27th Sep 2007 07:00
27th September, 2007 Daily Mail and General Trust plc (`DMGT') Trading Update Summary
This statement updates investors on DMGT's progress in the current year, ahead of its year end on 30th September, 2007.
Since we reported in May, the Group's newspaper divisions have continued to experience growth in advertising revenues. Similarly our business to business divisions are continuing to enjoy good trading conditions, tempered in sterling terms by the weakness of the US dollar. We are to date seeing no slow down in consumer advertising arising from higher UK interest rates, though we are wary about the impact of these rises on advertising generally and additionally of home information packs on property advertising. Similarly there has been minimal discernible impact to date on any of our businesses from the turmoil in the credit markets, although we will of course be watching this as we enter our new financial year.
We are continuing to invest heavily in our business information and online activities. In London, there has been no reduction in competitive activity in the newspaper market.
Overall we expect our adjusted results* for the year to be in line with market expectations.
National newspapers and related activities
Associated Newspapers' circulation revenues for the eleven months to August 2007 were 1.5% above the same period last year. The circulation of the Daily Mail was 2% lower than last year and that of The Mail on Sunday down 0.7% for the six-month ABC period to August 2007. Both titles have again increased their market share.
Total advertising revenues in the same period have increased by 8% year on year. These figures include those of Teletext, which are down 20%, and of Associated Northcliffe Digital which have risen by 78%, including the effect of acquisitions made primarily during last year. Print advertising revenues have increased by 2%, with display up by 5% and classified down 7%. The largest display category, retail, has continued to enjoy strong growth (up 18%) throughout the period.
The new print site at Didcot and enhancements at Surrey Quays are near completion. These will enable Associated's titles to be produced with increased pagination and full colour by early 2008.
Local media
Northcliffe Media is continuing to see slowly improving advertising revenues, in line with the trends we reported in July. Comparable UK advertising revenues for the eleven months to August 2007 were less than 1% lower than the same period last year. For the last twelve weeks advertising revenues have grown by 2.4%, having been up 0.3% in the quarter to the end of June 2007.
Recruitment advertising grew year on year by 1.2% to the end of August, although growth since the end of March 2007 has been much stronger at 5.8%. Property revenues were up by 7.9% for the 11 months, although the rate of growth is slowing. For the same period, motors advertising has fallen by 10.7% and retail by 6.9%, but these trends are improving. Revenues from digital publishing are 74% above last year.
Circulation revenues for the eleven months to August 2007 were 1.2% lower than the same period last year. UK publishing costs are 3% lower than last year, with headcount down 5%. The target of ‚£45 million annual cost reduction has been achieved.
The integration of the local media assets, acquired from Trinity Mirror plc in July 2007, is proceeding well.
Business information
DMG Information is performing strongly with year-on-year revenue growth (adjusted to exclude acquisitions and disposals and currency movements) exceeding 15% and margins stable despite increased revenue investment on new products.
Within the financial and insurance division, Risk Management Solutions is continuing its record of strong revenue growth. Whilst more challenging market conditions now prevail for Trepp and Lewtan due to the turmoil in the asset backed securities markets, the strength of their recurring revenues and nature of information provided mean that we remain optimistic that revenues will continue to grow.
Within the property division, Landmark is still enjoying good growth year-on-year, despite a slow down in the UK housing market which seems likely to continue due to the impact of interest rate increases and to the recent introduction of home information packs. Similarly Environmental Data Resources' revenues have continued to grow in relatively stable market conditions.
All other companies, including Genscape, are showing good growth.
Financial information
Euromoney Institutional Investor plc, in which the Group has a 61% interest, has reported separately that it expects its full year trading performance to be at the top end of City analysts' expectations, before accounting for its capital appreciation plan. Due to its strong performance, this plan is likely to vest a year early. This will mean charging two years of share option expenses in this year which the Group will not exclude from adjusted operating profit*.
Exhibitions
DMG World Media's revenues for the eleven months to August 2007 are at a similar level to last year. A strong performance by the high growth Business to business division, including new launches in Evanta, ad:tech and iMedia, has continued to offset falls within UK consumer events and its Western US gift shows. As a consequence of this change in mix, DMG World Media is showing improving margins.
We announced earlier this week the acceleration of the acquisition of the remaining 51% stake in George Little Management, which will be completed on 1 October 2007. We also announced our intention to sell our Home Interest business in North America.
Radio
DMG Radio Australia's revenues were 7% up year on year for the eleven months to August 2007. In surveys since the half year, both the Nova and Vega have been recording improved audiences.
Exceptional items and impairment charges
In its full year 2007 results, the Group expects to report exceptional gains in the region of ‚£50 million. The principal gain will be the profit of ‚£42 million which we are deemed to have made on Euromoney's issue of shares as part of its funding of the acquisition of Metal Bulletin, as reported at the half year. This will be augmented by profits on sale of businesses and properties.
These gains are likely to be offset by exceptional charges, including a charge currently of ‚£23 million, relating to our investment in GCap Media plc, charged to reserves in previous years, but now required to be recognised through the Income Statement in accordance with IAS 39. Exceptional operating costs in the region of ‚£20 million will also be reported, arising mainly from the reorganisation of the Group's printing arrangements following the completion of the Didcot plant and from the final phase of Northcliffe's reorganisation programme.
The Group will also undertake its regular impairment review of the carrying values of its intangible assets, particularly in the light of the review of Loot and the decision to exit the North American home interest market.
Preliminary announcement
DMGT intends to announce its preliminary results for the year on the morning of Wednesday 21st November, 2007.
*Adjusted results and adjusted operating profit exclude amortisation and impairment of intangible assets and exceptional items.
Enquiries: Peter Williams, Finance Director, DMGT, 020 7938 6631
Nicholas Jennings, Company Secretary, DMGT, 020 7938 6625 Andrew Honnor, Tulchan Communications, 020 7353 4200 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 27 September, 2007
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