Future organisation of Northcliffe Newspapers

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Monday 27 March 2006

Sale of Aberdeen Journals Limited
Share Buy-Back Programme

Daily Mail and General Trust plc ("DMGT") announced on 17 February 2006 that it had decided to retain its Northcliffe regional newspaper division. The Board considered that the three offers received did not reflect the long term value of the business to DMGT shareholders.

Following the completion of the full review of Northcliffe, DMGT is today announcing a series of further measures designed to place our regional newspaper businesses at the forefront of the UK media industry.

Sale of Aberdeen Journals Limited ('Aberdeen Journals')

DMGT has reached an unconditional agreement to sell Aberdeen Journals Limited ("Aberdeen Journals"), publisher of the Aberdeen Press & Journal and Aberdeen Evening Express to D.C. Thomson & Co Limited ("DC Thomson"), a leading Scottish publisher. The transaction puts an enterprise value of £132 million on the business. As a result of the transaction, Aberdeen Journals will have an obligation to pay approximately £27 million into DMGT's pension schemes when its employees are subsequently transferred into an appropriate scheme. DMGT expects to receive, after adjustments, net cash of approximately £105 million.

In the last financial year ended 2 October 2005 Aberdeen Journals reported operating profit before interest and tax of £8.1m on turnover of £38.2m, with gross assets of £33.3m.

Future organisation of Northcliffe Newspapers

The Board believes that Northcliffe has an excellent future as an integrated provider of local media services. It is positioned to provide its local and national customers with the information and advertising they seek through a range of media channels and brands. These will comprise primarily paid-for daily and weekly newspapers, free newspapers and a significantly increased online presence, but will encompass other delivery mechanisms, where appropriate. In particular, the combination of print and online will provide a differentiated product range that will be unequalled in its local markets.

To support this vision, DMGT has decided to create one division taking in its existing Associated and Northcliffe divisions. This will be headed by Kevin Beatty, previously MD of Northcliffe and currently MD of Associated, a role that he will also retain. Michael Pelosi, MD of Northcliffe, will report to Kevin. By taking advantage of the combined size and scale to create and operate shared support service centres, local editors and managers will be able to focus, with little distraction, on customers.

Northcliffe will be restructured managerially into a regional structure, following which the size of Northcliffe's central support functions will be reduced. The regional structure will be as follows:

North East: Hull, Grimsby, Scunthorpe, Lincoln
Midlands: Stoke, Derby, Nottingham, Leicester, Tamworth
West: Bristol, Bath, Cheltenham, Gloucester, Swansea
South West Dailies: Plymouth, Torquay, Exeter
South West Weeklies: Cornwall, Devon
South East Weeklies: Chelmsford, Tunbridge Wells

Certain operations within the two organisations, including printing, on line operations and back office support functions, will work more closely together.

Future Opportunities

When the Aim Higher project was first announced in June 2005, it was expected to realise a reduction in costs throughout Northcliffe of at least £20 million p.a. within an 18 month period. In November this estimate was increased to £30 million p.a.

As a result of further development of the original project, together with the expected result of today's announcement, we now expect the total reduction in Northcliffe's costs, excluding Aberdeen Journals, to amount to at least £45 million p.a. The total cash costs associated with achieving these cost savings are expected to be approximately £20 million, with the majority being incurred in the current financial year.

Considerable progress towards this target has already been achieved. We estimate that annualised cost savings as at the end of March 2006 will be £22 million p.a., which include certain initiatives not identified in the original Aim Higher project, one example being the recent closure of the Lincoln Press.

As a result of reinvigorating its focus on readers and advertisers, together with the development of a significantly increased online presence, Northcliffe will target additional revenues, particularly from online customers.

Northcliffe's capital expenditure over the next three years will be reduced from previously forecast levels. In particular, it is confirmed that the proposed North East print plant at Elsham Wold will not go ahead. DMGT expects capital expenditure to be approximately £26 million in 2005/6 reducing to approximately £20 million in the following two years. These compare with an average spend of £30 million p.a. over the last three years.

Return of Capital

Following the disposal of Aberdeen Journals, the planned reduction in capital expenditure announced today and the significant cost reductions that will be achieved at Northcliffe, the Board has decided to commence a share buy back programme of A Ordinary Non Voting Shares under the general authority approved at the AGM in February 2006. In the first 12 months, the Board's intention would be to return approximately £50 million to shareholders and thereafter
consideration will be given to a rolling programme of £50 million per annum.

Enquiries:

Daily Mail and General Trust
Peter Williams, Finance Director
020 7938 6631
Nick Jennings, Company Secretary
020 7938 6625

Northcliffe Newspapers
Michael Pelosi, Managing Director
020 7400 1100
Tulchan Communications
Andrew Honnor
020 7353 4200

Regarding the sale of Aberdeen Journals:

Greenhill & Co International
Simon Borrows
020 7440 0401
Brian Cassin
020 7440 0410
Peter Bell
020 7440 0421