Trading Update

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Wednesday 20 September 2000

This statement is intended to update investors on the Group's progress in the current year, ahead of the Group's year end at 1 October, 2000.

Summary

The Group's trading operations are performing well, with the newspaper divisions and Teletext all seeing continuing advertising strength. Investment in new businesses, including Metro, remains at a high level with an estimated £70 million to be charged against profits in the full year, but with good progress resulting.

Trading

Newspaper circulations have continued previous trends, with the Mail titles outperforming the national newspaper market. Advertising revenues have remained strong with Associated's paid-for titles up 12% year on year in the five months to August and the Northcliffe titles up 8% in the same period (on a comparable basis).

Within the Group's other divisions, advertising on Teletext's analogue service continues to thrive. Both divisions of dmg world media continue to grow, particularly the retail and consumer division, although the business media division has seen difficult trading conditions. Hobsons' overseas operations and DMGI's environmental information companies are also doing particularly well.

New Projects

The Group's electronic publishing businesses are making good progress, with monthly page impressions for the Group's consumer web sites now exceeding 50 million. The Group's consumer sites are benefiting from increased promotion in our own titles and cross-divisional co-operation. A range of business to business initiatives, through Euromoney Institutional Investor, dmg world media and DMG Information is being developed.

Metro continues to make excellent progress. The franchise arrangements with Trinity Mirror are now in place in Birmingham and Newcastle, and Metro has a national circulation approaching 800,000 copies, making it the sixth largest national newspaper by circulation.

Other Items

The level of profits from joint ventures and associates will fall sharply in the second half year following the purchase of the balance of Bristol United Press at the end of January 2000. Contributions from GWR and ITN will be offset by losses from the Group's interests in Zoom and Fish4.

Net interest payable will increase as a result of various acquisitions during the year. The cost of acquisitions so far in the second half of the year is around £115 million, with the largest item being the £60 million payment for the Sydney FM radio licence, from which the Group will see no benefit until after the station's launch early in 2001.

Exceptional items will include profits on disposals of Reuters shares, of the Group's remaining 40% interest in Soccernet and of its interest in Radiotrust. In total, these are currently expected to produce a pre-tax profit of around £35 million. The substantial gain on the sale of DMG Radio to GWR is not expected to give rise to an accounting profit for technical reasons. There will also be a charge for the repurchase of exchangeable bonds at a premium, which is likely to be in the order of £5 million.

The Group expects to announce its preliminary results for the year to 1 October, 2000 on Thursday, 14 December, 2000.

Inquiries to:
Peter Williams 020 7938 6631
Nicholas Jennings 020 7938 6625