23rd Mar 2009 07:00
23rd March, 2009 Daily Mail and General Trust plc (`DMGT') Trading Update Introduction
Ahead of its half year end on 29th March, 2009, this statement provides a further update on DMGT's progress in the current year. It covers the five months to February 2009, updated to the latest practicable date.
Summary
It is less than six weeks since our first quarter Interim Management Statement, within which period trends in our B2B operations have remained broadly unchanged. Our UK and European consumer media businesses are having a difficult quarter, although some degree of stabilisation seems to be occurring at the moment and into April. We will exceed our targeted revenue and cost initiatives of £100 million. Our current expectation is that the full year result* will be in line with the market consensus#, subject to us having little visibility on Associated Newspapers' advertising revenues.
Business to business (B2B)
Our B2B businesses are showing themselves to be resilient and at best continuing to show good growth, albeit that trading has generally become a little more difficult. Any reduction in revenue forecasts is being largely offset by cost reductions. The CEOs of Risk Management Solutions and DMG Information will both be presenting at today's Investor Day (see note below) and will say that they expect to achieve underlying~ revenue growth for the year.
B2B revenues for the five months rose by 15%, benefiting significantly from the stronger dollar in which currency most revenues are billed.
Consumer media
In common with other UK consumer media companies, this has been a tough quarter. Revenues for the five months fell by 12%. For the quarter to March, we expect advertising revenue from Associated to be down an underlying~ 24% in total, and that of Northcliffe Media to be down 37%. Prospects for the end of March and into April remain uncertain for display advertising, but classified revenues, other than recruitment, are showing signs of stabilisation. Recruitment revenues are still decreasing and we expect them to be down 55% for the quarter.
Associated is maintaining its strong advertising yields. Its circulation revenues are steady year on year, despite some softness in circulation numbers, partly attributable to reductions in publicity spending.
A&N Media's Central European division has also seen a sharp fall in activity levels in recent weeks.
As a result of the tough revenue picture, further substantial cost reductions are being made. We now expect a net total of about 1,000 people to leave Northcliffe this year, double the level envisaged at the time of our results in November 2008. Further reductions are also being made across all cost categories in Associated. This will give rise to exceptional operating costs in the region of £20 million in the Group's half year results.
Group
Results* for the first half of the year will show a substantial fall from last year's first half year due to a combination of the worsening trading conditions and a change in the timing of profits*. Traditionally, profits* in DMGT's first half year have been lower than in its second, with last year being the exception. This year the second half weighting will be particularly pronounced, due to timing issues, particularly within A&N Media, such as the sale of the Evening Standard at the end of February and the impact of cost reductions.
Net debt will, as expected, reflect this position. The Group's half year indebtedness level is usually at its peak due to the timing of dividend and other annual payments, and this is accentuated this year by trading and the costs of redundancies. A steady reduction in net debt is expected thereafter.
Notes
~Underlying revenue is revenue on a like for like basis, adjusted for acquisitions and disposals made in the current and prior year and at constant exchange rates.
*References to results or profits are to adjusted results or profits which exclude amortisation and impairment of intangible assets and exceptional items.
#Current City consensus of earnings* for 2009 is £187 million and earnings* per share of 33.3 pence. Source: DMGT website.
The average £:$ exchange rate for the half year has been estimated at £1: $1.48 (against £1:$2.01 in the same period last year).
For further information
For analyst and institutional enquiries:Peter Williams, Finance Director, DMGT 020 7938 6631Nicholas Jennings, Company Secretary, DMGT 020 7938 6625For media enquiries:Andrew Honnor / Mal Patel, Tulchan Communications 020 7353 4200
Conference call
A conference call will be held with City analysts at 9am. on 23rd March, 2009. The dial-in number is +44 (0) 1452 568 051 and the code 87754025.
Investor Day
DMGT is this afternoon holding an Investor Day for City analysts and institutions to give them an opportunity to learn more about the Group and its growth potential. Copies of the presentation will be available on the Company's website, www.dmgt.co.uk, from 2pm and videos will follow tomorrow afternoon.
The host will be Lord Rothermere, Chairman, and the presenters will be Martin Morgan, Chief Executive, Peter Williams, Finance Director, Hemant Shah, CEO of Risk Management Solutions, Kevin Beatty, CEO of A&N Media and Suresh Kavan, CEO of DMG Information.
This event is by invitation only and is fully subscribed. Numbers have been limited by space constraints.
Next trading update
The Group's next scheduled announcement of financial information will be its results for the half year ending 29th March which it intends to announce on the morning of Thursday 21st May, 2009.
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 23 March, 2009
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