20th Nov 2008 07:00
Daily Mail and General Trust plc (`DMGT')
Group unaudited preliminary results for the year ended 28th September, 2008. Adjusted results* Statutory results 2008 2007 Change 2008 2007 Revenue ‚£2,312 m ‚£2,235 m + 3% ‚£2,312 m ‚£2,235 m Operating profit ‚£317 m ‚£322 m -2% ‚£27 m ‚£159 m Profit/(loss) ‚£262 m ‚£288 m - 9% ‚£(68) m ‚£142 mbefore tax Earnings per share 47.9 p 49.3 p - 3% 0.0 p 27.3 p Dividend per share 14.70 p 14.35 p + 2%
*(before exceptional items and amortisation and impairment of intangible assets; see Consolidated Income Statement and reconciliation in Note 8).
Statutory results reflect amortisation, impairments and exceptional items.
RESILIENT PERFORMANCE IN DIFFICULT TRADING CONDITIONS
* Continued growth from the Group's business to business divisions despite
the turmoil in financial and property markets. * Commendable performance by Associated Newspapers, with the Mail titles further increasing their market share. * Strong focus on cash generation and debt reduction. Revenue and cost
initiatives put in place worth nearly ‚£100m in order to counter anticipated
advertising weakness and newsprint price increase. * Bank facilities extended for up to five years.
* Final dividend maintained, giving 2.4% growth for the year, reflecting sh
ort term concerns but real growth dividend policy reiterated over the
cycle.
Martin Morgan, Chief Executive, said
"Our strategy of creating a diversified international portfolio of market-leading companies across both business and consumer products has provided considerable overall resilience and leaves us well positioned to deliver long-term growth. Although the worsening economic conditions had an adverse impact on the newspaper and property businesses, our B2B divisions continued to perform well. The short term outlook remains difficult and we are taking decisive action to defend profitability. However, the Group's strong cash flow will also allow continued selective investment to ensure our businesses achieve their full potential."
A live webcast of the presentation of the Preliminary Results to City analystswill be available for viewing from 9.30 a.m. on 20th November, 2008 at http://www.dmgt.co.uk.Enquiries
Peter Williams, Finance Director Tel: 020 7938 6631
Nicholas Jennings, Company Secretary Tel: 020 7938 6625
Andrew Honnor/ Lizzie Morgan, Tulchan Communications Tel: 020 7353 4200
Daily Mail and General Trust plc
Contents
Management report
Condensed Consolidated Income Statement
Condensed Consolidated Statement of Recognised Income and Expenses
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Balance Sheet
Condensed Consolidated Cash Flow Statement
Notes to the Condensed Consolidated Financial Statements
Management report
This management report focuses on the adjusted results to give a more comparable indication of the Group's underlying business performance. A discussion of other items included in the statutory results is given after the divisional performance review and is set out in the segmental note. The adjusted results are summarised below:
Adjusted results* 2008 2007 Change¢â‚¬ ‚£m ‚£m Revenue 2,312 2,235 + 3% Operating profit 317 322 - 2% Income from joint ventures - 6 and associates Net finance costs (55) (41) - 36% Discontinued activities - 1 Profit before tax 262 288 - 9% Tax charge (63) (76) + 17% Minority interest (18) (20) + 9% Group profit 181 192 - 6% Adjusted earnings per share 47.9 p 49.3 p - 3%*Adjusted results are stated before amortisation and impairment of intangibleassets and exceptional items. For a reconciliation of Group profit to adjustedGroup profit, see Note 8.~Underlying revenue or profit* is revenue or profit* on a like for like basis,adjusted for acquisitions and disposals made in the current and prior year andat constant exchange rates.
¢â‚¬ Percentages are calculated on actual numbers to one decimal place.
Summary
Group revenue for the year was ‚£2,312 million compared with ‚£2,235 million forthe prior year, representing growth of 3%. Operating profit* was 2% lower at ‚£317 million. Adjusted profits* before tax were ‚£262 million, down 9% on theequivalent figure for last year.The Group has continued to follow its strategy of investing in productdevelopment to generate long-term growth. 62% of this year's operating profit*was generated from outside the Group's print newspaper titles, up from 53% lastyear. Further progress was made in building the Group's digital advertisingchannels.All of the Group's B2B divisions increased their profits*, despite economicconditions affecting DMG Information's property companies and DMG World Media'sremaining consumer exhibitions. The events experienced by financial markets andinstitutions in September had no material impact on the year's results. Theaverage sterling: US dollar exchange rate was unchanged over the financialyear.At Associated Newspapers, display advertising revenues grew slightly andcirculation revenue was maintained. As expected, profits* were lower, due tothe additional costs of full colour printing, after the new Didcot plant cameon stream, and promotional investment in the property and motors digitalcompanies. Northcliffe Media was badly affected by the exceptionallychallenging local advertising markets as the impact of the credit crunch spreadacross the wider economy. DMG Radio Australia moved back into profit*.The statutory result was a loss before tax for the year of ‚£68 million, aftercharging ‚£68 million of foreign exchange losses on tax equalisation hedgingtransactions, which cause an equal and opposite reduction in the tax charge,and non-cash amortisation and impairment charges of ‚£264 million. The statutoryafter-tax result of ‚£Nil reflected the benefit of exceptional tax credits.
Outlook
The new financial year has started with very challenging economic conditions,particularly in the UK. Our business to business divisions are generallycontinuing to trade well, with the benefit of significant subscriptionrevenues, but our UK consumer media businesses are being affected. As aconsequence, we are taking decisive action to defend their profitability and,more generally, to focus on cash generation and debt reduction. Measures we aretaking across the Group are worth approaching ‚£100 million and will offsetdownward pressure on advertising and upward pressure on newsprint prices.For DMG Information, whilst much uncertainty remains in its markets, quite anumber of its businesses expect to deliver growth even in these markets, andall of its businesses are well positioned to deliver strong growth both duringany upturn and through the medium term. DMGI's business models are strong andthe range of product developments underway and the number of growthopportunities remain encouraging.Euromoney's current trading is in line with its expectations, but in suchvolatile markets it is difficult to predict how well sales will hold up beyondthe first quarter. October's revenues were ahead of last year and forwardrevenues for the first quarter are ahead of the same time last year, but salesfor the past six weeks have shown signs of weakening. Having nearly 40% of itsrevenues coming from subscription streams that continue to grow will provideEuromoney with substantial stability.For DMG World Media, the economic climate will have an impact on the rate ofgrowth for certain exhibitions. There are continuing growth prospects in otherswith particular strength in the Middle East and in Oil and Gas events.Generally, we are seeing strength in market leading shows, and we are fortunatethat most of our major shows are in that position.
Our B2B divisions will benefit from the strengthening US dollar with each 5 cent rise in the average ‚£:$ exchange rate estimated to improve full year profits* by approximately ‚£4 million.
Within Associated Newspapers, October has seen total advertising revenues,including display, down by 10%, but it is difficult to predict tradingperformance for the rest of the first quarter, with even less visibilitythereafter. A plan has been implemented to improve revenues and to reduce costswithin Associated, including a Saturday cover price increase for the Daily Mailand the combining of some functions within the Mail titles.At Northcliffe Media, UK advertising trends have deteriorated further since theyear end, particularly in the property and recruitment sectors, with Octoberrevenues down on the prior year by 28%. Property revenues were 52% below theprior year and recruitment revenues were down 37%. The gloomy economic outlookpoints to extremely challenging conditions for our key advertising marketsthroughout the coming year. A new regional operating structure has beenimplemented which will allow us to benefit from our scale in the South West,Midlands and North of England. We are reviewing all areas of expenditure andexpect to remove significant further costs from Northcliffe in the coming year.
In addition to the divisional cost cutting measures within Associated and Northcliffe, we have also established A&N Media, a structure to share services across both divisions and to improve operational efficiency.
At DMG Radio Australia, we expect Nova further to improve its reach into itstarget demographic of all listeners aged 18-39 and we look for continued growthfrom Vega.Our focus is on managing the Group through the current difficult tradingconditions, based on an assumption of no improvement during 2009. At the sametime, we will take advantage of opportunities to increase market share, tolaunch new products and to leverage the strengths of the Group's diverseportfolio. DMGT's long term strategy remains in place and we are confident thatthe Group will emerge well from the current economic downturn.Divisional ReviewBusiness to businessDMG Information 2008 2007 Movement ‚£m ‚£m % Revenue 315 293 + 8% Operating profit* 75 71 + 6% Operating margin* 24% 24% In a year of turbulent property and financial markets DMGI was able to increaseoperating profits* by 6%. This reflected the crucial nature of the informationprovided in our chosen niche markets and continuing investment in new productsand services to meet the changing needs of our clients. On a like for likebasis, underlying revenue~ increased by 5% and operating profit* was flat.
Insurance & Financial
Operating profit* from DMGI's insurance and financial companies rose by 18% to ‚£41 million on revenues up 19% to ‚£131 million.
Risk Management Solutions, which represents more than half of this division,continued its impressive growth record. As the world's leading provider ofsolutions to assist the insurance sector in quantifying and managingcatastrophe and other risks, RMS grew revenues by 19% and, whilst pursuing itsstrategy to expand its product range, also grew operating profits* by 17%.Notwithstanding a virtual cessation of new issuance of asset-backed securities,the importance of the surveillance and monitoring products offered by Trepp,serving the commercial mortgage-backed securities market, and Lewtan, providingservices to both issuers and investors in asset-backed securities, has beenevident with both companies increasing revenues and operating profits*, inTrepp's case by more than 20%.
Property
Operating profit* from the property companies declined by 22% to ‚£23 million, with revenues being 13% lower at ‚£92 million.
In the UK, the volume of housing transactions plunged to record low levelsduring the second half of the year. This lack of activity in the marketplacehad a direct impact on revenues. Landmark has continued to invest in productenhancements and extensions and is well positioned for a recovery in theproperty market.Commercial property transaction volumes also reduced significantly in both theUS and UK, particularly affecting Environmental Data Resources and to a lesserextent Landmark. Both EDR and Landmark continue to be innovative, expandingtheir product offerings and the markets they serve. EDR grew its subscriptionsales strongly and successfully increased penetration of sales to commercialproperty lenders. Landmark acquired Inframation, a property informationbusiness based in Germany.
Property & Portfolio Research enjoyed a good year, expanding the geographic reach of their property research and growing revenues by 23%.
Other
Operating profit* from DMGI's other business information companies rose by 38% to ‚£15 million on revenues that were 18% higher at ‚£92 million.
Genscape, a leading provider of real-time information to the energy trading markets, continued to grow strongly with revenues increasing by more than 20% and margins improving.
Hobsons' education information business grew underlying~ revenues by 16%. Itcompleted further bolt-on acquisitions, with College Confidential being addedin the US and the minority in NARIC acquired in the UK. Following the disposalof its graduate recruitment information business, Hobsons is pursuing anexciting growth strategy solely focused on providing products and services toaid colleges and universities in the attraction, enrolment and retention ofstudents.
Sanborn enjoyed a good year with strong revenue and profit growth.
Euromoney Institutional Investor
2008 2007 Movement ‚£m ‚£m % Revenue 332 305 + 9% Operating profit* 76 68 + 12% Operating margin* 23% 22%
Euromoney announced its record preliminary results last week. This operating performance is stated after deducting a charge for its management incentive scheme, the CAP, ‚£5 million lower than last year.
These results demonstrate the success of its strategy to build a high quality,more robust subscription-driven information business. Throughout 2008 thebusiness has demonstrated its resilience in the face of problems in globalcredit markets, a gloomier economic outlook, and more recently the major impactof the credit crisis on the world's leading financial institutions.The diversity of Euromoney's revenue streams, geographic markets, productofferings and customer base helped sustain its trading through this difficultperiod. Subscription revenues increased by 18% to ‚£123 million and theproportion of revenues derived from subscription products increased from 34% to37%. Growth from emerging markets continued to compensate for weakness in thedeveloped financial markets, and emerging markets now account for nearly 50% ofrevenues. Euromoney's strengths in sectors outside finance, particularlymetals, commodities and energy, is demonstrated by a 16% increase in revenuesfrom business publishing activities, which helped offset the weakness in somefinancial sectors, particularly structured finance and hedge funds.DMG World Media 2008 2007 Movement ‚£m ‚£m % Revenue 202 164 + 23% Operating profit* 38 27 + 41% Operating margin* 19% 17%
dmg world media had a good year with increased revenues, operating profits* andoperating margin* reflecting strong growth in its B2B and B2R sectors. On alike for like basis, underlying~ revenues increased by 2% and operating profit*by 8%.
Business to business (`B2B')
Revenues and profits* were up 18% and 30%, respectively. In the TechnologySector, strong performance from Evanta's existing executive summits and ninenew launches contributed to the sector's 20% profit* growth. Profits from theOil and Gas portfolio also increased substantially, driven by the largestshows, the biennial Global Petroleum Show and the now annual Gastech, whichincreased by 35% and 52%, respectively, from the previous shows. The Dubaisector, comprising construction, interior design and hospitality shows,reported a 15% increase in revenues, but a 1% decline in profits* due toinvestment in people and infrastructure.
Business to Retail (`B2R')
The B2R division grew significantly in the year, following the acquisition ofthe remaining 51% interest of George Little Management (GLM) on 1st October,2007. B2R's revenues more than doubled and profit* grew 93%. In the prior year,GLM was reported as an associate. On a like for like basis, GLM grew itsprofits* by 8%, but the total B2R division's underlying~ revenues were down 1%and profits* down 8%, due a decline in its US West Coast gift shows.
Business to Consumer (`B2C')
B2C represented approximately 6% of dmg world media's operating profit* in theyear. Overall this division performed poorly, with profits* declining by ‚£5million, driven by a decline in the UK consumer business. In July the NorthAmerican home shows were sold, followed by Antiques Trade Gazette just afterthe year end for ‚£7.5 million. The remaining UK consumer business is a smallnon-core component of the division and one dominated by the Ideal Home Show,which we are re-fashioning.Consumer mediaA&N MediaIn September, the Group's national and local media businesses were restructuredas A&N Media, creating a structure for the shared services already in place andthose to come. DMGT continues to report the results of these businessesseparately.Associated Newspapers 2008 2007 Movement ‚£m ‚£m % Revenue 988 986 + 0% Operating profit* 73 83 - 13% Operating margin* 7% 8%
Despite the challenging economic conditions in the second half of the financial year and the continued competitive activity in the London evening newspaper market, Associated Newspapers achieved a commendable result. Total revenues were flat year on year, underlining the strength of its core brands.
Newspaper operations
Circulation revenue grew by 1% to ‚£382 million. The circulation of both theDaily Mail and The Mail on Sunday again performed ahead of the market,reflecting strong editorial and promotional activity. The Evening Standard alsogrew its circulation. The free newspapers performed well with Metro achieving areadership of over 3 million. London Lite maintained its distribution, reaching1 million readers which is now consistently ahead of the rival free newspaper.Costs, benefiting from a fall in the price of newsprint from 1st January, wereup by only 2% year on year despite the additional costs of full colourprinting.Print advertising was down 2%; display advertising was up 1% but classifiedadvertising was down 12%. Investment in the titles' companion websites resultedin a 33% increase in traffic and a near trebling of total digital revenues fromthese sites to ‚£9 million. Our largest display advertising category, retail,grew by 3% and all other categories were up, except for travel (down 9%) andmotors (down 2%).Harmsworth Printing successfully completed its press enhancement programme onschedule in January of this year. The final stage of the colour investmentprogramme culminated with the commissioning of full colour capability at SurreyQuays.
Associated Northcliffe Digital
Revenue grew by 3% to ‚£88 million across AND's jobs, property, motors anddating businesses, an underlying~ increase of 12%. Operating profit* fell by ‚£6million to ‚£5 million as a result of promotional investment in the property andmotors digital companies. This will continue in the coming year and will besupplemented by a multimedia advertising campaign at Jobsite.The AND network now extends to over 150 sites, reaching 24% of all UK internetusers, making it one of the largest players in the UK digital media industry.AND continued to acquire "bolt-on" value-enhancing assets. In conjunction withthis product development strategy, we invested heavily in building brandawareness.
Teletext
Teletext reduced its operating loss* by ‚£1 million to ‚£3 million. Revenues wereunchanged at ‚£41 million despite a fall in revenues from its televisionactivities of 13%. Teletext's online services have now moved into profit, andit extended its ThisisTravel brand in April to become a retail operationselling holidays directly to consumers through its own branded web-site and itstelevision services. Villarenters, offering self-catering villa holidayaccommodation, also performed well.Northcliffe Media 2008 2007 Movement ‚£m ‚£m % Revenue 420 447 - 6% Operating profit* 68 93 - 26% Operating margin* 16% 21%
UK regional advertising markets were exceptionally challenging in 2008. On alike for like basis, underlying revenues declined 11%, with the last quarterdown an unprecedented 23%. On the other hand, our European businesses continuedto grow, mainly fuelled by further progress from their digital activities.
UK
Northcliffe's underlying~ operating profit* was down 32% on a like for likebasis with comparable revenues down 8%. All categories of advertising fell inthe year with the rate of decline accelerating almost on a monthly basis sincethe first signs of weakness appeared at the start of the year.Property advertising was down 22% as estate agents reduced their advertisingbudgets in early spring in the face of an ailing property market. The cutbackswere so severe that in the month of September, property advertising was onlyhalf of that achieved in September 2007.Recruitment advertising declined by 11% with the growing uncertainty in theeconomy resulting in steep falls in the second half of the year as businessesreined back on recruitment plans. In September, recruitment advertising fell by30% on a like for like basis.Motors advertising fell by 12%. New car sales posted significant reductions inthe September quarter due to fewer private buyers. Furthermore there wascontinued online migration and structural changes in the industry arising fromconsolidation amongst the major franchise holders and increasing numbers ofused car dealers going out of business.UK digital revenues grew on a like for like basis by 42% to ‚£17 million,representing 6% of all advertising income. During the year, Northcliffeconsolidated its relationships with AND's digital pure play businesses. Thiswas evidenced through targeted marketing support which included rebranding allprint supplements to align with the digital products.Newspaper circulation revenues fell on a like for like basis by 3% to ‚£73million. Some cover price increases were taken during the year but, for others,price increases were delayed to minimise any adverse impact on sales. For theJanuary to June 2008 ABC period, Northcliffe's weeklies were down by 4.5%compared to an industry decline of just over 5%. In contrast, our daily titlesunderperformed the industry average, down just over 6% compared to an industrydecline of 5%.Central Europe
Northcliffe's portfolio of print and digital business in Central Europe performed well, delivering local currency profit* growth of 6%. In sterling terms, its operating profit* rose 15% to ‚£8 million with revenues on a like for like basis up 20% to ‚£43 million.
The growth came from the digital activities in the business. Profesia, the market leading Slovakian recruitment website, continued to grow strongly. Revenues were up by 29%, most of which was reinvested in the expansion of its digital network in the Czech Republic and Hungary. In Croatia, the market leading recruitment website, MojPosao, which was acquired in March 2007, continued to exceed expectations.
DMG Radio Australia 2008 2007 Movement ‚£m ‚£m % Revenue 55 40 + 38% Operating profit* 2 (4) + 154% Operating margin* 4% - 9%
DMG Radio Australia returned to profitability, driven by underlying~ revenue growth of 24%, against market growth of 6% nationally.
Network performance
The improvement in performance was driven by a year of strong growth for thenational Nova network which recorded an increase in operating profit* of 61% onthe prior year.Despite continued weakness in the Sydney advertising market, the Nova networkachieved revenue growth of 22%, driven largely by an increase in its share ofnational revenue.
The Nova network was again the number one national network in its target demographic of all listeners aged 18-39 with Nova Brisbane continuing its leadership of the Brisbane market, achieving the number one overall position in every survey across the year.
Vega FM stations in Sydney and Melbourne reduced their losses, but less thanhad been expected. They continued to grow their target audience of 40-54 yearolds, with Vega Sydney achieving the leading position in this demographic inSurvey 5, 2008 for the first time.Unallocated central costs 2008 2007 Movement ‚£m ‚£m % Operating loss* (16) (16) 0%Unallocated central costs were substantially unchanged. Higher overheads wereoffset by a lower financing component as a result of the surplus on the Group'sdefined benefit pension schemes at the start of the year.Other income statement items * Net finance costs 2008 2007 Movement ‚£m ‚£m % Net interest (75) (70) - 9 %payable and similar charges Swap premia income 20 27 - 26 % Dividend income - 2 Total (55) (41) - 36 %
Net interest payable and similar charges (excluding swap premia) rose by ‚£5 million to ‚£75 million due to higher average net debt. Income from tax equalisation swap premia fell by ‚£7 million due to market movements.
The Group's interest cover, calculated as the ratio of adjusted profits* beforeinterest, depreciation and amortisation (EBITDA) to net interest payable(excluding swap premia), was 5.2 times this year, down from 5.8 in 2007. TheGroup's ratio of year end net debt to EBITDA was 2.7 times, just above theGroup's target of 2.5 times. The Group has two main banking covenants which arethat: net debt must not be more than 4 times EBITDA; and EBITDA must exceed 3times net interest.
Dividend income fell by ‚£1.2 million due mainly to a lower distribution by GCap Media plc and to the sale of the Group's remaining interest in June.
* Other items
The Group's share of the results* of its joint ventures and associates fell by ‚£5.6 million to ‚£0.4 million reflecting the reclassification of GLM as a subsidiary from the start of the year. The main item is now DMG Radio Australia's joint ventures which increased their contribution, but this was offset by our share of increased losses of India Today, a start-up venture.
The Group has charged ‚£32 million as exceptional operating costs. This chargecomprised reorganisation, restructuring and closure costs within Associated,Northcliffe and DMG World Media.The charge for amortisation of intangible assets rose by ‚£5 million to ‚£91million. The Group also made an impairment charge of ‚£173 million, principallyrelating to more recently acquired regional media assets and to a number ofconsumer and gift shows. The charge also included the half year write down of ‚£14 million of the Group's original investment in GLM, arising purely from theGroup's IFRS transition election on 4th October, 2004 and matched by an equaland opposite credit to reserves.An exceptional gain of ‚£10 million arose within income from associates on thesale of the main business of Centurion (formerly Indigo Holidays). The Grouprecorded other gains and losses of ‚£28 million, compared to ‚£36 million lastyear. This comprised mainly net exceptional profits of ‚£24 million on the saleof businesses and gains of ‚£14 million on the sale of surplus properties andinvestments, offset by impairments of investments of ‚£10 million.
The Group recorded ‚£68 million of foreign exchange losses on hedges of intra-group financing. This foreign exchange loss is excluded from adjusted profit because an equal and opposite credit is excluded from the adjusted tax charge.
* Taxation After allowing for the effect of exceptional and other items that are notexpected to recur, the underlying tax rate fell from 26.3% to 24.0%. The fallreflects tax reductions from tax-efficient financing and increased taxdeductible amortisation in the US that are expected to recur. Over the next fewyears the adjusted rate is expected to remain at around this rate, buteventually to increase to around 30%.There were net exceptional tax credits of ‚£148 million, being the write back ofprior year provisions, together with the ‚£68 million tax credit on exchangedifferences on intra-group financings.
Pensions
The Group's defined benefit pension schemes have moved from a surplus of ‚£81million last year end to a deficit of ‚£41 million at 28th September 2008(calculated in accordance with IAS 19). This change is primarily due to a fallin the market value of the schemes' assets, partly offset by a reduction in thevalue attributed to its liabilities because of higher bond yields.
A funding agreement has been concluded with the trustees to the end of December 2010. The schemes are currently neutral in cash flow terms and so are not needing to sell assets to meet liabilities.
Net debt and cash flow
Net debt rose marginally during the year from ‚£951 million to ‚£1,015 million.The Group generated free cash flow of ‚£182 million which was used to paydividends and make share repurchases totalling ‚£154 million and acquisitions of‚£207 million, partly offset by disposals of investments and businesses of ‚£146million.The main acquisitions were made in the first half of the year, principally GLMfor ‚£77 million and the purchase of ‚£27 million of Euromoney shares, increasingthe Group's stake to 66%. The main disposals have also all been reportedpreviously and were the Group's investment in GCap Media plc, Hobsons' Europeangraduate businesses, our North America Home Interest shows and DolphinSoftware. Up until February, the Group spent ‚£88 million on acquiring its `A'Ordinary shares. No further purchases are planned in the foreseeable future asthe Group concentrates on reducing its debt.As reported in September, the Group has extended all its bank facilities for afurther three to five years with no change in basic financial covenants. Mostof the Group's debt remains in long-term bonds, the earliest of which is notrepayable until 2013.DividendThe Board is recommending payment on the issued Ordinary and 'A' OrdinaryNon-Voting shares of the Company of a final dividend of 9.90 pence per sharefor the year ended 28th September, 2008 (2007 9.90 pence). This will make atotal for the year of 14.70 pence (2007 14.35 pence per share), up 2% on lastyear. The final dividend will be paid on 13th February 2009 to shareholders onthe register at close of business on 28th November 2008.
The Board considered it appropriate in the current circumstances to hold the final dividend at last year's level, but is maintaining its policy of increasing the dividend in real terms over the cycle.
Board Change
Ian Park has decided to stand down as a Director of the Company at the AnnualGeneral Meeting on 11th February, 2009. He joined the Group as managingdirector of Northcliffe which he led from 1983 to 1995. During over 14 years onthe Board, he has made an invaluable contribution to its deliberations. Hisassistance and advice to the Group's executives have been greatly appreciated.The Viscount RothermereChairman*References to operating profit or loss or share of the results of jointventures and associates in the narrative above are to adjusted operating profitor loss or adjusted share of the results of joint ventures and associatesbefore amortisation and impairment of intangible assets and exceptional items);see notes 2 and 3.
The average ‚£:$ exchange rate for the year was ‚£1: $1.97 (against ‚£1:$1.97 last year).
For further information
For analyst and institutional enquiries:
Peter Williams, Finance Director 020 7938 6631
Nicholas Jennings, Company Secretary 020 7938 6625
For media enquiries:
Andrew Honnor, Tulchan Communications 020 7353 4200
Analysts' presentation and webcast
A presentation of the Preliminary Results will be given to investors and analysts at 9.30 a.m. on 20th November, 2008 at the offices of JP Morgan Cazenove, 20 Moorgate, London, EC2R 6DA. There will also be a live webcast available on our website: http://www.dmgt.co.uk.
Next trading update
The Group's next scheduled announcement of financial information will be its first quarter interim management statement on 11th February 2009.
Daily Mail and General Trust plc Summary Consolidated Income Statement for the year ended 28th September, 2008
Unaudited Audited 2008 2007 Total Total ‚£m ‚£m Continuing operations Revenue 2,311.7 2,235.1 Operating profit before exceptional operating 316.9
322.4
costs and amortisation and impairment of goodwill
and intangible assets Exceptional operating costs (31.8) (28.1) Amortisation and impairment of goodwill and (258.1) (134.9)intangible assets Operating profit before share of results of joint 27.0 159.4ventures and associates
Share of results of joint ventures and associates 3.5
1.8 Total operating profit 30.5 161.2 Other gains and losses 27.7 35.7 Profit before net finance costs and tax 58.2 196.9 Investment income 3.0 7.0 Finance costs (129.3) (61.8) Net finance costs (126.3) (54.8) (Loss)/profit before tax (68.1) 142.1 Tax 84.7 (20.3) Profit after tax from continuing operations 16.6 121.8 Discontinued operations
Profit from discontinued operations 0.2
0.5 Profit for the year 16.8 122.3 Attributable to: Equity shareholders - 107.0 Minority interests 16.8 15.3 Profit for the year 16.8 122.3 Earnings/(loss)per share From continuing operations Basic 0.0p 27.3p Diluted (0.2)p 27.1p From discontinued operations Basic 0.1p 0.1p Diluted 0.1p 0.1p
From continuing and discontinued operations
Basic 0.1p 27.4p Diluted (0.1)p 27.2p
Daily Mail and General Trust plc Consolidated statement of recognised income and
expense
for the year ended 28th September, 2008
Unaudited Audited 2008 2007 ‚£m ‚£m Profit for the year 16.8 122.3
Foreign exchange differences on translation of 58.8
1.8foreign operations
Fair value movements on available-for-sale -
0.2investments
(Losses)/gains on cash flow hedges (17.5)
6.4
Change in value of hedges recorded in equity (45.3)
13.4
Actuarial (loss)/gain on defined benefit pension (110.4) 207.1schemes Deferred tax on actuarial movement 38.5
(60.9)
Deferred tax on other items recognised directly in 1.5
1.2equity
Current tax on items recognised in equity 1.0
0.3
Net (loss)/income recognised directly in equity (56.6) 291.8 Transfers
Transfer from revaluation reserve to income -
24.4
statement on impairment of GCap Media plc Translation reserves recycled to income statement (0.1) (0.1)on disposals Transfer of gain on cash flow hedges from (2.9)
(2.7)
translation reserve to income statement
(3.0) 21.6 Total recognised income and expense for the year (59.6) 313.4 Attributable to : Equity shareholders (75.0) 296.0 Minority interests 15.4 17.4 (59.6) 313.4
Consolidated reconciliation of movements in equity for the year ended 28th September, 2008
2008 2007 ‚£m ‚£m Total recognised income and expense for the year (59.6) 313.4 Dividends paid (56.3) (53.2) Issue of share capital - 2.7 Initial recording of put options granted to (0.5)
(18.5)
minority interests in subsidiaries Exercise of acquisition option commitments 7.0
7.2
Movement in losses attributable to minorities -
5.4which are borne by Group
Transactions with minorities (12.3)
11.2
Settlement of exercised share options of (20.2) (13.2)subsidiary
Credit to equity for share based payments 16.6
18.1
Shares purchased to be held in treasury (88.3)
(32.8)
Own shares released on vesting of share options 21.0
4.9
Revaluation of previously held interest in 27.0
-
associate on acquisition of control Adjustment to equity following increased stake in (6.3)
-controlled entity Total movement in equity for the year (171.8)
245.2
Equity at the beginning of year 720.5 475.3 Equity at the end of year 548.6 720.5
Daily Mail and General Trust plc Consolidated cash flow statement for the year ended 28th September, 2008
Unaudited Audited 2008 2007 ‚£m ‚£m Operating profit before share of results of 27.0
159.4
joint ventures and associates - continuing Operating profit - discontinued -
0.8 Adjustments for: Share based payments 16.6 18.1 Depreciation 63.1 59.0
Impairment of property, plant and equipment 7.4
6.0
Amortisation of intangible assets 90.3
82.2
Impairment of goodwill and intangible assets 167.8
52.7
Operating cash flows before movements in working 372.2 378.2capital Decrease in inventories 0.6 5.9 Increase in trade and other receivables (3.9)
(64.2)
(Decrease)/increase in trade and other payables (6.3)
59.8 Increase in provisions 5.4 3.4 Cash generated by operations 368.0 383.1 Taxation paid (24.3) (43.8) Taxation received 11.2 - Net cash from operating activities before 354.9 339.3payment into pension scheme Payment into Group pension scheme following sale - (25.9)of Aberdeen Journals in 2006 Net cash from operating activities 354.9 313.4 Investing activities Interest received 1.6 5.7
Dividends received from joint ventures and 3.1
6.6associates
Dividends received from available-for-sale 0.3
1.5investments Purchase of property, plant and equipment (64.5)
(72.2)
Purchase of available-for-sale investments (15.9)
(0.6)
Proceeds on disposal of property, plant and 15.4
5.3equipment
Proceeds on disposal of available-for-sale 55.1
2.1investments Purchase of subsidiaries (104.3) (305.2) Purchase of additional interests in controlled (36.3) (7.1)entities Expenditure on internally generated intangible (18.7) (14.0)fixed assets
Treasury derivative activities (37.2)
32.8
Investment in joint ventures and associates (13.5)
(14.5)
Loans to joint ventures and associates repaid 4.8
5.0
Proceeds on disposal of businesses 58.5
37.0
Proceeds on disposal of associates 7.2
1.1 Net cash used in investing activities (144.4) (316.5) Financing activities Equity dividends paid (56.3) (52.6) Dividends paid to minority interests (10.3) (8.9) Issue of share capital - 2.7
Issue of shares by Group companies to minority 0.2
0.5interests Purchase of own shares (88.3) (32.8) Settlement of subsidiary share option plan (0.6) (8.7) Interest paid (64.8) (56.6) Proceeds on issue of bonds - 197.8 Premium on repurchase of bonds - (2.6) Bonds redeemed - (9.4) Loan notes repaid (26.0) (2.8) Increase in/(repayment of) bank borrowings 10.7 (54.7) Net cash used in financing activities (235.4)
(28.1)
Net decrease in cash and cash equivalents (24.9)
(31.2)
Cash and cash equivalents at beginning of year 64.0
96.1
Exchange gain/(loss) on cash and cash equivalents 5.2
(0.9)
Net cash and cash equivalents at end of year 44.3
64.0
Daily Mail and General Trust plc
Consolidated balance sheet
for the year ended 28th September, 2008
Unaudited Audited 2008 2007 ‚£m ‚£m ASSETS Non-current assets Goodwill 873.5 887.4 Other intangible assets 630.0 592.7 Property, plant and equipment 501.9 520.7 Investments Joint ventures 22.0 19.2 Associates 10.6 64.7 32.6 83.9
Available-for-sale investments 11.3
52.3 Trade and other receivables 8.3 4.8 Derivative financial assets 0.9 14.4 Retirement benefit assets 2.5 82.0 Deferred tax assets 31.1 8.0 2,092.1 2,246.2 Current assets Inventories 27.6 25.5 Trade and other receivables 456.9 429.5 Derivative financial assets 13.6 16.1 Cash and cash equivalents 45.3 70.4 543.4 541.5 Total assets 2,635.5 2,787.7 LIABILITIES Current liabilities Trade and other payables (650.2) (621.0) Current tax payable (119.2) (157.4) Acquisition put option (29.5) (21.8)commitments Other financial liabilities (26.0) (43.2) Derivative financial (33.8) (4.8)liabilities Provisions (27.4) (22.7) (886.1) (870.9) Non-current liabilities Trade and other payables (1.1) (0.7) Acquisition put option (7.6) (18.8)commitments Other financial liabilities (1,004.2) (982.7) Derivative financial (38.6) (8.1)liabilities Retirement benefit obligations (43.7) (1.4) Provisions (31.6) (49.0) Deferred tax liabilities (74.0) (135.6) (1,200.8) (1,196.3) Total liabilities (2,086.9) (2,067.2) Net assets 548.6 720.5 SHAREHOLDERS' EQUITY Called up share capital 49.1 49.4 Share premium account 12.4 12.4 Share capital 61.5 61.8 Capital redemption reserve 1.1 0.8 Revaluation reserve 39.5 46.0 Shares held in treasury (93.5) (44.4) Translation reserve 22.2 27.0 Retained earnings 479.1 601.7 Equity shareholders' funds 509.9 692.9 Equity minority interests 38.7 27.6 548.6 720.5
Approved by the Board on 19th November, 2008.
Notes 1. Basis of preparation
DMGT is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is Northcliffe House, 2 Derry Street, London, W8 5TT.
The financial information set out in this unaudited preliminary announcementdoes not constitute the Company's statutory accounts for the years ended 28thSeptember, 2008 or 30th September, 2007. The financial information for the yearended 30th September, 2007 is derived from the statutory accounts for that yearwhich have been delivered to the Registrar of Companies. The auditors reportedon those accounts; their report was unqualified, did not draw attention to anymatters by way of emphasis without qualifying their report and did not containa statement under s237(2) or (3) Companies Act 1985. Whilst the financialinformation included in this unaudited preliminary announcement has beencomputed in accordance with IFRS, this unaudited preliminary announcement doesnot itself contain sufficient information to comply with IFRS.The audit of the statutory accounts for the year ended 28th September, 2008 isnot yet complete. These accounts will be finalised on the basis of thefinancial information presented by the directors in this unaudited preliminaryannouncement and will be delivered to the Registrar of Companies following thecompany's annual general meeting. This unaudited preliminary announcement wasapproved by the Board on 19th November, 2008 for release.
These financial statements have also been prepared in accordance with the accounting policies set out in the 2007 Annual Report and Accounts, as amended by the following new accounting standards.
Impact of new accounting standards
In the current year, the Group has adopted the following standards:
- IFRS 7, Financial Instruments: Disclosures and IAS 1, Presentation ofFinancial Statements (effective for periods beginning on or after 1st January,2007). The impact of the adoption of IFRS 7 and the changes to IAS 1 has beento expand the disclosures provided in the Group's financial statementsregarding financial instruments and management of capital.- IFRIC 11 IFRS 2 Group and Treasury Share Transactions (effective for periodsbeginning on or after 1st March, 2007). The adoption of this interpretation hasnot had any significant impact on the Group's financial statements.
At the date of authorisation of these financial statements, the following standards have been issued but not applied to the information herein since they do not apply to this reporting period:
- Amendment to IAS 1, Presentation of Financial Statements (effective forperiods commencing on or after 1st January, 2009). This amendment introduceschanges to the way in which movements in equity must be disclosed and requiresan entity to disclose each component of other comprehensive income notrecognised in profit or loss. The amendment also requires disclosure of theamount of income tax relating to each component of other comprehensive incomeas well as several other minor disclosure amendments.- Amendment to IAS 23, Borrowing Costs (effective for periods commencing on orafter 1st January, 2009). This standard requires all borrowing costs which aredirectly attributable to an acquisition construction or production of aqualifying asset to form part of the cost of that asset. The Group does notexpect a significant impact from this standard.- Amendment to IAS 27, Consolidated and Separate Financial Statements(effective for periods commencing on or after 1st July, 2009). The amendmentintroduces changes to the accounting for partial disposals of subsidiaries,associates and joint ventures. Adoption of these amendments is not expected tosignificantly impact the measurement, presentation or disclosure of futuredisposals.- Amendments to IAS 32, Puttable financial instruments and obligations arisingon liquidation (effective for periods beginning on or after 1st January, 2009).The amendments are relevant to entities that have issued financial instrumentsthat are (i) puttable financial instruments or (ii) instruments, or componentsof instruments that impose on the entity an obligation to deliver to anotherparty a pro-rata share of the net assets on liquidation only. As a result ofthe amendments, some financial instruments that currently meet the definitionof a financial liability will be classified as equity because they representthe residual interest in the net assets of the entity. The amendments set outextensive detailed criteria to be met in order to be able to classify theseinstruments as equity. The impact of these amendments is restricted to specificcases and no analogies can be made. The Group does not expect a significantimpact from the adoption of this standard.- Amendments to IAS 39, Financial instruments: Recognition and Measurement(effective for periods commencing on or after 1st July, 2009). The amendmentsclarify treatment of inflation in a financial hedged item and one-sided risksin a hedged item. The Group does not expect a significant impact from theadoption of this standard.- Amendment to IFRS 2, Share-based Payment (effective for periods commencing onor after 1st January, 2009). The amendment clarifies that vesting conditionsare service conditions and performance conditions only. Other features of ashare-based payment are not vesting conditions. It also specifies that allcancellations, whether by the entity or by other parties, should receive thesame accounting treatment. The Group does not expect a significant impact fromthe adoption of this standard.- Amendment to IFRS 3, Business Combinations (effective for periods commencingon or after 1st July, 2009). The amendment introduces changes that will requireacquisition related costs (including professional fees previously capitalised)to be expensed and adjustments to contingent consideration to be recognised inincome and will allow the full goodwill method to be used when accounting fornon-controlling interests. This will result in a change to the Group'saccounting policy for purchases of stakes in controlled entities.IFRS 8, Operating Segments (effective for periods beginning on or after 1stJanuary, 2009). IFRS 8 sets out disclosure requirements concerning an entity'soperating segments, products, services, geographical areas in which it operatesand its major customers. IFRS 8 replaces IAS 14, Segmental Reporting. Adoptionof this standard is not expected to change the disclosures already made in theDMGT Report and Accounts significantly.2008 Annual Improvements (the majority of changes will effect periods beginningon or after 1st January, 2009). The standard makes 41 amendments to 25 IFRSs aspart of the first annual improvements project. The amendments include:restructuring IFRS 1, mainly to remove redundant transitional provisions; anamendment to bring property under construction or development for future use asfor future use as an investment property within the scope of IAS 40. Suchproperty currently falls within the scope of IAS 16; and an amendment toclarify the circumstances in which an entity can recognise a prepayment assetfor advertising or promotional expenditure. Recognition of an asset would bepermitted up to the point at which the entity has access to the goods purchasedor up to the point of receipt of services. The standard is not expected to havea significant impact on the Group. In relation to the amendment to IAS 38regarding prepayments for advertising or promotional expenditure, the Groupwill be required to reassess its accounting approach to reflect therequirements of the standard.
The following interpretations have been issued which are not applicable to the Group since they are only effective for accounting periods beginning on or after 28th September, 2008. The adoption of these interpretations is not expected to have any significant impact on the Group's financial statements.
- IFRIC 12 Service Concession Agreements (effective for periods beginning on or after 1st January, 2008)
- IFRIC 13 Customer Loyalty Programmes (effective for periods beginning on or after 1st July, 2008)
- IFRIC 14 The Limit on a Defined Benefit Asset Minimum Funding Requirementsand their Interaction (effective for periods beginning on or after 1st January,2008)
- IFRIC 15, Agreements for the Construction of Real Estate (effective for periods beginning on or after 1st January, 2009)
- IFRIC 16, Hedges of a Net Investment in a Foreign Operation (effective for periods beginning on or after 1st October, 2008)
2. Segment Analysis By activityThe Group's business activities are currently split into six operatingdivisions - business information, Euromoney Institutional Investor (Euromoney),exhibitions, national media (previously known as national newspapers andrelated activities), local media and radio. These divisions are the basis onwhich the Group reports its primary segment information. Each segment includesits respective associated electronic products.
Revenue comprises Group sales excluding value added tax, less discounts and commission where applicable and is analysed by segment as follows:
Unaudited Audited 2008 2007 ‚£m ‚£m Business information 315.3 292.7 Euromoney 332.0 305.2 Exhibitions 201.6 164.1 National media 987.7 986.2 Local media 420.4 447.1 Radio 54.7 39.8 2,311.7 2,235.1By geographic area
The majority of the Group's operations are located in the United Kingdom, the rest of Europe, North America and Australia.
The geographic analysis below is based on the location of companies in theseregions. Export sales and related profits are included in the areas from whichthose sales are made. Revenue in each geographic market in which customers arelocated is not disclosed as there is no material difference between the two.
Revenue is analysed by geographic area as follows :
Unaudited Audited 2008 2007 ‚£m ‚£m UK 1,614.1 1,655.9 Rest of Europe 71.3 58.9 North America 486.5 404.5 Australia 70.8 52.1 Rest of the World 69.0 63.7 2,311.7 2,235.1
Analysis of profit from operations before exceptional operating costs, amortisation and impairment charges, by activity:
Unaudited Audited 2008 2007 ‚£m ‚£m Operating profit/(loss) Business information 74.9 70.6 Euromoney 76.3 68.4 Exhibitions 38.3 27.0 National media 72.6 83.3 Local media 68.4 92.5 Radio 2.0 (3.7) Unallocated central costs (15.6) (15.7)
Operating profit before exceptional operating 316.9 322.4costs and amortisation and impairment of goodwill and intangible assets Exceptional operating costs (31.8) (28.1) Amortisation of intangible assets (90.3) (82.2) Impairment of goodwill and intangible (167.8) (52.7)assets Operating profit before share of results of 27.0 159.4joint ventures and associates
The Group's exceptional operating costs comprised exhibitions restructuring costs totalling ‚£4.5 million, together with reorganisation costs of ‚£18.7 million within national media and ‚£8.6 million within local media.
Operating profit/(loss) from continuing operations before share of joint ventures and associates result is analysed by segment as follows :
Unaudited Audited 2008 2007 ‚£m ‚£m Operating profit/(loss) Business information 64.5 59.0 Euromoney 55.8 44.7 Exhibitions (61.2) (3.2) National media 16.7 17.1 Local media (25.1) 70.3 Radio (8.1) (12.8) Unallocated central costs (15.6) (15.7) 27.0 159.4
3. Share of results of joint ventures and associates
Unaudited Audited 2008 2007 Note ‚£m ‚£m Share of profits from 0.5 2.4
operations of joint ventures Share of (losses)/profits from operations (0.3) 3.6
of associates Share of joint ventures' - -other gains and losses Share of associates' other i 9.8 0.6gains and losses
Before amortisation, impairment of 10.0 6.6goodwill, interest and tax Share of amortisation of intangibles of (0.6) (0.7)
joint ventures Share of amortisation of - (3.2)intangibles of associates Share of associates' interest 0.2 0.1receivable Share of joint ventures' tax (0.8) (0.5) Share of associates' tax (0.5) (0.5) Impairment of carrying value ii (4.8) -of associate 3.5 1.8 Share of results from (0.9) 1.2operations of joint ventures Share of results from 9.2 0.6operations of associates Impairment of carrying value (4.8) -of associate 3.5 1.8
(i) Represents the Group's share of Centurion Holiday Group Limited's (formerly Indigo Holidays Limited) profit on disposal of Hotels4u.com.
(ii) Centurion Holiday Group Limited was liquidated during the year. The carrying value was written down to the proceeds received on liquidation.
4. Other gains and losses Unaudited Audited 2008 2007 ‚£m ‚£m
Profit on sale of available-for-sale 7.6 0.7investments Impairment of available-for-sale assets (10.1) - Profit on sale of property, plant and 6.8 1.2equipment Profit on sale of businesses 23.4 15.2 Recycled impairment loss of GCap Media plc - (24.4) Profit on deemed part disposal of Euromoney - 42.4Institutional Investor plc Profit on sale and deemed disposal of joint - 0.6ventures and associates 27.7 35.7
The profit on sale of businesses mainly comprises the sale of Consumer North American Home Shows in the exhibitions division, Dolphin and the European business of Hobsons within business information and British Pathe within national media.
In the prior year the profit on deemed disposal of Euromoney arose followingEuromoney's issue of ‚£65.0 million new share capital to the shareholders ofMetal Bulletin plc thereby reducing the Group's interest in Euromoney. 5. Investment revenue Unaudited Audited 2008 2007 ‚£m ‚£m Dividend income The Press Association Limited - 0.2 AMI - 0.3 GCap Media plc 0.3 1.0 Interest receivable Short-term deposits 2.7 5.5 3.0 7.0 6. Finance costs Unaudited Audited 2008 2007 ‚£m ‚£m
Interest, arrangement and commitment (78.3) (72.0)fees payable on bonds, bank loans and loan notes (Loss)/gain on derivatives, or portions (45.6) 16.5thereof, not designated for hedge accounting Finance charge on discounting of deferred (2.4) (2.8)
consideration Other (3.0) (3.5) (129.3) (61.8) Analysed as follows :
Interest, arrangement and commitment fees payable (78.3) (72.0) on bonds, bank loans and loan notes
Finance charge on discounting of (2.4) (2.8)deferred consideration Change in fair value of non designated 2.6 -portion of derivatives designated as net investment hedges Change in fair value of interest rate caps (0.2) (0.3)not designated for hedge accounting Change in fair value of derivative hedge of 1.1 (3.0)bond Change in fair value of hedged portion of (1.1) 3.0
bond (78.3) (75.1) Tax equalisation swap income 14.5 30.5
Non foreign exchange gain/(loss) on tax 5.3 (3.4)
equalisation options 19.8 27.1 Foreign exchange loss on tax (67.8) (10.3)equalisation arrangements
Foreign exchange loss on intra-group - (4.7)financing Change in fair value of acquisition put (3.0) 3.8
options Premium on - (2.6)repurchase of bonds Fair value of - -short life options (70.8) (13.8) (129.3) (61.8)Tax equalisation swap income and the gain/(loss) from tax equalisation optionstotalling ‚£19.8 million (2007 ‚£27.1 million) arises from the economic hedgingof tax on foreign exchange movements. The foreign exchange loss on taxequalisation arrangements of ‚£67.8 million (2007 ‚£10.3 million) is excludedfrom adjusted profit since it is equal to a reduced tax charge (see note 7). Inaddition, the foreign exchange loss on intra group financing, premium onrepurchase of bonds and the change in fair value of acquisition put options arealso excluded from adjusted profits.
The finance charge on the discounting of deferred consideration arises from the requirement under IFRS 3, Business Combinations to discount deferred consideration back to current values.
7. Tax Unaudited Audited 2008 2007 ‚£m ‚£m
The credit/(charge) on the profit for the year consists of : UK Corporation tax at 29% (2007 30%) 18.0 (41.9) Adjustments in respect of prior years 28.2 29.4
46.2 (12.5) Overseas taxation Corporation taxes (18.4) (18.8)
Adjustments in respect of prior years (0.8) 0.2
Total current taxation 27.0 (31.1) Deferred tax
Origination and reversals of timing 60.6 13.7differences Adjustments in respect of prior years (2.9) (2.9)
Total deferred tax 57.7 10.8 84.7 (20.3)Being a multinational Group with tax affairs in many geographic locationsinherently leads to a highly complex tax structure which makes the degree ofestimation and judgement more challenging. Since the Group manages its taxaffairs on a Group wide basis it does not report a segmental analysis of thetax charge in the income statement.
Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and non-recurring items (adjusted tax charge) amounted to ‚£62.8 million (2007 ‚£75.9 million) and the resulting rate is 24.0% (2007 26.3%). The differences between the tax credit and the adjusted tax charge are shown in the reconciliation below:
Unaudited Audited 2008 2007 ‚£m ‚£m
Total tax credit/(charge) on the profit 84.7 (20.3)for the year Deferred tax on intangible assets and (37.2) (14.0)goodwill Current tax on foreign exchange on tax (67.8) (10.3)equalisation contracts Agreement of open issues with tax (23.8) (27.4)authorities Tax on other exceptional items (18.7) (3.9) Adjusted tax charge on the profit for (62.8) (75.9)the period
8. Adjusted profit (before exceptional operating costs and amortisation and
impairment of goodwill and intangible assets, other gains and losses and
exceptional financing costs, after taxation and minority interests)
Unaudited Audited 2008 2007 ‚£m ‚£m (Loss)/profit before (68.1) 142.1tax - continuing Profit before tax - 0.2 0.8discontinued Add back:
Amortisation of intangible assets in Group profit 90.9
86.0
from operations and in joint ventures and associates Impairment of goodwill 167.8 52.7and intangible assets Exceptional operating 31.8 28.1costs Share of associates' (9.8) (0.6)other gains Impairment of carrying 4.8 -value of associate Other gains and losses : Profit on sale of (7.6) (0.7) available-for-sale investments Profit on sale of property, (6.8) (1.2) plant and equipment Profit on sale of (23.4) (15.2) businesses Impairment of 10.1 - available-for-sale assets Recycled impairment loss of - 24.4 GCap Media plc Profit on deemed part disposal of - (42.4) Euromoney Institutional Investor plc Profit on sale and deemed disposal - (0.6) of joint ventures and associates Profit on sale of (0.2) - discontinued operations Finance costs : Foreign exchange loss on tax 67.8 10.3 equalisation arrangements Foreign exchange loss on - 4.7 intra-group financing Change in fair value of 3.0 (3.8) acquisition put options Premium on repurchase of - 2.6 bonds Fair value of short life - - options Tax : Share of tax in joint ventures 1.3 1.0 and associates Profit before exceptional operating costs, 261.8
288.2
amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and minority interest Total tax credit/ 84.7 (20.3)(charge) on the profit for the period Adjust for: Deferred tax on intangible assets (37.2) (14.0) and goodwill Current tax on foreign exchange on (67.8) (10.3) tax equalisation arrangements Agreed open issues with tax (23.8) (27.4) authorities Tax on other exceptional items (18.7) (3.9) Interest of minority (18.1) (19.8)shareholders Adjusted profit before exceptional operating costs, 180.9
192.5
amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and minority interests The adjusted minority share of profits for the year of ‚£18.1 million (2007 ‚£19.8 million) is stated after eliminating a credit of ‚£1.2 million (2007 ‚£4.5million), being the minority share of exceptional items.
9. Earnings/(loss) per share
Basic earnings per share of 0.0 p (2007 27.3 p) and diluted loss per share of0.2 p (2007 earnings 27.1 p) are calculated, in accordance with IAS 33 Earningsper share, on Group profit for the financial year of ‚£nil (2007 ‚£107.0 million)and on the weighted average number of ordinary shares in issue during the yearas set out below.As in previous years, adjusted earnings per share have also been disclosedsince the Directors consider that this alternative measure gives a morecomparable indication of the Group's underlying trading performance. Adjustedearnings per share of 47.9 p (2007 49.3 p) are calculated on profit beforeexceptional operating costs, amortisation and impairment of goodwill andintangible assets, after charging the taxation and minority interestsassociated with those profits, of ‚£180.9 million (2007 ‚£192.5 million), as setout in Note 8 above, and on the basic weighted average number of ordinaryshares in issue during the year as set out below.
The weighted average number of ordinary shares in issue during the year for the purpose of these calculations is as follows:
Unaudited Audited 2008 2007 Number Number m m Number of ordinary shares in 395.3 402.0issue Shares held in Treasury (17.7) (11.7) Basic earnings per share 377.6 390.3denominator Effect of dilutive share - 0.7options Dilutive earnings per share 377.6 391.0denominator
10. Analysis of net debt
Unaudited Audited 2008 2007 ‚£m ‚£m Net debt at start (950.4) (738.2) Cashflow (45.5) (162.8)
Arising with acquisitions - (34.1) Foreign exchange movements 4.8 2.4 Other non-cash movements (23.5) (17.7)
Net debt at year end (1,014.6) (950.4) Analsyed as :
Cash and cash equivalents 45.3 70.4 Bank overdrafts (1.0) (6.4) Net cash and cash equivalents 44.3 64.0
Debt due within one year (25.0) (36.8) Debt due in more than one year Bonds (838.9) (838.5) Bank loans (195.0) (139.1) Net debt at year end (1,014.6) (950.4)11. Retirement benefits The newspaper divisions of the Group operate a number of pension schemescovering most major UK group companies under which contributions are paid bythe employer and employees. The schemes for most employees are funded definedbenefit pension arrangements providing service-related benefits based on finalpensionable salary and are administered by trustee companies.During the year trust-based defined contribution pension plans wereprogressively being replaced by group personal pension plans, a process thatwas substantially complete at the year end. The trust-based plans will be woundup during 2009.
The assets of all the pension schemes and plans are held independently from the Group's finances.
The total net pension costs of the Group for the year ended 28th September, 2008 were ‚£20.5 million (2007 ‚£31.1 million).
A reconciliation of the net pension obligation reported in the balance sheet is shown in the following table:
Unaudited Unaudited Unaudited Audited Audited Audited 2008 2008 2008 2007 2007 2007 Schemes Schemes Total Schemes Schemes Total in in in in surplus deficit surplus deficit ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Present value of (70.0) (1,551.0) (1,621.0) (1,556.0) (221.1) (1,777.1)defined benefit obligation Assets at fair 75.4 1,507.3 1,582.7 1,648.2 219.7 1,867.9value Impact of asset (2.9) - (2.9) (10.2) - (10.2)ceiling on AVC Plan Surplus/(Deficit) 2.5 (43.7) (41.2) 82.0 (1.4) 80.6reported in the balance sheet
12. This preliminary announcement was approved by the Board on 19th November,
2008.
Highlights of this announcement will be advertised on 20th November, 2008 inthe Evening Standard, on 21st November, 2008 in the Daily Mail, Metro, WesternMorning News and the Western Daily Press and on 23rd November, 2008 in The Mailon Sunday. It is expected that the Annual Report and Accounts will be posted tothose shareholders who have requested it on or before 14th January, 2009 andposted on the Company's website at www.dmgt.co.uk the following morning. Not for public release until 7am on 20th November,
2008
DAILY MAIL & GENERAL TRUST PLCRelated Shares:
DMGT.L