6th Feb 2008 07:00
6th February, 2008 Daily Mail and General Trust plc (`DMGT') Interim Management Statement Introduction
This is DMGT's first Interim Management Statement, made in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the first quarter of DMGT's financial year to 31st December 2007 and describes the Group's financial position and performance during the period, updated to the latest practicable date.
Summary of the period:
* Revenue for the first quarter up 2% on last year. * Results* ahead of our expectations. They are marginally below last year due to timing differences, acquisitions and start-up costs. * New Didcot printing plant successfully brought on stream in October 2007 and, from 1st January, Mail titles being printed in full colour. * Continued strong growth from DMG Information and good progress for Euromoney Institutional Investor, DMG World Media and DMG Radio Australia. * Acquisitions of balance of George Little Management on 1st October and, since November, of 5% of Euromoney Institutional Investor and 4% of the Company's own `A' Ordinary shares.
The Viscount Rothermere, Chairman, said:
" It is too early to predict the outcome of the full year, but we are pleased with the start the Group has made to the financial year. Most of our businesses continue to perform well, and above our expectations, despite the troubles in the financial and property markets. We believe that our strategy of creating a diversified portfolio of market-leading operations across both business and consumer products leaves us well positioned to deliver long-term growth."
Associated Newspapers
Associated Newspapers' total revenues for the thirteen weeks to 30th December 2007 rose by 2% to ‚£250 million. Circulation revenues for the quarter were in line with the same period last year. On 18th November 2007, The Mail on Sunday increased its cover price by 10 pence. The circulations of both the Daily Mail and The Mail on Sunday for the six-month ABC period to December 2007 were flat year on year and each again increased its market share. The initial response from readers and advertisers to The Mail on Sunday's relaunch in January has been encouraging.
Total advertising revenues in the quarter increased by 4%. These figures include those of Teletext, which remained weak, and of Associated Northcliffe Digital which again grew strongly. Print advertising revenues increased by 4%, with display up by 5% and classified down 9%. The largest display category, retail, continued to enjoy good growth (up 8%) throughout the quarter. These trends have broadly continued into January.
Operating profits* were reduced by the costs of the new Didcot plant coming on stream, a quarter before full colour was available to the Mail titles, and by the timing of publicity expenditure. Newsprint costs were higher in the quarter, but since 1st January 2008, Associated has benefited from lower prices. Associated's overall London publishing operations made modest progress in the quarter.
Northcliffe Media
At Northcliffe Media, underlying total revenues for the thirteen weeks to 30th December 2007 were up 0.6% compared to the same period last year. Including acquisitions and disposals made in the prior year, they were down just 0.3% at ‚£105 million. This performance included a 90% increase in UK digital revenues, largely in the recruitment category.
Comparable UK advertising revenues for the first quarter were 1% lower than the same period last year. Recruitment (up 3%) and retail revenues (up 2%) were ahead of last year, but these were offset by lower motors (down 12%), leisure (down 5%) and property revenues (down 1%). Residential property advertising was 3% lower than last year, but new homes advertising saw revenue growth of 11%. Once again the performance in January 2008 was adversely affected by weak advertising over the New Year period, but the month has seen a softening particularly in property advertising.
Comparable circulation revenues for the first quarter were 2% below last year, excluding titles acquired or closed in the previous financial year. UK publishing costs were 2% higher than last year. Headcount was down 1%, offset by increased investment in digital products and higher newsprint prices in the quarter prior to their reduction on 1st January.
The International division continued to perform well with growth in revenues and profits* in the quarter.
DMG Information
DMGI's revenues for the three months to 31st December 2007 rose by 18% to ‚£74 million. At constant exchange rates and excluding acquisitions, the increase was 16%. Operating profits* were well up, despite the market conditions that now prevail in both the financial and property markets.
The revenues from DMGI's insurance and financial division rose by 19% to ‚£31 million, driven again by the strength of Risk Management Solutions which is still growing strongly and is not affected by the credit crunch. Both Trepp and Lewtan have seen strong demand for their information products from investors.
The revenues from the property division rose by 8% to ‚£23 million. Both EDR and Landmark made costs savings which mitigated the impact on profits* from significantly lower sales of residential reports, with the number of UK housing transactions down by 40% in the quarter. Neither business is entirely reliant on volumes and each benefits from repeat business and a broadening product portfolio.
The revenues from DMGI's other business information companies, mainly Hobsons, Sanborn and Genscape, rose by 52% to ‚£20 million, with Hobsons particularly strong.
Euromoney Institutional Investor
Euromoney announced its interim management statement last week. Revenues for the quarter to 31st December 2007 increased by 6% to ‚£75 million. Subscriptions continued to achieve strong growth rates in the first quarter. In addition, delegate revenues from training and events, traditionally a leading indicator of a downturn, have so far proved resilient to the difficult markets. As expected, there have been some signs of slowing in advertising and sponsorship sales, particularly from the global financial institutions most affected by the problems in the credit markets.
In contrast, emerging markets, which account for a significant part of Euromoney's revenues, remain in good health. Revenue visibility is similar to this time last year and in line with our expectations.
DMG World Media
DMG World Media is performing ahead of expectations, but below last year due to timing differences and non-annual shows. Revenues for the first quarter of ‚£38 million were below those of the same period by ‚£8 million. This was due to a timing difference on Gastech, which will reverse in the second quarter, and the non-annual Adipec. The technology and Middle Eastern shows performed strongly.
The inclusion of George Little Management (GLM), which held few shows in the quarter, means that the division is expecting to achieve an increase in profits * at the half year with revenues growing by around 10% year on year, or 6% when adjusted for timing differences, non-annual events and foreign exchange.
DMG Radio Australia
DMG Radio Australia's revenues for the first quarter rose by 27% to ‚£13 million. The division broke even at the operating profit* level and moved into profit* including its associates. The Nova network grew and the Vega stations reduced their losses sharply.
Unallocated central costs
The surplus on the Group's defined benefit pension schemes at the start of the year will result in a lower financing component of approximately ‚£7 million in the full year which will be reported within operating profit*. This is being spread evenly across the year.
Financing costs
Net interest payable was lower in the first quarter, compared to the same period last year, but should be at a similar level for the half year due to the cost of share purchases. The half year result will benefit from the inclusion of swap premia of around ‚£12 million (2007 ‚£12 million), arising from premia earned to date, but this arrangement has since been scaled back significantly.
Net debt / financing
Net debt at 31st December, 2007 was approximately ‚£1 billion. The Group has spent around ‚£90 million on acquisitions in the period, principally the accelerated acquisition of the 51% stake in GLM. In addition, DMG Information and Associated Newspapers have completed on a number of small acquisitions in recent months that have not previously been announced. These were: Inframation, a German property information business, Enva Power, which provides power market traders with trading insight based on complex analytics and real-time market data and Oilcareers, an online job-board for the oil industry principally focused on UK jobs.
The Group has acquired 15.6 million of its `A' Ordinary shares for ‚£74 million, an average price of ‚£4.75 per share, 1.5 million of which were cancelled in November. Following these purchases, DMGT's weighted average number of shares in issue for the full year is estimated at 377.6 million (2007 390.4 million).
Renewal of the authority to repurchase shares is being sought at today's Annual General Meeting. The Board will consider making further share repurchases where this continues to create value for shareholders.
The purchase of 5.5 million Euromoney shares for ‚£21 million has increased the Group's stake from 61.2% to 66.5%, though it is expected to be diluted by up to 1.6% on or after 15th February through the vesting of the first tranche of Euromoney's capital appreciation plan.
Notes
The average ‚£:$ exchange rate for the first quarter was ‚£1: $2.04 (against ‚£1: $1.92 in the same period last year). We estimate that each 5 cent move in the average ‚£:$ exchange rate affects DMGT's full year operating profits* by approximately ‚£4 million.
* References to earnings, results or operating profit are to adjusted earnings, results and operating profit which exclude amortisation and impairment of intangible assets and exceptional items.
For further information
For analyst and institutional enquiries:
Peter Williams, Finance Director, DMGT 020 7938 6631
Nicholas Jennings, Company Secretary, DMGT 020 7938 6625
For media enquiries:
Andrew Honnor, Tulchan Communications 020 7353 4200
Conference call
A conference call will be held with City analysts at 8.00 a.m. on 6th February, 2008. The dial-in number is +44 (0) 1452 555 566.
Next trading update
DMGT will announce its half yearly results for the six months to 30th March, 2008 on the morning of Thursday 22nd May, 2008.
Daily Mail and General Trust plc Northcliffe House, 2 Derry Street, London, W8 5TT Tel 020 7938 6000 Fax 020 7938 4626 www.dmgt.co.uk Registered in England and Wales No. 184594 Not for public release until 7am on 6 February, 2008
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