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WORLD TELEVISION DMGT Half Year Results Presentation 21st May 2015 DMGT - Half Year Results Presentation - 21st May 2015 DMGT Martin Morgan, Chief Executive Stephen Daintith, Finance Director QUESTIONS FROM William Packer, Exane BNP Paribas Gareth Davies, Numis Steve Liechti, Investec Nick Dempsey, Barclays Capital Alex DeGroote, Peel Hunt Ian Whittaker, Liberum Capital Patrick Wellington, Morgan Stanley Chris Collett, Deutsche Bank Page 2 DMGT - Half Year Results Presentation - 21st May 2015 Introduction Martin Morgan, Chief Executive Well good morning everybody it’s a pleasure to see you here and welcome you back to this marvellous hall. I hope you will find the presentation as equally enjoyable as the surroundings. So this is our presentation on the half year results up to the period to March the 31st. And this morning we have a simple agenda, I will touch on the highlights of the results following which Stephen Daintith our Finance Director will take you through the details and I’ll return to give you a brief update of what’s going on in the operating companies and then of course we’ll have Q&A. So as to the highlights. Group underlying revenue was up 1% with underlying operating profit down 7% and we came in at an operating margin of 16%. Adjusted operating profit before tax was down 4% but EPS was up 7%. And the interim dividend was 6.5p up 5%. We continued to be an active manager of our portfolio of businesses, as you know that’s very much a priority for us. Acquisitions were made within dmg::information, dmg::media and Euromoney and we completed the disposal of Jobsite which was the last remaining business in the former Evenbase digital recruitment company and we disposed Lewtan. Net debt to EBITDA ratio was 1.9 and Stephen will explain why that is expected to come down towards the end of the year. And we completed a bond buyback in October 2014. We made good progress with a £100m share buyback programme we announced last November with £71m of shares being purchased to date. And importantly the outlook for the full year is unchanged and in line with market expectations; although EPS - our expectations of EPS are somewhat ahead of current market expectations. So that concludes the highlights and it’s now my pleasure to hand over to Stephen. Financial Performance Stephen Daintith, Finance Director Thank you Martin, morning everybody. I think and Martin mentioned this, one of the key messages for today is that the first half was very much in line with our expectations and indeed the full year remains in line with our expectations. This is a slide that we put up back in November of last year and just to remind ourselves of the things that we flagged then which very much hold true today, some of the key things that are happening in the first half numbers, and there’s a lot of thing happening in our first half numbers, but this slide just sort of summarises those one by one. So the investment in RMS(one) and the reduction in margin and profit in RMS as a Page 3 DMGT - Half Year Results Presentation - 21st May 2015 consequence, the absence of the Gastech event which took place in March 2014 has not taken place in this fiscal year. The Evenbase disposal, Martin mentioned that, but we have a reduced stake in Zoopla, we IPO’d Zoopla back in June last year and our share went from 52% down to 32% of Zoopla so that’s a driver of the numbers that we see today. We have a reduced finance charge, we’ve bought in quite a lot of our bonds over the last 18 months or so and reduced our interest charge as a consequence. Other M&A, Martin mentioned that. And finally the exchange rate, last year’s average was 1.66 and as we’ll see later on the average so far this year has been somewhat lower than that. So a quick summary of the numbers before I get into the detail, underlying revenue growth of 1% and operating profits down 7%, the profit declined despite the revenue growth driven by the absence of Gastech and the investments in RMS. And then I just highlight down the bottom here that if we were to adjust the operating profits for the timing of events in Euromoney in fact the underlying decline would be somewhat smaller at 5%. It’s a small point but Euromoney do not adjust in their underlying calculation for the timing of events whereas we do. So I’m just pointing that out, it’s a slight point of detail but it’s just useful to know. Profit before tax down 4% and then earnings per share growing by 7%, I’ll get into that later explaining why there’s a difference there between the 4% decline and the 7% growth. And we are happy to declare a 5% growth in our dividends which is of course in today’s days of zero inflation CPI is a 5% real growth as well. So as we look at DMGT it is important I think just for a little while just to reflect on the diversity of the group and this is something we’ve been pursuing over the last, you know quite some time now. We are very much a good balance I think of B2B and consumer. B2B representing 59% of our revenues and 67% of our profits. B2B is growing its revenues at 2%, we’ll get into the detail of that shortly. Consumer down 2% and we’ll understand that a little better later on as well. What’s happening within the profits is interesting, B2B up until recently has represented a higher proportion of our profits than consumer; but one of the things that we are seeing today in our numbers is a resurgence in the profitability of our UK consumer business and the 15% margin that we’re reporting today, and again we’ll get into that detail as we progress through this presentation. B2B declining at 20% in profits largely driven by Gastech and RMS, so again not surprised by that number but just highlighting its impact, and consumer growing by a very healthy 33%. So I think what this also demonstrates is the importance of a portfolio like DMGT where one part of the group for whatever reasons sees a decline in its profits the other part can take up that slack and that works well for us right now and has done for quite some time. Similarly the geographical diversity of DMGT often seen as a UK business with just 51% of our revenues are out of the UK, 49% from the rest of the world. And you can see there in the UK on the profit side whilst 50% of the profits, the underlying growth of the Page 4 DMGT - Half Year Results Presentation - 21st May 2015 UK profitability up by 23%. So a very nice performance from our consumer business in the UK. North America down, driven by RMS largely. And again going back to the diversity of the portfolio very much diverse and well balanced revenue streams as well. Print advertising is now just 16% of our portfolio, that’s the one that we know and expect to decline over the years ahead, it’s just 16% of our Group revenues. And we’ve highlighted here that what we are doing across the group, this is taking into account the Euromoney print advertising revenues and the Daily Mail and Metro, the declines there, albeit Metro is in fact growing, but the declines there are being equally offset by the growth in digital advertising that we get from a small portion from Euromoney but from Mail Online in the UK, US, rest of the world and also from Wowcher which has grown very well as we’ll see later. So moving through our divisions one by one, first of all B2B, RMS again there are no surprises in these numbers, very much in line with our expectations. The core business flat year on year, the 2% decline that we see in RMS revenues, Group revenues, very much driven by the absence of RMS(one) consultancy revenues where we saw around $3m of consultancy revenues in the first half of fiscal ’14 in anticipation of the then planned launch for April 2014. It's been pretty much a complete absence of those in fiscal ’15 and that’s the big driver of the 2% decline across the board. We do expect an acceleration in the growth of the core business and we’ll get into the reasons for those I’m sure during the Q&A. Essentially driven by RiskLink 15.0 and two new versions of North American Hurricane and European Windstorm. 2% revenue decline I’ve just mentioned that. And the operating margin of 14%, we gave guidance back in November of between 10 and 15% so we’re very much in the range of our guidance that we gave, what is it now, 6/7 months ago. Dmg::information, revenue growth of 6% in dmg::information, good revenue growth. Growth a little bit below perhaps what one might have expected at the half year largely driven by a decline in UK mortgage approvals in the first half of this year down 14% on the same period last year. Just as a reminder the same period last year was up 34% on the first six months of fiscal ’13 so they were always going to be tough comparatives.

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