Reed returns more cash

Underlying revenues were broadly flat in the six-month period, primarily due to an 18 per cent sales decline within the business information division, although management identified "continuing print revenue declines" as the underlying cause. On the upside, profitability is improving and adjusted operating margins rose by 150 basis points to 28.8 per cent, while the dividend hike was made possible by a 7 per cent rise in adjusted net profits to £592m.

Net debt has increased by £212m to £3.3bn since the December year-end, although Reed managed to reduce net finance costs by 14 per cent through refinancing at lower rates. However, the group's cash-conversion rate of profits into cash flow fell to 85 per cent during the period (from 94 per cent in 2012), resulting in a 5 per cent fall in operating cash flow to £739m; Reed is confident of returning to its long-term average of 90 per cent during the second half. Around £280m in disposals were completed, including the sale of French media unit RBI France to investment funds belonging to the Rothschilds and BNP Paribas.

JPMorgan Cazenove expects full-year adjusted EPS of 52.9p (from 50.1p in 2012).