Preliminary Results

4 November 2025

Smiths News PLC

("Smiths News" or the "Company")

Final Results for the 52 weeks ended 30 August 2025

Smiths News (LSE: SNWS), the UK's largest news wholesaler and a leading provider of early morning end-to-end supply chain solutions, today announces audited results for the 52 weeks ended 30 August 2025 (the "Period" or "FY2025").

Financial highlights:

Outlook:

Jonathan Bunting, Chief Executive Officer of Smiths News, commented:

"I am delighted Smiths News has delivered such a strong financial and operational performance across the year, reinforcing the ongoing confidence we have in our business. Our strategic priorities remain steadfast as we seek to both leverage and expand our unique UK operating footprint. 

"In addition, our existing capital allocation policy has provided us with the flexibility to both invest in our new business verticals alongside distributing funds to shareholders.

"Finally, I would personally like to thank everyone at Smiths News for their dedication and hard work, which collectively, sits at the heart of our ongoing success."

* Prior to this announcement, the Company determines that consensus market expectation for FY2026 is adjusted operating profit of £36.7m.

For further information, please contact:

About Smiths News

Smiths News is the UK's largest news wholesaler and leading provider of early morning, end-to-end supply chain solutions. Smiths News has been delivering newspapers to retailers across the UK for over 200 years on behalf of the major national and regional publishers. Today, Smiths News delivers to over 22,000 customers across England and Wales on a daily basis.

Smiths News's service capability now extends into a number of new verticals that build on its expertise in warehousing, reverse logistics and early morning final mile services, across its extensive high-density UK delivery network, including a waste recycling collection service, the delivery of additional categories such as books and home entertainment, and extending our services in the final mile.

The speed of turnaround and the density of Smiths News' coverage is critical to one of the world's fastest physical supply chains and we remain focused on continuing to deliver best in class service to the news and magazines market, whilst exploring opportunities for growth based on this strong foundation.

For more information, please visit: www.smithsnews.co.uk

Person responsible for arranging release of this announcement:

Stuart Marriner, General Counsel & Company Secretary

Smiths News plc, Rowan House, Cherry Orchard North, Kembrey Park, Swindon SN2 8UH

Email: [email protected]

Notes

The Company uses certain performance measures for internal reporting purposes and employee incentive arrangements. The terms 'Bank Net Cash/ (Debt)', 'free cash flow', 'Adjusted operating profit', 'Adjusted profit before tax', 'Adjusted earnings per share' and 'Adjusted items' are not defined terms under IFRS and therefore are Alternative Performance Measures (APM) and may not be comparable with similar measures disclosed by other companies.

Cautionary Statement

This document contains certain forward-looking statements with respect to Smiths News plc's financial condition, its results of operations and businesses, strategy, plans, objectives and performance. Words such as 'anticipates', 'expects', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'targets', 'may', 'will', 'continue', 'project' and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of Smiths News plc's future performance and relate to events and depend on circumstances that may occur in the future and are therefore subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the industry; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this document. Unless otherwise required by applicable law, regulation or accounting standard, Smiths News plc undertakes no responsibility to publicly update any of its forward- looking statements whether as a result of new information, future developments or otherwise. Nothing in this document should be construed as a profit forecast or profit estimate. This document may contain earnings enhancement statements which are not intended to be profit forecasts and so should not be interpreted to mean that earnings per share will necessarily be greater than those for the relevant preceding financial period. The financial information referenced in this document does not contain sufficient detail to allow a full understanding of the results of Smiths News plc. For more detailed information, please see Preliminary Financial Results and/or the Annual Report and Accounts, each for the 52-week period ended 30 August 2025 which can each be found on the Investor Zone section of the Smiths News plc website - www.smithsnews.co.uk. However, the contents of Smiths News plc's website are not incorporated into and do not form part of this document.

OPERATING REVIEW

Overview of performance

The Company delivered a strong performance in FY2025, with the news and magazines business performing well, alongside significant demand and proactive trading in the collectables market.

The Company generated adjusted operating profit of £39.1m (FY2024: £39.1m), ahead of market expectations and ahead of FY2024 by £0.9m on a 52-week basis*. Company revenues, reflecting the long-term volume decline in the newspaper and magazines market, were £1,064.0m (FY2024: £1,103.7m / £1,082.9m on a 52-week basis), in line with internal forecasts. Revenues from new verticals increased 16%.

Adjusted profit after tax was £27.0m (FY2024: £24.7m), an increase of £2.3m, with net finance costs £2.6m lower than FY2024. The Company's cost out programme continues to perform in line with expectations, delivering £4.9m of annualised savings in FY2025 (FY2024: £5.6m). The Company ended the year in a Bank net cash position of £3.3m of (FY2024: Bank net debt of £11.0m). Adjusted EPS increased 0.8 pence to 11.1 pence (FY2024: 10.3p).

The Company's free cash flow improved to £36.1m (FY2024: £7.3m / £23.0m 52-week basis*), in part due to the receipt of £6.9m of one-off items, which included the final instalments from the administrators of McColl's, taking the total payments received from the administrators to £5.4m, 98% of the total stated debt balance.

Smiths News continues to implement its ongoing programme of internal investment, increasing investment by £2.0m per annum through to FY2027, to support delivery of the Company's core capabilities.

Over the course of FY2025, the Company has continued to focus on maintaining shareholder returns whilst simultaneously developing additional revenue streams for the business that leverage the Company's existing network and expertise to drive long-term value creation and mitigate the long-established and gradual decline of newspaper and magazine volumes.

Smiths News is an established expert in early morning supply chain management, and the Company's strategy remains to build on these foundations to expand its services across additional verticals including end-to-end services and final mile logistics.

The Company continues to apply the capital allocation policy which was updated following refinancing in May 2024. With higher profit after tax, the proposed total ordinary dividend increased 8% to 5.55p (FY2024: 5.15p) being 2x cover. A special dividend of 3.0p (FY2024: 2.0p) is also proposed, taking total distributions to 8.55p (FY2024: 7.15p).

* The impact of the 53rd week in FY2024 was additional revenue of £20.8m, additional adjusted operating profit of £0.9m and a net cash outflow of £15.7m.

News and magazines business

The news and magazines business delivered a pleasing performance in FY2025 and continues to generate the majority of Smiths News' revenue and profits. Against a backdrop of long-term market decline - which continues to be in line with internal expectations - the Company is working closely with retailers to maximise commercial opportunities across the category, alongside a focus on continual improvement to our customer proposition.

The collectables market, which has a separate demand cycle to newspapers and magazines, delivered an excellent performance in FY2025. Recognising this growth, the Company made a deliberate decision to focus efforts on these margin accretive products during the year in order to capitalise on momentum. Whilst some sales are non-repeatable, the Company believes the strength of the collectables market will continue into FY2026, supported by the 30th anniversary of Pokémon and the 2026 Men's Football World Cup.

New verticals

We continue to develop a number of initiatives as part of the Company's strategic vision to diversify the business and broaden revenue and profit streams through opportunities that complement our established news and magazines operations, and these initiatives continue to evolve.

Our growth verticals continue to build, producing a 16% increase in revenues. Profit was £1.4m (FY2024: £2.0m), reflecting planned investments, including trials, capability and capacity.

Within recycling, we see good demand from our existing newspaper and magazines customers, with volumes having increased by 49% to over 2,500 tonnes in the last 12 months, a key performance metric.

We welcomed Adam Wylie as Managing Director of Recycling at the end of FY2025. Adam brings a wealth of highly applicable industry experience and is already delivering valuable market intelligence to inform new market opportunities, including the use of partnerships and waste brokers.

In FY2025, we undertook a trial seeking to extend our recycling services to new customers along selected existing delivery routes in the Northwest. The trial has now concluded and provided the Company with valuable insights into the market dynamics, alongside the most efficient routes to market. Adam is now leading the development of our strategy, targeting scaled retailers where adoption is supported by both the recently introduced workplace recycling regulations[1], and the expected introduction of future regulation[2]. With an extended footprint, Smiths News is in a strong position moving into FY2026 to leverage its network to deliver its recycling services.

Our second key vertical focuses on the delivery of additional categories to existing customers, such as books and home entertainment. Smiths News already delivers to a number of customers in this vertical, including leading supermarkets and high street retailers. In February 2025, the Company commenced a trial with leading greetings cards brand Hallmark, and the offering is now live across circa 175 stores with over 63,000 cards sold in FY2025.

In the final mile services vertical, where we are specifically focused on delivering new products to new customers and locations, the small-scale trial for the delivery of specialist engineering and manufacturing parts was well received. Further to the trial, the Company was invited to tender for, and has now been awarded, a multi-year contract to undertake "in-night" deliveries.

Internal investment programme

As previously announced, Smiths News commenced a three-year internal investment programme in FY2025, increasing investment by £2.0m per annum through to FY2027. Thereafter, investment is expected to revert to a normalised level of £4.0m per annum.

The programme seeks to optimise warehouse operations and enhance existing capabilities and efficiencies, without disrupting service to the Company's existing customers.

We successfully implemented a new warehouse management system at one of our key regional hubs in the Period and put the foundations in place for a new transport management system, with initial implementation expected in FY2026.

Smiths News has simultaneously invested in its team, ensuring the Company has the skillset and talent to support the news and magazines business and to drive our new verticals. As noted above, at the end of FY2025, we welcomed a new Managing Director of Recycling and have continued to add skills in the wider management team. This investment ensures the business is well-positioned to capitalise on the opportunities available across all four verticals.

Operational efficiencies

Smiths News continues to identify operational efficiencies to optimise our network and services. The Company maintained the year-on-year delivery of cost savings despite the challenge of rising wages, delivering £4.9m in the Period (FY2024: £5.6m), focused on driving efficiencies in the business, streamlining operations, and reducing variable costs associated with volume declines.

Cash position

Cash generation - a core foundation of the Smiths News business model - remained positive in FY2025, with free cash flow at £36.1m (FY2024: £7.3m, £23.0m on a 52-week basis*), including the benefit of £6.9m one-off receipts in the year, being £5.4m from the McColls administrator and a £1.5m tax refund in respect of the return of surplus from the Smiths News pension scheme.

The £5.4m receipts from the administrators of McColl's, comprised £1.6m in H1 2025, a second payment of £1.7m, and a final payment of £2.0m, both received in H2 2025. This took the total payments received from the administrators to 98% of the original debt balance.

Average Bank net cash of £3.3m was achieved in the Period (FY2024: average Bank net debt of £11.7m), and closing Bank net cash improved to £3.3m (FY2024: £11.0m Bank net debt).

People

In January 2025, we welcomed Manju Malhotra as an independent non-executive director, replacing Denise Collis who retired from the Board at the conclusion of the AGM in January 2025. In March 2025, Paul Baker announced his intention to step down from his role as Chief Financial Officer, with Richard Clay joining the business in February 2026 to assume the role. George Cooper, currently Group Financial Controller at the Company, will assume the role of Interim Chief Financial Officer (a non-board appointment) to cover the period between Paul's departure and Richard's arrival.

We wish to take this opportunity to thank both Denise and Paul for their outstanding contribution to Smiths News. We are extremely grateful for the dedication and insights they have provided the business, and we wish them every success going forward.

We would also like to thank all our colleagues at Smiths News for their ongoing commitment to delivering first class customer service in an intense and time critical market. We remain committed to investing in our staff, and in creating a positive and inclusive culture that supports employees and enables our team to thrive.

Dividend

Further to a strong financial and cash generative performance, and in line with our capital allocation policy, the Company proposes to pay a final ordinary dividend of 3.80 pence per share on 5 February 2026 (FY2024: 3.40 pence per share) to shareholders on the register at close of business on 9 January 2026, which will bring the total proposed dividend for the year to 5.55 pence per share. The ex-dividend date will be 8 January 2026.

Additionally, the Company proposes to pay a special dividend of 3.0 pence per share, to be paid alongside the final ordinary dividend on 5 February 2026, to shareholders on the register at close of business on 9 January 2026.

Outlook

We have seen the positive momentum from FY2025 continue into FY2026, with the news and magazines business remaining resilient alongside ongoing strength in our collectables activities. In addition, we continue to refine our strategic focus to better utilise our early morning market expertise.

We remain committed to further extending our operational footprint into new verticals by leveraging our early morning, end-to-end supply chain solutions and utilising our high-density network and unrivalled experience and skillset. The Company has delivered a good start to trading in the current financial year and expects to deliver results in line with current market expectations*.

FINANCIAL REVIEW

Overview

In FY2025 the Company traded ahead of expectation, maintaining adjusted operating profit at £39.1m and increasing adjusted profit after tax to £27.0m despite one week less trading in the reporting period. This has led to an 8% increase in the ordinary dividend, paid at 2x cover in line with the Company's capital allocation policy. The Company continues to demonstrate good cash generation, augmented this year by additional one-off receipts of £6.9m, including £5.4m from the McColls administrator, which support the proposal of a 3.0p (£7.3m) special dividend, compared to 2.0p (£4.8m) in FY2024.

The Company's financial results in FY2025 represented 52 weeks of trading, compared to 53 weeks in FY2024. The additional week benefitted revenue in FY2024 by £20.8m (1.9%) and adjusted operating profit by £0.9m and did not include any significant one-off items.

Revenues of £1,064.0m (FY2024: £1,103.7m), were down 3.6% on the prior year, of which 1.9% related to the 53rd week. The remaining movement excluding the 53rd week of -1.7% was below the historic trend of -3% to -5%. Additional sales of collectables in FY2025 more than offset revenues made in FY2024 from the Men's UEFA Football Championships, while the decline in revenue from newspapers and magazines was within with our long-term guidance of -3% to -5%.

Adjusted operating profit of £39.1m was an increase of £0.9m excluding the impact of the 53rd week with beneficial margin mix and continuing operation cost focus driving improved performance.

Adjusted profit after tax increased by £2.3m to £27.0m with lower debt levels and banking fees reducing net interest cost (£2.6m lower) and a lower effective tax rate owing to the successful resolution of overpayments made in previous tax years. Consequently, Adjusted EPS increased by 0.8p to 11.1p and this has resulted in a total ordinary dividend of 5.55p for the year in line with the Company's capital allocation policy.

Adjusting items after tax were a credit of £1.3m (FY2024 credit of £0.8m) and included a release of the provision for McColls receivables (FY2025: £3.7m; FY2024: £0.6m), as well as legal expenses of £0.7m and technology programme improvement costs of £0.7m.

Free cash flow of £36.1m (FY2025: £7.3m) included a working capital inflow (£4.1m) compared to an outflow in FY2024 (£17.0m), both the result of timing differences in the Company's normal working capital cycle. Excluding these movements, the FY2025 cash flow of £32.0m was higher than FY2024 £24.3m due to lower interest costs and higher income from adjusting items (FY2025: £5.1m inflow, FY2024: £0.4m outflow) which included £5.4m of cash recovered from the McColls administrator and £1.5m tax refund in respect of the return of surplus of the Smiths News pension scheme which occurred in FY2022.

Bank net debt improved by £14.3m from £11.0m (debt) in FY2024 to £3.3m (cash) in FY2025, the first time the Company has reported a net cash position but noting the working capital timing benefit of £4.1m during the year.

A final ordinary dividend of 3.8p per share (£9.2m) is proposed by the Board, which makes a total full year ordinary dividend of 5.55p (£13.5m) an 8% increase compared to 5.15p in FY2024 (£12.5m). A special dividend of 3.0p (£7.3m) compared to 2.0p in FY2024 (£4.8m), is also proposed to be paid alongside the final ordinary dividend in February 2026 reflecting the distribution of one-off items received during the year.

Adjusted results

Group

Revenue

Revenue was £1,064.0m (FY2024: £1,103.7m), down 3.6%, but 1.7% excluding the impact of the 53rd week in FY2024. Lower newspaper and magazines volumes were offset by the benefits of News UK and Midlands News Association contract wins (Q2 FY2024), cover price increases, increased sales of trading card and sticker collectables and increased revenue from new verticals.

Newspaper revenue decreased by 3.1% excluding the impact of the 53rd week and the annualisation of FY2024 contract wins. Magazine revenue was down 4% excluding the 53rd week. Both newspapers and magazine revenue decline rates are within our long-term expectation of -3% to -5%.

Revenue from collectables increased by 17% excluding the 53rd week, with good Premier League and Champions League football collections and the popularity of the current Pokémon series. The success of these ranges more than offset the year-on-year impact of the men's UEFA European Championships which benefitted FY2024.

Operating profit

Adjusted operating profit £39.1m was the same as FY2024 (£39.1m) and included the following items:

Profit after tax

Net finance charges of £3.3m (FY2024: £5.9m) were driven by a lower net debt, lower interest rates and the write-off of unamortised fees in FY2024 relating to the previous financing facility. Taxation of £8.8m (FY2024: £8.5m) was higher than the prior period due to higher profit before tax. Profit after tax of £27.0m (FY2024: £24.7m) was £2.3m higher than last year and has driven an increase in the ordinary dividend, in line with the Company's capital allocation policy.

Statutory Results

Group

Statutory profit after tax of £28.3m was a £2.8m increase on the prior year (FY2024: £25.5m), resulting from the £2.3m increase in Adjusted profit after tax described above and a £0.5m higher benefit from adjusting items (FY2025 £1.3m credit; FY2024: £0.8m credit).

Earnings per share

Adjusted basic earnings per share of 11.1p, was an increase of 0.8p on the prior year driven by the increase in earnings of the business, offset by an increase in the average number of shares as a result of the employee benefit trust holding fewer shares.

Statutory basic earnings per share increased by 1.1p to 11.7p (FY2024: 10.6p) due to the benefit of adjusting items.

Dividends

The Board is proposing a final ordinary dividend of 3.80p per share (FY2024: 3.40p per share). The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 29 January 2026 and has not been included as a liability in these accounts. The Board is also proposing a special dividend of 3.0p per share. These dividend recommendations follow the capital allocation policy which was revised following the Company's refinancing in May 2024.

The proposed dividends will each be paid on 5 February 2026 to shareholders on the register at close of business on 9 January 2026. The ex-dividend date will be 8 January 2026.

Adjusting items

Adjusting items after tax was a net credit of £1.3m, compared to a net credit of £0.8m in the prior year period, both periods including a release of the provision for McColls receivables originally made in FY2022.

Tuffnells costs of £0.8m arose from professional fees incurred in responding to information requests from the Pensions Regulator in respect of its investigation into the Tuffnells defined benefit pension scheme (£0.7m), and an increase in provisions to settle insurance claims (£0.1m). Technology transformation costs of £0.7m related to enhancements made to technology infrastructure, and £0.1m of costs arose from simplifying the Group structure. The Company also recognised a £3.7m impairment reversal of the provision for McColl's receivables following final recoveries from the administrator. In total, the Company received £5.4m from the administrator, being 98% of the £5.5m receivable which was owing at the point of McColls administration. Of the initial provision of £4.4m, £4.3m has therefore been released (£0.6m in FY2024 and £3.7m in FY2025).

In the prior period, the Company also reversed the remaining impairment held on the Rascal joint venture of £0.3m and released insurance provisions made following Tuffnells entering into administration of £0.2m. These credits were partially offset by £0.1m of reorganisation costs in relation to simplifying the Group structure and £0.1m in respect of technology transformation costs.

Further information on these items can be found in Note 3 to the Group Financial Statements. Adjusting items are defined in the Glossary to the Group Financial Statements and present a further measure of the Company's performance. Excluding these items from profit metrics provides readers with helpful additional information on the performance of the business across periods because it is consistent with how the business performance is planned by, and reported to, the Board and the Executive Team. Alternative Performance Measures (APMs) should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

Free cash flow

Free cash flow of £36.1m (FY2024: £7.3m) was £28.8m higher than last year in part due to the impact of the 53rd week in FY2024, which was a net outflow of £15.7m and the benefit of £5.1m of adjusting items in FY2025 which included £5.4m of cash received from the McColls administrator.

There was a working capital inflow of £4.1m in FY2025 and an outflow of £17.0m in FY2024. The FY2025 inflow arose from increased collectables trading in the second half of the year, while the FY2024 outflow related to payments made to publishers in the 53rd week and part of the Company's normal working capital cycle at the end of the calendar month.

Capital expenditure in the period was £4.5m (FY2024: £4.4m), an increase of £0.1m and including £1.2m of spend relating to the Company's three-year investment programme.

Lease payments of £6.5m (FY2024: £5.9m) increased by £0.6m, driven by rent renewals.

Net interest and fees of £3.2m (FY2024: £5.0m) decreased by £1.8m, due to lower net debt.

Cash tax outflow of £8.8m (FY2024: £8.5m) was an increase on the prior period of £0.3m, owing to higher levels of profit.

Other items include non-cash share-based payment expense.

The total cash impact of other Adjusting items was a net inflow of £5.1m (FY2024: outflow of £0.4m).

In the current period, there were two significant inflows; £5.4m was received from the McColls administrators, and a £1.5m tax refund in respect of the return of surplus of the Smiths News pension scheme which occurred in FY2022. Offsetting these items were £0.8m of professional fees in respect of the Pensions Regulator's investigation into the Tuffnells pension scheme, £0.7m relating to technology investments, £0.2m settlement of Tuffnells insurance claims and reorganisation costs of £0.1m.

In the prior period, the outflow of £0.4m resulted from the £0.2m settlement of Tuffnells insurance claims, technology investment of £0.1m, and reorganisation costs of £0.1m.

A reconciliation of free cash flow to the net movement in cash and cash equivalents is given in the Glossary.

Net cash/debt

Bank net cash closed the year at £3.3m compared to Bank net debt of £11.0m at 31 August 2024, an improvement of £14.3m.

Average daily bank net debt moved from £11.7m (net debt) in the prior period to average Bank net cash of £3.3m in the current period, reflecting good ongoing cash generation and benefitting from increased collectables trading within the working capital cycle.

Total dividends paid during the year amounted to £17.4m (FY2024: £10.8m), an increase of £6.6m. The FY2024 final ordinary dividend of £8.3m was paid in February 2025 (FY2024: £6.7m), alongside a special dividend of £4.9m, bringing the total dividend paid in respect of FY2024 to £17.4m. The Company also paid an interim ordinary dividend in July 2025 of £4.2m (FY2024: £4.2m).

Reported net debt is impacted by the timing of the Company's working capital cycle. The intra-month working capital cash flow cycle generates a routine and predictable cash swing within the overall bank facility of £40.0m (FY2024: £40.0m) at the period end. This results in a predictable fluctuation of net debt during the month compared to the closing net debt position.

The Company's Bank net cash: Bank EBITDA ratio improved to -0.1x (FY2024: Debt ratio of +0.3x) which is within our main leverage covenant ratio of +2.5x. We remain within all our other bank covenant tests at period end.

A reconciliation of Bank net debt (which excludes IFRS 16 lease liabilities and unamortised arrangement fees) to the balance sheet and Bank EBITDA (which uses pre-IFRS16 lease accounting) to the profit and loss account is provided in the Glossary.

PRINCIPAL AND EMERGING RISKS

Principal Risks

During FY2025 the Board and Audit Committee each continued to undertake an ongoing assessment of the principal and emerging risks, the Board having considered the performance of the business, its markets, the changing regulatory and macroeconomic landscape, the Company's future strategic direction and ambition as well as the heightened climate-related risk environment. In addition, in evaluating the Company's risk management and internal control processes, the Audit Committee has considered both internal and external audit reports and received confirmation from management that the Company's control frameworks have operated satisfactorily. The sustainable development risks considered throughout our business have been reviewed by the Sustainability Committee. The directors are therefore of the view that they have carried out a robust assessment of the Company's emerging and principal risks, including those that could threaten its business model, future performance, solvency or liquidity.

Emerging Risks

Emerging risks are identified as either a new or previously unforeseen risk that we are now adding to our risk registers or a risk that was already on our radar and which has the potential to become a principal risk. Most risks identified as emerging are already reflected on our functional risk registers with a current risk rating of 'serious likelihood' or above. The Board has noted that in the execution of its growth and diversification strategy, new emerging risks have been identified. These emerging risks are managed through mitigating activities, such that the residual risk exposure is not considered significant. All new initiatives are planned in detail, with contingency and BCP plans in place and ongoing reviews conducted to evaluate the project execution against the original plan and to identify lessons learnt. We will continue to monitor potential risks relating to our growth and diversification strategy in the year ahead.

Key Changes in the Year

In line with our usual procedures, a refresh of the Company's principal and emerging risks was conducted at the half and full year, taking into account changes in our business practices, our industry sector, the development of our three growth verticals and any other market changes across our business and industry sector, together with the increasing relevance of climate-related risks and cyber security incidents across all sectors and industries (in relation to the former, considering both transitional and physical-related risks to both our business and through our supply chain). This broad review was conducted through discussion with a cross-section of the Executive Leadership Team, senior management and the Audit Committee, who were each asked to consider the key risks (both in place and emerging) and the challenges facing the business (by reference to the existing principal risks), our current activities and controls that help address these risks, and future actions that may be taken to further mitigate these risks (where appropriate). The opportunity to review and refresh the Company's principal and emerging risks has resulted in all but one of our identified principal risks remaining stable, with a reduction in the acquisition and retention of labour risk in light of vacancies (internally and amongst the outsourced final mile delivery contractors) having stabilised at a consistently lower level each month and our colleague turnover comparing favourably versus our sector. Following this review, there remains a general alignment around the nature of risks, the risk ownership, the direction of travel, any mitigation actions to reduce the gross risk, and acceptance of remaining net risk. 

In light of the above, we have therefore been able to maintain a stable number of principal risks but with a reduction in the number of emerging risks identified by the Board given that those events previously identified as emerging were, in fact, already broadly under review either as part of another principal or emerging risk.

The table below details each principal business risk, those aspects that would be impacted were the risk to materialise, our assessment of the current status of the risk and how each is mitigated.

The Audit Committee believes that it has been able to respond quickly and efficiently to the ever-evolving risk environment that the business regularly faces head on and have deployed effective risk management processes across the Company. Accordingly, the Audit Committee is satisfied (on behalf of the Board) that it has carried out a robust assessment of the principal and emerging risks that the Company faces (within the scope of the Board's risk appetite) as required by the 2018 edition of the UK Corporate Governance Code.

GROUP FINANCIAL STATEMENTS

Group Income Statement

for the 52-week period ended 30 August 2025

\* This measure is described in Note 1(4) of the accounting policies and the Glossary to the Accounts. Adjusting items are set out in Note 3 to the Group Financial Statements.

Group Statement of Comprehensive Income

for the 52-week period ended 30 August 2025

Group Balance Sheet

as at 30 August 2025

*Comparatives have been restated as detailed in Note 1(26).

The accounts were approved by the Board of Directors and authorised for issue on 3 November 2025 and were signed on its behalf by:

Group Statement of Changes in Equity

for the 52-week period ended 30 August 2025

Group Cash Flow Statement

for the 52-week period ended 30 August 2025

Notes to the Accounts

1. Accounting policies

(1) Basis of consolidation

Smiths News plc ('the Company') is a company incorporated in England, UK under the Companies Act 2006. The Group accounts for the 52-week period ended 30 August 2025 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in joint ventures. Subsidiary undertakings are included in the Group Accounts from the date on which control is obtained. They are deconsolidated from the date on which control ceases. All significant subsidiary accounts are made up to 30 August 2025 and are included in the Group Accounts.

Unless otherwise noted references to 2024 and 2025 relate to a 53-week period ended 31 August 2024 and the 52-week period ended 30 August 2025 as opposed to calendar year.

The Accounts were authorised for issue by the directors on 3 November 2024.

(2) Accounting basis of preparation

The financial information contained within this preliminary announcement for the 52 weeks to 30 August 2025 and the 53 weeks to 31 August 2024 does not comprise statutory financial statements for the purpose of the Companies Act 2006 but is derived from those statements. The statutory accounts for Smiths News PLC for the 53 weeks to 31 August 2024 have been filed with the Registrar of Companies and those for the 52 weeks to 30 August 2025 will be filed following the Company's annual general meeting. The auditor's reports on the accounts for both the 52 weeks to 30 August 2025 and the 53 weeks to 31 August 2024 were unqualified, did not draw attention to any matters by way of emphasis, and did not include a statement under Section 498 (2) or (3) of the Companies Act 2006. The Annual Report and Accounts will be available for shareholders in December 2025.

The Accounts are prepared on the historical cost basis and are presented in Pound Sterling and rounded to £0.1m, except where otherwise indicated.

The Group Accounts have been prepared in accordance with UK-adopted International Accounting Standards (IFRS) in conformity with the requirements of the Companies Act 2006.

Intra-group balances and unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the Group Accounts. Unrealised gains and losses arising from transactions with joint ventures are eliminated to the extent of the Group's interest in these entities.

(3) Going concern

The Group accounts have been prepared on a going concern basis. 

When assessing the going concern of the Group, the directors have reviewed the period-to-date financial actuals, as well as detailed financial forecasts for the period up to 27 February 2027, the Company's interim reporting date for FY2027, the going concern period.

The Group currently has a net asset position of £9.5m as at 30 August 2025. All bank covenant tests were met at the balance sheet date. The key Bank Net (Cash)/Debt: Bank EBITDA ratio of (0.1)x was below the covenant test threshold of 2.5x.

The intra-month working capital cash flow cycle at Smiths News generates a routine and predictable cash swing and therefore a predictable fluctuation in Bank Net Debt during the course of the month compared to the closing Bank Net Debt position. The Group's average daily Bank Net Cash during the period was £3.3m (2024: £11.7m Bank Net Debt). The Company utilises a Revolving Credit Facility (RCF) to manage the cash swing. At the balance sheet date, £36.4m of the RCF was available and the Company had £5.4m of cash on hand giving headroom of £41.8m. Additionally the Group held £2.8m in the EBT for the purpose of purchasing own shares.

3i) Bank facility

 The Group's banking facility comprises an RCF of £40.0m and an uncommitted accordion facility of £10.0m. The RCF is available less committed letters of credit amounting to £1.5m (see Note 15). The agreement is with HSBC and Santander.

The facility's current margin is 2.45% per annum over SONIA and has a final maturity date of 2 May 2028, following the extension exercised on the facility's first anniversary, and with the option of a one-year extension with lender consent on the second anniversary.

3ii) Reverse stress testing

The Directors have prepared their base case forecast which represents their best estimate of cash flows over the going concern period, and in accordance with FRC guidance have prepared a reverse stress test that identifies either insufficient liquidity or breach of the Bank Net Debt: Bank EBITDA ratio that at peak debt would create a scenario which could lead to the facility being exhausted or becoming repayable on demand, respectively.

A point of insufficient liquidity would occur in February 2027 if EBITDA was 56% below the Board approved three-year plan. The directors consider the likelihood of this level of downturn to be remote based on:

· current trading which is in line with expectations;

· period-on-period declines in revenues would have to be significantly greater than historical trends;

· 93% of contracts secured with publishers to 2029; and

· the Company continues to trade with adequate profit to service its debt covenants.

3iii) Mitigating actions

In the event the break environment scenario went from being remote to possible then management would seek to take mitigating actions to maintain liquidity and compliance with the bank facility covenants. The options within the control of management would be to:

· Optimise liquidity by working capital management of the peak-to-trough intra-month movement. Utilising existing vendor management finance arrangements;

· Utilise arrangements with retailers and optimise contractual payment cycles to suppliers which would improve liquidity headroom;

· Not pay planned dividend payments;

· Delay non-essential capex projects;

· Cancel discretionary annual bonus payments;

· Increase the principal facility amount by exercising the £10m accordion option in the RCF Facility; and

· Identify other overhead and depot savings.

 More extreme mitigating actions would also be available if the scenario arose.

The Company has vendor finance arrangements in place where it has the ability to request early payment of invoices at a small discount, the payments are non-recourse and the invoices are considered settled from both sides once payment is received. The Company has not made use of this facility in the current or prior periods, nor since the balance sheet date.

3iv) Assessment

Having considered the above and the funding requirements of the Group and Company, the directors are confident that headroom under the bank facility remains adequate, future covenant tests can be met and there is a reasonable expectation that the business can meet its liabilities as they fall due for a period of greater than 12 months (being an assessment period of 16 months) from the date of approval of the Group Financial Statements. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements and no material uncertainty has been identified.

(4) Alternate 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 (listed in the Glossary), are not considered to be a substitute for, or superior to, IFRS measures but provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported to the Board and Executive Leadership Team.

The APMs do not have standardised meaning prescribed by IFRS and therefore may not be directly comparable to similar measures presented by other companies.

(5) Estimates and judgements

The preparation of these accounts requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Key accounting judgements

The significant judgements made in the accounts are:

Revenue recognition

The Group recognises the wholesale sales price for its sales of newspapers and magazines. The Group is considered to be the principal based on the following indicators of control over its inventory: discretion to establish prices; it holds some of the risk of obsolescence once in control of the inventory on returns; and has the responsibility of fulfilling the performance obligation on delivery of inventory to its customers. If the Group were considered to be the agent, revenue and cost of sales would reduce by £898.2m (2024: £937.3m).

Adjusting items

Adjusting items of income or expense are excluded in arriving at adjusted operating profit to present a further measure of the Group's performance. Each adjusting item is considered to be significant in nature and/or quantum, non-recurring in nature and/or considered to be unrelated to the Group's ordinary activities or consistent with items treated as adjusting in prior periods. Excluding these items from profit metrics provides readers with helpful additional information on the performance of the business across periods because it is consistent with how the business performance is planned by, and reported to, the Board and the Executive Leadership Team.

The classification of adjusting items requires significant management judgement in considering the nature and intentions of a transaction. Adjusted measures are defined with other APMs in the Glossary.

Based on the nature of the transactions, adjusting items after tax was a credit of £1.3m (2024: credit of £0.8m) and a breakdown is included within Note 3.

Contingent liabilities

During the period the Group has responded to information requests from the Pensions Regulator in respect of its investigation relating to the Tuffnells defined benefit pension scheme and the Company's former period of ownership of Tuffnells. Management has, supported by external legal advice, applied judgement in concluding the matter to be disclosed as a contingent liability, with further details included in Note 20.

Key sources of estimation uncertainty

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next period are as follows.

Property provision

The Group holds a provision which estimates the future liabilities to restore leased premises to an agreed standard at the date the lease is terminated. The provision is calculated using assumptions which include the length of time properties will be occupied, the discount rate applied, inflation and the future costs of restoration and the condition of the property at the end of occupation. 

A change in any of these assumptions could materially impact the provision balance. Refer to Note 19 for further details on the sensitivity of the assumptions used to calculate the property provision. The property provision's carrying value at the balance sheet date was £4.6m (2024: £5.2m).

(6) Revenue

Revenue from wholesale distribution

Revenue from wholesale distribution is recognised when products and services have been delivered to and receipted by customers and there is no unfulfilled obligation that could affect the customer's acceptance of the products or services.

Revenue is earned from the wholesale of products, from charges for services, being the sortation, delivery, merchandising and return of products, and from the sale of recyclable returns waste. Products sold and handled are principally newspapers, magazines and collectables, but also include other items such as books and greeting cards. Certain products are sold to retailers on a sale or return basis and estimation is made of the expected returns as outlined further below.

Other revenue

Other revenue includes income from services to collect recyclate waste from customers, the short-term use of storage and space in depots and management fees for support provided to third parties.

Returns reserve

Sale of wholesale products are typically made on a sale or return basis, the Group estimates a value of expected returns from retailers. Likewise, as the publishers are required to provide the Group with credit for any purchase returns, so a purchase returns reserve is also required. The key estimates used in calculating the period end reserve are rates of returns (based on historical tends), average shelf life of the product types and average margin of each product type. These estimates are similarly applied to calculate the credit for purchase returns.

Revenue for goods supplied with a right of return is stated net of the value of any returns. Newspapers and magazines are often sold with retrospective volume discounts based on aggregate net sales. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discount and returns, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A returns reserve accrual and discount accrual (included in trade and other payables) is recognised for expected volume discounts and refunds payable to customers in relation to sales made until the end of the reporting period. A right to the returned goods (included in other debtors) is recognised for the products expected to be returned.

No element of financing is deemed present because the sales are made with short credit terms, which is consistent with market practice.

A receivable is recognised when the goods are delivered, since this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(7) Cost of sales and gross profit

The Group considers cost of sales to equate to cost of inventories recognised as an expense and distribution costs as these are considered to represent for the Group direct costs of making a sale.

Gross profit is equal revenue less cost of sales.

(8) Taxation

Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent it relates to items recognised in other comprehensive income or directly in equity. Current tax is the expected tax payable based on the taxable profit for the period, using tax rates enacted, or substantively enacted, at the balance sheet date and any adjustment to tax payable in respect of previous periods.

Deferred tax is provided on the balance sheet using the liability method with temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes recorded as a deferred tax asset of liability.

The amount of deferred tax provided is calculated using tax rates enacted or substantively enacted at the balance sheet date that are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which these temporary differences can be realised.

(9) Segmental reporting

The Board is responsible for allocating resources and assessing the performance of the business and is therefore identified as the chief operating decision maker.

The Group has determined that it has one reportable segment identified as Smiths News, a UK market-leading distributor of newspapers, magazines and ancillary products and services to retailers across the UK. The performance of Smiths News is reviewed, on a monthly basis, by the Board, making decisions based on the Group as whole.

Included in revenues arising from Smiths News are revenues of £100.3m (2024: £100.5m) which arose from sales to the Group's largest customer. Three other customers contributed 13.1% (2024: 13.9%) of the Group's revenue in the period.

No segmental analysis is required on geographical lines as substantially all of the Group's activities are in the United Kingdom. As a result, no segmental disclosure is provided.

(10) Dividends

Interim and final dividends are recognised in the financial statements in the period in which they are declared.

(11) Capitalisation of internally generated development costs

Expenditure on developed software is capitalised when the Group is able to demonstrate all of the following:

· the technical feasibility of the resulting asset;

· the ability (and intention) to complete the development and use it;

· how the asset will generate probable future economic benefits;

· adequate technical, financial and other resources to complete the development and to use the software are available; and

· the ability to measure reliably the expenditure attributable to the asset during its development.

Software costs are also capitalised if they can be hosted on another server, are portable and the Group has sole rights to the software. Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Software costs provided on a licence agreement (software-as-a-service) are expensed as incurred.

(12) Interests in joint ventures

The Group Financial Statements include the Group's share of the total recognised gains and losses in its joint ventures on an equity accounted basis.

Investments in equity accounted joint ventures are carried in the balance sheet at cost adjusted by post-acquisition changes in the Group's share of the net assets of the joint ventures, less any impairment losses. The carrying values of investments in joint ventures include acquired goodwill. Losses in joint ventures that are in excess of the Group's interest are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

(13) Business combinations - goodwill and intangibles

The Group uses the acquisition method of accounting to account for business combinations. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued, liabilities incurred or assumed at the date of exchange. Acquisition-related costs are recognised in profit or loss as incurred. Any deferred or contingent purchase consideration is recognised at fair value over the period of entitlement.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured, initially, at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.

Goodwill arising on all acquisitions is initially recognised as an asset at cost and is subsequently measured at cost and accumulated impairment losses.

The carrying value of goodwill is reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets arising under a business combination (acquired intangibles) are capitalised at fair value as determined at the date of exchange and are stated at fair value less accumulated amortisation and impairment losses. Amortisation of acquired intangibles is charged to the income statement on a straight-line basis over the estimated useful lives as follows:

Customer relationships - 2.5 to 7.5 years

Trade name - 5 to 10 years

Software and development costs - 3 to 7 years

Computer software and internally generated development costs which are not integral to the related hardware are capitalised separately as an intangible asset and stated at cost less accumulated amortisation and impairment losses.

All intangible assets are reviewed for impairment when there are indications that the carrying value may be higher than its recoverable value. The recoverable value used is the value in use. The value in use is determined by estimating the future cash inflows and outflows to be derived from continuous use of the asset and applying the appropriate discount rate to those future cash flows. Where the carrying value is higher than the calculated value in use, an impairment loss will be recognised.

(14) Property, plant and equipment

Property, plant and equipment assets are stated at cost less accumulated depreciation and any recognised impairment losses. No depreciation has been charged on freehold land. Other assets are depreciated, to a residual value, on a straight-line basis over their estimated useful lives, as follows:

Freehold and long-term leasehold properties - over 20 years

Short-term leasehold properties - shorter of the lease period and the estimated remaining economic life

Fixtures and fittings - 3 to 15 years

Equipment and vehicles - 2 to 12 years

All property, plant and equipment is reviewed for impairment when there are indications that the carrying value may not be recoverable.

(15) Leasing

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

· fixed payments (including in-substance fixed payments) less any lease incentives receivable;

· variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

· amounts expected to be payable by the Group under residual value guarantees;

· the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

· payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group:

· where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third-party financing was received;

· makes adjustments specific to the lease where applicable, for example with regards to the term and security.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

· the amount of the initial measurement of lease liability;

· any lease payments made at or before the commencement date less any lease incentives received; and

· any initial direct costs.

Right-of-use assets are depreciated over the lease term on a straight-line basis unless the lease transfers ownership of the underlying asset to the lessee, to which depreciation is over the useful life of the underlying asset. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

Modifications

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

(16) Inventories

Inventories comprise goods held for resale and are stated at the lower of cost or net realisable value. Inventories are recorded at purchase cost.

(17) Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. The Group derecognises financial assets and liabilities only when the contractual rights and obligations are transferred, discharged or expire.

Financial assets comprise trade and other receivables and cash and cash equivalents. Financial liabilities comprise trade payables, financing liabilities and bank borrowings.

(18) Financial assets

The Group classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through profit or loss (FVTPL) or through other comprehensive income (FVOCI); and

· those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

Trade receivables

Trade receivables are initially measured at fair value, which for trade receivables is equal to the consideration expected to be received from the satisfaction of performance obligations, plus any directly attributable transaction costs. Subsequent to initial recognition these assets are measured at amortised cost less any provision for impairment losses including expected credit losses. The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics such as the ageing of the debt and the credit risk of the customers. An historical credit loss rate is then calculated for each group and then adjusted to reflect expectations about future credit losses. The Group does not have any contract assets.

Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. The Group holds trade receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method. Details about the Group's impairment policies and the calculation of the loss allowance are provided in Note 13.

Due to the short-term nature of current receivables, their carrying amount is considered to be the same as their fair value.

Other receivables

Other receivables are recognised on trade date, being the date on which the Group has the right to the asset. Other receivables are derecognised when the rights to receive cash flows from the other receivables have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

At initial recognition, the Group measures other receivables at their fair value plus, in the case of a financial asset not held at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of FVTPL financial assets are expensed in profit or loss.

Subsequent measurement of other receivables depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its other receivables at amortised cost.

Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised within other gains/(losses). Impairment losses are presented separately in Note 2.

The Group classifies its financial assets at amortised cost when it is held within a business model whose objective is to collect the contractual cash flows, and the contractual terms give rise to cash flows that are solely payments of principal and interest.

The Group applies the general approach to impairment under IFRS 9 based on significant increases in credit risk rather than the simplified approach for trade receivables using lifetime ECL.

(19) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the period which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(20) Treasury

Cash and cash equivalents

Cash and cash equivalents in the balance sheet and cash flow statement comprise cash at bank and in hand, short-term deposits and funds with an original maturity of three months or less, held with the intention to meet short-term cash commitments, and it is subject to an insignificant risk of changes in value. BACS and next-day payments are recognised at the settlement date, rather than when they are initiated, to reflect the nature of these transactions.

Cash and cash equivalents includes amounts held by the EBT for the purpose of purchasing own shares.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued are recorded at the proceeds received, net of direct issue costs.

Bank borrowings

Interest-bearing bank loans and overdrafts are initially measured at fair value (being proceeds received, net of direct issue costs), and are subsequently measured at amortised cost, using the effective interest rate method. Finance charges, including premiums payable on settlement or redemptions and direct issue costs, are accounted for on an accruals basis and taken to the income statement using the straight-line method and are added to the carrying value of the instrument to the extent that they are not settled in the period in which they arise.

Modification/derecognition of financial liabilities

Financial liabilities are derecognised when there is extinguishment of the original financial liability and recognition of a new financial liability. Equally, significant modification of the terms of the existing financial liability is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability.

Foreign currencies

Financial statements of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition of a foreign entity, are treated as assets and liabilities of the foreign entity and are translated at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.

Foreign currency transactions

Transactions in foreign currencies are recorded using the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates ruling at the dates the fair value was determined.

(21) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the present value of the directors' best estimate of the expenditure required to settle the present obligation at the balance sheet date and if this amount is capable of being reliably estimated. If such an obligation is not capable of being reliably estimated, no provision is recognised and the item is disclosed as a contingent liability where material. Where the effect is material, the provision is determined by discounting the expected future cash flows.

(22) Retirement benefit costs

Defined contribution schemes

The Group operates two defined contribution schemes for the benefit of its employees. Payments to the Group's schemes are recognised as an expense in the income statement as incurred.

(23) Employee Benefit Trust

The Smiths News Employee Benefit Trust (EBT) purchases and holds shares in the Company from the market to satisfy the demand from the Group's share schemes. The EBT is a separately administered trust that is funded by contributions from Group companies. The assets of the trust comprise shares held in Smiths News plc and cash balances.

The Group consolidates the assets and liabilities of the EBT into the Group Financial Statements as a subsidiary on the basis of control. Where the EBT holds any shares in the Company, these are deducted from equity as 'own shares reserve' until those shares are either cancelled or transferred out of the EBT.

The shares held by the EBT are valued at the historical cost of the shares acquired. This value is deducted in arriving at shareholders' funds and presented as the own share reserve.

(24) Share schemes

Share-based payments

The Group operates several share-based payment schemes, being the Sharesave Scheme, the Executive Share Option Scheme, the LTIP and the Deferred Bonus Plan. Details of these are provided in the Directors' Remuneration report and in Note 24.

Equity-settled share-based schemes are measured at fair value at the date of grant. The fair value is expensed with a corresponding increase in equity on a straight-line basis over the period during which employees become unconditionally entitled to the options. The fair values are calculated using an appropriate option pricing model and are adjusted where a scheme includes market-based performance criteria. The income statement charge is then adjusted to reflect expected and actual levels of vesting based on non-market performance-related criteria.

Administrative expenses and distribution and marketing expenses include the cost of the share-based payment schemes.

(25) Changes in accounting policies

During the period the Group has adopted the following accounting standards and interpretations:

· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases);

· Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 Presentation of Financial Statements);

· Non-current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements); and

· Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures).

The standards and amendments adopted had no impact on the financial statements to prior periods and are not expected to significantly affect the current or future periods.

 New standards and interpretations not yet applied

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.

IFRS 18 - Presentation and Disclosure of Financial Statements was issued in April 2024 and replaces IAS 1 - Presentation of Financial Statements. The standard sets out new requirements for presentation in the income statement, including specified totals and subtotals, additional guidance on aggregation and disaggregation, and additional required disclosures in respect of management performance measures (which replace alternative performance measures).

The impact of this standard on the Group is currently being assessed. The standard is effective from 1 January 2027 with early adoption permitted.

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.

(26) Restatement of comparative information

The prior period balance sheet has been restated to reclassify £4.1m of returned newspapers from inventories to trade and other receivables to correctly reflect the nature of the balance. This has no impact on the net assets, cash flow statement, or income statement. The same reclassification of £4.1m was also required in the 2023 period end balance sheet.

2. Operating profit

Revenue and cost of sales are analysed as follows:

Operating profit is stated after charging/(crediting):

Included in administrative expenses are amounts payable by the Company and its subsidiary undertakings in respect of audit and non-audit services which are as follows:

Details of the Company's policy on the use of auditors for non-audit services and how the auditor's independence and objectivity were safeguarded are set out in the Audit Committee Report in the Annual Report 2025.

3. Adjusting items

The Group recognised a net total adjusting items credit before tax of £2.1m (2024: £0.9m) and net credit of £1.3m (2024: £0.8m) after tax respectively.

Adjusting items are defined in the accounting policies in Note 1 and in the Glossary. In the directors' opinion, removing these items from the adjusted profit provides a relevant analysis of the trading results of the Group because it is consistent with how the business performance is planned by, and reported to, the Board and Executive Team. However, these additional measures are not intended to be a substitute for, or superior to, IFRS measures. They comprise:

Administrative expenses: £1.6m costs (2024: net £nil)

(a) Tuffnells costs: £0.8m (2024: £0.2m credit)

As part of the sale of Tuffnells Parcels Express Limited (Tuffnells) in May 2020, a contractual agreement was put in place in respect of the future treatment and responsibility of certain insurance claims brought or notified to insurers. This agreement extinguished the Group's exposure to new accident and insurance claims brought after the sale of Tuffnells but which related to the Group's period of ownership of Tuffnells up to May 2020.

During the period, a review of provisions was held in respect of all remaining claims held following utilisations in the period and as a result, the provision was increased by £0.1m (2024: reduced by £0.2m), reflecting management's best estimate of remaining claims brought at the period end.

In the period professional fees of £0.7m were incurred in respect of the Group responding to information requests from the Pensions Regulator in respect of its investigation relating to the Tuffnells defined benefit pension scheme and the Company's former period of ownership of Tuffnells. Further details are included in Note 20.

These provisions have been reported as adjusting items on the basis that it relates to a former discontinued operation and is therefore outside the normal course of activity. The cash impact during the period was an outflow of £1.0m (2024: £0.1m) being £0.8m of professional fees and £0.2m (2024: £0.1m) of insurance settlements.

(b) Technology transformation costs: £0.7m (2024: £0.1m)

In the prior period a transformation programme to enhance its technology infrastructure and enable alignment to the Group's updated vision and strategy commenced.

Implementation costs of £0.7m (2024: £0.1m) have been recognised as adjusting items on the basis that the three-year programme is driving a significant change to the Company and largely comprise software-as-a-service arrangements. The cash impact was an outflow of £0.7m (2024: £0.1m).

(c) Network and reorganisation costs: £0.1m (2024: £0.1m)

During the period, an additional £0.1m (2024: £0.1m) of costs were provided for with regards to simplifying the DMD group structure. It is expected that this work will be concluded in the next 12 months.

The cash impact of network and reorganisation was a £0.1m outflow (2024: £0.2m outflow).

(d) Impairment provision on trade receivables: £3.7m credit (2024: £0.6m)

In respect of the administration of McColl's Retail Group during FY2022, at FY2024 a provision of £3.8m was held, in respect of management's best estimate of recovery of 30% of the total claim filed representing a total of £1.7m, as per the issued notification from the administrators.

During the period, £5.4m was recovered from the administrators in final settlement of the claim, which was £3.7m higher than expected, and therefore released and reported as an adjusting item on the same basis as previous impairment losses and reversals recognised during the prior periods. Further details are included in Note 13.

(e) Impairment reversal of investment in joint ventures: £nil (2024: £0.3m reversal)

During the prior period, the Company reviewed the business plan for the Rascal joint venture. As a result of this review, the remaining cumulative impairment of £0.3m was reversed, which has been presented within adjusting items to align to the previous impairment charge, which was significant in both quantum and nature to the results of the Group.

Taxation on adjusting items increased by £0.7m to £0.8m (2024: £0.1m), driven by the release of McColls provision noted above.

4. Staff costs and employees

The aggregate remuneration of employees (including Executive Directors) was:

The total average number of employees (including Executive Directors) was:

*During the period, the average number of employees reported has been updated to better align to the requirements of the Companies Act. Comparatives have been restated as a result.

Defined contribution pension schemes

The Group operates two defined contribution pension schemes. For the 52 weeks ended 30 August 2025, contributions from the respective employing company totalled £1.2m (2024: £1.1m) which is included in the income statement.

A defined contribution plan is a pension plan under which the Group pays contributions to an independently administered fund - such contributions are based on a fixed percentage of employees' pay. The Group has no legal or constructive obligations to pay further contributions to the fund once the contributions have been paid. Members' benefits are determined by the amount of contributions paid by the Company and the member, together with investment returns earned on the contributions arising from the performance of each individual's chosen investments and the type of pension the member chooses to buy at retirement. As a result, actuarial risk (that benefits will be lower than expected) and investment risk (that assets invested in will not perform in line with expectations) fall on the employee.

5. Finance costs and finance income

*During the prior period £0.8m of unamortised arrangement fees were immediately recognised on derecognition of the previous loan facility.

Finance income comprises interest received on bank deposits.

6. Income tax expense

The effective adjusted income tax rate in the period was 24.6% (2024: 25.6%). After the impact of tax recognised on adjusting items of £0.8m (2024: £0.1m), the effective statutory income tax rate was 25.3% (2024: 25.2%).

Corporation tax is calculated at the main rate of UK corporation tax of 25% (2024: 25%). The Group has assessed its deferred tax positions using a rate of 25%. Taxation for other jurisdictions was applied using prevailing rates.

The tax charge for the period can be reconciled to the profit in the income statement as follows:

Amounts recognised directly in equity

A current tax credit of £0.5m (2024: £0.1m) and deferred tax charge of £0.1m (2024: charge of £0.1m) was recognised directly in equity during the period.

Impact of future tax changes

The UK Government enacted legislation on 11 July 2023 to implement the Base Erosion and Profit Shifting (BEPS) Pillar Two model rules, including a Qualified Domestic Minimum Top-Up Tax. This legislation ensures that multinational enterprises (MNEs) pay a minimum tax rate of 15% on UK and overseas profits arising after 31 December 2023.

The period ended 30 August 2025 is the first to which these rules apply for the Group, which falls within scope of the legislation due to its UK and international presence and revenue exceeding €750 million. However, as the Group's business is substantially UK-based, and with its international revenues and profits at a de minimis level, there has been no impact on the Group's financial statements for the period.

7. Dividends

Amounts paid and proposed as distributions to equity shareholders in each period is set out below:

After the balance sheet date, a final ordinary dividend of 3.80p per share is proposed for the 52 weeks ended 30 August 2025 (53 weeks ended 31 August 2024: 3.40p), alongside a special dividend of 3.00p per share (2024: 2.00p), each of which is expected to be paid on 5 February 2026 to all shareholders who are on the register of members at close of business on 9 January 2026. The ex-dividend date will be 8 January 2026.

8. Earnings per share

Dilutive shares increase the basic number of shares at 30 August 2025 by 7.8m to 250.2m (31 August 2024: by 10.8m to 251.1m). The calculation of diluted EPS reflects the potential dilutive effect of employee incentive schemes.

9. Intangible assets

10. Property, plant and equipment