24th May 2012 07:00
Daily Mail and General Trust plc
Half Yearly Financial Report for the six months ended 1st April, 2012
Financial Highlights
Adjusted results* Adjusted Statutory results 2012 2011 Change†2012 2011Revenue £973m £991m -2% £973m £991mOperating profit £133m £144m -8% £73m £98mProfit before tax £105m £121m -14% £46m £73mEarnings per share 19.5p 23.6p -17% 15.8p 13.0pDividend per share 5.6p 5.3p
SOLID UNDERLYING PERFORMANCE; FULL YEAR OUTLOOK UNCHANGED
- Solid Group revenue performance, up 3% on an underlying basis.
- Underlying operating profit flat; reported Group profits in line with expectations.
- Good performance from B2B; underlying revenue up 9% and underlying profit* up 14%.
- Resilient revenues at Associated: strong digital advertising (up 21%) and circulation (up 4%), offsetting print advertising decline (down 10%)
- Northcliffe operating profit* up 34%.
- Profit before tax lower due to various one-off items.
- Active portfolio management; targeted acquisitions and disposal of non-core assets.
- Net debt up £90m to £809m, but is expected to reduce in the second half.
- Outlook for the year remains unchanged.
- Dividend increased by 6%.
Martin Morgan, Chief Executive, said:
"We have delivered a solid underlying performance in the first half reflectingthe strength of our B2B companies and the resilience of our national consumertitles. As expected, disposals and certain one-off factors have led to lowerreported half year results.Our international B2B companies have increased their underlying revenues andprofits* by 9% and 14% respectively. Their reported results were lower due tothe impact of disposals and a low biennial half year for the events business.Our UK consumer businesses have experienced more challenging conditions,although underlying revenues were only slightly down. Within Associated,circulation and digital revenue growth largely offset print advertisingweakness. Consumer first half profits were also affected by increased digitalpromotional activity which we expect to be less pronounced in the second half.We have continued actively to manage our portfolio of businesses and have madeseveral acquisitions and disposals during the period and into the second half,to improve the overall quality and growth prospects of the Group. Thecontinued growth of our B2B companies and more positive momentum expectedwithin our consumer operations in the second half of the year means that weexpect to achieve growth in earnings* for the full financial year, compared tothe equivalent figure last year."
A live webcast of the Half Year Results presentation to City analysts will be available on our website at 9.30 a.m. on 24th May, 2012 at http://www.dmgt.com.
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Enquiries
Stephen Daintith, Finance Director Tel: +44 20 3615
2907
Nicholas Jennings, Company Secretary Tel: +44 20 3615
2905
Kim Fletcher / Will Carnwath, Brunswick Group LLP Tel: +44 20 7404 5959
Notes to Editors
DMGT is an international group quoted on the London Stock Exchange. It operates in more than 40 countries, with a portfolio of businesses in media, information and digital markets that serve both business and consumer audiences.
Our B2B arm comprises Risk Management Solutions, dmg information,dmg events and Euromoney Institutional Investor. Our consumer media business,A&N Media, comprises Mail Newspapers, our free newspaper business, principallyMetro, Northcliffe Media and various digital businesses.Our strategy is to remain the owner of high-quality, sustainable,market-leading media and information assets across both the B2B and consumersectors and to become a more global growth company with sustainable earningsand dividend growth.Notes
*before exceptional items, impairment of goodwill and intangible assets, and amortisation of intangible assets arising on business combinations.
#Underlying revenue or profit* is revenue or profit* on alike-for-like basis, adjusted for acquisitions, disposals, closures andnon-annual events in the current and prior year and at constant exchangerates. For RMS, underlying percentage movements exclude RMSI and for dmginformation Sanborn. For dmg events, the comparison is between events held inthe year and the same events held the previous time. For Euromoney thecomparisons exclude Ned Davis Research and underlying profit excludes its CAPcharges in both periods. For A&N Media: Associated underlying advertisingexcludes the effects of the sale of Teletext Retail last year and TeletextHolidays and motors.co.uk this year. Northcliffe underlying advertising andcirculation revenue excludes the effects of the sale and closure of titleslast year, adjusts for the move of several titles from daily to weeklypublishing frequency and the move to a wholesale circulation model last year.
†Percentages are calculated on actual numbers to one decimal place.
Contents Page
Interim Management Report 4-21
Independent review report by the external auditors 22-23
Shareholder Information 24
Condensed Consolidated Income Statement 25
Condensed Consolidated Statement of Comprehensive Income 26
Condensed Consolidated Statement of Changes in Equity 27
Condensed Consolidated Statement of Financial Position 28 - 29
Condensed Consolidated Cash Flow Statement 30 - 31
Notes to the Condensed Consolidated Financial Statements 32 - 46
Interim Management Report
This interim management report focuses principally on the adjusted results to give a more comparable indication of the Group's underlying business performance. All year on year comparisons are on a like-for-like basis.
An explanation of restructuring and impairment charges and otheritems included in the statutory results is set out after the divisionalperformance review and in the segmental note. The adjusted results aresummarised below: Adjusted results* Half Year Half Year Change†Full Year 2012 2011 2011 £m £m £mRevenue 973 991 -2% 1,990 Operating profit 133 144 -8% 286Income from joint ventures and associates 3 1 5Net finance costs (31) (24) -31% (54)Profit before tax 105 121 -14% 237 Tax charge (18) (20) +10% (35)Minority interest (12) (11) - 9% (22)Group profit 75 90 -17% 180
Adjusted earnings per share 19.5p 23.6p -17% 47.0p
Notes
*Adjusted results are stated before exceptional items, impairment of goodwill and intangible assets, and amortisation of intangible assets arising on business combinations. For a reconciliation of Group profit to adjusted Group profit, see Note 9.
#Underlying revenue or profit* is revenue or profit* on alike-for-like basis, adjusted for acquisitions, disposals, closures andnon-annual events in the current and prior year and at constant exchangerates; see pages 15 and 16. For RMS, underlying percentage movements excludeRMSI and for dmg information Sanborn. For dmg events, the comparison isbetween events held in the year and the same events held the previous time.For Euromoney the comparisons exclude Ned Davis Research and underlying profitexcludes its CAP charges in both periods. For A&N Media: Associated underlyingadvertising excludes the effects of the sale of Teletext Retail last year andTeletext Holidays and motors.co.uk this year. Northcliffe underlyingadvertising and circulation revenue excludes the effects of the sale andclosure of titles last year, adjusts for the move of several titles from dailyto weekly publishing frequency and the move to a wholesale circulation modellast year.
†Percentages are calculated on actual numbers to one decimal place.
The average £: US$ exchange rate for the year was £1: $1.57 (against £1:$1.59 last year). The rate at the half year end was $1.60 (2011 $1.60), compared to $1.56 at the previous year end.
All references to profit or margin in this interim management report are to adjusted profit or margin, except where reference is made to statutory profit.
Summary
Group revenue for the six months to 1st April, 2012 was £973 million, comparedwith £991 million for the prior half year. This represents an underlyingincrease of 3%, but a decrease of 2% on a reported basis. There was goodunderlying growth in several revenue categories, particularly subscriptions,digital advertising and events, conferences & training. Whilst advertisingrevenue declined largely in the newspaper businesses, there was good growthelsewhere. Circulation revenue rose slightly due to the benefit of cover priceincreases.Operating profit* was down 8% at £133 million on the figure for the previoushalf year, but unchanged on an underlying basis. The decrease was due to theexpected reduced profitability of dmg::events, following the disposal ofGeorge Little Management (GLM) and a low biennial first half. There were nobiennial events in this half year, compared with two in the first half of theprior year. In addition, lower profits from Associated reflect lower printadvertising revenues and additional promotional activity in respect of itsdigital businesses.The Group's B2B companies' profits* were down 1% on a reportedbasis, an underlying increase of 14%. Within consumer media, the profits* ofA&N Media were down 24%, 28% on an underlying basis. As a consequence, 75% ofthis half year's operating profit* was generated from B2B and 25% fromconsumer media, compared to 70% and 30% for the prior half year. Thesepercentages have all been calculated after allocating head office costs on thebasis of revenues. More than half of the Group's operating profits* were againderived from outside the UK with the share from North America at 53%, up from45% in the prior half year.Adjusted profit* before tax fell by 14% to £105 million, reflectingthe changes in operating profit* described above and higher net finance costsdue mainly to a one-off £6 million charge for the premium on redemption of£110 million of 7.5% Bonds due 2013. The statutory profit before tax for theperiod was £46 million, after charging £23 million of amortisation andimpairment and £36 million of net exceptional charges. Adjusted Group profit*after tax and minority interests was down 17% to £75 million. Statutory profitafter non-controlling interests was £61 million, up from £50 million after thewrite back of tax provisions.Active portfolio managementThe principal strategic acquisitions during the period wereHobsons' acquisitions of Intelliworks, a provider of relationship managementsolutions for higher education, and PrepMe, which delivers adaptive learningtechnologies and test preparation programs, Genscape's purchase of SpringRock,a provider of dynamic production forecasts for the oil and gas industry andEuromoney's purchase of Global Grain Geneva and Global Grain Asia,international grain trading conferences.
In April, the Office of Fair Trading gave clearance for the proposed merger between the Digital Property Group and Zoopla to go ahead and this is expected to complete on 31st May. Also in April, A&N Media acquired Jobrapido, one of the world's largest job search engines, for an initial completion consideration of €30 million. In May, dmg::information made a strategic investment in Xceligent Inc, one of only two companies in the US that provide fully researched property and listing information to the commercial real estate community.
Outlook
The Group expects to benefit from the continuing strength acrossour B2B companies with the net effect of non-recurring events withindmg::events being much less pronounced in the second half. Within A&N Media,whilst trading since the start of April has seen advertising revenues belowlast year, Associated expects to achieve profit growth due to the benefit ofprevious cover price increases, some advertising and circulation revenuebenefit from the Olympics, a strong digital performance and a continued focuson costs. Northcliffe's improved profitability is expected to be maintained inthe second half.
As a consequence, the outlook for the full year remains unchanged and the Board expects to see growth in earnings for the full financial year, compared to the equivalent figure for last year.
Business ReviewBusiness to business (B2B) Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 431 433 0% 892Operating profit* 100 101 -1% 211Operating margin* 23% 23% 24%
These results are stated after allocating Group head office costs on the basis of B2B's share of Group revenues.
Revenues from the B2B group totalled £431 million, in line with theprior half year, with an underlying increase of 9%. Operating profits* were 1%lower at £100 million with increases from RMS, dmg:: information and Euromoneyoffsetting the expected reduction at dmg::events due to the sale of GLM andthe low biennial half year. The underlying operating profit increase was 14%and the overall B2B margin* was unchanged at 23%.
Risk Management Solutions
Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 81 79 +3% 159Operating profit* 30 21 +43% 47Operating margin* 36% 26% 30%
RMS increased its revenues by 3%, on a reported basis and by 8% on an underlying basis. Operating profit* rose by 43%, an underlying increase of 22% after reflecting the disposal of RMSI in August 2011. The increase in operating margin reflects both the disposal of loss-making RMSI and the capitalisation of expenditure on the new software platform.
The majority of the underlying revenue increase came from theNatural Catastrophe and Underwriting Solutions businesses through contractrenewal increases and product additions as a result of continuing strongdemand. Offsetting this, Capital Markets revenues declined in the first half,but are expected to be flat for the year as a whole due to expected increasedactivity in the second half.Outlook
RMS is on track to deliver high single digit underlying revenue growth for the full year with operating margins of around 30%.
dmg:: information
Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 116 105 +10% 238Operating profit* 17 15 +15% 47Operating margin* 15% 14% 20%
dmg::information had a good first half, with underlying revenues up by 12%, 10% on a reported basis. Underlying operating profit increased by 24%, 15% on a reported basis with growth being driven by the particularly good performances from the Education and Property information companies.
Property information Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 50 40 +25% 89Operating profit* 10 10 +3% 21Our Property Information companies grew underlying revenues by 11%despite market conditions remaining largely unchanged from last year. Landmarkachieved double digit growth in both revenues and profits, with our Germanbusiness growing particularly strongly. In the UK, Landmark revenues also grewdespite house transaction volumes continuing to be at approximately half oftheir historical levels. In the US, Environmental Data Resources producedsolid revenue growth in the period. In May, dmg::information made a strategicinvestment in Xceligent Inc., which provides fully researched property andlisting information to the commercial real estate community in the US.
Education, Energy and Financial
Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenueContinuing 66 56 +17% 133Discontinued - 9 - 16Total 66 65 - 149Operating profit* 9 7 +12% 30
Underlying revenues grew by 13%, with each of the three sectors (Education, Energy and Financial) contributing positively to the growth in the period.
Hobsons, serving the Education sector, continued its strong growth with underlying revenues increasing by 29%. Hobsons also successfully completed two bolt-on acquisitions in the period - Intelliworks, a leading provider of relationship management solutions, and PrepMe, a leader in adaptive learning technologies and test preparation programs.
Our Energy information company, Genscape, is the market leader in real-time collection, analysis and distribution of production data in the energy markets. Revenues grew in the first half and momentum continues to build. A small bolt-on acquisition called SpringRock, a cutting-edge provider of dynamic production forecasts and analytics for the oil and gas industry, was completed in early April.
The Financial information market remains turbulent, as participantsenter and exit the Commercial Mortgage-Backed Securities (CMBS) market servedby Trepp and the broader Asset-Backed Securities market served by Lewtan. In achallenging environment we are pleased that both Trepp and Lewtan were able toincrease underlying revenues and that profits grew from this sector.
Outlook
For the full year, dmgi remains on course to achieve high single digit revenue growth and to deliver an operating margin of around 20%.
dmg:: events Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 45 81 -45% 132Operating profit* 11 29 -60% 39Operating margin* 26% 35% 29%dmg::events reported revenues were down, as expected, by 45% due tothe sale of GLM in September 2011 and the absence of the two largest biennialevents, ADIPEC and Gastech, which took place in the first half of last year.As a consequence, dmg::events' operating profit* fell by 60% on a reportedbasis.
Adjusting for these factors, underlying revenue increased by an encouraging 12% with good growth across all sectors. Underlying profits* were up 28%.
Outlookdmg::events continues to expect to achieve high single digit underlyingrevenue growth for the full year and deliver an operating margin* of around20%. As previously indicated, reported revenues and profits will be lower yearon year for the reasons outlined above. Forward bookings for the major eventin the second half, the biennial Global Petroleum Show to be held in June, arestrong.
Euromoney Institutional Investor
Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 189 168 +13% 363Operating profit* 52 45 +15% 93Operating margin* 27% 27% 26%Euromoney announced its first half results last week. Revenueincreased by 13%, an underlying increase of 5%. This good performance wasparticularly due to Euromoney's subscription revenues which increased by 22%and accounted for 53% of its revenues for the period. The underlying increasein subscription revenues was 7%, continuing the good momentum from 2011. Onceagain, this growth was driven largely by electronic information services suchas BCA Research and CEIC Data.The performance of advertising (down 9%) and sponsorship revenues(unchanged) reflects the continuing uncertainty and volatility in financialmarkets, with global financial institutions exerting tighter controls overheadcount and marketing costs. Pressure on these revenue streams was firstfelt in the final quarter of financial year 2011 and has continued, althoughan improvement in advertising revenues at the end of the second quarter of thecurrent year reversed the negative trend. Delegate revenues increased by 19%due mostly to timing differences on events in the second quarter and theimpact of the political unrest in the Middle East on delegate bookings lastyear.
Operating profit* rose 15% to £52 million after charging the cost of Euromoney's management incentive Capital Appreciation Plan. Costs, particularly headcount, have been tightly controlled. At the same time, Euromoney has continued to invest in technology and new products as part of its online growth strategy.
Outlook
The outlook for financial markets still looks tough, particularly in the Eurozone. For Euromoney, recent sales trends suggest the outlook for advertising and sponsorship revenues remains challenging but forward revenue visibility its events businesses is encouraging. The rate of growth in subscription revenues is expected to fall in the second half, albeit only gradually, as growth comparisons become tougher. Overall trading remains in line with Euromoney's expectations.
Consumer media Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 542 558 -3% 1,098Operating profit* 33 43 -24% 75Operating margin* 6% 8% 7%
These results are stated after allocating Group head office costs on the basis of consumer media's share of Group revenues.
A&N Media's revenues for the period fell by 3%, an underlyingdecrease of 1%. Adjusted operating profits* decreased by £10 million (24%) dueto lower print advertising revenues and additional promotional activity withinthe digital businesses, offset partly by the effect of cover price increasesand further cost savings.Costs were 1% lower across A&N Media. Overall headcount was reducedby 593 to 6,280 during the period, 9% lower than at the start of the financialyear. Restructuring has resulted in an exceptional charge of £32 million (ofwhich around £14 million are cash items) for reorganisation costs andaccelerated depreciation of property, plant and equipment, principallyrelating to the move of printing facilities to Thurrock and closure of theDerby print facility in January.There was further refinement of the A&N Media portfolio in theperiod with the sale of controlling interests in Top Consultant, motors.co.ukand Teletext.Associated Newspapers Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 435 438 -1% 862Operating profit* 34 46 -26% 76Operating margin* 8% 10% 9%
These results are stated before the allocation of Group head office costs.
Summary
Underlying revenues were similar to the prior half year despite thecontinued challenging conditions for the UK consumer media industry. Theresilient revenue performance reflects the benefit of cover price rises at theDaily Mail and further strong growth from Metro, Mail Online and therecruitment and property digital businesses. These factors offset the weaknessin print advertising revenues at the Mail titles and the cessation ofmarginally profitable external print contracts. In total, reported revenueswere down by 1%. Total underlying advertising revenue fell by 4% in the period(quarter 1 - down 1%, quarter 2 - down 5%), though March saw an improvement intrading with advertising revenues up 1%.Operating profit* for the period fell by 26% to £34 million due tothe lower print advertising revenues and additional promotional activity andother investment in our growing digital businesses, particularly Wowcher andthe Digital Property Group. Continued control of costs and the cover priceincreases helped to mitigate these adverse factors.
UK Newspaper-related operations
Underlying circulation revenues rose by 4% to £183 million due tothe effect of cover price increases at the Daily Mail in July and October2011. Whilst the circulations of the Daily Mail and of The Mail on Sunday fellslightly, both titles maintained their market share. The market shares of theDaily Mail and of The Mail on Sunday's were higher in March 2012 than in March2011 and early indications are that the launch of the Sun's Sunday edition hashad little impact on the performance of the latter.Underlying advertising revenues from Associated's newspaper-relatedoperations were down 7% to £171 million, with print down by 10%, althoughthere was growth in Metro, and with digital up 55% to £12 million. The twolargest revenue categories, retaiI (down 9%) and travel (down 16%), were thedrivers of the overall newspaper-related 7% year-on-year decline, reflectingthe weak consumer spending environment. Other categories were below last yearby a more modest 3%.Mail Online continues to grow strongly with 94 million averagemonthly unique visitors in the quarter to March 2012, 63% higher than for thecorresponding period to March 2011, and total revenues 75% higher than theprior half year. In December 2011, it became the most popular newspaper ownedwebsite in the world (Source: ComScore).
Digital-only businesses
The underlying revenues of Associated's digital-only businesses grew by 15% to £41 million. Strong growth was seen in recruitment, together with a solid performance delivered by property. There was a continued investment in products and marketing. A&N Media disposed of its controlling interests in the challenged motors and travel sectors.
Central Europe
A&N International's operating profits* were unchanged at £2 million on revenues down 2% to £14 million. On a constant currency basis, strong revenue growth was seen from its digital and contract printing activities.
Outlook
Trading during April and the first three weeks of May has seenreported revenues up 1%, assisted by the acquisition of Jobrapido, but withunderlying advertising revenues 0.5% below last year. Overall for the fullyear, Associated now expects underlying revenues to be slightly below those ofthe prior year despite the benefit of the Daily Mail cover price increases,the Olympics and a strong digital performance. These factors, coupled withstable newsprint prices and a continuous focus on costs, should offset most ofthe decline in print advertising revenues and lead to operating margins in
theregion of 10%.Northcliffe Media Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mRevenue 107 120 -10% 236Operating profit* 11 8 +34% 17Operating margin* 10% 7% 7%
These results are stated before the allocation of Group head office costs.
Northcliffe's operating profits* increased by £3 million to £11 millionreflecting the early benefits of the transformation plan. This profit growthwas delivered despite a reduction in total reported revenues of 10% to £107million, an underlying revenue decrease of 6%.Reported advertising revenues were down by 11% to £75 million (quarter one -down 10%, quarter two - down 12%), an underlying decline of 7% (print 9% lowerwith digital 2% higher). By category, underlying recruitment revenues were 15%lower, motors 9% lower and retail revenues 6% lower; other categories were, intotal, 6% below last year. A decline in national advertising revenues of 20%was the key factor in the worsening second quarter position. A new nationaladvertising partnership with Trinity Mirror began in May and is expected todeliver improvements.
Circulation revenues fell by 5% to £29 million, driven entirely by the move of four titles from daily to weekly frequency and the transfer to wholesale distribution last year. Cover price increases have mitigated copy sale declines of 8% and there was an underlying circulation revenue increase of 2%.
Northcliffe's cost base continues to be reduced with publishing costs 13% lower than last year. Headcount fell by a further 6% during the period to 2,366, compared with 2,530 at the beginning of October 2011.
Outlook
Trading during April and the first three weeks of May has seen total underlying revenues improve to 6% below last year, with underlying advertising revenues down 9% and underlying circulation revenues up 3%. We expect a small improvement in advertising trends and further cost reductions in the second half, improving overall operating margins.
Other income statement items
- Net finance costs Half Year Half Year Movement Full Year 2012 2011 % 2011 £m £m £mNet interest payable and similar (31) (33) +7% (69)chargesPremium on bond buy back (6) - -Pension finance item 4 6 12Investment income 2 3 3Total (31) (24) -31% (54)
Net finance costs rose by £7 million to £31 million after charging the acceleration of interest of £6 million, being the premium on redemption of £110 million of 7.5% Bonds due 2013, purchased in December 2011.
There was a £2 million reduction in the pension finance credit due to the increase in the pension fund deficit over the year to 2nd October, 2011. Other investment revenue fell by £1 million due to the absence of last year's dividend from an internet investment fund.
Net interest payable and similar charges fell by £2 million to £31 million due to lower average net debt.
- Other items
The Group's share of the results* of its joint ventures and associates increased by £2 million to £3 million. It includes income from dmg radio Australia, offset by our share of the losses of Mail Today, the Delhi-based daily newspaper.
The Group has charged £39 million as exceptional operating costs.This charge includes reorganisation, redundancy and consultancy costs of £22million, principally at A&N Media, and accelerated depreciation and impairmentof property, plant and equipment of £17 million relating to the closure of itsprinting facility in Derby and the move to Thurrock.
The charge for amortisation of intangible assets fell by £5 million to £20 million. The Group also made an impairment charge of £3 million, principally relating to computer software at Associated Newspapers.
The Group recorded other net gains of £Nil, compared to £1 million in the prior period.
- Taxation
The adjusted tax charge of £18 million (2011 £20 million) is statedafter adjusting for the effect of exceptional items. The adjusted tax rate forthe half year is 16.4% (2011: 16.3%). The continued low rate reflects taxreductions from tax-efficient financing and tax deductible amortisation in theUSA that are expected to be in place for the next few years.
There were net exceptional tax credits of £42 million, due to the write back of provisions of £39 million and relief of £3 million on operating exceptional costs and the accelerated depreciation of property and equipment.
Pensions
The deficit on the Group's defined benefit pension schemesincreased from £336 million at the beginning of the year to £370 million atthe half year (calculated in accordance with IAS 19). This change is duelargely to a fall in corporate bond yields over the period, with acorresponding reduction in the discount rate used (from 5.2% to 4.8%) whichresults in a higher value on the defined benefit obligation. This has beenpartly offset by an increase in the schemes' assets and funding payments intothe main schemes of £37 million in early October 2011 in accordance withfunding agreements with the Trustees.
These schemes are closed to new employees and measures were introduced in April 2011 to reduce costs and risks to the business to help secure their financial health into the future. All new employees of A&N Media are now being offered a defined contribution pension plan, in line with our other newer and more internationally focused divisions where we have long considered this type of pension plan to be the most appropriate.
Net debt and cash flow
Net debt at the end of the period was £809 million, an increase of£90 million since the year end. The Group generated operating cash flows of£96 million, a 72% conversion rate of operating profits*. These funded netacquisitions of £38 million, capital costs at Thurrock of £17 million,capitalised software of £8 million, taxation £10 million, interest £37million, pension funding of £37 million and dividends totalling £51 million.Operating cash flows are stated after capital expenditure of £22 million,excluding that on Thurrock. The change in value of derivatives gave rise to adecrease in net debt of £13 million.Net debt is usually at its peak around the half year due to thetiming of dividend and other annual payments. Notwithstanding acquisitionsmade since the start of April, a steady reduction in net debt is expected inthe second half of the year. It is expected to reduce to approximately twiceEBITDA by the year end assuming no significant new acquisitions.
In December 2011, DMGT repurchased £110 million of its £157 million 7.5% Bonds due March 2013 through a tender, leaving £47 million outstanding. Most of the Group's remaining debt comprises long-term bonds.
The Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half yearly report.
Financing
The Group acquired 7.5 million `A' Ordinary shares for £30 millionin order to meet obligations to provide shares under its incentive plans. Italso utilised 7.0 million shares out of Treasury to provide shares undervarious incentive plans valued at £32 million. Following these transfers, DMGThas 382.7 million shares in issue, together with 10.2 million `A' Ordinaryshares held in Treasury to meet further obligations that may arise.
DMGT took its share of the final dividend for the prior full year from Euromoney in the form of a scrip. During the first half year, DMGT slightly increased its interest in Euromoney to 67.9% at a cost of £14 million. These actions were taken in order to enable it to offset the dilutive effect of the vesting of Euromoney's CAP.
Dividend
The Board has declared an interim dividend of 5.6 pence perOrdinary and `A' Ordinary Non-Voting share (2011 5.3 pence) which will be paidon 6th July, 2012 to shareholders on the register at the close of business
on1st June, 2012. Underlying analysis - revenues£m % Underlying M&A Other HY12 Underlying M&A
Exchange Other HY11 B2BRMS +8% 81 - - 81 76 (4) 1 - 79dmg::information +12% 117 1 - 116 104 (2) 1 - 105dmg::events +12% 45 - - 45 40 (20) 1 (22) 81Euromoney +5% 177 (12) - 189 168 - - - 168 +9% 420 (11) - 431 388 (26) 3 (22) 433 ConsumerAssociated Newspapers +0% 430 (5) - 435 429 (9) - - 438Northcliffe Media (6%) 105 (1) (1) 107 111 (5) - (4) 120 (1%) 535 (6) (1) 542 540 (14) - (4) 558 Total +3% 955 (17) (1) 973 928 (40) 3 (26) 991 Note: M&A includes the disposals of Sanborn, RMSI, GLM, TeletextRetail, Teletext Holidays & various regional newspapers and the acquisition ofNed Davis Research. Underlying analysis - adjusted profit before tax*£m % Underlying M&A Other HY12 Underlying M&A Exchange Other HY11 B2BRMS +22% 30 - - 30 24 3 - - 21dmg::information +24% 18 1 - 17 14 (1) - - 15dmg::events +28% 12 - 1 11 9 (8) - (12) 29Euromoney +5% 52 (5) 5 52 50 - - 5 45 +14% 112 (4) 6 110 97 (6) - (7) 110ConsumerAssociated Newspapers (30%) 35 - 1 34 50 4 - - 46Northcliffe Media +38% 11 - - 11 8 - - - 8 (21%) 46 - 1 45 58 4 - - 54 Head office costs (14%) (22) - - (22) (20) - - - (20)Operating profit +0% 136 (4) 7 133 135 (2) - (7) 144Joint ventures and +150% 3 - - 3 1 - - - 1associatesNet Finance charges (5%) (30) - 1 (31) (29) - - (5) (24) Total +1% 109 (4) 8 105 107 (2) - (12) 121
DMGT shares to leave the FTSE's UK index series
The Company explained in its 2010 and 2011 Annual Reports thatFTSE's adoption of the FSA's new listing classifications for determining theweighting of share classes in their indices would mean that DMGT's weightingin the UK Index Series would fall from 75% to 0% once our `A' shares arere-designated by the FSA as having a standard listing.On 18th April, FTSE clarified the position with regard to theinclusion of standard listed stocks in the FTSE UK Index Series such thatDMGT's `A' shares are expected no longer to be included. This change will haveno impact on the approach DMGT takes to its obligations as a listed company.It will continue to adopt the obligations and practices of the UK ListingRules as they have applied to DMGT historically, maintaining the higheststandard of governance and disclosure including the application of the UKCorporate Governance Code.
DMGT will, however, remain in many other indices including those of MSCI and Euro Stoxx.
Principal risks and uncertainties
The principal risks and uncertainties that affect the Group on acontinuing basis are described in our 2011 Annual Report at www.dmgt.com.These are still considered to be the most relevant risks and uncertainties atthis time. The risk that may have a specific impact on the Group's performanceover the remaining six months of the financial year is "Exposure to changes inthe economy." The impact of this risk could cause actual results to differfrom expected and historical results.
Where a risk that was disclosed in the Annual Report is unchanged or is not expected to have a specific impact in the remaining period, a summary of the disclosure given in the Annual Report has been included.
Risks specific to the remaining six month period of the year
Exposure to changes in the economy
A significant (although decreasing) proportion of the Group'srevenue (especially in the UK newspaper divisions) is derived from advertisingwhich is impacted by fluctuations in the wider economy. As ever, visibility offuture newspaper advertising performance is limited; however, the benefit ofthe Daily Mail cover price increases, together with a strong digitalperformance and a continuing focus on costs will help to mitigate any declinein print advertising revenues.
A similar, although reduced, effect has been seen in group businesses that rely on non-advertising revenues, especially in the financial and property markets.
The speed and extent of the recovery in the global economy and especially the UK and US economies, remains uncertain. A slower than expected recovery gives rise to a risk of not achieving the Group's forecast results.
Other risks disclosed in the Annual Report
The following is a summary of the other risks and uncertainties that were disclosed in the 2011 Annual Report.
Failure to respond effectively to changes in our key markets
The way in which our businesses deliver information to customersand the types of information provided are subject to constant change. This canresult in structural market changes that have the potential to redefine oreliminate current markets served by our businesses. Technological innovationssuch as tablet and other mobile devices, cloud computing and the proliferationof social media impact all of our businesses. Our products and services, andtheir means of delivery, are also affected by competitor activity and changingcustomer behaviour. The impact is both positive and negative. Failure toidentify and respond to changes in key markets in which the Group operatesincreases the risk of being left behind by both our competitors and ourcustomers with a resultant direct impact on Group results.
Compliance with laws and regulations
Group businesses are subject to legislation and regulation in thejurisdictions in which they operate. The key laws and regulations that impactthe Group cover areas such as bribery and corruption, competition, dataprotection, privacy (including e-privacy), health and safety and employmentlaw. Additionally, specific regulations from the Press Complaints Commissionand the Audit Bureau of Circulation apply to the newspaper divisions.
The Group generates a significant amount of its revenue from publishing, be it newspapers, magazines, trade journals or information and data published online. As a result, there is an inherent risk or error which, in some instances, may give rise to claims for libel.
The recent high profile events in the UK newspaper industry and theaccusations of illegal news gathering practices have raised questions overpress regulation and the relationship between the press, police andpoliticians. The Board has received assurances from the Editor-in-Chief that,so far as he is aware, such practices have not, and do not take place withinAssociated Newspapers. However, the Leveson Inquiry, which began on 14thNovember, 2011 and will conclude by September 2012, is considering as part ofits remit, the regulation of the industry.
Pension scheme shortfalls
Although closed to new entrants on 1st April 2012, we continue tooperate defined benefit pension schemes for our newspaper divisions andcertain senior executives. The triennial valuation, completed in June 2011 forthe position at 31st March 2010, identified deficits in the schemes, a primarycause of which is the lower bond yields, a product of Quantitative Easingmeasures. A new funding arrangement has been agreed with the trustees of theschemes under which the company will provide a series of funding paymentsaimed at reducing the deficit in the main scheme over the next twelve years.
Successfully managing change projects
At any given time there is a number of active capital and ITprojects underway around the Group. The two most significant change projectscurrently are RMS's new software solution project and A&N Media's new printsite at Thurrock. There is a risk of increased costs or lost revenues as aresult of delays, unforeseen problems, loss of access to systems and data orproduction and delivery issues.
Data integrity, availability and security
The quality and availability of the information products that DMGTbusinesses provide their clients is key to their success. This is true formany businesses in the Group, most notable within RMS, dmg::information, andEuromoney. Any challenge to the integrity of information within a DMGT productcould damage the reputation of that business resulting in lost revenue andpotentially increased costs of remediation.Information security has always been a key focus across DMGT.However, changing technology, mobile working, cloud based technologies, theconsumerisation of IT and the growing use of social media create opportunitiesbut is also a threat to information security and the protection of our data,and that of our customers. An information security incident resulting in theloss, theft, corruption, inappropriate use or unavailability of sensitiveinformation held by the Group could lead to operational and regulatorychallenges, and could impact on financial results.
Impact of a major disaster or outbreak of disease
There is a risk of disruption of Group operations as a result of a major disaster, outbreak of disease or other external threat. The Group's operations are geographically diversified which limits the impact of any given incident.
The events and training businesses within dmg::events and Euromoney rely to some extent on the confidence in, and ability of, delegates and speakers to travel internationally.
Reliance on key management and staff retention
DMGT is reliant on the talented and successful management and staffacross all of its businesses. Many businesses and products are dependent uponspecialist, technical expertise. The inability to recruit and retain talentedpeople could impact the Group's ability to maintain its performance anddeliver growth. When key staff leave or retire, there is a risk that knowledgeor competitive advantage is lost.
Commercial relationships, including volatility of newsprint prices
The Group is reliant on a number of commercial relationships with key customers, suppliers and third parties. The most significant of these relationships is with the newsprint suppliers. Other key examples include large advertising agencies and major retailers in A&N Media, key venues and agents in dmg::events and Euromoney, and data providers in dmg::information.
The loss, or damage to, any key commercial relationship could have a material impact on the Group's ability to produce and deliver its products. An increase in newsprint prices could impact the cost base of A&N Media.
Acquisition and disposal risk
As well as launching and building new businesses, an integral part of the Group's strategy has, and will continue to be, the acquisition (and successful integration) of businesses that expand expertise whilst supporting existing products. The strategy also results in the disposal of businesses that no longer fit the Group's investment criteria.
Failure to identify acquisition targets could result in an opportunity cost to the business. Equally, an unsuccessful integration of acquired subsidiaries, or an acquired business that fails to generate the expected returns, could result in the underperformance of the Group or impairment losses. This could also divert management time from other operational matters.
Our ability to achieve optimal value from disposals as well as the failure to realise other anticipated benefits of a disposal could also impact financial results.
Treasury operations
The Group Treasury function is responsible for executing treasury policy which seeks to manage the Group's funding, liquidity and treasury derivatives risks. More specifically, these include currency exchange rate fluctuations, interest rate risks, counterparty risk and liquidity and debt levels. If the treasury policy does not adequately mitigate these financial risks, or is not correctly executed, this could result in unforeseen derivative losses or higher than expected finance costs.
Unforeseen tax liabilities
The Group's operations are global and therefore earnings aresubject to taxation at differing rates across a number of jurisdictions.Whilst endeavouring to manage the Group's tax affairs in an efficient manner,there will always be a certain level of uncertainty when provisioning for taxliabilities due to an ever more complex international tax environment.
For further details of these risks and mitigating controls which are in place, please refer to the 2011 Annual Report.
Statement of Directors' responsibilities
The Directors are responsible for preparing the half-yearly financial report, in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
a) this condensed set of financial statements which should be read in conjunction with the annual financial statements for the year ended 2nd October, 2011 and has been prepared in accordance with IAS 34 `Interim financial reporting' as adopted by the European Union; and
b) the interim management report includes a fair review of the information required by the Financial Services Authority's Disclosure and Transparency Rules 4.2.7R and 4.2.8R.
By order of the Board of DirectorsThe Viscount RothermereChairman23rd May, 2012
*Adjusted results are stated before exceptional items, impairment of goodwill and intangible assets, and amortisation of intangible assets arising on business combinations. For a reconciliation of Group profit to adjusted Group profit, see Note 9.
#Underlying revenue or profit* is revenue or profit* on alike-for-like basis, adjusted for acquisitions, disposals, closures andnon-annual events in the current and prior year and at constant exchangerates; see pages 15 and 16. For RMS, underlying percentage movements excludeRMSI and for dmg information Sanborn. For dmg events, the comparison isbetween events held in the year and the same events held the previous time.For Euromoney the comparisons exclude Ned Davis Research and underlying profitexcludes its CAP charges in both periods. For A&N Media: Associated underlyingadvertising excludes the effects of the sale of Teletext Retail last year andTeletext Holidays and motors.co.uk this year. Northcliffe underlyingadvertising and circulation revenue excludes the effects of the sale andclosure of titles last year, adjusts for the move of several titles from dailyto weekly publishing frequency and the move to a wholesale circulation modellast year.
†Percentages are calculated on actual numbers to one decimal place.
The average £: US$ exchange rate for the year was £1: $1.57 (against £1:$1.59 last year). The rate at the half year end was $1.60 (2011 $1.60), compared to $1.56 at the previous year end.
For further information
For analyst and institutional enquiries:
Stephen Daintith, Finance Director, DMGT +44 20 3615 2902 Nicholas Jennings, Company Secretary, DMGT +44 20 3615 2905
For media enquiries
Kim Fletcher / Will Carnwath, Brunswick Group LLP +44 20 7404 5959
Analysts' presentation and webcast
A presentation of the Half Year results will be given to investors and analysts at 9.30 a.m. on 24th May, 2012 at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. There will also be a live webcast available on our website: http://www.dmgt.com.
A conference call will be available in case of any technical difficulties being experienced with the live webcast. The dial-in number is: +44 (0) 20-8515-2334; the UK Freephone number is 0800-358-5263.
Next trading update
The Group's next scheduled announcement of financial information will be its third quarter interim management statement on 25th July, 2012.
This Interim Management Report (IMR) is prepared for and addressedonly to the Group's shareholders as a whole and to no other person. The Group,its directors, employees, agents or advisers do not accept or assumeresponsibility to any other person to whom IMR is shown or into whose hands itmay come and any such responsibility or liability is expressly disclaimed.Statements contained in this IMR are based on the knowledge and informationavailable to the Group's Directors at the date it was prepared and thereforethe facts stated and views expressed may change after that date. By theirnature, the statements concerning the risks and uncertainties facing the Groupin this IMR involve uncertainty since future events and circumstances cancause results and developments to differ materially from those anticipated. Tothe extent that this IMR contains any statement dealing with any time afterthe date of its preparation such statement is merely predictive andspeculative as it relates to events and circumstances which are yet to occur.The Group undertakes no obligation to update these forward-looking statements.
Independent review report to Daily Mail and General Trust plc
We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the 26 weeks ended 1stApril, 2012 which comprise the condensed consolidated income statement, thecondensed consolidated statement of comprehensive income, the condensedconsolidated statement of changes in equity, the condensed consolidated cashflow statement, the condensed consolidated statement of financial position,and related notes 1 to 22. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in thecondensed set of financial statements.This report is made solely to the Company in accordance withInternational Standard on Review Engagements (UK and Ireland) 2410 "Review ofInterim Financial Information Performed by the Independent Auditor of theEntity" issued by the Auditing Practices Board. Our work has been undertakenso that we might state to the Company those matters we are required to stateto them in an independent review report and for no other purpose. To thefullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company, for our review work, for this report, or forthe conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of theGroup are prepared in accordance with IFRSs as adopted by the European Union.The condensed set of financial statements included in this half-yearlyfinancial report has been prepared in accordance with International AccountingStandard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standardon Review Engagements (UK and Ireland) 2410, "Review of Interim FinancialInformation Performed by the Independent Auditor of the Entity" issued by theAuditing Practices Board for use in the United Kingdom. A review of interimfinancial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical andother review procedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UK andIreland) and consequently does not enable us to obtain assurance that we wouldbecome aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 1st April, 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte LLPChartered Accountants and Statutory Auditor23rd May, 2012LondonUnited KingdomShareholder Information
Financial Calendar (provisional)
201224th May Half Yearly Financial Report published30th May Interim ex-dividend date1st June Interim record date6th July Payment of interim dividend25th July Interim management statement25th September Pre-close trading update30th September Payment of interest on loan notes30th September Year end22nd November Annual results and final dividend announced28th November Ex-dividend date30th November Record dateContactsDaily Mail and General Trust plc AuditorsNorthcliffe House Deloitte LLP2 Derry Street, 2 New Street SquareLondon LondonW8 5TT EC4A 3BZTelephone: +44 20 7938 6000Email: [email protected] Stockbrokers RegistrarsJP Morgan Cazenove Limited Equiniti10 Aldermanbury Street Aspect HouseLondon Spencer RoadEC2V 7RF Lancing West Sussex BN99 6DACredit Suisse Securities (Europe) LimitedOne Cabot SquareLondonE14 4QJ
For further investor information and contacts, please visit the Company's website at:
http://www.dmgt.com
Copies of this Half Yearly Financial Report are available electronically from the Company's website at www.dmgt.com or from the Secretary upon request.
DMGT plcCondensed Consolidated Income StatementFor the 26 weeks ending ended 1st April, 2012 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 Note £m £m £mCONTINUING OPERATIONSRevenue 2 973.4
991.0 1,989.8
Operating profit before exceptional 2operating costs and amortisation andimpairment of goodwill and acquiredintangible assets 132.8 144.0 286.3Exceptional operating costs, impairment 2of internally generated and acquiredcomputer software, investment propertyand property, plant and equipment (38.6) (16.6) (52.7)Amortisation and impairment of goodwill 2and acquired intangible assets arising onbusiness combinations (21.1)
(29.1) (66.9)
Operating profit before share of 2results of joint ventures and associates 73.1 98.3 166.7Share of results of joint ventures 3and associates 2.8 (2.0) (2.4)Total operating profit 75.9 96.3 164.3 Other gains and losses 4 0.4 1.1 14.8
Profit before net finance costs and tax 76.3
97.4 179.1 Investment revenue 5 6.1 9.5 17.1Finance costs 6 (36.9) (34.4) (71.7)Net finance costs (30.8) (24.9) (54.6) Profit before tax 45.5 72.5 124.5Tax 7 24.2 (15.0) 3.0
Profit after tax from continuing operations 69.7
57.5 127.5 PROFIT FOR THE PERIOD 69.7 57.5 127.5 Attributable to:Owners of the company 60.5 49.7 111.6Non-controlling interests 9.2 7.8 15.9Profit for the period 69.7 57.5 127.5 Earnings per share 10From continuing operationsBasic 15.8p 13.0p 29.2pDiluted 15.8p 12.9p 29.1pAdjusted earnings per sharefrom continuing operationsBasic 19.5p 23.6p 47.0pDiluted 19.5p 23.4p 46.9p
DMGT plc Condensed Consolidated Statement of Comprehensive Income For the 26 weeks ending ended 1st April, 2012
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ending ending ending
1st 3rd 2nd
April, April, October,
2012 2011 2011 £m £m £mProfit for the period 69.7 57.5 127.5Fair value movements on available-for-saleinvestments - 5.3 4.6Revaluation reserves recycled toConsolidated Income Statement on disposals - - (8.5)Gains/(losses) on hedges of netinvestments in foreign operations 20.0 14.7 (17.1)Cash flow hedges :Gains/(losses) arising during the period 2.4 (0.5) (1.2)Transfer of loss on cash flow hedges fromtranslation reserve to ConsolidatedIncome Statement 2.8 0.9 6.8Translation reserves recycled toConsolidated Income Statement on disposals - (0.2) (21.6)Foreign exchange differences ontranslation of foreign operations (14.3) (4.0) 10.6Actuarial (loss)/gain on definedbenefit pension schemes
(76.1) 57.1 (89.6)
Other comprehensive (expense)/incomebefore tax (65.2) 73.3 (116.0)Tax relating to components of othercomprehensive (expense)/income
14.0 (21.4) 15.8
Other comprehensive (expense)/income for the period (51.2) 51.9 (100.2) Total comprehensive incomefor the period 18.5 109.4 27.3 Attributable to :Owners of the Company 9.1 100.3 8.2Non-controlling interests 9.4 9.1 19.1 18.5 109.4 27.3DMGT plcCondensed Consolidated Statement of Changes in EquityFor the 26 weeks ending ended 1st April, 2012 Called Share Capital Reval- Shares Trans- Retained Non- Total up premium redemption uation held lation earnings controlling equity share account reserve reserve in reserve Total interests capital treasury £m £m £m £m £m £m £m £m £m £mBalance as at3rd October, 2010 49.1 12.5 1.1 7.0 (45.0) (16.3) 97.4 105.8 57.4 163.2Profit for the period - - - - - - 49.7 49.7 7.8 57.5Other comprehensiveincome for the period - - - 2.1 - 10.1 38.4 50.6 1.3 51.9Total comprehensiveincome for the period - - - 2.1 - 10.1 88.1 100.3 9.1 109.4Issue of share capital - 0.1 - - - - - 0.1 1.8 1.9Dividends - - - - - - (42.1) (42.1) (5.2) (47.3)Own shares acquiredin the period - - - - (11.7) - - (11.7) - (11.7)Own shares releasedon vesting of share options - - - - 9.8 - - 9.8 - 9.8Other transactions withnon-controlling interests - - - - - - 0.6 0.6 (0.5) 0.1Adjustment to equityfollowing increased stakein controlled entity - - - - - - (5.2) (5.2) 3.6 (1.6)Adjustment to equityfollowing decreased stakein controlled entity - - - - - - 0.5 0.5 (0.5) -Credit to equity forshare based payments - - - - - - 7.6 7.6 0.8 8.4Settlement of exercisedshare options of subsidiaries - - - - - - (9.7) (9.7) - (9.7)Deferred tax on other itemsrecognised in equity - - - - - - 0.1 0.1 (0.5) (0.4) Balance as at3rd April, 2011 49.1 12.6 1.1 9.1 (46.9) (6.2) 137.3 156.1 66.0 222.1 At 3rd October, 2010 49.1 12.5 1.1 7.0 (45.0) (16.3) 97.4 105.8 57.4 163.2Profit for the period - - - - - - 111.6 111.6 15.9 127.5Other comprehensiveincome for the period - - - (3.9) - (26.0) (73.5) (103.4) 3.2 (100.2)Total comprehensiveincome for the period - - - (3.9) - (26.0) 38.1 8.2 19.1 27.3Issue of share capital - 0.2 - - - - - 0.2 1.9 2.1Dividends - - - - - - (62.4) (62.4) (7.8) (70.2)Own shares acquiredin the period - - - - (11.7) - - (11.7) - (11.7)Own shares released onvesting of share options - - - - 10.4 - - 10.4 - 10.4Fair value adjustment tocontingent consideration - - - 0.2 - - - 0.2 - 0.2Adjustment to equityfollowing increased stakein controlled entity - - - - - - (5.5) (5.5) 4.3 (1.2)Adjustment to equityfollowing decreasedstake in controlled entity - - - - - - 0.5 0.5 (0.5) -Credit to equity for sharebased payments - - - - - - 16.9 16.9 2.7 19.6Settlement of exercisedshare options of subsidiaries - - - - - - (12.7) (12.7) - (12.7)Initial recording of putoptions granted tonon-controlling interestsin subsidiaries - - - - - - (7.1) (7.1) (3.2) (10.3)Non-controlling interestrecognised on acquisition - - - - - - - - 6.0 6.0Deferred tax on otheritems recognised in equity - - - - - - 1.4 1.4 0.4 1.8 Balance as at2nd October, 2011 49.1 12.7 1.1 3.3 (46.3) (42.3) 66.6 44.2 80.3 124.5Profit for the period - - - - - - 60.5 60.5 9.2 69.7Other comprehensiveincome for the period - - - - - 10.4 (61.8) (51.4) 0.2 (51.2)Total comprehensiveincome for the period - - - - - 10.4 (1.3) 9.1 9.4 18.5Issue of share capital - 0.7 - - - - - 0.7 0.9 1.6Dividends - - - - - - (44.8) (44.8) (6.3) (51.1)Own shares acquiredin the period - - - - (30.1) - - (30.1) - (30.1)Own shares releasedon vesting of share options - - - - 32.4 - - 32.4 - 32.4Exercise of acquisitionput option commitments - - - - - - 0.1 0.1 - 0.1Adjustment to equityfollowing increasedstake in controlled entity - - - - - - (12.0) (12.0) (1.6) (13.6)Credit to equity forshare-based payments - - - - - - 8.0 8.0 0.7 8.7Settlement of exercisedshare options of subsidiaries - - - - - - (14.6) (14.6) - (14.6)Deferred tax onother itemsrecognised in equity - - - - - - (0.1) (0.1) (0.2) (0.3) Balance as at1st April, 2012 49.1 13.4 1.1 3.3 (44.0) (31.9) 1.9 (7.1) 83.2 76.1DMGT plcCondensed Consolidated Statement of Financial PositionAs at 1st April, 2012 Unaudited Unaudited Audited as at as at as at 1st April, 3rd April, 2nd October, 2012 2011 2011 Note £m £m £mASSETSNon-current assetsGoodwill 755.6 732.2 747.0Other intangible assets 278.6 347.4 288.2
Property, plant and equipment 12 294.2 348.7 305.4Investment property 20.2 11.4 21.6Investments in joint ventures 20.0 12.2 16.3Investments in associates 12.2 12.0 13.0Available-for-sale investments 1.7
27.0 4.2Trade and other receivables 35.9 30.6 47.0Derivative financial assets 7.2 5.3 8.6Retirement benefit assets 18 - 0.8 -Deferred tax assets 204.2 123.6 191.1 1,629.8 1,651.2 1,642.4Current assetsInventories 31.1 26.9 23.1Trade and other receivables 374.5 386.3 356.9Current tax receivable 6.4 5.4 9.1Derivative financial assets 6.7 1.6 1.1Cash and cash equivalents 55.6 61.8 174.3 474.3 482.0 564.5 Total assets 2,104.1 2,133.2 2,206.9 LIABILITIESCurrent liabilitiesTrade and other payables (649.3) (647.3) (654.2)Current tax payable (18.3) (51.8) (53.2)
Acquisition put option commitments (5.3) (0.8) (1.1)Borrowings 13 (81.0) (9.5) (29.3)Derivative financial liabilities (17.3)
(9.2) (5.9)Provisions (47.4) (38.1) (49.7) (818.6) (756.7) (793.4) Non-current liabilitiesTrade and other payables (7.2) (1.5) (11.9)
Acquisition put option commitments (5.8) - (10.7)Borrowings 13 (760.9) (869.5) (832.0)Derivative financial liabilities (32.8) (46.1) (60.9)Retirement benefit obligations 18 (369.6) (199.0) (336.2)Provisions (10.3) (16.4) (13.5)Deferred tax liabilities (22.8) (21.9) (23.8) (1,209.4) (1,154.4) (1,289.0) Total liabilities (2,028.0) (1,911.1) (2,082.4) Net assets 76.1 222.1 124.5DMGT plcCondensed Consolidated Statement of Financial Position(continued)As at 1st April, 2012 Unaudited Unaudited Audited as at as at as at 1st April, 3rd April, 2nd October, 2012 2011 2011 Note £m £m £mSHAREHOLDERS' EQUITYCalled up share capital 49.1 49.1 49.1Share premium account 13.4 12.6 12.7Share capital 15 62.5 61.7 61.8 Capital redemption reserve 1.1 1.1 1.1Revaluation reserve 3.3 9.1 3.3Shares held in treasury (44.0) (46.9) (46.3)Translation reserve (31.9) (6.2) (42.3)Retained earnings 1.9 137.3 66.6
Equity attributable to owners of the company (7.1)
156.1 44.2Non-controlling interests 83.2 66.0 80.3 76.1 222.1 124.5
Approved by the Board of Directors on 23rd May, 2012
DMGT plcCondensed Consolidated Cash Flow StatementFor the 26 weeks ending ended 1st April, 2012 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd 2012 2011 October, 2011 Note £m £m £m
Operating profit before share of results 2 73.1 98.3
166.7
of joint ventures and associates -continuing operationsAdjustments for :Share-based payments 8.7 8.4 19.7Pension charge (less than)/in (1.3) 1.0 (1.9)excess of cash contributionsDepreciation 2 30.5 31.3 62.7
Impairment of internally generated 2 8.7 -
8.6
and acquired computer software,property, plant and equipmentand investment propertyImpairment of goodwill and impairment 2 3.4 6.5
24.4
charge of intangible assets arising onbusiness combinationsAmortisation of intangible assets 2 10.1 8.7
18.4
not arising on business combinationsAmortisation of intangible assets 2 17.7 22.6
42.5
arising on business combinations
Operating cash flows before 150.9 176.8 341.1movements in working capital
(Increase)/decrease in inventories (8.3) 0.5
2.0
Increase in trade and other receivables (5.8) (20.4)
(23.6)
(Decrease)/increase in trade and (8.4) 19.3
52.7
other payables(Decrease)/increase in provisions (0.9) (5.3)
4.1
Additional payment into pension schemes (37.1) (10.7)
(11.0) Cash generated by operations 90.4 160.2 365.3 Taxation paid (11.7) (36.6) (48.6)Taxation received 1.4 1.4 1.9
Net cash from operating activities 80.1 125.0
318.6 Investing activities Interest received 1.4 0.9 2.0Dividends received from 0.4 10.2 15.6joint ventures and associatesDividends received from 0.7 2.9
2.9
available-for-sale investmentsPurchase of property, 12 (29.3) (14.5) (33.0)plant and equipmentExpenditure on internally (17.1) (8.4) (23.2)generated intangible fixed assetsPurchase of available-for-sale - (0.1)
(0.1)
investments
Proceeds on disposal of property, 12 0.8 0.7
3.2
plant and equipmentProceeds on disposal of 2.0 0.9
23.0
available-for-sale investmentsPurchase of subsidiaries 16 (21.0) (10.7)
(81.3)
Purchase of additional interests 16 (14.7) (1.6)
(2.7)
in controlled entitiesTreasury derivative activities 2.4 (14.2)
(25.3)Investment in joint ventures (6.5) (3.3) (10.1)and associatesLoans to joint ventures and - - 0.6associates repaid
Proceeds on disposal of businesses 17 1.5 2.1
94.8Proceeds on disposal of - - 0.1joint ventures and associates
Net cash used in investing activities (79.4) (35.1)
(33.5)
DMGT plc
Condensed Consolidated Cash Flow Statement (continued) For the 26 weeks ending ended 1st April, 2012
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd 2012 2011 October, 2011 Note £m £m £mFinancing activitiesEquity dividends paid 8 (44.8) (42.1) (62.4)
Dividends paid to non-controlling interests (6.3) (4.1)
(7.8)
Issue of share capital 15 0.7 0.2
0.2
Issue of shares by Group companies tonon-controlling interests 0.9 0.7
1.9
Purchase of own shares (30.1) (11.7)
(11.7)
Net receipt/(payment) on exercise/settlementof subsidiary share options 17.9 0.1
(2.0)
Interest paid (31.9) (34.1)
(68.5)
Premium on redemption of bonds (6.1) -
-Bonds redeemed (110.0) - -Loan notes repaid (0.1) (3.6) (4.0)Repayments of obligations underhire purchase agreements - (2.5)
(20.3)
Increase/(decrease) in bank borrowings 93.0 4.6
(3.1)
Net cash used in financing activities (116.8) (92.5)
(177.7)
Net (decrease)/increase in cashand cash equivalents (116.1) (2.6) 107.4 Cash and cash equivalentsat beginning of period 171.7 64.3 64.3Exchange loss on cash andcash equivalents (0.6) (0.1) - Net cash and cash equivalents at end of period 11 55.0 61.6 171.7DMGT plcFor the 26 weeks ending ended 1st April, 2012
NOTES
1 BASIS OF PREPARATION
The information for the 26 weeks ended 1st April, 2012 and 3rd April, 2011 andfor the 52 weeks ended 2nd October, 2011 does not constitute statutoryaccounts for the purposes of section 435 of the Companies Act 2006. A copy ofthe accounts for the 52 weeks ended 2nd October, 2011 has been delivered tothe Registrar of Companies. The auditors' report on those accounts was notqualified and did not contain statements under section 498 (2) or (3) of theCompanies Act 2006.The Group's business activities, together with the factors likely to affectits future development, performance and position are set out in the interimmanagement report. The financial position of the Group, its cash flows,liquidity position and borrowing facilities are described in the condensedfinancial statements and notes. After making enquiries, the Directors have areasonable expectation that the Group has adequate resources to continue inoperational existence for the foreseeable future. Accordingly, they continueto adopt the going concern basis in preparing the half yearly report.This financial information has been prepared for the 26 weeks ending 1stApril, 2012, 26 weeks ending 3rd April, 2011 and 52 weeks ending 2nd October,2011. The Group, and its national and local media divisions, prepare financialinformation for a period ending on a Sunday near to the end of March orSeptember; all other divisions prepare financial information for periodsending on 31st March and 30th September.The Group considers whether there have been any significant transactions orevents between the end of the financial period of the divisions other than thenational and local media divisions and the end of the Group's financial periodand makes any material adjustments as appropriate.The Annual Report and Accounts of DMGT plc are prepared in accordance withInternational Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board as adopted by the European Union. These condensedfinancial statements have been prepared in accordance with InternationalAccounting Standard (IAS) 34 Interim Financial Reporting as adopted by theEuropean Union.Although not required by IAS 34, comparative figures for the Income Statementfor the 52 week period ending 2nd October, 2011 and the Condensed ConsolidatedStatement of Financial Position as at 3rd April, 2011 have been included on avoluntary basis.These condensed financial statements have been prepared in accordance with theaccounting policies set out in the 2011 Annual Report and Accounts with theexception of the changes in accounting policy described below, and as amendedby the application of certain new accounting standards in the period. Thesepolicies are expected to be followed in the preparation of the full financialstatements for the financial year ending 30th September, 2012.
Impact of new accounting standards
Standards not affecting the reported results or the financial position:
The following new and revised Standards and Interpretations have been adoptedin the current year. Their adoption has not had any significant impact on theamounts reported in the financial statements but may impact the accounting forfuture transactions and arrangements:
- IAS 24 (2009) Related Party disclosures
The revised Standard has a new, clearer definition of a related party, with inconsistencies under the previous definition having been removed. This interpretation does not affect the reported results nor the financial position.
- Amendments to IFRIC 14 prepayments of a minimum funding requirement
The amendments now enable recognition of an asset in the form of a prepaid minimum funding contribution.
- Annual improvements
- IAS 34: further guidance on the disclosure principles for interim reporting,particularly regarding financial instruments and their fair values. Theadditional guidance has had no impact on the Group's reported results,financial position nor any of the Group's disclosures at the half year. - IFRS7: Encourages qualitative disclosures in the context of the quantitativedisclosures required to help users to form an overall picture of the natureand extent of risks arising from financial instruments. This improvement doesnot affect the Group's reported results, financial position nor any of theGroup's disclosures at the half year. - IAS 1: Clarifies that an entity maypresent the analysis of other comprehensive income by item in the statement ofchanges in equity or in the notes to the financial statements. The Groupcurrently reflects this analysis in the notes to the financial statements.
Critical accounting judgements and key sources of estimation uncertainty
In addition to the judgement taken by management in selecting and applying the accounting policies set out above, management has made the following judgements concerning the amounts recognised in the consolidated financial statements :
Forecasting
The Group prepares medium-term forecasts based on Board approved budgets andthree year outlooks. These are used to support judgements made in thepreparation of the Group's financial statements including the recognition ofdeferred tax assets in different jurisdictions, the Group's going concernassessment and for the purposes of impairment reviews. Longer term forecastsuse long-term growth rates applicable to the relevant businesses.
DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
1 BASIS OF PREPARATION (Continued)
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible assets are impaired or whether areversal of impairment of intangible assets should be recorded requires anestimation of the value in use of the relevant cash generating units. Thevalue in use calculation requires management to estimate the future cash flowsexpected to arise from the cash generating unit and compare the net presentvalue of these cash flows using a suitable discount rate to determine if anyimpairment has occurred. A key area of judgement is deciding the long-termgrowth rate of the applicable businesses and the discount rate applied tothose cash flows. The carrying amount of goodwill and intangible assets at thebalance sheet date was £1,034.2 million (3rd April, 2011 £1,079.6 million 2ndOctober, 2011 £1,035.2 million) after an impairment loss on continuingoperations of £3.4 million (26 weeks to 3rd April, 2011 £6.5 million 52 weeksto 2nd October, 2011 £24.4 million) was recognised during the year (note 2).
Acquisitions and intangible assets
The Group's accounting policy on the acquisition of subsidiaries is toallocate purchase consideration to the fair value of identifiable assets,liabilities and contingent liabilities acquired with any excess considerationrepresenting goodwill. Determining the fair value of assets, liabilities andcontingent liabilities acquired requires significant estimates andassumptions, including assumptions with respect to cash flows and unprovidedliabilities and commitments, including in respect to tax, are often used. TheGroup recognises intangible assets acquired as part of a business combinationat fair values at the date of the acquisition. The determination of these fairvalues is based upon management's judgement and includes assumptions on thetiming and amount of future cash flows generated by the assets and theselection of an appropriate discount rate. Additionally, management mustestimate the expected useful economic lives of intangible assets and chargeamortisation on these assets accordingly.
Contingent consideration payable
Estimates are required in respect of the amount of contingent considerationpayable on acquisitions, which is determined according to formulae agreed atthe time of the business combination, and normally related to the futureearnings of the acquired business. The Directors review the amount ofcontingent consideration likely to become payable at each period end date, themajor assumption being the level of future profits of the acquired business.As at 1st April, 2012 the Group has outstanding contingent considerationpayable amounting to £7.2 million (3rd April, 2011 £12.4 million, 2nd October,2011 £11.8 million).Contingent consideration payable is discounted to its fair value in accordancewith applicable International Financial Reporting Standards. For acquisitionscompleted prior to 4th October, 2009, the difference between the fair value ofthese liabilities and the actual amounts payable is charged to theConsolidated Income Statement as notional finance costs with remeasurement ofthe liability being recorded against goodwill. For acquisitions completed inthe current period, movements in the fair value of these liabilities arerecorded in the Consolidated Income Statement in Financing.
Contingent consideration receivable
Estimates are required in respect of the amount of contingent considerationreceivable on disposals, which is determined according to formulae agreed atthe time of the disposal and is normally related to the future earnings of thedisposed business. The Directors review the amount of contingent considerationlikely to be receivable at each period end date, the major assumption beingthe level of future profits of the disposed business. The Group hasoutstanding contingent consideration receivable amounting to £1.2 million (3rdApril, 2011 £2.2 million, 2nd October, 2011 £1.6 million).Contingent consideration receivable is discounted to its fair value inaccordance with applicable International Financial Reporting Standards. Fordisposals completed prior to 4th October, 2009, the difference between thefair value of these liabilities and the actual amounts payable is charged tothe Consolidated Income Statement as notional finance costs with remeasurementof the liability being recorded against goodwill. For acquisitions completedin the current period, movements in the fair value of these liabilities arerecorded in the Consolidated Income Statement in Financing.
Adjusted profit
The Group presents adjusted earnings by making adjustments for costs andprofits which management believe to be exceptional in nature by virtue oftheir size or incidence or have a distortive effect on current year earnings.Such items would include costs associated with business combinations, one-offgains and losses on disposal of businesses, properties and similar items of anon-recurring nature together with reorganisation costs and similar charges,tax and by adding back impairment of goodwill and amortisation and impairmentof intangible assets arising on business combinations. See note 9 for areconciliation of profit before tax to adjusted profit.
Share-based payments
The Group makes share-based payments to certain employees. These payments aremeasured at their estimated fair value at the date of grant, calculated usingan appropriate option pricing model. The fair value determined at the grantdate is expensed on a straight-line basis over the vesting period, based onthe estimate of the number of shares that will eventually vest. The keyassumptions used in calculating the fair value of the options are the discountrate, the Group's share price volatility, dividend yield, risk free rate ofreturn, and expected option lives. Management regularly perform a true-up ofthe estimate of the number of shares that are expected to vest, this isdependent on the anticipated number of leavers.
Taxation
Being a multinational Group with tax affairs in many geographic locationsinherently leads to a highly complex tax structure which makes the degree ofestimation and judgement more challenging. The resolution of issues is notalways within the control of the Group and is often dependent on theefficiency of legal processes. Such issues can take several years to resolve.The Group takes a conservative view of unresolved issues, however, theinherent uncertainty regarding these items means that the eventual resolutioncould differ significantly from the accounting estimates and, therefore,impact the Group's results and future cash flows. As described above, theGroup makes estimates regarding the recoverability of tax assets relating tolosses based on forecasts of future taxable profits which are, by theirnature, uncertain.
Retirement benefit obligations
The cost of defined benefit pension plans is determined using actuarialvaluations prepared by the Group's actuaries. This involves making certainassumptions concerning discount rates, expected rates of return on assets,future salary increases, mortality rates and future pension increases. Due tothe long-term nature of these plans, such estimates are subject to significantuncertainty. The assumptions and the resulting estimates are reviewed annuallyand, when appropriate, changes are made which affect the actuarial valuationsand, hence, the amount of retirement benefit expense recognised in theConsolidated Income Statement and the amounts of actuarial gains and lossesrecognised in the Consolidated Statement of Changes in Equity. The carryingamount of the retirement benefit obligation as at 1st April, 2012 was adeficit of £369.6 million (3rd April, 2011 £198.2 million 2nd October, 2011£336.2 million). Further details are given in note 18.
DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
2 SEGMENT ANALYSISThe Group's business activities are split into seven operating divisions :RMS, business information, events, Euromoney, 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.
Details of the types of products and services from which each segment derives its revenues are included within the business review on pages 6 to 12.
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 1.
Inter-segment sales are charged at prevailing market prices other than thesale of newsprint and related services from the national media to the localmedia division which is at cost to the Group plus a margin where relevant. Theamount of newsprint sold between segments during the period amounted to £10.9million (2011 £11.5 million).Unaudited External Inter- Total Segment Less Operating26 weeks revenue segment revenue result operating profit beforeending revenue profit of exceptional1st April, 2012 joint ventures operating and associates costs and amortisation and impairment of goodwill and acquired intangible assets Note £m £m £m £m £m £mRMS 81.4 0.2 81.6 29.7 - 29.7Business information 115.6 - 115.6 16.9 (0.4) 17.3Events 44.7 - 44.7 11.5 - 11.5Euromoney 189.4 - 189.4 52.0 0.4 51.6National media 434.6 19.4 454.0 33.5 (0.5) 34.0Local media 107.7 1.4 109.1 10.8 - 10.8Radio - - - 3.7 3.7 - 973.4 21.0 994.4 158.1 3.2 154.9Corporate costs (22.1)Operating profit beforeexceptional operating costsand amortisation andimpairment of goodwilland acquired intangibleassets 132.8Exceptional operating costs,impairment of internallygenerated and acquiredcomputer software,investment property andproperty, plant andequipment (38.6)Impairment of goodwilland intangible assets (3.4)Amortisation of acquiredintangible assets arising onbusiness combinations (17.7)Operating profit beforeshare of results of jointventures and associates 73.1Share of result of joint 3ventures and associates 2.8Total operating profit 75.9Other gains and losses 4 0.4Profit before net financecosts and tax 76.3Investment revenue 5 6.1Finance costs 6 (36.9)Profit before tax 45.5Tax 7 24.2Profit for the period 69.7
Included within corporate costs is a credit of £1.3 million which adjusts thepensions charge recorded in each operating segment from a cash rate to the netservice cost in accordance with IAS 19, Employee benefits.
An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of investment property, property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows :
Unaudited Amortisation Amortisation Impairment Exceptional Exceptional Depreciation Investment Finance26 weeks of intangible of of operating depreciation of property, revenue costsending assets not intangible goodwill costs, of property, plant and1st April, 2012 arising on assets and impairment plant and equipment business arising on intangible of equipment combinations business assets investment combinations property and impairment of property, plant and equipment £m £m £m £m £m £m £m £mRMS (0.7) - - - - (2.6) - -Business information (4.4) (4.5) - (0.1) - (2.8) - -Events - (2.7) - - - (0.3) 1.0 -Euromoney (0.2) (8.2) - (0.5) (0.1) (1.7) - (1.0)National media (4.8) (2.1) (3.4) (18.8) (7.8) (11.1) 0.1 -Local media - (0.2) - (4.8) (0.3) (0.9) - -Radio - - - - - - - (0.8) (10.1) (17.7) (3.4) (24.2) (8.2) (19.4) 1.1 (1.8)Corporate costs - - - (6.2) - (2.9) 5.0 (35.1)Total and continuingoperations (10.1) (17.7) (3.4) (30.4) (8.2) (22.3) 6.1 (36.9) The Group's exceptional operating costs represent closure and reorganisationcosts in the national and local media segments amounting to £14.4 million andan impairment charge of £9.3 million on the closure of a print site. InEuromoney, restructuring costs amount to £0.5 million following thereorganisation of certain group functions and recently acquired businesses.Included in corporate costs is a charge of £6.8 million relating toconsultancy services offset by an impairment write back of £0.6 millionrelating to investment property. The Group's tax charge includes a relatedcredit of £1.2 million in relation to these items.
DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
2 SEGMENT ANALYSIS - CONTINUED
Unaudited External Inter- Total Segment Less Operating26 weeks revenue segment revenue result operating profit beforeending revenue profit of exceptional3rd April, 2011 joint ventures operating and associates costs and amortisation and impairment of goodwill and acquired intangible assets Note £m £m £m £m £m £mRMS 79.1 0.5 79.6 20.8 - 20.8Business information 105.0 1.4 106.4 15.1 - 15.1Events 81.1 0.1 81.2 28.6 - 28.6Euromoney 167.6 - 167.6 45.2 0.2 45.0National media 438.6 37.9 476.5 44.4 (1.4) 45.8Local media 119.6 0.1 119.7 8.0 - 8.0Radio - - - 2.5 2.5 - 991.0 40.0 1,031.0 164.6 1.3 163.3Corporate costs (19.3)Operating profit before exceptionaloperating costs and amortisation andimpairment of goodwill and acquiredintangible assets 144.0Exceptional operating costs, impairmentof internally generated and acquiredcomputer software, investment propertyand property, plant and equipment (16.6)Impairment of goodwill and intangible assets (6.5)Amortisation of acquired intangibleassets arising on business combinations (22.6)Operating profit before share of resultsof joint ventures and associates 98.3Share of result of joint ventures 3and associates (2.0)Total operating profit 96.3Other gains and losses 4 1.1
Profit before net finance costs and tax
97.4Investment revenue 5 9.5Finance costs 6 (34.4)Profit before tax 72.5Tax 7 (15.0)Profit for the period 57.5
Included within corporate costs is a charge of £1.0 million which adjusts thepensions charge recorded in each operating segment from a cash rate to the netservice cost in accordance with IAS 19, Employee benefits.
An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of investment property, property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows :
Unaudited Amortisation Amortisation Impairment Exceptional Exceptional Depreciation Investment Finance26 weeks of of of operating depreciation of property, revenue costsending intangible intangible goodwill costs, of property, plant and3rd April, 2011 assets not assets and impairment plant and equipment arising on arising on intangible of equipment business business assets investment combinations combinations property and impairment of property, plant and equipment £m £m £m £m £m £m £m £mRMS (0.9) - - - - (2.6) 0.1 -Business information (3.3) (3.7) - - - (3.5) - (0.2)Events - (6.2) - - - (0.3) 0.2 -Euromoney (0.2) (6.2) - (1.4) - (1.3) 0.2 (1.6)National media (4.3) (5.8) - (3.6) (7.2) (12.2) - (1.2)Local media - (0.7) (6.5) (4.4) - (1.9) - - (8.7) (22.6) (6.5) (9.4) (7.2) (21.8) 0.5 (3.0)Corporate costs - - - - - (2.3) 9.0 (31.4)Total and continuingoperations (8.7) (22.6) (6.5) (9.4) (7.2) (24.1) 9.5 (34.4) The Group's exceptional operating costs represent closure and reorganisationcosts in national and local media amounting to £8.0 million. In Euromoney,restructuring costs of £1.8 million follow the closure and reorganisation ofunderperforming businesses and an exceptional credit of £0.4 million followsthe successful resolution of a US legal dispute. The Group's tax chargeincludes a related credit of £2.5 million in relation to these items.
DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
2 SEGMENT ANALYSIS - CONTINUED
Audited External Inter- Total Segment Less Operating52 weeks revenue segment revenue result operating profit beforeending revenue profit of exceptional2nd October, 2011 joint ventures operating and associates costs and amortisation and impairment of goodwill and acquired intangible assets Note £m £m £m £m £m £mRMS 158.7 1.2 159.9 47.5 - 47.5Business information 237.5 0.3 237.8 47.0 0.1 46.9Events 132.1 - 132.1 38.8 - 38.8Euromoney 363.1 - 363.1 93.4 0.5 92.9National media 862.3 38.8 901.1 73.4 (2.4) 75.8Local media 236.1 0.2 236.3 16.9 - 16.9Radio - - - 6.7 6.7 - 1,989.8 40.5 2,030.3 323.7 4.9 318.8Corporate costs (32.5)Operating profit before exceptionaloperating costs and amortisationand impairment of goodwill andacquired intangible assets 286.3Exceptional operating costs,impairment of internally generatedand acquired computer software,investment property and property,plant and equipment (52.7)Impairment of goodwill and intangible assets (24.4)Amortisation of acquired intangibleassets arising on business combinations (42.5)Operating profit before share of resultsof joint ventures and associates 166.7Share of result of joint ventures and 3associates (2.4)Total operating profit 164.3Other gains and losses 4 14.8
Profit before net finance costs and tax
179.1Investment revenue 5 17.1Finance costs 6 (71.7)Profit before tax 124.5Tax 7 3.0Profit for the period 127.5
Included within corporate costs is a credit of £1.9 million which adjusts thepensions charge recorded in each operating segment from a cash rate to the netservice cost in accordance with IAS 19, Employee benefits.
An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of investment property, property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows :
Audited Amortisation Amortisation Impairment Exceptional Exceptional Depreciation Investment Finance52 weeks of of of operating depreciation of property, revenue costsending intangible intangible goodwill costs, of property, plant and2nd October, 2011 assets not assets and impairment plant and equipment arising on arising on intangible of equipment business business assets investment combinations combinations property and impairment of property, plant and equipment £m £m £m £m £m £m £m £mRMS (1.9) - - - - (5.3) 0.2 -Business information (7.0) (7.5) - (1.3) - (6.8) - (0.2)Events - (11.7) - 0.9 - (0.7) 1.3 -Euromoney (0.3) (13.1) (0.1) (3.2) - (2.7) 0.3 (2.9)National media (9.2) (9.4) (10.6) (16.9) (14.8) (23.9) 0.2 (2.2)Local media - (0.8) (13.7) (10.4) (0.3) (3.5) - - (18.4) (42.5) (24.4) (30.9) (15.1) (42.9) 2.0 (5.3)Corporate costs - - - (6.7) - (4.7) 15.1 (66.4)Total and continuingoperations (18.4) (42.5) (24.4) (37.6) (15.1) (47.6) 17.1 (71.7) The Group's exceptional operating costs represent closure and reorganisationcosts in the national and local media segments amounting to £24.9 million. InEuromoney, restructuring costs amount to £2.6 million following the closureand reorganisation of underperforming businesses, £1.0 million relates to theacquisition of Ned Davis Research Group offset by an exceptional credit of£0.4 million following resolution of a US legal dispute. Included in corporatecosts is an impairment charge of £6.7 million relating to investment property.The Group's tax charge includes a related credit of £12.2 million in relationto these items.DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
2 SEGMENT ANALYSIS - CONTINUED
The Group's revenue comprises sales excluding value added tax, less discounts and commission, where applicable, and is analysed as follows :
Unaudited 26 weeks ending Total Inter-segment Continuing1st April, 2012 operations £m £m £mSale of goods 440.5 - 440.5Rendering of services 553.9 (21.0) 532.9 994.4 (21.0) 973.4 Unaudited 26 weeks ending Total Inter-segment Continuing3rd April, 2011 operations £m £m £mSale of goods 352.9 - 352.9Rendering of services 678.1 (40.0) 638.1 1,031.0 (40.0) 991.0 Audited 52 Total Inter-segment Continuingweeks ending operations2nd October, 2011 £m £m £mSale of goods 576.7 - 576.7Rendering of services 1,453.6 (40.5) 1,413.1 2,030.3 (40.5) 1,989.8
The Group includes circulation and subscriptions revenue within sales of goods, the remainder of the Group's revenue, excluding investment revenue is included within rendering of services. Investment revenue is shown in note 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 :
Total and continuing operations Unaudited
Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mUK 627.7 649.7 1,288.6Rest of Europe 29.0 18.2 42.6North America 263.2 258.9 555.3Australia 4.8 4.9 11.9Rest of the World 48.7 59.3 91.4 973.4 991.0 1,989.8
The closing net book value of goodwill, intangible assets, plant and equipment and investment property is analysed by geographic area as follows :
Unaudited as at 1st April, 2012 Closing net Closing net
Closing net Closing net TOTAL
book value of book value of
book value of book value of
goodwill intangible property, plant investment assets and equipment property £m £m £m £m £mUK 258.8 67.7 248.4 20.2 595.1Rest of Europe 14.6 5.0 13.4 - 33.0North America 462.1 199.3 30.1 - 691.5Australia 1.6 0.8 0.3 - 2.7Rest of the World 18.5 5.8 2.0 - 26.3 755.6 278.6 294.2 20.2 1,348.6
Unaudited as at 3rd April, 2011 Closing net Closing net
Closing net Closing net TOTAL
book value of book value of
book value of book value of
goodwill intangible property, plant investment assets and equipment property £m £m £m £m £mUK 275.6 82.5 293.8 11.4 663.3Rest of Europe 7.1 4.6 17.1 - 28.8North America 429.5 252.0 31.6 - 713.1Australia 1.6 0.9 0.3 - 2.8Rest of the World 18.4 7.4 5.9 - 31.7 732.2 347.4 348.7 11.4 1,439.7
Audited as at 2nd October, 2011 Closing net Closing net
Closing net Closing net TOTAL book value of book value of book value of book value of goodwill intangible property, plant investment assets and equipment property £m £m £m £m £mUK 259.0 76.3 258.3 21.6 615.2Rest of Europe 10.5 4.7 14.8 - 30.0North America 457.2 199.8 30.1 - 687.1Australia 1.5 0.8 0.2 - 2.5Rest of the World 18.8 6.6 2.0 - 27.4 747.0 288.2 305.4 21.6 1,362.2 The Group tests goodwill annually for impairment, or more frequently if thereare indicators that goodwill might be impaired. Intangible assets, all ofwhich have finite lives, are tested separately from goodwill only whereimpairment indicators exist. The total impairment charge recognised for theperiod was £3.4 million which relates to internally generated and acquiredcomputer software in the national media segment. There is a £0.9 million taxcredit associated with this impairment charge.
The total impairment charge recognised for the prior period was £6.5 million which related to titles in the local media segment. There was no tax associated with this impairment charge.
When testing for impairment, the recoverable amounts for all of the Group'scash-generating units (CGUs) are measured at the higher of value in use andfair value less costs to sell. Value in use is calculated by discountingfuture expected cash flows. These calculations use cash flow projections basedon management approved budgets and projections which reflect management'scurrent experience and future expectations of the markets in which the CGUoperates. Risk adjusted discount rates used by the Group in its impairmenttests range from 9.0 % to 10.0 % (2011 9.0 % to 10.0 %), the choice of ratesdepending on the market and maturity of the CGU. The Group's estimate of theweighted average cost of capital is unchanged from the previous year. Theprojections consist of Board approved budgets for the following year, threeyear plans and growth rates beyond this period. The long-term growth ratesrange between 0.0 % and 3.0 % (2011 0.0 % and 5.0 %) and vary withmanagement's view of the CGU's market position, maturity of the relevantmarket and do not exceed the long-term average growth rate for the market inwhich it operates.DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
3 SHARE OF RESULTS OF JOINT VENTURES AND ASSOCIATES
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks ending ending ending 1st 3rd 2nd April, April, October, 2012 2011 2011 Note £m £m £mShare of profits from 2.9 1.2 4.4operations of joint venturesShare of profits from 0.3 0.1 0.5operations of associatesShare of profits 3.2 1.3 4.9before amortisation,impairment of goodwill,interest and taxShare of amortisation of (1.8) (1.7) (3.4)intangibles of joint venturesShare of amortisation of (0.1) (0.1) (0.3)intangibles of associatesShare of joint ventures' (1.0) (0.7) (1.7)interest payable
Share of joint ventures' tax
2.4 (0.3) (1.3)Share of associates' tax 0.1 (0.1) -Adjustment to the - - 3.0carrying value ofjoint venture on acquisitionImpairment of carrying (i) - - (3.2)value of joint ventureImpairment of carrying (ii) - (0.4) (0.4)value of associate 2.8 (2.0) (2.4)Share of associates items - - -recognised in equity 2.8 (2.0) (2.4) Share of results from 2.5 (1.5) (2.0)operations of joint venturesShare of results from 0.3 (0.1) 0.2operations of associatesAdjustment to the carrying - - 3.0value of joint venture on acquisitionImpairment of carrying - - (3.2)value of joint ventureImpairment of carrying - (0.4) (0.4)value of associates 2.8 (2.0) (2.4)
(i) In the prior year represents a £0.2 million write down in the carryingvalue of the Group's investment in Mail Today Newspapers Pvt. Limited in thenational media segment and £3.0 million write down in value of the Sanborn MapCompany in the business information segment.
(ii) In the prior period represents a write down in the carrying value of the Group's investment in Posvanete AD in the local media segment.
4 OTHER GAINS AND LOSSES Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 Note £m £m £m(Loss)/profit on disposal of (0.4) - 8.6available-for-sale investmentsImpairment of available-for-sale assets - - (0.2)Profit on disposal of property, - - 0.6plant and equipmentProfit on disposal of businesses 17, (i) 0.7 1.1 5.7Profit on disposal of joint ventures
0.1 - 0.1and associates 0.4 1.1 14.8
(i) Represents £0.4 million profit on sale of the motors businesses in thenational media segment and £0.3 million profit on sale of various exhibitionsbusinesses in the events segment. In the prior period, the profit on disposalof businesses mainly comprises the profit on disposal of various exhibitionbusinesses in the events segment and various assets in the local mediasegment.5 INVESTMENT REVENUE Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mExpected return on defined benefitpension scheme assets less intereston defined benefit pension scheme liabilities 4.3 6.1 12.3Dividend income 0.7 2.9 2.9Interest receivable from short-term deposits
1.1 0.5 1.9 6.1 9.5 17.1 DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES6 FINANCE COSTS Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending
1st April, 3rd April, 2nd October,
2012 2011 2011
Note £m £m £mInterest, arrangement and commitment (30.6) (32.9) (70.8)fees payable on bonds, bank loans and loan notesPremium on bond redemption (6.1) - -Change in fair value of derivative hedge of bond (0.6) (4.1) 0.1Change in fair value of hedged portion of bond 0.6 4.1 (0.1)Profit on derivatives, or portions thereof, not 0.2 0.3 1.7designated for hedge accountingFinance charge on discounting of contingent consideration (i) (0.1) (0.2) (0.4)Fair value movement on contingent consideration 0.2 (1.8) (1.7)Change in fair value of acquisition put options
(0.5) 0.2 (0.5)
(36.9) (34.4) (71.7)
(i) The finance charge on the discounting of contingent consideration arises from the requirement under IFRS 3 (2004), Business Combinations, to record contingent consideration at fair value using a discounted cash flow approach.
7 TAX Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st 3rd 2nd April, April, October, 2012 2011 2011 Note £m £m £mThe charge on the profit for the period consists of :UK taxCorporation tax at 25.0 % (2011 27.0 %) (4.1) (3.5) (2.4)Adjustments in respect of prior periods
(i) 38.8 (0.2) 0.4 34.7 (3.7) (2.0)Overseas taxCorporation tax (12.5) (9.1) (19.3)
Adjustments in respect of prior periods (i) (0.3) (0.3) (0.9)Total current tax 21.9 (13.1) (22.2)Deferred taxOrigination and reversals of timing differences 1.3 (2.5) 18.2Adjustments in respect of prior periods (i) 1.0 0.6 7.0Total deferred tax 2.3 (1.9) 25.2Total Group tax - continuing operations
24.2 (15.0) 3.0
(i) The net prior period credit of £39.5 million (2011 £0.1 million) arose largely from the agreement of certain prior period open issues with tax authorities and a reassessment of the level of tax provisions required.
Adjusted tax on profits before amortisation and impairment of intangibleassets, restructuring costs and non-recurring items (adjusted tax charge)amounted to a charge of £17.1 million (2011 £19.9 million) and the resultingrate is 16.4 % (2011 16.3 %). The differences between the tax credit and theadjusted tax charge are shown in the reconciliation below : Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending
1st April, 3rd April, 2nd October,
2012 2011 2011 £m £m £mTotal tax (charge)/credit on the profit for the period 24.2 (15.0) 3.0Share of tax in joint ventures and associates 2.5 - -Deferred tax on intangible assets and goodwill (0.8) (0.6) (0.9)Agreement of open issues with tax authorities (38.6) - 1.0Tax on other exceptional items (4.4) (4.3) (38.7)Adjusted tax charge on the profit for the period
(17.1) (19.9) (35.6)
In calculating the adjusted tax rate, the Group excludes the potential futuredeferred tax effects of intangible assets and goodwill (other than internallygenerated and acquired computer software) as it prefers to give the users ofits accounts a view of the tax charge based on the current status of suchitems.
DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES8 DIVIDENDS PAID Unaudited Unaudited Unaudited Unaudited Audited Audited 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks ending ending ending ending ending ending 1st April, 1st April, 3rd April, 3rd
April, 2nd October, 2nd October,
2012 2012 2011 2011 2011 2011 Pence per Pence per Pence per share £m share £m share £mAmounts recognisableas distributionsto equity holdersin the periodOrdinary shares - 11.70 2.5 - - - -final dividend forthe year ended2nd October, 2011`A' Ordinary Non-Voting 11.70 42.3 - - - -shares - final dividendfor the year ended2nd October, 2011Ordinary shares - - - 11.0 2.0 11.0 2.0final dividend for the yearended 3rd October, 2010`A' Ordinary Non-Voting - - 11.0 40.1 11.0 40.1shares - final dividendfor the year ended3rd October, 2010 44.8 42.1 42.1Ordinary shares - - - - - 5.3 1.1interim dividend for the yearended 2nd October, 2011`A' Ordinary Non-Voting - - - - 5.3 19.2shares - interim dividendfor the year ended2nd October, 2011 - - 20.3 11.70 44.8 11.0 42.1 16.3 62.4 The Board has declared an interim dividend of 5.6 p per Ordinary / 'A'Ordinary Non-Voting share (2011 5.3 p) which will absorb an estimated £21.4million of shareholders' funds for which no liability has been recognised inthese interim financial statements. It will be paid on 6th July, 2012 toshareholders on the register at the close of business on 1st June, 2012.
9 ADJUSTED PROFIT
Unaudited 26 Unaudited Audited
weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mProfit before tax -continuing operations 45.5 72.5 124.5Add back :Amortisation ofintangible assets inGroup profit fromoperations and injoint ventures andassociates arisingon business combinations 19.6 24.4 46.2Impairment of goodwilland intangibleassets arising onbusiness combinations 3.4 6.5 24.4Exceptional operatingcosts, impairmentof internally generatedand acquiredcomputer software,investment propertyand property, plantand equipment 38.6 16.6 52.7Impairment of carryingvalue of jointventure net of fairvalue adjustmenton acquisition - - 0.2Impairment of carrying valueof associate - 0.4 0.4Other gains and losses : Loss/(profit) on disposal of available-for-sale investments 0.4 - (8.6) Profit on disposal of property, plant and equipment - - (0.6) Profit on disposal of businesses (0.7) (1.1) (5.7) Impairment of available-for-sale assets - - 0.2 Profit on disposal of joint ventures and associates (0.1) - (0.1)Finance costs : Change in fair value of acquisition put options 0.5 (0.2) 0.5 Fair value movement on contingent consideration (0.2) 1.8 1.7Tax : Share of tax in joint ventures and associates (2.5) 0.4 1.3Adjusted profitbefore taxand non-controllinginterests 104.5 121.3 237.1Total tax credit/(charge)on the profit forthe period 24.2 (15.0) 3.0Adjust for : Share of tax in joint ventures and associates 2.5 - - Deferred tax on intangible assets and goodwill (0.8) (0.6) (0.9) Agreed open issues with tax authorities (38.6) - 1.0 Tax on other exceptional items (4.4) (4.3) (38.7)
Non-controlling interests
(12.2) (11.1) (21.8)Adjusted profitafter taxationand non-controllinginterests 75.2 90.3 179.7The adjusted non-controlling interests share of profits for the period of£12.2 million (2011 £11.1 million) is stated after eliminating a credit of£3.0 million (2011 £3.3 million), being the non-controlling interests share ofadjusting items.DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
10 EARNINGS PER SHARE
Basic earnings per share of 15.8 p (2011 13.0 p) and diluted earnings pershare of 15.8 p (2011 12.9 p) are calculated, in accordance with IAS 33,Earnings per share, on Group profit for the financial period of £60.5 million(2011 £49.7 million) and on the weighted average number of ordinary shares inissue during the period, as set out below.As in previous years, adjusted earnings per share have also been disclosedsince the Directors consider that this alternative measure gives a morecomparable indication of the Group's underlying trading performance. Adjustedearnings per share of 19.5 p (2011 23.6 p) are calculated on profit forcontinuing and discontinued operations before exceptional operating costs,impairment of goodwill and intangible assets, amortisation of intangibleassets arising on business combinations, other gains and losses andexceptional financing costs after taxation and non-controlling interestsassociated with those profits, of £75.2 million (2011 £90.3 million), as setout in note 9 above, and on the basic weighted average number of ordinaryshares in issue during the period. Unaudited Unaudited
Audited Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks ending ending ending ending ending ending 1st April, 3rd April, 2nd
October, 1st April, 3rd April, 2nd October,
2012 2011 2011 2012 2011 2011 Diluted Diluted Diluted Basic Basic Basic pence pence pence pence pence pence per share per share per share per share per share per shareBasic earningsper share fromtotal andcontinuing operations 15.8 12.9 29.1 15.8 13.0 29.2 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 Basic Basic Basic pence pence pence per share per share per shareProfit before tax -continuing operations 11.9 18.9 32.5Add back :Amortisation of intangibleassets in Groupprofit from operationsand in joint venturesand associates arising onbusiness combinations 5.1 6.4 12.1Impairment of goodwilland intangible assetsarising on businesscombinations 0.9 1.7 6.4Exceptional operatingcosts, impairment ofinternally generated andacquired computersoftware, investmentproperty and property,plant and equipment 10.1 4.3 13.8Impairment of carryingvalue of joint venturenet of fair value adjustmenton acquisition - - 0.1Impairment of carrying value of associate - 0.1 0.1Other gains and losses : Loss/(profit) on disposal of available-for-sale investments 0.1 - (2.2) Profit on disposal of property, plant and equipment - - (0.2) Profit on disposal of businesses (0.2) (0.3) (1.5) Impairment of available-for-sale assets - - 0.1 Profit on disposal of joint ventures and associates - - -Finance costs : Change in fair value of acquisition put options 0.1 (0.1) 0.1 Fair value movement on contingent consideration (0.1) 0.5 0.4Tax : Share of tax in joint ventures and associates (0.7) 0.1 0.3Adjusted profit beforetax andnon-controllinginterests 27.2 31.6 62.0Total tax credit/(charge) on the
profit for the period
6.3 (3.9) 0.8Adjust for : Share of tax in joint ventures and associates 0.7 - - Deferred tax on intangible assets and goodwill (0.2) (0.2) (0.2) Agreed open issues with tax authorities (10.2) - 0.3 Tax on other exceptional items (1.1) (1.1) (10.2)
Non-controlling interests
(3.2) (2.8) (5.7)Adjusted profitafter taxationand non-controllinginterests 19.5 23.6 47.0 DMGT plc
For the 26 weeks ending ended 1st April, 2012
NOTES
10 EARNINGS PER SHARE - CONTINUED
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 Diluted Diluted Diluted pence pence pence per share per share per shareProfit before tax -continuing operations 11.8 18.9 32.5Add back :Amortisation of intangibleassets in Groupprofit from operationsand in joint venturesand associates arising onbusiness combinations 5.1 6.3 12.1Impairment of goodwilland intangibleassets arising onbusiness combinations 0.9 1.7 6.4Exceptional operatingcosts, impairmentof internally generatedand acquired computersoftware, investmentproperty and property,plant and equipment 10.1 4.3 13.7Impairment of carryingvalue of joint venturenet of fair valueadjustment on acquisition - - 0.1Impairment of carryingvalue of associate - 0.1 0.1Other gains and losses : Loss/(profit) on disposal of available-for-sale investments 0.1 - (2.2) Profit on disposal of property, plant and equipment - - (0.2) Profit on disposal of businesses (0.2) (0.3) (1.5) Impairment of available-for-sale assets - - 0.1 Profit on disposal of joint ventures and associates - - -Finance costs : Change in fair value of acquisition put options 0.1 (0.1) 0.1 Fair value movement on contingent consideration (0.1) 0.5 0.4Tax : Share of tax in joint ventures and associates (0.7) 0.1 0.3Adjusted profit before tax
and non-controlling interests 27.1 31.5 61.9Total tax credit/(charge)on the profit for the period
6.3 (3.9) 0.8Adjust for : Share of tax in joint ventures and associates 0.7 - - Deferred tax on intangible assets and goodwill (0.2) (0.2) (0.2) Agreed open issues with tax authorities (10.1) - 0.3 Tax on other exceptional items (1.1) (1.1) (10.2)Non-controlling interests (3.2) (2.9) (5.7)Adjusted profit after taxationand non-controlling interests
19.5 23.4 46.9
The weighted average number of ordinary shares in issue during the period for the purpose of these calculations is as follows :
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 Number m Number m Number m
Number of ordinary shares in issue 392.6 392.6 392.6Shares held in Treasury (9.8) (9.8) (9.8)Basic earnings per share denominator 382.8 382.8 382.8Effect of dilutive share options 1.2 1.2 0.5Dilutive earnings per share denominator 384.0
384.0 383.3 11 ANALYSIS OF NET DEBT Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mNet debt at start of period (687.0) (819.2) (819.2)Cash flow (99.0) (1.1) 134.8Fair value hedging arrangements 0.6 4.1 (0.1)Foreign exchange movements (0.3) (0.1) -Other non-cash movements (0.6) (0.9) (2.5)Net debt at period end (786.3) (817.2) (687.0) Analysed as :Cash and cash equivalents 55.6 61.8 174.3Unsecured bank overdrafts (0.6) (0.2) (2.6)Cash and cash equivalents 55.0 61.6 171.7in the CondensedConsolidated Cash Flow StatementDebt due within one year :Bonds (47.3) - -Bank loans (29.9) (0.5) -Other financial liabilities - - (23.4)Loan notes (3.2) (3.7) (3.3)Hire purchase obligations - (5.1) -Debt due in more than one year :Bonds (674.7) (850.0) (832.0)Bank loans (86.2) (6.8) -Hire purchase obligations - (12.7) -Net debt at period end (786.3) (817.2) (687.0)Effect of derivatives on bank loans (22.8) (32.0) (32.6)Net debt including derivatives (809.1) (849.2) (719.6)
The net cash outflow of £99.0 million (2011 outflow £1.1 million) includes a cash outflow of £14.9 million (2011 £9.1 million) in respect of operating exceptional items.
DMGT
For the 26 weeks ending ended 1st April, 2012
NOTES
12 PROPERTY, PLANT AND EQUIPMENT
During the period the Group spent £29.3 million (2011 £14.5 million) on property, plant and equipment.
The Group also disposed of certain of its property, plant and equipment with acarrying value of £0.8 million (2011 £1.0 million) for proceeds of £0.8million (2011 £0.7 million).13 BORROWINGS Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mCurrent liabilitiesBank overdrafts 0.6 0.2 2.6Other borrowings - - 23.4Bonds 47.3 - -Bank loans 29.9 0.5 -Loan notes 3.2 3.7 3.3Hire purchase obligations - 5.1 - 81.0 9.5 29.3 Non-current liabilitiesBonds 674.7 850.0 832.0Bank loans 86.2 6.8 -Hire purchase obligations - 12.7 - 760.9 869.5 832.0
During the period the Group bought back £110.0 million nominal of 2013 bonds. The total consideration paid was £121.8 million which included accrued interest of £5.7 million. The resulting premium on redemption was £6.1 million.
14 BANK LOANS
The 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.These covenants were met at the relevant test dates during the period.On a bank covenant basis, using average exchange rates to calculate net debtand EBITDA, the Group's net debt to EBITDA ratio as at 1st April, 2012 was 2.3times (3rd April, 2011 2.2 times, 2nd October, 2011 1.97 times).
The Group's facilities and their maturity dates are as follows :
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £m
Expiring in one year or less 30.0 180.0 -Expiring in more than one year 60.0 30.0 90.0but not more than two yearsExpiring in more than two years - 210.0 -but not more than three yearsExpiring in more than four years 303.1 - 300.0but not more than five yearsTotal bank facilities
393.1 420.0 390.0
The following undrawn committed borrowing facilities were available to the Group in respect of which all conditions precedent had been met :
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £m
Expiring in one year or less 0.1 176.1 -Expiring in more than one year 14.8 30.0 36.4but not more than two yearsExpiring in more than two years - 138.0 -but not more than three yearsExpiring in more than four years 209.3 - 291.1but not more than five yearsTotal undrawn committed 224.2 344.1 327.5bank facilities
15 SHARE CAPITAL AND RESERVES
Share capital as at 1st April, 2012 amounted to £49.1 million. During the period 223,000 'A' Ordinary Non-Voting shares were allotted for aggregate consideration of £691,780 under the terms of the Company's 2006 Executive Share Option Scheme.
The Company disposed of 6,978,953 treasury shares, representing 1.87 % of thecalled up 'A' Ordinary Non-Voting share capital, in order to satisfy incentiveschemes. It also acquired 7,478,953 'A' Ordinary shares within treasury,representing 2.01 % of the called-up 'A' Ordinary share capital as at 1stApril, 2012.At 1st April, 2012 options were outstanding under the terms of the Company's1997 and 2006 Executive Share Option Schemes, together with nil cost options,over a total of 4,980,233 (3rd April, 2011 5,461,326 2nd October, 20115,399,633) 'A' Ordinary Non-Voting shares.
DMGT
For the 26 weeks ending ended 1st April, 2012
NOTES
16 SUMMARY OF THE EFFECTS OF ACQUISITIONS
A summary of the notable acquisitions completed during the period were asfollows :Name of acquisition Segment % voting Date of Business Consideration Intangible Goodwill rights acquisition description paid fixed arising acquired assets acquired £m £m £mIntelliworks Business 100.0% December, 2011 Provider of 8.5 3.7 7.0 information marketing, recruiting, enrolment & CRM solutions for higher education collegesPrepMe Business 100.0% February, 2012 Provider of 2.5 1.8 0.8 information adaptive learning servicesBUILDERadius Business 57.8% November, 2011 Provider of 5.7 3.3 6.5 information building safety and code enforcement software and servicesGlobal Grain Euromoney 50.0% February, 2012 International 5.2 1.3 4.4 grain conferences
Provisional fair value of net assets acquired with all acquisitions :
Book value Accounting Provisional Provisional policy fair value fair value alignments adjustments £m £m £m £mGoodwill - - 18.7 18.7Intangible assets - - 10.1 10.1Property, plant and equipment 0.2
- - 0.2Trade and other receivables 1.1 - - 1.1Cash and cash equivalents 0.1 - - 0.1Trade and other payables (6.6) - - (6.6)Deferred tax - - (1.7) (1.7)
Group share of net assets acquired (5.2)
- 27.1 21.9 Cost of acquisitions: Non-cash Cash paid Total in current period £m £m £mContingent consideration 0.1 - 0.1
Reclassification of investment 5.7 - 5.7in associateCash - 16.1 16.1Total consideration at fair value 5.8 16.1 21.9
The amount of goodwill which is deductible for the purposes of calculating the Group's tax charge amounts to £nil.
Directly attributable costs in relation to the above acquisitions amounted to £0.3 million.
If all acquisitions had been completed on the first day of the financial period, Group revenues for the period would have been £977.0 million and Group profit attributable to equity holders of the parent would have been £25.8 million. This information takes into account the amortisation of acquired intangible assets together with related income tax effects but excludes any pre-acquisition finance costs and should not be viewed as indicative of the results of operations that would have occurred if the acquisitions had actually been completed on the first day of the financial period.
Total profit attributable to equity holders of the parent since the date of acquisition for companies acquired during the period amounted to £nil.
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 Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £m
Cash consideration excluding 14.7 1.6 2.7 acquisition expenses
During the period, the Group acquired additional shares in controlled entitiesamounting to £14.7 million (2011 £1.6 million). In addition, the Group optedto receive a scrip dividend from Euromoney Institutional Investor PLC(Euromoney) amounting to £10.1 million (2011 £9.2 million) thereby acquiring afurther 1.6 % (2011 0.3 %) of the issued ordinary share capital of Euromoney.Under the Group's accounting policy for the acquisition of shares incontrolled entities, no adjustment has been recorded to the fair value ofassets and liabilities already held on the Condensed Consolidated Statement ofFinancial Position. The difference between the cost of the additional sharesand the carrying value of the non controlling interests share of net assets isadjusted in retained earnings. The adjustment to retained earnings in theperiod was a credit of £1.7 million (2011 charge £3.0 million).
Reconciliation to purchase of subsidiaries as shown in the Condensed Consolidated Cash Flow Statement:
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £mCash consideration excludingacquisition expenses 16.1 2.0 74.1Cash paid to settle contingentconsideration in respect of acquisitions 5.0 8.8 12.0Cash and cash equivalentsacquired with subsidiaries (0.1) (0.1) (4.8) 21.0 10.7 81.3 DMGT
For the 26 weeks ending ended 1st April, 2012
NOTES
17 SUMMARY OF THE EFFECTS OF DISPOSALS
A summary of notable disposals is as follows :
Name of disposal Segment Date of disposal Fair value of consideration £mTeletext National Media December, 2011 2.6Motors.co.uk National Media March, 2012 0.7Zambeasy.co.uk National Media January, 2012 0.5Chew Valley Regional Media January, 2012 0.4 In addition, the Group's interest in Euromoney was diluted during the periodby 0.0 % (2011 0.3 %). Under the Group's accounting policy for the disposal ofshares in controlled entities, no adjustment has been recorded to the fairvalue of assets and liabilities already held on the Condensed ConsolidatedStatement of Financial Position. The difference between the Group's share ofnet assets before and after this dilution is adjusted in retained earnings.The adjustment to retained earnings in the period was a credit of £nil (2011£0.5 million).
The impact of all disposals of businesses on net assets was :
Note £mGoodwill 0.7Intangible assets 0.6Property, plant and equipment 0.1Trade and other receivables 3.2Cash at bank and in hand 0.5Trade and other payables (1.7)Deferred tax 0.2Net assets disposed 3.6Profit on disposal of businesses 4 0.7 4.3 Satisfied by:Cash received 2.1Amounts receivable 2.3Directly attributable costs (0.1) 4.3
Reconciliation to disposal of businesses as shown in the Condensed Consolidated Cash Flow Statement :
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 £m £m £m
Cash consideration net of disposal costs 2.0 2.1 98.2 Cash and cash equivalents
(0.5) - (3.4)
disposed with subsidiaries
1.5 2.1 94.8
The businesses disposed of during the year absorbed £1.1 million of the Group's net operating cash flows, had £nil attributable to investing and £nil attributable to financing activities.
18 RETIREMENT BENEFITS
The Group operates a number of pension schemes primarily in its newspaper businesses under which contributions are paid by the employer and employees.
The schemes include funded defined benefit pension arrangements, providingservice-related benefits, in addition to a number of defined contributionpension arrangements. The defined benefit schemes in the UK and some definedcontribution plans are administered by trustees or trustee companies and areclosed to new employees.
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 period ended 1st April, 2012 were £7.1 million (2011 £10.4 million).
The defined benefit obligation is calculated on a year-to-date basis, using the latest actuarial valuation as at 31st March, 2010. The assumptions used in the valuation are summarised below:
Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ending ending ending 1st April, 3rd April, 2nd October, 2012 2011 2011 % pa % pa % paPrice inflation 3.1 3.4 3.0Salary increases 3.0 3.2 2.9Pension increases 3.0 3.2 2.9Discount rate for 4.8 5.5 5.2scheme liabilitiesExpected overall rate N/A N/A 6.7of return on assets
19 CONTINGENT LIABILITIES
There have been no material changes in contingent liabilities since 2nd October, 2011.
The Group has issued stand by letters of credit in favour of the Trustees ofthe Group's defined benefit pension fund amounting to £45.2million (2011 £59.7million).
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 were issued in Malaysia against thecompany and three of its employees in respect of an article published in oneof the company's magazines, International Commercial Litigation, in November1995. The writs were served on Euromoney Institutional Investor PLC(Euromoney) on 22nd October, 1996. Two of these writs have been discontinued.The total outstanding amount claimed on the two remaining writs is MalaysianRinggits 82 million (£16.8 million) (2011 Malaysian Ringgits 82.0 million(£16.9 million)). No provision has been made for these claims in these interimfinancial statements as the Directors do not believe Euromoney has anymaterial liability in respect of these writs.
DMGT
For the 26 weeks ending ended 1st April, 2012
NOTES
20 ULTIMATE HOLDING COMPANY
The Company's ultimate holding company and immediate parent company is Rothermere Continuation Limited, a company incorporated in Bermuda.
21 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, the Company's Chairman.
Transactions with Directors
There were no material transactions with Directors of the Company during the period, except for those relating to remuneration.
For the purposes of IAS 24, Related Party Disclosures, Executives below the level of the Company's Board are not regarded as related parties.
Transactions with joint ventures and associates
Daily Mail and General Holdings Limited has a 15.6 % shareholding in The PressAssociation. During the period the Group received services amounting to £1.8million (2011 £1.9 million) and the net amount due from the Press Associationas at 1st April, 2012 was £0.2 million (3rd April, 2011 £nil).Daily Mail and General Holdings Limited has a 24.9 % shareholding in theEvening Standard Limited. During the period, the Group received revenue of£11.0 million (2011 £14.0 million) and incurred charges of £4.8 million (2011£4.4 million). The net amount due to the Group at 1st April, 2012 was £3.8million (3rd April, 2011 £4.2 million).
The Group received a dividend of £0.4 million (2011 £0.3 million) from Hasznaltauto kft a joint venture.
Associated Newspapers Limited has a 33.3 % shareholding in Fortune GreenLimited. During the period the Group received revenue for newsprint, computerand office services of £0.4 million (2011 £0.3 million). The amount due fromFortune Green Limited at 1st April, 2012 was £0.2 million (3rd April, 2011£0.2 million).Associated Newspapers Limited has a 12.5 % shareholding in the NewspapersLicensing Agency (NLA) from which royalty revenue of £1.6 million was received(2011 £1.4 million). Commissions paid on this revenue total £0.4 million (2011£0.3 million). The amount due from the NLA on 1st April, 2012 was £0.2 million(2011 £nil). Interest bearing loans totalling £0.4 million (3rd April, 2011£0.4 million) are due to Associated Newspapers Limited as at 1st April, 2012.During the period, Landmark Information Group Limited (Landmark) chargedmanagement fees of £0.2 million (2011 £0.2 million) to Point X Limited, ajoint venture, and recharged costs of £50,000 (2011 £0.1 million). During theperiod Point X Limited received royalty income from Landmark of £11,200 (2011£24,000) and as at 1st April, 2012 owed £0.1 million to Landmark (3rd April,2011 £0.1 million).
Transactions with joint ventures and associates
A&N Media Limited (A&N) has a 50.0 % shareholding in Teletext Holdings Ltd.During the period, Teletext Holdings Limited received services totalling £0.1million from A&N, and the net amount due to A&N at 1st April, 2012 was £0.1million. Proceeds of £6.0 million on the sale of Teletext Holdings Limited isdue to A&N at the end of the period.
AN Mauritius Limited held a 26.0 % shareholding in Mail Today. During the period, additional share capital of £1.7 million (2011 £2.1 million) was invested in Mail Today by AN Mauritius Limited.
Associated Newspapers Limited has a 50.0 % shareholding in Artirix Limited(Artirix). At 1st April, 2012 Globrix owed £0.3 million to Artirix (3rd April,2011 £0.8 million). During the period, Artirix received revenues of £0.3million from Globrix (2011 £0.3 million). At 1st April, 2012 Artirix owed £0.1million to various A&N Media companies (3rd April, 2011 £1.4 million).
During the period the Group received a dividend of £0.9 million (2011 £9.5 million) from DMG Radio Investments Limited a joint venture.
Other related party disclosures
At 1st April, 2012, the Group owed £0.3 million (2011 £2.1 million) to thepension schemes which it operates. This amount comprised employees' andemployer's contributions in respect of March 2012 payrolls which were paid tothe pension schemes in April 2012.
22 POST BALANCE SHEET EVENTS
Following 1st April, 2012 the Group's national media segment acquired the entire share capital of Jobrapido Srl.
The completion consideration was €30.0 million (£25.4 million). The Jobrapidomanagement team is incentivised through an earn-out arrangement based onachieving agreed financial and business performance objectives. Jobrapidoachieved revenues of €24.0 million (£20.3 million) and profits of €6.0 million(£5.1 million) during its financial year to 31st December, 2011.The initial accounting for the acquisition of Jobrapido was incomplete at thetime that these interim financial statements were authorised for issue. As aconsequence, the Group has not presented a summary of the provisional fairvalue of assets and liabilities acquired nor the other disclosures required byIFRS 3, Business Combinations. The initial accounting is incomplete as theGroup is in the process of determining the fair value of the assets andliabilities acquired and the fair value of the contingent considerationelement of the earn out arrangement.
In April, the Office of Fair Trading gave clearance for the proposed merger between the Digital Property Group and Zoopla to go ahead and this is expected to complete on 31st May.
In May, the business information segment acquired Xceligent Inc, one of onlytwo companies in the US that provide fully researched property and listinginformation to the commercial real estate community, for consideration of £5.5million. The initial accounting for this acquistion was incomplete at the timethat these interim financial statements were authorised for issue.
XLONRelated Shares:
DMGT.L