Trading Statement

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Tuesday 25 September 2001

This statement is intended to update investors on the Group's progress in the current year, ahead of the Group's year end at 30th September 2001.

Trading
Circulations of the Daily Mail and of The Mail on Sunday have, despite a cover price increase for the former in June, continued to grow, thereby outperforming the overall market. Display advertising revenues for Associated Newspapers had, until two weeks ago, improved from the depressed levels of the quarter to June, as indicated in the Group's Interim Report. In particular, the Daily Mail's important retail advertising has been robust, although the financial and IT sectors have remained weak. Classified advertising on the Mail titles has increased by an estimated 5% year-on-year in the second half year, but on the Evening Standard has declined by 11% due to lower recruitment advertising revenues. Metro is progressing well towards breakeven, with year-on-year growth in both display and classified revenues.

Regional newspaper advertising revenues have remained stable. For the six months to September 2001, a year on year total increase of 3.5% is estimated, with recruitment revenues up 13% but motors down 4%. However, the picture is localised with the Group's S.W. England titles recovering only slowly from the effects of the foot and mouth outbreak.

Teletext is doing well, with year on year growth in revenues likely to be around 5%, although it has borne higher costs in moving on to new platforms, notably satellite television. Dmg world media's core exhibition sectors have been holding up well, even in North America, but the business media sector continues to see difficult trading conditions, as previously reported.

DMG Information is performing in line with expectations. The graduate recruitment side of Hobsons' business has tightened considerably, but Study Group, Landmark, edr and RMS are all doing well.

DMG Radio Australia has seen mixed fortunes: initial ratings for Nova, the new Sydney FM station, are excellent and litigation with Austereo has been settled in our favour; revenues for the regional stations continue to be depressed.

Other Items

We expect to report exceptional charges of around £10 million, arising across the Group from restructurings which have taken place in anticipation of or in reaction to weakening markets. These will be partly offset by exceptional gains on the sale of assets, comprising certain surplus properties and the recently announced sale of Johansens, the hotel guides business.

Impact on Group trading from recent terrorist attacks in the United States

The attacks have had an immediate impact on a number of the Group's activities. Euromoney Institutional Investor issued a statement yesterday indicating the effect, particularly on its conference and training businesses. Dmg world media have also had to cancel or postpone a small number of events due to be held in the New York area. The Mail titles have seen a considerable short term increase in circulation, but more than offset in revenue terms by a reduction in advertising revenues from the expected level. As a result of this and the weak third quarter to June, display advertising revenues for the second half of the year are estimated to finish 8% lower than the previous year.

Other parts of the Group, notably our regional newspapers, have seen no immediate impact on their revenues, but it is of course too soon and too uncertain to ascertain whether any longer term effects will be felt.

The Group expects to announce its preliminary results for the year to 30th September 2001 on Thursday 13 December 2001.

Inquiries to:
Petyer Williams +44 (0)20 7938 6631
Nicholas Jennings +44 (0)20 7938 6625