DMGT reports “performance in line with expectations and continued progress against strategic priorities”.
According to DMGT:
* Underlying revenue growth +1%; stable underlying adjusted operating profit
o Good B2B performance: underlying revenues +4% with margin improvement
o Challenging Consumer Media conditions: underlying revenues –3%, margin 11%
* Adjusted profit before tax up pro forma +8%; adjusted EPS up pro forma +2% to 24.4p
* Statutory operating profit £133m (HY 2017 £17m); statutory profit before tax £113m (£41m); statutory EPS 32.2p (155.8p)
* Interim dividend increased +3% to 7.1p
* Good progress made against key strategic priorities
* Strong financial position: net debt:EBITDA ratio of 1.2 including EDR disposal (Apr ‘18 proceeds)
* Recommended offer for ZPG Plc on 11 May 2018; c.£640m potential proceeds
* Outlook for the Full Year unchanged
Paul Zwillenberg, Chief Executive, commented: “DMGT’s performance in the first half was in line with our expectations as we continue to transition the Group and execute against our three strategic priorities. We have delivered continued, broad- based growth across our B2B businesses and a strong performance from our Consumer Media business in challenging market conditions.
We have made good progress with increasing our portfolio focus, notably through the disposal of EDR. Most recently, the expected disposal of our stake in ZPG Plc is a clear demonstration of our long-term approach to value creation. As a result of this portfolio activity, our balance sheet will be strengthened considerably, enhancing our financial flexibility for balanced capital allocation. We have also continued to implement a series of performance improvement initiatives across the Group which are starting to gain traction.
Guidance for the Full Year remains unchanged. Although progress during the period was encouraging, we remain cautious about the outlook as we continue to transition the Group during challenging market conditions for some of our businesses. However, the Board remains confident that the Group’s strategy and strong balance sheet will, over the medium term, deliver consistent earnings growth to underpin DMGT’s long-standing commitment to sustainable annual real dividend growth.”
Half Year 2018 Financial Results:
* Revenue of £746m; underlying growth +1%: the underlying growth reflects broad-based growth from Insurance Risk, EdTech, Energy Information and Events and Exhibitions and stable revenues from Property Information, partially offset by a decrease from Consumer Media.
* Adjusted operating profit of £84m; stable underlying performance: the growth from Insurance Risk and EdTech was offset by lower Consumer Media profits and increased Corporate costs.
* Statutory operating profit of £133m increased from £17m in the prior year due to reduced exceptional operating costs, the absence of impairment charges and the share of associates’ gains on disposals.
* Income from JV’s and Associates: the share of adjusted operating profit increased +14% on a pro forma basis to £41m, primarily due to growth from ZPG Plc.
* Profit before tax (PBT): adjusted PBT grew +8% on a pro forma basis to £103m, including finance charges of £21m (£21m) and the adverse effect of the weaker US dollar. Statutory PBT was £113m (£41m).
* Tax: the adjusted tax charge was £16m (£14m pro forma) and the adjusted effective tax rate increased to 15.8%, as expected, whilst statutory tax was a credit of £4m. Overall, we estimate that the impact of tax changes in the US will be largely neutral in the short term but become beneficial as US-generated profits increase.
* Earnings per share: adjusted EPS grew +2% on a pro forma basis to 24.4p (24.6p). Statutory EPS was 32.2p (155.8p) reflecting the prior year gain on the disposal of Euromoney.
* Net debt was £534m as at 31 March 2018, excluding the benefit of £146m of proceeds from the disposal of EDR, which completed in April 2018. The net debt:EBITDA ratio was 1.6 compared to 1.4 as at 30 September 2017 and 1.6 as at 31 March 2017, reflecting the usual seasonal cash outflows. Including the proceeds from EDR and excluding EDR’s profits, the net debt:EBITDA ratio would have been 1.2 as at 31 March 2018.
* Portfolio management: the focus within the portfolio has been further increased by Xceligent’s cessation of trading, the disposal of EDR and Hobsons’ Solutions business and the partial sale of SiteCompli, which is now classified as an associate rather than a subsidiary. The potential disposal of DMGT’s stake in ZPG Plc was announced in May 2018 and is expected to complete during the final quarter of the current financial year with c.£640m potential proceeds. The Events and Exhibitions business made two small acquisitions during the period.
* Outlook: the outlook and guidance for the Full Year remain unchanged, with the expectation of slower revenue growth in the second half due to challenging conditions for advertising and property information as well as timing factors. The B2B businesses are collectively expected to deliver a Full Year underlying revenue growth rate in the low-single digits and an operating margin in the mid-teens. The Consumer Media business, dmg media, is expected to experience a mid-single digit underlying decline in revenues and to deliver an operating margin of around 10%.
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