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Charles Sinclair
Chief Executive |
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On the following pages you will find a detailed
review of the past year’s activities of each of the
Group’s divisions. As the Chairman has said in his
statement, it has been a challenging year, but one
in which the resilience of the Group as a whole has
been demonstrated. Click to see performance graph...
Despite reporting profits higher this year than last, our share
price has not escaped the general weakness in the world’s stock
markets. As you can see from the graph above, the DMGT ‘A’ Ordinary
Non-Voting share price is currently around 5% lower than this
time last year, following a fall of 28% the previous year. The
media sector has performed substantially worse than the broader
market, as it has fallen from its "dot.com" inspired highs achieved
early in 2000.
It is some consolation that the DMGT share price has modestly
outperformed the media sector over that period and, as you can
see from the graphs on the remuneration report page, continues to outperform
the market substantially over longer periods. Over the last five
years, DMGT has invested substantial amounts of money in establishing
new business divisions, as well as strengthening our core newspaper
operations. It has been good to see these beginning to pay dividends
as with the profit improvement from our exhibition business, dmg
world media, and the business-to-business operations of DMG Information.
As I indicated last year, the pace of making acquisitions has
slowed significantly, with the total amount spent reduced to £119
million. The only substantial transactions have been the purchase
of Loot in October 2001, a business which fits well with our other
London titles, and the repurchase, in exchange for debt owed to
us, of the 25% of DMG Radio Australia we did not already own.
Other transactions have been relatively small and designed to
augment our existing businesses. Generally we are finding that
the prices asked for good media assets are not reducing in line
with stock markets, so we have to look hard for value. 
As regards the disposal of non-core assets, we have been able
to take advantage of strong property markets to sell a number
of properties that were surplus to requirements.
It seems appropriate for me to refer to the much publicised issue
of pensions. More employers have chosen to close defined benefit
schemes and to offer defined contribution schemes to their employees.
We aim to offer what we believe to be the most appropriate form
of pension benefit to our employees, be that defined benefit or
defined contribution. We have had an actuarial valuation of our
defined benefit schemes carried out during the year and reviewed
as at September 2002; this showed the schemes remaining in surplus
and not requiring any increase in contributions. We have also
been required to undertake a valuation under the rules set by
the new accounting standard, FRS 17 and, in common with most defined
benefit schemes, ours showed a substantial deficit as at September
2002. This is only for accounting purposes and has no impact on
the funding of our schemes. Importantly, our schemes have more
cash coming in from contributions and investment income than is
being paid out in benefits, and so there is no need to sell assets
at what we hope are today’s depressed prices. We have no plans
to close any of our pension schemes.
Over the next 12 months, we will continue to invest in our businesses
and to look for suitable acquisitions to strengthen them. We are
quite comfortable with our current level of debt, but in the current
uncertain trading environment, would not wish to see a substantial
weakening of our debt ratios. We are also likely to see the passing
of the new Communications Act, which will open up new possibilities
for us.
I hope that you find the reviews interesting and informative.
Charles Sinclair
Chief Executive
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