Daily Mail & General Trust PLC Nine Month Trading Update (7826V)

TIDMDMGT

RNS Number : 7826V

Daily Mail & General Trust PLC

26 July 2018

26 July 2018

Daily Mail and General Trust plc ('DMGT')

Nine Month Trading Update FY 2018

DMGT reports that the performance for the first nine months of FY 2018 was in line with our expectations. The trading outlook for the year remains unchanged and consistent with current market expectations(2) .

 
 Revenue Growth v Prior Year     Pro Forma(3)   Underlying(1) 
  9 Months to June 2018            reported 
 Group revenue                      -10%             +0% 
                               --------------  -------------- 
 B2B                                -14%             +4% 
                               --------------  -------------- 
 Insurance Risk                      -2%             +7% 
                               --------------  -------------- 
 Property Information               -13%             -1% 
                               --------------  -------------- 
 EdTech                             -40%            +10% 
                               --------------  -------------- 
 Energy Information                  -1%             +6% 
                               --------------  -------------- 
 Events and Exhibitions             -23%             +2% 
                               --------------  -------------- 
 Consumer Media(4)                   -5%             -4% 
                               --------------  -------------- 
 

Pro forma reported growth rates are calculated after restating prior year revenues to exclude Euromoney, the B2B business, which ceased to be a subsidiary at the end of December 2016.

Business to Business (B2B)

-- Broad-based underlying(1) revenue growth of 4% for the nine months, with continued good levels of growth delivered from Insurance Risk, EdTech, Energy Information and Events and Exhibitions.

-- Pro forma(3) reported revenue was 14% lower, reflecting disposals and the weaker US dollar, which affected all of the B2B divisions.

-- Full Year guidance maintained: low-single digit underlying revenue growth with adjusted operating profit margin in the mid-teens.

Insurance Risk (RMS)

Underlying revenue growth was 7%, including 4% growth in subscription revenues. The core modelling business remains strong and RMS continues to enhance its software and pursue a modular approach to the RMS(one) platform.

Property Information

Revenue decreased by 1% on an underlying basis, as growth from the US businesses was more than offset by Europe, given low transaction volumes in the UK property market. Reported revenue performance was impacted by the disposal of EDR, the partial disposal of SiteCompli in April 2018 and the cessation of trading at Xceligent in December 2017.

EdTech (Hobsons)

Underlying revenue growth of 10% reflected continued strong growth from each of the businesses: Naviance, Intersect and Starfish. Reported revenue performance was impacted by the disposal of the Admissions and Solutions businesses in September and October 2017.

Energy Information (Genscape)

Underlying revenue growth of 6% was delivered with continued growth from the oil, power and gas businesses, partly offset by lower revenue at the solar business.

Events and Exhibitions (dmg events)

Underlying revenue growth was 2% for the nine months and, as expected, there were no major events held in the third quarter. Reported revenue performance was affected by the absence of Gastech, which last occurred in April 2017 and will be held again in September 2018.

Consumer Media (dmg media)

-- Underlying(1) revenue decline of 4% and reported revenue decline of 5%, in line with our expectations.

-- Full Year guidance maintained: mid-single digit underlying decline in revenues with the adjusted operating profit margin around 10%.

 
 Revenue Growth v Prior Year    Reported   Underlying(1) 
  9 Months to June 2018(4) 
 dmg media                        -5%           -4% 
                               ---------  -------------- 
     Advertising                  -4%           -2% 
                               ---------  -------------- 
     Circulation                  -6%           -6% 
                               ---------  -------------- 
 

Circulation revenue declined 6%, with volume reductions partly offset by the cover price increase of The Mail on Sunday in October 2017. There was an underlying decrease in advertising revenue of 2% across dmg media, with the 5% decline in print being partly offset by 4% growth from digital(5) . The Mail newspaper titles continue to hold significant market shares and we remain confident in the future growth opportunities at MailOnline, which continues to improve audience engagement(6) .

Joint ventures and associates

On 18 June 2018, ZPG Plc announced that all resolutions relating to Silver Lake's offer to acquire the business had been approved. Consequently, DMGT ceased to recognise its share of ZPG Plc's profits from that date and will only include the results for the first eight and a half months of the year. The Full Year share of operating profits from all joint ventures and associates is therefore now expected to be around GBP70m, rather than the previous guidance of at least GBP75m.

Net debt

Net debt at 30 June 2018 was GBP447m, compared to GBP534m at 31 March 2018, including the benefit of GBP146m of proceeds from the disposal of EDR, which completed in April 2018. On 25 July 2018, DMGT received GBP642m of proceeds on the disposal of its c.30% stake in ZPG Plc and the Group is now in a net cash position.

For further information

 
 For analyst and institutional enquiries: 
                                                    [phone] 
 Tim Collier, Chief Financial Officer                2902 
 
                                                      [phone] 
   Adam Webster, Head of Management Information       2903 
 and Investor Relations 
 
 For media enquiries: 
                                                    [phone] 
 Paul Durman / Doug Campbell, Teneo Blue Rubicon     2700 
 

Conference call

A conference call will be held with City analysts at 8.00am on 26 July 2018. The dial-in number is [phone]. A recording of the call will be available on DMGT's website at www.dmgt.com.

Next trading update

The Group's next scheduled announcement of financial information will be its results for the year ended 30 September 2018, which will be released on the morning of 29 November 2018. As previously communicated, DMGT does not intend to provide a pre-close trading update in September.

About DMGT

DMGT manages a diverse, multinational portfolio of companies, with total revenues of around GBP1.5bn, that provide businesses and consumers with compelling information, analysis, insight, events, news and entertainment. DMGT is also a founding investor and the largest shareholder of Euromoney Institutional Investor PLC.

Notes

1 Underlying revenue is revenue on a like-for-like basis, adjusted for constant exchange rates, the exclusion of disposals and closures, the inclusion of the year-on-year organic growth from acquisitions and for the consistent timing of revenue recognition. For events, the comparisons are between events held in the year and the same events held the previous time. For Consumer Media, underlying revenues exclude low margin newsprint resale activities.

2 Current City analyst expectations for DMGT for FY 2018 are based on the eight analysts that have updated their projections since the Half Year 2018 results were released on 24 May 2018. Expectations range from GBP1,389m to GBP1,480m for revenue, from GBP170m to GBP180m for adjusted profit before tax and from 39.4p to 42.3p for adjusted basic earnings per share with a consensus of GBP1,420m, GBP174m and 40.5p. Consensus figures currently include an average GBP73m share of adjusted operating profits from joint ventures and associates, compared to revised guidance of around GBP70m. Adjusted results are stated before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, pension finance credits and fair value adjustments.

3 Pro forma reported growth rates are calculated after restating prior year revenues to exclude Euromoney, which ceased to be a subsidiary at the end of December 2016, consistent with the ownership in the current year. Treating Euromoney as a subsidiary for the three months to December 2016, the absolute reported growth rates for the nine months were B2B -25% and Group -17%. For the avoidance of doubt, pro forma growth rates do not include any adjustments for the impact of exchange rates, disposals, closures, acquisitions or the timing of events.

4 Consumer Media's results are for the thirty nine weeks to Sunday 1 July 2018 and are compared to the same thirty nine week period of the prior year.

5 Underlying advertising growth rates include a decline of 4% across the Mail titles, with a 10% underlying decline in print advertising being partly offset by 4% underlying growth from MailOnline.

6 Since late December 2017, dmg media has stopped making multiple copy sales of the Daily Mail and The Mail on Sunday; for example, to airlines to give to their customers free of charge. Multiple copy sales previously accounted for approximately 5% of both the Daily Mail's and The Mail on Sunday's circulation volumes. Despite this impact, the Daily Mail's 23.3% average market share during the nine months to June 2018 was in line with the 23.3% average during the nine months to June 2017 and The Mail on Sunday's 21.8% average market share during the nine months to June 2018 was only marginally lower than the 22.1% average during the nine months to June 2017. Circulation market share figures are calculated using ABC's National Newspapers Reports, excluding digital subscribers. MailOnline's average global daily unique browsers during the nine months to June 2018, excluding other platforms such as Snapchat and Facebook video, were 13.3 million, down 12% compared to the nine months to June 2017, due to reduced indirect traffic via search and social platforms. The average daily total minutes spent on MailOnline during the nine months to June 2018 was 146 million, up 5% compared to the nine months to June 2017, reflecting increased levels of engagement with the direct audience.

The average GBP:$ exchange rate for the nine months was GBP1:$1.36 (against GBP1:$1.25 in the same period last year).

This trading update is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this trading update save as would arise under English law. Statements contained in this trading update are based on the knowledge and information available to the Group's Directors at the date it was prepared and therefore facts stated and views expressed may change after that date.

This document and any materials distributed in connection with it may include forward-looking statements, beliefs, opinions or statements concerning risks and uncertainties, including statements with respect to the Group's business, financial condition and results of operations. Those statements and statements which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Group's Directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and which may cause results and developments to differ materially from those expressed or implied by those statements and forecasts. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this trading update. The Group undertakes no obligation to release any update of, or revisions to, any forward-looking statements, opinions (which are subject to change without notice) or any other information or statement contained in this trading update. Furthermore, past performance of the Group cannot be relied on as a guide to future performance.

No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per DMGT share for the current or future financial years would necessarily match or exceed the historical published earnings per DMGT share.

Nothing in this document is intended to constitute an invitation or inducement to engage in investment activity. This document does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This document does not constitute a recommendation regarding any securities.

Daily Mail and General Trust plc

Northcliffe House, 2 Derry Street,

London, W8 5TT

www.dmgt.com

Registered in England and Wales No. 184594

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July 26, 2018 02:00 ET (06:00 GMT)