The statement reads as follows: “It describes the Group’s financial position and performance during the period, updated to the latest practicable date.
Summary of the period:
• Revenue for the first quarter was £482 million, down 15% on last year, as expected, but only down 8% on an underlying# basis.
• Underlying growth from non-event B2B businesses.
• Improved margins resulting in operating profit* near to last year’s strong first quarter.
• Encouraging quarter for consumer operations with improved trading in new calendar year.
• Net debt reduced to £1,030 million.
Martin Morgan, Chief Executive, said: “Trading in the first quarter has been ahead of our expectations and the new calendar year has started well, but we remain cautious about the outlook for the rest of the year, particularly in the UK. We continue to manage the business actively to defend profitability with the focus on driving organic growth remaining our priority.”
Business to business (B2B)
Revenues from the Group’s B2B operations in the quarter were £186 million, 20% lower than for the corresponding period last year, but an underlying# fall of only 7%. The performance in the quarter reflects underlying# growth in revenues from Risk Management Solutions and DMG Information, offset by lower revenues from DMG World Media and Euromoney. Overall, operating margins* have improved, resulting in a higher operating profit*.
Risk Management Solutions
RMS’s revenues for the quarter rose by 2% to £35 million, an underlying# increase of 7%, with stable margins*. This reflects continued solid growth from its core modelling business as a result of the improving conditions in the insurance and capital markets. Looking forward, there are encouraging signs that the sales pipeline is strengthening for the rest of the year.
DMG Information
DMGI’s revenues for the quarter fell by 6% to £49 million, with an underlying# increase of 6%, although operating profits* were well ahead of last year. The property information companies delivered an underlying# increase of 12%, driven by an improvement in residential transaction volumes in the UK, which remain significantly below the long-term norm, and by slight improvements in the commercial property markets.
In other markets, revenues continued to grow in the education, financial and energy information markets and we remain encouraged by the prospects for these businesses.
DMG World Media
DMG World Media’s revenues for the quarter were 47% lower at £31 million, reflecting the divestments of businesses last year as part of our strategy to focus the portfolio on the B2B sector, and the absence of a biennial event. There was an underlying# decrease of 11%.
In the quarter our major shows in the Middle East and the several events in the technology sector operated in line with expectations and bookings for events early in 2010, such as the New York International Gift Fair, are moderately encouraging.
Euromoney Institutional Investor
Euromoney released its interim management statement on 21st January. First quarter trading continued in line with its expectations. Revenues for the quarter fell by 16% to £71 million, an underlying# decrease of 17%.
As expected, revenues from subscription-based products declined as the lag effect of cuts in headcount and information buying by customers during the first half of 2009 worked their way through into revenues. Revenues from events and training continued to decline at similar rates to those experienced from the second quarter of financial year 2009 after tight cost controls were implemented by customers from January 2009. In contrast, the demand for advertising, which was the first revenue stream to be hit by the credit crisis, is showing possible signs of recovery.
Consumer media
Revenues from the Group’s consumer operations in the quarter were £297 million, 12% lower than for the corresponding period last year, an underlying# fall of 9%. These revenues include those of DMG Radio Australia (DMGRA) up until 16th December 2009 after which date it is being accounted for as an associate. Overall, margins* improved slightly and operating profit* was broadly unchanged.
A&N Media
Headcount fell by 334 (4%) in the quarter, due to further reductions at Harmsworth Printing, Northcliffe Media and in Associated Newspapers through the closure of London Lite. A&N Media will benefit from lower newsprint prices this year.
Associated Newspapers
Associated Newspapers' total revenues for the quarter fell by 12% to £208 million, an underlying# fall of 6%, after excluding the Evening Standard and London Lite (which was closed on 13th November, 2009). Underlying# circulation revenues were 6% lower than the same period last year. The investment in a sustained subscription/home delivery initiative, the upfront cost of which is charged against circulation revenues, has contributed to an improved circulation performance for both the Daily Mail and The Mail on Sunday. Both titles achieved an increased market share in the quarter.
Total underlying# advertising revenues in the quarter fell by 11%. Within this figure, revenues from Associated’s newspaper operations fell by 8%. Display was down 8%, classified down 10% and digital up 4%. Retail, the largest display category, grew by 7% in the quarter and motors advertising was flat. All other major categories were down year on year. The revenues of AN Digital from its core operations in jobs, property and motors fell by 13%, due mainly to the depressed recruitment market.
There is a continuing focus on costs, which fell by 7% in the quarter on a like for like basis, despite significant investment in promotional spend on the national newspapers.
Trading in January has shown a marked improvement on last year, with advertising revenue up year on year in the newspapers and their online “companion” sites, although, as usual, visibility on future advertising performance is very limited. At AN Digital too there are clear signs that things are improving, particularly in jobs and property.
Northcliffe Media
Northcliffe Media’s total revenues for the quarter were down by 15% to £73 million. Of this, UK revenues were down 14% and International down 23% (down an underlying 27% in local currency).
In the UK, comparisons with the previous year are slightly distorted by the inclusion of a 53rd week ending 4th October in the prior financial year. We estimate that underlying# revenues for the quarter were 11% below last year. All revenue percentages below are similarly adjusted for improved comparability.
UK advertising revenues for the quarter were 13% lower than the same period last year, compared with a year-on-year decline of 18% in the previous quarter. Trading conditions were challenging particularly for recruitment advertising which was down 33%. In addition, retail declined by 7%, Property was down 5% and Motors fell by 8%. January has seen a continuing improvement in advertising trends.
UK digital revenues for the quarter were 11% higher than the same period last year, supported by good performances from Property, Motors and Retail.
UK circulation revenues for the quarter were 8% below last year. Copy sales of daily and weekly paid for titles declined by 8% and 5% respectively in the July to December 2009 ABC period (unaudited).
The continuing transformation of Northcliffe’s cost base resulted in UK publishing costs being 18% lower than last year. As a consequence, profits* were up on the previous year.
Net debt / financing
Net debt at 31st December, 2009 fell from £1,049 million at 4th October, 2009 to £1,030 million. The £64 million proceeds from the sale of 50% of DMGRA were partly offset by the traditional delays in debtor collection over the New Year period.
The Group spent £10 million on acquisitions, all being pre-contracted payments, including shares issued under subsidiary option plans.
In December 2009, the Group extended the maturity of its bond debt by issuing further 5.75% Bonds due 2018 in exchange for £144 million of 7.5% Bonds due 2013.
DMGT’s weighted average number of shares in issue for the full year is currently estimated at 382.9 million (2009 382.9 million).
DMGT has taken its share of the final dividend from Euromoney in the form of a scrip. This has increased the Group’s equity interest from 66.8% to 67.1%, though it is expected to be diluted back towards 66% on or after 12th February through the vesting of the final tranche of Euromoney’s capital appreciation plan.
Notes
* References to operating profit are to adjusted operating 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 compare 13 weeks with 13 weeks and exclude the Evening Standard and London Lite.
The average £:$ exchange rate for the first quarter was £1: $1.63 (against £1:$1.57 in the same period last year). The rate at 31st December, 2009 was $1.61, compared to $1.59 at 4th October, 2009.
Next trading update
The Group’s next scheduled announcement of financial information will be a pre-close trading update, provisionally scheduled for 30th March 2010. This will be followed on 19th April, 2010 by an Investor Day."
