Group Interim Results

Thursday 3 June 2004

for the half year ended 4th April, 2004.

Highlights

Summary

The Group has had a strong half year and is pleased to report an adjusted profit before tax of £107.3 million for the six months to 4th April, 2004, an increase of 29% compared with the equivalent figure for the prior year. This result reflects improved profitability from most of the Group's divisions and has been achieved despite only a patchy recovery in advertising.

For the newspaper divisions, the reporting period includes an additional week's trading, compared with the prior half year, the effect of which is to increase profit by approximately £4 million. Earnings of the exhibitions and information publishing divisions have been produced in accordance with the recently published Application Note G to FRS 5 in respect of revenue recognition; the prior interim period's results have been restated, increasing them by £6 million. Reported profit before tax for the period is £75.3 million, up 49% on last year's restated figure.

National Newspapers

Associated Newspapers increased its operating profit*, compared to the first half of 2003, by £14.4 million to £50.2 million on revenues up 9% to £455 million. All businesses produced improved performances, assisted by good cost control across the division and by the extra week's trading.

The Daily Mail and The Mail on Sunday maintained strong sales with their six month ABC average circulations being almost unchanged on the previous year at 2,441,000 and 2,372,000 respectively, thereby outperforming a declining market. The Evening Standard average sale fell by 6% to 400,000 copies. The circulation of Metro increased by 4% to an average level of 894,000 in the six months.

Advertising revenues for the half year increased 6% on a like-for-like basis. Associated's display advertising revenues increased by an underlying 6.8% in a market that remains volatile. Each month saw growth in total revenues, with those of March up 13% due in part to March 2003 being disrupted by the conflict in Iraq. Within the major categories, retail continued to perform strongly, travel improved slightly, whilst both motors and financial showed small declines. By title, display advertising at Metro grew by a further 26% and that at the Evening Standard increased by 11% due to increased yields. Both the Daily Mail and The Mail on Sunday saw modest increases. Underlying classified advertising rose by 3.7%, with increases at all titles, except for the Evening Standard where total classified was down by 12% and recruitment classified by 11% due to lower yields in a very challenging market.

Ireland on Sunday reduced its losses due to growth in both circulation and advertising revenues and Loot and its Irish equivalent, Buy and Sell, continued to make good progress. There was a small contribution from Jobsite, the UK's leading multi-sector online job board, which was acquired in mid-March.

*References to operating profit in the narrative above are to adjusted operating profit (before amortisation of intangible assets); see note 3.

Regional Newspapers

Northcliffe Newspapers increased its operating profit* by 9% to £46.6 million on turnover up 9% to £257 million, helped by the extra week's trading.

On a like-for-like basis, circulation revenues were up by 2% on last year. The ABC figures for July to December 2003 showed a slower decline on daily titles than in the comparable period last year. The performances of morning (down 1.9%), evening (down 2.5%) and weekly titles (up 0.2%) were all better than the regional newspaper industry average.

Underlying advertising revenues grew by 6%, with strong performances from both recruitment (up 8%) and property (up 8%). Public notice and leisure/travel advertising also performed well, but little growth was seen from motors and retail/display sectors.

A gradual improvement in publishing margins is being achieved, although this was largely offset in the period by lower contract printing margins as presses were being commissioned or refurbished.

Financial publishing

Euromoney Institutional Investor increased its operating profit* by £1.4 million to £12.2 million. After more than two years of exceptionally tough markets, there were signs of improved trading conditions in the first half. Revenues rose by 5% to £82 million, but the recovery in advertising has so far been slow and inconsistent. In general, Euromoney's traditional financial advertisers have been slow to increase their advertising spend, despite many announcing record profits. Markets have improved but the global financial institutions have been restraining their costs until there is more evidence that the recovery is sustained.

The first half result included contributions from Vinisud, the biennial wine exhibition, and from two recent acquisitions, Hedge Fund Intelligence, and Information Management Network ('IMN').

Broadcasting

Operating profit* of DMG Broadcasting fell by £1.3 million to £8.3 million on turnover up 8% to £60 million.

Teletext's revenues for the half year were down by 2% due mainly to reduced demand for holiday advertising in the four months to January. Revenues in February and March were up on the prior year when the conflict in Iraq had an impact. Operating profit fell by £2 million due to lower revenues and to the development and launch costs of the new Teletext Holidays TV channel on satellite and Teletext on 4 services on Freeview and satellite.

DMG Radio Australia's profits increased, despite launch costs of two new regional stations, due to strong performances from the Nova stations in Sydney and Melbourne. There was good advertising revenue growth in all business units, particularly in the Nova stations where underlying revenues increased by 38%. Nova 969 has been the number one station in Sydney in the last three independent ratings surveys.

Exhibitions

dmg world media reported revenues up 11% to £84 million. Operating profit* rose £2.5 million to £16.9 million against a figure, restated to apportion the results of the exhibitions held over the half year. The rise was due mainly to the strength of the home interest sector, both in the UK and in North America, and despite the lower sterling value of US profits. The Dubai exhibitions and Surf Expo also performed strongly, whilst operating profits in the gift and art and antiques sectors were at similar levels to those of last year.

*References to operating profit in the narrative above are to adjusted operating profit (before amortisation of intangible assets); see note 3.

Information publishing

DMG Information increased its operating profit* by £5.5 million to £10.3 million on the restated prior period figure on revenues up 12% to £109 million.

The business to business division grew its revenues by 12% and this led to profits increasing 33%. The main contributors to this strong performance were Risk Management Solutions and the property companies. Within the latter, Landmark achieved further growth from the residential market in the UK and benefited from the integration of Sitescope.

Within the careers division, the seasonal first half losses were reduced by £1.8 million on revenues up 11%. Study Group's Australian business performed particularly well; corporate graduate recruitment at Hobsons remained weak, although the educational recruitment market showed some growth.

Joint ventures and associates

The Group's share of net operating profits* of its joint ventures and associates rose by £3.1 million due to a higher contribution from GWR Group plc and to a lesser extent from nearly all of the Group's other interests, particularly that in Brisbane's 97.3 fm radio station.

Other profit and loss items

Profits on sale of fixed assets arose mainly from the sale of two million shares in Reuters Group plc and of a building by Northcliffe. Profit on disposal of businesses was due to the sale of dmg world media's Aluminium exhibitions. The slight increase in net interest payable was due to a higher average interest rate, caused mainly by the impact of a bond issue in the prior year.

Net debt

Net debt at the end of the period was £809 million, a decrease of £64 million since the year end. The fall in debt was attributable mainly to strong trading cash inflows, offset by acquisitions and investments of £69 million and capital expenditure of £48 million which continued at a high level due to the UK press expansion programme that is due for completion in November. The main acquisitions were Jobsite, IMN and a radio licence in Adelaide. Disposal proceeds amounted to £18 million.

Since the half year, the Group has bought Trepp, a US property information company, for US$42 million (£23 million) and will pay for the radio licences, bought in Sydney and Brisbane in April for a combined A$186 million (£76 million). As a result of these acquisitions and their cash flows, we currently expect net debt at the year end to be higher than at the half year, but still lower than last year end.

Outlook

Most of the Group's businesses have had a good first half and this has continued into April and May. For the newspaper businesses, the nationals' circulations have remained robust and both nationals and regionals are seeing advertising revenue growth. The Group's radio, exhibitions and information divisions should build on their strong first halves, while both Teletext's holiday and Euromoney's financial advertising revenues have recently shown signs of improvement. We expect to achieve an encouraging outcome for the full year.

Dividend

The Board has declared an interim dividend of 3.45 pence per Ordinary `A' Ordinary Non-Voting share (2003 3.15 pence) which will be paid on 9th July, 2004 to shareholders on the register at the close of business on 11th June, 2004.

The Viscount Rothermere
Chairman

*References to operating profit in the narrative above are to adjusted operating profit (before amortisation and impairment of intangible assets); see notes 3 and 4.

Group Profit and Loss Account

Group Cash Flow Statement

Group Balance Sheet

Statement of Group Total Recognised Gains and Losses

Reconciliation of Movement in Group Shareholders'Funds

Notes

1. Accounting policies

The financial information for the period has been prepared in accordance with the accounting policies adopted in the Group's 2003 Annual Report, as amended to reclassify the Group's investment in its own shares within shareholders' funds in accordance with UITF Abstract 38. As a consequence, provision is no longer made for the cost in excess of the option exercise price of shares purchased to match options, granted under the Company's 1997 Executive Share Option Scheme. As a result of these changes, the prior year primary statements and shareholders' funds have been restated to show the Company's own shares as a negative reserve, offset by a prior year adjustment to release the provision held and hence to increase revenue reserves by £2.5 million at 28th September, 2003 and by £2.2 million at 30th March, 2003. Group operating profit for the prior full and half year has also been restated, being increased by £0.4 million and £0.1 million respectively.

Furthermore, the Group's policy in respect of revenue recognition has been amended to reflect the recent publication of Application Note G to FRS 5 so that the earnings of exhibitions straddling the period end are recognised on a percentage to completion basis, where appropriate, and advertising revenues from the business to business careers division's web sites are spread over the term of contract. The effect of this change is that the prior half year profit and loss account has been restated so as to increase turnover and operating profit and the tax charge by £14.2 million, £5.9 million and £1.6 million respectively, with a corresponding adjustment made to the Group balance sheet. This change is one of timing only and has no impact on the results of the prior full year.

2. Turnover

3. Operating profit

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

5. Taxation charge

The tax charge for the period amounted to £27.0 million (2003 £21.6 million as restated). The charge for taxation has been computed at a rate of 30.0% on UK taxable profits. The underlying tax on profits before amortisation and impairment of intangible assets and exceptional items amounted to £30.1million (2003 £22.3 million as restated) and the resulting rate is 28.1% (2003 26.7% as restated). + See note 1.

6. Adjusted earnings per share

Adjusted earnings per share are calculated on profit before amortisation and impairment of intangible assets and exceptional items, after charging the taxation and minority interests associated with those profits, of £74.1 million (2003 £58.1 million as restated), as set out in note 7 below, and on the weighted average number of ordinary shares in issue during the period. The weighted average number of shares amounted to 397.7 million (2003 398.0 million). As in previous years, adjusted earnings per share have been disclosed since the Directors consider that this alternative measure gives a more comparable indication of the Group's underlying trading performance.

7. Adjusted profit (before amortisation and impairment of intangible assets and exceptional items)

8. Net cash inflow from operating activities

9. The figures for the year ended 28th September, 2003 set out above are not full accounts within the meaning of s.240 of the Companies Act 1985. Full statutory accounts for that year have been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain a statement under s.237 (2) or (3) of the Companies Act 1985. The financial information for the six months ended 4th April, 2004 and 30th March, 2003 has been the subject of an independent review by the auditors.

Copies of the Interim Report are being posted to shareholders on or around 11th June, 2004 and will be available thereafter from the Secretary, Daily Mail and General Trust plc, Northcliffe House, 2 Derry Street, London, W8 5TT. or electronically from the Company's web site at www.dmgt.co.uk.

Highlights of this announcement will be advertised on 3rd June, 2004 in the Evening Standard, on 4th June in the Daily Mail, Metro, Aberdeen Press & Journal, Western Morning News and the Western Daily Press and on 6th June in The Mail on Sunday.

A webcast of the Interim Results presentation to City analysts will be available for viewing from 9.30 am on 3rd June, 2004 at www.dmgt.co.uk.

Peter Williams Tel: 020 7938 6631

Nicholas Jennings Tel: 020 7938 6625

Andrew Honnor, Tulchan Communications Tel: 020 7353 4200

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