Group interim results

Thursday 26 May 2005

Group interim results for the half year ended 3rd April, 2005.

Highlights

Summary

The Group is pleased to report an adjusted profit before tax* of £114.5 million for the six months to 3rd April, 2005, an increase of 7% compared with the equivalent figure for the previous year. This result reflects a good trading performance, particularly from our business to business division and from Euromoney Institutional Investor, and the benefit of acquisitions made both this year and last year.

A number of factors, particularly the inclusion in last year's first half result of an extra week's trading for our newspaper divisions, make comparison of these results with the previous year more challenging than usual. However, the Group has achieved good underlying growth in profits, despite some of its businesses facing tough trading conditions. Statutory profit before tax for the period is £77.1 million, up 2% on last year.

Outlook

The period since the end of March has seen the Group's UK newspaper businesses face uncertain advertising markets. The picture has been obscured by the timing of Easter and by the general election, but recent assessments of consumer confidence are not encouraging. We expect our titles to continue to grow their market share and this, together with their greater colour printing capacity, should enable them to outperform their peers.

Allied to this, the Group's non-newspaper businesses, operating primarily outside the UK, are continuing to grow and to perform well, and now make up around 40% of the Group's operating profit*, a share that is expected to increase.

This balance of interests leads the Board to remain confident of a satisfactory outcome for the full year.

National Newspapers

Associated Newspapers' operating profit*, compared to the first half of 2004, was down by £1.7 million to £48.5 million on revenues up 1% to £458 million. This half year included one less week than the first half of last year and reflects increased newsprint prices in the second quarter.

The period was tough for most national newspaper titles' circulation. The Daily Mail once more outperformed its peers, although its six month ABC average circulation of 2,392,000 was down 2.0% on the previous year. The Mail on Sunday's equivalent figure of 2,405,000 was up 1.4% in a market which declined by 3.3%. The paid-for circulation of the Evening Standard fell by 11%, but following the launch of the Lite edition, the combined editions during the second quarter totalled 415,000 copies, an increase of 5% on the number of copies sold last year. Metro's distribution averaged over one million copies in each of the six months.

Associated's advertising revenues for the half year increased by 2.5%. On a comparable basis adjusting for the extra week last year, display advertising revenues increased 5.4%. Within the major categories, retail remained strong and travel grew, whilst both motors and financial declined. By title, display advertising at Metro grew by 23%, the Evening Standard by 6%, The Mail on Sunday by 3.2% and the Daily Mail by 3.0%.

Underlying classified advertising, excluding the extra week in 2004 and recent acquisitions, fell by 3.5%. There were good performances from the recently acquired Jobsite and Find a Property digital media properties.

Following the introduction of increased colour and pagination at the end of November, there was a marked increase in the migration of advertising from mono to colour. Colour advertising revenues in those four months were up 20% year on year with no reduction in yields.

For April, Associated's advertising revenues were up 2% in total (1% on an underlying basis) on the previous year, despite a slowdown in its markets.

Regional Newspapers

Northcliffe Newspapers increased its operating profit* by £0.1 million to £46.7 million on turnover which was unchanged at £257 million. The lack of growth was due to the absence of a twenty seventh week in 2005 and to the adverse effects on recruitment revenues from Easter falling in March this year.

Excluding the effect of the extra week last year, circulation revenues were up by 2.6%, or 0.7% excluding acquisitions. ABC figures for the July to December 2004 period show a decline of 3.9% on Northcliffe's titles, partly attributable to the further reduction in bulk sales to comply with revised ABC rules. The performance of the evening titles continued to be better than the regional newspaper industry average.

On a twenty six week basis, advertising revenues grew by 5.3% (2.6% excluding acquisitions and launches) and by 4.5% (2.4% excluding acquisitions and launches) in the UK. On a like-for-like basis, there was a continued strong performance from property (up 16%), but recruitment revenue (down 2%) has been in decline since January, and motors fell by 3%.

For March and April (combined to eliminate the effect of Easter being in March this year and April last year), advertising revenues were up 1.6%, but recruitment was down by 5%.

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

h3. Information publishing

DMG Information increased its operating profit* by £5.7 million to £16.0 million on revenues up 12% to £122 million.

The business to business division grew its revenues by 20% to £78 million, an underlying increase of 9% in sterling terms, excluding the contribution from businesses acquired since the first half of last year. Operating profit* rose by £6.0 million (40%) to £21.0 million, £2.4 million of which arose from recent acquisitions. All businesses improved their revenues and profitability, with Risk Management Solutions in particular again producing revenue growth in excess of 20%.

Within the careers division, the seasonal first half losses were slightly lower than last year on revenues up 1%. Hobsons had an encouraging performance with total bookings 19% ahead of last year, whilst there was little overall change at Study Group.

Financial publishing

Euromoney Institutional Investor increased its operating profit* by £3.2 million to £15.4 million on revenues up 9% to £89 million. Trading in the first half followed a similar pattern to 2004. Growth in the publishing businesses was held back by continued tough advertising markets, increased investment in marketing and by the weakness of the US dollar. In contrast, the training and events continued to build on their excellent performance in 2004. The contribution from Information Management Network, acquired in March 2004, more than offset the absence of Vinisud, a biennial event, and InfoSec World, which moved from March to April this year. The database businesses also continued to grow, driven by ISI.

Exhibitions

dmg world media increased its operating profit* by £0.3 million to £17.2 million on revenues up 7% to £90 million. Similar to Euromoney, the contribution from acquisitions, principally Gastech, outweighed the absence in this year of the Index show in Dubai. The Consumer sector increased its contribution despite experiencing challenging trading conditions in the home interest market both in the UK and North America, resulting in lower attendances across the portfolio. Within other sectors, operating profits* from gift and art and antiques also rose slightly. The international business to business sector held a successful first Gastech oil and gas show in March and both the Big 5 trade exhibition in Dubai and Surf Expo in Florida performed well.

Broadcasting

Operating profit* of DMG Broadcasting fell by £7.0 million to £1.3 million on turnover down 23% to £46 million.

Teletext's revenues fell by 17% due to a reduction in page volumes for holiday advertising, resulting from a weak holiday market and the continuing shift to late booking. Allied to a high level of investment in new products, operating profit* fell to £0.6 million. A number of initiatives are planned for the traditionally stronger second half of the year when the contract with ITV for the text button will help underpin the company's digital television strategy.

Operating profit* of DMG Radio fell to £0.7 million on turnover down 32% to £16 million, as a result of the sale of the regional radio stations in September 2004 and the launch costs of new stations. The Nova network stations performed strongly, with the established businesses in Sydney and Melbourne increasing their combined revenues by nearly 40%. During the period, both stations were rated the number one FM station in their city and all four Nova stations achieved the number one position in the key under-40 demographic, including Nova Adelaide which only launched in September 2004. In April, 106.9FM was successfully launched in Brisbane to complete the national Nova network.

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

Joint ventures and associates

The Group's share of net operating profits* of its joint ventures and associates fell by £0.5 million. There was a higher share of earnings from George Little Management, the North American gift exhibition organiser, following the increase in the Group's stake in January, and from the California Market Center and ITN. These increases were offset by a reduced contribution from GWR Group plc. Following the merger of GWR into GCap Media plc on 9th May, it has been concluded that the Group's 14.3% interest should be treated as a trade investment, rather than as an associate.

*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.

Other profit and loss items

Profits on sale of fixed assets arose mainly from the sale of 1.6 million shares in Reuters Group plc and of a building by DMG Information. The loss on disposal of businesses was due to the sale of DMG Broadcasting's Arts and Entertainment Programming, offset by further proceeds from the sale of DMG Regional Radio in 2004 and by profit on sale of Hot 91, its radio station operating on the Sunshine Coast of Australia. The large reduction in net interest payable was due mainly to swap premia on overseas financing arrangements and to lower average net debt.

Net debt

Net debt at the end of the period was £788 million, an increase of £8 million since the year end. Operating cash flows were offset mainly by acquisitions of £86 million and capital expenditure of £36 million. Disposals of investments and businesses amounted to £19 million.

International financial reporting standards ('IFRS')

As a listed company, the Group will be required to adopt IFRS in the preparation of its accounts from its 2005/6 financial year onwards. The project to manage the transition of financial reporting from UK accounting to international accounting has completed its initial assessment of the impact on the accounts of the Group and work to ensure full compliance for the year to 1st October, 2006 is continuing.

Based on the initial assessment, the areas of greatest impact for the Group are likely to be changes in respect of the accounting treatment for goodwill, share-based payments, pensions, deferred taxation and dividends. No significant operational impact is expected from the standards on financial instruments. Further information will be made available on the Group's corporate web site at the time of a conference call to City analysts, scheduled for the afternoon of 7th June, 2005.

Dividend

The Board has declared an interim dividend of 3.75 pence per Ordinary 'A' Ordinary Non-Voting share (2004 3.45 pence) which will be paid on 8th July, 2005 to shareholders on the register at the close of business on 10th June, 2005.

The Viscount Rothermere
Chairman
25th May, 2005

Group Profit and Loss Account

Group Cash Flow Statement

Group Balance Sheet

Approved by the Board of Directors on 25th May, 2005.

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 2004 Annual Report.

2. Turnover

Turnover of regional newspapers is stated after deducting intra-Group turnover of £10.0 million (2004 £8.6 million). Turnover of business to business information and careers comprised £78.0 million (2003 £65.0 million) from business to business information and £44.2 million (2004 £43.7 million) from careers. Turnover of broadcasting comprised £30.2 million (2004 £36.3 million) from television and £15.9 million (2004 £23.9 million) from radio.

3. Operating profit

Operating profits of business to business information and careers comprised £21.0 million (2004 £15.0 million) from business to business information and a loss of £3.4 million (2003 £3.6 million) from careers, offset by unallocated central costs of £1.6 million (2004 £1.1 million). Operating profits of broadcasting comprised £0.6 million (2004 £6.8 million) from television and £0.7 million (2004 £1.5 million) from radio.

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

5. Taxation charge

The tax charge for the period amounted to £30.1 million (2004 £27.0 million). The charge for taxation has been computed at a rate of 30.0% on UK taxable profits. The underlying tax on profits before amortisation and impairment of intangible assets, exceptional items and significant non-recurring or prior year items, amounted to £30.1 million (2004 £30.1 million), and the resulting rate is 26.8% (2004 28.1%).

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 £79.0 million (2004 £74.1 million), 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 396.6 million (2003 397.7 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 3rd October, 2004 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 3rd April, 2005 and 4th April, 2004 has been the subject of an independent review by the auditors.

Copies of the Interim Report are being posted to shareholders on or around 10th June, 2005 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 26th May, 2005 in the Evening Standard, on 27th May, 2005 in the Daily Mail, Metro, Aberdeen Press & Journal, Western Morning News and the Western Daily Press and on 29th May, 2005 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 26th May, 2005 at http://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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