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Nine Month Trading Update FY 2020

23 Jul 2020 07:00

RNS Number : 8106T
Daily Mail & General Trust PLC
23 July 2020
 

23 July 2020

 

Daily Mail and General Trust plc ('DMGT')

 

Nine Month Trading Update FY 2020

 

Strong first five months; Covid-19 disruption affecting trading since March and outlook remains uncertain

 

Group

· Nine months to 30 June 2020:

o Group revenue of £934m, down an underlying¹ 7%

o First five months to end February, before Covid-19 impact, Group revenue up 3% underlying

o Group adjusted operating profit of £63m (9m FY 2019: £112m)

o Seamless delivery of all products and services other than cancelled exhibitions

· Q3 FY 2020²:

o Group revenue of £241m, down an underlying 23%

o Continued growth from B2B subscription businesses

o Covid-19 disruption significantly affecting UK Property Information, Events & Exhibitions and Consumer Media

o Consumer Media on improving trend since April 2020

o Group adjusted operating loss of £2m (Q3 FY 2019: £22m profit)

o All businesses, other than dmg events, operated profitably in June 2020

· Continued commitment to maintaining financial flexibility; pro forma net cash £144m³ as at 30 June 2020

 

Revenue Growth

versus Prior Year

Revenue share

9 months FY 2020

9 months to 30 June 2020

 

3 months to

30 June 2020² (Q3) Underlying¹

growth

Reported

growth

Underlying¹

growth

Group revenue

100%

-11%

-7%

 

-23%

B2B

50%

-14%

-3%

 

-15%

Insurance Risk

20%

+4%

+2%

 

+3%

Property Information

14%

-21%

-10%

 

-28%

EdTech

7%

+10%

+9%

 

+6%

Events and Exhibitions

8%

-6%

-11%

 

-94%

Consumer Media4

50%

-9%

-11%

 

-30%

 

Business to Business (B2B)

· Nine month underlying revenue decrease of 3%:

o Growth of 4% from subscription businesses: Insurance Risk, US Property Information and EdTech

o UK Property Information down 15%

o Events and Exhibitions: no events held since February 2020

· Q3 underlying revenue decrease of 15%:

o Growth of 4% from subscription businesses

o UK Property Information down 39%

· Reported revenues down 14% for nine months including 14% reduction due to disposals

 

Insurance Risk (RMS)

Revenue grew 2% on an underlying basis in the nine months ending 30 June 2020, including 3% in Q3. The performance reflects continuing high renewal rates from existing customers as well as sales to new customers. New products have been released as planned and customer feedback remains encouraging.

 

Property Information

Revenue decreased by 10% on an underlying basis in the nine months to June 2020, including 28% in the third quarter. There was continued good growth from Trepp, the US business, reflecting increased demand as customers seek to understand the risk and cash flow profile associated with the debt instruments that they hold. US growth was more than offset by Landmark Information Group (Landmark) due to a marked reduction in both commercial and residential property transactions in the UK. Landmark's revenues decreased by an underlying 39% in the third quarter of the financial year.

 

Although there are some early signs of increased activity in the UK property market following the easing of Covid-19 lockdown restrictions and reductions in stamp duty, we expect it to take time for transaction volumes to recover and flow through to Landmark's revenues. Despite Landmark making a loss in the third quarter, the business delivered a small profit in June and is well positioned to further increase its cash generation when market conditions improve.

 

Property Information's reported revenues decreased by 21% in the nine months, including a 12% impact from the absence of On-geo, which was sold in June 2019, and BuildFax, which was sold in October 2019.

 

EdTech (Hobsons)

Underlying revenue growth of 9% for the nine months included 6% growth in the third quarter. There was continued growth from each of Hobsons' three product lines, Naviance, Intersect and Starfish. The Covid-19 pandemic continues to impact both the US higher education and K-12 markets with Hobsons' revenue growth slowing as customers face significant budget pressure.

 

Events and Exhibitions (dmg events)

Revenues decreased by an underlying 11% for the nine months. No major events were scheduled to be held in the third quarter. The final quarter of the year is usually much more significant and almost all events have been cancelled or postponed due to Covid-19. Gastech, which was scheduled to be held in Singapore in September 2020, has been postponed to September 2021.

 

For FY 2021, the scheduling of events has also been affected. Big 5 Dubai has been postponed to September 2021 from November 2020 and the ADIPEC exhibition will not be held in FY 2021, having been rescheduled to November 2021 from November 2020.

 

DMGT expects to recover US$20m in respect of FY 2020 event cancellations and postponements, from its insurance cover for communicable diseases, although the exact timing of recognition is uncertain. The Group has similar coverage for up to US$20m in respect of FY 2021 events.

 

Consumer Media 

· Underlying revenue decrease of 11% in the nine months, including 30% in the third quarter and 28% in the month of June 20205

· Reported revenue decrease of 9% in the nine months, including the benefit of seven months' trading of the 'i'6

· MailOnline delivered underlying revenue growth of 3% in the nine months

· Return to profitability in June 2020 with mid-single digit adjusted operating margin in the month

 

Revenue Growth v Prior Year

 

9 Months to 30 June 20204

 

3 Months to 30 June 20204

Underlying¹

Reported

Underlying¹

Consumer Media

-9%

-11%

 

-30%

Advertising

-10%

-12%

 

-45%

Circulation

0%

-7%

 

-12%

 

Circulation revenue decreased an underlying 7% over the nine months, including 12% in the third quarter which was affected by the UK lockdown. Volume reductions were partly offset by the cover price increases of the Saturday edition of the Daily Mail, from £1.00 to £1.10 in January 2020, and the weekend edition of the 'i', from £1.00 to £1.20 in September 2019. The Mail newspaper titles continued to grow their market shares7.

 

Since March, the impact of Covid-19 has resulted in a pronounced reduction in advertising revenues across both print and digital formats. Growth in online traffic has helped to mitigate the impact on digital but not enough to compensate for the overall reduction in advertising spend. Metro has been particularly affected as circulation volumes are currently approximately a quarter of their usual levels.

 

Total advertising revenues for the nine months decreased by an underlying 12%, including 45% in the third quarter. A 24% decline in print was partly offset by 4% growth from digital over the nine months. The third quarter performance reflected underlying reductions in print and digital advertising of 69% and 17% respectively8. We remain confident in the future growth opportunities at MailOnline, driven by increasing engagement with the direct audience9.

 

Net cash position 

Pro forma net cash³ at 30 June 2020 was £144m compared to £163m at 31 March 2020. The reduction included cash outflows for the purchase of shares by the Employee Benefit Trust, the payment of the interim dividend and annual bond interest and the acquisition of 11 small events from CWC Group in April 2020. Gross cash was £342m and the Group has £378m of committed undrawn bank facilities.

 

Outlook

DMGT's businesses are positioned to respond to market conditions as lockdown restrictions change and each has a plan for the different scenarios that could occur. At this stage, the outlook for the Group remains uncertain and suspension of formal guidance continues.

 

 For further information

 

For analyst and institutional enquiries:

 

Tim Collier, Chief Financial Officer

+44 20 3615 2902

Adam Webster, Head of Investor Relations

+44 20 3615 2903

 

 

For media enquiries:

 

Doug Campbell, Teneo

+44 7753 136628

Jesse Matthews, Teneo

+44 7912 783513

 Conference call

A conference call will be held with City analysts at 8.00am on 23 July 2020. To participate and register, please visit www.dmgt.com/tradingupdatecall. A recording of the call will be available on DMGT's website at www.dmgt.com.

 

Full Year Results FY 2020

The Group's next scheduled announcement of financial information will be its results for the year ended 30 September 2020, which will be released on the morning of 23 November 2020.

 

About DMGT

DMGT manages a portfolio of companies that provide businesses and consumers with compelling information, analysis, insight, events, news and entertainment. The Group takes a long-term approach to investment and has market-leading positions in consumer media, insurance risk, property information, education technology and events & exhibitions. In total, DMGT generates revenues of around £1.3bn.

 

 

Notes

 

1 Underlying revenue is revenue on a like-for-like basis, adjusted for constant exchange rates, the exclusion of disposals and business 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 that were scheduled to be held in the nine-month period and the same events held the previous time, so are adversely affected by the cancellation or postponement of events. For Consumer Media, underlying revenues exclude low margin newsprint resale activities.

 

2 The Board does not consider it helpful, in normal circumstances, to provide information on short-term trading. However, given the exceptional nature and uncertain duration of the Covid-19 crisis, some financial information for the third quarter of the year specifically is being provided in this instance to inform investors of recent trading dynamics.

 

3 The actual net cash position as at 30 June 2020 was £162m including c.£99m of additional lease liabilities in respect of the adoption of IFRS 16, the lease accounting standard. Excluding the additional lease liabilities, net cash would have been £261m. However, £117m has been made available to the Group's pension schemes but continues to be held as cash by DMGT. The pro forma net cash of £144m as at 30 June 2020 is stated after adjusting to deduct the £117m cash and to exclude the c.£99m of IFRS 16 related lease liabilities.

 

The pro forma net cash of £144m includes gross cash of £342m, £203m bond debt and £5m net cash in respect of collateral and derivatives. Gross cash includes cash, cash equivalents and short-term deposits, net of overdrafts, and excludes the £117m made available to the pension schemes.

 

4 Consumer Media's nine month results are for the 39 weeks to Sunday 28 June 2020 and are compared to the same 39 week period of the prior year. The three month results are for the 13 weeks to Sunday 28 June 2020 and are compared to the same 13 week period of the prior year.

 

5 Consumer Media's underlying revenue decrease of 30% in Q3 includes 33% in April, 30% in May and 27% in June.

 

6 The 'i', the UK national newspaper and website, was acquired at the end of November 2019. Reported growth rates include revenues from the 'i' for the seven months to June 2020 in FY 2020 but do not include any revenues from the 'i' in FY 2019. The underlying growth rates include the year-on-year organic growth of the 'i'.

 

7 The Daily Mail's market share of UK retail sales averaged an estimated 26% in the nine months to 30 June 2020 (9m 2020), an increase from 25.4% in the nine months to 30 June 2019 (9m 2019), and The Mail on Sunday's UK retail market share averaged an estimated 24%, an increase from 22.7% in 9m 2019. The 'i' achieved an estimated market share of UK retail sales of 4% in 9m 2020, consistent with 4.0% in 9m 2019. Circulation market share figures are calculated using ABC's National Newspapers Reports, excluding digital subscribers. ABC's public figures no longer include The Sun, The Times, The Sunday Times, The Daily Telegraph or The Sunday Telegraph and DMGT's estimates are used for calculating the circulation volumes of these titles.

 

8 Underlying advertising growth rates for the nine months include a 7% decrease across the Mail titles, with a 22% underlying decline in print advertising partly offset by 3% underlying growth from MailOnline. The underlying decrease in total advertising revenues in the third quarter includes a 33% decrease across the Mail titles, with a 55% decline in print and 18% decrease from MailOnline.

 

9 MailOnline's average global daily unique browsers in the nine months to 30 June 2020 (9m 2020), excluding other platforms such as Snapchat and Facebook video, was 17.4 million. This was a 37% increase compared to the nine months to 30 June 2019 (9m 2019), partly driven by increased indirect traffic via search and social platforms. The average daily total minutes spent on MailOnline during 9m 2020, excluding time spent viewing videos, was 148 million, up 16% compared to 9m 2019. The direct audience accounted for 79% of minutes spent during 9m 2020, compared to 81% in 9m 2019, reflecting continued high levels of engagement with the direct audience.

 

The average £:$ exchange rate for the nine months was £1:$1.27 (against £1:$1.29 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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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