Company: DMGT First Half Pre-Close Trading Update Presenter:...

DMGT First Half Pre-Close Trading Update

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Company: DMGT

Conference Title: First Half Pre-Close Trading Update

Presenter: Stephen Daintith

Date: Thursday 26th March 2015

Operator: Good day and welcome to the DMGT Conference Call. Today’s conference is being

recorded. At this time I would like to turn the conference over to Stephen Daintith, please go

ahead sir.

Stephen Daintith: Hi, thank you. Good morning ladies and gentlemen and welcome to the

conference call covering our First Half Pre-Close Trading Update. I’m Stephen Daintith, DMGT’s

Finance Director. I’m joined by Adam Webster, Head of Management Information and Investor

Relations.

So today’s conference call is a chance to pull together the key dynamics behind our trading over

the first five months of our financial year to the end of February 2015. As usual there’ll be an

opportunity at the end of the call for you to ask any questions you may have. So overall, trading

over the first five months of our financial year has been in line with our expectations. The revenue

and profit outlook for the full year provided us guidance at our full year results in November

remains unchanged. Group revenues for the period increased by 1% on a reported basis and after

adjusting for the timing of Euromoney’s events also grew by 1% on an underlying basis. Overall

our B2B companies have delivered a solid performance with underlying revenue growth after

adjusting for Euromoney’s events of 4% in the period. There were good performances from DMG

Information and DMG Events while RMS reported a slight decline in underlying revenues. More

detail on B2B dynamics to follow.

Our reported B2B revenues have benefited from the strengthening US dollar in the five months.

In summary for DMG Media underlying revenues were 2% lower in the first five months with

continued circulation declines offset in part by advertising growth from our digital companies.

Portfolio management activity has continued since we last reported at the Q1 stage with Hobsons

acquiring Starfish Retention Solutions in February. Starfish is a US based provider of higher


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education student support and advising systems and will complement Hobsons existing students

engagement and retention service. As part of our continued balanced approach to capital

allocation we bought back a further £33 million in shares in the period as part of our £100 million

share buyback programme announced in September 2014 at an average cost of £7.96 per share.

Taking into account the shares purchased at the end of September last year and those acquired

to date in March of this year we've now bought back £57 million of shares, meaning we are just

over half way through the programme.

Now to give you some more detail on each of our businesses. Within B2B firstly. RMS’s

underlying revenues declined by 2% whilst reported revenues increased by 3% due to the

stronger dollar. The dynamics of the underlying performance are that the core business revenues

were in line with last year, broadly in line with our expectations and were offset by the expected

lower RMS1 consultancy revenues. As you will have seen in this morning’s statement the revised

plan for RMS1 remains on track and we’ll update you further on its progress at the half year

results in May. DMG Information delivered good underlying growth with revenues up 5% in the

period. Reported revenues were up 8% reflecting the stronger dollar. Genscape delivered double

digit underlying growth with Hobsons and the property information companies generating single

digit growth. We do still anticipate an acceleration in growth over the remainder of the year,

specifically we expect an improvement in the growth rate of the UK property information

businesses and at Hobsons and we remain confident of DMG Information generating revenue

growth in the region of 10% over the year. DMG Events continues to perform very well although

Q2 is a quiet period for the business. Over the five months to date underlying revenues grew by

14% and reported revenues were up 24%. Looking forward, just to note that the Global

Petroleum Show, one of our four large events is moving from a biennial to an annual show in June

this year and to date forward bookings are encouraging. Euromoney released their pre-close

trading update this morning and are continuing to trade in line with expectations. Trading

conditions remain challenging with pressures in the investment banking sector continuing to

offset the improving performance in the asset management sector.

Moving on to our consumer business. DMG Media’s underlying revenues were down 2% in the

period compared to last year with positive advertising growth of 1% partially offsetting the 4%

decline in circulation revenues. The lower circulation revenues reflect declining sales volumes, a

dynamic you are familiar with given the continued weak market conditions. Importantly,


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however, the Daily Mail and the Mail on Sunday continue to increase their market shares with a

record share reached for the Daily Mail in February.

Looking at advertising. Underlying revenues were up 1% in the five months, newspapers down

6%, companion websites, which is mainly MailOnline up 20% and other digital advertising mainly

Wowcher up 29%. This is a similar overall trend to that reported at the Q1 stage although the

first two months of the second quarter have been quite volatile with declines in February partially

offsetting growth in January. The other dynamic to highlight is that Metro has performed well

over the period, growing UK print advertising revenues by 4%. In terms of current trading

advertising growth across DMG Media has resumed at a healthy 5% in the four weeks since 22nd

February. As ever visibility on advertising on a month to month basis remains unpredictable.

Importantly however, the good performance of our digital consumer assets continues to offset

the more challenging print side of the business.

So in a bit more detail now. MailOnline revenues continued to grow well in the period, up by 20%

albeit at a somewhat slower pace than last year. It is no surprise that growth rates are slowing

given the increased scale of the business and we remain extremely encouraged by the expanding

reach and appeal of the MailOnline proposition, both here in the UK and progressively overseas.

In terms of eyeballs the business continues to grow very fast with global monthly unique browsers

standing at 220 million in February up 32% on last year and there were 14.8 million average global

daily unique browsers, an increase of 31% on last year. And just a word on Wowcher, revenue

growth continued at a good pace up 34% in the five months. The business continues to perform

very well with the subscriber database standing at 6.5 million as at the end of February 2015, 40%

higher than February last year.

So in conclusion trading in the first half to date has been in line with our expectations and our full

year guidance remains unchanged. I would now like to hand over to you for any questions you

may have.

Operator: Thank you. If you would like to ask a question please press *1 on your telephone keypad.

Please ensure the mute function on your telephone is switched off to allow your signal to reach

our equipment. If you find your question has been answered you may remove yourself from the

queue by pressing *2. Again, please press *1 to ask a question.


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We will take the first question from Nick Dempsey from Barclays.

Nick Dempsey: Good morning Stephen, just two questions please, first of all I wonder if you can take us

through the reasons why you expect that 10% organic at DMG info for the year in a bit more detail

and particularly how much of that is based on hoping that property transaction volumes in the

UK improve and the second question just looking at that 5% organic growth since the end of

February, first of all did MailOnline improve in that month versus the first five months and then

secondly how much of that good growth was simply due to an easy comp because I think it was

a minus 7% that you achieved in the same period last year?

Stephen Daintith: Okay, fine. So let’s do. I’ll do MailOnline very quickly it was 23% in the last few

weeks, so if anything it’s accelerated again, so it remains, February was a blip and again the good

growth that we've seen in the whole five months is repeated in the last four or five weeks, and I

wouldn’t put it down to just an easy comp, I think it’s just a continuing growing traffic and the

revenues following the traffic growth, so that’s essentially what’s happening with MailOnline.

Now on DMG Information you’re right to allude to property as being a key driver here and in short

it’s mostly the DMG Information in this five months about UK property revenues. UK property

revenues account for just over 40% of DMG Information primarily through Landmark and

SearchFlow and a big number, important number here is UK’s mortgage approvals which in the

four months to January approvals were down 17% year on year whereas last year we saw 34%

growth over the same four months and that’s a pretty big shift and consequently you’ll see that

the UK property information revenues were flat for the five months year on year driven largely,

the February numbers aren’t out for mortgage approvals yet but the four months certainly are

and those are the numbers that I’ve just highlighted. What happened last year is that the UK

mortgage approvals picked up, the growth I should say slowed down pretty significantly moving

from March into April so in Q1 mortgage approvals were up 32%, they were up 35% in Q2 and

then in Q3 and Q4 they were up 7% and 1% respectively so we do expect that with those easier

comps and that the mortgage approvals at the level that they are at now and with pick-up that

we do anticipate that that will be a big driver of getting us towards that 10% growth that we are

still confident about across the rest of our businesses. Just going through the rest of the business,

US property grew at 11% and that’s primarily EDR but it now includes Strepp just to remind you

that we’ve brought that into the US property business. Education which is Hobsons for the five

months has grown at 6% which is pretty much in line with Q1. I went through the reasons for

Hobsons growth being slightly less than perhaps we might have anticipated at this stage, there


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are a couple of timing differences coming in there and we do expect the growth to actually pick

up in the second half of the year. Naviance continues to grow very well which is the K12 business,

that grew its revenues by 26% and you recall that the higher education business we’re moving a

lot of the revenues onto a new platform radius, a single technology platform for the higher

education business which might at times be at the expense of revenue growth but ultimately for

higher margins, so we are anticipating an improved margin for Hobsons as a consequence of that

shift. You might also recall that Common App which is a business that was essentially like the

UCap business in the UK to enable students to apply through a common application for many not

for profit organisations, Hobsons has provided that service for many years and quite a few years

ago Common App indicated they wished to bring that in house and we helped them with that

transition and indeed our staff have moved on to that business so that they’re doing it themselves

and that’s led to a consequent loss of revenues, albeit a time that will soon wash out in the

comparatives and finally the Mackie business which is where we help find online courses for

certain universities in North America, Christian universities, that had just one semester in this

period and it had two semesters in the previous period, so there’s a timing difference there in

that, so you put all those things together with Hobsons we’re pretty confident we’ll get back to

10% growth there and then finally Genscape continues to be the stand out performer growing at

17% in the five months and a little bit down on last year’s numbers but with its various

acquisitions that it’s done and the way it continues to expand its product range, we think if

anything that growth will accelerate rather than decelerate. So putting all those things together

we feel confident around the 10% that we've guided to.

Nick Dempsey: Sorry can I just quickly follow up on my tough comps thing, it wasn’t really about

MailOnline but more about the whole of DMG Media advertising which I think, was there

something maybe to do with the timing of Easter or is there a reason why that 5% was always

going to be better for the whole of DMG Media advertising.

Stephen Daintith: Possibly, I mean it’s really tricky with advertising and it’s like when you look at

sort of the monthly volumes and so on, or monthly revenue sorry, it really just depends on some

big campaigns, we've seen quite a bit of supermarket activity recently, quite a bit of

entertainment category campaigns and those are the things that will drive quite, reasonably

significant movement in percentage changes and they do come and go so I wouldn’t read too

much into it.


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Adam Webster: And Easter fell in April last year and April this year, yes so

Nick Dempsey: It’s like for like, yeah. Okay, thank you.

Stephen Daintith: Okay.

Operator: The next question comes from William Packer from Exane BNP Paribas.

William Packer: Hi there. Thanks a lot for taking my questions.

Stephen Daintith: Hi William.

William Packer: Hi there, just do a follow up on Nick’s question. With DMGI and its property

business more specifically, have you factored in the potential headwind of the election into your

calculations, obviously last year there was no election and this year it will be taking place in the

sort of talk in the industry is that at least residential property transactions may remain weak even

for some period relative to the election and you know what portion of your overall transactions,

revenues, come from commercial property in the UK versus residential and then secondly on RMS

and the core business specifically, could you talk us through the reasons why we should think that

growth should accelerate in H2, obviously you’ve talked about low single digit growth there. I

recall things related to new versions of the modular risk line etcetera just a reminder of that

would be great, thanks.

Stephen Daintith: Yes, sure, so whilst it’s fresh as you just mentioned it RMS we in fact next week

are releasing two new releases of North American Hurricane and European Windstorm so those

are upgrades to existing models, we tend to see a revenue pick up as a consequence of new

releases and also next week as I think we've mentioned previously Risk Link 15 is being released

which is the platform that allows RMS customers to host the RMS models and ultimately will be

phased out with RMS1 but as it stands today it is still very much the platform for the catastrophic

risk models that RMS produces and there’s a new version of that next week and both of those

things will help pick up revenue growth for RMS core and for RMS as a group.

William Packer: And just to clarify in H1 or the first five months were there any new model

releases or is this the first release of the year?


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Stephen Daintith: No, these are the first major releases of the year.

William Packer: Okay, great thank you.

Stephen Daintith: So that’s really the driver there. On the RMS itself as well I mean it’s important

just to note that for the RMS1 consultancy revenues, about 90% of those revenues came in the

first half of last year so given the relative absence of RMS1 consultancy revenues this year that

explains the sort of underlying decline that we are seeing in RMS as a group just to put a bit more

detail on that one. And then going back to your first question, we've looked at this actually and

historically elections have not caused big changes in transaction volumes or indeed mortgage

approvals in the run up to elections historically. I think this time around things may be slightly

differently given some of the positioning by one or two of the political parties, so we shall see, I

mean as it stands we still believe given the way that the comparatives do get significantly let’s say

easier we do expect to see growth pick up quite nicely once we get out of the tough comparative

which we saw in March and April was much more benign, so we’re pretty confident about that

pick up and what’s your second part, remind me of the second part of your question that you had

on the property bulk transactions?

William Packer: And should we think of, you can’t have answered already but how does your

exposure to commercial and residential property in the UK compare?

Stephen Daintith: In the UK commercial is probably about 10%, it’s pretty small, so it’s actually

largely residential.

William Packer: And just one for RMS, the previous investor day one of the kind of future growth

drivers that was discussed was the HD models, kind of which would help bring through new

growth in the core business but the sort of slight complication was that they require some kind

of RMS1 functionality. Could you kind of just recap where we stand on that is that still the case

or does the modular release of RMS1 mean that that’s less pressured now.

Stephen Daintith: No, it’s very much the case. RMS1 is the enabler for the HD models and we are

expecting to release three HD models during this calendar year, Pan European Flood, Japan

Typhoon and New Zealand Earthquake are the three that I recall and the first one of those is likely


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to be Pan European Flood. We have in the second week of April, sorry third week of April the

annual RMS client conference and at that conference Hement Shah will be giving more details to

RMS clients on the likely plan for RMS1 and the staged releases that we’ve talked about quite a

lot now over the last sort of six months or so and so those HD models again will help us drive

revenue growth, incremental revenue growth and we are still on track for those releases in the

final quarter of this calendar year at the same time we continue to work with our joint

development partners during the development phase of RMS1 and I would imagine that they will

be getting early views of these models and how they work and so on as we approach the broader

release in the final quarter of calendar year 2015.

William Packer: Okay, thanks very much Stephen.

Stephen Daintith: Okay, thank you.

Operator: The next question from Patrick Wellington from Morgan Stanley.

Stephen Daintith: Hi Patrick.

Patrick Wellington: Morning everybody. A couple of questions, the first one is a very basic one I

suppose which is you are reiterating your guidance but of course the guidance was set when the

dollar I think was probably about 1.58 at November last year and it’s now somewhat different

from that, so does that imply that you’ve downgraded your underlying profit expectations, but

have simply made that up with currency, because other things being equal you should really be

raising your guidance.

Stephen Daintith: Well, the guidance is always on an underlying basis so we guide to a

margin number and we guide to underlying revenue growth, so we actually don’t have an impact

from Forex either way. I think what is fair though is that on an adjusted profit basis when we look

at the absolute number there will be a benefit from an average sterling/dollar exchange rate that

is better from, that it improves from the last year’s average of 166, so what’s the average now,

the average now is probably 158 something like that for the year to date, something along those

lines 156, 155 so I think what we said previously is that for every cent there’s about a £1.2 million

or so benefit to adjusted profit so that’s a nice benefit, last year we were hindered by the fact we

moved from 156 to 166 and we saw a £14 million adverse impact last year, so it’s swings and


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roundabouts here but you’re dead right that there will be an improvement in adjusted profit that

has a currency impact attached to it.

Patrick Wellington: So when we think about your guidance we shouldn’t refer ourselves to the

consensus that appears on your webpage, that’s just

Stephen Daintith: We’re quite comfortable with consensus because when you run through

all the various guidance that we give we can still operate well within those ranges but ultimately

DMG Media is a good example where we stay stable within a sort of +2% or -2% and there’ll be

various views taken by various analysts on where we end up on that. We are currently down

cents and given the volume £700 million in DMG Media and a high margin attached to it that’s

quite a big shift, so we’re pretty comfortable with where that consensus is right now.

Patrick Wellington: Great, and just quickly on RMS, two things really. I mean the update we’re going

to get in April which arises from your conference I guess, is that going to be a meaningful event

for us in terms of thinking about the future revenue streams and profit streams or is that going

to be an update related to products and sort of internal workings of the business and secondly

on core RMS you talked I think three or four months ago about the market trend towards cap

bonds and tricky backdrop to price renegotiation and some consolidation amongst reinsurance

market participants, do you want to give us an update on the feel for some of those factors?

Stephen Daintith: Yes sure so it will very much be the conference will very much be the

latter rather than the former of those two things you described, it will be about how the project

is developing, what the timetable looks like, what HD models clients can anticipate, how RMS is

going to be rolling them out, all of that sort of stuff so it will be very much sort of product driven

rather than financial driven. I expect it won’t be until November that we talk about the financials

the fiscal 16 as is our novel practice. We have an Investor Day in September and Hement is due

to be on the stage for that so it may be that we feel confident enough to talk about it then but I

would, I think the stronger bet is that it’s more likely to be in November that we’ll give guidance

on the revenues for RMS1 in its first year of fiscal 16 and then moving on to RMS core and the

underlying reasons. So the cap bond market is an alternative to the sort of classic reinsurance

market has grown quite significantly as an industry. In 2014 for example I recall there’s about

$60 billion of alternative reinsurance capital through the cap bond market compared to $20

billion in 2010 and that’s in a context of a $570 billion reinsurance industry, so it’s a pretty


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important context this one when it comes to negotiating contract renewals with clients and

although those renewal rates remain very strong, the yield decline is inevitably put under

pressure as clients feel more squeezed from the loss of a large chunk, 10% or so of their business,

so there’s that example. Then there’s also been quite a bit of consolidation in the industry, there

have been four examples Helvetia’s acquisition of National Suisse, acquisition of Kaplan by the

Excel Group, Access and PartnerRe have merged and Fairfax have acquired Brit so those are four

recent examples all of which have taken place in the last six months or so and then finally as I’ve

alluded to previously the general tone of contract renewals is a tougher tone given the delay of

RMS1 and the understandable disappointment from RMS customers to that delay, who

notwithstanding that remain highly supportive of RMS1 and what RMS is trying to achieve with it

but clearly had the wind in their sails when it comes to contract negotiations given that

disappointment, so those are the three big drivers to the admittedly somewhat sluggish RMS core

revenue growth.

Patrick Wellington: And is that sluggish growth a sort of 2%, 3%, 4% whatever it is sort of the new

black for RMS, is that what it’s going to be in the future?

Stephen Daintith: No I think you know what we shouldn’t forget is that there’s quite a bit of focus

in RMS over the last two or three years has very much been on the RMS1 development, it’s been

sort of limited releases of new models we expect that to accelerate once RMS1 is up and running,

we have HD models coming on the RMS1 platform, so we would very much hope that once we

get into 16 and 17 that RMS will start to return to those high single digit revenue growth numbers

that we’re used to, if not moving into double digit revenue growth once our RMS1 really kicks off.

Patrick Wellington: Great, thank you.

Operator: The next question comes from Alexander Degroote from Peel Hunt.

Alexander Degroote: Yes, morning chaps.

Stephen Daintith: Morning Alex.

Alexander Degroote: Morning, morning, two questions from me please. Firstly just on the debt, you

had a lovely strong share price recently and you’ve been buying in equity but I’m not aware that


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you bought in anymore of the expensive gross debt, is that because it’s too expensive so a bit of

a heads up on where we are with Eurobonds and that nice juicy yield and then secondly just on

MailOnline I don’t know if you are aware but Facebook is shortly going to start hosting Buzzfeed

and New York Times in their own wall garden, I just wondered if there are any sort of early stages

thoughts on whether or not that’s something that MailOnline could do in terms of benefiting from

all that side traffic that Facebook would give you.

Stephen Daintith: Okay, so first of all over the last eighteen months we've actually bought in

£250 million of pretty expensive debt, we've got our bond level down to a level that is pretty low

now actually and at the same time we've increased our back facilities which are somewhat

cheaper. I wouldn’t want to, it’s quite reassuring to have a reasonably high proportion of fixed

coupon long term debt in your debt mix. As it stands when you look at our total capability we’re

now at about sort of 50% fixed term bond and about 50% bank facilities and we've been a lot

higher than that one, so I’m quite comfortable where we are. When you look at the rates that

we’re paying as well the economics of the bond buy back start to get less attractive compared to

the ones that we did the 2021 buy back was a particularly good buy back the 18’s, well I don’t

think we've done the calculations on those and economically we’re just three years to go the

saving is pretty negligible, so in short I wouldn’t expect too much activity there unless there was

a particularly significant cash windfall that came our way for whatever reason and we might think

twice about it then but I think as it stands I think we are pretty comfortable where we are. On

MailOnline, l mean look, MailOnline you may have seen the Snapchat deal that was announced

recently, we now give ten stories a day to Snapchat and that’s sponsored by advertisers, we take

a very large majority of the revenues that come out of that one and its growing quite nicely and

attracting good traffic and I’ve got no doubt that if there are opportunities with Facebook they

would love to talk to us and love to have a MailOnline angle, so I think we’re very much in demand

given the sort of traffic that we've got and the traffic engagement that we've got and particularly

when you look at the sort of audience on Facebook whatever, I think it would be great appeal

from MailOnline and indeed for Elite Daily which has a very strong social networking capability,

so I think if the opportunities are there it makes sense to us commercially, I’ve got no doubt that

we will pursue it with great energy.

Alexander Degroote: And is big picture is Steinberg sort of opening up that US marketplace as you

wanted them to do.


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Stephen Daintith: It really is actually, I mean I won’t talk too much about some of the ideas that we

have and some of the plans that are in place but he has, he has really raised the game of

MailOnline in the US and I don’t whether you have any opportunity to see the sort of the trade

coverage that takes place, or indeed the TV coverage but MailOnline is now routinely mentioned

on chat shows, on entertainment shows, on television news as a source and regularly contributors

are being asked to give little video snippets of the news stories and so on, so there’s an increasing

high profile of MailOnline in the US, indeed, the 20 or so percent MailOnline growth that we saw

in the first five months, the US grew it around 40% or so during that period, somewhere in the

40’s so it was heading towards 50%, so as we pointed out previously it’s the area that we do

anticipate the stronger growth over the next few years moving from the relatively low base and

moving towards the sorts of revenues that the UK business generates albeit with similar traffic,

although the engagement of the UK is still higher than that in the US but in the US is very much

moving in the right direction.

Alexander Degroote: Brilliant, that’s very reassuring, thanks chaps.

Operator: The next question comes from Chris Collett from Deutsche Bank.

Chris Collett: Good morning thanks for taking my questions, just two quick ones. One was I just wonder

if you could comment on some of the advertising trends just by sector just where you’re seeing

sort of some of the growth and the weakness coming from among your customer base and then

second was could you just help us with net debt, I think at the Q1 you said you had about 670

million of net debt so just wondering how that has moved since then.

Stephen Daintith: Okay, so I think we've all made a point of flagging advertising revenue is

a very volatile and can change a lot from week to week let alone month to month. So far in Q2

we've gone from +4% for five weeks to -5% for the next three weeks and up 5% for the most

recent four weeks, so it is pretty lumpy. Retail remains the largest sector and that accounts for

about a quarter of total advertising revenues and supermarkets do make up the majority of retail

advertising and it remains pretty volatile, the entertainment and media sector and the financial

sector were stronger for advertising in January and February than during Q1, so they did pretty

well. Telecoms advertising which was strong during Q1 was then noticeably weaker in Q2 and

somewhat less significantly but motor advertising was also weaker as well, so I think I’d love to

be able to give you some sort of real key trends that we’re seeing that are sort of set themes that


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are established but we just don’t see it. It tends to be around corporate activity, individual

businesses. We have a, I think our top 20 or so advertisers make up a very large percentage of

our revenues and it’s often around how Tesco see the world or Marks and Spencer’s or ASDA and

all it takes is one big push from them and it can significantly change our revenue, so I’m always

very wary to try to give some major sort of sector trends and themes, we just don’t see them I’m

afraid. And then the next question was on net debt, we don’t give a debt number at this stage, I

think if you look back to last year’s first half we’ll note that our net debt tends to be at its high

point around this time of the year, largely due to the dividend payments and also the fact that we

have after each year end of course we pay our incentive payments in the first half of the year as

well in respect of the previous year, so you put those two together, those are the two big drivers

as to why net debt tends to be as it is, we remain very confident that we will not exceed the 2

times net debt EBITDA ceiling that we set ourselves and as it stands today we have plenty of

capability to finish our share buyback programme during the fiscal year, we’re 57% of the way

through and MNA will remain our priority but as it stands today I’m reasonably confident that

we’ll complete the programme within this financial year.

Chris Collett: Perfect, thank you.

Operator: The next question comes from Jonathan Helliwell from Panmure Gordon.

Jonathan Helliwell: Morning, yes, couple of things actually just first of all on the MG information and

the UK housing exposure. Is there anything in your business in terms of what you’re seeing at the

moment or in your pipeline that supports the pick-up in the second half or is it entirely predicated

upon your view of the way the market and the comps go in the second half, that’s the first

question. Second on RMS again if my memory serves me correctly this first quarter of calendar

2015 was when you were going to have a go at introducing a refreshed pricing system for RMS1

after meeting some resistance I think to the pay per view elements previously, so I was wondering

if you might be giving us an update on that, if there’s anything you can say on that that will be

extremely helpful and then also just trying to get my mind around this release of the software

release of Risk Link 15, why would people go for that at all, why would they upgrade on that

particularly when there’s the whole RMS1 release coming through, pretty visibly coming through

the system as well.


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Stephen Daintith: Okay, fine. So on DMG information on UK property it is more about our

view and more about the comparatives. As you might imagine we have several executives within

the business that know the market well and know the ups and downs of the markets and their

view is that the market will improve during the second half of this year, the comparatives do help

but there’s also their seasoned and experienced view that the market will pick up in the second

half so it’s very much that rather than any sort of solid factual evidence which of course we’d all

love to see but we know the economists and forecasters out there have all sorts of views about

all sorts of things and I’ve read every couple of months for the last six years that interest rates are

going to increase imminently and they still haven’t, but anyway

Adam Webster: Just to add to that is that the mortgage approvals were down 17% and revenues were

flat, so you know if volumes return to being flat then obviously we’d expect reasonable revenue

growth.

Stephen Daintith: And on RMS1 on pricing I think what you may be talking about here is our

referencing of the fact that during 2015 is when we will be thinking about how we price RMS1

during anticipation of its broader release towards the end of this calendar year and there are no

conclusions on that yet and we’re working through it and again I think it will either be September

or November when we are ready to give you some clear guidance on how that pricing system will

work and indeed, if it’s changed at all from the one that we had in mind which was a combination

of fixed and variable, fixed being the number of locations and number of seats and variable being

the amount of data that’s run through the software but that’s what our thinking as it stands today,

that was the last stated thinking and if that changes well I think it will either be September or

November that we’ll update you on that and then finally, Risk Link 15 versus RMS1 why would

they migrate. Well quite frankly they might migrate because they might just decide that it’s going

to be a couple of years before they move on to RMS1. We’re not expecting a big bang approach

whereby all 200 customers move onto RMS1 on day one or indeed even within the first six months

or so, a client may very wisely or sensibly, depending on their own technology initiative plans

within their own business decide to delay the migration to RMS1 for a year or eighteen months

or two years or perhaps even longer if they wish and therefore the benefits of moving to the new

Risk Link 15 will still remain and we get, we would anticipate the revenue benefit accordingly.

Jonathan Helliwell: Okay, thank you.


Page | 15 Ref 8112126 26 March 2015

Stephen Daintith: Okay.

Operator: As a reminder if you would like to ask a question please press *1. We will now take the

next question from Steve Liechti from Investec.

Steve Liechti: Morning guys. Thanks for the question, on the events side, I know the oil price has

stabilised a bit but still clearly the industry must be in a few problems, can you just give us an

update in terms of GPS how that’s feeling and what you’re feeling about the industry generally?

Stephen Daintith: Right, well GPS is in June in Calgary and it’s typically been in even years

but we’ve had a big show in an even year and a smaller show in an odd year and this year we’re

having, we’re combining the two shows and bringing them both together to a large medium show

but hopefully a large show. At this stage bookings remain encouraging. Clearly you can always

have events where cancellations come in closer to the event and that remains a risk but I’m just

highlighting that as a possible risk but there’s no evidence to suggest that that will happen. As it

stands today GPS remains a very strong show and bookings are very much encouraging. When

you look at sort of Adipec and our other shows and their timetable, well Gastech first of all,

Gastech is in Singapore in October, South Eastern Asian nations are continued to sort of cheaper

cleaner burning gas and we don’t expect the oil price to have much of an impact on Gastech.

They could see a reduction in the level of sponsorship I guess from the oil majors as they would

feel the squeeze from low oil prices but as it stands today I think Gastech will feel pretty confident

about and then Adipec was in November, did very well delivered double digit growth, looking

ahead to November 2015 again we may see the sponsorship from oil majors hit us a little bit but

we've tended to see historically with oil price reductions the business remained pretty resilient

actually and our big three events have coped particularly well during oil price slumps before, so

we remain pretty confident about the solidity of those three big events, notwithstanding the

backdrop to the oil market.

Steve Liechti: Right and just in terms of what GPS does, probably my ignorance here, where does it

skew within the industry I’m just trying to calibrate whether there’s any particular risk or less risk

probably related to what you just said actually in terms of how you’ve done in other slumps and

things.


Page | 16 Ref 8112126 26 March 2015

Stephen Daintith: Okay, I’ll give you what I know about it and don’t ask me anymore detail.

It’s an upstream oil and gas extraction event.

Steve Liechti: Upstream extraction right.

Stephen Daintith: Yes.

Steve Liechti: That’ll do.

Operator: As a reminder if you would like to ask a question today please press *1 on your telephone

keypad. As there are no further questions I would like to hand the call back over to your host for

any additional or closing remarks.

Stephen Daintith: Okay, well thank you very much everybody for joining the call, look forward to

seeing you at our Half Year Results Presentation on 21st May. Thank you and good morning.

Operator: Thank you that will conclude today’s conference call. Thank you for your participation

ladies and gentlemen, you may now disconnect.

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