Smiths News plc (SNWS) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Smiths News plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can 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. I'd now like to hand you over to Jonathan Bunting, CEO. Good afternoon, sir.

Good afternoon. Good afternoon, everyone. Thank you for joining us this afternoon. Paul and I are looking forward to explaining our results today, results that I'm particularly pleased with, which we think reflects progress we've made on a number of fronts. Our headline message is very much one of reliable delivery. And that despite the challenging economic environment, Smiths News continues to generate positive and predictable returns, which benefit all stakeholders. It's a performance we're proud of. And as I said, we look forward to explaining it in more detail this afternoon. So today's presentation will follow our usual format, I'll cover a summary of the financial highlights. Paul will then talk you through more detailed financial results, before I return to discuss progress on the wider strategy and call out our priorities for the current year. As always, we welcome any questions you may have, and we'll take these at the end of the slides. And I'd just like to remind everybody that we will have a version of the presentation available on our own website later today. So starting with the headlines. Well, we've delivered a good performance in all key areas, amounting to a strong overall result despite the pressure of inflation and its particular challenges for the transport and distribution sector. From a financial perspective, we have exceeded market expectations. Adjusted operating profit of GBP 38.8 million is up 1.8%. Free cash flow of GBP 21.8 million, again supported a dividend of GBP 10 million and contributed to halving our average net debt to GBP 25 million. Turning to core operations. Sales have benefited this year from sustained cover price rises, offsetting the impact of continued volume declines. They were further boosted by the FIFA Men's World Cup taking place this financial year and the publications of several special additions following the sudden death of Her Majesty, the Queen, in September 2022. Equally importantly, we have once again achieved our cost efficiencies with them being in excess of GBP 5 million, an overall delivery of GBP 5.8 million, of which GBP 4.8 million were from the distribution operations. This has been a core competence of business now for over a decade and is a particularly valuable quality for any business in the current inflation requirement. Which takes me to the strategic headline of 65% of our contracts now secured into at least 2029. This is a milestone achievement and absolutely critical to our future planning. We are delighted to have made this progress as it underpins not only our assumptions for costs and revenues and therefore free cash, but also our plans for sustainability, people, capital investment and our important new profit streams. I'll talk later about growth, including the progress of Smiths News Recycle that is now live across our full network, and some of the other opportunities we've made progress on that leverage our capabilities and our infrastructure. In summary, our performance in FY 2023 is very much a continuation of the path we set out to follow. And the progress on all fronts is reflective of the focus we apply and our determination to put stakeholder interests at the forefront of all we do. I'll now hand over to Paul, who'll discuss our financial results in more detail.

Thank you, Jon, and good afternoon, everyone. You're right, if we move to Slide 5, we'll start with the financial headlines. Revenues increased in the period by 0.2%, which was ahead of the historic norm of a 3% to 5% decline. You may recall at the half year, we reported a 1% revenue growth, supported by price increases, the Royal Succession and the Men's Football World Cup. The second half had no material one-off impacts, but pricing remained beneficial, albeit not as strong as the second half last year. Adjusted operating profit increased 1.8% to GBP 38.8 million, of which the Royal Succession contributed GBP 0.7 million. Underlying profit was therefore, in line with last year despite the impact of GBP 4.7 million of inflation, which along with just over GBP 3 million of margin decline was offset by our strong cost-out plans and ancillary revenue streams. Adjusted earnings per share remained in line with last year at 10.8p. Average net debt halved from GBP 50 million last year to GBP 25 million this year. This was a result of free cash flow of GBP 21.8 million, which was in line with expectations and the annualization impact of GBP 22.1 million one-off receipts received in the prior year. Dividends are proposed at 4.15p, the same as last year, and the business anticipates distributing up to the maximum committed under our financing agreement of GBP 10 million for the full year. Now to give a little bit more color to revenues. As we mentioned at the half year, we have benefited from Royal Succession and the Men's World Cup collectibles, which overall contributed 1% revenue growth. Excluding these items, underlying revenues were down 0.8% compared to the historic trend of minus 3% to 5%. Daily newspapers, in particular, benefited from ongoing price increases, although these were lower than last year. These price increases had a consequent impact on volumes, which declined 13% compared to a historic norm of 9% to 11%. There were 26 price increases in the second half of 2023 compared with 37 in the same period last year. Increases in the final quarter were 50% down on the prior year. Therefore, we can expect revenue to slowly return to its historic trend as pricing begins to normalize. Magazine revenue volume decline was in line with previous years. Our collectibles, which now represent 4% of underlying revenue, continue to perform really well, up 43% year-on-year. These continue to have a higher margin than newspapers and magazines, supporting our overall profit delivery. As I outlined earlier, adjusted operating profit increased to GBP 38.8 million due to the benefit of the Royal Succession and with cost-out plans and ancillary revenues offsetting both the inflation and margin decline. Net finance charges have reduced by GBP 0.5 million as the extension of our debt facilities last year resulted in lower bank arrangement fee charges. The impact from higher SONIA rates was largely offset by the lower average debt. Profit after tax of GBP 25.6 million is GBP 0.1 million lower than last year and includes the impact of the higher U.K. corporation tax rates. This has no material impact on headline EPS, which is maintained at 10.8p. Continuing free cash flow for the year was GBP 21.8 million and includes a working capital outflow of GBP 4.9 million compared to GBP 0.6 million last year. This outflow was part of our normal working capital cycle with a large customer payment received during the first week of 2024. Capital expenditure of GBP 3.4 million is ahead of last year and more closely aligned to our target of circa GBP 4 million per annum as we are now back on track with our depo refurbishment program. Lease payments have reduced to GBP 0.3 million year-on-year due to the exit of one lease last year and the timing of two renewals. Net interest and fees are significantly lower than in 2022 as we paid GBP 2.9 million of arrangement fees last year. The cash impact of adjusting items were GBP 1 million, which is largely related to the cost of a reported M&A, which we discussed at the half year. Finally, as a reminder, the prior year benefited from GBP 22.1 million of one-off receipts. Bank net debt continues to reduce, and the business has generated almost GBP 25 million of cash flow before working capital and dividends. Over the last 2 years, we have focused on average net debt as a headline measure, as reported net debt is impacted by the timing of our working capital cycle. Average net debt has reduced by GBP 64 million or 72% over this period. A consistent level of cash flow of between GBP 20 million and GBP 25 million for the last 3 years allows the business to reduce debt and plan with certainty. We've separated our working capital, which this year is a GBP 5 million outflow due to the timing of the receipts just mentioned, but we'd normally expect a working capital outflow of about GBP 1 million. The timing of publisher payments will have a greater impact next year on a reported basis due to the impact of the 53rd week, which I'll cover on the next chart. Underlying cash flow for 2024 is expected to be consistent with last year. And this will enable average net debt to reduce further to circa GBP 15 million. However, as we have been highlighting through the last few reporting cycles, reported net debt will be impacted by the inclusion of a 53rd week, which will bring publisher payments of circa GBP 20 million into the last week of the financial year. Concluding the financial presentation, we expect the trends of the second half of 2023 to continue with cost out and growth offsetting the headwinds of inflation and margin decline as well as lower prices for the sale of waste paper. As a result, the business intends to maintain performance in 2024, in line with current market expectations. And with that, I'll hand back to Jonathan, who will provide the strategy up next.

Thank you, Paul. So in summary, we've achieved a good performance with a clear and sustained focus on the priorities we set out for the year. Indeed, the bullets on this slide are virtually identical to those we presented in May for our interim results. The key elements have not changed, and indeed, it would have been not how they've done so. One of the features of our business is its indeed relative predictability, provided we keep close control of the critical triangle of service, clients and long-term efficiencies, which, as indicated by the green ticks, is exactly what we've done for the remainder of the second half of the year. At the half year, we also spoke about our long-term strategy, and in particular, those three elements that we have stated are our critical goals. To remind you of these, they are: enhancing our core business, so we continue to serve customers with a market-leading service proposition that supports operational efficiency and generate reliable profits and cash flow. Secondly, leveraging our capabilities in new and complementary markets, exploring and testing opportunities in an agile way, and backing that approach with appropriately sized investments. And thirdly, delivering for all stakeholders throughout, delivering great service, supporting our people and the investment needs of the business, enhancing our customer and client relationships, and providing attractive returns for our investors, underpinned by a strong balance sheet. So let's look at these in turn, starting with enhancing the core. As I said earlier, the milestone achievement this year is securing of the 65% of our publisher contracts through to 2029. At the end of FY 2022, we had 45% secured, and we're building significant momentum. Today, we passed the tipping point that provides the surety of our territories and service requirements for the next 6 years. It's an enviable position for any business, and in our case, enables the planning of efficiencies and network consolidation that underpin our cost-saving plans. But it also enables us to plan and develop our growth profit streams with confidence given that we know which postcode we'll be distributing to and the likely economics. It's also pleasing to have secured a new and additional agreement with News UK for their direct deliveries into London. This new business slops into our existing operations and is a reflection of the way we are working ever closer with our publishers on supply chain efficiency and sustainability. Although not shown on this slide because it's relatively new business, it is equivalent to a further 2.7% of market share. Even more recently, we've secured an agreement with Midland Newspaper Association for the regional distribution of its titles in the Midlands to a value of circa GBP 5 million. Of course, the contracts also give us excellent visibility of the likely future cash flows, positioning us well when we come to the renewal of our banking arrangements that come to an end in the summer of 2025. And finally, I should just confirm that remaining contracts are operating well. These include rolling agreements with smaller or regional publishers as well as some larger contracts that we would expect to renew during this financial year. The other key elements of enhancing the core are the twin tracks of service and efficiency, and it is the ability to achieve both without compromising either that is the vital ingredient of our long-term success. On the service side of the equation, our goal is to work with our supply chain partners to make the news and magazine category as easy as possible to execute at store level. We think this is an area where we can continue to use our market leadership, ensuring that our retail customers continue to see the category that their consumers love and is becoming simpler to manage at store level. The bedrock of our retail service is, of course, delivering on time and packing accurately, and we continue to exceed our contractual KPIs in both areas. In addition, for a number of our scale retail customers, we've adjusted the commercial model to minimize the risk of shrink. This is an area of growing concern for multiple retailers across many different categories, and it's pleasing that the magazines we've made this move already. By combining our asset based delivery with these additional value-added services, we make the category easier and more profitable for our retail customers, demonstrating to all supply chain partners that we are the market leader not only in science, but in vision and commitment too. If we turn to efficiency, our approach here is a well-developed one with an enviable track record of securing scale savings now for over a decade. In FY '22, it was exactly the same. Lower volumes enabled us to remove warehouse activity costs, and where appropriate, to consolidate delivery routes. In addition, our distribution centers are now almost entirely pure-play logistics centers with administration and customer service activity centralized, which gives us not only the advantage of cost efficiencies, but also a more consistent and dedicated customer service. Lastly, as I think many of you are aware, we have two offshore service centers for customer experience, technology and finance. We continue to work well with our service provider in this area, benefiting from the labor arbitrage, but we can also see an opportunity in the medium term for some automation. Looking to the current year, we would expect our savings to be similar to the level of our historic norm of GBP 5 million. Turning to leveraging our capabilities. We recognize the importance of developing new and complementary profit streams that use our skills, capacity and assets. In particular, we have chosen to focus on potential profit streams that play to our proven strengths and competitive advantage rather than seeking to diversify in the purer sets. This time last year, you will have heard me talk about our strategy to enhance the core, add more and move up the value chain, and our plans to pursue and explore a spectrum of growth opportunities. Since then, we have made progress on each of these, albeit as expected, with some moving into faster pace than others. So taking each in turn, starting with logistics services. We have again made progress growing the number of clients for whom we either rent space or provide sortation and delivery services. This provides additional revenue, and we will continue to look for further opportunities to expand this service offer. From a supply chain integration perspective, we spoke last year about how we now have the U.K.'s largest home news delivery provider working from our warehouses. That relationship continues to be a mutually beneficial one. The focus this year, however, will be the successful integration of the News U.K. direct to retail business in London and the Midland Newspaper Association regional press business. In relation to direct to consumer, in the autumn of 2022, we made a modest joint venture investment in the launch of Love Media. This is a pay-to-go digital service that enables consumers to buy digital copies of newspapers or magazines from their local retail store, simply by scanning a QR code. Of all the areas of growth, this was the last to market, and it's still very early days. For us, it represents a limited investment and continued experimentation in what is a growing market that we are keen to stay close to. But now it's a complementary service offer for our publishers and our retailers, and time will tell whether it's a solution that consumers embrace. And then finally, categories and data. We spoke last year about using the DVD market to demonstrate to our larger retail customers the advantages of using the proven news and magazine supply chain for other categories. Working in partnership with our magazine distributor frontline, we have this year added books to that list of products. We expect both the number of customers and the breadth of categories to increase in the current year. Which brings me neatly to our most advanced new venture in the service expansion area, Smiths News Recycle. This is a material new service that was initially aimed at our independent customers. To remind you, the service collects cardboard and plastic waste from our retail customers on a weekly paid-for basis. This service backs onto our core delivery and returns capability. The waste is prepared and bailed at our depots and sold to recyclers at a profit. This year, the services come from regional trial to a full network. We are now also live with 900 local bookmakers. We're also looking at additional waste categories and potential strategic partners that would make this seem even more attractive. And in total, we now have 4,000 paying customers who described the service as flexible, convenient and excellent value. The third element of our strategy is to deliver for all stakeholders. I believe today's results and those over the last 3 years confirm that we are succeeding. Our retailer and publisher services are benchmarking #1. We have the confidence of our publishers to award contracts through to 2029. And in relation to shareholders, for the second year in succession, we were paying the maximum dividend under our banking agreements. This year, an equivalent yield to 8.5%. Net debt and average net debt has reduced materially over the last 4 years, positioning us well to renew our financial agreements ahead of 2025. And our new profit streams are beginning to flow without risk to our core focus or finances. Turning finally to people and the environment. These were best viewed as part of our ESG strategy and two of our priority objectives. You may recall this graphic from last year when we called out the pillars of environment and people's priorities, because they have the most impact on our supply chain and are the primary concerns of our partners in relation to our performance. On the environment, we've made progress in reducing fleet and warehouse emissions in FY 2023, and in line with governor's best practice, have adopted a science-based approach to our further targets. So the period between 2024 and 2028, we have set an absolute reduction target relating to Scope 1 and 2 emissions, a 4.9% linear per year and a reduction in Scope 3 emissions, so the relevant categories we can control of 32.5% cumulative. In relation to people, we've focused particularly on the benefits to greater diversity and inclusion with training, employee surveys, and the enhancement of our communications and employee networking groups. We are, of course, committed to train developing all of our people, maintaining the long service and industry expertise that underpins our competitive advantage, whilst also appointing new talent and functional expertise that enhances our skill set. And finally, our prioritization of the environment in people pillars does not mean the others have been downgraded. And indeed, we continue to work closely with our partners, making contributions to our communities, and we have established strong governance of our ESG approach, examples of which would be seen in our science-based targets, the achievements of Cyber Essentials Plus certification, and our ongoing investment in health and safety, which is a nonnegotiable priority every day in every location. So looking to the current year, our key priorities are focused once again on the issues we have discussed today. Managing inflation, cost reduction remain critical tasks, and doing this in a way that ensures we maintain service and customer satisfaction. Sustainable cost reductions of circa GBP 5 million are an established goal for which we have an excellent track record in achieving. We're in advanced discussions with our publishers for the remaining contracts and would hope to conclude a number of those shortly. And when we look to the longer term, we're targeting further progress on our new revenue streams, knowing these will play an even bigger role in our revenues over time. And finally, we will open discussions with our finance partners to refinance our banking facilities, which currently expire in August 2025. Which brings me finally, to the outlook for the current financial year, which has started well. Our network changes and operational cost savings are on track. And providing we do not see any further cost bites, we expect them to offset the impact of inflation in the year. New revenues are building, which is, of course, good news, as our various growth platforms become more established. In summary, we are currently on track to again meet market expectations for the full year. That ends the presentation. Paul and I are now happy to take any questions you might have.

Jonathan and Paul, thank you very much for your presentation this afternoon. [Operator Instructions] 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've received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

No problem.

Okay. I'll read out the first question. Can you help us understand in more detail the GBP 5 million of cost savings achieved in the year, the bulk of which was via the distribution network and the cost savings planned for the current year and how they will be achieved. Jon, do you want to start with that, or...

Yes. No problem, Simon. So yes. I mean it's a proven track record we've got in this area. Where do the cost savings come from? Some come from the fact that we have less volume for our warehouses and final mile distribution to handle. And therefore, that creates a capacity which we can take out of the system, which reduces our cost base. Some come from the greater centralization of activities, and in some cases, outsourcing of activity offshore. And others come from working with our supply chain partners. And that's probably the last one, which is the area that we'll probably explore more in the coming years than we've explored to this point. To this point, it's likely been internal cost savings that we focused on, whereas I think there is an opportunity in the medium term to focus end-to-end in terms of the supply chain.

Thanks, Jon. The next question. Would it be reasonable to assume that the group may look to uncheck and early refinance of their facilities in advance of 2025, given solid trading and the most improved balance sheet debt position? Thanks, Simon, for that question. I think as Jon alluded to in our priorities, certainly, we will look to having those ongoing discussions with our banking partners and making sure that we utilize the fact that this business is a very different business than the one that we refinanced last time. So I think it's in a much better position, and hope to providing the commercial rights, and they are attractive to us. We'd look to move that forward in the near future. But we're under no pressure to refinance it. We've got a facility until August 25. And so we'll do so if the commercials and the conditions are correct.

Absolutely.

So here's one from Mark. What key performance indicators should shareholders monitor to accurately determine the success of effectively leveraging capabilities?

Yes. I mean it's a really good question. I mean, I think, ultimately, your touch is based on the profit that those activities throw off, and I think that's how it's going to be judged. You look at the revenue that we're winning and the margin that that's accruing. So that is how I would imagine that most shareholders will choose to judge whether we're making a success of that or not.

And the only thing I'd add, Jon, is that we are looking to expand from the capabilities that we have today. So listen, we're trying to look at something that's left field or different or at least trying to improve our skills and capabilities that we currently have today that are underutilized to make sure we could take them to market in the best possible way. So...

I mean, the only other thing I would add is, we should not lose sight of the fact that whilst some people will have a perception that the news and magazine market is dying, it's actually not, okay? So we distribute 14.5 million newspapers every week. We distribute 4 million printed magazines every week. So the market continues to be a large and resilient market, as you can see. So what we need to do is make sure we focus on the core and keep running that business appropriately and throw off the cash in the way that it does. And then in a complementary way, enhance that by adding new profit streams to it. But that is the order. That is the priority of it. It is not grow the new profit streams at the expense of the Smiths News wholesale business. That would be exactly the wrong thing to do and not something we plan to do.

Thanks, Jon. And then the next question we've got is, is there any intention to change the dividend or share buyback policy when the current arrangement expires? I think, from my perspective, it's about the order of priorities, but we'll look to conclude a refinancing discussion and make sure we've got really great commercials and reduce the restrictions to more normal covenant-based approach to our financing facility, and that may well helpfully unlock our ability, our options to return to shareholders. And then we'll look at our policy at that point in time.

Yes. Great.

This is one here from Simon. Can you tell us a bit about the feedback you get from retailers on your service offering, deliveries and recycling, et cetera, and what else the group could do to leverage this retailer network?

Yes. I mean, as I think I mentioned in the presentation, Simon, the customers that use our recycling service are actually very complimentary about it. It's a very convenient solution for them, so they can leave the product out 7 days a week if they choose to. Many don't. They just choose to leave that 1 or 2 days a week, but they're very complimentary about the flexibility. And with regard to whatever else could we deliver or collect. Well, if you walk into any large supermarket and walk down the newspaper and magazine aisle, you can look at adjacent categories that sit there, and we're interested in seeing whether we can distribute any of those on behalf of the supermarkets or their manufacturers. And if you walk into a convenience store and look at the types of products that they are either selling or recycling, we're happy to support that. So there's a huge array of things we could do. What we're very keen to do is be very focused and make sure that we don't dilute our energy by being too widespread.

Yes, there's a couple here on new opportunities, Jon. One is about -- we've announced News U.K. going to retail win. Are there any other potential opportunities in the news and mag space. And then the second one is about recycling. How big do we think that could be ahead of the 4,000...

No problem. So in terms of the News U.K. announcement, I mean, first, I think it's great news. Great news for us. I think it's good news for News U.K., and I think it's really good news for the customers that will now stop having 2 suppliers and will have one going forward, and that will be us. So that, I think, is good news. It's actually the last of the big opportunities, I think, in terms of areas where publishers were going direct to the retailer that we could do for them. And certainly, from a regional perspective, the recent win, again, I think, is probably the last of the large opportunities that are out there. There will always be smaller opportunities, and where they become available, clearly, we will be competitive in our process to try and secure them. But I think in terms of the big needle movers, those 2 are probably the last of the two.

There's one here...

I'm not sure I answered the recycled question.

All right.

I think your question was how big is the United [indiscernible] market.

Yes, what other demographics are there? There are primarily all small retailers that probably are independent.

Great question again. So principally, yes. The vast majority of our 4,000 -- so 3,000 of those customers are independent retailers, 1,000 or circa 1,000 are bookmakers. So that's the current mix. How should you think about the available market? Well, we have 12,000 independent customers, but many of them will be attracted to other people and may or may not become available for us to try and persuade to join our service over time. And of course, if you start to think about bookmakers and news agents or convenience stores, quite often, you'll see them in a parade of shops in many different communities. And if it's possible to provide services to that parade of shops, it may well be economic to do so. So that's the way we're starting to think about that opportunity.

Thanks, Jon. There's another one about the dividend restriction clause. I hope, probably I've answered that as part of the conversation around re-fi timing. Another question about free cash flow. Hopefully, on Slide 8, you'll see the breakdown of our free cash flow from adjusted operating profit, which you can see the outflows there. We've done the recycling one. Just coming down, excuse me a second. There is an interesting one about category of magazines. What changes is Smiths News planning to improve profitability? It says the magazine category, but I think it's news and magazines, and retail might be one of them.

Yes. So certainly, from a profit perspective, if you're a London retailer, you'll have benefited from the decision News U.K. have taken there. I think more widely, there are 2 areas of focus for us. The only way we can improve the profitability of the category for a retailer is either making it simpler to sell, and therefore, reducing the labor they associate with the category, or adjusting the commercial model, so that areas such as shrink no longer damage the P&L from a retailer's perspective. In both those areas, we are working hard to put plans in place, not only in isolation, but with our publisher clients and our retail customers, so that we can continue to see the news and magazine category as a category seen in almost all of the big retail outlets you choose to go in every retail channel.

Thanks, Jon. There's one here about market expectations for the current year around sales and operating profit.

So we have expectations from the market from a sales perspective, but we would expect to be moving, that we reported 0.2% growth. But underlying, we talked about it was down 0.8% in June, if you watch out the one-off event. We think that's going to trend more towards 3% to 5%, but expecting next year to be very similar to that underlying number this year given the wins that we've made and just announced. And then from an operating profit perspective, I think it's also, this year, our operating profit being GBP 38.8 million with GBP 0.7 million due to the Royal Succession. And therefore, underlying was GBP 13.1 million, which is in line with last year, and we plan to maintain performance at that level.

So there's a question here about what's the anticipated time line for the automation of the customer service provision.

There is no time line on that one. We continue to have dedicated colleagues out in our customer service centers, who we think do a good job for us. If we can find ways of alleviating pinch points during busy moments, then we'll certainly look at that, but we do not currently have a plan to automate our entire customer service proposition. So there is no time line for that.

Thank you, Jon. So lots of comments on longevity of the cash flows given declining print. Can you comment on how many years, decades you expect to see print distribution continuing?

David, it's I think a million dollar question. I wish I had the answer. I don't. What I can tell you is that I think it will be a lot longer than many people give it credit for. I think if you look at the data points in terms of the level of distribution we still do, if you look at some of the YouGov's research that was undertaken last year that said 2/3 of U.K. consumers, 55 years or older, prefer the printed product to the digital product. That 58% of U.K. consumers that buy magazines prefer a printed product to a digital product, I think it's here for a while to come, and it is a large and stable market. Just look at the reaction when the Queen sadly passed, when we distributed an extra 5.4 million newspapers in that 10-day period. We had a 400% uplift on Hello and OK magazines. So for many people, print is still an incredibly important part of their life. It's how they like to unwind. And I think what we're really seeing is, at one point in time, people thought that digital would kill print, and we understand that. But actually, if you look at what's really happening with consumers, consumers are accessing content now, both digitally and through print. So increasingly, if you look at how publishers are marketing their content, they're giving the consumer the choice. Would you like a blended offer? Would you like to have print sometimes and digital sometimes. And the best example I can give you of that from a sort of personal experience is if I'm short of time, but maybe I've got 5 minutes, I'm waiting for a meeting to start or something like that, and I want to access the news, I'll do that digitally. But if I've got more time, particularly weekends, and I want to really enjoy reading the newspaper or magazine, I always do that through print, always, without question. And I think that behavior is very similar for lots of people. So I can't tell you how many years it's going to go on for, how many decades it's going to go on for, but I do think it will be a lot longer than many people give it credit for.

Thanks, Jon. A bit more on finance one here. So what interest cost forecast for '23/'24? John asked. And also, what dividend with management there is not constrained by banking facility agreement. I'm going to start with the interest cost one. Clearly, a lot of it would be driven by the underlying interest rates and how SONIA moves. Clearly, we'll continue to pay down our net debt in the short term and pay down some of our facility as well. So we won't have any other rates or fees in the short term. So I'd say this year, provided interest rates don't continue to go up, I feel this year's number is a reasonable reflection of what we might see. From a dividend point of view, clearly, it would be the Board that decided any dividend that we paid out. But in our current policy, absence of the constraints around the banking facility is a 2x cover, which would mean we've distributed up to about 1.3 -- GBP 3 million -- around GBP 13 million instead of the GBP 10 million. So that gives you a sort of direction of [ travel ] that we could get.

Have we covered that?

Yes, we've covered that one about new revenue streams.

Take Dean's question.

Yes, we have the -- distribution contracts, we've already covered off. In the future, greeting cards that can be added?

Good question, Dean, for the question here about whether we are going to consider greeting cards as an additional category, Absolutely, we would. That would be something that we would consider to be complementary to the way that we do business with actually all sorts of different retail types. So yes, we would consider that.

Next one more on M&A from Mark. Will you consider bolt-on acquisitions of relevant businesses if it is probably worth? Say, what happened to [indiscernible] in our results and you comment on the [indiscernible]. We were looking at an acquisition we mentioned at the half year. We wanted to work on that because we couldn't make that one work for us from a value point of view. It was part of our growth initiatives about those 5 areas that we saw Jon talked about earlier. And if the things that we've got that could add to our skills and scale in the area, we might look at them.

Yes. I mean, that's about it. Nothing more to add. Our growth strategy is very much a combination of testing it organically and making sure the economics work and there's a real demand for it. And then with a modest degree of investment, making sure that we can have some scale to those.

Here we go. I always like these questions a lot. The valuation of the streamlined Smiths News seems absurdly low given the free cash flow yield of the business to investors misunderstand the size of the opportunity to diversify the business? Or do you feel it's related to other concerns?

I mean, honestly, Mark, your guess is as good as ours, right? I agree with you. I think the business is well placed. I think the past issues are long behind this business. This business has delivered. Again, these conversations have clear view of the next few years that they articulated to the market. I think he should be better rewarded, but that's for shareholders to decide, not for us, right?

Okay. Let's see.

So there's a question here. What would cause the most heated debate in boardroom discussions? I mean, we don't really have heated debate. We have proper robust debate, but they don't get too heated. What are the areas that are most contentious? It's a really good question. I mean I think we are completely aligned on the strategy that we have for the business, and we're aligned on what the key priorities are for the year. And management has a really strong relationship with the Board. And so yes, I mean I know that's a rather dull answer, but we don't tend to have too many heated debates, we just have rigorous conversations about progress on a variety of topics.

Agreed. So with that, answered the acquisition question. And then the final one. Is your goal to repay debt completely? If so, how long will that take?

That's certainly our goal. I think this business would be well-suited to an RCF-type facility as much as our insurance working capital flow. But we'll go to market at the right time, and if we get the right facility with the right commercials, we should put something in place that enables this business to distribute to shareholders an effective dividend policy going forward.

I think that's all the questions that we can see right now.

Jonathan, Paul, thank you. And I think you've addressed all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Jonathan could I please ask you for a few closing comments?

Yes, sure. Thank you. So I mean, firstly, thank you for taking the time to listen to Paul and I again today. If you're an existing investor, I hope you're pleased with the progress we're making, and that you feel that we answer every question we possibly can, as honestly we can, and we're very transparent. If you're not an existing investor, I hope we've given you food for thought and that you take another look at our stock. We think we're making good progress. This is the fourth year on the trough now we've delivered results either in line with expectations or ahead of expectations, and we feel we have momentum. So thanks once again, and no doubt look forward to updating you at the half year.

Jonathan, Paul, thank you for updating investors today. Can 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 and I'm sure will be greatly valued by the company. On behalf of the management team of Smiths News plc, we'd like to thank you for attending today's presentation. Good afternoon to you all.