DMGT 1998 Interim Results

Thursday 4 June 1998

Group unaudited interim results for the half year ended 29th March, 1998

Highlights

Results
The Group profit before taxation for the period was £81.1 million, an increase of 24% over the results for the equivalent period last year. Excluding exceptional items, the underlying profit before taxation rose by 55% from £46.9 million to £72.7 million, although a number of factors referred to below flatter the comparison with the previous year. Operating profit increased by £33.6 million to £89.8 million, a 60% improvement.

*Trading *
Associated Newspapers had a good half year with further circulation rises for all three of its titles and advertising revenues up 11% against a difficult first half last year. The improvement in its results over the previous year was accentuated by the timing of newsprint price falls. This factor will be far less marked in the second half year.

Northcliffe Newspapers also thrived on the strength of advertising revenues across its titles, up some 8% in total over last year, and from the newsprint price effect. In addition more than half its titles posted circulation increases in the July-December 1997 period. The rate of growth of recruitment advertising seem now to be slowing, from an unsustainable peak growth level of around 25% per annum.

Euromoney Publications has already announced its results, which showed a 17% increase in profit before tax and a 24% increase in earnings per share. The acquisition of Institutional Investor at the end of August 1997 has gone well, but the financial difficulties in Asia have inevitably had a negative effect on the 10% of Euromoney's business which comes from that region.

DMG Exhibitions has had a busy and successful half year. DMG Business Media's triennial International Handling and Storage Exhibition in October 1997 went better than expected and the other divisions are operating ahead of last year's results. The second half year should be strong, particularly given a successful Ideal Home Exhibition in April.

DMG Radio Australia has expanded considerably during the period. The Australian operation doubled to 55 stations in October 1997, Danubius Radio (45% held by the Group) was successfully relaunched in Hungary in January 1998, and Essex Radio was acquired in February 1998.

Teletext has had another good period with continued growth in its key holiday advertising revenue. Its results are included as a subsidiary for six months this year, as against only two months last year. Teletext is now preparing for the launch in December 1998 of digital Teletext, the costs of which are likely to restrict profit growth in the short term. Channel One's losses are much lower than last year as its cost base has been reduced.

Harmsworth Publishing has expanded during the period with the acquisition of Risk Management Solutions in California in February 1998. These results include a small loss for March, as expected. Hobsons has produced its customary first half loss, but is on course to improve its full year contribution.

*Associates *
Results of associates are lower this year due to the transfer of Teletext to the trading line with effect from February 1997. This has been partly offset by growth from Bristol United Press and GWR. Study Group has seen its Australian operation suffer from the Asian financial difficulties.

*Exceptional Items *
Profits on sales of assets arose mainly from the disposal of surplus properties in London and Manchester. The Reuters capital reconstruction had a negligible effect on the Group's earnings. The prior year included profits on the sale of an interest in Westcountry Television and of a surplus property.

*Net Interest Payable *
This increased in the period from £17.7 million to £22.1 million due to the higher level of average debt.

*Funding *
The Group's net borrowings at the end of the period were £537 million, an increase of £18 million since the year end. A total of £118 million was spent on acquisitions, the principal elements being £40 million on Risk Management Solutions, £40 million on Regional Broadcasters Australia and £15 million on Essex Radio plc. Property and other disposals raised £57 million.

*Outlook *
Prospects for the rest of the financial year are good provided the current trading conditions and advertising trends for the Group's newspapers in the UK continue. Some of the factors which have affected the first half result, particularly the extent of the newsprint price effect and the accounting impact of the Teletext acquisition last year, will not be repeated in the second half year.

*Dividend *
The Board have declared an interim dividend of 8.0 pence per Ordinary / 'A' Ordinary Non-Voting Share (1997 7.0 pence), which will be paid on 10th July, 1998 to shareholders on the register at the close of business on 19th June, 1998.

*Appointment of New Director *
At a meeting of the Board of Directors held yesterday, Professor Klaus Schwab was appointed a non-executive director. Professor Schwab, 60, is president of the World Economic Forum, a not-for-profit foundation, based in Geneva, Switzerland.

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