Dawson bags Smithfield as ruling nears

Dawson Holdings has called in Smithfield as its new chairman settles into his role and the company braces itself for a regulatory ruling on newspaper and magazine distribution.

Smithfield's appointment brings to an end a four-year relationship with City Profile Group and follows the hire of independent non-executive director Nigel Freer to replace chairman Peter Brown earlier this year.

Smithfield director Reg Hoare and associate director Katie Hunt lead the Dawson account.

Dawson is the UK's third-largest distributor of newspapers and magazines, behind John Menzies and WH Smith.

A draft Office of Fair Trading (OFT) opinion in June arguing that exclusive distribution deals for magazines should be opened up to competition has worried Dawson investors in recent months.

Wholesalers such as WH Smith and Dawson have exclusive distribution territories in the UK. But the OFT has said that while exclusive distribution deals for newspapers were justified, similar systems for magazines should be opened up.

In May, Dawson closed travel brochure operation Dawson Marketing Services with the loss of 100 jobs. The division had been posting losses of more than £500,000 a year. A fall in volumes had resulted in a decline of turnover.

Storage and distribution of bulk travel brochures are to cease next month, with the closure resulting in a £2m exceptional charge to be booked in this financial year.

In its May interim results Dawson Holdings made steady progress in the 27 weeks to 2 April. Turnover rose 4.5 per cent to £363m, while pre-tax profits were up 9.5 per cent to £8.1m.

The company said that while growth continued at newspaper division Dawson News, which accounts for more than 85 per cent of group turnover and profits, sales since the end of March were one per cent down on the previous year.

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