PRELIMINARY TRANSCRIPT Conference Call Transcript DMGT.L - Daily Mail And General Trust PLC Interim Management Statement Conference Call Event Date/Time: Jul 26, 2011 / 07:00AM GMT 1 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY TRANSCRIPT Jul 26, 2011 / 07:00AM GMT, DMGT.L - Daily Mail And General Trust PLC Interim Management Statement Conference Call CORPORATE PARTICIPANTS Martin Morgan Daily Mail and General Trust plc - Chief Executive Stephen Daintith Daily Mail and General Trust plc - Finance Director CONFERENCE CALL PARTICIPANTS Ian Whittaker Liberum Capital - Analyst Paul Gooden RBS - Analyst Mark Braley Deutsche Bank - Analyst Alex DeGroote Panmure - Analyst Rakesh Patel Goldman Sachs - Analyst Johnathan Barrett Singer Capital Markets - Analyst Tim Nollen Macquarie - Analyst Nick Dempsey Barclays Capital - Analyst Ruchi Malaiya Citi - Analyst PRESENTATION Operator Thank you for standing by and welcome to the DMGT analyst conference call. (Operator Instructions). I would now like to hand the conference over to your speaker today, Mr. Martin Morgan. Please go ahead, sir. Martin Morgan - Daily Mail and General Trust plc - Chief Executive Good morning, ladies and gentlemen, and welcome to DMGT's conference call for our third quarter interim management statement. I'm Martin Morgan, Chief Executive of DMGT. And I'm joined today by Stephen Daintith, our Finance Director. Today's conference call is a chance to highlight the key points from our third quarter trading. I will touch briefly on the overall aspects of Group trading before handing over to Stephen, who will provide some more detail on our divisional and financial performance. There will then, of course, be an opportunity at the end of our call for you to ask questions. Overall trading in the third quarter has been mixed. There was continued strength from our international B2B businesses, with all divisions performing in line with our expectations. In contrast, conditions within our consumer businesses have been tough, with advertising revenue for our national newspapers significantly weaker than expected over the quarter. However, both the Daily Mail and the Mail on Sunday continued to deliver circulation performance considerably ahead of the overall market, underlying the strength of the franchise and the loyalty of their readers. 2 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY TRANSCRIPT Jul 26, 2011 / 07:00AM GMT, DMGT.L - Daily Mail And General Trust PLC Interim Management Statement Conference Call Costs, as you would expect, given the difficult advertising conditions, are something we are very focused on and achieving increased efficiencies, particularly within A&N Media in the quarter, to offset lower revenues. Overall operating efficiency continues to be a core component of our strategy to drive long-term profitability across all our divisions. In terms of the outlook, we do expect to achieve modest growth in earnings per share for the full financial year. The resilience of our earnings will be driven by the continued growth of the B2B operations and despite the volatile and uncertain market conditions faced by the UK consumer businesses, where we have very limited visibility. Given the strong cash generation of our companies, debt has reduced over the third quarter. And that concludes my opening remarks. So let me hand over to Stephen who will provide you with some more details. Stephen? Stephen Daintith - Daily Mail and General Trust plc - Finance Director Thank you, Martin. Okay. Some key points for the period. For the Group, revenue for the three months was GBP495m, up 2% on an underlying basis on last year and down 2% on a reported basis. Overall the positive B2B trends experienced in the first half of solid subscription revenues and the performance of our major trade shows has continued into the third quarter, with all businesses performing in line with our expectations. And we're maintaining our guidance for outlook for the full year as reported in May for our B2B business. Total B2B revenues were GBP229m, 8% higher on an underlying basis and 2% lower on a reported basis, due mainly to the impact of the lower US dollar exchange rate. Within our individual businesses, RMS continues to perform well, as expected, with underlying revenues up 9% cumulatively over the nine- month period. This has been driven by continued growth in their core modeling business, as well as the benefits of some of the newer initiatives coming through. DMGI has been as expected, with underlying revenues up 1%. The good performance from the property companies, EDR and Landmark, as well as growth from Hobsons and Genscape, were principally offset by continued weakness at Sanborn. In the financial markets, where Trepp and Lewtan operate, new bookings continued to be offset by higher attrition rates as speculative players continue to exit the market, a trend that we highlighted earlier in the year as a sign of stabilization of the market over the longer term. Turning to DMG Events. Revenues were up 17% on an underlying basis to GBP26m. Reported revenues were 12% lower, as expected, due to the absence of the biennial Global Petroleum Show and the impact of exchange rates. This second half has seen relatively few big shows, with the largest, the New York International Gift Fair, taking place in August. Indications for this show are positive, with bookings nicely ahead of last year at this stage. As announced recently, we're considering offers for our US retail-focused events business, which includes the New York International Gift Fair, and will update you on progress when appropriate. Euromoney. As you'll have seen from Euromoney's IMS on July 15, they produced a good and strong performance of 10% underlying revenue growth, driven by another good performance from the Events businesses. Turning to Consumer Media, revenues from A&N Media in the quarter were GBP266m, 6% lower on an underlying basis. The tough consumer environment and particularly the impact on the UK high street and retail industry have significantly impacted advertising revenues. We were therefore focused on cost control with further headcount reduction over the quarter, mainly in Northcliffe Media. And total A&N Media headcount is now 8% lower than at the start of the financial year. On Associated, our circulation strategy continues to produce good results, with continued outperformance at both the daily and Sunday markets, as evidenced by the most recent ABC data for June. On 18 July this year the cover price of the Daily Mail was raised from 50p to 55p to mitigate some of the continuing high cost of newsprint as well as the recent decline in advertising revenues. In the third quarter, underlying advertising revenues from Associated's newspaper operations were 10% below last year, with print down 12% and digital up by a pleasing 51%. Retail, our largest category, bore the brunt of the nervous consumer and high street uncertainty, closely followed by the travel and financial categories. Mail Online continues to grow strongly, with revenues up 59% in the period, with around 70m unique visitors in June, showing 62% year-on-year growth. Revenues from Associated's digital-only businesses grew by 2%, reflecting good growth from the jobs and property sites, being partly offset by difficult conditions for our travel and motors portals. Although it's a short-term view, advertising trends in the first three weeks of July 3 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us © 2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY TRANSCRIPT Jul 26, 2011 / 07:00AM GMT, DMGT.L - Daily Mail And General Trust PLC Interim Management Statement Conference Call have shown some improvement as against softer comparatives for the quarter, with revenues down by just 3%. However, visibility remains extremely limited. September is a key month, particularly in terms of the back-to-school advertising spending from retailers. And, as such, it is difficult to assess how quarter four will turn out at this stage. Moving on to Northcliffe. UK advertising revenues were down 10% in the quarter, showing a small improvement on the 11% run rate experienced in the second quarter. Our largest category, retail, is experiencing some good momentum, moving into positive territory during the quarter, up just under 1%, after recording a 6% fall in quarter two. Other categories, however, remain weak, especially the recruitment sector. Again, a short-term view, but advertising revenues in the last four weeks at Northcliffe were down 8% on last year, a slight improvement on the Q3 run rate. I will now hand you over to Martin for some concluding comments. Martin Morgan - Daily Mail and General Trust plc - Chief Executive Yes. So overall a mixed quarter, with a continued strength from our B2B operations offsetting weakness in the consumer media businesses. As I said earlier on, we still expect to achieve some growth in earnings for the full year. On the longer-term perspective, our strategy of having significant exposure to markets outside the UK as well as high-growth B2B operations gives us a good degree of diversification and resilience, as well as good organic growth potential.