) in relation to the
monitoring of the Company’s risk management
and internal control frameworks, a review
of their effectiveness vis-à-vis financial,
operational, reporting and compliance controls
and to report on each within the Company’s
Annual Report. Hence, whilst the Committee
acknowledges that presently we believe that
our current risk processes and internal controls
are adequate, during the lead-up period to this
enhanced reporting standard, the Committee
is expected to consider the need to undertake
a process based gap analysis of the Company’s
risk management and internal control
framework, which may extend to identifying and
mapping key processes, agreeing materiality
thresholds and testing associated controls as
well as any reassessment thereof, ahead of
detailed disclosure within our future reports.
Furthermore, with the extension of the
Committee’s mandate to cover oversight of
sustainability data, this year has also seen more
focus placed on the verification of narrative
reporting and the scrutiny thereof, including a
greater understanding by the Committee and
Board of the Company’s emissions and energy
usage in what is, at this time, a very technical
and novel area.
Reviewing our risks and reporting
As part of the Committee’s annual workplan, we
have also continued to review and interrogate
the Company’s principal and emerging risks.
In the previous year we concentrated on the
increasing impact of climate change and the
possible implications thereof to the newspaper
and magazine sector, which had resulted in the
inclusion of a new principal risk.
This year, there have been no significant
changes to the identification of principal risks or
their ratings from the previous review, but there
has nonetheless been some minor narrative
changes to the description of risk mitigations
and, specifically, the climate-related risk has
been broadened to a more encompassing
sustainability risk.
As discussed above, the ever-present cyber
security risk to our business, as well as risks
associated with our growth and diversification
strategy were each considered, with the former
remaining as a critical risk despite actions
been taken to reduce the likelihood in the year,
noting that the impact of an event, should it
ever occur, remains very high. The ‘Growth and
Diversification’ risk has also been reassessed
and is now best articulated as encompassing
two distinct risks. Therefore, it has been agreed
to separate them out, with the risk of a failed
diversification strategy noted only as a possible
emerging risk; with the growth risk more
particularly defined as relating to a risk in failing
to achieve certain stretching targeted returns
– accordingly, this remains as a principal risk
given the heightened interest of stakeholder
views in this regard (see the Risk Management
report on page 66 for further details).
External audit and Committee
effectiveness
Following the satisfactory completion of BDO’s
audit processes, no major issues have been
identified. Furthermore, we can confirm that
through ongoing monitoring and review, the
independence and objectivity of the external
auditor has been ensured, with a new lead
audit partner (Oliver Chinneck) in place for the
FY2024 audit following the 5-year term of the
previous lead audit partner.
The Committee’s performance and
effectiveness were reviewed as part of the
Board evaluation process undertaken during
the year, more details of which can be found
on page 78. I am pleased to confirm that the
Committee is seen to be operating effectively
and fulfilling the duties delegated to it by the
Board. Finally, the Committee has, once again,
undertaken an annual review of its terms
of reference, and I am pleased to be able to
confirm that we have acted in accordance
with its terms at all times during the year and
there are no major items of disclosure to bring
to the attention of our shareholders or other
stakeholders.
Further information on the Committee can
be found here, as well as in the Corporate
Governance report on pages 74 to 85.
Mark Whiteling
Chairman
4 November 2024
Composition and attendance
1
Members throughout
the year
Committee member
since Meeting attendance
Mark Whiteling – Chair 1 September 2017 4/4
Denise Collis 1 December 2015 4/4
Michael Holt 1 October 2018 4/4
Deborah Rabey 1 March 2023 4/4
1 The maximum number of meetings held during the year that each director could attend is shown next to the number attended.
The Committee met four times during the year as part of our schedule to consider matters planned
around the Company’s financial calendar. All Committee members attended each of the meetings.
For further details on attendance, please refer to the Corporate Governance report on page 79.
The composition of the Committee meets the 2018 UK Corporate Governance Code requirement
that the members are independent non-executive directors, and the Chairman of the Board is not a
member of the Committee.
Other regular attendees, by invitation, include the Chairman of the Board, the CEO and CFO, Head
of Internal Audit & Risk and representatives from BDO LLP as external auditors.
The detailed roles and responsibilities of the Committee are set out in the Terms of Reference which
can be found → www.smithsnews.co.uk/wp-content/uploads/Audit_Committee_Terms_of_
Reference_2024.pdf
Strategic Report
Governance
Financial Statements
87
Audit Committee Report continued
Key matters addressed by the Committee
Financial reporting • Reviewed reports from the Chief Financial Officer and the external auditor on matters of significance in relation to,
and the content of, the Group Financial Statements for the reporting period
• Approved the financial results’ press releases and the Annual Report and Accounts, including tone and consistency
and the application of the critical accounting policies and key judgements, and considered whether the report,
as a whole, was fair, balanced and understandable (see page 122)
• Approved the Group's viability and going concern assessments, and subsequent disclosures and statements
Risk management &
controls
• Conducted an annual assessment of risk and internal control, including a robust assessment of principal and
emerging risks
• Received information security and data protection reports, including key measures taken to enhance cyber security
controls, to mitigate against IT risks and cyber attacks
• Received information on climate-related risks
• Reviewed the external auditor’s report on the Company’s full year and half year financial statements
• Reviewed recommendations to executive management set out in the external auditor’s management reports
External audit matters • Reviewed the external auditor’s assessment of its objectivity and independence (including the rotation of the previous
lead partner), including a review of, and prior approval of, non-audit services (and associated fees) provided by the
external auditor as part of its performance review
• Reviewed management representation letters related to the Company’s full year and half year financial statements
• Reviewed the external auditor’s audit plan, scope and strategy for its audit of the Company’s full year and half year
financial statements
• Approved the external auditor’s fees
Internal audit matters • Reviewed and agreed the internal audit work plan, confirming the focus on key risk areas and adequacy of coverage
of material operational matters and internal controls environment
• Received reports from the Head of Internal Audit & Risk (see page 66)
• Reviewed whistleblowing process and procedures and received whistleblowing reports providing insight into the
culture of the Company and issues of particular concern to stakeholders
Governance and other • Reviewed various legal reports and compliance and risk updates
• Received updates on tax policy and the Company's approach to compliance and tax risk, as well as a review of the
Company’s tax strategy and insurance programme (including the risk profile of our insurance coverage)
• Reviewed policies – treasury, anti-bribery, non-audit work, recruitment of external auditors, parent company
guarantees etc.
• Conducted an annual review of the Committee’s terms of reference, evaluation and review of its composition
• Conducted private meetings between the non-executive directors, Head of Internal Audit & Risk and the external
auditor in order to ensure that each of their independent views, opinions and comments are reflected within the
Committee’s deliberations and dealings. In the year, the Committee met twice with representatives from BDO without
management present and held two separate private meetings with the Head of Internal Audit & Risk. No material
issues came to light in these discussions
• Reviewed evolving ESG reporting standards and received assurances in relation to ESG-related data insight
• Reviewed the cash management and treasury policies, including the treatment of surplus cash held from time to time
• Continued to keep under advisement the outcome of the UK Government’s proposals regarding its review of the
audit market, known as ‘Restoring Trust in Audit and Corporate Governance’ as well as other changes within the
auditing environment
• Reviewed the effectiveness of the Internal Audit model and structure and the results of the evaluation of the Internal
Audit function and oversaw the additional resourcing and composition of the Internal Audit function
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Smiths News plc | Annual Report and Accounts 2024
Audit Committee activity
Governance
The objective of the Committee is to promote
effective governance of the Company’s financial
controls, accounting and reporting, including
the adequacy of related disclosures; the
performance of both the Internal Audit function
and the external auditor; and to oversee the
Company’s risk management, internal control
systems (including whistleblowing reporting
processes, accounting policies, and of the
monitoring of ESG reporting and sustainability
matters).
The Committee’s terms of reference address all
matters set out in Disclosure and Transparency
Rule 7.1 and the 2018 edition of the Code and
are reviewed annually by the Committee and
referred to the Board for approval. During
FY2024, the terms of reference were revised to
include specific provision for the monitoring of
both ESG narrative reporting and sustainability
matters in anticipation of, what was then, a
proposed Code amendment together with a
general refresh of the terms of reference in
anticipation of the 2024 edition of the Code.
If there is any disagreement with the Board
and/or the Executive Team on any of the
Committee’s responsibilities that cannot be
resolved, the Committee retains the right to
report the issue to shareholders as part of
its report on the Committee’s activities. As
reported in my introduction, there are no such
matters to report to shareholders at this time.
In addition, the Committee seeks to identify
matters in respect of which we consider that
action or improvement by the Company is
needed, and appropriate recommendations
are made to the Board as to the steps that
should be taken to preserve and promote the
assurance and integrity of the Company’s
internal controls framework.
Internal controls and risk
management
The Company’s internal control and risk
management framework, embedded in all
key operations, is designed to address all the
significant strategic, financial, operational and
compliance risks that could undermine the
Company’s ability to achieve our business
objectives in the future and is managed
within risk tolerance levels defined by the
Board. In accordance with the provisions
of the UK Corporate Governance Code, the
Company has in place an internal control
environment to protect the business from
principal and emerging risks which have
been identified. Management is responsible
for establishing and maintaining adequate
internal controls over financial reporting
and the Committee retains responsibility for
ensuring the effectiveness of these controls.
Full details of the Company’s internal control
and risk management framework can be
found in the Risk Management report on
page 66. The Committee has reviewed
the risk management framework and the
system of internal controls and considers
that the system of internal controls operated
effectively throughout the financial year
and up to the date on which the financial
statements were signed.
A critical element of the Company’s risk
management review is the determination of
the extent to which the Company is willing to
‘accept’ a level of net risk as part of the cost of
delivering against its strategy. To this end, the
Board’s individual and collective risk appetite
is periodically reviewed, considering changes
in the business and the external environment,
as well as emerging trends and developing
risks. Our risk appetite differs across the
respective principal and emerging risks, with
a lower acceptance appetite for high impact/
high likelihood risks (seeking to reduce the
risk profile and mitigating its impact where
possible) and with a higher acceptance level
for low impact/low likelihood risks (potentially
accepting the risk, with limited impact
mitigation). For further details, please see the
Risk Management report on page 66.
Bribery, fraud, anti-trust
and whistleblowing
The Committee is responsible for reviewing
the Company’s bribery and fraud detection
systems and controls to ensure the prevention
of any inappropriate behaviour. The Company
has both Anti-Fraud and Anti-Bribery
policies in place, each of which are reviewed
annually by the Committee. Separately, the
Company has adopted a public statement
reaffirming our zero tolerance stance in this
regard, which is available on our website
– → www.smithsnews.co.uk/wp-content/
uploads/SN_corruption_bribery_Act.pdf. In
addition, approval procedures are in place
for the acceptance and management of
gifts and corporate hospitality across the
business which are aligned to the Company’s
Delegation of Authority matrix. All allegations
of corruption are investigated by independent
persons and our whistleblowing hotline is
accessible for the reporting of any allegations
of corruption, with the additional option to
directly contact either our Internal Audit or
legal departments as alternative confidential
lines of reporting. Both our payment systems
as well as our expense claims processes
maximise the identification of possible
corruption and these form part of both the
internal and external audit mandate.
In support of the prevention of anti-competitive
practices including market-collusion, abuse
of a dominant position, price-fixing and/or
the illegal sharing of competitive information,
we have a Competition Law Policy (which is
available on our website) which is reviewed
annually by the Committee. Any allegations of
anti-competitive behaviour are reported and
addressed in the same manner as instances
of bribery and corruption and may be directly
addressed with either our Internal Audit or
legal departments. We have a regulatory
compliance certification process which must
be completed annually by relevant colleagues
as confirmation that no anti-competitive
practices have taken place in the year and that
required training has been undertaken where
applicable. Overall, these risk management
processes each aid and improve the
identification of, and mitigating actions to
prevent and report, incidences of suspected
fraud, tax evasion, data breaches, bribery,
modern slavery or other forms of malpractice.
See the Corporate Governance report on page
74 for further details.
We have an independent whistleblowing
process including independent hotline and
reporting processes and the Committee
received quarterly reports on incidences of
whistleblowing or other malpractices reported
across the business. Further details are set out
in our Sustainability report (see page 34).
Strategic Report
Governance
Financial Statements
89
Significant financial statement reporting issues
The Committee has considered each of the following items listed below based on discussions with, and submissions by, management and satisfied
itself as to the accounting treatment and presentation thereof, including disclosure within Note 1 to the Group Financial Statements. The most
significant items were discussed with the external auditor during the planning stage and on completion of the audit. The key judgements and
estimations in relation to the FY2024 financial statements were:
Area Matter considered Outcome
Going
concern
and viability
The Committee reviewed and challenged executive
management’s assessment of forecast cash flows over
the relevant assessment periods, which were 18 months
for going concern and 36 months for viability from the
accounting reference date (16 months and 34 months
respectively from the date of approval of the Group Financial
Statements).
The Committee considered the sensitivities within trading
and expenditure plans, including a reverse stress test and
five reasonable worse case downside scenarios which were
linked to the principal and emerging risks as detailed on
page 66.
The Committee further reviewed the assumptions relating to
material events occurring before the end of the assessment
period, notably the renewal of publisher contracts. The
refinancing of the Company’s debt facilities that occurred in
May 2024 was also considered in this assessment.
The Committee concluded that the assumptions used in the
assessments and the periods of assessment were appropriate.
In reviewing the Group’s reverse stress tests, the Committee
challenged executive management as to the likelihood of any such
scenario occurring, to assess whether it was reasonable to assume
that the likelihood of any such scenario was remote. Factors that
were considered included the current trading performance of the
business compared with the base case, the extent of revenue and
operating profit decline that could impact the going concern of
the Company and current expectations as to the severity of any
inflationary impacts on cash flows.
The Committee further concluded that appropriate consideration
had been made of principal and emerging risks through the
inclusion of the five downside risk scenarios and reverse stress test.
The Committee noted the current level of average and peak debt,
the Company’s debt financing facilities and the factors set out
above to help it conclude that the application of the going concern
basis for the preparation of the Group Financial Statements
continues to be appropriate and therefore agreed the Group
Financial Statements should be prepared on a going concern basis
and recommended the approval of the viability statement.
This disclosure in respect of going concern is set out in
Note 1 to the Group Financial Statements on page 135.
IFRS 15 –
Revenue
Recognition
The Committee considered the appropriateness of
accounting for revenue from the wholesale of newspaper
and magazines as principal rather than as an agent.
The Company is considered to be the principal based on the
Company possessing credit risk of default by the customer
together with the following indicators of control over its
inventory: discretion to establish prices; it holds some of the
risk of obsolescence once in control of the inventory; and it
has the responsibility of fulfilling the performance obligation
on delivery of inventory to its customers.
Revenue from the delivery of newspapers and magazines
and from carriage fees is recognised when the titles
are delivered to the retailer and there is no unfulfilled
obligation that could affect the retailer’s acceptance of the
products, and the risks of obsolescence and loss have been
transferred to the retailer. No issues were noted with regards
to this risk.
The Committee also considered the additional revenue
streams from the growth activities and concluded that
the same accounting treatment applies for these growth
activities as applied for wholesaling of newspapers and
magazines in respect of the point at which revenue is
recognised and the performance obligation has been met.
The Committee was satisfied that appropriate consideration had
been made of the following factors which influence determination
of principal/ agent:
• primary responsibility for fulfilling the promise to provide
newspapers and magazines, and perform services, is with
Smiths News which is responsible for the timing of delivery,
bearing risk of loss or damage and dealing with retailer
complaints.
• Smiths News also bears inventory risk noting the customer
has a right of return and associated credit risk of default by the
customer.
• Smiths News has the discretion to establish prices with retailers
including wholesale discounts.
Audit Committee Report continued
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Smiths News plc | Annual Report and Accounts 2024
Area Matter considered Outcome
Carrying
value of
investment
held by
Smiths News
plc in its
subsidiary
The Committee considered management’s conclusion that
a reversal of previous impairment of the investment carrying
value held by the Company in its subsidiary should be
made. The following indicators of impairment or reversal of
impairment are present:
• decrease in the risk-free rate (reversal);
• the Company’s market capitalisation being below the
investment carrying value (impairment);
• lower net liability position (reversal);
• successful round of refinancing (reversal); and
• increased market capitalisation (reversal) in the year.
The Committee received detailed reports from executive
management outlining valuation methodology, the basis for
key assumptions (e.g. discount rate and terminal growth rate),
the key drivers for cash flow forecasts and the sensitivity of the
assumptions used.
After careful deliberation and challenge, the Committee was
satisfied that these assumptions and the disclosure of sensitivities
were appropriate.
In its deliberations, the Committee further acknowledged that,
while indicators of impairment and reversal existed, there had been
an improvement to the headroom available, driven by earnings
generated during the year and the repayment of debt.
The Committee agreed with management’s conclusion that a
£16.3m reversal of previous impairment of the investment should
be made.
Alternative
performance
measures
(APMs) and
adjusted
items
The Committee closely monitored management’s
interpretation and definition of APMs, with focus on
adjusted items. The Committee continues to review and
challenge the classification of adjusted items in line with
the Company’s defined policy. The Committee also ensures
sufficient involvement from external auditors in challenging
management to ensure an appropriate level of judgement is
exercised in their assessment.
The Committee considered the appropriateness of the
measure of adjusted profits, quality of earnings, and the
classification and transparency of items separately disclosed
as such.
The Committee also considered the presentation of APMs
in the Annual Report and Accounts in the context of the
requirement that they are fair, balanced and understandable.
The Committee was satisfied that the presentation of APMs and
adjusted profits provides a reasonable view of the underlying
performance of the Company and that there was transparent and
consistent disclosure of the items shown separately as adjusted
items.
The definition of APMs can be found in the Glossary on page 168.
The accounting policy on adjusted items is set out in Note 1 to the
Group Financial Statements on page 135.
Property
provisions
The Committee reviewed the property provisions as at
period end and the appropriateness of the additions,
utilisation and releases made in the year.
The Committee agreed that the property provisions held were
appropriately recognised and measured and that releases were
consistent with the manner in which the original provisions had
been made.
The Committee considered that the provisions have been
discounted to present value using an appropriate discount rate,
and this discount will be unwound over the life of the leases. A
negotiation settlement rate was also used as seen in the market.
The provisions cover the period to 2034; however, a significant
portion of the liability falls within ten years.
Determining
lease terms
The Committee considered the factors used by management
to determine lease terms.
The Committee considered the key judgements made in
determining lease terms and was satisfied with the approach.
Adoption of new accounting standards
There have been no significant changes in
accounting standards in the reporting period
which are expected to materially impact the
Company. However, we remain alert to any
such changes and regularly receive updates
on upcoming changes from both the external
auditor and management. In this light, the
Committee continues to monitor the impact
of the wide-ranging reforms in relation to
the Department of Business, Energy and
Industrial Strategy’s response to its March
2021 consultation on audit and corporate
governance reform (“Restoring Trust in
Audit and Corporate Governance”) and, in
particular, the implementation timetable
through primary and secondary legislation and
proposed amendments to the UK Corporate
Governance Code.
External audit
BDO was appointed as external auditor
following a competitive tender process in
January 2019. In light of Articles 16 and 17 of
the EU Audit Regulation (as it forms part of the
law of England and Wales by virtue of section 3
of the European Union (Withdrawal) Act 2018),
the Company will put the external audit contract
out to tender at least every ten years and will
mandatorily rotate audit firm every 20 years.
The Committee acknowledges that in line with
professional standards, BDO has a policy of
rotating the lead engagement partner every five
years. This year’s audit was the first with Oliver
Chinneck as the lead partner, following the
rotation off the account of Sophia Michael at the
end of the FY2023 audit.
Oliver had previously served five years as a
supporting partner and therefore is permitted
to serve as lead partner for two years in line
with the independence and ethical standard
requirements.
Strategic Report
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Financial Statements
91
Internal Audit
The Internal Audit function is an integral
part of the Company’s governance and risk
management framework, as well as undertaking
detailed reviews of the Company’s internal
system of controls which thereby assist the
Committee, and the Board, to manage risk
effectively and to protect the reputation, assets
and overall sustainability of the Company
through assessing whether the appropriate risks
have been identified, reported and managed.
The Committee monitors and reviews the scope
and effectiveness of the Internal Audit function
and ensures it acts within the purpose, remit and
authority as set out in its approved Internal Audit
Charter, which itself is reviewed annually.
To ensure such effectiveness the Head of Internal
Audit & Risk has unfettered access to executive
management as well as the Committee and the
chair of the Committee, and as mentioned earlier,
has opportunities to meet with the Committee
in private.
Each year, the Committee considers and
approves the internal audit workplan, which
is designed to focus on identified key risks
to ensure that they are managed effectively
within the context of the Company’s business
objectives and risk appetite, and that appropriate
internal controls are in place. The Committee
will consider deviations from plan should the
need arise and usually only in response to a
material change in the risk profile highlighted
through audit reports and/or as a result of a
matter raised either by management or through a
whistleblowing report.
Reports are provided to the Committee at
each meeting, including updates on activities,
resourcing levels, progress against plan, results
from audits carried out and management’s
response to address any areas highlighted for
improvement and timeliness thereof. FY2024
saw Internal Audit deliver its plan in full and in
a timely manner, which included the deferment
of two audits and the addition of two injected
audits, with no audit outcomes indicating an
unacceptable conclusion. This has resulted in
the Committee being satisfied that an effective
review of the control framework and governance
processes has taken place across the selected
areas of our business and that, from an audit
and assurance perspective, the Committee is
satisfied that an adequate assurance process is
in place in relation to the nature of the narrative
disclosures in this Annual Report.
A performance evaluation assessment of the
Internal Audit function was undertaken through
a formal internal review process, which included
the views and experiences of not only the
Committee members but also a cross section
of peers from across the business who have
engaged with the Internal Audit team during the
year. The review indicated that the function is
performing adequately.
Evaluation Focus
• BDO present the audit plan (strategy and
scope) for the financial year under audit,
with key audit matters highlighted for
special attention;
• Progress reports against the audit scope
allows the Committee to monitor progress
and raise any questions and challenge both
management and BDO;
• The Committee discusses, both internally
and with BDO, the level to which BDO
have demonstrated professional scepticism
and challenge of management’s position,
specifically regarding estimations and
judgements;
• Private meetings between the Committee
and BDO are held regularly to encourage
transparent feedback; and
• Review of feedback from Committee
members, including views on how BDO
has supported the work of the Committee
and communicated with the Committee.
Formal evaluation
At the completion of the financial reporting and
audit process a formal evaluation process is
undertaken each year, which includes a written
questionnaire distributed to each member of the
Committee, the Chief Financial Officer and senior
financial controllers from across the business.
Subsequently, the Committee holds a dedicated
session to discuss the collated responses,
including any learnings and suggested areas
for improvement, with BDO being afforded an
opportunity to comment on any relevant findings
and outcomes.
Key areas of focus in the evaluation of the
external audit included:
• the external auditor’s processes for its review
of the Board’s accounting judgements;
• understanding of key accounting matters and
issues;
• independence and objectivity;
• the expertise and technical knowledge of the
external audit teams;
• the scope, delivery and execution of the
external auditor’s audit plan;
• a review of the completeness, quality and
timeliness of the audit;
• a review of the robustness and perceptiveness
of the external auditor; and
• a review of formal reporting to the Committee.
Non-audit services
The Company has a formal policy on its
relationship with the external auditor to ensure
that the external auditor’s independence is
not impaired. Following regulatory changes
and in light of the introduction by the Financial
Reporting Counsel (FRC) of a new 2019 ethical
standard (which applied with effect from March
2020), in FY2020 the Committee reviewed the
revised ethical standard and amended our non-
audit services policy at that time.
In doing so, we removed the previous de minimis
financial approval limits for non-audit services
and adopted a ‘whitelist’ of non-audit services
which may be provided by the external auditor
in adherence to the new ethical standard.
No changes have been made this year and,
therefore, going forwards, the approval of both
the Audit Committee Chairman and the CFO
will continue to be required in respect of all non-
audit service engagements and, as part of such
approval process, where the maximum combined
spend is likely to exceed 50% of the annual
audit fee in any financial year, there is an express
requirement to engage with the external auditor
in order to ensure absolute compliance with the
latest standards.
Fees
Fees paid to BDO during the year in respect of
non-audit services support for the Company’s
interim financial results amounted to £65,800
(FY2023: £62,700). The Committee considered,
and was satisfied that, it was appropriate for BDO
to undertake this work and that doing so did not
affect their independence. Details of the total fees
paid to BDO during the year in respect of audit
and non-audit services are shown in Note 2 to
the Group Financial Statements.
Board approval
Prior to the Board’s approval of the period-end
Group Financial Statements, the Committee
provided its view to the Board on the outcome
of the statutory audit, explaining management’s
key accounting issues and judgements; the
outcome of the auditor’s assessment of key audit
matters; other areas of audit focus and control
deficiencies (if any); and how the statutory
audit contributed to the integrity of the financial
reporting process.
Conclusion
Following its review, the Committee concluded
that it was satisfied that the external audit
process had been independent, objective and
effective, with the Committee’s review concluding
that:
• it was satisfied with the quality and
independence of the BDO audit partner
and team;
• BDO had undertaken an appropriate level of
analysis, discussion and review of relevant
management papers and underlying
assumptions of the going concern and viability
statements to demonstrate the adequacy
and sufficiency of audit challenge and critical
assessment;
• the audit was well planned and executed
on time, with key findings appropriately
addressed; and
• BDO had a good understanding of the
business and its internal control systems and
reported in a clear and open manner.
Audit Committee Report continued
92
Smiths News plc | Annual Report and Accounts 2024
Going concern and viability
assessment
The Committee also reviewed a paper prepared
by the Chief Financial Officer to support the
going concern and viability assessment referred
to on pages 63 to 64. The Committee noted that
the Company had £38.5m of available facilities at
the end of the reporting period (of which £18.0m
was drawn at the end of the reporting period)
and, therefore, achieved 0.3x leverage covenant
of bank net debt to Bank EBITDA. With current
facilities in place for a minimum period of three
years from commencement to 1 May 2027 (with
the option to extend for two further years), this
gives the Company a strong platform to continue
in operation for the foreseeable future.
On this basis and the evaluation of the impact of
a number of sensitivity scenarios, the Committee
concluded in its recommendation to the Board
that the profit and cash forecasts supported the
view that the business continues to be a going
concern and can meet its liabilities as they fall
due for a period greater than 12 months (being
the going concern assessment period of 16
months) from the date of approval of the Group
Financial Statements and that there is also a
reasonable expectation that the Company will
remain viable over the period of assessment for
viability to August 2027. The viability statement
on page 64 sets out further details on the
process applied in relation to this assessment.
Fair, balanced and understandable
In line with the Committee’s
responsibility for ensuring
there are robust financial
reporting procedures and
internal controls in place, and
the UK Corporate Governance
Code requirement for the
Committee to advise the
Board in relation to the Annual
Report and Accounts, in
particular whether, taken as
a whole, it is fair, balanced
and understandable, the
Committee undertook an
assessment of the 2024
Annual Report and Group
Financial Statements. This
incorporated the work
undertaken by the Committee
throughout the year to monitor
financial reporting.
The process and outcome are
set out opposite.
Oversight throughout the year
• Review of applicable accounting policies and pronouncements and their application
• Review of regular financial results and announcements
• Reports from the Chief Financial Officer, BDO and Company Secretary & General Counsel
• Reports from Internal Audit
Review Included
• Provision of outline plan including content and structure, design concept and timetable
• Consideration of regulatory and governance requirements for reporting
• Review of detailed reports from the Chief Financial Officer and BDO providing the opportunity for debate
and challenge
• Summaries of areas where management judgements or significant accounting estimates had been made
• Monthly Board meetings where the management accounts and KPIs were each reviewed to ensure that the
Company’s financial, operational and commercial performance was appropriately assessed, reported and
understood
• Consideration of going concern and longer-term viability Separate meetings with BDO without management present
Review Confirmed
• Well-documented planning and procedures for the preparation of this report
• Collaborative approach between all parties required to contribute to this report
• Basis of preparation consistent with financial reporting throughout the year
• All significant issues had been considered
• Messaging was consistent, particularly the narrative disclosures reflecting financial and ESG data
Conclusion
• After completion of the detailed review, the Committee was satisfied that:
– taken as a whole, the Annual Report and Group Financial Statements in FY2024 are fair, balanced and
understandable; and
– the Annual Report accurately reflects the information shareholders would require in order to assess the
Company’s position and performance, business model and strategy
Recommendation
• The Committee reported its findings and conclusions to the Board
Approval
This report was approved by the Audit Committee and signed on its behalf by:
Mark Whiteling
Audit Committee Chair
4 November 2024
Strategic Report
Governance
Financial Statements
93
Chairman’s introduction
I am pleased to present the Nominations
Committee report for FY2024, which provides
an overview of the work of the Committee
during the review period, including the key
activities undertaken in accordance with its
terms of reference.
This year has seen a particular focus on talent
management across the business. Board
succession planning has equally formed a
key part of the Committee’s review, as we
have sought to thoughtfully address both the
independence status of Denise Collis as she
approaches the expiry of her nine-year term
whereupon the Corporate Governance Code
expects her independence requirements to be
seen to be impaired, and the resultant decision
for her to step down and retire from the Board
at the conclusion of the 2025 AGM. Accordingly,
and as I have already mentioned elsewhere in
this Annual Report, having reviewed the Board’s
composition and that of all of its Committees,
we have commenced a recruitment search
process looking to identify a suitable successor
to join the Board.
Although this process has progressed with an
external recruitment agency engaged to assist
us here, at the time of reporting a suitable
appointment has yet to be made.
As we roll out our growth and diversification
strategy, the Committee has also been mindful
not only of the additional opportunities this
provides for colleagues but also to broaden our
depth of skills and expertise across all levels
within the business, while also strengthening
our ability to attract, develop and retain our
talent pool. With this also comes the need
to remain aware of the expanding demands
on existing colleagues. The Committee has
therefore exercised oversight and constructive
challenge over our talent pipeline and
leadership structures to ensure that we have the
necessary human capital to deliver our strategy
in a sustainable and inclusive manner. We have
not lost sight of the need for both succession
planning and development across the Executive
Team and senior management.
David Blackwood
Nominations Committee Chair
As we have sought to adopt a more integrated
approach to this year’s Annual Report, I would
direct you to the Stakeholder Engagement and
Sustainability reports (see pages 22 and 34
respectively to read more about our approach
to colleague engagement surveys and training).
The outcomes of these surveys are informing
how we engage with colleagues, enable us to
better understand what is important to them
and how their opinions matter to the Board
and are referenced and considered when
relevant decisions are taken. The Board’s
engagement process with our wider workforce
continues through the Board’s representative
non-executive director Michael Holt, who
attends National Colleague Engagement
Forum meetings together with ad hoc informal
get-togethers with colleagues either in person
or remotely and reports back to the Board
accordingly. We remain of the view that this
process best meets the needs of our business
and ensures that the views of our colleagues
are appropriately communicated back to the
Board and considered in our decision-making.
Accordingly, we will continue to adopt this
approach going forward.
Finally, I would like to offer the Board’s
heartfelt appreciation for Denise’s significant
contribution, guidance and support in both
her nine years serving on the Board and as
Remuneration Committee Chair and together
we wish her every success in her continuing
business endeavours.
Further information on the Committee can also
be found in the Corporate Governance report
on page 74.
David Blackwood
Chairman
4 November 2024
Nominations Committee Report
94
Smiths News plc | Annual Report and Accounts 2024
Board composition, succession
and attendance
All directors are expected to devote the
necessary time commitment required to
adequately meet the needs of the Company
and to put themselves up for annual re-election
at each AGM as part of the conditions of their
appointment. The staggering of the respective
tenures of directors ensures a period of stability
and continuity on the Board and helps to ensure
the robustness of the Company’s succession
planning processes for the future.
The Board evaluation process (for further details
see page 78 of the Corporate Governance
report) continues to support the ongoing
assessment of the directors’ development
needs, opportunities and shortcomings against
the Board’s current skills, experience, expertise
and composition.
Identified recommendations are aligned with
our succession planning process, with the
Board remaining committed to ensuring that
it possesses the right blend of skills, expertise,
commitment and experience when selecting
suitable candidates, while at the same time also
striving to reflect today’s talent and customer
pools to build balanced teams.
The Committee has considered the current
established composition of the Board against
the spread of anticipated Board retirement
dates (as set out below), noting specifically
the position of the Remuneration Committee
Chair (Denise Collis) as she looks to retire from
the Board by no later than the conclusion of
the January 2025 AGM in line with the ‘nine-
year independence’ provision applicable to
non-executive directors pursuant to the UK
Corporate Governance Code provisions.
Composition and attendance
1
Members throughout
the year
Committee member
since Meeting attendance
David Blackwood – Chair 13 May 2020 2/2
Mark Whiteling 1 September 2017 2/2
Denise Collis 1 December 2015 2/2
Michael Holt 1 October 2018 2/2
Deborah Rabey 1 March 2023 2/2
1 The maximum number of meetings held during the year that each director could attend is shown next to the number attended.
The composition of the Committee meets the 2018 UK Corporate Governance Code requirement
that the majority of members are independent non-executive directors.
The Committee met twice during the year and all Committee members attended all meetings.
At the invitation of the Committee, certain executive directors and management attended the
meetings from time to time.
The detailed roles and responsibilities of the Committee are set out in the Terms of Reference which
can be found → www.smithsnews.co.uk/wp-content/uploads/Nominations_Committee_Terms_
of_Reference_2024.pdf
Activity in FY2024
The objective of the Committee is to lead
the process for Board appointments,
having due regard to Board diversity, and
to ensure orderly succession planning so
as to maintain an appropriate balance of
skills and experience on the Board. The
detailed roles and responsibilities of the
Committee can be found in the Terms of
Reference which are published on our
website.
Key matters addressed by
the Committee
November 2023
• Received reports on talent review and
succession planning for the Executive
Team as well as retention strategies
• Received a Diversity and Inclusion
update and reviewed an action plan
developed following the external audit of
the recruitment practices and policies
• Reviewed Board succession planning
in the light of the expected imminent
retirement of Denise Collis at the
conclusion of the 2025 AGM
April 2024
• Reviewed non-executive director
independence status and Board
succession planning recruitment
processes
Strategic Report
Governance
Financial Statements
95
Board composition, succession and attendance
Name Date of appointment
Date of intended Board
retirement – on or before
Last AGM for
annual re-election
Denise Collis 1 December 2015 January 2025 AGM January 2024
Mark Whiteling 1 September 2017 January 2027 AGM January 2026
Michael Holt 1 October 2018 January 2028 AGM January 2027
David Blackwood 13 May 2020 January 2030 AGM January 2029
Deborah Rabey 1 March 2023 January 2033 AGM January 2032
In line with our recruitment processes, we are ever mindful of the gender and diversity expectations of the FCA Listing Rules (UKLR:6.6.6R(9)) but we
remain realistic and cannot ignore the fierce competition which we face for a pool of diverse talent that is naturally limited by the size, nature, location
and profile of our business. We therefore note our current non-compliance with these gender and diversity expectations (UKLR:6.6.6R(9)) but note
that we remain committed to our stated objective to have at least two women on the Board and will, therefore, look to use the normal director-rotation
periods as a means to provide such an opportunity to improve both the gender and ethnic diversification across the Board, whilst also seeking to
maintain a blend of skills, expertise, commitment and experience which is right and appropriate for the Company in light of the size and composition
of the Board and current director tenures. Accordingly, as we look to target future non-executive director recruitment, we will endeavour to ensure that
candidate lists are compiled from a broad and diverse range of candidates, including those who may not have previous listed company experience.
The recruitment process for a suitable candidate to join the Board is led by the Chairman and we will look to use the normal director-rotation period as a
means to provide an opportunity to improve both the gender and ethnic diversification across the Board. Whilst this search commenced in July 2024, at
the time of reporting a suitable appointment has yet to be made.
This recruitment process is, once again, following a structured process as set out below:
Stage 1 • Appointment of search agency to deliver a candidate list through access to diverse data pools
• Detailed role specification developed using objective criteria
The search focus has included commercial insight, non-food retail experience, support of growth initiatives/change management and our
D&I agenda
Stage 2 Compilation of a longlist of candidates by search agency.
Stage 3 Following on from confirmation of interest from candidates, a shortlist of at least three candidates will be compiled based on
’strength of fit’ with the role specification, and face-to-face meetings scheduled with the Committee members and executive
directors.
Stage 4 A preferred candidate, or candidates will be identified, and a recommendation will be made to the Board for appointment,
subject to shareholder approval being sought at the subsequent AGM following appointment.
Stage 5 Induction programme – following any appointment a detailed induction programme will be undertaken. To understand the
full extent of this process please refer to our Corporate Governance report on page 74.
Nominations Committee Report continued
96
Smiths News plc | Annual Report and Accounts 2024
Talent reviews, succession planning
and recruitment
We operate a talent management process for
our most senior leaders, undertaken twice
a year in the business and reviewed once a
year by the Committee. This process identifies
the performance and potential of individuals
and ensures that those with high potential in
particular have developmental action plans
in place. These processes and development
actions feed into the business-wide succession
planning processes.
As part of this process, we continue to map
our talent pool and undertake further talent
development support to aid a proactive
succession planning process for key business
roles and the ongoing identification and
development of a diverse pipeline. We continue
to recognise that career progression and
development remains a key aspect for the
attraction and retention of the right talent, and
we have once again continued to promote
development and upskilling activities including
the promotion of our Trusted Leadership
programme and dedicated leadership master
classes which have included ‘leading and
thriving through change’.
A key deliverable for the business continues
to be the ambition of promoting ‘development
for all’. Supporting colleagues with their
development is designed to create a pipeline
of talent who could be considered as future
successors for more senior roles up to and
including executive roles. Successors are
considered both from the perspective of short-
term cover and for the potential full-time role,
accepting that this will not always be the same
person. For further information regarding our
progress against the ambition of ’development
for all’ please see the Sustainability report on
page 34.
Colleague engagement and surveys
During the year we continued our approach
of undertaking our ‘What Matters’ colleague
engagement pulse surveys, facilitating regular
‘check-ins’ with our colleagues at different
points throughout the year to better understand
if our actions from previous surveys are making
a positive impact. This ‘pulse’ approach gives
us the opportunity to continue, tweak or
amend these actions to ensure that our efforts
are having the desired effect. The survey itself
measures 12 different areas of engagement
(referred to as ‘drivers’) and, looking at
this year’s results, we are pleased with the
summary outcomes and participation rates
for the surveys, as well as the separate
work of Michael Holt (as the non-executive
director representative) and the National
Colleague Forum:
• Engagement Surveys – the most recent
survey (April 2024) saw an 88% participation
rate with over 2,200 free-narrative comments
received. Two areas stand out for material
improvement in the year, the first relating to
the ‘driver’ looking at the Company’s vision
and purpose which, following a focussed
communications programme in the year, saw
an increasing score of 14% and, secondly,
a 13% improvement in the score relating to
our colleagues’ belief that positive action
will be taken as a result of, and from the
survey results, itself a demonstration of
the receptiveness of colleagues to the
survey approach and an endorsement of
management’s activities arising from it.
The overall engagement score was equally
encouraging, with all survey ‘drivers’ having
increased since the last survey and the
overall engagement score for the business
of 66% representing a 9% increase since
the previous engagement survey, providing
another strong endorsement of the levels
of action and activities undertaken by
management since the last survey.
• The National Colleague Forum – this activity
continued in the year, led diligently by
the non-executive director representative
(Michael Holt), who, together with Denise
Collis (the Chair of the Remuneration
Committee), engaged on a number of
occasions with our workforce both as part
of the National Colleague Forum and as
separate discreet sessions with colleagues
from our depot locations. We remain
committed to this approach and the general
promotion of broader engagement with
colleagues, welcoming the opportunity to
engage with colleague forums and to develop
and implement action plans to address and
mitigate any issues raised and to consider
their views in our decision-making.
Further details in relation to these topics are
addressed in both the Stakeholder Engagement
report on page 22 and the Sustainability report
on page 34.
Gender and ethnic diversity
Given that this topic has already been
addressed in some detail within the Chair’s
introduction as well as in both the Corporate
Governance report on pages 74 and in
the Sustainability report on page 34 it is
not proposed to replicate this information
here, but we would direct the reader to the
aforementioned references as part of this report.
The Committee will continue to report annually
in future Annual Reports on the progress
achieved at the relevant time by the Board
against both our Board-diversity policy and
our compliance with the FCA Listing Rules,
as well as more generally across our progress
against the D&I agenda in the business. Our
objectives in this area remain steadfast to
improve diversity and, in doing so, to welcome
people from all-walks of life, each given the
opportunity to showcase their expertise,
experience and capabilities. As an illustration
of this, our recruitment and selection policy
is accessible to all colleagues and highlights
the importance of Diversity & Inclusion
throughout the whole recruitment process, from
identification of a vacancy thorough to ensuring
that a structured job description in a standard
format is created for use across a variety
of platforms, supported by adverts where
language is carefully considered to attract a
diverse range of candidates. The selection
process is then carefully structured and the
managers responsible for the recruitment are
specifically trained in processes and supplied
with appropriate tools and materials to ensure
the integrity of the process. This is an approach
applicable to all roles across the business, up to
and inclusive of the Executive Team.
Approval
This report was approved by the Nominations
Committee and signed on its behalf by:
David Blackwood
Nominations Committee Chair
4 November 2024
Strategic Report
Governance
Financial Statements
97
Directors’ Remuneration Report
Shareholder letter from the
Chair of the Remuneration
Committee
Dear shareholder
On behalf of the Board, I am pleased to present
the Remuneration Committee’s report for the
53-week period ended 31 August 2024.
Backdrop to the operation of the
policy and our performance
in FY2024
FY2024 was a year of positive progress across
the Group. Group financial performance was
ahead of market expectations, supported
by the performance of our underlying news
and magazines operations which was further
bolstered by sales of collectibles from England
and Scotland’s participation in the men’s UEFA
European Championships, and the additional
benefit of a 53rd week in the reporting period,
alongside increased contributions from strategic
growth initiatives and the Company’s ongoing
cost efficiency programme.
We successfully secured contracts for the
distribution of the Financial Times and the
Midlands News Association regional press
titles, as well as securing newspaper distribution
of News UK titles within the Company's
established London territories, expanding
our distribution services to News UK who
previously had retained these rights in London.
As a result, the Company now has in place
publisher contract renewals (including a
heads of terms agreement in respect of Reach
plc titles) covering 91% of current publisher
revenues through to at least 2029, providing
confidence that these revenue streams will
position the Company well to be able to
continue to deliver over the medium-term. In
May 2024, we announced a successful new
refinancing agreement with two of our existing
syndicate lenders (Santander and HSBC) on
improved margin terms, removing the former
cap on dividends and distributions and thereby
enabling the Company to deliver enhanced
returns to shareholders in line with our revised
capital allocation policy, at 2x dividend cover.
Denise Collis
Remuneration Committee Chair
Further, it has also allowed us to explore
additional distributions of surplus cash to
shareholders as referenced elsewhere in this
Annual Report and allows for further investment
in both our news wholesaling business and in
the pursuit of growth opportunities. During the
year, and as part of a wider programme that
ensures the business is ‘fit for the future’ we
also developed our forward-looking technology
strategy and set out investment plans to allow
us to leverage our existing capabilities and
market presence for growth, particularly within
adjacent business categories.
Variable pay outcomes in FY2024
The FY2024 bonus was based 70% on Adjusted
Operating Profit, the key measure of profitability
against which business performance was
assessed over the year in line with our internal
financial reporting, and 30% on personal
objectives based on our operational KPIs. In
addition, a minimum performance rating on
the personal objectives was required to be
met before the financial performance element
could be paid, with the Committee also having
a general power to adjust any formula-driven
outturns, if required.
As a result of both Adjusted Operating Profit of
£39.1m for FY2024 and the successful delivery
of the operational KPIs that the business set
itself a year ago (see later in this report), the
annual bonus pay out is between target and
maximum, resulting from:
• a pay out for the financial metric at 74.61%
(i.e. 52.23% of the 70% bonus opportunity);
and
• for the personal element in respect of each
executive director’s performance against their
respective personal objectives:
– at 75.0% (i.e. 22.5% of the 30% bonus
opportunity) for Jonathan Bunting; and
– at 87.5% (i.e. 26.25% of the 30% bonus
opportunity) for Paul Baker.
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Overall, this has resulted in an annual bonus
payout of 74.73% of the maximum 100%
opportunity for Jonathan Bunting and an annual
bonus payout of 78.48% of the maximum 100%
opportunity for Paul Baker. In determining
this outcome, the Committee has carefully
considered the following:
• the directors’ individual performances
against their personal objectives, taking into
consideration the financial performance
‘underpin’ whereby the Committee may scale
back the personal element of the bonus if this
is not deemed appropriate in light of financial
performance or shareholder experience; and
• the application of the FY2024 bonus scheme
across all scheme participants through the
‘fairness lens’, to ensure that there has not
been an unmerited bias of higher bonus
outcomes (and payments), as a percentage of
maximum reward opportunity, with seniority.
Overall, the Committee is satisfied that the
bonus payments to the executive directors are
appropriate, representing a strong link between
reward and performance and shareholder
alignment, as well as being consistent with the
treatment of bonus payments for colleagues.
On this basis, the Committee determined that
there was no need to use discretion to adjust
the outcome derived from the annual bonus
performance conditions.
In respect of the FY2022-24 LTIP award for
which the performance period ended on 31
August 2024, this was weighted 30% against
the final year (FY2024’s) free cash flow targets
and 70% against TSR relative to the FTSE Small
Cap (excluding investment trusts). Based on
the Company’s performance against the FTSE
Small Cap, this results in a payout of 100% of
the TSR metric, representing maximum TSR
outperformance vs the peer group over the
three-year performance period and an absolute
TSR of 75.5%.
The free cash flow performance in FY2024,
representing the final year of the performance
period, was £35.0m, which is below the
threshold performance target of £36.4m,
primarily due to lower profit than forecasted as
a result of the impact of inflationary increases
in the period and through increased capex
in the year (particularly investments in depot
refurbishment projects). This has resulted in no
payout of the free cash flow metric. Overall, the
vesting outcome for the FY2022-24 LTIP award
is therefore 70% of maximum. The Committee
has considered the formulaic out-turn and
confirms that it remains comfortable that the
payout level is appropriate in light of the overall
performance and shareholder experience over
the three-year performance period, and that no
discretion is necessary to adjust the outturn.
Composition and attendance
1
Members throughout
the year
Committee member
since Meeting attendance
Denise Collis – Chair 1 December 2015 4/4
David Blackwood 13 May 2020 4/4
Michael Holt 1 October 2018 4/4
Deborah Rabey 1 March 2023 4/4
Mark Whiteling 1 September 2017 4/4
1 The maximum number of meetings held during the year that each director could attend is shown next to the number attended.
The Committee met four times during the year. All Committee members attended each of the
meetings. For further details on attendance, please refer to the Corporate Governance report on
page 74.
The composition of the Committee meets the 2018 UK Corporate Governance Code requirement
that the majority of members are independent non-executive directors.
At the invitation of the Committee, certain executive directors and management attended the
meetings from time to time.
The detailed roles and responsibilities of the Committee are set out in the Terms of Reference
which can be found → www.smithsnews.co.uk/wp-content/uploads/Remuneration_Committee_
Terms_of_Reference_2024.pdf
Strategic Report
Governance
Financial Statements
99
Directors’ Remuneration Report continued
Operation of the Remuneration
Policy in FY2025
The base salaries of the Chief Executive
Officer and the Chief Financial Officer were
each increased by 3.25%, with effect from
1 September 2024, which is below the average
percentage increase awarded to our workforce,
the majority of whom saw an increase of 9.8%.
Separately, the Board has agreed an increase
of 3.25% to the fee rates of the Chairman and
non-executive directors, including the fees
for the chairing of Committees, the Senior
Independent Director and the NED responsible
for employee engagement, with effect from
1 September 2024.
For the executive directors, the annual bonus
opportunity will remain at 100% of base salary,
with 70% of the bonus subject to Adjusted
Operating Profit and the remaining 30%
subject to personal objectives, in line with the
position last year. Whilst the specific targets are
considered to be commercially sensitive and will
be reported retrospectively in next year’s report,
the Committee has extensively reviewed the
Operating Profit target range in order to ensure
that it represents a stretching expectation
when considered in light of the structural
decline of news print, our cost-out expectations
and ambitious growth plans for FY2025 and
analysts’ consensus expectations for our
FY2025 profit performance. Following this
review, we have concluded that these targets
are particularly challenging and represent an
appropriate level of stretch.
The LTIP grant level for the FY2025-27 award
will continue to be 100% of base salary. In
line with last year’s award, performance
will continue to be assessed based 60% on
a relative TSR measure over a three-year
performance period, 30% on final-year profit
from growth and diversified activities and
10% on reduction in Scopes 1, 2 and (within
categories 1, 4 and 6 of) Scope 3 emissions in
the final year of the performance period.
Broader employee remuneration
considerations and employee
engagement
The Committee has continued its focus on the
fairness agenda during the year as part of its
review of workforce remuneration. The topic
was discussed in detail in the Committee’s
meeting in March 2024, with a particular focus
on the following areas:
• Considering the scale of the National Living
Wage increase effective 1 April 2024, and
the impact of this increase in the context
of the review of the grading framework
and pay structure;
• Considering the employee-benefits available
to colleagues and noting the consistent
take up levels. The Committee noted that a
benefits survey was undertaken at the end of
the financial year to help the business better
understand what benefits colleagues truly
value; and
• Approving the 2024 SAYE offer with
a 20% discount price, and noting the
increased participation rates this year with
a significant majority of the take-up from
lower employee grades.
I remain committed to engaging with our
colleagues around remuneration and ensuring
that their views are shared with the Committee.
During the year, I attended several meetings
with colleagues where our Company-wide
remuneration policy and wider workforce pay
were discussed alongside reward matters
and the sharing of our aspirations around
equitable reward. A particularly important
aspect of these discussions was the opportunity
to help colleagues to better understand
the role and purpose of the Remuneration
Committee and associated governance
surrounding remuneration in a listed-plc
environment, particularly in the context of
balancing responsibility to both colleagues and
shareholders alike. Helping our colleagues to
understand this structure led to an open and
informed discussion resulting in a number
of valuable outcomes. These included an
audit of the current benefit offering to identify
desirability and to assess understanding
and level of uptake of each of the benefits
by different colleague groups in line with our
Diversity & Inclusion agenda. The outcomes
have been built into the reward agenda for the
forthcoming financial year.
Concluding remarks
The Committee remains mindful that the
decisions around executive pay outcomes
should be proportionate and demonstrate
a strong link between reward, performance
and shareholder alignment. In this light, we
are comfortable that the policy has operated
as intended and remuneration is appropriate
taking into account internal and external factors
and measures (including pay ratios and gaps,
colleague pay and the fairness agenda, and the
overall stakeholder experience).
Finally, after a period of just over 9 years sitting
on the Board and chairing the Remuneration
Committee, I confirm that I will be stepping
down from the Board and as Chair of the
Remuneration Committee following the
conclusion of the 2025 AGM. I would like to
express my sincere gratitude for the support
and contribution of my colleagues on the
Board but also to all the colleagues who I have
encountered over my time with the Company.
I wish all associated with Smiths News every
success for the future. I would also like to thank
our shareholders for their engagement with,
and support of, our remuneration agenda over
the years.
Denise Collis
Remuneration Committee Chair
4 November 2024
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Directors’ Remuneration Policy
At-a-glance summary
A summary of the shareholder approved policy and its application for FY2025 is shown below.
Policy element
Jonathan Bunting
Chief Executive Officer
Paul Baker
Chief Financial Officer
Annualised base salary from 1 September 2024 £515,327 £335,714
% increase from prior year 3.25% 3.25%
Pension for FY2025 5% of base salary, aligned to the rate available to the majority of the workforce
Annual bonus (ABP) 100% of base salary
Annual bonus metrics Adjusted Operating Profit (70%)
Personal objectives (30%)
ABP payment for threshold performance 0% of base salary
ABP payment for on-target performance 50% of base salary
Deferred Bonus Plan (DBP) 50% of annual bonus deferred for two years in shares
LTIP 100% of base salary
LTIP metrics Relative Total Shareholder Return vs FTSE Small Cap (60%)
Profit from growth and diversified activities (30%)
ESG Scope 1, 2 and 3 emissions (tCO
2
e) reduction (10%)
LTIP payment for threshold performance 20% of award
LTIP post-vesting holding period 2 years
Malus and clawback Applies to awards made under the ABP, DBP and LTIP
Shareholding guidelines requirement 200% of base salary
Post-cessation of employment shareholding
requirement
Lower of 200% of base salary or shareholding on departure for two years post-cessation,
excluding self-purchased shares
Introduction
This report has been prepared on behalf of the Board by the Remuneration Committee in accordance with the relevant provisions of the Companies Act
2006 and on the basis prescribed in The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.
Where required, data has been audited by BDO LLP and is indicated accordingly.
Directors’ Remuneration Policy
The following section sets out the Company’s policy on remuneration for executive and non-executive directors, which was approved by shareholders at
the Annual General Meeting on 24 January 2023. It is intended that the directors’ Remuneration Policy will apply from this date for the maximum three
years permitted by the regulations and so, in the absence of a new or amended policy or as otherwise required by law, will only be brought back to the
shareholders at the Company’s Annual General Meeting in 2026.
Decision-making process for the determination, review and implementation of the directors’ Remuneration Policy
The aim of the policy remains to facilitate delivery of our long-term strategy through attracting, retaining and motivating high-calibre directors
with the necessary skills and experience. In designing the policy, the Committee has adopted the principles set out in the 2018 edition of the UK
Corporate Governance Code and also considered investor and investor representative body views and market practice. Where changes are made
to the remuneration policy or a material change to operation, we will consult with our largest shareholders to ensure their views are taken into account.
In addition, the Committee also considers management’s views and input from its independent remuneration consultants.
Any potential conflicts of interest are managed by ensuring that no individual is involved in discussions regarding their own remuneration arrangements
and that remuneration is fully aligned to and supports our business strategy and culture. When reviewing and implementing the policy, the Committee
also carefully considers the remuneration arrangements, policies and practices of the workforce and the cascade of remuneration throughout
the business.
Strategic Report
Governance
Financial Statements
101
The policy has been reviewed in light of the six factors listed in Provision 40 of the 2018 edition of the UK Corporate Governance Code:
• Clarity – the policy is as clear as possible and is described in straightforward concise terms.
• Simplicity – remuneration structures are as simple as possible and market typical, whilst at the same time incorporating the necessary structural
features to ensure a strong alignment to performance, strategy and minimising the risk of rewarding failure.
• Risk – the policy has been shaped to discourage inappropriate risk taking through a weighting of incentive pay towards long-term incentives, the
balance between financial and non-financial measures, a significant portion of the annual bonus being paid in shares, recovery provisions, and in-
employment and post-employment shareholding requirements.
• Predictability – annual bonus and LTIP awards are subject to caps and dilution limits. Examples of how remuneration varies depending on
performance is set out in the scenario charts. The Committee may exercise its discretion to adjust executive directors’ remuneration if a formula-
driven incentive payout is inappropriate in the circumstances. Outcomes will not reward poor performance.
• Proportionality – there is a sensible balance between fixed pay and variable pay, and incentive pay is balanced between annual and long-term
performance.
• Alignment to culture – The Committee considers Company culture and wider workforce policies when shaping and developing executive director
remuneration policies to ensure that there is coherence across the business. There is a strong emphasis on the fairness of remuneration outcomes
across the broader workforce.
Executive directors
The table below sets out the Company’s Remuneration Policy for executive directors:
Element
Purpose and
link to strategy Operation Maximum
Performance
conditions
Base salary Provide fixed
remuneration which
is sufficient to recruit
and retain individuals
of the necessary
calibre.
Salaries are set by the Committee taking
into account:
• the skills and experience of the
individual;
• the size and scope of the role;
• market data for similar roles in
comparable companies; and
• performance of the individual and the
business.
Typically, salaries are reviewed annually,
with any changes effective from
1 September each year.
There is no prescribed
maximum salary. Salary
increases will normally be
in line with salary increases
generally for colleagues.
Larger increases may
be awarded where the
Committee considers it
appropriate to reflect, for
example:
• significant changes
in the size and/or
complexity of the Group
and/or of the role; or
• individuals being moved
to market positioning
over time.
None.
Benefits Ensure that benefits
are sufficient to recruit
and retain individuals
of the necessary
calibre and provide
business continuity.
Executive directors are eligible to receive
benefits which may include a company
car (or cash equivalent), private medical
insurance, a periodic health assessment
and permanent health insurance.
Where relevant, other benefits to reflect
specific individual circumstances, such
as housing, relocation, travel or expatriate
allowances may also be provided.
Executive directors are also provided with
insured Death in Service benefits.
There is no prescribed
maximum monetary value
of benefits.
Benefit provision is set at a
level which the Committee
considers to be appropriate
for the nature and location
of the role.
None.
Pension Contribute towards
funding later life cost
of living.
Executive directors may participate in
the Group’s defined contribution pension
plan, receive a salary supplement or a
combination of the two.
The maximum employer
contribution or salary
supplement for executive
directors is the contribution
available to the majority of
the workforce, currently 5%
of salary.
None.
Directors’ Remuneration Report continued
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Element
Purpose and
link to strategy Operation Maximum
Performance
conditions
Annual bonus To incentivise the
delivery of the annual
business plan.
Bonus levels are determined by the
Committee after the year-end based on
performance against targets set at the start
of the financial year. The Committee retains
discretion to adjust bonus payments,
including to override the formulaic outcome
of the award, in the event that performance
against targets does not properly reflect
the underlying performance of the Group
and/or the relevant businesses, the overall
shareholder experience or employee
reward outcome.
Half of the bonus is paid in (immediately
vesting) shares but with appropriate and
relevant trading restrictions imposed by
the Company’s share Registrars, in order to
enforce a two-year deferral period and with
the associated share certificate retained by
the Company for two years.
Clawback and dividend equivalent
provisions apply (see notes below).
The maximum bonus
opportunity in respect of
a financial year is 125% of
salary.
The threshold payment
level for the financial
performance condition is
0% and up to 50% of the
maximum may be payable
for target performance.
The Company’s largest
shareholders would be
consulted beforehand if
the bonus opportunity
increases above 100%
of salary (the currently
applied maximum level).
Annual measures and
targets will be set by the
Committee at the start of
the financial year.
The majority of the bonus
will be based on financial
performance, with the
remaining performance
condition attributable to
non-financial strategic
or personal objectives,
including ESG-related
measures.
LTIP To incentivise the
delivery of long-term
shareholder value.
Awards are made in the form of nil-cost
options or conditional share awards, the
vesting of which is conditional on the
achievement of performance targets (as
determined by the Committee).
Vested awards must be held for a further
two-year period before sale of the shares
(other than to pay tax).
The Committee retains discretion to adjust
the outturn of an LTIP award, including
to override the formulaic outcome of the
award, in the event that performance
against targets does not properly reflect
the underlying performance of the Group
and/or the relevant businesses, the overall
shareholder experience or employee
reward outcome.
Malus and clawback provisions apply (see
the notes below).
The value of dividends payable over the
vesting period may be paid, normally in the
form of shares.
The maximum award in
respect of a financial year
is 150% of salary.
The Company’s largest
shareholders would be
consulted beforehand if
the grant level increases
above 100% of salary (the
currently applied maximum
grant level).
Performance
conditions are based
on the achievement of
challenging financial, total
shareholder return (TSR)
or non-financial strategic
(including related to ESG)
performance targets
measured over a period of
three years normally.
For the achievement of
the threshold performance
target, a maximum of 20%
of the award will vest.
A majority of the award will
be based on financial and/
or TSR based conditions.
All-employee
share plans
To provide alignment
with colleagues and
to promote share
ownership.
The executive directors may participate in
any all-employee share plan operated by
the Company.
Participation may be
capped by the Committee
and, in any case, within
HMRC limits applying to
the respective plan.
None.
Strategic Report
Governance
Financial Statements
103
Element
Purpose and
link to strategy Operation Maximum
Performance
conditions
Shareholding
guidelines
To provide alignment
of interest between
executive directors
and shareholders.
The shareholding guideline for executive
directors is 200% of base salary. Until this
level is reached, except for payment of
tax arising on the exercise of awards and
other exceptional circumstances, executive
directors will be required to retain 75% of
the shares vesting under share incentive
arrangements (excluding the application
of the Sharesave Scheme). In exceptional
circumstances, executive directors may
seek permission from the Committee to
temporarily go below their target holding.
Following termination of their employment,
executive directors will be required to
retain shares at the lower of 200% of
base salary, or the actual shareholding on
departure, for two years post-cessation.
Shares purchased voluntarily will not count
towards this requirement.
Notes to the policy table:
a) Choice of performance measures – each year the Committee will select the most appropriate performance measures and targets for the annual bonus plan and LTIP. The measures selected will be
aligned with Company strategy and key performance indicators and may also be based on total shareholder return.
b) Participation in incentive schemes is at the discretion of the Committee.
c) Legacy and mandated payments – the Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it in
connection with such payments) notwithstanding that they are not in line with the policy set out above: (i) where the terms of the payment were agreed before the policy came into effect; or (ii) where
the terms of the payment were agreed at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in contemplation of the
individual becoming a director of the Company; or (iii) where the Company is mandated to make the payment as a result of an award issued by a competent court, tribunal or authority. For these
purposes ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.
d) Clawback and malus – the Company operates clawback and malus provisions for the annual bonus plan, DBP and LTIP. The Committee reserves the right to take such action as it reasonably considers
appropriate to put the Company and participants in the same overall financial position as they would have been had certain circumstances (described below) not occurred. This includes a reduction
or cancellation of vested or unvested share awards and/or a reimbursement to the Company of part or all of any cash or share payments within two years of payment. Such circumstances include,
but are not limited to: (i) discovery of a material misstatement of the Company’s audited results on the basis of which the payment was or would be determined; or (ii) serious reputational damage of
the Company, any member of the Group or the relevant business as a result of the participant’s misconduct; or (iii) gross misconduct by the participant; or (iv) corporate failure; or (v) any other similar
circumstance or event which in the view of the Committee has a serious adverse effect on the Company, any member of the Group or the relevant business.
e) There are some differences in the directors’ Remuneration Policy compared to the policy for colleagues generally. Whilst the overall structure of the remuneration package cascades throughout the
business, participation in and the opportunity for the incentive plans varies by seniority. Pension opportunity for executive directors and the workforce is aligned. All permanent employees are invited
to participate in the all-employee share plan. Overall, the Remuneration Policy for the executive directors is more heavily weighted towards variable pay than for other employees, to ensure a clear link
between reward and the performance and value created for shareholders.
Directors’ Remuneration Report continued
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Application of the Remuneration Policy
The charts below illustrate the application of the policy for FY2025. Each element (as a percentage of total remuneration) and the total values have been
set out.
£0
£200,000
£400,000
£600,000
£800,000
£1,000,000
£1,200,000
£1,400,000
£1,600,000
£2,000,000
£1,800,000
£1,204,785
£701,214
£365,500
£1,840,411
£1,067,420
£552,093
100%
Minimum Target Maximum Minimum Target
Jonathan Bunting Paul Baker
Maximum
24%
24%
52%
14%
28%
28%
30%
100%
24%
24%
52%
14%
28%
28%
30%
LTIP with 50% share price appreciation Annual Bonus LTI P Fixed Pay
Notes
(a) Fixed pay comprises annual base salary, benefits and pension, at current rates at the date of this report.
(b) Benefits are the value received in FY2024.
(c) The on-target level of annual bonus and LTIP is 50% of the maximum opportunity.
(d) The maximum value also shows the impact of an increase in share price of 50% on the value of the LTIP award.
(e) The value of dividend equivalents on LTIP vested awards is excluded.
Approach to recruitment remuneration
On appointment of a new executive director, the Committee would seek to offer a remuneration package which can secure an individual with the
necessary skills, while seeking to pay no more than it believes is necessary to facilitate the appointment. Any remuneration package would be in line
with the parameters set out in the directors’ Remuneration Policy, which is salary set at a level to be able to recruit the most appropriate candidate,
a maximum annual bonus opportunity of 125% of base salary and a maximum LTIP award of 150% of base salary.
Where an individual forfeits outstanding incentive awards with a previous employer as a result of accepting the appointment within the Company, the
Committee may offer compensatory awards to facilitate recruitment. These awards would be in such form as the Committee considers appropriate
taking into account all relevant factors, including the form, expected value, performance conditions, anticipated vesting and timing of the forfeited
awards. The expected value of any compensatory awards would be no higher than the value forfeited.
If an executive director needs to relocate in order to take up the role, the Company may pay to cover the costs of relocation including (but not limited to),
actual relocation costs, temporary accommodation and travel expenses.
Any share awards referred to in this section will be granted as far as possible under the Company’s existing share and incentive plans. If necessary,
awards may be granted outside these plans as currently permitted under the Financial Conduct Authority’s Listing Rules.
Strategic Report
Governance
Financial Statements
105
Contracts of service and policy on loss of office
Contracts of employment with executive directors may be terminated at any time by the Company or employee upon up to 12 months’ notice. The
contracts of employment do not include any provisions for predetermined compensation for early termination.
Executive director
Date of
current contract
Notice from
the Company
Notice from
the individual
Unexpired period
of service contract
Jonathan Bunting 1 March 2018, as
supplemented by
a letter of variation
dated 15 June 2020
12 months 12 months Rolling
Paul Baker 10 August 2021 12 months 12 months Rolling
The Committee may terminate an employment contract immediately by making a payment in lieu of notice consisting of base salary only for the
unexpired period of notice. In normal circumstances, such a payment would be made in monthly instalments over the period, subject to a duty to
mitigate, and will be reduced by the amount in respect of income receivable from alternative employment, excluding a single non-executive directorship.
In the event that the employment of an executive director is terminated, any compensation payable will be determined in accordance with the terms
of the service contract, as well as the rules of any incentive plans and post-cessation shareholding requirements. Incentives will be treated in the
following way:
Annual bonus Unless the Committee determines otherwise, executives will not be eligible for a bonus if they are under notice.
If the Committee determines that the executive director is a good leaver
1
they may still receive a bonus, reduced
to reflect the portion of the year they were in active employment.
Any payment would remain subject to performance and would be paid following the normal year-end
assessment process.
DBP (deferred annual
bonus shares)
Deferred bonus will be in shares, awarded at the outset, with a requirement for the executive directors to hold
the shares for a two-year deferral period. The deferred shares would be subject to clawback and post-cessation
shareholding requirements and any held shares would be subject to the executive share ownership requirements,
including post-cessation of employment obligations.
LTIP If the Committee determines that an executive director is a good leaver, LTIP awards may vest subject to
performance and would normally be scaled back to reflect the portion of the performance period that has elapsed
on the date that employment ceases. The awards will vest on the normal vesting date (other than in exceptional
circumstances, such as death in service when the award may accelerate). The post-vesting holding period will
continue to apply for the full two-year period.
If an executive leaves the Group for any other reason, outstanding awards would lapse.
1. Good leaver reasons include death, injury, disability, redundancy, retirement by agreement with the Company, the employing entity no longer being part of the Group, or any other reason as determined
by the Committee.
The Committee retains discretion to make additional exit payments where such payments are made in good faith in discharge of an existing legal
obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim arising in connection with the
termination of a director’s office or employment. The details and rationale for any such payments would be disclosed in the following year’s directors’
report on remuneration.
External non-executive director appointments
It is the Company’s policy to allow each executive director to accept one non-executive directorship of a publicly quoted company provided that it does
not conflict with the interests of the Company. Executive directors may retain the fee for such an appointment.
Consideration of pay and employment conditions elsewhere in the Group
The Committee considers the general basic salary increase for colleagues throughout the Group when determining the annual salary increases for
executive directors. In addition, any Group performance targets used in the executive bonus plan are cascaded into broader-based annual bonus
arrangements for all eligible colleagues, to ensure alignment across the bonus plans and participating populations.
As part of the Board’s commitment to broader stakeholder engagement, the Committee Chair meets with our National Colleague Engagement Forum,
to explain the Company-wide remuneration policy and outline how executive remuneration operates. The discussions explore the pay structure at
different organisation levels, in particular focusing on the checks and balances in place, to ensure pay for performance over both short and longer-term
timeframes, and the ‘fair pay’ agenda and fair pay principles adopted by the Company following colleague engagement.
Consideration of shareholder views
The views of shareholders are very important to the Committee and feedback received from shareholders following publication of the Annual
Report and at the AGM is welcomed. It is the Committee’s policy to consult with its largest shareholders and investor representative bodies before
proposing any material changes to the Remuneration Policy. In line with our policy, the Committee undertook a thorough consultation with our largest
shareholders to inform the policy review. There were no matters during FY2024 that required shareholder consultation.
Directors’ Remuneration Report continued
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Non-executive directors
The table below sets out the Company’s Remuneration Policy for non-executive directors:
Element
Purpose and link
to strategy Operation Maximum
Chairman’s and non-executive
directors’ fees
To attract and retain high-calibre
individuals
Fee levels are set to reflect the time
commitment, demands and responsibility
of the role, taking into account fees paid by
similarly sized companies.
Fees are reviewed from time to time
to ensure that they remain in line with
market practice.
Fees are paid in equal monthly instalments.
The Chairman’s fee includes his
chairmanship of the Nominations
Committee.
There is no prescribed
maximum.
Additional fees To provide compensation to
non-executive directors taking on
additional responsibility
Non-executive directors (other than the
Chairman) are paid an additional fee for
their chairmanship of a Board Committee
or additional responsibility, such as chairing
the National Colleague Engagement
Forum, or may be paid additional fees for
significant additional workload or roles.
There is no prescribed
maximum.
Benefits To facilitate the execution
of the role
The Company reimburses reasonable travel
and subsistence costs and other legitimate
business expenses, including any tax that
may be incurred.
There is no prescribed
maximum.
The Chairman and non-executive directors do not participate in any pension or incentive plans.
Recruitment policy
The remuneration package for a newly appointed non-executive director would be in line with the policy outlined above.
All non-executive directors, including the Chairman, have a letter of appointment for an initial three-year term, subject to review thereafter.
The table below details the letter of appointments for each non-executive director.
Non-executive directors
Date of current letter
of appointment
Notice from the
Company
Notice from the
individual
Date current term
is due to expire
David Blackwood 6 May 2020 3 months 3 months 2027 AGM
Denise Collis 16 November 2015 3 months 3 months 2025 AGM
Michael Holt 30 September 2018 3 months 3 months 2025 AGM
Deborah Rabey 27 February 2023 3 months 3 months 2027 AGM
Mark Whiteling 14 August 2017 3 months 3 months 2027 AGM
Strategic Report
Governance
Financial Statements
107
Annual report on remuneration
Total remuneration payable in respect of FY2024 (audited)
The total remuneration for each director for FY2024 and the prior year is set out below.
Jonathan Bunting Paul Baker
Fixed pay
FY2024
‘000
FY2023
‘000
FY2024
‘000
FY2023
‘000
Salary 499 483 325 315
Benefits
(a)
11 15 14 17
Pension benefits 25 24 16 15
Total fixed pay 535 522 355 347
Performance-related pay
Annual bonus payments 373 301 255 196
LTIP award vesting
(b)
496 692 323 –
Dividend equivalent payments
(c)
97 101 63 –
Total variable pay 966 1,094 641 196
Total single figure 1,501 1,616 996 543
Notes
(a) Benefits include the taxable value of a company car (Jon Bunting) or car cash allowance (Paul Baker), private medical insurance and the intrinsic value of Sharesave options granted during the year,
as applicable to each director.
(b) The FY2022-24 LTIP awards were granted on 29 December 2021. As a result of the final assessment against the free cash flow and TSR performance conditions, 70.0% of the awards vested on
4 November 2024 (based on performance to 31 August 2024), resulting in 869,299 shares vesting for Jonathan Bunting and 566,313 shares vesting for Paul Baker. The vested award has been valued
at 57.0p per share, being the opening market price of the Company’s shares on the date of vesting (4 November 2024). Further details on the FY2022-24 award and vesting can be found on page 111.
(c) Dividend payments equivalent to the aggregate of all dividends paid during the vesting period applicable to the LTIP vesting noted in note (b) above, paid in shares.
Remuneration and link to performance during the year (audited)
Annual bonus
In FY2024, the executive directors had a maximum opportunity under the annual bonus of 100% of salary, split 70% on financial performance and 30%
on personal objectives. Performance measures and actual performances are set out in the table below:
Targets
Measure Weighting
Threshold
(0%)
Target
(50%)
Max
(100%)
Actual result
(£m)
Group adjusted operating profit 70% £36.3m £38.2m £40.1m £39.1m
Personal objectives 30% See detail below See detail below
Directors’ Remuneration Report continued
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Smiths News plc | Annual Report and Accounts 2024
For the financial year under review, the executive directors were each given a number of personal objectives against which the personal element of the
annual bonus was assessed. These are set out in the table below, together with the basis for their assessment.
Personal
objective
Weighting
of objective Target Achievement
Outcome
(%)
Bonus paid
(%)
Jonathan Bunting
Growth 30% Achieve an adjusted operating
profit of £2m from Growth
activities over the year
Stretch target achieved, being
a 190% increase in profit from
Growth activities compared
with FY2023
80% 24%
Income 15% Secure renewal of our publisher
contracts and related income
targets
91% of current revenues
have been secured through
to 2029 (including a heads of
terms agreement with Reach
plc) following the successful
conclusion of publisher contract
renewals in the year
80% 12%
Cost 15% Deliver £5.5m of cost-out
savings
Continued focus on cost-out
efficiencies delivered £5.6m
cost savings in the year
90% 14%
Strategy 30% Create and commence
implementation of a plan to
develop strategic partnerships
and/or value-chain optionality
within the Company’s growth
ambitions
Plan developed, with
approaches and relationships
established to support future
growth initiatives. Plan now in
roll out phase
50% 15%
Engagement 10% Achieve a 5% improvement
on the blended employee
engagement score from 2023
Two engagement surveys
completed within the financial
year, with a 9% increase in
score between the first and
second survey
100% 10%
Total (out of a
maximum 30%
bonus opportunity)
100% 75.0%
Strategic Report
Governance
Financial Statements
109
Personal
objective
Weighting
of objective Target Achievement
Outcome
(%)
Bonus paid
(%)
Paul Baker
Refinancing 30% Ensure successful delivery of
refinancing
Refinancing concluded in
May 2024, with material
improvement in terms
100% 30%
Value creation 30% Initiate ‘early morning’ strategic
review to support future growth
opportunities and ambitions
Lead market scan for inorganic
growth opportunities
‘Early morning’ markets plan
developed to support future
growth opportunities and
ambitions, with possibility to
extend to adjacent bolt-on
inorganic targets
Market scan for inorganic
growth opportunities initiated
and ongoing
85% 25.5%
Sustainability 20% Lead further development of the
Sustainability agenda
Assumed role of chair of a
Sustainability board sub-
committee
Conducted deep analysis of
sustainability reporting data
and developed improvement
roadmap with enhanced metrics
and targets for implementation
in FY2025
Initiated deep focus review
of Scope 3 emissions within
the supply chain to ensure
alignment of approach
85% 17%
Growth/ efficiency 10% Create a three-year business
plan and review of cost saving
initiatives across (i) Operations
and (ii) Functional Support
Plans
Three-year business plan
developed and signed off by
the Board. 5% costs challenge
established and delivered
across the business in the year
75% 7.5%
Finance Function
Transformation
Growth reporting,
analysis and insight
10% Create and implement a
Finance Transformation
roadmap including organisation
development and synergy
enhancement, with specific
emphasis on enabling the new
Growth propositions
Delivery against Plan 75% 7.5 %
Total (out of a
maximum 30%
bonus opportunity) 100% 87.5%
Further detail on our key strategic objectives and performance against those objectives is provided in the Strategic Report on page 14.
As a result of the financial performance and each director’s respective personal performances as noted above, the overall bonus outcomes are as
follows:
Financial
performance
(70%)
Personal
performance
(30%)
Total bonus
outcome for
FY2024
(% of base salary)
Total bonus
payment
1
Jonathan Bunting 74.61% 75.0% 74.73% £372,958
Paul Baker 74.61% 87.5% 78.48% £255,160
1. 50% of the bonus payment is deferred into shares for two years.
The Committee is satisfied that these bonus payments represent a strong link between reward and performance, being aligned with the overall
shareholder experience and consistent with the bonus payments made to employees generally.
Directors’ Remuneration Report continued
110
Smiths News plc | Annual Report and Accounts 2024
Long-term incentive plan
Jonathan Bunting and Paul Baker were each granted LTIP awards on 29 December 2021 which were subject to performance over a three-year
performance period FY2022-24. The two performance measures were final year (FY2024) free cash flow and TSR relative to the FTSE Small Cap
(excluding investment trusts). The targets set and the final level of vesting for both measures are set out in the table below.
FY2022-2024 award Weighting
Threshold
(20% vesting)
Maximum
(100% vesting) Actual performance Vesting
Cumulative Free Cash Flow 30% £36.4m £40.4m £35.0m 0% (of 30%)
Total Shareholder Return vs FTSE Small Cap 70% Median Upper quartile Above upper quartile 70% (of 70%)
Final total vesting (% of max) 70.0%
The Committee has considered the appropriateness of the rate of vesting at 70.0% and confirms that it is comfortable that the payout level is
appropriate in light of the overall long-term performance and shareholder experience over the three-year performance period, and that no discretion
would be necessary to adjust the outturn.
Accordingly, the table below shows the number of shares vesting and the value of these shares for the FY2022-2024 award:
Number of
shares at
grant
Value at grant
(37.7p)
Total vesting
outcome
Number
of shares
vesting
Value on
vesting
(a)
Value
attributable
to share price
growth on
vesting
Dividend
payment
(b)
Jonathan Bunting 1,241,856 £468,180 70.0% 869,299 £495,500 £27,320 £97,361
Paul Baker 809,018 £305,000 70.0% 566,312 £322,798 £17,798 £63,426
(a) The FY2022-24 LTIP awards have been valued at 57.0p per share, being the opening market price of the Company’s shares on the date of vesting (4 November 2024).
(b) Dividend payments equivalent to the aggregate of all dividends paid during the vesting period, paid in shares.
Share plans – awards made during the year
LTIP awards granted in FY2024 (audited)
On 30 November 2023, executive directors were granted the following FY2024-2026 LTIP awards:
Executive director
Share price at
date of grant
1
Number of
nil-cost options
subject to
maximum award
Face value
of award
Percentage of
awards released
for achieving
threshold targets
2
Performance
period
Jonathan Bunting
47.6 p
1,048,542 £499,106
20%
FY2024-2026
Paul Baker 683,081 £325,147
1. Share price is the mid-market average price in the three days immediately prior to the date of grant.
2. 100% for achieving maximum targets.
Awards are subject to (i) relative total shareholder return compared to the companies comprising the FTSE Small Cap Index (excluding investment
trusts) (for 60% of the award), (ii) final year profit from growth and diversified activities in FY2026 (for 30% of the award) and (iii) an absolute reduction
in final year Scopes 1, 2 and (within categories 1, 4 and 6 of) Scope 3 emissions in FY2026 (for 10% of the award).
The performance conditions applied to the awards were as follows:
Performance period
Relative TSR compared to the
companies comprising the FTSE
Small Cap Index over the three-
year performance period (60% of
the award)
Final Year Profit from
Growth and Diversified
Activities in FY2026 (30%
of the award)
An absolute reduction
in Final Year/FY2026
Scopes 1, 2 and (within
categories 1, 4 and 6 of)
Scope 3 emissions (10%
of the award)
Proportion
exercisable
Three years ending
29 August 2026
Below median rank Below £3.5m More than 238,903 tCO
2
e Zero
Median £3.5m 238,903 tCO
2
e 20%
Between median and upper quartile Between £3.5m and £6m Between 238,903 tCO
2
e
and 205,145 tCO
2
e
20%-100%
Upper quartile or higher £6m 205,145 tCO
2
e 100%
Strategic Report
Governance
Financial Statements
111
Deferred Bonus Plan awards granted in FY2024 (audited)
On 23 November 2023, the following awards were granted to the Chief Executive Officer and Chief Financial Officer under the DBP, equating to 50% of
their FY2023 bonus payment, as follows:
Executive director
Share price at
date of grant
1
Number of nil cost
options subject to
award
Face value of
award
Jonathan Bunting 47. 1p 319,091 £150,292
Paul Baker 47. 1p 207,875 £97,909
1. Share price is the mid-market average price in the three days immediately prior to the date of grant.
Awards are immediately exercisable subject to the shares being held (after payment of taxes) for a period of two years from the date of grant in line with
the Company’s shareholding guidelines policy and subject to clawback within this period. As part of this deferral period, appropriate and relevant trading
restrictions have been imposed with the Company’s Registrars, in order to enforce the two-year deferral period and the associated share certificate
retained by the Company.
Performance graph and table
The graph below shows the Company’s Total Shareholder Return (TSR) performance against the TSR of the FTSE Small Cap Index (excl. Investment
Trusts) over the past ten years. The FTSE Small Cap Index was chosen because it represents a broad equity market index of which the Company has
primarily been a constituent and is the benchmark for the relative Total Shareholder Return performance condition used for the LTIP awards. The table
below the graph sets out the total remuneration for the Chief Executive Officer during each of the last ten financial years.
Value (£)
August
2014
August
2015
August
2016
August
2017
August
2018
August
2019
August
2023
August
2024
August
2022
August
2021
August
2020
Smiths News plc FTSE 250 Small Cap (excl. Investment Trusts)
0
50
100
150
200
250
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024
Chief Executive Officer Total
remuneration (£’000) 1,095 882 794 539 537 596 917 1,209 1,616 1,501
Chief Executive Officer Annual
bonus payment (% of maximum) 71.3% 38.9% 15.0% 0.0% 0.0% 20.0% 82.2% 68.7% 62.18% 74.73%
Chief Executive Officer EPP
1
payout (% of maximum) 61.5% 72.0% 72.0% 0.0% N/A N/A N/A N/A N/A N/A
Chief Executive Officer LTIP
vesting (% of maximum) 63.5% 0.0% 0.0% 0.0% 0.0% 0.0% 27.6 % 72% 91.38% 70.0%
1. The EPP is a legacy incentive plan based on economic profit. In FY2018, the Committee exercised its discretion in deciding that the final tranche payment would not be considered in FY2019 or FY2020
as permitted by the scheme rules.
Directors’ Remuneration Report continued
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Smiths News plc | Annual Report and Accounts 2024
Percentage change in directors’ remuneration
The table below shows the percentage change in the directors’ salary, taxable benefits and annual bonus over the relevant reporting periods noted
in the table compared to the average of all UK-based employees. This group has been chosen as the majority of our workforce is UK-based.
Chairman CEO CFO D Collis M Holt D Rabey M Whiteling
UK
employees
% change FY2020
Base salary/fees 0.0 0.0 N/A 0.0 0.0 N/A 0.0 5.6
Benefits 0.0 (30.8) N/A 0.0 0.0 N/A 0.0 (1.0)
Annual bonus – 100.0 N/A – – N/A – 20.6
% change FY2021
Base salary/fees 0.0 2.0 N/A 0.0 0.0 N/A 0.0 (3.1)
Benefits 0.0 (38.1) N/A 0.0 0.0 N/A 0.0 0.0
Annual bonus – 346.7 N/A – – N/A – 282.1
% change FY2022
Base salary/fees 0.0 2.0 N/A 15.0 16.7 N/A 13.6 7.7
Benefits 0.0 7.7 N/A 0.0 0.0 N/A 0.0 0.0
Annual bonus – (14.6) N/A – – N/A – (3.1)
% change FY2023
Base salary/fees 3.25 3.25 3.25 3.25 3.25 N/A 3.25 7.7
Benefits – 5.1 45.5 – – – – 0.0
Annual bonus – (6.5) 7. 1 – – – – 3.8
% change FY2024
Base salary/fees 3.25 3.25 3.25 3.25 3.25 3.25 3.25 8.5
Benefits – 11.2 14.0 – – – – 0.0
Annual bonus – 23.9 30.0 – – – – 30.1
1. The value of the Chairman’s fee in FY2020 represents the combined remuneration for Gary Kennedy (to 13 May 2020) and David Blackwood (from 13 May 2020) and from FY2021 exclusively
represents the remuneration of David Blackwood.
2. The CEO’s values in FY2020 represent the combined remuneration for Jos Opdeweegh (to 5 November 2019) and Jonathan Bunting (from 5 November 2019), and from FY2021 exclusively represents
the remuneration of Jonathan Bunting.
3. For part of FY2020, the annual fee for Michael Holt was temporarily increased by £205,000 per annum for the duration of his tenure as Executive Chairman of Tuffnells Parcels Express from 5 November
2019 until its sale on 2 May 2020.
Chief Executive Officer pay ratio to the workforce
The table below shows the ratio of the Chief Executive Officer’s single figure total remuneration to the median (50th percentile), 25th and 75th percentile
paid employee, based on the total remuneration of the Group’s full-time equivalent UK colleagues.
The employee total remuneration includes wages and salary, taxable benefits, annual bonus, share-based remuneration and other incentive plans and
pension benefits. In line with the pay ratio regulations, we have shown the pay ratio going back to FY2018.
Year Methodology Population 25th percentile Median 75th percentile
FY2024
Option B
Employee salary
Employee total remuneration
CEO to employee pay ratio
£22,011
£22,011
68.2:1
£24,204
£24,977
60.1:1
£26,466
£27,415
54.8:1
FY2023 CEO to employee pay ratio 78.4:1 72.4:1 62.6:1
FY2022 CEO to employee pay ratio 63.3:1 57.8:1 43.9:1
FY2021 CEO to employee pay ratio 51.6:1 40.8:1 38.5:1
FY2020 CEO to employee pay ratio 34.7:1 29.1:1 23.9:1
FY2019 CEO to employee pay ratio 31.8:1 22.7:1 18.8:1
FY2018 CEO to employee pay ratio 32.4:1 26.3:1 17.8:1
The Company has calculated the ratios in accordance with the Option B methodology laid out in the pay gap regulations which has been deemed the
most reasonable and practical approach given the collation of data exercise required and held by the Company for gender pay gap reporting purposes.
The data for the three employees at each quartile is based on the gender pay gap data as at April 2024 and has been calculated at a full-time equivalent
level, based on the full time hours for the role, to allow for direct comparison.
The composition of colleague population in each of the reporting years FY2018-FY2024 remains consistent, with over 50% of colleagues in operational
roles within the warehouse and field operations. As previously reported, these roles typically attract pay levels at or just above the National Living Wage
upon inclusion of shift allowances. Hence, given the large proportion of these operational roles, this continues to evidence the salaries that sit at both
the 25th percentile and at median and, also, explains the close proximity of salaries and total remuneration reported in the table above between those
two points. The second-largest population consists of administrative and field sales support, team leaders/supervisors and management roles, with
the remainder of colleagues (reflective at the 75th percentile) made up of professional functional roles and higher management grades which span
Leadership Levels 1-4 and who, therefore, have a broad range of salaries, benefits and entitlement to performance-related incentives.
In reviewing the pay ratio in accordance with our resourcing requirements, the data and ratios are considered to represent a true reflection of pay within
the Company and demonstrates the varied, but consistently applied, pay practice reported at each percentile due to (i) the Company’s organisational
shape and diverse range of roles within each grade in the business, (ii) the significant weighting of warehouse and field operational roles sitting at
both the 25th percentile and median and (iii) the emphasis on fixed pay and overtime, rather than performance-related initiatives across most of our
colleague population. Notably, the overall pay package for the CEO has a higher weighting to performance-related pay (part of which is share based)
than for employees at the three comparable percentiles.
Strategic Report
Governance
Financial Statements
113
The overall pay ratio for FY2024 identifies a marginal reduction from that reported in FY2023 primarily as a result of a reduction in the vesting level of
the FY2022-24 LTIP, although this has been partially offset by an increase in the FY2024 annual bonus payment outturn (as reported in the Total Single
Figure table on page 108). Pay levels otherwise remain comparable to prior years at the lower quartile and median levels save for legislative changes to
the National Living Wage, with minimal changes elsewhere in the composition of colleagues or of the eligible benefits available to those colleagues at
the lower quartile and median levels.
As noted above, the pay gap in FY2024 indicates a marginal lowering this year than in FY2023 but an increase against each of the prior years before
FY2023, noting that for each of FY2020, FY2019 and FY2018, the ratios did not include any LTIP payments and, for each of FY2018 and FY2019, the
ratios did not include any annual bonus payments either, each of which softened the CEO remuneration for those comparable years.
Relative importance of spend on pay
The table below illustrates the Company’s expenditure on pay in comparison to adjusted EBITDA, corporation tax paid and distributions to shareholders
by way of dividend payments.
FY2024
£m
FY2023
£m % change
Total employees pay 45.0 45.2 3.3%
Adjusted Operating Profit 39.1 38.8 0.8%
Corporation tax paid 8.5 6.6 28.8%
Dividends paid 10.8 9.8 10.2%
The figures above are principally set out in the income statements on pages 130 and on pages 138 and 148 in the Notes to the Group Financial
Statements. Total employee pay is the total pay for all colleagues across the Company. Adjusted operating profit has been used as a comparison as this
is the key financial metric which the Board considers when assessing the Company’s financial performance. Corporation tax paid and dividends paid
have also been used as a comparison as these together indicate the sustainable after tax and dividends paid position of the Company for reinvestment.
Payments to former directors and payments for loss of office
There were no payments to former directors or payments for loss of office during the year.
Employee Benefit Trust
The Company’s Employee Benefit Trust is used to facilitate the acquisition of ordinary shares in the Company to satisfy awards granted under the
Company’s executive share schemes and Sharesave Scheme. The Trust is a discretionary trust, the sole beneficiaries being employees (including
executive directors) and former employees of the Company. The Trust waives its right to vote and to dividends on the shares that it holds.
The Trustee is Computershare Trustees (Jersey) Limited, an independent professional trustee company based in Jersey.
The number of shares held in the Employee Benefit Trust at 31 August 2024 was 8,031,253 ordinary shares.
The Board has resolved that all employee share scheme exercises in FY2024 and, until otherwise agreed, all future employee share scheme exercises
in FY2025 should be satisfied through the Employee Benefit Trust, using market purchased shares and intends to instigate a plan for share purchases
to cover likely future commitments.
Dilution of share capital by employee share plans
Awards granted under the Company’s Sharesave Scheme have, in the past, been satisfied by the issue of new shares when the options are exercised.
The Company monitors the number of shares issued under the Sharesave Scheme and, as at 31 August 2024, had issued 2,906,449 new shares within
the past ten-year period, representing 1,17% of the issued share capital. This is well within our dilution limit of 10% in any rolling ten-year period in the
Sharesave Scheme rules and in line with the guidelines set by the Investment Association.
Executive directors’ incentive plan share interests (audited)
The table below sets out details of outstanding share awards held by executive directors as at 31 August 2024 under the LTIP and DBP (covering
deferred annual bonus awards), together with exercises made during the year under both the LTIP and DBP. Awards under these schemes are
structured as nil cost options. In addition, the table sets out awards held by executive directors pursuant to the Sharesave Scheme .
Unvested subject
to performance
measures
1
Unvested
without performance
measures
2
Vested but
unexercised
Vesting
during the year
3
Jonathan Bunting 2,872,037 40,613 0 1,760,062
Paul Baker 1,871,013 0 0 207,875
1. These unvested awards relate to the FY2022-FY2024 LTIP which have vested at 70.0% of maximum on 4 November 2024, and the FY2023-FY2025 and FY2024-FY2026 LTIPs. The FY2022-FY2024
and FY2023-FY2025 awards are subject 70% to TSR and 30% to free cash flow performance conditions. The FY2024-FY2026 award is subject 60% to TSR, 30% to free cash flow performance and
10% to ESG conditions.
2. These awards relate to awards made under the Company’s SAYE plan in FY2023 (40,613).
3. These awards relate to the immediately vesting annual bonus deferred shares (which were granted to executive directors under the DBP on 23 November 2023, equating to 50% of their respective
FY2023 bonus) and, in the case of Jonathan Bunting, both the FY2021-23 LTIP (1,601,476 shares) and the Company’s SAYE plan in FY2020 (42,857 shares). The awards relating to the annual bonus
deferred shares and LTIP vesting must each be held for at least two years.
Directors’ Remuneration Report continued
114
Smiths News plc | Annual Report and Accounts 2024
Executive directors’ shareholdings and shareholding guidelines
The shareholding guideline for executive directors is 200% of salary. Until this level is reached, except for payment of tax arising on the exercise/vesting
of awards and in other exceptional circumstances, executives will be required to retain 75% of the shares vesting under share incentive arrangements
(excluding the application of the Sharesave Scheme). The table below sets out the beneficial interests of the executive directors who served during the
year, and of their connected persons, in the ordinary shares of the Company, together with the level held against the shareholding guidelines.
Name Salary
Holding on
26 August
2023
Holding on
31 August
2024
Valuation
of current
holding
1
% of salary
held compared
to 200% of
salary target
shareholding
Shareholding
requirement
met?
Jonathan Bunting £499,106 1,695,080 2,529,022 £1,446,600 290% Yes
Paul Baker £325,147 175,370 285,200 £163,134 50% No
1. Using the closing share price of 57.20p as of 31 August 2024.
Between 31 August 2024 and 4 November 2024 (the publication date of this report), there has been no other change in the executive directors'
shareholdings shown above.
Non-executive directors
Non-executive directors’ fees
The following fees were paid to non-executive directors for FY2024 and FY2023 (audited):
Year
£000
Base fee
£000
Additional fees
£000
Benefits
1
£000 Total fees
David Blackwood
2
FY2024 149.2 – 1.0 150.2
FY2023 144.5 – 1.4 145.9
Denise Collis
3
FY2024 50.6 10.6 0.6 61.8
FY2023 49.0 10.3 1.0 60.3
Michael Holt
4
FY2024 50.6 5.3 0.2 56.1
FY2023 49.0 5.1 0.2 54.3
Mark Whiteling
5
FY2024 50.6 16.0 0.8 67.4
FY2023 49.0 15.4 0.8 65.2
Deborah Rabey
6
FY2024 50.6 0.0 0.5 51.1
FY2023 24.5 0.0 0.3 24.8
1. The benefits disclosed relate to the reimbursement of travel and accommodation expenses incurred in attending Board meetings at the Company’s premises around the UK. The grossed-up value has
been disclosed and the tax arising is settled by the Company.
2. The Company chairman is paid a single fee which includes chairmanship of the Nominations Committee.
3. Denise Collis received an additional £10,661 per year as chair of the Remuneration Committee.
4. Michael Holt is responsible for Board colleague engagement and is chair of the National Colleague Engagement Forum. He received an additional £5,330 per year for this role.
5. Mark Whiteling is Senior Independent Director and received a fee of £5,330 per year for this role plus a fee of £10,660 per year as chair of the Audit Committee.
6. Deborah Rabey joined the Board on 1 March 2023.
Non-executive directors’ shareholdings (audited)
The beneficial interests of the non-executive directors who served during the year are set out below:
31 August
2024
26 August
2023
David Blackwood 284,510 284,510
Denise Collis 48,846 48,846
Michael Holt 0 0
Mark Whiteling 80,000 80,000
Deborah Rabey 0 0
There has been no change in the non-executive directors’ shareholdings shown above between 31 August 2024 and 4 November 2024 (the publication
date of this report).
Strategic Report
Governance
Financial Statements
115
Implementation of the Remuneration Policy in FY2025
Executive directors
Base salary
The base salary for the Chief Executive Officer increased by 3.25% to £515,327, and the base salary for the Chief Financial Officer increased by 3.25%
to £335,714 with effect from 1 September 2024, each of which is below the average percentage increase awarded to our workforce, the majority of
whom saw an increase of 9.8%.
Pension
The Company’s pension contribution for executive directors is 5% of salary, which is aligned to the rate available to the majority of the workforce.
Bonus
The annual bonus opportunity will remain at 100% of salary. 70% will be based on Adjusted Operating Profit as this will be the key measure of
profitability against which business performance will be assessed over the year and will be in line with our internal financial reporting. An Operating
Profit target range has been set against a stretching budget number and is also considered to be challenging in light of analysts’ consensus
expectations for our FY2025 profit performance. 30% will be based on personal measures which will be based on the achievement of stretching targets
set against our operational KPIs.
Of the maximum bonus, 50% will be paid out for both the financial and personal objectives for on-target performance. The Committee will apply
discretion as to whether any payment should be made on the personal element of the bonus in the event that the financial targets are not met.
There will also be a requirement for a minimum personal performance rating to be achieved before the financial performance element may be paid.
The performance targets are considered commercially sensitive, so will not be disclosed in advance. However, there will be full disclosure of the targets
that were set, the performance against them and the bonus payable, in next year’s Annual Report.
LTIP
LTIP awards are expected to be granted within 42 days following publication of the Company’s preliminary financial results for FY2024 covering the
performance period FY2025-2027.
The LTIP grant level for the FY2025-2027 award will be 100% of base salary. Performance will be assessed at 60% on a relative Total Shareholder
Return measure over a three-year performance period, 30% on final-year profit from growth and diversified activities and 10% on reduction in Scopes 1,
2 and (within categories 1, 4 and 6 of) Scope 3 emissions in the final year of the performance period. For further details please see the TCFD report on
pages 34 to 59.
The performance targets are set out below:
Measure Weighting
Threshold
(20% vests)
Maximum
(100% vests)
Relative TSR versus the companies comprising the FTSE Small Cap index
(excluding investment trusts) as at the date of grant
60% Median Upper quartile
Profit from growth and diversified activities in the final year (FY2027) of the
three-year performance period
30% £4.81m £7.50m
ESG measure – 4.96% absolute reduction in Scopes 1, 2 and (within categories 1, 4
and 6 of) Scope 3 emissions (tCO
2
e) in the final year (FY2027) of the three-year
performance period 10% 227,103 tCO
2
e 195,266 tCO
2
e
TSR provides a strong and direct incentive to continue to focus on share price growth and shareholder value whilst the continuation of an ESG
measure is a reflection of the Board’s increasing oversight of TCFD reporting and its ambitions in this area to improve our environmental footprint.
The profit generated from growth and diversified activities measure represents the growing importance of the strategic imperative for the Company
to successfully diversify and explore new revenue opportunities within its core markets and other adjacent categories and aligns with the Board’s
ambitions to measure the success of management’s endeavours in this important area. The target range from 87.5% of target (at threshold) through to
136.5% of target (at maximum) reflects the Company’s stretching growth and diversification ambitions. The significant stretch above target has been set
based on an expected mix of both organic growth and growth by acquisition, in line with the business strategy.
Non-executive directors
Non-executive directors’ fees in FY2025
The Company Chairman’s fee rate increased by 3.25% from £149,247.88 to £154,098.43 with effect from 1 September 2024, and the non-executive
directors’ fees similarly increased by 3.25% with effect from 1 September 2024, such that the following rates now apply:
• the base fee rate increases from £50,637.67 per annum to £52,283.39;
• the additional fee for chairing the Board’s Committees increases from £10,660.56 per annum to £11,007.02 per annum; and
• the additional fees for the role of Senior Independent Director and/or chairing the National Colleague Engagement Forum increase from £5,330.28
per annum to £5,503.51 per annum.
Directors’ Remuneration Report continued
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Consideration by the directors of matters relating to directors’ remuneration
Remuneration Committee
David Blackwood is non-executive chairman of the Board and was deemed independent on appointment. All other members of the Committee are
independent non-executive directors.
In addition to the formal number of Committee meetings set out below, members regularly engaged throughout the year in considering various other
matters that arose under the remit of the Committee.
Meetings
attended
Possible
meetings
Denise Collis 4 4
David Blackwood 4 4
Michael Holt 4 4
Mark Whiteling 4 4
Deborah Rabey 4 4
The Committee’s terms of reference, which are available on the Company’s website → www.smithsnews.co.uk and from the Company Secretary on
request, set out the responsibilities of the Committee.
During the year, the Committee was supported in its work by its appointed external advisers, Korn Ferry, who were paid fees of £30,688 (plus VAT). Korn
Ferry has no connection with the Company or the directors. Based on its experience of working with the advisers, the Committee is satisfied that the
advice received from Korn Ferry has been, and continues to be, objective and independent. Korn Ferry provides no other services to the Company that
could potentially lead to a conflict of interest with the independent advice to the Committee.
Korn Ferry is a founder member of the Remuneration Consultants’ Group and, as such, voluntarily operates under the code of conduct in relation to
executive remuneration consulting in the UK. The code of conduct can be found at → www.remunerationconsultantsgroup.com.
The Chief Executive Officer, the Chief Financial Officer, the Company Secretary and General Counsel, the People Director and the Head of Reward also
attended Committee meetings in the year but were not present when their own performance or remuneration was discussed.
Shareholder vote
The table below sets out the voting results for the Directors’ Remuneration Policy at the 2023 AGM and the Directors’ Remuneration report at the
2024 AGM:
Resolution Votes for
Percentage
of votes cast
in favour
Votes
against
Percentage
of votes cast
against
Total
votes cast
Votes
withheld
To approve the Remuneration Policy (2023 AGM) 130,074,330 91.34% 12,336,356 8.66% 142,410,686 86,953
To approve the Directors’ Remuneration report
for the year ended 26 August 2023 (2024 AGM) 127,710,514 88.72% 16,243,992 11.28% 143,954,506 140,501
Approval
This report was approved by the Board and signed on its behalf by:
Denise Collis
Remuneration Committee Chair
4 November 2024
Strategic Report
Governance
Financial Statements
117
Directors’ Report – Other statutory disclosures
Directors’ Report
This Annual Report and the Group Financial Statements include the Directors’ Report and the audited financial statements of Smiths News plc
(the ‘Company’) and its subsidiaries (the ‘Group’) for the 53 week period ended 31 August 2024. The information required to be disclosed in the
Directors’ Report is provided in the following sections of the Annual Report, which are incorporated into this Directors’ Report by reference:
• Strategic Report on pages 1 to 71;
• Corporate Governance report on pages 72 to 85:
• Audit Committee report on pages 86 to 93;
• Nominations Committee report on pages 94 to 97;
• Sustainability Committee report on pages 32 to 33;
• Directors’ Remuneration report on pages 98 to 117;
• Sustainability and TCFD report on pages 34 to 59;
• this section, Other statutory disclosures;
• Directors’ Responsibilities statement on page 122; and
• Notes to the Group Financial Statements as detailed in this section.
This Directors’ Report has been drawn up and presented in accordance with and in reliance upon applicable English company law, and the liabilities
of the directors in connection with those reports shall be subject to the limitations and restrictions provided by such law.
Non-financial information statement
The Company has complied with the requirements of s414CB of the Companies Act 2006 by including certain non-financial information within the
Strategic Report as follows:
• the business model on page 04;
• information on environmental, employee, social, human rights, anti-corruption and anti-bribery matters (non-financial matters), including the relevant
policies, due diligence process implemented in pursuance of the policies and outcomes of those policies, on pages 34 to 59 and 89;
• principal and emerging risks identified in relation to non-financial matters, including a description of the business relationships, products and services
which are likely to cause adverse impacts in those areas of risk, and a description of how the principal risks are managed, on page 66;
• all Key Performance Indicators (KPIs), including those in relation to non-financial matters, are on page 14;
• the Financial Review, which includes, where appropriate, references to, and additional explanations of, amounts included in the Group Financial
Statements on pages 123 to 170;
• a statement explaining how the directors have had regard to the matters in s172 of the Companies Act 2006 in performing their duties on pages 83
and 22; and
• future developments in the business on pages 18 and 20.
Subsidiaries and branches
The Company’s operating subsidiaries, branches and associated undertakings are listed in Note 28 to the Group Financial Statements.
Post balance sheet events
The directors have considered the period between the balance sheet date and the date when the accounts are authorised for issue for evidence of
conditions that existed at the balance sheet date, either adjusting or non-adjusting post balance sheet events, and have concluded that, other than
those events disclosed in Note 15 and Note 20, there are no other events in the current period.
Profit attributable to shareholders and dividends
The statutory profit for the financial year, after taxation, was £25.5m (FY2023: £25.1m).
In light of the Company’s performance, the Board has decided to recommend both a final ordinary dividend of 3.40p and a special dividend of 2.00p,
each of which is expected to be paid on 6 February 2025 to all shareholders who are on the register of members at close of business on 10 January
2025. Accordingly, the total combined dividend for the 53 week period ended 31 August 2024 is 7.15p per ordinary share (FY2023: 4.15p).
Share capital
The Company’s issued share capital comprises a single class of ordinary shares of 5p each. All issued shares are fully paid, can be held in certificated
or uncertificated form and are listed on the London Stock Exchange. Details of movements in the issued share capital during the year can be found in
Note 22 to the Group Financial Statements.
The rights and obligations attaching to the Company’s ordinary shares, in addition to those conferred on their holders by law, are set out in the Company’s
Articles of Association (Articles), a copy of which can be obtained from Companies House or from the Company’s website → www.smithsnews.co.uk.
The Company’s Articles may only be amended by a special resolution of the Company. Subject to applicable statutes, shares may be issued with such
rights and restrictions as the Company may by ordinary resolution decide, or (if there is no such resolution or so far as it does not make specific provision)
as the Board may decide.
Holders of ordinary shares are entitled to attend and speak at general meetings of the Company; to appoint one or more proxies and, if they are
corporations, to appoint corporate representatives; and to exercise voting rights. Holders of ordinary shares may also receive a dividend and on a
liquidation may share in the assets of the Company. In addition, holders of ordinary shares are entitled to receive the Company’s Annual Report and
Accounts. Subject to meeting certain thresholds, holders of ordinary shares may require a general meeting of the Company to be held or propose
resolutions to be considered at Annual General Meetings.
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Voting rights and restrictions on transfer of shares
On a show of hands at a general meeting of the Company, every holder of ordinary shares present in person or by proxy and entitled to vote has one
vote and on a poll every member present in person or by proxy and entitled to vote has one vote for every ordinary share held. None of the ordinary
shares carry any special rights with regard to control of the Company. Electronic and paper proxy appointments and voting instructions must be
received by the Company’s Registrars not later than 48 hours before a general meeting. However, when calculating the 48-hour period, no account
is taken of any part of a day that is not a working day.
The directors may refuse to register a transfer of a certificated share: which is not fully paid, provided that the refusal does not prevent dealings in the
shares in the Company from taking place on an open and proper basis; or on which the Company has a lien. The directors may also refuse to register a
transfer of a certificated share unless the instrument of transfer: (i) is lodged at the office, or such other place as the directors may decide accompanied
by the certificate for the share to which it relates and such other evidence (if any) as the directors may reasonably require to show the right of the
transferor to make the transfer; (ii) is in respect of only one class of shares; and (iii) is in favour of not more than four transferees.
Transfers of uncertificated shares must be carried out using CREST and the directors can refuse to register a transfer of an uncertificated share in
accordance with the regulations governing the operation of CREST.
There are no other restrictions on the transfer of ordinary shares in the Company other than those imposed by prevailing laws and regulations (such as
insider trading laws and market requirements in respect of close periods).
The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of ordinary shares or on voting rights.
Shares held by the Employee Benefit Trust
The Trustee of the Smiths News Employee Benefit Trust holds ordinary shares of the Company on behalf of the beneficiaries of the Trust, who are the
employees and former employees of the Company. If any offer is made to the holders of ordinary shares to acquire their shares, the Trustee will not be
obliged to accept or reject the offer in respect of any shares which are, at that time, subject to subsisting options, but will have regard to the interests
of the option holders and can obtain their views on the offer, and subject to the foregoing, the Trustee will take the action with respect to the offer it
thinks fair. The Trustee waives its right to vote and to dividends on the shares that it holds. Further details on the Trust can be found in the Directors’
Remuneration report on page 98.
Purchase of own shares
At the Annual General Meeting held on 31 January 2024, authority was given for the Company to purchase, in the market, up to 24,765,920 ordinary
shares of 5p each. The Company did not use this authority to make any purchases of its own shares during FY2024. This authority is renewable annually
and approval will be sought from shareholders at the Annual General Meeting in January 2025 to renew the authority for a further year.
Issue of new ordinary shares
The Board has resolved that all employee share scheme exercises during FY2024 and, unless otherwise agreed, all future employee share scheme
exercises in FY2025 should be satisfied through the Employee Benefit Trust (further details on the Employee Benefit Trust and market purchases are set
out in Directors’ Remuneration report on page 98). Accordingly, during the 53 week period ended 31 August 2024, no ordinary shares in the Company
were issued.
Any newly issued ordinary shares rank pari passu with those previously in issue. The Articles provide that the Board may, subject to the prior approval of
the Company’s shareholders, exercise all the powers of the Company to allot relevant securities including new ordinary shares.
Interests in voting rights
As at 31 August 2024, the Company is aware of the following shareholding interests in its issued share capital as may have been notified to it from time
to time pursuant to the Financial Conduct Authority’s Disclosure and Transparency Rule 5:
Holder % of voting rights
Aberforth Partners LLP 17.21
FORUM Family Office Value Fund/Small Cap Fund 13.48
Hargreaves Lansdown (Stockbroker) 6.03
Fidelity International Limited 4.97
Interactive Investor 4.36
Worsley Investors Limited 4.13
M&G Investments 4.00
In the period 1 September 2024 to 4 November 2024, a notification of updated voting rights positions has been received by the Company from Fidelity
International Limited, the impact of which has been included in the table above.
Except for the above, the Company is not aware of any other shareholders with interests in 3% or more of the voting rights attached to the issued share
capital of the Company.
Strategic Report
Governance
Financial Statements
119
Directors’ Report – Other statutory disclosures continued
Change of control
Each of the Company’s trading subsidiaries has agreements with customers and suppliers that may contain change of control clauses giving rights
to those customers and suppliers on a takeover of the Company.
A change of control of the Company following a takeover bid may cause a number of other agreements to which the Company and/or one or more of its
subsidiaries is party, such as banking arrangements, property leases and licence agreements, to alter or be capable of termination at the election of the
counterparty.
The Company does not have agreements with any director or employee that would provide compensation for loss of office or employment resulting
from a takeover except that provisions of the Company’s share schemes may cause options and awards granted to employees under such schemes
to vest on a takeover – the relevant scheme rules stating that as a result of a change of control event (or other corporate action) the proportion of the
award which may vest shall be limited (unless the Board determines otherwise) to a pro rata proportion on the basis of the number of whole months
which have elapsed from the first day of the performance period to the date of the corporate action, as compared to the number of whole months within
the performance period; any remainder of the award thereby lapsing.
Directors
All directors who served during the year are set out on pages 76 to 77.
The directors are responsible for the management of the business of the Company and may exercise all the powers of the Company subject to
applicable legislation and regulation and the Company’s Articles.
The Company’s Articles give power to the Board to appoint directors and (where notice is given signed by all the other directors) remove a director
from office. They also give a power to the Company to appoint directors (by ordinary resolution) and remove a director from office (by special resolution
or by ordinary resolution of which special notice has been given).
The interests of the directors and their immediate families in the share capital of the Company, along with details of directors’ share options and awards,
are set out in the Directors’ Remuneration report on pages 114 to 115.
At no time during the year did any of the directors have a material interest in any significant contract with the Company or any of its subsidiaries.
The Company maintains Directors’ and Officers’ liability insurance which gives appropriate cover for any legal action brought against its directors.
The Company has also provided an indemnity for its directors and secretary and for the directors of its associated companies, to the extent permitted
by law, which is a qualifying third-party indemnity provision for the purposes of section 234 of the Companies Act 2006.
Directors’ conflicts of interest
The Board confirms that a formal system for directors to declare their interests and for the independent directors to authorise situational conflicts
continues to be in place. Any authorisations given by the Board are recorded in the Board minutes and in a register of directors’ conflicts which is
reviewed annually by the Board.
Employees
Details of the Company’s policies in relation to employment, training and development, employee engagement, employee share ownership and equal
opportunities are set out in the Sustainability report on pages 34 to 59 and in the Corporate Governance report on pages 74 to 85.
Suppliers and customers
Details of how the directors have engaged with suppliers and customers to help foster the Company’s business relationships with its suppliers,
customers and others and the outcome of such engagement on the decisions made by the Board are set out in the Stakeholder Engagement report on
pages 22 to 31.
Greenhouse gas emissions
Details of the Company’s greenhouse gas emissions and SECR disclosures are set out in the Sustainability report on page 48.
Consideration of climate change
In preparing the Group Financial Statements, the directors have considered the impact of climate change, particularly in the context of the risks identified
in the Sustainability report on pages 34 to 59. There has been no material impact identified on the financial reporting judgements and estimates. In
particular, the directors considered the impact of climate change in respect of the Company’s going concern and viability review (see pages 63 to 64).
The directors have determined that none of the short or medium-term climate-related risks identified in its review pose a threat to the business but the
directors nonetheless remain mindful of the ever-changing risks associated with climate change and intend to continue to assess these risks (and any
emerging risks that arise from ongoing reviews) against the judgements and estimates made in the preparation of the Group Financial Statements.
Political donations
It is the Company’s policy not to make political donations and no political donations or EU political expenditure were made in the year (FY2023: £nil).
Bribery Act 2010
The Company has an established anti-bribery policy in place designed to manage risks relating to bribery and corruption. Guidance and training are
provided to colleagues through an online webinar presentation, along with support from the Company’s Legal team on how to manage these risks.
Suppliers and contractors are made aware of the anti-bribery policy, through our Supplier Code and appropriate contractual arrangements. Anti-bribery
and corruption measures are regularly kept under review to ensure that the steps in place are sufficiently robust to prevent bribery and corruption.
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Health & safety
We are committed to providing a safe place for our colleagues to work and for visitors and contractors to our sites. Policies applicable to the safety and
wellbeing of our colleagues are reviewed on an ongoing basis to ensure that the approach to training, risk assessments, safe systems of working and
accident management are appropriate. An ongoing audit programme assesses health and safety risks on a regular basis and ensures that robust control
measures are in place to limit these risks. Further details are set out in the Sustainability report on page 34.
Financial instruments
Information on the Company’s financial risk management objectives and policies and on the exposure of the Company to relevant risks in respect
of financial instruments is set out in Note 16 to the Group Financial Statements.
Disclosure of information to auditor
Each director confirms that, so far as they are aware, there is no relevant audit information (as defined in section 418 of the Companies Act 2006)
of which the Company’s auditor is unaware and that each director has taken all the steps they ought reasonably to have taken as a director in order
to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Auditor
Resolutions to re-appoint BDO LLP as auditor of the Company and to authorise the Audit Committee to determine their remuneration will be proposed
at the 2025 Annual General Meeting.
Annual General Meeting
The 2025 Annual General Meeting of the Company will be held at DoubleTree by Hilton, Lydiard Fields, Great Western Way, Swindon SN5 8UZ on
Thursday 16 January 2025 at 11.30am. The Notice of Annual General Meeting is given, together with explanatory notes to the proposed resolutions
to be considered at the meeting, in the booklet which accompanies this report.
Approved by order of the Board and signed on its behalf by:
Stuart Marriner
Company Secretary and General Counsel
4 November 2024
Strategic Report
Governance
Financial Statements
121
Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors are required to prepare the
Group Financial Statements in accordance with UK adopted international accounting standards and have elected to prepare the Company Financial
Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with UK adopted international accounting standards (relevant to the Group Financial
Statements), subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group or Company will continue in
business;
• prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration report which comply with the requirements of the Companies Act 2006.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose,
with reasonable accuracy at any time, the financial position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for ensuring that this Annual Report and the Group Financial Statements, taken as a whole, are fair, balanced and
understandable, and provide the information necessary for shareholders to assess the Group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring this Annual Report and the Group Financial Statements are made available on a website. The Group Financial
Statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination
of these financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the
responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
• The Group Financial Statements have been prepared in accordance with the applicable set of accounting standards (UK-adopted international
accounting standards) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and
• This Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the parent
company, together with a description of the principal risks and uncertainties that they face.
This responsibility statement was approved by the Board on 4 November 2024 and signed on its behalf by:
Jonathan Bunting Paul Baker
Chief Executive Officer Chief Financial Officer
4 November 2024 4 November 2024
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Independent auditor’s report
to the members of Smiths News plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 August 2024 and of the
Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Smiths News plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the 53 week period ended
31 August 2024 which comprise Group Income Statement, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Group
Statement of Changes in Equity, the Group Cash Flow Statement, the Company Balance Sheet, Company Statement of Changes in Equity and notes to
the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law and UK adopted
international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to
the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed on 15 March 2019 to audit the financial statements for the year ended
31 August 2019 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is 6 years,
covering the periods ended 31 August 2019 to 31 August 2024. We remain independent of the Group and the Parent Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that
standard were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
• A review of the forecasts and covenant calculations for the Group for a period of 16 months from the date of approval of the financial statements,
being the period determined by the Directors over which going concern was assessed to align with covenant compliance dates post the 12 month
period. This included testing that the forecasts were consistent with the latest Board approved budgets;
• Considered whether the period used by the Directors for the 16 months to 28 February 2026 was appropriate – this included assessing any
significant events or conditions expected beyond the period of management’s assessment & considering the implication thereof;
• Assessed assumptions within the cash flow forecasts: we challenged the assumptions used in the forecasts, this included:
– the rate of revenue decline;
– the ability to implement operational cost-saving strategies;
– future growth strategies;
– Dividend payments; and
– Share purchases required for the EBT.
Strategic Report Governance
Financial Statements
123
Independent auditor’s report continued
to the members of Smiths News plc
In challenging management we held meetings with both the finance team and Commercial Director. The assumptions were corroborated by reviewing
historical trend analysis and reviewing against market data where applicable;
• Tested the numerical accuracy & mechanics of the model used to prepare the forecasts;
• Agreed a sample of the Group cash balances from the forecasts to post year end bank statements and compared the Group cash balance to the
forecasted amount to identify any potential liquidity issues;
• Considered and evaluated the new financing agreement to understand the terms of the agreement and the covenant compliance requirements;
• Tested the covenant calculation, and forecast covenant compliance, against the Group’s financing agreements to confirm that there remains sufficient
headroom in the forecasts for the going concern period;
• Challenge of Directors' scenario analysis and sensitivities with specific reference to the Group’s risk register. This included an evaluation
of sensitivities over the Group’s cash flows and covenants to changes in the significant inputs and assumptions used;
• Scrutinised the stress tests and reverse stress test which demonstrated the reduction in EBITDA required without mitigation for a liquidity event
or covenant breach to occur and considered the Directors’ assessment that it was remote for such a reduction to occur;
• Compared the post year end trading results to the forecasts to evaluate the accuracy and achievability of the forecasts prepared;
• Evaluated the accuracy of Management’s historical forecasting; and
• Evaluated the completeness and accuracy of the disclosures in relation to the conclusion reached by the Directors in their going concern assessment
and the adequacy of the disclosures in the financial statements against the requirements of the accounting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Overview
Coverage 99% (2023: 99%) of Group profit before tax
99% (2023: 99%) of Group revenue
99% (2023: 98%) of Group total assets
Key audit matters 2024 2023
Carrying value of the investments in Smiths News plc (Parent Company)
✓ ✓
Materiality Group financial statements as a whole
£1.6m (2023: £1.5m) based on 5% (2023: 4.8%) of Adjusted Profit before Tax
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and
assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
There were two significant components which were subject to full scope audits, being Smiths News Trading Limited and Smiths News plc. Non-
significant components were subject to desktop review procedures with specified audit procedures where necessary. All audits and desktop review
procedures were completed by the Group engagement team.
Climate change
Our work on the assessment of potential impacts on climate-related risks on the Group’s operations and financial statements included enquiries
of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements.
We have reviewed the disclosures in the annual report to ensure that they adequately disclose climate-related risks.
We reviewed the extent to which climate-related considerations have been reflected, where appropriate, in management’s going concern assessment
and viability assessment.
We also assessed the consistency of managements disclosures included as ‘Other Information’ on page 118 with the financial statements and with our
knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related risks.
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Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Carrying value
of investment
in Smiths
News Holding
Limited by
Smiths News
plc (Parent
Company)
Refer to the
Accounting
polices (note 3
of the Parent
Company
Financial
Statements.
The carrying value of investment in Smiths News
Holding Limited has previously been subject to
impairment and the carrying value is therefore below
original cost.
Management identified an indicator of impairment in
respect of the difference in market capitalisation and
investment carrying value.
Management also identified indicators of potential
reversal which would offset the above factors, owing
to the reduction in the Group’s borrowings, refinancing
at more favourable rates, increase in share price,
reduction in discount rates and performing ahead of
market consensus in the current year.
Based on the above indicators, an impairment
assessment was performed by management on the
investment carrying value.
Where an impairment review is conducted, the
recoverable amount is determined based on the higher
of ‘value in use’ or ‘fair value less costs of disposal’.
Value in use has been calculated using cash flows
reflecting management’s best estimate of the current
economic outlook. As the investment represents an
equity investment the value in use has been adjusted to
reflect the overall net debt of the underlying subsidiaries.
Management’s value in use model and hence
impairment/reversal assessment is sensitive to changes
in the key assumptions, including discount rates, year on
year growth and long term growth rates set out in Note
3 of the Parent Company financial statements.
Management is required to ensure that the disclosures
are complete and accurate to enable users of the
financial statements to understand the assumptions and
the sensitivities apparent.
As the model is highly sensitive to the key assumptions,
and given the proportion of time spent in auditing this
judgemental area, we determined it to be a Key Audit
Matter (“KAM”).
With the support of our internal valuation specialists we have assessed the
methodology applied by management in performing the impairment test
against the requirements of IAS 36 ‘Impairment of assets’ and considered
the various indicators identified by management in respect of impairment
and reversal.
In respect of the value in use calculations we challenged the cash flow
estimates and assumptions used by:
• reviewing the forecast trends against historical trends, where available,
including long-term volume declines compared to year on year
actuals, confirming existing contracts with publishers, and assessing
the Group’s capacity to mitigate volume declines through operational
savings; and
• holding discussions with operational team members who were separate
to the finance team, as to assess the key assumptions flowing into
the model, assessing price and volume assumptions against market
benchmarks, while also evaluating historical trends.
We assessed the discount rate applied in the model, by reviewing the
methodology used to calculate the discount rates and by independently
determining a range of acceptable rates, considering market data and
comparable companies, and comparing the range of rates independently
calculated to the rate used by management.
We tested the arithmetic accuracy of the impairment model.
The model was assessed against the Group’s principal risks and
uncertainties as well as considering whether further sensitivities could be
applied.
We considered risk of management bias and override given the impact
an impairment or reversal would have on retained earnings, and hence
distributable reserves.
Furthermore, the audit team evaluated the accuracy of Management’s
historical forecasting, challenged the revenue, costs and other cash
flows assumptions based on our knowledge of the business, contractual
revenue streams and the economic outlook.
We assessed and challenged the adequacy of management’s sensitivity
disclosures in relation to key assumptions to consider the extent of change
in those assumptions that either individually or collectively would be
required to lead to a significant change in the carrying value, in particular
forecast cash flows and discount rate.
We assessed whether the disclosures in the financial statements detail the
key judgements within the impairment model and sources of estimation
uncertainty.
Key observations:
As a result of performing the procedures above we did not identify any
material issues.
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Independent auditor’s report continued
to the members of Smiths News plc
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to
be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis
of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as
we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements Parent Company financial statements
2024
£m
2023
£m
2024
£m
2023
£m
Materiality 1.6 1.55 0.96 0.93
Basis for determining materiality 5% of profit before
adjusting items
and tax
4.8% of profit before
adjusting items
and tax
1% of Total Assets,
but capped at
60% of Group
consolidated
materiality
1% of Total Assets,
but capped at
60% of Group
consolidated
materiality
Rationale for the benchmark applied We consider this to be the most
appropriate performance measure as it
removes the impact of certain one-off
or exceptional items impacting the
underlying profit of the Group and is also
a key measure for stakeholders.
Calculated as a percentage of Group
materiality for Group reporting purposes
given the assessment of aggregation risk
Performance materiality 1.2 1.04 0.72 0.65
Basis for determining performance materiality 75% of materiality 70% of materiality 75% of materiality 70% of materiality
Rationale for the percentage applied for
performance materiality
Based on our experience and
knowledge of the Group, the Group
structure, planned testing approach,
and history of errors.
The Performance Materiality percentage
has increased from the prior period, given
the reduced level of misstatements and
control environment.
Based on our experience and knowledge
of the Parent Company, planned testing
approach, and history of errors.
The Performance Materiality percentage
has increased from the prior period, given
the reduced level of misstatements and
control environment.
Component materiality
We identified 2 significant components being Smith News Trading Limited and the Smiths News plc (Parent Company). We set materiality at £1.4m
based on a percentage of 90% of Group materiality in respect of Smith News Trading Limited and £0.7m for the Parent Company as detailed above.
In the audit of the component, we further applied performance materiality level of 75% (2023: 70%) of the component materiality to our testing to ensure
that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £30k (2023: £62k). We also agreed
to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual Report and Accounts
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 63; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 63.
Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 122;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 66;
• The section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on page 87; and
• The section describing the work of the audit committee set out on page 88.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and
ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements in
the Strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on which we are required
to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report
to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend
to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
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Financial Statements
127
Independent auditor’s report continued
to the members of Smiths News plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the legal and regulatory frameworks applicable to the Parent and Group and the industry in which it operates;
• Discussion with management and those charged with governance, and the legal counsel; and
• Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be the applicable financial reporting frameworks (UK adopted international accounting standards
in respect of the Group and UK GAAP in respect of the Parent Company) and relevant tax compliance regulations.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures
in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be UK Companies Act,
Listing Rules, employment law, health and safety and pensions legislation.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;
• Review of financial statement disclosures and agreeing to supporting documentation;
• The audit team engaged an internal tax specialist to analyse the Group’s compliance with local tax regulations;
• Review of whistleblowing reports for any known or suspected instances of non-compliance with laws and regulations;
• Review of legal expenditure accounts to understand the nature of expenditure incurred; and
• Discussions with management, those charged with governance, in-house legal counsel and the Audit Committee to identify any instances or
potential instances of non-compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
• Enquiry with management, those charged with governance, in-house legal counsel and the Audit Committee regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
Detecting and responding to the risks of fraud.
• Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
• Review of whistleblowing reports for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
and
• Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition and management override of controls.
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Smiths News plc | Annual Report and Accounts 2024
Our procedures in respect of the above included:
• Testing of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation and corroborating that the
journals had been posted by appropriate users under appropriate authorisation;
• Assessing the key estimates and judgements made by management in preparing the financial statements for indications of bias or management
override when presenting the results and financial position of the Group. This included those relating to the Parent Company impairment review,
presentation of adjusting items and the property dilapidations provision.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to
have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting
a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed
non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: → www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent
Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Oliver Chinneck (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
4 November 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Strategic Report Governance
Financial Statements
129
Group Income Statement
for the 53-week period ended 31 August 2024
2024 | 2023 | ||||||
| Adjusting | Adjusting | ||||||
£m | Note | Adjusted* | items | Total | Adjusted* | items | Total |
Revenue | 1 | ||||||
Cost of sales | 2 | ( | ( | ( | ( | ||
Gross profit | 2 | ||||||
Administrative expenses | 2 | ( | ( | ( | ( | ( | |
Net impairment (loss)/reversal on trade receivables | 13 | ( | ( | ( | |||
(Losses)/profits from joint ventures | 11 | ( | ( | ||||
Impairment reversal of joint venture investment | 11 | ||||||
Operating profit | 2 | ( | |||||
Finance costs | 5 | ( | ( | ( | ( | ||
Finance income | 5 | ||||||
Profit/(loss) before tax | ( | ||||||
Income tax/(expense) | 6 | ( | ( | ( | ( | ( | |
Profit/(loss) for the year attributable to equity shareholders | ( | ||||||
| Earnings per share | |||||||
Basic | 8 | ||||||
Diluted | 8 | ||||||
Equity dividends per share (paid and proposed) | 7 |
* This measure is described in Note 1(4) of the accounting policies and the Glossary to the Accounts on page 168. Adjusting items are set out in Note 3 to the Group Financial Statements.
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Smiths News plc | Annual Report and Accounts 2024
£m | 2024 | 2023 |
| Items that may subsequently be reclassified to the income statement: | ||
Currency translation (subsidiaries) | ( | |
Other comprehensive result for the year | ( | |
Profit for the year | ||
Total comprehensive income for the year |
Group Statement of Comprehensive Income
for the 53-week period ended 31 August 2024
Strategic Report Governance
Financial Statements
131
Group Balance Sheet
as at 31 August 2024
£m | Note | 2024 | 2023 |
| Non-current assets | |||
Intangible assets | 9 | ||
Property, plant and equipment | 10 | ||
Right of use assets | 17 | ||
Interest in joint ventures | 11 | ||
Deferred tax assets | 18 | ||
| Current assets | |||
Inventories | 12 | ||
Trade and other receivables | 13 | ||
Cash and cash equivalents | 15 | ||
Corporation tax receivable | |||
Total assets | |||
| Current liabilities | |||
Trade and other payables | 14 | ( | ( |
Bank loans and other borrowings | 15 | ( | |
Lease liabilities | 17 | ( | ( |
Provisions | 19 | ( | ( |
( | ( | ||
| Non-current liabilities | |||
Bank loans and other borrowings | 15 | ( | ( |
Lease liabilities | 17 | ( | ( |
Non-current provisions | 19 | ( | ( |
( | ( | ||
Total liabilities | ( | ( | |
Total net liabilities | ( | ( | |
| Equity | |||
Called up share capital | 22(a) | ||
Share premium account | 22(c) | ||
Demerger reserve | 23(a) | ( | ( |
Own shares reserve | 23(b) | ( | ( |
Translation reserve | 23(c) | ||
Retained earnings | 24 | ||
Total shareholders’ deficit | ( | ( |
Registered number – 05195191
132
Smiths News plc | Annual Report and Accounts 2024
Group Statement of Changes in Equity
for the 53-week period ended 31 August 2024
| Hedging | ||||||||
| Share | Own | and | ||||||
| Share | premium | Demerger | shares | translation | Retained | |||
£m | Note | capital | account | reserve | reserve | reserve | earnings | Total |
Balance at 27 August 2022 | ( | ( | ( | |||||
Profit for the year | ||||||||
Total comprehensive income for the year | ||||||||
Dividends paid | 7 | ( | ( | |||||
Employee share scheme purchases | ( | ( | ||||||
Employee share scheme awards | ( | |||||||
| Recognition of share-based payments | ||||||||
| net of tax | ||||||||
Deferred tax recognised in equity | ||||||||
Balance at 26 August 2023 | ( | ( | ( | |||||
Profit for the year | ||||||||
Currency translation (subsidiaries) | ( | ( | ||||||
Total comprehensive income for the year | ( | |||||||
Dividends paid | 7 | ( | ( | |||||
Employee share scheme purchases | ( | ( | ||||||
Employee share scheme awards | ( | |||||||
| Recognition of share-based payments | ||||||||
| net of tax | ||||||||
Current tax recognised in equity | ||||||||
Deferred tax recognised in equity | ( | ( | ||||||
Balance at 31 August 2024 | ( | ( | ( |
Strategic Report Governance
Financial Statements
133
Group Cash Flow Statement
for the 53-week period ended 31 August 2024
£m | Note | 2024 | 2023 |
Net cash inflow from operating activities | 21 | ||
| Investing activities | |||
Dividends received from joint ventures | |||
Purchase of property, plant and equipment | ( | ( | |
Purchase of intangible assets | ( | ( | |
Investment in joint venture | 11 | ( | |
Interest received | |||
Net cash used in investing activities | ( | ( | |
| Financing activities | |||
Interest paid | ( | ( | |
Dividend paid | 7 | ( | ( |
Repayments of lease principal | ( | ( | |
Repayment of term loan | ( | ( | |
Net increase in revolving credit facility | |||
Purchase of shares for Employee Benefit Trust | ( | ( | |
Net cash used in financing activities | ( | ( | |
Net (decrease)/increase in cash and cash equivalents | ( | ||
Opening net cash and cash equivalents | |||
Closing net cash and cash equivalents | 15 |
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Smiths News plc | Annual Report and Accounts 2024
Notes to the Accounts
Strategic Report Governance
Financial Statements
135
Notes to the Accounts continued
1. Accounting policies continued
(3) Going concern continued
136
Smiths News plc | Annual Report and Accounts 2024
1. Accounting policies continued
(5) Estimates and judgements continued
Strategic Report Governance
Financial Statements
137
Notes to the Accounts continued
1. Accounting policies continued
(6) Revenue continued
138
Smiths News plc | Annual Report and Accounts 2024
1. Accounting policies continued
Strategic Report Governance
Financial Statements
139
Notes to the Accounts continued
1. Accounting policies continued
140
Smiths News plc | Annual Report and Accounts 2024
1. Accounting policies continued
Strategic Report Governance
Financial Statements
141
Notes to the Accounts continued
1. Accounting policies continued
(20) Treasury continued
142
Smiths News plc | Annual Report and Accounts 2024
1. Accounting policies continued
2024 | 2023 | ||||||
| Adjusting | Adjusting | ||||||
£m | Note | Adjusted | items | Total | Adjusted | items | Total |
Revenue | 1,103.7 | – | 1,103.7 | 1,091.9 | – | 1,091.9 | |
Cost of inventories recognised as an expense | (937.3) | – | (937. 3) | (926.5) | – | (926.5) | |
Distribution costs | (93.2) | – | (93.2) | (92.9) | – | (92.9) | |
Cost of sales | (1,030.5) | – | (1,030.5) | (1,019.4) | – | (1,019.4) | |
Gross profit | 73.2 | – | 73.2 | 72.5 | – | 72.5 | |
Other administrative expenses | (24.4) | – | (24.4) | (23.4) | (0.5) | (23.9) | |
Share-based payment expense | 25 | (0.9) | – | (0.9) | (1.1) | – | (1.1) |
Net impairment (loss)/reversal on trade receivables | (0.1) | 0.6 | 0.5 | (0.1) | – | (0.1) | |
Impairment reversal of joint venture investment | – | 0.3 | 0.3 | – | – | – | |
Share of (losses)/profits from joint ventures | 11 | (0.2) | (0.2) | 0.1 | – | 0.1 | |
EBITDA | 47.6 | 0.9 | 48.5 | 48.0 | (0.5) | 47.5 | |
Depreciation on property, plant and equipment | 10 | (2.2) | – | (2.2) | (2.2) | – | (2.2) |
Depreciation on right-of-use assets | 17 | (5.9) | – | (5.9) | (6.4) | – | (6.4) |
Amortisation of intangibles | 9 | (0.4) | – | (0.4) | (0.6) | – | (0.6) |
Operating profit | 39.1 | 0.9 | 40.0 | 38.8 | (0.5) | 38.3 |
£m | Note | 2024 | 2023 |
Depreciation on property, plant and equipment | 10 | 2.2 | 2.2 |
Amortisation of intangible assets | 9 | 0.4 | 0.6 |
Depreciation on right-of-use assets | 17 | 5.9 | 6.4 |
Short-term and low-value lease charges on equipment and vehicles | 0.5 | 0.4 | |
Lease rental income – land and buildings | (0.4) | (0.4) | |
Staff costs (excluding share-based payments) | 4 | 44.5 | 44.1 |
£m | 2024 | 2023 |
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts – BDO LLP | 0.2 | 0.2 |
Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries – BDO LLP | 0.5 | 0.4 |
Total non-audit fees | 0.1 | 0.1 |
Total fees | 0.8 | 0.7 |
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143
Notes to the Accounts continued
3. Adjusting items
£m | 2024 | 2023 | |
Tuffnells provision credit/(charge) | (a) | 0.2 | (0.4) |
Network and reorganisation (costs)/credits | (b) | (0.1) | 0.5 |
Technology transformation costs | (c) | (0.1) | – |
Aborted acquisition costs | (d) | – | (0.6) |
Administrative expenses | – | (0.5) | |
Impairment reversal on trade receivables | (e) | 0.6 | – |
Impairment reversal of investment in joint ventures | (f) | 0.3 | – |
Total before tax | 0.9 | (0.5) | |
Taxation | (0.1) | – | |
Total after taxation | 0.8 | (0.5) |
The Group recognised a total adjusting items credit before tax of £0.9m (2023: charge of £0.5m) and credit of £0.8m (2023: charge of £0.5m) after
tax respectively.
Adjusting items are defined in the accounting policies in Note 1 and in the Glossary on page 168. In the directors’ opinion, removing these items from
the adjusted profit provides a relevant analysis of the trading results of the Group because it is consistent with how the business performance is planned
by, and reported to, the Board and Executive Team. However, these additional measures are not intended to be a substitute for, or superior to, IFRS
measures. They comprise:
Administrative expenses: net £nil (2023: £0.5m)
(a) Tuffnells provision: £0.2m credit (2023: £0.4m cost)
As part of the sale of Tuffnells Parcels Express Limited (Tuffnells) in May 2020, a contractual agreement was put in place in respect of the future
treatment and responsibility of certain insurance claims brought or notified to insurers. This agreement extinguished the Group’s exposure to new
accident and insurance claims brought after the sale of Tuffnells but which related to the Group’s period of ownership of Tuffnells up to May 2020.
However, as a result of Tuffnells falling into administration in June 2023, the enforceability of, and subsequent recoverability under, this contractual
agreement has been negatively impacted and the Group’s insurers have instead looked to the Group to stand behind the excess/deductible limit of such
claims and in the prior period a provision of £0.4m was recognised in addition to existing claims.
During the period, a review of provisions was held in respect of all remaining claims held following utilisations in the period and as a result, the provision
was reduced by £0.2m, which represents management’s best estimate of remaining claims brought. The cash impact of utilisations on claims in the
period was an outflow of £0.1m (2023: £0.2m).
These provisions have been reported as adjusting items on the basis that it relates to a former discontinued operation and is therefore outside the
normal course of activity.
(b) Network and reorganisation: £0.1m costs (2023: £0.5m net credit)
During the period, an additional £0.1m of costs were incurred with regards to simplifying the DMD group structure.
During the prior period, there was a reversal of accrued amounts of £0.6m relating to projects in connection with our outsourced Shared Service
Centre (SSC) in India, where accrued costs relating to overheads on projects would no longer materialise. These amounts were released to the income
statement when these projects concluded. This was partially offset by £0.1m of costs incurred with regards to simplifying the DMD group structure.
The cash impact of network and reorganisation was a £0.2m outflow (2023: £0.2m).
(c) Technology transformation costs: £0.1m (2023: £nil)
During the period, the Group commenced a transformation programme to enhance its technology infrastructure and enable alignment to the Group’s
updated vision and strategy.
Implementation costs of £0.1m have been recognised as adjusting items given that costs over the three-year programme are expected to be a
significant change to the Company and largely comprise software-as-a-service arrangements. The cash impact was an outflow of £0.1m.
(d) Aborted acquisition costs: £nil (2023: £0.6m)
During the prior period the Company incurred due diligence and legal costs associated with an aborted acquisition. The cash impact of these items was
an outflow of £0.6m.
(e) Impairment provision on trade receivables: £0.6m credit (2023: £nil)
On 9 May 2022 (‘the administration date’), McColl’s Retail Group went into administration. A statement of claim form was filed with the administrators
for an amount of £5.5m. The latest issued notification from the administrators on 7 June 2024 stated that unsecured creditors can be expected to
receive between 30-50% (2023: 20-50%) of approved claims. Management has determined its best estimate of recovery to be 30% (2023: 20%) of the
outstanding balance and therefore decreased the provision held to £3.8m (2023: £4.4m).
The Company continues to trade with McColl’s as acquired by Wm Morrison Supermarkets Ltd (Morrisons) under a pre-packaged insolvency
agreement with the administrator. The Company’s bad debt exposure relates solely to the outstanding trade receivable balance as at the
administration date.
This release is reported as an adjusting item on the same basis as the impairment loss of £4.4m recognised during the prior period ended 27 August 2022.
(f) Impairment reversal of investment in joint ventures: £0.3m reversal (2023: £nil)
During the period, the Company reviewed the business plan for the Rascal Joint Venture. The potential challenges anticipated to arise in a prior period
which had led to an impairment at that time continue not to have materialised; contracts remain in place and growth plans continue to progress.
As a result of this review, the remaining cumulative impairment of £0.3m (2023: £0.3m) was released, which has been presented within adjusting to align
to the previous impairment charge, which was significant in both quantum and nature to the results of the Group.
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4. Staff costs and employees
The aggregate remuneration of employees (including executive directors) was:
£m | 2024 | 2023 |
Wages and salaries | 39.4 | 39.2 |
Social security | 3.6 | 3.7 |
Pension costs | 1.1 | 1.2 |
Share-based payments expense | 0.9 | 1.1 |
Total | 45.0 | 45.2 |
The total average number of employees (including executive directors) was:
Number | 2024 | 2023 |
Operations | 1,333 | 1,368 |
Support functions | 98 | 140 |
Total | 1,431 | 1,508 |
£m | Note | 2024 | 2023 |
Interest on bank overdrafts and loans | (2.7) | (3.9) | |
Amortisation of loan arrangement fees* | (1.4) | (1.1) | |
Interest payable on leases | (2.0) | (1.4) | |
Total interest cost on financial liabilities at amortised cost | (6.1) | (6.4) | |
Unwind of discount on provisions | 19 | (0.2) | (0.1) |
Finance costs | (6.3) | (6.5) | |
Interest receivable on bank deposits | 0.4 | – | |
Net finance costs | (5.9) | (6.5) |
6. Income tax expense
2024 | 2023 | |||||
| Adjusting | Adjusting | |||||
£m | Adjusted | items | Total | Adjusted | items | Total |
Current tax | 8.2 | 0.1 | 8.3 | 6.5 | – | 6.5 |
Adjustment in respect of prior year | – | – | – | 0.2 | – | 0.2 |
Total current tax charge | 8.2 | 0.1 | 8.3 | 6.7 | – | 6.7 |
Deferred tax – current year | 0.3 | – | 0.3 | 0.5 | – | 0.5 |
Deferred tax – prior year | – | – | – | (0.4) | – | (0.4) |
Deferred tax – impact of rate change | – | – | – | (0.1) | – | (0.1) |
Total tax charge | 8.5 | 0.1 | 8.6 | 6.7 | – | 6.7 |
Effective tax rate | 25.6% | 25.2% | 20.7% | 21.1% |
The effective adjusted income tax rate in the year was 25.6% (2023: 20.7%). After the impact of tax recognised on adjusting items of £0.1m (2023: £nil),
the effective statutory income tax rate was 25.2% (2023: 21.1%).
Corporation tax is calculated at the main rate of UK corporation tax of 25% (2023: 21.5%). The UK Finance Act 2021 increased the corporate tax rate to
25% effective from 1 April 2023, which in the prior period resulted in a blended rate. The Group has assessed its deferred tax positions using a rate of
25%. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
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145
Notes to the Accounts continued
6. Income tax expense continued
The tax charge for the year can be reconciled to the profit in the income statement as follows:
£m | 2024 | 2023 |
Profit before tax | 34.1 | 31.8 |
Tax on profit at the standard rate of UK corporation tax 25% (2023: 21.5%) | 8.5 | 6.8 |
Income not subject to tax | (0.1) | 0.1 |
Expenses not deductible for tax purposes | 0.3 | 0.1 |
Adjustment in respect of prior years | 0.1 | (0.2) |
Share options | (0.2) | – |
Impact of change in UK tax rate | – | (0.1) |
Tax charge | 8.6 | 6.7 |
Amounts recognised directly in equity
A current tax credit of £0.1m (2023: £nil) and deferred tax charge of £0.1m (2023: £0.6m) was recognised directly in equity during the period.
Impact of future tax changes
In November 2022 the UK Government confirmed its intention to implement Framework Pillar Two rules in the UK, including a Qualified Domestic
Minimum Top-Up Tax rule. The subsequent Base Erosion Profit Sharing Pillar Two legislation, enacted on 11 July 2023, has introduced a multinational
top-up tax, which applies where a UK parent member has interests in entities located in non-UK jurisdictions, and the Group’s profits in those
jurisdictions are taxed at below the minimum rate of 15%.
With revenue consistently greater than the threshold, the Group falls within the scope of this legislation. Assessment of the potential exposure to Pillar
Two income taxes is based on the most recent available tax filings, country-by-country reporting and financial statements for the constituent entities
in the Group. However, as the UK rate of corporation tax is 25%, and the Group’s business is primarily UK-based, initial indications are that the impact
of these rules on the Group is not expected to be material. The IAS 12 exemption to recognise and disclose information about deferred tax assets and
liabilities related to Pillar Two income taxes has been applied.
7. Dividends
Amounts paid and proposed as distributions to equity shareholders in each period is set out below:
| 2024 | 2023 | 2024 | 2023 | |
| Paid and proposed dividends for the year | Per share | Per share | £m | £m |
Interim dividend – paid | 1.75p | 1.40p | 4.2 | 3.3 |
Special dividend – proposed | 2.00p | – | 4.8 | – |
Final dividend – proposed | 3.40p | 2.75p | 8.2 | 6.7 |
7.15p | 4.15p | 17. 2 | 10.0 | |
| Recognised dividends for the year | ||||
Final dividend – prior year | 2.75p | 2.75p | 6.7 | 6.5 |
Interim dividend – current year | 1.75p | 1.40p | 4.2 | 3.3 |
4.50p | 4.15p | 10.8 | 9.8 |
After the balance sheet date, a final 3.4 0 p dividend per share is proposed for the 53 weeks ended 31 August 2024 (2023: 2.75 p), alongside a special
dividend proposed of 2.00p per share, each of which is expected to be paid on 6 February 2025 to all shareholders who are on the register of members
at close of business on 10 January 2025. The ex-dividend date will be 9 January 2025.
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2024 | 2023 | |||||
| Weighted | Weighted | |||||
| average | average | |||||
| number of | number of | |||||
| Earnings | shares | Pence | Earnings | shares | Pence | |
| £m | Million | per share | £m | Million | per share | |
Weighted average number of shares in issue | 247.7 | 247.7 | ||||
Shares held by the EBT (weighted) | (7.4) | (10.4) | ||||
| Basic earnings per share (EPS) | ||||||
Adjusted earnings attributable to ordinary shareholders | 24.7 | 240.3 | 10.3 | 25.6 | 237.3 | 10.8 |
Adjusting items | 0.8 | – | – | (0.5) | – | – |
Earnings attributable to ordinary shareholders | 25.5 | 240.3 | 10.6 | 25.1 | 237.3 | 10.6 |
| Diluted earnings per share (EPS) | ||||||
Effect of dilutive share options | 10.8 | 12.6 | ||||
Diluted adjusted EPS | 24.7 | 251.1 | 9.8 | 25.6 | 249.9 | 10.2 |
Diluted EPS | 25.5 | 251.1 | 10.2 | 25.1 | 249.9 | 10.0 |
| Acquired intangibles | ||||||
| Internally | ||||||
| generated | Computer | |||||
| Customer | development | software | ||||
£m | Goodwill | relationships | Trade name | costs | costs | Total |
| Cost: | ||||||
At 26 August 2023 | 5.7 | 2.4 | 0.2 | 1.8 | 2.8 | 12.9 |
Additions | – | – | – | 0.8 | 0.1 | 0.9 |
Disposals | – | (0.3) | – | – | (0.3) | (0.6) |
At 31 August 2024 | 5.7 | 2.1 | 0.2 | 2.6 | 2.6 | 13.2 |
| Accumulated amortisation and impairment: | ||||||
At 26 August 2023 | (5.7) | (2.4) | (0.2) | (0.4) | (2.3) | (11.0) |
Amortisation charge | – | – | – | (0.2) | (0.2) | (0.4) |
Disposals | – | 0.3 | – | – | 0.3 | 0.6 |
At 31 August 2024 | (5.7) | (2.1) | (0.2) | (0.6) | (2.2) | (10.8) |
Net book value at 31 August 2024 | – | – | – | 2.0 | 0.4 | 2.4 |
| Cost: | ||||||
At 27 August 2022 | 5.7 | 2.4 | 0.2 | 3.2 | 7. 4 | 18.9 |
Additions | – | – | – | 0.5 | 0.3 | 0.8 |
Disposals | – | – | – | (1.9) | (4.9) | (6.8) |
At 26 August 2023 | 5.7 | 2.4 | 0.2 | 1.8 | 2.8 | 12.9 |
| Accumulated amortisation and impairment: | ||||||
At 27 August 2022 | (5.7) | (2.4) | (0.2) | (2.1) | (6.8) | (17. 2) |
Amortisation charge | – | – | – | (0.2) | (0.4) | (0.6) |
Disposals | – | – | – | 1.9 | 4.9 | 6.8 |
At 26 August 2023 | (5.7) | (2.4) | (0.2) | (0.4) | (2.3) | (11.0) |
Net book value at 26 August 2023 | – | – | – | 1.4 | 0.5 | 1.9 |
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147
Notes to the Accounts continued
| Land and buildings | |||||
| Long-term | Short-term | ||||
| leasehold | leasehold | Fixtures | Equipment | ||
| £m | improvements | improvements | and fittings | and vehicles | Total |
| Cost: | |||||
At 26 August 2023 | 0.2 | 9.2 | 3.5 | 17.0 | 29.9 |
Additions | – | 1.4 | 0.1 | 1.6 | 3.1 |
Disposals | (0.2) | (0.9) | (0.4) | (2.8) | (4.3) |
At 31 August 2024 | – | 9.7 | 3.2 | 15.8 | 28.7 |
| Accumulated depreciation: | |||||
At 26 August 2023 | (0.2) | (6.8) | (1.7) | (12.4) | (21.1) |
Depreciation charge | – | (0.5) | (0.3) | (1.4) | (2.2) |
Disposals | 0.2 | 0.9 | 0.4 | 2.8 | 4.3 |
At 31 August 2024 | – | (6.4) | (1.6) | (11.0) | (19.0) |
Net book value at 31 August 2024 | – | 3.3 | 1.6 | 4.8 | 9.7 |
| Cost: | |||||
At 27 August 2022 | 0.2 | 10.5 | 3.0 | 23.0 | 36.7 |
Additions | – | 1.0 | 0.9 | 0.5 | 2.4 |
Disposals | – | (2.3) | (0.4) | (6.5) | (9.2) |
At 26 August 2023 | 0.2 | 9.2 | 3.5 | 17.0 | 29.9 |
| Accumulated depreciation: | |||||
At 27 August 2022 | (0.2) | (8.7) | (1.8) | (17.4) | (28.1) |
Depreciation charge | – | (0.4) | (0.5) | (1.3) | (2.2) |
Disposals | – | 2.3 | 0.6 | 6.3 | 9.2 |
At 26 August 2023 | (0.2) | (6.8) | (1.7) | (12.4) | (21.1) |
Net book value at 26 August 2023 | – | 2.4 | 1.8 | 4.6 | 8.8 |
11. Interests in joint ventures
£m | 2024 | 2023 |
At 27/28 August | 4.4 | 4.2 |
Additions | – | 0.3 |
Share of profit | 0.1 | 0.1 |
Impairment reversal | 0.3 | – |
Dividends received | (0.2) | (0.2) |
At 31/26 August | 4.6 | 4.4 |
The joint ventures listed below have share capital consisting solely of ordinary shares, which are held directly by the Group.
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11. Interests in joint ventures continued
Company name/(number) | Share class | Group % | Registered address | Measurement method |
| Rascal Solutions Limited | Ordinary A Shares | 50% | Silbury Court, 420 Silbury Boulevard, | Equity method |
| 05191277 | Milton Keynes MK9 2AF | |||
| Bluebox Systems Group | Ordinary A Shares | 31.8% | Estantia House, Pitreavie Drive, Pitreavie | Equity method |
| Limited SC544863 | Business Park, Dunfermline, | |||
| Fife KY11 8US | ||||
| Fresh On The Go Limited | Ordinary Shares | 30% | 61 Bridge Street, | Equity method |
| 08775703 | Kington, HR5 3DJ | |||
| Lucid Digital Magazines | Ordinary Shares | 50% | Rowan House Cherry Orchard North, | Equity method |
| Limited t/a LoveMedia | Kembrey Park, Swindon, | |||
| 12738320 | England, SN2 8UH |
12. Inventories
£m | 2024 | 2023 |
Goods held for resale | 22.0 | 17.5 |
Raw materials and consumables | 0.1 | 0.2 |
Total | 22.1 | 17.7 |
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149
Notes to the Accounts continued
13. Trade and other receivables
£m | 2024 | 2023 |
Trade receivables | 76.4 | 73.5 |
Provision for individually assessed expected credit losses (1) | (3.8) | (4.4) |
Provision for collectively assessed expected credit losses | (0.1) | (0.1) |
72.5 | 69.0 | |
Other debtors | 26.4 | 29.4 |
Prepayments | 1.8 | 1.1 |
Accrued income | 1.4 | 1.6 |
Trade and other receivables | 102.1 | 101.1 |
(1) Net impairment loss on trade receivables – McColl’s Retail Group
During the period ended 27 August 2022, the Company received notice that McColl’s Retail Group had gone into administration. A statement of claim
was filed with the administrators for an amount of £5.5m. The latest notification issued from the administrators on 7 June 2024 stated that unsecured
creditors can be expected to receive between 30-50% (2023: 20-50%) of approved claims. Management has maintained a best estimate that only 30%
(2023: 20%) of the outstanding balance is recoverable. The Company has therefore reduced the provision to £3.8m (2023: £4.4m), representing 70%
(2023: 80%) of the total balance of £5.5m (2023: £5.5m). For more information see Note 4.
The expected credit loss provision of £3.8m (2023: £4.4m) has been allocated to ‘over 90 days overdue’ (2023: over 90 days overdue), matching the
ageing profile of the £5.5m total receivable due.
If the Company had considered 50% (2023: 50%) of the total balance of £5.5m to be recoverable in line with the upper range of the administrator’s
estimate, the provision recognised would have been £2.7m (2023: £2.7m), allocated to ‘over 90 days overdue’ (2023: over 90 days overdue).
On 31 October 2024, £1.6m was received from the administrators as an interim dividend on the statement of claim filed.
2024 | 2023 | |||||||
| Gross | Individually | Collectively | Net | Gross | Individually | Collectively | Net | |
| carrying | assessed | assessed | carrying | carrying | assessed | assessed | carrying | |
| £m | amount | ECL | ECL | amount | amount | ECL | ECL | amount |
Current (not overdue) | 70.4 | – | (0.1) | 70.3 | 67. 8 | – | (0.1) | 67.7 |
30-60 days overdue | 0.1 | – | – | 0.1 | – | – | – | – |
61-90 days overdue | 0.1 | – | – | 0.1 | – | – | – | – |
Over 90 days overdue | 5.8 | (3.8) | – | 2.1 | 5.7 | (4.4) | – | 1.3 |
Total | 76.4 | (3.8) | (0.1) | 72.5 | 73.5 | (4.4) | (0.1) | 69.0 |
The following table provides information about the Group’s loss rates applied against customer balances:
% | 2024 | 2023 |
Current (not overdue) | <0.1 | <0.1 |
30-60 days overdue | <0.1 | <0.1 |
61-90 days overdue | <0.1 | <0.1 |
Over 90 days overdue | 70.0 | 80.0 |
Of the trade receivables balance at the end of the year:
• two customers (2023: three) had individual balances that represented more than 10% of the total trade receivables balance. The total of these was
£20.9m (2023: £30.3m); and
• a further three customers (2023: two) had individual balances that represented more than 5% of the total trade receivables balance. The total of these
was £16.9m (2023: £9.0m).
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13. Trade and other receivables continued
Trade receivables continued
The movement in provision for expected credit losses for the period is detailed below:
£m | Note | 2024 | 2023 |
At 27/28 August | 4.5 | 4.5 | |
Expected credit losses recognised | 0.1 | 0.1 | |
Reversal of individually assessed credit losses | 3 | (0.6) | – |
Amounts written off as uncollectible | (0.1) | (0.1) | |
At 31/26 August | 3.9 | 4.5 |
The directors consider that the carrying amount of trade and other receivables approximates their fair value which is considered to be a level 2
methodology of valuing them. The inputs used to measure fair value are categorised into different levels of the fair value hierarchy (levels 1 to 3).
The fair value measurement is categorised in its entirety in the level of the lowest level input that is significant to the entire measurement.
Default occurs when the debt becomes overdue by 90 days.
The Group performed sensitivity analysis on the expected credit loss (excluding losses in respect of McColl’s Retail Group) and should the default rate
change from expected:
• An increase in default rate by 2% would increase the expected credit loss by £1.4m.
• A decrease in default rate by 2% would result in no credit losses.
• An increase in default rate by 5% would increase the expected credit loss by £3.4m.
• A decrease in default rate would result in no credit losses.
Other debtors and prepayments
The largest items included within this balance are returns reserve asset of £16.9m (2023: £16.8m) (refer to Note 1, section 6) and £8.0m (2023: £9.8m)
of publisher debtors.
14. Trade and other payables
£m | 2024 | 2023 |
Trade payables | (88.4) | (101.0) |
Other creditors | (32.6) | (34.0) |
Accruals | (7.4) | (6.4) |
Deferred income | (0.1) | (0.1) |
(128.5) | (141.5) |
Included within other creditors is a balance of £19.8m (2023: £19.7m) relating to the returns reserve accrual. (Refer to Note 1, section 6.)
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade
purchases is 33 days (2023: 32 days). No interest is charged on trade payables. The directors consider that the carrying amount of trade and other
payables approximates to their fair value using a level 2 valuation.
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151
Notes to the Accounts continued
| Total | ||||||
£m | Sterling | Euro | US Dollar | Other | 2024 | 2023 |
Cash and cash equivalents | 6.4 | 0.3 | 0.2 | 0.1 | 7.0 | 37.3 |
Revolving credit facility | (18.0) | – | – | – | (18.0) | – |
Term loan – current liabilities | – | – | – | – | – | (10.0) |
Term loan – non-current liabilities | – | – | – | – | – | (31.5) |
| Unamortised arrangement fees – | 0.4 | – | – | – | 0.4 | 1.3 |
| presented in non-current liabilities | ||||||
Total borrowings | (17.6) | – | – | – | (17.6) | (40.2) |
Net borrowings | (11.2) | 0.3 | 0.2 | 0.1 | (10.6) | (2.9) |
| Total borrowings | ||||||
Due for settlement within 12 months | – | – | – | – | – | (10.0) |
Due for settlement after 12 months | (17.6) | – | – | – | (17.6) | (30.2) |
Total | (17.6) | – | – | – | (17.6) | (40.2) |
| 27 August | Financing | Other | 31 August | |||
£m | Note | 2023 | cash flows | New leases | changes | 2024 |
| 2024 | ||||||
Revolving credit facility | 16 | – | 18.0 | – | (0.4) | 17.6 |
Term loan | 16 | 40.2 | (41.5) | – | 1.3 | – |
Leases | 23.2 | (7.9) | 11.2 | 4.4 | 30.9 | |
Total | 63.4 | (31.4) | 11.2 | 5.3 | 48.5 |
| 28 August | Financing | Other | 26 August | |||
£m | Note | 2022 | cash flows | New leases | changes | 2023 |
| 2023 | ||||||
Term loan | 16 | 47.1 | (11.9) | – | 5.0 | 40.2 |
Leases | 27.6 | (7.5) | 1.7 | 1.4 | 23.2 | |
Total | 74.7 | (19.4) | 1.7 | 6.4 | 63.4 |
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15. Cash and borrowings continued
£m | Note | 2024 | 2023 |
Cash and cash equivalents | 16 | 7.0 | 37.3 |
Current borrowings | 16 | – | (10.0) |
Non-current borrowings | 16 | (17.6) | (30.2) |
Net borrowings | (10.6) | (2.9) | |
Lease liabilities | 17 | (30.9) | (23.2) |
Net debt | (41.5) | (26.1) |
16. Financial instruments
Treasury policy
The Group operates a centralised treasury function to manage the Group’s funding requirements and financial risks in line with the Board-approved
treasury policies and procedures and their delegated authorities. The role of Treasury is to ensure that appropriate financing is available for running the
businesses of the Group on a day-to-day basis, whilst minimising interest cost. No transactions of a speculative nature are undertaken. Dealings are
restricted to those banks with suitable credit ratings and counterparty risk and credit exposure is monitored frequently.
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153
Notes to the Accounts continued
16. Financial instruments continued
| Due | Due | ||||
| between | between | Greater | |||
| Due within | 1 and | 2 and | than | ||
| £m | 1 year | 2 years | 3 years | 3 years | Total |
| At 31 August 2024 | |||||
Bank and other borrowings | (18.0) | – | – | – | (18.0) |
Trade and other payables | (128.5) | – | – | – | (128.5) |
Leases | (7.6) | (6.8) | (6.0) | (19.8) | (40.2) |
Total | (154.1) | (6.8) | (6.0) | (19.8) | (186.7) |
| At 26 August 2023 | |||||
Bank and other borrowings | (10.0) | (10.0) | (21.5) | – | (41.5) |
Trade and other payables | (141.5) | – | – | – | (141.5) |
Leases | (6.1) | (5.1) | (4.4) | (12.0) | (27.6) |
Total | (157.6) | (15.1) | (25.9) | (12.0) | (210.6) |
£m | 2024 | 2023 |
Bank deposits | 7.0 | 37.3 |
Trade and other receivables | 98.9 | 98.4 |
105.9 | 135.7 |
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17. Leases
| Equipment | Land and | ||
| £m | and vehicles | buildings | Total |
| Cost: | |||
At 27 August 2023 | 2.0 | 38.4 | 40.4 |
Additions | 0.3 | 13.3 | 13.6 |
Disposals | (0.8) | (2.5) | (3.3) |
At 31 August 2024 | 1.5 | 49.2 | 50.7 |
| Accumulated depreciation: | |||
At 27 August 2023 | (1.4) | (17.2) | (18.6) |
Depreciation charge | (0.3) | (5.6) | (5.9) |
Disposals | 0.8 | 2.5 | 3.3 |
At 31 August 2024 | (0.9) | (20.3) | (21.2) |
Net book value at 31 August 2024 | 0.6 | 28.9 | 29.5 |
| Cost: | |||
At 28 August 2022 | 1.7 | 42.1 | 43.8 |
Additions | 0.3 | 1.4 | 1.7 |
Disposals | – | (5.1) | (5.1) |
At 26 August 2023 | 2.0 | 38.4 | 40.4 |
| Accumulated depreciation: | |||
At 28 August 2022 | (1.0) | (16.5) | (17.5) |
Depreciation charge | (0.4) | (6.0) | (6.4) |
Disposals | – | 5.3 | 5.3 |
At 26 August 2023 | (1.4) | (17.2) | (18.6) |
Net book value at 26 August 2023 | 0.6 | 21.2 | 21.8 |
Amounts recognised in respect of leases
£m | 2024 | 2023 |
Interest expense (included in finance cost) | 2.0 | 1.4 |
Expense relating to low-value leases (included in cost of sales and administrative expenses) | 0.5 | 0.4 |
Property rental income | (0.4) | (0.4) |
Total cash outflow from leases | 7.9 | 6.5 |
Maturity analysis of lease liabilities
£m | 2024 | 2023 |
Current | (5.5) | (4.9) |
Non-current | (25.4) | (18.3) |
Total | (30.9) | (23.2) |
Amounts recognised as lessor:
At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:
£m | 2024 | 2023 |
Within one year | 0.3 | 0.2 |
In the second to fifth years inclusive | 0.6 | 0.6 |
0.9 | 0.8 |
Strategic Report Governance
Financial Statements
155
Notes to the Accounts continued
| Other | ||||
| Share-based | temporary | |||
£m | Fixed assets | payments | differences | Total |
At 27 August 2023 | 0.4 | 1.0 | 0.3 | 1.7 |
(Charge)/credit to income | (0.4) | – | 0.1 | (0.3) |
Charge to equity | – | (0.1) | – | (0.1) |
At 31 August 2024 | – | 0.9 | 0.4 | 1.3 |
At 28 August 2022 | 0.6 | 0.5 | – | 1.1 |
(Charge)/credit to income | (0.2) | (0.1) | 0.3 | – |
Credit to equity | – | 0.6 | – | 0.6 |
At 26 August 2023 | 0.4 | 1.0 | 0.3 | 1.7 |
19. Provisions
| Insurance | ||||
| Reorganisation | and legal | Property | ||
| £m | provisions | provisions | provisions | Total |
At 27 August 2023 | (1.0) | (0.8) | (4.9) | (6.7) |
Charged to income statement | (0.1) | (0.1) | (0.6) | (0.8) |
Credited to income statement | – | 0.3 | 0.2 | 0.5 |
Utilised in period | 0.9 | 0.1 | 0.3 | 1.3 |
Unwinding of discount utilisation | – | – | (0.2) | (0.2) |
At 31 August 2024 | (0.2) | (0.5) | (5.2) | (5.9) |
£m | 2024 | |||
Included within current liabilities | (1.3) | |||
Included within non-current liabilities | (4.6) | |||
Total | (5.9) |
Included within non-current liabilities is £4.6m (2023: £4.2m) relating to property provisions.
Reorganisation provisions of £0.2m (2023: £1.0m) relate to the restructure of the DMD business, the Smiths News network and the Group’s
support functions.
Insurance and legal provisions represent the expected future costs of employer’s liability, public liability, motor accident claims and legal claims; included
within the total balance is £0.5m (2023: £0.8m) relating to claims from the Tuffnells business prior to disposal.
The property provision represents the estimated future cost of dilapidation costs across the Group. These provisions have been discounted to present
value and this discount will be unwound over the life of the leases. The provisions cover the period to 2034 with all of the liability falling within ten years.
The Group has performed sensitivity analysis on the property provision using the possible scenarios below:
If the discount rate changes by +/- 0.5%, the property provision would change by +/- £0.1m (2023: +/- £0.1m).
If the repair cost per square foot changes by +/-£1.00p, the property provision would change by +/-£0.3m (2023: +/- £0.4m).
156
Smiths News plc | Annual Report and Accounts 2024
21. Net cash inflow from operating activities
£m | Note | 2024 | 2023 |
Operating profit | 3 | 40.0 | 38.3 |
Impairment reversal of investment in joint venture | 11 | (0.3) | – |
Share of loss/(profit) of joint ventures | 11 | 0.2 | (0.1) |
Depreciation of property, plant and equipment | 10 | 2.2 | 2.2 |
Depreciation of right-of-use assets | 17 | 5.9 | 6.4 |
Amortisation of intangible assets | 9 | 0.4 | 0.6 |
Share-based payments | 0.9 | 1.1 | |
Increase in inventories | (4.4) | (2.1) | |
Decrease in receivables | (1.0) | (5.5) | |
(Decrease)/increase in payables | (12.2) | 1.9 | |
(Decrease)/increase in provisions | (0.8) | 0.2 | |
Income tax paid | (8.5) | (6.6) | |
Net cash inflow from operating activities | 22.4 | 36.4 | |
Net cash flow from operating activities is stated after the following adjusting items: | 3 | ||
Network and reorganisation costs | (0.2) | (0.2) | |
Tuffnells provision utilisation | (0.1) | (0.2) | |
Technology transformation costs | (0.1) | – | |
Aborted acquisition costs | – | (0.6) | |
Total adjusting items cash flow | (0.4) | (1.0) |
Strategic Report Governance
Financial Statements
157
Notes to the Accounts continued
£m | 2024 | 2023 |
| Issued, authorised and fully paid: | ||
247.7m ordinary shares of 5p each (2023: 247.7m) | 12.4 | 12.4 |
| Ordinary shares | |
| Number (m) | of 5p each |
At 26 August 2023 and at 31 August 2024 | 247.7 |
£m | 2024 | 2023 |
At 26 August 2023 and at 31 August 2024 | 60.5 | 60.5 |
£m | 2024 | 2023 |
At 26 August 2023 and at 31 August 2024 | (280.1) | (280.1) |
£m | 2024 | 2023 |
Balance at 27/28 August | (4.4) | (4.6) |
Acquired in the period | (3.3) | (1.7) |
Disposed of on exercise of options | 4.0 | 1.9 |
Balance at 31/26 August | (3.7) | (4.4) |
£m | 2024 | 2023 |
At 27 August 2023/28 August 2022 | 0.4 | 0.4 |
Retranslation of reserves (subsidiaries) | (0.2) | – |
At 31 August 2024/26 August 2023 | 0.2 | 0.4 |
158
Smiths News plc | Annual Report and Accounts 2024
| £m | |
Balance at 27 August 2022 | 179.4 |
Amounts recognised in total comprehensive income | 25.1 |
Dividends paid | (9.8) |
Disposed of on exercise of options | (1.9) |
Equity-settled share-based payments, net of tax | 1.5 |
Deferred tax recognised in equity | 0.6 |
Balance at 26 August 2023 | 194.9 |
Amounts recognised in total comprehensive income | 25.6 |
Dividends paid | (10.8) |
Disposed of on exercise of options | (3.2) |
Equity-settled share-based payments, net of tax | 0.9 |
Current tax recognised in equity | 0.1 |
Deferred tax recognised in equity | (0.1) |
Balance at 31 August 2024 | 207.4 |
25. Share-based payments
The Group recognised a total charge of £0.9m (2023: £1.1m) related to equity-settled share-based payment transactions. The average share price
throughout the year was 51.5p (2023: 44.6p).
The Group operates the following share incentive schemes:
Sharesave Scheme | Under the terms of the Group Sharesave Scheme, the Board may grant options to purchase ordinary shares in |
| the Company to eligible employees who enter into an HM Revenue & Customs approved Save-As-You-Earn | |
| (SAYE) savings contract for a term of three years. Options are granted at up to a 20% discount to the market | |
| price of the shares on the day preceding the date of offer and are normally exercisable for a period of six months | |
| after completion of the SAYE contract. | |
| Executive Share Option Scheme | Under the terms of the Group Executive Share Option Scheme, the Board may grant options to purchase |
| (ESOS) | ordinary shares in the Company to executives up to an annual limit of 200% of base salary. The exercise of |
| options is conditional on the achievement of adjusted profit after a three-year period, which is determined | |
| by the Remuneration Committee at the time of grant. Provided that the target is met, options are normally | |
| exercisable until the day preceding the tenth anniversary of the date of grant. | |
LTIP | Under the terms of the Group LTIP, executive directors and key senior executives may be awarded each year |
| conditional entitlements to ordinary shares in the Company (which may be in the form of nil cost options or | |
| conditional awards) or, in order to retain flexibility and at the Company’s discretion, a cash sum linked to the | |
| value of a notional award of shares up to a value of 200% of base salary. The vesting of awards is subject to the | |
| satisfaction of a three-year performance condition, which is determined by the Remuneration Committee at the | |
| time of grant. Subject to the satisfaction of the performance condition, awards are normally exercisable until the | |
| tenth anniversary of the date of grant. | |
Deferred Bonus Plan (DBP) | Under the terms of the Group Deferred Bonus Plan, each year executive directors and key senior executives |
| may be granted share awards (in the form of nil cost options) dependent on the achievement of the Annual | |
| Bonus Plan performance targets. Awards are immediately exercisable, but a two-year hold-back period | |
| applies, during which the share certificate for such shares is held by the Company. Separately, key senior | |
| executives may also be granted share awards (in the form of nil cost options) under the DBP plan in respect | |
| of a (discounted) restricted share award (dependent on continued employment with the Company). |
Strategic Report Governance
Financial Statements
159
Notes to the Accounts continued
25. Share-based payments continued
Details of the options/awards are as follows:
Sharesave | ESOS | LTIP | DBP | |||||
| Weighted | Weighted | Weighted | Weighted | |||||
| average | average | average | average | |||||
| No of | exercise | No of | exercise | No of | exercise | No of | exercise | |
| Number of options/awards | shares | price (p) | shares | price (p) | shares | price (p) | shares | price (p) |
At 27 Aug 2022 | 7,579,083 | 25.27 | 1,056,744 | 126.1 | 10,893,872 | – | 1,499,148 | – |
Granted | 1,316,234 | 55.40 | – | – | 2,695,499 | – | 1,337,604 | – |
Exercised | (264,430) | – | – | – | (2,791,373) | – | (1,614,771) | – |
Expired/Forfeited | (670,274) | 30.01 | (256,294) | 137.8 | (1,429,910) | – | – | – |
At 26 Aug 2023 | 7,960,613 | 30.38 | 800,450 | 125.3 | 9,368,088 | – | 1,221,981 | – |
Granted | 1,603,582 | 60.80 | – | – | 2,994,040 | – | 1,389,805 | – |
Exercised | (4,415,748) | – | – | – | (3,167,125) | – | (1,424,789) | – |
Expired/Forfeited | (302,050) | 42.83 | (340,412) | 189.5 | (201,737) | – | (18) | – |
At 31 Aug 2024 | 4,846,397 | – | 460,038 | – | 8,993,266 | – | 1,186,979 | – |
Exercisable at 31 Aug 2024 | – | – | 460,038 | 153.9 | – | – | – | – |
Exercisable at 26 Aug 2023 | – | – | 800,450 | 125.3 | – | – | – | – |
The weighted average remaining contractual life in years of options/awards is as follows:
Sharesave | ESOS | LTIP | DBP | |
Outstanding at 31 August 2024 | 1.0 | 0.3 | 1.2 | 1.6 |
Outstanding at 26 August 2023 | 1.4 | 5.2 | 1.2 | 1.5 |
Details of the options/awards granted or commencing during the period were as follows:
Sharesave | ESOS | LTIP | DBP | |
| During 2024: | ||||
Effective date of grant or commencement date | Jul 2024 | – | Dec 2023 | Dec 2023 |
Average fair value at date of grant or scheme commencement – pence | 16.4 | – | 32.6 | 47.6 |
| During 2023: | ||||
Effective date of grant or commencement date | Jul 2023 | – | Jan 2023 | Jan 2023 |
Average fair value at date of grant or scheme commencement – pence | 21.5 | – | 34.9 | 50.6 |
The options outstanding at 31 August 2024 had exercise prices ranging from nil to 48.9p (2023: nil to 139.5p). The weighted average share price on the
date of exercise was 45.4p (2023: 47.8p).
The Sharesave options granted during each period have been valued using the Black-Scholes model. The LTIP performance measures include a 60%
(2023: 70%) total shareholder return (TSR) metric which is valued by reference to the share price at date of grant less an adjustment for the TSR portion
of the award. The DBP schemes are valued by reference to the share price at the date of grant.
The inputs to the Black-Scholes model are as follows:
Sharesave | LTIP | DBP | |
| 2024 options/awards: | |||
Share price at grant date – pence | 60.8 | 48 | 48 |
TSR adjustment – pence | – | (25) | – |
Exercise price – pence | 48.9 | – | – |
Expected volatility – per cent | 69.5 | – | – |
Expected life – years | 3 | – | – |
Risk free rate – per cent | 3.9 | – | – |
Expected dividend yield – per cent | 7.48 | – | – |
Weighted average fair value – pence | 16 | 33 | 48 |
| 2023 options/awards: | |||
Share price at grant date – pence | 55.4 | 51 | 51 |
TSR adjustment – pence | – | (23) | – |
Exercise price – pence | 44.3 | – | – |
Expected volatility – per cent | 121.5 | – | – |
Expected life – years | 3 | – | – |
Risk free rate – per cent | 4.7 | – | – |
Expected dividend yield – per cent | 8.83 | – | – |
Weighted average fair value – pence | 22 | 28 | 51 |
160
Smiths News plc | Annual Report and Accounts 2024
26. Post balance sheet events
The directors have considered the period between the balance sheet date and the date when the accounts are authorised for issue for evidence of
conditions that existed at the balance sheet date, either adjusting or non-adjusting post balance sheet events, and have concluded that, other than
those events disclosed in Note 15 and Note 20, there are no other events in the current period.
| Sales to related parties | ||
£m | 2024 | 2023 |
Joint ventures | 0.4 | 0.4 |
| Loans to related parties | ||
£m | 2024 | 2023 |
Joint ventures | – | 0.3 |
£m | 2024 | 2023 |
Salaries | 0.8 | 0.8 |
Bonus | 0.6 | 0.5 |
Non-executive director fees | 0.4 | 0.4 |
1.8 | 1.7 |
£m | 2024 | 2023 |
Short-term employee benefits | 3.0 | 2.9 |
Share-based payments | 0.8 | 1.0 |
3.8 | 3.9 |
Strategic Report Governance
Financial Statements
161
Notes to the Accounts continued
Company name/(number) | Share class | Group % | Company name/(number) | Share class | Group % | ||
| United Kingdom | |||||||
Connect Limited 02008952 | Ordinary Shares | 100% | Martin Lavell Limited 02654521 (*) | Ordinary Shares | 100% | ||
Connect Logistics Limited 09172965 | Ordinary Shares | 100% | Pass My Parcel Limited 09172022 | Ordinary Shares | 100% | ||
| Connect News & Media Limited | Ordinary Shares | 100% | Phantom Media Limited 03805661 (*) | Ordinary Shares | 100% | ||
| 08572634 | |||||||
Connect Parcel Freight Limited 09295023 | Ordinary Shares | 100% | Smiths News Holdings Limited | Ordinary Shares | 100% | ||
| 04236079 | |||||||
Connect Parcels Limited 09172850 | Ordinary Shares | 100% | Smiths News Instore Limited 03364589 | Ordinary Shares | 100% | ||
Connect Services Limited 08522170 | Ordinary Shares | 100% | Smiths News Investments Limited (*) | Ordinary Shares | 100% | ||
| 06831284 | |||||||
| Connect Specialist Distribution | Ordinary Shares | 100% | Smiths News Distribution Limited | Ordinary Shares | 100% | ||
| Group Limited 08458801 | 08506961 | ||||||
Connect2U Limited 03920619 | Ordinary Shares | 100% | Smiths News Trading Limited 00237811 | Ordinary Shares | 100% | ||
| Dawson Media Services Limited | Ordinary Shares | 100% | Dawson Limited 03433262 | Ordinary Shares | 100% | ||
| 06882722 | |||||||
| Dawson Guarantee Company Limited | Ordinary Shares | 100% | Dawson Media Direct Limited (*) | Ordinary Shares | 100% | ||
| 06882393 | 06882366 | ||||||
Dawson Holdings Ltd (*) 00034273 | Ordinary Shares | 100% | |||||
| Germany | |||||||
Dawson Media Direct GmbH HRB 96649 | Ordinary Shares | 100% | Johannstr. 39 | 40476 | Dusseldorf, Germany | ||
| Hong Kong | |||||||
| Dawson Media Direct China Limited | Ordinary Shares | 100% | Flat/Rm 5008 50/F, Central Plaza, 18 Harbour Road, Wanchai, Hong | ||||
| 1167911 | Kong | ||||||
| Thailand | |||||||
| Dawson Media Direct Company Limited | Ordinary Shares | 48.9% | 87 M Thai Tower, All Seasons Place, 23rd Floor, Wittayu Road, Lumpini | ||||
| 105558138385 | Sub-District, Pathumwan District, Bangkok, Thailand |
162
Smiths News plc | Annual Report and Accounts 2024
Company Balance Sheet
As at 31 August 2024
£m Note 2024 2023
Fixed assets
Investments in subsidiary undertakings 3 402.5 383.6
Current assets
Amounts owed by subsidiary undertakings 4 30.6 30.6
Total assets 433.1 414.2
Creditors: amounts falling due within one year 5 (229.8) (219.0)
Net assets 203.3 195.2
Capital and reserves
Called up share capital 6(a) 12.4 12.4
Share premium account 6(c) 60.5 60.5
Retained earnings 7 130.4 122.3
Total shareholders’ funds 203.3 195.2
The result for the year was a profit of £18.9m (2023: £13.4m).
These accounts were approved by the directors on 4 November 2024.
Signed on behalf of the Board of Directors:
Jonathan Bunting Paul Baker
Chief Executive Officer Chief Financial Officer
Registered number – 05195191
Strategic Report Governance
Financial Statements
163
Company Statement of Changes in Equity
For the 53 weeks ended 31 August 2024
£m
Share
capital
Share
premium
Retained
earnings Total
Balance at 27 August 2022 12.4 60.5 118.7 191.6
Profit for the year and total comprehensive income – – 13.4 13.4
Dividend paid – – (9.8) (9.8)
Balance at 26 August 2023 12.4 60.5 122.3 195.2
Profit for the year and total comprehensive income – – 18.9 18.9
Dividend paid – – (10.8) (10.8)
Balance at 31 August 2024 12.4 60.5 130.4 203.3
164
Smiths News plc | Annual Report and Accounts 2024
Notes to the Company balance sheet
1. Accounting policies
(a) Accounting convention
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of a
qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. Accordingly, the financial statements
have been prepared in accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced Disclosure Framework’ as issued by the Financial
Reporting Council.
The Company has taken advantage of section 408 of the Companies Act 2006 not to present a profit and loss account and related notes.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
• the requirements of paragraphs 10(d), 10(f), 39(c) and 134-136 of IAS 1 Presentation of Financial Statements;
• the requirements of IAS 7 Statement of Cashflows;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
• the requirements of IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group,
provided that any subsidiary which is a party to the transaction is wholly owned by such a member;
• the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets;
• paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted average exercise prices of options, and how the
fair value of goods and services received was determined); and
• IFRS 7, ‘Financial Instruments: Disclosures’.
Where required, equivalent disclosures are given in the Group Financial Statements.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in
Note 1 to the Group Financial Statements except as noted below.
Investments in subsidiaries and associates are stated at cost less, where appropriate, provisions for impairment.
Critical accounting estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the
carrying value of assets and liabilities which are not readily apparent from other sources. Actual results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis and any revisions to them are recognised in the period in which they are revised.
Estimated impairment of investments
Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When
a review for impairment is conducted, the recoverable amount is determined using value in use calculations. The value in use method requires the
Company to determine appropriate assumptions in relation to the cash flow projections over the three-year plan period (which is a key source of
estimation uncertainty), the terminal growth rate to be applied beyond this three-year period and the risk-adjusted post-tax discount rate used to
discount the assumed cash flows to present value. The assumption that cash flows continue into perpetuity is a source of significant estimation
uncertainty.
(b) Investments in subsidiary undertakings
Investments in subsidiary undertakings are individually valued at historical cost less provision for impairment in value.
(c) Financial liabilities and equities
Trade payables are measured at amortised cost.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
(d) Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted
at the balance sheet date.
2. Result for the year
The Company has not presented its own profit and loss account as permitted by section 408 of the Companies Act 2006. The result for the year
attributable to shareholders, which is stated on an historical cost basis, was a profit of £18.9m (2023: £13.4m). There were no other recognised gains
or losses. The dividend paid in the year is £10.8m (2023: £9.8m) (refer to Note 7 of the Group financial statements).
Strategic Report Governance
Financial Statements
165
3. Investments in subsidiary undertakings
£m 2024 2023
Net book value:
Balance at 27/28 August 383.6 370.2
Impairment reversal 18.9 13.4
Balance at 31/26 August 402.5 383.6
At 31 August 2024 the carrying value of the Company’s investment in subsidiary was £402.5m (2023: £383.6m) with a cumulative impairment provision
of £260.4m (2023: £279.3m). At the period end, the directors identified indicators both of impairment (due to the difference between the Group’s total
market capitalisation and carrying value and ongoing market decline) and of reversal of impairment (lower risk free rate, lower net debt position for the
Group and an improved outlook evidenced through an increase in the average share price). Accordingly, they conducted an impairment review, based
on the Group’s value in use adjusted for net debt, which included a sensitivity analysis on the key inputs including the discount rate and on scenarios
which might affect the Group’s future cash flows.
The Group’s calculated value in use increases as a result of higher present cash flows from a lower discount rate partially offset by lower expected
profitability in the outer years of the assessment period. The sensitivity analyses showed a material range of outcomes was possible and highlighted
a sensitivity to the discount rate (see table below).
The directors further considered whether there had been a significant change to the long-term value of the Group or its market since the prior year.
The Group’s FY2024 result (£39.1m adjusted operating profit) was higher than the modelled and market expectation of £38.2m and therefore there was
no evidence of a decline in the Group’s current outlook.
As a result of the impairment review, the directors concluded that it was appropriate to partially reverse the previously recognised cumulative
impairment of £279.3m by £18.9m representing the modelled estimate of the Group’s value in use being higher than the carrying amount of the
Company’s investment in subsidiary.
The Company indirectly owns three cash generating units (CGU), Smiths News Trading Limited (Smiths News), Dawson Media Direct group (DMD)
and its joint venture investment in Rascal Solutions Limited. Each cash-generating unit was independently valued using value in use calculations;
the Company prepares cash flow forecasts derived from the most recent budgets and three-year plans. Cash flows beyond this three-year period are
extrapolated using a terminal growth rate based on management’s future expectations.
The future cash flows applied in the calculation reflect the Group’s current plan for Smiths News and its ancillary businesses. These plans reflect the
updated trading position of the businesses with ongoing inflationary cost pressures.
The key assumptions in the value in use calculations are the rates of revenue decline including the offsetting impact of growth initiatives, level of cost
mitigation to maintain margins, terminal growth rates and the risk-adjusted post-tax discount rate. The post-tax discount rates are derived from a risk-
adjusted weighted cost of capital using an average market participant capital structure, the inputs of which include a UK risk free rate, risk premium,
small company risk premium and a risk adjustment (beta). The post-tax discount rate used is 11.2% (2023: 11.6%) for the primary Smiths News CGU.
The pre-tax discount rate used for the Smiths News CGU is 14.9% (2023: 15.5%).
The core newspaper and magazine market (and associated revenues) is in long-term structural decline and it is assumed that revenue is expected to
fall each year over the longer term. Any such decline in revenue is considered to be consistently within a historically tight range, allowing management
to plan appropriate cost savings measures each year to mitigate the impact of any fall in revenue such that profitability and cash flows are maintained
or impacted to a lesser extent by such declining revenues. It is expected that, as cost savings become optimised, it is expected that leveraging growth
opportunities will continue offset any further decrease in revenue. As such, a terminal growth rate of 0% (2023: 0%) is used in the calculations.
As disclosed in the accounting policies (see Note 1), the cash flows used within the impairment model are based on assumptions which are sources
of estimation uncertainty and small movements in these assumptions could lead to a change in the impairment loss. Management has performed
sensitivity analysis on the key assumptions in the impairment model using reasonably possible changes in these key assumptions and in reference to
the Company’s principal risks.
Terminal
growth rate
(TGR) %
Post-tax
discount
rate %
Reversal/
(impairment)
£m
Impact to
carrying
value
£m
Expected case 0% 11.2 18.9 –
+1% Discount rate 0% 12.2 1.7 (17.2)
-1% Discount rate 0% 10.2 39.4 20.5
+1% TGR 1% 11.2 32.7 13.8
-1% TGR (1%) 11.2 7.5 (11.4)
Scenario 1 0% 11.2 (11.3) (30.2)
Scenario 2 0% 11.2 (7.8) (26.7)
Scenario 1 – Assumes gross profit from newspapers and magazines is reduced by 3%
Scenario 2 – Assumes profit from growth activities is reduced by 50%
Notes to the Company balance sheet continued
166
Smiths News plc | Annual Report and Accounts 2024
4. Amounts owed by subsidiary undertakings
£m 2024 2023
Amounts owed by subsidiary undertakings 30.6 30.6
Amounts owed by subsidiary undertakings are repayable on demand, unsecured, non-interest bearing and settled in cash.
5. Creditors: amounts falling due within one year
£m 2024 2023
Amounts owed to subsidiary undertakings (229.8) (219.0)
Amounts owed to subsidiary undertakings are repayable on demand, unsecured, non-interest bearing and typically settled in cash.
6. Share capital
(a) Share capital
£m 2024 2023
Issued and fully paid ordinary shares of 5p each
At 26 August 2023 and at 31 August 2024 12.4 12.4
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the meetings of
the Company. The Company has one class of ordinary shares, which carry no right to fixed income.
(b) Movement in share capital
Number (m)
Ordinary shares
of 5p each
At 26 August 2023 and at 31 August 2024 247.7
(c) Share premium
£m
At 26 August 2023 and at 31 August 2024 60.5
7. Reserves
Retained earnings £m
At 27 August 2023 122.3
Profit for the period 18.9
Dividend paid (10.8)
At 31 August 2024 130.4
8. Directors’ emoluments and employees
The Company engaged five (2023: five, restated) non-executive directors. Smiths News Trading Limited, an indirect subsidiary, pays all remuneration
without recharge for all directors and the amounts are disclosed within the Directors’ Remuneration report.
Strategic Report Governance
Financial Statements
167
Glossary – Alternative performance measures
Introduction
In the reporting of financial information, the directors have adopted various alternative performance measures (APMs).
These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other
companies’ APMs, including those in the Group’s industry.
APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.
Purpose
The directors believe that these APMs assist in providing additional useful measures of the Group’s performance. They provide readers with additional
information on the performance of the business across periods which is consistent with how the business performance is planned by, and reported to,
the Board and the Executive Team.
Consequently, APMs are used by the directors and management for performance analysis, planning, reporting and incentive-setting purposes.
The key APMs that the Group has focused on and changes to APMs within the period can be found in Note 1.
APM
Closest
equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Note/page
reference for
reconciliation Definition and purpose
Income statement
Adjusting
items
No direct equivalent N/A Note 3 Adjusting items of income or expenses are excluded in
arriving at adjusted operating profit to present a further
measure of the Group’s performance. Each Adjusting
items is considered to be significant in nature and/or
quantum, non-recurring in nature and/or unrelated to the
Group’s ordinary activities or consistent with items treated
as adjusting in prior periods. Excluding these items from
profit metrics provides readers with helpful additional
information on the performance of the business across
periods because it is consistent with how the business
performance is planned by, and reported to, the Board and
the Executive Team.
Adjusted
operating
profit
Operating profit* Adjusting items Income statement/
Note 3
Adjusted operating profit is defined as operating profit
excluding the impact of adjusting items (defined above).
This is the headline measure of the Group’s performance
and is a key management incentive metric.
Adjusted
profit before
tax
Profit before tax (PBT) Adjusting items Income statement/
Note 3
Adjusted profit before tax is defined as profit before tax
excluding the impact of adjusting items (defined above).
Adjusted
profit after tax
Profit after tax (PAT) Adjusting items Income statement/
Note 3
Adjusted profit after tax is defined as profit after tax from
continuing operations, excluding the impact of adjusting
items (defined above).
Adjusted
EBITDA
Operating profit* Depreciation and
amortisation
Adjusting items
Note 2 This measure is based on business unit operating profit
from continuing operations. It excludes depreciation,
amortisation and adjusting items.
Bank EBITDA Operating profit* Depreciation and
amortisation
Adjusting items
Operating lease
charges
Note 2 This measure is based on business unit operating profit
from continuing operations. It excludes depreciation,
amortisation, adjusting items and adds back operating
lease charges under accounting standards applicable in
2019 and share-based payments expense. This measure is
used to calculate compliance with banking covenants.
Adjusted
earnings per
share
Earnings per share Adjusting items Note 8 Adjusted earnings per share is defined as Adjusted PBT,
less taxation attributable to Adjusted PBT and including
any adjustment for minority interest to result in adjusted
PAT attributable to shareholders; divided by the basic
weighted average number of shares in issue.
Cash flow statement
Free cash
flow
Net movement
in cash and cash
equivalents
Dividends,
acquisitions and
disposals, repayment
of bank loans, EBT
share purchases
Page 62 Free cash flow is defined as the movement in cash and
cash equivalent plus the following: payment of dividends,
the impact of acquisitions and disposals, the repayment of
bank loan principal amounts, and outflows for purchases of
own shares (EBT share purchases). This measure reflects
the cash available to the Group, which can be used for
investments, dividends and the reduction of debt.
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Smiths News plc | Annual Report and Accounts 2024
APM
Closest
equivalent
IFRS measure
Adjustments to
reconcile to IFRS
measure
Note/page
reference for
reconciliation Definition and purpose
Free
cash flow
(excluding
adjusting
items)
Net movement
in cash and cash
equivalents
Dividends,
acquisitions and
disposals, repayment
of bank loans, EBT
share purchases,
pension deficit repair
payments adjusting
items
Page 62 Free cash flow (excluding adjusting items) is free cash flow
adding back adjusting cash costs.
Balance sheet
Bank Net
Debt
Borrowings less cash Cash flow statement Bank net debt is calculated as total debt less cash and
cash equivalents. Total debt includes loans and borrowings
excluding unamortised arrangement fees, overdrafts
and obligations under finance leases under accounting
standards applicable in 2019.
Net debt Borrowings less cash Cash flow statement Net debt is calculated as total debt less cash and cash
equivalents. Total debt includes loans and borrowings,
overdrafts and obligations under leases.
* Operating profit is presented on the Group income statement. It is not defined per IFRS, however, is a generally accepted profit measure.
Reconciliation of free cash flow to net movement in cash and cash equivalents
A reconciliation between free cash flow and the net increase in cash and cash equivalents is shown below:
£m 2024 2023
Net (decrease)/increase in cash and cash equivalents (30.3) 2.0
Net decrease in borrowings 23.5 8.0
Movement in borrowings and cash (6.8) 10.0
Dividend paid 10.8 9.8
Investment in joint venture – 0.3
Outflow for EBT shares 3.3 1.7
Total free cash flow 7.3 21.8
Reconciliation of bank net debt to reporting net debt
£m 2024 2023
Bank net debt (11.0) (4.2)
Unamortised arrangement fees (Note 15) 0.4 1.3
IFRS 16 lease liabilities (Note 17) (30.9) (23.2)
Net debt (Note 15) (41.5) (26.1)
Reconciliation of adjusted operating profit to Bank EBITDA
£m 2024 2023
Operating profit 40.0 38.3
Adjusting items (0.9) 0.5
Adjusted operating profit 39.1 38.8
Depreciation 2.2 2.2
Amortisation 0.4 0.6
Right of use asset depreciation 5.9 6.4
Adjusted EBITDA 47.6 48.0
Operating lease charges (8.3) (8.1)
Exclude: Share based payments expense 0.9 1.1
Bank EBITDA 40.2 41.0
Strategic Report Governance
Financial Statements
169
Shareholder information
Company Secretary and registered office
Stuart Marriner, Smiths News plc, Rowan House, Cherry Orchard North, Kembrey Park, Swindon, Wiltshire SN2 8UH.
Telephone 0845 128 8888.
Smiths News plc is registered in England and Wales (company number 05195191).
Shareholder enquiries may be submitted to cosec@smithsnews.co.uk
General shareholder enquiries – Registrars
Enquiries relating to shareholders, such as the transfer of shares, change of name or address, lost share certificates or dividend cheques, should be
referred to the Company’s Registrars EQ (formerly Equiniti) at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA (telephone +44 (0)371
384 2771.
1
For deaf and speech impaired customers, we welcome calls via Relay UK. Please see → www.relayuk.bt.com for more information.
In addition, EQ provides a range of shareholder information online at → www.shareview.co.uk (to register for this service you will need your shareholder
reference number which can be found on the Proxy Form).
1 Lines are open from 8.30am to 5.30pm, Monday to Friday, excluding public holidays in England and Wales.
Company website
Smiths News plc’s Annual Reports and results announcements are available online at → www.smithsnews.co.uk. The investor zone section of our
website provides a wide range of information about the Company including Annual Reports, regulatory news releases, share price data, financial
calendar and a Shareholder Centre containing Annual General Meeting information and other useful shareholder information.
Annual Report and Group Financial Statements
This Annual Report and the Group Financial Statements are published on our website and have only been sent to those shareholders who have asked
for a copy. Shareholders who have not requested a paper copy of the Annual Report and Financial Statements have been notified of the availability on
our website.
Annual General Meeting
The 2025 Annual General Meeting will be held at DoubleTree by Hilton, Lydiard Fields, Great Western Way, Swindon SN5 8UZ on Thursday 16 January
2025 at 11.30am.
The Notice of Annual General Meeting sets out the business to be transacted. Shareholders who wish to attend the meeting should detach the
Attendance Card from the Proxy Form that they are sent and present it at the registration desk on arrival at the Annual General Meeting.
The voting results of the 2025 Annual General Meeting will be accessible at → www.smithsnews.co.uk shortly after the meeting.
A paper copy of the Annual Report and Financial Statements can be obtained by writing to the Company Secretary at the address listed above or you
can email your request to investor.relations@smithsnews.co.uk.
Proxy Form
Shareholders unable to attend the Annual General Meeting should complete a Proxy Form. To be effective, it must be completed and lodged with the
Company’s Registrars, EQ, by not later than 11.30am on Tuesday 14 January 2025.
Electronic proxy voting
You may, if you wish, register the appointment of a proxy for the Annual General Meeting electronically, by logging onto the website
→ www.sharevote.co.uk. Full details of the procedure are given on the website. You will need to have your Proxy Form to hand when you log on as it
contains information which will be required. CREST members may appoint a proxy electronically via the Company’s Registrars, EQ (ID RA19). If you are
an institutional investor, you may alternatively be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by
the Company and approved by the Registrars. For further information regarding Proxymity, please go to → www.proxymity.io. Electronic proxy voting
instructions must be received by not later than 11.30am on Tuesday 14 January 2025.
Financial calendar (provisional dates)
Financial year end 31 August 2024
Results announced 5 November 2024
Annual Report published 13 December 2024
FY2024 Final Dividend Record Date 10 January 2025
Annual General Meeting 16 January 2025
FY2024 Final Dividend Payment Date 6 February 2025
Half-year end 1 March 2025
Interim results announced 7 May 2025
Financial year end 30 August 2025
Results announced 4 November 2025
For the dates of events in the second half of the financial calendar, please check the Smiths News plc website at → www.smithsnews.co.uk nearer the
relevant time for further details, and to ensure that no changes have been made.
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Smiths News plc | Annual Report and Accounts 2024
Share dealing service
The Company has arranged for Shareview Dealing, a telephone and internet share dealing service offered by EQ, to be made available to UK
shareholders wishing to buy or sell the Company’s shares. For telephone dealing, you may call 03456 037 037 between 8.30am and 4.30pm,
Monday to Friday, and for internet dealing log on to → www.shareview.co.uk/dealing. You will need your shareholder reference number shown on your
share certificate.
ShareGIFT
If you only have a small number of shares which are uneconomic to sell, you may wish to consider donating them to charity under ShareGIFT, a charity
share donation scheme administered by the Orr Mackintosh Foundation. A ShareGIFT transfer form may be obtained from EQ. Further information
about the scheme can be found on the ShareGIFT website at → www.sharegift.org.
Warning to shareholders (‘boiler room’ scams)
In recent years, like many other companies, we have become aware of a small number of investors who have received unsolicited calls or
correspondence, in some cases purporting to have been issued by us, concerning investment matters. These typically make claims of highly
profitable opportunities in UK or US investments which, in fact, turn out to be worthless or simply do not exist. These approaches are usually made by
unauthorised companies and individuals and are commonly known as ‘boiler room’ scams. Investors are advised to be wary of any unsolicited advice or
offers to buy shares. If it sounds too good to be true, it often is.
Please see the Financial Conduct Authority website (Protect yourself from scams | FCA) for more detailed information about this or similar activity.
Details of any share dealing facilities that the Company endorses will be included in Company mailings.
UK Capital Gains Tax (CGT)
Rights Issue 17 December 2014
Shareholders who acquired shares
For the purposes of calculating any chargeable gains or losses, any ordinary shares you acquired as a result of the Rights Issue (at a price of 102p each)
are treated as being acquired at the same time as your original holding of ordinary shares and the subscription cost added to the base cost of your
original holding.
Shareholders who sold or renounced their rights or who allowed their rights to lapse
If you sold any or all of your rights to subscribe for the ordinary shares provisionally allotted to you, or if you allowed your rights to lapse and received a
cash payment in respect of them, if the proceeds were ‘small’ as compared with the market value (on the date of sale or lapse) of your existing holding
of ordinary shares in respect of which the rights arose, you will not generally be treated as making a disposal for CGT purposes. Instead, the proceeds
received should be deducted from the base cost of your existing holding of ordinary shares. HMRC current practice is to regard a sum as ‘small’ for
these purposes where either: (i) the proceeds do not exceed 5% of the market value (at the date of sale or lapse) of the ordinary shares in respect of
which the rights arose; or (ii) the sum received is £3,000 or less, regardless of whether the 5% test is satisfied.
If the proceeds you received were not ‘small’ the sale is treated as a disposal and, in order to calculate any chargeable gains or losses, you need to
apportion the original base cost of your existing holding of ordinary shares between the sale proceeds and your existing holding of ordinary shares in
the ratio of the sale proceeds divided by the sale proceeds plus the market value of your existing holding of ordinary shares (on the date of sale or lapse).
Further guidance can be found on the HMRC website → www.gov.uk/capital-gains-tax-share-reorganisation-takeover-or-merger.
Demerger 31 August 2006
Following the demerger of new WH Smith PLC on 31 August 2006, in order to calculate any chargeable gains or losses arising on the disposal of shares
after 31 August 2006, the original tax base cost of your old WH Smith PLC ordinary shares of 2
13
/
81
p (adjusted if you held your shares at 24 September
2004 and 22 May 1998 to take into account the capital reorganisations of 27 September 2004 and 26 May 1998 respectively (see below)) will have to be
apportioned between the shareholdings of ordinary shares of 5p in the Company and ordinary shares of 22
6
/
67
p (or 20p if the disposal took place before
22 February 2008) in new WH Smith PLC in the ratio of 0.30415 and 0.69585 respectively.
Capital reorganisation 27 September 2004
If your shares result from a holding of old WH Smith PLC shares acquired on or before 24 September 2004, in order to calculate any chargeable
gains or losses arising on the disposal of shares after 24 September 2004, the original tax base cost of your old WH Smith PLC ordinary shares of
55
5
/
9
p (adjusted if you held your shares as at 22 May 1998 to take into account the capital reorganisation of 26 May 1998 (see below)) will have to be
apportioned between the shareholdings of ordinary shares of 2
13
/
81
p and ‘C’ shares resulting from the capital reorganisation.
The cost of your shareholding of ordinary shares of 2
13
/
81
p is calculated by multiplying the original base cost of your ordinary shares of 55
5
/
9
p (adjusted
where necessary to take into account the capital reorganisation of 26 May 1998 referred to above) by 0.73979.
Capital reorganisation 26 May 1998
If your shares result from a holding of old WH Smith PLC shares acquired on or before 22 May 1998, in order to calculate any chargeable gains or
losses arising on the disposal of shares after 22 May 1998, the original tax base cost of your old WH Smith PLC ordinary shares of 50p will have to be
apportioned between the shareholdings of ordinary shares of 55
5
/
9
p and redeemable ‘B’ shares resulting from the capital reorganisation.
The cost of your shareholding of ordinary shares of 55
5
/
9
p is calculated by multiplying the original cost of your ordinary shares of 50p by 0.90714.
Strategic Report Governance
Financial Statements
171
Shareholder information continued
March 1982 values
If your shares result from a holding of old WH Smith PLC shares acquired on or before 31 March 1982, the tax base cost to be used in order to calculate
any chargeable gains or losses arising on the disposal of shares is the 31 March 1982 base values per share as follows:
Arising from an
original shareholding
of old WH Smith PLC
‘A’ ordinary
shares
‘B’ ordinary
shares
Ordinary shares of 5p 26.93p 22.25p
WH Smith PLC ordinary shares of 22
6
/
67
p 61.62p 50.92p
If you have a complicated tax position, or are otherwise in doubt about your tax circumstances, or if you are subject to tax in a jurisdiction other than the
United Kingdom, you should consult your professional adviser.
Cautionary statement
This Annual Report contains certain forward-looking statements with respect to Smiths News plc’s financial condition, its results of operations and
businesses, strategy, plans, objectives and performance. Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘targets’,
‘may’, ‘will’, ‘continue’, ‘project’ and similar expressions, as well as statements in the future tense and statements other than statements of historical
fact, identify forward-looking statements. These forward-looking statements are not guarantees of Smiths News plc’s future performance and relate to
events and depend on circumstances that may occur in the future and are therefore subject to risks, uncertainties and assumptions. There are a number
of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements,
including, among others, the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or
licences; fluctuations in demand and pricing in the industry; fluctuations in exchange controls; changes in government policy and taxations; industrial
disputes; and war and terrorism. These forward-looking statements speak only as at the date of this document 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,
Smiths News plc undertakes no responsibility to publicly update any of its forward-looking statements whether as a result of new information, future
developments or otherwise.
The information contained within this Annual Report may be deemed to constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 (as it forms part of the law of England and Wales by virtue of section 3 of the European Union (Withdrawal) Act 2018). Upon the
publication of this Annual Report, this inside information is now considered to be in the public domain.
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Smiths News plc | Annual Report and Accounts 2024
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Rowan House
Kembrey Park
Swindon
Wiltshire
SN2 8UH
United Kingdom
0345 128 8888