REG - WH Smith PLC - Half Year Results <Origin Href="QuoteRef">SMWH.L</Origin> - Part 2
15/07/2015 13:07
- Part 2: For the preceding part double click ID:nRSP3585Ka
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014(audited)
Total actuarial loss before consideration of asset ceiling (118) (17) (73)
Return on scheme assets excluding amounts included in net interest cost 67 18 100
Gain / (loss) resulting from changes in amounts not recognised due to effect of asset ceiling excluding amountsrecognised in net interest cost 48 (8) (43)
Gain resulting from changes in additional liability due to minimum funding requirements excluding amountsrecognised in net interest cost 38 5 11
Total actuarial gain / (loss) recognised in other comprehensive income 35 (2) (5)
In addition a £1m debit (2014: £nil) was recognised in the statement of
comprehensive income in relation to actuarial losses in the period on the
United News Shops Retirement Benefits Scheme.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
3. Retirement benefit obligation (continued)
WHSmith Pension Trust (continued)
Movement in net retirement benefit liability during the period:
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014(audited)
At beginning of period (55) (62) (62)
Current service cost - - -
Net interest cost on the defined benefit liability (1) (1) (3)
Contributions 3 7 14
Past service credit - - 1
Actuarial gains / (losses) on defined benefit pension schemes 35 (2) (5)
At end of period (18) (58) (55)
The defined benefit pension schemes are closed to further accrual and given
the Liability Driven Investment policy adopted by the WHSmith Pension Trust
Trustees, the present value of the economic benefits of the IAS 19 surplus in
the pension scheme of £110m (2014: £119m) available on a reduction of future
contributions is £nil (2014: £nil). As a result the Group has not recognised
this IAS 19 surplus on the balance sheet. There is an ongoing actuarial
deficit primarily due to the different assumptions and calculation
methodologies used compared to those under IAS 19. We have recognised the
schedule of contributions as a liability of £18m (2014: £58m) in accordance
with the requirements of IFRIC 14.
A full actuarial valuation of the scheme is carried out every three years,
with interim reviews in the intervening years. The latest full actuarial
valuation of the Pension Trust was carried out at 31 March 2014 by independent
actuaries using the projected unit credit method. Following this valuation,
the deficit was £24m, and a revised deficit funding schedule of approximately
£3m per annum from 1 October 2014 for the following nine years was agreed with
the Trustee. During the period, the Group made a contribution of £3m to the
WHSmith Pension Trust (2014: £7m) in accordance with the agreed pension
deficit funding schedule. The expected contributions for the year ended 31
August 2015 will be approximately £4m, reflecting the higher contribution paid
in September 2014 under the previous schedule of contributions.
The principal long-term assumptions used in the IAS 19 valuation were:
6 months to 12 months to
% 28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014(audited)
Rate of increase in pension payments 3.08 3.28 3.17
Rate of increase in deferred pensions 2.30 2.50 2.37
Discount rate 3.20 4.32 3.84
RPI Inflation assumption 3.20 3.40 3.27
CPI Inflation assumption 2.30 2.50 2.37
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
4. Finance costs
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Interest payable on bank loans and overdrafts 1 1 1
Unwinding of discounts on provisions - - 1
Net interest cost on the defined benefit pension liability 1 1 3
2 2 5
5. Income tax expense
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014(audited)
Tax on profit 17 18 32
At the standard rate of UK corporation tax 20.58% (2014: 22.16%)
Adjustment in respect of prior year UK corporation tax (4) (5) (12)
Total current tax charge 13 13 20
Deferred tax - current year (1) - -
Deferred tax - prior year - - -
Tax on profit 12 13 20
Effective tax rate 17% 19% 18%
18%
Tax on Headline Group profit 12 13 20
Effective tax rate on Headline Group profit 17% 19% 18%
6. Dividends
Amounts paid and recognised as distributions to shareholders in the period are
as follows:
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Dividends
2013 Final dividend of 21.3p per ordinary share - 26 26
2014 Interim dividend of 10.8p per ordinary share - - 12
2014 Final dividend of 24.2p per ordinary share 28 - -
28 26 38
38
The directors have declared an interim dividend in respect of the period
ending 28 February 2015 of 12.1p per ordinary share, which will absorb an
estimated £14m of shareholders' equity. This will be paid on 6 August 2015 to
shareholders registered at the close of business on 17 July 2015.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
7. Earnings per share
a) Earnings
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014 (audited)
Earnings attributable to shareholders 60 56 92
Adjusted for non-headline items (net of taxation):
One off pension past service credit - - (1)
Non-cash income statement charge for pensions 1 1 3
Headline earnings attributable to shareholders 61 57 94
61
57
94
b) Weighted average share capital
6 months to 12 months to
Millions 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Weighted average ordinary shares in issue 118 123 121
Less weighted average ordinary shares held in ESOP Trust (1) (3) (2)
Weighted average ordinary shares for basic earnings per share 117 120 119
Add weighted average number of ordinary shares under option 1 1 2
Weighted average ordinary shares for diluted earnings per share 118 121 121
121
c) Basic and diluted earnings per share
6 months to 12 months to
Pence 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Basic earnings per share 51.3 46.7 77.3
Adjustments for non-headline items 0.8 0.8 1.7
Basic headline earnings per share 52.1 47.5 79.0
Diluted earnings per share 50.8 46.3 76.0
Adjustments for non-headline items 0.9 0.8 1.7
Diluted headline earnings per share 51.7 47.1 77.7
51.7
47.1
77.7
Diluted earnings per share takes into account various share awards and share
options including SAYE schemes, which are expected to vest, and for which a
sum below fair value will be paid.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
8. Fixed Charges Cover - Non GAAP
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Net finance charges 2 2 5
Net operating lease rentals 92 89 185
Total fixed charges 94 91 190
Profit before tax and non-underlying items 72 69 111
Profit before tax, non-underlying items and fixed charges 166 160 301
Fixed charges cover - times 1.8x 1.8x 1.6x
9. Capital Expenditure
In the financial period, there were additions to property, plant and
equipment, including finance leases, of £24m (28 February 2014: £17m) and
additions to intangible assets of £3m (28 February 2014: £2m).
In the financial period, there were disposals of property, plant and equipment
with a cost of £1m and a net book value of £nil (28 February 2014: cost £2m
and net book value £nil). There were no material disposals of intangible
assets during the period (28 February 2014: £nil).
10. Analysis of net funds
Analysis of net funds
Net funds can be analysed as follows:
£m At28 Feb 2015(unaudited) At28 Feb 2014(unaudited) At31 Aug 2014 (audited)
Cash and cash equivalents 36 57 34
Debt
- Revolving credit facility (20) (39) (12)
- Obligations under finance leases (6) - -
Net funds 10 18 22
22
Movement in net funds:
£m At31 Aug 2014(audited) Cash flow Non Cash Currency translation At28 Feb 2015(unaudited)
Cash and cash equivalents 34 3 - (1) 36
Debt
- Revolving credit facility (12) (8) - - (20)
- Obligations under finance leases - - (6) - (6)
Net funds 22 (5) (6) (1) 10
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less. The carrying
amount of these assets approximates their fair value.
The Group has a £93.3m 5-year committed revolving credit facility. As at 28
February 2015 this Group had drawn down £20m on this facility. The revolving
credit facility is due to mature on 9 June 2019. During the period the
interest rate on the facility was LIBOR plus 90bps.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
11. Net cash inflow from operating activities
Net cash inflow from operating activities
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Operating profit from continuing operations 74 71 117
Depreciation and amortisation 17 17 34
Impairment losses (relating to store closures) 2 1 2
Share-based payments 3 3 5
(Increase) / decrease in inventories (1) (1) 4
Decrease in receivables 3 3 (2)
Decrease in payables (11) (11) (5)
Adjustment for pension funding (3) (7) (14)
Non-cash pension past service credit - - (1)
Income taxes paid (10) (9) (21)
Charge to provisions - - 1
Cash spend against provisions - (2) (4)
Net cash inflow from operating activities 74 65 116
12. Called Up Share Capital
28 Feb 2015(unaudited) 28 Feb 2014(unaudited) 31 Aug 2014(audited)
Number of shares (millions) Nominal value£m Number of shares (millions) Nominal value£m Number of shares (millions) Nominal value £m
Equity
Ordinary shares of 22 6/67p 117 26 121 27 119 26
Total 117 26 121 27 119 26
During the six month period the Company repurchased 2,091,000 (six months to
28 February 2014: 2,107,000) of its own shares in the open market for an
aggregate consideration of £24m (2014: £21m).
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.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
13. Contingent liabilities
6 months to 12 months to
£m 28 Feb 2015(unaudited) 28 Feb 2014 (unaudited) 31 Aug 2014 (audited)
Bank and other loans guaranteed 5 4 5
Other potential liabilities that could crystallise are in respect of previous
assignments of leases where the liability could revert to the Group if the
lessee defaulted. Pursuant to the terms of the Demerger Agreement with Smiths
News PLC, any such contingent liability, which becomes an actual liability,
will be apportioned between the Group and Smiths News PLC in the ratio 65:35
(provided that the actual liability of Smiths News PLC in any 12 month period
does not exceed £5m). The Group's 65 per cent share of these leases has an
estimated future rental commitment at 28 February 2015 of £5m (28 February
2014: £10m).
At 28 February 2015, contracts placed for future capital expenditure approved
by the directors but not provided for amounted to £3m (28 February 2014:
£1m).
14. Financial Instruments
IFRS 13 requires disclosure of fair value measurements by level based on the
following measurement hierarchy:
· Level 1 - quoted prices (unadjusted) in active markets for identical
assets or liabilities;
· Level 2 - inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices); and
· Level 3 - inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
All fair value measurements made by the group are in the Level 2 category. The
fair value of forward foreign exchange contracts has been determined using
forward currency exchange rates at the balance sheet date. These have been
provided by the individual banking institutions with whom the contracts are
held. There have been no transfers of assets or liabilities between any levels
of the fair value hierarchy.
£m 28 Feb 2015 (unaudited) 28 Feb 2014 (unaudited)
Financial assets / (liabilities)
Cash flow hedges:
Forward foreign currency contracts 1 (1)
1 (1)
15. Acquisitions
On 7 November 2014, the Group acquired the trade and assets of Supanews, a
business operating in Australia, for a cash consideration of £3m. The
business is a retailer of news, books and convenience products. The fair value
of assets acquired is £3m and has been allocated as follows; £1m intangible
assets (representing the brand asset), £2m goodwill (representing expected
synergies and future growth potential).
16. Related Parties
There have been no material related party transactions during the interim
period under review.
WH Smith PLC
Notes to the Condensed Interim Financial Statements
For the 6 months to 28 February 2015
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that this condensed set
of financial statements has been prepared in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union, and that the interim
management report herein includes a fair review of the information required by
DTR 4.2.7R and DTR 4.2.8R.
The Directors of WH Smith PLC are listed on the website at
www.whsmithplc.co.uk/about_whsmith/directors/.
By order of the Board
Stephen Clarke Robert Moorhead
Group Chief Executive Chief Financial Officer and
Chief Operating Officer
16 April 2015
INDEPENDENT REVIEW REPORT TO WH SMITH PLC
Report on the interim financial statements
Our conclusion
We have reviewed the interim financial statements, defined below, in the
Interim Results Announcement of WH Smith Plc for the six months ended 28
February 2015. Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not prepared,
in all material respects, in accordance with International Accounting Standard
34 as adopted by the European Union and the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in the remainder
of this report
What we have reviewed
The interim financial statements, which are prepared by WH Smith Plc,
comprise:
· The Condensed Group Balance Sheet as at 28 February 2015;
· The Condensed Group Income Statement and Condensed Group Statement of
Comprehensive Income for the period then ended;
· The Condensed Group Cash Flow Statement for the period then ended;
· The Condensed Group Statement of Changes in Equity for the period then
ended; and
· The Notes to the Condensed Interim Financial Statements.
As disclosed in note 1, the financial reporting framework that has been
applied in the preparation of the full annual financial statements of the
group is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
The interim financial statements included in the Interim Results Announcement
have been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and, consequently,
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information contained in the Interim Results
Announcement and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the interim financial
statements.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Results Announcement, including the interim financial statements,
is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the Interim Results Announcement in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on the interim
financial statements in the Interim Results Announcement based on our review.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure and Transparency
Rules of the Financial Conduct Authority and for no other purpose. We do not,
in giving this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
16 April 2015
London
Notes:
(a) The maintenance and integrity of the WH Smith PLC website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
WH Smith PLC
Appendix
Analysis of retailing stores and selling space
Number of High Street stores
1 Sept 2014 Opened Closed 28 Feb 2015
High Street 604 21 1 (4) 621
Total 604 21 (4) 621 2
2
1 Includes 20 Cardmarket stores
2 Excludes WH Smith LOCAL franchised stores
Number of Travel units
A Travel store may consist of multiple units within one location. On an
individual unit basis, Travel stores can be analysed as follows:
1 Sept 2014 Opened Closed 28 Feb 2015
Non franchise units 525 18 (19) 524
Joint Venture and Franchise units3 200 17 (1) 216
Total 725 35 (20) 740
3 Travel units include motorway and international franchise units, and exclude
kiosks in China and India, and Supanews and Wild Cards and Gifts franchisees
in Australia.
Retail selling square feet ('000s)
1 Sept 2014 Opened Closed 28 Feb 2015
High Street 2,939 26 1 (29) 2,936
Travel 547 6 (18) 535
Total 3,486 32 (47) 3,471
Total Retail selling square feet does not include franchise units.
This information is provided by RNS
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