Chief Executive's Review

Introduction

This Business Review is addressed to the members of the Company. Its purpose is to help them assess how the Directors have performed in their duty to promote the success of the Company. It is framed by the principles and guidelines for Operating and Financial Reviews published by the UK Accounting Standards Board in 2006. It outlines the main operational and financial factors underpinning the development, performance and position of the Group as well as those likely to affect performance over the coming year, illustrating this with key performance indicators.

This Chief Executive's Review will start by setting out the nature, objectives and strategy of the Group. A business review of the development and performance of each of our operating divisions can be found within this section. A Financial and Treasury Review is given here and the principal risks and uncertainties the Group faces are set out in the Directors' Report.

DMGT's Philosophy

DMGT is a multi-media and information company providing essential news, entertainment and information services in both the business to business (B2B) and consumer sectors. We operate in many different markets, in many countries, each with its own competitive and regulatory requirements.

It has been DMGT's philosophy for many years to take advantage of its shareholding structure and to invest with a long-term perspective to generate value. Our particular ownership structure, with control maintained by the founding family, has proved itself throughout our long history to be a successful business model in the media and information industry. It is this ownership structure that affords us a longer-term perspective and that is at the heart of our philosophy.

We are committed to remaining diversified across both the B2B and consumer media sectors in order to give us a breadth of opportunities and to spread risk. Our B2B arm is made up of Risk Management Solutions (RMS), dmg information (dmgi), dmg events (which changed its name from dmg world media in April) and Euromoney Institutional Investor. Our consumer media division, A&N Media comprises Mail Newspapers, our digital only businesses (formerly Associated Northcliffe Digital), our free newspaper division, principally Metro, and Northcliffe Media. We also own 50% of dmg Radio Australia, a 50:50 joint venture with Illyria, an Australian company that is the private investment vehicle of Mr Lachlan Murdoch, which was established in December 2009.

Strategy

The overarching strategy for the Group is to remain the owner of high quality, sustainable, market-leading media and information assets across both the B2B and consumer sectors and to improve DMGT's overall share rating. Our intention is for DMGT to become a truly global growth company with sustainable earnings and dividend growth with an increasing exposure to growth economies and international opportunities. The three pillars of my leadership continue to be growth, adaptability and innovation.

Our strategy is underpinned by five guiding tasks.

The first is to enhance focus by concentrating our management and investment on a subset of businesses where we see the closest alignment between opportunities and growth, and which fit with our investment criteria. On this task, we have made considerable progress. Secondly, we have been strengthening our balance sheet in order to maintain financial flexibility so that we are able to take advantage of opportunities as they arise. The third key priority remains reducing pension liabilities. The fourth is applying consistent investment criteria. This requires being highly disciplined both in regularly assessing our current businesses and in the way we assess all future investments, resulting in a clear capital allocation process. There must also be a preparedness to sell as well as buy on a timely basis.

Finally we are building on DMGT's distinct values and management philosophy. We remain committed to a decentralised operating structure with a small central team in order to nurture innovation and an entrepreneurial mind set. We have been raising the bar on talent by being committed to attracting and retaining the best people in order to optimise our management philosophy and to meet our global growth ambitions. If anything it has become even clearer over the last year just how critical our work on talent is, in order to have the entrepreneurially minded people who can drive the revenue line and our strategic ambitions.

In summary we have pursued our strategy with vigour over the last twelve months.

We have established a new Investment and Finance Committee alongside a newly formed DMGT Leadership Team, which together will improve investment decision making and Group strategy development, at the higher operating tempo we have been setting and which, I firmly believe, is so crucial to our success. The Leadership Team comprises all the divisional company leaders, together with the DMGT executive. Its remit is to focus on developing DMGT Group-wide longer-term strategy, on furthering cross Group co-operation when and where this makes sense, and to guide policy on matters which are cross divisional in nature, for example Group leadership courses, communications and aspects of technical capability. it does not replace the decision making and accountability structures in place through our decentralised operating structure.

The new Committee comprises the DMGT executive and two non-executives. It acts independently on investment decisions and capital allocation from the divisions, although it will invite attendance and contributions from time to time by divisional CEOs as well as from outside experts.

We recognise that our future is largely digital, whether it be in the consumer or the B2B markets, and we are uniquely placed to take key learnings and experience from one to inform the other. Accordingly, we have encouraged the sharing of more information regarding technology developments across the Group, particularly regarding new product development and entering new markets. We have retained the services of a technology expert to advise us at Group level.

Our plan is to continue to run the Company on a conservative basis over the next few years because tough economic conditions may prevail in the UK for some time yet and the course of the US economy remains uncertain. We are giving priority to investing in the considerable organic growth potential of our existing portfolio of businesses, supplemented by bolt-on acquisitions offset by a few minor disposals. We are taking steps to limit the growth in our pension scheme liabilities and to reduce the schemes' volatility.

Progress in year

I am proud to report that we have delivered on what we promised two years ago. We achieved our targeted £150 million in profit enhancements, enabling us to preserve our investment in innovation and organic growth. We re-focused the portfolio with a wide range of disposals, closures, and re-organisations. Our results are a testament to our success in meeting these short-term objectives.

With a more focused portfolio, improved margins and a somewhat better trading environment, operating profit* rose by 17% to £320 million and debt has fallen. Operating margin* rose from 13% to 16%. We have beaten our initial debt: ebitda target of 2.5 times and have virtually no bank debt. Moreover, since we made every effort not to lose sight of our long-term strategic objectives and maintained organic growth investment during this difficult period, we should not need to increase our rate of investment in new products and services during the recovery.

DMGT has always been a first mover in the media and information industry. Our results demonstrate once again that the success of the decision made many years ago by the Chairman's father to diversify our portfolio and move away from a dependence on UK newspapers has been a remarkable success. Today our national newspapers are strengthening further their market leading positions, complemented by growth in our newer consumer digital business and our strong portfolio of B2B sector companies.

A&N Media has made huge progress in bringing focus to its activities and in advancing impressively in print as well as in digital consumer media. Mail Newspapers stands apart from other newspaper businesses in the UK and is now in a different league in newspaper digital activities through Mail Online, which is a core engine for growth. The Daily Mail and the Mail on Sunday improved their market shares towards the end of the year to record levels, a testament to our strategy of investing in editorial content and in marketing and promotion.

At Northcliffe Media, which still faces difficult market conditions, our strategy has been to create a lower cost, high quality publishing business with improved levels of service for readers and advertisers, coupled with investment in digital media. This has been achieved by harnessing technology, leveraging the scale of the Northcliffe portfolio and working more collaboratively with the rest of A&N Media. The results have been impressive. Headcount is down almost 50% from its peak levels in 2004. Northcliffe's operating structure has been reorganised into new publishing centres, focused on their core competencies of news gathering and local advertising sales; and centres of excellence established for common business functions, including sub-editing, advertising production, information technology, finance, printing and digital publishing; and regional contact centres, which improve the overall customer experience, for recruitment and private advertising, as well as the home delivered sale of our newspapers. This much lower cost operating model means that Northcliffe is more operationally geared today and so will see substantial benefits when the economy recovers. We are implementing plans for additional cost and efficiency gains.

There has been much talk within the media of potential consolidation within the regional newspaper industry. Whilst we can see benefits, we will not put further capital into the industry because of the more certain potential of our other opportunities for investment. We are, however, committed to the ongoing transformation of Northcliffe because we believe there will always be a demand for local news and information. To this end we have launched Local People, a digital service aimed at smaller communities than are often covered by local print media.

The recovery of the profits* of our uk national consumer media activities means that the percentage of the Group's operating profits* derived from B2B fell this year, as expected, from 71% to 66%. A significant part of our operations are now outside the UK with more than half of the Group's operating profits* again derived from outside the UK, which also has the effect of reducing the Group's exposure to media regulation.

Two years ago, I recognised the need to focus on a narrower range of activities in order to concentrate human resources and financial capital where the most potential for long term growth and value creation existed. I stated that we would remain active managers of our portfolio of businesses and apply our investment criteria vigorously in determining where to allocate capital but at the same time maintaining our long term perspective and rate of internal investment to drive organic growth.

The investment criteria that I identified were to focus on having businesses which operate in attractive growth markets. Such businesses should have products or services that are highly innovative and highly valued, ones which customers repeat buy. We have a strong bias towards market leaders. Businesses with these characteristics will not only grow but be high margin, cash generative and produce a high return on capital. We are also focused on capturing and retaining entrepreneurial management and we give preference to businesses which can benefit from DMGT's long term perspective.

We have fully adopted these investment criteria both in new investments and in the management of currently owned businesses. In keeping with this approach, we have re-focused the portfolio with a further wide range of disposals, closures and reorganisations.

At A&N Media, we closed London Lite in the London evening newspaper market in November 2009 following on from the sale of 75% of the Evening Standard and its subsequent move to a free revenue model, and closed Teletext's television operations in December 2009. We sold Allegran, our online dating business, DMR, our digital data and auto business, Loot and our Slovakian newspapers. We have re-engineered Northcliffe UK, including the closure of a further print plant at Plymouth. We merged Metro Dublin with Herald AM. We restructured dmg world media, eliminating its corporate centre and renaming the smaller and leaner business, dmg events, and we sold 50% of dmg radio to Illyria.

We have continued to focus on business fundamentals and organic growth and on nurturing our existing businesses, rather than on making large scale acquisitions. We have been willing to make a small number of highly attractive bolt-on acquisitions and investments with low risk and high returns which strengthen the competitive position of our businesses. These were within dmg information and A&N Media: Builder Radius, which has built a proprietary database of building permit information from cities and counties across the US for EDR, Calnea Analytics, which supplies automated valuations for residential properties, and Argyll Environmental, providers of environmental risk reports, for Landmark; Foresight Analytics, which provides real estate analysis for commercial and residential real estate, for Trepp; and 50% of Globrix, a UK free to list property portal for the Digital Property Group; and as previously mentioned, Local People which we launched in the summer of 2009. Euromoney also acquired Arete Consulting, a small but high quality online publishing business, with its proprietary database containing information on more than 1.3 million structured products around the world.

Whilst we have been focused necessarily on reducing our debt over the short term, our capital constraints have not caused us to miss any significant acquisition opportunities. We are now in a better position to make acquisitions again, but will continue our policy to prioritise a programme of selective smaller scale deals which we can develop and which can benefit from our longer-term perspective. We will continue to divest on a periodic basis and our track record over recent years is good on this count.

DMGT Operational Model

DMGT's approach to managing the Group's companies has not changed: we continue to adopt a decentralised structure. We take a considerable amount of comfort in the fact that we know all our companies are run by chief executives with expert knowledge of their companies and the markets in which they operate. Over the last year, we have continued to nurture operational autonomy with strong incentives based on performance, whilst retaining central control over surplus capital and its reinvestment.

Maintaining this approach is of upmost importance to me. The benefits are numerous and enabled us to respond rapidly to the economic downturn. At DMGT we realise that if you want to survive in this sector, you must be able to react quickly and efficiently to the rapidly changing media world. If management teams are able to exercise relative autonomy, they are able to keep decision making as close to their customer as possible. Real innovation comes from having a customer focus and our decentralised model provides a fertile environment for innovative people and, in turn, a positive breeding ground for innovative ideas.

Business to Business Summary

I am pleased to report that our B2B operations achieved good profit* growth in the year, driven by solid subscription revenues and tight cost control, with no benefit from foreign exchange as the average sterling: US dollar exchange rate was unchanged. They reported combined revenues of £824 million, down 4% due to the effect of prior year disposals within dmg events, but an improved operating margin up from 24% to 27% on an operating profit of £226 million.

Risk Management Solutions

RMS achieved another record operating profit*, up 12% on revenues also up 12%, reflecting continued growth from both its core modelling business and newer initiatives. Margins remained at 31%, a very acceptable level, given the need to invest in the business to maintain existing subscriptions and in order to drive future growth.

RMS continues to develop products and services to fulfil demand for catastrophe models, expand along the "decision sciences" value chain, and devise solutions in adjacent insurance market segments, such as in life and health. This year, it delivered for the first time a state-of-the-art high performance computing solution, RMS Enterprise Grid Computing.

DMG Information

Dmgi achieved another record operating profit*, up 14%, maintaining its impressive history of profits* growth. Revenues increased by 1%, with strong growth from its companies in the education, financial and energy information markets. Margins rose from 20% to 23%.

Dmgi's strategy remains focused on investing in those companies within the existing portfolio which operate in an attractive sector and have the combination of attractive business models, strong market positions, growth potential and good management. Its ambition to invest in must-have, high-growth, innovative business information companies remains unchanged, as does its remit to diversify DMGT by sector, by business model and by geography.

Within property, landmark information Group and EDR are developing their strategy to expand their offering from "environmental" to "green". Landmark have developed a more ambitious growth strategy, which includes further expansion in serving the financial aspects of the property market and more on physical data on property, together with an increased expansion in Germany. Co-operation between Landmark and A&N Media's Digital Property Group has deepened.

Within finance, Trepp is pursuing its strategy to enter the broader commercial real estate market. Within energy, Genscape is accelerating its organic growth across new energy classes, such as gas and oil, and has made progress in strengthening its management team. Within education, Hobsons continues to grow in providing digital information and services to high schools and universities.

dmg events (formerly DMG World Media)

Dmg events' operating profits fell by just £7 million, despite a reduction in revenues of £64 million due to the impact of prior year disposals. Although the underlying^† revenues of dmg events were down by 9%, the most significant declines were experienced early in the year and more recent events have been in line with or ahead of prior year revenues. Margins rose from 21% to 27%.

The refinement of our portfolio of exhibitions was concluded earlier in the year. The business has been transformed from more than 300 B2C and B2B exhibitions, fairs, conferences and magazines to 36 B2B exhibitions and two conference businesses, all with number one or two positions in their market places. The group, renamed dmg:: events, has been restructured into five operating groups and management layers removed. Growth will be driven by geo-cloning, expanding into adjacencies and selected early stage exhibition acquisitions. New management have begun to launch new shows once again.

Euromoney Institutional Investor

Euromoney achieved a record operating profit*, up 25%, maintaining its recent history of profits* growth. The rebound in its revenues came faster than expected and it has benefited from early and aggressive action at the onset of the downturn in its markets.

The benefits of Euromoney's strategy to build a more resilient and better focused business by increasing the proportion of revenues derived from subscription products, now nearly a half of total revenues, and transforming a predominantly publishing driven business to one with significant activities in electronic information and database services, were again demonstrated by these results.

Euromoney has outperformed all expectations, allowing management to shift its focus to positioning the business for growth, both from existing products as markets recover, and from investment in technology and new products as part of the migration to a digital information business.

Euromoney's performance and its shift into more subscription and digital activity means that the Board regards it as core to DMGT's own strategic global growth ambitions.

Euromoney's separate listing on the London Stock Exchange has enabled it to introduce its capital appreciation plans which have motivated management to grow the company significantly over recent years. We remain a supportive shareholder, fully backing its management's expansion strategy. DMGT again took its share of dividends from Euromoney in the year in the form of a scrip. This enabled us to offset the dilutive effect of the vesting of the final tranche of Euromoney's first capital appreciation plan, thereby maintaining our equity interest at around 66%. It is the Board's intention also to take Euromoney's forthcoming final dividend in the form of a scrip in order to avoid dilution caused by its management incentive plans.

To sum up, within B2B overall there remains a concerted continuing focus on organic growth supplemented by bolt-on acquisitions and aimed at strengthening the quality of the portfolio over time.

Consumer

Higher national advertising revenues, together with a focus on cost control, enabled A&N Media to increase its operating profits by 46%. This was in spite of a reduction of 5% in reported revenues, reflecting portfolio changes and high standards of execution. Margins* rose from 7% to 11%.

The consumer media industry is continuing to witness a time of unprecedented change. Whilst technology is undoubtedly an enabler, allowing us to extend our reach to our chosen audiences over a multitude of platforms, it has had a significant deflationary effect on advertising yields and newspaper copy sales. The environment forces us to remain even more focused and orientated around the needs of our customers and on the strength of our brands.

A&N Media has made significant progress in bringing focus to its activities, and is advancing impressively in print and in digital consumer media. We continue to focus on building around the Mail brand and formulating the next stage of our strategy for the consumer digital market.

The Mail titles, despite operating in a sector in long term decline, are and will be a core business for many years to come and will continue to offer real growth opportunities, for example because of the excellent progress of its online offering, Mail Online, which has significant growth opportunities ahead of it.

Associated Newspapers

The Mail publications continue to capture market share from competitors. Content has been at the heart of our success at Associated and we continue to invest in editorial quality. This graph shows that our actions are proving successful with circulation on the Daily Mail stabilising in recent months and market share rising once again for both Mail titles. The increased gap in cover price compared to the so called "quality" newspapers, combined with the pressures from rising newsprint prices on those with lower cover prices, may provide us with an option to raise cover prices, once consumer confidence recovers.

Our national free morning newspaper, Metro, grew rapidly this year and traded strongly. Released from competing in the free London afternoon market, management has been able to turn its entire focus on Metro and has delivered an increase in display advertising of more than 20%. For the first time, it has developed a presence in the retail advertising market and launched successful mobile applications. A new seven and a half year contract with the London Underground was secured on fair terms for both parties. Our competitors to the Irish Metro are now our partners in Metro Herald.

Mail Digital made significant progress this year, recording a 33% improvement in revenue. Traffic to its primary website, Mail Online, increased by more than 70% to 50 million unique users in October 2010. Launched in its current form only in May 2008, it is already now the largest UK newspaper website. It is differentiated from the print newspaper by a particular focus on celebrity, gossip and colour features which appeal to a younger demographic of mid Britons, the majority of whom do not buy a Mail newspaper. IPhone and iPod Touch versions have recently been launched to be followed by an iPad version within months. We therefore see digital publishing as a growth opportunity, and a means of extending the Mail brand. One example is a large and growing non-UK audience, especially in the USA. An ambitious expansion strategy targeting the US is underway. In May, we opened an office is Los Angeles, to be followed by a New York office, in order to increase US content, users and thereby to drive US advertising sales.

There has been much media debate about whether online newspaper sites should erect paywalls. Our position with respect to Mail Online is that few consumers will pay for general news content which they can access free from elsewhere, such as from the BBC, and our strategy is to build large audiences. They will pay, however, for more specialised information and for special applications such as on the iPad. this is still very much an emerging area and our approach is to provide compelling content and to remain flexible on distribution channels and pricing.

Good progress has been made in our efforts to monetise the reach of our titles through database marketing. The revenue achieved by the growth of A&N Media Enterprises demonstrates the Mail's ability to diversify revenue streams by leveraging its strong brands and developing new products and services to meet the needs of its targeted audiences, for instance through the Mail's multi-channel retail brand, MailLife.co.uk.

Digital only businesses (formerly AND)

We reassessed our portfolio of businesses and reorganised to concentrate on those companies seen as having worthwhile long-term prospects. As a result a number of businesses were sold and divisional operating costs substantially reduced. We are now focused on the verticals of jobs, property, motors and travel. The Digital Property Group was strengthened with the acquisition of 50% of Globrix. The second half saw a pleasing upward trend in revenues at Jobsite and The Digital Property Group.

A&N International Media

Northcliffe's Central and Eastern European operations now report directly to A&N Media's CEO, Kevin Beatty, allowing Northcliffe's UK leadership to concentrate on the challenges faced in the domestic marketplace. We will in future report A&N International Media within Associated.

Its underlying^† revenues were down by 9% after disposals, mainly from its print business in Slovakia which was sold during the year and from its regional newspapers in Hungary. The performance of our portfolio of digital businesses, primarily in Jobs and Property markets, has improved significantly and unique visitor engagement with all of our digital businesses continues to grow.

Northcliffe Media

Our expectation in May, because of gradually improving UK advertising trends, that Northcliffe UK would move into year on year growth during the second half of the year, proved over-optimistic. We now expect Northcliffe to have another hard year in prospect and to continue to suffer from the effects of reduced public sector advertising spend. Until recruitment advertising recovers, it is difficult to see growth and there is new uncertainty over the property market. Northcliffe is, however, outperforming its rivals, which is testament to the way its management is transforming the company's operations.

The commercial relationship between Northcliffe and our pure play digital businesses, in recruitment, property and motors, continue to be strategically important to the company.

DMG Radio Australia

We disposed of 50% of dmg Radio Australia. The new joint venture has started well with a rise in operating profits* year on year.

Summary

During 2010 we delivered on our promises and have demonstrated the benefits of our diversified international portfolio of market-leading businesses with revenue beginning to rise, higher operating margins* and our debt falling rapidly. I feel confident the Group is well placed to benefit from improvements in our markets and from our ongoing commitment to internal investment in organic growth.

Regaining investment grade credit status is an objective as we contemplate being able safely to expand our balance sheet as we move closer to our remaining bond repayment in 2013. Containing and eventually eliminating significant liability risk and volatility from our pension schemes remains a high priority.

Because of continuing economic uncertainties, we will remain disciplined about our approach to costs and acquisitions. At the same time we will work on building a pipeline of potential new innovative products, and in growing a target list of attractive target bolt-on acquisitions.

At our first Investor Day in March 2009, I stated that our aim for DMGT was to be a modern company of tomorrow, not a legacy company of the past. We have a much sounder platform today than we did then on which to execute this objective, due to the management actions taken right across the Group, and from some recovery in a number of key markets. Therefore our strategy remains unchanged.

Whilst we believe print is far from dead, our growth lies in digital media in both consumer and in B2B, and we are increasingly focused on doing what is needed to excel in the digital world.

We envisage DMGT becoming a global growth company. We plan to be nimble, bold and decisive in order to realise this vision. Our objective is to ensure profitable sustainable growth over the long term.

Share price performance

Our share performance remains important to us as an indicator as to whether our strategy is understood and appreciated by institutional investors.

The price of our widely traded 'A' Ordinary Non-Voting shares has been less volatile this year, aided by stock lending of the shares trending downwards below 15% of the free float. The share price started the financial year at £4.39, falling to £3.90 at the end of October, before rising to a high of £5.33 at the end of April, a movement of 36%. The shares fell back in early summer, along with the wider market in the light of the prevailing economic uncertainty, before closing the year at £5.26.

The market appears gradually to be absorbing the quality of our diversified portfolio of assets. This, together with the operationally geared nature of our national advertising revenues in particular, led to us outperforming our peers again this year.

As a consequence of a decision by FTSE in May, in response to the Financial Services Authority's Policy Notice in February, to adopt listing classifications for determining the weighting of share classes in their indices, DMGT's weighting in the UK Index Series will fall from 75% to 0% when our 'A' shares are re-designated by the FSA as having a standard listing on 31st May, 2012. DMGT will remain a premium listed company, following this change, by virtue of its Ordinary shares. Pure index funds tend to hold only around 5% of our 'A' shares.

Capital structure

The Company has not made a capital call on its shareholders since 1933. Capital growth is funded by long-term debt and by retained earnings. Since the late 1980s, our strategy has been to seek to raise the dividend in real terms and since 2002, the Board's policy has been to target a real rate of growth in the dividend in the region of 5% to 7% on the basis of the Directors' confidence in the Group's long term financial health.

Having held the dividend during the financial crisis, whilst maintaining its policy of seeking to increase the dividend in real terms over the economic cycle, the Board has declared a final dividend up 11%, making an increase of 9% for the year. As shown on page 11, the compound dividend growth over the last twenty two years is 10% in nominal terms, which is an increase of 7% in real terms.

The Company acquired 2.9 million of its 'A' Ordinary shares for £12 million, using them to provide shares under various incentive plans. The Company currently holds 9.6 million shares in treasury to meet obligations that may arise to provide shares under various incentive plans.

By the year end, we had virtually no bank debt and £300 million of unused bank facilities. We have no refinancing to contemplate until 2013. Having beaten our initial debt: ebitda target of 2.5 times by achieving a ratio of 2.3 times, we will continue to manage the ratio down through strong cash flow generation, in order to create more capacity to satisfy attractive acquisition and investment opportunities.

Whilst we can run the Group without having to raise new finance, we will want to do so in order to sustain the Group's long term growth ambitions. Therefore regaining investment grade status remains a key objective.

Resources

The Group's main resources are its brands, reputation, the market-leading position of its major businesses and above all its people. It is my strong belief that it is the obligation of a Chief Executive to leave a company in a better shape than he found it in and I realise that the skills required of leaders in our industry ten years ago are not the same today. We cannot capitalise on the future unless we invest in the talent of today, in the leaders of tomorrow. We understand that superior business performance starts with superior people, and it is my overriding priority to ensure that we continue to attract and promote the very best talent and reward talent suitably in line with shareholders' interests.

Our commitment to raising the bar on talent is continuing and increasingly effective, applying human capital where growth prospects are best – if you like, to where the money is. Three DMGT-wide executive training courses have been held and talent reviews are now taking root in every business under the direction of our Human Resources director, Joe McCollum.

We made several further key appointments in order to populate the Group with new superior talent, coming from within and from outside the Group. At Group level, as the Chairman has said in his statement, we have hired Stephen Daintith from Dow Jones who joins us in January to succeed Peter Williams as Finance Director. We have also hired Bill Raduchel as technology advisor. We appointed James Welsh, who joined us from Dixons Retail, as finance director of A&N Media in February and who has carried out an extensive restructuring of its finance team. At dmg events, Geoff Dickinson joined us to run its Middle East Operations. DMGT will always invest in its people in order to grow.

Communications

We continue our commitment to raising the profile of DMGT and communicating the quality, performance and prospects of the Group both internally and externally. We have increased the regularity and consistency of our communications. In April 2010 we ran our second investor day which was positively received. We are planning a further Investor Day to be held in London on 28th March, 2011.

Relationships with stakeholders, other than shareholders

Across the Group we take our corporate responsibility (CR) seriously. This vision permeates our approach to everything and influences our outlook on the environment, our employees and on local community issues where we operate.

As one significant example of how our CR agenda can have a beneficial impact, Landmark developed Carbon Counter, an online service to prepare businesses for the governmental CRC Energy Efficiency Scheme. Furthermore, I am proud to report that DMGT has qualified for this climate change and energy saving programme, one central to the UK's strategy for reducing carbon dioxide (CO₂) emissions. This is just one example of how DMGT companies are combining innovation and their business knowledge to drive their commitment to corporate responsibility. It is an attitude which will permeate the Group at large over the next few years.

For more detailed information on our CR activities, please see the CR Report on pages 34 to 36 which makes reference to the policies the Board has adopted in this area.

DMGT and the Environment

We recognise that our businesses have an impact on the environment, be that through our printing operations, offices, transport or other activities. We are truly committed to ensuring that, where possible, our impact on the environment is minimised.

The greatest impact we make arises from our printing operations. Here, I am pleased to say that we have been diligent in measuring and reducing waste in our usage of materials, and, through our analysis of our carbon footprint, monitoring and improving our efficiency in the use of energy.

We started to measure our footprint in 2006 and the graph shown above illustrates that the Group's emissions have fallen steadily since then.

This year both Harmsworth Quays, our largest printing plant, and Northcliffe House, the Company's headquarters and the London base of Associated Newspapers, Northcliffe Media and dmg events, achieved the key international environmental standard ISO 14001. With these facilities now recognised as meeting world class standards of environmental management, our focus has moved to facilities in other parts of our business.

DMGT and our Employees

The number of employees rose by 338 from 14,254 at the beginning of the year (excluding DMG Radio Australia) to 14,592 at the year end, an increase of 2%, due to an increase within RMS's India operations. Excluding the India increase and with a continued focus on cost reduction, the number of employees fell by 736 in the year. Within this number there was a fall within Northcliffe UK and A&N Media's UK printing operations of nearly 400 (10%), including the job losses from the closure of our printing plant in Plymouth.

A variety of approaches to staff communications exist within the Group, as explained in our CR report. In March, we communicated the introduction of a share incentive plan, DMGT Share Purchase+, which is available to all eligible UK staff to give them the opportunity to own the Company's shares, so that they can benefit if we are successful in meeting our financial objectives. This followed approval by shareholders at our AGM in February.

The Company attaches great importance to a clear understanding of personal financial issues by its employees, a view which prompted the development by DMGT Pensions of an online workplace financial information website (www.timeformoney.co.uk), which was launched in the UK in August.

DMGT has been operating defined benefit pension schemes, primarily in its newspaper businesses, for a long time and has a reputation for the quality of pension provision. However, the cost of providing this benefit continues to rise as people are expected to live longer and, more recently, as turmoil in financial markets has reduced expected investment returns.

Given the size of the Company's pension commitments compared to the size of the Group, this cost needs to be controlled to ensure the financial health of the Company and of these pension plans. Accordingly, the Board decided to close its defined benefit (final salary) plans to new employees from the start of the financial year, whilst keeping them open for current employees. The Company has also announced plans to introduce a series of measures during the 2010/11 financial year designed to help secure the financial health of these plans into the future.

All new employees of A&N Media are now offered a defined contribution pension plan, which is consistent with our other newer and more internationally focused companies where we have long believed this type of pension plan to be more appropriate.

Social and community issues

Community involvement is integral to the way we run our company, as is its importance to the personal motivation of our employees. We donate money, time and in-kind donations such as radio airtime and advertising space, and staff participate in a huge range of activities, including fundraising, organising events and acting as trustees to charitable initiatives.

Information about persons with whom the company has contractual or other arrangements essential to the company's business

Group companies undertake business with a range of customers and suppliers. There is no dependence on any particular contractual arrangement, other than those disclosed in Note 38 to the Accounts as regards ink and printing, where arrangements are in place until 2015 and 2022 respectively to obtain competitive prices and to secure supplies.

As regards the Group's principal commodity, newsprint, arrangements are made annually with a range of suppliers to ensure the security of supply at the best available prices, having regard to the need for the necessary quality. Particularly in the light of its strategy to create a diversified international portfolio of media businesses, the Group is not dependent on any suppliers of other commodities, nor for its revenue on any particular customer. Distribution arrangements are in place to ensure the delivery of newspapers to retail outlets.

Trends and factors likely to affect the outlook

We have entered our new financial year in good heart as our businesses are performing well. Many markets remain tough, however, and there is continuing economic uncertainty in the medium term, including in the UK where the impact of the Government's austerity measures has yet to be fully felt. Moreover, whilst we do not anticipate a 'double dip', external risks, such as the sovereign debt crisis, have not gone away.

RMS has started the year well with a number of contracts booked and a solid sales pipeline. It is expecting to achieve low double digit growth again this year.

At dmgi, we expect the combination of continuing investment in core growth initiatives, combined with improving market conditions, to drive a modest acceleration in revenue and profits* growth.

At dmg events recent attendance and bookings trends have been moderately encouraging and we anticipate these continuing to improve in 2011. The forthcoming year will benefit from two of our three major biennial shows taking place.

For Euromoney, although the broader outlook for global economic growth remains challenging, the outlook for the start of the new year is good and Euromoney expects the good revenue performance achieved in the second half of the year to continue into the first quarter. Further, subscriptions were growing at an annual rate of 7% at the end of 2010, which provides support for further growth in 2011. However, there is uncertainty over the outlook beyond December.

After a strong recovery and return to revenue growth in 2010, Euromoney will continue to pursue its successful strategy with an emphasis on investing in technology and new subscription-based electronic information services, supplemented with small strategic acquisitions. The level of spending on technology and new product investment will increase further in 2011. In the short term, this may reduce operating* margins as most of the investment is being made in subscription-based electronic information services which have a long lead time to build and sell.

Within A&N Media, national advertising revenue at Associated in the first eight weeks of the new year was up 9% on last year, continuing the recovery we have seen since January. It is still very difficult to predict future revenue trends, but the strength of our key brands, fast growing digital businesses and focused cost control, leave Associated well placed to capitalise on any further recovery in the economy. We are, however, facing upward pressure on newsprint prices. We expect to see continuing strong growth in Mail Online readership.

Northcliffe is facing another tough year. Advertising revenue in the first eight weeks was down 6% on last year, continuing to track the year-on-year trend experienced in 2009/10 (like-for-like decline of 7%). The outlook for the first quarter is not expected to improve on this trend. As with Associated, Northcliffe will be affected by higher newsprint prices. Although cost reduction initiatives will continue, Northcliffe also is focused on revenue opportunities as it builds on its digital strengths and sales capability.

For the Group as a whole, we will build on our achievements over the last two years by maintaining firm control of costs and seizing on the growth opportunities we see. Our focus will remain on cash generation and debt reduction, as we seek to recover our investment grade credit rating. At the same time, we will continue to drive organic growth through new product development, investments to increase market share and carefully selected acquisitions.

Although we remain wary of market conditions due to continuing economic uncertainty, the strength of our leaner more focused Group with its diversified international portfolio of market leading companies allows the Board to be cautiously optimistic of achieving another year of underlying growth.

Martin MorganChief Executive