26th May 2005 06:00
Group interim results for the half year ended 3rd April, 2005.Highlights Statutory results Adjusted results* 2005 2004 Change 2005 2004 Change Turnover ‚£1,062 m ‚£1,047 m +1% Operating profit ‚£101.6 m ‚£103.9 m -2% ‚£136.1 m ‚£134.9 m +1% Profit before ‚£77.1 m ‚£75.3 m +2% ‚£114.5 m ‚£107.3 m +7%tax Earnings per 10.8 p 11.7 p -8% 19.9 p 18.6 p +7%share Dividend per 3.75 p 3.45 p +9% share *(before amortisation and impairment of intangible assets and exceptionalitems; see Group Profit and Loss Account and reconciliation in Note 7).SummaryThe Group is pleased to report an adjusted profit before tax* of ‚£114.5 millionfor the six months to 3rd April, 2005, an increase of 7% compared with theequivalent figure for the previous year. This result reflects a good tradingperformance, particularly from our business to business division and fromEuromoney Institutional Investor, and the benefit of acquisitions made boththis year and last year.A number of factors, particularly the inclusion in last year's first halfresult of an extra week's trading for our newspaper divisions, make comparisonof these results with the previous year more challenging than usual. However,the Group has achieved good underlying growth in profits, despite some of itsbusinesses facing tough trading conditions. Statutory profit before tax for theperiod is ‚£77.1 million, up 2% on last year.OutlookThe period since the end of March has seen the Group's UK newspaper businessesface uncertain advertising markets. The picture has been obscured by the timingof Easter and by the general election, but recent assessments of consumerconfidence are not encouraging. We expect our titles to continue to grow theirmarket share and this, together with their greater colour printing capacity,should enable them to outperform their peers.Allied to this, the Group's non-newspaper businesses, operating primarilyoutside the UK, are continuing to grow and to perform well, and now make uparound 40% of the Group's operating profit*, a share that is expected toincrease.This balance of interests leads the Board to remain confident of a satisfactoryoutcome for the full year.National NewspapersAssociated Newspapers' operating profit*, compared to the first half of 2004,was down by ‚£1.7 million to ‚£48.5 million on revenues up 1% to ‚£458 million.This half year included one less week than the first half of last year andreflects increased newsprint prices in the second quarter.The period was tough for most national newspaper titles' circulation. The DailyMail once more outperformed its peers, although its six month ABC averagecirculation of 2,392,000 was down 2.0% on the previous year. The Mail onSunday's equivalent figure of 2,405,000 was up 1.4% in a market which declinedby 3.3%. The paid-for circulation of the Evening Standard fell by 11%, butfollowing the launch of the Lite edition, the combined editions during thesecond quarter totalled 415,000 copies, an increase of 5% on the number ofcopies sold last year. Metro's distribution averaged over one million copies ineach of the six months.Associated's advertising revenues for the half year increased by 2.5%. On acomparable basis adjusting for the extra week last year, display advertisingrevenues increased 5.4%. Within the major categories, retail remained strongand travel grew, whilst both motors and financial declined. By title, displayadvertising at Metro grew by 23%, the Evening Standard by 6%, The Mail onSunday by 3.2% and the Daily Mail by 3.0%.Underlying classified advertising, excluding the extra week in 2004 and recentacquisitions, fell by 3.5%. There were good performances from the recentlyacquired Jobsite and Find a Property digital media properties.Following the introduction of increased colour and pagination at the end ofNovember, there was a marked increase in the migration of advertising from monoto colour. Colour advertising revenues in those four months were up 20% year onyear with no reduction in yields.For April, Associated's advertising revenues were up 2% in total (1% on anunderlying basis) on the previous year, despite a slowdown in its markets.Regional NewspapersNorthcliffe Newspapers increased its operating profit* by ‚£0.1 million to ‚£46.7million on turnover which was unchanged at ‚£257 million. The lack of growth wasdue to the absence of a twenty seventh week in 2005 and to the adverse effectson recruitment revenues from Easter falling in March this year.Excluding the effect of the extra week last year, circulation revenues were upby 2.6%, or 0.7% excluding acquisitions. ABC figures for the July to December2004 period show a decline of 3.9% on Northcliffe's titles, partly attributableto the further reduction in bulk sales to comply with revised ABC rules. Theperformance of the evening titles continued to be better than the regionalnewspaper industry average.On a twenty six week basis, advertising revenues grew by 5.3% (2.6% excludingacquisitions and launches) and by 4.5% (2.4% excluding acquisitions andlaunches) in the UK. On a like-for-like basis, there was a continued strongperformance from property (up 16%), but recruitment revenue (down 2%) has beenin decline since January, and motors fell by 3%.For March and April (combined to eliminate the effect of Easter being in Marchthis year and April last year), advertising revenues were up 1.6%, butrecruitment was down by 5%.*References to operating profit in the narrative above are to adjustedoperating profit (before amortisation and impairment of intangible assets); seenote 3.Information publishingDMG Information increased its operating profit* by ‚£5.7 million to ‚£16.0million on revenues up 12% to ‚£122 million.The business to business division grew its revenues by 20% to ‚£78 million, anunderlying increase of 9% in sterling terms, excluding the contribution frombusinesses acquired since the first half of last year. Operating profit* roseby ‚£6.0 million (40%) to ‚£21.0 million, ‚£2.4 million of which arose from recentacquisitions. All businesses improved their revenues and profitability, withRisk Management Solutions in particular again producing revenue growth inexcess of 20%.Within the careers division, the seasonal first half losses were slightly lowerthan last year on revenues up 1%. Hobsons had an encouraging performance withtotal bookings 19% ahead of last year, whilst there was little overall changeat Study Group.Financial publishingEuromoney Institutional Investor increased its operating profit* by ‚£3.2million to ‚£15.4 million on revenues up 9% to ‚£89 million. Trading in the firsthalf followed a similar pattern to 2004. Growth in the publishing businesseswas held back by continued tough advertising markets, increased investment inmarketing and by the weakness of the US dollar. In contrast, the training andevents continued to build on their excellent performance in 2004. Thecontribution from Information Management Network, acquired in March 2004, morethan offset the absence of Vinisud, a biennial event, and InfoSec World, whichmoved from March to April this year. The database businesses also continued togrow, driven by ISI.Exhibitionsdmg world media increased its operating profit* by ‚£0.3 million to ‚£17.2million on revenues up 7% to ‚£90 million. Similar to Euromoney, thecontribution from acquisitions, principally Gastech, outweighed the absence inthis year of the Index show in Dubai. The Consumer sector increased itscontribution despite experiencing challenging trading conditions in the homeinterest market both in the UK and North America, resulting in lowerattendances across the portfolio. Within other sectors, operating profits* fromgift and art and antiques also rose slightly. The international business tobusiness sector held a successful first Gastech oil and gas show in March andboth the Big 5 trade exhibition in Dubai and Surf Expo in Florida performedwell.BroadcastingOperating profit* of DMG Broadcasting fell by ‚£7.0 million to ‚£1.3 million onturnover down 23% to ‚£46 million.Teletext's revenues fell by 17% due to a reduction in page volumes for holidayadvertising, resulting from a weak holiday market and the continuing shift tolate booking. Allied to a high level of investment in new products, operatingprofit* fell to ‚£0.6 million. A number of initiatives are planned for thetraditionally stronger second half of the year when the contract with ITV forthe text button will help underpin the company's digital television strategy.Operating profit* of DMG Radio fell to ‚£0.7 million on turnover down 32% to ‚£16million, as a result of the sale of the regional radio stations in September2004 and the launch costs of new stations. The Nova network stations performedstrongly, with the established businesses in Sydney and Melbourne increasingtheir combined revenues by nearly 40%. During the period, both stations wererated the number one FM station in their city and all four Nova stationsachieved the number one position in the key under-40 demographic, includingNova Adelaide which only launched in September 2004. In April, 106.9FM wassuccessfully launched in Brisbane to complete the national Nova network.*References to operating profit in the narrative above are to adjustedoperating profit (before amortisation and impairment of intangible assets); seenote 3.Joint ventures and associatesThe Group's share of net operating profits* of its joint ventures andassociates fell by ‚£0.5 million. There was a higher share of earnings fromGeorge Little Management, the North American gift exhibition organiser,following the increase in the Group's stake in January, and from the CaliforniaMarket Center and ITN. These increases were offset by a reduced contributionfrom GWR Group plc. Following the merger of GWR into GCap Media plc on 9th May,it has been concluded that the Group's 14.3% interest should be treated as atrade investment, rather than as an associate.*References to operating profit in the narrative above are to adjustedoperating profit (before amortisation and impairment of intangible assets); seenotes 3 and 4.Other profit and loss itemsProfits on sale of fixed assets arose mainly from the sale of 1.6 millionshares in Reuters Group plc and of a building by DMG Information. The loss ondisposal of businesses was due to the sale of DMG Broadcasting's Arts andEntertainment Programming, offset by further proceeds from the sale of DMGRegional Radio in 2004 and by profit on sale of Hot 91, its radio stationoperating on the Sunshine Coast of Australia. The large reduction in netinterest payable was due mainly to swap premia on overseas financingarrangements and to lower average net debt.Net debtNet debt at the end of the period was ‚£788 million, an increase of ‚£8 millionsince the year end. Operating cash flows were offset mainly by acquisitions of‚£86 million and capital expenditure of ‚£36 million. Disposals of investmentsand businesses amounted to ‚£19 million.International financial reporting standards ('IFRS')As a listed company, the Group will be required to adopt IFRS in thepreparation of its accounts from its 2005/6 financial year onwards. The projectto manage the transition of financial reporting from UK accounting tointernational accounting has completed its initial assessment of the impact onthe accounts of the Group and work to ensure full compliance for the year to1st October, 2006 is continuing.Based on the initial assessment, the areas of greatest impact for the Group arelikely to be changes in respect of the accounting treatment for goodwill,share-based payments, pensions, deferred taxation and dividends. No significantoperational impact is expected from the standards on financial instruments.Further information will be made available on the Group's corporate web site atthe time of a conference call to City analysts, scheduled for the afternoon of7th June, 2005.DividendThe Board has declared an interim dividend of 3.75 pence per Ordinary `A'Ordinary Non-Voting share (2004 3.45 pence) which will be paid on 8th July,2005 to shareholders on the register at the close of business on 10th June,2005.The Viscount RothermereChairman25th May, 2005Daily Mail and General Trust plcGroup Profit and Loss Account Notes Unaudited Unaudited Unaudited Unaudited Audited Half year Half year Half year Half year Year ended ended ended 3rd ended ended April 3rd April 3rd April 2005 4th April 3rd 2005 2005 2004 October Total 2004 Before Amortisation, Total impairment ‚£m Total Amortisation, and ‚£m impairment exceptional ‚£m items and exceptional ‚£m items ‚£m Turnover 2 1,061.9 - 1,061.9 1,047.0 2,108.5 Operating profit before 3 136.1 - 136.1 134.9 283.6 amortisation and impairment of intangible assets and exceptional items Operating exceptional 3 - - - - (17.8) items Amortisation and 3 - (34.5) (34.5) (31.0) (84.1) impairment of intangible assets Operating profit 3 136.1 (34.5) 101.6 103.9 181.7 Share of operating profits 4 5.9 (5.7) 0.2 (2.5) (8.8) and losses of joint ventures and associates Total operating profit- Group and share of joint ventures 142.0 (40.2) 101.8 101.4 172.9 and associates Profit on sale of fixed - 4.5 4.5 6.2 6.1 assets (Loss) / profit on - (1.6) (1.6) 0.7 5.3 disposal of businesses Income from other fixed - - - - 3.4 asset investments Amounts written off - (0.1) (0.1) - - investments Profit on ordinary 142.0 (37.4) 104.6 108.3 187.7 activities before interest and finance charges Net interest payable (25.9) - (25.9) (31.7) (59.7) Other finance charges (1.6) - (1.6) (1.3) (3.4) Net interest payable and (27.5) - (27.5) (33.0) (63.1) similar charges Profit on ordinary 114.5 (37.4) 77.1 75.3 124.6 activities before taxation Taxation on profit on 5 (30.1) - (30.1) (27.0) (57.2) ordinary activities Profit on ordinary 84.4 (37.4) 47.0 48.3 67.4 activities after taxation Equity interest of (5.3) 1.2 (4.1) (1.9) (5.7) minority shareholders Group profit for the 79.1 (36.2) 42.9 46.4 61.7 period Dividends (14.9) (13.7) (43.7) Retained profit for the 28.0 32.7 18.0 period Basic earnings per share 10.8p 11.7p 15.5p Diluted earnings per share 10.8p 11.7p 15.4p Adjusted earnings per 6 19.9p 18.6p 41.6p share (before amortisation and impairment of intangible assets and exceptional items) Daily Mail and General Trust plcGroup Cash Flow Statement Unaudited Unaudited Audited Half year Half year Ended Year Ended ended 3rd April 4th April 3rd October 2005 2004 2004 ‚£m ‚£m ‚£m Net cash inflow from operating activities 158.7 185.5 382.4 (Note 8) Dividends received from joint ventures 3.9 3.8 8.8 and associates Returns on investments and servicing of (38.1) (32.0) (58.1) finance Taxation (paid) / received (net) (7.0) 3.7 (14.3) Capital expenditure and financial (25.1) (33.3) (85.7) investment (net) Acquisitions and disposals (75.8) (66.6) (128.5) Equity dividends paid (30.0) (27.2) (41.0) Management of liquid resources (56.7) (1.5) (1.3) Net cash inflow / (outflow) from 70.4 4.6 (19.1) financing Increase in net cash 0.3 37.0 43.2 Reconciliation of net cash flow to movement in net debt Increase in net cash 0.3 37.0 43.2 Cash (inflow) / outflow from change in (68.8) 21.8 43.7 debt and lease finance Cash outflow from change in liquid 56.7 1.5 1.3 resources Change in net debt from cash flows (11.8) 60.3 88.2 Loan notes issued and loans arising from (1.9) - (2.2) acquisitions Other non-cash items 6.1 3.1 7.4 (Increase) / decrease in net debt in the (7.6) 63.4 93.4 period Net debt at beginning of year (779.8) (873.2) (873.2) Net debt at end of period (787.4) (809.8) (779.8) Daily Mail and General Trust plcGroup Balance Sheet Unaudited Unaudited Audited 3rd April 4th April 3rd October 2004 2005 2004 ‚£m ‚£m ‚£m Fixed Assets Intangible assets 822.0 704.8 793.0 Tangible assets 496.9 508.2 502.6 Investments 193.4 194.7 178.9 1,512.3 1,407.7 1,474.5 Current Assets Stocks 24.4 25.0 24.8 Debtors 427.2 394.3 429.3 Short-term investments 60.9 4.9 4.7 Cash at bank and in hand 87.0 79.3 88.0 599.5 503.5 546.8 Creditors Amounts falling due within one year (743.2) (630.3) (852.8) Net Current Liabilities (143.7) (126.8) (306.0) Total Assets less Current 1,368.6 1,280.9 1,168.5 Liabilities Creditors Amounts falling due after more than (865.3) (873.0) (703.8) one year Provisions for Liabilities and (59.7) (54.0) (62.6) Charges Net Assets 443.6 353.9 402.1 Capital and Reserves Called up share capital 50.2 50.2 50.2 Share premium account 7.8 7.1 7.3 Revaluation reserve 71.1 72.7 72.1 Other reserves (34.2) (26.5) (25.7) Profit and loss account 353.2 260.7 306.8 Equity Shareholders' Funds 448.1 364.2 410.7 Minority interests (4.5) (10.3) (8.6) 443.6 353.9 402.1 Approved by the Board of Directors on 25th May, 2005.Daily Mail and General Trust plcStatement of Group Total Recognised Gains and Losses Unaudited Unaudited Audited Half year Half year Year ended ended ended 3rd April 4th April 3rd October 2004 2005 2004 ‚£m ‚£m ‚£m Group profit for the period 42.9 46.4 61.7 Currency translation differences 21.0 29.2 28.3 Taxation on translation differences (7.7) (7.8) (7.9) Unrealised loss on disposal of (0.4) - (2.4) minority interest Minority interests (1.3) (2.2) 2.3 Total gains and losses recognised in 54.5 65.6 82.0 the period Reconciliation of Movement in Group Shareholders' Funds Unaudited Unaudited Audited Half year Half year Year Ended ended ended 3rd April 4th April 3rd October 2005 2004 2004 ‚£m ‚£m ‚£m Group profit for the period 42.9 46.4 61.7 Dividends (14.9) (13.7) (43.7) 28.0 32.7 18.0 Other recognised gains and losses 11.6 19.2 20.3 Movement in other reserves (8.5) 1.0 1.8 Loss on sale of own shares - - (3.8) New share capital subscribed 0.5 - 0.2 Adjustment to goodwill in respect of (0.2) (1.7) (3.0) deferred consideration Goodwill reinstated on unrealised loss 0.7 - 5.0 on disposal of minority interest Goodwill written back on disposals and 5.3 2.4 61.6 closures Net movement in shareholders' funds 37.4 53.6 100.1 Opening shareholders' funds 410.7 310.6 310.6 Closing shareholders' funds 448.1 364.2 410.7 NOTES 1. Accounting policies The financial information for the period has been prepared in accordance withthe accounting policies adopted in the Group's 2004 Annual Report. 2. Turnover Unaudited Unaudited Audited Half year Half year Year ended ended ended 3rd April 4th April 3rd 2004 October 2005 ‚£m 2004 ‚£m ‚£m By activity: National newspapers and related 457.6 455.4 890.2 activities Regional newspapers and related 257.0 257.1 519.4 activities Business to business information 122.2 108.7 257.1 and careers Euromoney Institutional Investor 89.0 81.8 174.7 Exhibitions and related 90.0 83.8 144.7 activities Broadcasting 46.1 60.2 122.4 1,061.9 1,047.0 2,108.5 Turnover of regional newspapers is stated after deducting intra-Group turnoverof ‚£10.0 million (2004 ‚£8.6 million). Turnover of business to businessinformation and careers comprised ‚£78.0 million (2003 ‚£65.0 million) frombusiness to business information and ‚£44.2 million (2004 ‚£43.7 million) fromcareers. Turnover of broadcasting comprised ‚£30.2 million (2004 ‚£36.3 million)from television and ‚£15.9 million (2004 ‚£23.9 million) from radio. 3. Operating profit Unaudited Unaudited Audited Half year Half year Year ended ended ended 3rd April 4th April 3rd October 2004 2005 2004 ‚£m ‚£m ‚£m By activity: National newspapers and related 48.5 50.2 90.3 activities Regional newspapers and related 46.7 46.6 100.5 activities Business to business information 16.0 10.3 36.7 and careers Euromoney Institutional Investor 15.4 12.2 30.6 Exhibitions and related 17.2 16.9 25.8 activities Broadcasting 1.3 8.3 19.4 Unallocated central costs (9.0) (9.6) (19.7) Less: exceptional operating items 136.1 134.9 283.6 Less: amortisation of intangible - - (17.8) assets (33.4) (31.0) (71.2) Less: impairment of intangible assets (1.1) - (12.9) 101.6 103.9 181.7 Operating profits of business to business information and careers comprised ‚£21.0 million (2004 ‚£15.0 million) from business to business information and aloss of ‚£3.4 million (2003 ‚£3.6 million) from careers, offset by unallocatedcentral costs of ‚£1.6 million (2004 ‚£1.1 million). Operating profits ofbroadcasting comprised ‚£0.6 million (2004 ‚£6.8 million) from television and ‚£0.7 million (2004 ‚£1.5 million) from radio.NOTES 4. Share of operating profits and losses of joint ventures and associates Unaudited Unaudited Audited Half year Half year Year Ended ended ended 3rd April 4th April 3rd October 2005 2004 2004 ‚£m ‚£m ‚£m Share of operating profits of joint 1.4 0.7 1.3 ventures Share of operating profits of 4.5 4.7 8.9 associates Before amortisation and impairment of 5.9 5.4 10.2 goodwill Share of amortisation of goodwill of (1.4) (1.5) (2.8) joint ventures and associates Impairment of goodwill of associates - - (3.3) Amortisation of goodwill of joint (4.3) (6.4) (12.9) ventures and associates 0.2 (2.5) (8.8) 5. Taxation charge The tax charge for the period amounted to ‚£30.1 million (2004 ‚£27.0 million).The charge for taxation has been computed at a rate of 30.0% on UK taxableprofits. The underlying tax on profits before amortisation and impairment ofintangible assets, exceptional items and significant non-recurring or prioryear items, amounted to ‚£30.1 million (2004 ‚£30.1 million), and the resultingrate is 26.8% (2004 28.1%).6. Adjusted earnings per shareAdjusted earnings per share are calculated on profit before amortisation andimpairment of intangible assets and exceptional items, after charging thetaxation and minority interests associated with those profits, of ‚£79.0 million(2004 ‚£74.1 million), as set out in note 7 below, and on the weighted averagenumber of ordinary shares in issue during the period. The weighted averagenumber of shares amounted to 396.6 million (2003 397.7 million). As in previousyears, adjusted earnings per share have been disclosed since the Directorsconsider that this alternative measure gives a more comparable indication ofthe Group's underlying trading performance. 7. Adjusted profit (before amortisation and impairment of intangible assets and exceptional items) Unaudited Unaudited Audited Half year Half year Year Ended ended ended 3rd April 4th April 3rd October 2004 2005 2004 ‚£m ‚£m ‚£m Profit before tax 77.1 75.3 124.6 Add back: Amortisation of intangible assets in 39.1 38.9 86.9 Group operating profit and in share of joint venture and associates Impairment of goodwill in Group 1.1 - 16.2 operating profit and in share of associates Operating exceptional items - - 17.8 Profit on sale of fixed assets (4.5) (6.2) (6.1) Loss / (profit) on disposal of 1.6 (0.7) (5.3) businesses Amounts written off investments 0.1 - - Adjusted profit before tax (before 114.5 107.3 234.1 amortisation and impairment of intangible assets and exceptional items) Taxation charge (30.1) (30.1) (60.6) Interest of minority shareholders (5.3) (3.1) (8.2) Profit before amortisation and 79.1 74.1 165.3 impairment of intangible assets and exceptional items, after taxation and minority interests NOTES 8. Net cash inflow from operating activities Unaudited Unaudited Audited Half year Half year Year Ended ended ended 3rd April 4th April 3rd October 2005 2004 2004 ‚£m ‚£m ‚£m Operating profit 101.6 103.9 181.7 Depreciation charge 33.9 35.7 84.5 Amortisation and impairment of 34.5 31.0 84.1 intangible assets Working capital movement (11.3) 14.9 32.1 Net cash inflow from operating 158.7 185.5 382.4 activities 9. The figures for the year ended 3rd October, 2004 set out above are not fullaccounts within the meaning of s.240 of the Companies Act 1985. Full statutoryaccounts for that year have been delivered to the Registrar of Companies. Theauditors' report on those accounts was not qualified and did not contain astatement under s.237 (2) or (3) of the Companies Act 1985. The financialinformation for the six months ended 3rd April, 2005 and 4th April, 2004 hasbeen the subject of an independent review by the auditors.Copies of the Interim Report are being posted to shareholders on or around 10thJune, 2005 and will be available thereafter from the Secretary, Daily Mail andGeneral Trust plc, Northcliffe House, 2 Derry Street, London, W8 5TT. orelectronically from the Company's web site at www.dmgt.co.uk.Highlights of this announcement will be advertised on 26th May, 2005 in theEvening Standard, on 27th May, 2005 in the Daily Mail, Metro, Aberdeen Press &Journal, Western Morning News and the Western Daily Press and on 29th May, 2005in The Mail on Sunday.A webcast of the Interim Results presentation to City analysts will beavailable for viewing from 9.30 am on 26th May, 2005 at http://www.dmgt.co.uk.Peter Williams Tel: 020 7938 6631Nicholas Jennings Tel: 020 7938 6625Andrew Honnor, Tulchan Communications Tel: 020 7353 4200ENDDAILY MAIL & GENERAL TRUST PLCRelated Shares:
DMGT.L