The statement:
Summary of the period:
• Trading in line with our expectations;
• Revenue for the first quarter of £495 million, up an underlying# 2%;
• Good underlying# revenue growth of 6% from B2B operations;
• Stable revenue at Associated Newspapers, but weakness in print advertising;
• Further market share gains by the Mail titles and strong digital performance;
• Continued focus on operational efficiency;
• Outlook for the year remains unchanged.
Martin Morgan, Chief Executive, said:
"We have made a solid start to the year with trading in the first quarter in line with our expectations. Overall our B2B operations achieved good underlying revenue growth, whilst our consumer media operations were resilient with increased national circulation revenues which, together with a strong digital performance, offset a decline in print advertising revenues. Whilst we acknowledge the continuing external uncertainties, particularly for UK advertising, the outlook for the year remains unchanged."
Business to business (B2B)
Revenues from the Group's B2B operations in the quarter were £224 million, 3% higher than for the corresponding period last year, with an underlying increase of 6%.
Risk Management Solutions had a good first quarter in terms of bookings, reflecting continued growth and product additions from the core modelling business. Revenues for the quarter rose by 8% to £41 million, an underlying increase of 12%, after reflecting the disposal of RMSI in August 2011.
The revenues of dmg information rose by 8% to £54 million with an underlying increase of 9%. Revenues grew in all sectors. The property information companies generated 8% underlying growth in a market that remains fragile. Hobsons, which serves the education information market, grew strongly whilst low single digit growth was generated in both the energy information and financial information markets.
As expected, there was a reduction in the revenues of dmg events due to the absence of a major biennial event (ADIPEC), with a 24% decrease to £34 million. Underlying revenues increased by 2%, with a solid performance from Big 5 in the UAE and strong revenue increases from the Adtech shows in New York and Tokyo. Overall, forward bookings are tracking slightly ahead of expectations.
Euromoney Institutional Investor released its IMS on 26th January. Revenues rose by 11% to £95 million, an underlying increase excluding the impact of Ned Davis Research (NDR), of 3%. Headline subscription revenues including NDR increased by 25%, and now account for more than 50% of Euromoney's revenues. The volatility and uncertainty in financial markets during the summer of 2011 was followed by weakness in sales of advertising and, to a lesser extent, event sponsorship. As expected, the impact of this advertising slowdown was felt in the first quarter, with advertising revenues down 13%. In contrast, event sponsorship held up reasonably well while delegate revenues from its training and event businesses have continued to achieve good growth.
Consumer media
Revenues from A&N Media were £272 million, 2% lower than the same period last year and 1% lower on an underlying basis. Overall headcount was further reduced by 160 to 6,710, 2% lower than at the start of the financial year. The reduction was at both Associated Newspapers and Northcliffe Media, offset by additional headcount at MailOnline and the digital recruitment businesses.
After completing a period of consultation, A&N Media closed its printing facility in Derby on 27th January 2012. On 31st January, 50% of the Group's holding in Teletext was sold to its management and on 2nd February we disposed of Top Consultant, both disposals being part of our continuing portfolio management.
Associated Newspapers' total revenues for the quarter of £219 million were in line with last year, with an underlying increase of 1%.
Circulation revenues were 5% higher, benefiting from the effect of cover price increases at the Daily Mail in July and October 2011. Both the Daily Mail and The Mail on Sunday continue to improve their market share, with the Daily Mail achieving a record share in December and The Mail on Sunday consolidating its position as the largest selling Sunday national newspaper.
Total underlying advertising revenues were down 2%. Total advertising revenues from Associated's newspaper related operations were down 4%, with print down by 7%, but digital up 61%. RetaiI (down 8%) and travel (down 12%) revenues were the drivers of the overall 4% year-on-year decline, reflecting the weak consumer spending environment. Metro revenues continued to show strong growth.
MailOnline continues to grow strongly with over 99 million unique browsers in January 2012 according to Omniture, 77% higher than January 2011, and 15 million higher than the previous month. Revenues for the quarter were 70% higher than last year. In December, it became the most popular newspaper owned website in the world. In January 2012, an online version for the Indian market was launched.
The revenues of Associated's digital-only businesses grew by 8%. Strong growth was seen in recruitment, with a solid performance delivered by property.
Trading in January has seen total advertising revenues for Associated 9% below last year. As usual, visibility on future newspaper advertising performance is very limited; however, the benefit of the Daily Mail cover price increases, together with a strong digital performance and a continuing focus on costs will help to mitigate the decline in print advertising revenues. We expect to see a modest newsprint price increase for the current financial year.
Northcliffe Media's total revenues were down by 9% to £53 million, an underlying decline of 7%. Circulation revenue fell by 7%, driven entirely by the move of four titles from daily to weekly frequency and the transfer to wholesale distribution last year. Circulation declines are being offset by cover price increases. Advertising revenues were 10% below prior year levels, an underlying decline of 6%. By category, underlying recruitment revenues were 13% lower, motors 7% lower and retail revenues 6% lower; other categories were, in total, 4% below last year.
Northcliffe's cost base continues to be reduced with publishing costs 12% lower than last year. Headcount has fallen by a further 3% during the quarter with total headcount now at 2,450, compared with 2,530 in October 2011.
Trading in January has seen underlying advertising revenues 10% lower than last year.
Net debt / financing
Net debt at 2nd January, 2012 rose from £719 million at 2nd October, 2011 to £820 million due to the agreed payment of £37 million into the Group's main Pension Scheme in October 2011, acquisitions of £20 million and the usual seasonal cash outflows. The principal acquisitions were, as previously reported, the increased interest in Euromoney and Hobsons' acquisition of Intelliworks, a leading provider of relationship management solutions.
In December 2011, DMGT repurchased £110 million of its outstanding £156 million 7.5% Bonds due 2013 through a tender. This gave rise to a premium on redemption of £6 million which will be charged within normal financing items.
Notes
#Underlying revenue is revenue on a like-for-like basis, adjusted for acquisitions, disposals, closures and non-annual events in the current and prior year and at constant exchange rates. The underlying percentage movements of RMS and dmg information exclude RMSI and Sanborn. For dmg events, the comparison is between events held in the year and the same events held the previous time. For Euromoney the comparisons exclude Ned Davis Research and for A&N Media Teletext Retail and titles disposed of and closed within Northcliffe Media.
The average £:$ exchange rate for the first quarter was £1: $1.61 (against £1:$1.58 in the same period last year). The rate at 31st December, 2011 was $1.55, compared to $1.56 at 2nd October, 2011.
DMGT's estimated weighted average number of shares in issue for the full year is currently 382.9 million (2011: 382.8 million). The total number of shares in issue (after deducting shares held in treasury) is currently 382.9 million.
