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Business News

Daily Mail profits fall 15 per cent as papers come under pressure

DMGT has admitted the Leveson Inquiry will cost the group a considerable figure

The owner of the Daily Mail saw revenues at its newspapers tumble this year blaming consumer pressures, and admitting it faced "considerable" fees related to the ongoing hacking inquiry.

Daily Mail & General Trust yesterday reported pre-tax profits had fallen15 per cent to £125m in the 12 months to 2 October, compared with a year earlier. Revenues were down 4 per cent to £1bn.

Martin Morgan, the chief executive of DMGT, said: "Our UK consumer businesses have been impacted by the weak advertising environment, particularly in the third quarter, and higher newsprint costs, resulting in profits down 20 per cent for the year."

When quizzed on the size of the legal fees related to phone-hacking allegations against the Mail on Sunday, Mr Morgan said: "I don't have the figure, but no doubt it will be considerable, absolutely. It's going to be a year-long exercise, minimum." He added that Associated Newspapers had no evidence of phone hacking at their newspapers.

This came as its Associated Media arm, whose titles include the Daily Mail, Mail on Sunday and Metro, fell 15 per cent to £76m. This was brought on by a rise in newsprint costs, hitting the company to the tune of £18m.

Underlying advertising revenues were down 2 per cent on the previous year, as were the circulation revenues. This was due in part because of aggressive discounting on the Mail on Sunday trying to attract readers following the closure of the News of the World.

Operating profits at Northcliffe, which overseas the company's regional titles, plunged 37 per cent to £17m. The company cut 602 people, almost a fifth of the division, during the year, as part of a drive to slash £15m out of the ailing business.

Mail Online continued to grow throughout the year. Mr Morgan said: "It is now a global name in news and on course to become the world's biggest English language newspaper website."

The company expects to see "low single-digit revenue growth" and a boost from the London Olympics.

The business-to-business division, which includes risk management operation, and data and events, provided the growth at DMGT, with profits up more than a tenth.

Trading in the first quarter of the new financial year was described as "reasonable" although, as Panmure Gordon's analyst Alex DeGroote pointed out, "without too many hard numbers to back it up".

Mr Morgan said: "We remain cautious about the medium-term outlook, given continuing external uncertainties, particularly for UK advertising."

The net debt fell from £862m to £719m at the end of its financial year, which pleased the analysts. Mr Morgan said the company would continue to reduce its debts.