News distributor and airport ground handling group John Menzies was in confident mood yesterday after posting a 12 per cent rise in underlying first half profit - a touch above market expectations.

"The board believes that further progress will be achieved in the second half of the year," said chief executive Patrick Macdonald. "Trading for the year remains consistent with expectations."

For the six months to June 25 the Edinburgh- based group, which trades from two divisions - Menzies Aviation and Menzies Distribution - notched up pre-tax profits before tax, exceptionals and goodwill of £16.8 million, compared to consensus analyst expectations of £16.1 million and £15 million last time. Revenues were flat at £668.6 million.

Revenue and operating profit at Menzies Distribution both fell one per cent to £ 542 . 6 million and £14.7 million respectively.

The performance reflected weakness in some product categories offset by close control of costs.

Paul Dollman, group finance director, does not expect the Office of Fair Trading's final ruling on magazine distribution, due this month or next, to bring about significant changes in the industry.

Three large wholesalers, John Menzies, WH Smith and Dawson News, currently dominate the distribution of magazines and newspapers in the UK.

They have long-standing exclusive rights to allocated territories. In return for this exclusivity they guarantee comprehensive delivery to all the nation's retailers.

The OFT has been reviewing the system following European competition legislation.

The competition regulator issued its draft opinion in May, proposing that while the current system can remain for newspapers, it should change for magazines.

However, Mr Dollman believes the OFT has got bogged down in "theoretical" concepts.

"Essentially the current system works well and if you were to design it from scratch you'd probably make it look pretty well like it is right now," he said.

He explained that the practicalities of the industry in reality make major changes unlikely.

The magazines currently go through the same system as the newspapers at the depots and are carried on the same vans.

"It's very difficult for our staff to unbundle the magazines because it's all part of one big process," added Mr Dollman.

"If you ended up with more than one wholesaler in any one patch by definition you are putting more costs into the system, having two vans going down the same high street to the same shop - one with newspapers and one with magazines - is not a good economic thing to do."

An interim dividend of 5.8 pence, up 5.5 per cent, was proposed, while underlying earnings per share rose 16 per cent to 21.6 pence.