Adjust for one-off items - amortisation and goodwill and £114.4m of gains from selling Evanta and Digital Property Group - and
The B2B (business-to-business) division remains the growth engine. Although revenues there grew just 1 per cent to £899m, improved efficiencies saw B2B grow overall operating profit by 7 per cent to £237m. Strip out the contribution from Northcliffe Media, which is being sold, and B2B now generates a hefty 79 per cent of group operating profit. The capacity to exclude struggling local media arm Northcliffe is something management has long wanted to do. That's now being offloaded to Local World, a joint venture that includes Trinity Mirror, for £52.5m in cash and a 38.7 per cent stake in the venture. Meanwhile, underlying revenue at Associated Newspapers grew 2 per cent, to £848m, helped by higher digital revenues and cover price increases. Management, however, remains cautious about medium-term prospects for newspapers, pointing to uncertainties in the UK advertising market.
Broker Liberum Capital expects pre-tax profit of £280m for 2013, giving EPS of 53.3p (from £249m and 48.5p for 2012).
|DAILY MAIL AND GENERAL TRUST (DMGT)|
|ORD PRICE:||517p||MARKET VALUE:||£1.98bn**|
|TOUCH:||517-518||12-MONTH HIGH:||535p||LOW: 361p|
|DIVIDEND YIELD:||3.5%||PE RATIO:||10|
|NET ASSET VALUE**:||42p**||NET DEBT:||£613m|
The group is now far more exposed to decent B2B business than to weaker newspaper operations, while the share buy-back programme will please shareholders. But after rising more than 40 per cent since June, the shares now trade on 10 times expected earnings - which looks up with events. Hold.