I like the fact that they already have the lightweight, seatback IFE option although I never really understood how you can watch that when someone reclines on a 6 to 8 hour flight?

• Surridge Dawson plc takes equity stake in Phantom Media

Phantom media has confirmed that on the 17th January 2006 it has completed it negotiations with Surridge Dawson plc and that a significant shareholding has been acquired by the FTSE listed company. It is understood that the original stakeholders still hold significant equity themselves and that Phantom will now embark on its own acquisition trail within the Ife industry and the media in general. Rick Stuart, M.D. at Phantom commented ``the IFE marketplace is about to enter an interesting period of inevitable consolidation, critical to its sustained future and the lines will be blurred between the traditional roles of content service provision and IFE hardware manufacturing - especially since the arrival of cost effective portable digital devices and indeed Phantom`s own Bluebox system``

Surridge Dawson Ltd.

International subsidiary

, Croydon , United Kingdom

()44 020 8774 3000, 44 020 8774 3010 fax, http://www.dawson.co.uk

Primary SIC: Books Periodicals & Newspapers, Primary NAICS: Book, Periodical and Newspaper Merchant Wholesalers

Description: Wholesale: Wholesale and retail trade in newspapers and periodicals, books and stationery

06 June 2006

Embargoed until 0700 Tuesday, 6 June 2006

Interim Results

For the 26 weeks ended 1st April 2006

Dawson Holdings PLC, the newspaper and magazine distribution, book supply,

logistics and marketing services group, today announces its interim results for

the 26 weeks ended 1st April 2006.

Financial Highlights:

* Results for the period are in line with expectations against a backdrop

of tough trading conditions

Statutory results*:

* Turnover** fell by 4.0% to £344.5m (2005: £358.8m)

* Pre tax profit** down 17.4% to £7.6m (2005: £9.2m)

* Earnings per share** of 8.5p (2005: 9.5p)

* Interim dividend maintained at 2.9p

Underlying performance***:

* Turnover** down 0.1% to £344.5m (2005: £344.9m)

* Pre tax profit** down 20% to £6.4m (2005: £8.0m)

* Earnings per share** of 6.6p (2005: 8.2p)

* Continued underlying cash generation; average net debt**** decreased by

12% to £13.8m (2005 FY : £15.6m)

* statutory results show 26 weeks to 1st April 2006 compared to 27 weeks to

2nd April 2005

** stated on a continuing operations basis

*** underlying performance adjusts the prior year to an equivalent 26 week

period and excludes a £1.2m exceptional gain on exchange of contract rights

made in the current period

**** calculated on all banking and leasing arrangements

Operational Highlights:

* Appointment of Peter Harris as Chief Executive in April 2006

* Dawson News successfully secured key contract renewals and won an

additional £25m of annualised sales in new territories;

* Dawson Media Direct performed ahead of expectations; continued

overseas expansion

* Dawson Books showed progress across both UK and overseas

markets

Commenting on outlook, Peter Harris, Chief Executive, said:

``The group has a solid base from which to deliver progress in future periods on

the back of its high level of contracted revenues. Trading since the period

end is in line with expectations and, as such, our outlook for the year remains

unchanged.

``Dawson News is at the forefront of its industry and is well positioned for

industry changes. We continue to evaluate opportunities for the geographical

expansion of Dawson News which would enhance shareholder value and are pleased

with the good progress being made in our growing Dawson Media Direct and Dawson

Books businesses.``

For further information, please contact: www.dawson.co.uk

Dawson Holdings PLC 020 8774 3000

Nigel Freer, Chairman

Peter Harris, Chief Executive

David Lowther, Group Finance Director

Smithfield 020 7360 4900

Katie Hunt / Reg Hoare

About Dawson

Dawson Holdings provides distribution and logistics services through four

divisions, as follows:

Dawson News, which accounts for c.85% of group turnover, is one of the three

leading UK newspaper and magazine wholesalers, with a 21% share of the news and

magazine market. Annually, it distributes over 1 billion individual newspaper

and magazine copies, with an annualised retail sales value of more than £850m,

to c. 15,000 UK news retailers.

Dawson Media Direct is a market leading provider of newspapers and magazines to

airlines and airline lounges globally with more than 100 million newspapers and

magazines loaded each year to over 160 airlines.

Dawson Books provides shelf-ready books and services across the globe to the

professional, academic, corporate and library markets. It is the leading

supplier to the UK professional, academic and corporate library market, a major

supplier to Scandinavia and has strong exports across Europe, the Middle East

and the Far East.

Dawson Marketing Services specialises in handling sales literature; point of

sale and direct mail, providing design, print, storage, fulfilment and

distribution as well as call handling and data capture services and has long

term customer relationships with a customer base primarily in the electronic

games, automotive, pharmaceutical and charity sectors.

Chairman`s Statement

Introduction

As I draw towards the end of my first year as Chairman, it is interesting to

reflect on the fundamental market changes affecting the group`s core News

business. During the period being reported, and as expected, the general

industry trading environment has been difficult resulting in flat sales for the

group. However, despite this we continue on plan to invest in growing the

business and have made good progress in improving efficiencies and enhancing

customer services. I am very pleased to report that we have successfully secured

the renewal of key contracts and taken a significant strategic step with the

winning of major new contracts in additional areas.

We continue to be pleased with the contribution and performance of our Books and

Media Direct businesses.

Financial highlights

Results for the period are in line with expectations. Turnover fell 4.0% to

£344.5m (2005: £358.8m), pre tax profit was down 17.4% to £7.6m (2005: £9.2m)

and earnings per share decreased by 10% to 8.5p (2005: 9.5p). It should however

be noted that the comparative financial period was 27 weeks, one week longer

than the current period. Adjusting the results to a like for like basis, and

excluding an exceptional gain made in the period, the comparisons show: turnover

down by 0.1% to £344.5m (2005: £344.9m) and pre tax profit down 20.0% to £6.4m

(2005: £8.0m).

Dividend

The Board has declared a maintained interim dividend of 2.9 pence per share.

This will be paid on 14th July to shareholders registered on 16th June. We

continue to view the dividend as an important element of total shareholder

return and are proud of Dawson`s long term track record in respect of increasing

or maintaining dividends year on year.

Board

We have recently announced some important changes to the Board. David Blundell

retired in April and our thanks go to him for his eight years of fine

stewardship. We continue to benefit from him remaining as a consultant to the

Board.

We also extended a warm welcome to Peter Harris who took over as Chief Executive

on 10th April. We are fortunate to benefit from his successful track record,

logistics expertise and experience of managing B2B relationships with both small

and large enterprises in diverse industries.

Our grateful thanks also go to Malcolm Pearce, who retired as a non-executive

director on 31st March 2006, for his knowledgeable contribution over the past 6

years

Prospects & outlook

Group trading since the period end continues in line with our expectations.

Dawson News faces a changing and demanding market place, which represents both

challenges and opportunities. The Office of Fair Trading`s (``OFT``) recent draft

Opinion on newspaper and magazine distribution agreements forms part of the

potential for industry change. As such, we continue to strengthen our industry

positioning based on ever more cost effective and high quality service delivery

to publishers and all retailers alike. We, therefore, look forward to engaging

with the OFT, publishers and retailers to further develop the industry`s

effectiveness and remain confident that Dawson is very well positioned for these

changes.

The renewal of key contracts, for periods of three to five years, and the

significant gains in new territories offer stability and real growth

opportunities for the future.

Dawson Media Direct is successfully expanding overseas and has taken its first

steps in the Inflight Entertainment market.

Dawson Books will continue to build on its market leading customer services,

including further investment in ebooks, as it progressively increases its market

presence.

We are reviewing the options for Dawson Marketing Services.

Our experienced team, a well established business and a strong financial

position provide us with a solid base from which to develop the group and take

advantage of the opportunities represented by our markets.

Following the appointment of Peter Harris as our new Chief Executive, there will

be an updated statement on strategy at the time of the preliminary results later

this year.

Nigel Freer

Chairman

5th June 2006

Chief Executive`s Review of the Business

Introduction

Since my appointment in April, I have primarily been involved in immersing and

familiarising myself within the business. I have been highly impressed by the

quality of the operations and personnel inherited from my predecessor.

However, it is clear that we have a considerable challenge to manage a core

business that operates in a tough market which is under review by the regulator,

whilst at the same time seeking to grow the overall group. It is this challenge

to which I am primarily addressing myself in the coming months.

Dawson is an excellent business, with a solid financial position, and I am

confident that there is much to build on.

Interim results

The results cover the 26 weeks to 1st April 2006, whilst the previous financial

period covered 27 weeks. The extra week had a disproportionate impact on the

operating profits as that week had higher than average sales and no fixed costs.

In addition, it should be noted that some activities which were previously

managed within the Dawson Media Direct division have been run as a part of

Dawson News since May 2005.

Adjusting the comparatives for these two matters, the results for the continuing

businesses, before exceptional items, for the comparable periods were:

Unaudited 26 weeks to 26 weeks to

1st April 2nd April

2006 2005

£m £m

Revenue 344.5 344.9

Profit from operations

Dawson News 5.9 7.5

Dawson Books 1.1 1.2

Media Direct and Marketing Services 0.8 0.9

Unallocated central expenses (0.8) (0.8)

7.0 8.8

Income from associates 0.1 0.1

Net finance costs (0.7) (0.9)

Profit before exceptional items 6.4 8.0

All the results are presented on the basis of International Financial Reporting

Standards (``IFRS``). Full reconciliations of previously reported results under UK

GAAP are included in Appendices to the Interim Statements, whilst an indication

of the impact of IFRS on the current period is explained in the Financial

Review.

Exceptional profit - profit on transfer of contract rights

There was a non cash one-off exceptional gain of £1.2m recorded on the transfer

of the group`s interests in certain magazine distribution contracts as described

in Note 2 to the financial statements.

Dawson News

Sales revenues in the 26 weeks were 0.1% up on the comparable 26 weeks last

year. As the previous reporting period was 27 weeks the reported comparison is a

reduction in sales revenue of 3.4%. Inflationary pressure in a high fixed cost

business and margin reductions on some contract renewals, have had a marked

effect on profitability with reported profits of £5.9m down from the equivalent

£7.5m in the comparable 26 weeks.

Overall, newspaper revenue was 2.8% ahead of the comparable period last year,

representing a 0.7% decrease in newspaper volumes which was more than offset by

cover price increases. Sales of quality newspaper titles enjoyed the benefits of

re-sizing and heavy promotional activity, with the Guardian having moved to the

``Berliner`` format and a particularly successful re-launch of the Observer during

the period. Whilst the quality titles were more buoyant this was balanced by

more difficult trading in the middle and `red top` markets.

The periodical and magazine market has been more difficult with sales revenue

2.2% below the comparable 26 weeks last year. The trend for moving from monthly

to weekly titles has continued. Weekly titles were 3.1% ahead of the comparable

period supported by a number of launches (e.g. Love It! and Real People). In

contrast the monthly titles, which have proportionately higher cover prices,

fell sharply at 8.4% below the previous equivalent period. Within these broad

categories sales of partworks and collectables were 37% down bringing them back

to levels last experienced three years ago.

Cost control is a priority within this high volume, time sensitive business, but

inflationary pressures, such as wage costs and fuel price increases, inevitably

lead to increases. This results in profits falling when sale revenue is flat.

Investment has continued into driving efficiencies in the operations and

opportunities to increase activity through the network are continually

evaluated.

In particular during the period there were some important contract renewals and

area gains. Dawson News successfully renewed contracts with Frontline/Seymour,

for four years, and Express/Northern & Shell, for five years, across all

existing areas as well as winning their business in new territories, namely

Chester/North Wales, Preston and Canterbury areas. Subsequently, News

International awarded Dawson News a five year contract in Chester/North Wales.

This has brought an additional 3,000 new customers in these areas (bringing our

total to nearly 15,000). Start up costs mean that these areas will have a

negative contribution in the second half year but are expected to be earnings

enhancing in the financial year starting in October 2006.

Trading in the new areas started successfully after the period end, for

Frontline/Seymour on 10th April and Express/Northern & Shell on 1st May,

followed by News International on 8th May. This followed extensive planning,

great commitment from managers and staff, and investment in property and

equipment.

There remain a number of contracts still under discussion, although the majority

of publishers are now contracted for the next three to five years giving greater

stability and visibility for the business.

Achieving high levels of performance in respect of both industry and contractual

key performance indicators remains a priority for the division. Further customer

facing Information Technology developments around data provision, using our DNX

web based reporting system, and industry wide service level requirements have

been successfully implemented.

On 31st May 2006, the OFT announced its draft opinion for consultation

expressing concerns about newspaper and magazine distribution agreements and

setting out a framework for assessing whether individual agreements comply with

competition law. We see this opinion in the context of a changing and

increasingly demanding industry and believe that Dawson`s continual drive for

cost effective and high quality service delivery to publishers and all retailers

alike positions it well for any changes. We therefore look forward to working

closely with the OFT, publishers and retailers to further develop the industry`s

effectiveness.

Since the period end, the disappointing sales of magazines have continued as

expected though there should be a modest boost from product associated with the

football World Cup this summer. Our focus remains on driving cost efficiencies

whilst meeting customer service levels.

Dawson Books

Overall, Dawson Books as a division experienced growth of 5.9% in sales revenue.

Dawson Books continues to progress in the UK and overseas markets due in no

small measure to the high quality services provided under the Total Book

Management programme, which provides shelf ready books to customers.

Sales in the UK were 6.0% ahead of the comparable period in the prior year.

Dawson Books has made further gains in the University sector with the extension

of several contracts including reappointment to the London University Purchasing

Consortium. The increase in business from the Further Education field has also

kept pace with our expectations.

Total export sales are 6.4% ahead of the prior year, despite overseas markets

continuing to perform unevenly under competitive pressures and due to the

weakness of the US dollar. Encouraged by a strong sales and marketing effort,

our markets in the Far East, Middle East and Europe have returned to double

digit growth, whilst important contract renewals in Nordic countries have added

to this improving situation.

The overseas based operations in France, Spain and USA have also continued to

make gradual progress.

Dawson Books is continuing to break ground with its eBook service which has been

well received by customers throughout the world. Moreover, we continue to lead

from the front with new services such as Radio Frequency Identification Tags,

providing libraries with an ability to electronically track and trace their

books.

Dawson Books has been investing resources to meet the challenges of the rapidly

evolving digital market. As is always the case with new markets, start up costs

are usually incurred before the benefits of the investment come through. In the

first half, this investment was slightly more than the additional income

generated by the sales growth, but we anticipate this position will reverse over

the coming years.

Dawson Media Direct

Last year we reported that a major UK newspaper publisher had withdrawn from the

promotional placement activities and that this would affect turnover this year.

Good progress has been made sourcing replacement product and whilst this has not

compensated for the reduction in full, Dawson Media Direct is performing well

and is ahead of our expectations at the half year.

The division continues to focus on the provision of printed media product to

airlines as its core business. It has also acquired 50% of Phantom Media, an

airline Inflight Entertainment content provider, as a route to developing

complementary media solutions for airlines. Although at an early stage, the

co-ordination of printed and electronic proposals to airlines is a priority for

the division and we anticipate further developments in this area.

The geographical development of Dawson Media Direct`s traditional print media

business continues with encouraging early trading in our newly established

operations in France and Spain. Further European opportunities are currently

being reviewed together with development potential in the Middle East and Asia.

The successful relationships already established with US publishers have also

been used to form the basis of an expanding US operation in partnership with an

established airline service provider in the US. We anticipate continued

development as we grow our presence with domestic US airlines.

The world`s airlines continue to show confidence in Dawson Media Direct`s

service as demonstrated by Virgin Atlantic`s decision to renew its supply

agreement on a long term basis, and the signing of a contract for the worldwide

supply of printed media for international flights with American Airlines, the

world`s largest carrier.

Dawson Marketing Services

The initial part of the period was concentrated on the smooth closure of the

bulk travel brochure business. This was completed successfully, leaving a small

but profitable business providing point of sale fulfilment services primarily in

the electronic games, automotive, pharmaceutical and charity sectors.

We are currently reviewing the strategic options for this business.

Summary

We have a solid business with a high proportion of contracted revenue. Dawson

News is at the forefront of its industry, due to the investment in service and

efficiency improvements we have implemented, and we continue to evaluate

opportunities for geographical expansion which would enhance shareholder value.

In addition, continued good progress in our Media Direct and Books businesses

positions them well to take advantage of their growth opportunities.

Peter Harris

Chief Executive

5th June 2006

Financial Review

International Financial Reporting Standards

As noted earlier, full reconciliations of the 2005 comparative financial

information from UK GAAP to IFRS are included in Appendices to the Interim

Statements.

An indication of the impact of adopting IFRS on the current interim period is

summarised below. The two most significant adjustments relate to recognising the

group`s obligations in respect of defined benefit pension commitments and also

in respect of a put option granted to the minority shareholders of Solent SD

Limited.

Retirement benefit obligation

The net retirement benefit (pension) obligation recognised in the balance sheet

at 1st April 2006 under IFRS is £8.5m. This represents the present value of the

defined benefit obligation as reduced by the fair value of scheme assets.

The consolidated income statement for the 26 weeks ended 1st April 2006 now

includes the interest cost on the scheme liabilities (£1.4m charge) as well as

the expected return on scheme assets (£1.2m credit). Conversely, the income

statement no longer includes any part of the cost of funding the pre-existing

obligation. Additional pension contributions made during the period amounted to

£0.6m.

Post tax, the effect of these adjustments has been to increase reported profit

for the current half-year by £0.3m.

Solent put option

The group has a financial liability in respect of a put option granted to the

minority shareholders of Solent SD Limited over their unquoted shares in this

subsidiary undertaking. The minimum liability increases annually in accordance

with the General Index of Retail Prices. At 1st April 2006, this stood at £5.2m.

Had IFRS 3, Business Combinations, been applied to the original acquisition of

Solent SD Limited in 1995, the assumption of the initial liability

(approximately £4.0m) would have been deemed part of the acquisition cost and

thereby increased the goodwill balance. As it is considered impractical to

retrospectively apply IFRS 3 from 1995, particularly in terms of time and

expense, the group has taken advantage of the transitional provisions available

on adoption of IFRSs and retained goodwill at its UK GAAP carrying value.

Application of these transitional rules thus results in a cumulative charge

against shareholders` funds of £5.2m upon recognition of the financial liability

within net assets as at 1st April 2006.

The annual increase is progressively charged to the income statement as a

finance cost. For the 26 weeks ended 1st April 2006 the increase amounted to

just under £0.1m.

Other items

Goodwill amortisation of £0.5m that would have been charged under UK GAAP is not

charged under IFRS.

Overall, the profit for the current period under UK GAAP would have been £4.9m,

in comparison to the reported profit under IFRS of £5.6m.

Financing

Net debt relating to banks and leasing arrangements, (excluding the financial

liability in respect of Solent SD Limited), totalled:

At At At

2nd April 1st April 1st October

2006 2005 2005

£m £m £m

Net debt 20.6 24.6 20.5

Seasonal factors have traditionally led to higher net debt at the half year end

than at the year end. The average net debt in the period under the above

facilities was £13.8m compared to £14.3m in the comparable period and £15.6m for

the previous year as a whole.

Taxation

26 weeks to 53 weeks to

1st April 1st October

2006 2005

£m £m

Profit before tax from continued operations 7.6 17.4

Less: capital gains (1.2) (0.4)

Profit before tax excluding capital gains 6.4 17.0

Tax on profit on ordinary activities 2.1 4.9

Effective rate of tax 33% 29%

There will be no net tax on the exceptional item as the capital gain can be

offset against capital losses brought forward.

The effective rate of tax in 2005 was unusually low because of credits in

respect of prior years` tax charges.

David Lowther

Group Finance Director

5th June 2006

Consolidated Income Statement

For the 26 weeks ended 1st April 2006

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

(Appendix 2) (Appendix 4)

£m £m £m

Continuing operations

Revenue Note 1 344.5 358.8 700.4

Net operating costs (337.5) (348.8) (682.0)

-------------------------------------

Profit from operations Note 1 7.0 10.0 18.4

Profit on exchange of contract

rights Note 2 1.2 - -

Profit on disposal of investment

property Note 2 - - 0.4

Income from associates Note 1 0.1 0.1 0.2

Investment income 1.3 1.0 2.2

Finance costs (2.0) (1.9) (3.8)

-------------------------------------

Profit before tax 7.6 9.2 17.4

Tax (2.1) (2.9) (4.9)

-------------------------------------

Profit for the period from

continuing operations 5.5 6.3 12.5

Discontinued operations

Profit/(loss) for the period

from discontinued operations Note 3 0.1 (0.3) (2.0)

-------------------------------------

Profit for the period 5.6 6.0 10.5

-------------------------------------

Attributable to:

Equity holders of the Company 5.5 5.8 10.1

Minority interest 0.1 0.2 0.4

-------------------------------------

5.6 6.0 10.5

-------------------------------------

Earnings per share

Continuing operations

Basic earnings per share Note 4 8.5p 9.5p 17.4p

-------------------------------------

Diluted earnings per share Note 4 8.4p 9.4p 17.2p

-------------------------------------

Continuing and discontinued

operations

Basic earnings per share Note 4 8.7p 9.0p 16.1p

-------------------------------------

Diluted earnings per share Note 4 8.6p 8.9p 15.9p

-------------------------------------

Consolidated Statement of Recognised Income and Expense

For the 26 weeks ended 1st April 2006

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Exchange differences on

translation of foreign

operations 0.1 - -

Actuarial gains/(losses) on

defined benefit pension schemes 3.4 (2.7) (4.6)

Tax on items taken directly to

equity (1.0) 0.8 1.4

UK deferred tax attributable to

pension scheme liabilities (0.2) (0.2) (0.4)

UK current tax attributable to

additional pension scheme

contributions 0.2 0.2 0.4

-------------------------------------

Net income/(expense) recognised

directly in equity 2.5 (1.9) (3.2)

Profit for the period 5.6 6.0 10.5

-------------------------------------

Total recognised income and

expense for the period 8.1 4.1 7.3

-------------------------------------

Attributable to:

Equity holders of the Company 8.0 3.9 6.9

Minority interest 0.1 0.2 0.4

-------------------------------------

8.1 4.1 7.3

-------------------------------------

Consolidated Balance Sheet

As at 1st April 2006

Unaudited Unaudited Audited

1st April 2nd April 1st October

2006 2005 2005

(Appendix 3) (Appendix 5)

£m £m £m

Assets

Non-current assets

Goodwill and intangible assets 15.8 15.6 15.7

Property, plant and equipment 17.5 18.8 18.4

Investment property - 1.3 -

Investments in associates Note 5 2.9 0.9 1.0

Other investments 1.0 0.5 1.0

Trade and other receivables 0.2 0.2 0.2

Deferred tax asset 2.3 2.9 3.3

-------------------------------------

39.7 40.2 39.6

-------------------------------------

Current assets

Inventories 2.2 1.8 1.7

Trade and other receivables 38.6 36.9 35.0

Cash and cash equivalents Note 7 3.8 4.5 7.8

-------------------------------------

44.6 43.2 44.5

-------------------------------------

Total assets 84.3 83.4 84.1

-------------------------------------

Liabilities

Current liabilities

Trade and other payables (51.8) (50.4) (49.3)

Current tax liabilities (4.1) (3.8) (2.9)

Financial liabilities Note 7 (17.4) (21.8) (21.2)

Short-term provisions (1.3) (0.6) (1.8)

-------------------------------------

(74.6) (76.6) (75.2)

-------------------------------------

Non-current liabilities

Financial liabilities Note 7 (12.2) (12.4) (12.3)

Retirement benefit obligation Note 8 (8.5) (11.2) (12.3)

Long-term provisions (0.9) (1.5) (1.3)

-------------------------------------

(21.6) (25.1) (25.9)

-------------------------------------

Total liabilities (96.2) (101.7) (101.1)

-------------------------------------

Net liabilities (11.9) (18.3) (17.0)

-------------------------------------

Equity

Attributable to equity holders

of the Company Share capital Note 10 0.6 0.6 0.6

Share premium account Note 10 6.0 5.8 6.0

Reserve for treasury shares Note 10 (0.3) (0.2) (0.3)

Translation reserve Note 10 0.1 - -

Retained loss Note 10 (18.3) (24.5) (23.3)

-------------------------------------

(11.9) (18.3) (17.0)

Minority equity interests Note 10 - - -

-------------------------------------

Net shareholders` deficit (11.9) (18.3) (17.0)

-------------------------------------

Consolidated Cash Flow Statement

For the 26 weeks ended 1st April 2006

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Net cash from operating

activities Note 6 3.0 (9.9) (1.8)

-------------------------------------

Investing activities

Interest received 0.1 - 0.1

Dividends received from

associates 0.1 0.1 0.2

Sale of property, plant and

equipment 0.1 0.1 0.2

Sale of investment property Note 2 1.7 - -

Purchase of property, plant and

equipment (1.1) (1.0) (2.6)

Expenditure on intangible assets (0.2) (0.2) (0.3)

Acquisition of unincorporated

business - (1.7) (1.7)

Purchase of interest in associate (0.4) - -

Purchase of trade investment - - (0.5)

Loans to associates

(advanced)/repaid (0.3) 0.1 0.1

-------------------------------------

- (2.6) (4.5)

-------------------------------------

Financing activities

Dividends paid (2.9) (2.8) (4.7)

Repayment of bank and other loans - (5.3) (5.4)

Repayment of finance lease

obligations (0.2) (0.2) (0.6)

Purchase of treasury shares - - (0.3)

Sale of treasury shares - - 0.1

Issue of ordinary share capital - - 0.2

Payments made to minority

shareholders (0.2) (0.2) (0.4)

-------------------------------------

(3.3) (8.5) (11.1)

-------------------------------------

Decrease in cash and cash

equivalents Note 7 (0.3) (21.0) (17.4)

Net (overdrafts)/cash and cash

equivalents at beginning of

period (7.9) 9.5 9.5

Effect of foreign exchange rate

changes - - -

-------------------------------------

Net overdrafts at end of period (8.2) (11.5) (7.9)

-------------------------------------

Analysis of net (overdrafts)/cash and

cash equivalents

Cash and cash equivalents 3.8 4.5 7.8

Overdrafts (12.0) (16.0) (15.7)

-------------------------------------

(8.2) (11.5) (7.9)

-------------------------------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

1. Business segments

For management purposes, the group is currently organised into four operating

divisions - Dawson News, Dawson Books, Dawson Media Direct and Dawson Marketing

Services. These divisions are the basis on which the group reports its primary

segment information.

Dawson News provides wholesale and specialist news distribution services.

Dawson Books provides shelf-ready books, and a variety of added value services,

to professional, academic, corporate and public library markets throughout the

world. Dawson Media Direct (DMD) provides inflight management services,

including specialist distribution to the airline industry, as well as niche

delivery and subscription management.

Dawson Marketing Services (DMS) currently provides marketing support and

logistics services through an effective integration of stock management, web

reporting and distribution arrangements. It was also previously involved with

travel brochure distribution. This latter activity was discontinued with effect

from October 2005.

Segment information about these businesses is presented below.

Summary of continuing activities

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Revenue

Dawson News 307.2 318.1 623.3

Dawson Books 25.2 23.8 48.2

Dawson Media Direct and

Dawson Marketing Services 12.1 16.9 28.9

-------------------------------------

344.5 358.8 700.4

-------------------------------------

Profit from operations

Dawson News 5.9 8.5 15.7

Dawson Books 1.1 1.2 2.4

Dawson Media Direct and

Dawson Marketing Services 0.8 1.1 2.2

Unallocated corporate

expenses (0.8) (0.8) (1.9)

-------------------------------------

7.0 10.0 18.4

-------------------------------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

1. Business segments (continued)

Total activities for the 26 weeks ended 1st April 2006

+---------------------------+

| | Exclude Total

|Dawson Dawson DMD and |discontinued continuing

| News Books DMS | operations operations

| £m £m £m | £m £m

| |

Revenue | |

External sales | 307.2 25.2 12.1 | - 344.5

Inter-segment sales | - - - | - -

|---------------------------|-------------------------

| 307.2 25.2 12.1 | - 344.5

|---------------------------|

| |

Segment result | 5.9 1.1 1.0 | (0.2) 7.8

|---------------------------|-------------------------

|---------------------------|-------------

Unallocated corporate | |

expenses | | (0.8)

| | -----------

Profit from operations | | 7.0

| |

Profit on exchange of | |

contract rights | 1.2 | 1.2

Share of result of associates| 0.1 - | 0.1

|--------- ---------|-------------------------

+---------------------------+

Net finance costs (0.7)

----------

Profit before tax 7.6

----------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

1. Business segments (continued)

Total activities for the 27 weeks ended 2nd April 2005

+--------------------------+

| | Exclude Total

|Dawson Dawson DMD and | discontinued Other continuing

| News Books DMS | operations eliminations operations

| £m £m £m | £m £m £m

| |

Revenue | |

External sales| 318.1 23.8 21.0 | (4.1) - 358.8

Inter-segment | |

sales | 0.5 - - | - (0.5) -

|--------------------------|-----------------------------------------

| 318.6 23.8 21.0 | (4.1) (0.5) 358.8

|--------------------------|-----------------------------------------

| |

Segment result| 8.5 1.2 0.6 | 0.5 - 10.8

|--------------------------|-----------------------------------------

| |

Unallocated | |

corporate | |

expenses | | (0.8)

|--------------------------|--------------------------------

Profit from | |

operations | | 10.0

| |

Share of | |

result of | |

associates | 0.1 | 0.1

|-------- |

+--------------------------+

Net finance

costs (0.9)

----------

Profit before

tax 9.2

----------

Total activities for the 53 weeks ended 1st October 2005

+-------------------------- +

| | Exclude Total

|Dawson Dawson DMD and |discontinued Other continuing

| News Books DMS | operations eliminations operations

| £m £m £m | £m £m £m

| |

Revenue | |

External sales| 623.3 48.2 36.1 | (7.2) - 700.4

Inter-segment | |

sales | 1.0 - - | - (1.0) -

|---------------------------|-----------------------------------------

| 624.3 48.2 36.1 | (7.2) (1.0) 700.4

|---------------------------|-----------------------------------------

| |

Segment result| 15.7 2.4 1.0 | 1.2 - 20.3

|---------------------------|-----------------------------

| |

Unallocated | |

corporate | |

expenses | | (1.9)

| | ------------

Profit from | |

operations | | 18.4

| |

Closure | (1.7)| 1.7 -

costs | |

Profit on | |

disposal of | |

property | | 0.4

| |

Share of | |

result of | |

associates | 0.2 | 0.2

|-------- |

+---------------------------+

Net finance

costs (1.6)

------------

Profit before

tax 17.4

------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

2. Exceptional items

Exceptional items are those items that the group considers to be one-off and/or

material in nature that should be brought to the reader`s attention.

Profit on

exchange of Disposal of Net impact of

contract Closure investment exceptional

rights costs property items

2006 2005 2005 2005

£m £m £m £m

Profit on exchange of

contract rights 1.2 - - -

Direct costs of closure - (1.0) - (1.0)

Provision for future

property costs - (0.6) - (0.6)

Losses on disposal of

fixed assets - (0.1) - (0.1)

Profit on disposal of

investments - - 0.4 0.4

--------------------------------------------------

1.2 (1.7) 0.4 (1.3)

Taxation effect of

exceptional items - 0.5 0.2 0.7

--------------------------------------------------

Net effect on profit after

tax 1.2 (1.2) 0.6 (0.6)

--------------------------------------------------

During the 26 weeks ended 1st April 2006 the group transferred its interest in

certain magazine distribution contracts in the southwest London area to another

wholesaler. In return, the group received a further 20% shareholding in T Cox &

Son (Tonbridge) Limited, an existing associate (taking the group`s total holding

to 40%). The fair value of the contractual rights and privileges transferred and

the shares received are considered to be equivalent, and both are estimated at

£1.2m. However, as the contracts had no carrying value in the group`s balance

sheet there is effectively no cost of disposal to offset against the proceeds

received. As a result, a non-cash profit of £1.2m is created

A capital tax charge of £0.4m arises on the exceptional income, although this is

offset by the availability of capital losses to leave a net taxation provision

of £nil. At 1st October 2005, the group had approximately £11m of capital losses

available for offset against current and future capital gains.

There were no exceptional items during the 27 weeks ended 2nd April 2005.

In the latter half of the 53 weeks ended 1st October 2005 the group undertook

closure of the Abingdon operations of Dawson Marketing Services, comprising the

storage and distribution of bulk travel brochures plus ancillary activities. The

direct costs of closure amount to £1.0m, of which £0.4m was spent prior to 1st

October 2005. In addition, full provision was made for future property costs in

relation to the now vacant premises at Abingdon.

Also in the latter half of the 53 weeks ended 1st October 2005, the group

disposed of the last of its investment properties for net consideration of

£1.7m. This represented a profit of £0.4m against the carrying value (£1.3m).

The proceeds were received in full on 3rd October 2005 and were represented by a

debtor of £1.7m in the balance sheet as at 1st October 2005.

As the group had sufficient capital losses available to offset the chargeable

gain, no tax charge arose on the disposal. Furthermore, as no timing differences

remained in respect to investment properties, deferred tax of £0.2m was credited

back to the consolidated income statement.

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

3. Discontinued activities

The travel brochure distribution activities of Dawson Marketing Services were

discontinued with effect from October 2005. The results of these discontinued

activities were as follows:

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Revenue - 4.1 7.2

Net operating income/(costs) 0.2 (4.6) (8.4)

--------------------------------------------------

Profit/(loss) from operations 0.2 (0.5) (1.2)

Loss arising from closure - - (1.7)

--------------------------------------------------

Profit/(loss) before tax 0.2 (0.5) (2.9)

Taxation (charge)/credit (0.1) 0.2 0.9

--------------------------------------------------

Profit/(loss) after tax 0.1 (0.3) (2.0)

--------------------------------------------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

4. Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to

ordinary shareholders by the weighted average number of ordinary shares in issue

during the period. Diluted earnings per share is calculated by adjusting the

weighted average number of ordinary shares in issue on the assumption of

conversion of all potential dilutive ordinary shares.

Unaudited

Unaudited 27 weeks to Audited

26 weeks to 2nd April 53 weeks to

1st April 2006 2005 1st October 2005

-------------------------------------------------------------

Before Before Total

exceptional exceptional

items Total items

£m £m £m £m £m

Net profit/(loss)

attributable

to equity holders of

the

parent company:

Continuing operations 4.2 5.4 6.1 11.5 10.9

Discontinued operations 0.1 0.1 (0.3) (0.8) (0.8)

-------------------------------------------------------------

4.3 5.5 5.8 10.7 10.1

-------------------------------------------------------------

Million Million Million Million Million

Weighted average number

of ordinary shares 63.2 63.2 63.1 63.1 63.1

Dilution effect of share

options 1.3 1.3 0.8 0.7 0.7

-------------------------------------------------------------

Diluted weighted

average

number of ordinary

shares 64.5 64.5 63.9 63.8 63.8

-------------------------------------------------------------

Pence Pence Pence Pence Pence

Basic earnings per

share

Continuing operations 6.6 8.5 9.5 18.4 17.4

Discontinued operations 0.2 0.2 (0.5) (1.3) (1.3)

-------------------------------------------------------------

Total operations 6.8 8.7 9.0 17.1 16.1

-------------------------------------------------------------

Diluted earnings per

share

Continuing operations 6.5 8.4 9.4 18.2 17.2

Discontinued operations 0.2 0.2 (0.5) (1.3) (1.3)

-------------------------------------------------------------

Total operations 6.7 8.6 8.9 16.9 15.9

--------------------------------------------------------------

Earnings per share before exceptional items has been provided to give a better

indication of the group`s underlying trading. Continuing operations for the 26

weeks ended 1st April 2006 exclude £1.2m profit on exchange of contract rights

(Note 2). Continuing operations for the 53 weeks ended 1st October 2005 exclude

£0.6m post-tax profit on disposal of an investment property (Note 2)

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

5. Investment in associates

During the 26 weeks ended 1st April 2006, the group acquired a 50% interest in

Phantom Media Limited, a small business whose main activity is the sourcing and

provision of inflight entertainment content, for consideration of £0.4m.

Also during the 26 weeks ended 1st April 2006, the group acquired additional

shares in T Cox & Son (Tonbridge) Limited valued at £1.2m (see Note 2).

6. Net cash from operating activities

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Profit from continuing operations 7.0 10.0 18.4

Profit/(loss) from discontinued

operations 0.2 (0.5) (2.9)

---------------------------------------

Profit from total operations 7.2 9.5 15.5

Adjustments for:

Depreciation of property, plant and

equipment 1.8 1.8 3.6

Amortisation of intangible assets 0.1 - 0.1

Profit on disposal of property,

plant and equipment - - (0.1)

Funding of retirement benefit

obligations (0.6) (0.4) (1.2)

Share based payment expense - - 0.1

(Decrease)/increase in provisions (0.9) (0.1) 0.9

---------------------------------------

7.6 10.8 18.9

Movements in working capital:

Increase in inventories (0.5) (0.2) (0.1)

Increase in receivables (5.1) (7.1) (3.5)

Increase/(decrease) in payables 2.4 (10.6) (11.6)

---------------------------------------

Cash generated/(absorbed) by

operations 4.4 (7.1) 3.7

Tax paid (0.9) (2.1) (4.2)

Interest paid (0.5) (0.7) (1.3)

---------------------------------------

Net cash from operating activities 3.0 (9.9) (1.8)

---------------------------------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

7. Reconciliation of movement in net debt

At At

1st 1st

October Cash April

2005 flow 2006

£m £m £m

Cash and cash equivalents 7.8 (4.0) 3.8

Overdrafts (15.7) 3.7 (12.0)

--------

(0.3)

Loans due after 1 year (12.1) - (12.1)

Loans due within 1 year - - -

Finance leases (0.5) 0.2 (0.3)

----------------------------

(20.5) (0.1) (20.6)

Solent put option (5.2) - (5.2)

----------------------------

Net debt (25.7) (0.1) (25.8)

----------------------------

Net debt is presented in the balance sheet as

follows:

Cash and cash equivalents 7.8 3.8

Financial liabilities - current (21.2) (17.4)

Financial liabilities - non current (12.3) (12.2)

------------ -----------

(25.7) (25.8)

------------ -----------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

8. Retirement benefit obligation

In the UK, the Dawson Holdings PLC Group Pension Fund has both a defined

contribution section and a defined benefit section. The defined benefit section

was closed to new entrants with effect from 1st July 2000. The assets of this

fund are held in Trust, separately from the assets of the group. In addition,

the group has an unfunded obligation to pay ex-gratia pensions on a defined

benefit basis to certain former employees and their spouses.

The amount included in the balance sheet arising as a result of the group`s

commitments in respect of defined benefit obligations is as follows:

Unaudited Unaudited Audited

As at As at As at

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Dawson Holdings PLC Pension Fund:

Present value of defined benefit

obligations (56.4) (48.0) (54.4)

Fair value of scheme assets 48.3 37.2 42.5

-------------------------------------

Deficit in fund (8.1) (10.8) (11.9)

Add: ex-gratia (unfunded) defined

benefit obligation (0.4) (0.4) (0.4)

-------------------------------------

Total liability recorded in the balance

sheet (8.5) (11.2) (12.3)

-------------------------------------

Movement in the defined benefit obligation during the period

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Benefit obligation at

the beginning of the

period (12.3) (8.7) (8.7)

Current service cost (0.8) (0.6) (1.2)

Amortisation of past

service cost - - (0.1)

Employer contribution 1.4 1.0 2.5

Interest cost (1.4) (1.2) (2.3)

Expected return on

scheme assets 1.2 1.0 2.1

Actuarial gain on scheme

assets 3.4 1.2 4.3

Actuarial loss on

retirement benefit

obligation - (3.9) (8.9)

---------------------------------------

Benefit obligation at

the end of the period (8.5) (11.2) (12.3)

---------------------------------------

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

9. Dividends

Unaudited Unaudited Audited

26 weeks to 27 weeks to 53 weeks to

1st April 2nd April 1st October

2006 2005 2005

£m £m £m

Amounts recognised as distributions to

equity holders in

the period:

Final dividend for the year ended 25th

September 2004 of 4.5p per share - 2.9 2.9

Interim dividend for the year ended 1st

October 2005 of 2.9p per share - - 1.8

Final dividend for the year ended 1st

October 2005 of 4.6p per share 2.9 - -

---------------------------------------

2.9 2.9 4.7

---------------------------------------

Proposed interim dividend for the year

ended 30th

September 2006 of 2.9p

per share 1.8

----------

The proposed interim dividend was recommended by the Board on 5th June 2006 and

has not been included as a liability in the balance sheet as at 1st April 2006.

It is to be paid on 14th July 2006 to shareholders on the register on 16th June

2006.

Notes to the Interim Statement

For the 26 weeks ended 1st April 2006

10. Consolidated statement of changes in shareholders` equity

Reserve

Share for Minority

Share premium treasury Translation Retained equity Total

capital account shares reserve loss interest equity

£m £m £m £m £m £m £m

At 25th

September 2004 0.6 5.8 (0.2) - (25.5) - (19.3)

Retained profit for

the period 5.8 0.2 6.0

Actuarial losses (2.7) (2.7)

Tax on actuarial

losses 0.8 0.8

Final dividend

for 2003/04 (2.9) (2.9)

Disbursements

to minorities (0.2) (0.2)

------------------------------------------------------------------------

At 2nd April

2005 0.6 5.8 (0.2) - (24.5) - (18.3)

Arising on

issue of

shares 0.2 0.2

Purchase of

shares by ESOP (0.3) (0.3)

Sale of shares

by ESOP 0.1 0.1

Share-based

payment

expense 0.1 0.1

Retained

profit for

the period 4.3 0.2 4.5

Actuarial

losses (1.9) (1.9)

Tax on

actuarial

losses 0.6 0.6

Interim

dividend for

2004/05 (1.8) (1.8)

Disbursements

to minorities (0.2) (0.2)

------------------------------------------------------------------------

At 1st October 0.6 6.0 (0.3) - (23.3) - (17.0)

------------------------------------------------------------------------

At 1st October

2005 0.6 6.0 (0.3) - (23.3) - (17.0)

Exchange

differences 0.1 0.1

Retained

profit for

the period 5.5 0.1 5.6

Actuarial

gains 3.4 3.4

Tax on

actuarial

gains (1.0) (1.0)

Final dividend

for 2004/05 (2.9) (2.9)

Disbursements

to minorities (0.1) (0.1)

------------------------------------------------------------------------

At 1st April

2006 0.6 6.0 (0.3) 0.1 (18.3) - (11.9)

------------------------------------------------------------------------

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR KELFBQQBEBBX