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26 April 2007

Interim Results 2007

Unaudited Interim Results Announcement for the six months ended 28 February 2007 
 
Smiths News PLC (Smiths News) is the UK's leading newspaper and magazine
wholesaler serving 22,000 retailers across England and Wales 
 
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS (Unaudited) 
 
  - Revenue of £615.0m, up 4.8% (2006: £586.7m)
 
  - Underlying(1) operating profit of £17.6m, up 13.5% (2006: £15.5m)
 
  - Profit before tax of £15.2m, up 14.3%(2) (2006: proforma(2) - £13.3m,
    statutory - £16.3m)
 
  - Free cash flow of £9.7m(3)
 
  - Earnings per share of 8.1p, up 12.5% (2006: 7.2p)
 
  - Adjusted earnings per share of 6.9p(4), up 16.9%(2) (2006: proforma(2) -
    5.9p)
 
  - Interim dividend of 2.1p (2006: 2.0p) (5) 

Commenting on the results, Mark Cashmore, Chief Executive said: 
 
"I am pleased to report the business has made good progress in this, the first
half year in which we report as an independent company following the demerger.
These solid results demonstrate the inherent strengths of the business and our
strategy. Despite the challenging trading conditions, we have produced growth in
underlying profitability and cash generation. 
 
"We continue to manage the business on the basis of limited like for like(6)
revenue growth this year. As expected newspaper cover price inflation continues
to offset circulation declines, however, the magazine market remains
challenging. The rate of revenue growth in the second half of the year will be
lower as we reach the annualisation of the contract gains in 2006. 
 
"Our focus on service has increased customer satisfaction. Our ongoing
efficiency programme and tight control of costs is helping to deliver consistent
performance. Futhermore, we remain well placed to secure new business where
opportunities arise. We expect current trading conditions to continue for the
remainder of the year and the financial performance of the company to be in line
with expectations." 
 
(1) Operating profit before property profits (2007: Nil, 2006: £1.6m)
 
(2) Proforma 2006 results assume the £70m of debt funding introduced at the time
    of the demerger, and the one off pension payment of £25m, had been made at 
    the beginning of the 2006 period, giving rise to a finance cost of £1.4m.  
    Proforma 2006 results also exclude property profits of £1.6m
 
(3) Excludes the one off pension funding payment of £25m and dividend payment
 
(4) Includes a tax adjustment to reflect the anticipated full year tax rate of
    20%
 
(5) 2006 dividend is the Smiths News apportionment of Old WH Smith dividend
 
(6) Like for like revenue growth excludes publisher contract gains
 
These definitions are applied consistently throughout this Interim Results
Announcement