DMGT reports successful half year

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Thursday 29 May 2003

(London, 29 May 2003) - The Group has had a successful half year and is pleased to report an adjusted profit before tax of £77.4 million for the six months to 30 March, 2003, an increase of 19% compared with the equivalent figure for the prior year. Reported profit before tax for the period is £44.4 million, up 38% on last year.

Associated Newspapers
Associated's revenues were broadly unchanged at £419 million. Circulation performance remained strong with the average Daily Mail sale up 0.2% to 2,441,000 and that of The Mail on Sunday up 1.2% to 2,381,000, despite continued discounting of cover prices by other titles. The Evening Standard average sale rose by 0.4% to 427,000 copies with the quarter to March 2003 up 3.6% to an average 425,000 copies.

Advertising revenues for the half year were up 0.4%. Performance has slowed from the levels achieved in October and November against weak comparatives. Display advertising was down by 1%, with February and March increasingly weak due to the effects of the war in Iraq on bookings. By category, retail and travel performed well; financial continued to be poor. Classified advertising rose by 4%, despite the Evening Standard’s recruitment advertising experiencing a further 8% fall. All titles, and particularly the Evening Standard, improved their yields for both display and classified.

Metro continued to increase advertising revenues and was profitable throughout the half year. Its circulation in March had risen to 860,000. As regards recent acquisitions, Ireland on Sunday increased its average circulation in the period to 166,000, compared to 43,000 in the previous half year, backed by a strong series of promotions including a reduced cover price. It has now returned to its original cover price. Loot and its Irish equivalent, Buy and Sell, continued to make good progress.

Associated's operating profit was down year on year by 22% to £35.8 million, reflecting continuing investment in Ireland on Sunday following its relaunch in May 2002, additional investment in the Evening Standard and promotional expenditure for The Mail on Sunday in March, following a cover price increase. We expect the benefits from these expenditures to come through from the second half onwards.

Northcliffe Newspapers
Northcliffe continued its robust performance, increasing operating profit for the half year by 7% to £42.9 million on turnover up 2% to £237 million, despite the benefits of Easter trading falling outside the period in 2003.

Circulation revenues were up by 4.6%. Volumes showed diminishing declines, but weakened in March due to the negative impact of the war in Iraq on newspaper readership. The ABC figures covering July to December 2002 showed Northcliffe's titles again outperforming the industry. Ten daily titles implemented cover price increases in the period as a consequence of continued editorial improvements.

Advertising revenues were up by 3%, with recruitment advertising revenues up 7% and property revenues up 8%. Other categories showed little year on year movement.

*Euromoney Institutional Investor *
Euromoney experienced a further 12%, or £11 million, reduction in revenues to £78 million, as the global investment banks continued to cut costs in falling markets.

The uncertainty over the Middle East led many institutions to postpone advertising campaigns and to ban staff travel, particularly in the period after Christmas.

Tight cost controls limited the impact on its operating profit to a fall of £2.5 million to £10.8 million.

Broadcasting
Broadcasting increased its operating profit by £5.3 million to £9.6 million. Teletext increased its operating profit by £3 million due largely to cost savings achieved through greater efficiencies. Revenues rose by 4% with performance in February and March affected by the impact of the war in Iraq. Overseas holidays and flights advertising tailed off rapidly once the war started, although there has been some strengthening of the UK holiday sector. The web site, TeletextHolidays.co.uk, continues to grow strongly and the Teletext Holidays service on digital satellite is now the most popular holiday service on the Sky platform.

DMG Radio Australia returned to profit. Its regional stations increased their profits by 13%, despite continuing depressed conditions in much of rural Australia. The three NOVA stations, in Sydney, Melbourne and the newly launched 50% owned Perth station, have all achieved No.1 status for their core 18-39 audience in the latest ratings. Sydney and Melbourne are both in profit, despite aggressive competitive activity.

dmg world media
dmg world media reported an operating profit up £0.8 million to £10.1 million. Excluding a one-off charge taken in the prior half year, operating profit fell by 14% on turnover down 9%. This fall was due to the absence of large non-annual shows.

The home interest exhibition sector performed well with strong stand sales, although these were mitigated to an extent by the negative effect of war and SARS on attendance levels at the end of the period. Trading profits in the gift sector were generally in line with expectation, but conditions in the arts and antiques sector remained difficult across the market.

DMG Information
DMG Information made an operating profit of £3.2 million, compared to a first half loss of £9.1 million in the prior half year. Revenues rose by 14% to £96 million. The improvement was due to a combination of growth in the less seasonal business to business division and reduced costs in the careers division.

The business to business division increased revenues by 16% due to strong growth by Risk Management Solutions which was translated into sharply higher profits. The property information companies also achieved good overall profit growth.

Within the careers division Study Group halved its first half loss due to an improved performance by its academic business and US cost savings. Hobsons' first half losses were also much reduced as a result of the restructuring programme undertaken at the end the last financial year, but its graduate recruitment markets remained deeply depressed.

*Joint ventures and associates *
The Group's share of net operating profits of its joint ventures and associates rose by £1.1 million due mainly to a higher contribution from GWR Group plc. The contribution from George Little Management rose slightly, but this was offset by an initial loss from the newly launched radio station in Perth in which the Group has a 50% interest.

Other profit and loss items
Income from fixed asset investments reflects dividends received from the Press Association. Profits on disposal of businesses represent the Group's share of losses by GWR, offset by a sale by Northcliffe of Central Press Features and the sale of two titles owned by Asia Law and Practice within Euromoney. The fall in net interest payable is due to lower interest rates.

Net debt
Net debt at the end of the period was £907 million, a decrease of £15 million since the year end. This fall reflects the continuing high level of capital expenditure due to the UK press expansion programme. Capital expenditure amounted to £47 million, whilst acquisitions and disposals, net of disposal proceeds, cost £22 million, the main item being the purchase of Property & Portfolio Research within DMG Information.

Outlook
April has seen a continuation of weak advertising revenues for the Group's national titles. Travel advertising has been particularly weak which has also affected Teletext. May has seen some recovery, but we do not expect an improvement above pre-Iraq war levels in this financial year. The regionals are seeing slowing recruitment revenues, although strong property advertising. Elsewhere in the Group, Euromoney and to a lesser extent dmg world media are experiencing some impact from the SARS epidemic.

Nevertheless, the Group's businesses remain reassuringly strong with our newspapers increasing circulation revenues and our newer divisions now producing good underlying growth in profits, particularly within DMG Information's business to business division. We are continuing our policy of investing in our products.

Dividend
The Board has declared an interim dividend of 3.15 pence per Ordinary 'A' Ordinary Non-Voting share (2002 2.95 pence) which will be paid on 11th July, 2003 to shareholders on the register at the close of business on 6th June, 2003.