When we picked Smiths News as our Income Tip of the Year one of the things we liked was the group's assured revenues thanks to its long-term contracts. That visibility has just got even better after the newspaper and magazine distributor agreed a five-year extension to its contract with News International, securing the distribution for The Times, The Sunday Times and The Sun until July 2019.
There are several encouraging points. First, the contract was renewed early as it wasn't due until 2014 and Smiths News picked up £40m of additional distribution business that News International used to do in house. That takes the total contract value to £200m a year, around 11 per cent of total group revenue. But Mark Cashmore, the chief executive, says the adds-ons won't boost earnings in 2013 because of their start-up costs.
Smiths News also says that results for the year to end August would be a the top end of the City's expectations as the recent Consortium acquisition was trading ahead of forecast and the books business reported like-for-like revenues whipped up 4.3 per cent by strapping demand for mummy porn title 50 Shades of Grey.
