Smiths News - Better FY22 than expected; 10% dividend yield

Smiths News’ FY22 results were strong, with revenue and profit ahead of market expectations. Continuing adjusted PBT increased by 0.6% to £31.1m as financing costs reduced and net debt fell to £14.2m. Management was successful in mitigating inflation and controlling costs within budget. FY23 has started well, with uplifts in one-shot revenues and ancillary income. However, we have upgraded our forecasts, and an increase in the discount rate has driven a decrease in our DCF valuation from 94p to 89p. Smiths News trades on an FY23e P/E of 3.8x with a 10% yield, which we believe is attractive for a company with such cash-generative characteristics.