27th Mar 2006 08:44
Daily Mail & General Trust PLC27 March 2006 Future organisation of Northcliffe Newspapers ("Northcliffe") Sale of Aberdeen Journals Limited Share Buy-Back Programme Daily Mail and General Trust plc ("DMGT") announced on 17 February 2006 that ithad decided to retain its Northcliffe regional newspaper division. The Boardconsidered that the three offers received did not reflect the long term value ofthe business to DMGT shareholders. Following the completion of the full review of Northcliffe, DMGT is todayannouncing a series of further measures designed to place our regional newspaperbusinesses at the forefront of the UK media industry. Sale of Aberdeen Journals Limited ('Aberdeen Journals') DMGT has reached an unconditional agreement to sell Aberdeen Journals Limited ("Aberdeen Journals"), publisher of the Aberdeen Press & Journal and AberdeenEvening Express to D.C. Thomson & Co Limited ("DC Thomson"), a leading Scottishpublisher. The transaction puts an enterprise value of £132 million on thebusiness. As a result of the transaction, Aberdeen Journals will have anobligation to pay approximately £27 million into DMGT's pension schemes when itsemployees are subsequently transferred into an appropriate scheme. DMGT expectsto receive, after adjustments, net cash of approximately £105 million. In the last financial year ended 2 October 2005 Aberdeen Journals reportedoperating profit before interest and tax of £8.1m on turnover of £38.2m, withgross assets of £33.3m. Future organisation of Northcliffe Newspapers The Board believes that Northcliffe has an excellent future as an integratedprovider of local media services. It is positioned to provide its local andnational customers with the information and advertising they seek through arange of media channels and brands. These will comprise primarily paid-fordaily and weekly newspapers, free newspapers and a significantly increasedonline presence, but will encompass other delivery mechanisms, whereappropriate. In particular, the combination of print and online will provide adifferentiated product range that will be unequalled in its local markets. To support this vision, DMGT has decided to create one division taking in itsexisting Associated and Northcliffe divisions. This will be headed by KevinBeatty, previously MD of Northcliffe and currently MD of Associated, a role thathe will also retain. Michael Pelosi, MD of Northcliffe, will report to Kevin.By taking advantage of the combined size and scale to create and operate sharedsupport service centres, local editors and managers will be able to focus, withlittle distraction, on customers. Northcliffe will be restructured managerially into a regional structure,following which the size of Northcliffe's central support functions will bereduced. The regional structure will be as follows: North East - Hull, Grimsby, Scunthorpe, Lincoln Midlands - Stoke, Derby, Nottingham, Leicester, Tamworth West - Bristol, Bath, Cheltenham, Gloucester, Swansea South West Dailies - Plymouth, Torquay, Exeter South West Weeklies - Cornwall, Devon South East Weeklies - Chelmsford, Tunbridge Wells Certain operations within the two organisations, including printing, on lineoperations and back office support functions, will work more closely together. Future Opportunities When the Aim Higher project was first announced in June 2005, it was expected torealise a reduction in costs throughout Northcliffe of at least £20 million p.a.within an 18 month period. In November this estimate was increased to £30million p.a. As a result of further development of the original project, together with theexpected result of today's announcement, we now expect the total reduction inNorthcliffe's costs, excluding Aberdeen Journals, to amount to at least £45million p.a. The total cash costs associated with achieving these cost savingsare expected to be approximately £20 million, with the majority being incurredin the current financial year. Considerable progress towards this target has already been achieved. Weestimate that annualised cost savings as at the end of March 2006 will be £22million p.a., which include certain initiatives not identified in the originalAim Higher project, one example being the recent closure of the Lincoln Press. As a result of reinvigorating its focus on readers and advertisers, togetherwith the development of a significantly increased online presence, Northcliffewill target additional revenues, particularly from online customers. Northcliffe's capital expenditure over the next three years will be reduced frompreviously forecast levels. In particular, it is confirmed that the proposedNorth East print plant at Elsham Wold will not go ahead. DMGT expects capitalexpenditure to be approximately £26 million in 2005/6 reducing to approximately£20 million in the following two years. These compare with an average spend of£30 million p.a. over the last three years. Return of Capital Following the disposal of Aberdeen Journals, the planned reduction in capitalexpenditure announced today and the significant cost reductions that will beachieved at Northcliffe, the Board has decided to commence a share buy backprogramme of A Ordinary Non Voting Shares under the general authority approvedat the AGM in February 2006. In the first 12 months, the Board's intentionwould be to return approximately £50 million to shareholders and thereafterconsideration will be given to a rolling programme of £50 million per annum. Enquiries: Daily Mail and General Trust Peter Williams, Finance Director 020 7938 6631 Nick Jennings, Company Secretary 020 7938 6625 Northcliffe Newspapers Michael Pelosi, Managing Director 020 7400 1100Tulchan Communications Andrew Honnor 020 7353 4200 Regarding the sale of Aberdeen Journals: Greenhill & Co International Simon Borrows 020 7440 0401 Brian Cassin 020 7440 0410 Peter Bell 020 7440 0421 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DMGT.L