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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Daily Mail and General Trust plc    DMGT   GB00BJQZC279

DAILY MAIL AND GENERAL TRUST PLC

(DMGT)
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Daily Mail and General Trust : Pre-close trading update and impact of COVID-19

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03/26/2020 | 02:14am EDT

26 March 2020

Daily Mail and General Trust plc (DMGT)

Pre-close trading update and impact of coronavirus (COVID-19)

Ahead of DMGT's half year end on 31 March 2020, this statement provides an update on progress in the current year and the potential impact of coronavirus (COVID-19) on the Group's businesses.

Five month trading in line with expectations; outlook adversely impacted by COVID-19

Paul Zwillenberg, CEO, commented: 'I would like to offer my sincere thanks to all our employees, customers, business partners and their families for their amazing work, flexibility and loyalty at this difficult time.

The health and wellbeing of everyone who produces or consumes our products is paramount and we are committed to doing everything we can to keep them all safe. These are not normal times, but I have been truly inspired by the ability of all DMGT's companies to adapt to the current restrictions and maintain their standards of excellence. We are determined to continue to deliver our compelling journalism, information, analysis, insight and events to our loyal customers.

From a financial perspective, trading for the first five months of the financial year was in line with our expectations, but the impact of COVID-19 is likely to affect our business adversely. I am confident, however, that the Group's diversified portfolio and strong financial position, with more than £700m of cash and bank facilities available, will enable us to withstand a sustained period of global economic uncertainty and continue to invest through the cycle.'

Five month Group trading to 29 February 2020

· DMGT Group revenue up 3% on an underlying¹ basis, in line with expectations

· Solid performance across B2B and Consumer Media

· Strong balance sheet: pro forma net cash² £155m at 29 February 2020; £374m committed undrawn bank facilities

Revenue growth v prior year

5 months to 29 February 2020

Revenue share

5 months

FY 2020

Reported growth

Underlying¹ growth

Group revenue

100%

-3%

+3%

B2B

51%

-8%

+4%

Insurance Risk

17%

+2%

+2%

Property Information

14%

-16%

0%

EdTech

6%

+10%

+10%

Events and Exhibitions

13%

+10%

+8%

Energy Information

1%

-77%

N/A

Consumer Media3

49%

+3%

+1%

Business to Business (B2B)

· Underlying revenue growth of 4%, reflecting continued growth from Insurance Risk, EdTech and Events and Exhibitions

· Reported revenues down 8%, reflecting disposals, notably of Genscape, the Energy Information business that was sold in November 2019

Consumer Media

· Underlying revenue growth of 1%, including 19% digital advertising growth

· Reported revenue growth of 3%; results include three months' trading for the 'i', the UK national newspaper and website, which was acquired at the end of November 20194

Five month3 revenue growth v prior year

Reported

Underlying¹

Consumer Media

+3%

+1%

Advertising

+10%

+9%

Circulation

+1%

-5%

Net cash

The balance sheet remains strong, with pro forma net cash² at 29 February 2020 of £155m compared to £160m at 31 December 2019, reflecting trading cash generation and a £38m payment of the 2019 final dividend in February.

Impact of coronavirus (COVID-19) and outlook

At this stage, the severity and duration of the impact of COVID-19 and the escalating measures to control it are unclear, with a range of possible outcomes. Although there has been limited impact on the Group's performance to date, we have started to see the effects, notably on our Events and Exhibitions and Consumer Media businesses, and the financial performance in FY 2020 is now likely to be lower than the existing guidance5. We consider it prudent to suspend the guidance at this stage and will provide an update at the Half Year results on 28 May 2020.

The Board is confident that DMGT is positioned to withstand a sustained period of global economic uncertainty. The Group benefits from being a diverse portfolio, operating across multiple sectors, geographies and business models. DMGT's balance sheet strength, including £363m of gross cash and £374m of committed undrawn bank facilities2, provides financial resilience and enables it to continue to adopt a long-term approach.

Consumer Media

Total advertising revenues generated by the Consumer Media business are likely to be lower than previously expected, notably for print advertising. Circulation revenues are also now expected to be adversely affected as some readers are unable to buy newspapers from retail outlets and if deliveries are not possible6.

Events and Exhibitions

The Events and Exhibitions business, dmg events, which accounted for 8% of DMGT's revenues in FY 2019, will be affected by COVID-19, particularly if more exhibitions are postponed or cancelled, although the adverse impact on profits is expected to be partially offset by insurance coverage.

dmg events benefits from timing, with two of its three largest events having already been held in November 2019 and the third, Gastech, scheduled to be held in Singapore in September 2020. FY 2020 was expected to have a similar revenue profile to FY 2019, when 59% fell in the five months to February, 12% in the six months from March to August and 29% in September, but this may now change.

UK Property Information

Landmark6, the Property Information business, will be affected if COVID-19 leads to a reduction in the volume of residential or commercial property transactions in the UK.

Other B2B businesses

DMGT's other B2B businesses, RMS in Insurance Risk, Trepp in Property Information and Hobsons in EdTech, benefit from collectively deriving c.90% of their revenues from subscriptions. COVID-19 may, however, result in customers taking longer to make purchasing decisions and delay projects.

Enquiries

Investors:

Tim Collier, Group CFO

+44 20 3615 2902

Adam Webster, Head of Investor Relations

+44 20 3615 2903

Media:

Doug Campbell / Paul Durman, Teneo

+44 20 7260 2700

Next trading update

The Group's next scheduled announcement of financial information will be its results for the half year ended 31 March 2020, which will be released on 28 May 2020.

Market Abuse Regulation

The information communicated in this announcement includes inside information.

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.

Person responsible for arranging the release of this announcement:

Fran Sallas, Company Secretary

+44 20 3615 2904

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 The actual net cash position as at 29 February 2020 was £197m including c.£75m 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 £272m. 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 £155m as at 29 February 2020 is stated after adjusting to deduct the £117m cash and to exclude the c.£75m of IFRS 16 related lease liabilities.

The pro forma net cash of £155m includes gross cash of £363m, £202m bond debt and £6m net debt in respect of loan notes, 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. The US$ denominated elements of net cash and the committed undrawn bank facilities are stated at a $1.28 exchange rate.

3 Consumer Media results are for the 21 weeks to Sunday 23 February 2020 and are compared to the same 21 week period of the prior year.

4 The reported growth rates include revenues from the 'i' for the three months to February 2020 in FY 2020 but do not include any revenues from the 'i' in FY 2019. For the purposes of calculating the underlying growth rates, the FY 2019 revenues are adjusted to include revenues from the 'i' for the three months to February 2019. Following reviews by the UK Competition and Markets Authority and Ofcom, the acquisition of the 'i' was cleared by the Secretary of State for Digital, Culture, Media and Sport on 24 March 2020.

5 DMGT's previousguidance for FY 2020 was that Group revenues would be broadly stable on an underlying basis and that the Group cash operating income margin would be expected to exceed the operating profit margin which was expected to be around 10%. The cumulative net losses from JVs and associates were expected to exceed £10m, net finance costs were expected to be in the £10m to £15m range and the effective tax rate was expected to be around 22%.

6 In the six months to September 2019, print advertising accounted for 13% of DMGT's revenues, digital advertising for 11%, circulation for 20% and Landmark, the Property Information business, for 11%.

The average £:US$ exchange rate for the five months was £1:$1.29, consistent with £1:$1.29 in the same period last year. The rate as at 29 February 2020 was $1.28 (30 September 2019, $1.23).

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 futureand 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 Groupundertakes 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 Groupcannot 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

Disclaimer

DMGT - Daily Mail & General Trust plc published this content on 26 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2020 07:12:02 UTC

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Sales 2020 1 245 M 1 537 M 1 537 M
Net income 2020 194 M 240 M 240 M
Net cash 2020 218 M 269 M 269 M
P/E ratio 2020 10,4x
Yield 2020 3,45%
Capitalization 1 600 M 1 975 M 1 975 M
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EV / Sales 2020 1,11x
Nbr of Employees 5 950
Free-Float 73,5%
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Mean consensus HOLD
Number of Analysts 11
Average target price 681,50 GBp
Last Close Price 716,00 GBp
Spread / Highest target 21,5%
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Managers
NameTitle
Paul A. Zwillenberg Chief Executive Officer & Director
Viscount Rothermere Chairman
Timothy Guy Collier Group Chief Financial Officer & Executive Director
Rob Chandhok Group Chief Technology Officer
Kevin Joseph Beatty Executive Director
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