Preliminary unaudited consolidated results

Thursday 14 December 2000

Highlights

Summary

The Group has had another good year. Operating profit, before new project costs and amortisation, was 23% higher at £312 million.

The net cost of new projects, charged against pre-tax profits, was £69 million, against £20 million last year. This covered both the successful expansion of Metro into a national operation and a wide range of electronic publishing ventures. As a result, the adjusted profit before tax is 7% down on last year at £192 million. The proposed final dividend of 5.5 pence gives a total dividend for the year of 8.0 pence, an increase of 10% on last year.

Associated Newspapers

Despite trading one week less, Associated’s underlying operating profit from its traditional publishing increased substantially on last year. The costs of the expansion of the free Metro newspaper beyond London and digital publishing resulted in a 15% reduction in operating profit to £73.3 million.

The Daily Mail and The Mail on Sunday both continued to increase their share in falling markets. For the year, the former’s average circulation was up 1.1% to 2,380,000 and the latter was 0.1% down to 2,296,000, despite a cover price increase in October 1999. The Evening Standard achieved an average circulation of 441,000, 1.6% down on last year.

Advertising remained strong in all three titles, with an increase of 12% on last year. The underlying increase, allowing for the extra week, was 14%. Both display and classified advertising showed healthy growth, with financial and travel categories particularly strong. For the Evening Standard, recruitment and property advertising enabled significant growth in the relevant supplements.

Metro continues to beat all our expectations. We have now established franchise arrangements in Birmingham and Newcastle with Trinity Mirror, which is hoped to be extended to central Scotland early in 2001. At that time a further franchise will start in Yorkshire through Regional Independent Media.

Associated New Media has worked to link its web sites more closely with the printed titles and this, among other initiatives, has led to substantial increases in usage for This is Money and This is London. Annual revenues more than doubled to £5.0 million.

Northcliffe Newspapers

Northcliffe’s operating profit, including acquisitions, was up 26% to a record £93.0 million. The underlying increase was 11%.

As indicated at the half year, trading for the quarter to December 1999 was difficult, but there was a marked improvement, particularly in recruitment advertising, in January 2000 which was sustained for the rest of the year. Underlying recruitment advertising revenues finished up 22% for the year, but motors’ advertising continued to suffer and was down 5%. Newspaper circulations of its weekly titles were up with its daily titles down by 2%, better than the regional press as a whole.

The improved financial results were across most of Northcliffe’s centres, although Aberdeen, Nottingham and Swansea showed above average increases, as did the printing centres at Staverton, Stoke and Derby. The Bristol-based titles, acquired at the end of January 2000, had a strong eight months within Northcliffe.

Northcliffe continues to expand its portfolio of publications, both by the launch of niche titles, and by acquisitions such as the recent purchase of The Forester, a weekly paid-for title serving the Forest of Dean in Gloucestershire.

Its electronic publishing activities are being developed in conjunction with its newspapers. Traffic on the main This is… sites now exceeds 10 million page impressions a month, up from 3 million last year. Progress of its part-owned national classified site, Fish4, is similarly encouraging.

Euromoney Institutional Investor

Euromoney Institutional Investor announced its results on 29th November 2000. These showed an operating profit of £32.5 million, a 28% increase on last year before higher expenditure on new projects.

Its core financial publications and its training businesses had particularly good results, although the regional publications in Asia and Latin America continued to find advertising weak. The net cost of new projects increased from £4.1 million to £9.4 million, most of it at ISI, the emerging markets’ information service. ISI improved annualised subscription revenues by 20% and usage of its services by customers almost doubled.

Broadcasting

Teletext’s analogue service on Channels 3 and 4 continued to perform well. Its audience has grown to around 24 million people every week and its revenues grew 16% over the previous year, dominated as usual by holiday advertising. It has continued to develop equivalent services on other platforms and its internet site is currently receiving around 10 million page impressions a month, five times the level at the beginning of the year. Despite the cost of these developments, operating profit was at a similar level to last year.

The UK and Hungarian operations of DMG Radio were sold to GWR in July 2000. The regional Australian stations had a difficult last quarter following the introduction of a general sales tax and with the Sydney Olympics concentrating advertising on metropolitan areas.

dmg world media

dmg world media produced a 13% increase in operating profit, including acquisitions, to £17.6 million, with the result for the second half of the year reduced by restructuring and development costs. Its core home interest, gifts, art and antiques, and sports retailing divisions continue to do well and are expanding both organically and by acquisition.

Since the year end, dmg world media has announced that it is to focus on fewer core sectors and will therefore be selling its Redhill business media division. It has also completed the purchase of an initial 25% interest in George Little, the world’s leading organiser of gift trade shows, for US$70 million.

DMG Information

DMG Information increased its operating profit by almost 90% to £12.3 million, with growth across all its companies.

The education businesses produced record results, with Hobsons’ overseas operations growing strongly, and including a maiden profit from Hobsons US. Study Group recovered from the first half weakness in its South American markets and its Australian operation performed particularly well.

In the business-to-business division, the UK environmental information company, EDR Landmark, had an excellent year following the enactment of new Environmental legislation. The US business produced a good result by effective cost control. RMS saw its core licence revenues grow by 28%, but had a lower profit due to substantial investments in new products and services.

Joint ventures and associates

The results of Bristol United Press have been included for the four months before it became a subsidiary. In the second half of the year, losses from the Group’s investments in a number of early stage companies, mainly involved with the internet, including Zoom and Fish4, have outweighed the profit contribution from the Group’s enlarged holding in GWR. GWR itself recently announced strong interim results to September 2000, with Classic fm excelling. The Group continues to explore a range of commercial initiatives with GWR.

Other Profit and Loss Items

During the year, the Group sold 3.5 million Reuters shares, generating a profit of £19 million. These included 0.7 million shares sold to match the repurchase of Exchangeable Bonds for which they were reserved. The repurchases were at a premium of £5 million, which has been charged as a finance charge. Profits on sale of businesses of £13 million include that generated by the sale of the Group’s remaining interest in Soccernet. The substantial gains on the disposals of much of DMG Radio to GWR and of the Group’s holding in Radiotrust have been taken to reserves for technical reasons.

Funding

The Group’s net debt rose during the year from £608 million to £785 million, an increase of £177 million. Acquisitions during the year cost a total of £282 million, with the largest items being £94 million for the Bristol United Press shares not previously owned, and £60 million to acquire a new FM radio licence in Sydney. The Group’s interest charge rose 53% to £61 million, with a resultant interest cover of five times.

Outlook

The financial year has begun well, with advertising trends remaining generally encouraging. However, a higher newsprint price also seems likely in 2001 and the Group’s national newspapers may face increased competition. New project costs should be similar to last year; lower losses from Metro will be offset by higher expenditure elsewhere, particularly at Teletext as it extends its brand to other platforms. Directors are confident that the strength of the Group’s brands and businesses will enable them to present satisfactory results in a year’s time.

Dividend

The Board are recommending payment on the issued Ordinary and ‘A’ Ordinary Non-Voting shares of the Company of a final dividend of 5.5 pence per share for the year to 1st October 2000, (1999 5.0 pence per share). This will make a total for the year of 8.0 pence per share (1999 7.25 pence per share).

For transferees to receive this dividend, which will be paid on 16th February 2001, transfers must be lodged with the Registrar by 3rd January 2001.

Daily Mail and General Trust plc Group Profit and Loss Account (unaudited) for the year ended 1st October, 2000

Daily Mail and General Trust plc Group Cash Flow Statement (unaudited) for the year ended 1st October, 2000

Daily Mail and General Trust plc Group Summarised Balance Sheet (unaudited) as at 1st October, 2000

NOTES

1 Accounting policies

The financial information for the year has been prepared in accordance with the accounting policies set out in the Group's 1999 Annual Report, except that the Profit and Loss account reflects the adoption of FRS 16, Current Taxation, which the Group is required to adopt in the current year to 1st October, 2000.

2 Turnover

Turnover of £61.4 million from acquisitions arose £45.9 million in regional newspapers and related activities, £2.9 million in broadcasting, £11.4 million in exhibitions and related activities and £1.2 million in education and information publishing.

3 Operating profit

Operating profit of £17.0 million, before amortisation of intangible assets, from acquisitions arose £12.3 million in regional newspapers and related activities, £1.0 million in broadcasting, £2.7 million in exhibitions and related activities and £1.0 million in education and information publishing.

4 Share of operating profits and losses in joint ventures and associates

5 Other finance charges

The premium on repurchase of Exchangeable Eurobonds has been treated as an exceptional item in arriving at adjusted profit before tax.

6 Taxation charge

The tax charge for the year amounted to £58.0 million (1999 £44.0 million). The charge for taxation has been computed at a rate of 30.0% on UK taxable profits. The underlying tax on profits before exceptional items amounted to £58.8 million (1999 £62.6 million) and the resulting rate of tax is 30.7% (1999 30.5%).

7 Adjusted earnings per share

Adjusted earnings per share (before amortisation of intangible assets and exceptional items) are calculated on profit before amortisation of intangible assets and goodwill and exceptional items, but after charging the taxation and minority interests associated with those profits, of £123.2 million (1999 £134.6 million), as set out in note 8 below, and on the weighted average ordinary shares in issue during the period in accordance with FRS 14. The weighted number of shares amounted to 399.3 million (1999 399.4 million, after adjusting for the effects of the four-for-one share split). The comparative earnings per share figures have been restated accordingly.

8 Adjusted profit (before amortisation of intangible assets and exceptional items)

9 Net cash inflow from operating activities

10

The financial information set out above does not constitute the statutory accounts of the Company within the meaning of s.240 of the Companies Act 1985. Statutory accounts for the year ended 3rd October, 1999 have been delivered to the Registrar of Companies. The auditors have reported on the accounts for the year ended 3rd October, 1999; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The auditors have not yet reported on the accounts for the year ended 1st October, 2000.

11

Highlights of this announcement will be advertised on 14th December in the Evening Standard, on 15th December in the Daily Mail, Metro, Aberdeen Press & Journal and the Western Morning News and the Western Daily Press and on 17th December in The Mail on Sunday. It is expected that the Annual Report and Accounts will be posted to shareholders on 17th January, 2001.

Enquiries: Peter Williams 020 7938 6631
Nicholas Jennings 020 7938 6629

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