25th Nov 2010 07:00
DMGT plcCONSOLIDATED INCOME STATEMENTfor the 52 weeks ending 3rd October, 2010 Unaudited Audited 52 weeks ending 53 weeks ending 4th October, 3rd October, 2010 2009 Restated (note 2) Note £m £mCONTINUING OPERATIONSRevenue 3 1,968.0 2,062.4 Operating profit before 3 317.2 269.1exceptional operating costsand amortisation andimpairment of goodwilland intangible assetsExceptional operating costs, 3 (39.0) (99.0)impairment of investmentproperty and impairmentof property, plant and equipmentAmortisation and impairment 3 (50.7)
(331.3)
of goodwill and intangible assets
Operating profit/(loss) before 3 227.5
(161.2)share of results of jointventures and associatesShare of results of joint 4 (5.3) (9.2)ventures and associates
Total operating profit/(loss) 222.2
(170.4)Other gains and losses 5 0.1 (23.5)Profit/(loss) before net 222.3 (193.9)finance costs and tax Investment revenue 6 1.4 7.0Finance costs 7 (77.4) (113.8)Net finance costs (76.0) (106.8) Profit/(loss) before tax 146.3 (300.7)Tax 8 39.6 80.3Profit/(loss) after 185.9 (220.4)
tax from continuing operations
DISCONTINUED OPERATIONSProfit/(loss) from 21 33.1 (85.0)discontinued operations PROFIT/(LOSS) FOR THE YEAR 219.0 (305.4) Attributable to:Owners of the company 199.8 (303.4)Non-controlling interests 19.2 (2.0)Profit/(loss) for the year 219.0 (305.4) Earnings/(loss) per share 11From continuing operationsBasic 43.5p (57.4)pDiluted 43.5p (57.4)pFrom discontinued operationsBasic 8.6p (22.4)pDiluted 8.6p (22.4)pFrom continuing anddiscontinued operationsBasic 52.1p (79.8)pDiluted 52.1p (79.8)pAdjusted earnings per shareBasic 50.0p 37.2pDiluted 50.0p 37.2pDMGT plcCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the 52 weeks ending 3rd October, 2010 Unaudited Audited 52 weeks ending 53 weeks ending 3rd October 2010 4th October 2009 £m £mProfit/(loss) for the year 219.0 (305.4)Fair value movements on 2.9 1.4
available-for-sale investments
Losses on hedges of net (3.6)
(41.9)
investments in foreign operations
Cash flow hedges :
Gains/(losses) arising during the year 0.7
(4.5)
Transfer of loss on cash flow hedges 4.3
3.5
from translation reserve to Income Statement
Share of joint ventures and -
(2.4)
associates other comprehensive income items
Translation reserves recycled to (39.1)
0.9
Income Statement on disposals
Foreign exchange differences 14.3
39.8
on translation of foreign operations
Actuarial gain/(loss) on defined 146.9
(424.5)
benefit pension schemes
Other comprehensive income/(loss) before tax 126.4
(427.7)
Tax relating to components of other (44.5)
120.6
comprehensive income /(loss)
Other comprehensive income/(loss) for the year 81.9
(307.1)
Total comprehensive income/(loss) for the year 300.9 (612.5) Attributable to :Owners of the Company 279.2 (613.9)Non-controlling interests 21.7 1.4 300.9 (612.5)DMGT plcCONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the 52 weeks ending 3rd October, 2010 Called Share Capital Revaluation Shares Translation Retained Total Non- Total up premium redemption reserve held reserve earnings/ controlling equity share account reserve in (deficit) interests capital treasury £m £m £m £m £m £m £m £m £m £m Balance as at 49.1 12.4 1.1 39.5 (93.5) 22.2 479.1 509.9 38.7 548.628th September, 2008 audited Loss for the - - - - - - (303.4) (303.4) (2.0) (305.4)period Other - - - 1.4 - (11.6) (300.3) (310.5) 3.4 (307.1)comprehensive income/(loss) for the period Total - - - 1.4 - (11.6) (603.7) (613.9) 1.4 (612.5)comprehensive income/(loss) for the period Issue of share - - - - - - - - 0.2 0.2capital Dividends - - - - - - (55.3) (55.3) (9.3) (64.6) Own shares - - - - (5.6) - - (5.6) - (5.6)acquired in the period Own shares - - - - 52.3 - - 52.3 - 52.3released on vesting of share options Transfer to - - - (36.8) - - 36.8 - - -retained earnings realised gain on GCap Media plc shares Exercise of - - - - - - 20.2 20.2 6.9 27.1acquisition put option commitments Other - - - - - (0.8) (6.2) (7.0) 7.9 0.9transactions with non-controlling interests Adjustment to - - - - - - (3.1) (3.1) - (3.1)equity following increased stake in controlled entity Credit to - - - - - - 11.4 11.4 1.0 12.4equity for equity settled share based payments Settlement of - - - - - - (43.2) (43.2) - (43.2)exercised share options of subsidiaries Balance as at 49.1 12.4 1.1 4.1 (46.8) 9.8 (164.0) (134.3) 46.8 (87.5)4th October, 2009 audited Unaudited Profit for the - - - - - - 199.8 199.8 19.2 219.0year Other - - - 2.9 - (26.1) 102.6 79.4 2.5 81.9comprehensive income/(loss) for the year Total - - - 2.9 - (26.1) 302.4 279.2 21.7 300.9comprehensive income/(loss) for the year Issue of share - 0.1 - - - - - 0.1 4.1 4.2capital Dividends - - - - - - (57.1) (57.1) (6.6) (63.7) Own shares - - - - (12.3) - - (12.3) - (12.3)acquired in the year Own shares - - - - 14.1 - - 14.1 - 14.1released on vesting of share options Exercise of - - - - - - 1.3 1.3 (1.3) -acquisition put option commitments Adjustment to - - - - - - 10.0 10.0 (10.0) -equity following increased stake in controlled entity Adjustment to - - - - - - (2.3) (2.3) 2.3 -equity following decreased stake in controlled entity Credit to - - - - - - 16.2 16.2 0.7 16.9equity for equity settled share based payments Settlement of - - - - - - (9.3) (9.3) - (9.3)exercised share options of subsidiaries Corporation tax - - - - - - 0.5 0.5 - 0.5on share based payments Deferred tax on - - - - - - (0.3) (0.3) (0.3) (0.6)share based payment transactions Balance as at 49.1 12.5 1.1 7.0 (45.0) (16.3) 97.4 105.8 57.4 163.23rd October, 2010unaudited DMGT plcCONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 3rd October, 2010 Unaudited Audited Audited As at As at As at 3rd October, 2010 4th October, 28th 2009 September, Restated 2008 (note 2) Restated (note 2) Note £m £m £mASSETSNon-current assetsGoodwill 735.8 734.2 873.5Other intangible assets 377.9 460.9 630.0Property, plant and equipment 13 370.8 440.4 501.9Investment property 14 7.0 - -Investments in joint ventures 20.4 16.8 15.8Investments in associates 12.7 5.4 6.9Available-for-sale investments 23.2 18.1 11.3Trade and other receivables 27.9 17.6 18.2Derivative financial assets 8.7 5.5 0.9Retirement benefit assets 22 - - 2.5Deferred tax assets 151.3 164.6 31.1 1,735.7 1,863.5 2,092.1Current assetsInventories 27.5 23.6 27.6
Trade and other receivables 368.9 377.5 456.9Current tax receivable 0.9 12.8 -Derivative financial assets
2.3 17.9 13.6Cash and cash equivalents 65.7 47.4 45.3 465.3 479.2 543.4 Total assets 2,201.0 2,342.7 2,635.5 LIABILITIESCurrent liabilitiesTrade and other payables (632.1) (640.1) (650.2)Current tax payable (69.4) (97.0) (119.2)Acquisition put option commitments (1.1) (11.2) (29.5)Borrowings (14.3) (20.5) (26.0)Derivative financial liabilities
(6.6) (9.5) (33.8)Provisions (37.7) (38.7) (27.4) (761.2) (817.0) (886.1)Non-current liabilitiesTrade and other payables (1.5) (0.6) (1.1)Acquisition put option commitments - (0.7) (7.6)Borrowings (870.6) (1,040.7) (1,004.2)Derivative financial liabilities (79.8) (82.2) (38.6)Retirement benefit obligations
22 (271.4) (430.4) (43.7)Provisions (27.6) (34.4) (31.6)Deferred tax liabilities (25.7) (24.2) (74.0) (1,276.6) (1,613.2) (1,200.8) Total liabilities (2,037.8) (2,430.2) (2,086.9) Net assets/(liabilities)
163.2 (87.5) 548.6
DMGT plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) as at 3rd October, 2010
Unaudited Audited Audited As at As at As at 3rd October, 2010 4th October, 28th 2009 September, Restated 2008 (note 2) Restated (note 2) Note £m £m £m SHAREHOLDERS' EQUITYCalled up share capital 49.1 49.1 49.1Share premium account 12.5 12.4 12.4Share capital 18 61.6 61.5 61.5Capital redemption reserve 1.1 1.1 1.1Revaluation reserve 7.0 4.1 39.5Shares held in treasury (45.0) (46.8) (93.5)Translation reserve (16.3) 9.8 22.2Retained earnings/(deficit) 97.4 (164.0) 479.1Equity attributable to owners of the company 105.8 (134.3) 509.9Non-controlling interests 57.4 46.8 38.7 163.2 (87.5) 548.6
Approved by the Board on 24th November, 2010.
DMGT plcCONSOLIDATED CASH FLOW STATEMENTfor the 52 weeks ending 3rd October, 2010 Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October 2009 Restated (note 2) Note £m £m
Operating profit/(loss) before share of results of joint ventures and 227.5 (161.2)
associates - continuing operations
Operating profit/(loss) before share of results of joint ventures and
0.7 (100.9)
associates - discontinued operations
Adjustments for :Share-based payments 16.9 12.5Pension curtailments (9.5) (27.4)
Pension charge in excess of cash contributions 4.0 4.8Depreciation 3 50.8 61.7Impairment of property, plant and equipment and investment properties 3 26.3 25.4Impairment of goodwill and impairment/(write back) of intangible assets 3 (19.9) 346.6Amortisation of intangible assets 3 72.4 89.1Operating cash flows before movements in working capital 369.2 250.6(Increase)/decrease in inventories (3.8) 5.8(Increase)/decrease in trade and other receivables (8.6) 109.4Decrease in trade and other payables (7.7) (88.0)Decrease in provisions 1.5 24.2Additional payment into pension schemes
(7.7) (4.2)Cash generated by operations 342.9 297.8Taxation paid (27.7) (32.3)Taxation received 19.2 18.3
Net cash from operating activities
334.4 283.8Investing activitiesPurchase of subsidiaries 19 (18.3) (22.0)
Purchase of additional interests in controlled entities 19 (12.8) (24.1)Investment in joint ventures and associates (6.1) (5.4)Loans advanced to joint ventures and associates (2.3) -Loans to joint ventures and associates repaid 65.0 0.4Expenditure on internally generated intangible fixed assets (16.8) (17.8)Purchase of available-for-sale investments (1.4) (2.5)Purchase of property, plant and equipment 13 (35.2) (39.6)Proceeds on disposal of businesses 20 8.5 4.7Proceeds on disposal of associates 0.1 -Proceeds on disposal of available-for-sale investments 0.1 1.3Proceeds on disposal of property, plant and equipment 13 4.2 20.5Treasury derivative activities 11.9 (58.7)Interest received 0.9 0.9Dividends received from joint ventures and associates 3.7 2.1Dividends received from available-for-sale investments 0.6 0.2 Net cash generated by/(used in) investing activities
2.1 (140.0) DMGT plcCONSOLIDATED CASH FLOW STATEMENT (continued)for the 52 weeks ending 3rd October, 2010 Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October 2009 Restated (note 1) Note £m £mFinancing activitiesEquity dividends paid 9 (57.1) (55.3)Dividends paid to minority interests (6.6) (9.3)Issue of share capital 0.1 -Issue of shares by Group companies to non-controlling interests 4.1 0.2Purchase of own shares (12.3) (5.6)Receipt on exercise of subsidiary share options
4.8 5.2Interest paid (66.8) (77.0)Bond issue costs (0.4) -Loan notes repaid (8.5) (14.4)
Sale and lease back receipts under hire purchase agreements - 25.0Repayments of obligations under hire purchase agreements (4.7) -Decrease in bank borrowings (172.4) (16.1) Net cash used in financing activities (319.8) (147.3)Net increase/(decrease) in cash and cash equivalents 16.7 (3.5)Cash and cash equivalents at beginning of year 46.9 44.3Exchange gain on cash and cash equivalents 0.7 6.1Net cash and cash equivalents at end of year
64.3 46.9 DMGT plc NOTES1 BASIS OF PREPARATION
While the financial information contained in this unaudited preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board as adopted by
the European Union, this announcement does not itself contain sufficient information to comply
with IFRS.
This financial information has been prepared for the 52 weeks ending 3rd October, 2010. The Group
and its national and local media divisions, prepare financial statements for a 52 or 53 week
financial period ending on a Sunday near to the end of September. The Group has prepared the 2010
financial statements on the basis of a 52 week financial year to 3rd October 2010, having been
prepared on the basis of a 53 week year in 2009, in order to ensure that the Group's year end
remains close to the end of September in the current and forthcoming financial years. As the
current financial year is 52 weeks, the comparative figures for the 53 weeks ended 4th October,
2009 are not entirely comparable with the amounts presented for the current financial year as the
comparative figures include the results of the national and local media divisions for 53 weeks.
The Group's remaining divisions prepare financial statements for a financial year to 30th
September and do not prepare additional financial statements corresponding to the Group's
financial year for consolidation purposes as it would be impracticable to do so. As a result, the
financial statements are comparable in relation to those elements of the comparatives that relate
to the Group's other divisions. The Group considers whether there have been any significant
transactions or events between the end of the financial year of the other divisions and the end of
the Group's financial year and makes any material adjustments as appropriate.
The information for the 52 weeks ended 3rd October, 2010 and the 53 weeks ended 4th October, 2009
do not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A
copy of the accounts for the 53 weeks ended 4th October, 2009 has been delivered to the Registrar
of Companies. The auditors' report on those accounts was not qualified and did not contain
statements under section 498(2) or 498(3) of the Companies Act 2006.
The audit of the statutory accounts for the 52 weeks ended 3rd October, 2010 is not yet complete.
These accounts will be finalised on the basis of the financial information presented by the
Directors in this preliminary announcement and will be delivered to the Registrar of Companies
following the Company's annual general meeting.
The Group's business activities, together with the factors likely to affect its future
development, performance and position are set out in the management report on pages 4 to 17. The
Company has long term financing in the form of Eurobonds and meets its day-to-day working capital
requirements through bank facilities which expire in two to four years. Current economic
conditions create uncertainty particularly over the future performance of those parts of the
business that derive a significant proportion of revenue from advertising. The Board's forecasts
and projections, after taking account of reasonably possible changes in trading performance, show
that the company is expected to operate within the terms of its current facilities. After making
enquiries, the Directors have a reasonable expectation that the Group will have access to adequate
resources to continue in operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the financial statements.
This financial information has been prepared in accordance with the accounting policies set out in
the 2009 Annual Report and Accounts, with the exception of the changes in accounting policy and
presentation and as amended by the new accounting standards as set out below.
The Group financial statements incorporate the financial statements of the Company and all of its
subsidiaries together with the Group's share of all of its interests in joint ventures and
associates. The financial statements have been prepared on the historical cost basis, except for
the revaluation of financial instruments.
The principal accounting policies used in preparing this information are set out below.
2 SIGNIFICANT ACCOUNTING POLICIES
Change in accounting policy
The Group's defined benefit pension scheme charge under IAS 19, Employee Benefits, contains
financing components which comprise the expected return on scheme assets and an interest cost on
scheme liabilities. In order to provide a more relevant presentation to assist the user of these
accounts to understand the components of the Group's defined benefit pension scheme charge, the
Group has chosen to present these financing elements within net Finance costs. Previously these
were included within operating profit along with the service cost element. Accordingly the
comparatives presented in these consolidated financial statements have been restated.
In the Consolidated Income Statement this change in accounting policy has resulted in a
reclassification of a return on scheme assets of £116.2 million and an interest cost of £111.4
million from operating profit to net Finance costs in the 53 weeks to 4th October, 2009. In the
current year the amount presented in net Finance costs is a net charge of £2.2 million.
Reclassification of loans to joint ventures and associates
The Group has reclassified loans to joint ventures and associates from investment in joint
ventures and associates to trade and other receivables. The amount reclassified in respect of
joint ventures at 4th October, 2009 was £7.5 million (2008 £6.2 million) and the amount
reclassified in respect of associates as at 4th October, 2009 was £5.9 million (2008 £3.7
million). In the current year the amount presented in trade and other receivables amounts to £9.9
million in relation to joint ventures and £0.3 million in relation to associates. This
reclassification aligns the Group's presentation more closely with the requirements of the
relevant accounting standards.
New accounting policy
The Group transfers property from property, plant and equipment to investment property when owner
occupation ends. Investment properties are stated in the Consolidated Statement of Financial
Position at their cost, less any subsequent accumulated depreciation and subsequent accumulated
impairment losses.
Depreciation is charged so as to write off the cost of these assets, using the straight-line
method, over their estimated useful lives as follows : Freehold buildings and long leasehold properties 50 years Depreciation is not provided on freehold land Impact of new accounting standards
In the current year, the Group has adopted the following accounting standards :
- IAS 1 (2007) Presentation of Financial Statements
IAS 1 (2007) requires the presentation of a Statement of Changes in Equity as a primary statement,
separate from the Income Statement and Statement of Comprehensive Income. As a result, a
Consolidated Statement of Changes in Equity has been included in the primary statements, showing
changes in each component of equity for each period presented. The revised standard also requires
that restatements show two Statements of Financial Position for comparison and so certain
information from the 2009 Annual Report and Accounts has been included in the 2010 Annual Report
and Accounts, where appropriate.
- Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments:
Disclosures)
- IAS 1 (2007) Presentation of Financial Statements
IAS 1 (2007) requires the presentation of a Statement of Changes in Equity as a primary statement,
separate from the Income Statement and Statement of Comprehensive Income. As a result, a
Consolidated Statement of Changes in Equity has been included in the primary statements, showing
changes in each component of equity for each period presented. The revised standard also requires
that restatements show two Statements of Financial Position for comparison and so certain
information from the 2008 Annual Report and Accounts has been included in the 2010 Annual Report
and Accounts, where appropriate.
- IFRS 3 (2008) Business Combinations and IAS 27 (2008) Consolidated and Separate Financial
Statements.
As a consequence of the adoption of these standards, the Group has applied the following policies
on a prospective basis with regard to business combinations and purchases and sales of shares in a
controlled entity effected after October 4th, 2009. Transactions which completed prior to October
4th, 2009 have not been restated and remain as previously reported.
DMGT plc
NOTES
2 SIGNIFICANT ACCOUNTING POLICIES - continued
Business combinations
The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The
consideration for each acquisition is measured at the aggregate of fair values of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in exchange for
control of the acquiree. Acquisition related costs are now recognised in the Consolidated Income
Statement as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting
from a contingent arrangement, measured at its acquisition date fair value. Subsequent changes in
such fair values are adjusted through the Consolidated Income Statement. All other changes in the
fair value of contingent consideration classified as an asset or liability are accounted for in
accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified
as equity are not recognised.
If the initial accounting for a business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports provisional amounts for the items for
which the accounting is incomplete. Those provisional amounts are adjusted during the measurement
period, or additional assets or liabilities are recognised, to reflect new information obtained
about facts and circumstances that existed as of the date of the acquisition that, if known, would
have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains
complete information about facts and circumstances that existed as of the acquisition date and is
a maximum of one year.
Business combinations achieved in stages
Where a business combination is achieved in stages, the Group's previously held interests in the
acquired entity are remeasured to fair value at the date the Group attains control and the
resulting gain or loss is recognised in the Consolidated Income Statement. Amounts arising from
interests in the acquiree prior to the acquisition date that were recognised in other
comprehensive income are reclassified to the Consolidated Income Statement where such treatment
would be appropriate if the interest were disposed of.
Purchases and sales of shares in a controlled entity
Where the Group's interest in a controlled entity increases, the non-controlling interests' share
of net assets, excluding any allocation of goodwill, is transferred to retained earnings. Any
difference between the cost of the additional interest and the existing carrying value of the non
controlling interests' share of net assets is recorded in retained earnings.
Where the Group's interest in a controlled entity decreases, but the Group retains control, the
share of net assets disposed, excluding any allocation of goodwill, is transferred to the
non-controlling interest. Any difference between the proceeds of the disposal and the existing
carrying value of the net assets or liabilities transferred to the non-controlling interests is
recorded in retained earnings.
Disposal of controlling interests where non-controlling interest retained
Where the Group disposes of a controlling interest but retains a non-controlling interest in the
business, the Group accounts for the disposal of a subsidiary and the subsequent acquisition of a
joint venture, associate or available-for-sale asset at fair value on initial recognition. On
disposal of a subsidiary all amounts deferred in equity are recycled to the Consolidated Income
Statement.
Business combinations occurring prior to 4th October, 2009
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the
acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for
control of the acquiree, plus any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent liabilities are recognised at their
fair values at the acquisition date, other than non-current assets and liabilities of disposal
groups which are recognised at fair value less costs to sell. Where an adjustment to fair values
relating to previously held interests (including interests which were equity accounted under IAS
28, Investments in associates) is required on achieving control, this is accounted for as an
adjustment directly in equity.
Goodwill arising on acquisitions is recognised as an asset and initially measured at cost, being
the excess of the cost of the business combination over the Group's interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities recognised. Where control is
achieved in more than one exchange transaction, goodwill is calculated separately for each
transaction based on the cost of each transaction and the appropriate share of the acquiree's net
assets based on net fair values at the time of each transaction.
The interest of non-controlling interests in the acquiree is initially measured at the
non-controlling interest's proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.
Purchase and sale of shares in a controlled entity occurring prior to 4th October, 2009
Where the Group's interest in a controlled entity increases, no adjustments are recorded to the
fair values of the assets already held on the Consolidated Statement of Financial Position. The
Group calculates the goodwill arising as the difference between the cost of the additional
interest acquired and the increase in the Group's interest in the fair value of the subsidiary's
net assets at the date of the exchange transaction. Any difference between the cost of the
additional interest, goodwill arising and the existing carrying value of the non-controlling
interest share of net assets is adjusted directly in equity.
Where the Group's interest in a controlled entity decreases, which does not result in a change of
control, the Group increases the non-controlling interest's share of net assets by the book value
of the share of net assets disposed. Any profit or loss on disposal of the share of net assets to
the non-controlling interest is calculated by reference to the consideration received, the book
value of the share of net assets disposed and a proportion of any relevant goodwill in the
Statement of Financial Position relating to the subsidiary.
DMGT plc
NOTES
2 SIGNIFICANT ACCOUNTING POLICIES - continued
Standards not affecting the reported results or the financial position:
The following new and revised Standards and Interpretations have been adopted in the current year.
Their adoption has not had any significant impact on the amounts reported in the financial
information but may impact the accounting for future transactions and arrangements:
- IFRS 1 (amended)/IAS 27 (amended) Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate ;
- IFRS 2 (Revised) Share-Based Payment: Vesting Conditions and Cancellations ;
- IFRS 5 (Revised) Non-current Assets Held for Sale and Discontinued Operations ;
- Improvements to IFRSs (2008) including :
- Amendment to IAS 38 Intangible Assets ;
- Amendment to IAS 40 Investment Property ;
- Amendment to IAS 20 Accounting for Government Grants and Disclosure of Government Assistance ;
and
- Amendment to IFRS 2 Share based payment - Vesting Conditions and Cancellations ;
- IAS 32 Puttable financial instruments and obligations arising on liquidation ;
- Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial
Statements - Puttable Financial Instruments and Obligations Arising on Liquidation ;
- Amendment to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosure regarding reclassifications of financial assets ;
- IAS 23 (revised 2007) Borrowing Costs ;
- IFRIC 9 Reassessments of embedded derivatives and IAS 39 Financial Instruments: Recognition and
Measurement ; - IAS 39 (amended 2008) Eligible Hedged Items ; - IFRIC 15 Agreements for the Construction of Real Estate ; - IFRIC 16 Hedges of a Net Investment in a Foreign Operation ; - IFRIC 17 Distributions of Non-cash Assets to Owners ; - IFRIC 18 Transfers of Assets from Customers ;
At the date of authorisation of the financial information, the following Standards and
Interpretations, which have not been applied in the financial information, were in issue but not
yet effective (and in some cases had not yet been adopted by the EU). Their adoption Is not
expected to have a significant impact on the amounts reported in the financial information but may
impact the accounting for future transactions and arrangements: - Improvement to IFRSs 2010 ; - IFRS 9 Financial Instruments ; - IAS 24 (revised 2009) Related Party Disclosures ; - Improvements to IFRSs (April 2009) ; - IAS 32 (amended 2009) Classification of Rights Issues ; - IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. Critical accounting judgements and key sources of estimation uncertainty
In addition to the judgement taken by management in selecting and applying the accounting policies
set out above, management has made the following judgements concerning the amounts recognised in
the consolidated financial information :
Forecasting
The Group prepares medium term forecasts based on Board approved budgets and three year outlooks.
These are used to support judgements made in the preparation of the Group's financial statements
including the recognition of deferred tax assets in different jurisdictions, the Group's going
concern assessment and for the purposes of impairment reviews. Longer term forecasts use long-term
growth rates applicable to the relevant businesses.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are impaired or whether a reversal of an
impairment of intangible assets should be recorded requires an estimation of the value in use of
the relevant cash generating units. The value in use calculation requires management to estimate
the future cash flows expected to arise from the cash generating unit and compare the net present
value of these cash flows using a suitable discount rate to determine if any impairment has
occurred. A key area of judgement is deciding the long-term growth rate of the applicable
businesses and the discount rate applied to those cash flows. The carrying amount of goodwill and
intangible assets at the period end date was £1,113.7 million (2009 £1,195.1 million 2008 £1,503.5
million) after a net impairment write back of £19.9 million (2009 charge £346.6 million 2008
charge £167.8 million) was recognised during the year.
Acquisitions and intangible assets
The Group's accounting policy on the acquisition of subsidiaries is to allocate purchase
consideration to the fair value of identifiable assets, liabilities and contingent liabilities
acquired with any excess consideration representing goodwill. Determining the fair value of
assets, liabilities and contingent liabilities acquired requires significant estimates and
assumptions, including assumptions with respect to cash flows and unprovided liabilities and
commitments, including in respect to tax, are often used. The Group recognises intangible assets
acquired as part of a business combination at fair values at the date of the acquisition. The
determination of these fair values is based upon management's judgement and includes assumptions
on the timing and amount of future cash flows generated by the assets and the selection of an
appropriate discount rate. Additionally, management must estimate the expected useful economic
lives of intangible assets and charge amortisation on these assets accordingly.
DMGT plc
NOTES
2 SIGNIFICANT ACCOUNTING POLICIES - continued
Acquisition option commitments
Written put options to acquire further stakes in subsidiaries, associates and joint ventures
written at the time of business combinations, unless so deeply in the money that they represent
in-substance ownership interests, are considered financial instruments under IAS 32 and IAS 39.
Put options over a non-controlling interest stake in a subsidiary give rise to a financial
liability under IAS 32. Put options over an associate are within the scope of IAS 39 and are
accounted for as derivatives at fair value through profit and loss. Where put options over
associates have a fair value of £nil, no accounting is required. Written put options are
classified within current liabilities if exercisable within one year.
The Group is party to a number of put and call options over the remaining non-controlling
interests in some of its subsidiaries. IAS 39 requires the fair value of these acquisition option
commitments to be recognised as a liability on the Consolidated Statement of Financial Position
with a corresponding decrease in reserves. Subsequent changes in the fair value of the liability
are reflected in the Consolidated Income Statement. On exercise and settlement of the put option
liability, cumulative amounts are removed from retained earnings along with the derecognition of
the non-controlling interest and recognition of additional goodwill. Key areas of judgement in
calculating the fair value of the options are the expected future cash flows and earnings of the
business and the discount rate. At October 3rd, 2010 the fair value of these acquisition option
commitments is £1.1 million (2009 £11.9 million 2008 £37.1 million).
Contingent consideration
Estimates are required in respect of the amount of contingent consideration payable on
acquisitions, which is determined according to formulae agreed at the time of the business
combination, and normally related to the future earnings of the acquired business. The Directors
review the amount of contingent consideration likely to become payable at each period end date,
the major assumption being the level of future profits of the acquired business. The Group has
outstanding contingent consideration payable amounting to £17.8 million (2009 £23.5 million 2008
£37.6 million).
Contingent consideration is discounted to its fair value in accordance with IFRS 3 and IAS 37. For
acquisitions completed prior to October 4th, 2009, the difference between the fair value of these
liabilities and the actual amounts payable is charged to the Income Statement as notional finance
costs with remeasurement of the liability being recorded against goodwill. For acquisitions
completed in the current period, movements in the fair value of these liabilities are recorded in
the Consolidated Income Statement in Financing.
Adjusted profits and exceptional items
The Group presents adjusted earnings by making adjustments for costs and profits which management
believe to be exceptional in nature by virtue of their size or incidence or have a distortive
effect on current year earnings. Such items would include costs associated with business
combinations, one off gains and losses on disposal of businesses, properties and similar items of
a non-recurring nature together with reorganisation costs and similar charges, tax and by adding
back impairment of goodwill and amortisation and impairment of intangible assets. See note 10 for
a reconciliation of profit before tax to adjusted profit. In periods ending on or after October
2nd, 2011 the Group will add back only the amortisation of intangible assets acquired in a
business combination in arriving at its adjusted numbers.
Share-based payments
The Group makes share-based payments to certain employees. These payments are measured at their
estimated fair value at the date of grant, calculated using an appropriate option pricing model.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting
period, based on the estimate of the number of shares that will eventually vest. The key
assumptions used in calculating the fair value of the options are the discount rate, the Group's
share price volatility, dividend yield, risk free rate of return, and expected option lives.
Management regularly perform a true-up of the estimate of the number of shares that are expected
to vest, this is dependent on the anticipated number of leavers.
Taxation
Being a multinational Group with tax affairs in many geographic locations inherently leads to a
highly complex tax structure which makes the degree of estimation and judgement more challenging.
The resolution of issues is not always within the control of the Group and is often dependent on
the efficiency of legal processes. Such issues can take several years to resolve. The Group takes
a conservative view of unresolved issues, however, the inherent uncertainty regarding these items
means that the eventual resolution could differ significantly from the accounting estimates and,
therefore, impact the Group's results and future cash flows. As described above, the Group makes
estimates regarding the recoverability of tax assets relating to losses based on forecasts of
future taxable profits which are, by their nature uncertain.
Retirement benefit obligations
The cost of defined benefit pension plans is determined using actuarial valuations prepared by the
Group's actuaries. This involves making certain assumptions concerning discount rates, expected
rates of return on assets, future salary increases, mortality rates and future pension increases.
Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.
The assumptions and the resulting estimates are reviewed annually and, when appropriate, changes
are made which affect the actuarial valuations and, hence, the amount of retirement benefit
expense recognised in the Consolidated Income Statement and the amounts of actuarial gains and
losses recognised in the Consolidated Statement of Changes in Equity. The carrying amount of the
retirement benefit obligation at October 3rd, 2010 was a deficit of £271.4 million (2009 £430.4
million 2008 £41.2 million). Further details are given in note 22.
DMGT plc NOTES3 SEGMENT ANALYSIS
Within these consolidated financial statements the Group's
Radio operating segment (up to and including December 16th,
2009) has been treated as discontinued operations. Further
details are set out in note 21.
The Group's business activities are split into seven operating
divisions : RMS, business information, events (previously known
as exhibitions), Euromoney, national media, local media and
radio. These divisions are the basis on which information is
reported to the Group Board. The segment result is the measure
used for the purposes of resource allocation and assessment and
represents profit earned by each segment, including share of
results from joint ventures and associates but before
exceptional operating costs, amortisation and impairment
charges, other gains and losses, net finance costs and
taxation.
Details of the types of products and services from which each
segment derives its revenues are included within the management
report on pages 4 to 17.
The accounting policies applied in preparing the management
information for each of the reportable segments are the same as
the Group's accounting policies described in note 2.
Inter-segment sales are charged at prevailing market prices
other than the sale of newsprint from the national media to the
local media division which is at cost to the Group. The amount
of newsprint sold during the year amounted to £22.0 million
(2009 £28.2 million).Unaudited 52 weeks Note External Inter- Total Segment Less Group profitending 3rd October, revenue segment revenue result operating before2010 revenue profit of exceptional joint operating ventures costs and and amortisation associates and (note i) impairment of goodwill and intangible assets £m £m £m £m £m £m RMS 152.6 1.6 154.2 47.1 - 47.1 Business information 230.8 1.6 232.4 52.8 0.1 52.7 Events 110.5 - 110.5 30.1 - 30.1 Euromoney 330.0 - 330.0 96.3 0.4 95.9 National media 849.9 63.4 913.3 92.9 (2.3) 95.2 Local media 294.2 1.3 295.5 30.1 0.4 29.7 Radio (ii), 21 15.9 - 15.9 5.9 3.4 2.5 1,983.9 67.9 2,051.8 355.2 2.0 353.2 Corporate costs (33.5) Discontinued operations (ii), 21 (15.9) (2.5) 1,968.0 Operating profit before 317.2exceptional operating costs and amortisation
and impairment of goodwill
and intangible assets
Exceptional operating costs,
(39.0)impairment of investment property and impairment
of property, plant and equipment
Impairment of goodwill 20.2and reversal of impairment/ (impairment) charge of intangible assets Amortisation of intangible (70.9) assets Operating profit before 227.5share of results of joint ventures and associates Share of result of (5.3)joint ventures and associates Total operating profit 222.2 Other gains and losses 0.1 Profit before net 222.3finance costs and tax Investment revenue 1.4 Finance costs (77.4) Profit before tax 146.3 Tax 39.6 Profit from discontinued 21 33.1 operations Profit for the period 219.0
(i) The operating profit of joint ventures and associates deducted in reconciling the Group
profit before exceptional operating costs and amortisation and impairment of goodwill
and intangible assets includes the results of the radio operating segment from December
17th, 2009 from which date the business is accounted for as a joint venture. (ii) Revenue and Group profit before exceptional operating costs and amortisation and
impairment of goodwill and intangible assets relating to the discontinued operations of
Radio has been deducted in order to reconcile to Group profit before tax from continuing
operations.
Operating profit before exceptional operating costs and amortisation and impairment of
goodwill and intangible assets within the national media division comprised £124.0
million from newspapers, £6.0 million from digital offset by unallocated divisional
central costs of £35.0 million.
Operating profit before exceptional operating costs and amortisation and impairment of
goodwill and intangible assets within the local media division comprised £3.2 million
from operations in central Europe.
Included within corporate costs is a charge of £4.0 million which adjusts the pensions
charge recorded in each operating segment from a cash rate to the net service cost in
accordance with IAS 19, Employee benefits.
An analysis of the amortisation and impairment of goodwill and intangible assets,
depreciation and impairment of property, plant and equipment, exceptional operating
costs, investment income and finance costs by segment is as follows :
Unaudited 52 Amortisation Impairment Exceptional Impairment
Depreciation Investment Finance
weeks ending of of operating of of revenue costs 3rd October, 2010 intangible goodwill costs investment property, assets and property plant intangible and and assets impairment equipment of property, plant and equipment Note 6 Note 7 Note £m £m £m £m £m £m £m RMS (2.0) - - - (3.9) 0.2 - Business (13.3) - (0.6) - (7.6) - (0.5) information Events (12.6) 26.8 (0.8) - (1.3) 0.3 - Euromoney (14.8) (1.8) 1.8 (0.2) (2.5) 0.2 (1.6) National (23.8) (3.3) (10.4) (9.8) (14.4) 0.1 (2.4) media Local (4.2) (1.4) (5.7) (9.1) (18.9) - - media Radio (1.7) (0.4) - - (0.6) - - (72.4) 19.9 (15.7) (19.1) (49.2) 0.8 (4.5) Corporate - - 3.0 (7.2) (1.6) 0.6 (72.9) costs (72.4) 19.9 (12.7) (26.3) (50.8) 1.4 (77.4) Relating to 21 1.5 0.3 - - 0.6 - - discontinued operations Group total (70.9) 20.2 (12.7) (26.3) (50.2) 1.4 (77.4) The Group's exceptional operating costs represent closure and reorganisation costs in business information, events,national media and local media amounting to £17.5 million offset by a net credit of £3.0 million in corporate costscomprising restructuring costs of £6.5 million less a pension curtailment gain of £9.5 million. In Euromoney theexceptional operating income is represented by restructuring charges of £0.6 million following further reductions inheadcount and an exceptional credit of £2.2 million following the successful resolution of a US legal dispute. TheGroup's tax charge includes a related credit of £4.2 million in relation to these items.
3 SEGMENT ANALYSIS CONTINUED
Audited 53 weeks External revenue Inter-
Total Segment Less Group profit
ending 4th October, segment revenue
revenue result operating before
2009 Restated (note 2) profit exceptional of joint operating ventures costs and and amortisation associates and impairment of goodwill and intangible assets Note £m £m £m £m £m £m RMS 136.5 1.8 138.3 42.2 - 42.2 Business information 229.8 0.3 230.1 46.4 0.2 46.2 Events 174.6 - 174.6 37.1 - 37.1 Euromoney 317.6 - 317.6 77.3 0.3 77.0 National media 876.0 61.1 937.1 57.9 (3.8) 61.7 Local media 327.9 2.7 330.6 24.5 0.5 24.0 Radio (i) 55.1 - 55.1 5.6 1.9 3.7 2,117.5 65.9 2,183.4 291.0 (0.9) 291.9 Corporate costs (19.1) Discontinued operations (i) (55.1) (3.7) 2,062.4 Operating profit before 269.1
exceptional operating costs
and amortisation and
impairment of goodwill
and intangible assets
Exceptional operating costs
(99.0) including impairment of property, plant and equipment Impairment of goodwill (253.4) and intangible assets
Amortisation of intangible
(77.9) assets Operating loss before (161.2) share of results of joint ventures and associates Share of results of (9.2) joint ventures and associates Total operating loss (170.4) Other gains and losses (23.5) Loss before net finance (193.9) costs and tax Investment revenue 7.0 Finance costs (113.8) Loss before tax (300.7) Tax 80.3 Loss from discontinued (85.0) operations Loss for the year (305.4)
(i) Revenue and Group profit before exceptional operating costs and amortisation and
impairment of goodwill and intangible assets relating to the discontinued operations
of Radio has been deducted in order to reconcile to Group profit before tax from
continuing operations.
Operating profit before exceptional operating costs and amortisation and impairment
of goodwill and intangible assets within the national media division comprised £85.1
million from newspapers, £0.3 million from digital offset by a loss of £4.3 million
from television and unallocated divisional central costs of £19.4 million.
Operating profit before exceptional operating costs and amortisation and impairment
of goodwill and intangible assets within the local media division comprised £4.2
million from operations in central Europe.
Included within unallocated central costs is a credit of £0.2 million which adjusts
the pensions charge recorded in each operating segment from a cash rate to the net
service cost in accordance with IAS 19, Employee benefits.
An analysis of the amortisation and impairment of goodwill and intangible assets,
depreciation and impairment of property, plant and equipment, exceptional operating
costs, investment income and finance costs by segment is as follows :
Audited 53 Amortisation Impairment Exceptional Impairment Depreciation Investment Finance weeks of of operating of of revenue costs ending 4th intangible goodwill costs investment property, October, assets and property plant 2009 intangible and and Restated assets impairment equipment (note 2) of property, plant and equipment Note 6 Note 7 Note £m £m £m £m £m £m £m RMS (1.9) - - - (3.3) 0.2 (0.3) Business (12.1) (0.5) (1.2) - (8.1) - (1.1)information Events (13.2) (88.8) (10.0) - (1.8) 0.5 - Euromoney (17.1) (21.9) (9.8) (1.2) (2.5) 0.3 (30.7) National (26.5) (48.1) (63.2) (21.9) (29.1) 1.0 (0.3)media Local media (7.1) (94.2) (13.8) (1.7) (13.0) - - Radio (11.2) (93.1) (0.2) - (2.2) - - (89.1) (346.6) (98.2) (24.8) (60.0) 2.0 (32.4) Corporate - - 24.4 (0.6) (1.7) 5.0 (81.4)costs (89.1) (346.6) (73.8) (25.4) (61.7) 7.0 (113.8) Relating to 20 11.2 93.2 0.2 - 2.2 - -discontinued operations Group total (77.9) (253.4) (73.6) (25.4) (59.5) 7.0 (113.8)The Group's exceptional operating costs represent reorganisation costs of £83.3 million, charges relating to a rationalisation of the Group's property portfolio of £3.7 million together with exceptional provisions of £10.5 million in the national media division and £1.0 million in the local media divisions for a bad debt offset by pension curtailments of £24.7 million in corporate costs. There is a related current tax credit of £5.1 million associated with the total exceptional operating costs.
3 SEGMENTAL INFORMATION CONTINUED
The Group's revenue comprises sales excluding value added tax, less discounts and commission where applicable and is
analysed as follows :
Unaudited Unaudited Unaudited Unaudited Audited Audited Audited Audited 52 weeks 52 weeks 52 weeks 52 weeks 53 weeks 53 weeks 53 weeks 53 weeks ending ending ending ending ending ending ending ending 3rd October, 3rd October, 3rd October, 3rd
4th 4th October, 4th October, 4th
2010 2010 2010 October, October, 2009 2009 October, 2010 2009 2009 Total Discontinued Inter-segment Continuing
Total Discontinued Inter-segment Continuing
operations operations operations operations (note 21) (note 21) £m £m £m £m £m £m £m £m Sale of goods 711.5 - - 711.5 727.4 - - 727.4 Rendering of services 1,340.3 (15.9) (67.9) 1,256.5 1,456.0 (55.1) (65.9) 1,335.0 2,051.8 (15.9) (67.9) 1,968.0 2,183.4 (55.1) (65.9) 2,062.4
The Group includes circulation and subscriptions revenue within sales of goods, the remainder of
the Group's revenue, excluding investment revenue is included within rendering of services.
Investment revenue is shown in note 6.
By 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 these regions. Export sales and
related profits are included in the areas from which those sales are made. Revenue in each geographic
market in which customers are located is not disclosed as there is no material difference between the two.
Revenue is analysed by geographic area as follows :
Unaudited Unaudited
Unaudited Audited Audited Audited
52 weeks ending 52 weeks ending 52 weeks ending 53 weeks 53 weeks 53 weeks 3rd October, 2010 3rd October, 2010 3rd October, 2010 ending ending ending 4th October, 4th October, 4th 2009 2009 October, 2009 Total Discontinued Continuing Total Discontinued Continuing operations (note 21) operations operations operations (note 21) £m £m £m £m £m £m UK 1,305.2 - 1,305.2 1,369.2 - 1,369.2 Rest of Europe 46.8 - 46.8 56.9 - 56.9 North America 527.7 - 527.7 530.0 - 530.0 Australia 26.3 (15.9) 10.4 65.7 (55.1) 10.6 Rest of the World 77.9 - 77.9 95.7 - 95.7 1,983.9 (15.9) 1,968.0 2,117.5 (55.1) 2,062.4
The closing net book value of goodwill, intangible assets, investment property and property, plant and equipment
is analysed by geographic area as follows :
Unaudited Audited Audited Unaudited Audited Audited Closing net book value of goodwill Closing Closing Closing Closing Closing net book net book net book net book net book value of value of value of value of value of goodwill
goodwill intangible intangible intangible
assets assets assets As at 3rd October, 2010 As at 4th
As at 28th As at 3rd As at 4th As at 28th
October,
September, October, October, September,
2009 2008 2010 2009 2008 £m £m £m £m £m £m UK 275.2 294.4 342.4 96.6 114.3 176.1 Rest of Europe 7.1 3.9 10.4 4.8 15.2 17.8 North America 433.4 413.4 479.1 267.1 263.3 277.5 Australia 1.5 1.9 1.9 0.8 57.2 146.8 Rest of the World 18.6 20.6 39.7 8.6 10.9 11.8 735.8 734.2 873.5 377.9 460.9 630.0 Unaudited Audited Audited Unaudited Audited Audited Closing net book value of investment Closing Closing Closing Closing Closing property net book net book net book net book net book value of value of value of value of value of investment investment property, property, property, property property plant and plant and plant and equipment equipment equipment As at 3rd October, 2010 As at 4th As at 28th As at 3rd As at 4th As at 28th October, September, October, October, September, 2009 2008 2010 2009 2008 £m £m £m £m £m £m UK 7.0 - - 316.4 374.9 440.2
Rest of Europe - -
- 17.3 19.9 17.8
North America - -
- 31.2 25.2 24.7
Australia - -
- 0.3 15.6 14.4
Rest of the World - -
- 5.6 4.8 4.8
7.0 -
- 370.8 440.4 501.9
The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill
might be impaired. Intangible assets, all of which have finite lives, are tested separately from goodwill only
where impairment indicators exist. The total impairment credit recognised for the period was £19.9 million
(2009 charge £346.6 million). Of the impairment credit for the period, £26.8 million relates to the exhibitions
division in relation to their gift sector businesses following a reduction in the Group's weighted average cost
of capital and an improvement in the markets in which these businesses operate offset by a £1.8 million charge
relating to Euromoney, mostly in connection with its Asia based conference and training business, a £1.4
million charge relating to the local media division and a £0.3 million charge relating to the radio division
following a continued decline in advertising revenues in these segments. There is a deferred tax charge of
£10.7 million in relation to this impairment credit (2009 credit £38.9 million and a current tax credit of
£19.8 million).
When testing for impairment, the recoverable amounts for all the Group's cash-generating units (CGUs) are
measured at the higher of value in use and fair value less costs to sell. Value in use is calculated by
discounting future expected cash flows. These calculations use cash flow projections based on management
approved budgets and projections which reflect management's current experience and future expectations of the
markets in which the CGU operates. Risk adjusted discount rates used by the Group in its impairment tests range
from 8.5 % to 11.5 % (2009 9.5 % to 12.0 %), the choice of rates depending on the market and maturity of the
CGU. The Group's estimate of the weighted average cost of capital has decreased from the previous year
reflecting principally a 1% decrease in equity premium together with a reduction in bond yields. The
projections consist of Board approved budgets for the following year, three year plans and growth rates which
range between 0.0 % and 3.0 % (2009 0.0 % and 5.0 %) and vary with management's view of the CGU's market
position, maturity of the relevant market and do not exceed the long-term average growth rate for the market in
which it operates for periods beyond this period.
DMGT plc NOTES4 SHARE OF RESULTS OF
JOINT VENTURES AND ASSOCIATES
Unaudited Audited 52 weeks 53 weeks ending ending 3rd October, 4th October, 2010 2009 Note £m £m Share of profits/(losses) 1.9 (1.5) from operations of joint ventures Share of profits/(losses) 0.1 (1.3) from operations of associates Operating profits/(losses) 2.0 (2.8) from joint ventures and associates Share of amortisation of (2.4) - intangibles of joint ventures Share of amortisation of (0.3) - intangibles of associates Share of joint ventures' (1.0) - interest payable Share of associates' interest payable - (0.2) Share of joint ventures' tax (0.7) - Share of associates' tax (0.1) (0.2) Impairment of carrying (i) (1.2) (2.4) value of joint venture Impairment of carrying (ii) (1.6) (3.6) value of associate (5.3) (9.2) Share of associates items - (2.4) recognised in equity (5.3) (11.6) Share of results from (2.2) (1.5) operations of joint ventures Share of results from (0.3) (1.7) operations of associates Impairment of carrying (1.2) (2.4) value of joint ventures Impairment of carrying (1.6) (3.6) value of associates (5.3) (9.2) Share of associates' items - (2.4) recognised in equity (5.3) (11.6)
(i) Represents a write down in the carrying value of the Group's investment in Mail Today Newspapers Pvt. Limited. (ii) Represents a write down in the carrying value of the Group's investment in InfoStud, Fortune Green Limited and
Inview Interactive Limited. In the prior year this represented a write down in the value of the Group's investment
in Inview Interactive Limited.
5 OTHER GAINS AND LOSSES Unaudited Audited 52 weeks 53 weeks ending ending 3rd October, 4th October, 2010 2009 £m £m Impairment of available- - (8.7) for-sale assets Profit on sale of property, - 1.5 plant and equipment
Amounts provided against contingent
consideration receivable on disposal
- (5.6)
Profit/(loss) on sale of businesses
0.4 (8.3) Loss on deemed part - (2.4) disposal of Euromoney Institutional Investor plc Loss on sale of joint (0.3) - ventures and associates 0.1 (23.5) 6 INVESTMENT REVENUE Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 Restated (note 2) £m £m Expected return on pension - 4.8 scheme assets less interest
on pension scheme liabilities
Dividend income 0.6 0.2 Interest receivable from 0.8 2.0 short-term deposits 1.4 7.0 DMGT plc NOTES7 FINANCE COSTS Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 Note £m £m Interest on pension scheme (2.2) - liabilities less expected return on pension scheme assets Interest, arrangement and (72.8) (76.1) commitment fees payable on bonds, bank loans and loan notes Loss on derivatives, or portions (0.4) (28.0) thereof, not designated for hedge accounting Finance charge on discounting (i) (0.7) (1.7) of contingent consideration Other (1.3) (8.0) (77.4) (113.8) Analysed as follows : Interest, arrangement and (72.8) (76.1) commitment fees payable on bonds, bank loans and loan notes Interest on pension scheme (2.2) - liabilities less expected return on pension scheme assets Finance charge on discounting (0.7) (1.7) of contingent consideration Change in fair value of - (2.0) non-designated portion of derivatives designated as net investment hedges Change in fair value of (0.4) - interest rate caps not designated for hedge accounting Change in fair value of 3.8 9.0 derivative hedge of bond Change in fair value of (3.8) (9.0) hedged portion of bond (76.1) (79.8) Tax equalisation swap income - 0.8 Non foreign exchange gain - 1.1 on tax equalisation options (ii) - 1.9 Foreign exchange loss on - (27.9) tax equalisation arrangements Foreign exchange loss on (iii) - (6.2) restructured hedging arrangements Change in fair value of (1.3) (1.8) acquisition put option commitments (1.3) (35.9) (77.4) (113.8)
(i) The finance charge on the discounting of contingent consideration arises from the requirement under IFRS 3,
Business Combinations, to record contingent consideration at fair value using a discounted cashflow approach.
There have been no other fair value movements recorded in contingent consideration for acquisitions since October
3rd, 2009. (ii) Tax equalisation swap income and the gain from tax equalisation options totalling £nil (2009 £1.9 million), arises
from the economic hedging of tax on foreign exchange movements. The foreign exchange loss on tax equalisation
arrangements of £nil (2009 £27.9 million) is excluded from adjusted profit since it is equal to a reduced tax
charge (see note 11). In addition, the foreign exchange loss on intra group financing, premium on repurchase of
bonds, on restructured hedging arrangements and the change in fair value of acquisition put options are also
excluded from adjusted profits. (iii) The foreign exchange losses on restructured hedging arrangements of £nil (2009 £6.2 million) arise from forward
contracts classified as ineffective under IAS 39, Financial instruments, following the directors' review of the
Group's US dollar revenue capacity in its UK based businesses.
8 TAX Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 Note £m £m
The credit on the profit/(loss)
for the year consists of :
UK tax
Corporation tax at 28% (2009 28%) (6.3) - Adjustments in respect of prior years (i)
32.3 26.4 26.0 26.4 Overseas tax Corporation tax (21.7) (1.0) Adjustments in respect of prior years (i) 3.6 1.6 Total current tax 7.9 27.0 Deferred tax Origination and reversals (0.5) 49.1 of timing differences
Adjustments in respect of prior years (i)
32.2 4.2 Total deferred tax 31.7 53.3 Total Tax 39.6 80.3
Relating to discontinued operations 21 (1.4) 14.2 38.2 94.5
(i) The net prior year credit of £67.6 million (2009 £30.8 million), which includes amounts relating to discontinued
operations, arose largely from the agreement of certain prior year open issues with tax authorities, a reassessment
of the level of tax provisions required and a reassessment of prior year capital allowance claims.
Being a multinational Group with tax affairs in many geographic locations inherently leads to a highly complex tax
structure. The tax charge is reviewed and measured on a Group total basis only.
Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and
non-recurring items (adjusted tax charge) amounted to a charge of £33.7 million (2009 £44.3 million) and the
resulting rate is 13.7 % (2009 22.1 %). The differences between the tax credit and the adjusted tax charge are shown
in the reconciliation below : Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 £m £m
Total tax credit on the profit/(loss) for the year 38.2 94.5Deferred tax on intangible assets and goodwill 8.9 (52.4)Current tax on foreign exchange tax equalisation contracts - (27.9)Agreement of open issues with tax authorities (46.2) (34.4)Tax on other exceptional items (34.6) (24.1)Adjusted tax charge on the profit/(loss) for the period (33.7) (44.3)In calculating the adjusted tax rate, the Group excludes the potential future deferred tax effects of intangible assetsand goodwill as it prefers to give the users of its accounts a view of the tax charge based on the current status ofsuch items.A credit of £nil relating to tax on foreign exchange losses (2009 £27.9 million) has been treated as exceptional as itmatches foreign exchange losses of £nil (2009 £27.9 million) on tax equalisation swaps included within finance costs(see note 7). DMGT plc NOTES8 TAX CONTINUED
The deferred tax assets disclosed in the
Consolidated Statement of Financial Position
in respect of tax losses and tax credits are analysed as follows :
Unaudited Audited Audited As at 3rd October, As at 4th October, As at 28th September, 2010 2009 2008 £m £m £mUK 31.1 18.3 1.6North America 55.1 59.1 41.8Australia 3.7 1.9 1.5 89.9 79.3 44.9These losses have been recognised on the basis that the Directors are of the opinion based on recent and forecasttrading, that sufficient suitable taxable profits will be generated in the relevant territories in future accountingperiods, such that it is considered probable that these assets will be recovered. Of these assets, £41.9 million willexpire between 2017 and 2029.9 DIVIDENDS PAID Unaudited Unaudited Audited Audited 52 weeks ending 52 weeks 53 weeks ending 53 weeks 3rd October, ending 4th October, ending 2010 3rd 2009 4th October, October, 2010 2009 Pence per share £m Pence per share £m Amounts recognisable as distributions to equity holders in the period Ordinary shares - final 9.90 2.0 - - dividend for the year ended 4th October, 2009 'A' Ordinary Non-Voting 9.90 35.9 - - shares - final dividend for the year ended 4th October, 2009 Ordinary shares - final dividend - - 9.90 2.0 for the year ended 28th September, 2008 'A' Ordinary Non-Voting - - 9.90 35.1 shares - final dividend for the year ended 28th September, 2008 37.9 37.1 Ordinary shares - interim 5.00 1.0 - - dividend for the year ending 3rd October, 2010 'A' Ordinary Non-Voting 5.00 18.2 - - shares - interim dividend for the year ending 3rd October, 2010 Ordinary shares - interim - - 4.80 1.0 dividend for the year ended 4th October, 2009 'A' Ordinary Non-Voting - - 4.80 17.2 shares - interim dividend for the year ended 4th October, 2009 19.2 18.2 14.90 57.1 14.70 55.3 The Board has declared a final dividend of 11.0 p per Ordinary / `A' Ordinary Non-Voting share (2009 9.90 p) which willabsorb an estimated £42.1 million of shareholders' funds for which no liability has been recognised in these financialstatements. It will be paid on 11th February, 2011 to shareholders on the register at the close of business on 3rdDecember, 2010.
10 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 NON-CONTROLLING
INTERESTS) Unaudited Audited 52 weeks 53 weeks ending ending 3rd 4th October, October, 2010 2009 £m £m
Profit/(loss) before tax - 146.3 (300.7)continuing operations Profit/(loss) before tax - 1.3 (99.2)discontinued operations Add back : Amortisation of intangible 75.1 89.9assets in Group profit from operations and in joint ventures and associates
Impairment (reversal)/charge (19.9) 346.6
of goodwill and intangible assets
Exceptional operating costs, 39.0 99.2
impairment of investment property
and impairment of property, plant and equipment
Impairment of carrying value of joint venture 1.2 2.4 Impairment of carrying value of associate 1.6 3.6 Other gains and losses : Profit on sale of property, - (1.5) plant and equipment Amounts provided against - 5.6 contingent consideration receivable on disposal (Profit)/loss on sale of businesses (0.4) 8.3 Impairment of available- - 8.7 for-sale assets Loss on deemed part - 2.4 disposal of Euromoney Institutional Investor plc Loss on sale of joint 0.3 - ventures and associates Profit on sale of - (1.2) discontinued operations Finance costs : Foreign exchange loss on - 27.9 tax equalisation arrangements Foreign exchange loss on - 6.2 restructured hedging arrangements Foreign exchange loss on - 1.8 restructured hedging arrangements Change in fair value of 1.3 - acquisition put option commitments Tax : Share of tax in joint 0.8 0.8 ventures and associates
Profit before exceptional operating 246.6 200.8costs, amortisation and impairment of goodwill and intangible assets,
other gains and losses and exceptional financing costs,
taxation and non-controlling interests Total tax credit on the profit for
38.2 94.5 the period Adjust for : Deferred tax on intangible 8.9 (52.4) assets and goodwill Current tax on foreign exchange - (27.9) on tax equalisation arrangements Agreed open issues with tax (46.2) (34.4) authorities Tax on other exceptional (34.6) (24.1) items Non-controlling interests (21.1) (15.8) Adjusted profit before exceptional 191.8 140.7operating costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs after taxation and non-controlling interests The adjusted non-controlling interests share of profits for the period of £21.1 million (2009 £15.8 million) is statedafter eliminating a credit of £1.9 million (2009 £17.8 million), being the non-controlling interests share ofexceptional items.The Group has decided to alter the presentation of its adjusted results from 2010/11 so as to include the charge foramortisation of software and internally generated intangible assets. Henceforth, the Group will add back only theamortisation of intangible assets acquired in a business combination in arriving at its adjusted numbers. This changewill bring it into line with the practice of the majority of other companies. Had this change been made in the currentfinancial year adjusted profit before exceptional operating costs, amortisation and impairment of goodwill andintangible assets, other gains and losses and exceptional financing costs after taxation and non-controlling interestswould have been £14.0 million lower at £177.8 million (2009 £10.5 million lower at £130.2 million). DMGT plc NOTES11 EARNINGS/(LOSS) PER SHARE
Basic earnings per share of 52.1 p (2009 loss 79.8 p) and diluted earnings per share of 52.1 p (2009 loss 79.8 p) arecalculated, in accordance with IAS 33, Earnings per share, on Group profit for the financial period of £199.8 million(2009 loss £303.4 million) and on the weighted average number of ordinary shares in issue during the year, as set outbelow.As in previous years, adjusted earnings per share have also been disclosed since the Directors consider that thisalternative measure gives a more comparable indication of the Group's underlying trading performance. Adjusted earningsper share of 50.0 p (2009 37.2 p) are calculated on profit for continuing and discontinued operations before exceptionaloperating costs, amortisation and impairment of goodwill and intangible assets, after charging the taxation andnon-controlling interests associated with those profits, of £191.8 million (2009 £140.7 million), as set out in note 10above, and on the basic weighted average number of ordinary shares in issue during the year.Basic and diluted earnings/(loss) per share
Unaudited Unaudited Audited Audited 52 weeks 52 weeks 53 weeks 53 weeks ending ending ending ending 3rd 3rd 4th 4th October, October, October, October, 2010 2010 2009 2009 Basic Diluted Basic Diluted pence pence pence pence per share per share per share per share
Profit/(loss) per share 43.5 43.5 (57.4) (57.4)from continuing operations Adjustment to include 8.6 8.6 (22.4) (22.4)earnings of discontinued operations Basic earnings/(loss) per 52.1 52.1 (79.8) (79.8)share from continuing and discontinued operations Adjusted earnings/(loss) per share Unaudited Unaudited Audited Audited 52 weeks 52 weeks 53 weeks 53 weeks ending ending ending ending 3rd 3rd 4th 4th October, October, October, October, 2010 2010 2009 2009 Basic Diluted Basic Diluted pence pence pence pence per share per share per share per share
Profit/(loss) before tax - 38.2 38.2 (78.5) (78.5)continuing operations Profit/(loss) before tax - 0.3 0.3 (25.9) (25.9)discontinued operations Profit on disposal of 8.7 8.7 - -discontinued operations Add back : Amortisation of intangible 19.6 19.6 23.7 23.7assets in Group profit from operations and in joint ventures and associates Impairment (reversal)/ (5.2) (5.2) 91.5 91.5charge of goodwill and intangible assets
Exceptional operating costs, 10.2 10.2 26.2 26.2impairment of investment property and impairment of property, plant and equipment Impairment of carrying 0.3 0.3 0.6 0.6value of joint venture Impairment of carrying 0.4 0.4 1.0 1.0value of associate Other gains and losses : Profit on sale of property, - - (0.4) (0.4) plant and equipment Amounts provided against - - 1.5 1.5 contingent consideration receivable on disposal (Profit)/loss on sale of (0.1) (0.1) 2.2 2.2 businesses Impairment of available - - 2.3 2.3 -for-sale assets Loss on deemed part disposal - - 0.6 0.6 of Euromoney Institutional Investor plc Loss on sale of joint ventures 0.1 0.1 - - and associates Profit on sale of discontinued - - (0.3) (0.3) operations Finance costs : Foreign exchange loss - - 7.4 7.4 on tax equalisation arrangements Foreign exchange loss on - - 1.6 1.6 restructured hedging arrangements Change in fair value of 0.3 0.3 0.5 0.5 acquisition put option commitments Tax : Share of tax in joint 0.2 0.2 0.2 0.2 ventures and associates Profit from discontinued operations Profit on disposal of (8.7) (8.7) - - discontinued operations
Profit before exceptional operating costs, 64.3 64.3 54.2 54.2amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and non-controlling interests Total tax credit on the profit
10.0 10.0 24.6 24.6 for the period Adjust for : Deferred tax on intangible 2.3 2.3 (13.9) (13.9) assets and goodwill Current tax on foreign - - (7.4) (7.4) exchange on tax equalisation arrangements Agreed open issues (12.1) (12.1) (9.1) (9.1) with tax authorities Tax on other (9.0) (9.0) (6.4) (6.4) exceptional items Non-controlling interests (5.5) (5.5) (4.8) (4.8) Adjusted profit before 50.0 50.0 37.2 37.2
exceptional operating costs, amortisation and impairment of goodwill and intangible assets,
other gains and losses and exceptional financing costs
after taxation and non-controlling
interests
The Group has decided to alter the presentation of its adjusted results from 2010/11 so as to include the charge
for amortisation of software and internally generated intangible assets. Henceforth, the Group will add back only
the amortisation of intangible assets acquired in a business combination in arriving at its adjusted numbers. This
change will bring it into line with the practice of the majority of other companies. Had this change been made in
the current financial year adjusted earnings per share (before exceptional operating costs, amortisation and
impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs after taxation
and non-controlling interests) would have been 46.3 p (2009 34.4 p).
The weighted average number of ordinary shares in issue during the period for the purpose of these calculations is as follows : Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 Number Number m m Number of ordinary 392.6 392.6 shares in issue Shares held in Treasury (9.6) (14.0) Basic earnings per 383.0 378.6 share denominator Effect of dilutive 0.7 0.1 share options Dilutive earnings per 383.7 378.7 share denominator DMGT NOTES12 ANALYSIS OF NET DEBT Unaudited Audited As at As at 3rd October, 2010 4th October 2009 £m £m Net debt at start (1,048.6) (1,014.6) including derivatives Cashflow 190.1 (8.8) Arising with acquisitions (1.0) - Foreign exchange movements 1.0 (20.7) Other non-cash movements (3.5) (4.5) Net debt at year end (862.0) (1,048.6) including derivatives Analysed as : Cash and cash equivalents 65.7 47.4 Unsecured bank overdrafts (1.4) (0.5) Cash and cash equivalents 64.3 46.9 in the cash flow statement Debt due within one year Bank loans (0.5) (0.5) Loan notes (7.3) (14.8) Hire purchase obligations (5.1) (4.7) Debt due in more than one year Bonds (853.2) (847.1) Hire purchase obligations (15.2) (20.3) Loans (2.2) (173.3) Net debt at year end (819.2) (1,013.8) Effect of derivatives on bank loans (42.8) (34.8) Net debt including derivatives (862.0) (1,048.6)
13 PROPERTY, PLANT AND EQUIPMENT
During the year the Group spent £35.2 million (2009 £39.6 million) on property, plant and equipment.
The Group also disposed of certain of its property, plant and equipment with a carrying value of
£4.1 million (2009 £21.5 million) for proceeds of £4.2 million (2009 £20.5 million).
14 INVESTMENT PROPERTY
During the year a number of the Group's freehold properties ceased to be owner occupied and became
subject to letting activity. In accordance with the Group's accounting policy these properties have
been transferred out of property, plant and equipment and into investment property at net book value.
The fair value of the Group's investment properties as at 3rd October, 2010 was £7.0 million (2009 £nil).
This was arrived at by reference to market evidence for similar properties and was carried out by
an officer of the Group's property department.
15 ACQUISITION PUT OPTION COMMITMENTS
Unaudited Audited Audited As at As at As at 3rd October, 2010 4th October, 2009 28th September, 2008 £m £m £m Current 1.1 11.2 29.5 Non-current - 0.7 7.6 1.1 11.9 37.1
16 OTHER FINANCIAL LIABILITIES
Unaudited Audited Audited As at As at As at 3rd October, 2010 4th October, 2009 28th September, 2008 £m £m £m Current liabilities Bank overdrafts 1.4 0.5 1.0 Bank loans 0.5 0.5 - Finance leases 5.1 4.7 - Loan notes 7.3 14.8 25.0 14.3 20.5 26.0 Non-current liabilities Bonds 853.2 847.1 838.9 Bank loans 2.2 173.3 165.3 Finance leases 15.2 20.3 - 870.6 1,040.7 1,004.217 BANK LOANS
The Group's bank loans bear interest charged at LIBOR plus a margin based on the Group's ratio of
net debt to EBITDA. Additionally each facility contains a covenant based on a minimum interest
cover ratio. EBITDA for these purposes is defined as the aggregate of the Group's consolidated
operating profit before share of results of joint ventures and associates before deducting depreciation,
amortisation and impairment of goodwill, intangible and tangible assets, before exceptional items and
before interest and finance charges. These covenants were met at the relevant test dates during the period.
The Group's facilities and their maturity dates are as follows : Unaudited Audited Audited As at 3rd As at As at 28th October, 2010 4th September, October, 2008 2009 £m £m £m
Expiring in one year or less 180.0 180.0 70.0Expiring in more than one year but not more than two years - 30.0 180.0Expiring in more than two years but not more than three years 240.0 - -Expiring in more than four years but not more than five years - 210.0 240.0Total bank facilities 420.0 420.0 490.0
The following undrawn committed borrowing facilities were available to the Group in respect of which all conditions precedent had been met :
Unaudited Audited Audited As at 3rd As at As at 28th October, 2010 4th September, October, 2008 2009 £m £m £m
Expiring in one year or less 153.6 - -Expiring in more than one year but not more than two years - 105.7 5.7Expiring in more than two years but not more than three years 201.6 30.0 84.5Expiring in more than four years but not more than five years - 68.2 157.3Total undrawn committed bank facilities
355.2 203.9 247.5 DMGTNOTES18 SHARE CAPITAL AND RESERVES
Share capital as at 3rd October, 2010 amounted to £49.1 million which was unchanged during the period.
The Company disposed of 2,942,161 'A' Ordinary non-voting shares, representing 0.79 % of the called up
'A' Ordinary Non-Voting share capital, in order to satisfy incentive schemes.
At 3rd October, 2010 options were outstanding under the terms of the Company's 1997 and 2006 Executive
Share Option Schemes , together with nil cost options over a total of 5,557,567
(2009 6,380,067 2008 6,978,245) 'A' Ordinary Non-Voting shares.
19 SUMMARY OF THE EFFECTS OF ACQUISITIONS
Notable acquisitions completed during the period, the
percentage of voting rights acquired, the dates of
acquisition and the goodwill arising were as follows :
Name of acquisition Segment % voting Business
Date of Consideration Intangible Goodwill
rights acquired description acquisition paid fixed arising assets acquired £m £m £mGlobrix Limited National media 50% (note i) UK property January 2010 6.9 3.2 3.7 portalCalnea Analytics Business 100% Automated July 2010 2.7 0.7 1.9Limited information valuation service providerArete Consulting Euromoney 100% Provider of August 2010 6.7 3.3 4.4Limited information on retail structured investment products
(i) The Group is able to exert control through its ability to control the composition of the Board of Directors of
Globrix Limited. As a result, in accordance with IAS 27, the Group has accounted for Globrix Limited as a
subsidiary. Provisional fair value of net assets acquired with acquisitions : Book Provisional fair Provisional fair value value adjustments value £m £m £mGoodwill - 12.0 12.0Intangible assets - 8.3 8.3Property, plant and equipment 0.1
- 0.1Current assets 0.7 - 0.7Cash and cash equivalents 1.5 - 1.5
Trade creditors and other payables (1.0)
- (1.0)Deferred tax - (2.1) (2.1)Net assets acquired 1.3 18.2 19.5Non-controlling interests (0.1) - (0.1)share of net assets acquired
Group share of net assets acquired 1.2
18.2 19.4 Non-cash Cash paid in current Total period £m £m £m
Contingent consideration 4.9 - 4.9Loan notes 1.0 - 1.0Cash - 13.5 13.5
Total consideration at fair value 5.9 13.5 19.4
and total cost of acquisition
If all acquisitions had been completed on the first day of the financial year,Group revenues for the year would have been £1,971 million and Group profitattributable to equity holders of the parent would have been £201.5 million.This information takes into account the amortisation of acquired intangibleassets for a full year, together with related income tax effects but excludesany pre-acquisition finance costs and should not be viewed as indicative ofthe results of operations that would have occurred if the acquisitions hadactually been completed on the first day of the financial year
Total profit attributable to equity holders of the parent since the date of acquisition for companies acquired during the period amounted to £nil.
The aggregate consideration for these and other businesses was £19.4 million,of which £13.5 million was paid in cash during the year, an estimated amountof £4.9 million payable in the form of contingent consideration, dependingupon trading results and £1.0 million satisfied by the issue of a loan note.This contingent consideration has been discounted back to current values inaccordance with IFRS 3, Business Combinations. In each case, the Group hasused acquisition accounting to account for the purchase.
Goodwill arising on the acquisitions is principally attributable to the anticipated profitability relating to the distribution of the Group's products in new and existing markets and anticipated operating synergies from the business combinations.
Purchase of additional shares in controlled entities
Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 2010 4th October, 2009 £m £m
Cash consideration (including acquisition 12.8
24.1
expenses of £nil (2009 £0.1 million))
During the period, the Group acquired additional shares in controlled entitiesamounting to £12.8 million (2009 £24.1 million). In addition, the Group optedto receive a scrip dividend from Euromoney amounting to £10.7 million (2009£13.7 million) thereby acquiring a further 0.9 % (2009 1.8 %) of the issuedordinary share capital of Euromoney. Under the Group's accounting policy forthe acquisition of shares in controlled entities, no adjustment has beenrecorded to the fair value of assets and liabilities already held on theConsolidated Statement of Financial Position. The difference between the costof the additional shares and the carrying value of the non-controllinginterests share of net assets is adjusted in retained earnings. The adjustmentto retained earnings in the period was a charge of £2.8 million (2009 £3.1million).Reconciliation to purchase of subsidiaries as shown in the cash flow statement : Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 4th October, 2010 2009 £m £m
Cash consideration excluding 13.5 7.6acquisition expensesCash paid to settle contingent 6.3
15.1
consideration in respect of acquisitionsCash and cash equivalents (1.5) (0.7)acquired with subsidiariesPurchase of subsidiaries 18.3 22.0DMGTNOTES
20 SUMMARY OF THE EFFECTS OF DISPOSALS
As referred to in note 26, the Group disposed of a 50.0% interest in dmg radio Australia. As part of this disposal
transaction the Group received A$112.5 million (£63.9 million) in repayment of amounts due to the Group arising from
a pre-sale restructuring of the radio division.
The net assets disposed were as follows :
£mIntangible assets 57.2Property, plant and equipment 15.9Interests in joint ventures 24.7Trade and other receivables 14.0Cash at bank and in hand 2.3Deferred tax 1.4Trade creditors and other payables (87.6)Net assets disposed 27.9Profit on sale of businesses 33.2 61.1 Satisfied by :Cash received 0.9
Investment in DMG Radio Investments Limited 21.3 Recycled cumulative translation differences 41.3 Directly attributable costs
(2.4) 61.1
During the period radio generated £0.7 million of the Group's net operating cash flows, paid £nil in respect of
investing activities and paid £nil in respect of financing activities.
The other principal disposals completed during the period included the sale of various exhibition businesses in the
events segment. Cash proceeds received amounted to £10.7 million. In addition, the Group's interest in Euromoney was
diluted during the period by 1.65 %. Under the Group's accounting policy for the disposal of shares in controlled
entities, no adjustment has been recorded to the fair value of assets and liabilities already held on the Consolidated
Statement of Financial Position. The difference between the Group's share of net assets before and after this dilution
is adjusted in retained earnings. The adjustment to retained earnings in the period was a charge of £2.3 million.
The impact of all disposals of businesses on net assets was :
£mGoodwill 6.3Intangible assets 65.1Property, plant and equipment 17.1Interests in joint ventures 25.2Trade and other receivables 18.5Cash at bank and in hand 3.1Deferred tax 0.1
Trade creditors and other payables (94.5) Net assets disposed
41.3Profit on disposal of businesses 33.6 74.9 Satisfied by:Cash received 17.8Contingent consideration receivable 2.9
Investment in DMG Radio Investments Limited 21.3 Recycled cumulative translation differences 39.1 Directly attributable costs
(6.2) 74.9
Reconciliation to disposal of businesses as shown in the cash flow statement :
£mCash consideration net of disposal costs 11.6Cash and cash equivalents disposed with subsidiaries (3.1)Proceeds on disposal of businesses 8.5
The businesses disposed of during the year absorbed £1.7 million of the Group's net operating cash flows, had £nil
attributable to investing and £nil attributable to financing activities.
DMGT
NOTES
21 DISCONTINUED OPERATIONS
In December 2009, the Group sold a 50.0% interest in dmg radio Australia to Illyria Radio Investments Limited
(Illyria). As required by IFRS 3 (2008) this transaction has been accounted for as a disposal of dmg radio Australia
and subsequent acquisition of a 50% interest in the jointly controlled business. As part of this transaction Illyria
invested A$37.5 million of equity which corresponds with the acquisition fair value of the Group's 50% stake. In
addition, both the Group and Illyria subscribed A$15.0 million each in redeemable preference shares at the time of the
transaction. As a result of the funding and borrowings established during the transaction, a balance of A$112.5 million
owed to the Group was repaid. Since the Group has joint control over the day to day management of this business, the
Group's remaining 50.0% interest has been accounted for as a joint venture. The revenue of the Radio segment was £38.4
million from 17th December, 2009 to 3rd October, 2010. There was no intersegment revenue for this segment.
In the prior year the Group received a final payment of £1.2m after related costs from the sale of Atalink Limited,
following agreement of their completion accounts. There is no related tax charge. The business and net assets of
Atalink Limited were sold in March 2007 and were treated as a discontinued operation up to that date.
The Group's Consolidated Income Statement includes the following results from discontinued operations :
Unaudited Audited 52 weeks ending 53 weeks ending 3rd October, 4th October 2010 2009 £m £mRevenue 15.9 55.1Expenses (12.8) (49.2)Depreciation (0.6) (2.2)Operating profit beforeexceptional operating costsand amortisation and impairmentof goodwill and intangible assets 2.5 3.7Exceptional operating costs - (0.2)Impairment of goodwill andintangible assets (0.3) (93.2)Amortisation of intangible assets (1.5) (11.2)Operating profit/(loss) beforeshare of results of jointventures and associates 0.7 (100.9)Share of results of joint venturesand associates 0.6 0.5Total operating profit/(loss)
1.3 (100.4)Other gains and losses - 1.2Profit/(loss) before tax 1.3 (99.2)Tax (1.4) 14.2
Loss after tax attributable to (0.1) (85.0)discontinued operationsProfit on disposal of 33.2 -discontinued operationsProfit/(loss) attributable to 33.1 (85.0)
discontinued operations
There was no tax associated with the profit on disposal of discontinued operations.
Cashflows associated with discontinued operations comprises operating cashflows of £0.7 million (2009 £0.9 million), investing cashflows of £nil million (2009 £1.2 million) and financing cashflows of £nil (2009 £nil).
22 RETIREMENT BENEFITS
The Group operates a number of pension schemes covering most major Group companies under which contributions are paid bythe employer and employees.The schemes include funded defined benefit pension arrangements, providing service-related benefits, based on finalpensionable salary in addition to a number of defined contribution pension arrangements. The defined benefit schemes inthe UK and some defined contribution plans are administered by trustees or trustee companies.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 3rd October, 2010 were £22.9 million (2009 £1.1 millionincome).
The defined benefit obligation is calculated on a year-to-date basis, using the latest actuarial valuation as at 29th March, 2009. The assumptions used in the valuation are summarised below:
Unaudited Audited Audited 52 weeks ending 53 weeks ending 52 weeks ending 3rd October, 4th October, 28th September 2010 2009 2008 % pa % pa % paPrice inflation 3.1 3.1 3.7Salary increases 2.9 3.0 4.2Pension increases 2.9 3.0 3.7Discount rate for 5.0 5.4 7.0scheme liabilitiesExpected overall rate 6.6 7.0 7.5of return on assets
The discount rate for scheme liabilities reflects yields at the period end date on high quality corporate bonds. The
assumption for salary growth has been adjusted to take account of the limit on the extent to which expected future pay
increases will count towards pension accrued and being earned in the schemes. All assumptions were selected after
taking actuarial advice.
Mortality assumptions take account of scheme experience, and also allow for further improvements in life expectancy
based on `medium cohort' projections but with a minimum rate of reduction in mortality rates in future of 1% per annum.
Allowance is made for the extent to which employees have chosen to commute part of their pension for cash at retirement
and for the proportion of members with dependants at retirement eligible for a pension.
23 CONTINGENT LIABILITIESThe Group has issued stand by letters of credit in favour of the Trustees of the Group's defined benefit pension fundamounting to £54.5 million (2009 £37.8 million 2008 £64.3 million) together with other guarantees of £8.1 million (2009£5.3 million 2008 £9.2million).The Group is exposed to libel claims in the ordinary course of business and vigorously defends against claims received.The Group makes provision for the estimated costs to defend such claims when incurred and provides for any settlementcosts when such an outcome is judged probable.Four writs claiming damages for libel were issued in Malaysia against the company and three of its employees in respectof an article published in one of the company's magazines, International Commercial Litigation, in November 1995. Thewrits were served on the company on October 22 1996. Two of these writs have been discontinued. The total outstandingamount claimed on the two remaining writs is Malaysian ringgits 82.0 million (£14.8 million). No provision has been madefor these claims in these financial statements as the directors do not believe the company has any material liability inrespect of these writs. DMGT NOTES24 ULTIMATE HOLDING COMPANY
The Company's ultimate holding company and immediate parent company is Rothermere Continuation Limited, a company
incorporated in Bermuda.25 RELATED PARTY TRANSACTIONSTransactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidationand are not disclosed in this note. The transactions between the Group and its joint ventures and associates aredisclosed below.The following transactions and arrangements are those which are considered to have had a material effect on thefinancial performance and position of the Group for the period.Ultimate Controlling PartyThe Company's ultimate controlling party is the Viscount Rothermere, the Company's Chairman.Transactions with DirectorsThere were no material transactions with Directors of the Company during the year, except for those relating toremuneration.For the purposes of IAS 24, Related Party Disclosures, Executives below the level of the Company's Board are notregarded as related parties.Transactions with joint ventures and associatesAssociated Newspapers Limited has a 33.3 % (2009 45.0 % 2008 45.0 %) shareholding in Fortune Green Limited. During theperiod the Group received revenue for newsprint, computer and office services of £0.5 million (2009 £0.9 million 2008£0.9 million). The amount due from Fortune Green Limited at 3rd October, 2010 was £0.1 million (2009 £0.2 million 2008£0.3 million).Associated Newspapers Limited has a 12.5 % (2009 12.5 % 2008 12.5 %) share in the Newspapers Licensing Agency (NLA) fromwhich royalty revenue of £2.9 million was received (2009 £2.5 million 2008 £3.0 million). Commissions paid on thisrevenue total £0.6 million (2009 £0.3 million 2008 £0.5 million). The amount due from the NLA at 3rd October, 2010 was£0.1 million (2009 £0.1 million 2008 due to £0.2 million).Daily Mail and General Holdings Limited has a 15.6 % (2009 15.8 % 2008 15.8 %) shareholding in The Press Association.During the period the Group received services amounting to £3.5 million (2009 £1.3 million 2008 £1.8 million) and thenet amount due from the Press Association as at 3rd October, 2010 was £0.2 million (2009 £33,000 2008 £0.1 million).The Group has a 24.9 % (2009 24.9 % 2008 nil) share in the Evening Standard. During the year, the Group has receivedrevenue of £25.6 million (2009 £5.6 million 2008 £nil) and incurred charges of £9.3 million (2009 £13.3 million 2008£nil). The net amount due from the Group at 3rd October, 2010 was £2.3 million (2009 £1.0 million 2008 £nil).The wife of a Director of Associated Newspapers Limited is a director of a subsidiary company of Menzies which owns TheNetwork Limited (Network). Network provided distribution services and promotional staff to the Metro and the London Liteduring the year. Purchases of £2.2 million were made by Associated Newspapers Limited during the year and the amount dueto Network at 3rd October, 2010 was £5,000.During the period, Landmark charged management fees of £0.3 million (2009 £0.3 million 2008 £0.3 million) to Point XLimited, and recharged costs of £0.1 million (2009 £0.1 million 2008 £0.1 million). Point X Limited received royaltyincome from Landmark of £68,000 (2009 £77,000 2008 £43,000) and the amount owed to Landmark at 3rd October, 2010 was£5,200 (2009 £39,000 2008 £0.1 million).During the period, Landmark recharged costs totalling £0.1 million (2009 £0.2 million 2008 £nil) to Financial AssetSearch Ltd and the amount due to Landmark at 3rd October, 2010 was £0.3 million (2009 £0.2 million 2008 £nil).Other related party disclosuresAt 3rd October, 2010, the Group owed £3.3 million (2009 £1.6 million 2008 £1.5 million) to the pension schemes which itoperates. This amount comprised employees' and employer's contributions in respect of September 2010 payrolls which werepaid to the pension schemes in October 2010.The Group recharges its principal pension schemes with costs of investment management fees. The total amount rechargedduring the year was £0.7 million (2009 £0.7 million 2008 £0.7 million).
26 POST BALANCE SHEET EVENTS
There were no material post balance sheet events.
DAILY MAIL & GENERAL TRUST PLCRelated Shares:
DMGT.L