REG - WH Smith PLC - Preliminary Results Announcement
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RNS Number : 2353M WH Smith PLC 19 December 2025
19 December 2025
WH SMITH PLC
The global travel retailer
PRELIMINARY RESULTS ANNOUNCEMENT
FOR THE YEAR ENDED 31 AUGUST 2025
Group completes strategic shift into pure-play travel retail
Clear strategic priorities to drive sustainable profitable growth
· Completion of the Group's transformation into a pure-play travel
retailer following the sale of the High Street business and funkypigeon.com
· Total Group revenue up 5% to £1,553m (2024(1): £1,473m)
o UK up 5%; North America (NA) up 7%*; Rest of the World and Other ('ROW')
up 12%*
· Headline Group profit before tax and non-underlying items(2) £108m
(2024(1): £114m)
o Headline Group trading profit(2) of £159m (2024(1): £170m)
· Headline diluted EPS before non-underlying items(2) 43.4p
· Proposed final dividend of 6.0p per share, resulting in full year
dividend of 17.3p per share, maintaining our dividend policy of 2.5x cover,
reset to our continuing business earnings
· Clear priorities established by division and a more focused strategy
to deliver profitable growth and enhanced return on capital:
o expand and strengthen category leadership in UK Travel essentials, scale
health and beauty and food-to-go offer;
o enhanced focus on NA Travel Essentials business. Plan to exit North
America fashion and speciality stores and to review the breadth of InMotion NA
portfolio; and
o strengthen core ROW markets, new growth driven through franchise model,
review and exit non-core markets.
· Following the findings of the Deloitte Review announced on 19 November
2025, a comprehensive remediation plan is in place and progressing at pace
· The Financial Conduct Authority ('FCA') has commenced an investigation
into the Company
· The Group expects to deliver FY26 Headline Group profit before tax and
non-underlying items(2) of £100m - £115m.
Andrew Harrison, Interim Group Chief Executive, commented:
"It has been a difficult end to the year for the Group. The Board and I are
acutely aware that we have much to do to rebuild confidence in WHSmith and
deliver stronger returns as we move forward. We are acting at pace progressing
our remediation plan and are committed to ensuring that we strengthen our
financial controls and governance as we move forward.
"Following the sale of our UK High Street business and Funky Pigeon during the
year, we are now a pure-play global travel retailer. Travel retail is a high
growth market, and we have attractive market positions in the UK, North
America and our international markets from which we are well-positioned to
grow.
"I would like to thank our colleagues who have shown the utmost commitment and
professionalism during an uncertain and busy period for the business.
"As Interim CEO, my focus is to provide stability and to lead the Group with
transparency and discipline. WHSmith is a business with an exciting future and
I look forward to executing against our clear priorities to ensure we
capitalise on the attractive opportunities ahead."
* On a constant currency basis
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory-related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details)
(2) Alternative Performance Measure (APM) defined and explained in the
Glossary on page 56. All numbers presented are from continuing operations
unless otherwise stated
Group financial summary - continuing operations
£m unless indicated otherwise IFRS 16 Headline pre-IFRS 16(3)
Trading profit(2)
Aug 2025 Aug 2024 Aug 2025 Aug 2024
Restated(1) Restated(1)
UK 131 126 130 122
North America 22 38 15 34
Rest of the World and Other ('ROW') 20 18 14 14
Group trading profit(2) 173 182 159 170
Group profit before tax and non-underlying items(2) 102 106 108 114
Diluted earnings per share before non-underlying items(2) 39.5p 55.7p 43.4p 60.3p
Non-underlying items (including finance costs)(2) (100) (41) (92) (41)
Group profit before tax 2 65 16 73
Basic (loss)/earnings per share (24.4)p 28.7p (14.2)p 33.3p
Diluted (loss)/earnings per share (24.4)p 28.2p (14.2)p 32.8p
Revenue performance - continuing operations
£m Total Revenue Full Year 2025 Total Revenue Full Year 2024 Total Revenue % change Constant currency Full Year 2025 % change(4) LFL LFL LFL
Restated(1) Full Year 2025 % change 13 weeks to 31 August 2025 15 weeks to 14 December 2025
% change % change
UK 834 795 5% 5% 5% 3% 2%
North America 413 401 3% 7% 2% 1% 1%
Rest of the World and Other 306 277 10% 12% 7% 6% 6%
Group 1,553 1,473 5% 7% 5% 3% 3%
Current trading, outlook and planning assumptions
In the 13 weeks to 31 August 2025, the Group delivered like-for-like ('LFL')
revenue(2) growth of 3%. By division, the UK delivered LFL revenue growth of
3% reflecting softer passenger numbers through the summer period and a reduced
level of spend per passenger growth. In North America, we delivered LFL
revenue growth of 1%. Our core Travel Essentials business continued to perform
well with revenue growth of 8% with InMotion down 7% and Resorts down 6%. Rest
of the World delivered LFL revenue growth of 6%.
(3) The Group adopted IFRS 16 'Leases' with effect from 1 September 2019. The
Group continues to monitor performance and allocate resources based on
pre-IFRS 16 information (applying the principles of IAS 17), and therefore the
results for the years ended 31 August 2025 and 31 August 2024 have been
presented on both an IFRS 16 and a pre-IFRS 16 basis.
Measures described as 'Headline' are presented pre-IFRS 16.
For the purposes of narrative commentary on the Group's performance and
financial position, both pre-IFRS 16 and IFRS 16 measures are provided.
Reconciliations from pre-IFRS 16 measures to IFRS 16 measures are provided in
the Glossary on page 56. Group revenue was not affected by the adoption of
IFRS 16, and therefore all references to and discussion of revenue are based
on statutory measures.
(4) Constant currency
These sales trends have continued into the first 15 weeks of the current
financial year.
In the first 15 weeks of FY26, the Group delivered LFL growth of 3%, with the
UK softening slightly to 2%, largely reflecting a softening in rail. North
America revenue trends were in line with the last 13 weeks of FY25 with LFL
growth of 1%, and Rest of the World has continued to perform well, with growth
of 6%.
For the full year ending 31 August 2026, the Group expects total revenue
growth of c.4-6%.
In the UK, total revenue growth is expected to be c.3-5%, in North America
c.6-8%, and in the Rest of the World division c.4-6%.
Headline trading profit margin(2) in the UK is expected to be c.14-15%, North
America c.7-8%, and c.5% in the Rest of the World. This reflects the different
dynamics in each market: a year of investment in the UK, a focus on rebuilding
profitability in North America and strengthening our foundations
internationally.
FY26 technical planning assumptions for the Group can be found on page 12.
ENQUIRIES:
WH Smith PLC
Nicola Hillman Media Relations 01793 563354
Mark Boyle Investor Relations 07879 897687
Brunswick
Tim Danaher 020 7404 5959
WH Smith PLC's Preliminary Results 2025 are available at whsmithplc.co.uk
(http://www.whsmithplc.co.uk) .
GROUP OVERVIEW
This has been a year of strategic progress and challenge. The Group has
completed a significant strategic shift by completing the sale of our High
Street business and online business, funkypigeon.com, fully aligning with our
strategic focus to operate as a pure-play travel retailer.
This transformation strengthens our platform for growth enabling us to
capitalise on the significant potential of the global travel sector. We have a
clear leadership position in Travel Essentials. Our stores are located in
attractive, high footfall locations across the globe, and we have a dedicated
team of passionate and customer-focused colleagues.
Following the Group's strategic reset to a pure-play travel retailer, we have
reviewed the broader Travel portfolio with a sharp focus on profitable growth
and return on capital.
In the UK, we are focused on retaining category leadership in Travel
Essentials through our one-stop-shop format. We will continue to expand our
presence in the category by targeting new and better quality space growth, and
we are actively scaling our health and beauty and food-to-go categories.
In North America, we will focus on improving and investing in our core Travel
Essentials business. Following a review of our Resorts business, we are in the
process of exiting a number of unprofitable fashion and speciality stores. We
are also undertaking a review of our North America InMotion business and the
breadth of the portfolio. Across the business, we have put in place a more
rigorous approach to any future store openings with new InMotion stores only
being considered as part of a strategically important tender package.
In our ROW division, we will focus our investment in our core, strategically
important markets, including Australia, Ireland and Spain, resulting in
reducing our presence in or exiting sub-scale markets and using a less
capital-intensive franchise model for future openings.
In August 2025, the Board instructed Deloitte to undertake an independent and
comprehensive review of the North America division following the identified
accelerated recognition of supplier income in this division. The Deloitte
Review identified that the accounting treatment for supplier income adopted by
the North America division was not consistent with the Group's stated
accounting policy and consequently was not consistent with the requirements of
the relevant accounting standards. This issue had arisen against a backdrop of
a target-driven performance culture and decentralised divisional structure
combined with a limited level of Group oversight of the finance processes in
North America. Supplier income has therefore been overstated in the North
America division and this has resulted in prior year restatements. In light of
the findings, the Board instructed the Group Finance team to review other
balances in the division and identified further restatements, which are
described in more detail on page 9.
The Internal Audit review, conducted by the Group alongside the Deloitte
review, concluded that the supplier income for the full year ended 31 August
2025 across the UK and Rest of the World travel divisions was appropriate,
resulting in supplier income being appropriately recognised in these
divisions.
The Board has acted quickly to put in place a clear remediation plan. This
plan is structured around three key business objectives: to strengthen
governance and controls to protect value and restore trust; to embed aligned
processes and ways of working across the Group supported by new systems; and
to sustain this through cultural change, enhanced training and monitoring.
The Board is applying malus and clawback to recover overpaid bonuses from
former executive directors following the restatement of profits in the
financial years ended 31 August 2023 and 31 August 2024.
The Group can confirm that the FCA has commenced an investigation into the
Company in respect of its compliance with UK Listing Principles and Rules and
the Disclosure and Transparency Rules in relation to the matters announced by
the Company on 19 November 2025.
The Group is committed to cooperating fully with any engagement in relation to
the North America accounting issue from any regulatory body or other
authority.
In the near-term, the Board continues with its search for a Group CEO and two
Non-Executive Directors to strengthen the Board with one area of focus being
North America retail experience.
Group revenue - continuing operations
Year to 31 August 2025
Total Total constant currency(4) LFL(2)
vs 2024 vs 2024 vs 2024
UK 5% 5% 5%
North America 3% 7% 2%
Rest of the World and Other 10% 12% 7%
Group 5% 7% 5%
Total Group revenue at £1,553m (2024(1): £1,473m) was up 5% compared to the
prior year.
The Group delivered a good performance with total revenue up 7%(4) and up 5%
on a LFL(2) basis. This was driven by a good performance from the UK division,
up 5% on a total basis, North America up 7%(4), and ROW up 12%(4). On a LFL
basis, the UK was up 5%, North America was up 2%, and ROW up 7%.
Group profit
The Group delivered a Headline trading profit(2) in the year of £159m
(2024(1): £170m). The UK increased by £8m to £130m; North America decreased
by £19m to £15m; and ROW was in line with the prior year at £14m.
Headline Group profit before tax and non-underlying items(2) was down 5% to
£108m (2024(1): £114m). Group profit before tax, including non-underlying
items and on an IFRS 16 basis, was £2m (2024(1): £65m) in the year.
Discontinued operations
During the year, the Group disposed of the High Street business and
funkypigeon.com. These disposals are classified as discontinued operations in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations.
Group balance sheet
The Group has a strong balance sheet, has cash generative trading operations
and has substantial liquidity. The Group has the following cash and committed
facilities as at 31 August 2025:
£m 31 August 2025 Maturity
Cash and cash equivalents(5) 71
Revolving Credit Facility(6) 400 June 2030
Convertible bonds 327 May 2026
US Private Placement notes 200 2032-2037
Term loan 120 March 2028
The Group has a 5-year revolving credit facility ('RCF') with a maturity date
of 30 June 2030 and a £327m convertible bond with a maturity of 7 May 2026
which has a fixed coupon of 1.625%.
As at 31 August 2025, Headline net debt(2) was £390m (2024: £371m) and the
Group has access to c.£650m of liquidity. Leverage(2) at the 31 August 2025
was 2.1x Headline EBITDA(2) (2024(1): 1.9x). Net debt including IFRS 16 lease
liabilities at 31 August 2025 was £874m (2024: £997m).
Refinancing
On 25 March 2025, the Group announced the successful completion of a £200m
issue of US Private Placement (USPP) notes and a bank term loan of £120m,
neither of which have been drawn down as at 31 August 2025.
The USPP notes, which represent the Group's debut issue in the USPP market,
have a maturity of 7, 10 and 12 years and have been issued on investment grade
terms. At the same time, the Group has agreed a £120m three-year bank term
loan with two uncommitted extension options of one year each, which would,
subject to lender approval, extend the tenor of the new bank loan to 4 and 5
years, if exercised.
The Group has a £400m committed revolving credit facility ('RCF'). The last
extension option was exercised during the year, taking the maturity to 13 June
2030. The Group has drawn down £141m at 31 August 2025.
In November 2025, the Group entered into a £200m syndicated 12-month term
loan. The loan has two extension options, which would, if exercised, extend
the maturity date to 31 August 2027. The facility is provided by a syndicate
of banks: BNP Paribas, J.P. Morgan Securities PLC, London Branch, PNC Capital
Markets LLC and Skandinaviska Enskilda Banken AB (PUBL). This additional loan
provides further financing security for the Group as a Backstop facility which
will remain in place until the USPP completes and the Convertible Bond is
repaid.
This refinancing will diversify the Group's sources of debt financing and
extends the Group's debt maturity profile in advance of the convertible bond
maturing on 7 May 2026. The income statement cost of the convertible bond is
currently c.4.6% including the non-cash debt accretion charge. The income
statement cost of the replacement financing will be c.6.3%.
Group cash flow
The Group generated a Headline EBITDA(2) of £187m in the year (2024(1):
£198m). Capex was £81m (2024(1): £105m(7)). We had a working capital
inflow(8) of £4m in the year (2024(1): outflow(8) of £22m). This mainly
relates to a one-off payables timing benefit linked to one of our large
franchise partners, broadly offsetting an inventory increase relating to new
store openings. This year, we expect an outflow mainly relating to the
unwinding of this timing benefit and opening new stores.
(5) Cash and cash equivalents comprises cash on deposit of £49m and cash in
transit of £22m
(6) Draw down of £141m as at 31 August 2025
(7) Excluding capex related to non-underlying items of £nil (2024: £1m)
(8) Pre-IFRS 16
In total, there was a free cash inflow(2) in the year of £63m (2024(1):
£35m). This year, we expect, subject to investment opportunities, headline
net debt(2) to be in the region of £400m at the end of the year. The increase
in net debt relates to the timing of investment in refurbishment of UK stores
and disciplined investment in new stores in North America alongside ongoing
transformation costs.
Capital allocation
We remain focused on maintaining an efficient balance sheet and on a
disciplined approach to capital allocation. In the near-term, we aim to:
· strengthen the balance sheet through tighter cash control and improved
cash generation, diversify our debt structure, extend our maturity profile and
reduce our leverage(2) position to below 2.0x;
· invest to grow and protect value. We will do this by investing in
business development and new space growth with a clear focus on attractive
returns. Furthermore, we will protect our business assets through maintenance
and transformation projects. We expect capex of c.£90m in the current
financial year;
· deliver shareholder returns through our dividend policy of 2.5x cover,
reset to our continuing business earnings, and when we have surplus capital,
we will look to return further cash to shareholders.
The Board has today proposed a final dividend of 6.0 pence per share in
respect of the financial year ended 31 August 2025, making it a full year
dividend of 17.3 pence per share. This is in line with our stated dividend
policy of 2.5x cover and reflects the continuing earnings profile of the Group
following the sale of the non-travel businesses. Subject to shareholder
approval, the dividend will be paid on 12 February 2026 to shareholders
registered at the close of business on 23 January 2026. This is in line with
our existing policy and has been rebased to match the continuing earnings of
the Group.
During the year, the Group completed a £50m share buyback announced on 11
September 2024.
CONTINUING OPERATIONS
Total revenue for the Group was £1,553m (2024(1): £1,473m), up 5% compared
to the previous year, generating a Headline trading profit(2) in the year of
£159m (2024(1): £170m).
£m Trading profit(2) Headline trading profit(2)
(IFRS 16) (pre-IFRS 16) Revenue
2025 2024 2025 2024 2025 2024
Restated(1) Restated(1) Restated(1)
UK 131 126 130 122 834 795
North America 22 38 15 34 413 401
Rest of the World and Other 20 18 14 14 306 277
Total 173 182 159 170 1,553 1,473
UK
In the UK, our largest division, we have delivered another year of good
growth.
Total revenue in the year was £834m (2024: £795m) which, together with
improved margins, resulted in a Headline trading profit(2) of £130m (2024:
£122m). These results underline the strength of our model and the resilience
of our growth strategy.
Our strategy remains clear. To develop ranges and formats that are relevant to
the customer at each stage of their journey enabling them to make best use of
their time and put more products into their baskets to grow spend per
passenger.
In food-to-go, our Smiths Family Kitchen offer has gone from strength to
strength with award-winning products, an expanded meal deal proposition and an
enhanced hot food and coffee range that is resonating strongly with
customers.
In health and beauty, we have delivered strong growth, up 20% year-on-year, as
we scale this category across our estate.
These extended ranges have enabled us to continue to innovate through format
development, ensuring our one-stop-shop proposition is credible to customers
and landlords and we can enhance our space through this format.
During the year, we have continued to optimise the estate and review our
operating model, realising substantial cost efficiencies in the face of
sustained inflationary cost pressures. We will continue with this discipline
to manage continuing cost pressures.
Air passenger numbers remain a key growth driver and they are forecast to grow
in the long term.
We are investing in our UK store portfolio while also identifying new and
better quality space opportunities across each of our channels. During the
year, we have opened 17 new stores, including 4 at airports, 10 in Hospitals
and 3 motorway service area franchises. We closed 18 small and less well
located stores in the year. This year, we expect to open c.20 new stores in
the UK and close c.15 stores in line with our strategy to improve the quality
of our space.
Revenue growth by key channels
Revenue (% change)
Year to 31 August 2025
Total LFL(2)
vs 2024 vs 2024
Air 6% 7%
Hospitals 7% 4%
Rail 4% 4%
Total UK 5% 5%
Air
Air has delivered another good performance in the year. Total revenue in Air
was up 6%, supported by spend per passenger growth of 4% on the prior year in
Travel Essentials. In addition, we have delivered strong ATV growth, driven by
category development in health and beauty and food-to-go.
Today, WHSmith is the leading travel essentials operator across UK airports.
In the last 18 months, we have secured agreements with key airports to enhance
our space, including at London Heathrow, Manchester and London Stansted.
Looking ahead, 2026 will be a year of investment. We will execute our
largest-ever store development programme, rolling out our one-stop-shop
strategy across six more UK airport terminals, including at London Heathrow,
laying the foundations for future growth and long-term success. With this,
brings short-term disruption as we reformat our existing stores.
These new formats will deliver greater convenience for customers and they will
be central to our future growth. We are clear that this model works following
the success of our store opening at Birmingham Airport in 2023. This is a good
example of our strategy in action.
Following its refit to the one-stop-shop format in 2023, our Birmingham store
is our best-performing store in our UK Air estate. With everything under one
roof, a full health and beauty offer and an in-store pharmacy, it is driving
ATV growth of c.20% and sales per square foot up over 30%. This success gives
us confidence as we scale the format further.
At London Heathrow Airport, we will extend our presence with flagship
one-stop-shop formats across Terminals 3, 4 and 5, demonstrating our
leadership in UK Travel essentials. These stores will see us further enhance
our proposition following data-led customer insights to set a new global
standard for travel essentials in UK airports. The stores will also bring
together everything passengers need under one roof, delivering convenience and
driving strong commercial returns.
We will become the leading airside health and beauty operator across these
terminals with full category ranges and instore pharmacies and we will have
significantly enhanced our design and proposition.
Hospitals
Hospitals is our second largest channel by revenue in the UK and it delivered
another strong performance in the year, with total revenue up 7%. This growth
reflects the strength of our multi-format approach and our strong
partnerships.
This growth reflects the strength of our multi-format approach and the
partnerships that we have built.
We opened 10 new stores and have continued to grow with our partners M&S
and Costa Coffee.
At the same time, we've developed our own Smith's Family Kitchen café
proposition, which gives us a great opportunity for further growth across UK
Hospitals.
Our offer for NHS landlords is now truly multi-format and this flexibility
allows us to meet diverse customer needs and maximise returns for NHS Trusts.
Looking ahead, Hospitals remain a significant growth opportunity for WHSmith.
We have a strong pipeline of new stores to open in FY26 and we see further
potential to expand our footprint and deepen our partnerships across the
hospital estate.
Rail
Rail is also an attractive channel. During the year, we delivered another good
performance with total revenue up 4% on the prior year.
We have made good progress with our one-stop-shop strategy, opening flagship
stores at King's Cross and Charing Cross stations in London. These formats
bring together travel essentials, food-to-go, and health and beauty under one
roof, creating a seamless experience for passengers and driving higher spend
per visit. Looking ahead, we see further opportunity to expand this model
across the rail estate.
Our latest store opening at London Bridge station showcases the future of this
format in Rail, combining our Smith's Family Kitchen coffee and breakfast
offer with food-to-go, health and beauty and a travel essentials offer. We
have also introduced an extended range of on-the-go food and beverage products
as we continue to evolve our retail mix to maximise customer convenience and
value for our landlords.
UK outlook
We continue to benefit from structural tailwinds, including passenger growth,
and we see ongoing opportunities in Air and Hospitals and across our
multi-format stores and brand partnerships. Despite this, there are also
headwinds, including a challenging consumer outlook, sustained inflationary
pressure of 4-5% across most major cost lines, and regulatory changes
affecting some of our core categories.
Category development and innovation remain central to our strategy, driving
spend per passenger and reinforcing our leadership in Travel Essentials, as
does a continued focus on costs and margin.
The year ahead will be a year of investment as we execute our largest-ever
store development programme and accelerate the rollout of our one-stop-shop
strategy. This is a transformational step that will strengthen our estate and
position us for long-term growth.
While this investment will create trading disruption in the short term, and we
expect some margin dilution as a result of this disruption, as well as cost
inflation, our focus remains on disciplined capital spend and cost
optimisation.
These actions will ensure we deliver profitable growth and build the
foundations for future accelerated returns.
NORTH AMERICA
Despite the challenges of recent months, North America remains an attractive
market and investment opportunity. This is the largest travel retail market in
the world with significant investment and long-term structural growth trends.
We see plenty of opportunity to capitalise on the substantial growth
opportunities given our small market share.
During the year, revenue in North America increased by 7%(4), on a constant
currency basis, with total revenue up 3% to £413m (2024: £401m). Further to
the investigation undertaken by Deloitte, Headline trading profit(2) was £15m
(2024(1): £34m).
The revision from the previous market expectation of £55m includes a net
reduction in supplier income of £23m, broadly in line with the value
previously announced. This comprises a gross reduction of £33m of which £20m
is deferred to future financial years and £13m has not been delivered due to
delays in signing supplier income contracts and the under delivery of the
commercial plan. Supplier income costs of £3m have also been incurred. This
is offset by a £13m supplier income restatement benefit from prior years.
Expected cost savings of c.£5m were not delivered in FY25, largely relating
to the delayed restructure of the North America logistics and distribution
network. The direct benefits are no longer expected to be delivered at this
scale, however indirect benefits from the network review are expected over the
medium term.
The adjusted Headline trading profit(2) margin for FY25 before additional
one-off inventory related costs of £12m is 6.5%.
The net cost of the inventory items in FY25 is £12m. This comprises a gross
increase in costs of £23m with £11m restated to prior years. The net
inventory items for FY25 primarily consists of an increase in the stock
obsolescence provision of c.£5m and an increase in the stock loss position
for the year of c.£5m.
The increase in the stock obsolescence provision is driven by the ageing
profile of stock and a marginally worsened stock turn in FY25. The Group has
also revised its provision methodology with a more granular approach across
product categories. There is a clear set of activities focused on narrowing
product ranges and exiting aged stock in the year ahead.
The FY25 shrinkage charge comprises known stock losses realised through stock
counts and a shrinkage provision reflecting expected losses since the count to
year-end. As part of the remediation plan, there is a focus on enhancing
controls and stock management processes across the North America business in
FY26.
In terms of restatements of the prior years, supplier income adjustments on a
net basis for the prior years are £13m for FY24 and £5m for FY23.
Approximately £5m of supplier income from these prior years will be
recognised in FY26 and beyond.
Some of the inventory adjustments also relate to prior years, on a net basis,
£7m recorded in FY24 and £4m in FY23.
As a result, the restated Headline trading profit(2) margins for the prior
years are: 8.5% for FY24 and 10.5% for FY23.
In addition, over recent months, we have also reviewed the nature of one-off
items included in the income statement to ensure we have a clear understanding
of the normalised trading profit margin in North America. We identified a
small number of one-off items, the most notable of which related to Covid-19
rent relief benefits and Covid-19 insurance claims received. After removing
the net benefits, the normalised North America Headline trading profit(2)
margin for the prior years of FY24 and FY23 is around 8%.
Travel Essentials
Our Travel Essentials business has consistently delivered a strong
performance, growing 19% on a constant currency basis in FY25, underpinned by
customer demand and attractive double-digit margins.
In 2022, Travel Essentials represented 37% of the overall North America
business. Over the past three years, we have invested and grown this business
and it now represents 55% of total North America revenue. The Travel
Essentials segment is our most profitable and, on a fully allocated basis,
generates around a 10% Headline trading profit(2) margin. As we scale our
business and enhance our operations, we expect to grow margins further, which
will support the overall profitability of our North America division.
Given our priority to deliver strong returns, we expect the proportion of
Travel Essentials to increase to over 70% in the medium term.
We have a strong pipeline of new stores which we have reviewed in light of the
normalised margin levels and we are confident that, in aggregate, they meet
our investment hurdle rates. We have also started the process of reviewing all
of our individual formats within the store pipeline.
InMotion
InMotion remains highly regarded by landlords as part of tender packages where
it adds value to the overall retail offer in airports and its strong
reputation gives us a competitive advantage in securing attractive space
within key airports. Our InMotion estate is profitable, however it is in like
for like decline and the portfolio is large with 123 stores. During the year,
InMotion LFL revenue declined by 3% year on year.
As we move forward, our approach to operating InMotion will be highly focused.
We will limit new store openings with new stores being considered only as part
of strategically important tender packages. Where appropriate, we will also
move the InMotion proposition into the large marketplace stores, where we
offer customers the convenience of everything under one roof, providing
flexibility on space use over time.
In parallel, we will undertake a review of the existing store portfolio. It is
imperative that we improve the profitability and revenue performance of this
business. As a result, our focus will include undertaking a deeper diagnostic
of the estate to determine the factors that need to be in place for these
stores to succeed. We expect to complete this in the first half of 2026 and we
will then be in a position to reshape the portfolio to improve profitability
and allow us to better target where we can open new stores that payback with
strong returns. We will also focus on our commercial proposition reducing the
number of product lines, improving availability and reducing working capital.
Over time, we expect the number of InMotion stores to decline as we focus on
our Travel Essentials business and integrating more tech accessories into
these stores, as well as the impact of landlord redevelopment. In the years
ahead, we would expect the InMotion estate to contract by around 20-30% with
store numbers reducing below 100 in the medium term.
Despite store closures, we see an opportunity to increase the margin with our
strongest margin stores retained, range optimisation and strengthened
operational performance.
Air store profiles
Our strategy to grow in US airports is delivering good results. Over recent
years, we have secured a mix of standalone stores and multi-store packages,
combining our profitable Travel Essentials offer with complementary stores
such as InMotion.
In Kansas City, we opened an 8 store package in February 2023, including 6
Travel Essentials stores, a larger-format City Market and a localised 'Made in
KC' concept store. This tailored approach across the airport meets travellers
needs and drives performance with like-for-like growth of around 6% in these
stores, a payback period of c.3 years and a long-term contract.
In Washington, we opened an Eastern Market store in May 2025 and this is a
good example of where we have introduced a marketplace format offering the
convenience of everything under one roof -similar to our one-stop-shop
strategy in the UK. Within this standalone store, we have the flexibility to
realign our category mix over the term of the lease to ensure we stay ahead of
changing trends. We expect a current payback period here of less than three
years and we have a long-term contract in place.
In Palm Springs, we have secured exclusive rights to all the retail locations
in the airport. This was a significant strategic win and includes a 5-store
package: 3 Travel Essentials stores, an InMotion and a coffee shop. This
localised offer is performing very well, with like-for-like growth of around
9% and a current payback period of c.2 years. Again, with a long-term contract
in place.
We have a clear ability to win prime locations, adapt our formats and leverage
our brands, and we are able to drive good growth with attractive returns.
Resorts
We have completed a review of our Resorts business in Las Vegas to evaluate
the current store portfolio based on the performance and market dynamics of
each format.
There are four primary store formats that make up our Resorts business: hotel
convenience and gift stores; 'Welcome to Las Vegas' stores; fashion stores;
and speciality stores.
Our hotel convenience and gift stores, of which we operate c.20, sell
consumables and souvenirs. Our 'Welcome to Las Vegas' stores primarily sell
souvenirs with some consumables and we operate c.20 of these. We see a good
contribution from our hotel convenience and 'Welcome to Las Vegas' stores.
Despite a decline in LFL revenue in the last year, we continue to benefit from
attractive margins and these stores contribute cash.
Our fashion stores deliver c.25% of Resort revenue and, on a comparable basis,
have declined c.10% year on year. At an aggregated level, these stores are
unprofitable and do not generate cash.
Our speciality stores sell categories such as confectionery and represent
c.10% of Resort revenue. LFL revenue also declined around 7% in the year and
these stores are marginally unprofitable.
Following our review, we are exiting a number of Resort fashion and speciality
stores, where the leases are short, and we are reviewing further format and
other controlled exit route options where the arrangements run over the medium
term. While this will take some time, we have initiated the work and the
margin and cash benefits, along with growth benefits, already support our FY26
plans.
Revenue growth by key channels
Revenue (% change)
Year to 31 August 2025
Total Total at constant currency(4) vs 2024 LFL(2)
vs 2024 vs 2024
Air 5% 9% 4%
Resorts (7)% (3)% (4)%
Total North America 3% 7% 2%
During the year, we opened 35 new stores and closed 14 stores, consistent with
our strategy of improving the quality of our store estate.
We have a new store pipeline of c.70 stores with around 35-40 due to open over
the next year and, currently, we anticipate closing c.30 stores in FY26 as we
continue to improve the quality of our store portfolio.
Including the 35 store openings in the year, we now have 274 stores in Air
(including 123 InMotion stores), and 88 stores in Resorts and Rail.
Rebuilding profitability in North America
Given this division has grown significantly over the past few years, it has
become complex with significant store, supplier and product range expansion.
It is therefore necessary that we focus on refining the operating model with
core business process improvements.
It is clear that this will be a multi-year piece of work and our focus areas
for the next 12 months will be on our people structure and talent and
investment in our end-to-end supply chain to improve the current processes and
ways of working, both centrally and in stores. This will be combined with the
roll out of two new regional distribution centres; one operated by GXO in New
Jersey and a second in Las Vegas, operated directly as an extension of how we
operate today. We will utilise these distribution centres to transform our
distribution and transportation capabilities and stay ahead of the store
growth. We also expect operational savings to deliver a benefit in the years
ahead.
In the year ahead, we are expecting total revenue growth in the region of
6-8%, driven largely by space. In terms of profitability, we expect to grow
Headline trading profit(2) margin from 4% in FY25 to around 7-8% in FY26. This
includes trading profit contribution in the region of £5m, the rebuild of
profit excluding the one-off inventory related costs of around £12m, supplier
income deferral gains of around £5m year on year, offset by operating model
changes and remediation investment of around £2m.
Looking ahead, we will focus on five key actions that will strengthen our
business and deliver future margin gains:
· increasing the mix of Travel Essentials;
· deploying capital with discipline - investing where we see the highest
returns and avoiding unnecessary expansion. Every decision will be guided by
rigorous financial criteria;
· strengthening our operating model to improve efficiency;
· rationalising low-margin stores to sharpen our focus on profitable
locations; and
· exiting loss-making stores to ensure our portfolio is positioned for
long-term success.
REST OF THE WORLD AND OTHER
It has been a strong year for revenue growth. Revenue was up 12%(4), largely
driven by new store openings. Headline trading profit(2) was broadly flat year
on year with operating investment in the new store openings and gross margin
headwinds driven by location mix.
We remain focused on growing and building scale in our core, strategically
important markets, particularly in Australia, Ireland and Spain where we have
established strong brand recognition and proven commercial success.
We will focus on further investment where we already have scale and expertise,
ensuring that we deepen our presence and strengthen profitability in the
markets we know best. In prime locations, we will also look to grow our key
categories, such as health and beauty and further develop our one-stop-shop
format.
In addition, we will continue to actively manage our store portfolio which
will result in exiting sub-scale markets as contracts expire or through active
portfolio management.
The outcome of this is clear: we plan to improve headline trading profit
margins over the medium term and deliver stronger returns.
As part of this disciplined approach, in the near term, new directly-run
stores will be opened only within our existing core markets allowing us to
leverage operational synergies, local market knowledge, and established
infrastructure.
As we look at our next phase of growth, we are sharpening our focus on a
franchise-led model, an area in which we already have considerable experience.
By working in partnership with experienced local operators, we can leverage
their local expertise alongside our space and promotional management to
optimise performance. This shift will take time, but it offers several clear
advantages and will therefore drive stronger returns. It also provides the
ability to grow while reducing operational complexity.
We now have 325 stores open. Of the 325 stores open, 59% are directly-run, 9%
are joint venture and 32% are franchise. During the current financial year, we
expect to open c.5 stores and close c.20 stores.
CultPens.com delivered a good performance in the year, in line with our
expectations.
Technical planning assumptions FY26 (Pre IFRS 16 basis)
Central costs £30-£32m
Interest charges £33-£35m
Effective tax rate c.25% of Group revenue
Working capital Working capital growth broadly in line with revenue growth, plus c.£10m
outflow relating to one-off payables timing
Non-underlying c.£20m-£30m
Capex c.£90m
Headline net debt c.£400m
Total stores
Year ended 31 August 2025
No. of stores UK North America ROW Total
At 1 September 2024 594 341 356 1,291
Opened 17 35 27 79
Closed (18) (14) (18) (50)
Net (closures)/openings (1) 21 (31) (11)
India franchise closures (40) (40)
At 31 August 2025 593 362 325 1,280
Closures (including India franchises):
Relocations / loss-makers (14) (5) (2) (21)
Landlord redevelopment (3) (3) (3) (9)
Lease expiries (1) (6) (53) (60)
(18) (14) (58) (90)
During the year, we opened 79 stores. As at 31 August 2025, our global
business operated from 1,280 stores (2024: 1,291). As part of our strategy to
improve the quality of our space, we closed 90 stores in the year. 21 closures
were the result of relocations or removing loss makers, and in our Rest of the
World division, 40 store closures in India were franchised stores. Outside of
planned redevelopment, all of these closures were actioned in line with our
strategy. Our focus will remain on opening more profitable stores and better
quality space. As a result, we expect to see further store closures in the
current financial year of c.65 stores and to open a further c.62 stores.
Excluding franchise stores, the global business occupies 1.2m square feet
(2024: 1.2m square feet).
HIGH STREET
On 28 March 2025, the Group agreed to sell its UK High Street business
comprising approximately 480 stores to Modella Capital. The transaction
excluded the WHSmith brand, which was retained by the Group. The High Street
business represented a separate major line of business and geographical area
of operations. Accordingly, the results of this business have been classified
as discontinued operations in accordance with IFRS 5. The related assets and
liabilities were derecognised on completion of the sale.
The sale was completed on 28 June 2025. Under the terms of the agreement, the
Group received an upfront cash payment of £10m at completion, with the
remainder of the proceeds comprising contingent consideration linked to future
cash flows and taxable profits of the divested business.
The carrying value of the net assets disposed was compared to the fair value
of the total consideration receivable, net of estimated costs to sell of
£27m.
FUNKYPIGEON.COM
On 14 August 2025, the Group completed the sale of its online personalised
greeting cards business, funkypigeon.com Ltd, to Card Factory PLC for total
consideration of £25m. The associated cost of sale amounted to £3m. The
results of this business have been classified as discontinued operations in
accordance with IFRS 5. The related assets and liabilities were derecognised
on completion of the sale.
ENVIRONMENTAL AND SOCIAL GOVERNANCE ('ESG')
We continue to make solid progress against our main sustainability
commitments.
Our transition to a net zero business continues, with Scope 1 and 2 carbon
emissions now 89% lower than in 2020 and 53% of our supply chain emissions
covered by science-based carbon reduction targets. We will be commencing the
process of seeking revalidation of our carbon targets by the Science Based
Targets initiative within the next financial year, and will include a FLAG
target to minimise forestry, land and agricultural emissions as our food
offering continues to grow.
Our employee networks continue to grow, providing a channel for colleague-led
engagement on our diversity and inclusion initiatives and employee policies
and processes.
Our charity partnerships with the National Literacy Trust support children's
literacy, and Miracle Flights support children who need to travel to receive
life-changing medical care continue.
We are the top performing speciality retailer in Morningstar's Sustainalytics
ESG Benchmark and have been awarded an ESG rating of AAA from MSCI. In
addition, we were included, once again, in the Dow Jones World Sustainability
Index.
FINANCIAL REVIEW
IFRS Headline
pre-IFRS 16(2)
£m 2025 2024 2025 2024
Restated(1) Restated(1)
Trading profit
UK(2) 131 126 130 122
North America(2) 22 38 15 34
Rest of the World and Other(2) 20 18 14 14
Group trading profit - continuing operations(2) 173 182 159 170
Unallocated central costs (25) (28) (25) (28)
Group operating profit before non-underlying items - continuing operations(2) 148 154 134 142
Net finance costs(9) (46) (48) (26) (28)
Group profit before tax and non-underlying items - continuing operations(2) 102 106 108 114
Non-underlying items(2,9) (99) (41) (91) (41)
Non-underlying items - Finance costs(2) (1) - (1) -
Group profit before tax - continuing operations(2) 2 65 16 73
Income tax charge (26) (22) (27) (24)
(Loss)/profit for the year - continuing operations (24) 43 (11) 49
(Loss)/profit for the year - discontinued operations (113) 17 (135) 13
(Loss)/profit for the year - total operations (137) 60 (146) 62
Attributable to:
Equity holders of the parent (144) 54 (153) 56
Non-controlling interests 7 6 7 6
(137) 60 (146) 62
Total Headline trading profit(2) in the year was £159m (2024(1): £170m) of
which the largest division, UK, generated a Headline trading profit(2) of
£130m (2024: £122m). North America delivered £15m (2024(1): £34m) and ROW
£14m (2024: £14m).
Group generated a Headline profit before tax and non-underlying items(2) of
£108m (2024(1): £114m).
(9) Excluding non-underlying Finance costs disclosed below
Net finance costs - Continuing operations
Headline
IFRS pre-IFRS 16(2)
£m 2025 2024 Restated(1) 2025 2024 Restated(1)
Interest payable on bank loans and overdrafts 11 14 11 14
Interest on convertible bonds 15 14 15 14
Interest on lease liabilities 20 20 - -
Net finance costs before non-underlying items 46 48 26 28
Headline net finance costs before non-underlying items(2) (pre-IFRS 16) for
the year were £26m (2024(1): £28m). This includes cash costs of £16m and
£9m relating to the non-cash debt accretion charge from the convertible bond
which has a fixed coupon of 1.625%.
Lease interest of £20m arises on lease liabilities recognised under IFRS 16,
bringing the total net finance costs before non-underlying items on an IFRS 16
basis to £46m (2024(1): £48m).
Tax
The effective tax rate(2) was 42% (2024(1): 26%) on profit before tax and
non-underlying items(2) for the year. This is higher than the UK corporation
tax rate of 25% primarily due to the derecognition of US tax losses in 2025.
Net corporation tax payments in the year were £28m (2024: £18m) after using
all possible loss relief. Based on current legislation, we expect the
effective tax rate(2) in the current financial year to be around 25%.
Earnings per share
Calculation of Headline diluted earnings per share - Continuing
operations(2)
Headline
pre-IFRS 16(2)
£m - Unless otherwise stated 2025 2024
Restated(1)
Headline profit before tax(10) 108 114
Income tax expense(10) (45) (29)
Headline profit for the year(10) 63 85
Attributable to non-controlling interests (7) (6)
Headline profit for the year attributable to equity holders of WH Smith 56 79
PLC(10)
Weighted average shares in issue (diluted) (no. of shares - millions) 129 131
Headline diluted EPS(2,10) (p) 43.4p 60.3p
The above measures are calculated on a pre-IFRS 16 basis.
Headline diluted EPS(2) was 43.4p (2024(1): 60.3p), a decrease of 28% on the
previous year.
EPS calculated on an IFRS 16 basis is provided in Note 9, and a reconciliation
between the IFRS 16 and pre-IFRS 16 earnings per share is provided in Note A4
to the Glossary on page 63.
The diluted weighted average number of shares in issue used in the calculation
of Headline diluted EPS(2) assumes that the convertible bond is not dilutive
and reflects the number of shares held by the ESOP Trust.
Profit attributable to non-controlling interests primarily represents the
joint venture partner share of profit in relation to airport contracts in the
USA. For the year ended 31 August 2025, the profit attributable to
non-controlling interests was £7m (2024(1): £6m).
(10) Before non-underlying items
Non-underlying items(2)
The Group has chosen to present a measure of profit and earnings per share
that excludes certain items, which are considered non-underlying and
exceptional due to their size, nature or incidence, or are not considered to
be part of the normal operations of the Group. Non-underlying items in the
year in the Income Statement are detailed in the table below.
IFRS Headline
pre-IFRS 16(2)
£m Ref. 2025 2024 Restated(1) 2025 2024 Restated(1)
Items included in the Income statement
Amortisation of acquired intangible assets (1) (3) (3) (3) (3)
Impairment of non-current assets (2) (53) (22) (24) (14)
Provisions for onerous contracts (2) (3) (4) (24) (9)
Transformation programmes - supply chain, IT and operational efficiencies (3) (25) (7) (25) (7)
Costs relating to the investigation into accelerated recognition of supplier (4) (10) - (10) -
income in North America
Impairment of other receivables (5) (3) - (3) -
Costs relating to M&A activity and Group legal entity structure (6) (1) (4) (1) (4)
Costs associated with pensions - (2) - (2)
IFRS 16 remeasurement gains - 3 - -
Other non-underlying costs (1) (2) (1) (2)
Total non-underlying items recognised in the income statement before finance (99) (41) (91) (41)
costs - continuing operations
Finance costs associated with onerous contracts (2) (1) - (1) -
Total non-underlying items recognised in the income statement - continuing (100) (41) (92) (41)
operations
(1) Amortisation of acquired intangible assets
Non-cash amortisation of acquired intangible assets of £3m (2024: £3m)
primarily relate to the MRG and InMotion brands.
(2) Impairment of non-current assets and provision for onerous contracts
The Group has carried out an assessment for indicators of impairment of
non-current assets across the store portfolio.
Where an indicator of impairment has been identified, an impairment review has
been performed to compare the value-in-use of cash generating units, based on
management's assumptions regarding likely future trading performance, aligned
with the latest Board approved budget and three-year plan, to the carrying
value of the cash-generating unit as at 31 August 2025.
As a result of this exercise, a non-cash charge of £24m (2024(1): £14m) was
recorded within non-underlying items for impairment of non-current assets on a
pre-IFRS 16 basis, of which £24m (2024(1): £13m) relates to property, plant
and equipment and £nil (2024(1): £1m) relates to intangible assets
(primarily software). On an IFRS 16 basis the total impairment charge of £53m
(2024(1): £22m) comprises £24m property, plant and equipment (2024(1):
£11m), £nil intangible assets (2024(1): £1m) and £29m (2024(1): £10m)
right-of-use assets.
A charge of £24m on a pre-IFRS 16 basis (2024(1): £9m; IFRS 16 basis £3m;
2024(1): £4m) has been recognised in the income statement to provide for the
unavoidable costs of continuing to service a number of non-cancellable
supplier and property contracts where the space is vacant, a contract is
loss-making or currently not planned to be used for ongoing operations. This
provision will be utilised in line with the profile of the contracts to which
they relate. The unwinding of the discount on provisions for onerous contracts
is treated as an imputed interest charge, and has been recorded in
non-underlying finance costs.
Of the total charge for impairment and onerous contracts, on a pre-IFRS 16
basis, £7m is attributable to the UK operating segment, £25m to North
America and £16m to Rest of the World and Other. Impairment charges in the
North America and Rest of the World and Other operating segments have
principally arisen due to a lower trading outlook in certain individual stores
across these regions, in addition to localised labour cost pressures in one
particular grouping of stores..
(3) Transformation programmes
Costs of £25m (2024(1): £7m) have been classified as non-underlying in
relation to a number of Board-approved programmes relating to supply chain
(£3m), IT transformation (£11m) and operational efficiencies (£11m).
The supply chain transformation programme includes costs of reconfiguration of
the Group's UK distribution centres following the outsourcing of operations to
a third party (GXO), in order to generate a more efficient and productive
supply chain to support the performance and growth of the Group's UK
businesses. This project concluded in 2025.
The IT transformation programme includes costs relating to upgrading core IT
infrastructure, data migration and investment in data security, store systems
modernisation and other significant IT projects. These strategic projects will
provide additional stability, longevity and operational benefits. The
implementation will cover several years, and we anticipate total costs in the
year ending 31 August 2026 to be around £5-7m.
The operational efficiencies programme commenced in the year and includes £6m
of costs associated with the restructuring of store and field management
structures within the UK segment, and £5m of head office restructuring and
other transformation costs across all segments. This programme will deliver a
more efficient operating model to support the Group's strategic objectives.
The implementation of certain of these projects will continue into next
financial year.
These multi-year programmes are reported as non-underlying items on the basis
that they are significant in quantum, relate to a Board-approved programme and
to aid comparability from one period to the next.
(4) Costs associated with the investigation into accelerated recognition of
supplier income in North America
Costs incurred during the year include £10m of professional fees in relation
to the investigation into accelerated recognition of supplier income in North
America. We anticipate further costs in the year ending 31 August 2026 to be
around £5m.
(5) Impairment of other receivables
The Group's other receivables include amounts due from non-controlling
interest equity shareholders in certain of the Group's US subsidiaries which
relate to contributions owed towards property, plant and equipment
construction for stores. These contributions are used towards unit fixed asset
buildouts and are received in accordance with the cash requirements of the
subsidiary. Certain of these contributions are no longer considered to be
recoverable based on the expected credit loss that considers the
counterparty's ability to pay, which reflects the financial outlook of the
associated stores. Such expected credit losses of £3m (2024: £nil) are
recognised within non-underlying items where an impairment charge for store
non-current assets has also been recognised within non-underlying items.
(6) Costs relating to Group legal entity structure
Costs incurred during the year include £1m (2024(1): £4m) of professional
and legal fees in relation to a reorganisation of the Group's legal entity
structure.
A tax credit of £18m (2024(1): £5m) has been recognised in relation to the
above items (£18m pre-IFRS 16 (2024(1): £5m)) from continuing operations.
Cash flow
Free cash flow(2) reconciliation - Continuing operations
pre-IFRS 16(2)
£m 2025 2024(1)
Headline Group operating profit before non-underlying items(2) 134 142
Depreciation, amortisation and impairment (pre-IFRS 16)(11) 51 44
Non-cash items 2 12
Headline EBITDA(2, 11) 187 198
Capital expenditure(7) (81) (105)
Working capital (pre-IFRS 16)(11) 4 (22)
Net tax paid (28) (18)
Net finance costs paid (pre-IFRS 16)(11) (19) (18)
Free cash flow(2) 63 35
(11) Excludes cash flow impact of non-underlying items
The Group generated a headline EBITDA(2) of £187m in the year (2024(1):
£198m) demonstrating the cash generative nature of the business. Capex was
£81m (2024(1): £105m(7)) as we continued to invest in new stores, IT and
energy efficient chillers and other store equipment. We had a working capital
inflow(8) of £4m in the year (2024(1): outflow(8) of £22m). This mainly
relates to a one-off payables timing benefit linked to one of our large
franchise partners, broadly offsetting an inventory increase relating to new
store openings. This year, we expect an outflow mainly relating to the
unwinding of this timing benefit and opening new stores. In total, there was a
free cash inflow in the year of £63m (2024(1): £35m).
Net corporation tax payments in the period were £28m (2024: £18m).
Capex was £81m (2024(1): £105m(7)) which includes the additional spend from
opening 79 stores around the world.
£m 2025 2024(1,)(7)
New stores and store development 54 64
Refurbished stores 16 12
Systems 9 9
Other 2 20
Total capital expenditure 81 105
Reconciliation of Headline net debt(2)
Headline net debt(2) is presented on a pre-IFRS 16 basis. See Note 10 and Note
A8 of the Glossary for the impact of IFRS 16 on net debt.
As at 31 August 2025, the Group had Headline net debt(2) of £390m comprising
convertible bonds of £320m and net overdrafts of £70m (2024: £371m,
convertible bonds of £310m and net overdrafts of £61m).
Headline(2)
pre-IFRS 16
£m 2025 2024(1)
Opening Headline net debt(2) (371) (330)
Free cash flow(2) 63 35
Non-underlying items - continuing operations(2) (38) (17)
Dividends paid (43) (41)
Purchase of own shares for cancellation (50) -
Net purchase of own shares for employee share schemes - (12)
Receipt of pension surplus 75 -
Discontinued operations (25) 7
Other (1) (13)
Closing Headline net debt(2) (390) (371)
Net overdraft (70) (61)
Convertible bond (320) (310)
Headline net debt(2) (390) (371)
In addition to the free cash flow, the Group had outflows relating to
non-underlying items(2) from continuing operations of £38m (2024(1): £17m)
mainly relating to transformation and restructuring projects and spend
relating to prior year property provisions; the dividend of £43m (2024:
£41m) being the final dividend from 2024 and the interim dividend from 2025;
the £50m (2024: £nil) share buyback announced in September 2024; and £nil
(2024: £12m) on own shares for the Group's share schemes. The Group also had
an inflow of £75m (2024: £nil) in respect of receipt of the pension surplus
following wind-up of the scheme and a net cash outflow related to discontinued
operations of £25m (2024(1): £7m inflow).
This year, we would expect, subject to investment opportunities Headline net
debt(2) to be in the region of £400m at the end of the year. The increase
relates to continuing investment in new stores in North America alongside
ongoing transformation costs.
On an IFRS 16 basis, net debt was £874m (2024: £997m), which includes an
additional £484m (2024: £626m) of lease liabilities.
Leverage(2) - Continuing operations
pre-IFRS 16(2)
£m 2025 2024(1)
Headline EBITDA(2) 187 198
Headline net debt(2) 390 371
Leverage - multiple 2.1x 1.9x
Leverage(2) at 31 August 2025 was 2.1x (2024(1): 1.9x), comprising headline
net debt(2) over headline EBITDA(2). The Group plans to reduce the leverage
position to below 2.0x.
Fixed charges cover(2) - Continuing operations
pre-IFRS 16(2)
£m 2025 2024(1)
Headline net finance costs before non-underlying items (2) 26 28
Headline fixed operating lease charges(2) (Note A12) 232 216
Total fixed charges 258 244
Headline EBITDA(2) 187 198
Headline fixed operating lease charges(2) 232 216
Headline EBITDA before fixed charges(2) 419 414
Fixed charges cover - times 1.6x 1.7x
Fixed charges, comprising property operating lease charges and net finance
costs, were covered 1.6 times (2024(1): 1.7 times) by Headline EBITDA(2)
before fixed charges.
Return on capital employed(2) - Continuing operations
ROCE %
2025 2024(1)
UK 38% 35%
North America 4% 10%
Rest of the World and Other 22% 23%
Group 18% 20%
Return on capital employed is calculated as the Group operating profit before
non-underlying items(2) as a percentage of operating capital employed and is
stated on a pre-IFRS 16 basis. Operating capital employed is calculated as the
12-month average net assets, excluding net debt, retirement benefit
surplus/obligation and net current and deferred tax balances.
Balance sheet
Headline(2)
IFRS pre-IFRS 16
£m 2025 2024(1) 2025 2024(1)
Goodwill and other intangible assets 447 490 449 491
Property, plant and equipment 254 316 251 308
Right-of-use assets 367 505 - -
Investments in joint ventures 2 2 2 2
Non-current investments 4 - 4 -
1,074 1,313 706 801
Inventories 148 209 148 209
Payables less receivables (191) (211) (181) (204)
Working capital (43) (2) (33) 5
Net current and deferred tax asset 31 38 31 38
Provisions (1) (17) (25) (28)
Operating assets 1,061 1,332 679 816
Net debt (874) (997) (390) (371)
Net assets excluding retirement benefit surplus 187 335 289 445
Retirement benefit surplus 1 87 1 87
Total net assets 188 422 290 532
The Group had Headline net assets excluding the retirement benefit surplus of
£289m, £156m lower than last year end reflecting the disposal of the High
Street business. Under IFRS the Group had net assets before the retirement
benefit surplus of £187m (2024(1): £335m).
Events after the balance sheet date
The FCA has commenced an investigation into the Company in respect of its
compliance with UK Listing Principles and Rules and the Disclosure and
Transparency Rules in relation to the matters announced by the Company on 19
November 2025.
Total stores by region
No. of stores At 31
August 2025
UK 593
North America
Air 274
Resorts / Rail 88
Total North America 362
Rest of the World and Other 325
Total 1,280
PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES
The Board regularly reviews and monitors the risks and uncertainties that
could have a material effect on the Group's financial results. The principal
risks and uncertainties that could lead to a material impact have not
significantly changed from those listed in the Annual Report and Accounts
2024. No new principal risks were identified in the year, however there were
six risks where the potential impact had increased over the year, with the
remaining risks having no change in their overall impact. We have also
recognised that the ongoing global conflicts have created further uncertainty
in the macro economy. A summary of the principal risks has been provided
below:
Risk and change in risk level Impact
Treasury, financial and credit risk management - increased The Group's exposure to and management of capital, liquidity, credit, interest
rate and foreign currency risk are analysed further in Note 21 on page 154 of
the Annual Report and Accounts 2024.
The Group also has credit risk in relation to its trade and other receivables
and sale or return contracts with suppliers.
The Group's ability to ensure the accuracy of financial reporting including a
failure to prevent fraud could result in misstatement and key decisions being
taken on inaccurate information.
The Group has begun the execution of the Remediation plan and has engaged a
third party to provide assurance in respect of the Company's compliance with
Provision 29 of the 2024 Code.
Economic, political, competitive and market risks - increased The Group operates in highly competitive markets and in the event of failing
to compete effectively with travel, convenience and other similar product
category retailers, this may affect revenues obtained through our stores.
Failure to keep abreast of market developments, including the use of new
technology, could threaten our competitive position.
Factors such as the economic climate, levels of household disposable income,
seasonality of revenue, changing demographics and customer shopping patterns,
and raw material costs could impact on profit performance.
The Group may also be impacted by political developments both in the UK and
internationally, such as regulatory and tax changes, increasing scrutiny by
competition authorities and other changes in the general condition of retail
and travel markets or impacts from further geopolitical threats or escalation
in global conflict.
Brand standards - no change The WHSmith brand is an important asset and failure to protect it from
unfavourable publicity could materially damage its standing and the wider
reputation of the business, adversely affecting revenues.
As the Group continues to expand its convenience offer in travel locations,
introducing a wider range of products, associated risks include compliance
with food hygiene and health and safety procedures, product and service
quality, environmental or ethical sourcing, and associated legislative and
regulatory requirements.
Key suppliers and supply chain management - no change The Group has agreements with key suppliers in the UK, Europe and Asia and
other countries in which it operates. The interruption or loss of supply of
core category products from these suppliers to our stores may affect our
ability to trade.
Quality of supply issues may also impact the Group's reputation and impact our
ability to trade.
Store portfolio - no change The quality and location of the Group's store portfolio are key contributors
to the Group's strategy. Retailing from a portfolio of good quality real
estate in prime retail areas and key travel hubs at commercially reasonable
rates remains critical to the performance of the Group.
Most Travel stores are held under concession agreements, on average for five
to ten years, although there is no guarantee that concessions will be renewed
or that Travel will be able to bid successfully for new contracts.
Business interruption - increased An act of terrorism or war, or an outbreak of a pandemic, could reduce the
number of customers visiting WHSmith outlets, causing a decline in revenue and
profit. In the past, our Travel business has been particularly impacted by
geopolitical events such as major terrorist attacks, which have led to
reductions in customer traffic. Closure of travel routes both planned and
unplanned, such as the disruption caused by natural disasters or
weather-related events, may also have a material effect on business. The Group
operates from different distribution centres and the closure of any one of
them may cause disruption to the business.
In common with most retail businesses, the Group also relies on a number of
important IT systems, where any system performance problems, cyber risks or
other breaches in data security could affect our ability to trade.
Reliance on key personnel - increased The performance of the Group depends on its ability to continue to attract,
motivate and retain key head office and store staff. The retail sector is very
competitive and the Group's personnel are frequently targeted by other
companies for recruitment.
International expansion - increased The Group continues to expand internationally. In each country in which the
Group operates, the Group may be impacted by political or regulatory
developments, or changes in the economic climate or the general condition of
the travel market.
Cyber risk, data security and GDPR compliance - increased The Group is subject to the risk of systems breach or data loss from various
sources including external hackers or the infiltration of computer viruses.
Theft or loss of Company or customer data or potential damage to any systems
from viruses, ransomware or other malware, or non-compliance with data
protection legislation, could result in fines and reputational damage to the
business that could negatively impact our revenue.
Environment and Social Sustainability - no change Our investors, customers and colleagues expect us to conduct our business in a
responsible and sustainable way. Climate change is now recognised as a global
emergency. Failure to effectively respond and influence our value chain and
wider stakeholders to decarbonise could damage our reputation and introduce
higher costs. Delivery against our sustainability targets and meeting
regulatory obligations is vital.
We have identified several climate related risks, including;
- Increases in the cost of energy and fuel from carbon pricing and
changing market dynamics;
- Disruption to supply of goods caused by acute and chronic changes in
weather patterns.
Although the impact is limited over our outlook period, these risks are
potentially significant over the longer term.
This announcement contains inside information which is disclosed in accordance
with the Market Abuse Regulations.
This announcement contains certain forward-looking statements with respect to
the operations, performance and financial condition of the Group. By their
nature, these statements involve uncertainty since future events and
circumstances can cause results to differ from those anticipated. Nothing in
this announcement should be construed as a profit forecast. We undertake no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise.
WH Smith PLC
Group Income Statement
For the year ended 31 August 2025
2025 2024 (restated(1))
£m Note Before non-underlying items(2) Non-underlying items(3) Total Before non-underlying items(2) Non-underlying items(3) Total
Revenue 2 1,553 - 1,553 1,473 - 1,473
Group operating profit/(loss) - continuing operations 2,3 148 (99) 49 154 (41) 113
Finance costs 5 (46) (1) (47) (48) - (48)
Profit/(loss) before tax - continuing operations 102 (100) 2 106 (41) 65
Income tax (expense)/credit 6 (44) 18 (26) (27) 5 (22)
Profit/(loss) for the year - continuing operations 58 (82) (24) 79 (36) 43
Profit/(loss) for the year - discontinued operations 7 24 (137) (113) 27 (10) 17
Profit/(loss) for the year - total operations 82 (219) (137) 106 (46) 60
Attributable to equity holders of the parent 75 (219) (144) 100 (46) 54
Attributable to non-controlling interests 7 - 7 6 - 6
82 (219) (137) 106 (46) 60
Loss/(earnings) per share - continuing operations
Basic 9 (24.4) 28.7
Diluted 9 (24.4) 28.2
Loss/(earnings) per share - total operations
Basic 9 (113.4) 41.9
Diluted 9 (113.4) 41.2
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North
America division (refer to Note 1b for further details) and to separately
disclose results from discontinued operations (refer to Note 1a and Note 7 for
further details).
(2) Alternative performance measure. The Group has defined and explained the
purpose of its alternative performance measures in the Glossary on page 56.
(3) See Note 4 for an analysis of non-underlying items. See Glossary on page
56 for a definition of Alternative Performance Measures.
( )
WH Smith PLC
Group Statement of Comprehensive Income
For the year ended 31 August 2025
£m 2025 2024 (restated(1))
(Loss)/profit for the year (137) 60
Other comprehensive (loss)/income:
Items that will not be reclassified subsequently to the income statement:
Remeasurement of the recoverability of retirement benefit surplus - 87
Actuarial gains on defined benefit pension schemes - 2
- 89
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (9) (15)
(9) (15)
Other comprehensive (loss)/income for the year, net of tax (9) 74
Total comprehensive (loss)/income for the year (146) 134
Attributable to equity holders of the parent (150) 129
Attributable to non-controlling interests 4 5
(146) 134
Total comprehensive (loss)/income arising from:
- Continuing operations (33) 117
- Discontinued operations (113) 17
(146) 134
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North
America division (refer to Note 1b for further details) and to separately
disclose results from discontinued operations (refer to Note 1a and Note 7 for
further details).
WH Smith PLC
Group Balance Sheet
As at 31 August 2025
£m Note 2025 2024 (restated1) 2023 (restated1)
Non-current assets
Goodwill 13 402 426 436
Other intangible assets 13 45 64 69
Property, plant and equipment 13 254 316 270
Right-of-use assets 13 367 505 444
Investments in joint ventures 2 2 2
Non-current investments 4 - -
Retirement benefit surplus 1 - -
Deferred tax assets 16 37 45
Trade and other receivables 25 24 19
1,116 1,374 1,285
Current assets
Inventories 148 209 201
Trade and other receivables 102 126 101
Retirement benefit surplus - 87 -
Derivative financial asset - - 1
Current tax receivable 23 2 3
Cash and cash equivalents 10 71 56 56
344 480 362
Total assets 1,460 1,854 1,647
Current liabilities
Trade and other payables (318) (361) (344)
Bank overdrafts and other borrowings 10 (461) (117) (84)
Lease liabilities (90) (125) (116)
Derivative financial liabilities - - (1)
Current tax payable (1) (1) (1)
Short-term provisions (1) (4) (1)
(871) (608) (547)
Non-current liabilities
Bank loans and other borrowings 10 - (310) (301)
Long-term provisions - (13) (16)
Lease liabilities (394) (501) (450)
Deferred tax liabilities (7) - -
(401) (824) (767)
Total liabilities (1,272) (1,432) (1,314)
Total net assets 188 422 333
Shareholders' equity
Called up share capital 28 29 29
Share premium 316 316 316
Capital redemption reserve 14 13 13
Translation reserve (15) (9) 5
Other reserves (254) (268) (255)
Retained earnings 69 315 202
Total equity attributable to equity holders of the parent 158 396 310
Non-controlling interests 30 26 23
Total equity 188 422 333
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
and to reclassify certain receivables from current to non-current (refer to
Note 1b for further details).
WH Smith PLC
Group Cash Flow Statement
For the year ended 31 August 2025
£m Note 2025 2024
(restated1)
Operating activities
Cash generated from continuing operations 11 330 249
Interest paid(2) (32) (35)
Financing arrangement fees (3) (1)
Income taxes paid (28) (18)
Net cash inflow from operating activities - discontinued operations 9 71
Net cash inflow from operating activities 276 266
Investing activities
Purchase of property, plant and equipment (77) (97)
Purchase of intangible assets (4) (9)
Receipt from settlement of financial instruments 7 9
Acquisition of subsidiaries, net of cash acquired - (6)
Proceeds received from investments 8 -
Net cash outflow from investing activities - discontinued operations (3) (25)
Net cash outflow from investing activities (69) (128)
Financing activities
Dividends paid (43) (41)
Purchase of own shares for employee share schemes - (12)
Purchase of own shares for cancellation (50) -
Distributions to non-controlling interests (7) (6)
Net drawdown on borrowings 10 24 33
Capital repayments of obligations under leases(3) 10 (86) (73)
Net cash outflow from financing activities - discontinued operations (30) (39)
Net cash outflow from financing activities (192) (138)
Net increase in cash and cash equivalents in the year 15 -
Opening cash and cash equivalents 56 56
Closing cash and cash equivalents 10 71 56
(1) Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details) and to
reclassify the Receipt from settlement of financial instruments from Operating
activities to Investing activities (refer to Note 1b for further details).
(2) Includes interest payments of £16m on lease liabilities (2024: £18m) for
continuing operations. Interest payments on lease liabilities for discontinued
operations were £4m (2024: £6m).
(3) Capital repayments of obligations under leases for discontinued operations
were £30m (2024: £39m)
WH Smith PLC
Group Statement of Changes in Equity
For the year ended 31 August 2025
£m Called up share capital and share premium Translation reserve Other reserves Retained earnings Total equity attributable to equity holders of the parent Non-controlling interests Total equity
Capital redemption reserve
Balance at 1 September 2024 - restated1 345 13 (9) (268) 315 396 26 422
(Loss)/profit for the year - total operations - - - - (144) (144) 7 (137)
Other comprehensive loss:
Exchange differences on translation of foreign operations - - (6) - - (6) (3) (9)
Total comprehensive (loss)/income for the year - - (6) - (144) (150) 4 (146)
Employee share schemes - - - - 5 5 - 5
Dividends paid (Note 8) - - - - (43) (43) - (43)
Share repurchase (1) 1 - - (50) (50) - (50)
Distributions to non-controlling interest - - - - - - (7) (7)
Non-cash movement on non-controlling interests - - - - - - 7 7
Disposals of a business - - - 14 (14) - - -
Balance at 31 August 2025 344 14 (15) (254) 69 158 30 188
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details).
£m Called up share capital and share premium Translation reserve Other reserves Retained earnings Total equity attributable to equity holders of the parent Non-controlling interests Total equity
Capital redemption reserve
Balance at 1 September 2023 - restated(1) 345 13 5 (255) 202 310 23 333
Profit for the year - total operations(1) - - - - 54 54 6 60
Other comprehensive income:
Remeasurement of the recoverability of retirement benefit surplus - - - - 87 87 - 87
Actuarial gains on defined benefit pension schemes - - - - 2 2 - 2
Exchange differences on translation of foreign operations - - (14) - - (14) (1) (15)
Total comprehensive (loss)/ income for the year(1) - - (14) - 143 129 5 134
Employee share schemes - - - (13) 12 (1) - (1)
Dividends paid (Note 8) - - - - (41) (41) - (41)
Deferred tax on share-based payments - - - - (1) (1) - (1)
Distributions to non-controlling interest - - - - - - (6) (6)
Non-cash movement on non-controlling interests - - - - - - 4 4
Balance at 31 August 2024(1) 345 13 (9) (268) 315 396 26 422
(1) Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details).
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies
a. Basis of preparation
Whilst the information included in the consolidated financial statements has
been prepared in accordance with UK-adopted International Accounting Standards
in conformity with the requirements of the Companies Act 2006, this
announcement does not itself contain sufficient information to comply with
IFRSs. The financial information in this full year results statement does not
constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006.
Statutory accounts for the year ending 31 August 2024 have been delivered to
the Registrar of Companies and those for 2025 will be delivered following the
Company's Annual General Meeting. The Annual Report for the year ending 31
August 2025 and this full year results statement were approved by the Board on
19 December 2025. The auditors have reported on the Annual Report for the
years ended on 31 August 2025 and 2024 and neither report was qualified and
neither contained a statement under Section 498(2) or (3) of the Companies Act
2006.
The consolidated financial information for the year ended 31 August 2025 has
been prepared on a consistent basis with the financial accounting policies set
out in the Accounting Policies section of the WH Smith PLC Annual Report and
Accounts 2024 except as described below. The Group has adopted the following
standards and interpretations which became mandatory for the first time during
the year ended 31 August 2025. The Group has considered the below new
standards and amendments and has concluded that they are either not relevant
to the Group or they do not have a significant impact on the Group's
consolidated financial statements, except for the IAS 1 amendments, described
further below.
Amendments to IAS 1 Classification of liabilities as current or non-current and non-current
liabilities with covenants
Amendment to IAS 7 and IFRS 7 Supplier finance arrangements
Amendments to IFRS 16 Lease liability in a sale and leaseback
The IAS 1 amendments in respect of current and non-current classification of
liabilities remove the requirement that the right to defer settlement be
unconditional. Under the amended standard, in order to classify liabilities as
non-current, the right to defer settlement must have substance and exist at
the reporting date. The Group considers in respect of its revolving credit
facility, which has a maturity date of 13 June 2030 and carries financial
covenants, there is not a right to defer settlement for at least 12 months
from the reporting date following announcement of the accelerated supplier
income recognition in the North America division. Whilst waivers were
subsequently agreed with lenders, these were not in place at 31 August 2025.
As a result, the amounts drawn down under the facility (£141 million) are
presented as a current liability. As the accelerated supplier income
recognition issue also impacts prior periods, the Group has concluded that the
right to defer settlement did not exist in prior periods and has therefore
presented amounts drawn down under the facility as a current liability for the
years ended 31 August 2024 and 31 August 2023 as previously reported. The
Group anticipates that such amounts may be reclassified to non-current
liabilities in future reporting periods.
At the Group balance sheet date, the following standards and interpretations,
which have not been applied in these condensed financial statements, were in
issue but not yet effective:
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 19 Subsidiaries without public accountability: disclosures
Amendments to IFRS 9 and IFRS 7 Classification and measurement of financial instruments
Amendments to IFRS 9 and IFRS 7 Contracts referencing nature-dependant electricity
Amendments to IFRS 10 and IAS 28 Sale of Contribution of assets between an investor and its associate or joint
venture
Lack of exchangeability
Amendments to IAS 21
With the exception of IFRS 18, the adoption of the above standards and
interpretations is not expected to have any material impact on the Group's
financial statements. IFRS 18 was issued in April 2024 and is effective for
periods beginning on or after 1 January 2027. Early application is permitted
and comparatives will require restatement. The standard will replace IAS 1
Presentation of Financial Statements. IFRS 18 will not change how items are
recognised and measured, rather it will require changes to the reporting of
financial performance. Specifically classifying income and expenses into three
new defined categories - operating, investing and financing, and two new
subtotals 'operating profit and loss' and 'profit or loss before financing and
income tax', as well as introducing disclosures of management-defined
performance measures (MPMs) and enhancing general requirements on aggregation
and disaggregation. The impact of the standard on the Group is currently being
assessed and it is not yet practicable to quantify the effect of IFRS 18 on
these consolidated financial statements. IFRS 18 will be applicable for the
Group's Annual report and accounts for the year ending 31 August 2028.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
a. Basis of preparation (continued)
Alternative Performance Measures (APM's)
The Group has identified certain measures that it believes will assist the
understanding of the performance of the business. These APMs are not defined
or specified under the requirements of IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for, or superior to, IFRS measures, provide stakeholders with
additional useful information on the underlying trends, performance and
position of the Group and are consistent with how business performance is
measured internally. The APMs are not defined by IFRS and therefore may not be
directly comparable with other companies' APMs.
The key APMs that the Group uses include: measures before non-underlying
items, Headline profit before tax, Headline earnings per share, trading
profit, Headline trading profit, Headline Group profit from trading
operations, like-for-like revenue, gross margin, fixed charges cover, Headline
EBITDA, effective tax rate, net debt and Headline net debt, free cash flow,
return on capital employed and leverage. These APMs are set out in the
Glossary on page 56 including explanations of how they are calculated and how
they are reconciled to a statutory measure where relevant.
Non-underlying items
The Group has chosen to present a measure of profit and earnings per share
that excludes certain items, which are considered non-underlying and
exceptional due to their size, nature or incidence, or are not considered to
be part of the normal operations of the Group. The Group believes that the
separate disclosure of these items provides additional useful information to
users of the financial statements to enable a better understanding of the
Group's underlying financial performance.
Non-underlying items can include, but are not limited to, restructuring and
transformation costs linked to Board agreed programmes, costs relating to
M&A activity, impairment charges and other property costs, significant
items relating to pension schemes, amortisation of intangible assets acquired
in business combinations, and the related tax effect of these items. Reversals
associated with items previously reported as non-underlying, such as reversals
of impairments and releases of provisions or liabilities are also reported in
non-underlying items. Further details of non-underlying items recognised in
the Income statement in the current and prior year are provided in Note 4.
Going concern
The consolidated financial statements have been prepared on a going concern
basis.
The directors are required to assess whether the Group can continue to operate
for at least 12 months from the date of approval of these financial
statements.
The Strategic report describes the Group's financial position, cash flows and
borrowing facilities and also highlights the principal risks and uncertainties
facing the Group. The Strategic report also sets out the Group's business
activities together with the factors that are likely to affect its future
developments, performance and position.
In making the going concern assessment, the directors have undertaken a
rigorous assessment of current performance and forecasts for the 15-month
period to February 2027, including expenditure commitments, capital
expenditure and available borrowing facilities. The Group's borrowing
facilities are described on page 5 and in Note 10. The covenants on the
Group's facilities are tested half-yearly and are based on fixed charges cover
and leverage. The directors have also considered the existence of factors
beyond the going concern period that could indicate that the going concern
basis is not appropriate. We received legal advice, and waivers were obtained
where required, for the facilities in place as at 31 August 2025 to allow for
any potential impact as a result of the North America accounting issues. We
are not aware of any other events within the going concern period which could
trigger a breach of covenants associated with the facilities.
The directors have modelled a base case scenario consistent with the latest
Board approved forecasts, which include management's best estimates of market
conditions and include a number of assumptions including passenger numbers,
revenue growth and cost inflation. These forecasts fully reflect the updated
view of the Group following resolution of the North America accounting issues
and the correction of prior year restatements. Under this scenario the Group
has significant liquidity and complies with all covenant tests throughout the
assessment period.
As a result of uncertainty and challenges in the macroeconomic environment,
this base case scenario has been stress tested by applying severe, but
plausible, downside assumptions relating to an economic downturn of a
magnitude and profile in line with previous experience. These assumptions
include an increasing reduction to revenue assumptions of up to ten per cent,
phased over the assessment period, versus the base case, together with a
decrease in variable costs, including turnover-based rents.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
a. Basis of preparation (continued)
Going concern (continued)
Under this downside scenario, after Management mitigations of reducing capex
and suspending purchases of shares for Employee Share Option Plans, the Group
would continue to have significant liquidity headroom on its existing
facilities and complies with all covenant tests throughout the assessment
period.
A reverse stress test scenario has also been conducted to understand the level
of revenue downside that could be absorbed before covenants are breached.
Under this scenario in addition to Management's mitigating actions in the
severe but plausible scenario a further assumption has been made that, post
the payment of the final dividend for the year ended 31 August 2025, no
dividends would be paid in the assessment period. In this reverse stress test
scenario, a covenant breach occurs upon revenue decreasing by 12.3% on a
phased basis.
Based on the above analysis, the directors have concluded that the Group is
able to adequately manage its financing and principal risks, and that the
Group will be able to continue to meet its obligations as they fall due and
operate within the level of its facilities for at least 12 months from the
date of approval of these financial statements.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates and any subsequent changes are accounted for with an
effect on income at the time such updated information becomes available.
Critical accounting judgements and key sources of estimation uncertainty in
determining the financial condition and results of the Group are those
requiring the greatest degree of subjective or complex judgement.
Critical accounting judgements relate to:
· non-underlying items (Note 4): the classification of items as non-underlying;
· store impairment indicator assessment (Note 13): use of indicators to assess
those stores (or groups of stores) where the carrying amount of store
non-current assets may not be recoverable, and should be tested for
impairment; and
· lease accounting: determining whether certain retail concession contracts meet
the definition of a lease under IFRS 16; and determining the lease term for
contracts where both an IFRS 16 lease exists and contains options to extend or
terminate early.
Key sources of estimation uncertainty relate to:
· goodwill impairment assessment (Note 13): revenue growth assumptions in the
Rest of the World and Other segment.
Management also considers that estimation exists over the following areas, but
with a limited risk of material change to amounts recognised within the next
twelve months:
· discontinued operations (Note 7): measurement of contingent consideration in
relation to the sale of the High Street business;
· valuation of inventory: inventory is carried at the lower of cost and net
realisable value, which requires the estimation of sell through rates, and the
eventual sales price of goods to customers in the future; and
· supplier income (Note 12): the amount and timing of recognition of supplier
income.
Discontinued operations
A discontinued operation is a component of the Group that (i) either has been
disposed of or is classified as held for sale; and (ii) represents a separate
major line of business or geographical area of operations or is part of a
single coordinated plan to dispose of a separate major line of business or
geographical area of operations. The results of discontinued operations are
presented as a single amount of profit or loss after tax in the consolidated
income statement, separate from the results of continuing operations.
Non-current assets or disposal groups classified as held for sale are measured
at the lower of their carrying amount and fair value less costs to sell.
Depreciation of such assets ceases once they are classified as held for sale.
Details relating to the discontinued operations of the Group's High Street and
funkypigeon.com businesses, which were disposed of during the financial year,
are provided in Note 7. The next page shows the Group income statement for
the year ended 31 August 2024 as previously reported along with the impact of
discontinued operations.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
a. Basis of preparation (continued)
Discontinued operations (continued)
Group income statement
2024 as previously reported Reclassification of discontinued operations 2024 after reclassification of discontinued operations
£m Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total
Revenue 1,918 - 1,918 (445) - (445) 1,473 - 1,473
Group operating profit/(loss) 213 (55) 158 (39) 14 (25) 174 (41) 133
Finance costs (52) - (52) 4 - 4 (48) - (48)
Profit/(loss) before tax - continuing operations 161 (55) 106 (35) 14 (21) 126 (41) 85
Income tax (expense)/credit (38) 9 (29) 8 (4) 4 (30) 5 (25)
Profit/(loss) for the year - continuing operations 123 (46) 77 (27) 10 (17) 96 (36) 60
Profit/(loss) for the year - discontinued operations - - - 27 (10) 17 27 (10) 17
Profit/(loss) for the year - total operations 123 (46) 77 - - - 123 (46) 77
Attributable to equity holders of the parent 113 (46) 67 - - - 113 (46) 67
Attributable to non-controlling interests 10 - 10 - - - 10 - 10
123 (46) 77 - - - 123 (46) 77
Total comprehensive income 151 - 151
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements
In August 2025, the Group identified that the recognition of supplier income
was being accelerated in the North America division. Further investigation of
the financial information for the years ended 31 August 2023 and 31 August
2024 identified that similar practices existed in these prior reporting
periods. The Group also identified additional one-off costs regarding
inventory-related items in the year ended 31 August 2025, including in respect
of the completeness of inventory provisions and liabilities related to goods
received but not invoiced. Certain of these costs should have been recorded in
prior reporting periods. As a result, prior year consolidated financial
statements have been restated. Amendments to the previously reported
consolidated primary financial statements for the year ended 31 August 2024
are shown below, after taking into account the adjustments for discontinued
operations arising from the sale of the High Street and Funky Pigeon
businesses in the year. The reclassification of discontinued operations within
the Group income statement have been presented in Note 1a. Certain other
reclassification restatements to primary financial statements have also been
identified and are set out below., including the reclassification of certain
receivables from current to non-current assets and the reclassification of
certain cash flows from operating cash flows to investing cash flows. A third
Balance sheet, as of 1 September 2023, has also been disclosed.
Group income statement
2024 after reclassification of discontinued operations Restatement 2024 restated
£m Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total
Revenue 1,473 - 1,473 - - - 1,473 - 1,473
Group operating profit/(loss)1 174 (41) 133 (20) - (20) 154 (41) 113
Finance costs (48) - (48) - - - (48) - (48)
Profit/(loss) before tax - continuing operations 126 (41) 85 (20) - (20) 106 (41) 65
Income tax (expense)/credit (30) 5 (25) 3 - 3 (27) 5 (22)
Profit/(loss) for the year - continuing operations 96 (36) 60 (17) - (17) 79 (36) 43
Profit/(loss) for the year - discontinued operations 27 (10) 17 - - - 27 (10) 17
Profit/(loss) for the year - total operations 123 (46) 77 (17) - (17) 106 (46) 60
Attributable to equity holders of the parent 113 (46) 67 (13) - (13) 100 (46) 54
Attributable to non-controlling interests 10 - 10 (4) - (4) 6 - 6
123 (46) 77 (17) - (17) 106 (46) 60
Total comprehensive income 151 (17) 134
1 All restatements impacting Group operating profit/(loss) relate to Cost of
sales.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements (continued)
2024 as previously reported1 Restatement 2024 restated
£m Headline before non-underlying items Headline non-underlying items IFRS 16 Total Headline before non-underlying items Headline non-underlying items IFRS 16 Total Headline before non-underlying items Headline non-underlying items IFRS 16 Total
(pre-IFRS 16)
(pre-IFRS 16)
(pre-IFRS 16)
(pre-IFRS 16)
(pre-IFRS 16)
(pre-IFRS 16)
UK 122 - 4 126 - - - - 122 - 4 126
North America 54 - 4 58 (20) - - (20) 34 - 4 38
Rest of the World and Other1 14 - 4 18 - - - - 14 - 4 18
Group trading profit - continuing operations 190 - 12 202 (20) - - (20) 170 - 12 182
1 Restated for the revision to operating segments following the sale of the
High Street and Funky Pigeon businesses in 2025 (refer to Note 2 and Note 7
for further details).
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements (continued)
Group income statement - disaggregation of restatement
Accelerated supplier income recognition Inventory related items Total restatement
£m Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total
Revenue - - - - - - - - -
Group operating loss1 (13) - (13) (7) - (7) (20) - (20)
Finance costs - - - - - - - - -
Profit/(loss) before tax - continuing operations (13) - (13) (7) - (7) (20) - (20)
Income tax credit 2 - 2 1 - 1 3 - 3
Loss for the year - continuing operations (11) - (11) (6) - (6) (17) - (17)
Profit/(loss) for the year - discontinued operations - - - - - - - - -
Loss for the year - total operations (11) - (11) (6) - (6) (17) - (17)
Attributable to equity holders of the parent (8) - (8) (5) - (5) (13) - (13)
Attributable to non-controlling interests (3) - (3) (1) - (1) (4) - (4)
(11) - (11) (6) - (6) (17) - (17)
Total comprehensive income (11) (6) (17)
1 All restatements impacting Group operating profit/(loss) relate to Cost of
sales
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements (continued)
Group earnings per share
£m 2024 Reclassification of discontinued operations 2024 after reclassification of discontinued operations Accelerated supplier income recognition Inventory related items 2024
As previously reported
Restated
Basic earnings per share - continuing operations 51.9p (13.2p) 38.7p (6.2p) (3.8p) 28.7p
Diluted earnings per share - continuing operations 51.1p (13.0p) 38.1p (6.1p) (3.8p) 28.2p
Basic earnings per share - total operations 51.9p - 51.9p (6.2p) (3.8p) 41.9p
Diluted earnings per share - total operations 51.1p - 51.1p (6.1p) (3.8p) 41.2p
Group cash flow statement extract - year ended 31 August 2024
£m 2024 Classification of financial instrument settlements1 2024
As previously reported
Restated
Net cash inflows from operating activities 275 (9) 266
Net cash outflows from investing activities (137) 9 (128)
Net cash outflows from financing activities (138) - (138)
Net increase in cash in the period - - -
1 Reclassification of cash flows linked to the settlement of financial
instruments from operating to investing activities
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements (continued)
Group balance sheet extract - as at 31 August 2024
£m 2024 Accelerated Inventory Other receivables: current vs non-current1 2024
As previously reported
supplier income recognition
related items
Restated
Deferred tax assets 33 4 - - 37
Trade and other receivables 12 - - 12 24
Total non-current assets 1,358 4 - 12 1,374
Inventories 217 (3) (5) - 209
Trade and other receivables 150 (12) - (12) 126
Current tax receivable 1 1 - - 2
Total current assets 511 (14) (5) (12) 480
Trade and other payables (352) (4) (5) - (361)
Total current liabilities (599) (4) (5) - (608)
Total non-current liabilities (824) - - - (824)
Total net assets 446 (14) (10) - 422
Retained earnings 335 (11) (9) - 315
Non-controlling interests 30 (3) (1) - 26
Total equity 446 (14) (10) - 422
1 Reclassification of certain receivables related to joint venture
arrangements in North America from current to non-current. In addition, within
Trade and other receivables all receivables related to joint venture
arrangements have been reclassified from Trade receivables to Other
receivables (£15m)
(
)
( )
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
1. Material accounting policies (continued)
b. Restatement of prior year financial statements (continued)
Group balance sheet extract - as at 31 August 2023
£m 2023 Accelerated supplier income recognition restatement Inventory related items Other receivables: current vs non-current1 2023
As previously reported
Restated
Deferred tax assets 43 2 - - 45
Trade and other receivables 9 - - 10 19
Total non-current assets 1,273 2 - 10 1,285
Inventories 205 (1) (3) - 201
Trade and other receivables 112 (1) - (10) 101
Total current assets 377 (2) (3) (10) 362
Trade and other payables (340) (3) (1) - (344)
Total current liabilities (543) (3) (1) - (547)
Total non-current liabilities (767) - - - (767)
Total net assets 340 (3) (4) - 333
Retained earnings 209 (3) (4) - 202
Total equity 340 (3) (4) - 333
1 Reclassification of certain receivables related to joint venture
arrangements in North America from current to non-current. In addition, within
Trade and other receivables all receivables related to joint venture
arrangements have been reclassified from Trade receivables to Other
receivables (£10m)
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
2. Segmental analysis of results
IFRS 8 requires segment information to be presented on the same basis as that
used by the Chief Operating Decision Maker for assessing performance and
allocating resources. The Group's operating segments are based on the reports
reviewed by the Board of Directors who are collectively considered to be the
chief operating decision maker.
Following the sale of the High Street and funkypigeon.com businesses during
the year, for management and financial reporting purposes, the continuing
operations of the Group are organised into three divisions and reportable
segments - UK, North America and Rest of the World and Other, all of which
relate to the Group's Travel businesses with the exception of Cult Pens which
was previously reported as part of the High Street segment and is now
presented within the renamed Rest of the World and Other segment. The results
of the discontinued operations of the High Street segment are presented in
Note 7.
The information presented to the Board is prepared in accordance with the
Group's IFRS accounting policies, with the exception of IFRS 16, and is shown
below as Headline information in section b). A reconciliation to statutory
measures is provided below in accordance with IFRS 8, and in the Glossary on
page 56 (Note A2).
a) Revenue
£m 2025 2024 (restated1)
UK 834 795
North America 413 401
Rest of the World and Other 306 277
Revenue - continuing operations 1,553 1,473
Revenue - discontinued operations 358 445
Revenue - total operations 1,911 1,918
1 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
Rest of the World and Other revenue includes revenue from Australia of £85m
(2024: £83m), Ireland £64m (2024: £53m) and Spain £59m (2024: £55m). No
other country has individually material revenue in the context of total Group
revenue.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
2. Segmental analysis of results (continued)
b) Group results
2025 2024 (restated1)
£m Headline before non-underlying items(2) Headline non-underlying items(2) IFRS 16 Total Headline before non-underlying items(2) Headline IFRS 16 Total
(pre-IFRS 16) (pre-IFRS16) (pre-IFRS 16) non-underlying items(2)
(pre-IFRS16)
UK 130 - 1 131 122 - 4 126
North America 15 - 7 22 34 - 4 38
Rest of the World and other 14 - 6 20 14 - 4 18
Group trading profit - continuing operations 159 - 14 173 170 - 12 182
Unallocated central costs (25) - - (25) (28) - - (28)
Group operating profit before non-underlying items - continuing operations 134 - 14 148 142 - 12 154
Non-underlying items (Note 4) - (91) (8) (99) - (41) - (41)
Group operating profit - continuing operations 134 (91) 6 49 142 (41) 12 113
Finance costs (26) - (20) (46) (28) - (20) (48)
Non-underlying finance costs (Note 4) - (1) - (1) - - - -
Profit before tax - continuing operations 108 (92) (14) 2 114 (41) (8) 65
Income tax expense (45) 18 1 (26) (29) 5 2 (22)
Profit/(loss) for the year - continuing operations 63 (74) (13) (24) 85 (36) (6) 43
Profit/(loss) for the year - discontinued operations 11 (146) 22 (113) 25 (12) 4 17
Profit/(loss) for the year - total operations 74 (220) 9 (137) 110 (48) (2) 60
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
2 Presented on a pre-IFRS 16 basis. Alternative Performance Measures are
defined and explained in the Glossary on page 56.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
2. Segmental analysis of results (continued)
c) Other segmental items
2025
Non-current assets(1) Right-of-use assets
£m Capital additions Depreciation and amortisation Impairment Depreciation Impairment
UK 27 (22) - - -
North America 48 (20) - - -
Rest of the World and Other 12 (9) - - -
Headline, before non-underlying items (pre-IFRS 16) - continuing operations 87 (51) - - -
Headline non-underlying items (pre-IFRS 16) - (3) (24) - -
Headline, after non-underlying items (pre-IFRS 16) - continuing operations 87 (54) (24) - -
Impact of IFRS 16 - - - (80) -
Non-underlying items (IFRS 16)(2) - - - - (29)
Group - continuing operations 87 (54) (24) (80) (29)
Group - discontinued operations 16 (10) (76) (18) (62)
Group - total operations 103 (64) (100) (98) (91)
2024 (restated2)
Non-current assets(1) Right-of-use assets
£m Capital additions Depreciation and amortisation Impairment Depreciation Impairment
UK 35 (20) - - -
North America 60 (16) - - -
Rest of the World and Other 20 (8) - - -
Headline, before non-underlying items (pre-IFRS 16) - continuing operations 115 (44) - - -
Headline non-underlying items (pre-IFRS 16) - (3) (14) - -
Headline, after non-underlying items (pre-IFRS 16) - continuing operations 115 (47) (14) - -
Impact of IFRS 16 - - 2 (80) -
Non-underlying items (IFRS 16) - - - - (10)
Group - continuing operations 115 (47) (12) (80) (10)
Group - discontinued operations 22 (17) (8) (32) -
Group - total operations 137 (64) (20) (112) (10)
1 Non-current assets including property, plant and equipment and intangible
assets, but excluding right-of-use assets.
2 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
3. Group operating profit
2025 2024 (restated1)
£m Before non-underlying items Non-underlying items Total Before non-underlying items Non-underlying items Total
Revenue 1,553 - 1,553 1,473 - 1,473
Cost of sales (664) - (664) (621) - (621)
Gross profit - continuing operations 889 - 889 852 - 852
Distribution costs (611) - (611) (572) - (572)
Administrative expenses (135) - (135) (135) - (135)
Other income 5 - 5 9 - 9
Non-underlying items (Note 4) - (99) (99) - (41) (41)
Group operating profit - continuing operations 148 (99) 49 154 (41) 113
2 Comparative periods have been restated a) to correct the accelerated
supplier income recognition and inventory related items in the North America
division (refer to Note 1b for further details), totalling a £20m reduction
to previously reported cost of sales; b) to reclass certain income amounting
to £5m from cost of sales to other income for consistency with the current
period; c) to reclassify certain costs amounting to £43m from distribution
costs to cost of sales for consistency with the current period; and d) to
separately disclose results from discontinued operations (refer to Note 7 for
further details).
£m from continuing operations 2025 2024 (restated1)
Cost of inventory recognised as an expense(2) 624 592
Write-down of inventory in the year(2) 40 29
Depreciation of property, plant and equipment 45 38
Depreciation of right-of-use assets 80 80
Amortisation of intangible assets 9 9
Impairment of property, plant and equipment 24 11
Impairment of intangible assets - 1
Impairment of right-of-use assets 29 10
Expenses relating to leases:
- expense relating to short-term leases 15 14
- expense relating to variable lease payments not included in the measurement 40 38
of the lease liability
Other occupancy costs 24 21
Staff costs 268 271
1 Comparative periods have been restated a) to correct the accelerated
supplier income recognition and inventory-related items in the North America
division (refer to Note 1b for further details), totalling a £20m reduction
to previously reported cost of sales; b) to reclassify certain income
amounting to £5m from cost of sales to other income for consistency with the
current period; c) to reclassify certain costs amounting to £43m from
distribution costs to cost of sales for consistency with the current period;
and d) to separately disclose results from discontinued operations (refer to
Note 7 for further details).
2 Write-down of inventories in the year are included within the amounts
disclosed as Cost of inventories recognised as an expense and recognised in
Cost of sales.
( )
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
4. Non-underlying items
Critical accounting judgement: Classification of non-underlying items
The Group has chosen to present a measure of profit and earnings per share
that excludes certain items, which are considered non-underlying and
exceptional due to their size, nature or incidence, or are not considered to
be part of the normal operations of the Group. The Group's definition of
non-underlying items is outlined in Note 1a and is applied consistently year
on year. The classification of items as non-underlying requires management
judgement. The charge is mainly non-cash.
£m 2025 2024 (restated1)
Amortisation of acquired intangible assets 3 3
Impairment of non-current assets
- property, plant and equipment 24 11
- intangible assets - 1
- right-of-use assets 29 10
Provisions for onerous contracts 3 4
Transformation programmes - IT 11 4
Transformation programmes - supply chain 3 3
Transformation programmes - operational efficiencies 11 -
Costs associated with the investigation into accelerated recognition of 10 -
supplier income in North America
Impairment of other receivables 3 -
Costs related to M&A activity and Group legal entity structure 1 4
Costs associated with pensions - 2
IFRS 16 remeasurement gains - (3)
Other non-underlying costs 1 2
Non-underlying items, included in operating profit - continuing operations 99 41
Finance costs associated with onerous contracts 1 -
Non-underlying items, before tax - continuing operations 100 41
Tax credit on non-underlying items (18) (5)
Non-underlying items, after tax - continuing operations 82 36
Non-underlying items, after tax - discontinued operations 137 10
Non-underlying items, after tax - total operations 219 46
1 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets primarily relates to the MRG and
InMotion brands (see Note 13).
Impairment of non-current assets
The Group has carried out an assessment for indicators of impairment of
non-current assets across the store portfolio. Where an indicator of
impairment has been identified, an impairment review has been performed to
compare the value-in-use of cash generating units, based on management's
assumptions regarding likely future trading performance, anchored in the
latest Board approved budget and three-year plan, to the carrying value of the
cash generating unit as at 31 August 2025. As a result of this exercise, a
non-cash charge of £53m (2024: £22m) was recorded within non-underlying
items for impairment of non-current assets, of which £24m (2024: £11m)
relates to property, plant and equipment, £nil (2024: £1m) relates to
intangible assets and £29m (2024: £10m) relates to right-of-use assets. Of
the total impairment charge, £5m (2024: £2m) is attributable to the UK
operating segment, £32m (2024: £10m) to North America and £16m (2024:
£10m) to Rest of the World and Other. Impairment charges in the North America
and Rest of the World and Other operating segments have principally arisen due
to a lower trading outlook in certain individual stores across these regions,
in addition to localised labour cost pressures in one particular grouping of
stores.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
4. Non-underlying items (continued)
Impairment of non-current assets (continued)
The impairment recognised on a pre-IFRS 16 basis is provided in the Glossary
on page 56.
Provisions for onerous contracts
A charge of £3m (2024: £4m) has been recognised in the income statement to
provide for the unavoidable costs of continuing to service a number of
non-cancellable supplier and lease contracts where the space is vacant, a
contract is loss-making or currently not planned to be used for ongoing
operations. This provision will be utilised over the next two to four
financial years. The unwinding of the discount on provisions for onerous
contracts is treated as an imputed interest charge, and has been recorded in
non-underlying finance costs.
Transformation programmes - IT
Administrative expenses of £11m (2024: £4m) have been classified as
non-underlying in relation to a Board-approved IT transformation programme.
The IT transformation programme includes one-off costs relating to upgrading
core IT infrastructure, data migration and investment in data security, store
systems modernisation and other significant IT projects. These strategic
projects will provide additional stability, longevity and operational benefits
and, due to the significance of the programme, will span several years.
Transformation programmes - supply chain
Distribution costs of £3m (2024: £3m) have been classified as non-underlying
in relation to a Board-approved programme relating to supply chain. The supply
chain transformation programme includes costs of reconfiguration of the
Group's UK distribution centres following the outsourcing of operations to a
third party (GXO), in order to generate a more efficient and productive supply
chain to support the performance and growth of the Group's UK businesses. This
project concluded in 2025.
Transformation programmes - operational efficiencies
Costs of £11m (2024: £nil) have been classified as non-underlying in
relation to Board-approved programmes relating to operational efficiencies.
This programme commenced in the year and includes £6m of distribution costs
associated with the restructuring of store and field management structures
within the UK segment, and £5m of administrative expenses related to head
office restructuring and other transformation costs across all segments. This
programme will deliver a more efficient operating model to support the Group's
strategic objectives. The implementation of certain of these projects will
continue into next financial year.
Costs associated with the investigation into accelerated recognition of
supplier income in North America
Administrative expenses incurred during the year include £10m (2024: £nil)
of professional fees in relation to the investigation into accelerated
recognition of supplier income in North America.
Impairment of other receivables
The Group's other receivables include amounts due from non-controlling
interest equity shareholders in certain of the Group's US subsidiaries which
relate to contributions owed towards property, plant and equipment
construction for stores and are received in accordance with the cash
requirements of the subsidiary. Certain of these contributions are no longer
considered to be recoverable based on the expected credit loss that considers
the counterparty's ability to pay, which reflects the financial outlook of the
associated stores. Such expected credit losses of £3m (2024: £nil) are
recognised within non-underlying items where an impairment charge for store
non-current assets has also been recognised within non-underlying items.
Cost relating to M&A activity and Group legal entity structure
Costs of £1m (2024: £4m) have been incurred arising from professional and
legal fees in relation to a reorganisation of the Group's legal entity
structure.
A tax credit of £18m (2024: £5m) has been recognised in relation to
non-underlying items from continuing operations.
Non-underlying items - discontinued operations
Refer to Note 7 for further details.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
5. Finance costs
£m 2025 2024 (restated1)
Interest payable on bank loans and overdrafts 11 14
Interest on convertible bonds 15 14
Interest on lease liabilities 20 20
Non-underlying finance costs 1 -
Total Group - continuing operations 47 48
Total Group - discontinued operations 3 4
Total Group 50 52
1 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
Interest on convertible bonds includes £5m (2024: £5m) coupon interest, £9m
(2024: £8m) non-cash debt accretion charges and £1m (2024: £1m) fee
amortisation.
( )
6. Income tax expense
£m 2025 2024 (restated1)
Tax on profit 23 31
Standard rate of UK corporation tax 25% (2024: 25%)
Adjustment in respect of prior years (6) (1)
Total current tax expense 17 30
Deferred tax - current year 27 -
Deferred tax - prior year 2 (5)
Deferred tax - change in tax rates (2) 2
Tax on profit before non-underlying items 44 27
Tax on non-underlying items - current tax (10) -
Tax on non-underlying items - deferred tax (8) (5)
Total tax on profit - continuing operations 26 22
Total tax on (loss)/profit - discontinued operations (3) 4
Total tax on profit - total operations 23 26
Reconciliation of the taxation charge
£m 2025 2024 (restated1)
Tax on profit at standard rate of UK corporation tax 25% (2024: 25%) 1 17
Tax effect of items that are not deductible or not taxable in determining 5 3
taxable profit
Derecognition of deferred tax balances 31 2
Differences in overseas tax rates 1 3
Adjustment in respect of prior years - current tax (6) (1)
Adjustment in respect of prior years - deferred tax 2 (5)
Group relief for nil payment (6) -
Adjustment due to change in tax rates (2) 3
Total income tax expense - continuing operations 26 22
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
6. Income tax expense (continued)
The effective tax rate(1) from continuing operations before non-underlying
items is 42 per cent (2024: 26 per cent). The UK corporation tax rate is 25
per cent effective from 1 April 2023.
The legislation implementing the Organisation for Economic Co-Operation and
Development's (OECD) proposals for a global minimum corporation tax rate
(Pillar Two) was substantively enacted in the UK on 20 June 2023 and applies
to reporting periods beginning on or after 1 January 2024. Under the
legislation the Group is liable to pay a top-up tax for the difference between
their Global Anti-Base Erosion Rules (GloBE) effective tax rate per
jurisdiction and the 15% minimum rate.
The rules are applicable to the Group for the year ended 31 August 2025. The
Group has performed an assessment of the Group's potential exposure to Pillar
Two top-up taxes. Based on this assessment, the Pillar Two effective tax rates
in most of the jurisdictions in which the Group operates are above 15% or will
meet the financial thresholds required to meet the Transitional Safe Harbour
Rules. However, there are a limited number of jurisdictions where the
Transitional Safe Harbour relief does not apply, and the Pillar Two effective
rate is close to 15%. There is not a material exposure to Pillar Two taxes in
those jurisdictions. The Group applies the temporary exception from the
accounting requirements for deferred taxes in IAS 12. Accordingly, the Group
neither recognises nor discloses information about deferred taxes in relation
to Pillar Two.
(1)Presented on a pre-IFRS 16 basis. Alternative performance measures are
defined and explained in the Glossary on page 56.
7. Discontinued Operation
Other estimates: Measurement of contingent consideration in relation to the
sale of the High Street business
The fair value of the contingent consideration receivable from the sale is
subject to estimation uncertainty. Its measurement depends on assumptions
about future cash flows, the probability of different performance scenarios,
and discount rates. The worst-case scenario results in the Group receiving no
additional consideration and in adopting a cautious approach to the
measurement basis, the Group has valued the contingent consideration using
this scenario. Changes in these estimates over time could have an upside
impact to the valuation.
During the year, the Group disposed of the High Street business and
funkypigeon.com, both of which were part of the High Street segment. These
disposals are classified as discontinued operations in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations.
Sale of High Street business
Overview of Disposal
On 28 March 2025, the Group agreed to sell its UK High Street business
comprising of approximately 480 stores to Modella Capital. The transaction
excluded the WH Smith brand, which was retained by the Group. The High Street
business represented a separate major line of business and geographical area
of operations. Accordingly, the results of this business have been classified
as discontinued operations in accordance with IFRS 5. The related assets and
liabilities were derecognised on completion of the sale.
The sale was completed on 28 June 2025. Under the terms of the agreement, the
Group received an upfront cash payment of £10m at completion, with the
remainder of the proceeds comprising contingent consideration. One element of
the contingent consideration entitles the Group to a share in the future cash
flows generated by the divested business through to 31 August 2026, while the
other is dependent on the timing and realisation of deferred tax assets within
the disposed business.
The total consideration has been measured at fair value at the date of
disposal. The carrying value of the net assets disposed was compared to the
fair value of the total consideration receivable, net of estimated costs to
sell of £27m. This comparison resulted in the recognition of an impairment of
£87m, which has been allocated to the non-current assets within the disposal
group and recognised within discontinued operations in the consolidated income
statement.
Contingent consideration receivable
The fair value at initial recognition was determined using a discounted cash
flow model, incorporating management's best estimates of future cash flows of
the disposed business, timing of deferred tax realisation,
probability-weighted scenarios, and a market-based discount rate. These inputs
reflect management's judgement using information available at the reporting
date.
The valuation involves estimation uncertainty. The Group has performed
sensitivity analysis on key unobservable inputs, including variations in
scenario probabilities and discount rates.
No fair value changes have been recorded in profit or loss during the period.
Future changes in the fair value of the contingent consideration will be
recognised in profit or loss within non-underlying items. There were no
transfers between levels of the fair value hierarchy during the reporting
period.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
7. Discontinued Operation (continued)
Sale of funkypigeon.com
On 14 August 2025, the Group completed the sale of its online personalised
greeting cards business, funkypigeon.com Ltd, to Card Factory PLC for total
consideration of £25m. The associated cost of sale amounted to £3m.
funkypigeon.com Ltd was reported within the High Street segment, represented a
major line of business that the Group exited as part of its strategic shift to
become a travel-focused retailer and has therefore been classified as a
discontinued operation in accordance with IFRS 5. One of the factors in
concluding that funkypigeon.com Ltd constitutes a major line of business was
its inclusion within the High Street segment, which the Group has exited as
part of its strategic shift to become a travel-focused retailer. Its results
are presented within discontinued operations, together with those of the High
Street business. The assets and liabilities of funkypigeon.com Ltd were
derecognised from the Group's consolidated statement of financial position
upon completion of the sale.
Financial Impact
The statutory results of the discontinued operations were as follows:
£m 2025 2024
Revenue 358 445
Operating expenses (334) (406)
Operating profit 24 39
Finance cost (3) (4)
Non-underlying items (137) (14)
(Loss)/profit before tax (116) 21
Income tax credit/(expense) 3 (4)
(Loss)/profit for the year - discontinued operation (113) 17
Non-underlying items principally include the following items:
· An impairment loss of £87m was recognised on the measurement of
the High Street business at the lower of its carrying amount and fair value
less costs to sell. This loss was allocated on a pro-rata basis to the
non-current assets within the High Street business, resulting in no gain or
loss on disposal being recognised in the Group's income statement. In
addition, an impairment charge of £51m was recognised earlier in the year in
relation to non-current assets, including goodwill, following an impairment
review triggered by indicators of impairment in the first half of the
financial year. Taken together, the total impairment of £138m recognised
across non-current assets during the year comprised £57m relating to
property, plant and equipment, £62m to right-of-use assets, £15m to
goodwill, and £4m to other intangible assets;
· The charge further includes £6m in respect of dilapidation
liabilities, £5m relating to store closure costs of High Street stores and
£4m of other costs;
· The total charge to the non-underlying items outlined above
amounts to £153m that is partially offset by a gain on the sale of the
funkypigeon.com, amounting to £16m resulting in the net charge of £137m in
this financial year.
· A tax credit of £nil (2023: £4m) has been recognised in
relation to the above items.
The carrying amounts of assets and liabilities of the High Street business and
funkypigeon.com at the point of disposal were as follows:
£m 2025
Non-current assets 49
Current assets 98
Non-current liabilities (111)
Current liabilities (58)
Current and deferred tax 11
Carrying amount of net liabilities disposed (11)
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
8. Dividends
Amounts paid and recognised as distributions to shareholders in the year are
as follows:
£m 2025 2024
Dividends
Final dividend for the year ended 31 August 2024 of 22.6p per ordinary share 29 -
Interim dividend for the year ended 31 August 2025 of 11.3p per ordinary share 14 -
Final dividend for the year ended 31 August 2023 of 20.8p per ordinary share - 27
Interim dividend for the year ended 31 August 2024 of 11.0p per ordinary share - 14
43 41
The Board has proposed a final dividend of 6.0p per share, amounting to a
final dividend of c.£8m, which is not included as a liability in these
financial statements and, subject to shareholder approval, will be paid on 12
February 2026 to shareholders registered at the close of business on 23
January 2026.
9. Earnings per share
a) Earnings
£m 2025 2024 (restated1)
Profit for the year before non-underlying items, attributable to equity holders of the parent - continuing operations 51 73
Non-underlying items, after tax (Note 4) (82) (36)
(Loss)/profit for the year, attributable to equity holders of the parent - continuing operations (31) 37
(Loss)/profit for the year - discontinued operations (113) 17
Total (loss)/profit for the year, attributable to equity holders of the parent (144) 54
( )
b) Weighted average share capital
Number (millions) 2025 2024
Weighted average ordinary shares in issue 129 131
Less weighted average ordinary shares held in ESOP Trust (2) (2)
Weighted average shares in issue for earnings per share 127 129
Add weighted average number of ordinary shares under option 2 2
Weighted average ordinary shares for diluted earnings per share 129 131
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
(
)
( )
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
9. Earnings per share (continued)
c) Basic and diluted earnings per share
Pence 2025 2024 (restated1)
Basic earnings per share before non-underlying items - continuing operations 40.2 56.6
Adjustment for non-underlying items (64.6) (27.9)
Basic (loss)/earnings per share - continuing operations (24.4) 28.7
Basic (loss)/earnings per share - discontinued operations (89.0) 13.2
Basic (loss)/earnings per share - total operations (113.4) 41.9
Diluted earnings per share before non-underlying items - continuing operations 39.5 55.7
Adjustment for non-underlying items (63.6) (27.5)
Impact of antidilutive potential shares (0.3) -
Diluted (loss)/earnings per share - continuing operations (24.4) 28.2
Diluted (loss)/earnings per share - discontinued operations (89.0) 13.0
Diluted (loss)/earnings per share - total operations (113.4) 41.2
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
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.
When the numerator in the earnings per share calculation is a loss, the
weighted average number of ordinary shares applied is the basic value, rather
than the diluted value, as the inclusion of potentially dilutive shares would
improve the loss per share. As at 31 August 2025 the convertible bond has no
dilutive effect as the inclusion of these potentially dilutive shares would
improve earnings per share (2024: no dilutive effect).
The calculation of earnings per share on a pre-IFRS 16 basis is provided in
the Glossary on page 63.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
10. Analysis of net debt
Movement in net debt can be analysed as follows:
£m Convertible bonds Revolving credit facility Leases Sub-total Cash and cash equivalents Net debt
Liabilities from financing activities
At 1 September 2024 (310) (117) (626) (1,053) 56 (997)
Business disposals - - 97 97 - 97
Bond accretion and fee amortisation (10) - - (10) - (10)
Lease additions, modifications and interest - - (93) (93) - (93)
Cash movements - (24) 136 112 15 127
Currency translation - - 2 2 - 2
At 31 August 2025 (320) (141) (484) (945) 71 (874)
£m Convertible bonds Revolving credit facility Leases Sub-total Liabilities from financing activities Cash and cash equivalents Net debt
At 1 September 2023 (301) (84) (566) (951) 56 (895)
Bond accretion and fee amortisation (9) - - (9) - (9)
Lease additions, modifications and interest - - (208) (208) - (208)
Cash movements - (33) 136 103 - 103
Currency translation - - 12 12 - 12
At 31 August 2024 (310) (117) (626) (1,053) 56 (997)
An explanation of Alternative Performance Measures, including Headline net
debt on a pre-IFRS 16 basis, is provided in the Glossary on page 56.
Cash and cash equivalents
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 to their fair value.
Lease liabilities
Non-cash movements in lease liabilities mainly relate to new leases,
modifications, measurements and interest in the year. Cash movements on leases
include principal repayments of £116m (2024: £112m) and interest paid of
£20m (2024: £24m).
Revolving credit facilities
The Group has a £400m committed revolving credit facility ("RCF"). The last
extension option was exercised during the year, taking the maturity to 13 June
2030.
The RCF is provided by a syndicate of banks: Barclays Bank PLC, BNP Paribas,
Citibank N.A. London Branch, Fifth Third Bank National Association, HSBC UK
Bank PLC, JP Morgan Securities PLC, PNC Capital Markets LLC, Banco Santander
SA London Branch and Skandinaviska Enskilda Banken AB (PUBL). Utilisation is
interest bearing at a margin over SONIA. As at 31 August 2025, the Group has
drawn down £141m on the RCF (2024: £117m).
Transaction costs of £5m relating to the RCF have been capitalised and are
amortised to the Income statement on a straight-line basis.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
10. Analysis of net debt (continued)
Convertible bonds
The Group issued £327m guaranteed senior unsecured convertible bonds on 7 May
2021 with a 1.625 per cent per annum coupon payable semi-annually in arrears
in equal instalments. The bonds are convertible into new and/or existing
ordinary shares of WH Smith PLC. The initial conversion price was set at
£24.99 representing a premium of 40 per cent above the reference share price
on 28 April 2021 (£17.85). The conversion price at 31 August 2025 was
£23.3660 (2024: £24.3104). If not previously converted, redeemed or
purchased and cancelled, the bonds will be redeemed at par on 7 May 2026.
The convertible bond is a compound financial instrument, consisting of a
financial liability component and an equity component, representing the value
of the conversion rights. The initial fair value of the liability portion of
the convertible bond was determined using a market interest rate for an
equivalent non-convertible bond at the issue date. The liability is
subsequently recognised on an amortised cost basis using the effective
interest rate method until extinguished on conversion or maturity of the
bonds. The remainder of the proceeds was allocated to the conversion option
and recognised in equity (Other reserves), and not subsequently remeasured. As
a result, £41m of the initial proceeds of £327m was recognised in equity
representing the option component.
Transaction costs of £6m were allocated between the two components and the
element relating to the debt component of £5m is amortised through the
effective interest rate method. The issue costs apportioned to the equity
component of £1m have been deducted from equity.
New financing in the year
During the year, the Group announced new financing arrangements to diversify
the Group's sources of debt financing and to extend the Group's debt maturity
profile in advance of the convertible bond maturing on 7 May 2026.
Term loans
The Group entered into a three-year £120m committed term loan. The term loan
has two uncommitted extension options of one year, which would, subject to
lender approval, extend the maturity date to 24 March 2030.
The term loan is provided by a syndicate of banks: Fifth Third Bank National
Association, HSBC UK Bank PLC, Banco Santander SA London Branch and
Skandinaviska Enskilda Banken AB (PUBL). Utilisation is interest bearing at a
margin over SONIA. As at 31 August 2025, the term loan is undrawn.
Transaction costs of £1m relating to the term loan have been capitalised and
are amortised to Income statement on a straight-line basis.
US private placements
The Group entered into £200m of committed US Private Placement notes ("USPP")
which have a tenor of seven, ten and twelve years.
Utilisation is interest bearing at a fixed rate. As at 31 August 2025, the
USPP notes are undrawn.
Transaction costs of £1m relating to the USPP have been capitalised and are
amortised to Income statement on a straight-line basis.
Backstop facility
In November 2025, the Group entered into a £200m syndicated 12-month term
loan. The loan has two extension options, which would, if exercised, extend
the maturity date to 31 August 2027. The syndicated loan is undrawn.
The facility is provided by a syndicate of banks: PNC Capital Markets LLC,
J.P. Morgan Securities PLC, BNP Paribas, London Branch and Skandinaviska
Enskilda Banken AB (PUBL).
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
11. Cash generated from continuing operations
£m 2025 2024 (restated1)
Group operating profit - continuing operations 49 113
Depreciation of property, plant and equipment 45 38
Impairment of property, plant and equipment 24 11
Amortisation of intangible assets 9 9
Impairment of intangible assets - 1
Depreciation of right-of-use assets 80 80
Impairment of right-of-use assets 29 10
Non-cash change in lease liabilities - (3)
Non-cash movement in pensions - 1
Share-based payments 3 9
Gain on remeasurement of leases (1) (4)
Other non-cash items (incl. foreign exchange) (1) 1
Increase in inventories (22) (13)
Decrease/(increase) in receivables 9 (22)
Increase in payables 33 17
Receipt of retirement benefit surplus 75 -
Movement on provisions (through utilisation or income statement) (2) 1
Cash generated from continuing operations` 330 249
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details), to re-present settlement receipts for
swap contracts as investing activities and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
12. Supplier Income
Other estimates: Supplier income
Management is required to make estimates in determining the amount and timing
of recognition of supplier income for some transactions with suppliers. In
determining the amount of volume-related allowances recognised in any period,
management estimates the probability that the Group will meet contractual
target volumes, based on historical and forecast performance. The Group
considers that while there is inherent estimation, which has contributed
towards the accelerated recognition of supplier income and associated
restatement of prior period financial information in the North America
division, there is limited risk of a material change in the amounts recognised
or disclosed in the next financial year. This in-part reflects a high volume
of low-value contracts with suppliers, with varying terms of agreement.
Management considers the best indicator of the estimation undertaken is by
reference to supplier income balances not settled at the balance sheet date
and has therefore provided additional disclosures of supplier income amounts
reflected in the Group balance sheet. Amounts related to supplier income held
on the Balance Sheet are as follows:
£m 2025 2024 (restated1)
Within inventories (8) (9)
Within trade and other receivables
Trade receivables 44 55
Accrued income 23 33
Within trade and other payables
Trade payables2 14 7
Deferred income (20) (15)
1 Comparative periods have been restated to correct the accelerated supplier
income recognition in the North America division (refer to Note 1b for further
details).
2 Trade payables is stated net of £14m (2024: £7m) amounts receivable from
suppliers in relation to supplier income, that has been invoiced, for which
the Group has the right to set off against amounts payable at the balance
sheet date.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
13. Non-current assets
Key source of estimation uncertainty: Short-term revenue growth assumptions
adopted for Rest of the World and Other segment in impairment testing for
indefinite-lived intangible assets, including goodwill
When an impairment test is performed, the recoverable amount is determined
based on value-in-use calculations. The key assumptions that underpin the
value-in-use calculations comprise revenue growth in the initial forecast
period, the pre-tax discount rate and the long-term growth rate. For the Rest
of the World and Other operating segment, reasonably possible changes to
revenue growth assumptions may result in the recoverable amount being equal to
the carrying value. Refer to information set out below for further detail,
including sensitivity analysis.
Critical accounting judgement: Store impairment reviews
Property, plant and equipment and right-of-use assets with definite useful
lives at a store level are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable. For
impairment testing purposes, the Group has determined that each store is a
separate cash-generating unit ('CGU') or in some cases a group of stores is
considered to be a CGU where the stores do not generate largely independent
cash inflows. The determination of indicators requires judgement. Such
indicators may include, but are not limited to: loss-making stores; planned
store closures; stores that are marginally profitable but with a significant
asset base; and stores that have experienced a significant deterioration in
performance in the year.
During the year ended 31 August 2025, there were additions to property, plant
and equipment of £96m (31 August 2024: £115m). There were adverse foreign
exchange movements of £3m (2024: £5m) and net disposals of tangible assets
during the year of £2m (31 August 2024: £nil). In addition, the disposal of
the High Street business resulted in a reduction of cost of £398m and a
corresponding reduction in accumulated depreciation of £377m.
During the year ended 31 August 2025, there were additions to right-of-use
assets of £75m (31 August 2024: £152m), modifications and remeasurements of
£1m (2024: £48m) offset by disposals of £3m (2024: £8m). In addition, the
disposal of the High Street business resulted in a reduction in the net book
value of right-of-use assets of £22m.
Additions to intangible assets totalled £7m (31 August 2024: £22m) in the
period. addition, the disposal of the High Street business resulted in a
reduction of cost of £108m and a corresponding reduction in accumulated
amortisation of £99m.
Goodwill decreased by £24m in the period, as a result of an impairment of
goodwill associated with the High Street segment of £15m as described below,
and adverse movements in exchange rates of £9m. (31 August 2024: decreased by
£10m as a result of £6m of additions offset by a £16m adverse movement in
exchange rates).
Impairment of goodwill and other indefinite-lived intangible assets
The Group tests goodwill and other indefinite-lived intangible assets,
including tenancy rights, for impairment annually or where there is an
indication that goodwill might be impaired. Other intangible assets, including
acquired brand and software, have been assessed for indicators of impairment
during the year.
For impairment testing purposes, goodwill is allocated to groups of CGUs in a
manner that is consistent with our operating segments, as this reflects the
lowest level at which goodwill is monitored. All goodwill has arisen on
acquisitions of groups of retail stores. These acquisitions are then
integrated into the Group's operating segments as appropriate.
Goodwill and acquired brands have been tested for impairment by comparing the
carrying amount of each group of CGUs (considered to be the Group's three
continuing operating segments), including goodwill and acquired brands, with
the recoverable amount determined from value-in-use calculations. The
value‑in‑use of each group of CGUs has been calculated using cash flows
derived from the Group's latest Board‑approved budget and three-year plan
'the initial forecast period'.
Cash flows beyond the initial forecast period are extrapolated for up to two
further years using estimated mid-term growth rates, and then into perpetuity
using estimated long-term growth rates.
The key assumptions that underpin the value-in-use calculations comprise
revenue growth in the initial forecast period, the pre-tax discount rate and
the long-term growth rate.
Revenue growth assumptions over the initial forecast period (and other non-key
assumptions, including gross margin and cost inflation) are expected to exceed
long-term growth rate assumptions and were determined based on management's
best estimates of market conditions and future achievable growth, giving
consideration to the extrapolation of historical trends within the Group and
external information on expected future trends.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
13. Non-current assets (continued)
Impairment of goodwill and other indefinite-lived intangible assets
(continued)
The pre-tax discount rates are derived from the Group's weighted average cost
of capital, which has been calculated using the capital asset pricing model,
the inputs of which include a risk-free rate, equity risk premium, Group size
premium and a risk adjustment (beta). Country-specific discount rates were not
considered to be materially different to the Group rate. The pre-tax discount
rate used in the calculations was 12.6 per cent (2024: 10.7 per cent).
The long-term growth rate assumption is two per cent (2024: two per cent for
the Travel businesses), having considered a variety of external and industry
data points.
The immediately quantifiable impacts of climate change and costs expected to
be incurred in connection with our net zero commitments, are included within
the Group's budget and three-year plan which have been used to support the
impairment reviews, with no material impact on cash flows.
The value-in-use estimates indicated that the recoverable amount exceeded the
carrying value for each group of CGUs. As a result, no impairment has been
recognised in respect of the carrying value of goodwill in the year for these
segments (2024: £nil).
Management has considered a range of sensitivities for these segments in
applying reasonably possible changes to each of the key assumptions.
Reasonably possible changes to the long-term growth rate and discount rate,
individually and in combination, do not result in the recoverable amount
reducing below the carrying value.
Reasonably possible changes to revenue growth, in isolation or combined with
reasonably possible changes to other assumptions, could result in the
recoverable amount reducing below the carrying value for the Rest of the World
and Other segment. The recoverable amount currently exceeds the carrying value
by £36m for this segment, but would be equal, if, in isolation, with
approximately one third of the impact mitigated by lower variable costs,
revenues were to miss forecasts in each year of the initial forecast period
and the terminal value year by two per cent, or if headline EBITDA were to
miss forecasts by 13 per cent. In the UK and North America segments, the
recoverable amount would be equal to the carrying value if revenues were to
miss forecasts by 15 per cent and seven per cent respectively, which is not
considered reasonably possible.
Impairment of goodwill and other intangibles - discontinued operations
At the interim reporting period, following a period of challenging trading
conditions, a strategic review of the High Street business was undertaken and
as a result, an impairment review of the goodwill associated with the High
Street business was performed. The recoverable amount was calculated using
value-in-use calculations of all of CGUs that make up the High Street segment,
based on management's assumptions regarding likely future trading performance.
This was compared to the carrying value of all CGUs, including goodwill, as at
28 February 2025. As a result of this exercise, a non-cash charge of £15m
(2024: £nil) was recorded within non-underlying items for impairment of
goodwill.
Impairment to software assets of £4m (2024: £4m) has been recorded within
discontinued operations during the year as a result of the Board-approved
transformation programmes.
Impairment of store-based property, plant and equipment and right-of-use
assets
For impairment testing purposes, the Group has determined that each store is a
separate cash-generating unit ('CGU') or in some cases a group of stores is
considered to be a CGU where the stores do not generate largely independent
cash inflows. Grouping is limited to stores at the same airport and with the
same landlord, being the level at which decisions are made regarding the
continuing or disposing of store operations.
For those CGUs where an indicator of impairment has been identified, property,
plant and equipment and right-of-use assets have been tested for impairment by
comparing the carrying amount of the CGU with its recoverable amount
determined from value-in-use calculations. It was determined that value-in-use
was higher than fair value less costs to sell.
The value-in-use of CGUs is calculated in a consistent manner with and
underpinned by the same key assumptions as those described above for the
goodwill impairment assessment. Cash flows have been included for the
remaining lease life for the specific store.
The useful economic lives of store assets are short in the context of climate
change scenario models therefore no medium to long-term effects have been
considered.
Where the value-in-use was less than the carrying value of the CGU, an
impairment of property, plant and equipment and right-of-use assets was
recorded. The Group has recognised an impairment charge of £81m (2024: £15m)
to property, plant and equipment and £91m (2024: £10m) to right-of-use
assets.
WH Smith PLC
Notes to the Financial Statements
For the year ended 31 August 2025
13. Non-current assets (continued)
Of the total impairment of property, plant and equipment and right-of-use
assets described above, £5m (2024: £2m) is attributable to the UK operating
segment, £32m (2024: £10m) to North America, £16m (2024: £9m exclusive of
a £1m impairment of intangible assets) to Rest of the World and Other and
£119m to the High Street business, described further in Note 7. Impairment
charges in the North America and Rest of the World and Other operating
segments have principally arisen due to a lower trading outlook in certain
individual stores across these regions.
Of the total impairment, £17m in North America relates to a full impairment
of one grouping of stores at Los Angeles airport, in-part from localised
labour cost pressures, of which £10m is attributable to property, plant and
equipment and £7m is attributable to right-of-use assets.
Included in the impairment values above are impairments of property, plant and
equipment connected with Board-approved programmes relating to supply chain
and IT transformation. Assets have been impaired where their use is planned to
be discontinued as a result of these programmes.
Management have considered a range of sensitivities in applying reasonably
possible changes to each of the key assumptions, both individually and in
combination. The sensitivities include increases in the discount rate by one
per cent, and a reduction in expected future cash flows of one per cent. Under
these combined scenarios, the impairment charge for property, plant and
equipment and right-of-use assets would increase by less than £1m.
Impairments to non-current assets have been presented as non-underlying items
(see Note 4).
14. Contingent liabilities and capital commitments
£m 2025 2024
Bank guarantees and guarantees in respect of lease agreements 76 71
Bank guarantees are principally in favour of landlords and could be drawn down
on by landlords in the event that the Group does not settle its contractual
obligations under lease or other agreements.
Contracts placed for future capital expenditure approved by the directors but
not provided for in these financial statements amount to £66m (2024: £62m).
£m 2025 2024 (restated1)
Commitments in respect of property, plant and equipment 65 60
Commitments in respect of other intangible assets 1 2
66 62
1 Comparative periods have been restated to correct the previously reported
commitments
15. Events after the balance sheet date
The FCA has commenced an investigation into the Company in respect of its
compliance with UK Listing Principles and Rules and the Disclosure and
Transparency Rules in relation to the matters announced by the Company on 19
November 2025.
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures, 'APMs', which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional useful information on the underlying trends, performance and
position of the Group and are consistent with how business performance is
measured internally. The alternative performance measures are not defined by
IFRS and therefore may not be directly comparable with other companies'
alternative performance measures. Alternative performance measures reflect
continuing operations unless otherwise stated.
Non-underlying items
The Group has chosen to present a measure of profit and earnings per share
that excludes certain items, which are considered non-underlying and
exceptional due to their size, nature or incidence, or are not considered to
be part of the normal operations of the Group. The Group believes that the
separate disclosure of these items provides additional useful information to
users of the financial statements to enable a better understanding of the
Group's underlying financial performance.
Non-underlying items can include, but are not limited to, restructuring and
transformation costs linked to Board agreed programmes, costs relating to
M&A activity, impairment charges and other property costs, significant
items relating to pension schemes, amortisation of intangible assets acquired
in business combinations, and the related tax effect of these items. Reversals
associated with items previously reported as non-underlying, such as reversals
of impairments and releases of provisions or liabilities are also reported in
non-underlying items.
Items recognised in Other comprehensive income/loss may also be identified as
non-underlying for the purposes of narrative explanation of the Group's
performance, where the Group has determined that they are associated with the
above categories and are judged to have met the Group's definition of
non-underlying.
IFRS 16
The Group adopted IFRS 16 in the year ended 31 August 2020. IFRS 16 superseded
the lease guidance under IAS 17 and the related interpretations. IFRS 16 sets
out the principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to account for all leases under a
single on-balance sheet model as the distinction between operating and finance
leases is removed. The only exceptions are short-term and low-value leases. At
the commencement date of a lease, a lessee will recognise a lease liability
for the future lease payments and an asset (right-of-use asset) representing
the right to use the underlying asset during the lease term. Lessees are
required to separately recognise the interest expense on the lease liability
and the depreciation expense on the right-of-use asset.
Management has chosen to exclude the effects of IFRS 16 for the purposes of
narrative commentary on the Group's performance and financial position in the
Strategic report. The effect of IFRS 16 on the Group income statement is to
frontload total lease expenses, being higher at the beginning of a lease
contract, and lower towards the end of a contract, and this is further
influenced by timing of renewals and contract wins, and lengths of contracts.
As a result of these complexities, IFRS 16 measures of profit and EBITDA (used
as a proxy for cash generation) do not provide meaningful KPIs or measures for
the purposes of assessing performance, concession quality or for trend
analysis, therefore management continues to use pre-IFRS 16 measures
internally.
The impact of the application of IFRS 16 on the Income statement and Segmental
information is provided in Notes A1 and A2 below. There is no impact on cash
flows, although the classification of cash flows has changed, with an increase
in net cash flows from operating activities being offset by a decrease in net
cash flows from financing activities, as set out in Note A9 below. The balance
sheet as at 31 August 2025 both including and excluding the impact of IFRS 16
is shown in Note A10 below.
Leases policies applicable prior to 1 September 2019
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases. Assets held under finance
leases are recognised as assets of the Group at their fair value determined at
the inception of the lease or, if lower, at the present value of the minimum
lease payments. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. These assets are depreciated over
their expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease. Lease payments are apportioned
between finance charges and a reduction of the lease obligations so as to
achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are recognised directly in the income statement.
Rentals payable and receivable under operating leases are charged to the
income statement on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease term. The Group
has a number of lease arrangements in which the rent payable is contingent on
revenue. Contingent rentals payable, based on store revenues, are accrued in
line with revenues generated.
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
Definitions and reconciliations
In line with the Guidelines on Alternative Performance Measures issued by the
European Securities and Markets Authority ('ESMA'), we have provided
additional information on the APMs used by the Group below, including full
reconciliations back to the closest equivalent statutory measure.
APM Closest equivalent IFRS measure Reconciling items to IFRS measure Definition and purpose
Income statement measures
Headline measures Various See Notes A1-A10 & A12 Headline measures exclude the impact of IFRS 16 (applying the principles of
IAS 17). Reconciliations of all Headline measures are provided in Notes A1 to
A10 and A12.
Group profit before tax and non-underlying items Group profit before tax See Group income statement and Note A1 Group profit before tax and non-underlying items excludes the impact of
non-underlying items as described below. A reconciliation from Group profit
before tax and non-underlying items to Group profit before tax is provided on
the Group income statement on page 24, and on a Headline (pre-IFRS 16) basis
in Note A1.
Group profit from trading operations and segment trading profit Group operating profit See Note 2 and Note A2 Group profit from trading operations and segment trading profit are stated
after directly attributable share-based payment and pension service charges
and before non-underlying items, unallocated costs, finance costs and income
tax expense.
A reconciliation from the above measures to Group operating profit and Group
profit before tax on an IFRS 16 basis is provided in Note 2 to the financial
statements and on a Headline (pre-IFRS 16) basis in Note A2.
Non-underlying items None Refer to definition and see Note 4 and Note A6 Excludes items which are considered non-underlying and exceptional due to
their size, nature or incidence, or are not considered to be part of the
normal operations of the Group. The Group believes that the separate
disclosure of these items provides additional useful information to users of
the financial statements to enable a better understanding of the Group's
underlying financial performance. An explanation of the nature of the items
identified as non-underlying on an IFRS 16 basis is provided in Note 4 to the
financial statements, and on a Headline (pre-IFRS 16) basis in Note A6.
Earnings per share before non-underlying items Earnings per share Non-underlying items, see Note 9 and Note A4 Profit for the year attributable to the equity holders of the parent before
non-underlying items divided by the weighted average number of ordinary shares
in issue during the financial year. A reconciliation is provided on an IFRS 16
basis in Note 9 and on a Headline (pre-IFRS 16) basis in Note A4.
Headline EBITDA Group operating profit Refer to definition Headline EBITDA is Headline Group operating profit before non-underlying items
adjusted for pre-IFRS 16 depreciation, amortisation and impairment and before
non-cash items.
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
APM Closest equivalent IFRS measure Reconciling items to IFRS measure Definition and purpose
Income statement measures (continued)
Effective tax rate None Non-underlying items Total income tax charge excluding the tax impact of non-underlying items
divided by Group Headline profit before tax and non-underlying items. See Note
6 on an IFRS 16 basis, and Notes A3 and A6 on a pre-IFRS 16 basis.
Fixed charges cover None Refer to definition This performance measure calculates the number of times Headline EBITDA covers
the total fixed charges included in calculating profit or loss. Fixed charges
included in this measure are net finance charges (excluding finance charges
from IFRS 16 leases) and fixed operating lease rentals stated on a pre-IFRS 16
basis. The calculation of this measure is outlined in Note A5.
Gross Gross profit margin Not applicable Where referred to throughout the Preliminary announcement statement, gross
margin is calculated as gross profit divided by revenue.
margin
Like-for-like revenue Movement in revenue per the income statement - Revenue change from non like-for-like stores Like-for-like revenue is the change in revenue from stores that have been open
for at least a year, with a similar selling space at a constant foreign
- Foreign exchange impact exchange rate.
Balance sheet measures
Headline net debt Net debt Reconciliation of net debt Headline net debt is defined as cash and cash equivalents, less bank
overdrafts and other borrowings and both current and non-current obligations
under finance leases as defined on a pre-IFRS 16 basis. Lease liabilities
recognised as a result of IFRS 16 are excluded from this measure. A
reconciliation of Net debt on an IFRS 16 basis provided in Note A8.
Other measures
Free cash flow Net cash inflow from operating activities See Note A7 and Group overview Free cash flow is defined as the net cash inflow from operating activities
before the cash flow effect of IFRS 16, non-underlying items and pension
funding, less net capital expenditure. The components of free cash flow are
shown in Note A7 and on page 18, as part of the Financial review.
Return on capital employed (ROCE) None Not Applicable Return on Capital Employed is calculated as the Headline Group operating
profit as a percentage of operating capital employed, and is stated on a
pre-IFRS 16 basis. Operating capital employed is calculated as the 12-month
average net assets, excluding net debt, retirement benefit obligations and net
current and deferred tax balances.
Leverage None Not Applicable Leverage is calculated as Headline net debt divided by rolling 12 month
Headline EBITDA (on a pre-IFRS 16 basis).
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A1. Reconciliation of Headline to Statutory Group operating profit and Group
profit before tax
2025
pre-IFRS 16 basis IFRS 16 Basis
£m Headline, before non-underlying items (pre-IFRS 16) Headline non-underlying items (pre-IFRS 16) Headline (pre-IFRS 16) IFRS 16 adjustments IFRS 16 Total
adjustments
non-underlying items
Revenue 1,553 - 1,553 - - 1,553
Cost of sales (664) - (664) - - (664)
Gross profit - continuing operations 889 - 889 - - 889
Distribution costs (625) - (625) 14 - (611)
Administrative expenses (136) - (136) 1 - (135)
Other income 6 - 6 (1) - 5
Non-underlying items - (91) (91) - (8) (99)
Group operating profit/(loss) - continuing operations 134 (91) 43 14 (8) 49
Finance costs (26) (1) (27) (20) - (47)
Profit/(loss) before tax - continuing operations 108 (92) 16 (6) (8) 2
Income tax (charge)/credit (45) 18 (27) 1 - (26)
Profit/(loss) for the year - continuing operations 63 (74) (11) (5) (8) (24)
Profit/(loss) for the year - discontinued operations 11 (146) (135) 13 9 (113)
Profit/(loss) for the year - total operations 74 (220) (146) 8 1 (137)
Attributable to:
Equity holders of the parent 67 (220) (153) 8 1 (144)
Non-controlling interests 7 - 7 - - 7
74 (220) (146) 8 1 (137)
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A1. Reconciliation of Headline to Statutory Group operating profit and Group
profit before tax (continued)
2024 (restated1)
pre-IFRS 16 basis IFRS 16 Basis
£m Headline, before non-underlying items (pre-IFRS 16) Headline non-underlying items (pre-IFRS 16) Headline (pre-IFRS 16) IFRS 16 adjustments IFRS 16 Total
adjustments
non-underlying items
Revenue 1,473 - 1,473 - - 1,473
Cost of sales (621) - (621) - - (621)
Gross profit - continuing operations 852 - 852 - - 852
Distribution costs (581) - (581) 9 - (572)
Administrative expenses (137) - (137) 2 - (135)
Other income 8 - 8 1 - 9
Non-underlying items - (41) (41) - - (41)
Group operating profit/(loss) - continuing operations 142 (41) 101 12 - 113
Finance costs (28) - (28) (20) - (48)
Profit/(loss) before tax - continuing operations 114 (41) 73 (8) - 65
Income tax (charge)/credit (29) 5 (24) 2 - (22)
Profit/(loss) for the year - continuing operations 85 (36) 49 (6) - 43
Profit/(loss) for the year - discontinued operations 25 (12) 13 2 2 17
Profit/(loss) for the year - total operations 110 (48) 62 (4) 2 60
Attributable to:
Equity holders of the parent 104 (48) 56 (4) 2 54
Non-controlling interests 6 - 6 - - 6
110 (48) 62 (4) 2 60
1 Comparative periods have been restated a) to correct the accelerated
supplier income recognition and inventory-related items in the North America
division (refer to Note 1b for further details), totalling a £20m reduction
to previously reported cost of sales; b) to reclassify certain income
amounting to £5m from cost of sales to other income for consistency with the
current period; c) to reclassify certain costs amounting to £43m from
distribution costs to cost of sales for consistency with the current period;
and d) to separately disclose results from discontinued operations (refer to
Note 7 for further details).
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A2. Reconciliation of Headline to Statutory Segmental trading profit and
Group profit from trading operations
2025
pre-IFRS 16 basis IFRS 16 basis
£m Headline, before non-underlying items (pre-IFRS 16) Headline non-underlying items (pre-IFRS 16) Headline (pre-IFRS 16) IFRS 16 adjustments Total
UK 130 - 130 1 131
North America 15 - 15 7 22
Rest of the World and Other 14 - 14 6 20
Group profit from trading operations- continuing operations 159 - 159 14 173
Unallocated central costs (25) - (25) - (25)
Group operating profit before non-underlying items - continuing operations 134 - 134 14 148
Non-underlying items - (91) (91) (8) (99)
Group operating profit/(loss) - continuing operations 134 (91) 43 6 49
2024 (restated1)
pre-IFRS 16 basis IFRS 16 basis
£m Headline, before non-underlying items (pre-IFRS 16) Headline non-underlying items (pre-IFRS 16) Headline (pre-IFRS 16) IFRS 16 adjustments Total
UK 122 - 122 4 126
North America 34 - 34 4 38
Rest of the World and Other 14 - 14 4 18
Group profit from trading operations- continuing operations 170 - 170 12 182
Unallocated central costs (28) - (28) - (28)
Group operating profit before non-underlying items - continuing operations 142 - 142 12 154
Non-underlying items - (41) (41) - (41)
Group operating profit/(loss) - continuing operations 142 (41) 101 12 113
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A3. Reconciliation of Headline to Statutory tax expense
2025 2024 (restated1)
£m Headline (pre-IFRS 16) IFRS 16 Total Headline (pre-IFRS 16) IFRS 16 adjustments Total
adjustments
Profit before tax and non-underlying items 108 (6) 102 114 (8) 106
Tax on profit - Standard rate of UK corporation tax 25% (2024: 25%) 24 (1) 23 33 (2) 31
Adjustment in respect of prior years (6) - (6) (1) - (1)
Total current tax charge/(credit) 18 (1) 17 32 (2) 30
Deferred tax - current year 27 - 27 - - -
Deferred tax - prior year 2 - 2 (5) - (5)
Deferred tax - adjustment in respect of change in tax rates (2) - (2) 2 - 2
Tax charge/(credit) on profit before non-underlying items 45 (1) 44 29 (2) 27
Tax on non-underlying items - current tax (10) - (10) - - -
Tax on non-underlying items - deferred tax (8) - (8) (5) - (5)
Total tax charge/(credit) on profit - continuing operations 27 (1) 26 24 (2) 22
Total tax charge/(credit) on profit - discontinued operations (3) - (3) 4 - 4
Total tax charge/(credit) on profit - total operations 24 (1) 23 28 (2) 26
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
A4. Calculation of Headline and Statutory earnings per share
2025 2024
millions Basic EPS Diluted EPS Basic EPS Diluted EPS
Weighted average shares in issue (Note 9) 127 129 129 131
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A4. Calculation of Headline and Statutory earnings per share (continued)
2025 2024 (restated1)
Profit for the year attributable to equity holders of the parent Basic EPS Diluted EPS Profit for the year attributable to equity holders of the parent Basic EPS Diluted EPS
£m pence pence £m pence pence
Headline (pre-IFRS-16 basis)
- Before non-underlying items 56 44.1 43.4 79 61.2 60.3
- Non-underlying items (74) (58.3) (57.4) (36) (27.9) (27.5)
- Impact of anti-dilutive shares - (0.2) - -
- Continuing operations (18) (14.2) (14.2) 43 33.3 32.8
- Discontinued operations (135) (106.3) (106.3) 13 10.1 9.9
- Total operations (153) (120.5) (120.5) 56 43.4 42.7
IFRS 16 adjustments
- Before non-underlying items (5) (3.9) (3.9) (6) (4.6) (4.6)
- Non-underlying items (8) (6.3) (6.2) - - -
- Impact of anti-dilutive shares - (0.1) - -
- Continuing operations (13) (10.2) (10.2) (6) (4.6) (4.6)
- Discontinued operations 22 17.3 17.3 4 3.1 3.1
- Total operations 9 7.1 7.1 (2) (1.5) (1.5)
IFRS 16 basis
- Before non-underlying items 51 40.2 39.5 73 56.6 55.7
- Non-underlying items (82) (64.6) (63.6) (36) (27.9) (27.5)
- Impact of anti-dilutive shares - (0.3) - -
- Continuing operations (31) (24.4) (24.4) 37 28.7 28.2
- Discontinued operations (113) (89.0) (89.0) 17 13.2 13.0
- Total operations (144) (113.4) (113.4) 54 41.9 41.2
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A5. Fixed charges cover
£m Note 2025 2024 (restated1)
Headline net finance costs before non-underlying items 26 28
Headline fixed operating lease charges (pre-IFRS 16) A12 232 216
Total fixed charges 258 244
Headline EBITDA A13 187 198
Headline fixed operating lease charges (pre-IFRS 16) A12 232 216
Headline EBITDA before fixed charges before non-underlying items (pre-IFRS 16) 419 414
- continuing operations
Fixed charges cover - times - continuing operations 1.6x 1.7x
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
( )
A6. Non-underlying items on pre-IFRS 16 and IFRS 16 bases
2025 2024 (restated1)
£m Headline (pre-IFRS16) IFRS 16 Headline IFRS 16
(pre-IFRS16)
Amortisation of acquired intangible assets 3 3 3 3
Impairment of non-current assets
- property, plant and equipment 24 24 13 11
- intangible assets - - 1 1
- right-of-use assets - 29 - 10
Provisions for onerous contracts 24 3 9 4
Transformation programmes - IT 11 11 4 4
Transformation programmes - supply chain 3 3 3 3
Transformation programmes - operational efficiencies 11 11 - -
Costs relating to the investigation into accelerated recognition of supplier 10 10 - -
income in North America
Impairment of other receivables 3 3 - -
Costs relating to M&A activity and Group legal entity structure 1 1 4 4
Costs associated with pensions - - 2 2
IFRS 16 remeasurement gains - - - (3)
Other non-underlying costs 1 1 2 2
Non-underlying items, included in operating profit - continuing operations 91 99 41 41
Finance costs associated with onerous contracts 1 1 - -
Non-underlying items, before tax 92 100 41 41
Tax credit on non-underlying items (18) (18) (5) (5)
Non-underlying items, after tax - continuing operations 74 82 36 36
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A6. Non-underlying items on pre-IFRS 16 and IFRS 16 bases (continued)
Non-underlying items on a pre-IFRS 16 basis are calculated on a consistent
basis with IFRS 16, with the exception of the below items.
Impairment of right-of-use assets
On a pre-IFRS 16 basis right-of-use assets are not recognised, therefore the
right-of-use asset impairment of £29m is also not recognised.
Provisions for onerous contracts
A charge of £24m has been recognised on a pre-IFRS 16 basis to provide for
the unavoidable costs of continuing to service certain non-cancellable
supplier and property contracts where the space is vacant, a contract is
loss-making or currently not planned to be used for ongoing operations. On an
IFRS 16 basis this charge is £3m, as the charge is offset by impairments to
right-of-use assets that are not recognised on a pre-IFRS 16 basis.
A tax credit of £18m has been recognised in relation to the above items
(£18m pre-IFRS 16).
A7. Free cash flow
£m 2025 2024 (restated1)
Net cash inflow from operating activities - continuing operations 267 195
Cash flow impact of IFRS 16 (Note A9) (86) (72)
Add back:
- Cash impact of non-underlying items 38 17
- Other non-cash items - 1
Deduct:
- Purchase of property, plant and equipment (incl. £2m (77) (97)
non-underlying capital expenditure (2024: £2m))
- Purchase of intangible assets (4) (9)
- Pension funding (75) -
Free cash flow - continuing operations 63 35
Free cash flow - discontinued operations (25) 18
Free cash flow - total operations 38 53
1 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
A8. Headline net debt
The table below shows Headline net debt (pre-IFRS 16). This excludes lease
liabilities recognised on application of IFRS 16.
£m 2025 2024
Borrowings
- Revolving credit facility (141) (117)
- Convertible bonds (320) (310)
- Lease liabilities (484) (626)
Liabilities from financing activities (945) (1,053)
Cash and cash equivalents 71 56
Net debt (IFRS 16) (Note 10) (874) (997)
Add back lease liabilities recognised under IFRS 16 484 626
Headline net debt (pre-IFRS 16) (390) (371)
( )
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A9. Cash flow disclosure impact of IFRS 16
There is no impact of IFRS 16 on cash flows, although the classification of
cash flows has changed, with an increase in net cash flows from operating
activities being offset by a decrease in net cash flows from financing
activities.
2025 2024 (restated1)
£m Headline (pre-IFRS 16) IFRS 16 Headline (pre-IFRS 16) IFRS 16
IFRS 16 Adjustment(2) IFRS 16 Adjustment
Net cash inflows from operating activities 160 116 276 155 111 266
Net cash outflows from investing activities (69) - (69) (128) - (128)
Net cash outflows from financing activities (76) (116) (192) (27) (111) (138)
Net decrease in cash in the period 15 - 15 - - -
1 Comparative periods have been restated to reclassify the receipt from
settlement of financial instruments from Operating activities to Investing
activities
2 Comprises £86m related to continuing operations and £30m related to
discontinued operations
A10. Balance sheet impact of IFRS 16
The balance sheet including and excluding the impact of IFRS 16 is shown
below:
2025 2024 (restated1)
Headline (pre-IFRS 16) IFRS 16 Headline (pre-IFRS 16) IFRS 16
IFRS 16 Adjustment IFRS 16 Adjustment
£m
Goodwill and other intangible assets 449 (2) 447 491 (1) 490
Property, plant and equipment 251 3 254 308 8 316
Right-of-use assets - 367 367 - 505 505
Investments in joint ventures 2 - 2 2 - 2
Non-current investments 4 - 4 - - -
706 368 1,074 801 512 1,313
Inventories 148 - 148 209 - 209
Payables less receivables (181) (10) (191) (204) (7) (211)
Working capital (33) (10) (43) 5 (7) (2)
Net current and deferred tax assets 31 - 31 38 - 38
Provisions (25) 24 (1) (28) 11 (17)
Operating assets employed 679 382 1,061 816 516 1,332
Net debt (390) (484) (874) (371) (626) (997)
Net assets excluding retirement benefit surplus 289 (102) 187 445 (110) 335
Retirement benefit surplus 1 - 1 87 - 87
Total net assets 290 (102) 188 532 (110) 422
1 Comparative periods have been restated in accordance with the items set
out in Note 1b.
A11. Like-for-like revenue reconciliation
The reconciling items between like-for-like revenue change and total revenue
change are shown below:
UK North America Rest of the World and Other Total Group - continuing operations
£m
Like-for-like revenue change 5% 2% 7% 5%
Net space impact -% 4% 5% 2%
Foreign exchange -% (3)% (2)% (2)%
Total revenue change 5% 3% 10% 5%
WH Smith PLC
Glossary (unaudited)
For the year ended 31 August 2025
A12. Operating lease expense
Amounts recognised in Headline Group operating profit on a pre-IFRS 16 basis
are as follows:
£m 2025 2024 (restated1)
Fixed charges 232 216
Variable charges 100 93
Net operating lease charges - continuing operations 332 309
1 Comparative periods have been restated to separately disclose results from
discontinued operations (refer to Note 7 for further details).
In the year ended 31 August 2020, the Group adopted IFRS 16. IFRS 16 requires
lessees to account for all leases under a single on-balance sheet model as the
distinction between operating and finance leases is removed. In order to
provide comparable information the Group has chosen to present Headline
measures of operating profit and profit before tax, as explained in Note 2
segmental analysis.
The table above presents the pre-IFRS 16 net operating lease charges, applying
the principles of IAS 17, and Group accounting policies as applicable prior to
1 September 2019, as described in the Glossary on page 56.
The Group leases various properties under non-cancellable operating lease
agreements. The leases have varying terms, escalation clauses and renewal
rights. The Group has a number of lease arrangements in which the rent payable
is contingent on revenue. Contingent rentals payable, based on store revenues,
are accrued in line with revenues generated. The average remaining lease
length across the Group is five years.
Rentals payable and receivable under operating leases are charged to the
income statement on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease term.
A13. Headline EBITDA
£m 2025 2024 (restated1)
Group operating profit (Note A1) - continuing operations 134 142
Depreciation, amortisation and impairment (Note 2c) 51 44
Non-cash items 2 12
Headline EBITDA - continuing operations 187 198
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
A14. Leverage
£m 2025 2024 (restated1)
Headline EBITDA (Note A13) 187 198
Headline net debt (Note A8) 390 371
Leverage - multiple - continuing operations 2.1x 1.9x
1 Comparative periods have been restated to correct the accelerated supplier
income recognition and inventory related items in the North America division
(refer to Note 1b for further details) and to separately disclose results from
discontinued operations (refer to Note 7 for further details).
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