Introduction
Ahead of its half year end on 4th April, 2010, this statement provides a further update on DMGT’s progress in the current year. It covers the five month period to the end of February 2010 and includes comments on March, where appropriate.
Summary
It is less than seven weeks since our first quarter Interim Management Statement, within which period the generally positive trends in our international B2B operations have remained broadly unchanged and the trends in our UK consumer media businesses have continued to improve. Trading has continued to be ahead of our expectations, but we remain cautious about the second half of the year, particularly in the light of political uncertainty in the UK after the General Election. We continue to focus on driving profitable organic growth across all our divisions.
Revenues for the period were 13% lower than for the corresponding period last year, as expected, but only down 5% on an underlying# basis, allowing for the impact of currency and business portfolio changes. Overall, margins* and operating profits* have continued to improve.
Business to business (‘B2B’)
Revenues from the Group’s B2B operations for the period were 17% lower than last year, with an underlying# fall of 4%. This performance includes continued underlying# growth from the non-event B2B businesses. At Risk Management Solutions this was 8%, reflecting continued solid growth from its core modelling business. DMG Information grew by an underlying# 6%, including an increase of 10% from the property information companies and good growth from our companies in the education, financial and energy information markets. DMG World Media’s underlying# revenues were 11% lower, as expected, reflecting the late cycle impact of the economic downturn on event businesses. These figures include those of Euromoney Institutional Investor which released its trading update on 26th March.
Consumer media
Revenues from the Group’s consumer operations for the period were 11% lower than for the corresponding period last year, an underlying# fall of 6%. These figures include the revenues of DMG Radio Australia up until 16th December 2009 after which date it is being accounted for as an associate. A&N Media’s improving performance in the quarter to March is accentuated by easier comparatives, given the state of the markets a year ago.
For Associated Newspapers, total underlying# advertising revenues for the period were down 2%. For the quarter to March so far, they have risen by 8% with display up by 13% and AN Digital up 3%. As usual, visibility on future advertising performance remains very limited. Though underlying# circulation revenues were 4% lower, both the Daily Mail and The Mail on Sunday increased their market share.
For Northcliffe Media, underlying# UK revenues for the period were 9% lower than last year with advertising revenues down 10%. Advertising trends have continued to improve: for the quarter to March so far they were 5% lower, with recruitment revenues 14% lower, but property revenues 4% above last year. Circulation revenues fell by 7% compared to last year for the five month period.
Group
Results* for the first half of the year are expected to show a significant increase on last year’s first half year largely due to the improvement in the profitability* of the consumer businesses. B2B profit* growth will be partially offset, as expected, by a lower contribution from DMG World Media, reflecting the divestments of businesses last year as part of our strategy to focus the portfolio on the B2B sector, and the absence of one large biennial event.
This first half improvement will be achieved despite a more normal level of central costs this half year and the change of last year’s IFRS 19 pensions finance credit into a charge (henceforth to be reported within net finance costs, as previously explained). Prior year operating profit* and net finance costs will be restated for this change in presentation. There will be exceptional costs of around £10 million, mainly at A&N Media, arising from reorganisation costs, and exceptional tax credits, currently expected to be around £40 million, due to the release of provisions no longer required.
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 exclude the Evening Standard, London Lite and the discontinued television activities of Teletext.
The average £:$ exchange rate for the half year is estimated at £1: $1.60 (against £1:$1.51 in the same period last year). For the 5 month period, the rate is £1: $1.60 (against £1:$1.45 in the same period last year).
