26th Nov 2009 07:00
Daily Mail and General Trust plc ('DMGT')Group unaudited preliminary results for the year ended 4th October, 2009. Adjusted results* Statutory results 2009 2008 Change 2009 2008 Revenue GBP2,118 m 2,312 m -8% GBP2,118 m 2,312 m
Operating profit / (loss)GBP278 m GBP317 m -12%GBP(257) mGBP27 m
Profit/(loss) before tax GBP201 m GBP262 m - 23%GBP(401) m (68) m
Earnings/(loss) per share 37.2 p 47.9 p - 22% (80.1) p 0.0 p
Dividend per share 14.7 p 14.7 p 0%
*(before exceptional items and amortisation and impairment of intangible assets; see Consolidated Income Statement and reconciliation in Note 9). Statutory results reflect amortisation, impairments and exceptional items.
B2B RESILIENCE AND SIGNIFICANT COST SAVINGS
Continued growth from business to business operations, including currency gains.
Improvement in profitability* of UK consumer operations since March due to cost initiatives.
Strong focus on cash generation with net debt down by 178 million since half year.
Statutory results reflect restructuring actions taken and impairment charges.
Sale of 50% interest in DMG Radio Australia.
Final dividend maintained.
Martin Morgan, Chief Executive, said
"We have actively managed the business to defend profitability duringunprecedented trading conditions with a clear focus on fundamentals. Revenueand cost initiatives of 150 million have been delivered and we have takenaction on various underperforming assets across the Group. We remain focusedon cash generation, debt reduction and cost efficiency.Our B2B operations have demonstrated their resilience, growing their profits*,including currency gains. Our UK consumer businesses have achieved a sharpimprovement in profitability* in the second half of the year reflecting morestable conditions and a lower cost base.
Our strategy of creating a diversified international portfolio of market-leading businesses in both B2B and consumer markets is proving to be effective in the current environment and leaves us well positioned for 2010 and beyond."
A live webcast of the presentation of the Preliminary Results to City analystswill be available for viewing from 9.30 a.m. on 26th November, 2009 at http://www.dmgt.co.uk. Enquiries Peter Williams, Finance Director Tel: 020 7938 6631 Nicholas Jennings, Company Secretary Tel: 020 7938 6625
Andrew Honnor/ Tom Rayner, Tulchan Communications Tel: 020 7353 4200
Daily Mail and General Trust plc
Contents
Management reportCondensed Consolidated Income StatementCondensed Consolidated Statement of Recognised Income and ExpensesCondensed Consolidated Statement of Changes in EquityCondensed Consolidated Balance SheetCondensed Consolidated Cash Flow StatementNotes to the Condensed Consolidated Financial Statements Management reportThis management report focuses principally on the adjusted results to give amore comparable indication of the Group's underlying business performance. Adiscussion of restructuring and impairment charges and other items included inthe statutory results is given after the divisional performance review and isset out in the segmental note. The adjusted results are summarised below:
2009 2008 Change**Adjusted results* GBPm GBPm Revenue 2,118 2,312 - 8% Operating profit 278 317 - 12% Income from joint ventures and associates (1) - Net finance costs (76) (55) - 36% Profit before tax 201 262 - 23% Tax charge (44) (63) + 29% Minority interest (16) (18) + 12% Group profit 141 181 - 22% Adjusted earnings per share 37.2 p 47.9 p - 22% *Adjusted results are stated before amortisation and impairment of intangibleassets and exceptional items. For a reconciliation of Group profit to adjustedGroup profit, see Note 9.#Underlying revenue or profit* is revenue or profit* on a like for like basis,adjusted for acquisitions and disposals made in the current and prior year andat constant exchange rates. In the case of A& N Media, the underlyingpercentage movements compare 52 weeks with 52 weeks.
** Percentages are calculated on actual numbers to one decimal place.
Summary and OutlookGroup revenue for the year was 2,118 million compared with 2,312 million forthe prior year, a fall of 8%. Operating profit* was 12% lower at 278million. Adjusted profits* before tax were 201 million, down 23% on theequivalent figure for last year, with all divisions, except Northcliffe Media,maintaining or increasing operating margins*.The Group's B2B operations increased their overall profit* by 7%, benefitingfrom a 21% reduction in the average sterling: US dollar exchange rate over theyear. The underlying# result was a fall of around 5%. The profits* of A&N Mediawere significantly lower for the year although the second half saw a largeimprovement in profitability. As a consequence, 73% of this year's operatingprofit* was generated from outside the Group's consumer operations, up from
60%last year. Business to BusinessRisk Management Solutions
- solid growth, despite higher than usual level of cancellations.- now seeing more favourable insurance and related capital market
conditions.
DMG Information- Property businesses hit by significant falls in property
transactions, recently seeing limited improvement in the UK. -
Non-property businesses continuing to grow well, with benefit
from
innovative new product lines.
Euromoney
- resilience of increased subscription revenues, now 47% of totalrevenues, although weakening into new year;- partly protected by exposure to better performing emerging markets;- excellent management of costs and margins*;- expect tough first quarter, but has stepped up investment to take
advantage of recovery when it comes.
DMG World Media- softer bookings in second half, after good first half;- more recently, encouraging attendances and booking trends, but
yetto convert into revenues.Business to ConsumerAssociated Newspapers
- strength of Daily Mail brand produced maintained profits*, thesecond highest in its history;- Sunday and free markets more challenged;- nearly 80 million of cost savings achieved.- advertising revenue trends improving in new year, but still
down
year on year, and with little forward visibility;- will benefit this year from elimination of loss-making entities
over last year and of expected lower newsprint costs.
Northcliffe Media- suffered from substantial falls in core revenue categories;- led to complete re-engineering of business, leading to 50
million
of cost reductions which are still continuing;- advertising revenues stable since February/March;- reducing costs leading to improved profits* and margins.*DMG Radio Australia- good increase in profits* despite reduction in market revenue;- improved revenue share and reduced costs;- advertising market recently improved, so profit* growth expectedfor this year.Net debt and financing
- after significant cash outflow in first half, net debt reduced by 178 million in second half;- small increase in debt over year accounted for by movements inexchange rates;- net debt ratios comfortably within covenants and 200 million
of
unused facilities at end of year;- next maturity of 180 million of facilities not till September
2011;
- continued focus on debt reduction.Statutory results- statutory accounts loss of 401 million;- includes charges for amortisation and impairment of assets
(regional media, exhibitions, radio principally) of 443 million; -
also includes other exceptional items (mainly redundancy and
reorganisation costs) and a tax credit of 138 million.
Divisional ReviewBusiness to businessRisk Management Solutions 2009 2008 Movement GBPm GBPm % Revenue 137 98 + 39% Operating profit* 42 31 + 37% Operating margin* 31% 31%
RMS produced solid growth with an increase in underlying# revenue of 7% and underlying# operating profit* of 9%, despite challenging market conditions worldwide. The reported results benefited significantly from the stronger dollar in which currency the majority of revenues are billed.
In spite of difficult economic and trading conditions, RMS achieved solid newsales bookings in the year. More than 80% of new sales were in its coremodelling business with the rest in specific growth initiatives including DataSolutions. Growth was slowed to some extent in the first three quarters of2009 by client cost cutting initiatives or by client withdrawal from certainlines of business leading to product swaps and partial reductions in annuallicence fees. Industry merger activity also resulted in reductions.Growth in its earlier stage capital markets business was hampered by thosemarkets being virtually shut down for the first half of the year, which had asignificant impact on RMS's efforts in this small but growing sector of itsbusiness. Catastrophe bond issuance was down more than 60% in fiscal 2009 ascompared to fiscal 2008. Prudent cost controls were initiated in response to a slower growth rate inrevenues. RMS nevertheless maintained its investment programme to drive futuregrowth. RMS added more than 60 new headcount in North America and Europe duringthe year. Investments were focused on the multi-year development effort on itsnext generation software platform and within its Emerging Risk Solutions group.dmg information 2009 2008 Movement GBPm GBPm % Revenue 230 217 + 6% Operating profit* 46 44 + 5% Operating margin* 20% 20%
In a year of turbulence for dmgi's markets, the robustness of our portfolio hasbeen demonstrated and overall performance has been resilient with underlyingimprovement coming through in the second half.
In aggregate, dmgi's underlying# revenue and operating profit* (which now exclude RMS) reduced by 6% and 7% respectively. The businesses comprising dmgi are primarily US based and therefore the reported results benefit from year-on-year exchange rate movements.
Property
Operating profit* from the property information companies fell by 23% to 18million, with revenues being 9% lower at 84 million. Despite this, margins*were still around 20% due to tight cost control. Underlying# revenues andoperating profits* reduced by 19% and 36% respectively.The volume of housing transactions in the UK was at all-time low levelsthroughout the year, having plunged dramatically in early 2008, and, whilst wesaw some positive signs of recovery towards the end of the financial year, attimes the monthly volumes were less than half of their historical norm. Thisaffected Landmark Information Group revenues, albeit its market position is asstrong as ever.The commercial property market volumes also declined significantly in both theU.S. and U.K. affecting Environmental Data Resources and Landmark respectively.Both companies continue to be innovative and expand their product offerings,whilst managing costs effectively in the current conditions.Other markets63% of dmgi's revenues comes from its companies operating in the financial,education, energy and geospatial markets. Revenue in these other markets was17% higher year-on-year at 146 million and they contributed operating profits*of 32 million representing 26% growth. The underlying# revenue and operatingprofits were higher by 3% and 16% respectively.In the financial information market, Trepp is the market leader of informationto the Commercial Mortgage-backed Securities (CMBS) market and, in turbulentmarket conditions, the value of its data and analytics has been proven by theincreasing frequency of use and growing revenues. Trepp was also selected bythe Federal Reserve Bank of New York as the collateral monitor for CMBS as partof the Term Asset-Backed Securities Loan Facility (TALF). Trepp grew itsunderlying# revenues by 17%. Lewtan Technologies, also serving the financialinformation market, had a good year too, with record profits* and significantproduct enhancements in its offerings to the ABS investor market.Hobsons, the education information business, grew underlying# revenues by 6%and improved margins*. Hobsons continues to pursue an aggressive growthstrategy, focused on providing products to education professionals to assist inthe preparation, recruitment, management and advancement of students. Naviance,the Hobsons' company providing solutions in the U.S. high school segment, grewparticularly strongly.Genscape, the leading provider of real-time information to the energy tradingmarkets, grew its underlying# revenues by 12%. Whilst continuing to expand itsgeographic coverage of electricity supply data in the U.S. and continentalEurope, the company also successfully launched new offerings to traders in theoil market and, during the forthcoming year, will grow products serving thenatural gas markets.Sanborn's revenues are primarily sourced from U.S. local, state and municipalbudgets where funding has tightened significantly. Sanborn has performed wellin the circumstances, and remains both profitable and in a market-leadingposition.
Throughout all the companies, costs have been managed aggressively and effectively as circumstances have demanded.
Dmgi is well placed to benefit in particular from a recovery in property transaction volumes and has used these tougher economic conditions to strengthen its market positions through continuing to enhance and develop products across all its markets.
dmg world media
2009 2008 Movement GBPm GBPm % Revenue 175 202 - 13% Operating profit* 37 38 - 3% Operating margin* 21% 19% Dmg world media, like the rest of the exhibition industry, experienced softerbookings for many of its shows which translated into lower revenues. Actionstaken in the year on cost initiatives, together with the continued divestmentof non-core business lines, enabled its full year operating profit* to be onlyslightly below that of last year with an increased margin*. Underlying#revenues, adjusted for non-annual events, decreased by 9% and operating profit*by 5%. Business to business (B2B)Revenues were down 10% to 149 million and profits* down 12% to 36 million.Underlying# revenues and profits* were down 8% and 9%, respectively. The Dubaisector, comprising construction, interior design and hospitality shows,reported a 19% increase in revenues and a 20% increase in profits*. Performance in the Oil and Gas portfolio was driven by one of its largestshows, the biennial ADIPEC, which more than doubled its profits from itsprevious show. However, a decline in the profits of its BMI and Australasiabusinesses had a detrimental effect on the B2B profits. The BMI business wassold in September. During the year, dmg world media divested its West Coastgift shows, which had underperformed. Business to Consumer (B2C) As a result of disposals in the last two years, B2C is now a small part of thedivision, with all publications fully divested and only a small number ofremaining exhibitions. Overall, the B2C division, driven by a decline in theUK consumer business and certain Art & Antiques businesses now divested,performed poorly, with revenues down 24% to 26 million and losses* unchangedat 3 million.
Euromoney Institutional Investor
2009 2008 Movement GBPm GBPm % Revenue 318 332 - 4% Operating profit* 77 76 +1% Operating margin* 24% 23%
Euromoney announced its preliminary results last week. Operating profit* rose by 1% despite a 4% fall in revenues due to cost savings and the benefit of foreign exchange movements.
These results continue to highlight the success of Euromoney's strategy tobuild a more resilient and better focused global information business. Subscription revenues increased by 24%, in sharp contrast to the declines inother revenue streams, and now account for 47% of total revenues against 37% in2008. Similarly, the profits* from databases and information services, whichinclude some of the highest margin products in Euromoney and are derived mostlyfrom subscription products, accounted for 36% of its operating profits*,compared to 21% a year ago.The performance of Euromoney's various revenue streams reflects the timing ofthe reaction of its customers to the global credit crisis in reducing theircosts. For the past three quarters, the year-on-year declines in advertisingand sponsorship (-20%) and delegate revenues (-30%) have been running atsimilar rates. In contrast, subscription revenues grew by a third in the firsthalf, and have continued to grow in the second half, although the rate ofgrowth has slowed rapidly.Euromoney's activities outside finance are in sectors traditionally lessvolatile, and which follow different cycles. Among these sectors, metals,minerals and mining under the Metal Bulletin brand, telecoms and legalpublishing all achieved good growth; only the energy sector was weak. WithinDatabases and Information Services, demand for BCA's high quality, independentmacro-economic research has proved robust despite the shrinking of the assetmanagement industry.Emerging markets, which account for nearly half of Euromoney's revenues, wereless exposed to the excess leverage and complex financial products that havecharacterised the credit problems in North America and Europe, and have comethrough the credit crisis well.
Tight control of costs and focus on high quality, high margin products was critical to Euromoney's success in 2009. Operating margin* improved as cost cuts were implemented early in the year, leading to exceptional restructuring costs of 11 million, low margin products were eliminated quickly, and continued product investment ensured the growth in higher margin electronic publishing products was maintained.
Consumer mediaA&N Media
Given the unprecedented trading conditions, A&N Media took decisive action oncosts and achieved its cost reduction target in September. Headcount (excludingthe Evening Standard) fell by over 1,600 (16%) in the year, including the joblosses from the closure of three regional printing plants at Grimsby, Leicesterand Bristol. As a consequence, an exceptional restructuring charge of 101million was made. As expected, the benefit of significantly lower costs camethrough in the second half of the year.
The results of Associated and Northcliffe benefited from the inclusion of an extra week's trading, but all underlying# year on year comparisons are on a like-for-like basis, comparing 52 weeks with 52 weeks and, for Associated, exclude the Evening Standard.
Associated Newspapers
2009 2008 Movement GBPm GBPm % Revenue 876 988 - 11% Operating profit* 62 73 - 15% Operating margin* 7% 7% In the face of extremely challenging economic conditions throughout thefinancial year and continued competitive activity in the London eveningnewspaper market, Associated achieved a very satisfactory result. This waslargely due to another strong performance by the Daily Mail, which produced thesecond highest profit* in its history, maintained from last year. Totalrevenues were down 112 million, despite stable circulation revenues, due to a14% fall in underlying# advertising revenues and to the sale of the EveningStandard. However, the cost reduction programme, together with the sale of theEvening Standard, restricted the fall in operating profit* to 11 million andyear on year profits* increased in the second half of the year. Newspaper operationsCirculation revenue at 366 million was down an underlying# 2%. Thecirculation of both the Daily Mail and The Mail on Sunday fell marginally morethan the market, reflecting the decision to direct promotional activity awayfrom CD and DVD giveaways towards a sustained direct marketing campaign torecruit more long term loyal purchasers. In consequence, circulations havebeen stable in recent months.Total advertising revenues were 350 million, down an underlying# 15%. Displayadvertising was down by an underlying# 16% to 281 million. By sector, allcategories were lower, but retail, our largest category, was the bestperformer. The Daily Mail's readership remains extremely attractiveparticularly to retail advertisers. Underlying# classified advertising, whichis not dependent on property and jobs, fell by only 12% to 60 million.Underlying# digital revenue from the newspaper titles' companion sites was up11% in a competitive market, buoyed by the success of the MailOnline brand. London Lite traded in line with last year, with advertising only an underlying#4% down, but, following the decision of the Evening Standard to go free, it wasclosed on 13th November after consultation with its employees.
The reported profits* are stated after charging losses made by the Evening Standard for the first five months of the year, prior to its sale.
Associated Northcliffe DigitalAND's portfolio of digital businesses continued to build market share amidstdifficult economic conditions. Revenue fell by an underlying# 20% to 70million as a result of the economic slowdown across all of AND's core verticalmarkets. The Jobs and Property businesses were particularly affected, thoughboth of these companies outperformed the decline in transaction volumes intheir respective markets. Profitability was further reduced by the strategicinvestments in Jobsite's marketing campaign, including TV and Portsmouth FCsponsorship and overall was down 5 million. Teletext's operating loss* increased by 1 million to 4 million due to thecontinuing decline in television revenues, despite further significant actionson cost reduction. In July we announced the planned closure of the majority ofTeletext's television business in early 2010. The remaining businesses, whichare profitable and show good profit growth potential, now form AND's travel andtelevision divisions, focusing around the company's online travel activities.Northcliffe Media 2009 2008 Movement GBPm GBPm % Revenue 328 420 - 22% Operating profit* 24 68 - 65% Operating margin* 7% 16% Northcliffe's portfolio of titles in the UK and in central Europe were badlyaffected by weak advertising markets. All categories were under pressure butparticularly recruitment, property and motors. The company responded byinitiating a range of significant restructuring activities. Overall,Northcliffe's underlying# operating profit was down 45 million, with revenuesdown 98 million, offset by cost reductions of 53 million.
UK
UK operating profits* fell by 40 million (67%) to 20 million. Revenues weredown by 89 million (24%) to 285 million with underlying# advertising revenuesdown by 30% to 201 million in unprecedented trading conditions for localnewspapers. Newspaper sales were also affected by the recession, as householdsscaled back on discretionary expenditure. By category, the increase in unemployment levels took its toll on recruitmentadvertising revenues, both print and digital. Underlying# recruitment revenuesdeclined by 49%. In the property category, the weak residential marketcontinued as estate agents and new home builders continued to scale backadvertising spend. Underlying# revenues fell by 46%. The rate of year-on-yeardecline slowed to 18% in the month of September. Underlying# motors advertisingfell by 24% in 2009. Retail advertising, Northcliffe's largest category in2009, fell by an underlying# 20%. All other categories combined contracted byan underlying# 11%.Newspaper circulation revenues fell by an underlying# 7% to 70 million. Only ahandful of cover price increases were implemented during the year. For theJanuary to June 2009 ABC period, our dailies were down 9% compared with anindustry average of 8%. The weekly titles recorded a fall of 8%, which was inline with the industry average decline.This loss of print circulation contrasts with the rise in our digital audience.The number of visitors across our entire digital network rose by 31% inSeptember 2009, compared to September 2008. Digital advertising revenue of 17million was in line with last year despite a decline in recruitment revenues of35%. Growth was achieved across all other categories, particularly propertywhere our improved digital property offering continued to gain estate agentsupport. Progress was also made by motors.co.uk. Retail and leisure digitaladvertising also recorded impressive growth.The scale of revenue attrition forced a radical review of our cost base andoperating model with Northcliffe embarking upon a major restructuring programmewhich delivered savings across all departments. This review also resulted insome rationalisation of the product portfolio.Central EuropeProfits* for the year of 4.3 million were 4 million (49%) below last year.Underlying# revenues fell by 5.5 million (11%) as a result of weak markets inprinted media for recruitment, motors and retail advertising. Printadvertising revenues declined by 24% while online revenues were down 1% in theyear. Circulation revenues were in line with last year.
After growth of 29% in the first quarter, underlying# digital revenues deteriorated and by September were 22% below the prior year. Digital recruitment revenue declines have been offset partially by online revenue growth from the expansion of the digital network in the Czech Republic and Hungarian classified and property websites.
Cost saving measures were implemented to mitigate the revenue shortfalls. Headcount reductions of 132 (15%), were achieved, alongside pagination and promotional spending cuts.
DMG Radio Australia 2009 2008 Movement GBPm GBPm % Revenue 55 55 + 1% Operating profit* 4 2 + 85% Operating margin* 7% 4%
DMG Radio Australia significantly outperformed the radio market, which experienced a decline of 4.6% on the prior year. Underlying# profitability increased by 21% reflecting the resilient performance in attaining revenue across the eastern states as well as a successful cost reduction programme.
Network performanceThe Nova network results were driven by strong performance in Sydney where Nova969 increased its revenue share for the year from 14.4% to 15.3% in a marketwhich declined 10.4% and also performed strongly in national revenues fromSydney on to other Nova stations.The Nova Network achieved the number one ranking for 18-39 in every market forthe critical breakfast timeslot in Survey 6, 2009 and held the number twoposition overall for 18-39 for the year. Nova Brisbane continued itsdominance of the Brisbane market, achieving the No 1 overall position for 18-39in every survey across the year.Vega FM stations in Sydney and Melbourne experienced strong growth in revenuesof 12.4%, also significantly outperforming the market. Vega Sydney held itsoverall share of its target demographic of 40-54 for the year, with VegaMelbourne significantly increasing its share to the number two FM position inAugust. Subsequent eventDMGT has today announced that Illyria, the private investment vehicle of MrLachlan Murdoch, has acquired a 50% interest in DMGRA, which will therefore bea 50:50 joint venture between DMGT and Illyria. Mr Murdoch will become chairmanof DMGRA. Net proceeds to DMGT from the transaction are estimated to be A$112million ( 63 million). We do not expect there to be a material profit or lossarising from this transaction. Other income statement itemsNet finance costs 2009 2008 Movement GBPm GBPm %
Net interest payable and similar charges (77) (75) - 2%
Swap premia income 1 20 - 96% Total (76) (55) - 36%
Net interest payable and similar charges (excluding swap premia but including deemed finance charges and interest receivable) rose by 2 million to 77 million with the higher sterling value of interest on fixed US$ liabilities offset by lower interest rates on floating rate debt.
Income from tax equalisation swap premia fell by 19 million. The taxequalisation swap premia structure includes foreign exchange hedges whichgenerate foreign exchange movements with an equal and opposite movement in theGroup's tax position. This resulted in a 28 million exceptional charge to netinterest and an equal credit to taxation (2008 68 million).Other itemsThe Group's share of the results* of its joint ventures and associates fell by 1.5 million to a loss of 1.1 million. The profits of DMG Radio Australia'sjoint ventures were offset by our share of the losses of India Today.The Group has charged 99 million as exceptional operating costs. This chargecomprised reorganisation, restructuring and closure costs mainly withinAssociated, Northcliffe and DMG World Media, offset by pension curtailments of 25 million. Of this, 50 million represents expenditure during the year and afurther 37 million will be spent during 2009/10; the balance representsnon-cash items.The charge for amortisation of intangible assets fell by 1 million to 89million. The Group also made an impairment charge of 347 million, principallyrelating to assets acquired in recent years by Northcliffe ( 94 million), DMGRadio ( 93 million) and DMG World Media ( 89 million).The Group recorded other net losses of 24 million, compared to net gains of 28 million in the prior period. This comprised mainly exceptional losses onthe sale of consumer businesses and write offs of investments, offset partly byexceptional profits on the sale of properties. There were also 36 million ofexceptional finance charges which included foreign exchange hedges.
Taxation
After allowing for the effect of exceptional and other items that are not expected to recur, the underlying tax rate fell from 24.0% to 22.1%. The continued low rate reflects tax reductions from tax-efficient financing and tax deductible amortisation in the US that are expected to recur.
There were net exceptional credits of 139 million, being the deferred taxcredits on goodwill and intangible assets, ( 52 million), tax credits onexceptional items ( 24 million), the write back of provisions arising from theagreement of certain prior year open issues with tax authorities ( 35 million)and the 28 million credit on foreign exchange hedges.
Pensions
The deficit on the Group's defined benefit pension schemes has increased from 41 million last year end to 430 million at 4th October, 2009 (calculated inaccordance with IAS 19). This change is primarily due to an increase in thevalue attributed to its liabilities because of lower bond yields, augmented bya fall in the market value of the schemes' assets. The funding agreement withthe trustees remains in place until replaced by a new agreement reflecting theresults of the 2010 triennial valuation.Net debt and cash flow Net debt has fallen by 178 million since the half year, but rose marginallyduring the full year from 1,015 million to 1,049 million, principally due toan increase of 50 million from the depreciation of sterling against the USdollar. The Group generated trading cash flow of 296 million and disposalproceeds of 28 million. These funded acquisitions of 73 million, capitalexpenditure of 40 million, taxation (including related tax equalisationpayments) of 83 million, interest of 42 million and dividends totalling 65million.
Acquisitions were largely pre-contracted earn-out payments and other deferred consideration. Disposals were of properties and businesses, principally the sale of the Antiques Trade Gazette in October 2008.
As expected, net debt was reduced sharply in the second half of the year and weintend to reduce it further. Most of the Group's debt remains in long-termbonds, the earliest of which is not repayable until 2013. At the year end, theGroup had 839 million of Bonds due for repayment in 2013, 2018, 2021 and 2027.It also had 180 million of committed banking facilities available to it untilSeptember 2011 and 240 million until September 2013. Consequently, the Grouphas sufficient committed debt facilities to meet its foreseeable requirements.It had surplus committed facilities of 200 million at the year end.The Group's ratio of year end net debt to adjusted profits* before interest,depreciation and amortisation (EBITDA) was 3.1 times, above the Group's targetof 2.5 times but is comfortably within the requirements of the Group's bankcovenants. The Group's interest cover, calculated as the ratio of EBITDA tonet interest payable (excluding swap premia), was 4.5 times this year, downfrom 5.8 in 2008, but well above the required 3 times. Other financingThe Group utilised 10,184,237 'A' Ordinary Non-Voting shares out of treasury inorder to meet obligations to provide shares under various incentive plansvalued at 29 million. It also acquired 1,626,058 such shares in treasury for 5.6 million. Following these transfers, DMGT has 382.9 million shares in issue(excluding shares held in treasury).DMGT took its share of dividends from Euromoney in the form of a scrip. Thisenabled it to mitigate the dilutive effect of the vesting of the second trancheof Euromoney's CAP, thereby maintaining its equity interest at just under 67%. It is the Board's current intention also to take Euromoney's forthcoming finaldividend in the form of a scrip.Dividend The Board is recommending payment on the issued Ordinary and 'A' OrdinaryNon-Voting shares of the Company of a final dividend of 9.90 pence per sharefor the year ended 4th October, 2009 (2008 9.90 pence). This will make a totalfor the year of 14.70 pence (2008 14.70 pence per share). The final dividendwill be paid on 12th February 2010 to shareholders on the register at close ofbusiness on 4th December 2009.Principal risks and uncertaintiesThe principal risks and uncertainties the Group faces vary across the differentbusinesses and are the focus of the Risk Committee. These risks are identifiedin the DMGT Group Risk Register. The materiality of each risk is assessedagainst a framework to determine its significance and likelihood of occurrence.The Risk Register is used to determine the agenda and activity of the RiskCommittee. The most material risks identified in the Risk Register, togetherwith the steps taken to mitigate them, are described below. The geographic spread and diverse portfolio of businesses within the Group helpto dilute the impact of some of the Group's key risks. Certain of these risksare interdependent and should not be considered in isolation. Exposure to changes in the economy and customer spending patterns The current economic climate, especially in the UK and US economies, continuesto represent a significant risk to the Group. A significant (althoughdecreasing) proportion of our revenue is derived from advertising, which hashistorically been cyclical, and has reduced as a result of the downturn in theglobal economy. A similar effect has been seen in our businesses that rely onnon-advertising revenues in the financial and property markets. Despite thedifficult trading conditions in these businesses, our long term strategy ofdiversifying the Group's portfolio, especially into business information andsubscription revenue streams, and our commitment to invest in our core brands,puts us in a strong position both now and when growth returns. The impact of technological and market changes on our competitive advantage Our businesses operate in highly competitive environments that can be subjectto rapid change. Our products and services, and their means of delivery, areaffected by technological innovations, changing legislation, competitoractivity or changing customer behaviour. A structural change in the advertisingmarkets resulting in significant advertising moving away from our traditionalproducts to the internet has affected our results both positively andnegatively. We have developed an internet strategy for each of our mainsegments of advertising revenue.The decentralised autonomous culture of the Group encourages an entrepreneurialapproach to the development of new opportunities in response to these threatsand we must continue to invest and adapt to remain competitive. Our strategy ofdiversification and willingness to take a long-term view helps us to react tothese challenges and opportunities. Pension scheme shortfalls We operate defined benefit pension schemes for our newspaper divisions andcertain senior executives. Reported earnings may be adversely affected bychanges in our pension costs and funding requirements due to lower thanexpected investment returns, demographic changes and increased life expectancy.Recent turmoil in global equity markets and reduced bond yields has increasedthis risk, which is considered with the scheme trustees as part of discussionsaround the three yearly actuarial valuation. A funding approach and a revisedasset allocation strategy, designed to reduce and diversify the risk inherentin the investment portfolios, have been agreed and implemented. The cash flowof the main defined benefit scheme is broadly neutral so the trustees have notneeded to sell assets to any material extent in these depressed markets. Thenext valuation will be undertaken as at 31st March, 2010. These actions havebeen supplemented by the recently announced closure of the scheme to newemployees, changes to benefits and further proposals to be introduced next yearthat are designed to deal with the ongoing risk to the balance sheet created bydefined benefit pension liabilities. By next year a programme to installupdated, consistent defined contribution pension plans in all divisions will becomplete, a further measure to control pension liabilities and costs incurredby the Group.Impact of a major disaster or outbreak of disease The first wave of the H1N1 influenza pandemic was not as severe as firstpredicted and had only a limited impact on DMGT. It is, however, possible thatthere will be a further wave in the northernhemisphere coinciding with the 2009/10 winter flu season. At present the virusis at the low end of the virulence spectrum; however it is impossible topredict whether the virus will mutate into a more virulent and severe form.
A
second wave could affect the Group's ability to produce and deliver its products, reduce the demand for them, or affect our cost base. Some of our events businesses are more sensitive to a pandemic as the success of certain events can depend on confidence in global travel.
Business continuity plans including specific pandemic planning measures havebeen implemented across the Group. We have called upon specific pandemicmodelling expertise within RMS to give us the best available insight into thelikely spread of the pandemic and issued regular communications to seniordivisional management and staff members. In addition we have implemented apandemic influenza management scheme that includes provision of anti-viralmedication to our staff. Our planning in advance of the recent events and sincehave allowed our businesses to be well prepared and to respond quickly as newinformation becomes available to protect our staff, brands and reputation.Reliance on key management and staff retention In order to pursue our strategy, we are reliant on key management and staffacross all our businesses. We cannot predict with certainty that we will enjoycontinued success in our recruitment and retention of high quality managementand creative talent.
Our Group Human Resources Director has worked with divisional and executive management across the DMGT divisions to implement a formal approach to talent management and succession planning. This includes payment of competitive rewards, employee performance and turnover monitoring and a variety of approaches to staff communication.
Commercial Relationships including: volatility of newsprint DMGT is reliant on a number of commercial relationships with key suppliers andthird parties. A significant change to the commercial terms under which wetrade or a loss of any of these key relationships could have a material impacton the Group's financial results and ability to trade.An example of this is newsprint which represents a significant proportion ofour costs within the newspaper divisions. Newsprint prices are subject tovolatility arising from variations in supply and demand. Generally, thesevariations are not large, but from time to time changes are significant. Inresponse to this, significant time and resources are committed to developingthese relationships to ensure they continue to operate satisfactorily. TheGroup's newsprint requirements are also monitored by the board of HarmsworthPrinting (to which the duties of the Newsprint Committee were transferred inOctober 2009) and, where possible, long term arrangements are agreed withsuppliers to limit the potential for volatility. Acquisition and disposal risk There are risks to our ability to achieve optimal value from disposalsincluding the incorrect timing of any sale, the inability to identify and agreea deal with a purchaser, the unsuccessful separation of a business andmanagement of any related costs, as well as the failure to realise any otheranticipated benefits of a disposal. This risk is particularly pertinent, giventhe current economic climate.As well as launching and building new businesses, an integral part of oursuccess has, and will continue to be, the acquisition of businesses thatcomplement our existing products or expand the scope of our expertise into newmarkets. A number of risks are inherent within any strategy to acquire. TheGroup generally acquires businesses with a high potential for growth in relatedmarkets. The majority of acquisitions considered are smaller add-onacquisitions, which reduces the size of the risk of each acquisition to theGroup.Reliance on IT infrastructureAll of our businesses are dependent on technology to some degree. Informationsystems are critical for the effective management and provision of servicesaround the Group. Disruption to our information technology infrastructure orfailure to implement new systems effectively could result in lost revenue anddamage our reputation. Dedicated project management teams are used to managethe risk in any change project and business continuity plans are in place ineach division to protect existing systems. Information securityInformation security has become an important issue in recent years as a resultof several high profile losses of data. Any future breach in our data securitycould have a harmful impact on our business and reputation. A Group-wide policyhas been set and the Risk Committee have overseen the implementation of thispolicy in all divisions.Climate changeThe risks associated with climate change include the introduction of orincrease in legislation and regulation of the environmental impact of ouroperations. In the longer term, the physical impact of climate change couldaffect our business locations, distribution routes or third party suppliers. AGroup wide review of the impact of climate change was performed in 2008 toidentify the key risks and opportunities for the Group presented by futureclimate change.Legal and regulatory DMGT businesses are subject to varying legislation and regulation acrossseveral jurisdictions including health and safety and employment law as well asmore specific regulations such as from the Office of Fair Trading and the AuditBureau of Circulation. The impact of this legislation or regulations couldadversely affect the results and future trading of the business. Whilstemployees need to be responsible for their own health and safety, they are madeaware of health and safety and of employment rights through the employeehandbook. A Group-wide code of conduct highlighting key legal and regulatoryissues affecting our businesses and working practices has been developed anddistributed in the year. Controls are also in place surrounding compliance withthe ABC's regulations and other regulatory bodies to which we adhere. Treasury Risk There are a number of risks arising from the Group's Treasury operationsincluding currency exchange rate fluctuations impacting on the Group's reportedearnings, liquidity risk, interest rate risk and debt levels. The currentproblems in global financial markets as a result of the credit crunch andbanking crisis heighten the risk in this area. In addition the treasuryfunction within DMGT undertakes high value transactions and therefore there isinherently a risk of treasury fraud or error. These risks are as follows:
(a) Liquidity Risk
It is the Group's policy to have sufficient surplus borrowingheadroom such that its development is not constrained. The Group is funded by amixture of equity, debt and retained profits. Debt consists mainly of committedbank facilities and bonds. The bank facilities provide the Group withflexibility for operational requirements and acquisitions. Overdraft facilitiesare also utilised. The bonds currently in issue consist of four sterlingEurobonds. Maturities of debt are maximised and spread in order to avoid therequirement for significant repayments at any point in time. In September, theGroup raised a further 25 million of funding through a sale and hire purchaseback amortising over eight years. Surplus funds are generally used to pay downbank debt. If temporary surpluses arise, they are generally deposited in moneymarket accounts with banks that provide bilateral credit lines. Covenants on debt instruments are kept to a minimum, even if
this
results in marginally higher interest costs. External finance is unsecured andis usually an obligation of the Company or its immediate subsidiary, ratherthan of trading subsidiaries. This gives operating management maximumflexibility to run the business without the distraction of meeting short-termfinancing requirements. Although the Group's bank facilities are multicurrency, the
limit
to total drawings available is denominated in sterling. During the year theincrease in value of the Group's US dollar drawings reduced the unutilisedcommitted facilities below the Group's 100m target. This liquidity risk waseliminated through normal cash inflow and by increasing the Groups borrowingfacilities, releasing facilities used for Letters of Credit and by using mediumterm forward sales of US$ as an alternative to borrowing in US dollars.
(b) Foreign Exchange Risk
(i) Transaction RiskMost of the Group's businesses do not transact cross-border: hencemulti-currency transaction risk is not substantial. The main exception isEuromoney which has net receipts in US dollars and Euros and net payments insterling and Canadian dollars. Euromoney has a series of US dollar and Euroforward sale contracts in place up to two years forward to meet its sterlingand Canadian dollar outgoings. Other than in Euromoney, there were nosignificant foreign currency forward contracts in existence that hedge revenuesor costs. Major items of capital expenditure in foreign currency are fixedusing forward currency purchases.Tax on non-trading exchange rate movements is hedged, using cross currencyswaps and forward currency contracts. The Group's internal financing structuresgive rise to foreign exchange gain or losses which are either taxable or taxdeductible. Where appropriate, the Group enters into market derivatives tohedge this exposure in economic terms through Tax Equalisation Swaps (TES).However, IAS 12 prohibits TES gains and losses from being shown net in the taxline and as a result increased volatility is introduced in the incomestatement. This year's profit before taxation has been reduced by 32 million(2008 68 million) in relation to these structures and tax payable has beenreduced by a similar amount. Both have been removed in arriving at adjustedprofits*. These transactions are unlikely to continue at the same level in thenear future.(ii) Translation ExposureBorrowings are principally incurred in sterling, with lesser amounts in USdollars and other currencies. Generally, the proportion of foreign currencydebt (after allowing for any hedging instruments) to total net debt is managedto be approximately equal to the proportion of foreign EBITA, compared to totalGroup EBITA. During 2009 this policy was suspended and US$ liabilities werebelow this target and they remain so. This was to ensure that the Groupminimised both liquidity risk and the risk of failing bank covenants. As thefinancial position is now clearer the Group will move back to its policy statedabove. A substantial proportion of non-sterling debt liabilities are createdthrough the use of foreign exchange derivatives which are treated as netinvestment hedges. The consequence of this policy is that the Group'ssignificant foreign earnings are not hedged back to sterling.(iii) Economic ExposureA substantial proportion of the Group's value relates to foreign subsidiaries,in the US in particular. The foreign currency debt described above is only apartial hedge of this economic exposure.(iv) NettingThe Group may offset currency risks on trading, capital expenditure, tax andborrowings and only hedge the net exposure. This may result in not obtainingIFRS hedge accounting.(c) Interest Rate RiskThe Group aims to have approximately 70% of forecast net debt to 80% of targetnet debt as fixed interest rate liabilities. It aims to achieve this ratioover the medium term and it is applied to each of the Group's main currencies.During 2009 the currency policy was suspended and US$ liabilities were belowthis target and they remain so. This was to ensure that the Group minimisedboth liquidity risk and the risk of failing bank covenants. As the financialposition is now clearer the Group will move back to its policy stated above.The predictability of interest costs is deemed to be more important than thepossible opportunity cost foregone of achieving lower interest rates.Borrowings are made in either fixed or floating rates. Interest rate swaps,cross currency swaps, and options are used to help attain the Group's targetlevel of fixed interest rate debt. The maturity dates are spread in order toavoid interest rate basis risk and also to negate short-term changes ininterest rates. At the year end, fixed interest rate debt representedapproximately 80% of total net debt (including options which are not treated aseffective hedges under IFRS).(d) Counterparty RiskCounterparties and their credit ratings are regularly reviewed by GroupTreasury. The Group has counterparty limits for banks with long term creditratings of 'AA' or better, and a lower limit for single 'A' rated banks.Typically this is banks that extend credit facilities to the Group. The Groupdoes not expect any counterparties to be unable to meet their obligations. Tax risk The Group operates within many jurisdictions; our earnings are thereforesubject to taxation at differing rates across these jurisdictions. Whilst weendeavour to manage our tax affairs in an efficient manner, due to an ever morecomplex international tax environment there will always be a level ofuncertainty when provisioning for our tax liabilities. There is also a risk oftax laws being amended by authorities in the different jurisdictions in whichwe operate which would have an adverse effect on our financial results. Workingwith divisional management and external experts we have a team of in-housespecialists who review all tax arrangements within the Group and keep abreastof changing legislation. The Viscount RothermereChairman* References to operating profit or loss or share of the results of jointventures and associates in the narrative above are to adjusted operating profitor loss or adjusted share of the results of joint ventures and associatesbefore amortisation and impairment of intangible assets and exceptional items);see notes 2 and 3. # Underlying revenue or profit is revenue or profit on a like for like basis,adjusted for acquisitions and disposals made in the current and prior year andat constant exchange rates. In the case of A& N Media, the underlyingpercentage movements compare 52 weeks with 52 weeks.
The average : US$ exchange rate for the year was 1: $1.55 (against 1:$1.97 last year). The rate at the year end was $1.59 (2008 $1.84).
For further information For analyst and institutional enquiries: Peter Williams, Finance Director Tel: 020 7938 6631 Nicholas Jennings, Company Secretary Tel: 020 7938 6625 For media enquiries:
Andrew Honnor/ Tom Rayner, Tulchan Communications Tel: 020 7353 4200
Analysts' presentation and webcastA presentation of the Preliminary Results will be given to investors andanalysts at 9.30 a.m. on 26th November, 2009 at the City Presentation Centre, 4Chiswell Street, Finsbury Square, London EC1Y 4UP. There will also be a livewebcast available on our website: http://www.dmgt.co.uk.Next trading updateThe Group's next scheduled announcement of financial information will be itsfirst quarter interim management statement on 10th February 2010. DMGT plc
Condensed consolidated income statement for the 53 weeks ending 4th October, 2009
Unaudited Audited 53 weeks 52 weeks ending ending 4th 28th October September 2009 2008 GBPm GBPm CONTINUING OPERATIONS Revenue 2,117.5 2,311.7
Operating profit before exceptional operating costs and 277.6
316.9
amortisation and impairment of goodwill and intangible assets
Exceptional operating costs (99.2) (31.8)
Amortisation and impairment of goodwill and intangible assets (435.7)
(258.1)
Operating (loss)/profit before share of results of joint (257.3)
27.0ventures and associates
Share of results of joint ventures and associates (8.7)
3.5 Total operating (loss)/profit (266.0) 30.5 Other gains and losses (23.5) 27.7
(Loss)/profit before net finance costs and tax (289.5)
58.2 Investment revenue 2.2 3.0 Finance costs (113.8) (129.3) Net finance costs (111.6) (126.3) Loss before tax (401.1) (68.1) Tax 94.5 84.7
(Loss)/profit after tax from continuing operations (306.6)
16.6 DISCONTINUED OPERATIONS
Profit from discontinued operations 1.2
0.2 (LOSS)/PROFIT FOR THE YEAR (305.4) 16.8 Attributable to: Equity shareholders (303.4) - Minority interests (2.0) 16.8 (Loss)/profit for the year (305.4) 16.8 (Loss)/earnings per share From continuing operations Basic (80.1)p 0.0p Diluted (80.1)p (0.2)p From discontinued operations Basic 0.3p 0.1p Diluted 0.3p 0.1p
From continuing and discontinued operations
Basic (79.8)p 0.1p Diluted (79.8)p (0.1)p Adjusted earnings per share Basic 37.2p 47.9p Diluted 37.2p 47.7p DMGT plc
Condensed consolidated statement of recognised income and expense for the 53 weeks ending 4th October, 2009
Unaudited Audited 52 weeks ending 53 weeks ending 28th 4th October September 2009 2008 GBPm GBPm (Loss)/profit for the year (305.4) 16.8
Foreign exchange differences on 39.8
58.8
translation of foreign operations
Fair value movements on 1.4 -
available-for-sale investments
Losses on cash flow hedges (4.5) (17.5)
Change in value of net investment (41.9)
(45.3)hedges recorded in equity
Actuarial loss on defined benefit pension schemes (424.5)
(110.4)
Deferred tax on actuarial movement 118.9
30.9 Deferred tax on other items 1.7 9.1recognised directly in equity
Current tax on items recognised in equity -
1.0
Share of associates items recognised in equity (2.4)
-
Net deficit recognised directly in equity (311.5)
(73.4) Transfers
Translation reserves recycled to 0.9
(0.1)
income statement on disposals Transfer of gain/(loss) on cash flow hedges from translation reserve to 3.5
(2.9)income statement 4.4 (3.0)
Total recognised income and expense for the year (612.5)
(59.6) Attributable to : Equity shareholders (613.9) (75.0) Minority interests 1.4 15.4 (612.5) (59.6) DMGT plc
Condensed consolidated reconciliation
of movements in equity
for the 53 weeks ending 4th October, 2009
Unaudited Audited 52 weeks ending 53 weeks ending 28th 4th October September 2009 2008 GBPm GBPm
Total recognised income and expense for the year (612.5)
(59.6) Dividends paid (55.3) (56.3)
Initial recording of put options granted to -
(0.5)
minority interests in subsidiaries Exercise of acquisition option commitments 27.1
7.0
Movement in losses attributable to minorities -
-
which are borne by the Group Transactions with minorities (8.2)
(12.2)
Settlement of exercised share options of subsidiary (43.2)
(20.2)
Credit to equity for share-based payments 12.4
16.6
Shares purchased to be held in treasury (5.6)
(88.3)
Own shares released on vesting of share options 52.3
21.0
Revaluation of previously held interest in -
27.0
associate on acquisition of control Adjustment to equity following increased (3.1)
(6.4)stake in controlled entity
Total movement in equity for the year (636.1)
(171.9)
Equity at the beginning of year 548.6
720.5 Equity at the end of year (87.5) 548.6 DMGT plc
Condensed consolidated cash flow statement for the 53 weeks ending 4th October, 2009
Unaudited Audited 53 weeks ending 4th 52 weeks ending October 28th September 2009 2008 GBPm GBPm
Operating (loss)/profit before share of results of joint ventures and associates - (257.3)
27.0continuing operations Adjustments for : Share-based payments 12.5 16.6 Pension curtailments (27.4) - Depreciation 61.7 63.1
Impairment of property, plant and equipment 25.4
7.4
Amortisation of intangible assets 89.1
90.3
Impairment of goodwill and intangible assets 346.6
167.8 Operating cash flows before 250.6 372.2movements in working capital Decrease in inventories 5.8 0.6 Decrease/(increase) in trade 109.4 (3.9)and other receivables
Decrease in trade and other payables (88.0)
(6.3) Increase in provisions 24.2 5.4
Additional payment into pension schemes (4.2)
- Cash generated by operations 297.8 368.0 Taxation paid (32.3) (24.3) Taxation received 18.3 11.2
Net cash from operating activities 283.8
354.9 Investing activities Interest received 0.9 1.6 Dividends received from 2.1 3.1
joint ventures and associates
Dividends received from 0.2 0.3
available-for-sale investments Purchase of property, plant and equipment (39.6)
(64.5) Expenditure on internally (17.8) (18.7)
generated intangible fixed assets Purchase of available-for-sale investments (2.5)
(15.9) Proceeds on disposal of 20.5 15.4
property, plant and equipment
Proceeds on disposal of 1.3 55.1
available-for-sale investments
Purchase of subsidiaries (22.0) (104.3)
Purchase of additional interests (24.1)
(36.3)in controlled entities
Treasury derivative activities (58.7)
(37.2) Investment in joint ventures (5.4) (13.5)and associates Loans to joint ventures and 0.4 4.8associates repaid
Proceeds on disposal of businesses 4.7
58.5
Proceeds on disposal of associates -
7.2 Net cash used in investing activities (140.0) (144.4) Financing activities Equity dividends paid (55.3) (56.3)
Dividends paid to minority interests (9.3)
(10.3)
Issue of shares by Group companies 0.2
0.2to minority interests Purchase of own shares (5.6) (88.3)
Receipt/(payment) on exercise/settlement 5.2
(0.6)of subsidiary share options Interest paid (77.0) (64.8) Loan notes repaid (14.4) (26.0)
Sale and lease back finance receipts 25.0
-
Decrease/(Increase) in bank borrowings (16.1)
10.7 Net cash used in financing activities (147.3)
(235.4)
Net decrease in cash and cash equivalents (3.5)
(24.9)
Cash and cash equivalents at beginning of year 44.3
64.0
Exchange gain on cash and cash equivalents 6.1
5.2
Net cash and cash equivalents at end of year 46.9
44.3 DMGT plc
Condensed consolidated balance sheet
as at 4th October, 2009 Unaudited Audited As at 4th As at 28th October September 2009 2008 GBPm GBPm ASSETS Non-current assets Goodwill 734.2 873.5 Other intangible assets 460.9 630.0
Property, plant and equipment 440.4
501.9 Investments Joint ventures 24.3 22.0 Associates 11.3 10.6 35.6 32.6
Available-for-sale investments 18.1
11.3 Trade and other receivables 4.2 8.3 Derivative financial assets 5.5 0.9 Retirement benefit assets - 2.5 Deferred tax assets 164.6 31.1 1,863.5 2,092.1 Current assets Inventories 23.6 27.6 Trade and other receivables 377.5 456.9 Current tax receivable 12.8 - Derivative financial assets 17.9 13.6 Cash and cash equivalents 47.4 45.3 479.2 543.4 Total assets 2,342.7 2,635.5 LIABILITIES Current liabilities Trade and other payables (640.1) (650.2) Current tax payable (97.0) (119.2)
Acquisition put option commitments (11.2)
(29.5) Borrowings (20.5) (26.0)
Derivative financial liabilities (9.5)
(33.8) Provisions (38.7) (27.4) (817.0) (886.1) Non-current liabilities Trade and other payables (0.6) (1.1)
Acquisition put option commitments (0.7)
(7.6) Borrowings (1,040.7) (1,004.2)
Derivative financial liabilities (82.2)
(38.6)
Retirement benefit obligations (430.4)
(43.7) Provisions (34.4) (31.6) Deferred tax liabilities (24.2) (74.0) (1,613.2) (1,200.8) Total liabilities (2,430.2) (2,086.9) Net (liabilities)/assets (87.5) 548.6 SHAREHOLDERS' EQUITY Called up share capital 49.1 49.1 Share premium account 12.4 12.4 Share capital 16 61.5 61.5 Capital redemption reserve 1.1 1.1 Revaluation reserve 4.1 39.5 Shares held in treasury (46.8) (93.5) Translation reserve 9.8 22.2 Retained earnings (164.0) 479.1 Equity shareholders' funds (134.3) 509.9 Equity minority interests 46.8 38.7 (87.5) 548.6 Approved by the Board on 25 November 2009. NOTES
1 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 53 weeks ending 4thOctober, 2009. The Group, and its National and Local media divisions, preparefinancial statements for a 52 or 53 week financial period ending on a Sundaynear to the end of September. The Group has prepared the 2009 financialstatements on the basis of a 53 week financial year to 4th October 2009 inorder to ensure that the Group's year end remains close to the end of Septemberin the current and forthcoming financial years. As the current financial yearis 53 weeks, the comparative figures for the 52 weeks ended 28th September,2008 are not entirely comparable with the amounts presented for the currentfinancial year as the comparative figures include the results of the Nationaland Local media divisions for 52 weeks.The Group's remaining divisions prepare financial statements for a financialyear to 30th September and do not prepare additional financial statementscorresponding to the Group's financial year for consolidation purposes as itwould be impracticable to do so. As a result, the financial statements arecomparable in relation to those elements of the comparatives that relate to theGroup's other divisions. The Group considers whether there have been anysignificant transactions or events between the end of the financial year of theother divisions and the end of the Group's financial year and makes anymaterial adjustments as appropriate.The information for the 52 weeks ended 28th September, 2008 does not constitutestatutory accounts for the purposes of section 240 of the Companies Act 1985. Acopy of the accounts for the 52 weeks ended 28th September, 2008 has beendelivered to the Registrar of Companies. The auditors' report on those accountswas not qualified and did not contain statements under section 237 (2) or (3)of the Companies Act 1985.The audit of the statutory accounts for the 53 weeks ended 4th October, 2009 isnot yet complete. These accounts will be finalised on the basis of thefinancial information presented by the Directors in this preliminaryannouncement and will be delivered to the Registrar of Companies following theCompany'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. The Group's funding arrangements are set out the balance sheet and notes 11, 14 and 15.
As highlighted in notes 14 and 15, the company has long term financing in theform of Eurobonds and meets its day-to-day working capital requirements throughbank facilities which expire in 2 to 4 years. The current economic conditionscreate uncertainty particularly over the future performance of those parts ofthe business that derive a significant proportion of revenue from advertising.The Board's forecasts and projections, after taking account of reasonablypossible changes in trading performance, show that the company is expected tooperate within the terms of its current facilities.After making enquiries, the Directors have a reasonable expectation that theGroup will have access to adequate resources to continue in existence for theforeseeable future. Accordingly, they continue to adopt the going concern basisin preparing the financial statements.
The principal accounting policies used in preparing this information are set out below.
These financial statements have also been prepared in accordance with the accounting policies set out in the 2008 Annual Report and Accounts, as amended by the following new accounting standards.
Impact of new accounting standards
In the current year, the Group has adopted the following accounting standards:
The Group has adopted IFRS8, Operating Segments in advance of its effectivedate with effect from 29th September, 2008. IFRS 8 sets out disclosurerequirements concerning an entity's operating segments, products, services,geographical areas in which it operates and its major customers and replacesIAS 14, Segmental Reporting. IFRS 8 requires operating segments to beidentified on the basis of internal reports about components of the Group thatare regularly reviewed by the DMGT Board to allocate resources to the segmentsand to assess their performance. Adoption of this standard did not change theanalysis of the Group's results and performance significantly. In addition thefollowing IRFICs were adopted which had no significant impact on the Group'sfinancial statements.
IFRIC 12 Service Concession Agreements (effective for periods beginning on or after 1st January, 2008)
IFRIC 13 Customer Loyalty Programmes (effective for periods beginning on orafter 1st July, 2008)IFRIC 14 The Limit on a Defined Benefit Asset Minimum Funding Requirements andtheir Interaction (effective for periods beginning on or after 1st January,2008)
At the date of authorisation of this preliminary announcement, the following standards have been issued but not applied to the information in these financial statements since they do not apply to this reporting period :
Amendment to IAS 1, Presentation of Financial Statements (effective for periodscommencing on or after 1st January, 2009). This amendment introduces changes tothe way in which movements in equity must be disclosed and requires an entityto disclose each component of other comprehensive income not recognised inprofit or loss. The amendment also requires disclosure of the amount of incometax relating to each component of other comprehensive income as well as severalother minor disclosure amendments.Amendment to IAS 23, Borrowing Costs (effective for periods commencing on orafter 1st January, 2009). This standard requires all borrowing costs which aredirectly attributable to an acquisition construction or production of aqualifying asset to form part of the cost of that asset. The Group does notexpect a significant impact from the adoption of this standard.Amendment to IAS 27, Consolidated and Separate Financial Statements (effectivefor periods commencing on or after 1st July, 2009). The amendment introduceschanges to the accounting for partial disposals of subsidiaries, associates andjoint ventures. Adoption of these amendments is not expected to significantlyimpact the measurement, presentation or disclosure of future disposals.Amendments to IAS 32, Puttable financial instruments and obligations arising onliquidation (effective for periods beginning on or after 1st January, 2009).The amendments are relevant to entities that have issued financial instrumentsthat are (i) puttable financial instruments or (ii) instruments, or componentsof instruments that impose on the entity an obligation to deliver to anotherparty a pro-rata share of the net assets on liquidation only. As a result ofthe amendments, some financial instruments that currently meet the definitionof a financial liability will be classified as equity because they representthe residual interest in the net assets of the entity. The amendments set outextensive detailed criteria to be met in order to be able to classify theseinstruments as equity. The impact of these amendments is restricted to specificcases and no analogies can be made. The Group does not expect a significantimpact from the adoption of this standard.Amendments to IAS 39, Financial instruments: Recognition and Measurement(effective for periods commencing on or after 1st July, 2009). The amendmentsclarify treatment of inflation in a financial hedged item and one-sided risksin a hedged item. The Group does not expect a significant impact from theadoption of this standard.Amendment to IFRS 2, Share-based Payment (effective for periods commencing onor after 1st January, 2009). The amendments clarifies that vesting conditionsare service conditions and performance conditions only. Other features of ashare-based payment are not vesting conditions. It also specifies that allcancellations, whether by the entity or by other parties, should receive thesame accounting treatment. The Group does not expect a significant impact fromthe adoption of this standard.Amendment to IFRS 3, Business Combinations (effective for periods commencing onor after 1st July, 2009). The amendment introduces changes that will requireacquisition related costs (including professional fees previously capitalised)to be expensed and adjustments to contingent consideration to be recognised inincome and will allow the full goodwill method to be used when accounting fornon-controlling interests. This will result in a change to the Group'saccounting policy for purchases of stakes in controlled entities.Amendment to IFRS 7, Improving Disclosures about Financial Instruments(effective for periods commencing on or after 1st January, 2009). The amendmentclarifies and enhances existing disclosure requirements about the nature andextent of liquidity risk arising from financial instruments. The Group does notexpect a significant impact from the adoption of this standard.2008 Annual Improvements (the majority of changes will effect periods beginningon or after 1st January, 2009). The standard makes 41 amendments to 25 IFRSs aspart of the first annual improvements project. The amendments include :restructuring IFRS 1, mainly to remove redundant transitional provisions; anamendment to bring property under construction or development for future use asfor future use as an investment property within the scope of IAS 40. Suchproperty currently falls within the scope of IAS 16; and an amendment toclarify the circumstances in which an entity can recognise a prepayment assetfor advertising or promotional expenditure. Recognition of an asset would bepermitted up to the point at which the entity has access to the goods purchasedor up to the point of receipt of services. The standard is not expected to havea significant impact on the Group. In relation to the amendment to IAS 38regarding prepayments for advertising or promotional expenditure, the Groupwill be required to reassess its accounting approach to reflect therequirements of the standard. The Group has followed the guidance of theamendments to IFRS 8 in relation to segment assets.2009 Annual Improvements (the majority of changes will effect periods beginningon or after 1st January, 2010). The IASB has issued several improvements toIFRSs - a collection of amendments to twelve International Financial ReportingStandards - as part of its program of annual improvements to its standards. TheGroup does not expect a significant impact following these changes.The following interpretations have been issued which are not applicable to theGroup since they are only effective for accounting periods beginning on orafter 4th October, 2009. The adoption of these interpretations is not expectedto have any significant impact on the Group's financial statements.IFRIC 15, Agreements for the Construction of Real Estate (effective for periodsbeginning on or after 1st January, 2009)IFRIC 16, Hedges of a Net Investment in a Foreign Operation (effective forperiods beginning on or after 1st October, 2008)IFRIC 17, Distributions of non-cash assets (effective for periods beginning onor after 1st July, 2009)IFRIC 18, Transfers of assets from customers (effective for periods beginningon or after 1st July, 2009)2 SEGMENT ANALYSIS 2009 2009 2009 2009 2009 2009 External Inter-segment Total Segment Less Group profit revenue revenue revenue
result operating before
profit of exceptional joint operating ventures costs and and amortisation associates and impairment of goodwill and intangible assets GBPm GBPm GBPm GBPm GBPm GBPm 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 Exhibitions 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 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 (14.3) Total revenue 2,183.4
Operating profit before exceptional operating costs and amortisation 277.6and impairment of goodwill and intangible assets Exceptional operating costs including impairment of property plant and
(99.2)equipment
Impairment of goodwill and intangible assets (346.6) Amortisation of intangible assets (89.1) Operating loss before share of results of joint ventures and associates (257.3) Share of result of joint ventures and associates (8.7) Total operating loss (266.0) Other gains and losses (23.5) Loss before net finance costs and tax
(289.5) Investment revenue 2.2 Finance costs (113.8) Loss before tax (401.1) Tax 94.5
Profit from discontinued operations
1.2 Loss for the year (305.4) By activity
The Group's business activities are split into seven operating divisions - RMS,business information, Euromoney, exhibitions, national media, local media andradio. These divisions are the basis on which information is reported to theGroup Board. The segment result is the measure used for the purposes ofresource allocation and assessment and represents profit earned by eachsegment, including share of results from joint ventures and associates butbefore exceptional operating costs, amortisation and impairment charges, othergains and losses, net finance costs and taxation.Consistent with disclosures made in the Group's Financial Report for the sixmonths ended 29th March, 2009 the Group has separately disclosed the results ofRMS which meet the criteria of a reportable segment under IFRS 8, OperatingSegments. In prior periods the results of RMS were included within the businessinformation segment.
Details of the types of products and services from which each segment derives its revenues are included within the management report.
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 saleof newsprint from the national media to the local media division which is atcost. The amount of newsprint sold during the year amounted to 28.2 million(2008 35.1 million).Operating profit before exceptional operating costs and amortisation andimpairment of goodwill and intangible assets within the national media divisioncomprised 85.1 million from newspapers, 0.3 million from digital offset by aloss of 4.3 million from television and unallocated divisional central costsof 19.4 million.Included within unallocated central costs is a credit of 4.6 million whichadjusts the pensions charge recorded in each operating segment from a cash rateto actuarial accrual rate in accordance with IAS 19, Employee benefits.An analysis of the amortisation and impairment of goodwill and intangibleassets, depreciation and impairment of property, plant and equipment,exceptional operating costs, investment income and finance costs by segment isas follows: 2009 2009 2009 2009 2009 2009 2009 Amortisation Impairment Exceptional
Impairment Depreciation Investment Finance
of of operating
of of property, income costs
intangible goodwill costs property, plant and assets and plant and equipment intangible equipment assets GBPm GBPm GBPm GBPm GBPm GBPm GBPm RMS (1.9) - - - (3.3) 0.2 (0.3) Business information (12.1) (0.5) (1.2) 0.0 (8.1) - (1.1) Exhibitions (13.2) (88.8) (10.0) 0.0 (1.8) 0.5 - Euromoney (17.1) (21.9) (9.8) (1.2) (2.5) 0.3 (30.7) National media (26.5) (48.1) (63.2) (21.9) (29.1) 1.0 (0.3) Local media (7.1) (94.2) (13.8) (1.7) (13.0) - - Radio (11.2) (93.1) (0.2) 0.0 (2.2) - - Segment result (89.1) (346.6) (98.2) (24.8) (60.0) 2.0 (32.4) Corporate costs - - 24.4 (0.6) (1.7) 0.2 (81.4) Group total (89.1) (346.6) (73.8) (25.4) (61.7) 2.2 (113.8) The Group's exceptional operating costs represent reorganisation costs of 83.3million, charges relating to a rationalisation of the Group's propertyportfolio of 3.7 million together with exceptional provisions of 10.5 millionin the national media division and 1.0 million in the local media divisionsfor a bad debt offset by pension curtailments of 24.7 million in corporatecosts. There is a related current tax credit of 5.1 million associated withthe total exceptional operating costs. 2008 2008 2008 2008 2008 2008 External revenue Inter-segment Total Segment Less Group profit revenue revenue result operating before profit of exceptional joint operating costs ventures and and amortisation associates and impairment of goodwill and intangible assets GBPm GBPm GBPm GBPm GBPm GBPm RMS 97.9 3.2 101.1 30.7 - 30.7 Business information 217.4 0.2 217.6 44.5 0.3 44.2 Exhibitions 201.6 - 201.6 38.3 - 38.3 Euromoney 332.0 - 332.0 76.7 0.4 76.3 National media 987.7 77.0 1,064.7 69.5 (3.1) 72.6 Local media 420.4 6.6 427.0 68.9 0.5 68.4 Radio 54.7 - 54.7 4.1 2.1 2.0 Segment result 2,311.7 87.0 2,398.7 332.7 0.2 332.5 Corporate costs (15.6) Total revenue 2,398.7 Operating profit before exceptional operating costs and amortisation and 316.9 impairment of goodwill and intangible assets
Exceptional operating costs including (31.8)impairment of property, plant and equipment
Impairment of goodwill (167.8)
Amortisation and impairment
(90.3)of intangible assets
Operating profit before share of results 27.0of joint ventures and associates Share of results of joint ventures and associates
3.5 Total operating profit 30.5 Other gains and losses 27.7
Profit before net finance costs and tax
58.2 Investment revenue 3.0 Finance costs (129.3) Loss before tax (68.1) Tax 84.7
Profit from discontinued operations
0.2 Profit for the year 16.8 Operating profit before exceptional operating costs and amortisation andimpairment of goodwill and intangible assets within the national media divisioncomprised 88.6 million from newspapers, 6.0 million from digital offset by aloss of 3.0 million from television and unallocated divisional central costsof 19.0 million.Included within unallocated central costs is a credit of 15.2 million whichadjusts the pensions charge recorded in each operating segment from a cash rateto actuarial accrual rate in accordance with IAS 19, Employee Benefits.An analysis of the amortisation and impairment of goodwill and intangibleassets, depreciation and impairment of property, plant and equipment,exceptional operating costs, investment income and finance costs by segment isas follows: 2008 2008 2008 2008 2008 2008 2008 Amortisation Impairment Exceptional Impairment
Depreciation Investment Finance
of of operating of of property, income costs intangible goodwill costs property, plant and assets and plant and equipment intangible equipment assets GBPm GBPm GBPm GBPm GBPm GBPm GBPm RMS (1.4) - - - (2.3) 0.2 - Business information (9.0) - - - (6.3) 0.2 (1.2) Exhibitions (13.7) (81.3) (4.5) - (2.2) 0.5 (0.1) Euromoney (14.8) (5.7) - - (2.8) 0.6 (11.9) National media (28.2) (9.0) (13.2) (5.5) (32.9) 0.2 (1.9) Local media (13.1) (71.8) (6.8) (1.8) (12.5) - - Radio (10.1) - - - (2.4) 0.2 - Segment result (90.3) (167.8) (24.5) (7.3) (61.4) 1.9 (15.1) Corporate costs - - - - (1.7) 1.1 (114.2) Group total (90.3) (167.8) (24.5) (7.3) (63.1) 3.0 (129.3)
The Group's exceptional operating costs comprised local media restructuring costs totalling 4.5 million, together with reorganisation costs of 18.7 million within national media and 8.6 million within local media.
The Group's revenue comprises sales excluding value added tax, less discounts and commission where applicable and is analysed as follows :
2009 2009 2009 2008 2008 2008 Total Inter-segment Continuing Total Inter-segment Continuing GBPm GBPm GBPm GBPm GBPm GBPm Sale of goods 727.4 - 727.4 670.4 - 670.4 Rendering of services 1,456.0 (65.9) 1,390.1 1,728.3 (87.0) 1,641.3 2,183.4 (65.9) 2,117.5 2,398.7 (87.0) 2,311.7
The Group includes circulation and subscriptions revenue within sales of goods. Revenue from investment revenue is shown in note 5.
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 theseregions. Export sales and related profits are included in the areas from whichthose sales are made. Revenue in each geographic market in which customers arelocated is not disclosed as there is no material difference between the two.
Revenue is analysed by geographic area as follows:
2009 2008 Total and continuing Total and continuing GBPm GBPm UK 1,369.2 1,614.1 Rest of Europe 56.9 71.3 North America 530.0 486.5 Australia 65.7 70.8 Rest of the World 95.7 69.0 2,117.5 2,311.7
The closing net book value of goodwill, intangible assets and property, plant and equipment is analysed by geographic area as follows :
Closing Closing Closing Closing Closing Closing Total Total net book net book net book net book net book net book value of value of value of value of value of value of goodwill goodwill intangible intangible property, property, assets assets plant and plant and equipment equipment 2009 2008 2009 2008 2009 2008 2009 2008 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm UK 294.4 342.4 114.3 176.1 374.9 440.2 783.6 958.7 Rest of Europe 3.9 10.4 15.2 17.8 19.9 17.8 39.0 46.0 North America 413.4 479.1 263.3 277.5 25.2 24.7 701.9 781.3 Australia 1.9 1.9 57.2 146.8 15.6 14.4 74.7 163.1 Rest of the World 20.6 39.7 10.9 11.8 4.8 4.8 36.3 56.3 734.2 873.5 460.9 630.0 440.4 501.9 1,635.5 2,005.4 The Group tests goodwill annually for impairment or more frequently if thereare indicators that goodwill might be impaired. Intangible assets, all of whichhave finite lives, are tested separately from goodwill only where impairmentindicators exist. The total impairment charge recognised for the period was 346.6 million (2008 167.8 million). Of the impairment charge for the period, 88.8 million relates to the exhibitions division in relation to their giftsector businesses following a further downturn in the gift sector markets theyserve, 21.9 million relates to Euromoney, mostly in connection with itsstructured finance event businesses where its main customers are experiencing afall in demand and its Asia-based conference organiser and training businesswhich has suffered a decline in its customers spending on training, 48.1million relates to the national media division, 94.2 million relates to thelocal media division and 93.1 million relates to the radio division followinga continued decline in advertising revenues in these segments. There is acurrent tax credit of 19.8 million and a deferred tax credit amounting to 38.9 million in relation to these impairment charges.In the prior period Euromoney re-assessed the recoverability of tax lossesacquired with Metal Bulletin and as a result recognised a deferred tax asset of 2.8 million. In accordance with IAS 12, Income Taxes, the Group is required toreduce its previously capitalised goodwill to offset this deferred tax asset.Additionally in the prior period, included within the gift sector charge is anamount of 41.4 million relating to George Little Management LLC (GLM). GLM wasan associate on 3rd October, 2004, the Group's transition date to IFRS. Ontransition to IFRS, the Group elected not to apply IFRS 3, BusinessCombinations, retrospectively to past business combinations and the carryingvalue of goodwill, intangible assets and other assets and liabilitiesassociated with the Group's stakes in its subsidiaries, associates and jointventures. As a result of the application of IFRS 3 on acquiring control of GLMa double count of goodwill in respect of the Group's acquisition of its initial25% stake has occurred as under UK GAAP the majority of this stake wasattributed to goodwill and no separately identifiable assets were recorded. Asa result of this double count the Group was required to record an impairmentcharge of 14.4 million immediately following acquisition of control in 2008and this is included in the charge for that period.
The balance of the gift sector charge reflected a downturn in the gift sector markets they support.
When testing for impairment, the recoverable amounts for all the Group'scash-generating units (CGUs) are measured at the higher of value in use andfair value less costs to sell. Value in use by discounting future expected cashflows. These calculations use cash flow projections based on managementapproved budgets and projections which reflect management's current experienceand future expectations of the markets in which the CGU operates. Risk adjusteddiscount rates used by the Group in its impairment tests range from 9.5% to12.0 %, 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 increased fromthe previous year and the 2009 half year results reflecting principally a 2%increase in equity premium. The growth rates used in the projections rangebetween 0 % and 5.0 % and vary with management's view of the CGU's marketposition, maturity of the relevant market and do not exceed the long-termaverage growth rate for the market in which it operates.
3 SHARE OF RESULTS OF JOINT VENTURES AND ASSOCIATES
Unaudited Audited 2009 2008 GBPm GBPm
Share of profits from operations of joint ventures
0.4 0.5
Share of losses from operations of associates
(1.3) (0.3)
Operating (losses)/profits from joint ventures and associates
(0.9) 0.2
Share of associates' other gains and losses
- 9.8
Before amortisation, impairment of
(0.9) 10.0goodwill, interest and tax
Share of amortisation of intangibles of joint ventures
(0.8) (0.6)
Share of associates' interest (payable)/receivable
(0.2) 0.2
Share of joint ventures' tax
(0.6) (0.8) Share of associates' tax (0.2) (0.5)
Impairment of carrying value of joint venture
(2.4) -
Impairment of carrying value of associate
(3.6) (4.8) (8.7) 3.5 Share of associates items (2.4) -recognised in equity (11.1) 3.5 Share of results from (1.0) (0.9)operations of joint ventures
Share of results from operations of associates
(1.7) 9.2
Impairment of carrying value of joint ventures
(2.4) -
Impairment of carrying value of associates
(3.6) (4.8) (8.7) 3.5
Share of associates items recognised in equity
(2.4) 0.0 (11.1) 3.5 (i) In the prior year this represents the Group's share of Centurion HolidayGroup Limited's (formerly Indigo Holidays Limited) profit on disposal ofHotels4u.com.(ii) Represents a write down in the carrying value of the Group's investment inMail Today Newspapers Pvt. Limited.(iii) Represents a write down in the carrying value of the Group's investmentin Inview Interactive Limited. In the prior year Centurion Holidays GroupLimited was liquidated following the period end. The Group's carrying value waswritten down to the proceeds received on liquidation.4 OTHER GAINS AND LOSSES Unaudited Audited 2009 2008 GBPm GBPm
Profit on sale of available-for-sale investments -
7.6
Impairment of available-for-sale assets (8.7)
(10.1)
Profit on sale of property, plant and equipment 1.5
6.8
Amounts provided against deferred (5.6)
-
consideration receivable on disposal (Loss)/profit on sale of businesses (8.3)
23.4
Loss on deemed part disposal of (2.4)
-
Euromoney Institutional Investor plc
(23.5) 27.7 (i) The impairment of available-for-sale assets represents a
further impairment charge for the Group's investment in Spot Runner Inc., an advertising services company, in light of its continued trading performance.
(ii) The (loss)/profit on sale of businesses mainly comprises aloss of 5.0m on the national media division's sale of a 75.1% interest in theEvening Standard offset by a 2.7 million curtailment gain, a profit of 2.4mwithin the business information division on its disposal of Property PortfolioResearch and net losses of 9.1m in the exhibitions division in relation to a 6.2 million profit on sale of Metropress and losses of 15.3 million inrelation to various consumer event businesses. There is a deferred tax chargeof 2.4 million in relation to these profits and losses.Following the disposal of the 75.1% interest in the Evening Standard, the Grouphas no Board representation and no influence over the day to day management ofthis business the Group's remaining 24.9% interest has been accounted for as anavailable for sale asset (note 20).In the prior year the profit on sale of businesses mainly comprises the sale ofConsumer North American Home Shows in the exhibitions division, Dolphin and theEuropean business of Hobsons within business information and British Pathewithin national media. No tax charge is due on the sale of Hobsons and BritishPathe due to the availability of a statutory exemption. A tax charge of 1.9million arose on the sale of Consumer North American Home Shows and a taxcharge of 2.4 million arose on the sale of Dolphin.5 INVESTMENT REVENUE Unaudited Audited 2009 2008 GBPm GBPm Dividend income 0.2 0.3 Interest receivable from 2.0 2.7short term deposits 2.2 3.0 6 FINANCE COSTS Unaudited Audited 2009 2008 GBPm GBPm
Interest, arrangement and commitment fees (76.1)
(78.3)
payable on bonds, bank loans and loan notes Loss on derivatives, or portions thereof, not (28.0)
(45.6)
designated for hedge accounting Finance charge on discounting of deferred (1.7)
(2.4)consideration Other (8.0) (3.0) (113.8) (129.3) Analysed as follows :
Interest, arrangement and commitment fees (76.1)
(78.3)
payable on bonds, bank loans and loan notes Finance charge on discounting of (1.7)
(2.4)deferred consideration
Change in fair value of non designated portion of derivatives designated as (2.0)
2.6 net investment hedges
Change in fair value of interest rate -
(0.2)
caps not designated for hedge accounting Change in fair value of derivative hedge of bond 9.0
1.1
Change in fair value of hedged portion of bond (9.0)
(1.1) (79.8) (78.3)
Tax equalisation swap income 0.8
14.5
Non foreign exchange gain on 1.1
5.3tax equalisation options 1.9 19.8 Foreign exchange loss on (27.9) (67.8)
tax equalisation arrangements
Foreign exchange loss on (6.2) -
restructured hedging arrangements
Change in fair value of (1.8) (3.0)acquisition put options (35.9) (70.8) (113.8) (129.3) (i) The finance charge on the discounting of contingent
consideration arises from the requirement under IFRS 3, Business Combinations to discount contingent consideration back to current values.
(ii) Tax equalisation swap income and the gain from taxequalisation options totalling 1.9 million (2008 19.8 million) arises fromthe economic hedging of tax on foreign exchange movements. The foreign exchangeloss on tax equalisation arrangements of 27.9 million (2008 67.8 million) isexcluded from adjusted profit since it is equal to a reduced tax charge (seenote 9). In addition, the foreign exchange loss on intra group financing,premium on repurchase of bonds, on restructured hedging arrangements and thechange in fair value of acquisition put options are also excluded from adjustedprofits.(iii) The foreign exchange losses on restructured hedgingarrangements of 6.2 million (2008 nil) arise from forward contractsclassified as ineffective under IAS 39, Financial instruments, following thedirectors' review of the Group's US dollar revenue capacity in its UK basedbusinesses.7 TAX Unaudited Audited 2009 2008 GBPm GBPm
The credit on the loss for the year consists of :
UK tax
Corporation tax at 28% (2008 29%) -
18.0
Adjustments in respect of prior years 25.4
28.2 25.4 46.2 Overseas tax Corporation tax (1.0) (18.4)
Adjustments in respect of prior years 1.4
(0.8) Total current tax 25.8 27.0 Deferred tax
Origination and reversals of timing differences 64.7
60.6
Adjustments in respect of prior years 4.0
(2.9) Total deferred tax 68.7 57.7 Total Tax 94.5 84.7 (i) The net prior year credit of 30.8 million (2008 24.5
million) arose largely from the agreement of certain prior year open issues with tax authorities and a reassessment of the level of tax provisions required.
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.
Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and non-recurring items (adjusted tax charge) amounted to 44.3 million (2008 62.8 million) and the resulting rate is 22.1% (2008 24.0%). The differences between the tax credit and the adjusted tax charge are shown in the reconciliation below:
Unaudited Audited 2009 2008 GBPm GBPm Total tax credit on the 94.5 84.7loss for the year
Deferred tax on intangible assets (52.4)
(37.2)and goodwill
Current tax on foreign exchange (27.9)
(67.8)
on tax equalisation contracts
Agreement of open issues (34.4) (23.8)with tax authorities
Tax on other exceptional items (24.1)
(18.7) Adjusted tax charge on the (44.3) (62.8)loss for the period In calculating the adjusted tax rate, the Group excludes the potential futuredeferred tax effects of intangible assets and goodwill as it prefers to givethe readers of its accounts a view of the tax charge based on the currentstatus of such items.A credit of 27.9 million relating to tax on foreign exchange losses (2008 67.8 million) has been treated as exceptional as it matches foreign exchangelosses of 27.9 million (2008 67.8 million) on tax equalisation swaps includedwithin finance costs (see note 6).8 DIVIDENDS PAID 2009 2009 2008 2008 Pence Pence per share GBPm per share GBPm
Amounts recognisable as distributions to
equity holders in the period
Ordinary shares - final dividend for the year 9.9 2.0 - -ended 28th September, 2008 'A' Ordinary Non-Voting shares - final dividend for the year 9.9 35.1 - -ended 28th September, 2008
Ordinary shares - final dividend - - 9.9 2.0for the year ended 30th September, 2007 'A' Ordinary Non-Voting shares -
final dividend for the year - - 9.9 36.4ended 30th September, 2007 9.9 37.1 9.9 38.4
Ordinary shares - interim dividend for 4.8 1.0 - -the year ended 4th October, 2009 'A' Ordinary Non-Voting shares - interim dividend 4.8 17.2 - -for the year ended 4th October, 2009 Ordinary shares - interim dividend for the year - -
4.8 1.0ended 28th September, 2008
'A' Ordinary Non-Voting shares - interim dividend - - 4.8 16.9for the year ended 28th September, 2008
4.8 18.2 4.8 17.9 14.7 55.3 14.7 56.3 The Board has declared a final dividend of 9.90p per Ordinary / 'A' OrdinaryNon-Voting share (2008 9.90p) which will absorb an estimated 37.9 million ofshareholders' funds for which no liability has been recognised in thesefinancial statements. Subject to shareholder approval it will be paid on 12thFebruary, 2010 to shareholders on the register at the close of business on 4thDecember, 2009.
9 ADJUSTED PROFIT (BEFORE EXCEPTIONAL OPERATING COSTS AND AMORTISATION AND IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS, OTHER GAINS AND LOSSES AND EXCEPTIONAL FINANCING COSTS, AFTER TAXATION AND MINORITY INTERESTS)
Unaudited Audited 2009 2008 GBPm GBPm Loss before tax - (401.1) (68.1)continuing operations Profit before tax - 1.2 0.2discontinued operations Add back : Amortisation of intangible assets in Group profit from 89.9 90.9
operations and in joint ventures
and associates Impairment of goodwill 346.6 167.8and intangible assets Exceptional operating costs 99.2 31.8
Share of associates' other gains -
(9.8) Impairment of carrying 2.4 -value of joint venture
Impairment of carrying value of associate 3.6
4.8 Other gains and losses : Profit on sale of - (7.6)
available-for-sale investments
Profit on sale of property, (1.5) (6.8)plant and equipment
Amounts provided against deferred 5.6
-
consideration receivable on disposal (Loss)/profit on sale of businesses 8.3
(23.4)
Impairment of available-for-sale assets 8.7
10.1
Loss on deemed part disposal of 2.4
-
Euromoney Institutional Investor plc
Profit on sale of (1.2) (0.2)discontinued operations Finance costs : Foreign exchange loss on tax 27.9 67.8equalisation arrangements
Foreign exchange loss on restructured 6.2
3.0hedging arrangements Change in fair value of 1.8 -acquisition put options Tax :
Share of tax in joint ventures 0.8
1.3and associates
Profit before exceptional operating costs, amortisation and impairment of goodwill and intangible assets, 200.8
261.8
other gains and losses and exceptional financing costs, taxation and
minority interests
Total tax credit on the profit for the period 94.5
84.7 Adjust for : (52.4) (37.2)
Deferred tax on intangible assets and goodwill
Current tax on foreign exchange on tax (27.9)
(67.8)equalisation arrangements (34.4) (23.8)
Agreed open issues with tax authorities
(24.1) (18.7)
Tax on other exceptional items Interest of minority shareholders (15.8)
(18.1)
Adjusted profit before exceptional operating costs, amortisation and impairment of goodwill and intangible 140.7
180.9
assets, other gains and losses and exceptional financing costs after taxation and minority interests
The adjusted minority share of profits for the year of 15.8 million (2008 18.1 million) is stated after eliminating a credit of 17.8 million (2008 1.2million), being the minority share of exceptional items.
10 (LOSS)/EARNINGS PER SHARE
Basic loss per share of 80.1p (2008 0.0p) and diluted loss per share of 80.1p(2008 0.0p) are calculated, in accordance with IAS 33, Earnings per share, onGroup loss for the financial year of 303.4 million (2008 nil) and on theweighted average number of ordinary shares in issue during the year, as set outbelow.As in previous years, adjusted earnings per share have also been disclosedsince the Directors consider that this alternative measure gives a morecomparable indication of the Group's underlying trading performance. Adjustedearnings per share of 37.2p (2008 47.9p) are calculated on profit beforeexceptional operating costs, amortisation and impairment of goodwill andintangible assets, after charging the taxation and minority interestsassociated with those profits, of 140.7 million (2008 180.9 million), as setout in Note 13 above, and on the basic weighted average number of ordinaryshares in issue during the year. Unaudited Unaudited Audited Audited 2009 2009 2008 2008 Basic Diluted Basic Diluted pence pence pence pence per share per share per share per share Loss per share from (80.1) (80.1) - (0.2)continuing operations Adjustment to exclude earnings of discontinued 0.3 0.3 0.1 0.1operations Basic (loss)/earnings per share from continuing (79.8) (79.8) 0.1 (0.1)and discontinued operations Add back: Amortisation of intangible assets in Group profit from 23.7 23.7 24.1 24.1operations and in joint ventures and associates Impairment of goodwill and 91.5 91.5 44.4 44.4intangible assets Exceptional operating costs 26.2 26.2 8.4 8.4 Share of associates' other - - (2.6) (2.6)gains Impairment of carrying 0.6 0.6 - -value of joint ventures Impairment of carrying 1.0 1.0 1.3 1.3value of associate Other gains and losses : Profit on sale of available-for-sale - - (2.0) (2.0)investments Profit on sale of property, (0.4) (0.4) (1.8) (1.8) plant and equipment Amounts provided against deferred 1.5 1.5 - -consideration receivable on disposal (Loss)/profit on sale 2.2 2.2 (6.2) (6.2)of businesses Impairment of 2.3 2.3 2.7 2.7available-for-sale assets Loss on deemed part disposal of Euromoney 0.6 0.6 - -Institutional Investor plc
Profit on sale of discontinued (0.3) (0.3)
(0.1) (0.1)operations Finance costs : Foreign exchange loss on 7.4 7.4 18.0 18.0
tax equalisation arrangements
Foreign exchange loss on 1.6 1.6 - -
restructured hedging arrangements Change in fair value of acquisition put options 0.5 0.5
0.8 0.8 Tax :
Share of tax in joint ventures 0.2 0.2
0.3 0.3and associates Profit before exceptional
operating costs, amortisation
and impairment of goodwill and intangible assets, 78.8 78.8 87.4 87.2other gains and losses and
exceptional financing costs, taxation and minority interests
Adjust for: Deferred tax on intangible (13.9) (13.9) (9.9) (9.9)assets and goodwill Current tax on foreign exchange on tax equalisation (7.4) (7.4) (18.0) (18.0)arrangements Agreed open issues with tax (9.1) (9.1) (6.3) (6.3)authorities Tax on other (6.4) (6.4) (5.0) (5.0)exceptional items Interest of minority (4.8) (4.8) (0.3) (0.3)shareholders Adjusted earnings per share (before exceptional operating costs, amortisation and impairment of goodwill and 37.2 37.2 47.9 47.7
intangible assets, other gains and losses and exceptional financing costs after taxation
and minority interests)
The weighted average number of ordinary shares in issue during the year for the purpose of these calculations is as follows :
Unaudited Audited 2009 2008 Number Number m m Number of ordinary 392.6 395.3shares in issue Shares held in Treasury (14.0) (17.7) Basic earnings per share denominator 378.6
377.6
Effect of dilutive share options 0.1
- Dilutive earnings per 378.7 377.6share denominator 11 ANALYSIS OF NET DEBT Unaudited Audited 2009 2008 GBPm GBPm Net debt at start (1,014.6) (950.4) Cashflow 20.0 (45.5) Foreign exchange movements (49.5) 4.8 Other non-cash movements (4.5) (23.5) Net debt at year end (1,048.6) (1,014.6) Analsyed as : Cash and cash equivalents 47.4 45.3 Unsecured bank overdrafts (0.5) (1.0) Cash and cash equivalents 46.9 44.3in the cash flow statement Debt due within one year Bank loans (0.5) - Loan notes (14.8) (25.0) Hire purchase obligations (4.7) -
Debt due in more than one year
Bonds (847.1) (838.9) Hire purchase obligations (20.3) - Loans (173.3) (165.3) Net debt at year end (1,013.8) (984.9) Effect of derivatives on bank loans (34.8)
(29.7)
Net debt including derivatives (1,048.6) (1,014.6)
12 PROPERTY, PLANT AND EQUIPMENT
During the period the Group spent 39.6 million (2008 64.5 million) onproperty, plant and equipment.The Group also disposed of certain of its property, plant and equipment with acarrying value of 21.5 million (2008 8.6 million) for proceeds of 20.5million (2008 15.4 million).
13 ACQUISITION PUT OPTION COMMITMENTS
Unaudited Audited 2009 2008 GBPm GBPm Current 11.2 29.5 Non-current 0.7 7.6 11.9 37.1
14 OTHER FINANCIAL LIABILITIES
Unaudited Audited 2009 2008 GBPm GBPm Current liabilities Bank overdrafts 0.5 1.0 Bank loans 0.5 - Hire purchase obligations 4.7 - Loan notes 14.8 25.0 20.5 26.0 Non-current liabilities Bonds 847.1 838.9 Bank loans 173.3 165.3 Hire purchase obligations 20.3 - 1,040.7 1,004.2 15 BANK LOANSThe Group's bank loans bear interest charged at LIBOR plus a margin based onthe Group's ratio of net debt to EBITDA. Additionally each facility contains acovenant based on a minimum interest cover ratio. EBITDA for these purposes isdefined as the aggregate of the Group's consolidated operating profit beforeshare of results of joint ventures and associates before deductingdepreciation, amortisation and impairment of goodwill, intangible and tangibleassets, before exceptional items and before interest and finance charges. Thesecovenants were met at the relevant test dates during the period.
The Group's facilities and their maturity dates are as follows :
Unaudited Audited 2009 2008 GBPm GBPm Expiring in one year or less - - Expiring in more than one year 180.0 70.0but not more than two years Expiring in more than two years 30.0 180.0but not more than three years Expiring in more than four years 210.0 240.0but not more than five years Total bank facilities 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 2009 2008 GBPm GBPm
Expiring in one year or less -
-
Expiring in more than one year 105.7
5.7but not more than two years Expiring in more than two years 30.0 84.5but not more than three years Expiring in more than four years 68.2 157.3but not more than five years Total undrawn committed bank facilities 203.9 247.5 16 SHARE CAPITAL AND RESERVES
Share capital as at 4th October, 2009 amounted to 49.1 million, which wasunchanged during the period.The Company disposed of 10,184,237 'A' Ordinary Non-Voting shares representing2.73% of the called up 'A' Ordinary Non-Voting share capital, in order tosatisfy incentive schemes.The Company also purchased 1,626,058 'A' Ordinary Non-Voting shares having anominal value of 203,257 to match obligations under incentive plans. Theconsideration paid for these shares was 5.6 million. Shares repurchasedduring the period represented 0.44% of the called up 'A' Ordinary Non-Votingshare capital at 4th October, 2009.At 4th October, 2009 options were outstanding under the terms of the Company's1997 and 2006 Executive Share Option Schemes over a total of 6,380,067 (20086,978,245) 'A' Ordinary Non-Voting shares.
17 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 was as follows:
Name of acquisition Segment % voting Date of Business Consideration Intangible Goodwill
rights acquisition description paid fixed arising acquired assets acquired GBPm GBPm GBPm Supplier of Metropix Business 100% December floor-plan 4.3 2.5 2.4 Information 2008 drawing services Event organiser November and
Reflex Publishing Exhibitions 100% 2008 publisher 1.6
1.6 - in the energy sector Multiple job posting
Broadbean Technology National 100% October and 7.8
4.8 4.1 Media 2008 application tracking solutions
Provisional fair value of net assets acquired with acquisitions :
Book Provisional fair Provisional value value adjustments fair value Note GBPm GBPm GBPm Goodwill - 6.5 6.5 Intangible assets - 8.9 8.9
Property, plant and equipment 0.2 -
0.2 Current assets 2.1 - 2.1 Cash and cash equivalents 0.7 - 0.7
Trade creditors and other payables (2.6) -
(2.6) Deferred tax - (2.2) (2.2) Group share of net 0.4 13.2 13.6
(liabilities)/assets acquired
Cost of acquisitions: Cash paid in current Non-cash period Total Note GBPm GBPm GBPm Deferred consideration 6.0 - 6.0 Loan notes - - - Cash - 7.3 7.3
Consideration at fair value 6.0 7.3
13.3
Directly attributable costs - 0.3
0.3 Total cost of acquisition 6.0 7.6 13.6 If all acquisitions had been completed on the first day of the financial year,Group revenues for the year would have been 2,117.7 million and Group lossattributable to equity holders of the parent would have been 303.1 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 of theresults 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 0.8 million.
The aggregate consideration for these and other businesses was 13.3 million,of which 7.3 million was paid in cash during the year, and an estimated amountof 6.0 million payable in the form of contingent consideration, depending upontrading results. This contingent consideration has been discounted back tocurrent values in accordance with IFRS 3, Business Combinations. In each case,the Group has used 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 2009 2008 GBPm GBPm Cash consideration (including acquisition 24.1
36.3
expenses of 0.1 million (2008 nil))
During the period the Group acquired additional shares in controlled entitiesamounting to 24.1 million (2008 36.3 million). This includes 13.7 millionacquiring a further 1.8% of the issued ordinary share capital of Euromoney.Under the Group's accounting policy for the purchase of shares in controlledentities, no adjustment has been recorded to the fair value of assets andliabilities already held on the balance sheet. The difference between the costof the additional shares, goodwill arising and the carrying value of theminority share of net assets is adjusted directly in equity. The adjustment toequity in the period was a charge of 3.1 million.
In the prior year this includes 26.7 million acquiring a further 5.4% of the issued ordinary share capital of Euromoney. The adjustment to equity in the prior period was a charge of 6.4 million.
GLM owns and manages tradeshows for consumer goods in the US, servingindustries as diverse as giftware, social stationery, home textiles, tabletop,gourmet house wares, contemporary furniture and wellness. GLM is involved inthe production of nearly 40 tradeshows in 15 cities across the US and Canada.Reconciliation to purchase of subsidiaries as shown in the cash flow statement: 2009 2008 GBPm GBPm
Cash consideration including acquisition GLM -
78.8
expenses of nil (2008 0.2 million) Cash consideration including acquisition Others 7.6
14.8
expenses of 0.3 million (2008 0.5 million) Cash paid to settle deferred consideration 15.1
14.2in respect of acquisitions
Cash and cash equivalents acquired (0.7)
(3.5)with subsidiaries 22.0 104.3
18 SUMMARY OF THE EFFECTS OF DISPOSALS
On 21st January 2009, the national media division sold a 75.1% interest in the Evening Standard for cash proceeds of 8.3 million. Following disposal the Group has no Board representation and no influence over the day to day management of the title. The remaining 24.9% investment has therefore been treated as an available-for-sale investment.
The impact of the disposal on net assets was as follows :
GBPm
Property, plant and equipment
1.0 Total net assets disposed 1.0 Loss on sale of businesses (2.3) (1.3) Satisfied by : Cash received 8.3 Directly attributable costs (4.0) Cash reinvested (8.3) Pension curtailment gain 2.7 (1.3) During the period the Evening Standard absorbed 11.4 million of the Group's net operating cashflows, paid nil in respect of investing activities and paid nil in respect of financing activities. The other principal disposals completed during the period, the proceeds received and date of disposal were as follows :
Name of disposal Segment Date of disposal Disposal proceeds Metro Press Exhibitions October 2008 6.4 Mayhill Exhibitions September 2009 4.6 At various dates Various consumer shows between March 2009 Exhibitions and September 2009 2.2
Property Portfolio Research Business to business July 2009
13.8 The proceeds on disposal of Property, Portfolio Research were received in the form of shares in CoStar, Inc., a leading provider of information, marketing and analytic services to commercial real estate professionals in the United States and the United Kingdom (note 22). The impact of disposals of businesses on net assets was : Note GBPm Goodwill 18.7 Intangible assets 3.2 Property, plant and equipment 2.2 Trade and other receivables 2.3 Cash at bank and in hand 0.8
Trade creditors and other payables
(5.1) Deferred tax 1.6 Net assets disposed 23.7
Profit on disposal of businesses
(6.0) 17.7 Satisfied by: Cash received 13.6 Investment in CoStar, Inc. 13.8 Liabilities assumed (3.5)
Recycled cumulative translation differences
(0.9) Directly attributable costs (5.3) 17.7 Reconciliation to disposal of businesses as shown in the cash flow statement : GBPm
Cash consideration net of disposal costs
12.6
Cash consideration net of disposal costs - discontinued operations
1.2 Cash reinvested (8.3)
Cash and cash equivalents disposed with subsidiaries
(0.8) 3.5
The businesses disposed of during the year contributed 0.1 million to the Group's net operating cash flows, nil attributable to investing and nil attributable to financing activities.
19 RETIREMENT BENEFITS
The Group operates a number of pension schemes covering most major Group companies under which contributions are paid by the employer and employees.
The schemes include funded defined benefit pension arrangements, providing service-related benefits, based on final pensionable salary in addition to a number of defined contribution pension arrangements. The defined benefit schemes in the 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 4th October, 2009 were 28.8 million (2008 20.5 million).
The defined benefit obligation is calculated on a year-to-date basis, using thelatest actuarial valuation as at 29th March, 2009. The assumptions used in thevaluation are summarised below: Unaudited Audited 2009 2008 %pa %pa Price inflation 3.1 3.7 Salary increases 3.0 4.2 Pension increases 3.0 3.7
Discount rate for scheme liabilities 5.4
7.0
Expected overall rate of return on assets 7.0
7.5 During the period the Group recognised pension curtailment gains arising fromthe remeasurement of pension liabilities of 2.7 million in relation to thedisposal of the Evening Standard and 24.7 million in relation to the Group'sreorganisation and restructuring programmes.
20 CONTINGENT LIABILITIES
As set out in note 31 the Group has issued stand by letters of credit in favourof the Trustees of the Group's defined benefit pension fund amounting to 37.8million (2008 64.3 million).
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 settlement costs when such an outcome is judged probable.
Four writs claiming damages for libel have been issued in Malaysia againstEuromoney Institutional Investor and three of its employees in respect of anarticle published in one of Euromoney's magazines, International CommercialLitigation, in November 1995. The writs were served on Euromoney on 22ndOctober, 1996. Two of these writs have been discontinued. The total outstandingamount claimed on the two remaining writs is 82.0 million Malaysian ringgits ( 15.1 million). No provision has been made in these accounts since the Directorsdo not believe that Euromoney has any material liability in respect of thesewrits.21 ULTIMATE HOLDING COMPANY
The Company's ultimate holding company and immediate parent company is Rothermere Continuation Limited, a company incorporated in Bermuda.
22 RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not disclosed in thisnote. The transactions between the Group and its joint ventures and associatesare disclosed below.
The following transactions and arrangements are those which are considered to have had a material effect on the financial performance and position of the Group for the period.
Ultimate Controlling Party
The Company's ultimate controlling party is the Viscount Rothermere, theCompany's Chairman. Transactions relating to the remuneration and shareholdingsof the Viscount Rothermere are given in the Remuneration Report.Transactions with DirectorsThere were no material transactions with Directors of the Company during theyear, except for those relating to remuneration and shareholdings, disclosed inthe Remuneration Report.For the purposes of IAS 24, Related Party Disclosures, Executives below thelevel of the Company's Board are not regarded as related parties.The remuneration of the Directors at the year end, who are the key managementpersonnel of the Group, is set out below in aggregate for each of thecategories specified in IAS 24. Further information about the individualDirectors' remuneration is provided in the audited part of the Directors'Remuneration Report.Transactions with joint ventures and associatesAssociated Newspapers Limited has a 45% shareholding in Fortune Green Limited.During the period the Group received revenue for newsprint, computer and officeservices of 0.9 million (2008 0.9 million). Amounts due from Fortune GreenLimited at 4th October, 2009 were 0.2 million (2008 0.3 million).Associated Newspapers Limited has a 20% share in the Newspapers LicensingAgency (NLA) from which royalty revenue of 2.5 million was received (2008 3.0million). Commissions paid on this revenue total 0.3 million (2008 0.5million). The amount due from the NLA on 4th October, 2009 was 0.1 million(2008 0.2 million due to the NLA).Daily Mail and General Holdings Limited has a 15.8% share holding in The PressAssociation. During the period the Group received services amounting to 1.3million (2008 1.8 million) and the net amount due from the Press Associationas at 4th October, 2009 was 33,000 (2008 0.1 million).
During the period, the Company received services from companies in which Directors have an interest totalling 6.9 million (2008 7.9 million) and received revenue of 0.6 million (2008 0.6 million). The net amount owed by these companies at 4th October, 2009 was 0.6 million (2008 0.1 million).
In January, 2009 the Group sold 75.9% of the Evening Standard. Since this datethe Group has received revenue of 5.6 million (2008 nil) and paid forservices of 13.3 million (2008 nil). The net amount due from the Group at4th October, 2009 was 1.0 million (2008 nil).During the period, Landmark charged management fees of 0.3 million (2008 0.3million) to Point X Ltd, and recharged costs of 0.1 million (2008 0.1million). Point X received royalty income from Landmark of 77,000 (2008 43,000) and owed 39,000 to Landmark (2008 0.1 million) at the period end.During the period, Landmark recharged costs totalling 0.2 million (2008 nil)to Financial Asset Search Ltd and at the period end was due 0.2 million (2008 nil).
During the period, DMG Radio Australia Pty Ltd invoiced DMG Radio Perth Pty Ltd AU$2.8 million (2008 AUS$2.8 million).
Other related party disclosures
During the period, two loans of 33,263 and 3,732 made to an officer of the Company were repaid in full. The loans bore interest at 5% and 6.25% respectively per annum. The maximum principal amount outstanding during the period was 33,263 and 3,732.
At 4th October, 2009, the Group owed 1.6 million (2008 1.5 million) to thepension schemes which it operates. This amount comprised employees' andemployer's contributions in respect of September 2009 payrolls which were paidto the pension schemes in October 2009.
The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged during the year was 0.7 million (2008 0.7 million).
Post Balance Sheet Events
Details of material post balance sheet events are given in the management report.
DAILY MAIL & GENERAL TRUST PLCRelated Shares:
DMGT.L