WORLD TELEVISION - DMGT Technology/media/Files/D/DMGT/reports-and...Daily Mail Monday to Friday from 55p to 60p early February 2013 so we had a four month benefit of that in this year’s

WORLD TELEVISION

DMGT

Results Presentation

26th November 2014

DMGT - Results Presentation - 26th November 2014

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DMGT

Martin Morgan, Chief Executive

Stephen Daintith, Finance Director

QUESTIONS FROM

Alex DeGroote, Peel Hunt

Gareth Davies, Numis Steve Liechti, Investec Nick Dempsey, Barclays Capital Will Packer, Exane BNP Paribas Ruchi Malaiya, Bank of America Merrill Lynch Ian Whittaker, Liberum Capital Tom Singlehurst, Citigroup


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Introduction


Good morning ladies and gentleman and welcome to the DMGT Preliminary Results

Presentation for the full year, the financial year '13/'14. I hope this morning you’ll

appreciate our figures and results as much as this magnificent setting, we’re very

grateful to be able to be here today.

Our agenda is the normal pretty simple one, after a very brief introduction from myself,

Stephen Daintith our Finance Director will take you through the financial figures in some

detail. And then I’ll come back and talk a bit more broadly about the group, how it’s

developing, our investment philosophy, additional comments about the performance

looking forward to the next year for the various operating companies and then of course

we’ll take your questions.

So first of all it’s been another year of good growth for DMGT, we’ve delivered underlying

revenues up 5% with operating profit up a very healthy 15% and I think a good margin

at 17%. Adjusted profit before tax was up 9% and EPS up 12%.

We continued to manage our portfolio of businesses actively, of course you’ll all know

about the IPO of Zoopla and we completed the disposal of our digital recruitment

businesses called Evenbase and did some acquisitions, the largest of which was a

property information business in the UK called DIIG(E) or we often call it SearchFlow.

We, of course, as you know over the years we’ve been very active in managing our debt

carefully and very pleased that the debt EBITDA ratio came in at 1.5. We completed

that buy share back programme, the initial share back of £100m and were able to

announce a new one as well. And I think it was particularly pleasing we were able to use

the strength of our balance sheet to buy in bonds in two iterations in December ’13 and

October ’14 and added to our bank facilities as well.

And as you know the dividend is very important to us and I’m sure to you and the full

dividend was 20.4p, up 6%. And as I usually do I like to show you this chart about the

dividend trend at DMGT and we are very determined to continue that upward trend and

produce real increases in the dividend.

And that’s all I’m going to say by way of introduction and it’s my pleasure to welcome

Stephen Daintith to the podium, Stephen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Performance


Thank you Martin and morning everybody welcome to, this used to be the City of London

Boys School I think, I almost feel like taking a register to be honest but I think most

people, did anybody go to school here by the way? Yes William, nice one, did you do

exams in this room, okay.


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Well look welcome again DMGT, I think Martin’s said it very well I think it’s a very, you

know, a good set of results. 5% growth in our revenues across the group that’s the

mixture of B2B and consumer combined. 15% growth in operating profits so very

pleased with that, hopefully none or very few of these numbers will be surprises to you

because we’ve been reporting the trends during the course of the year but it’s good to

see them actually come through in the numbers.

Underlying just as a reminder is after adjusting for M&A, acquisitions and disposals, it’s

after adjusting for foreign exchange which we’ll talk about a little bit later because it’s

quite a significant impact in these numbers and it’s after adjusting for the timing of

certain events as well.

Profit before tax, this is adjusted profit before tax is at a very healthy 9%, operating

margin 17%. Then earnings per share growing at a very nice 12% which we’re

particularly pleased about and that’s not withstanding an increase in the tax rate as we’ll

see a little later to just over 20%, still managing to report a pretty good earnings per

share growth.

Given that the share Martin just mentioned that, it remains a very important part of the

investment case for DMGT, 6% growth on the back of 20 years of compound annual

growth rate of around 8%. And worth pointing out that in the profit before tax number

whilst it’s grown very nicely to £291m, that’s after a negative impact of £14m in respect

of the weakening dollar and the strengthening pound. Last year we were at 156, as an

average this year at 166 but we’ve been able to swallow and accommodate that negative

impact within the adjusted profit before tax growth which is a particularly pleasing

performance.

So looking into the shape of the business, B2B continues to be a very important

contributor to the group, now 57% of revenues and growing at a healthy 8%, we’ll go

through the detail about growth a little later. Our consumer business is flat which again

we see as a pleasing result on the back of continuing print circulation revenue declines

and print advertising declines so to report that number we’re particularly pleased about.

B2B the profit growth there matching the 8% profit growth rate, quite a bit happening

there within the B2B division on the profitability side across the division, we’ll see that a

little later. And probably one number that may be a surprise this morning is the extent

of the profit growth in the consumer business growing 39% on an underlying basis and a

really healthy improvement in the margin of that business from 10% to 12%. And 15%

growth in operating profits across the group as a consequence.

The geographical split again and again investors that I meet for the first time are

surprised at how global DMGT really is. 21% of our revenues now are outside of the UK

and the US, the big contributors here are our Events businesses in the Middle East and in

Asia but also Euromoney is a very big contributor to this proportion of our revenue mix

being in the rest of the world and outside of the UK and the US.

32% of the growth of - our UK businesses grew their profits by 32%, that is

dmg::media, a big contributor there, we get into the detail of that a little later. And you


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can now see that 55% of our profits are outside of the UK which to an extent explains

that negative impact of forex that’s accommodated within our numbers.

So looking at the revenue dynamics advertising across the board is 3% up year on year,

if you just look at dmg::media on its own that’s actually 5% so there’s a bit of

Euromoney decline within that but 3% up year on year.

I always call out print advertising, not so long ago I think it was about five, six years ago

this represented around 40% of group revenues and clearly that was a risk to be

managed downwards which we’ve done successfully; not just through the natural decline

of that business but also through investing in growth businesses that are more digital

and subscription based and done that pretty successfully as today’s numbers I think

demonstrate.

Circulation revenues are down 4%, a reminder here is that in the year to fiscal ’14 we

only had a four month cover price benefit, there was an increase in the cover price of the

Daily Mail Monday to Friday from 55p to 60p early February 2013 so we had a four

month benefit of that in this year’s numbers but no more than that. So all it takes is a

cover price increase, no plans for that and we would see circulation revenue growth.

And then across subscriptions, events and transactions, pretty good growth there across

the group. As a reminder the transactions component largely includes Landmark and

Environmental Data Resources in the US which are quasi subscription but are transaction

businesses as they sell environmental assessment reports.

So moving through the divisions one by one. RMS, RMS a much talked about business

during calendar 2014, I think what’s pleasing today is that no new news is coming out

and everything that we said in September in respect of RMS (one) still holds true today.

RMS is reporting core revenue growth of 5% and consultancy revenues from RMS (one)

of £2m giving the overall 4% growth across RMS.

There’s a reduced operating margin as we’ve highlighted this time last year in respect of

the additional costs that we’re seeing in RMS within the RMS (one) initiative. Next year,

again this will be something we called out on September 17th, we expect to see an

operating margin of between 10 to 15% for RMS, predominantly driven by two increases

in cost which are reduced capitalisation of around £10m and an increase in data centre

costs of around £10m so £20m of increased cost base.

We’re calling out today, we’re highlighting today that we’re expecting that the low single

digit underlying revenue growth for RMS, that’s for the core business as we get into

fiscal ’15 largely on the back of slightly more challenging conditions in the reinsurance

market and pretty much mirroring the trend of the second six months of RMS core

revenues, which I’m sure we’ll talk about later.

So RMS (one) very quickly no change is the key sort of sound bite here to what we said

in September. And we expect the high definition models to be available to the broader

client base by late calendar 2015. And we are reporting today a £45m impairment

charge in respect of the total £86m that had been spent on the development of RMS

(one) up until the end of September 2014, so £41m remains on the balance sheet. And


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we have around $42m or so of capex planned for RMS (one) in fiscal ’15 which let’s call

that just below £30m or so in sterling.

Dmg::information, dmg::information had a cracking performance, I think the revenue

growth of 12% won’t come as too much of a surprise during the course of the year; we

started very strongly here and we’ll get into the detail of the divisional performance a

little later but a very good performance across dmg::information with not just an

underlying -revenue growth but a 26% growth in operating profits as well, a very health

improvement in profits.

One might be surprised then at the reduced margin of 17% versus 20% but of course

that accommodates the Xceligent losses which was an associate last year. And also the

lower margin SearchFlow business that was acquired at the start of the year which grew

very strongly its revenues but has a lower margin than the other dmg::information

businesses that’s the 17%.

I mentioned the DIIG(E) acquisition at the start of the year and next year we are looking

at underlying revenue growth of around 10% with an operating margin in the high teens.

Looking at dmg::information on the sector by sector basis the standout performance

again should be no surprise here in property, education and energy, just a reminder

property is Landmark and EDR, education is Hobsons and energy is Genscape, all

growing very nicely for various reasons. I won’t go into the detail or reasons now, they

might come out in the Q&A.

Finance less so, we announced as the underlying growth across those businesses of

13%, if you take Lewtan out the 12% growth becomes 13% so Lewtan was one of the

smaller growing businesses in the portfolio so we should see an improvement in revenue

growth on the back of, well clearly there is on the back of the Lewtan disposal which was

realised earlier this month.

Next year we’re looking at a, sorry dmg::information operating margin fiscal ’14 is in

fact 18% excluding Lewtan as well. So not only do we have a higher revenue growth

profile but an improved margin as well once we exclude Lewtan from the numbers.

Dmg::events had a stellar performance in fiscal ’14 highlighted by the successful

conversion of biennial events to an annual basis and there’s a chart up next that shows

how that worked out. 21% underlying revenue growth, ADIPEC was a big contributor

there, even taking out ADIPEC the growth was 15% so we’ll see that a little later.

Operating profits growing nicely at 29% with a 27% improved margin as well, so very

healthy margin for our Events, all four of the major events within the portfolio took place

in fiscal ‘14.

ADIPEC I’ve just mentioned, a successful conversion we’ll see that in a second. A key

point to look for in your numbers for fiscal ’15 is that there is no Gastech events in fiscal

’15, it’s one of the top four Events for our events division. Our top four events make up

53% of the total revenues of the division so you can see how significant the absence is

of an event the size of Gastech so that’s one thing you should be looking to reflect in

your numbers for fiscal ’15.


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We’re looking at an underlying revenue growth of 10 to 15% so that’s after adjusting for

the timing of events and that’s after adjusting for the absence of Gastech. On a

reported basis you’ll see a revenue climb of around 10%, so you should be able to see in

that a demonstration of the significance of Gastech to this division. An operating margin

of 20 to 25% for the events division, again a slightly muted margin but you would

expect that again with Gastech not appearing and that being the high margin event that

it is.

So on the detail of the large four events this is, quite a bit of detail in the slide but I

think it is, hopefully you’ll find it a very helpful slide. And it demonstrates how we’ve

successfully moved from either biennial or 18 month to an annual cycle which should

make the numbers become more regular and easier to read performance as we move

into future years.

All four of these big events reported significant attendance growth and you can see there

with ADIPEC moving from a biennial to an annual basis revenue’s down only 4% despite

having it 12 months earlier but actually growing the attendance. And if you look at the

growth of the other three businesses, Gastech, Big 5 and Global Petroleum Show, these

four businesses combined grew their revenues on an underlying basis by 37% so pretty

good performance. Next year highlighting fiscal ’15 only three of the big four events are

due to take place.

Euromoney, Euromoney reported its numbers recently and as previously I won’t dwell

too long on their numbers because they give quite a lot of information around their

numbers and their outlook in their statements. Underlying revenue growth of 3%,

profits up 4%, 29% operating margin; so pretty consistent numbers for Euromoney

which remains an incredibly important part of our portfolio and a resilient performer,

notwithstanding the challenging conditions that it faces in its markets.

Euromoney hit particularly hard by the FX impacts having some pretty significant US

based businesses, challenging conditions I’ve just mentioned. I’ll just go back on that

slide a couple of bullet points there, Indaba adds around £5m of profits to next year’s

number so that’s acquisition of the mining events held in Cape Town in the early part of

next calendar year that adds around £5m of profits.

Dealogic bullet point down at the bottom there, a very exciting investment for

Euromoney owning just less than 16% of that business, which will be reported through

the joint ventures and associates line within the DMGT results of fiscal ’15.

Moving on to our UK consumer business dmg::media, flat underlying revenues, actually

pretty pleased with this there aren’t many publishers in the UK that come from a

traditional publishing background that are reporting a resilient performance like this one.

So not just a flat underlying revenue performance but a 28% improvement on

profitability; so the printing and distribution efficiencies we’ve been driving the last two

or three years flowing through, continues to flow through, there will still be some more

of those savings flowing through in fiscal ’15.


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Headcount reductions we were comfortably over 8,000 staff five years ago that does

include Northcliffe but we’re now around 2,500 staff following their disposal of Evenbase

recently and or course the disposal of Northcliffe. A much improved margin of 12%

across our UK consumer business which we expect to at least maintain. Margin benefit

newspaper and central cost savings; so there’s been printing and distribution

efficiencies, there’s been headcount reductions but there’s also been some efficiencies in

marketing and promotion costs that we’ve been able to identify.

I talked about the disposal of Evenbase that comes out of next year’s numbers. And as

we look to fiscal ’15 once again we’ve done this the last few years quite successfully

highlighting what we believe to be stable revenues across dmg::media, that forecast

excludes any plans for a cover price increase, there are no plans for a cover price

increase but the last one on Monday to Friday was early in February 2013. So clearly

that remains an opportunity but there are no plans to do that.

But when we say stable we say between a range of either down 2% or up 2% and that

worked very well for us the last few years and that’s the guidance that we continue to

give today. And operating margin we expect to be around 12% for fiscal ’15 so

continuing the improvement or at least maintaining at least the improvement that we’ve

seen in fiscal ’14 with a 12% margin. That’s not withstanding the continued investment

in MailOnline.

So looking at dmg::media in a bit more detail with its revenue streams, the decline of

4% in circulation revenues I’ve talked about with only a small benefit of a cover price

increase in just four months or so and just 5p on the Daily Mail Monday to Friday. 5% a

particularly pleasing performance that we are able to achieve these sorts of numbers

against you know a background of a challenged print advertising market. But a

reasonably resilience performance just 4% down on print advertising, it wasn’t that long

ago print advertising was declining at close to sort of 9, 10% or so.

And within those numbers the number that is a little bit lost is classified revenue actually

grew slightly in fiscal ’14 over fiscal ’13. It’s a pretty small proposition now of print

advertising but it’s an important, I think dynamic, that’s take place at least in fiscal ’14

and we would hope that would continue into fiscal ’15. And there’s the zero number so

across dmg::media digital revenues almost well a little bit I guess offsetting the decline

in print.

Looking at dmg::media on a business by business basis, Mail businesses represents the

newspapers and MailOnline and 1% decline only. I was asked a lot about this by a

couple of journalists earlier on this morning and I think often you know one can look at

dmg::media as an amalgamation of the newspapers and then other digital assets.

Looking just at the Mail franchise so to speak of the newspaper and the website down to

just now just a 1% and we are a whisker away from moving into positive revenue

growth territory for the Mail businesses full stop.

And we talked about dmg::media inflection point but I think the Mail businesses

inflection point is perhaps more important than the dmg::media one and we should we

would hope within the next one to two years we’d see that as being a regular feature of

performance across the UK consumer business.


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Metro down slightly 3% but has had a good start to the year, that will probably come out

in some of the questions. And Wowcher which is our daily deals Groupon type business

growing incredibly well, it now has a subscriber base close to 6 million people, 6 million

subscribers, urban affluent females is its main customer base, growing at 73% and

moving into profitability during fiscal 2015. So total continuing businesses revenues flat

year on year.

Looking at the profitability of dmg::media and this is something that I don’t think you’ve

seen these numbers before in quite this level of detail, Mail businesses that is the

profitability across the newspapers and the website, £71m and that’s off a revenue of

£598m that we showed on the previous slide. So a healthy operating margin for this

business and with a good growth in underlying profits of 13%. And then we combine

Metro, 7 days and Wowcher that give us £14m of operating profit, a very nice

improvement largely on the back of an improvement in Wowcher as it moves towards

profitability from the previous investment phase that it was in. And across the board

28% operating profit growth so a very pleasing performance.

This table just summarises all the businesses I’ve just run through on a single slide so

you should recognise all these numbers they sort of catch all across. And then FX

impact I’ve mentioned already £45m on revenues and £14m on profits although the

underlying percentages of course accommodate that exchange rate change, but clearly

not the reported numbers. Operating profit by business again you should have all these

numbers, this is just again an aggregation of the previous slides we’ve gone through, FX

'14.

Moving on to joint ventures and associates, Zoopla Property Group a small growth of

£2m but there’s a reminder here that Zoopla we held 52% of Zoopla for 100% of the

year last year and this year we hold 52% with just 8 months and then 32% four months,

very successful IPO and you’ll have read and heard the Zoopla results that were

announced yesterday. I’m sure we might get one or two questions about Zoopla.

Local World, Local World is doing incredibly well for us in fact much better than we

thought it would do and very pleasingly so. We managed to get £15m of share of

operating profits from Zoopla during fiscal ’14 that’s from our 39%, we had the full 12

months in fiscal ’14 and we had nine months in fiscal ’13, three months of the year of

course we owned Northcliffe outright and had 100% of Northcliffe for the first three

months of fiscal ’13.

Local World continues to perform well, it’s pretty much paid off all of the debt that it

started its life with in January 2013; it remains and is now debt free, pension deficit free,

healthy cash flow and growing its profits notwithstanding revenue declines.

Zoopla, Local World I’ve mentioned, the loss making Xceligent that was in last year’s

numbers is now consolidated within the dmg::information numbers. And next year's

numbers will include the 15.5% stake in Dealogic and our outlook for next year is at

least £30m from this set of businesses within our joint ventures and associates.


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Net finance costs, quite a lot happening with our net finance costs this year and indeed

next year as we’ll see in a second. Net finance costs are down £6m largely on the back

of a reduced net debt but largely linked to the buyback, the bond buyback that Martin

mentioned December of 2013 of around £100m of bonds. We paid the premium at that

time of £24m and we see that later on in the slide that shows the exceptional and

adjusting items.

That’s the premium that I’ve just mentioned, the finance costs, this is the pensionable

related item in respect of the charge on our pension deficit. And then Press Association

this year we received a small dividend from the Press Association following their sale of

Meteo that you may have read about, the weather business.

Outlook for fiscal ’15 well you will have read that we recently bought in a further £151m

of our bonds with a £40m premium and that significantly changes the debt profile of

DMGT as we’ll see in a second. And our net finance costs for next year are around £40m

as a consequence of that debt restructuring. So the Zoopla proceeds and other

disposable proceeds have been used I think pretty effectively to end up with a less

expensive debt base and still plenty of capability for the future as you’ll see as we’ve

increased our bank facilities quite significantly.

Adjusted results, well you'll recognise the operating profit number, these are reported

numbers we don't put underlying in here, there's the 9% profit before tax, adjusted

earnings, growth of 10% and that's not withstanding the increase in the tax rate to

20.1%.

We've said for a little while now that we expect to move towards 22% or so over the

next few years, I think next year it will be interesting to see how fiscal '15 tax rate

moves, particularly as US profits are likely to be a little lower, largely on the back of the

RMS decline, so might even see a temporary slight reduction in our tax rate in fiscal '15,

but the long term direction remains moving towards 22%, 23% as long as published UK

and US rates remain as they are today.

So this is a helpful bridge on the adjusted profit before tax, all these business numbers

accommodate the foreign exchange impact of £14m. So it's a portion of these numbers

is related to the forex impact. Notwithstanding that though good performance pretty

much across the Group. RMS the one profit decline which we highlighted this time last

year and we've highlighted M&A effect at the end there on the right hand side, that's the

£14m.

The exceptional items and amortisation, the major cash item here is the £27m of

reorganisation, redundancy and consultancy; largely in dmg::media and linked to those

headcount reductions that I mentioned. There is a little piece in here in respect of RMS

(one) which saw a headcount reduction around September time of this year, but in the

main it's dmg::media.

There's - that impairment is almost entirely the RMS (one) impairment and then the

profit on sale of assets relates to the IPO of Zoopla earlier this year.


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Net debt movement, we closed the year at 1.5 times, cash conversion a little bit lower

but largely just due to one off items that are appearing, some of this is to do with the

timing of events and cash collections in advance. But I wouldn't read too much into this,

typically we would hope to convert around 100% of our profits into cash. Capex this

year is higher than previous years and we would expect a reduction in fiscal '15 as well -

that's capex outside of RMS (one).

And I think it's important to continue to tell this story for a little while, how we've

managed our debt profile over the last few years. Back in 2009, pretty concerning debt

to EBITDA ratios and we're now down to 1.5 times, we have a preference to be no more

than two times and that will maintain during fiscal '15. That works well for us because

it's brought extra discipline to our capital allocation, which I think is always a very

sensible thing to do. So we have a much healthier balance sheet. Capital availability for

investment of between £250m and £300m for the year ahead, assuming that we target

finishing at 2 times EBITDA at the year end and a much higher quality of earnings as

well.

Net debt, let's just talk about this one, this is where we were as at the end of

September, £569m of bonds, and we've drawn down on our facilities, £60m or so giving

us net debt of the £603m that we talked about.

Our bank facilities £489m, but we've recently increased that by £50m, so we now have

£539m of facilities expiring with our bilateral agreement banks in 2019, £539m.

So bonds now after the £149m bond buyback in October 2014 are now just £416m, so a

much lower proportion of fixed coupon debt on our balance sheet and clearly when

you're running at the debt levels that we're running at it would not make sense to have

bonds significantly higher than your average net debt level, you just - you know there's

costs that you can avoid. Bank facilities remain a good source of inexpensive finance to

us, which are now £539m, so total capability £955m which compares to the £974m

under the previous structure.

So we target no more than 2 times net debt EBITDA, operating cash flow remains

incredibly important to us, we have around £250m to £300m available for capital

allocation and just a few things to think about, the Jobsite and Lewtan proceeds - both

have occurred in the last couple of months, the October bond buyback has taken place,

we continue to be acquisitive, it remains our priority. And we have announced our

second share - sorry not our second share buyback programme, our recent buyback

programme on top of the one we announced in November 2012 of a further £100m and

we're £31m of the way through that already, so we've made pretty good progress in the

first couple of months, particularly when you consider it took us two years to complete

the first one.

So considerations for fiscal '15, the sort of things you ought to be thinking about as you

approach your models for fiscal '15 and beyond. RMS (one) investment, I've mentioned

the £20m of additional cost and the 10 to 15% margin. There's no Gastech event and

there's a smaller Global Petroleum Show, which moves to an annual basis. The

Evenbase disposal, so we've got to reduce dmg::media revenue base, we have that

reduced stake in Zoopla, 32% for all of the year, we have a reduced finance charge, post


Page 12

the bond buybacks. Other M&A, the Lewtan disposal has an impact, the Indaba

acquisition has an impact. And then the FX rate as well, the average in fiscal '14 was

$1.66 and it's currently $1.56, so you can do your maths on how material the

dollar/sterling exchange rate is to our numbers with the 10 cent differential on £14m

profit impact.

What this table neatly does is summarise all the outlook and guidance that we've just

given. There's a lot happening with DMGT and I often get asked, are we sure we want

to give this level of guidance? But I think it actually proves to be very helpful giving this

detail, given all the moving parts within the business.

That's it from me and it's now back over to Martin, thanks Martin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Group Development


Thank you Stephen. As I said I'll just close out this morning's presentation with a few

remarks about our strategy, how our investment philosophy is evolving, what we've

been doing on M&A and a few additional comments about the operating companies.

So let's start first of all with our strategy. Those of you who've been following DMGT will

have seen this graphic I'm sure on a number of occasions. I'll put it up again with no

apologies in as much as it's just really to emphasise that we continue to pursue the

strategy that we laid out I suppose about five years ago. We're continuing to invest

both in B2B and as we've seen from the figures that's growing very nicely. And of

course in our consumer side as well where there's actually been a lot of portfolio

management, so we're more clearly focusing on the potential around the Mail in

particular and of course MailOnline, which is really joined in with our strategic ambition

to be not only a growth company, but a more global company because MailOnline has

been increasingly successful around the world.

If you look at DMGT just ignoring products and markets for a moment and just look at it

more generically and I've presented this graphic before as well. I think we feel there are

a number of combinations that really describe us, you know we're at heart a content

business, albeit that we're deploying more technologies and investing in platforms and

so on, at heart we're a content business and I think we're pretty good at providing

trusted needed content, whether it's in B2B markets or consumer markets.

I think we feel we're a pretty entrepreneurial company, adaptive and it's no surprise that

that is, I think, the key reason DMGT is still around despite more than 100 years of

changing markets. We run the business on a devolved and diversified basis,

encouraging entrepreneurial people to be close to markets and to spot new opportunities

and we've talked a lot about active portfolio management and I'll come on to what we've

done more recently. I think we've continued to do that very effectively over the last few

months, I would say the last year and the last few months into this year. And of course

the family ownership is a key characteristic providing stability of ownership and where it

counts, a long term view.


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Now Stephen has touched on some of these numbers earlier on but I've put them in a

more sort of graphic form in terms of what does DMGT really look like today. I think we

all know that the diversification into B2B has been successful and this year 75% of our

profits arising from B2B, you know we don't have a specific target as the proportion from

one to the other, what we're more concerned about is growth and profitability and

prospects. So this ratio will vary, but it does show that B2B obviously is a very

important part of DMGT today.

Stephen touched on this in terms of international, that ambition to be a more

international business and indeed 55% of our profits are arising now out of the UK. And

right down on the bottom right hand side of this graph we show that rest of the world

profits actually grew very strongly. And that's I think showing that we can grow

internationally and grow profitably internationally as well.

Over the last, well I suppose more than just my tenure as Chief Executive, going back

quite a long time it's been an ambition of DMGT to reduce its reliance on print

advertising and Stephen again has touched on that. And I think this mix of revenue is

another good way of thinking about DMGT in terms of its health and also in terms of the

risks involved in trading, that in fact we rely on a variety of revenue streams. And

particularly important are subscriptions, they're now 28% of the whole.

And actually the sort of transaction businesses are really quasi subscription businesses

and they sell on a repeat basis to largely the same group of customers sort of day in day

out and we're very successful as you have seen and from the figures in the sort of face

to face conference and exhibition business. Not only in dmg::events, but of course in

Euromoney as well and it's pleasing to see how quickly the digital advertising side is

growing, offsetting the decline in print.

Talking about digital that was another ambition of course to become more digital as a

group, I think I've said in the past, the future is digital, which I suppose is blindingly

obvious now, maybe it wasn't so obvious ten years or so ago. But I think particularly

interesting here is that if you look at the B2B businesses, and you strip out events which

are inherently not digital because they're face to face, people go in person, 85% of our

B2B operations are actually digital now.

Again repeating a graphic you've seen before, we continue to favour organic investment

and there's obviously a lot of talk about RMS (One) perhaps following that, the

investment of Mail Online, particularly in the US, but I really just want to emphasise that

there is organic growth type investment in new product going on across the whole of

DMGT. I'll give you some examples later on.

We'll talk a little bit about bolt-ons where we continue to be successful in investing in

adjacent markets to where we have good companies and where we have knowledge

about market sectors, such as property and energy, financial markets and so on and

periodically we'll enter new sectors. And we're putting more effort, and I think I said

this at the half year, into looking at investing in new sectors. We've made some steps

into the agricultural market, we talked about the Asia Risk Centre in Singapore being a

particular case in point, I hope to see more in there. And we talked about before, but I


Page 14

hope to see some investments in the medical healthcare sector as well as we get into

financial year '15.

So what about M&A and the active portfolio management, this is an update on a

previous graph, I'm not going to go through all of these of course, but I think you can

just see eyeballing it that activity has picked up as we came away from the effects of the

recession and got our balance sheet into a better shape and not all of these are of

course the same size in terms of investment, but clearly there's more activity.

But if you look down the bottom of the graph you'll see the sums that we've raised from

disposals and this past year we raised more from disposals than we spent in

investments, I think that's the fifth year out of six. But perhaps as we go forward it will

be less likely that that will be the case. In fact it would be nice if it wasn't the case,

because you know as Stephen has said we have some strong free cash flow to invest.

So I hope that we will be able to invest it, of course wisely.

What about more recent deals, you've seen these listed out before, it was pleasing to

see us make some nice further investments in real estate, in businesses like SearchFlow,

SiteCompli, Xceligent, some more investments in energy, we're doing very well in the

Genscape business, it's very nice to see that they're identifying some really terrific bolt

on and adjacent acquisitions, sometimes it's product, sometimes it's people, sometimes

it's geography, it's a nice sort of mix and very much what we like to do.

We've pulled out possibly for the first time in the middle of this table a list of sort of

minority investments we're making. And we're doing a little bit more of that than we did

in the past. And that's really partly to get involved in exciting businesses at a somewhat

earlier stage, where maybe there isn't the opportunity to become a controlling

shareholder initially, where we can get a seat on the board, get to understand the

market and the entrepreneurs, obviously with the hope that they turn out well and we

can increase our stake in time. Two of them are in India, which is part of the

international expansion.

And actually Petrotranz which is the second on the list is a good case in point because

Petrotranz we took the minority stake, this is an energy information business in Canada

and actually in relative short order - the business is doing very well and we have

managed to increase that stake to a majority stake. So that's a good illustration of this

kind of form of investing. And we've made various disposals since - also in the year

which I won't go over because you've heard plenty about them.

Since the year end we've continued this policy of further investing through bolt-ons and

adjacencies and another investment in a property information business, albeit it a very

small stake, called CompStak in the US, which fits into the broadening portfolio of

property investments and acquisitions for the Events business as well.

I think the deal that Euromoney hopefully will complete through the Dealogic is actually

a very interesting transaction for them and therefore for us. It takes Euromoney

another step into being involved in investment banking markets in terms of fundamental

data management and workflow that is very important, you know, for banks operating in

that market and that's a sort of further step I think towards Euromoney's ambition to be


Page 15

more in subscription and digital businesses that are very fundamental to their clients in

key markets that they understand very well.

Now turning to adding a few comments about the operating divisions, first of all RMS;

you know market conditions are a little tougher as Stephen has identified, there is

downwards pressure on reinsurance premiums. On the upside to do with that that's the

benefit of insurances and indeed accedence as well, but typically RMS does find it a little

harder to sell existing customers new models, or increase the value of those models in

times when RMS's customers, are themselves under budgetary pressure. And so that

does go to explaining a little bit of caution about the growth rate as we go into '15 for

RMS.

But as was laid out very clearly I think in the Investor Day in September and I know

some of you were concerned about this a little while ago, the investment in the core

modelling business and new models has never stopped and continues to be very robust.

In fact there are more scientists and technical people working in the modelling business

than there were 12 months ago, so we continue to support that part of the business.

And coming into this year there will be a new release of the core Risk Link software

platform which is the delivery model with some upgrades to some very, very important

models; North Atlantic Hurricane and European Windstorm represent a very large chunk

of premium in the industry. And as we get towards the end of '15 we should move into

starting to deliver the first sort of high definition models and these are very exciting

developments and of course RMS (one) software will be the sort of platform if you like

that helps to deliver those models and I've listed some of them out and they are very

significant models indeed.

There really isn't anything new to say on RMS (one) since the Investor Day presentation.

The team continue to work diligently on building the new product in the new architecture

which is explained as a simplified more elegant architecture and you know things are

processing perfectly satisfactorily.

Dmg::information, we've had very nice growth, double digit growth for

dmg::information, that's been sustained by continued investment in new products. I've

listed some of them here, it's not actually a comprehensive list, there are a few that

occurred to me after doing this slide, but we won't have time to go into those now. And

as I said it's very nice to see this part of DMGT finding these bolt on and adjacent

acquisitions; albeit that the [short gap in audio] group acquisition was a bigger one so

that was nice to do. But it's an active M&A market, but we're continuing to exercise

discretion and discipline and not chasing some of the very high multiples that are out

there.

Dmg::events as Stephen has given you a very good description of that, another strong

performance, I think we've a great management team there, they're very

entrepreneurial, a very good group beginning to expand geographically. We do have a

very strong position in the energy markets and I would have thought that some of you

might be wondering what the impacts of the low oil price might be on those events. Well

first of all in the short term ADIPEC, has already taken place this year, very strong


Page 16

results. So in terms of the financial year '15 that's obviously not a worry. And Gastech

is taking place in October '15 and it falls into the next financial year.

Having said all that and regardless of the timings, our thinking is along these lines that

you know in the Gulf States, production costs are some of the lowest and ADIPEC is

doing very well, so we would be a little disappointed to see any significant adverse

impact on ADIPEC coming in to the next iteration of November '15 and visitor numbers

have been up strongly and I think the whole content of the show is continuing to

improve. So of course this is early days and none of this is for certain. So we think we

feel pretty good about ADIPEC.

And coming to Gastech, albeit in the next financial year, that's taking place in Singapore;

there's such an enormous amount of development and growth and demand in the Asia

region that we think Gastech should be well protected, anyway it's in the gas market not

the oil market. And the one show that might see some effects is the GPS show, the

Global Petroleum Show in Canada because production costs are somewhat higher in

Canada and there is quite a large sort of equipment component to that show. But the

last iteration went very well, visitor numbers are up strong, bookings are good, so we

hasn't seen any adverse impact now.

I thought I would just bring you up to date with a development within DMGT in the B2B

group, earlier this month in order to facilitate a greater degree of sort of cooperation and

sharing across the B2B companies we brought them together into a new divisions if you

like, we're calling dmg::b2b. The Chief Executive of that is Suresh Kavan and you've

seen Suresh present in the past, he's a CEO of dmg::information and the Chairman of

dmg::events and he's also taken on the Chairmanship now of RMS.

And this really is an internal management change, I am the Chairman of this Group, but

as you know we're investing heavily in the different parts of our B2B companies,

particularly around technology and we want to make sure that we get the benefits

flowing around this group. So it's a nice development, but it's an internal management

development.

We will continue to report the results of each of the three legs if you like of dmg::b2b as

we do now and the Chief Executives who run the individual businesses continue to run

their businesses in the way they have in the past.

Euromoney present their own results as you know, so like Stephen I won't say very

much more. There are challenging conditions in investment banking. I gather at their

investor/analyst presentation they've said that maybe there are some just faint signs of

some improvement there, but I'd rather rely on their statements than mine on that one.

It's very pleasing from a DMGT perspective to see how much innovation and product

development that's going on at Euromoney because obviously it's our priority too. And I

commend you, if you haven't seen the Investor Day, take a look at the Euromoney

component of that because there's some very interesting presentations about the rollout

and the impact of the Delphi content management system and also at IIN and there's

plenty of other developments going on there too.


Page 17

Of course Euromoney remain acquisitive they're a disciplined buyer and we hope to see

them bringing in some additional acquisitions. And it fits very nicely for our strategy too

to see them investing in a business like Indaba which extends our footprint, if you like,

into Africa and we're a strong supporter of the Euromoney business as you know.

Dmg::media, these are my final comments on the operating companies, MailOnline

continues to grow very strongly in terms of audience, which is the underpinning of the

business and we've got a hand out, I think you have it there with some of the statistics

on that.

It's reassuring to see the Mail newspapers continuing to gain market share, it is a sign of

health and how competitive we are in terms of the content that we produce, important

for advertisers of course as well. Metro, we're pleased with the Metro performance,

although revenue declined a bit it's in an industry that's facing declining revenues and to

a certain extent we've reinvigorated the Metro business and it's a very creative place in

terms of the packages and so on that they're putting together for advertisers. There's a

new editor there, or newish editor there, so I think that business is in much better health

than it was perhaps a year ago.

Innovation continues, there's been a launch of a very successful new [short gap in

audio] on travel, travel of course is a hugely important advertising category for this part

of the business and it's doing well. And we've created a thing called My Mail and I think

you can think of it as a sort of club for Mail readers where you can benefit if you

participate from all sorts of e-commerce options and various other things. And it's

designed to encourage people to repeat buy - to buy the newspapers as well as other

things on a very regular basis. It's early days, but the numbers are look pretty good and

it's all part of the restructuring of the marketing and sort of promotion side of that

business and it's beginning to look pretty successful, i.e. more impact at lower cost.

Stephen has talked about Wowcher and I'm particularly proud of the work that the team

at dmg::media did and continue to do in finding ways to reduce costs and increase in

efficiency. And we talked about that I think first about four or five years ago during the

financial crisis that we were digging into that and the numbers were very big then and

it's great and I think I said that we would be continuing to always look. It's part of the

business to continue to find efficiencies in that area of the business and they certainly

have delivered.

I've also talked about this before, so just to say I think there are multiple drivers of

growth for DMGT again when you just ignore specific product or market, whether it's

international or whether it'd developing communities for users as IIN are doing at

Euromoney, whether it's the growth in mobile and I think we are adapting very well to

the mobile world now, some might argue we were a bit slow to start, but I think whether

it's in B2B or consumer, mobile is proving to be an opportunity for new product

development and the opportunity to reach greater audiences.

So I take comfort from the fact that we have a number of strings to our bow, both in

terms of our strengths which I presented at the beginning and the sort of dynamics of

what's going on in our markets more generally.


Page 18

So just to wrap up, I hope you'll agree that we are delivering on our strategy. It is a

consistent strategy, no apologies for that; I think it's good that we don't have to have

major changes in strategy. As Stephen has enumerated we have some near term

factors that will impact our results next year, but I hope you can look through those and

be reassured that the growth prospects for the group are still very sound indeed when

you look through those factors to the years that will follow.

I think the portfolio is nicely balanced now with the transactions we've done more

recently and the trend in those transactions over the last few years and it's very nice to

be CEO of a company that has a balance sheet that's now as strong as it is and that as

Stephen presented at the Investor Day gives us options in terms of how we apply that

capital; with our priority being good acquisitions and then of course we've got other

commitments on buybacks, so if we can make them we will continue to have a flexible

approach to the way we use our cash.

So that's all from me and now we'll take your questions. Stephen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Questions and Answers


Two slightly arcane questions I'm afraid to kick off. One is just on the cash funding for

the pension scheme and I think there's a reference also to a top up there relating to the

buyback. So I wondered if we could have clarification on that? So that's question one,

cash funding for the pension scheme, top re buyback.

And then the second question is just note 13 to the accounts on the sales of some

property assets which I think generated quite a nice return for you over carrying value.

I just wondered if that makes you look more closely at the PPE that you've got on the

balance sheet with regards to potential disposals? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


They both sound like Stephen questions to me. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Sorry, I was still writing down the first one, and the second one? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Note 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


I think you took a short 12 million off the sale of some property assets this year in cash,

so I just wondered if that made you look more closely in general at the PPE carrying


Page 19

value that you have on the balance sheet, which is about 190 million, because it may

well be that that's a store of value that you could look to utilise? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


It is. So the second question first, you're dead right we do, and we have a bunch of

properties around the UK that we've been slowly selling down as best we can. Adrian

Perry smiling here because he's been working hard on that along with Lisa Hayward

within the head office team and we continue to realise those opportunities. There was a

time when the market was particularly poor when it wasn't a good idea to do that, but

where the opportunities emerge we will take them and we've got properties in Bristol,

well I won't go into the detail, but around the UK and we will realise that cash when we

can, when the prices are what we consider to be attractive.

And then on the pension question, yes we do have an agreement with our trustees that

where we do a share buyback a percentage, up to an amount is paid in, but it's no more

than sort of £20m or so that we can expect that we contribute in and it's capped at a

percentage, it's about 10% or so of any buybacks that we make, but capped at an

amount. So it's not a material adjustment, it's just an acknowledgement that a share

buyback is as the trustees see it an allocation of funds that they would argue that given

that we've got a deficit a certain proportion ought to be going in the direction of the

pension fund, which is a perfectly reasonable argument, so we've got a good agreement

with them on that arrangement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gareth Davies, Numis

Two on dmg::media for me. You noted a plus 3% advertising performance for the eight

weeks. That feels pretty resilient relative to what we heard from some of your peers,

and in particular I think others have flagged a tough time in supermarket spend, so can

you maybe talk a little around that?

And then the second one is really trying to understand the operating leverage in

dmg::media. You’re guiding to a flattish margin for the year. I suppose my assumption

is that as digital becomes more meaningful you can creep that margin up. Are you

electing to just simply reinvest that operating leverage or am I sort of misunderstanding

that relationship?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


No, you’re not. The 3% growth is a pleasing performance for the start of the year. And

when you look into the detail of that what is particularly pleasing is that supermarkets

have performed well in the first eight weeks which I think is bucking the trend. We’ve

also had a strong performance in telecoms in the first eight weeks of the year and in the

entertainment sector as well. So those are the three areas that have helped us get to

that 3%.


Page 20

And yeah, it’s a good question in margin in dmg::media. I mean in the long run yes you

would expect to see the margin improve. This is clearly though an investment phase for

Mail Online in particular. Headcount now in Mail Online is 620 people. It was 460 people

at the start of the year. We now have 120 journalists based in the UK. That’s only half

the number - half is still a small amount I guess but is only half the number of the

number of journalists we have in the UK - yeah 120 in the US sorry versus 250 or so in

the UK. The Mail Online revenues were £12m this year; they were £5m last year. But

the amount of US content is much more significant in the US than it was [short gap in

audio].

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Just worth saying on the figures for dmg::media so far, I mean it’s still very volatile

though, isn’t it?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Yeah, it is yeah.

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You know there's been a few weeks and you think oh dear it’s going down, and then it

recovers strongly. So it’s usual caution not to read too much into it.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Exactly right, it remains extremely volatile. We’d hope that net-net we’d continue to see

a net advertising growth across the portfolio of prints and digital combined.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Steve Liechti, Investec

Thank you. Two questions please. One is just on the margin in dmg::information, you

referenced that I think it was 17% you just reported, 22% if you ex out various bits, and

then another 1% for the Lewtan disposal. Just back of the envelope maths says you’re

probably - you've got about 20 million losses from Xceligent and SearchFlow in there, I

just wondered if you can give us any feel for going forward, given your guidance is high

teens, how long do those businesses go through an investment phase before you see

them break even, given that relatively high investment spend?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Sure. Well SearchFlow is a profitable business. It actually has a single digit margin, but

it’s a profitable - it’s just not at the margin of the other business, so it’s a lower margin

business bit profitable. And Xceligent is still an investment and is - you can work out a

maths, it’s sort of a single digit million pounds loss making business for us. But the


Page 21

revenues have grown around in excess of 50% this year, and we expect that revenue

growth to broadly continue. So it will move into profitability, probably not in ‘15 but

certainly into ‘16, and that’s where we ought to see the margin improvements in

dmg::information. Similarly Hobsons has a lower margin that Gastech and Landmark,

but Hobsons again we - simple challenge we’ll put to them is to see an improved margin

there. So all things being equal we should see that improved margin over the next two

or three years.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


And the margin in Hobsons has been improving.

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It has been improving, yeah; it’s just not at the rate of the other businesses.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Steve Liechti, Investec

Thank you. Second question is just on Events, some of your competitors seem to have

decided they want to make some big acquisitions in the US. Can you just sort of go

through what your strategy is for Events, because clearly you've gone the other way

arguably. What are you thinking you want to do with that business, which is quite small

in a group context? Does it want to be emerging markets; you know where does it go

from here?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Yes we have gone rather in a different direction and the remit to the Events

management is that it’s very unlikely that we want to support the kind of deals that

you’re referring to, and that their remit is more one of launching or investing typically in

shows when they’re in earlier stage of development. And you know that is a choice. So

it’s very unlikely that we’ll see - I think it’s extremely unlikely that we would do a deal

on that sort of scale in Events.

And you know that’s a capital allocation choice. We really like our Events businesses;

they’re very well run as I said. I think they’re a very good sort of counterpart to the

digital print mix. But you know Events aren’t at the high end of quality like digital

subscription businesses. So we’re relying more on geographic expansion, launches,

buying into early shows. And like some of the deals that they’ve done now, you know

occasionally you’re doing those bolt on acquisitions in markets where they’re already

strong.

We do look at the United States. The team are looking at the US. We don’t have a lot in

the US. There probably are opportunities in the US, it’s a huge exhibition market, but

we’re going to be quite careful about entering there and I don’t think we’ll do it in a big

bang way.


Page 22

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Nick Dempsey, Barclays Capital

Hi, two questions please. So just first of all on RMS, low single digit growth. I don’t

really remember you saying in the past about the reinsurance market, the vagaries of it,

so I'm a bit surprised that that’s having an effect on you when you seem to have been

somewhat immune to your underlying market. And when we look at Verisk they seem

not to be pointing to a slowdown, quite happy with that business.

And the second question just on dmg::media, any restructuring charges still to come out

below the line in this year?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Well in terms of RMS I am absolutely certain I have spoken in the past about the impact

of what’s going on amongst insurers. I think I have and it’s true to say we’ve never

been able to generate a direct correlation between what’s going on in premiums and

RMS, but I think circumstantial evidence is such that - and of course one of the things

that’s grown significantly and has taken a while to develop is the capital market side of

the insurance business. So you know that’s a big change. You know the cap bond

market has really, really kind of taken off in terms of scale much more. It’s taken a long

time to really get there, so that’s changing the dynamics of the market. So you know

maybe it won’t [short gap in audio] we’re seeing in the reinsurance sector.

And the other was?

dmg::media and the further costs that come out.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Yeah. I think it would be wrong to - think we’ll always strive to continuously improve

the way we operate and the efficiency of the business, and where we see opportunities

for either headcount reduction or print or distribution rationalisation, we will take them.

And where it’s appropriate to treat them as an exceptional item we’ll do so. No

immediate current significant plans along those lines, but where we see them we will

pursue them.

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Question

[Short gap in audio] on the consumer margin side. Is there scope to do a bit more cost

saving between the daily and the Sunday? You know not necessarily across editorial but

maybe just sports or in some segments of it?

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Well I’ll take the second one. I suspect in time there will be. There's been some

integration in terms of the sports side already which I think has been very successful.

Personally I think the sports coverage actually in the Mail titles does continue to get

stronger and stronger. It’s a personal view of course and I would be prejudiced perhaps.

The sales forces as you know were combined some years ago, so I think the main

combinations are probably already being executed. But as I said earlier on, you know

we - they have continued, we’ve got to look at getting cost efficiencies out of the

business. So there may be some further development. So there's nothing I'm aware of

that’s going on in the short term.

Stephen, on Hobsons?

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Yeah, Hobsons. Hobsons has some seasonality in its business. And you'll recall that

Hobsons is broadly made up of two key businesses. The kindergarten to grade 12

business called Naviance which is a subscription business just on a routine sort of 12

month cycle so to speak, with many schools signing up to it, and that’s growing at

around 40% or so, so very good growth in Naviance. And then you've got the higher

education revenue stream which makes up about two thirds of the revenue base, I'm

using round numbers for the sake of the example to demonstrate the impact, but the

large growth in the higher education business tends to be seen in the second half of the

year, but of course that’s growing at a smaller rate than the 40% growth of the Naviance

business which is a through the year growth. So I hope that explains the impact. You

end up seeing what looks like a second half decline, but is really just down to the

seasonality of the higher education business in the second half of the year.

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Will Packer, Exane BNP Paribas

Hi. Couple from me on RMS please. So based on my numbers I believe that in Q4 RMS

growth is around minus 2%, minus 3%. Could you explain, A, why that has sort of

decelerated further, and B, why you think it can improve in next year in the context of

no major new launches, in the context of a challenged environment?

And then lastly, I know that RMS (one) revenues have actually fallen in FY'14 versus

FY'13, which is a little bit of a surprise despite the kind of postponements etc. Can you

just kind of talk us through what’s happened there? Thank you.

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Sure, shall I - so on RMS. RMS core revenues, first half was 6%, second half 4%. We’ll

have to go through your numbers with you because I don’t recognise those numbers in

the final quarter. So we -

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So we’re still positive?

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Oh yes, still positive. The low single digits that we’re calling out, and you know I tend to

use sort of 4, 5, 6 as mid-single digits, 7, 8, 9 as high single digit, and therefore 1, 2, 3 -

it’s at the top end of the low single digit range is sort of where we would hope to be.

Laughter

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Given that it’s at 4% for the second half of the year, calling out low single digits is not

remarkably different from where we were in the second half of the year, if that helps.

And then on RMS (one), yeah you’re dead right, £2m versus £3m. To an extent there's

a forex impact here. We round the numbers as well. I think this is just in the rounding

in the maths more than anything else, to explain the difference rather than anything

significant that’s taking place.

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Thanks a lot.

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Ruchi Malaiya, Bank of America Merrill Lynch

Good morning. It was a question on the Events business. How much of that lower

margin guidance is due to the mix effect of events? So you talked about the lack of

Gastech. And how much of it is due to increased investments?

And if you could maybe put a bit more colour around the type of investment that’s going

into the Events business? Thanks.

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Yeah, I don’t think there's any material increase in the investment rate, so I think it’s

primarily, I'm looking at Stephen, timing of the events. So we don’t see any underlying

margin erosion there.

I think I can only just expand on the answer for the previous question. You know we’re

doing new launches in places like Indonesia. We’re having to do more in India. There's

still plenty more to do in the Middle East. And largely these are in sectors that the

company is already in, so construction, obviously energy and so on. You know it’s sort

of more of the same.

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And I think that what I would just highlight is that 37%, the big four events grew 37% in

fiscal ‘14. The balance, the other sort of 47% of revenues grew at around 15%. Sorry,

I think it was 9% actually that number, so there's a more muted growth in the other

events around the dmg::events division, with the high growth is in those big four events.

And therefore then in the absence of Gastech next year, there's an impact that ripples

through accordingly.

And on the margin, well again it’s the fact that sort of the Gastech event is a high

margin business for us, so you will expect to see a little bit of a dampening of the margin

in fiscal ‘15. Those are the sort of key drivers of the trend that I think you’re looking for.

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Ian Whittaker, Liberum Capital

Good morning. Just one question around MailOnline. Just listening to some of your

comments, I mean it almost seems as though the online - your strategy in terms of

journalists on the online almost seem to be a replication of newspaper, i.e. hire more

journalists therefore be able to cover more stories. The risk of that is sort of on the

profitability side, because even though you've had good growth in Mail Online your

revenues are still below the Metro. Do you ever step back and actually think well sort of

maybe this approach of trying to replicate the newspaper online in terms of resource and

so on might not be the right one, and maybe something more like a VICE approach may

be the way to go?

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Yeah, well I think we haven’t talked about the fact that a good deal of the investment in

the US actually is on the commercial side. Stephen happened to mention the journalist

side, but we’ve been beefing up the sales team in the US. It’s our analysis that based

on the traffic we’ve already got there's more revenue that should be coming our way.

That’s a kind of B2B activity.

And no, I think that we ought to ask Martin Clarke, the publisher, I think it is the core

proposition of Mail Online to produce really good journalism, you know that is

distinctively Mail Online. And I think I heard a talk recently by some senior people at

WPP, I think there's a growing kind of awareness say in the agency community that

where - it’s in old stuff, where the environment in which an advertisement runs and the

approach in the way it runs, did somebody actually see it and did they take action is still

a very important consideration.

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I agree.

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Regardless of algorithmic trading which is certainly growing. So yeah, do we step back

and reflect on these things? Yes, because this is such a rapidly changing market. You

know we’ve always said that we’d be very flexible and change the business model we

have, but personally I think there's a long way to go yet to exploit the particular

distinctiveness if you like of MailOnline. And yes we do believe in kind of journalistic

talent making a difference.

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Yeah, I would agree. If you look at the size of the prize in the US, we do just £12m of

revenues in the US. We do £45m of revenues in the UK, and the US is a more valuable

and more advanced digital advertising market than the UK. There are several publishers

in the US that have - where their websites generate in excess of $100m of advertising

revenues, and the trick in the US is it’s to get the engagement of the audience to the

levels that it is in the UK. So the number of regular daily visitors and the minutes spent

on the site in the US is below that of the UK, and that’s the trick, is to get that US

content that drives that engagement and the revenues will follow accordingly. So that’s

very much the strategy there.

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Tom Singlehurst, Citigroup

I just had one question on Zoopla. And it’s whether we should consider than an asset

for sale firstly. And then secondly, I know you've indicated in the past you don’t want to

put any more capital into that area. If it is an asset for sale, should we think about the

IPO price as a reference price? Would you be willing to sell it down below what you

achieved in the … ?

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What was the asset you’re talking about?

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Tom Singlehurst, Citigroup

Zoopla.

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Zoopla.

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No plans to sell down our take in Zoopla. We said this at the time in the IPO we’re a

highly supportive engaged investor. We have two seats on the board, we really like the


Page 27

management team and we feel very positive about the future of Zoopla over the next

few years. So no plans to sell down at all.

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Thanks. Just being a bit greedy. Just on the guidance on JVs and associates which I

think is for 30 million for this year. So you did 31 last year, and this year you'll have the

benefit of Dealogic for most of the year, together with a bit of growth in Local World. So

unless Zoopla is sort of going backwards or flattish, how do you get to 30? Seems a bit

light.

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We are probably being a little cautious with that number so you’re not wrong in your

logic. 32% versus 52% does play a part and of course Local World is a business that

has surprised us in its resilience, and it is still in a very challenged space in regional

newspapers with revenues declining sort of 8%, 9%. So we are being cautious but you

know there are a couple of factors just to bear in mind on. One is just a percentage

holding, the other on is a challenged regional newspaper sector. But you’re dead right in

your logic.

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Great, thanks.

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Well I think if there are no more questions …

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Any more questions? Anyone? No.

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Thank you all for coming and for listening to the presentation and your questions. We

very much enjoyed it. Thank you very much. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

END

DISCLAIMER


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Documents

WORLD TELEVISION - DMGT Technology/media/Files/D/DMGT/reports-and...Daily Mail Monday to Friday from 55p to 60p early February 2013 so we had a four month benefit of that in this year’s