25th Sep 2008 07:00
25th September, 2008 Daily Mail and General Trust plc (`DMGT') Trading Update Introduction
Ahead of its year end on 28th September, 2008, this statement provides an update on DMGT's progress in the current year since we last reported in July. It covers the eleven months to 31st August 2008.
Summary of the period:
* Revenue for the eleven months to August 2008 up 4% year on year, an underlying increase of 2%. * Continued growth from the Group's business to business divisions. * Economic conditions affecting advertising revenues and property information businesses. * Bank facilities renewed for a further three to five years. * Adjusted results* for the full year expected to be at the lower end of current market expectations~.
The Viscount Rothermere, Chairman, said:
"Our strategy of creating a diversified international portfolio of market-leading operations across both business and consumer products provides considerable resilience and leaves us well positioned to deliver long-term growth. Inevitably, the worsening economic conditions are having an impact on our newspaper and property businesses but the B2B divisions have continued to perform well. The recent events experienced by financial markets and institutions will have no material impact on this year's results."
Business to business
DMG Information
DMG Information's revenues for the period rose year on year by 8%. Excluding acquisitions and disposals made in the previous year and at constant exchange rates, they were up by 2%. As reported in July, DMGI has continued to trade well, except that transaction volumes in its two principal property information companies, Landmark (UK) and EDR (US), have inevitably been affected by the current state of the market.
Risk Management Solutions, Hobsons, Genscape, Trepp and Lewtan will all achieve double digit revenue growth and so DMGI still expects to achieve year-on-year profit* growth of approximately 5% for the full year.
Euromoney Institutional Investor
Euromoney announced its trading update yesterday. Since it last reported in July, trading in the second half has continued to be encouraging with strong performances from subscription revenues and from emerging markets. Trading in the key month of September, which is particularly important for advertising revenues, has held up well.
DMG World Media
DMG World Media's revenues for the period increased by 24%. The underlying increase was 5%, after adjusting for the George Little Management acquisition (which became a subsidiary at the start of the financial year), non-annual events, closures, disposals and foreign exchange. GLM's premier product, The New York International Gift Fairs, performed well with revenue increasing 6% over last year's result.
On 28th July 2008, the sale of DMG World Media's Home Interest business in North America for ‚£27 million was announced.
DMG World Media's full year operating profit* is expected to be significantly ahead of last year.
Consumer mediaA&N Media
DMGT last week announced a management restructuring of its National and Regional media businesses under one banner, A&N Media. A & N Media will continue to deliver all its consumer newspaper and digital brands through Associated Newspapers and Northcliffe Media, while realising the efficiencies that this combination brings about. This creates a structure for the shared services already in place, such as printing, marketing and procurement, and those to come, including finance. DMGT will continue to report the results of Associated and Northcliffe separately.
Associated Newspapers
Associated Newspapers' total revenues for the eleven months increased by 1% including the effect of lower contract printing. Circulation revenues were 1% higher than the same period last year, reflecting cover price rises earlier in the year. Both the Daily Mail and The Mail on Sunday have continued to increase their market share.
Total advertising revenues in the same period have increased by 0.4% year on year. These figures include those of Associated Northcliffe Digital (up 11%), and of the titles' companion websites which have continued to grow strongly. Advertising revenues from Associated's newspaper operations have increased by 1%, with display up by 2% and classified down 11%. The largest display category, retail, grew by 3% in the period and all other categories were up, other than travel (down 9%).
Recent trends have been more difficult with total advertising in July and August down by 3%. In those two months, newspaper advertising revenues fell by 2.6%, with display down by 0.9% and classified down 15%. Retail advertising was down 0.5% and financial turned down, falling by 18%. These trends have broadly continued into September.
Associated's full year operating profits* are expected to be lower than last year, due to weakening advertising revenues as well as the previously reported additional costs of full colour printing, as a result of the new Didcot plant coming on stream, and promotional investment in the property and motors digital companies.
Northcliffe Media
Northcliffe Media's total revenues for the period were down 5%, compared to the same period last year. Excluding acquisitions and disposals made in the prior year, underlying revenues were down 4% (UK down 7%; International up 21%, 8% in local currency).
Comparable UK advertising revenues for the period were 9% lower than the same period last year. All major categories remained under pressure with property down 19%, recruitment down 9%, retail down by 3% and motors down by 12%. Trends deteriorated again in July and August, particularly in the property and recruitment sectors, with comparable UK advertising revenues down on the prior year by 22%. In those months, property revenues were 45% below the prior year and recruitment revenues were down 28%. September has seen a slight further deterioration in these trends with advertising revenues down 24%.
UK digital revenues have grown strongly in the period, although the pace has slowed. They were 46% ahead of last year and now represent 6% of total advertising revenues. On-line recruitment advertising was up 27%, representing 62% of all digital revenues. Motors and property also showed significant year on year growth.
Comparable UK circulation revenues for the period were 2% below last year, excluding titles acquired or closed in the previous financial year.
Operating profit* for the full year will inevitably reflect the worsening advertising revenue conditions.
The International division has continued to perform well with growth in revenues and profits* for the period assisted by favourable exchange rate movements. Digital operations in Slovakia and Croatia are growing very strongly.
DMG Radio Australia
DMG Radio Australia's revenues in the period increased by 27% at constant exchange rates. This was driven by growth of the Nova network which has continued greatly to outpace the market. The division will be in operating profit* for the full year.
Exceptional items and impairment charges
In its full year 2008 results, the Group expects to report exceptional gains in the region of ‚£45 million on the sale of businesses and properties.
These gains will be partially offset by exceptional operating costs likely to be between ‚£15 million and ‚£20 million, arising mainly from reorganisation costs within the consumer media businesses.
The Group will also undertake its regular impairment review of the carrying values of its intangible assets, with some provisions likely, particularly against more recently acquired regional media assets.
Financing
In September, the Group extended all its bank facilities for a further three to five years with no change in basic financial covenants. Most of the Group's debt remains in long-term bonds, the earliest of which is not repayable until 2013.
* 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.
~ Current City expectations of earnings* for 2008 range from ‚£257 million to ‚£ 279 million and earnings* per share from 45.6 pence to 51.6 pence. Source: DMGT website.
The average ‚£:$ exchange rate for the eleven months was ‚£1: $1.99 (against ‚£1: $1.96 in the same period last year). The rate at 23rd September, 2008 was $1.86, compared to the 30th September, 2007 year end rate of $2.04.
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 / Lizzie Morgan, Tulchan Communications 020 7353 4200
Conference call
A conference call will be held with City analysts at 9.00 a.m. on 25th September, 2008. The dial-in number is +44 (0) 1452 568 051; conference code: 65474164.
Next trading update
DMGT intends to announce its preliminary results for the year on the morning ofThursday 20th November, 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 25 September, 2008
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