Smiths News plc (SNWS) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Smiths News plc Preliminary Results investor presentation. [Operator Instructions]. The company may not be in a position to answer every question received in the meeting itself. How the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Jonathan Bunting, CEO. Good afternoon, sir.

Thank you very much. Afternoon, everyone, and thank you for dialing in for our update today of our annual results. I'm here together with Paul Baker, our Chief Financial Officer. Between us, we'll cover off the highlights and the key events by year, review our financial performance and give some wider context on the progress we've made. It is, I believe, a strong story reflecting the underlying stability of Smiths News. And by any one standard, it's been a good year in what has been challenging and uncertain economic environment. In the second part of today's presentation, I will also give some insight into the assessment we've made of opportunities to enhance our core business through organic growth and potential entry into new markets. For clarity, what I plan to share is our approach and directive. It is not a road map. What I do want to do, though, is make this as tangible as possible, and I will give some examples of the trials and initiatives we have underway at the moment. But the key thing I want to say at this point is we're already testing our strategy in a low-risk [indiscernible]. So as Alessandro said, I'm happy to take questions at the end. So let's start with the headlines. We've delivered a good performance, underpinned by determined focus on our key deliverables together with some pragmatism in achieving our short-term goals. As a result, performance is ahead of expectations with adjusted profit before tax up 0.6% to GBP 31.1 million, and adjusted operating profit of GBP 38.1 million, down 3.8%. Free cash flow of GBP 48.2 million is an outstanding performance, up over 100% and benefit from pound one-offs that came through in the first half. As a consequence, year-end bank net debt of GBP 14.2 million. It's down by 73%, well below our target of 1x EBITDA by the end of 2023. And frankly, a transformation from where we were just 3 years ago. There's no one single factor to achieving these results. Rather, they are founded on sustaining the positive circle of close cost control, maximizing sales and an agile response plans to new revenue opportunities. Looking ahead, these qualities will remain essential, but as I indicated earlier, we're in a strong position to continue to deliver value to our shareholders alongside providing invaluable service to our clients and our retail customers. Our reduced borrowings, I think we can be confident in paying dividends this year to the full extent of the GBP 10 million cap that was agreed under our new banking agreement from December 2021. The recent awarded publisher contracts amounting to 35% of our revenues and over 50% of our magazine share sends a clear message about the future shape and security of our network. And finally, we have identified a range of options to enhance our core business by taking our tools and assets into adjacent markets. I'll talk later about these, but for now, I'll hand over to Paul, who'll talk you through the numbers in more detail.

Thank you, John, and good morning, everyone. Starting with the financial headlines on Slide 5. Revenue was down 1.8%. a better performance in the pre-pandemic declines of 3% to 5% and was buoyed by better-than-expected one shot and magazine sales. The impact of inflation was managed in line with guidance given earlier in the year, with a net impact of GBP 2.1 million largely flowing to adjusted EBITDA, which was down GBP 1.9 million, up GBP 40.7 million. Adjusted operating profit, down GBP 1.5 million, will become our new profit performance measure from 2023 and includes both depreciation and IFRS 16 lease accounting adjustments. Free cash flow increased 100% to GBP 48.2 million, and includes the final settlement of deferred consideration from Tuffnells of GBP 14 million and the return of the pension surplus of GBP 8.1 million. Both receipts were used to pay down debt in line with the terms of our financing agreements. As a result of these cash flows, bank net debt would reduce to GBP 14.2 million at the end of the year. Reported leverage is now 1.3x EBITDA compared to 1.2x last year. Average net debt, meanwhile, reduced 40% to GBP 49.9 million for the full year. We are pleased to show a dividend per share of 4.15p for the year. We've increased this dividend from GBP 4 million in 2021 to GBP 10 million that Jon referred to in his headlines. Now on to the adjusted income statement on Slide 6. The 1.8% decline in revenue has a GBP 20 million impact at the top of the income statement. The impact is a profit level, however, is mitigated due to the stronger product mix towards magazines and one-shots, which will cover this further on the next slide. As I have mentioned, the main driver of the GBP 1.5 million reduction in operating profit was the net impact of inflation of GBP 2.1 million. As previously guided, we saw pressure on contractor and warehouse staff costs from early in the financial year, which we have managed to offset through cost reduction measures and the benefit of higher prices for the sale of waste paper. As we move into 2023, we are still subject to inflationary pressures in the broader economy, but we are not seeing the same level of staff and contractor shortages this year. As a result, we remain confident that our cost out plans and additional revenue activities will be able to offset the annualization impact of last year's cost increases and maintain performance in 2023. Net financing charges have reduced by GBP 1.7 million due to the lower levels of debt. and as a result, profit before tax increased to GBP 31.1 million. The tax charge has an effective tax rate of 17.4%, was GBP 1.2 million higher than last year because they benefited from the final utilization of Tuffnells losses. Adjusting items after tax of GBP 2.3 million were GBP 2.2 million higher than last year and included a GBP 4.4 million provision for bad debt following the administration of McColl's Retail Group. Excluding the impact of McColl's, adjusting items continue to reduce from prior years. Adjusted EPS is maintained at 10.8p as lower profit is offset by the diluted impact of common share purchases. Moving on to Slide 7 on revenue. It's worth explaining how this year's results fit into the solid trading patterns and the impact on profitability. Newspapers continue to decline, but over the lower end historic ranges, which is supported by cover price inflation as publishers look to recover higher input costs. Magazine sales were declining at 5% to 6% prior to the pandemic and have also shown some resilience with a decline of less than 3%. Higher levels of travel and a year 3 of lockdowns have also helped support these sales levels. One shots performed particularly strongly, up 43% year-on-year, and are now contributing more to our profit than before the pandemic. Our sales have benefited from the return to school compared to 2021. The publishers have had real success with Pokemon and Premier League football trading cards, which are sustaining sales into 2023. This chart shows the last 12 months movement in bank net debt, which supported by GBP 22.1 million of one-off receipts to a 73% reduction. Closing net debt of GBP 14.2 million is 0.3x EBITDA compared to 1.2x at the end of 2021, and well below our target of 1x EBITDA. Average net debt, which is more representative of our overall borrowing levels as it takes into account the material working capital movements we have each month, reduced by 40% to GBP 49.9 million. In the last quarter, this average net debt dropped further to GBP 34 million compared to GBP 73 million in quarter 4 last year. Operating cash flows on this chart represent the underlying cash generated by the business available to pay down debt and pay dividends. We expect similar levels of operating cash flow in the core business for the foreseeable future. We've used this next slide, which is Slide 9, to set up modeling guidance. We used a basic premise that profit and underlying cash flows are maintained. Declining newspaper and magazine revenues are offset by cost out savings and other mitigating measures and ancillary revenue activities. Net debt and interest both reduced as a result of cash flow generation. Interest has some year underpin, and will therefore move in line with base rates. CapEx of GBP 2 million in the last 2 years have been lower than guidance. The depot refurbishments in IT improvement programs, which are now underway, should increase CapEx to around 10% of adjusted operating profit on average going forward. And the dividend of GBP 10 million that are permitted under current banking facilities are our funding assumptions. And finally, just a brief update on the cadence to our headline performance measure the business will use for 2023. The business will move from the adjusted EBITDA pre-IFRS 16 to an adjusted operating profit APM, which is a number you will see in our income statement. This will enable the business to continue to focus on operational performance, including the impact of leases through depreciation, while moving away from the historic measure. Now back to Jon.

Thank you, Paul. I'd now like to spend a little time looking at the key drivers of the core business this year, the priorities that we have to relentlessly pursue and where this positions us in terms of our new opportunities and direction. There should be no major surprises in this first section, but I'm sure the sharp hike we all have noticed that I've used in the chart in here enhancing the core. That's because, as I said earlier, I plan to also share the outcomes of the work we've undertaken to identify avenues for growth. And the judgment calls we are making to enhance the business in a way that continues to meet the needs of all stakeholders. But first, let's look back at those key drivers of performance over the last year. And in essence, there are of 4 major factors. Firstly, the gradual phaseout of the impact of the COVID pandemic. Aside from the Omicron variant, which amazingly was only this time last year, we are now coming around to a point where the various restrictions are no longer a significant year-on-year influence to our U.K. wholesaling operation. Secondly, sales of newspaper and magazines have returned to best in historic trends, albeit with softer annual comparables than H1. Pleasingly the margin benefit from the sale of one shots for stickers and albums has been sustained throughout. Thirdly, the cost mitigation to help offset inflation have been ongoing throughout the year, and as a result, we have limited the net impact to our forecast of GBP 32 million. As you'd expect, there will be some carryover into the current year, which we've allowed again for in our forward planning. And fourthly, through a range of initiatives ranging from small tactical gains to opportunities with the longer-term potential, we have generated welcome additional revenue that we are confident can be repeated and indeed developed further. Finally, the improvement to our debt and cash flow benefited from the expected inflows but also from the disciplined management of capital. This has reduced our interest payments, and as I said earlier, transfer on the underlying financial strength of the business. This, in turn, supports the increase in dividend whilst the new contracts give us their confidence in the visibility of cash flows that will be underpinning our future shareholder value. As I said earlier, I hope there are no surprises in that. It should also be no surprise too, that we've made good progress with the priorities that we laid out this time last year. I don't propose to go through each one of those that's listed here. The key point I want to make is that our results aren't delivered and they're not delivered by compromising our future, which is a really important part of the philosophy that we have in a way that we work the business. So before looking ahead to future opportunities, we should be clear that we are building on a solid core business with a clear path to sustaining its value generation. Historic drivers of service and efficiency are once again the key challenges we face. Our track record, our skills and our expertise [ hint ] we're well placed to continue balancing these imperatives. Our markets have stabilized after the disruption of the pandemic, and although the wider economy is under pressure, we've benefited from both price increases, and indeed, margin mix. And finally, the contract renewals are a milestone in securing our future. Our model is based on long-term partnerships and a matching commitment to the supply chain, and we are confident of reaching equivalent agreements with all our other major publishers in due course. So in short, this is the core of our value model. And all the work we have done in relation to the future is focused on how we build on these very solid foundations. That's why it was so important that we first established the underlying financial strength and flexibility that will allow us to enhance the core by moving up the value chain as and when the right opportunity present themselves. So what for the future, and what might we do beyond the core? Are there opportunities to leverage our network, skills and relationships to new markets without diminishing our focus? How do we grow the business in a way that's ambitious for the long term, but is mindful of the immediate need of our stakeholders, and indeed, the missteps of the past? These are the questions that many shareholders have been asking us, I'm conscious and wanted to provide some meaningful insight without laying out every detail of our plan in a way that might actually create new barriers to execution. Before I come on to specifics, it's worth saying that looking -- as we look ahead, we first tested our business model and its capabilities against the trends and opportunities that are emerging in and adjacent to our core markets. All the options for growth we have identified are grounded on these twin tracks of a robust market assessment and a detailed review of our capabilities as they stand today. The robust analysis included assessing opportunities against the macro trends in logistics and warehousing, forecast changes in consumer behaviors, the future requirements of our publisher and retailers and beyond what we do for them today, and last but not least, the tactical transferability of our skills to give us competitive advantage. In parallel to this review, we've also developed a set of guiding principles that will ensure we meet the needs of our stakeholders. First and foremost, we will seek to enhance our core business and will not allow our pursuit of growth to distract our progress. In short, we will grow from this enhanced core, not in isolation of its foundation and importance. This is what we mean when we talk at pursuing adjacent opportunities rather than outright diversification. Secondly, where possible, we will prioritize opportunities to facilitate enhanced partnerships with our existing retail customers and publishing clients. Thirdly, and this is pivotal to what I have to say today, we'll pursue an adaptive and agile approach, combining organic opportunities with focused bolt-on acquisitions, and that's important. So it's a combination of organic opportunities and focused bolt-on acquisitions. We will test and explore opportunities through real-life trials rather than textbook theories or modeling expenditures. And finally, we'll maintain capital prudence throughout, ensuring the investment parameters allows for the continued strong dividend without materially higher levels of debt. So what are some of the tangible opportunities we've targeted? Well, we've identified a range of opportunities, actually, and they both play to our strengths and enhance the core business. Towards the top part of the graphic, we have opportunity to leverage our physical capabilities using latent or spare capacity, either directly or in partnership with others. This is about expanding our service of existing customers or partnering with logistic providers to use fair capability in our network. In the middle, we have supply chain integration, which refers to playing a bigger role in our supply chain. Towards the lower half of the spectrum, we have direct-to-consumer sales, which also represents a potentially large opportunity to partner with suppliers and retailers. Lastly, categories and data partnerships refer to opportunities to work with suppliers and customers using our depot, data and technology and systems to manage the supply of complementary categories. And in line with the principles of first testing our capability and the market appetite, we have a range of initiatives already underway. So starting with service expansion at the top. In Birmingham, we have launched a service for cardboard and plastic waste collection that backs into daily deliveries. It offers a simple solution for what is a growing issue for our retail customers. And of our encouraging early trials, we are now expanding this and have around 50 customers signing up each week. For logistics services, we have partnered with a major international carrier to provide storage for sortation using spare capacity at selected depots. In relation to the supply chain, we now have 2 national home news delivery businesses operating from within our facilities. To give some idea of scale, NewsTeam alone delivers to 60,000 homes, making 420,000 home deliveries of media per week. And then if we look at direct-to-consumer, we've recently made a seed for investment in a joint venture with Lucid Digital Magazines. It's called My Mags, and it's been developed with publishers and researchers to create a one-stop solution which enables consumers to browse and order single-issue magazines or newspapers digitally. And they do this by swiftly downloading these onto their tablets or phones. By offering a simple solution that's successful at this picture or in the store, My Mags complements traditional print sales and effectively increases the range of titles that are available in stores, albeit digitally. And then finally, at the bottom, we have in category and data partnerships. This summer, we supplied and serviced over 50,000 DVDs into a leading supermarket using our EPoS or replenishment systems. In this way, the stores did not have to hold or handle the stock, process returns or forecast demand. From the retailer's perspective, it's a super simple solution for an otherwise time-consuming and complex to manage category. While from our perspective, we are simply applying our existing deliveries, invoicing relationships and smart replenishment systems to a new product category. So as I said earlier, these are some of the trials and tests that are already underway. At the risk of laboring at point, they cover a range of options for growth, all of which are adjacent to our markets and complementary to our existing capabilities. They're also part of the process of evaluation we've established. And whilst we're excited about the prospects of potential scalability, we're also realistic enough to know that some will work while others will prove too complex or distracting. Understanding which are the most appropriate is precisely the purchasing approach to the principles that I set out earlier. Importantly, the progress we've made so far in the core business means we can choose carefully on those decisions that will undoubtedly shape our future. But in the meantime, we've got very clear plans and projects to continue delivering value for our shareholders. From sustaining the core business to generating cash flows underpin strong returns, we are focused on all the actions in between and confident we have the right balance of ambition and realism necessarily to sustain progress. These fundamentals of great service and tight cost control remains central to our operating model. The renewal of our contracts and the way that works for all parties will give further certainty and visibility of cash flows. Investing in capability through people, systems and processes will help the core but also, it complements opportunity of new ventures, new revenues. And last but not least, we're fit to maintain strong returns for our shareholders, paying dividends subject to our performance but to the full limit of the GBP 10 million cap. This overarching commitment, the reliable delivery of tangible value remains our number one priority. So in summary, we believe we are well placed to grow shareholder value. The core business has come through some difficult years in good shape, and it remains a solid foundation for tangible value creation. The discipline we have shown these last 3 years has not only strengthened our finances, which has given us the flexibility to explore new opportunities without compromise to the deliverables that our stakeholders expect and indeed rely on. In terms of our outlook for the current year, actually, we've made a good start. Our markets again have returned to historic trends, with the relative predictability that, that brings. Inflation remains a key pressure but within our forecast, and trading year-to-date is in line with our expectations. So on that note, I'm very happy now for Paul and I to answer any questions anyone may have submitted.

Jonathan, Paul, thank you very much for your presentation. [Operator Instructions]. But just while the company take a few minutes to review those questions submitted today. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor dashboard. As you can see, we received a number of questions throughout today's presentation. If I could ask you just to read out the questions and give response to where it's appropriate to do so. I'll pick up from you both at the end.

Thanks very much. So the first question we have, can you talk about the cost inflation outlook, and how we digest some, if not all, cost increase? And could you talk about the status of selecting some of your warehouses? As you have mentioned before, is there any potential to further optimize out our assets? I'd say the first on inflation on -- you just answer the one on the warehouse. So inflation, we talk about the annualization impact of the inflation. We expect that to be broadly about GBP 1.5 million to 2023. That's in our plans, and we expect the cost out program and the ancillary revenues that we're pursuing to offset that. And so we expect to be able to maintain performance and cover that will impact the inflation. On the warehouses, Jon?

Yes. It's a good question, so yes, you're right. We did talk about that at the half year. We've continued to make progress with that. A lot of what we've been doing with our clients in that area is both repeatable, and indeed, we can grow the revenue from that area. I don't think it's necessarily absolutely core to where we're going from a growth perspective. But that said, the clients, we're working with are very happy with our capability, very happy with the culture we have within the business. And therefore, it's an area that could potentially grow. But for the purposes of our 3-year forecast, the revenues associated with that particular area are not material.

Thanks, Jon. The next question is partly inflation related, but how does inflation affects revenue? Do your customer contracts include inflation and price increases? We have 2 revenue streams, so one is essentially a cover price, which our contracts at having this. So clearly, it publishes an increase in the cover prices. We benefit from that because we're paid a percentage of that cover price. We don't have control when those increases to come through. But clearly, in the final quarter of last year, we benefited as publishers were looking to recover some of their input inflationary costs. Now neither party when we deliver to our resellers, we apply a delivery service charge, and that has some degree in inflationary impact that we calculated every year, although we actually might do that, how much that increases, maybe to protect the category at a retail level. Hopefully, that answers that one. The next question is, what is your target for debt levels? What would you do with your cash flow you've achieved your debt target? I guess we have a stated debt target, 1x EBITDA. We're unable to maintain that under our current banking facilities, and therefore, we will continue with our bank facilities there to a massive dividend we can and pay down net debt with the remainder. Jonathan, one for you. Citi analyst seems to think revenues will decline by 4% annually through 2025. Do these estimates seem sensible to you? And can you maintain earnings in that environment?

Yes, good question. So pre-pandemic, the business revenue decline was typically 4 to 5 percentage points each year, and we'll return to those sorts of trends over the last 12 months. So I think from modeling purchases, declining at 4% is the sensible assumption. And in terms of how we maintain profits and cash flow through that period, in exactly the same way we have been for the last 10 years. Through a combination of managing our cost base with great care and some agility, and driving of ancillary revenues and for the benefit of them driving proactive sales and the margin mix that can come with that.

Thank you, Jon. The next one again is about average daily debt. The current average daily debt was GBP 36.7 million. Would you expect these numbers to trend in 2023 and '24, continue to be downwards? I think our operating cash flow will be GBP 20 million to GBP 25 million, and we'll pay dividends of GBP 10 million up to our cap. If we deliver that, and that remainder will be used to pay down our net debt, so hopefully that is pretty clear from a funding perspective. What about fees, bank arrangement fees were GBP 2.9 million in '22. What are your expectations for the current year? There's no more. So we've completed that refinancing in December last year. There's no more cash payments. So there's P&L charges at the end of the 2025, August 25, and the term of the facility of GBP 1.2 million per year, but the cash flow has already taken place. Do you expect any further one-off costs to arise in relation to the pension schemes in '23? No. That's all completed now, and we see the surplus sale will provide some. We're not insurance, we have some provisions for providing insurance in the future, but there's no further costs. A bit of a longer question, so I'll take a deep breath here. Can you please elaborate on approximately how much of your warehouse distribution space you have managed to select? And whether there is more to go for? Also, can you give investors any idea of any time line for upcoming negotiations on your banking facilities to unlock the current GBP 10 million dividend cap? Jon, do you want to take the first one...

Yes. I think I've comment on this in the previous question. But yes, there is a degree of space that we could sublet and we continue to talk to with interested parties about that. That will be business as usual for us. But even if we do sublet it, it will not be material to this year's numbers.

Yes. And on the banking services space, we just increased the dividend from GBP 6 million to GBP 10 million in this year by the refinance beginning December '21. There's no current plans to renegotiate that now, but clearly, we'll look to at the right point in time to have the negotiations with the banking service space. So next question, about contract charges.

I'll take that one there. So, yes. So we've announced the Daily Mail, DMGT, and Frontline. But you're right, we haven't announced UK region market force. That's simply because their contracts are not up for renewals yet. In fact, none of our contracts are up for renewal until 2024 or 2025, but each individual publisher takes a different view as to how they want to manage that negotiation. Some like to renegotiate early, some a little later, and that's absolutely fine. They are our clients, and we're happy to negotiate at whatever point works for them. That said, we've got excellent relationships with all of our publisher clients. And we're very, very positive about the relationship we have with them and our ability to renew our contracts with them.

Thanks, Jon. There's question here about -- I think it's about recycling, actually, about the fact that we so actually have a small corner shops that generate a lot of waste. And could we drive more value through picking up the waste and make sure that's part of the recycling.

Yes, exactly. So apologies if I didn't make that clear in the presentation, but you're absolutely spot on. That's exactly the initiative. So our delivery drivers take these bunch of magazines out with them, they bring back yesterday's returns of the product that's not being sold. And at the same time, collect retailer cardboard and plastic and bring it back. And then we make sure that, that is then recycled. So yes, we agree with you. There is a market there which is in growth, and it's something we are there, we're exploring and trialing.

Thanks, Jon. Retail customer numbers are listed as broadly flat. Are you able to put a number on current total outlets supplied? We currently supply about 24,000 key outlets, which is about 19,000 independents and the rest are -- the multiple gross of check or change. That's about the number.

Yes.

How are potential volume changes and cost inflation reflected in customer agreements?

Yes. So in terms of how the commercial model works for the supply chain. So as Paul has already alluded to, our contracts with our publisher clients are linked directly to volume and cover price, so that's -- there's a direct link there. And broadly, as cover price increases, that's beneficial to us because typically, it creates greater value than the volume decline that sometimes is associated with that price increase. And from a customer agreement perspective, we have every service charge or the charge to deliver the product to our retail customers, and that's how they are index-linked. So yes, that's how it's reflected.

There's a question about share price Jon.

Okay.

Somebody thinks the share price are some of the value, and why do we think that might be?

It's a really good question. We would agree with you that it is undervalued, but we would say that, wouldn't we? There's a whole market as -- let's rewind back a bit. Prior to the recent 3 years and when the business was known as Connect Group, it had a turbulent period, and that materially impacted the share price and dense people's confidence. Over the last 3 years, we've stripped a lot of the ancillary businesses away, and we're left now with a very strong core, and we've got a new leadership team in place. And I think if you look at our track record over the last 3 years, we've been very transparent about our commitment to all stakeholders and then our performance against those commitments. So I'd like to think that's starting to rebuild some trust. We've done all the things you would expect us to try and do in terms of sorting out the balance sheet in Phase 1 with the disposal of Tuffnells, renegotiating our banking arrangements twice, the latest time to improve the dividend payment for a potential from GBP 4 million to GBP 10 million. We've started to renegotiate our publisher contracts. We're delivering our profit promises. We brought down the debt materially. And the last bit therefore, really, is about how do we grow the business, and we started to hear today the progress we've started to make in that area. So I think we're trying to do all the right things. Sometimes it takes the market little while to catch up, and it's turbulent times in the broader economy. So I think all we can do is not get too fixated about share price and assume that if we run the business in the right way and continue to deliver on our promises, that actually, the share price will take care of itself, and that's very much the approach we take.

Thanks, Jon. Next question is, [indiscernible] enables us somewhat Rascal is often -- we don't get a chance to. So the question is, with the expansion of EPR into newspapers, where it was mentioned as a long-term opportunity, how often news publishers to buy into working with Rascal? Rascal being a joint venture you have.

Yes. I mean, I think everybody in the supply chain, whether as newspaper publishers, magazine publishers, wholesalers or retailers, I'm very focused on how do we elongate the life time of the category. And to do that, we've got to make sure that all links in the chain are profitable and to the best extent, they can flourish. And therefore, part of the role of Rascal has been they try and help our major retail customers reduce waste and shrink in their stores, and thus, therefore, improve category profitability. It started with magazines. It's now moved on to collectibles in some cases. And I'm sure, over time, newspapers will also adopt an EPR model or something similar to that. But everyone's very fixated and very focused on making sure that we do everything we can in the supply chain to reduce unnecessary waste and shrink.

Thanks, Jon. Well, that was about Rascal, there's another question here about My Mags, which is a new initiative. Can we expand upon what you talked about before? Any more detail on My Mags?

Yes, sure. So this is a really exciting and simple initiative. So what we -- look, there are lots and lots of digital plays out in the market. And actually, we think there's a potential gap there for us. But we recognize we didn't necessarily have the digital skills ourselves, hence, the reason why we created a joint venture with Lucid Digital Magazines. And how they offer we work is very simply a consumer can walk into a store, and if the store does not have the magazine they were looking for or indeed the newspaper they're looking for, either if they don't stock it or maybe they sold out, there is a simple QR-code they can scan and it automatically takes them to a website which offers them all of the digital magazines and newspapers. And unlike many of the digital propositions, you don't need to subscribe for a month or a year or commit to certain lever downloads, you simply buy a single issue there and then. And therefore, we've been working on that with our publisher clients and our retail customers. And I have to say, so far, the reaction from the supply chain has been very positive. So we're hoping that what we're driving there is a complementary sale, not only for ourselves but for our publishing clients, and indeed, our retail customers.

Thanks, Jon. I think that's broadly -- there are other questions varying on a theme on debt and those new initiatives, which hopefully we'll be able to give you a little bit more color on. I think that concludes the questions.

Jonathan, Paul, thank you very much for that. I think you addressed all those questions you can from investors. And of course, the company will review all the questions submitted today, and we'll publish those responses on the company platform. But just before I redirect to investors to provide you with their feedback, which is particularly important to you both. Jonathan, could I just ask you for a few closing comments?

Yes. I mean, personally, as I started with, I guess thank you for dialing in and taking the time to show an interest in Smiths News. I hope you feel whenever we do these things, we try and be as honest and open and transparent as we could possibly be. And yes, again, we've tried to do that today. It's always a pleasure to have the opportunity to present to you. Hopefully, today you've got some value from it, and go and buy our shares.

Jonathan, Paul, thank you very much for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, which I'm sure will be greatly valued by the company. On behalf of management team of Smiths News plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.