28th Sep 2010 07:00
28th September, 2010 Daily Mail and General Trust plc (`DMGT') Trading Update Introduction
Ahead of the year end on 3rd October, 2010, this statement provides an update on DMGT's progress in the current year. It covers the eleven month period to the end of August 2010 and includes comments on September, where appropriate.
Summary
* Underlying revenue up 2% on last year, down 7% on a reported basis. * Trading remains robust, with underlying growth from both B2B and consumer media businesses. * Strong margin* and profit* growth, driven by positive revenue trends and effective cost control. * Further reduction in net debt and on track towards our target of 2.5 times net debt: EBITDA by the financial year end. * Outcome for the year at least in line with City consensus~ expectations.
Business to business (`B2B')
Underlying# revenues from the Group's B2B operations for the period were 3% higher than for the corresponding period last year. Reported revenues were 5% lower, principally reflecting the effect of prior year disposals within dmg events, with little change in the average sterling: US dollar exchange rate. We continue to expect to achieve profit* growth in the year, driven by solid subscription revenues and good cost control.
At a divisional level, Risk Management Solutions' revenues grew by 11%, reflecting continued growth from both its core modelling business and newer initiatives.
At dmg information, reported revenues grew by 1%. The underlying# revenue increase was 5% with 11% from the property information companies. There was strong growth from our companies in the education, financial and energy information markets which in aggregate grew by 9%. The overall increase from all our non-property companies, including Sanborn (which will have a minimal impact on overall profit* growth for the full year), was 2%.
Although the underlying# revenues of dmg events were down by 9%, the most significant declines were experienced early in the year and more recent events have been in line with or ahead of prior year revenues. This includes our largest recent event, the summer New York International Gift Fair, which returned to growth in August (up 7%). The reported revenues fell, as expected, by 38% due to the impact of prior year disposals.
B2B revenues include those of Euromoney Institutional Investor, which released its trading update on 24th September, reporting that total revenues for the full year are expected to show a headline increase of approximately 3%. Recent trading has shown a recovery in the rate of sales growth during August and September, particularly in advertising and subscription revenues.
Consumer media
Underlying# revenues from the Group's consumer media operations were 1% higher than for the corresponding period last year, though 8% lower on a reported basis, reflecting various portfolio changes. Higher national advertising revenues, together with A&N Media's focus on cost control, will lead to significantly higher profits* for the full year, compared to last year.
Associated Newspapers' underlying# revenues for the period were 3% higher, but 4% lower on a reported basis. Whilst underlying# circulation revenues were 2% lower, both the Daily Mail and The Mail on Sunday have improved their market share in recent months. Total underlying# advertising revenues were up 6%, with those from both Associated's newspaper and pure play digital operations up by 6%. For the quarter to September so far, total underlying# advertising revenues have risen by 13% with our newspapers up by 10% and our pure play digital activities up by 22%. There has been strong growth across most display advertising categories.
Northcliffe Media's total revenues for the period were 6% lower with advertising revenues down 7% and circulation revenues down 6% compared to last year. For the quarter to September so far, advertising revenues are down 5% due principally to weakness in our East Midland titles and the widely anticipated effects of reduced public sector advertising spend.
A&N International Media's revenues for the period were down by 25%. The underlying# decrease was only 9% after disposals, with improving trends from circulation, digital revenues and contract print activity.
Exceptional items
In its full year 2010 results, the Group expects to report exceptional gains of around £60 million, being mainly the exceptional tax credits, reported at the half year, and gains on the sale of businesses. These will be offset partly by operating costs approaching £40 million, arising mainly from reorganisation and closure costs within A&N Media.
Notes
* References to margin or profit are to adjusted margin or profit which exclude amortisation and impairment of intangible assets and exceptional items.
# Underlying revenue is revenue on a like for like basis, adjusted for acquisitions, disposals and closures made in the current and prior year and at constant exchange rates. For A&N Media, the underlying percentage movements exclude the Evening Standard, London Lite and the discontinued television activities of Teletext, and for consumer media as a whole DMG Radio Australia.
~ Current City expectations of profit before tax* for 2010 is £238 million and earnings* per share of 46.1 pence. Source: DMGT website.
The average £:$ exchange rate for the eleven months was £1: $1.55 (against £1: $1.54 in the same period last year). The rate at 24th September, 2010 was $1.58, compared to the 4th October, 2009 year end rate of $1.59.
DMGT's estimated weighted average number of shares in issue for the full year is 383.0 million (2009: 378.6 million). The total number of shares in issue (after deducting shares held in treasury) is currently 383.0 million.
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 / Anastasia Shiach, Tulchan Communications 020 7353 4200
Conference call
A conference call will be held with City analysts at 9.00 a.m. on 28th September, 2010. The dial-in number is +44 (0) 1452 568 051; conference code: 10906435. For a replay of the call, the dial-in number is +44 (0) 1452 55 00 00 and the replay code: 10906435#.
Next trading update
DMGT intends to announce its preliminary results for the year on the morning ofThursday 25th November, 2010. 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 28 September, 2010
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