CNCT.L Regulatory News (CNCT)

16 Jan 2009 07:00



Smiths News PLC

AGM and Interim Management Statement

Smiths News PLC ("the Group"), the UK's leading wholesaler of newspapers and magazines, will hold its AGM today, where the following comments will be made. This statement includes the 19-week period ("the period") from 1 September 2008 to 10 January 2009 and constitutes the Group's Interim Management Statement as required by the UK Listing Authority's Disclosure and Transparency Rules.

At the AGM, to be held at 11am today, Mark Cashmore, Group Chief Executive will make the following remarks:

"Despite the difficult UK economic conditions, I am pleased to report that trading remains in line with the Board's expectations.

Total revenues for the period were 0.3% below last year and slightly ahead of expectations due largely to the implementation of some of the News International contract gains earlier than expected. Newspaper sales have increased year on year, benefiting from a number of recent price rises and from contract gains achieved across the past year.  The magazine market continues to prove more challenging with sales down on last year, although sales of sticker collections have been particularly strong.

As expected, the change in sales mix between newspapers and magazines has had a dilutive impact on the Group's overall gross margin. However, the Group continues to make good progress in driving business efficiencies with costs for the period below last year, despite additional costs incurred in servicing recent contract gains.

The restructuring of the Group's network is progressing well. As part of the South Wales plan, a major new depot opened in Newport on 15 December 2008.  This enables the consolidation of operations in Cardiff, Newport and Bridgend into one depot, yielding both costs savings and service improvements.

The planning work to take on the £85m of additional News International business from July 2009 is now well underway. Two News International territories, in Hemel Hempstead and Bristol, transferred to the Group in the autumn, earlier than originally planned, and will add £15m to sales in the current financial year.

In October, the Office of Fair Trading (OFT) announced its findings in relation to the newspaper and magazine industry.  The findings were in line with the Group's expectations. Of particular importance was the OFT's recommendation not to refer the industry to the Competition Commission. The findings are subject to a period of consultation and the Group will play a full part in these discussions.  The Group remains well placed to respond to the opportunities and challenges that may arise.

There has been no significant change in the financial position of the Group since 1 September 2008. The business continues to generate positive cash flow and operates well within its bank facilities which expire in June 2011.

The strong fundamentals of the business and our continued focus and track record of service, efficiency and strong cost management will stand us in good stead in these challenging markets."

The Group will announce its interim results for the six months ending 28 February 2009, on 23 April 2009.

Enquiries:

About Smiths News:

Smiths News is the UK's leading wholesaler of newspapers and magazines. The Group was formed on 1 September 2006 following the demerger of WH Smith PLC.

Smiths News distributes newspapers and magazines on behalf of all the major national publishers as well as a large number of regional publishers. The business serves approximately 23,000 customers across England and Wales, supplying large general retailers as well as smaller independent newsagents.

In addition to its distribution activities, Smiths News collects and processes returns, supplies sales information to publishers and provides a range of services for its retail customers.

Smiths News has an approximate 40 per cent share of the magazine wholesaling sector and an approximate 35 per cent share of the newspaper wholesaling sector in the UK.

Smiths News has 46 distribution centres across England and Wales, employing 4,000 staff.