Source - LSE Regulatory
RNS Number : 3859M
Daily Mail & General Trust PLC
21 January 2021
 

21 January 2021

 

Daily Mail and General Trust plc ('DMGT')

 

First Quarter Trading Update FY 2021

 

First quarter revenue in line with management expectations; trading environment remains uncertain; continued confidence in the long-term

 

Group

·  Group revenue of £304m, down an underlying¹ 15%; excluding Events & Exhibitions, down an underlying¹ 5%

·   Consumer Media and Events & Exhibitions particularly impacted by Covid-19 pandemic, partially offset by growth in digital advertising

·    B2B subscription growth and strong UK Property Information performance

·    Strong financial position maintained with pro forma net cash² £55m at 31 December 2020

 

Revenue growth v prior year

3 months to 31 December 2020

Revenue share

Q1 FY 2021

 Reported growth

Underlying¹ growth

Group revenue

100%

-20%

-15%

B2B

46%

-30%

-17%

  Insurance Risk

20%

-3%

0%

  Property Information

18%

+20%

+18%

  EdTech

7%

-2%

0%

  Events & Exhibitions

1%

-95%

-92%

Consumer Media3

54%

-9%

-13%

 

 

 

 

Group excluding Events and Exhibitions

 

-5%

-5%

B2B excluding Events and Exhibitions

 

0%

+6%

 

Business to Business (B2B)

·    Underlying revenue decrease of 17% in total; underlying revenue growth of 6% excluding Events and Exhibitions:

Growth of 1% from subscription businesses: Insurance Risk, US Property Information and EdTech

UK Property Information up 22%

Events & Exhibitions: no major physical events held, absence of ADIPEC

·    Reported revenues down 30% in total, reflecting disposals, weaker US dollar and adverse impact of cancelled and postponed events.  Excluding Events & Exhibitions, reported revenues in line with last year.

 

Insurance Risk (RMS)

Revenue was in line with the prior year on an underlying basis.  There was continued growth from product subscriptions. The customer renewal rate remains strong and has increased since FY 2020. This revenue growth was offset by a reduction from consulting services and one-time items, driven by the impact of Covid-19, with some customer budgets under pressure.  Customer engagement with the new products and services remains encouraging and RMS is expected to deliver modest revenue growth in FY 2021.

 

Property Information

Revenue grew by an underlying 18%, with particularly strong growth from Landmark Information Group in the UK, which accounts for a little less than three quarters of Property Information revenues.  Landmark benefitted from high transaction volumes in the residential property market, supported by reductions in stamp duty that were introduced in July 2020 and which are scheduled to end in March 2021.  There was also an acceleration in revenue growth from Trepp in the US, which has experienced increased demand as customers seek to further understand their risk exposure. 

 

Reported revenue growth of 20% includes the impact of the acquisition of OneSearch Direct by Landmark in December 2019.  Property transaction volumes in the UK are expected to remain volatile and to be affected by lockdown restrictions and the reintroduction of stamp duty.

 

EdTech (Hobsons)

Revenue was in line with the prior year on an underlying basis.  This reflected continued growth from the higher education products, Intersect and Starfish, offset by the adverse impact of customer budget pressure on Naviance, the K-12 product.  The US education markets remain unsettled by the social and economic ramifications of the Covid-19 pandemic, which is affecting renewal rates and new bookings.  Over the medium term, the business remains well positioned to deliver growth.

 

Events and Exhibitions (dmg events)

Two of the business's largest events are usually held in November but, as announced following the onset of Covid-19, Big 5 Dubai was postponed to September 2021 and the ADIPEC exhibition, our largest event, was cancelled.  A virtual version of ADIPEC was held, which received positive customer feedback, and two small physical events occurred in the quarter in Singapore and China.  Revenue decreased 92% on an underlying basis and, including the impact of Big 5 Dubai, by 95% on a reported basis. 

 

Sales bookings for larger events remain encouraging and, other than for a few smaller shows, no changes have been made to the 2021 events schedule in recent months.  The vaccination programmes in Dubai and Singapore, where Gastech is scheduled to be held in September 2021, are progressing, but exhibitors' and delegates' ability and willingness to travel internationally remain uncertain.

 

Consumer Media 

·    Total underlying revenue decrease of 13%; performance in line with management expectations and improved sequential growth across all revenue types compared to Q4 FY 2020.

·    Digital advertising achieved underlying growth of 8%.

·    Reported revenue decrease of 9% includes the 'i', which was acquired at the end of November 2019.

 

Q13 Revenue growth v prior year

Reported

Underlying¹

Consumer Media

-9%

-13%

     Advertising

-15%

-16%

     Circulation

-2%

-7%

 

Circulation revenue declined an underlying 7%, reflecting expected volume reductions partly offset by the benefit of a 10p cover price increase of the Saturday edition of the Daily Mail to £1.10 in January 2020.  On a reported basis, circulation revenue declined by 2%, benefitting from the 'i' acquisition.  The Mail newspapers continued to grow their market shares4

 

Advertising revenues decreased by an underlying 16% with 8% growth in digital advertising more than offset by a 38% decline in print advertising5.  The print advertising market remains challenging and the revenue impact was exacerbated by reduced readership of Metro. Excluding Metro, total advertising was in line with the prior year on an underlying basis. MailOnline achieved strong growth as it delivered high and increasing levels of engagement with the direct audience6

 

Consistent with DMGT's long-term approach, dmg media acquired three printing plants in October 2020, strategically strengthening its position in the newspaper production market.

 

 

Net cash and portfolio management

Pro forma net cash² at 31 December 2020 was £55m compared to £168m at 30 September 2020. The reduction reflected the usual seasonal cash outflows and included £34m of investment in Cazoo, the online used car business, in October 2020, and £10m to acquire printing plants.

 

 

Group outlook

The duration and severity of the Covid-19 pandemic remains unclear at this stage, despite the hope that vaccination programmes will enable lockdowns around the world to be eased over time.  Consequently, the short-term outlook for the UK Property Information, Consumer Media and Events & Exhibitions businesses remains difficult to predict, albeit the dynamics outlined in DMGT's FY 2020 results release on 23 November 2020 remain the same.  The Board is confident that DMGT's diversified portfolio is well positioned to continue to withstand the present uncertainties and that its long-term approach will continue to create value for its shareholders.

 

 

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

Paul Durman, Teneo

+44 7793 522824

 

Conference call

A conference call will be held with City analysts at 8.00am on 21 January 2021.  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.

 

Investor Briefing and next trading update

DMGT will be hosting an Investor Briefing on 10 February 2021, with a focus on its Property Information businesses, Landmark and Trepp.

 

The Group's next scheduled announcement of financial information will be its results for the half year ended 31 March 2021, which will be released on 27 May 2021.

 

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 £1.2bn.

 

 

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 held in the period, or that were scheduled to be held in the period but were cancelled, and the same events held the previous time. Underlying growth includes the adverse impact of event cancellations (e.g. ADIPEC) but not of events postponed to later in FY 2021 (e.g. Big 5 Dubai).  For Consumer Media, underlying revenues exclude low margin newsprint resale activities.

 

2 The actual net cash position as at 31 December 2020 was net debt of £35m including c.£90m of additional lease liabilities in respect of the adoption of IFRS 16, the lease accounting standard.  The lease liabilities largely reflect the future operating costs of renting office space and are not considered a component of net debt when the Board reviews the Group's capital available. Consequently, they are excluded from pro forma net cash and the £55m pro forma net cash as at 31 December 2020 is stated after adjusting to exclude the c.90m of IFRS 16 related lease liabilities.  The pro forma net cash of £168m as at 30 September 2020 excluded £100m of IFRS 16 related lease liabilities and also excluded £117m of cash that had been made available to the Group's pension schemes but was still held by DMGT at the time.  The £117m cash was paid into escrow in October 2020 and is no longer held by DMGT.

 

The pro forma net cash of £55m includes gross cash of £255m and £200m of bond debt.  Gross cash includes cash, cash equivalents and short-term deposits, net of overdrafts.

 

3 Consumer Media results are for the thirteen weeks to Sunday 27 December 2020 and are compared to the same thirteen week period of the prior year.

 

4 During the three months to 31 December 2020 (Q1 FY 2021), the Daily Mail's market share of UK retail sales averaged an estimated 27%, an increase from 25.9% in the three months to 31 December 2019 (Q1 FY 2020).  The Mail on Sunday's UK retail market share averaged an estimated 24% in Q1 FY 2021, an increase from 23.2% in Q1 FY 2020. The estimated UK retail market share of the 'i' in Q1 FY 2021 was 4%, broadly consistent with 4.1% in Q1 FY 2020.  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.  DMGT's estimates have been used for all titles for the month of December 2020 as ABC's report will be published on 21 January 2021.

 

5 Underlying advertising growth rates include 0% across the Mail titles, with a 15% underlying decline in print advertising partly offset by 9% underlying growth from MailOnline.

 

6 The average daily total minutes spent on MailOnline during Q1 FY 2021, excluding time spent viewing videos, was 135 million, up 5% compared to Q1 FY 2020.  The direct audience accounted for 81% of minutes spent during Q1 FY 2021, compared to 78% in Q1 FY 2020, reflecting high and increasing levels of engagement with these valuable and loyal consumers. MailOnline's average global daily unique browsers during Q1 FY 2021, excluding other platforms such as Snapchat and Facebook video, were 16.2 million, up 5% compared to Q1 FY 2020.

 

The average £:$ exchange rate for the three months was £1:$1.32 (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 or responsibility 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, its current goals and expectations, financial condition, strategy, objectives and results of operations. Those statements can be identified by the fact that they do not relate to any historical or current facts. Those forward-looking 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. DMGT believes factors that could cause actual financial condition, performance or other indicated results to differ materially from those indicated in forward-looking statements in this document include, without limitation, the ongoing effects of the Covid-19 pandemic; the policies and actions of governmental and regulatory authorities in the jurisdictions in which DMGT operates; the actual or anticipated political, legal and economic ramifications of the UK's withdrawal from the European Union; economic, political, social or other developments in jurisdictions and markets in which DMGT operates; the impact of competition, and other changes in trading conditions. Therefore, 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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