Trading Update

Text size:

Wednesday 15 March 2006

Summary

This statement updates investors on the Group’s progress in the current year, ahead of its half year end on 2nd April 2006.

Since the Group last reported in November 2005, it has continued to see very different trading conditions for its divisions. The businesses-facing divisions are seeing good growth in revenues and are finding new opportunities; the consumer-facing divisions have seen continuing difficult conditions, particularly when compared with their trading performance in the first half of last year. Overall, the Group remains on track for a satisfactory year.

National Newspapers

Associated Newspapers' overall circulation revenues for the five months to February 2006 were 1% below the same period last year. Advertising revenues in the same period have decreased by 9%, compared to last year (quarter one down 8%; January/February down 9%), reflecting the well-reported difficulties within the market.

The Daily Mail has continued to increase its share of an extremely competitive national newspaper market and has again begun to record year-on-year circulation increases. The Mail on Sunday has performed in line with the market for the six-month ABC period to February 2006. Both titles continue to invest in a range of new initiatives, such as The Mail on Sunday’s launch of Live Magazine, the re-design of You Magazine on high-quality silk paper and the February launch of a new mid-week pull-out puzzle section in the Daily Mail. The Evening Standard achieved a reduced year-on-year decline in its paid-for circulation for the third successive six-month period. Metro's distribution continued to average over one million copies and has increased by 10% recently as a result of new franchises in Liverpool and Cardiff. In addition, Metro was launched in Dublin as a joint venture in December 2005.

Associated's newspaper display advertising revenues have fallen by 10% for the five months to February 2006, although yields in the national titles are generally being maintained or improved, despite the challenging trading conditions. Classified advertising revenues are down by 11% for the same period.

Digital advertising revenues from Associated’s many online brands including Jobsite, Find a Property and Prime Location, have, however, risen by 43% year on year and continue to show signs of encouraging growth. Associated is now one of the leading players in the UK internet jobs and property markets. The property site, primelocation.com, which was acquired in January, is trading well.

Advertising revenue at Teletext, which is now part of Associated Newspapers, is down 19% year on year, as the predicted decline in analogue viewing continues. Revenues from digital services (television and internet) are, however, up over 70% in the five month period to February.

Although visibility on future advertising performance is very limited, there have been recent signs that the year-on-year decline in advertising revenue may ease in the second half of the financial year, but in any event all cost areas are being rigidly controlled, with significant savings already flowing through.

Regional Newspapers

Northcliffe Newspapers continues to experience tough trading conditions. UK advertising revenues for the five months to February 2006 were 7% below the comparable period last year (quarter one down 6%; January/February down 8%). Excluding recruitment revenues, which have declined by 16%, advertising revenues are 3% lower so far this year. The rate of decline in recruitment revenues has slowed, from 19% in the first quarter to 12% in both January and February. Property (up 6%) has continued to grow, but motors has fallen by 14%. Revenues from digital publishing are 17% above last year for the five months to February 2006.

Circulation revenues for the five months to February 2006 were in line with the same period last year. In the July to December 2005 ABC period, Northcliffe evening titles continued to out-perform the regional newspaper industry average circulation figures. Northcliffe morning titles also out-performed the regional newspaper industry average circulation figures.

The implementation of the Aim Higher programme of organisational and structural improvements is continuing, leading to significant year-on-year cost reductions currently running around £20 million on an annualised basis. For the five months to February 2006, operating costs are 5% lower than in the previous year, despite suffering a newsprint price increase and significantly higher energy costs. A third print site, Lincoln, has been closed recently following the press closures last year at Exeter and Swansea.

As previously stated, a further announcement regarding the future organisation of Northcliffe Newspapers will be made soon.

Information publishing

DMG Information's business to business division continues to grow strongly with year-on-year revenue growth exceeding 20% and margins remaining at similar levels to last year. Landmark is seeing particular strength in its residential market, as the number of transactions in the UK housing market has picked up. Environmental Data Resources continues to deliver consistent revenue growth. Risk Management Solutions has experienced record levels of bookings including from new re/insurance companies established in Bermuda (as a consequence of Hurricane Katrina) and from renewals secured at increased rates. Trepp continues to grow strongly in a buoyant commercial mortgage-backed securities market that has just completed a record year for issuance in both the U.S. and Europe.

Within the careers division, the revenues of both Hobsons, with the US and Australian businesses to the fore, and Study Group show year-on-year revenue growth in excess of 10% and margins are continuing to improve.

Financial publishing

Trading at Euromoney Institutional Investor has followed a similar pattern to 2005. Demand for its events, training and electronic information products has continued to increase, and the outlook for advertising has gradually improved. The trading outlook for global financial markets remains positive, and Euromoney is optimistic it can make further progress in the second half in implementing its strategy of increasing profits through a mix of organic growth, strategic acquisitions and margin improvement.

Exhibitions

DMG World Media has seen the same divergence in results as the Group overall, with its consumer events struggling, but its business shows performing strongly. The home and gift fairs have had a tough period, albeit with signs of recovery recently in the North American home shows. There have been particularly good performances from Palm Beach 3, the contemporary art, sculpture and photography show, and SurfExpo in Florida, from Index and Big 5 in Dubai, and from AdTech's online marketing show and conference in New York. Revenue, when adjusted for timing differences, non-annual events and foreign exchange, has grown by around 11% year on year.

Broadcasting

DMG Radio continues to see strong growth in revenues in excess of 20% from its radio network, despite a slowing radio advertising market and one disappointing listener survey result in Sydney. The most recent survey shows Nova to be number one in the five main cities in the 18-24 age group, as well as being the leading national network in its target market of listeners under 40. The new Vega stations have been slow to build audience and changes are currently being implemented.

Exceptional items

The Group expects to report in its half year results a charge in the region of £15 million as exceptional operating costs. This charge will comprise the professional costs of the strategic review of Northcliffe, together with the costs for the second phase of its reorganisation programme.

Interim announcement

The Group will be reporting its interim results for the half year to 2nd April, 2006 for the first time under international financial reporting standards. The announcement of these interim results will be made on the morning of Thursday 25th May, 2006.

Enquiries:

Peter Williams, Finance Director, DMGT 020-7938 6631
Nicholas Jennings, Company Secretary, DMGT 020-7938 6625
Andrew Honnor, Tulchan Communications 020 7353 4200

Daily Mail and General Trust plc
Northcliffe House, 2 Derry Street,
London, W8 5TT
Tel 020 7938 6000
Fax 020 7938 4626
www.dmgt.co.uk
Registered in England and Wales No. 184594