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11th January 2013
Mecom Group plc
Pre-close trading update
The Board of Mecom Group plc ("Mecom" or the "Group"), a leading European consumer publishing company, issues the following trading update for the year ended 31st December 2012, in advance of its final results which are scheduled to be announced on 21st March 2013. All trading performance figures and comparisons quoted in this statement are based on the Group's on-going operations (i.e. excluding the Edda Media and Presspublica operations, which were sold in 2012 and 2011 respectively), except where stated otherwise.
Full-year results for the Group are expected to be in line with the guidance given in the Trading Statement made on the 6th June 2012, and confirmed in an Interim Management Statement on 18th October 2012 (the "October IMS"), with a preliminary estimate of on-going 2012 EBITDA of approximately €89 million. Taking into account the EBITDA of Edda Media for the period until its disposal in June 2012, total Group EBITDA is estimated to be €105 million. Year-end net debt was approximately €130 million (representing c.1.5 times on-going EBITDA). The Group expects adjusted earnings per share from on-going operations to be approximately 24 euro cents, and expects to propose a final dividend in line with its stated dividend policy of dividends being approximately three times covered by net adjusted earnings.
Key trading highlights of the year were as follows:
· total revenue in 2012 was approximately 9 per cent lower than in 2011;
· during the final quarter of the year, the Group continued to experience advertising revenue declines in all territories. Total advertising revenue fell by 17 per cent in the three months to 31st December 2012 (compared to a 20 per cent decline in the third quarter), resulting in a 17 per cent decline for the full year;
· other revenues (including circulation revenue) for the full year 2012 displayed trends broadly consistent with those announced in the October IMS; and
· total operating costs were approximately €70 million (7 per cent) lower in 2012 than in 2011, with the on-going restructuring programme contributing significantly to this reduction.
Following the Group's announcement on 19th July 2012 that it would conduct a Strategic Review to examine potential options for maximising shareholder value, processes have been initiated in all of the Group's territories to solicit expressions of interest and, in some cases, offers from potential buyers for certain of the Group's assets.
The current status of these processes in respect of each of the Group's operations is as follows:
· As yet, no acceptable offers have been received for the whole of the Group's operations in the Netherlands. The Group is exploring a number of indicative offers from parties interested in acquiring specific parts of the Dutch business, including some of its standalone digital operations.
· In Denmark, expressions of interest have been received for the entire Danish operations, and the Group will invite a small number of potential buyers to conduct due diligence shortly.
· In Poland, the Group has received a number of offers for the Group's operations and is now in exclusive discussions with one party.
A further update on the Strategic Review will be provided at the time of the Group's annual results announcement on 21st March 2013.
The Group is in discussions with its lenders to extend the term of the current bank facilities by one year, to 31st October 2014, and anticipates agreeing terms for this extension in the near future.
Dutch Competition Authority
On the 27th September 2012, the Group announced that the District Court of Rotterdam had determined that amounts payable by the Group's Dutch subsidiary, Koninklijke Wegener N.V. ("Wegener") to the Dutch Competition Authority (the NMa), in respect of alleged breaches of undertakings given by Wegener at the time of its acquisition of VNU Dagbladen in March 2000, should be reduced from the originally assessed amount of €20.6 million to a total of €2.2 million. Following further discussions between Wegener and the NMa, agreement was reached in December 2012 that the reduced fine would be paid in full and final settlement of the matter, and this was done prior to the year-end.
Dutch Management Change
As announced by the Supervisory Board of Koninklijke Wegener N.V. (the "Supervisory Board") this morning, Truls Velgaard will step down from his position as Chairman of the Management Board of Wegener in mid-2013, consistent with Wegener's understanding with him when he was appointed in 2010. A search process for his successor is underway and Truls will participate fully in an orderly transition.
The Group expects earnings in 2013, on an on-going basis, to be influenced by continuing pressure in the Group's advertising markets and continuing declines in single copy circulation sales in Denmark and Poland. These factors will be substantially offset by further benefits from the Group's restructuring programme, which remains on track to deliver additional cost savings in 2013 as previously announced, and lower interest costs following significant debt reduction during 2012.
Commenting, Stephen Davidson, Executive Chairman, said:
"I am pleased that we expect to deliver 2012 results in line with the trading statement we made on 6th June 2012. During a period of sustained economic pressure and notwithstanding the additional demands of the Strategic Review processes, our people remain committed to the improvement and modernisation of our products and businesses. In 2013 we expect further benefits to come from restructuring initiatives and the launch of new subscription packages that provide our readers different and innovative ways to access our content."
Mecom Group plc 020 7925 7200
Stephen Davidson, Executive Chairman
Henry Davies, Group Finance Director
Pendomer 020 3603 5220
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