30th Nov 2005 07:00
Press Release 30th November, 2005Daily Mail and General Trust plc (`DMGT')Group audited preliminary results for the year ended 2nd October, 2005.Highlights Statutory results Adjusted results* 2005 2004 Change 2005 2004 Change Turnover ‚£2,138 m ‚£2,109 m +1% Operating profit ‚£207.2 m ‚£181.7 m +14% ‚£297.3 m ‚£283.6 m +5% Profit before ‚£162.9 m ‚£124.6 m +31% ‚£253.4 m ‚£234.1 m +8%tax Earnings per 24.9 p 15.5 p +61% 46.2 p 41.6 p +11%share Dividend per 12.0 p 11.0 p +9% share *(before amortisation and impairment of intangible assets and exceptionalitems; see Group Profit and Loss Account and reconciliation in Note 7).These results have been reported under applicable UK accounting standards.SummaryDMGT is pleased to report another record year with an adjusted profit beforetax of ‚£253 million, up 8% on the equivalent figure for last year. Thisimprovement was due mainly to strong growth from DMG Information and fromEuromoney Institutional Investor. Both newspaper divisions also performed well,increasing their operating profits* despite the reporting period including onefewer week's trading, compared with the prior year, and despite worseningtrading conditions.Statutory profit before tax for the year was ‚£163 million, up 31% on lastyear's figure.Continued growth by the Group's newer businesses means that 44%+ of this year'stotal operating profit* has been generated by its non-newspaper operations, upfrom 41% last year.Review of Northcliffe NewspapersThe Board has been conducting a strategic review of the Group's regionalnewspaper division, Northcliffe Newspapers. The Aim Higher initiative wasannounced to the market on 29th June, 2005 and aimed at improving operationalefficiency across the division. The Board has now identified the potential forfurther restructuring of the business. Given the strategic importance ofNorthcliffe within the regional newspaper industry, it has also decided toexplore whether greater shareholder value can be achieved through a sale of thebusiness. The Board has appointed Greenhill & Co. International LLP to assistin this process.In the event of a sale, the Board intends to return a substantial portion ofthe net proceeds to shareholders, after allowing for continuing our currentacquisition and investment programme and maintaining our current credit rating.The Group remains fully committed to the continued growth and development ofAssociated Newspapers. Its titles are at the heart of DMGT and will continue tobe so. There remains considerable potential to improve the performance ofNorthcliffe and any sale will only take place if substantially more value canbe achieved for shareholders. DMGT's business to business divisions,particularly DMGI and Euromoney, continue to grow strongly as the Groupcontinues its strategy of reducing its dependence on UK newspaper advertising.*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see note 3.+including the digital operations of the newspaper divisions.OutlookThe new financial year has started as the old one ended. We have referred aboveto the continued progress of our business to business divisions. Theadvertising markets experienced by the Group's UK newspaper businesses show nosign of recovery yet. Our national newspapers have continued to increase theirmarket shares, despite fierce competitive circulation activity within thenational market.The Group has implemented cost saving programmes in its newspaper divisions andat Teletext, giving significant protection to the profitability of thesebusinesses, despite falling revenues at present. They are all well placed totake full advantage of any recovery in consumer advertising markets, althoughthe trend in newsprint prices is a concern.Even in the absence of any recovery, the Group's long-standing strategy ofreducing its dependence on traditional UK advertising markets leads the Boardto look forward to another year of progress.National newspapersAssociated Newspapers achieved its highest ever profits increasing operatingprofit* by ‚£4.8 million or 5% to ‚£95.1 million on revenues down 1% to ‚£877million, despite one less week's trading than last year. This result wasparticularly commendable in a year which saw a significant slowdown in theadvertising market in the second half and increased newsprint prices.The Daily Mail and The Mail on Sunday again increased their share of adeclining market. The average circulation of the Evening Standard for the sixmonth ABC period to September was up 12%, including the Lite edition, launchedin December 2004. Metro continued to show strong growth in profit and return onsale. Ireland on Sunday's circulation fell 9% as we reined in promotionalexpenditure. Associated Newspapers' overall circulation revenues for the yearwere 3% below those of last year (1% on a fifty two week basis).After adjusting for the extra week last year, Associated's total advertisingrevenues increased marginally as a result of the difficult market conditions inthe second half of the year. Display was down 0.7%, Classified was down 6.2%,but Internet-related revenue was up 74% (including Find a property, which wasacquired at the start of the financial year). The Daily Mail was down 3.4%, TheMail on Sunday was down 2%, but Metro was up 13.8%. The Evening Standard wasdown 7.1% mainly due to the continued weakness of its recruitment advertising.Colour advertising was up 7.5%.On the production front, the project to facilitate colour on every page of itstitles is proceeding well and due for completion in the last quarter of 2007. Asite for the new plant in Didcot has been purchased, planning permissionobtained and presses ordered.Associated New Ventures (ANV) made good progress in the year, strengthening itsposition in jobs and expanding into property. Jobsite continued to show stronggrowth and traded ahead of expectations. During the year it launched three newniche sites for the pharmaceutical and secretarial markets and for jobs inScotland. ANV acquired Top Consultant and Office Recruit, underlining thisexpansion into niche online recruitment sectors. Find a property also showedstrong growth, trading ahead of expectations and extending its market positionin London and the South East.An exceptional operating charge of ‚£1.2 million resulted from further costreductions at the Evening Standard, the major benefits of which will flowthrough in the next financial year.*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see note 3.Regional newspapersNorthcliffe Newspapers achieved operating profits* of ‚£102 million in 2005, ‚£1million or 1.5% ahead of last year on revenues broadly unchanged at ‚£520million, despite one less week's trading and notwithstanding an increasinglychallenging advertising market.In aggregate, Northcliffe's advertising grew by 2%, declining in the secondhalf of the financial year after an encouraging start due to a slowing economyand a decline in public sector spending. Property had another strong yearrecording growth of 13%. Retail generated growth of 3%, whereas motors declinedby a similar amount. Recruitment was down 4% over the year, but down 16% in thelast quarter. Despite these figures, Northcliffe is outperforming its regionalnewspaper peers.The downturn in advertising affected most of Northcliffe's publishing centres,although Aberdeen saw its profits* rise by 18% on the back of a buoyant localeconomy and Bristol was up by 10% driven by cost savings.UK circulation revenues increased by 1.6%, excluding the impact of the extraweek last year. Northcliffe's titles continued to show gentle declines incirculations but, together with its wider portfolio of products and services,Northcliffe maintains the highest reach of any media in its core market places.Northcliffe's internet operation moved into profit for the year. Traffic to itssites is now running at 1.7 million unique users and revenues are growingstrongly.An exceptional operating charge of ‚£10 million has been taken as a result ofthe Aim Higher programme, launched in June, to reduce Northcliffe's cost base,and improve its operational efficiency. Significant progress has been madealready so that Northcliffe is now targeting an annual reduction in its costsof at least ‚£30 million by 2007, ‚£10 million more than envisaged at the outset.A further exceptional cost of ‚£10 million is expected in 2005/6, ‚£3 millionhigher than originally estimated.Information publishingDMG Information had an outstanding year with all companies making good progressand operating profit* growing by 41% or ‚£14.9 million to ‚£51.6 million onturnover up 15% to ‚£295 million.Its business to business companies were once again the main driver of growth,with underlying revenues (excluding the impact of acquisitions) increasing by11% and underlying operating profits* by 38%. Operating profit* margin improvedto 29%.Risk Management Solutions continued its strong growth trajectory. Theincreasing appetite of the insurance sector for more sophisticatedquantification of risk exposure, together with the trend for closer integrationof peril modelling into core underwriting processes, drove demand for RMSproducts and services.Environmental Data Resources enjoyed an excellent year in a buoyant U.S.commercial property market. In the U.K., Landmark grew revenues throughincreasing market penetration for environmental reports despite a depressedhome property market. Strong growth was achieved in the commercial propertymarket from sales of both mapping and environmental reports.Trepp continued its excellent growth trend in a buoyant commercialmortgage-backed securities market and Lewtan's performance exceededexpectations at the time of its acquisition a year ago.*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see note 3.Information publishing (continued)Within the careers division, the main driver of the growth at Hobsons was theU.S. business, whilst trading remained more difficult in the U.K. andcontinental Europe. Hobsons Australia had an outstanding year. Study Groupperformed satisfactorily: the UK had another solid year, the USA continued itsencouraging recovery trend, whilst student volumes softened into Australia andNew Zealand in line with the market there, a trend which was reversing by theyear end.Financial publishingEuromoney Institutional Investor increased its operating profit* by ‚£8.4million or 27% to ‚£39.0 million on turnover up 12% to ‚£196 million. Theseresults reflect the key elements of its strategy for growing profit before tax*towards a target of ‚£50 million by 2008: driving top line growth from both newand existing products; reducing the dependence on advertising by building morerobust subscription and repeat revenues; a focus on improving the operatingmargin; and acquisitions to strengthen the company's market position in keyareas.With the exception of Adhesion (which did not hold its biennial wine exhibitionin 2005), all of Euromoney's event businesses increased profits* through acombination of new products and a continued focus on building high margin,market leading events for their various sectors. Information Management Networkwas particularly successful in both growing its market-leading securitisationconferences as well as launching new events, and its performance sinceacquisition has significantly exceeded expectations. The events and trainingbusinesses now contribute more than 53% of operating profits* compared to 37%three years ago.ExhibitionsDMG World Media's operating profit* fell by ‚£1.2 million (7%) to ‚£24.6 millionon turnover up 5% to ‚£152 million. 2005 was a low year in its cycle of eventswith large non-annual events such as the Global Petroleum Show not taking placeand no Index Shows reporting. Underlying operating profit* (taking account ofthis cycle and the effect of foreign exchange) grew by 19% and revenue by 11%.DMG World Media saw strong performances from its Middle East business, its Surfsector, its Business Media International business and from Ad:tech, acquired inJanuary, which has already outperformed initial revenue projections. Lessstrong was the consumer home show division, with attendances down around theworld, although stand sales held up well.Much of the division's growth was underpinned by a number of strategicacquisitions and new launches. Once again, it recorded some of its largest everevents, including Big 5 in Dubai, Chemspec in Germany, Surf Expo in Orlando andthe Oil Sands Tradeshow held in Canada.*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see note 3.BroadcastingOperating profit* of DMG Broadcasting fell by ‚£17.6 million to ‚£1.8 million onturnover down 21% to ‚£97 million.Teletext's revenues fell by 14% as its traditional travel advertisers facederratic market activity and greater competition, particularly from onlineretailers, against a background of structural decline in analogue televisionviewing. As a consequence, adjusted operating profit* fell by ‚£13.4 million anda restructuring of the provision of these services was undertaken which gaverise to an exceptional operating charge of ‚£2.3 million.Teletext's new digital services more than doubled audience and revenue in theyear. The `Teletext on itv' service was launched in June on Satellite andFreeview. The audience has grown rapidly and the digital services now accountfor over 25% of Teletext's total television audience. Teletextholidays.co.ukhas enhanced its position as one of the most popular travel websites in the UKwith around 3 million monthly users. Its revenues grew by over 70% in the year.DMG Radio Australia outperformed the market once again, recording revenuegrowth from continuing operations of 39% and operating profit* growth(excluding new station costs) of over 95%. As expected, its operating profit*fell by ‚£4.2 million to a small loss, following the sale of its regionalstations in September 2004 and the launch of new stations during the currentyear.In April, the launch of Nova 106.9 in Brisbane completed the national Novanetwork and, in June, Nova became the Number One station in its targeted Under40 demographic in every metropolitan market. The second of DMG Radio'smetropolitan FM brands was born in August when Vega 95.3 Sydney and Vega 91.5Melbourne were launched. Vega complements Nova, targeting people aged 40-60 andairing a combination of talk and music from the past 40 years.Joint ventures and associatesThe Group's share of net adjusted operating profits* of its joint ventures andassociates fell by ‚£1.8 million. The fall was due solely to the change instatus of the Group's UK radio investment in May. Whereas DMGT had a 29.9%stake in GWR Group plc and treated it as an associate, the merger with CapitalRadio plc reduced the stake to 14.3%. Since then, DMGT has taken in dividendsreceived and not its share of GCap Media's profits. Nearly all of the Group'sother interests including GLM, the North American gift exhibition organiser inwhich the Group increased its stake from 25% to 40% in January, showed improvedresults.Other Profit and Loss ItemsIncome from fixed asset investments fell by ‚£0.8 million to ‚£2.6 million duemainly to a lower distribution from the Press Association, offset by a firstdividend from GCap Media.The fall in net interest payable of ‚£8.2 million was due mainly to swap premiaon overseas financing arrangements and to lower average net debt. Interestcover, calculated as the ratio of adjusted profits* before interest anddepreciation to net interest payable, rose above seven times and the ratio ofnet debt to these profits fell slightly to 2.0.The charge for amortisation of intangible assets fell by ‚£3.5 million to ‚£83.4million and an impairment charge of ‚£3.9 million was made.*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see note 3.Other Profit and Loss Items (continued)Profits on sale of fixed assets arose mainly from the sale of shares in ReutersGroup plc. Profits on disposal of businesses arose mainly from the sale of theGroup's stake in California Market Center, and of Hot 91, a radio stationoperating on the Sunshine Coast of Australia. These profits were offset bylosses on the sale of DMG Broadcasting's Performance channel, Euromoney'sBusiness Traveller and one of dmg world media's French antique shows.After allowing for the effect of exceptional and other items that are notexpected to recur, the underlying tax rate fell to 24.1% from 26.6% due to ahigher proportion of profits coming from the United States, where the Group hascarried forward losses.Net debtNet debt at the end of the financial year was ‚£766 million, a decrease of ‚£13million. The fall in debt was due to strong trading cash flows, offset by thenet cost of acquisitions of ‚£111 million and capital expenditure of ‚£73million. Gross capital expenditure amounted to ‚£95 million, lower than lastyear's level reflecting the completion of the 2001-4 press expansion programmein November 2004.International financial reporting standards ('IFRS')DMGT is reporting under UK accounting standards for the last time. From itsfinancial year to 1st October, 2006, the Group will be required to report inaccordance with International Financial Reporting Standards (IFRS).A project has been undertaken to restate DMGT's numbers for the year ended 2ndOctober, 2005 as comparative information for the IFRS-compliant 2006 Accounts.A reconciliation of the adjustments required to convert these 2005 figures fromUK accounting standards is set out in an appendix on page 14. Theseadjustments, which are still subject to audit, are mainly in respect ofemployment benefits (pensions), share-based payments, goodwill, dividends anddeferred tax. DMGT will be taking advantage of all of the transitionalarrangements available under IFRS 1, First-time adoption of IFRS, and, inparticular, will not be adopting IAS 39, Financial instruments: recognition andmeasurement, early; this will be applied from 3rd October, 2005. Overall weexpect the impact of IFRS will be to reduce our 2005 adjusted profit* beforetax by ‚£17.2 million (8%) to ‚£236.2 million.Net assets in DMGT's opening balance sheet at 4th October, 2004 are expected tobe reduced by ‚£223 million mainly due to the impact of IAS 19, EmployeeBenefits, principally pensions. There will be no impact on cash flows, althoughthe presentation of the Cash Flow Statement will change; nor should there beany impact on historic net debt.DividendThe Board is recommending payment on the issued Ordinary and 'A' OrdinaryNon-Voting shares of the Company of a final dividend of 8.25 pence per sharefor the year ended 2nd October, 2005 (2004 7.55 pence). This will make a totalfor the year of 12.0 pence (2004 11.0 pence per share). For transferees toreceive this dividend, which will be paid on 10th February 2006, transfers mustbe lodged with the Registrar by 9th December 2005.The Viscount RothermereChairman*References to operating profit in the narrative above are to adjustedoperating profit (before operating exceptional items and amortisation andimpairment of intangible assets); see notes 3 and 4.Daily Mail and General Trust plcGroup Profit and Loss Accountfor the year ended 2nd October, 2005 Notes 2005 2005 2005 2004 Before Amortisation, Total Total impairment Amortisation, and ‚£m ‚£m impairment exceptional items and exceptional ‚£m items ‚£m Turnover 2 2,138 - 2,138 2,109 Operating profit before 3 297.3 - 297.3 283.6 amortisation and impairment of intangible assets and exceptional 3 (13.9) (13.9) (17.8)items Operating exceptional items Amortisation and impairment of 3 (76.2) (76.2) (84.1)intangible assets Operating profit 3 297.3 (90.1) 207.2 181.7 Share of operating profits and 4 8.4 (11.1) (2.7) (8.8) losses of joint ventures and associates Total operating profit- Group and Share of joint ventures and 305.7 (101.2) 204.5 172.9 associates Profit on sale of fixed assets - 10.9 10.9 6.1 Profit on disposal of businesses - 2.3 2.3 5.3 Income from other fixed asset 2.6 - 2.6 3.4 investments Amounts written off investments - (2.5) (2.5) - Profit on ordinary activities 308.3 (90.5) 217.8 187.7 before interest and finance charges Net interest payable (51.6) - (51.6) (59.7) Other finance charges (3.3) - (3.3) (3.4) Net interest payable and similar (54.9) - (54.9) (63.1)charges Profit on ordinary activities 253.4 (90.5) 162.9 124.6 before taxation Taxation on profit on ordinary 5 (57.2) 4.2 (53.0) (57.2)activities Profit on ordinary activities 196.2 (86.3) 109.9 67.4 after taxation Equity interest of minority (13.3) 2.2 (11.1) (5.7) shareholders Profit for the financial year 182.9 (84.1) 98.8 61.7 Dividends (47.5) (43.7) Retained profit 51.3 18.0 Basic earnings per share 24.9p 15.5p Diluted earnings per share 24.9p 15.4p Adjusted earnings per share 6 46.2p 41.6p (before amortisation and impairment of intangible assets and exceptional items) Daily Mail and General Trust plcGroup Cash Flow Statementfor the year ended 2nd October, 2005 2005 2004 ‚£m ‚£m Net cash inflow from operating activities 357.1 382.4 (Note 8) Dividends received from joint ventures 6.8 8.8 and associates Returns on investments and servicing of (56.1) (58.1) finance Taxation paid (net) (35.6) (14.3) Capital expenditure and financial (72.7) (85.7) investment (net) Acquisitions and disposals (117.6) (128.5) Equity dividends paid (44.9) (41.0) Management of liquid resources (37.8) (1.3) Net cash outflow from financing (4.0) (19.1) (Decrease) / increase in net cash (4.8) 43.2 Reconciliation of net cash flow to movement in net debt (Decrease) / increase in net cash (4.8) 43.2 Cash (inflow) / outflow from change in (7.1) 43.7 debt and lease finance Cash outflow from change in liquid 37.8 1.3 resources Change in net debt from cash flows 25.9 88.2 Loan notes issued and loans arising from (2.0) (2.2) acquisitions Other non-cash items (10.5) 7.4 Decrease in net debt in the year 13.4 93.4 Net debt at beginning of year (779.8) (873.2) Net debt at end of year (766.4) (779.8) Daily Mail and General Trust plcGroup Balance Sheetas at 2nd October, 2005 2005 2004 ‚£m ‚£m Fixed Assets Intangible assets 833.4 793.0 Tangible assets 518.4 502.6 Investments 189.3 178.9 1,541.1 1,474.5 Current Assets Stocks 26.6 24.8 Debtors 493.4 429.3 Short-term investments 42.5 4.7 Cash at bank and in hand 82.3 88.0 644.8 546.8 Creditors Amounts falling due within one year (753.9) (852.8) Net Current Liabilities (109.1) (306.0) Total Assets less Current Liabilities 1,432.0 1,168.5 Creditors Amounts falling due after more than one (906.3) (703.8) year Provisions for Liabilities and Charges (63.3) (62.6) Net Assets 462.4 402.1 Capital and Reserves Called up share capital 50.2 50.2 Share premium account 8.3 7.3 Revaluation reserve 71.1 72.1 Other reserves (41.3) (25.7) Profit and loss account 379.9 306.8 Equity Shareholders' Funds 468.2 410.7 Minority interests (5.8) (8.6) 462.4 402.1 Approved by the Board of Directors on 29th November, 2005.Daily Mail and General Trust plcStatement of Group Total Recognised Gains and Lossesfor the year ended 2nd October, 2005 2005 2004 ‚£m ‚£m Recognised gains and losses: Group profit for the year 98.8 61.7 Currency translation differences 10.9 28.3 Taxation on translation differences 4.0 (7.9) Unrealised loss on disposal of (0.9) (2.4) minority interest Minority interests 1.4 2.3 Total gains and losses recognised in 114.2 82.0 the year Reconciliation of Movement in Group Equity Shareholders' Funds 2005 2004 ‚£m ‚£m Group profit for the year 98.8 61.7 Dividends (47.5) (43.7) 51.3 18.0 Other recognised gains and losses 15.4 20.3 Movement in own shares (15.6) 1.8 Loss on sale of investment in own - (3.8) shares New share capital subscribed 1.0 0.2 Adjustment to goodwill in respect of (1.3) (3.0) deferred consideration Goodwill reinstated on unrealised 1.4 5.0 loss on disposal of minority interest Goodwill written back on disposals 5.3 61.6 and closures Net movement in equity shareholders' 57.5 100.1 funds Opening shareholders' funds 410.7 310.6 Closing equity shareholders' funds 468.2 410.7 NOTES 1. Accounting policies The financial information for the year has been prepared under UK financialreporting standards in accordance with the accounting policies adopted in theGroup's 2004 Annual Report. 2. Turnover 2005 2004 ‚£m ‚£m By activity: National newspapers and related 877.5 890.2 activities Regional newspapers and related 520.1 519.4 activities Business to business information and 294.6 257.1 careers Euromoney Institutional Investor 196.3 174.7 Exhibitions and related activities 152.1 144.7 Broadcasting 97.1 122.4 2,137.7 2,108.5 Turnover of regional newspapers is stated after deducting intra-Group turnoverof ‚£17.1 million (2004 ‚£17.1 million).Turnover of broadcasting comprised ‚£63.2 million (2004 ‚£74.9 million) fromtelevision and ‚£33.9 million (2004 ‚£47.5 million) from radio.Turnover of business to business information and careers comprised ‚£173.7million (2004 ‚£143.3 million) from business to business information and ‚£120.9million (2004 ‚£113.8 million) from careers. 3. Operating profit 2005 2004 ‚£m ‚£m By activity: National newspapers and related 95.1 90.3 activities Regional newspapers and related 101.6 100.5 activities Business to business information and 51.6 36.7 careers Euromoney Institutional Investor 39.0 30.6 Exhibitions and related activities 24.6 25.8 Broadcasting 1.8 19.4 Unallocated central costs (16.4) (19.7) Less: exceptional operating costs 297.3 283.6 Less: amortisation of intangible (13.9) (17.8) assets (72.3) (71.2) Less: impairment of intangible assets (3.9) (12.9) 207.2 181.7 Operating profits of broadcasting comprised ‚£2.2 million (2004 ‚£15.6 million)from television and a loss of ‚£0.4 million (2004 ‚£3.8 million profit) fromradio.Operating profits of business to business information and careers comprised ‚£50.3 million (2004 ‚£34.8 million) from business to business information and ‚£5.2 million (2004 ‚£4.9 million) from careers, offset by unallocated centralcosts of ‚£3.9 million (2004 ‚£3.0 million). 3. Operating profit (continued) Exceptional operating costs comprised reorganisation costs of ‚£13.9 million(2004 ‚£Nil) including the closure of a press and the write off of pressequipment of ‚£4.4 million (2004 ‚£17.8 million) as follows: 2005 2004 ‚£m ‚£m By activity: National newspapers and related (1.2) (17.8) activities Regional newspapers and related (10.4) - activities Broadcasting - television (2.3) - (13.9) (17.8) The impairment charge arose as follows: 2005 2004 ‚£m ‚£m By activity: National newspapers and related (3.5) (3.8) activities Regional newspapers and related - (2.0) activities Business to business information and - (3.5) careers Euromoney Institutional Investor - (1.2) Exhibitions and related activities (0.4) (2.4) (3.9) (12.9) 4. Share of operating profits and losses of joint ventures and associates 2005 2004 ‚£m ‚£m Share of operating profits of joint 2.4 1.3 ventures Share of operating profits of 6.0 8.9 associates Before amortisation and impairment of 8.4 10.2 goodwill Share of amortisation of goodwill of (2.1) (2.8) joint ventures and associates Amortisation of goodwill of joint (1.1) (3.7) ventures Amortisation of goodwill of associates (5.4) (9.2) Impairment of goodwill of associates (2.5) (3.3) (2.7) (8.8) 5. Taxation charge The tax charge for the year amounted to ‚£53.0 million (2004 ‚£57.2 million)which included a charge of ‚£4.8 million (2004 ‚£2.1 million) in respect ofoverseas tax. The charge for taxation has been computed at a rate of 30.0% onUK taxable profits. The underlying tax on profits before amortisation andimpairment of intangible assets, exceptional items and significantnon-recurring or prior year items, amounted to ‚£61.1 million (2004 ‚£62.2million), and the resulting rate is 24.1% (2004 26.6%). There was a tax creditof ‚£4.2 million (2004 ‚£3.4 million) relating to exceptional items.6. Adjusted earnings per shareAdjusted earnings per share are calculated on profit before amortisation andimpairment of intangible assets and exceptional items, after charging thetaxation and minority interests associated with those profits, of ‚£182.9million (2004 ‚£165.3 million), as set out in note 7 below, and on the weightedaverage number of ordinary shares in issue during the period in accordance withFRS 14. The weighted average number of shares amounted to 396.1 million (2004397.5 million). As in previous years, adjusted earnings per share have beendisclosed since the Directors consider that this alternative measure gives amore comparable indication of the Group's underlying trading performance. 7. Adjusted profit (before amortisation and impairment of intangible assets and exceptional items) 2005 2004 ‚£m ‚£m Profit before tax 162.9 124.6 Add back: Amortisation of intangible assets in 80.9 86.9 Group operating profit and in share of joint venture and associates Impairment of goodwill in Group 6.4 16.2 operating profit and in share of associates Operating exceptional items 13.9 17.8 Profit on sale of fixed assets (10.9) (6.1) Profit on disposal of businesses (2.3) (5.3) Amounts written off investments 2.5 - Adjusted profit before tax (before 253.4 234.1 amortisation and impairment of intangible assets and exceptional items) Taxation charge (57.2) (60.6) Interest of minority shareholders (13.3) (8.2) Profit before amortisation and 182.9 165.3 impairment of intangible assets and exceptional items, after taxation and minority interests 8. Net cash inflow from operating activities 2005 2004 ‚£m ‚£m Operating profit 207.2 181.7 Depreciation charge 72.7 84.5 Non-exceptional profit on sale of 0.3 - fixed assets Amortisation and impairment of 76.2 84.1 intangible assets Working capital movement 0.7 32.1 Net cash inflow from operating 357.1 382.4 activities 9. This preliminary announcement was approved by the Board on 29th November,2005. The financial information set out above does not constitute the statutoryaccounts of the Company within the meaning of section 240 of the Companies Act1985. Statutory accounts for the year ended 3rd October, 2004, have beendelivered to the Registrar of Companies. The Company's auditors have reportedon the accounts for the year end 3rd October, 2004; their report wasunqualified and did not contain a statement under section 237 (2) or (3). TheCompany's auditors have reported on the statutory accounts for the year ended2nd October, 2005 and these will be delivered to the Registrar of Companies indue course. Their report was unqualified and did not contain a statement undersection 237 (2) or (3).Highlights of this announcement will be advertised on 30th November, 2005 inthe Evening Standard, on the 1st December in the Daily Mail, Metro, AberdeenPress & Journal, Western Morning News and the Western Daily Press and on the3rd December in The Mail on Sunday and Ireland on Sunday. It is expected thatthe Annual Report and Accounts will be posted to shareholders on or around 11thJanuary, 2006.A webcast of the Preliminary Results presentation to City analysts will beavailable for viewing from 9.30 am on 30th November, 2005 at http://www.dmgt.co.uk/investorrelations/presentations/Peter Williams Tel: 020 7938 6631 Nicholas Jennings Tel: 020 7938 6625 Andrew Honnor, Tulchan Tel: 020 7353 4200 Communications Additionally for Northcliffe: Simon Borrows, Greenhill & Co Tel: 020 7440 0400 Brian Cassin, Greenhill & Co Tel: 020 7440 0400 APPENDIXInternational financial reporting standards ('IFRS')Set out below are unaudited reconciliations of the Group's 2005 figures from UKGAAP to IFRS:a) Segmental analysis - Reconciliation of Adjusted Group Operating profit fromUK GAAP to IFRS (unaudited) UK GAAP IFRS IFRS adjustments ‚£m ‚£m ‚£m By activity: National newspapers and 95.1 (0.4) 94.7 related activities Regional newspapers and 101.6 (0.8) 100.8 related activities Business to business 51.6 (8.6) 43.0 information and careers Euromoney Institutional 39.0 (0.5) 38.5 Investor Exhibitions and related 24.6 (0.4) 24.2 activities Broadcasting 1.8 - 1.8 Unallocated central costs (16.4) (14.1)* (30.5) 297.3 (24.8) 272.5 * Includes unallocated retirement benefit costs under IAS 19, EmploymentBenefits.b) Reconciliation of Profit for the year under UK GAAP to IFRS (unaudited) Adjusted Adjusted Statutory operating profit profit before profit after tax tax ‚£m ‚£m ‚£m UK GAAP 297.3 253.4 109.9 Share-based payments (11.0) (11.0) (12.4) Employee benefits (13.0) (3.1) (1.5) Amortisation of - - (7.0) intangible assets Goodwill on disposal - - 5.3 Associates - (2.3) - reclassification Taxation - - (15.1) Amortisation reversal - - 53.8 Others (0.8) (0.8) (0.5) IFRS 272.5 236.2 132.5 c) Reconciliation of Net Assets under UK GAAP to IFRS (unaudited) Shareholders' Funds ‚£m UK GAAP 462.4 Employee benefits, net of deferred tax (163.8) Goodwill amortisation 53.8 Deferred tax on temporary differences (41.7) Amortisation of intangible assets (7.0) Deferred marketing costs (2.5) Dividends 32.6 Others (2.0) IFRS 331.8 ENDDAILY MAIL & GENERAL TRUST PLCRelated Shares:
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