Trading Update

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Thursday 18 March 2004

(London - 18 March 2004) This statement updates investors on the Group's progress in the current year, ahead of its half year end on 4th April, 2004. For the newspaper divisions, the reporting period will include an additional twenty-seventh week's results, compared to last year.

The current financial year has continued its good start. Growth has been achieved in both the established newspaper divisions and in most of the newer businesses. National newspaper advertising revenues have increased, but it still remains too early to call the turn in this market. Since the Group's revenues are generated predominantly in the UK, its exposure to the weakness of the US dollar has been limited.

National Newspapers
The Daily Mail and The Mail on Sunday have maintained strong sales, their six month ABC average circulations to February 2004 being almost unchanged on the previous year, thereby outperforming a declining market. The circulation of the Evening Standard declined by 5% year on year in a market showing ever changing commuter habits, but that of Metro increased by 7% to a new record of 894,000.

Associated's display advertising revenues have increased year on year by 5.4% for the five months to February 2004, but the market remains somewhat volatile. Although the increase was bolstered by a particularly strong performance by retail in the period leading up to Christmas, each month has seen growth in total revenues. Within the other major categories, motors has seen a slight increase, but both travel and financial have declined. By title, display advertising at Metro has grown by a further 29% and that at the Evening Standard has increased by 8% due to increased yields. Both the Daily Mail and The Mail on Sunday have seen modest overall increases.

Overall classified advertising revenues were up by 1.2% to the end of February, but those of the Evening Standard are still declining year on year, with the recruitment category down by 11% due to lower yields in a very challenging market.

With newsprint prices unchanged in 2004 from 2003 and, in particular, lower costs for the Evening Standard, the growth in revenues is feeding through to the trading profit.

Regional Newspapers
Northcliffe Newspapers has continued to perform well. Circulation revenues for the five months to February 2004 were up on the corresponding period last year by 1.6%. ABC figures for July to December 2003 show a slower decline than in the previous year and performances of both daily and weekly titles were significantly better than the regional newspaper industry average.

Northcliffe's advertising revenues for the five months to February 2004 were 5% ahead of the comparable period last year, with strong performances from property (up 9%) and recruitment (up 7%). Motors revenues remain weak. Yield growth has been achieved on all categories of advertising.

A gradual improvement in publishing margins is being achieved, although this will be partially offset in the period by lower contract printing margins as presses are being either commissioned or refurbished.

Other divisions
At DMG Broadcasting, Teletext's revenues for the half year are expected to have fallen by around 2%, against last year, due mainly to reduced demand for holiday advertising, particularly in the first quarter. Some additional costs have been borne as Teletext has recently launched its Teletext Holidays TV channel on satellite and Teletext on 4 services on Freeview and satellite. DMG Radio Australia has experienced good advertising revenue growth in all business units, particularly in its Nova stations. In the most recent independent listener survey, Nova 969 was the outright number one station in Sydney and hence in Australia.

dmg world media continues to see good growth in most of its underlying businesses, with strong performances again achieved by its Dubai exhibitions, North American home shows and Surf Expo in particular. The home interest sector remains buoyant with the first Autumn Ideal Home Show in London successfully launched.

DMG Information's business to business division continues to generate double digit revenue growth at both Risk Management Solutions and the property companies. Within the latter, Landmark is continuing to achieve growth from the residential market in the UK and has made good progress in the integration of Sitescope. Within the careers division, Study Group has seen some growth and at Hobsons, although corporate graduate recruitment remains weak, the educational recruitment market is growing.

In summary, the Group expects a good half-year trading performance. For the full year, an improved contribution from its newer businesses, combined with organic growth from all divisions, indicate the prospect of continued growth.

Exceptional items
DMGT will report exceptional gains of around £5 million at its half year arising on the sale of non-core assets, principally listed investments.

Interim report
The Group intends to report its interim results for the half year to 4th April 2004 on the morning of Thursday 3rd June 2004.