CHAIRMAN'S STATEMENT

WINNING IN A CHANGING
MEDIA LANDSCAPE

In a time of rapid technological change, DMGT’s purpose is to enrich lives with media products that inspire, enthuse and entertain. At the heart of this mission are our people, their talents, their innovations and the profits they make.

This spirit of innovation extends throughout our businesses. Newspapers have existed for centuries yet, in July, The Mail on Sunday achieved a world’s first by launching a music CD, Prince’s new album ‘Planet Earth’, by distributing it with the paper. This worked well. The Mail on Sunday achieved its second highest sale ever; Prince sold out his UK concerts thanks to the publicity. This was followed in September by the release of a new film through the paper.

Our Nova radio stations, the first to introduce the concept of “no more than two ads in a row”, this year became the first radio network in Australia and one of the first in the world to link with Apple’s iTunes. This allows listeners to buy and download tracks that they hear on the radio straight from Nova websites.

Our newspaper businesses are also innovative in a geographical sense. Northcliffe has a fast growing business in Central Europe. We are now a major publisher of both newspapers and online products in Hungary, Slovakia and Croatia. In partnership with India Today, one of India’s leading media groups, we have recently launched a new mid-market newspaper, ‘Mail Today’, aimed at India’s burgeoning middle classes.

Our business information companies continue to perform well by providing their sophisticated customers with the developments they need. During the year, Risk Management Solutions published new models for the insurance industry on the effects of various natural and man-made catastrophes. There are ambitious and innovative internal development programmes in all DMGI’s businesses.

We also pride ourselves on the quality of our products. The journalists on Institutional Investor magazine won five awards this year (more than anyone else) from the American Society of Business Publication Editors. The website accompanying ad:tech (dmg world media’s exhibition and conference for digital marketing), was named as “Best Overall” and as “Best Use of Technology” at the industry’s Tradeshow Website Awards.

Such initiatives, as well as continuing to do better what we have always done, have enabled us to produce another record result. Revenues were up 3% to over £2.2 billion and adjusted profit* before tax, the measure we believe is the best indication of our progress, was up 11% to £288 million. We have proposed a further 10% increase in the final dividend, maintaining our long-standing record of steady real growth in our payments to shareholders.

The cash flow that our newspapers generate is prodigious. It enables us to develop our digital and business-to-business operations in order to produce a better balance across the Group and to enjoy the resilience this diversification gives us.

We shall continue to follow our strategy and we believe the results will continue to justify it.

Throughout the Group we have been working to minimise our impact on the environment. External consultants have carried out a full exercise to calculate our carbon footprint and to identify ways to minimise it. We have also appointed RMS, our own company and a world leader in this field, to review the impact of climate change on our Group and the business risks and opportunities that such change may create.

You can read more about this in the DMGT and Corporate Responsibility section of this report, along with details of the extensive community and charitable work the Group and its employees undertake. I am particularly proud of Euromoney’s raising of nearly £300,000 to build an eye hospital in Orissa, one of the poorest regions of India.

I now turn to an unusual event: a change in our Chief Executive. Charles Sinclair was appointed to this role in December 1987 and is now, 20 years later, the second longest serving Chief Executive in the FTSE 100. Charles has overseen the transformation of DMGT from when we owned only just under half of the then separately listed Associated Newspapers, through the sale of its non-media interests in the ’90s, to the expansion over the last ten years of our business media and online divisions. He has decided to stand down next September, soon after his 60th birthday.

I am extremely grateful to Charles. He has worked closely with both my father and me, and helped me enormously through the difficult time after my father’s death when I became Chairman of DMGT. I will miss his wise counsel and friendship and I will make the most of both in the months before he leaves.

He told me of his intention to retire about two years ago, which has enabled the Nominations Committee to undertake a wide ranging review. I am delighted that the Committee concluded the best candidate was Martin Morgan, currently the Managing Director of DMG Information. Martin has overseen the building of DMG Information into the formidable business it is today and is well qualified to take over as Chief Executive. I look forward to working with him.

Charles, and every other employee in the Group, has worked hard and well to produce another record result and I thank them all on your behalf. Meanwhile, DMGT is well placed to continue its impressive progress.

ROTHERMERE

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