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Daily Mail and General Trust plc
Satisfying
the need
to know
Annual Report
2016
OVERVIEW
DMGT is an international
business built on entrepreneurship
and innovation.
DMGT manages a balanced multinational portfolio of entrepreneurial
companies, with total revenues of almost £2 billion, that provide
a diverse range of businesses and consumers with compelling
information, analysis, insight, news and entertainment.
Financial
highlights
Revenue#
Operating margin*#
Adjusted profit before tax*#
Statutory profit before tax†
£1,917m
2015: £1,845m
14%
2015: 16%
£260m
2015: £281m
£247m
2015: £216m
Adjusted earnings
per share*#
56.0p
2015: 59.7p
Dividend per share
22.0p
2015: 21.4p
Net debt §/EBITDA
1.8x
2015: 1.8x
Organic investments
as % of revenues
9%
2015: 7%
International share
of revenues#
53%
2015: 49%
Digital share
of revenues#
51%
2015: 47%
Subscriptions share
of revenues#
33%
2015: 31%
£ million
Statutory profit before tax
Discontinued operations
Exceptional operating charges
Tangible fixed assets impairment
Impairment and amortisation
Profit on sale of assets
Bond redemption premium
Pension finance charge
Exceptional dividend income
Other adjustments
Adjusted profit before tax
For more detailed tables and explanations please refer to pages 35 and 36.
FY 2016
247
–
58
–
107
(138)
–
5
–
(19)
260
FY 2015
Explanation
216
1
20
2
68
(82)
40
7
(3)
12
281
i
ii
iii
iv
v
vi
vii
viii
ix
# From continuing and discontinued operations.
*
Before exceptional items, other gains and losses, impairment of goodwill and intangible assets, pension finance charges, premiums on bond redemptions and
amortisation of intangible assets arising on business combinations; see Consolidated Income Statement on page 96 and the reconciliation in Note 13 to the Accounts.
Statutory profit before tax is for continuing operations only (excluding the disposal of the Evenbase business).
†
◊ Non-UK revenues by destination.
§ See Note 16 for details of Net debt.
02
CHAIRMAN’S
STATEMENT
NEW STRATEGIC PRIORITIES
HAVE BEEN ESTABLISHED TO
DELIVER ON THE GROUP’S
LONG-TERM POTENTIAL.
10
CEO’S
STRATEGY
REVIEW
Inside this
Report
HOW WE
CREATE
VALUE
06
OUR BUSINESS
MODEL
Strategic Report
Chairman’s Statement
DMGT at a Glance
Our Business Model
Market Overview
CEO’s Strategy Review
Key Performance Indicators
Operating Business Review
RMS
dmg information
dmg events
Euromoney Institutional Investor
dmg media
Principal Risks
Financial Review
Our People and Our Communities
08
ADAPTING TO
CONTINUOUS
CHANGE
Governance
Board of Directors
Chairman’s Statement on Governance
Corporate Governance
Remuneration Report
Statutory Information
Annual General Meeting 2017: Resolutions
Independent Auditor’s Report
Financial Statements
Shareholder Information
42
44
46
60
84
88
89
96
195
02
04
06
08
10
14
16
16
18
21
23
25
28
32
38
01
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Chairman
CHAIRMAN’S STATEMENT
DRIVING LONG-TERM GROWTH
As Chairman of the Board, I am pleased
to report that DMGT has once again
demonstrated the quality and depth of a
business portfolio that spans world-class
journalism, both print and digital content,
specialist information and B2B operations.
Our Group has successfully navigated a volatile marketplace
in the sectors where it operates, particularly in print advertising
and property information, to deliver solid financial results.
DMGT’s belief in supporting entrepreneurial and creative
leadership in editorial and data services is well on the way
to delivering long-term value creation and replacing our
reliance on print media. Our performance is a testament to the
appeal of our products and services, from the Daily Mail and
MailOnline to reinsurance modelling, events management,
business data and financial information.
The journey continues to pose challenges and opportunities.
We relish these alongside our successes for making us a
vibrant and dynamic company to work for.
I would like to thank our entire workforce and management
team for contributing to a resilient performance in FY 2016,
a year in which we delivered an operating margin of 14%.
Our team has been led with distinction by Martin Morgan,
who this year retired as CEO after 27 years at DMGT. Martin
deserves credit for building a diverse business portfolio that
has encouraged entrepreneurialism, stimulated growth and
built international scale in both our consumer media and
B2B operations. I would like to thank Martin for his immense
contribution to the success of DMGT.
Martin has been succeeded by Paul Zwillenberg, who was
appointed CEO from June 2016. Paul, who has joined DMGT
from Boston Consulting Group, is recognised as one of the
most talented strategic leaders in the global media and
communications industry. As such, I am confident he will lead
DMGT to further success as we adapt to a fast changing
business and digital environment.
I would also like to thank Stephen Daintith for his contribution
as DMGT Finance Director over the past five years. Stephen’s
Financial Review (pages 32 to 37) will be his last before he
departs the Group to take up the same role at Rolls-Royce.
We wish Stephen every success there, and look forward to
continuing to work with him until a successor is named.
Together with Martin and Stephen, and latterly working
closely with Paul, I have continued to focus on delivering
our core strategy at DMGT. This strategy is founded on creating
shareholder value from our increasingly international portfolio
of must-have information, business services and event
providers in reinsurance, property, energy, education and
finance, whilst also championing the first-class popular
journalism represented by the Mail titles – both in print
and online.
Our financial discipline, tactical organic investment and
portfolio management has delivered satisfactory returns in the
past year. We generated healthy cash flow and maintained
net debt below 2.0x EBITDA. The Board is therefore pleased to
recommend a 3% increase in the final dividend per share for
FY 2016, giving a total dividend for the year of 22.0 pence per
share, an increase of 3%.
Among our B2B assets, RMS continues to deliver market-
leading catastrophe models. The investment in the RMS(one)
platform remains essential to providing our customers in the
insurance industry with superior modelling and analytics.
At dmg information and dmg events, we have continued
to focus on organic growth across their respective portfolios.
Over the past year there has been further investment in new
products and value add services that combine platform
solutions with analytical capability.
We have also seen encouraging early signs of Euromoney’s
revised strategy following the appointment of its new CEO,
Andrew Rashbass. The Board is confident in the delivery
of this strategy, which focuses on long-term global growth
and a framework for clearer capital allocation.
THE STRENGTH OF
DMGT’S MARKET-LEADING
BUSINESSES HAS ENABLED
US TO NAVIGATE THROUGH
CHALLENGING MARKET
CONDITIONS AND
CREATE OPPORTUNITIES
FOR GROWTH.
The Viscount Rothermere
Chairman
Daily Mail and General Trust plc
02
Annual Report 2016
STRATEGIC REPORT Chairman’s Statement
As announced on 8 December 2016, subject to Euromoney
shareholder approval, the DMGT Board has decided to reduce
its holding in Euromoney to c. 49 per cent. This sell down will
allow Euromoney financial flexibility to pursue its strategy,
thereby realising additional value for DMGT notwithstanding
its smaller stake. Further details can be found at www.dmgt.com
or from the Company Secretary’s office (details on page 195).
In consumer media, we have continued to provide quality,
popular journalism through the Mail titles – which remain
powerful advertising platforms – and we continue to attract
global audiences with our compelling MailOnline platform.
Alongside the management of these businesses, our Board
continued to manage the portfolio actively, including the
sale of our stakes in LocalWorld and Wowcher. We also made
several acquisitions and early stage investments, thereby
strengthening our B2B information capabilities.
DMGT is continuing to expand internationally. Over the past
year, we have expanded in North America through our B2B
information businesses with investments in the property and
energy sectors. In dmg events, we have secured a strong
growth trajectory in Africa with new events launching in 2017.
At the Group level, Paul Zwillenberg has implemented
reorganisation initiatives, further detailed in the CEO’s
Strategy Review (see page 10), for which we have incurred
an exceptional operating charge of £37 million in FY 2016.
With my support, Paul has formed an Executive Committee
(see page 51) which brings together the Group’s key
operational heads in a weekly decision-making forum.
The Governance Report (pages 44 to 59) sets out the
framework for operating performance and shareholder value
that is central to the growth of DMGT. The implementation of
our Group strategy is overseen by the Board, which maintains
the high standards of governance our shareholders expect.
I would like to thank our Non-Executive Directors for their
contribution over the past year with the Group benefiting
from their skills and experience at both an individual business
and Board level.
We continue to strengthen our boardroom capabilities.
I am pleased to announce the appointment of Suresh Kavan,
CEO of dmg information, to the Board. I would also like to
thank David Dutton as he retires from his 45 years of service to
DMGT both on the Board and in other roles across the Group.
In addition John Hemingway and Francisco Balsemão will not
seek re-election at the Annual General Meeting in February
2017. I expand on their contributions to DMGT and the Board
in the Corporate Governance section on page 44.
Throughout its history, DMGT has relied upon the talent,
experience and skills of its employees. That is why we invest
significant time and resources to develop our leaders of the
future and to encourage our high-potential talent. This year
we ran the first Early Career Development Workshop and
I was pleased to interact with all the individuals who took part.
Our People and Our Communities section, page 38
At the senior management level, remuneration and incentives
are aligned with performance. These value creation metrics
and related payments are set out in the Remuneration Report
on pages 60 to 83.
The Board and I remain confident in DMGT’s long-term growth
prospects. DMGT will continue to use its financial strength and
diversified portfolio to manage short-term volatility and invest
in the best ideas for the long term. We have reached a turning
point for the Group, as we adapt to structural change in the
news-media industry and pursue growth opportunities in B2B
operations. Our focus in the coming year will remain to ensure
DMGT can both address market challenges and seize growth
opportunities in every part of the Group.
The Viscount Rothermere
Chairman
Revenue by business (%) 2016
Dividend per share
The Board’s policy is to maintain dividend growth in real terms
over the long term and for this to be supported by earnings
per share growth.
37
11
26
5
21
RMS
dmg information
dmg events
Euromoney
dmg media
25
20
15
10
5
0
4.9p
1996
22.0p
7.1p
2016
Dividend
Inflation
Daily Mail and General Trust plc
03
Annual Report 2016
STRATEGIC REPORT GAAG
DMGT AT A GLANCE
WHO WE ARE
DMGT operates in over 30 countries.
We are an international group, well
positioned for long-term growth.
B2B
RMS
Produces risk models, software
applications, and analytical data
services used by the global risk
and insurance industry to quantify
and manage catastrophic risks.
DMG
INFORMATION
An international provider of B2B
information and analysis for
the property, education and
energy sectors.
DMG EVENTS
An international B2B exhibitions and
conferences organiser, focusing on
the energy, construction, interiors,
and hotel and hospitality sectors.
Revenues
£205m
2015: £187m
Operating margin*
18%
2015: 14%
Revenues
£498m
2015: £430m
Operating margin*
15%
2015: 17%
Revenues
£105m
2015: £95m
Operating margin*
28%
2015: 21%
Employees
1,110
2015: 1,094
Operating profit*
£36m
2015: £27m
Employees
3,763
2015: 3,421
Operating profit*
£77m
2015: £75m
Employees
344
2015: 356
Operating profit*
£29m
2015: £20m
More information on page 16
More information on page 18
More information on page 21
* These are adjusted results; see pages 35 and 36 for more detailed tables and explanations.
04
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc CONSUMER
DMG MEDIA
An international publisher with a
print and digital portfolio. Assets
include two of the UK’s most read
paid-for newspapers, one of
the world’s most popular free
newspapers and the world’s
most visited English language
newspaper website.
JOINT VENTURES
AND ASSOCIATES
In recent years it has been DMGT’s
approach to retain investments
in certain ventures. The largest
is Zoopla Property Group Plc.
EUROMONEY
INSTITUTIONAL
INVESTOR
An international B2B information
group focused on the global asset
management, capital markets and
commodities sectors. It provides
an extensive portfolio of digital
information, research, pricing and
data services as well as running
events all over the world.
Revenues
£403m
2015: £403m
Operating margin*
25%
2015: 26%
Revenues
£706m
2015: £731m
Operating margin*
DMGT’s share of operating profits*
11%
2015: 13%
£23m
2015: £33m
Employees
2,244
2015: 2,297
Operating profit*
£100m
2015: £107m
Employees
2,704
2015: 2,927
Operating profit*
£77m
2015: £96m
More information on page 23
More information on page 25
More information on page 33
05
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Chairman
OUR BUSINESS MODEL
HOW WE CREATE VALUE
1
WE SUPPLY
HIGH-VALUE
INFORMATION
2
WHICH WE MONETISE
THROUGH FIVE
REVENUE MODELS
DMGT produces high-value
information for the insurance,
property, energy, education
and finance sectors. We
operate highly successful
events and deliver news and
entertainment to a growing,
global consumer audience.
DMGT is diversified by revenue,
geography and business type,
which enhances our resilience
as a Group.
Subscription
Our B2B businesses have a strong subscription
revenue component with high renewal
rates demonstrating the strength of our
client relationships.
Advertising
Growth in our digital advertising revenues
continues to help offset weakness in print
advertising. Enhanced user engagement
drives advertiser interest in increasingly
sophisticated advertising formats.
Circulation
Circulation revenues are generated
from sales of the Daily Mail and The Mail
on Sunday newspapers, which continue
to show a market-leading position in
a declining market.
Events attendance and sponsorship
Exhibitor fees, delegate fees and sponsorship
revenues are earned from the growing
portfolio of B2B shows run by dmg events
and from Euromoney’s conferences,
seminars and training activities.
Transactions
dmg information’s revenues from its property
information business are influenced by
property transaction volumes; these revenues
are quasi-subscription in nature due to their
regularity and frequency of purchase.
06
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Our Business Model
3
SUPPORTED BY A
COMPETITIVE ADVANTAGE
ARISING FROM OUR FIVE
CORE STRENGTHS
4
ENABLING US TO
CREATE VALUE FOR ALL
OF OUR STAKEHOLDERS
Entrepreneurial heart
Fosters constant innovation, growth
and talent development across our
international businesses.
Active portfolio
management
Reflects our investment philosophy
and responds to market
opportunities.
Devolved and
diversified philosophy
Gives our businesses freedom within
a framework and ensures that they
remain close to their customers.
Family ownership
Enables the Company to
continually adapt and innovate,
allowing it to take entrepreneurial
risks and make investment decisions
for the long term.
Trusted expertise
Provides customers with the vital
news and entertainment, analysis,
data and information they need
in the form that they want.
For shareholders
We have a good track record of generating
a positive return on investment with strong cash flow.
Our active portfolio management drives sustainable
long-term earnings and dividend growth.
Total shareholder return FY 2011 – FY 2016
19% CAGR
For employees
We nurture talent, making it a priority to identify,
develop and cultivate passionate experts within
our businesses and through acquisitions.
Employees worldwide
10,241
For customers
Our deep understanding of customer needs
enables us to constantly innovate and create
content, products and solutions that provide our
businesses with a competitive edge and make
us even more relevant to our customers.
Organic investment as a percentage
of revenues FY 2016
9%
For our communities
DMGT businesses have developed strategic
partnerships with a number of
charitable organisations.
Amount donated to charity FY 2016
£1.3m
07
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Chairman
MARKET OVERVIEW
ADAPTING TO CONTINUOUS CHANGE
DMGT comprises a portfolio
of businesses working across
diverse marketplaces. While
each has its own individual
characteristics, some share
common features and are
exposed to similar trends.
The characteristics and commonalities
found across all of our marketplaces
can be summarised as:
• fast paced and frequently changing;
• technology driven, with constant
innovation;
• customer-centric;
• content and information driven; and
• international.
Our businesses are constantly looking
towards the future and identifying and
managing current and future trends.
The most significant of these are
identified here. More detail on the
trends affecting our individual
businesses can be found in the Principal
Risks section on pages 28 to 31.
INCREASED
VOLATILITY
POLITICAL
UNCERTAINTY
Context to DMGT
• In DMGT’s key territories voters
have delivered unexpected
political outcomes over the
last 12 months.
Market trend
• There is long-term geopolitcal
uncertainty associated with the
outcomes of the unexpected UK
vote to leave the European Union
and the US presidential election.
• Throughout the rest of the world,
political turmoil has also been
on the rise.
Our approach
• As the owner of some of the
leading B2B and media assets
in the world, DMGT seeks to
provide information and
analysis regarding the impact
of these changes.
Context to DMGT
• As a provider of proprietary,
hard-to-obtain, real-time
information, DMGT benefits from
growing uncertainty in the world
as its customers require ever
more sophisticated data before
making decisions.
Market trend
• Global economic uncertainty,
political tensions and supply/
demand disruptions continue
unabated in what is becoming
a new normal level of market
volatility.
• Complex forces that affected
global activity in 2015 are still
shaping the economic outlook.
These include medium- and
long-term trends such as
population ageing and
declining potential growth;
global shocks, such as low oil
prices; and many country- or
region-specific factors, such as
crisis legacies and exchange
rate swings triggered by actual
and expected changes in
monetary policies.
• As a diversified portfolio,
DMGT’s multiple revenue
streams can provide a balancing
effect in times of volatility.
So where one sector might
be underperforming another
might be overperforming, thus
allowing the Group overall
to sustain its performance.
Our approach
• In a world of constant change,
DMGT is continuously investing in
new ways of providing not only
more accurate and timely data
and content to our customers,
but also requires the insights
to help them navigate these
uncertain times.
For more information see CEO’s Strategy
Review on page 10 and Operating Business
Review on pages 16 to 27
08
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Market Overview
CONTINUOUS
INNOVATION
RISE OF THE
MACHINES
A COMPETITIVE
TALENT POOL
Context to DMGT
• Technological change and the
speed at which customers are
adopting new technology in
our key markets are accelerating
at a pace never seen before.
Market trend
• As an entrepreneurial Group
focused on digital growth,
DMGT keeps one step ahead by
continually fostering innovation
and embracing new ideas.
This is best reflected by DMGT’s
expectation of investing at
least 5% of revenue in organic
initiatives each year.
• The pace at which major
industries are changing is
irrevocably and rapidly erasing
and replacing more traditional
business models. These changes
have been enabled by
technology and are impacting
all aspects of our lives, from the
financial sector, where cash and
cards may soon become relics,
to insurance, media, education,
property and energy.
Our approach
• As a company with a family
heritage which encourages
long-term thinking, DMGT can
invest for the future. Throughout
DMGT’s history, innovation
and diversification have been
essential elements of how
we do business, and given us
a wealth of experience to
draw on in order to adapt
to market changes.
• DMGT’s sector approach
enables us to remain close to
customers through our portfolio
of businesses, gaining greater
insight and understanding into
exactly what our customers
value, engage with, and,
ultimately, want to buy.
Context to DMGT
• An ever growing number
of machines surrounding us
are producing, using, and
communicating with virtually
immeasurable amounts of
information. Machine learning
is what makes machines appear
“intelligent” by enabling them
to understand concepts in their
environment and also to learn.
Through machine learning, a smart
machine can change its future
behaviour. These developments
create opportunities for DMGT
and its businesses.
Market trend
• Machine learning gives rise to
a spectrum of smart machine
implementations – including
virtual personal assistants (VPAs)
and smart advisers – that act
in an autonomous (or at least
semi-autonomous) manner.
This feeds into the ambient
user experience in which an
autonomous agent becomes
the main user interface. Instead
of interacting with menus, forms
and buttons on a smartphone,
the user speaks to an app, which
is really an intelligent agent.
Our approach
• DMGT’s businesses help their
customers to identify which
information provides strategic
value, access data from
different sources and explore
how algorithms leverage the
Internet of Everything to fuel new
business designs. This area is
evolving quickly, and DMGT’s
businesses are leading the
way in areas such as sensing
technology, where Genscape
uses a multitude of sensors and
smart algorithms to monitor the
world’s commodity markets.
Context to DMGT
• The supply of talent is shifting at a
time when demand is increasing.
Mature economies are not able
to find the talent they need,
just as emerging markets are
increasing their demand for
highly educated workers.
Market trend
• Demand for those qualified to
take advantage of big data and
analytics is increasing, creating
a war for talent. The concept of
a job for life is being challenged.
Skills learned now will become
out of date in a few years’ time,
so workers need continuous
education. DMGT understands
the need to constantly redevelop
its people.
Our approach
• As an organisation,
DMGT supports training and
development led by its businesses
for our people. We also provide
Group-wide programmes such
as our Product Management
Workshops and Leadership
Development Programmes.
• As a successful global employer
able to offer a wide range of
opportunities, DMGT is well
positioned to attract and retain
talent. DMGT champions its
entrepreneurial culture in order
to attract and retain recruits,
particularly those starting
their careers.
09
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc CEO
CEO’S STRATEGY REVIEW
FIRM FOCUS ON DELIVERY
DMGT’s results reflect the ongoing resilience
of the portfolio through varying market
conditions. Revenues were supported by
good organic growth in many of our B2B
and consumer digital operations. This was
balanced by challenging market conditions
for print advertising, property information,
energy and financial sectors.
During this time our focus has been on prudent financial
and strategic management of DMGT’s diversified portfolio.
We have continued to invest in long-term growth
opportunities across a variety of organic product initiatives
whilst making small bolt-on acquisitions, maintaining a
strong balance sheet and delivering real dividend growth
for our shareholders.
I joined the Company as CEO in June 2016. It has become
clear to me that DMGT is at an important juncture in its long
history. The significant organic and M&A investments made
across the Group over the past few years have started to
bear fruit. Alongside this we are carefully managing the UK
newspaper businesses as they continued to outperform in
a challenging market.
Realising the full revenue, profit and cash flow potential within
our existing portfolio is of paramount importance. Following
a strategic review, three key priorities have been identified:
Improving operational execution
Increasing portfolio focus
Delivering on
our potential
Enhancing financial flexibility
Improving operational execution: the first priority will include
enhanced performance management, instilling best
practice through ‘signature moves’ and creating a faster,
fitter and more agile organisation to improve efficiencies,
leverage our scale and enable faster decision-making.
Given the challenging market conditions facing certain
businesses within the portfolio, reorganisation initiatives
have been implemented to increase their resilience.
Many of these initiatives have been made under a project
known as Project Simplicity (Simplicity).
Increasing portfolio focus: the second priority is to increase
the focus within the portfolio over time. There are benefits
to spreading risk and DMGT will continue to have a diverse
and balanced portfolio. There are advantages, however,
to operating in fewer sectors, notably in respect of resource
allocation and the implications for market share. We are
undertaking a rigorous evaluation of all businesses in order
to allocate resources according to individual business growth
characteristics and funding requirements. The evaluation will
also help us to set clear objectives and targets for individual
businesses and management teams.
Enhancing financial flexibility: the final priority is to
enhance our financial flexibility in order to pursue a range
of capital allocation opportunities. Cash flow is expected
to progressively improve as our operational execution
initiatives are implemented and returns on our organic
investments are realised. In addition, our actions to increase
the focus of the portfolio are likely to improve our financial
flexibility. These actions will allow DMGT to invest in its
market-leading positions, both organically and by acquisition,
while also delivering increased shareholder returns.
I feel confident that long-term shareholder value can
be created, building from our strong brands and leading
market positions to deliver on DMGT’s potential.
DMGT IS BENEFITING FROM
ITS DIVERSE PORTFOLIO
OF STRONG BRANDS
AND BUSINESSES. NEW
STRATEGIC PRIORITIES
HAVE BEEN ESTABLISHED TO
DELIVER ON THE GROUP’S
LONG-TERM POTENTIAL.
Paul Zwillenberg
CEO
Daily Mail and General Trust plc
10
Annual Report 2016
STRATEGIC REPORT CEO’s Strategy Review
Financial performance
Group revenues were stable on an underlying basis and
operating profit declined by an underlying 11%. The Group’s
operating profit margin was 14%. The diversity of DMGT’s
portfolio by revenue stream, sector and geography has
helped protect revenues and profits on a Group basis.
Nevertheless, underlying operating profit growth at RMS
and dmg information was not enough to offset declines
at dmg media and Euromoney where increased digital
investment and challenging financial and commodity
market conditions significantly impacted our performance.
The Group’s reported results have been positively impacted
by the stronger US dollar versus the British pound over the
year, partly offset by the disposals of Local World and
Wowcher in October 2016. Adjusted profit before tax and
earnings per share were down 7% and 6% respectively
and dividend per share was up 3%.
Year-end net debt of £679 million was lower than in FY 2015,
despite £58 million of revaluation as a result of the stronger US
dollar, reflecting net operating cash inflow and proceeds
from disposals being greater than acquisition cash outflows.
The net debt to EBITDA ratio of 1.8 times was below the
Group’s preferred upper limit of around 2.0 times.
In the Financial Review (pages 32 to 37), Stephen Daintith,
Finance Director, describes our financial performance in
further detail. Key Performance Indicators (KPIs) are used
to measure DMGT’s performance at a Group level and
there is an update on how these have progressed during the
reporting period on pages 14 and 15 of the Strategic Report.
2016 strategic priorities
In the 2016 financial year, the Group pursued its five strategic
priorities that had been in place for a number of years.
These were:
Fostering innovation to deliver organic growth
DMGT develops compelling content that is relevant and
trusted. Product is at the heart of what DMGT does every day.
One of the common threads that links the businesses within
DMGT is the development and provision of proprietary data
and information. It is evident in our newspaper journalism
through to complex algorithms used by our B2B information
companies. The strategy to build out our data analytics
capabilities, particularly focusing on artificial intelligence
and machine learning, enables our businesses to add more
value to their proprietary data.
We have continued to commit significant amounts of capital
to organic investment programmes across the Group,
particularly within RMS, dmg information and MailOnline.
The level of organic investment is one of our KPIs, and as
a percentage of total revenues was 9% in FY 2016 (7% 2015).
Over the last four years, organic investment has totalled
more than £500 million.
To support the process of successful innovation and
technology leadership, we ran Product Management
Workshops across the Group as well as a Technology Summit.
At a business level, there have been a number of major
ongoing organic investment programmes. Please see the
Operating Business Review (pages 16 to 27) for further detail.
CAPITAL ALLOCATION
One of our new strategic priorities is to enhance
financial flexibility in order to pursue a range of
capital allocation opportunities. This will enable
us to continue investing in our market-leading
positions and build our financial capacity
while also delivering real dividend growth
for shareholders.
INVESTMENT PREFERENCES
We are undertaking a rigorous evaluation
of all businesses in order to allocate resources
according to individual business growth
characteristics and funding requirements.
Our investment criteria are as follows:
Investment criteria
What we consider
Attractive and value
creating
Expected future revenue, profit
and cash flow to deliver value
Scalability
End market size, growth rate
and competitive position
Long-term competitive
advantage
Value of proprietary data
and services
Affordability
Achievability
Investment to achieve
full potential
Ability and resources of
current business to execute
11
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc CEO’s Strategy Review
Maintaining rigorous and active portfolio management
Through active portfolio management covering both
acquisitions and disposals, our overall aim is to create a
balanced and diversified revenue stream by market sector
and geography and enhance the long-term growth profile
of the Group.
DMGT further reduced the Group’s exposure to print
advertising, through the sale of its stake in Local World. We
also realised value in high-growth digital operations, through
the partial sale of Wowcher. Euromoney disposed of Gulf
Publishing and Petroleum Economist, in line with its renewed
focus on streamlining its portfolio of assets under new Chief
Executive Andrew Rashbass.
As announced on 8 December 2016, subject to Euromoney
shareholder approval, DMGT has also decided to reduce its
holding in Euromoney to c. 49 per cent. This transaction will
allow Euromoney to be able to pursue its revised strategy to
accelerate growth, thereby realising additional value for
DMGT notwithstanding its smaller stake. Further details can
be found at www.dmgt.com or from the Company Secretary’s
office (details on page 195).
Our acquisition strategy in the year focused on small bolt-on
companies and early-stage investments to complement
and strengthen existing businesses, particularly within
dmg information. dmg media sought to consolidate its
MailOnline position overseas by acquiring the 50% of
Daily Mail Australia that it did not already own.
Driving international growth
Our international revenues now account for 53% of total
revenues with 33% coming from North America and 20% from
the Rest of the World. Revenues from outside the UK grew at
an underlying rate of 4%.
North America generated 40% of our adjusted operating
profit in FY 2016, reflecting our strategic decision to invest
both organically and by acquisition in this geographic area
over the past few years.
Using technology to enable growth
Technology is an increasingly important foundation for our
businesses, and we have continued to invest in and develop
expertise in this area. Technology is particularly significant for
our B2B companies. We continue to focus on ensuring that
our companies offer the full suite of digital products, workflow
solutions and analytical tools that our clients now expect.
A good example is RMS, which is in the early stage of its
multi-year transition towards a cloud delivery model. In July
2016, RMS released Exposure Manager on its RMS(one) SaaS
platform. Additional models and applications are scheduled
for availability in the coming year.
One way in which we measure our ability to harness
technology has been through monitoring the proportion of
our revenues from digital sources. In FY 2016, we have seen a
further increase in the digital share of Group revenue to 51%.
The proportion of digital revenues is expected to continue
to grow given both B2B and consumer trends.
Attracting and developing entrepreneurial talent
In order to sustain DMGT’s distinctive culture, one where
innovation thrives and individuals flourish, we have remained
focused on developing a wide variety of practices to support
and develop our people. We have continued to invest in
strengthening the capabilities of our leaders as the scale of
their businesses change. We are placing greater emphasis on
developing those employees at an early stage in their career,
in order to identify and build the leaders of the future. We are
also discovering and implementing new ways of nurturing
talent and skills between businesses, harnessing benefits from
our diverse portfolio.
2016 STRATEGIC PRIORITIES
Fostering innovation to
deliver organic growth
Maintaining rigorous and active
portfolio management
Driving international
growth
Using technology
to enable growth
Attracting and developing
entrepreneurial talent
12
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc CEO’s Strategy Review
The Board remains confident that DMGT has good long-term
prospects and that its diverse portfolio of businesses provides a
sustainable basis for growth over the business cycle. Following
a period of significant investment in a variety of projects, we
expect the benefit of that activity to start flowing through,
supporting revenues, cash flow and profits in the medium-
term. We will continue to build on the passion, purpose,
quality of content and entrepreneurialism that is so distinctive
at DMGT, attributes which will help create long-term
shareholder value.
Paul Zwillenberg
CEO
The Leadership Development Programme continues to be
an important cross-Group event, allowing the sharing of
insights in critical leadership areas such as market dynamics,
competitive landscapes and advances in technology. This
year, 75 senior leaders attended the Programme, which was
delivered in partnership with the University of Cambridge.
DMGT established the Early Career Development Workshop
in 2016, covering multiple disciplines from across the Group.
The Workshop offers carefully selected attendees the
opportunity to share ideas and foster business opportunities
with peers.
It is important to adapt our remuneration arrangements
to reflect fast-moving market conditions and the Group’s
long-term investment horizon. Details of our approach to
training, management and remuneration are set out in
Our People and Our Communities (pages 38 to 41) and
in the Remuneration Report (pages 60 to 83).
Outlook
We have entered the new financial year with our businesses
performing in line with our expectations. Whilst some of our B2B
businesses continue to face challenging market conditions,
we still expect to deliver underlying revenue growth for the B2B
sector as a whole. On the consumer side, revenue progress will
be largely dependent on the print advertising environment,
balanced against further growth in digital areas, although a
continued focus on cost efficiencies should provide margin
stability for dmg media.
STRATEGIC REPORT
Read more about our performance during the year
and the markets in which we operate at:
Market Overview
Information on key trends affecting DMGT
Financial Review
DMGT’s financial performance for the year
Operating Business Reviews
Further information on each of our operating businesses
16
18
21
23
25
RMS
dmg information
dmg events
Euromoney institutional Investor
dmg media
08
32
13
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc KEY PERFORMANCE INDICATORS
MEASURING OUR PERFORMANCE
DMGT has pursued a consistent strategy of growing its B2B
companies, developing its consumer businesses and diversifying
internationally into high-growth markets.
The Board seeks to deliver sustained long-term growth for DMGT’s shareholders
and seeks to enable that growth by attracting and developing outstanding talent,
fostering innovation and using technology. Due to DMGT holding a changing
portfolio of different companies, many Key Performance Indicators (KPIs) that
are targeted by individual businesses, such as client numbers, revenue per client
and employee productivity, are not appropriate at a consolidated Group level.
The KPIs shown below, however, are considered to be good indicators of the
Group’s overall progress against its strategic priorities.
Description
Relevance
Performance
Narrative
Strategic priority
Underlying
revenue
growth^
Underlying revenue
growth compares
revenues on a
like-for-like basis and is
an important indicator
of the health and
trajectory of the
individual businesses
and the Group as
a whole.
Group
adjusted
profit
before tax
DMGT actively
manages its portfolio
and allocates capital
to increase adjusted
profit before tax over
the long term.
Net debt §/
EBITDA ratio
Management aims
to maintain a strong
balance sheet and
retain DMGT’s
investment-grade status
and consequently
targets the year-end
net debt/EBITDA ratio
to be no more than 2.0.
Adjusted
earnings
per share
Management seeks
sustained long-term
growth in adjusted
earnings per share to
maximise overall returns
for DMGT’s shareholders.
2016
+0%
Underlying revenue growth
2015
2014
2013
2012
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
2016
2015
2014
2013
2012
+1%
+2%
+3%
+0%
2015: +1%
+5%
The stable underlying
revenue performance
reflects the resilience of
the B2B and consumer
businesses despite
challenging market
conditions.
£260m
£281m
£291m
£267m
£247m
1.8x
1.8x
1.5x
1.6x
1.7x
Group adjusted profit
before tax#*
£260m
2015: £281m
Group adjusted profit
before tax declined by 7%,
reflecting the disposal of
Local World and the impact
of the challenging UK print
advertising market on
dmg media.
Net debt/EBITDA
1.8x
2015: 1.8x
Through strong operational
cash flows, continued
portfolio management
and tight control of working
capital, the net debt/EBITDA
ratio remains below our
preferred upper limit of 2.0.
56.0p
59.7p
55.7p
49.9p
47.4p
Adjusted earnings per share#*
56.0p
2015: 59.7p
Adjusted earnings per share
declined by 6%, reflecting the
decline in adjusted profits
after tax, partly offset by the
effect of share buy-back
programmes.
14
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Key Performance Indicators
2016 Strategic Priorities
Fostering innovation
to deliver organic
growth
Maintaining rigorous
and active portfolio
management
Driving international
growth
Using technology
to enable growth
Attracting and
developing
entrepreneurial talent
Description
Relevance
Performance
Narrative
Strategic priority
Dividend
per share
The Board’s policy is
to maintain dividend
growth in real terms
and, in the medium-
term, to distribute
about one-third
of the Group’s
adjusted earnings.
International
share of
revenues
DMGT’s long-term
strategic objective is to
develop into a global
growth company.
This KPI measures
DMGT’s success in
internationalising
the business.
25
20
15
10
5
0
4.9p
1996
Dividend
Inflation
2016
2015
2014
2013
33%
30%
26%
25%
North America
Rest of the World
22.0p
7.1p
2016
Dividend per share
22.0p
2015: 21.4p
We have proposed a full-year
dividend of 22.0 pence,
up by 3% from last year,
continuing our strong track
record of dividend growth
and delivering an 8%
cumulative annual growth
rate over the past 20 years.
20%
53%
International share
of revenues#
19%
21%
23%
49%
47%
48%
53%
2015: 49%
The international share
of revenues reflects the
changing composition of
the business as well as the
strengthening of the US dollar
relative to the British pound.
Organic
investment
as a
percentage
of revenues
2016
2015
2014
2013
Investing back into the
businesses to support
product innovation
and effective use of
technology is key to
delivering DMGT’s
sustained long-term
growth. The Board
expects at least 5% to
be used for organic
investment.
7%
7%
7%
9%
Organic investment as a %
of revenues
9%
2015: 7%
DMGT continued to
reinvest in the businesses
during the year, notably
in dmg information,
RMS and MailOnline.
^ Underlying revenue growth is on a like-for-like basis, adjusted for constant exchange rates, disposals, non-annual events occurring in the current and prior year and
acquisitions; see pages 36 and 37. For dmg information, underlying growth includes the year-on-year organic growth from acquisitions, excludes disposals and includes
revenues from one-off sales of IP assets, consistent with prior years. For dmg events, the comparisons are between events held in the year and the same events held the
previous time. For Euromoney, acquisitions and disposals are excluded and a biennial event that took place during the current year is also excluded. For dmg media,
the underlying comparison excludes disposals, Wowcher and Evenbase, and includes the year-on-year organic growth from acquisitions. dmg media’s underlying
growth rate also excludes the benefit of an additional 53rd week from the FY 2016 results. Underlying revenues only include the profit but not the gross-up, equivalent to
the cost of sales, from low-margin newsprint resale activities.
§ See Note 16 for details of net debt.
# From continuing and discontinued operations.
*
Before exceptional items, other gains and losses, impairment of goodwill and intangible assets, pension finance charges, premiums on bond redemptions and
amortisation of intangible assets arising on business combinations.
15
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc RMS
OPERATING BUSINESS REVIEW
RMS has continued to strengthen its modelling capabilities
and develop the RMS(one) platform to deliver innovative risk
management solutions to the insurance industry. New areas
of risk modelling as well as geographic expansion underpin
RMS’s long-term growth opportunities.
RMS is focused on execution and investment for organic
growth, in both its core modelling business and in the
development of RMS(one), a new risk modelling platform
for the insurance industry. RMS has delivered its broadest
ever range of modelling solutions in FY 2016, deepening its
coverage of Global Flood modelling and expanding into
new lines of risk with its Cyber and Global Marine Cargo
models. The release of three High-Definition (HD) models
alongside the first RMS(one) application, Exposure Manager,
have also been key milestones for RMS in FY 2016.
Business model
RMS offers its models, data, services and software to insurers,
brokers and reinsurers. Its solutions are increasingly in
demand from capital market entrants into the risk
and insurance market.
Revenues are derived mainly from annual subscriptions.
RMS also offers a variety of analytical, managed and hosted
services, often to augment its customers’ licensing of its models
and data products.
Performance highlights
RMS produced underlying revenue growth of 1%. Reported
revenues were up 10% at £205 million, reflecting the benefit
of the stronger US dollar versus the British pound. The business
achieved this solid revenue performance, in line with
expectations, despite the continuing adverse impact of
some client consolidation. There was good demand for
RMS’s core subscription services, with renewal rates remaining
above 90%.
Operating profit was up an underlying 14% at £36 million
with an operating margin of 18%. There was a reduction in
the capitalisation of RMS(one) development costs, but this was
more than offset by cost savings elsewhere, notably in respect
of employment costs. RMS continued to invest strongly in its
modelling business to underpin its long-term growth trajectory.
Strategic priorities
As the risk and insurance industry consolidates, RMS’s existing
and potential customers are increasingly competing on data,
analytics, systems and technology as fundamental drivers
of advantage in the market.
Industry participants are looking for opportunities not simply
to manage the risks they underwrite today, but to increase
their relevance by using models and data to inform their
own insurance and insurance-linked product development
and create new financial solutions for a riskier world.
RMS aims to innovate, refine and deliver improvements in
data and analytics so that clients can implement better
informed and higher quality decision-making processes.
RMS is modelling new classes of risk, such as cyber risk, as
well as researching and developing analysis of those risks
which had been previously unmodelled, such as marine
cargo risk.
RMS’s strategy to meet customer demand entails investment
in its core modelling business as well as the execution and
delivery of its risk modelling platform, RMS(one).
Fostering innovation to deliver organic growth
RMS continued to innovate in the risk modelling market and
delivered its broadest range of modelling solutions in FY 2016.
RMS has incorporated new science into many of its models,
with pioneering new methodologies to solve complex
market problems such as global flood risk (see the case study
on page 17 for further detail).
RMS released version 16.0 of its RiskLink catastrophe modelling
platform in June 2016. This included updates to the RMS Europe
Windstorm Model and the company’s terrorism modelling
suite, as well as the new Marine Cargo Model.
Cyber insurance is an important new area of coverage in the
risk modelling industry. In February 2016, RMS launched the
industry’s first data standard for cyber exposure as part of
a new suite of cyber risk management tools. This standard
provides a framework for the industry to capture and report
on all cyber exposure and will facilitate risk transfer within
the market.
RMS IS FOCUSED ON EXECUTION
AND INVESTMENT FOR ORGANIC
GROWTH, IN BOTH ITS CORE
MODELLING BUSINESS AND IN THE
DEVELOPMENT OF RMS(ONE), A
NEW RISK MODELLING PLATFORM
FOR THE INSURANCE INDUSTRY.
Hemant Shah
Co-Founder
and CEO
16
Business review
Revenue
Operating profit*
Operating margin*
2016
£m
205
36
18%
2015
£m
187
27
14%
Movement
%
+10%
+36%
Underlying^
%
+1%
+14%
Adjusted operating profit and operating margin; see pages 35 and 36 for details.
*
^ Underlying growth rates give a like-for-like comparison; see pages 36 and 37
for details.
Key developments
• RMS(one) Exposure Manager application released to clients
in August 2016.
• RMS is on track for further staged releases of applications of
RMS(one) in FY 2017.
• Release of RiskLink 16.0 which delivered new US flood hazard
data, a global Marine Cargo risk model and a global
terrorism model suite.
• Three HD models completed and released to clients.
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc RMS
Using technology to enable growth
The development of the RMS(one) risk management platform
continued with its first application, Exposure Manager,
released to clients in August 2016. Staged releases of further
applications of the RMS(one) suite of products and solutions
are on track for FY 2017, namely Risk Modeler and Risk
Enterprise. RMS expects clients to begin migrating from
RiskLink to RMS(one) during FY 2017, supported by an open
and flexible cloud technology framework.
Supported by leading-edge research from its growing team
of technical analysts, RMS released three HD models in FY 2016:
Europe Inland Flood, Japan Typhoon and a New Zealand
Earthquake Model. The HD models improve the granularity
and resolution of existing models to provide more product
definition and higher quality information.
Driving international growth
RMS has built a diverse global list of customers, deriving c. 43%
of its revenues from customers outside North America. RMS’s
key focuses are the expansion of coverage in Asia and to scale
development across this vast region. Modelling global flood
risk to support the growth of the global insurance industry is
central to RMS’s core strategy and future growth prospects
(see case study below for further detail).
In FY 2016 RMS was appointed by a project team of eight
global banks, the Natural Capital Declaration and the
German government’s Emerging Markets Dialogue on Green
Finance to assess the economic impact of drought in bank
stress testing scenarios. RMS, working in collaboration with
academics from leading European universities and global
research centres, will develop a drought model to enable
global financial institutions to better understand their exposure
to environmental risk.
Attracting and developing entrepreneurial talent
RMS has continued to invest in and develop a team of
catastrophe modelling professionals to further strengthen the
core science that has put the company in a leading market
position. The modelling team continued to increase its number
of employees in FY 2016, following two previous years of
growth. Investment in modelling resources has been balanced
with developing talent on the technological side to build on
software product management and engineering skills
within the business.
With the acquisition of HWind, RMS strengthened its modelling
and scientific capabilities. HWind provides mission-critical
hurricane information to businesses and government agencies.
Priorities in the year ahead
The main focus for the RMS management team in FY 2017 will
be on the continued development and delivery of its core
models to clients and the ongoing staged release of RMS(one)
applications. A key aspect of this will be managing the staged
migration of clients to the RMS(one) platform, supported by
an enhanced customer-centric service model. In addition,
the release of RiskLink 17 will be a strong proof point in RMS’s
strategy to deliver new modelling solutions for Asia, in addition
to incorporating important new science into its models.
Outlook
Given the continued consolidation in the reinsurance industry
and the limited impact that RMS(one) is expected to have on
short-term revenues, underlying revenue growth is expected
to be in the low single digits in FY 2017. Operating expenses
will include a full year of amortisation of the RMS(one) asset
and will also increase due to the cessation of capitalisation
of RMS(one) development costs. Consequently the operating
margin is expected to be in the low teens in FY 2017 and to
increase in subsequent years.
For the risks affecting RMS see Principal Risks on page 28
CASE STUDY
GLOBAL FLOOD MODELLING TO SUPPORT GROWTH OF INSURANCE INDUSTRY
RMS has invested significantly over the past few years in talent, science,
data and computational resources in order to develop high-quality flood models.
Market need
• RMS’s investment in flood modelling reflects the market need
for better risk coverage:
– Aon reported in 2016 that 26% of the economic losses from
natural hazards over the past 25 years resulted from floods,
more than any other single peril;
– with only 13% of these losses covered by private insurance,
The response
• RMS’s response to this market demand was
to deliver the following models in FY 2016:
– flood maps for South Korea and Taiwan.
– US Flood Hazard Data.
– Europe Flood Maps and Data.
– HD Europe Flood Model.
the insurance industry has a significant opportunity to
expand coverage, close the protection gap, and grow
the market; and
– with the growth of Asia’s economies, industrial clusters,
and mega cities, the imperatives for resiliency and
demands for coverage are expected to increase.
• In FY 2017 there will be further releases including:
– Europe Inland Flood Perils Rating Databases.
– Extension to the wind and earthquake perils offering.
• RMS’s aim has been to build the resources and modelling
tools to scale not only to continental-level models, but to
pursue simultaneous development and delivery across
Europe, the United States, and Asia-Pacific.
17
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc DMG INFORMATION
OPERATING BUSINESS REVIEW
The continued growth from our specialist information B2B
portfolio has been driven by product innovation and a focus
on organic investment. This strategy has been supplemented
by small bolt-on acquisitions to support the portfolio’s excellent
long-term growth prospects.
dmg information is a portfolio of companies with market-
leading positions in the property information, education and
energy sectors. Our capacity to scale the business over the
long-term is supported by the high-value and ‘must have’
nature of the B2B content and information services provided
to a loyal customer base.
Business model
Each of dmg information’s companies has a strong position
in its market niche, operating in attractive, long-cycle sectors
with good growth prospects. Its strategy is to combine
proprietary content and domain expertise with a focus on
class-leading information and solutions delivery. This ensures
that close customer relationships are built and maintained.
Approximately 90% of dmg information’s revenues are
subscription based or quasi-subscription based. These
subscriptions have high renewal rates and good profit margins.
Performance highlights
dmg information delivered another good performance in
FY 2016. This was driven by strong growth from the energy
business and good progress for the education business, with
varied results across the US and European property information
portfolio, which faced challenging market conditions.
Revenues were £498 million, with underlying growth of 6%.
Reported revenue growth was 16%, reflecting the benefit
of acquisitions as well as the positive impact of a stronger
US dollar relative to the British pound.
Operating profit increased by an underlying 6% to £77 million
with an operating margin of 15%. The decline in margin
compared to the previous year was partly due to continued
investment in product innovation and new launches to drive
long-term organic growth, particularly in the US property
portfolio. The effect of FY 2015 M&A activity in respect
investment phase and loss-making businesses also impacted
FY 2016 margins.
dmg information made a number of small strategic
acquisitions and investments to enhance its ability to scale
the businesses over time and bring new talent in to the
organisation (see active portfolio management on page 20).
Compared to previous years, there was a greater focus on
organic investment in FY 2016, with the value of acquisitions
totalling £25 million compared to £86 million in the prior year.
Reorganisation initiatives, as part of Simplicity, during the year
resulted in exceptional operating costs of £6 million, primarily
in respect of severance payments as positions were removed
from central support functions, notably within businesses that
have acquired bolt-on companies over the past few years.
The changes are expected to improve efficiency and in no
way reduce dmg information’s commitment to continued
product innovation and organic investment.
Property information
In the property information portfolio, revenues grew by 1%
on an underlying basis. The five US-based property businesses
collectively delivered underlying revenue growth of 5%,
despite a decline in US commercial property market volumes.
EDR was particularly impacted by the weak market. Trepp
delivered good growth due to successful new product
launches in the Commercial Mortgage-Backed Securities
(CMBS) market. The earlier stage US businesses, Xceligent,
SiteCompli and BuildFax grew very strongly. Growth was
supported by significant investment in new products,
geographic coverage, sales teams and technological
developments. In Europe, Landmark and SearchFlow
produced an underlying revenue decline of 1%, reflecting
considerable weakness in the UK residential and commercial
property market in the second half of the year following
the UK’s vote in June 2016 to leave the European Union.
The operating profit of the property information businesses
decreased by an underlying 8% to £55 million reflecting
continuing investment in the US portfolio and the effect of
weaker trading in the high-margin UK and European businesses.
EACH OF DMG INFORMATION’S
COMPANIES HAS A STRONG
POSITION IN ITS MARKET NICHE,
OPERATING IN ATTRACTIVE,
LONG-CYCLE SECTORS WITH
GOOD GROWTH PROSPECTS.
Suresh Kavan
CEO
Business review
Revenue
Operating profit*
Operating margin*
2016
£m
498
77
15%
2015
£m
430
75
17%
Movement
%
+16%
+3%
Underlying^
%
+6%
+6%
Adjusted operating profit and operating margin; see pages 35 and 36 for details.
*
^ Underlying growth rates give a like-for-like comparison; see pages 36 and 37
for details.
Key developments
• Continued investment in organic product development.
• Growth from property businesses despite challenging markets.
• New products and sector expansion generated Genscape’s
double-digit underlying revenue growth.
• Good growth at Hobsons with strong performance from K-12
school business and continuing traction within the student
retention market.
• Small bolt-on acquisitions and investments made across
the portfolio.
18
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc dmg information
Education
In education, Hobsons produced another year of growth
with underlying revenues up 13%. Hobsons’ strong growth
was driven by a good performance in the K-12 market and
encouraging progress from the Starfish retention product that
enables institutions to better engage with underperforming
students (see the case study below for further detail). Hobsons
progressed with its strategy to bring the K-12 and higher
education businesses closer together and further growth
opportunities are being created by extending the life cycle of
the students Hobsons serves. To enhance its long-term market
position, Hobsons continued with its bolt-on acquisition
strategy by acquiring PAR Framework in December 2015. PAR
Framework is a provider of predictive models that improve
student retention and graduation rates in US higher education
institutions, and is a complementary business to Starfish
Retention Solutions. There was good underlying profit growth
due to the cost benefits of new technology platforms and
other operating efficiencies.
Energy and commodities
In energy, Genscape, a provider of real-time, fundamental
production data and analysis, produced another strong
performance with revenues up an underlying 17% in the
market that the business serves. Genscape’s solar and natural
gas products delivered particularly good growth. The
electricity, oil and maritime businesses delivered a more
muted performance, reflecting the impact of low electricity
and oil prices. Genscape continued to pursue its long-term
strategy of expanding products and services in existing energy
and commodity markets as well as making inroads into new,
adjacent sectors. Organic growth was supported by strategic
bolt-on M&A activity, most notably the acquisition of GP
Energy Management. The operating margin at Genscape
decreased compared to the previous year, reflecting the
impact of early-stage acquisitions in FY 2015 and FY 2016
and significant investment in organic initiatives.
Strategic priorities
dmg information remains focused on investing in the long-term
sustainable growth trajectory of its portfolio of businesses
and on consolidating its position in niche verticals within
the property information, education and energy sectors.
Management continues to balance investment in innovative,
organic product development with carefully selected bolt-on
acquisitions and investments.
Fostering innovation to deliver organic growth
Innovation is at the heart of dmg information’s strategy
to grow the business. New product development remains
a key driver of growth, evidenced through the success of
Trepp’s Bank Navigator product which was launched in
FY 2016 (see the case study on page 20 for further detail).
In education, Hobsons launched a new version of its career
and college planning platform, Naviance, in the US. The
product, ‘Naviance for Elementary’ is a digital tool for students
in grades K-5, and was developed in response to educator
demand for tools to integrate college and career exploration
into elementary classrooms.
In energy, Genscape developed the Locus Energy solar
performance monitoring and data analytics platform further,
following its acquisition in September 2015. Locus Energy’s
solar monitoring fleet surpassed 2.0 gigawatts of solar
capacity in the US in February 2016 and since 2014, Locus
Energy has increased its monitored solar capacity by 88%.
This milestone reflects record growth in the solar monitoring
sector, which has outpaced solar market growth as owners
and operators both retrofit already installed systems with
monitoring, and install monitoring on new solar PV systems
as they come online.
HOBSONS – STARFISH RETENTION SOLUTIONS
Starfish, a technology platform which improves student outcomes, was acquired by Hobsons in February 2015.
CASE STUDY
Market need
• Starfish provides solutions to enable educational institutions
to leverage data in order to identify underperforming
students and improve retention rates.
The response
• Helena College University of Montana needed a solution
to help staff enhance retention initiatives, identify success
measures, and track progress. Since implementing Starfish,
Helena College has seen its retention rate increase from
49.9% to 54.8% in one year. Students decreased financial
aid borrowing by nearly 40%, and advisers have become
more actively engaged in student academic and
completion planning.
• From autumn 2017, all 70,000 students enrolled in the
Pima Community College District of Tucson, Arizona
will have real-time, individualised access to Starfish by
Hobsons. The technology platform will make it easier
for students to identify academic and career goals,
collaborate with advisers and faculty, and make
better-informed decisions about courses and majors.
Daily Mail and General Trust plc
19
Annual Report 2016
STRATEGIC REPORT dmg information
Using technology to enable growth
Technology remains a core driver of dmg information’s
commitment to provide relevant, high-value and specialist
B2B services. There has been further investment in
developing the technology teams within each business
to support product development in the rapidly changing
technological environment.
Within the property information sector, Landmark in the UK
continued to develop the products and services that support
the property valuation industry. The investment programme
included a redesign of its market-leading valuation platform,
Landmark Quest, which handles the majority of property
valuation instructions in the UK. Landmark also launched
several new products including a new version of a secure
tablet-based mobile valuation software and an enhanced
Valuation Risk Model that transforms the way property risk is
assessed for mortgage applications.
Maintaining rigorous and active portfolio management
dmg information has developed a good track record of
creating value through strategic, bolt-on acquisitions and
investments. Its strategy is to develop deep vertical knowledge
within its sectors and build close relationships with potential
target businesses. This ensures that any business brought into
the dmg information portfolio is aligned with its culture and
growth ambitions. It is also an effective way of attracting new
entrepreneurs who believe they can thrive under its light-touch
management approach.
dmg information made further acquisitions in FY 2016.
For example, ETSOS, a UK-based provider of conveyancing
searches, was acquired in October 2015 to complement
dmg information’s existing European property information
businesses, Landmark and SearchFlow. In December 2015,
Hobsons acquired PAR Framework. In April 2016, Trepp
acquired Codean, a software and data analytics business
in the UK. In June 2016, Genscape acquired GP Energy
Management, a New York-based provider of energy
management services to electricity and gas retailers
and generators.
Driving international growth
dmg information will continue to expand into Asia over
the long-term. Hobsons in particular has a clear strategy to
develop its business overseas and in June 2016 announced
the expansion of its popular digital platform, Naviance,
into the Australian and Asia-Pacific markets.
Attracting and developing entrepreneurial talent
dmg information nurtures an environment where
entrepreneurs have the freedom to innovate and lead their
companies in a fast-changing market. dmg information
continually appraises and develops the skills and capabilities
of its employees through workshops and training programmes.
Over the last three years, there has been a particular focus on
upgrading the Chief Technology Officer function and Finance
function within each business. dmg information has also
focused on providing the appropriate skills training and
support for its leaders to be able to manage their businesses
on a larger scale.
Priorities in the year ahead
Over the past few years, several of dmg information’s
companies have been in an accelerated growth cycle
requiring significant organic investment to ensure that
their products and services are at the forefront of the
markets they serve. Looking forward, there will be a clear
focus on operational execution to improve the return on
these investments.
Outlook
dmg information is mindful of the increased uncertainty within
some of its markets, particularly the UK property sector which
may continue to adversely impact trading. Nevertheless,
in FY 2017, underlying revenue growth is expected to be in
the high-single digits and the operating margin to be in the
mid teens.
For the risks affecting dmg information see Principal Risks on page 28
CASE STUDY
TREPP AND BANK NAVIGATOR
Trepp, founded in 1979, is a leading provider of information, analytics and technology to the Commercial
Mortgage-Backed Securities, commercial real estate and banking markets.
Market need
• Following the 2008 financial crisis, US regulators
determined that US banks needed to face significantly
higher scrutiny and created new stress-testing mandates
under the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank). Specifically, Dodd-Frank
directs financial institutions with assets over US$10 billion
to run stress tests annually.
• Without an innovative solution banks would need to hire
expensive teams of model builders and/or consultants
and produce expensive data sets.
The response:
• In response Trepp developed the Trepp Capital Adequacy
Stress Test™ (T-CAST) model to those mandates. T-CAST
allows banks to produce these results via a comprehensive
web-based financial institution surveillance and risk
management system.
20
• Clients have subscribed to the Trepp T-CAST system to meet
the regulatory mandates. Several clients have been through
multiple stress-testing cycles with The Federal Reserve,
the Options Clearing Corporation, and/or the Federal
Deposit Insurance Corporation. The model, its transparency,
and its documentation have been highly praised
by many clients.
• The T-CAST platform has also served as an entry point into
the banking market for Trepp. Once Trepp became known
in the banking space, other products based on client need
were developed including the sale of large data sets to
banks with above US$10 billion in assets, of a Credit Default
Model for commercial real estate (TreppDM).
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc DMG EVENTS
OPERATING BUSINESS REVIEW
dmg events’ experience of emerging markets and
entrepreneurial culture has led to the creation of five new
events in 2016 with eight new events scheduled for 2017.
dmg events now hosts over 50 events per year attracting
almost 300,000 visitors and over 11,000 exhibitors from more
than 60 countries.
Business model
dmg events is an organiser of B2B exhibitions and associated
conferences with industry-leading events in energy,
construction, interiors and hotel and leisure. The strong
markets and brand positions, emerging market experience
and entrepreneurial culture create opportunities for growth
through geo-cloning, creating satellite and bolt-on events,
and spinning off sections from existing shows to become
stand-alone events. The key branded events are Big 5, ADIPEC,
Gastech and Global Petroleum Show, all of which provide
opportunities to develop event spin-off and geo-cloning.
dmg events recognises that in the face-to-face industry, high
levels of customer satisfaction are key to event growth and the
ability to take customers to new markets. A keen focus on the
user experience through developing industry-leading event
content has been an important part of dmg events’ strategy.
Performance highlights
Given the tougher market environment of weaker energy
prices, dmg events produced a resilient performance over the
year, delivering underlying revenue growth of 2%. Reported
revenues grew by 12% benefiting from the occurrence of
the biennial Gastech event and the strength of the US dollar
relative to the British pound, which was more than sufficient
to offset the impact of the disposal of the digital marketing
events business. Over the year, the Big 5 construction event
performed particularly strongly with growth in space, visitors,
revenues and profits. In the energy sector, ADIPEC delivered
good growth through adding the new offshore and marine
section and seeing increased levels of exhibitors and visitors
due to the strong international reputation of the event.
Gastech revenues were stable compared to the previous
event, due to its influential conference programme,
established reputation and the benefit of having the event
in Singapore, which is part of the South East Asian gas-buying
market. The Global Petroleum show experienced softer market
conditions given the tough Canadian oil and gas sector.
Operating profit declined by 6% on an underlying basis
reflecting the challenged Canadian energy events, investment
in growing attendance levels and that Singapore was a more
expensive location for Gastech than South Korea, where the
2014 event was held. The operating margin was a healthy 28%
benefiting from the occurrence of Gastech this year, the
September 2015 disposal of the low-margin digital marketing
business, and cost reduction actions across the Canadian
events portfolio. Despite the challenging energy market in 2016,
dmg events continued to invest and create a strong pipeline of
organic growth from new launches. In 2016 five new events took
place. The geo-cloned East Africa Coatings show in Kenya, and
Windows and Doors event in Dubai, a spin-off from Big 5, were
particularly successful launches.
See events schedule on page 22
Strategic priorities
Developing a balanced and diversified portfolio of market-
leading, branded events remains a strategic priority. Through
geo-cloning and creating spin-off events, dmg events remains
committed to expanding in existing sectors and geographies
whilst selectively adding some new strategic sectors and
geographies. Existing sectors, particularly construction and
energy, continue to present geo-cloning opportunities such
as the Big 5 East Africa, which is a new construction event in
Nairobi, and Egypt Petroleum Show (EGYPS), a new oil and gas
event in Cairo. Event sector spin-offs, such as Windows and
Doors from Big 5 Dubai, protect dmg events from becoming
space constrained in venues whilst offering successful niche
industry events. In FY 2016 dmg events entered into new
exciting geographies in Africa and targeted growth sectors
including Food and Power (see the case study on page 22
for further detail).
Innovation and technology fostering organic growth
Alongside the geo-clone and spin-off innovations strategy,
continued investment in data and analytics have helped
develop online communities to foster customer engagement.
The Big 5 Hub and Gastech News have been particularly
successful and further investments are being made in visitor
monitoring technology to continually improve the visitor
experience. Smart badging was used at the most recent
iteration of Gastech to track visitor movements and engagement.
DMG EVENTS’ EMERGING
MARKETS EXPERIENCE AND
ENTREPRENEURIAL CULTURE
CONTINUED TO DRIVE
ORGANIC GROWTH AND
CREATE OPPORTUNITIES
IN NEW GEOGRAPHIES.
Business review
Revenue
Operating profit*
Operating margin*
2016
£m
105
29
28%
2015
£m
Movement
%
+12%
+44%
95
20
21%
Underlying^
%
+2%
(6)%
Adjusted operating profit and operating margin; see pages 35 and 36 for details.
*
^ Underlying growth rates give a like-for-like comparison; see pages 36 and 37
for details.
Key developments
• Creation of numerous spin-off events including the highly
successful launch of the Windows and Doors event in Dubai
(spun off from Big 5) in September 2016.
Geoff Dickinson
CEO
• Continued geo-cloning with the first edition of East Africa
Coatings in Nairobi in June 2016.
• Acquisition of Exhibition Management Services (EMS), a South
African events business, to augment dmg events’ African
development strategy – 15 events are scheduled for 2017
with an extensive African event launch programme planned.
21
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc dmg events
International growth
dmg events has built a strong reputation as an organiser
of leading international industry trade shows. Overseas
exhibitors, associations and government groups trust
dmg events to deliver new market opportunities when
launches are announced in new geographies. dmg events’
track record has allowed it to continue to expand in many
emerging markets throughout the Middle East, India, Africa,
South East Asia and Latin America. Growth for dmg events in
Africa has been accelerated with 15 events in seven countries
scheduled for 2016 and 2017.
Active portfolio management
In early 2016 the strategy to increase exposure to the African
continent was enhanced by the purchase of EMS, a South
African events business. The purchase of EMS secured four
events in South Africa and one event in Ghana, and the now
integrated dmg EMS Africa has had a very encouraging first
year. The EMS acquisition established a strong position for
dmg events in a major African economy whilst also taking
the business into a new key strategic sector of Food, with the
AB7 event.
In addition, dmg events has continued to follow a disciplined
approach with regard to the shape and balance of its
events portfolio. Over the past years, dmg events has exited
consumer events, gift fairs and digital marketing events
which were no longer regarded as core events for the
dmg events business.
Attracting and developing entrepreneurial talent
Retaining and recruiting entrepreneurial talent remains a key
strategic priority for dmg events. An environment of light-touch
management and creative freedom has delivered a high
level of annual launches. In addition, two industry-recognised
Portfolio Directors have been appointed to help deliver the
ambitious expansion plans for the Design and Hospitality
division. Well-crafted incentives and rewards programmes
combined with good career progression opportunities,
illustrated by numerous internal promotions, help to grow
and retain our top talent. Training, coaching and mentoring
all help to equip our leaders for the dynamic marketplace
dmg events operates within.
Priorities for the year ahead
Strategic priorities for FY 2017 will continue to include
developing dmg events’ portfolio of market-leading events
across geographies and sectors. dmg events will continue to
focus on the quality of customer experience in order to grow
and develop its existing events. Reputation, relationships and
experience will be leveraged from existing industry-leading
events to launch into new geographies and sectors including
Africa (see the case study below for further detail). In FY 2017,
significant focus will be on Gastech which will be held in Tokyo
for the first time. Where desirable, in order to create new event
opportunities or to avoid becoming venue bound, dmg events
will spin sections out of the major shows to become new
stand-alone events. With 10 launches scheduled for FY 2017,
dmg events remains committed to creating a strong organic
growth pipeline.
Outlook
With the oil industry adjusting to lower price points that are
less volatile, and the benefit of Gastech taking place in Tokyo,
the revenues and profits of our oil and gas events are expected
to improve. This, combined with a number of exciting and
innovative launches in FY 2017, creates a more encouraging
outlook. Revenue growth for dmg events is therefore expected
to be in the high single digits in FY 2017, and its operating
margin is expected to be around 25%.
For the risks affecting dmg events see Principal Risks on page 28
Events schedule
Event
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
Big 5 Dubai
ADIPEC
Global
Petroleum Show
Gastech
Annual
c.18 months
CASE STUDY
AFRICA
Last year, dmg events decided to use its expertise to build a portfolio of events in Africa. A small strategic
acquisition and an extensive launch programme have created a strong start in the continent in just one year.
Market need
• dmg events identified a need to build strong relationships
and identify opportunities in African emerging markets.
The response
• The Global Africa Investment Summit held in London in 2015
created the opportunity to expand into this new territory.
• Additionally, the 2016 acquisition of EMS, an events business
based in Johannesburg, brought in five new events (four
in South Africa, one in Ghana). Now fully integrated, the EMS
acquisition has created good levels of revenue and
profit growth.
• As a result of the expanded events portfolio and strong
launch programme, the following events have been
held over the past year: Coatings East Africa took place
successfully in Kenya; INDEX North Africa and Big 5 North
Africa were launched in Morocco; and Big 5 Kenya
and the Africa Renewable Energy Leaders’ Summit
were launched in Nairobi.
• In 2017, Big 5 Egypt and EGYPS (oil and gas) will be held
as part of dmg events’ launch programme.
2222
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc
EUROMONEY INSTITUTIONAL INVESTOR
OPERATING BUSINESS REVIEW
Encouraging early signs of the impact of Euromoney’s revised
strategy provide confidence in its ability to harness growth
from long-term global trends in asset management, price
discovery and other areas. Although industry headwinds
remain, we are increasingly confident that Euromoney is well
placed to prosper.
Business model
Euromoney actively manages a portfolio of B2B businesses in
asset management, price discovery and other sectors where
information, data and convening market participants are
valued, delivering products and services that support its
clients’ critical activities.
Through more than 20 brands, Euromoney serves customers
with information, insight and marketing services. Nearly 60% of
total revenue is derived from subscriptions and other recurring
sources. Around a third of revenue comes from emerging
markets and over 85% of revenue is generated outside the
UK. The culture of the company is entrepreneurial, with
management teams given significant autonomy to develop
their businesses to capture market opportunities. At the same
time, small but increasingly strong central functions make sure
best practice is shared, economies of scale are achieved
and appropriate governance and controls are in place.
Performance highlights
Euromoney’s performance reflects the continuing challenges
experienced by its customers, particularly within the
investment banking sector. Revenues were down by 4% on an
underlying basis at £403 million, with reported revenues flat,
reflecting the benefit of a stronger US dollar relative to the
British pound.
The pressures on Euromoney’s banking and finance and
commodity events, which together constituted 26% of its
revenue, continued to offset the improving performance in
its businesses focused on price discovery, data and market
intelligence and those serving the asset management sector.
Subscription revenues continued to grow, supported by a
strong asset management market, and were up an underlying
1%. Advertising revenues deteriorated throughout the year,
declining at the same rate as in FY 2015, reflecting continued
budgetary pressures in global financial institutions, and were
down an underlying 11%. Large events, particularly in the
finance sector run by the Information Management Network
(IMN) business and those in the telecoms sectors, performed
well but smaller events faced challenges. Overall event
sponsorship was down by an underlying 2%. Revenue from
event delegates was down an underlying 14%.
Adjusted operating profit declined by 6%. As expected,
operating margin fell from 26% to 25%, largely reflecting
the drag from more cyclically and strategically
challenged businesses.
During the year, Euromoney increased its investment in
developing and launching new products to enhance organic
revenue growth. M&A activity remains an important feature
of Euromoney’s strategy to supplement organic growth
and to manage the portfolio more actively. For example,
Euromoney disposed of Gulf Publishing (Gulf) and Petroleum
Economist (PE) during the year to reduce exposure to the
energy market and advertising. Euromoney’s Metal Bulletin
group also acquired FastMarkets and Reinsurance Security to
add to its portfolio of services aimed at the reinsurance market.
Strategy
Following the appointment of a new CEO, Andrew Rashbass,
Euromoney revised its strategy to accelerate growth but also
to meet the existing challenges to some of its businesses and
changing dynamics within its markets.
Euromoney’s strategy is to actively manage a portfolio of
businesses in asset management, price discovery and other
sectors where information, data and convening market
participants is valued. Euromoney delivers products and
services that are critical to its customers’ businesses.
Euromoney has always had a structured approach to capital
allocation, but future financial performance will come from
a more rigorous allocation of capital, in line with the following
quadrants overleaf:
EUROMONEY’S REVISED
STRATEGY IS TO ACTIVELY
MANAGE A PORTFOLIO FOCUSED
ON HARNESSING GROWTH IN
SECTORS WHERE INFORMATION,
DATA AND CONVENING MARKET
PARTICIPANTS ARE VALUED.
Andrew Rashbass
CEO
Business review
Revenue
Operating profit*
Operating margin*
2016
£m
403
100
25%
2015
£m
403
107
26%
Movement
%
+0%
(6)%
Underlying^
%
(4)%
(12)%
Adjusted operating profit and operating margin; see pages 35 and 36 for details.
*
^ Underlying growth rates give a like-for-like comparison; see pages 36 and 37
for details.
Key developments
• Revised strategy in place with encouraging early signs.
• Investing around the big themes such as information and
services to support the asset management industry, price
discovery and others.
• Introducing an effective operating model which harnesses
the best of the company’s entrepreneurial culture and
accelerates product development and launch timescales.
• More rigorous capital allocation framework implemented
resulting in, for example, the disposal of Gulf and PE.
23
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Euromoney Institutional Investor
+
Prepare for upturn
• Protect and enhance
competitive position.
• Careful, selective investment
for when the cycle turns.
• Tight cost control.
• Fix any operational deficit.
• Opportunistic on revenue
opportunities.
Cycle
Invest
• New product development.
• Sales and marketing.
• Acquisition.
• Fix any operational deficit.
Disinvest
• Maximise shorter-term
profit and cash.
• Divest.
• Prevent future build-up.
e Use the time wisely
r
u
t
c
u
r
t
S
• Modest investment to move
to top-right quadrant above.
• Maximise shorter-term profit
and cash.
• Fix any operational deficit.
• Consider divestment.
–
–
+
All businesses within the Euromoney portfolio have been
classified based on this framework and strategic activity
prioritised accordingly. In addition to the framework,
Euromoney categorises its activities across three pillars
as follows:
Investing around big themes
Euromoney investment decisions are, and will be, based
around the big themes of information and services to support
the asset management industry, price discovery as well
as other potential growth engines (see the case study below
for further detail).
Introducing an effective operating model
To ensure that the best of the group’s entrepreneurial culture is
complemented by a new focus on implementing and sharing
best practice, Euromoney is introducing a strong operating
model. Various initiatives have been started over the past year,
providing a firm foundation for future growth, including a new
emphasis on modern marketing techniques, group-wide
talent management, seeking economies of, and opportunities
from, scale and adopting a more strategic approach to
developing each of Euromoney’s businesses.
Actively managing the portfolio
Euromoney’s portfolio management focus is now centred
on investing where businesses are structurally strong and
there are market tailwinds. It will consider divesting businesses
where the market is weak and the business model is
structurally challenged.
Over the year, Euromoney completed the sale of Gulf and PE
and in August, completed two acquisitions in the strategically
important areas of price discovery and reinsurance.
Priorities in the year ahead
FY 2017 will be a year of transition for Euromoney with a clear
focus on delivering its new strategic priorities. Euromoney
plans to actively manage its portfolio of businesses in asset
management and other sectors where information, data and
convening market participants are valued. Euromoney will
continue to deliver products and services that are critical to
its customers’ businesses and, through its refined operating
model, ensure that its products reach their markets as quickly
and effectively as possible. Although Euromoney expects
headwinds to continue in its markets, encouraging progress
has been made so far with its renewed strategy and the
business will look to build on this momentum in the year ahead.
Outlook
As announced on 8 December 2016, subject to Euromoney
shareholder approval, DMGT will reduce its holding in
Euromoney to c. 49 per cent. This sell down will allow
Euromoney additional financial flexibility which in turn will
maximise returns for DMGT. Further details can be found at
www.dmgt.com or from the Company Secretary’s office
(details on page 195).
Specifically in the year ahead, Euromoney will continue to
implement its new strategy of investing in its big themes,
ensuring an effective operating model and continuing to
actively manage the portfolio. The Euromoney board does not
expect markets to improve over the coming year and has built
its plans for the business accordingly. As stated at Euromoney’s
Investor Day, the strategy would not change the trajectory of
the business in FY 2016, that, subject to the usual caveats, the
business expected to return to growth in FY 2018 and that
FY 2017 would be a year of transition. This remains the case.
For the risks affecting Euromoney see Principal Risks on page 28
For further details of Euromoney’s performance during the year,
strategy and priorities for the year ahead see www.euromoneyplc.com
BCA RESEARCH EQUITY TRADING STRATEGY
The launch of a new investment research product, Equity Trading Strategy (ETS) by BCA Research (BCA) this year
demonstrated Euromoney’s strategy of investing around big themes and effective, efficient product development.
CASE STUDY
Market need
• BCA has been the leading provider of independent
macroeconomic investment research for nearly 70 years.
• As BCA conducted extensive market research to support its
future product strategy, it became evident that its investor
customers needed a way to link macro investment
strategies with individual investment decisions. BCA further
discovered that the more specific an individual instrument
investment recommendation is, the more valuable that
recommendation is for the investor customer.
The response
• Working with clients, BCA developed ETS, a product for
investors that combines BCA’s top-down macro research
with company fundamental and quantitative analysis to
deliver a 360-degree view of stocks.
• Launched in December 2015 covering US equities only,
ETS has been a huge success with clients and is becoming
one of BCA’s best-selling products. Following this success,
ETS was further extended in October 2016 with the launch
of European and Asian market coverage.
• The launch of ETS demonstrates Euromoney’s strategy of
responding to a market need and bringing new products
to market efficiently.
24
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc DMG MEDIA
OPERATING BUSINESS REVIEW
Quality popular journalism still has significant market appeal
and remains at the heart of dmg media’s strategy to harness
the strength of the Mail and Metro brands.
dmg media has continued to focus on delivering highly valued
content to a scaled audience on a global basis. The platform-
agnostic approach ensures that the business is increasingly
flexible in the fast-moving and technologically oriented
consumer market. Recognition of the combined strength
of the Mail brand, in all its forms, creates opportunities to
position dmg media’s proposition to advertisers to reach
their target audiences.
Business model
dmg media’s portfolio of newspaper and digital consumer
media businesses includes two of the UK’s most read paid-for
newspapers, the Daily Mail and The Mail on Sunday, and the
world’s most visited English language newspaper website,
MailOnline. The Mail brand is the number one commercial
news media brand in the UK and has achieved scale in other
geographic markets, including the US and Australia. The
portfolio also includes Metro, the UK’s most popular free
newspaper and Elite Daily, the media destination for
millennials in the US.
dmg media’s revenues are generated largely from advertising
and circulation, with growing commerce revenues. While the
newspaper businesses continue to generate strong profits, the
digital businesses are the driver of dmg media’s future growth.
Performance highlights
Despite challenging market conditions, dmg media delivered
a resilient performance in the year, broadly in line with
expectations. Revenues were relatively stable, down just 2%
on an underlying basis, with the decline in print advertising
revenues being partly offset by digital advertising growth
and a robust circulation performance. The operating margin
remained relatively healthy at 11%.
Revenues were £706 million, representing an absolute
decline of 3%, reflecting the adverse impact of the disposal
of Wowcher in November 2015, which was partly offset by the
financial year benefiting from an additional 53rd week of
newspaper results. The disposal of Wowcher was very much
part of our active portfolio management. Adjusted operating
profit was £77 million, an underlying decrease of 23%. The
growth in digital revenues and cost savings in the newspaper
businesses were more than offset by the decline in print
revenues and continued investment in our digital businesses.
There were £24 million of exceptional operating costs incurred
as part of the Simplicity restructuring, primarily due to reduced
headcount in the newspaper businesses and central functions,
together with costs incurred when Polestar, the printer of our
magazines, went into administration.
Mail businesses
Revenues for the combined newspaper and website
businesses (the Daily Mail, The Mail on Sunday and MailOnline)
were relatively resilient in challenging market conditions,
declining by just 2%, on an underlying basis, to £577 million.
The 13% underlying decline in print advertising revenue to
£151 million and the 1% underlying decline in circulation
revenue to £315 million were largely offset by MailOnline,
which grew revenues by an underlying 19% to £93 million.
Total advertising revenues from the Mail titles were £244 million,
an underlying decline of 3%.
The print advertising market has continued to experience
challenging conditions over the year. Although trends in
the second half of the year showed some improvement,
the market is expected to remain volatile due to the
continuing increase in competition for advertising budgets
from other media types, combined with uncertainty over
consumer confidence.
Circulation revenues grew 1% in absolute terms, including
the benefit of the 53rd week, a good result in the context of the
UK newspaper market. The Daily Mail and The Mail on Sunday
continue to hold significant market shares, averaging 23.2%
and 22.0% for the year respectively.
The robust revenue performance was achieved as a result of
cover price increases largely offsetting the adverse impact of
declining circulation volumes. The cover price of the Monday
to Friday editions of the Daily Mail was increased from 60p
to 65p in February 2016, The Mail on Sunday was increased
from £1.60 to £1.70 in July 2016 and the Saturday edition of the
Daily Mail was increased from 90p to £1.00 in October 2016.
DMG MEDIA HAS CONTINUED
TO FOCUS ON DELIVERING
HIGHLY VALUED CONTENT
TO A SCALED AUDIENCE
ON A GLOBAL BASIS.
Business review
Revenue
Operating profit*
Operating margin*
2016
£m
706
77
11%
2015
£m
731
96
13%
Movement
%
(3)%
(20)%
Underlying^
%
(2)%
(23)%
Kevin Beatty
Chief Executive
Adjusted operating profit and operating margin; see pages 35 and 36 for details.
*
^ Underlying growth rates give a like-for-like comparison; see pages 36 and 37
for details.
Key developments
• Continued strong growth from MailOnline with investment
in mobile and video capability and further expansion of the
global footprint.
• Cover price increases implemented at the Daily Mail and
The Mail on Sunday.
• Gaining traction in Mail Brands’ omnichannel advertising solution.
• Continued strong circulation market share for the Daily Mail
and The Mail on Sunday.
• Disposal of Wowcher in November 2015.
25
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc dmg media
MailOnline continued to demonstrate strong levels of revenue
growth for the year, generating underlying growth of 19%.
In the US, MailOnline’s revenues grew by an underlying
28% to £24 million, reflecting increased awareness of the
DailyMail.com brand amongst advertising buyers.
MailOnline grew its global audience to 231 million average
monthly unique browsers and 14.8 million average daily
unique browsers in September 2016, with average growth
during the whole year of 8% and 6% respectively. The business
continues to focus on increasing the size and engagement
level of its global audience, particularly in the US. MailOnline
sees good opportunity for growth over the longer term,
whether through video and native advertising, eCommerce
or new revenue models.
The initiative to bring together the UK Mail Brands’ commercial
sales operations onto one platform to create an omnichannel
advertising solution has gained traction over the year (see the
case study below for further detail). dmg media’s approach
has created a simpler, more creative and relevant advertising
proposition to advertisers which is increasingly important in the
tough advertising market conditions.
Metro
Metro delivered a resilient performance in challenging
conditions for the print advertising market, with revenues down
by an underlying 9%. The revenue decline exceeded cost
savings, resulting in a reduction in operating profit despite the
benefit of the 53rd week in the year. In October 2016 Metro
increased its national circulation by 10%, raising its daily figure
to 1.5 million copies. Given the market conditions, Metro’s cost
base is being managed carefully to defend its profitability
whilst ensuring that the quality of the newspaper and its
approach to advertising creativity remain.
Strategic priorities
dmg media remains focused on maintaining the profitability
of its newspapers whilst generating revenue growth through
MailOnline. The business continues to innovate with content,
product, advertising and distribution initiatives to develop
a scalable global audience. dmg media also remains
committed to the highest editorial standards and increasing
the value proposition to readers.
Fostering innovation to deliver organic growth
In challenging market conditions for the newspaper industry,
with advertising spend under scrutiny, constant innovation
within the business is vital in order to increase market share
with readers as well as advertisers. The success of MyMail,
the loyalty programme for Daily Mail and The Mail on Sunday,
continues due to various innovative approaches to fostering
reader loyalty. Since dmg media launched the MyMail loyalty
club it has seen a 33% increase in its seven-day readership. The
loyalty created with Mail readers has enabled dmg media’s
e-commerce activities to continue to grow across various
channels with MyMail readers purchasing 50% more items
than non-readers.
Metro continues to attract new advertisers by implementing
creative advertising solutions. The recent collaboration with
Ladbrokes to develop Metro’s football content through
expanding editorial coverage and launching a new football
app, 11versus11, is typical of the innovative approaches being
taken across dmg media. These initiatives, together with the
benefits from the omnichannel advertising solution, have
produced a resilient performance for all three newspapers
in the financial year.
Innovation is also at the heart of MailOnline’s strategy to
increase the scale and engagement of its global audience
and to gain traction with advertisers. This has been especially
important in driving revenue from MailOnline’s US operation,
DailyMail.com. There has been increased spend by US
advertising buyers given growth of unique visitors, page views
and visits. Following the launch of a partnership with Snapchat
in January 2015, MailOnline has progressively increased the
scale of articles submitted to Snapchat’s discovery product
over the past year. MailOnline is the only publisher present in
all three regions in which Snapchat operates and is consistently
in the highest tier of publishers in terms of engagement.
Using technology to enable growth
MailOnline’s strategy is centred on the growth opportunities
created through changing audience consumption patterns
from desktop to mobile applications, alongside an increased
appetite for video content. Over the last year MailOnline
has worked closely with some of the internet’s largest platforms.
CASE STUDY
MAIL BRANDS
An omni channel advertising solution.
Market need
• Lidl needed to enhance its brand perception and
ultimately increase consumers’ propensity to shop
at Lidl for food, wine and other goods.
The response
• dmg media formed a collaborative and integrated
partnership with Lidl. To achieve this partnership,
dmg media set out the following KPIs:
– deliver engaging content to Lidl’s female main
shopper audience; and
– deliver in-store voucher redemptions each month,
thereby increasing the basket size of shoppers.
• By utilising dmg media’s multiple platforms and
touchpoints across print and digital, dmg media created
a holistic 12-month campaign which consisted of native
content, advertorials, displays and in-paper voucher
promotions. Using data and insight tools, dmg media was
able to map out its target audience’s media consumption
habits and interests to ensure it delivered the right
message, at the right time and on the right platform.
• Research concludes that 78% of readers now say they are
more likely to shop at Lidl as a direct result of the campaign.
Daily Mail and General Trust plc
2626
Annual Report 2016
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc dmg media
For example MailOnline is now one of the top publishers in
Facebook’s Instant Articles programme, both in terms of
articles and videos contributed and viewed each day.
In addition, MailOnline has partnered with Google on its
AMP (Accelerated Mobile Page) to improve user experience.
The use of technology within our newspaper businesses also
remains important in terms of enabling growth from both
a readership and advertising solution perspective. Metro’s
cover-wrap, designed for the London Theatre production
of Aladdin, used thermochromic ink to create an original
and creative advertising solution.
Maintaining rigorous and active portfolio management
In November 2015, dmg media disposed of its online discount
business, Wowcher, to a newly formed company, Excalibur,
in which DMGT holds a c.30% economic interest. Excalibur
also acquired the UK and Ireland operations of LivingSocial,
which was approximately half the size of Wowcher, and
expects to realise synergies from combining these businesses’
operations and databases. Wowcher generated £1 million of
operating profit from £7 million of revenues in the period prior
to disposal.
Driving international growth
The primary driver of international growth for dmg media
is through MailOnline’s operations overseas, particularly
in the US and Australia. 26% of MailOnline’s revenue was
generated in the US in the year, up from 24% in the prior year,
demonstrating increased traction with key advertisers in this
very large market.
In terms of audience, there were 82 million average monthly
unique US browsers and 4.4 million average daily unique US
browsers in September 2016, with average growth during the
whole year of 7% and 8% respectively. In the Rest of the World,
outside the UK and US, September 2016 monthly unique
browsers and average daily unique browsers stood at
88 million and 5 million respectively, with both metrics
demonstrating strong growth in the year.
Attracting and developing entrepreneurial talent
dmg media’s transformation continues at pace, reflecting the
changing marketplace, supported by significant investment
in current and future talent.
dmg media’s graduate and apprenticeship schemes
continue to grow with FY 2016 having the largest graduate
intake across every part of the dmg media business.
As a mark of the strength of dmg media’s talent, the
business continues to receive external industry recognition
for both editorial excellence and achievement, and media
and advertising campaigns.
Priorities in the year ahead
dmg media intends to continue to harness the value of the
Mail brands for both readers and advertisers in the year
ahead. The business will continue to focus on the reader
experience, in print and online, with continued editorial
investment and commitment to the quality of its popular
journalism. Significant investment has been made in
MailOnline and digital revenue growth over the coming
year is expected to exceed incremental costs for the digital
businesses. The omnichannel advertising solution will help
our advertising clients to gain traction from the strength
of the Mail Brands across a global audience.
Outlook
For FY 2017, dmg media expects to deliver stable underlying
revenues, with digital advertising growth and the benefit
of cover price increases helping to offset circulation volume
and print advertising declines. Reported results will be
adversely impacted by the absence of the 53rd week, which
contributed £12 million of revenue and £6 million of operating
profit in FY 2016. The operating margin is, however, expected
to remain broadly in line with the 11% achieved in FY 2016,
with cost efficiencies helping to protect profitability.
For the risks affecting dmg media see Principal Risks on page 28
CASE STUDY
MAILONLINE – EXPANDING ITS GLOBAL FOOTPRINT
MailOnline is expanding its global footprint through acquisition and innovation.
Market need
• dmg media identified a market need to facilitate
advertisers’ global reach.
The response
• Last year, dmg media acquired Elite Daily, the news and
entertainment website, to complement MailOnline’s
operations in the US and extend opportunities to
attract advertisers through an expanded millennials
audience platform.
• MailOnline also expanded with the acquisition of 50% of
Daily Mail Australia in February 2016. Daily Mail Australia
became a wholly owned MailOnline business in February
2016, following the acquisition of the remaining 50% of the
business not already owned by the Group.
• In addition to acquisitions, innovation is at the heart of
MailOnline’s strategy to increase the scale of its global
audience, raise engagement levels and gain traction
from advertisers. Working in partnership with the internet’s
largest global platforms, MailOnline’s global growth
has benefited from innovative approaches taken with
Facebook, Google and Snapchat. MailOnline continues
to expand its audiences into new territories. The chart
below shows that MailOnline now has an average monthly
audience of over one million unique browsers in 24 countries.
2016
2015
24 countries
22 countries
Daily Mail and General Trust plc
27
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc PRINCIPAL RISKS
ACTIVELY MONITORING AND MANAGING OUR RISKS
DMGT executive management completed a robust and
detailed assessment of the Group’s risk management
processes and the Group risk register.
The Group’s risks are categorised as either strategic or operational. Strategic risks
are linked to DMGT’s strategic priorities and impact the whole Group.
Operational risks are those arising from the execution of the business functions
and typically impact on one or more of the operating businesses.
Further details of the Group’s risk management process, the governance structure surrounding risk
and the Audit & Risk Committee can be found in the Corporate Governance Report on pages 44 to 59
Changes in principal risks during the year
Two principal risks disclosed last year, ‘Internal investment’ and ‘New product launches’, have been combined this year due to their overlap. These are now
described in a new risk called ‘Success of new product launches and internal investments’. In recognition of the results of the recent referendum on the UK
membership of the European Union (EU) and wider macroeconomic volatility, a new principal risk, ‘Economic and geopolitical uncertainty’, has been
added and the potential impact on DMGT is outlined below. At this early stage, due to the diverse nature of our portfolio, we believe that the impacts will
be manageable, however, we will continue to monitor these carefully as they develop and adapt accordingly.
Strategic risks
Description
Market disruption
Market disruption creates opportunities as well as risks.
This enables us to move into new markets and geographies
to grow the business.
Failure to respond to market disruption, such as changes to
customer behaviours and demands, technological changes, the
availability of free information and the emergence of competitors
may affect the long-term viability of some principal businesses in
the Group.
Success of new product launches
and internal investments
The Group is continually investing in our products and services.
Internal investments in new products and services, and
development of existing products and services may fail to
achieve customer acceptance and yield expected benefits.
A lack of innovation and failure to successfully invest in our
products and services may compromise their competitiveness.
Uncertainty as a result of geographic expansion into new and
emerging markets.
Economic and geopolitical uncertainty
The Group generates income from certain sectors and markets
that can be impacted by economic and geopolitical uncertainty.
Following the UK vote to leave the EU, there is uncertainty
surrounding the nature, timing and associated trade conditions
of the UK exit.
The Group is also likely to experience ongoing foreign exchange
rate fluctuations in the currencies in our key markets.
There is further long-term geopolitical uncertainty associated
with the outcome of the US presidential election.
Acquisitions and disposals
Active portfolio management is key to the Group’s strategy.
The success of portfolio management could be compromised
by not identifying the right targets, investments failing, or not
divesting from non-core businesses at the right time.
The Group completes multiple small acquisitions and bolt-on
investments every year; some may not perform as expected.
Larger acquisitions are rarer.
Examples and dynamics of the risk
Mitigation
• dmg media: acceleration in the decline of print advertising and circulation
revenue, but growth in digital advertising revenue.
• RMS: convergence of reinsurance with capital markets and increased
consolidation in the insurance industry.
• dmg information, for example, Genscape and EDR: the availability of free
information, driven by potential changes in legislation, could dilute the value
of some offerings in the portfolio.
• MailOnline: monetisation of digital strategy.
• RMS: client adoption of the first RMS(one) application, Exposure Manager,
and further planned releases from the RMS(one) suite of products.
• Xceligent: continued expansion across the US.
• dmg events: geo-cloning of individual events across new locations.
Geographic expansion presents significant opportunities as well as risks.
Risks may include unexpected costs or logistical and management challenges
due to differing business cultures, heightened security threats or local legal
and regulatory requirements.
• The European property businesses in dmg information: possible decline in
residential and commercial property transactions versus pre UK referendum
volumes.
• dmg media: a weakening of the UK economy, particularly if consumer led,
could accelerate the decline in print advertising revenue.
• Euromoney: uncertainty in the financial services sector could affect a number
of businesses in the Euromoney portfolio.
• Genscape: fluctuations in the global commodities markets could impact
Genscape’s revenues.
• dmg events: fluctuations in the global oil markets could impact revenue
achieved from associated trade shows.
• The impact of further weakening in British pound to US dollar exchange rates
up to six months in advance.
will positively affect consolidated revenues.
• Growth opportunities and potential synergies lost through failure to identify
• Our investment preferences and criteria are clearly articulated. Investments are approved
acquisition and investment targets.
• Failed investments may lead to reduced return on capital and/or
impairment losses.
• Underperforming acquisitions and investments could result in a diversion
of management time.
• Optimal value may not be achieved from disposals.
See Operating Business Review for details of active portfolio management
on pages 16 to 27
28
• The Group’s diverse portfolio of businesses and products reduces the overall impact.
• Our devolved structure means our businesses are close to their markets and can pre-empt
and react to market disruption.
• DMGT executive membership of operating business boards.
• The Executive Committee, supported by operating businesses’ management teams,
monitors markets, the competitive landscape and technological developments.
• Regular analysis of business performance through financial results, KPIs and milestones
to highlight early indications of market disruption.
Change in the risk in FY 2016
Strategic
priority
This risk remained relatively stable
throughout FY 2016.
• Executive Committee oversight of progress from the centre as part of the business
review process.
• Regular analysis of business performance through financial results, KPIs and milestones.
• The autonomous culture of the Group encourages an entrepreneurial approach to the
development of organic growth opportunities and new products.
• Investments are approved by the Investment & Finance Committee, Executive Committee
or operating business management teams, dependent on criteria.
• Technology Summit: Group-wide event facilitating product and technology development
teams to share best practice and ideas.
• Strategic analysis of key investments by independent third parties.
This risk remained relatively stable
throughout FY 2016, as projects
progress, new products launch
and new projects are continuously
added to the portfolio.
• The Group’s diverse portfolio of businesses and products reduces the overall impact.
• Our devolved structure means our businesses are close to their markets and can pre-empt
and react to economic and geopolitical uncertainty.
• The relevant executives monitor the macroeconomic and geopolitical environment through
regular analysis of business performance through financial results, KPIs and milestones
to highlight early trends and impacts from economic and geopolitical uncertainty.
• Regarding exposure to the future UK exit from the EU, there is limited trade within, with or
sourcing from the European single market (apart from newsprint). Therefore the majority
of our businesses are not primarily dependent on access to it.
– Less than 10% of our revenues originate from entities based in the EU (excluding the UK).
– The majority of our newsprint is sourced from the EU, but the price and volume are fixed
This risk increased over FY 2016
primarily as a result of wider
macroeconomic volatility following
the UK vote to leave the EU.
by the Investment & Finance Committee.
• Regular analysis of business performance through financial results, KPIs and milestones.
• Investment & Finance Committee review post-acquisition performance.
• Performance of detailed due diligence.
• Retention of key management in acquired businesses.
• Implementation of DMGT Essentials post-acquisition.
• Acquisitions and disposals overseen by the Board.
The risk reduced in FY 2016
reflecting the rate and nature of
acquisitions and disposals during
the prior year.
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Principal Risks
2016 Strategic Priorities
Fostering innovation
to deliver organic
growth
Maintaining rigorous
and active portfolio
management
Driving international
growth
Using technology
to enable growth
Attracting and
developing
entrepreneurial talent
Strategic risks
Description
Market disruption
Market disruption creates opportunities as well as risks.
This enables us to move into new markets and geographies
to grow the business.
Failure to respond to market disruption, such as changes to
customer behaviours and demands, technological changes, the
availability of free information and the emergence of competitors
may affect the long-term viability of some principal businesses in
the Group.
Success of new product launches
and internal investments
The Group is continually investing in our products and services.
Internal investments in new products and services, and
development of existing products and services may fail to
achieve customer acceptance and yield expected benefits.
A lack of innovation and failure to successfully invest in our
products and services may compromise their competitiveness.
Uncertainty as a result of geographic expansion into new and
emerging markets.
• dmg media: acceleration in the decline of print advertising and circulation
revenue, but growth in digital advertising revenue.
• RMS: convergence of reinsurance with capital markets and increased
consolidation in the insurance industry.
• dmg information, for example, Genscape and EDR: the availability of free
information, driven by potential changes in legislation, could dilute the value
of some offerings in the portfolio.
• MailOnline: monetisation of digital strategy.
• RMS: client adoption of the first RMS(one) application, Exposure Manager,
and further planned releases from the RMS(one) suite of products.
• Xceligent: continued expansion across the US.
• dmg events: geo-cloning of individual events across new locations.
Geographic expansion presents significant opportunities as well as risks.
Risks may include unexpected costs or logistical and management challenges
due to differing business cultures, heightened security threats or local legal
and regulatory requirements.
Economic and geopolitical uncertainty
The Group generates income from certain sectors and markets
that can be impacted by economic and geopolitical uncertainty.
volumes.
• The European property businesses in dmg information: possible decline in
residential and commercial property transactions versus pre UK referendum
Following the UK vote to leave the EU, there is uncertainty
surrounding the nature, timing and associated trade conditions
of the UK exit.
• dmg media: a weakening of the UK economy, particularly if consumer led,
could accelerate the decline in print advertising revenue.
• Euromoney: uncertainty in the financial services sector could affect a number
of businesses in the Euromoney portfolio.
The Group is also likely to experience ongoing foreign exchange
• Genscape: fluctuations in the global commodities markets could impact
rate fluctuations in the currencies in our key markets.
Genscape’s revenues.
There is further long-term geopolitical uncertainty associated
with the outcome of the US presidential election.
• dmg events: fluctuations in the global oil markets could impact revenue
achieved from associated trade shows.
Acquisitions and disposals
Active portfolio management is key to the Group’s strategy.
The success of portfolio management could be compromised
by not identifying the right targets, investments failing, or not
divesting from non-core businesses at the right time.
The Group completes multiple small acquisitions and bolt-on
investments every year; some may not perform as expected.
Larger acquisitions are rarer.
acquisition and investment targets.
• Failed investments may lead to reduced return on capital and/or
• Underperforming acquisitions and investments could result in a diversion
impairment losses.
of management time.
• Optimal value may not be achieved from disposals.
See Operating Business Review for details of active portfolio management
on pages 16 to 27
Examples and dynamics of the risk
Mitigation
• The Group’s diverse portfolio of businesses and products reduces the overall impact.
• Our devolved structure means our businesses are close to their markets and can pre-empt
and react to market disruption.
• DMGT executive membership of operating business boards.
• The Executive Committee, supported by operating businesses’ management teams,
monitors markets, the competitive landscape and technological developments.
• Regular analysis of business performance through financial results, KPIs and milestones
to highlight early indications of market disruption.
Change in the risk in FY 2016
Strategic
priority
This risk remained relatively stable
throughout FY 2016.
• Executive Committee oversight of progress from the centre as part of the business
review process.
• Regular analysis of business performance through financial results, KPIs and milestones.
• The autonomous culture of the Group encourages an entrepreneurial approach to the
development of organic growth opportunities and new products.
• Investments are approved by the Investment & Finance Committee, Executive Committee
or operating business management teams, dependent on criteria.
• Technology Summit: Group-wide event facilitating product and technology development
teams to share best practice and ideas.
• Strategic analysis of key investments by independent third parties.
This risk remained relatively stable
throughout FY 2016, as projects
progress, new products launch
and new projects are continuously
added to the portfolio.
• The Group’s diverse portfolio of businesses and products reduces the overall impact.
• Our devolved structure means our businesses are close to their markets and can pre-empt
and react to economic and geopolitical uncertainty.
• The relevant executives monitor the macroeconomic and geopolitical environment through
regular analysis of business performance through financial results, KPIs and milestones
to highlight early trends and impacts from economic and geopolitical uncertainty.
• Regarding exposure to the future UK exit from the EU, there is limited trade within, with or
sourcing from the European single market (apart from newsprint). Therefore the majority
of our businesses are not primarily dependent on access to it.
– Less than 10% of our revenues originate from entities based in the EU (excluding the UK).
– The majority of our newsprint is sourced from the EU, but the price and volume are fixed
This risk increased over FY 2016
primarily as a result of wider
macroeconomic volatility following
the UK vote to leave the EU.
• The impact of further weakening in British pound to US dollar exchange rates
up to six months in advance.
will positively affect consolidated revenues.
• Growth opportunities and potential synergies lost through failure to identify
• Our investment preferences and criteria are clearly articulated. Investments are approved
by the Investment & Finance Committee.
• Regular analysis of business performance through financial results, KPIs and milestones.
• Investment & Finance Committee review post-acquisition performance.
• Performance of detailed due diligence.
• Retention of key management in acquired businesses.
• Implementation of DMGT Essentials post-acquisition.
• Acquisitions and disposals overseen by the Board.
The risk reduced in FY 2016
reflecting the rate and nature of
acquisitions and disposals during
the prior year.
29
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Principal Risks
Strategic risks continued
Description
Examples and dynamics of the risk
Securing and retaining talent
Failure to secure and retain the right people for senior and
business-critical roles could impact the ability of businesses in
the Group to maintain performance and deliver growth.
At any one time the Group has unfilled vacancies for key roles,
however, only a select few roles are deemed to be business
critical. A significant impact from loss of key talent would
therefore rarely occur.
• Entrepreneurship and leadership skills are a priority for the Group and key
to the continued success of many of our operating businesses.
• Technology and software development skills remain crucial to many of
our businesses, particularly the European property businesses, Xceligent,
Hobsons, RMS, Genscape and MailOnline where collectively there is
significant investment in product development.
• Sales and operational execution expertise with market and product
knowledge are vital, particularly in our businesses with significant expansion
plans, such as Xceligent, Hobsons, RMS and Genscape.
Operational risks
Description
Major change projects
Increased costs, impairment losses and delayed or lower revenues
can result from the failure or delay of a major project.
Failure or significant delay in the delivery of a major change
project, or the failure to effectively communicate to the market
could damage the reputation of the business and impact on
DMGT’s share price.
Information security breach or cyberattack
An information security breach would cause reputational
damage with potential for a resultant loss of revenue.
A breach of data protection legislation could result in financial
penalties for the business affected and potentially the Group.
The investigation and management of an incident would result
in the diversion of management time.
Reliance on key third parties
Certain third parties are critical to the operations of DMGT’s
businesses. A failure of one of our critical third parties may cause
disruption to business operations.
An operational or financial failure of a key supplier could affect
the ability of DMGT’s businesses to deliver products, services
or events with a direct impact on revenue and/or costs and
management time.
The reputation of the business may be damaged by the poor
performance or failure of some third parties, particularly
outsourced service providers.
Compliance with laws and regulations
The Group operates across multiple jurisdictions. Increasing
regulation, especially in the areas of data privacy and security,
increases the risk that the Group is not compliant with all
applicable laws and regulations across all of the jurisdictions
in which it operates, which could result in financial penalties
and reputational damage. Increasing regulation also results
in increasing costs of compliance.
Pension scheme deficit
The newspaper business, certain other UK businesses and
DMGT head office operated defined benefit pension schemes.
These schemes are closed to new entrants.
The schemes remain ultimately funded by DMGT, with Pension
Fund Trustees (Trustees) controlling the investment allocation.
There is a risk that the funding of the deficit could be greater
than expected.
Examples and dynamics of the risk
Mitigation
Change in the risk in FY 2016
Divisions
most affected
• A number of organisational changes have been identified by our new Executive
Committee under Simplicity, and with our operating businesses, to achieve
greater cost efficiencies in administrative tasks, speed up decision-making
and develop centres of expertise to share knowledge more effectively across
the portfolio.
• The risk is relevant to all businesses in the Group, in particular Hobsons, dmg media,
RMS and Euromoney due to the nature of their products and services.
• Loss of confidential, personal or payment card information.
• Integrity of online products, services and data compromised.
• Unavailability of online products and services.
Key third parties include:
• data centre and cloud software and service providers;
• IT development support;
• newsprint, flexographic plate and ink suppliers;
• newspaper distribution and wholesale;
• data providers; and
• event venues.
Particular areas of focus for DMGT businesses are:
• data protection, including the new EU General Data Protection Regulation (GDPR);
• market abuse, including the new UK Market Abuse Regulation;
• new financial transparency regulations related to prices, benchmarks and
indices, such as MiFID II particularly affecting our businesses in research and
commodity pricing;
• libel legislation;
• UK tax compliance;
• entering regulated markets or sectors; and
• trade sanctions.
• The latest triennial valuation and funding statement was agreed between
the Company and the Trustees during the year.
• The risk could change due to market volatility regarding assets and liabilities,
or changes in valuation methodologies and assumptions.
• The agreed funding plan gives certainty over the financial commitment until FY 2019.
• Monitoring and management of pension risks is performed by the DMGT Pension
Sub-Committee.
• Company appointed Trustees.
30
Mitigation
centrally by DMGT.
• Formal approach to talent management and succession management, coordinated
• Executive management involved in the recruitment of all leadership roles.
• Alignment of employee incentives and Group strategy.
• Payment of competitive rewards including LTIP for key senior roles, developed using
industry benchmarks and external specialist input.
• Increased focus on providing a broader set of employee benefits across our portfolio.
• Investment in leadership development programmes and other related programmes.
• Monitoring of employee performance and engagement.
• Succession and retention planning.
• Increased employee communication, including from the Executive Committee and
operating business management in respect of planned organisational changes.
Change in the risk in FY 2016
Strategic
priority
This risk remained relatively stable
during FY 2016.
• Rigorous project planning procedures and ongoing project management.
• Regular reporting on progress to the Executive Committee for significant change projects.
• Board or specific oversight committee monitoring for significant change projects,
including tracking of both progress and realisation of the benefits arising from agreed
organisational changes.
• DMGT executive membership of operating business boards.
• Project assurance using specialist external resources.
• Group information security policy and detailed security standards with regular reviews
against these standards.
• Group policy on business continuity planning including IT system disaster recovery.
• Working group with representatives from across the Group meeting regularly and sharing
information security best practice.
• Oversight by the Executive Committee and assurance on the progress against security
standards through IT audit reports provided to the Audit & Risk Committee.
• Oversight by operating business board at high-risk businesses.
• Information security is reviewed as part of every internal audit.
• Due to the Group’s geographic and industry diversity, a significant impact from the
loss of a key third party would rarely occur.
• Operational and financial due diligence is undertaken for key suppliers on an
• Close management of key supplier relationships including contracts, service levels
ongoing basis.
and outputs.
• Contingency arrangements in place for some key suppliers.
• Dedicated newsprint-buying team.
• Business continuity management.
• Event cancellation and business interruption insurance policies.
• Changes in laws and regulations are monitored and potential impacts discussed
with the relevant persons, Board, or committee, or escalated as appropriate.
• Developments in the legal and regulatory landscape are reviewed by
• Implementation and monitoring of Group-wide policies to address new legislation
the Audit & Risk Committee.
and regulation where applicable.
• Group-wide Governance, Risk and Compliance network and working groups for key
emerging compliance areas, such as the GDPR.
This risk remained relatively stable
during FY 2016. As some major
projects reach the final stages of
completion, other projects across
the Group begin.
This risk increased over FY 2016
as the inherent threat of an
information security breach
or cyberattack continues to
increase. This is partially offset
by continuous improvement in
information security controls.
This risk remained relatively stable
during FY 2016.
All
All
All
All
This risk increased over FY 2016
with the finalisation of the GDPR.
Compliance roadmaps are
underway, with full compliance
required by 25 May 2018.
The risk from other laws and
regulations remained relatively
stable across the Group
throughout FY 2016.
This risk reduced over FY 2016 owing
to the agreement of the funding
plan for the next three years.
dmg media
DMGT
Euromoney
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Principal Risks
Strategic risks continued
Description
Examples and dynamics of the risk
Mitigation
Securing and retaining talent
Failure to secure and retain the right people for senior and
business-critical roles could impact the ability of businesses in
the Group to maintain performance and deliver growth.
At any one time the Group has unfilled vacancies for key roles,
however, only a select few roles are deemed to be business
critical. A significant impact from loss of key talent would
therefore rarely occur.
• Entrepreneurship and leadership skills are a priority for the Group and key
to the continued success of many of our operating businesses.
• Technology and software development skills remain crucial to many of
our businesses, particularly the European property businesses, Xceligent,
Hobsons, RMS, Genscape and MailOnline where collectively there is
significant investment in product development.
• Sales and operational execution expertise with market and product
knowledge are vital, particularly in our businesses with significant expansion
plans, such as Xceligent, Hobsons, RMS and Genscape.
• Formal approach to talent management and succession management, coordinated
centrally by DMGT.
• Executive management involved in the recruitment of all leadership roles.
• Alignment of employee incentives and Group strategy.
• Payment of competitive rewards including LTIP for key senior roles, developed using
industry benchmarks and external specialist input.
• Increased focus on providing a broader set of employee benefits across our portfolio.
• Investment in leadership development programmes and other related programmes.
• Monitoring of employee performance and engagement.
• Succession and retention planning.
• Increased employee communication, including from the Executive Committee and
operating business management in respect of planned organisational changes.
Change in the risk in FY 2016
Strategic
priority
This risk remained relatively stable
during FY 2016.
Examples and dynamics of the risk
Mitigation
Change in the risk in FY 2016
Divisions
most affected
• A number of organisational changes have been identified by our new Executive
Committee under Simplicity, and with our operating businesses, to achieve
greater cost efficiencies in administrative tasks, speed up decision-making
and develop centres of expertise to share knowledge more effectively across
the portfolio.
• The risk is relevant to all businesses in the Group, in particular Hobsons, dmg media,
RMS and Euromoney due to the nature of their products and services.
• Loss of confidential, personal or payment card information.
• Integrity of online products, services and data compromised.
• Unavailability of online products and services.
Key third parties include:
• data centre and cloud software and service providers;
• IT development support;
• newsprint, flexographic plate and ink suppliers;
• newspaper distribution and wholesale;
• data providers; and
• event venues.
Particular areas of focus for DMGT businesses are:
• data protection, including the new EU General Data Protection Regulation (GDPR);
• market abuse, including the new UK Market Abuse Regulation;
• new financial transparency regulations related to prices, benchmarks and
indices, such as MiFID II particularly affecting our businesses in research and
commodity pricing;
• libel legislation;
• UK tax compliance;
• trade sanctions.
• entering regulated markets or sectors; and
• Rigorous project planning procedures and ongoing project management.
• Regular reporting on progress to the Executive Committee for significant change projects.
• Board or specific oversight committee monitoring for significant change projects,
including tracking of both progress and realisation of the benefits arising from agreed
organisational changes.
• DMGT executive membership of operating business boards.
• Project assurance using specialist external resources.
• Group information security policy and detailed security standards with regular reviews
against these standards.
• Group policy on business continuity planning including IT system disaster recovery.
• Working group with representatives from across the Group meeting regularly and sharing
information security best practice.
• Oversight by the Executive Committee and assurance on the progress against security
standards through IT audit reports provided to the Audit & Risk Committee.
• Oversight by operating business board at high-risk businesses.
• Information security is reviewed as part of every internal audit.
• Due to the Group’s geographic and industry diversity, a significant impact from the
loss of a key third party would rarely occur.
• Operational and financial due diligence is undertaken for key suppliers on an
ongoing basis.
• Close management of key supplier relationships including contracts, service levels
and outputs.
• Contingency arrangements in place for some key suppliers.
• Dedicated newsprint-buying team.
• Business continuity management.
• Event cancellation and business interruption insurance policies.
• Changes in laws and regulations are monitored and potential impacts discussed
with the relevant persons, Board, or committee, or escalated as appropriate.
• Developments in the legal and regulatory landscape are reviewed by
the Audit & Risk Committee.
• Implementation and monitoring of Group-wide policies to address new legislation
and regulation where applicable.
• Group-wide Governance, Risk and Compliance network and working groups for key
emerging compliance areas, such as the GDPR.
• The latest triennial valuation and funding statement was agreed between
the Company and the Trustees during the year.
• The risk could change due to market volatility regarding assets and liabilities,
or changes in valuation methodologies and assumptions.
• The agreed funding plan gives certainty over the financial commitment until FY 2019.
• Monitoring and management of pension risks is performed by the DMGT Pension
Sub-Committee.
• Company appointed Trustees.
This risk remained relatively stable
during FY 2016. As some major
projects reach the final stages of
completion, other projects across
the Group begin.
This risk increased over FY 2016
as the inherent threat of an
information security breach
or cyberattack continues to
increase. This is partially offset
by continuous improvement in
information security controls.
This risk remained relatively stable
during FY 2016.
All
All
All
All
This risk increased over FY 2016
with the finalisation of the GDPR.
Compliance roadmaps are
underway, with full compliance
required by 25 May 2018.
The risk from other laws and
regulations remained relatively
stable across the Group
throughout FY 2016.
This risk reduced over FY 2016 owing
to the agreement of the funding
plan for the next three years.
dmg media
DMGT
Euromoney
31
Operational risks
Description
Major change projects
Increased costs, impairment losses and delayed or lower revenues
can result from the failure or delay of a major project.
Failure or significant delay in the delivery of a major change
project, or the failure to effectively communicate to the market
could damage the reputation of the business and impact on
DMGT’s share price.
Information security breach or cyberattack
An information security breach would cause reputational
damage with potential for a resultant loss of revenue.
A breach of data protection legislation could result in financial
penalties for the business affected and potentially the Group.
The investigation and management of an incident would result
in the diversion of management time.
Reliance on key third parties
Certain third parties are critical to the operations of DMGT’s
businesses. A failure of one of our critical third parties may cause
disruption to business operations.
An operational or financial failure of a key supplier could affect
the ability of DMGT’s businesses to deliver products, services
or events with a direct impact on revenue and/or costs and
management time.
The reputation of the business may be damaged by the poor
performance or failure of some third parties, particularly
outsourced service providers.
Compliance with laws and regulations
The Group operates across multiple jurisdictions. Increasing
regulation, especially in the areas of data privacy and security,
increases the risk that the Group is not compliant with all
applicable laws and regulations across all of the jurisdictions
in which it operates, which could result in financial penalties
and reputational damage. Increasing regulation also results
in increasing costs of compliance.
Pension scheme deficit
The newspaper business, certain other UK businesses and
DMGT head office operated defined benefit pension schemes.
These schemes are closed to new entrants.
The schemes remain ultimately funded by DMGT, with Pension
Fund Trustees (Trustees) controlling the investment allocation.
There is a risk that the funding of the deficit could be greater
than expected.
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc FINANCIAL REVIEW
WELL PLACED TO GENERATE GROWING REVENUE, PROFIT AND CASH FLOW
The Financial Review details DMGT’s
performance in the year, which saw stable
underlying revenues and a resilient profit
performance. Underlying operating profit
declined as a result of challenging trading
conditions in some of our markets, and
disposals adversely impacted adjusted profit
before tax and earnings per share. Overall
performance was in line with our expectations.
Performance highlights
The diverse nature of DMGT’s portfolio, by sector, geography
and revenue type, helped to support the Group’s revenue
performance, which was stable on an underlying basis. Digital
and subscription businesses continued to grow, particularly
for RMS, dmg information and MailOnline, offset by difficult
market conditions for the banking and commodity sectors
at Euromoney, the European property information
businesses within dmg information and continued declines at
dmg media. Reported revenues benefited from the stronger
US dollar relative to the British pound. The reduction in Group
underlying operating profit, adjusted profit before tax and
adjusted earnings per share was principally due to the dmg
media business, which suffered an underlying 12% decline in
print advertising revenues in the year, although outperforming
the market.
The recommended full-year dividend increased by 3%,
reflecting the Board’s confidence in the long-term prospects
for DMGT and representing another year of real growth.
DMGT maintained a strong balance sheet, with the year-end
net debt to EBITDA ratio standing at 1.8x despite the adverse
impact of the stronger US dollar, reflecting the benefit of net
M&A proceeds and good cash flow generation.
Revenue performance
Group revenues in the financial year were in line with the prior
year on an underlying basis. On a reported basis, revenues
rose by 4% to £1,917 million reflecting the stronger US dollar
relative to the British pound and the occurrence of the
Gastech event this year. The average exchange rate during
the year was £1:$1.42 compared with £1:$1.54 in the prior year.
There was good underlying growth in several revenue
categories, particularly subscriptions and digital advertising,
which was offset by the revenue decline in print advertising
and, to a lesser extent, circulation.
Revenues from B2B businesses were £1,212 million, an
underlying increase of 1%. Good growth was achieved
at dmg information and there was solid progress at RMS.
Reported revenues benefited strongly from favourable
exchange rates as described above.
Revenues from the consumer media business, dmg media,
were £706 million, down 2% on an underlying basis.
Business performance
Revenues
Operating profit*
Growth
FY16
FY15
Growth
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
DMGT
FY16
£m
205
498
105
403
706
FY15
£m
187
430
94
403
731
Reported
Underlying^
+10%
+16%
+12%
+0%
(3%)
+1%
+6%
+2%
(4%)
(2%)
1,917
1,845
+4%
+0%
£m
36
77
29
100
77
(42)
277
£m
26
75
20
107
96
(36)
288
Reported
Underlying^
+36%
+3%
44%
(6%)
(20%)
(16%)
(4%)
+14%
+6%
(6%)
(12%)
(23%)
(16%)
(11%)
DMGT’S DIVERSE SECTOR
PORTFOLIO, BALANCED
REVENUE STREAMS AND
GOOD GEOGRAPHIC SPREAD
HAVE HELPED SUPPORT
REVENUES AND PROFITABILITY
IN A YEAR THAT SAW VARIED
TRADING CONDITIONS
ACROSS OUR BUSINESSES.
Stephen Daintith
Finance Director
Daily Mail and General Trust plc
32
Annual Report 2016
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Financial Review
FINANCIAL HIGHLIGHTS
Underlying^ revenue growth
+0%
2015: +1%
Underlying^ operating
profit growth*
-11%
2015: -4%
Adjusted operating margin*
14%
2015: 16%
Adjusted EPS*
-6%
2015: +7%
Adjusted PBT*
-7%
2015: -4%
Dividend
22.0p
2015: 21.4p
Dividend increase*◊
Net debt/EBITDA ratio*#
+3%
2015: +5%
1.8x
2015: 1.8x
Statutory revenue growth#
Statutory PBT growth
+4%
2015: -1%
+14%
2015: -19%
Strong growth in MailOnline revenues only partially offset the
impact of declining print advertising and circulation revenues.
Reported revenues were adversely impacted by the disposal
of Wowcher.
The charts on page 34 demonstrate DMGT’s diverse
revenue profile.
Further detail on each operating business’s revenue
performance can be found on pages 16 to 27.
Operating profit performance
In the financial year, adjusted operating profit of £277 million
was down by 11% on an underlying basis and by 4% on
a reported basis. The overall operating margin was 14%
compared to 16% in the prior year, reflecting good margin
performances from RMS and dmg events, offset by lower
margins at dmg media, dmg information and Euromoney.
The overall profit of the Group’s B2B operations, including
allocated Group corporate cost, decreased by an underlying
5% to £215 million, whilst the profit from consumer media,
including corporate costs, was £62 million, an underlying
decrease of 29%.
The B2B operations generated 78% of the year’s operating
profit with 22% generated by consumer media, compared
to 72% and 28% in the prior year. Well over half of DMGT’s
profits come from outside the UK, with 40% generated
in North America.
Joint ventures and associates
The Group’s share of the operating profits* of its joint ventures
and associates decreased by 30% to £23 million, reflecting the
disposal of DMGT’s c.39% stake in Local World in November
2015. The share of operating profits from Zoopla Property
Group (ZPG) increased more than 50%, reflecting the
business’s particularly strong performance, notably its price
comparison services division, following the acquisition
of uSwitch in June 2015. ZPG saw the number of its UK property
partnerships continue to grow during the year and, in April
2016, acquired the Property Software Group, a provider of
property software and workflow solutions to over 8,000 UK
agency branches. ZPG released its Preliminary Full Year results
on 30 November 2016.
The share of operating profits and losses from other joint
ventures and associates was £2 million. These include
Euromoney’s stake in Dealogic, investments by dmg information
in early-stage businesses and dmg media’s stake in Excalibur.
Financing costs
Adjusted net finance costs were £40 million and in line with the
prior year. There was no investment income in the year.
The pension finance charge, which is excluded from adjusted
results, was £5 million for the year compared to £7 million for the
prior year.
Exceptional finance costs in the prior year included a
£40 million charge for the premium on the early redemption
of bonds in October 2014.
Results before taxation
Adjusted profit before tax declined by 7% to £260 million.
The statutory pre-tax profit for the financial year was
£247 million compared to £216 million in the prior year.
Taxation
The adjusted tax charge was £37 million for the year,
compared to £41 million for the prior year, and is stated after
adjusting for the effect of exceptional items. The adjusted tax
rate of 14.4% decreased slightly compared to 14.8% in 2015.
The effective tax rate is expected to increase to around 20%
over the next three years as the proportion of US-generated
profits increases.
The statutory tax charge for the year, excluding £2 million
of tax charges in respect of joint ventures and associates, was
£33 million, £4 million less than the adjusted tax charge. There
were tax credits of £10 million in respect of the amortisation
and impairment of intangible fixed assets. There were also
£8 million of exceptional tax charges, a combination of tax
credits on restructuring charges, recognition of previously
unrecognised deferred tax assets and de-recognition of
overseas tax losses.
Footnotes are defined on the inside front cover with the exception of that below:
^ Underlying adjusted revenue or adjusted operating profit growth is on a like-for-like basis, adjusted for constant exchange rates, disposals, non-annual events
occurring in the current and prior year and acquisitions; see pages 36 and 37. For dmg information, underlying growth includes the year-on-year organic growth from
acquisitions, excludes disposals and includes revenues from one-off sales of IP assets, consistent with prior years. For dmg events, the comparisons are between events
held in the year and the same events held the previous time. For Euromoney, acquisitions and disposals are excluded and a biennial event that took place during the
current year is also excluded. Euromoney’s underlying profit excludes the benefit in FY 2015 of the release of the accrual, charged in FY 2014, for the CAP incentive plan.
For dmg media, underlying comparisons exclude disposals, Wowcher and Evenbase, and include the year-on-year organic growth from acquisitions. dmg media’s
underlying growth rates also exclude the benefit of an additional 53rd week from the FY 2016 results. Underlying revenues only include the profit but not the gross-up,
equivalent to the cost of sales, from low-margin newsprint resale activities.
33
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Financial Review
Revenue profile
By business (%)
By type (%)
By destination (%)
RMS
dmg information
dmg events
Euromoney
dmg media
11
26
5
21
37
Transactions and other
Print advertising
Digital advertising
Circulation
Subscriptions
Events, conferences
and training
19
13
7
16
33
12
UK
North America
Rest of the World
47
33
20
Profit after tax
Adjusted Group profit after tax and minority interests
declined by 8% to £198 million. Statutory post tax profit was
£214 million, compared with £245 million in the prior year.
Earnings per share
Adjusted basic earnings per share declined by 6% to
56.0 pence, compared with 59.7 pence in the prior year.
The statutory basic earnings per share declined by 4% to
57.8 pence. The weighted average number of shares in issue
during the year was 353.4 million, down from 360.8 million
in the previous year, reflecting share buy-back activity.
Exceptional items and amortisation
Exceptional operating costs were £55 million compared
to £21 million in the prior year. The increase was mainly
due to £37 million of reorganisation, redundancy and
consultancy costs, an increase on the £20 million in the
prior year, including £15 million in respect of dmg media,
£9 million of DMGT central corporate costs and £6 million in
respect of dmg information. Reorganisation initiatives, under
Simplicity, included reducing the headcount by over 400
positions, notably within the newspaper businesses, and
streamlining central support functions within dmg information
businesses, particularly those that have expanded through
bolt-on acquisitions.
Exceptional operating costs also included £8 million in respect
of an additional Euromoney provision for a potential overseas
sales tax exposure and £5 million in respect of a supplier that
went into voluntary administration.
The charge for amortisation of intangible assets arising on
business combinations, including the share from joint ventures
and associates, increased by £4 million to £52 million. The
Group also made an impairment charge against goodwill
and acquired intangible assets of £55 million, including
£28 million in respect of Euromoney businesses, notably Mining
Indaba and Total Derivatives, and £25 million in respect
of dmg media’s Elite Daily business, since audience and
revenue growth has not met expectations.
Cash flow and net debt
Net debt at the end of the year was £679 million, a decrease
of £23 million during the year.
The Group generated operating cash flows of £200 million,
a conversion rate of 72% of operating profits, compared to
90% in the prior year, reflecting customers paying in advance
of the Gastech event in October 2015. Operating cash flows
included exceptional operating items of £25 million and
capital expenditure of £75 million, excluding £13 million
of expenditure in respect of RMS(one). During the year there
were also pension funding payments of £34 million, net interest
payments of £35 million and £6 million of share buy-backs. The
weakening of the British pound, notably against the US dollar,
resulted in an adverse debt revaluation of £58 million.
Active portfolio management continued throughout the
year with acquisitions totalling £42 million and disposals,
including of Local World and Wowcher totalling £128 million,
thus generating net proceeds of £86 million. For further
information on DMGT’s acquisitions and disposals see the
Operating Business Review (on pages 16 to 27).
At the end of the financial year, the Group had £425 million
of bonds with £214 million maturing in December 2018,
£10 million maturing in April 2021 and £202 million maturing
in June 2027. At the year end, the committed bank facilities
were £624 million, of which £367 million was unutilised, and
cash balances were £18 million. Bond debt constitutes less
than half of the debt available to DMGT.
DMGT’s ratio of year-end net debt to adjusted profits before
interest, depreciation and amortisation (EBITDA) was 1.8x,
below the Group’s preferred upper limit of 2.0 x. DMGT has
retained its BBB- investment grade corporate credit ratings
from each of Standard & Poor’s and Fitch.
Pensions
The Group’s defined benefit pension schemes provide
retirement benefits for UK staff, largely in dmg media. These
schemes are closed to new entrants. The deficit on the Group’s
defined benefit pension schemes increased from £159 million
at the beginning of the year to £246 million at the financial year
end (calculated in accordance with IAS 19 (Revised)). Falling
discount rates increased the value of pension liabilities. This
was partly offset by gains on investments that hedge against
inflation and interest rate risk, as well as returns on other
investment categories.
Following the triennial actuarial valuation of the defined
benefit schemes as at 31 March 2016, the Group has agreed
to a revised plan of reduced funding payments. This outcome
reflects the liability hedging activity referred to above, better
investment performance, increased mortality and lower
inflation than expected at the previous valuation in 2013.
34
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Financial Review
The revised funding plan includes payments of approximately
£13 million p.a. to FY 2019 and £16 million p.a. from FY 2020 to
FY 2027. This compares favourably to the £34 million funding
payments that were made into the main schemes during
FY 2016. In addition a contribution equal to 20% of any share
buy-backs is contributed to the schemes. Contributions will be
discontinued should the schemes’ actuary agree the schemes
are no longer in deficit. The next formal actuarial valuation is
scheduled for 31 March 2019.
Dividends
The Board aims to deliver sustained dividend growth in real
terms. The recommended final dividend is 15.3 pence which,
if approved, would make the total dividend for the year
22.0 pence, an increase of 3% over the prior year. The Board’s
decision to recommend increasing the dividend, in real terms,
despite the decline in adjusted earnings during the year
reflects the Group’s dividend policy and the Board’s
confidence in the Group’s ability to deliver future long-term
earnings growth. The dividend policy is to grow the dividend
in real terms and, in the medium term, to distribute around
one-third of the Group’s adjusted earnings. This policy
reflects the combined objectives of delivering a reliable
and predictable dividend growth trajectory while also being
sufficiently prudent to retain the flexibility to make significant
investments in the long-term future growth of the business.
Viability Statement
In accordance with provision C.2.2 of the 2014 Corporate
Governance Code, the Directors have assessed the
prospects of the Company. The Board used a three-year
review period as this is consistent with the Group’s business
planning cycle. Additionally the next refinancings of our
bank debt facilities and 5.75% bonds is within the next three
years (April 2019 and December 2018 respectively).
The Board’s assessment of the Company’s future prospects
and viability determined the Group’s overall risk capacity
by considering banking and bond covenants, other
financial commitments, and borrowing capacity to
determine the maximum loss from risk events that the
Group could endure whilst remaining viable. The
assessment has also been made with reference to the
Group’s current position and prospects, the Group
strategy, the Board’s risk appetite and principal risks,
which the Directors review at least annually.
Group forecast revenue, operating profit, EBITDA and cash
flows were subject to robust downside stress testing over
the assessment period, which involved modelling the
impact of a combination of severe but plausible adverse
scenarios. This was focused on the impact of the Group’s
principal risks crystallising, including modelling a number
of successive product investment failures, a dramatic
decline in print advertising revenue, significant decrease
in property transactions and a severe cyberattack.
In making the assessment, the Directors have considered
the Group’s diverse portfolio of businesses and products,
as seen in DMGT at a Glance on page 4, its ability to
restructure quickly and its headroom on bank covenants.
Based on the analysis described above, the Directors
confirm that they have a reasonable expectation that
the Group will continue to operate and meet its liabilities
as they fall due over the next three years.
Adjusted results
When reviewing DMGT’s performance, the Board and
management team particularly focused on adjusted results
rather than statutory results. There are a number of items that
are included in statutory results but which are considered to
be one-off in nature or not representative of the business’s
performance and which are excluded from adjusted results.
The tables on page 36 show the full list of adjustments between
statutory operating profit and adjusted operating profit by
business, as well as between statutory profit before tax and
adjusted profit before tax at Group level for both FY 2016
and FY 2015.
Note 13 on page 123 shows the full list of adjustments between
statutory and adjusted results. The table on page 36 shows
a summarised version of the reconciliation from statutory profit
before tax to adjusted profit before tax.
The explanation for each adjustment is as follows:
i.
ii.
iii.
iv.
v.
vi.
The adjusted results for FY 2015 include the pre-disposal
results of discontinued operations, namely Jobsite, which was
the final remaining part of dmg media’s digital recruitment
business, Evenbase, which was sold in October 2014, whereas
statutory results only include continuing operations.
Businesses occasionally incur exceptional costs in respect of
a reorganisation, such as Simplicity. These are non-recurring
in nature and are excluded from adjusted results.
Occasionally the carrying value of an asset in the
balance sheet is considered too high and it is appropriate to
impair it. The associated one-off charge is excluded from
adjusted results. The ongoing depreciation and amortisation
of tangible assets and software, including products, is,
however, an everyday cost of doing business and is included
in both statutory and adjusted results. A reorganisation may
also result in the write-off of the carrying value of tangible
fixed assets, as was the case when dmg media vacated
office space during FY 2015, and this expense is excluded
from adjusted results.
When acquiring businesses, the premium paid relative to the
net assets on the balance sheet of the acquired business is
classified as either goodwill or as an intangible asset arising
on a business combination and is recognised on DMGT’s
balance sheet. This differs to organically developed
businesses where assets such as employee talent and
customer relationships are not recognised on the balance
sheet. Impairment and amortisation of intangible assets
and goodwill arising on acquisitions are excluded from
adjusted results as they relate to historic M&A activity rather
than the trading performance of the business. An example,
is the impairment in FY 2016 of the goodwill and acquired
intangible assets associated with dmg media’s Elite
Daily business.
The Group makes gains or losses when disposing of businesses,
for example on the disposal in November 2015 of DMGT’s
c.39% stake in Local World. These one-off items are excluded
from adjusted results as they reflect the value created since
the business was formed or acquired rather than the
operating performance of the business during the year.
The Group’s debt includes bonds issued by DMGT in the past,
when interest rates were at higher levels than currently. DMGT
pays interest on the bonds and the cost is included in both
statutory and adjusted results. In October 2014, however,
DMGT bought back bonds before their due dates and, given
the relatively high coupon rates on the bonds, relative to
current market rates, paid a premium to do so. The buy-back
premium, which is different to the cost of servicing the debt
and is a one-off expense, is excluded from adjusted results.
35
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Financial Review
vii. The finance charge on defined benefit schemes is a
formulaic calculation that does not necessarily reflect
the underlying economics associated with the relevant
pension assets and liabilities. It is effectively a notional
charge and is excluded from adjusted results.
viii. In FY 2015, the Press Association paid DMGT a significantly
larger dividend than usual due to proceeds from its
disposal of MeteoGroup. The larger dividend resulted
from a disposal rather than operating activities and, similar
to a gain made by DMGT when disposing of a business,
was excluded from FY 2015 adjusted results.
ix.
Other items that are excluded from adjusted results
include changes in the fair value of certain financial
instruments and changes to future acquisition related
payments. They are considered one-off in nature and not
reflective of the ongoing cost of doing business. The share
of joint ventures’ and associates’ tax charges is included
in statutory profit before tax but, since it is a tax charge,
is excluded from adjusted profit before tax. The share
of joint ventures’ and associates’ interest charges is
reclassified to financing costs in the adjusted results.
Underlying growth
When assessing the performance of the different businesses,
the Board considers the adjusted results. The year-on-year
change in adjusted results may not, however, be a fair
like-for-like comparison as there are a number of factors
which can influence growth rates but which do not reflect
underlying performance.
When calculating underlying growth, adjustments are made
to give a like-for-like comparison. For example, the adjusted
results in FY 2016 benefited from the strengthening of the US
dollar relative to the British pound. To calculate underlying
growth, the prior year comparatives are restated using the
FY 2016 exchange rates.
Similarly, adjustments are made to completely exclude
disposals from both years. When businesses are acquired,
the prior year comparatives are adjusted to include the
acquisition or, in the case of Euromoney, the acquisition
is completely excluded from both years.
Reconciliation of statutory operating profit to adjusted operating profit: FY 2016
£ million
Statutory operating profit
Exceptional operating charges
Impairment and amortisation
Exclude JVs & Associates
Adjusted operating profit
dmg
information
dmg
events Euromoney
dmg
media
Corporate
costs
JVs and
associates
Group Explanation
47
6
24
77
27
1
1
29
37
13
50
100
32
24
21
77
(50)
8
–
(42)
3
3
11
17
129
58
107
(17)
277
ii
iv
RMS
33
3
–
36
Reconciliation of statutory operating profit to adjusted operating profit: FY 2015
£ million
Statutory operating profit
Discontinued operations
Exceptional operating charges
Tangible fixed asset impairment
Impairment and amortisation
Exclude JVs & Associates
Adjusted operating profit
dmg
information
dmg
events Euromoney
dmg
media
Corporate
costs
JVs &
Associates
Group Explanation
56
–
–
–
19
75
18
–
–
–
2
67
–
3
–
37
20
107
75
1
18
2
–
96
(36)
–
–
–
–
(36)
12
–
4
–
10
26
218
1
25
2
68
(26)
288
i
ii
iii
iv
RMS
26
–
–
–
–
26
Reconciliation of statutory profit before tax to adjusted profit before tax
£ million
Statutory profit before tax
Discontinued operations
Exceptional operating charges
Tangible fixed assets impairment
Impairment and amortisation
Profit on sale of assets
Bond redemption premium
Pension finance charge
Exceptional dividend income
Other adjustments
Adjusted profit before tax
FY 2016
FY 2015
Explanation
247
–
58
–
107
(138)
–
5
–
(19)
260
216
1
20
2
68
(82)
40
7
(3)
12
281
i
ii
iii
iv
v
vi
vii
viii
ix
36
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Financial Review
The timing of events can also be a distortion. Gastech, a major
event, took place in FY 2016 but not in FY 2015. To give a fair
like-for-like comparison when calculating underlying growth,
the FY 2015 comparative is amended to include the revenues
and profits from the March 2014 Gastech event.
In FY 2016, DMGT’s revenues grew by 4% on a reported basis
and the adjusted operating profit declined by 4%. The growth
rates benefited from the stronger US dollar and the occurrence
of Gastech. After adjusting for these factors as well as others,
such as acquisitions and disposals, the underlying growth
rates were 0% for revenues and a 11% decline in adjusted
operating profit, as shown in the table below.
Outlook
DMGT’s financial results for the year reflect the difficult market
environment faced by some of our businesses, particularly
in the print advertising, investment banking and property
information sectors. Nevertheless, the Group’s relatively
resilient performance demonstrates the benefits of our
diversified portfolio and the strength of our market-leading
businesses, which have been supported by substantial
investment over the last few years. Looking forward, we will
remain focused on prudent financial management to
maintain our strong balance sheet, alongside delivering
on the excellent long-term revenue, profit and cash flow
potential which the Group has developed.
Stephen Daintith
Finance Director
Underlying performance
£ million
Revenues
RMS
dmg information
dmg events
Euromoney
dmg media
DMGT
Operating profit
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
DMGT
FY 2016
Reported
M&A
Other Underlying
Reported
M&A
FY 2015
Exchange
rates
Other Underlying
Underlying
growth
205
498
105
403
706
1,917
36
77
29
100
77
(42)
277
205
496
105
393
650
187
430
94
403
731
1,849
1,845
36
79
29
98
69
(42)
269
26
75
20
107
96
(36)
288
(4)
(52)
(56)
(2)
(6)
(8)
17
(14)
(13)
(25)
(35)
(5)
(4)
(5)
15
22
8
18
2
65
6
4
1
11
(1)
16
(43)
(27)
10
(3)
(14)
21
7
202
469
104
408
665
1,848
32
74
31
111
90
(36)
302
+1%
+6%
+2%
(4%)
(2%)
+0%
+14%
+6%
(6%)
(12%)
(23%)
(16%)
(11%)
(2)
(6)
(4)
(12)
2
(2)
–
37
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc OUR PEOPLE AND OUR COMMUNITIES
At DMGT we all share a common goal:
to satisfy our customers’ need to know.
To do this we encourage and support
entrepreneurial behaviour and value people
who are courageous, curious and who
stretch themselves, but also act with integrity
and the best interests of their communities.
People
Our success is down to our people. They drive themselves,
others, and ultimately the businesses, to grow. Many are
driven entrepreneurs renowned in their industries for growing
businesses. Our culture is one that allows talented people to
rise to challenges and to be innovative. Our people agenda
is a key element of delivering against our strategic priorities,
particularly improving operational execution.
Being a part of DMGT means having the opportunity to find
something that you are passionate about and to truly make
it your own.
There is an expectation that individuals flourish at the
Company. We want people who are driven, who have the
capacity and curiosity to learn. We provide challenging work
with a purpose, and we give people the opportunity to grow
and develop through their own endeavours.
Our businesses employ a wide variety of practices to equip
employees with the skills to support experiential learning.
At Group level, emphasis is put on leadership coaching,
management training and technology.
Full details about DMGT’s approach to career development can be found
at www.dmgt.com/careers/working-with-us
Freedom, speed of action and initiative
We believe that our businesses are closest to their customers
and are best placed to make the right decisions.
This autonomy relies on an ethos of trust and integrity.
Establishing and maintaining this trust rests on clearly
articulated values, practices and processes. These are
underpinned by our five guiding principles:
• lawful, moral and ethical approach;
• purpose/control and accountability;
• transparency and openness;
• championing our people; and
• focused on quality.
We empower our people to do their job within this framework
and reinforce these principles through our incentive schemes,
which are detailed in our Remuneration Report.
Remuneration Report see page 60
Corporate responsibility
The Corporate Governance section (on page 44) outlines a
refocused approach to CR which will be adopted following
a review of the Corporate Responsibility (CR) Committee’s
activities. This review included an employee survey which
highlighted that CR activities were strongly welcomed as part
of employee engagement. As a result, a decision was taken to
ensure that responsibility for CR activities falls within the Human
Resources (HR) function.
CR activities will continue to be supported by the CR Champions
network as further described on page 40. The CR Champions
network will also continue to promote and support Group-
wide CR initiatives such as the DMGT Community Champion
Awards. The FY 2016 winners of these Awards are profiled on
page 40.
We will continue to highlight the CR activities of our businesses.
The flow of stories that emanate from the businesses will
continue to be published on each of DMGT’s communication
channels, showcasing the wonderful work DMGT’s employees
engage in with their local communities.
Keeping our people informed
One of the challenges of our decentralised
management approach is ensuring we can
still communicate with all of our people.
To address this. we have a range of Group
communications channels including:
• the DMGT Employee Centre, a new Group-wide
portal for employees;
• DMGT Daily, our daily email news bulletin;
• DMGT Careers webpage, showing opportunities
across our Group; and
• CR Champions network, a network of individuals
actively involved in CR at the operating businesses
(see page 40).
38
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Our People and our Communities
The year in review
DMGT Employee Centre
Following a project to capture how DMGT is viewed by its
people, a new Group-wide employee portal was developed
(see case study on page 38). The portal provides employees
with useful cross-Group information and policies and gives
them the opportunity to communicate with others working
in similar functions through online communities.
LinkedIn
Over the past year DMGT has been working closely with
LinkedIn to promote the DMGT Employee Brand to a wider
audience. Followers of DMGT can now see job opportunities
from around the Group and it is hoped this will not only improve
the talent pipeline, but also increase internal talent mobility.
Followers can also see employee testimonials, videos and
news updates.
Team changes
In September 2016 DMGT announced the appointment
of a new Director of Global HR who will be responsible for
leading DMGT’s HR strategy and ensuring it is implemented
across the Group.
Leadership
DMGT leaders throughout the Group have contributed to
a document called the Pillars of Performance. This captures
what DMGT collectively regards as essential leadership
attributes, capabilities and mindsets. These factors
differentiate successful leaders from the norm and help
guide their development.
Each operating business carries out an annual talent review
against the Pillars of Performance where, together, we
consider the capabilities and capacity that our teams
will require to deliver long-term growth plans. Implicit within
this are emergency cover and succession options for each
leadership position. Each operating business also undertakes
an annual discussion about team development.
Cross-Group development
To bring our businesses closer together and foster
collaboration, DMGT has delivered several developmental
initiatives this year aimed at senior managers and leaders:
• the Leadership Development Programme (LDP) is a
comprehensive programme developed and delivered
in partnership with Churchill College at the University
of Cambridge. It allows the sharing of insights in critical
leadership areas such as markets, competitive landscapes,
and advances in technology. There is particular emphasis
on coaching skills to develop high-performance teams.
This year alone, 75 senior leaders have completed
the programme;
• the DMGT Finance Conference is an annual event where
the finance teams from the operating businesses come
together to discuss industry updates, share expertise
and network;
• the Technology Leaders Summit, held in April, brought senior
technology leaders together to build DMGT-wide subject
matter communities centred on Technology Trends of the
Future. We recognise that tech leaders have to engage
and inspire others to see new opportunities and threats;
• as well as focusing on senior leaders, we are also committed
to developing those at an early stage in their career.
Through the establishment of an Early Career Development
Workshop (see below), developed and delivered in
partnership with Strayer University, we aim to identify and
support future leaders within the operating companies.
Through mentorship, structured career paths and challenging
assignments we look to grow and develop our future leaders.
We ran two pilot programmes this year in the US; and
• the CR Champions network is designed to provide an
opportunity for some of our most talented employees
to develop their leadership skills and network with other
individuals from around the Group (see the case study
on page 40 for further detail).
75
SENIOR LEADERS
COMPLETED THE
DMGT LEADERSHIP
DEVELOPMENT
PROGRAMME
IN FY 2016
EARLY CAREERS WORKSHOP
During the year DMGT began the early Career
Development Workshop. The aim of the workshop
is to provide DMGT employees in the early stages
of their careers with the opportunity to develop
their knowledge and skills across three main areas:
• product management;
• sales; and
• business leadership.
The workshop gives our emerging talent the
opportunity to engage, learn from and network
with senior leaders who are in attendance.
39
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Our People and our Communities
Community Champions Awards winners 2016
Team Award – Genscape, Urban League of Louisville
Genscape secured the Team Award due to a project
called ‘Urban League’. The project aims to support the
communities in which Genscape’s employees live, work and
play. The project accomplished this in three different ways:
• firstly in their use of physical space – when Genscape’s
lease was up last year, it continued its commitment to
disadvantaged urban areas by renovating an abandoned
warehouse building. It was a US$4.5 million build out project
that was completed by locals, with 66% of the money going
to local vendors;
• secondly, through community support – Genscape
continuously supports employees who get involved in
local associations and volunteering at museums, and it also
supports local hospitality vendors by using them for lunches
and guest accommodation; and
• finally, Genscape teamed up with the Louisville Urban
League to aid human capital in their communities by
offering furnishings, supplies and general support.
Merabeth Martin, Director, HR at Genscape commented
on winning the award, “It’s a huge honour for us and it’s
something that we’re proud of, and it will allow us to continue
to support the Urban League in all that they’re doing in our
community here in Louisville”.
Personal Achievement Award – Maria Realf
Maria, who works at YOU Magazine, secured her title as
winner of the Personal Achievement Award 2016 as a result of
her outstanding efforts in raising awareness of brain tumours.
Maria’s younger brother sadly passed away due to a brain
tumour two years ago, so she decided to set up a petition
calling on the UK government to invest more into research.
Brain tumours are the biggest cancer killer of children and
young adults under the age of 40, yet receive just 1% of the
national spend on research into cancer.
A network of individuals representing
each operating business who meet by video call
each quarter to discuss CR at a grassroots level.
The CR Champions share ideas and lessons learnt
from CR initiatives they have carried out to share
best practice. They promote Group initiatives
such as the Community Champions Awards
and Green Week.
To find out more about the CR Champions network go to
www.dmgt.com/corporate-responsibility
Cross-Group mobility
As a product of the Early Career Development Workshop,
we have specifically identified global career opportunities
as a key initiative to developing our people further. This is
evident even at senior leadership level. At DMGT Annie
Edwards has joined the senior team from one of our operating
businesses, Genscape, to take up the position of DMGT
Director of Global HR.
People success performance metrics
Our businesses share common people objectives. We can
better serve our businesses and measure their impacts through
a new approach. With the implementation of the Centre
of Expertise for HR, DMGT will evaluate the quality of our
businesses’ performance in terms of our most valuable asset,
our people. Performance will be measured through turnover,
return on investment on people and employee engagement.
These metrics will assess the contribution to productivity
improvement in our businesses through people.
Outlook
Over the next 12–18 months DMGT will be establishing a Centre
of Expertise for HR (Centre). The formation of the Centre is part
of a wider reorganisation of Group structure, under Simplicity,
and will provide support for all the businesses at DMGT,
pooling knowledge that already exists and ensuring all of our
businesses have access to it. This means that businesses will
be able to access a group of the best experts from across
DMGT in a number of key HR areas rather than having to
source them individually or to engage external advisers.
The Centre, will specialise in four areas:
• talent & recruitment;
• learning & development; and
• communications & reward.
CR will also form part of the Centre.
CR CHAMPIONS NETWORK
NIKI LEE
JOHN
BOANNO
ERIN
GARLAND
MICHAEL
COLLINS
FRAN SALLAS
JOHN
WHITAKER
40
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc Our People and our Communities
After six months the petition had received over 120,000
signatures, which eventually resulted in a debate at
Westminster. Maria’s campaign also prompted the first
ever inquiry by the House of Commons’ Petitions Committee
in respect of brain tumours, which found that brain tumour
patients and their families have been failed for decades.
The Government has now announced plans for a working
group of clinicians, charities and officials to discuss how to
address the need for more brain tumour research.
The Strategic Report was approved by the Board and
signed on its behalf by the Finance Director.
By order of the Board
“I’d like to say a big thank you to everyone in the company
who supported my campaign,” Maria said.
Stephen Daintith
Finance Director
Green Week Award – EDR
During their Green Week last year, the Green Team at EDR
took on a number of initiatives in order to help raise awareness
of environmental issues. They took part in activities such as
upcycling, growing a garden on their office patio, a local
street clean-up, volunteering to help build a home with
recycled wood and energy-efficient appliances, clothes
donations and their very own Polar Bear Pass which
encouraged employees to pledge to donate US$10 or
more, or participate in a green activity and then nominate
someone else to do the same. EDR raised US$3,000 through
the Polar Bear Pass, and all donations went to the World Wide
Fund for Nature to help fight climate change and save
the polar bears.
Following their Green Week, EDR have continued their efforts
by creating new initiatives such as ‘mug madness’, where
all paper cups in the office were replaced with coffee and
water mugs.
Commenting on their win, Roger Caramanica said, “We’re
thrilled to be recognised for last year’s green efforts, and are
proud to represent EDR and DMGT in this year’s honours.”
Video interviews with the winners can be found at www.dmgt.com/
corporate-responsibility
COMMUNITY CHAMPIONS AWARDS
In FY 2016 we changed the format of the Community
Champions Awards in order to involve as many
DMGT employees as possible. The Awards nominations
period was extended from two to six months and
entries could be for activities that spanned a longer
period. A sense of competition between DMGT
businesses was encouraged with regular updates
about the number of nominations per business.
The scheme is detailed at
www.dmgt.com/corporate-responsibility
Videos of the 2015 Awards
ceremonies can be found at
www.youtube.com/user/dmgtplc
41
STRATEGIC REPORTAnnual Report 2016Daily Mail and General Trust plc BOARD OF DIRECTORS
The Viscount Rothermere
Chairman
Appointed to the Board: 1995
Appointed Chairman: 1998
P A Zwillenberg
CEO
Appointed to the Board and
CEO: 2016
S W Daintith
Finance Director
Appointed to the Board and
Finance Director: 2011
K J Beatty
Executive Director
Appointed to the Board: 2004
Skills and experience:
Lord Rothermere brings significant
experience of media and
newspapers. He worked at the
International Herald Tribune in
Paris and the Mirror Group before
moving to Northcliffe Newspapers
in 1995. In 1997 he became
Managing Director of the
Evening Standard.
Committee membership:
Investment & Finance,
Remuneration & Nominations
and Executive.
Other appointments:
Euromoney Institutional Investor
PLC Board and Remuneration
Committee.
Skills and experience:
Paul Zwillenberg has over 25 years’
experience across the media
industry. He has a breadth of
experience across DMGT’s
portfolio and a broad knowledge
of the Group, having set up the
digital division of dmg media
(formerly Associated Newspapers
digital) in 1996. Prior to joining
DMGT, Paul was the Global Leader
Media Sector and Senior Partner
and Managing Director at The
Boston Consulting Group and
before that founded an early
interactive media company and
launched a European technology
services firm.
Committee membership:
Investment & Finance and
Executive.
Other appointments: Euromoney
Institutional Investor PLC.
Skills and experience:
Stephen Daintith provides
significant expertise in finance
gained through a number of roles.
He was COO and CFO of Dow
Jones and previously CFO at
News International. He held
several CEO and CFO positions
at British American Tobacco.
Stephen is a chartered
accountant.
Committee membership:
Investment & Finance, Risk
(up to 30 September 2016),
and Executive.
Other appointments:
Euromoney Institutional Investor
PLC Audit Committee, RMS,
Zoopla Property Group Plc
and 3i plc.
Skills and experience:
Kevin Beatty brings a number of
years’ media industry experience.
He is CEO of dmg media. He was
Managing Director of the Scottish
Daily Record and Sunday Mail.
Kevin has been Managing
Director of The Mail on Sunday,
the Evening Standard and London
Metro, COO of both Associated
New Media and Northcliffe
Newspapers.
Committee membership:
Executive.
Other appointments:
Newsmedia Association, World
Association of Newspapers
and News Publishers, PA Group,
Regulatory Funding Company,
Local World (until 13 November
2015) and Zoopla Property
Group Plc (from 1 July 2016).
S Kavan
Executive Director
Appointed to the Board: 2016
Skills and experience:
Suresh Kavan has over 30 years’
experience in the B2B information
industry holding a variety of
positions in sales, marketing,
research, technology, product
development, business
development and general
management. Suresh acts as CEO
of dmg information, Chairman
of dmg events and Chairman of
RMS. Previously he was President
of the Investment & Advisory
group at Thomson Reuters,
having joined Thomson Reuters in
2000 from I/B/E/S International,
where he was President and CEO.
Committee membership:
Executive.
Other appointments (Group
companies): dmg information,
dmg events and RMS.
Lady Keswick
Independent Non-Executive
Director
Appointed to the Board: 2013
Skills and experience:
Lady Keswick’s extensive career
is based in public policy and
international affairs, particularly
in Asia. She is Deputy Chairman
of the Centre of Policy Studies and
was a Special Policy Adviser to the
Rt. Hon. Kenneth Clarke QC MP,
working at the Departments for
Health, Education and Science,
the Home Office and HM Treasury.
She previously worked in
advertising and journalism.
In September 2013, Lady Keswick
was elected as Chancellor of
the University of Buckingham.
A H Lane
Non-Executive Director
Appointed to the Board: 2013
D H Nelson
Non-Executive Director
Appointed to the Board: 2009
Skills and experience:
Andrew Lane brings a range
of experience of dealing in
complex legal and regulatory
matters. He is a partner at Forsters
LLP and specialises in private
client law.
Committee membership:
Investment & Finance, Risk and
Audit & Risk (from 1 October 2016).
Other appointments:
Trustee of the Pension Fund of
the Royal Agricultural Society
of England.
Skills and experience:
David Nelson provides the
Board and Audit & Risk Committee
with relevant financial expertise,
gained through a career in
accounting. He is Senior Partner
at Dixon Wilson, Chartered
Accountants, and a Non-
Executive Director of a number
of family companies. He is an
adviser to UK-based families
and their businesses, advising on
financial and tax matters in the UK
and overseas. He is a trustee of
a number of substantial UK trusts.
Committee membership:
Investment & Finance, Audit & Risk
and Remuneration & Nominations.
42
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Board of Directors
P M Dacre
Executive Director
Appointed to the Board: 1998
F P Balsemão
Independent Non-Executive
Director (Portuguese)
Appointed to the Board: 2002
N W Berry
Independent Non-Executive
Director
Appointed to the Board: 2007
J G Hemingway
Non-Executive Director
Appointed to the Board: 1978
Skills and experience:
Paul Dacre brings unparalleled
experience of the UK newspaper
industry. He joined the Group as US
Bureau Chief in 1979. Appointed
Editor of the Evening Standard in
1990, he has been Editor of the
Daily Mail since 1992 and
Editor-in-Chief of Associated
Newspapers since 1998, years
which saw the launches of
Metro and MailOnline,
respectively.
Skills and experience:
Francisco Balsemão provides
the Board with insight into
international relations, gained
through his career as Prime
Minister of Portugal and elected
member of the State Council.
He serves as Chairman of the
European Publishers Council
and sits on the International
Advisory Board of Santander
International Group.
Other appointments:
Impresa Group and IMPRESA,
SGPS.
Skills and experience:
Nicholas Berry’s global commercial,
B2B media ownership and emerging
markets experience is of significant
value to the Board. He is owner of
Mintel International, and Intersport
Switzerland Psc and Chairman
of Stancroft Trust.
Committee membership:
Investment & Finance, Audit & Risk
and Remuneration & Nominations.
Skills and experience:
John Hemingway provides
the Board and Committees
with expertise of legal matters.
He recently surrendered his
practising certificate as a solicitor
for which he qualified in 1953.
After national service in the RAF,
John joined Freshfields in the
City of London where he was
a partner from 1960 to 1974.
For more than 40 years, John has
specialised in advising a select
number of families on the
structuring and management
of their family resources. This
remains his principal activity.
Committee membership:
Investment & Finance and
Audit & Risk.
K A H Parry
Independent Non-Executive
Director
Appointed to the Board: 2014
J H Roizen
Independent Non-Executive
Director (American)
Appointed to the Board: 2012
D Trempont
Independent Non-Executive
Director (American)
Appointed to the Board: 2011
Skills and experience:
Heidi Roizen provides the Board
with experience in digital media,
entrepreneurial growth and
business development in both
public and private companies
in the US. She teaches
entrepreneurship at Stanford
University. Heidi was Vice President
of Worldwide Developer Relations
for Apple Computers, as well as
being CEO and co-founder of
pioneering consumer software
company T Maker.
Committee membership:
Remuneration & Nominations.
Other appointments:
DFJ.
Skills and experience:
Dominique Trempont brings
experience as a Chief Executive
Officer, Chairman and
Independent Board Director in
large multinational high-tech
companies and start-ups. He has
extensive knowledge of online
B2C and B2B markets. He is
currently on the board of two
US public companies (Real
Networks and Energy Recovery
Inc.) and one private company
(on24), focusing on disruptive
innovation and emerging markets.
Committee membership:
Audit & Risk.
Other appointments:
On24, Real Networks and Energy
Recovery Inc.
Skills and experience:
Kevin Parry is a chartered
accountant who brings a broad
range of experience and skills to
the Board. He serves on a number
of listed company boards and has
previously been a Non-Executive
Director of Schroders plc and
Knight Frank LLP. He has extensive
experience chairing audit and risk
committees and being a member
of remuneration and nominations
committees. He was Group CEO
of Management Consulting
Group PLC and the managing
partner of KPMG’s information,
communications and
entertainment practice in London.
Committee membership:
Audit & Risk.
Other appointments:
Intermediate Capital Group plc,
Nationwide Building Society,
Standard Life plc, Royal National
Children’s Foundation and Homes
and Communities Agency.
43
C Chapman
General Counsel &
Company Secretary
Claire Chapman acts as
Secretary to the Board,
Audit & Risk Committee,
and Investment & Finance
Committee. She is also a
member of the Executive
Committee. Claire is a
qualified solicitor, England and
Wales and Attorney, New York.
Martin Morgan and
David Dutton each served on
the Board for part of the year,
until 30 May and 30 June,
respectively.
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc CHAIRMAN’S STATEMENT ON GOVERNANCE
DMGT’S APPROACH TO
GOVERNANCE IS DISTINCTIVE,
AS WE ARE ABLE TO
ADDITIONALLY RELY ON AND
UTILISE THE SIGNIFICANT
BENEFITS FROM THE FAMILY
SHAREHOLDING AND THE
LONG-TERM VIEW THAT
THIS PERMITS.
The Viscount
Rothermere
Chairman
In this section:
Chairman’s Statement on Governance
Corporate Governance
Executive Committee Report
Risk Committee Report
Audit Committee Report
Investment & Finance Committee Report
Remuneration & Nominations Committee Report
Corporate Responsibility Committee Report
Remuneration Report
Statutory Information
Annual General Meeting 2017: Resolutions
44
46
51
51
52
58
58
59
60
84
88
Strong governance is essential to the way we
operate throughout the Group. It is a key factor
in our ability to achieve growth in a profitable,
responsible and sustainable manner and in how
we maximise shareholder value over the long
term. In practice, this means that the Board
establishes a framework within which our
businesses operate and deliver shareholder value.
DMGT’s approach to governance is distinctive, as
we are able to additionally rely on and utilise the
significant benefits from the family shareholding
and the long-term view that this permits.
During FY 2016 the Board considered and approved a
strategic review of our portfolio as described in the CEO’s
Strategy Review on pages 10 to 13. The Board is fully
supportive of the strategic objectives and of Paul Zwillenberg
and his team. Areas of particular focus for the Board
include our approach to our portfolio of businesses and their
continued growth, as well as divestments, rigorous financial
management, balanced capital allocation and managing
a strong balance sheet. Additionally the Board has focused
on our people agenda and leadership capabilities.
It is vital to have the right composition of Directors and a
Committee structure to support the new strategic agenda.
In order to be agile and responsive to the needs of the
businesses, and maximise effectiveness and the speed
of decision-making, DMGT has simplified its governance
structure, under Simplicity. The structure adopted from
1 October 2016 is detailed in the diagram on page 45.
I would like to thank John Hemingway and Francisco
Balsemão for their contribution to the DMGT Board as they
have both confirmed that they will not be standing for
re-election at the Annual General Meeting (AGM) in
February 2017. I would like to personally thank Francisco
for his contributions to the Board over the last 14 years.
John Hemingway has served on the Board for 38 years and has
additionally been a Director of, and adviser to, RCL. John has
made an immense contribution to the Company, to myself
and to my family, including my father. It is hard to summarise
how valuable his advice and insights have been over a lengthy
period, but I would like to note my sincere thanks to him for his
tireless service.
This year we have decided to focus the governance report
on the key information for shareholders in order to encourage
clear and concise reporting. As a result we have moved more
routine information such as our Investor Relations calendar
and the Committee responsibilities and Terms of Reference
onto our website.
www.dmgt.com/about-us/board-and-governance
The Viscount Rothermere
Chairman
44
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Chairman’s Statement on Governance
Committee Structure
The Board Committee structure, approval limits and key processes were
analysed as part of a broader project to improve agility and efficiency,
and to define the new Executive Committee’s role and agenda.
The new Committee structure is set out in the diagram below.
New Committee Structure
DMGT Board
Collectively responsible for the long-term success
of the Company.
DMGT Board
Executive Committee
The Executive Committee is led by the Chairman
and CEO. Its members are the CEOs of the B2B
and Consumer divisions, the Finance Director and
the General Counsel & Company Secretary. The
Executive Committee meets weekly to discuss all
aspects of the Group’s performance and strategy,
particularly performance management, capital
allocation and senior talent considerations.
Audit & Risk Committee
The Audit & Risk Committee has responsibility for:
• the Company’s financial reporting;
• narrative reporting;
• whistleblowing arrangements;
• internal financial controls;
• the Internal and External audit processes; and
• the signing off of external disclosures.
It also oversees:
• the Group’s risk register, risk appetite and tolerance,
including as part of the Viability Statement;
• developments in relevant legislation and regulation; and
• the Group’s system of internal controls and risk management.
The decision taken to combine the Audit Committee and Risk
Committee allows a single Committee to look across the range
of financial and non-financial risks which the Group may face,
alongside its internal controls.
Investment &
Finance Committee
The Investment & Finance
Committee evaluates
investment opportunities
and financing proposals
and monitors returns on
investments made.
Disclosure Committee
The Disclosure Committee
ensures, under delegated
authority from the Board,
that the Company complies
with its disclosure obligations,
specifically under the
Market Abuse Regulation
and related legislation.
Committee and governance changes
The Board approved the following changes for FY 2017:
• reduce the number of committees to: Audit & Risk, Disclosure,
Remuneration & Nominations (a change approved and
implemented previously), Investment & Finance and
Executive (see the diagram above);
• a new cycle of business reviews of the operating companies,
to focus on performance, strategy execution and talent; and
• simplify the approval limits structure to improve the process
and speed of decision-making, including reviews of the
M&A approval process.
Remuneration & Nominations Committee
The Remuneration & Nominations Committee ensures that
remuneration arrangements support the strategic aims of the
business and enable the recruitment, motivation and retention
of senior executives in a manner that is aligned to shareholder
interests, while also complying with the requirements of
regulation. It also reviews the structure and composition
of the Board and its Committees, in particular the skills,
knowledge and experience of Directors. Time is allocated
at each meeting for both Remuneration and Nominations
matters, to ensure that all items are adequately addressed.
The single Committee (combined in February 2016) approach,
with specific time allocations, ensures efficiency in how the
Committee operates taking into account the similarity of
topics under review.
Corporate Responsibility
During the course of the year, the Corporate Responsibility (CR)
Committee undertook a review of its activities including a survey
of a representative sample of employees from across the Group
with a view to understanding the Group’s CR needs and aims. The
results of the survey were positive in that CR activities were strongly
welcomed as part of employee engagement. However, in light
of these findings, the approach of simplifying how we operate,
and to minimise duplication, we have decided that CR activities
will form part of the employment proposition workstream, headed
up by HR (see Our People and Our Communities on page 38).
Simplicity
Simplicity has looked at our governance and our support
functions including finance, HR, business development and
legal. We want to embrace the special and individual
entrepreneurial business cultures that we have across DMGT,
but at the same time, to leverage our scale, particularly in how
we support the businesses through our core functions. We have
implemented some changes already. This includes the formation
of the Executive Committee (see page 51) and the changes
to streamline our Board and our Committee structure and
operations (see above). Initiatives under this project will evolve
and will underpin and support our businesses, allowing them to
focus on what they do best – serve our customers and our markets.
As a result of these changes each of the Committees’ Terms
of Reference have been updated and these can be found
on our website.
www.dmgt.com/about-us/board-and-governance
45
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc CORPORATE GOVERNANCE
Family shareholding
RCL is a holding company incorporated in Bermuda. The main
asset of RCL is its holding of DMGT Ordinary Shares. RCL is
owned by a trust (Trust) which is held for the benefit of Lord
Rothermere and his immediate family. Both RCL and the Trust
are administered in Jersey, in the Channel Islands. The directors
of RCL, of which there are seven, included two directors of
DMGT during the reporting period: Lord Rothermere and
John Hemingway.
RCL has controlled the Company for many years. RCL maintains
that the Company should be managed in accordance with
high standards of corporate governance for the benefit of all
shareholders; this has been the case throughout the period
of RCL’s control.
RCL has again indicated to the Company that its intentions
for the Company’s governance are long-term in nature and
that it will discuss with the Board of the Company any material
change in its intentions. In particular, RCL has confirmed its
intention that the Company will:
• continue to observe the Listing Principles in their current form;
• continue to maintain a securities dealing code for certain
of its employees;
• continue to observe the UK Corporate Governance Code
on a ‘comply or explain’ basis; and
• have an appropriate number of independent
Non-Executive Directors on its Board.
It is also intended by RCL that the Company’s independent
Directors at the time would take decisions on behalf of the
Company in relation to any proposed transaction between
the Company and RCL, or between the Company and
an associate of RCL, where any such proposed transaction
would have been a related party transaction under
Chapter 11 of the Listing Rules in its current form.
UK Corporate Governance Code
The UK Corporate Governance Code (Code) is an important
part of how we operate. It also allows a ‘comply or explain’
approach to achieving best governance practice. We have
chosen to explain our governance practices if these do not
fully meet the principles of the Code. This allows us to recognise
our requirements and the benefits of our shareholding
structure. Our explanations are set out in the relevant sections
of Corporate Governance.
Information required under DTR 7.2.6 is provided on page 84
and forms part of this Report.
Leadership
The Board has a duty to promote the long-term success of
the Company for its shareholders. This includes: the review
and monitoring of strategic objectives; approval of major
acquisitions, disposals and capital expenditure; financial
performance; reviewing the effectiveness of the Group’s
systems of internal controls; governance; risk management;
and training and development.
Persons Discharging Management Responsibility
As part of the Company’s continuing obligation to ensure
compliance with the Listing Rules and related regulations,
we have identified that Directors and other senior executives
who have regular access to inside information and the
power to make managerial decisions affecting the future
development and business prospects of the Company
are those on the Board and/or Executive Committee.
How the Board operates
There is a schedule of matters reserved to the Board. This
details key matters in respect of the Company’s management
that the Board does not delegate. This can be seen at
www. dmgt.com/about-us/board-and-governance. If any
Director had any concerns about the way the Board was
operating, these would be recorded in the minutes. No such
concerns were raised during the reporting period. Day-to-day
management of the Company is the responsibility of the
Executive Committee and of the executive management
of the operating businesses.
Delegation of authority
The Board has delegated certain activities to Board
Committees, under formal terms of reference, details
of which are set out on pages 51 to 59 and the full Terms of
Reference for which can be found on the DMGT website
at www.dmgt.com/about-us/board-and-governance.
Division of Chairman and CEO responsibilities
In accordance with the Code, the roles of Chairman and CEO
are separate. With the appointment of a new CEO during the
year, the respected roles and responsibilities were reviewed to
ensure they remain appropriate. The Chairman is responsible
for leading the Board and overseeing operations and strategy.
The CEO is responsible for the execution of the strategy and
the day-to-day management of the Group and is supported
by the Executive Committee.
Non-Executive Directors
The Non-Executive Directors, as members of the Board and its
Committees, are responsible for ensuring the Company has
effective systems of internal controls and risk management
and additionally, for monitoring financial performance.
All Committee Chairmen report to the Board on Committee
activity at each Board meeting.
Senior Independent Director
The Chairman has an interest in all the Ordinary Shares of
the Company through the Trust and so there is no need
for a Senior Independent Director to represent Ordinary
Shareholders. Accordingly the Board has not appointed a
Senior Independent Director as recommended under Code
principle A.4.1. The Remuneration & Nominations Committee
(without the Chairman being present) annually assesses the
Chairman’s performance. Other Directors consider that they
can represent themselves freely to the Chairman. However,
when a situation arises that would best be handled by an
individual Independent Non-Executive Director, the most
appropriate person is appointed by the Board (with or
without the Chairman being present, as appropriate).
46
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
Independence
The Board has determined that Francisco Balsemão,
Nicholas Berry, Lady Keswick, Kevin Parry, Heidi Roizen and
Dominique Trempont are independent within the meaning
of the Code. Nicholas Berry and Francisco Balsemão have
been on the Board for 10 years. The Board has reviewed their
independence against the Code, recognising that longevity
of service is only one factor to be taken into account. The
Board is satisfied that they have continued to demonstrate
independence in terms of character and judgement.
David Nelson and Andrew Lane are not considered to be
independent within the meaning of the Code, as they are
each advisers to the Chairman and to RCL. Nevertheless, the
Board believes that these Non-Executive Directors make an
important contribution to its deliberations and have invaluable
experience of the Company, its business and its employees.
The Board believes that its current composition is appropriate
taking into account the heritage of the Group, the interests of
our operating businesses represented on the Board, and that
a good balance is achieved from the Board’s Non-Executive
Directors in terms of skill and independence. The Board keeps
this under review. Less than half of the Board are independent
Non-Executive Directors, which is not in line with principle B.1.2
of the Code.
Effectiveness
The Board reviewed its effectiveness within the context of the
principles and provisions of Section B of the Code. In addition
to its review of independence and the Board evaluation
process, discussed separately in the box to the right, the Board
discharged its Code duties as follows:
• appointments: the Remuneration & Nominations
Committee is responsible for referring potential
appointments to the Board for approval and is assisted
by the CEO. Further details are in the Remuneration &
Nominations Committee Report on page 58;
Relations with shareholders
Any concerns raised by shareholders in relation to the
Company and its affairs are communicated to the Board
through regular briefings. Analyst reports are circulated to
the Board. Feedback from meetings held with the executive
management, or the Investor Relations team and institutional
shareholders, are also communicated to the Board.
The Company’s website, www.dmgt.com, provides the
latest news, historical financial information, details about
forthcoming events for shareholders and analysts, and other
information regarding the Group.
Evaluation
In 2016, the Board undertook a review of its own
performance and those of its Committees, which built on
the results of the 2015 review. The review was conducted
through an internal process facilitated by the General
Counsel & Company Secretary. A questionnaire was used
focusing on the remit and key issues facing the Board. The
review focused on a series of specific questions covering
areas reserved to the Board. In particular, the Board
considered how it was discharging its strategic remit and
reviewed key issues facing the Group and its businesses.
Completed questionnaires were submitted and reviewed
by the Chairman. A summary of findings was presented
to the Board in a manner that did not identify individual
specific responses, ensuring that the follow-up discussion
with the entire Board was open. The responses showed
that the Board welcomed the process and that overall,
the Board was happy with the progress during the year
and that the Board and its Committees continue to
function well.
Actions arising from the evaluation included ensuring
that time on the Board agenda was allocated for:
• time: the time commitment of each Non-Executive Director
• reviews of major projects and lessons learnt during
the year;
• continued review of the composition of the Board
through the Remuneration & Nominations Committee;
• continued follow-up on key matters and actions arising
at Board meetings; and
• continued reviews of strategy, with close alignment
of the Board and the Executive Committee agenda.
is set out in his/her Letter of Engagement. Each Letter of
Engagement is renewed annually following a review by
the Remuneration & Nominations Committee and the
shareholder vote at the AGM;
• multiple commitments: the Remuneration & Nominations
Committee recognises that Board members may be
directors of other companies and that additional
experience is likely to enhance discussions at the Board.
Details of any additional directorships are on pages 42
and 43. Executive Directors are generally permitted to
hold non-executive directorships as long as it does not
lead to conflicts of interest or time;
• development and information: on joining, Directors
receive a comprehensive, tailored induction programme,
which includes time with the General Counsel & Company
Secretary, the Executive Directors and a range of senior
managers across the Group. During the year, the Board has
received updates on key areas of finance and governance
as well as areas of the business; and
• re-election: in line with the Code, all Directors are eligible
to stand for re-election annually and will do so at the
2017 AGM.
47
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
Board composition and diversity
We have continued to review the composition of the Board
during FY 2016 to ensure that we have the right mix of members
to contribute effectively to the development of our strategy
and how we operate. In addition to Paul Zwillenberg’s
appointment to the Board on 1 June 2016, to ensure the mix
of skills and expertise represented complements our strategic
goals, Suresh Kavan, CEO of DMGT’s B2B businesses, was
appointed to the Board to represent the businesses he is
responsible for. As mentioned in the Chairman’s Statement on
page 2, Martin Morgan and David Dutton retired as Directors
during the year. As announced on 2 and 5 December 2016
respectively, Francisco Balsemão and John Hemingway
will not seek re-election at the Annual General Meeting in
February 2017.
The Board believes that diversity is broader than gender.
We consider diversity in its broadest sense in reviewing how
the Board operates and its composition. We do not see this
as solely a compliance issue and consider that there is a risk
that it becomes seen as such. The split of the Group’s profits
between our US and other businesses, the global nature of
our operations and the range of activities undertaken across
the Group has been reflected over recent years in our Board
appointments. Maintaining this broad range of appropriate
skills and experience will continue to be a factor in our
Board succession planning. The Board is aware of and takes
into account the principles regarding diversity of its senior
management. This is considered as part of the senior
management appointment process. Further details on our
approach are included in the Remuneration & Nominations
Committee Report on page 58.
In preparation for Gender Pay Reporting obligations
anticipated to be applied from April 2017, we have created
a working group of HR and payroll representatives from
Group businesses in order to be able to report the necessary
data and monitor developments.
DMGT Board – membership
Member
Chairman
The Viscount Rothermere
CEO from 01/06/2016
P A Zwillenberg
Finance Director
S W Daintith
Executive Directors
K J Beatty
P M Dacre
S Kavan
from 01/07/2016
Non-Executive Directors
F P Balsemão
N W Berry*
J G Hemingway*
Lady Keswick
A H Lane
D H Nelson
K A H Parry
J H Roizen
D Trempont
Former Board members
M W H Morgan
CEO until 31/05/2016
D M M Dutton
until 30/06/2016
Member for the full period
Meetings held
Meetings attended
Yes
5
No
Joined 01/06/2016
Yes
2
After 01/06/2016
5
Yes
Yes
No
Joined 01/07/2016
5
5
2
After 01/07/2016
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
5
5
5
5
5
5
5
5
5
No
Left 31/05/2016
No
Left 30/06/2016
3
Before 31/05/2016
3
Before 30/06/2016
5
2
5
4
5
2
5
3
4
5
5
5
5
4
5
3
3
* Nicholas Berry and John Hemingway were absent from meetings due to ill health.
48
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
The Board’s focus in 2016
Board members have visited, and received presentations and functional area updates from, DMGT’s operating businesses
on a rolling basis. During the year, as part of the Directors’ ongoing development, these updates were a combination of
presentations to the whole Board and smaller groups as deemed appropriate and detailed below.
Portfolio management and strategy
Finance and capital
• A strategic review of our portfolio.
• Simplicity.
• Non-Executive Directors David Nelson, Heidi Roizen
and Dominique Trempont attended RMS Exceedance
in Miami in May 2016.
• Presentations by Euromoney, RMS, Landmark and
Xceligent.
Risk management
• The Group’s risk appetite for 2017 as part of the Viability
Statement approval process.
• With the support of the Risk and Audit Committees, review
of principal risks, other key risk areas and performance
against risk appetite.
• Assessment and monitoring on a regular basis,
performance against agreed financial targets,
budget and returns on investment.
• Approval of authority limits and process for investments.
• Assessment and monitoring of approach to pensions
and tax policy.
Governance
• Regular updates throughout the year including on the
Market Abuse Regulation, the Human Trafficking and
Modern Slavery Statement, the Viability Statement as
well as from the Committee Chairmen.
• Approval and changes to updated versions of Terms
of Reference and matters reserved to the Board.
• Review of the quality of the External Audit.
People
• Discussions regarding senior appointments and
succession planning.
• Updates on talent management.
Board oversight of risk management
and internal controls
The Board delegated day-to-day responsibility for internal
controls to the Audit Committee, and for risk management
to the Risk Committee. Following our review of operational
effectiveness (Simplicity) a decision was taken to combine the
activities of the Risk Committee and the Audit Committee to
enable more collaboration and align with our goal of more
agile decision-making. The Board considers the newly formed
Audit & Risk Committee possesses the requisite skills and
experience to meet its obligations and provide the relevant
assurance to the Board, as well as delegating matters to the
operating businesses. Operating and investment decisions
were delegated to the Investment & Finance Committee.
Further details of the activities of these Committees are on
pages 51 to 59.
The Board has overall responsibility for establishing, monitoring
and maintaining an effective system of risk management
and internal controls. This system provides reasonable rather
than absolute assurance that the Group’s business objectives
will be achieved within the risk tolerance levels defined by
the Board.
The Group operates on a divisional basis, with each of the
divisions having some autonomy regarding the establishment
of risk management and internal control systems. Overseeing
the divisional structure is a central management team,
which reports to the Board. Certain functions are undertaken
centrally, including: Group accounting; investor relations;
strategy; risk; internal audit; corporate tax; treasury; property;
pensions; insurance; senior management reward; senior
recruitment; and HR.
49
The Board has established an ongoing process for identifying,
evaluating and managing the principal risks faced by the
Company. This system has been in place for the year and up
to the date of approval of the financial statements. Monitoring
is an ongoing process and principal risks are formally reviewed
at half year and year end.
Risk management function
The Group has taken the decision to split the Risk & Assurance
function into its constituent elements: Risk, and Internal Audit.
The Board believes that this will minimise the self-review threat
across our ‘three lines of defence’ model (see page 50).
The Risk function will provide an increased focus on priority
risk areas in the new operating model. It is responsible for
maintaining the Group risk management process, facilitating
change for select risks, evolving our approach to operational
compliance, and working with other Group functions. The Risk
function sources specialist external expertise to maintain
best practice approaches. To enable timely escalation of
emerging risks, the Head of Risk reports to the Executive
Committee via the General Counsel & Company Secretary
and meets with the Chairman of the new Audit & Risk
Committee independent of management.
Internal Audit
The Internal Audit function undertakes an agreed programme
of independent assurance reviews. The function sources
external expertise as required from specialist suppliers. This
mix of internal and specialist resource works well in practice.
Internal Audit seeks to comply with relevant professional
standards, notably those issued by the Institute of Internal
Auditors in England and Wales.
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
The Internal Audit Charter (Charter) sets out the purpose
and objectives of Internal Audit, bringing a systematic and
disciplined approach to the evaluation and improvements in
control and governance processes. The Charter strengthens
the function’s independence and objectivity by means of the
function’s reporting lines and access to all records, personnel,
property and operations of the Group. To ensure his
independence from management, the Director of Internal
Audit reports directly to the Chairman of the Audit Committee
(now Audit & Risk Committee). The Charter confirms the
high-level responsibilities of operational management (first
line of defence) and ensures that the Internal Audit function
undertakes its third line of defence duties, avoiding any first-
or second-line duties. The Charter is reviewed annually to take
account of changing practices and standards. The Audit
Committee (now the Audit & Risk Committee) is satisfied that
the provisions of the Charter have been achieved in the year.
The Board formally evaluated the system of risk management
and internal control in conjunction with the Risk and Audit
Committees (see pages 51 to 57). This evaluation focused
on material controls relating to principal risks and entity-level
controls, as well as any additional controls and processes
required to support the Company’s Viability Statement
(see page 35). The evaluation also considered any control
weaknesses identified by Internal or External Audit, or as a
result of incidents of fraud. Controls over the recording of
amounts in the Group’s consolidated financial statements
relating to investments have also been assessed and
considered as appropriate.
Euromoney is subject to the requirements of the Code in its own
right. As disclosed in its Annual Report, it has in place its own
system of internal controls and risk management processes
which form part of the Group’s overall framework of control.
The Directors have excluded joint ventures and associates,
principally Zoopla Property Group Plc, from their assessment
of the Group’s Code compliance, as DMGT does not have
the ability to dictate or modify controls at these entities.
Monitoring and oversight
The Group operates a ‘three lines of defence’ model. The
benefits of the approach are shown in the table below. The
Board delegated day-to-day responsibility for internal controls
to the Audit Committee, and for risk management to the
Risk Committee. From 1 October 2016, these duties are all
now delegated to the combined Audit & Risk Committee.
Three lines of defence table
First line of defence
Second line of defence
Third line of defence
Each operating business is responsible
for the identification and assessment
of risks, understanding the Group’s
risk return strategy and operating
appropriate controls.
Benefits
• Ownership and responsibility remains
close to the operating businesses and
their attendant performance.
• Promotes a strong culture of adhering
to limits and managing risk exposures
in accordance with each business’s
risk appetite and the regulatory
environment.
• Promotes a healthy risk culture
and long-term approach to risk
management.
Risk, supported as appropriate by
other functional areas, particularly
legal, tax and finance, reviews the
completeness and accuracy of risk
assessments, reporting and adequacy
of mitigation plans.
Benefits
• Understand aggregated risk
positions.
• Objective oversight and challenge
to the business areas and internal
control and risk management
framework used in the first line.
• Provide ongoing training and
support on Group-wide risks to
the operating businesses.
Internal Audit provides independent and
objective assurance on the robustness of
the risk management framework and the
effectiveness of internal controls.
Benefits
• Independent assurance on the system
of risk management and internal
controls.
• Assessment of the appropriateness
and effectiveness of internal controls.
• Internal Audit provides assurance
to the Audit & Risk Committee.
50
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
Key features of the risk management and internal
controls system
The main features of the system of risk management and
internal controls in relation the financial reporting process
are described below:
1. Confirmation of key internal controls, and fraud and
bribery assessment
Each operating business confirms the operation of key internal
controls to Group Finance and Internal Audit annually. The
purpose of the assessment is to confirm the operation of a
framework of internal controls, including anti-fraud controls,
which are expected to be in place in each business unit. These
internal controls are intended to provide standards against
which the control environments of DMGT’s business units can
be monitored. An annual fraud and bribery risk assessment
is completed simultaneously, detailing risks and mitigating
controls. In each case, the Internal Audit team reviews and
follows up on these submissions, as appropriate.
2. Review of relevant and timely financial information
Each of the operating businesses and DMGT executive
management regularly reviews relevant and timely financial
information. This is produced from a financial information
system operated across the Group. It is supported by a
framework of forecasts as well as annual budgets that are
approved at a divisional level by the Executive Committee
and confirmed by the Investment & Finance Committee.
3. Senior Accounting Officer sign-off
The Group Finance Director is the Senior Accounting Officer
and is required, by HMRC, to certify that the Company, and its
subsidiaries, have established and maintained appropriate
arrangements to ensure that tax liabilities are calculated
accurately in all material respects.
Fair, balanced and understandable
One of the key governance requirements of a group’s annual
report is for it to be fair, balanced and understandable. The
coordination and review of Group-wide input into the Annual
Report is a specific project, with defined time frames, which
runs alongside the formal audit process undertaken by the
External Auditor. The Audit Committee’s and the Board’s
confirmations of satisfaction with the process and the
statements being made is underpinned by:
• comprehensive guidance being provided to the operating
businesses in respect of each of the requirements for, and
each of their contributions to, the Annual Report;
• a verification process in respect of the factual context of the
submissions made;
• comprehensive sign-off process by owners of all statements
made; and
• comprehensive reviews undertaken at different levels
of the Group with the aim of ensuring consistency and
overall balance.
As a result of this process, the Audit Committee and the
Board are satisfied with the overall fairness, balance and
understandabiity of the Annual Report.
Board Committees
All Committees in this section are described as they were prior
to the Governance changes made on 1 October 2016.
EXECUTIVE COMMITTEE
The Executive Committee is the key executive
management body, responsible for the
day-to-day operation of the Group in line with
the overall strategic aims set by the Board.
Membership
Members of the Executive Committee attended all meetings,
except for cases of annual leave or personal commitments.
The Executive Committee, formed in June 2016, meets weekly.
It has a broad remit covering strategy and its execution, and
operational performance oversight.
Member
The Viscount Rothermere
P A Zwillenberg
S W Daintith
K J Beatty
C Chapman
S Kavan
Member for full period
Yes
Yes
Yes
Yes
No
Joined 01/10/2016
Yes
Key activities
• Business reviews with all operating businesses at least
twice yearly.
• Performance management review and analysis.
• Talent management.
• Review of key investment opportunities and capital
allocation decisions.
• Budget approval and tracking against budget.
Governance
Membership of the Committee is designed to represent
all key business and functional areas. It ensures that
there is appropriate support for and challenge to the
operating businesses.
RISK COMMITTEE
Oversight of the risk management process was
provided by the Risk Committee during the year.
There is a comprehensive process to review
significant business risks to the Group including
financial risk, operational risk and compliance
risk that could affect or impact the achievement
of the Group’s strategy and business objectives.
Given the Group’s divisional structure, a flexible approach
to risk management has been implemented so that each
operating business can tailor and adapt its processes to its
specific circumstances. This approach, which provides an
overarching framework for acceptable risk-taking, has the
support of the Executive Committee and the executive
management of the operating businesses.
A Group-wide risk assessment process is managed biannually
by the new Risk function, reviewing risks to the achievement of
business plans in operating businesses. The results are collated
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
and presented to the Risk Committee and an overall Group-
wide risk plan is derived from these results. This process assists
management in identifying internal and external threats and
prioritising responses to them. This identification is aimed at
providing the Risk Committee with insight into any material
changes and trends in the risk profile and to evaluate whether
the system, including reporting and controls, adequately
supports the Board in its risk oversight. Principal risks and
mitigating actions are set out on pages 28 to 31.
Membership
The Risk Committee has been supported in its activities during
the year by the Head of Risk. Membership and meetings are
shown below.
Member
K A H Parry
(Chairman from
01/06/2016)
C Chapman
S W Daintith
A H Lane
Former members
M W H Morgan
(Chairman to
31/05/2016)
D M M Dutton
Member for
the full period
Meetings
held
Meetings
attended
Yes
Yes
Yes
Yes
4
4
4
4
No
Left
31/05/2016
3
Before
31/05/2016
No
Left
30/06/2016
3
Before
30/06/2016
4
4
4
3
3
3
• From 1 October 2016 the combined Audit & Risk Committee
will comprise only Non-Executive Directors and three of
these are considered by DMGT to be independent.
• Next year’s report will be a combined report of the Audit &
Risk Committee which will have operated throughout the
year ending 30 September 2017.
AUDIT COMMITTEE:
CHAIRMAN’S INTRODUCTION
We focus our work on judgemental areas of
accounting and auditing in the context of
our changing business. In the year ahead, the
format of meetings will change substantially
as a result of combining the Risk Committee
with the Audit Committee.
We added the scrutiny of tax and enhanced
our review of the work of external audit
during the year. The extension of our work
has bedded in well.
The following pages set out the Audit Committee’s Report
for the financial year. The Report is structured in five parts:
1. summary of how the Committee operates: membership,
key responsibilities; and governance as well as effectiveness;
Note: All members stood down from this Committee on 30 September 2016. This
Committee was then combined with the Audit Committee to form the Audit & Risk
Committee. For members of the new Audit & Risk Committee see page 53.
2. review of the year: the significant financial reporting and
auditing issues we addressed;
Key activities
• The Risk Committee reviewed the Group’s risk management
processes and the Group risk register. It received
presentations from head office and a selection of the
operating businesses on their individual risk registers.
• As part of our drive to improve the Group’s governance, risk,
and compliance capability, the Risk Committee focuses
on a rolling programme of topics:
– information security is a principal risk, as such each
operating business’s information security, cyber resilience
and implementation of the Group’s information security
standards was considered at each meeting;
– a key compliance focus area over the next two years
will be responding to the new EU GDPR in the most
efficient and effective way, bringing further resilience
to our businesses;
– further activity will be undertaken to refresh core
compliance training topics to continue to engage our
employees effectively with the compliance agenda; and
– other specific risk reviews included business continuity,
data protection, health and safety, and insurance.
Governance
• The Risk Committee comprised both independent and
non-independent Directors contrary to the Code
recommendation. This was deemed appropriate given
the separation of Risk and Audit activities, the focus on
operational in addition to strategic risks, and the oversight
provided by the Board.
• The Risk Committee reported to the Board on its operations
and the Group’s principal risks and uncertainties.
3. internal controls: the assessment of the adequacy of the
control framework;
4. Internal Audit: the scope of their work including key reviews;
and
5. External Auditor: appointment, independence,
effectiveness and objectivity.
During the year, the Audit Committee worked closely with the
Risk Committee to cover pertinent topics in the most suitable
forum. To avoid duplication, the Risk Committee and the
Audit Committee are combined from 1 October 2016. All
members of the Audit Committee are Non-Executive Directors
and there is continuity of membership in the new Audit & Risk
Committee. Andrew Lane, a solicitor, is joining the newly
formed Audit & Risk Committee. The Committee continues
to be regularly attended by financial and other management
to provide reports and context to the Committee.
The Audit Committee approves an annual audit plan that is
flexible enough to embrace intra-year changes fluctuations
due to changed circumstances, such as acquisitions,
disposals, extensive management change etc. In setting
the plan, the scope of Internal Audit work is considered for
each division (including head office) and takes account of
assessments of risk, input from senior management and the
Audit Committee, and previous findings. Some audits are
undertaken for the Group as a whole. For example, this year
there was a Group-wide emphasis on cash collection
management, information security, cyber crime, culture and
anti-fraud and bribery procedures. Other issues selectively
audited included revenue recognition and payroll. Each year,
the Audit Committee assesses recommended changes to
the annual plan to ensure that total coverage meets its
requirements and that the budget and resource levels
are adequate.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
At each Audit Committee, the Director of Internal Audit
addresses key matters which have arisen, focusing on audits
with the most significant findings. Additionally, common
themes are drawn out so that management can make early
enquiries of businesses not recently visited with a view to
heading off potential issues.
Throughout the year, there was a range of outcomes from
the internal audits. The Audit Committee welcomes the
identification of areas for improvement and places higher
emphasis on actions taken as a result of review points than on
particular findings at the time of review. Whenever deficiencies
or opportunities for improvements are identified, the Audit
Committee’s emphasis is on the appropriateness of the
reaction to the identified issue. We look to management to
take timely and proportionate steps to eliminate weaknesses
and we monitor their adherence to agreed timescales.
Kevin Parry
Chairman
Membership
Member
K A H Parry (Chairman)*
N W Berry*
J G Hemingway
A H Lane**
D H Nelson
D Trempont*
Member for
the full period
Meetings
held
Meetings
attended
Yes
Yes
Yes
No
Yes
Yes
4
4
4
0
4
4
4
3
3
0
4
4
Independent Director.
*
** Member of the Audit & Risk Committee from 1 October 2016.
The Committee meets regularly, at least four times a year.
All members of the Committee are Non-Executive Directors
and the majority are Independent Non-Executive Directors.
The Audit Committee members continue to represent the
necessary range of financial, risk, control and commercial
expertise required to provide an effective level of challenge
to management. Kevin Parry is a former senior audit partner,
former chief financial officer and chairs two audit committees
at financial institutions. David Nelson is the senior partner of
an accounting practice. Consequently Kevin Parry and David
Nelson continue to be designated for Code purposes as the
financial experts with competence in accounting and auditing.
Key activities
• Clarifying the basis of alternative performance measures.
• Challenging management’s accounting judgements
relating, in particular, to impairments.
• Appointing a new Director of Internal Audit.
• Reviewing and discussing Internal Audit reports to maintain
their contribution to improving the control environment.
• Decluttering the Annual Report to improve communications
with shareholders.
• Review of Simplicity and associated restructuring costs.
Governance
The integrity of the Group’s financial results and internal control
systems are important to the Directors and the shareholders.
They are particularly important to DMGT because the Group’s
delegated management style requires reliable measurement
of achievements against strategic objectives. Consequently,
the Audit Committee encourages and seeks to safeguard high
standards of integrity and conduct in financial reporting and
internal control. The Audit Committee tests and challenges the
results and controls in conjunction with management and the
Internal and External Auditors.
The Audit Committee has fulfilled its responsibilities during the
year and confirms the Group is in compliance with the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014. The Audit Committee
is permitted to obtain its own external advice at the Company’s
expense. No such advice was sought during the year.
John Hemingway and David Nelson are advisers to the
Harmsworth family and are not Independent Directors.
This is a deviation from Code Principle C.3.1. The Board
considers that their membership adds to the deliberations
of the Audit Committee and the Audit Committee Chairman
confirms there was no conflict of interest during the year.
From 1 October 2016, Andrew Lane, who is also an adviser
to the Harmsworth family interest, joined the Committee.
The combined Audit & Risk Committee approved new Terms
of Reference which applied from 1 October 2016.
How the Committee operates
During the year Audit Committee meetings were scheduled
to take place around the time of the Risk Committee meetings
and just prior to Board meetings to maximise the efficiency
of interactions. Reports are made to each Board meeting on
the activities of the Audit Committee, focusing on matters of
particular relevance to the Board in the conduct of its work.
The Audit Committee has been supported in its activities
during the year by the CEO, Finance Director, Group Financial
Controller, Head of Risk, Director of Internal Audit and the
General Counsel & Company Secretary. These individuals
generally sponsor papers for the Audit Committee, which are
typically distributed one week prior to meetings.
The External Auditor is invited to each meeting. The Audit
Committee has met regularly and separately with the Finance
Director, the External Auditor and Director of Internal Audit,
without others being present.
Effectiveness
The Audit Committee reviews its terms of reference and
effectiveness annually.
The effectiveness of the Audit Committee has been internally
reviewed by its members and by the Board. The review
confirmed that the Audit Committee remained effective at
meeting its objectives, the principles of the Code and the
needs of the Group.
The Audit Committee also assessed the quality of the Internal
Audit function during the year without considering it necessary
to engage an outside review. The last external review was
performed three years ago and it is the Audit Committee’s
intention to commission an external review in the year ending
30 September 2017. Based on its internal review, the Audit
Committee concluded that the function is highly effective.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
Review of the year
Summary of meetings in the year
The Audit Committee held four meetings during the year,
with the November and May meetings specifically aligned
with the full- and half-year results. The Audit Committee
works with executive management, External Auditors
and the Risk and Internal Audit functions to discuss
judgemental issues at an early and relevant opportunity.
This resulted in informed decisions made on the basis of quality
papers which provide a thorough understanding of facts and
circumstances, and act as a backdrop to insightful discussions.
There was no disagreement over accounting or reporting
outcomes with management or the External Auditors during
the reporting period.
The Audit Committee has focused its time on financial
reporting policies and presentation, the valuation of intangible
assets and the External and Internal Audit arrangements
and findings.
Over the course of the year the Audit Committee considered
and discussed the significant matters relating to financial
reporting and accounting, as set out in the table below.
The issue and its significance
Focus of work
Comments and conclusion
Financial reporting
The content of the annual and
semi-annual reports and
trading updates needs to be
appropriate, complying with
laws and regulation.
Taken as a whole, the Annual
Report needs to be fair,
balanced and understandable
so that it is relevant to readers.
We reviewed our approach to the Annual
Report to improve its clarity, reduce clutter
and avoid immaterial adjustments to
operating profit.
We specifically reviewed:
• all accounting policies for continued
appropriateness and consistency
of application;
• all sections of the Annual Report
having particular regard for the Audit
Committee’s responsibilities for the
financial statements;
• reports from financial management,
Legal, Risk and Internal Audit which
confirmed compliance with
regulations; and
• the financial risks and papers to support
the going concern basis of accounting.
We continued our practice of comparing
our Annual Report with those of other
relevant companies and asked our
External Auditors for improvement
recommendations.
Drafts of the Annual Report were reviewed
by both the Audit Committee and the
Board. We used the Executive Directors’,
the External Auditors’ and the Audit
Committee’s knowledge to determine
the overall fairness, balance and
understandability of the Report,
prior to its final approval by the Board.
To reduce clutter, we continued to reduce
notes to avoid immaterial disclosures.
A materiality threshold of £5 million has
been set for exceptional items unless
continuation of activity previously disclosed
as exceptional.
There were no important changes to
accounting policies. Based on our enquiries
of management and the external auditors,
we concluded the policies were being
properly applied.
We were satisfied that judgemental matters
were explained.
We were satisfied that the Group complied
with reporting requirements.
We received confirmation that individuals’
responsibilities had been fulfilled and
confirmed that the overall Report was
consistent with the Directors’ knowledge.
This allowed the Audit Committee and the
Board to be satisfied that the Annual Report
taken as a whole is fair, balanced and
understandable. We were satisfied that the
information presented in the Strategic Report
was consistent with the performance of the
business reported in the financial statements.
In particular, we were satisfied that the
estimates and quantified risk disclosures in
the financial statements are consistent with
those identified in the Strategic Report. The
Committee concluded that appropriate
judgements had been applied in determining
the estimates and that sufficient disclosure has
been made to allow readers to understand
the uncertainties surrounding outcomes.
We were satisfied that the Viability Statement
should consider a three-year period reflecting
both our internal planning cycle and the
timescale over which banking facilities
are available.
We will continue to monitor feedback for
future enhancements to the Annual Report.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
The issue and its significance
Focus of work
Comments and conclusion
Financial reporting continued
The Annual Report includes a
number of non-GAAP measures.
See Note 13 and pages 35 and 36.
Accounting judgements
The Group has capitalised
software development costs,
other intangible assets and
goodwill associated with
acquisitions. Goodwill and
intangible assets represent 185%
(2015 198%) and 94% (2015 92%)
respectively of the net assets.
The carrying values need to
be justified by reference to future
economic benefits to the Group
(see Notes 21 and 22).
In addition to the disclosure of operating
profit before and after specified adjustment,
other non-GAAP measures (known as
alternative performance measures)
are disclosed in the Annual Report, e.g.
underlying revenue growth; net debt
to EBITDA ratio. A seminar was held for
management by our Auditors. The
Chairman of the Committee attended
on behalf of the Audit Committee. We
commissioned Internal Audit to review
other alternative performance measures
to ensure whenever possible that they
were third-party sourced or otherwise
robustly compiled.
We ensured capitalised costs were
separately identifiable and met the
relevant accounting standard.
We considered whether there have been
events triggering an impairment review.
Where there was such an event and
whenever impairment testing is otherwise
required, we reviewed papers prepared
by executive management to determine
whether an impairment had taken place.
We focused on facts, assumptions,
methodologies and discount rates.
We received input from both operational
and financial management and also
reviewed relevant external commentaries.
The Group carries deferred tax
assets in respect of brought
forward losses and deferred
interest that represent 32% (2015
37%) of net assets (see Note 38).
At the year end, the Group recognised
deferred tax assets of £169.3 million in
respect of brought forward losses and
deferred interest.
We decided to continue to adjust operating
profit for intangible asset amortisation and
compensation in the nature of capital
payments because they are akin to goodwill
which is capitalised. Additional adjustments
have been made to exclude the impact
of exceptional costs and goodwill. The
adjustments assist understanding of the
outcome for the reporting period. However,
we also determined that communication
would be enhanced by avoiding immaterial
adjustments and combining similar items.
We determined that the published data was
of a high quality and helps a shareholder
understand progress (particularly in the
digital arena). Sources of data are disclosed.
We were satisfied that costs should be
capitalised.
Our reviews embraced sensitivities to
changes in assumptions which allowed us
to understand the materiality of conclusions
in the context of our financial reporting.
We focused on Elite Daily, Genscape,
RMS(one) and Xceligent.
We were satisfied with the impairments for
Indaba, Total Derivatives, Hedge Fund
Intelligence and Elite Daily.
The Audit Committee noted that the
conclusions were sensitive to future outcomes.
Some combined downside sensitivities
could trigger impairments if they occur
in the future.
The assets were recognised following
a detailed review of how the brought
forward tax losses would be utilised and
we were satisfied that changes to tax laws
internationally did not adversely impact
the carrying value of the total assets.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
The issue and its significance
Focus of work
Comments and conclusion
Accounting judgements continued
The Group actively manages
its portfolio of investments and
consequently is active in making
acquisitions and disposals.
Transactions that contain
unusual terms and/or innovative
structures would require the
accounting treatment to be
carefully considered.
During the year, £29.5 million
was incurred on acquisitions
and £39.5 million was realised on
disposals (see Notes 17 and 18).
The Group has multiple sources
of revenue ranging from
subscriptions to software sales
to display advertising. Revenue
recognition can be intricate.
The Audit Committee considers carefully
judgemental accounting and the carrying
value of intangible assets and goodwill to
ensure that external audit individually audits
material transactions.
The Internal Audit team audits all significant
acquisitions within 12 months of the relevant
acquisition where consideration exceeds
£10 million.
The Investment & Finance Committee
oversees all acquisition and disposal activity.
There are common Committee members
and the Audit Committee Chairman receives
all the papers of that Committee. We were
satisfied with the judgements made.
We reviewed the accounting policies for
revenue recognition and determined their
appropriateness. Internal Audit visits all
businesses on a rotational basis taking
account of changed circumstances
and perceived risk. Their work includes
the testing of revenue recognition.
One immaterial difference was identified
as a result of the review.
Other matters
In addition to the significant matters addressed above, the
Audit Committee maintains a rolling agenda of items for its
review, including: capital strategy; financial and treasury
management; feedback from analysts and investors;
reconciliations of reported financial results with management
accounts; tax management; and litigation. Nothing of
significance arose in respect of those reviews during the
year. There was no interaction with the Financial Reporting
Council’s (FRC) corporate reporting team during the year.
Internal controls
The Audit Committee closely monitored changes in financial
management and reviewed the competence and quantity
of the financial management resource in discussion with
the Finance Director during the year. The Audit Committee
was satisfied that the Company was able to fulfil its first
line of defence duties and that there is a culture of
continuous improvement.
The Audit Committee had oversight responsibility for financial
risks and controls. During the year it reviewed the nature of
the top financial risks facing the Group, including: foreign
exchange and interest rates; liquidity; credit; counterparty
and capital management. The Audit Committee concurs
with the view of the Risk Committee that the financial risks are
not the principal risks that the Group faces. Nevertheless, the
Audit Committee places emphasis on the maintenance of
high standards for controlling the financial risks and in addition
to an annual confirmation from financial officers that the
environment has operated effectively, gains independent
assurance from internal audits.
Internal Audit
Throughout the year, the Audit Committee ensures the
annual plan remains current, taking into account changed
risk circumstances. Budgets and resources are adjusted
as necessary to ensure they remain adequate.
External Auditors
PricewaterhouseCoopers (PwC) is the External Auditor. Its first
audit of DMGT was in respect of the year ended 30 September
2015. The Audit Committee has responsibility for making
recommendations to the Board on the reappointment of the
External Auditors, for determining its fees and for ensuring its
independence of the Group and management. The External
Auditors stand for reappointment annually, at each Annual
General Meeting, but absent concerns over the quality of their
service or opinion, we anticipate retaining PwC as our auditors
for at least the next three years.
Auditor independence
The Audit Committee considered the safeguards in place to
protect the External Auditor’s independence. In particular,
the Audit Committee has ensured that the Company’s policy
on the External Auditor’s independence is consistent with the
ethical standard set out by the FRC in the UK. PwC reviewed its
own independence in line with this criteria and its own ethical
guideline standards. PwC confirmed to the Audit Committee
that following this review it was satisfied that it had acted in
accordance with relevant regulatory and professional
requirements and that its objectivity is not compromised.
To ensure no conflicts of independence arising from auditors
being responsible for non-audit work, the Audit Committee
reviewed and approved an updated policy on non-audit
services. The review included consideration of the process
to manage the engagement of PwC, regulatory changes
and good practice.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
This is within the range that audit opinions are conventionally
thought to be reliable. To manage the risk that aggregate
uncorrected errors become material, we agreed that audit
testing would be performed to a lower materiality threshold
of £7.5 million (2015 £8.30 million). PwC has drawn the
Audit Committee’s attention to all identified uncorrected
misstatements greater than £0.5 million. The aggregate net
difference between the reported adjusted profit before tax
and the Auditor’s judgement of net adjusted profit before tax
was less than £2.4 million which was significantly less than audit
materiality. The gross differences were attributable to various
individual components of the income statement. No audit
difference was material to any line item in either the income
statement or the balance sheet. Accordingly, the Audit
Committee did not require any adjustment to be made to
the financial statements as a result of the audit differences
reported by the Auditor.
As in the prior year we asked PwC to write to us to explain how
they would respond to the findings of the Audit Quality Review
team of the FRC in its annual review of their firm (in so far as
comments are relevant to DMGT). Additionally, the Audit
Committee Chairman, Finance Director and Group Financial
Controller discussed with PwC in detail the work it carried out
on the audit of DMGT’s Annual Report. The Audit Committee
was satisfied with the specific responses to both sets of enquiries.
PwC has outlined to the Committee the professional
development programme applicable to the partners
and employees engaged on our audit, have reviewed
key judgements taken during the course of the audit, and
confirmed the audit complies with their internal independent
review procedures. We have reviewed the professional skills,
knowledge and scepticism of key members of the audit team
including the Group team and partners responsible for the
divisional audits.
We have reviewed PwC’s transparency report for the year
ended 30 June 2015. We have enquired whether the audit
of DMGT was subject to either a quality assurance process
undertaken internally by PwC or externally by the FRC.
The Audit Committee met in private with PwC at the
conclusion of the audit to confirm that they had received a
high level of cooperation from management and to receive
private feedback on the quality of financial management.
Based on the information currently available which draws
on the enquiries outlined above and informal soundings
of management, the Audit Committee anticipates it will
conclude there has been a robust, high-quality audit for
the year ended 30 September 2016 both in respect of PwC’s
opinion and service. The Committee has consequently
recommended that PricewaterhouseCoopers LLP be
reappointed as Auditors at the 2017 AGM.
The audit fee payable to PwC amounts to £2.7 million.
The Audit Committee is satisfied that the fee is commensurate
with permitting PwC to provide a quality audit. In addition
to the Group’s policy, PwC has confirmed that any non-audit
work commissioned by the Group is reviewed for compliance
with PwC’s internal policy on the provision of non-audit
services. The total non-audit fees paid to PwC amounted
to £0.8 million (2015 £0.9 million) which is within the 70% of
audit fees (which applies over a rolling three-year period).
The Audit Committee is satisfied that PwC was selected
based on individuals’ particular expertise, knowledge
and experience and that the work did not impair PwC’s
independence as External Auditors (see Note 5 to the
accounts). All non-audit work undertaken by PwC was
approved by the Audit Committee unless it was de minimis
and not prohibited under our policy.
The Audit Committee, having taken account of PwC’s
confirmations, is satisfied that PwC is independent of DMGT
and its subsidiaries.
Audit quality and materiality
The Audit Committee places great importance on ensuring
that there are high standards of quality and effectiveness in
the external audit process.
The Audit Committee has reviewed the quality of PwC’s
audit by way of interviews and completion of a questionnaire
by Audit Committee members, by regular attendance at
Audit Committees and by financial management. The Audit
Committee is satisfied that its requirements were met with
some improvement actions in respect of communications
being noted.
In addition, the Audit Committee reviewed PwC’s scope and
approved the external audit plan to ensure that it is consistent
with the scope of the external audit engagement and that all
commitments made in the audit tender are adhered to. The
Audit Committee discussed significant and elevated risk areas
that are most likely to give rise to a material financial reporting
error or those that are perceived to be of a higher risk and
requiring audit emphasis (including those set out in PwC’s
Report on pages 90 to 95). It considered the audit scope
and materiality threshold.
This included the Group-wide risks and local statutory
reporting enhanced by desktop reviews for smaller, low-risk
entities. 75% of the revenue and 71% adjusted profit was
fully audited; 8% of revenue and 8% of adjusted profit was
subjected to specific procedures and the balance of revenue
and profit was covered by desktop reviews. The audit included
visits to smaller businesses. This year’s audit included a visit to
Hobsons. The FY 2017 audit will include a visit to Genscape.
We have discussed the accuracy of financial reporting (known
as materiality) with PwC both as regards accounting errors
that will be brought to the Audit Committee’s attention, and as
regards amounts that would need to be adjusted so that the
financial statements give a true and fair view. Errors can arise
for many reasons, ranging from deliberate errors (fraud etc.)
to good estimates that were made at a point in time that, with
the benefit of more time, could have been more accurately
measured. Overall audit materiality has been set at £10 million
(2015 £11.0 million). This equates to approximately 4% of
adjusted pre-tax profit as reported in the income statement.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
INVESTMENT & FINANCE COMMITTEE
The Investment & Finance Committee
evaluates the benefits and risks of investment
opportunities and financing proposals up to a
value threshold with the Board. The Committee
provides regular updates to the Board
including monitoring returns on investments
made and progress against agreed targets.
Membership
The Investment & Finance Committee has been supported in
its activities during the year by the Deputy Finance Director,
Director of Strategy Development and the General Counsel
& Company Secretary. Membership and meetings are
shown below.
Member
The Viscount Rothermere
(Chairman)
P A Zwillenberg
S W Daintith
N W Berry
J G Hemingway
A H Lane
D H Nelson
Former members
M W H Morgan
D M M Dutton
Member for
the full period
Meetings
held
Meetings
attended
Yes
8
No
Joined
01/06/2016
2
After
01/06/2016
Yes
Yes
Yes
Yes
Yes
8
8
8
8
8
No
Left
31/05/2016
No
Left
30/06/2016
6
Before
31/05/2016
6
Before
30/06/2016
8
2
8
8
7
8
7
6
6
Key activities
• Reviewing all acquisitions, disposals and capital expenditure
within its remit, including presentations made by operating
businesses to request support in line with strategic objectives.
• Reviewing performance against budget and plan including
reviewing debt position, tracking performance against the
original investment case and assumptions for acquisitions
and investments.
• Oversight of the Company’s pension scheme planning,
including discussions with the various Scheme Trustees
and their advisers and the latest triannual valuations.
• Reviewing the Company’s dividend planning activities.
• Reviewing and approving the Company’s tax strategy.
• Oversight of the Chairman’s Fund for Innovation and Growth.
• Oversight of the Company’s share buy-back programme.
Governance
• The Investment & Finance Committee reviewed its
membership and approved that Lord Rothermere continue
as its Chairman.
• The Investment & Finance Committee confirmed that it had
complied with its Terms of Reference throughout the year.
• The Investment & Finance Committee reviewed and
updated its Terms of Reference to apply with effect from
1 October 2016.
58
REMUNERATION &
NOMINATIONS COMMITTEE
The Remuneration & Nominations Committee
meetings are held together. Remuneration
items are taken separately to the
Nominations items.
In February 2016 the Remuneration and Nominations
Committees were combined to take place at the same
time. Remuneration items are considered separately from
Nominations items and therefore the Remuneration element
of the Committee is described within the Remuneration Report
on pages 60 to 83. The Nominations element keeps under
regular review the structure and composition of the Board
and its Committees, particularly the skills, knowledge and
experience of the Directors to ensure that these remain
aligned with the Group’s developing requirements and
strategic agenda.
Membership
The Committee has been supported in its activities during the
year by the CEO, Group HR Director, and the General Counsel
& Company Secretary. Membership and meetings are
shown below.
Member
The Viscount Rothermere
(Chairman)
N W Berry
D H Nelson
J H Roizen
Member for
the full period
Meetings
held
Meetings
attended
Yes
Yes
Yes
Yes
9
9
9
9
9
7
9
9
Key activities
• Reviewing potential candidates for Board appointments
including Paul Zwillenberg and Suresh Kavan.
• Reviewing the Letter of Engagement with each Non-Executive
Director to ensure the provisions remain in line with best
practice, following shareholder approval at the AGM.
• Re-engaging the service of Non-Executive Directors for
a further period of a minimum of one year.
• Reviewing time commitments required by Non-Executive
Directors and confirming that it was satisfied that the Directors
had met or exceeded the time commitment required.
• In line with the Code, recommending that all Directors stand
for re-election at the AGM.
• Discussing Board and Committee composition and
longevity of service, and Board independence.
• Reviewing governance activities against best practice.
• Reviewing Francisco Balsemão and John Hemingway’s
decisions to step down from the Board.
Looking ahead, the Committee’s key activities for the
forthcoming year are:
• reviewing the composition of the Board to ensure that the
right skills and experience to support the Group’s strategy
are represented;
• reviewing Committee membership to ensure that there
is a balance of skills reflected; and
• continuing to review succession planning for the Executive
Directors, including the Group Finance Director.
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Corporate Governance
Succession planning
Given the importance of succession planning, in addition
to the general Board planning undertaken by the
Remuneration & Nominations Committee in addition
to review sessions during the year.
Governance
• The Committee confirmed that it had complied with its
Terms of Reference throughout the year.
• The Committee paid particular attention to extending the
term of any Non-Executive Director that has served a term
in excess of six years.
• The Committee reviewed the independence of its
Non-Executive Director members and agreed to
recommend that Nicholas Berry and Heidi Roizen
continued to be considered independent in accordance
with the Code provisions.
• The process for appointing Directors depends on which
role is being filled. External recruiters, including Egon
Zhender, and other methods have been used to identify
potential candidates.
• The combined Remuneration & Nominations Committee
reviewed and updated its Terms of Reference for application
in FY 2017.
• In line with Code principle A.4.2 the Non-Executive Directors
met with the Chairman once during the year without the
Executive Directors present.
• The Chairman of the Committee is Lord Rothermere and
the majority of its members are not considered to be
independent under the Code. Although this does not meet
Code principle B.2.1, as holder of all the Ordinary Shares of
the Company through the Trust, the Board considers that
Lord Rothermere’s interests are fully aligned with those of
other shareholders. Additionally, the Committee is confident
that its membership ensures that it carries out all aspects
of its role with proper and appropriate regard to long term
shareholder interests.
CORPORATE RESPONSIBILITY
COMMITTEE
The Corporate Responsibility (CR) Committee
considers and recommends the Group’s
strategy for CR issues. The Committee focuses
on the Group’s approach to our people, our
stakeholders and our environment, to ensure
that we have a positive impact on our activities
and the communities within which we operate.
Membership
Membership of the CR Committee comprised representatives
from all of our operating businesses.
Member
C Chapman (Chairman)
S W Daintith
N Clements
A G DiCola
C R Jones
M Milner
G Poss
R Spitzer
Member for
the full period
Meetings
held
Meetings
attended
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
2
2
2
2
2
2
2
2
2
2
2
2
1
2
2
2
59
Member
Former members
P S Collins
D M M Dutton
Member for
the full period
Meetings
held
Meetings
attended
No
Left
31/05/2016
No
Left
30/06/2016
2
Before
31/05/2016
2
Before
30/06/2016
2
2
In line with our new governance structure, in 2017 the
Committee will no longer meet. For further information about
how the matters considered by the CR Committee will be
managed in future, see Our People and Our Communities
section on page 38.
Key activities
• Reviewing entries for the Community Champions Awards
and choosing the winners of each category.
• Reviewing data used to calculate the annual carbon
footprint.
• Approval of CR content of the Annual Report.
• Monitoring the progress of the CR Champions network.
• Promoting the Group-wide Green Week initiative to
encourage environmental awareness across our businesses
and extending this to cover the whole year.
Governance
• The CR Committee reported to the Board about its operation.
• The CR Committee confirmed that it had complied with
its Terms of Reference throughout the year.
The Viscount Rothermere
Chairman
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc REMUNERATION REPORT
SUPPORTING OUR STRATEGY,
THE COMMITTEE IS PROPOSING
THE ADOPTION OF A NEW
LONG-TERM EXECUTIVE INCENTIVE
PLAN, WHICH WILL MORE DIRECTLY
LINK PAYOUTS TO BUSINESS
PERFORMANCE BY AWARDING
MANAGEMENT A SHARE OF
PROFIT GROWTH, OVER AND
ABOVE A MINIMUM THRESHOLD,
AFTER DEDUCTING A CHARGE
FOR ADDITIONAL CAPITAL.
The Viscount
Rothermere
Chairman
In this section:
Chairman’s statement on remuneration
Executive Directors:
remuneration at a glance
Executive Directors:
annual report on remuneration
Annual report on remuneration:
Remuneration Committee role and activities
Executive Directors:
Remuneration Policy implementation
Non-Executive Directors:
Remuneration Policy implementation
Annual report on remuneration:
Directors’ shareholdings
Non-Executive Directors:
annual report on remuneration
60
63
64
62, 81
78
79
80
83
REMUNERATION POLICY
In accordance with the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2013, shareholders are provided with the opportunity
to endorse the Company’s Remuneration Policy through a
binding vote. The current policy was agreed at the Annual
General Meeting (AGM) on 4 February 2015 and the policy
has been operated, as described, from that date.
It is our intention to present an updated policy for approval
at the February 2017 AGM to reflect changes we intend to
make to our Annual Bonus and Long-Term Incentive schemes
(pages 72 to 83).
The Remuneration Committee believes the new policy
will provide a more direct link between pay, performance
and the interests of shareholders over the longer term.
60
Chairman’s statement on remuneration
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report.
Pay for performance remains key to our remuneration strategy.
Our incentive schemes across our business are designed to
reward entrepreneurial behaviour and profitable growth.
Our focus is on ensuring that performance targets are in line
with our long-term strategy and the creation of sustained
shareholder value.
Executive Directors’ bonus payments for FY 2016
In order to ensure alignment with our Key Performance
Indicators, the bonus included a mixture of profit measures
(both at the Group and business level) as well as key
strategic targets.
In FY 2016, DMGT delivered a resilient performance. Group
revenues were stable on an underlying basis and operating
profit declined by an underlying 11%. The Group’s operating
profit margin was 14%. The diversity of DMGT’s portfolio by
revenue stream, sector and geography has helped protect
revenues and profits on a Group basis.
Nevertheless, underlying operating profit growth at RMS
and dmg information was not enough to offset declines
at dmg media and Euromoney where increased digital
investment and challenging financial and commodity
market conditions significantly impacted our performance.
The Group’s reported results have been positively impacted
by the stronger US dollar versus the British pound over the year,
partly offset by the disposal of Local World and Wowcher in
October 2016. Adjusted profit before tax and earnings per
share were down 7% and 6% respectively and dividend per
share was up 3%.
Bonuses reflect this overall level of performance.
Paul Zwillenberg received an award of 50% of maximum.
Paul’s award for 2016 was measured solely against financial
performance and was prorated for his period of employment.
Martin Morgan’s bonus included a 20% weighting on delivery
of strategic measures, and he received an award of 68%
of maximum (prorated for the period of employment).
Full details can be found on page 65.
Long-term incentives for FY 2016
2016 was the first year in which awards under the 2012 Long
Term Incentive Plan vested. The vesting of the award made
in February 2012 is measured against the following priorities:
• growing B2B business;
• investing in strong brands of digital consumer media,
particularly MailOnline;
• growing sustainable earnings and dividends; and
• increasing the Company’s exposure to growth economies
and international opportunities.
We have made significant progress against all of these
priorities since 2012 and the Remuneration Committee
has determined that the award should vest in full in
December 2016.
Additional awards were made in 2016. These awards were
measured against the same strategic priorities as awards
made in prior years.
For more information see page 68
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Our strategic priorities
For more information see page 10
Retirement of Martin Morgan
Martin Morgan retired as DMGT’s CEO at the end of May 2016.
We are indebted to Martin for his leadership through a period
of huge transformation for the business. Martin received a
bonus for FY 2016 which was prorated for the period worked.
The Remuneration Committee agreed that bonus deferral
would not apply to Martin’s final bonus award. Full details can
be found on page 65.
In recognition of Martin’s length of service, his contribution
to DMGT’s performance over the years, and the significant
progress that has already been made towards the
achievement of relevant plan targets, the Remuneration
Committee agreed to exercise discretion to treat him as a
good leaver under the rules of the Long-Term Incentive Plan
(LTIP) and the Deferred Bonus Plan. This allows Martin’s
outstanding awards to vest in full according to the normal
vesting dates. His outstanding awards under the Share
Incentive Plan are treated in accordance with the rules
of that plan. Further details can be found on page 69.
No further share options or awards will be granted to Martin.
He will be engaged on a one-year consultancy agreement
commencing January 2017 to provide advisory services to
the Company at a fee of £30,000 per month.
Retirement of David Dutton
David Dutton retired at the end of June 2016. Over the
past 45 years David has been a key figure in the Group’s
transformation and diversification from a print business into
B2B. Further details can be found on page 69.
Appointment of Suresh Kavan to the Board
Suresh Kavan, CEO of dmg information and dmg events joined
the Board on 1 July 2016. Suresh has been part of our business
since 2008 and brings considerable experience to the role.
Suresh is based in the United States and his remuneration
arrangements reflect the current strategic priorities associated
with his role.
Base salary for FY 2017
We regularly review the competitive position of remuneration
for the Company’s Executive Directors. Base pay increases in
the last few years have been modest (2 to 3%) and in line with
increases for the general DMGT workforce and the relevant
external market (particularly the UK and US). Salaries for
FY 2017 were frozen for all Executive Directors and there was
a targeted and modest salary increase budget for other
employees across the Group.
Incentive arrangements for FY 2017
In 2016 we undertook a comprehensive review of our incentive
arrangements across the Group to ensure that they were
appropriately aligned to the creation of shareholder value.
As a result of that review we intend to make a number of
changes to existing incentive arrangements.
Executive Directors’ bonus
It is proposed that we broaden the financial metrics used in
the Executive Bonus Plan to include revenue and cash flow
components in addition to the existing profit metric. The current
weighting on strategic objectives will be eliminated for FY 2017.
The Committee believes that this combination of measures
will reward participants for delivering sustainable long-term
revenue, profit and cash-flow growth. Suresh Kavan who
leads dmg information and dmg events and Kevin Beatty who
heads up dmg media will have 30% of their bonus evaluated
against DMGT performance and the remainder against the
performance of their relative businesses.
Resignation of Stephen Daintith
Stephen Daintith has announced his resignation and will leave
DMGT in FY 2017. Details of his compensation arrangements
will be disclosed at that time.
Paul Zwillenberg’s bonus will transition from 50% to 70% of his
base salary for on-target performance and the maximum
payable for superior performance will increase from 100%
to 140% in FY 2017 for his first full financial year as CEO.
Appointment of Paul Zwillenberg
Paul Zwillenberg was appointed as DMGT’s CEO in June 2016,
and details of his compensation arrangements can be found
on page 63. His appointment terms are in line with DMGT’s
Remuneration Policy and include a one-off award of DMGT
shares with a value of £750,000 as at 1 June 2016. The award
is intended to compensate for the forfeiture of unvested
incentives from his previous employer, Boston Consulting
Group. We intend to seek shareholder approval for this
award at the next AGM, and will make the award in
February 2017. The award will vest on 1 June 2019 subject
to Paul’s continuing employment.
Participants will still be required to defer any bonus awarded
in excess of target outcome into DMGT equity. Further details
can be found on page 65.
Long-term Incentives
In 2015 we started a process of looking at our long-term
incentive arrangements across the Group and this has
continued in 2016. In order to ensure that as our business
evolves we continue to have a strong alignment between
our incentives and our priorities, a key focus of 2017 will be
the roll-out of the reward strategy for our operating businesses.
Our Strategic Review has highlighted the paramount
importance of realising the full revenue, profit and cash flow
potential within our existing portfolio, as part of our drive for
long-term growth and shareholder value creation. Supporting
our strategy, the Committee is proposing the adoption of
a new Long-Term Executive Incentive Plan (subject to
shareholder approval at the AGM), which will more directly link
payouts to business performance by awarding management
a share of profit growth, over and above a minimum threshold,
after deducting a charge for additional capital. The new
Long-Term Executive Incentive Plan provides for exceptional
pay in cases of truly exceptional performance, while not
over-rewarding average performance.
61
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
October to December 2015
(3 meetings)
Agenda items
• FY 2015 outcome of executive bonus schemes.
• Approval of LTIP participants and performance conditions.
• Approval of Remuneration Report.
• Principles of future reward design.
February 2016
Agenda items
• Valuation provider selection.
• Review of malus and clawback provisions.
April 2016
Agenda items
• Update on share schemes.
• Executive pension allowances and life assurance review.
• Operating company incentive plans.
May 2016
Agenda items
• Martin Morgan retirement terms.
• Paul Zwillenberg appointment terms.
June 2016
Agenda items
• Paul Zwillenberg 2016 bonus arrangements.
July 2016
Agenda items
September 2016
Agenda items
• Operating company salary review budgets.
• David Dutton retirement terms.
• Suresh Kavan appointment terms.
• Review of shareholding guidelines
• Executive and divisional remuneration strategy.
• Review of Committee effectiveness.
• Stephen Daintith resignation terms.
• Annual salary review.
In recognition of the significant challenge of setting appropriate
long-term targets across the diverse and rapidly changing
sectors in which we operate, we have taken the decision to
move from a five-year to three-year performance period.
The new equity awards will be subject to challenging stretch
targets and for this reason the Committee has agreed that
the maximum award (subject to performance conditions)
should be increased from 100% to 500% of base salary.
Awards will only vest at the maximum level if an exceptional
level of performance is met resulting in significant value
creation for shareholders. Vesting at 500% would be
achievable for meeting challenging stretch targets and
100% (on target) for meeting a positive level of performance.
In addition we are introducing enhanced shareholding
guidelines for Paul Zwillenberg. Suresh Kavan and Paul Dacre
will remain on their current long-term incentive arrangements.
We believe that the new incentive arrangements that we
intend to put in place for FY 2017 will help us to drive sustained
future success.
The Viscount Rothermere
Chairman
62
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Executive Directors: remuneration at a glance
Corporate performance in FY 2016
Key indicators of corporate performance are shown below:
Adjusted profit before tax
Dividend per share
Adjusted earnings per share
Share price
2016
2015 Movement
£260m £281m
22.0p
56.0p
£7.45
21.4p
59.7p
£7.54
-7%
+3%
-6%
-1%
FY 2016 Remuneration outcomes for the Executive Directors
The table below summarises the remuneration for the Executive Directors in FY 2016:
Salary 2016
Increase with effect from
1 October 2015
Bonus (including deferred amounts)
As a % of salary
Taxable benefits
Pension benefits
LTIP awards vesting in year
Dividend equivalent payment
Total remuneration FY 2016
Total remuneration FY 2015
The Viscount
Rothermere
£000
P A
Zwillenberg
£000
S W
Daintith
£000
837
2%
756
90%
37
310
–
–
1,940
2,069
250
–
126
50%
7
75
–
–
458
–
714
2%
384
54%
16
214
1,017
6
2,351
1,410
K J
Beatty
£000
744
2%
211
28%
19
275
1,059
10
2,318
1,418
P M
Dacre
£000
1,448
2%
–
–
59
–
–
–
1,507
1,475
S Kavan
£000
221
–
102
46%
4
1
–
–
328
–
M W H
Morgan
£000
708
2%
481
68%
14
248
1,433
–
2,884
1,944
D M M
Dutton
£000
310
2%
92
25%
12
–
–
–
414
485
Total
£000
5,232
2,152
168
1,123
3,509
16
12,200
8,801
The key elements of remuneration for the Executive Directors
The key elements of remuneration applicable for each Executive Director in FY 2016 are described below:
Annual bonus deferral
LTIP
Pension
Benefits
None applies
Does not participate
Allowance of
37% of salary
Salary
£837,000
(including
Euromoney
Board fees)
£750,000
£250,000 since
FY 2016
appointment
£714,000
£744,000
£1,448,000
Annual bonus
opportunity
180% of salary
maximum
90% of salary
on target
100% of salary
maximum
50% of salary
on target
100% of salary
maximum
50% of salary
on target
60% of salary
maximum
30% of salary
on target
–
The Viscount
Rothermere
P A
Zwillenberg
S W
Daintith
K J
Beatty
P M
Dacre
Any amount above
target deferred into
nil cost options for
two years
Any amount above
target deferred into
nil cost options for
two years
Any amount above
target deferred into
nil cost options for
two years
–
S Kavan
US$1,250,000
$312,500 since
FY 2016
appointment
150% of salary
maximum
100% of salary
on target
Any amount above
target deferred into
nil cost options for
two years
63
Car allowance
Family medical
insurance
Car allowance
Family medical
insurance
Car allowance
Family medical
insurance
Family medical
insurance
Company car
and car
allowance
Fuel benefit
Family medical
insurance
Medical and life
insurance
Standard award of 100%
of salary vesting after
five years
Allowance of
30% of salary
Standard award of 100%
of salary vesting after
five years
Allowance of
30% of salary
Standard award of 100%
of salary vesting after
five years
Allowance of
37% of salary
Company car
allowance
In 2015 the previous annual
salary supplement of
£500,000 p.a. was replaced
by an annual LTIP award
with a value equivalent to
70% of salary vesting after
three years
Did not participate in 2016
(received an operating
business LTI award prior to
appointment to the Board)
US 401(k)
retirement
plan
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
The key elements of remuneration for the Executive Directors continued
Salary
£1,006,000
(including
Euromoney
Board fees)
£366,000
M W H
Morgan
D M M
Dutton
Annual bonus
opportunity
100% of salary
maximum
50% of salary
on target
50% of salary
maximum
25% of salary
on target
Annual bonus deferral
LTIP
Pension
Benefits
Any amount above
target deferred into
nil cost options for
two years
Standard award of 100%
of salary vesting after
five years
Allowance of
37% of salary
Car allowance
Family medical
insurance
None applies
Does not participate
Personal
medical
insurance
Martin Morgan retired from the Board on 31 May 2016 and David Dutton retired 30 June 2016. Salary shown in the table on pages 63 and 64 is for the period of service on
the Board.
Executive Directors: annual report on remuneration
Annual report on remuneration table 1: Single figure of remuneration paid to Executive Directors – Audited
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in FY 2016 and FY 2015.
Details of the calculation of the annual bonus figure for FY 2016 can be found in the section Variable pay awards vesting in FY 2016,
on page 65.
The Viscount
Rothermere
P A Zwillenberg
S W Daintith
K J Beatty
P M Dacre
S Kavan
M W H Morgan
D M M Dutton
Total
Financial
year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Salary
and
fees1
£000
837
823
250
–
714
700
744
729
1,448
1,419
221
–
708
988
310
359
5,232
5,018
Taxable
benefits2
£000
Pension
benefits
£000
37
37
7
–
16
16
19
23
59
56
4
–
14
21
12
16
168
169
310
304
75
–
214
210
275
270
–
–
1
–
248
365
–
–
1,123
1,149
Total
fixed
£000
1,184
1,164
332
–
944
926
1,038
1,022
1,507
1,475
226
–
970
1,374
322
375
6,523
6,336
Annual
bonus3
£000
Total annual
remuneration
£000
Recruitment
and other
awards5
£000
LTIP4
£000
Total
remuneration
£000
756
905
126
–
384
461
211
309
–
–
102
–
481
570
92
110
2,152
2,355
1,940
2,069
458
–
1,328
1,387
1,249
1,331
1,507
1,475
328
–
1,451
1,944
414
485
8,675
8,691
–
–
–
–
1,017
–
1,059
–
–
–
–
–
1,433
–
–
–
3,509
–
–
–
–
–
6
23
10
87
–
–
–
–
–
–
–
–
16
110
1,940
2,069
458
–
2,351
1,410
2,318
1,418
1,507
1,475
328
–
2,884
1,944
414
485
12,200
8,801
Notes
1. Salary shown for Lord Rothermere, Paul Zwillenberg and Martin Morgan includes fees of £30,000, £7,500 and £22,500 p.a. respectively as Directors of Euromoney.
Amounts for Martin Morgan and David Dutton also include payment for holiday accrued but not taken at the time of retirement.
2. Taxable benefits comprise car or equivalent allowances which are £34,000 p.a. for Lord Rothermere; £13,500 p.a. for Martin Morgan; £14,000 p.a. for Stephen Daintith;
£16,000 for Kevin Beatty; and £14,000 for David Dutton. Paul Dacre has a company car with a taxable value of £30,976 p.a. plus a car allowance of £10,000 p.a.
Paul Dacre also received a fuel benefit of £15,470 p.a. All of the Executive Directors received medical benefits with a cost to the Company of approximately £2,500
to £3,000 p.a.
3. The bonuses shown include amounts that will be deferred into shares but do not have any further performance conditions attached. Details of the calculation of the
FY 2016 bonus are shown on page 65.
4. Awards made in February 2012 under the 2012 Long-Term Incentive Plan vested in full in December 2016.
5. Under the rules of the deferred bonus plan, participants are entitled to the value of the dividends that they would have received between the award date and the
exercise date. In February 2016 Kevin Beatty and Stephen Daintith received cash dividend equivalent payments in relation to their exercise of deferred bonus nil cost
option awards.
64
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Executive Directors: annual report on remuneration
Executive Directors: Variable pay awards vesting in FY 2016
Annual report on remuneration table 2.1: Annual bonus weightings, opportunity and outcomes – Audited
The details of the weightings and opportunity relating to the annual bonus paid to Executive Directors for the year ended
30 September 2016 and included in the single figure table 1 on page 64 (opposite) are shown below. The performance measures
are a combination of adjusted pre-tax profits and strategic objectives. The resulting bonus amounts are shown in the table below:
The Viscount Rothermere
P A Zwillenberg
S W Daintith
K J Beatty
S Kavan1
M W H Morgan
D M M Dutton
Weightings
Opportunity as a % of salary
B2B
Consumer
Overall
DMGT
Strategic
objectives
Threshold
Target
Maximum
Actual
outcome %
of salary
Actual
outcome
£000
30%
30%
30%
0%
100%
30%
30%
30%
30%
20%
70%
0%
20%
30%
40%
40%
30%
0%
0%
30%
40%
–
–
20%
30%
0%
20%
0%
0%
0%
0%
0%
50%
0%
0%
90%
50%
50%
30%
100%
50%
25%
180%
100%
100%
60%
150%
100%
50%
90%
50%
54%
28%
46%
68%
25%
756
126
384
211
102
481
92
Note
1. Suresh Kavan’s bonus is weighted against targets specific to dmgi and dmge.
Annual report on remuneration table 2.2: Profit measures
The profit measure is split into three categories and weighted appropriately to the role of the Executive Director (shown in table 2.1).
The Board considers the performance targets for the measures to be commercially sensitive as it would disclose information of
value to competitors, and they will not be disclosed. The following illustrates performance against targets for the profit measures:
Profit targets
B2B
Consumer
Overall DMGT
Below
0%
Threshold
0%
Target
100%
Maximum
200%
Outcome as
a % of target
105%
89%
98%
Annual report on remuneration table 2.3: Strategic objectives
For the Executive Directors shown below with strategic objectives forming part of their bonus, the following illustrates performance
against targets:
Strategic objectives
S W Daintith
K J Beatty
M W H Morgan
Portfolio structure and divisional leadership
Mail Brands and divisional targets
Portfolio structure
Below
0%
Threshold
0%
Target
100%
Maximum
200%
Outcome as
a % of target
100%
133%
200%
Annual report on remuneration table 3: Deferred annual bonus
The Committee agreed the following deferral requirements would apply to the annual bonus with no further performance conditions:
Deferral requirement
Type of deferral
The Viscount Rothermere
P A Zwillenberg
S W Daintith1
K J Beatty
S Kavan
M W H Morgan
D M M Dutton
Nil
Amounts above target bonus deferred for two years
Amounts above target bonus deferred for two years
Amounts above target bonus deferred for two years
Amounts above target bonus deferred for two years
Amounts above target bonus deferred for two years
Nil
None
Nil cost options
Nil cost options
Nil cost options
Nil cost options
Nil cost options
None
Note
1. The Remuneration Committee agreed to waive the requirement for deferral for Martin Morgan and Stephen Daintith.
Amount
deferred
FY 2016
£000
Amount
deferred
as a % of
FY 2016 bonus
0
0
0
0
0
0
0
0%
0%
0%
0%
0%
0%
0%
65
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc
Remuneration Report
Executive Directors: annual report on remuneration continued
Executive Directors: Awards made under share schemes
Annual report on remuneration table 4: Nil cost options – Audited
The table below sets out the details of all outstanding awards of nil cost options as part of the deferred bonus plan, including
those derived from the Executive Directors’ bonuses for FY 2015 that were granted in December 2015 at the closing price on
1 December 2015 of £7.06. Following the exercise of an award, a cash payment with a value equivalent to the sum of all of
the dividends declared for the award between the grant date and the date of delivery of the shares is made. No further
performance conditions are imposed.
The value of December 2015 awards at issue were £76,908 for Martin Morgan, £110,600 for Stephen Daintith and £90,396 for
Kevin Beatty and were based on a 1 December 2015 market closing price of £7.06. There were no deferrals in relation to FY 2016
bonus outcomes.
Award date
Award type
Relating to
Exercisable from
Expiry date
Status of awards
Award price
Outstanding awards
The Viscount
Rothermere
S W Daintith
K J Beatty
M W H Morgan
Total outstanding
Exercised during year
The Viscount
Rothermere
S W Daintith
K J Beatty
M W H Morgan
Total exercised
Dec 2009
Dec 2010
Dec 2011
Dec 2012
Dec 2012
Dec 2013
Dec 2014
Dec 2015
Nil cost
options
2011
Bonus
Nil cost
options
2009
Bonus
Nil cost
options
2010
Bonus
Nil cost
options
2012
Bonus
Dec 2012 Dec 2013 Dec 2014 Dec 2014
Dec 2016 Dec 2017 Dec 2018 Dec 2019
Vested
£5.27
Vested
£5.39
Vested
£3.98
Vested
£4.10
Nil cost
options
2012
Bonus
Dec 2015
Dec 2019
Vested
£5.27
Nil cost
options
2013
Bonus
Dec 2015
Dec 2020
Nil cost
options
2014
Bonus
Dec 2016
Dec 2021
Nil cost
options
2015
Bonus
Dec 2017
Dec 2022
Vested Outstanding Outstanding
£7.06
£8.29
£9.16
187,581
110,464
–
129,635
–
–
Total
outstanding
–
427,680
–
34,970
77,272
299,823
–
17,069
44,215
171,748
–
19,473
21,560
41,033
–
–
–
129,635
23,257
16,795
38,349
78,401
2,416
25,585
4,270
32,271
15,666
12,804
10,893
39,363
41,339
126,696
196,559
792,274
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Shaded columns show options that have vested.
66
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Annual report on remuneration table 5.1: 2010 LTIP award, core award and matching shares – Audited
The table below sets out the details of the 2010 LTIP core awards and matching shares which vest in the year and also those
that are due to vest (to the extent that the core award vested) in subsequent years in accordance with the 2001 Plan rules.
No further performance conditions apply, except that the core award and none of the matching awards are realisable until the
full award vests. Total values for core and matching awards for the 2010 LTIP award for Martin Morgan are included in the CEO
remuneration outcomes table 9 on page 71.
Award date
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Award type
Relating to
Vests
Realisable in
Status of awards
Core
2010 LTIP
Sep 2013
Dec 2016
Restricted
until Dec 2016
Matching
2010 LTIP
Dec 2013
Dec 2016
Restricted
until Dec 2016
Matching
2010 LTIP
Dec 2014
Dec 2016
Restricted
until Dec 2016
Matching
2010 LTIP
Dec 2015
Dec 2016
Restricted
until Dec 2016
Matching
2010 LTIP
Dec 2016
Dec 2016
Outstanding
Outstanding awards
K J Beatty
M W H Morgan
Exercised/realised
during year
K J Beatty
M W H Morgan
39,017
0
–
36,740
19,508
0
–
18,370
19,508
0
–
18,370
19,508
0
–
18,370
Total
outstanding
117,049
0
Total
–
110,220
19,508
0
–
18,370
Value at
30 Sep 2013
(£7.62 per share)
£000
892
0
0
840
Shaded columns show options that have vested.
Martin Morgan exercised the December 2010 LTIP award in July 2016 in accordance with the terms of his termination agreement.
Annual report on remuneration table 5.2: 2009 LTIP award, core award and matching shares – Audited
The table below sets out the details of the 2009 LTIP core awards and matching shares which vest in the year and also those that
are due to vest (to the extent that the core award vested) in subsequent years in accordance with the 2001 Plan rules.
No further performance conditions apply, except that the core award and none of the matching awards are realisable until the
full award vests.
Award date
Dec 2009
Dec 2009
Dec 2009
Dec 2009
Dec 2009
Award type
Relating to
Vests
Realisable in
Status of awards
Outstanding awards
K J Beatty
M W H Morgan
Exercised/realised
during year
K J Beatty
M W H Morgan
Core
2009 LTIP
Sep 2012
Dec 2015
Vested
Matching
2009 LTIP
Dec 2012
Dec 2015
Vested
Matching
2009 LTIP
Dec 2013
Dec 2015
Vested
Matching
2009 LTIP
Dec 2014
Dec 2015
Vested
Matching
2009 LTIP
Dec 2015
Dec 2015
Vested
–
–
–
–
–
–
69,053
34,527
–
–
–
–
–
–
25,521
34,527
25,521
34,527
25,521
34,527
Total
outstanding
Value at
30 Sep 2012
(£4.82 per share)
£000
–
–
Total
76,563
207,161
–
–
369
999
Shaded columns show options that have vested.
67
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Executive Directors: annual report on remuneration continued
Annual report on remuneration table 6: Long-Term Incentive Plans (LTIP) – Audited
All of the outstanding awards subject to performance conditions are summarised in the table below. Awards are made annually
in line with policy.
The Board considers that the specific targets relating to the measures for the LTIPs are commercially sensitive and will disclose
performance against targets at the time the award vests. Awards made in FY 2016 were based on a 1 December 2015 market
closing price of £7.06.
Awards made in February 2012 under the 2012 Long-Term Incentive Plan vested in full during the year based on an evaluation
by the Remuneration Committee of the performance against the measures detailed below.
2009 LTIP1
core award
Dec 2009
Sep 2012
2010 LTIP1
core award
2011 LTIP
award
2012 LTIP
award
2013 LTIP
award
2014 LTIP
award
2015 LTIP
award
Dec 2010 Feb 2012 Dec 2012 Dec 2013 Dec 2014 Dec 20152
Sep 2013 Oct 2016 Oct 2017 Oct 2018 Oct 2019 Oct 2020
187.5%
187.5%
100%
100%
100%
100%
100%
£4.04
£4.82
EBITDA;
cumulative free
cash; net debt/
EBITDA average;
and
performance
against strategic
plan
Vested
100%
£5.59
£7.62
EBITDA;
cumulative free
cash; investment-
grade rating;
and
performance
against strategic
plan
Vested but
restricted until
Dec 2016
100%
£4.37
£6.95
£5.27
N/A
• Grow B2B business.
£9.16
N/A
£8.29
N/A
£7.06
N/A
• Continue to invest in strong brands of digital
consumer media, particularly MailOnline.
• Grow sustainable earnings and dividends.
• Increase the Company’s exposure to growth
economies and to international opportunities.
Vested
Out-
standing
Out-
standing
Out-
standing
Out-
standing
100%
100%
100%
100%
100%
52.5%a M W H Morgan
37.5%a
K J Beatty
53.9%a
–
–
–
–
–
–
76,563
207,161
283,724
–
117,049
–
–
–
117,049
–
110,220
110,220
100%a
100%e
100%e
100%e
100%e
146,453
152,494
–
–
206,350
505,297
125,085
130,246
–
–
176,243
431,574
74,167
77,226
–
–
104,500
255,893
84,439
87,937
119,819
–
118,938
411,133
101,133
105,382
143,569
–
142,493
492,577
Total
outstanding
531,277
670,334
263,388
–
748,524
2,213,523
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
76,563
317,381
393,944
Award name
Award date
Performance
period ends
Standard award
as a % of salary
Award price
Price at vesting
Performance
measures
Status of award
Maximum
percentage of
face value that
could vest
Estimatede/
actual vestinga
Outstanding awards
S W Daintith
K J Beatty
P M Dacre3
S Kavan
M W H Morgan
Total outstanding
Exercised/realised
during year
K J Beatty
M W H Morgan
Total exercised/
realised during
year
Shaded columns show options that have vested.
Notes
1. The value of core and matching awards for the 2009 and 2010 LTIPs are shown in tables 5.1 and 5.2 on page 67.
2. The value of the 2015 LTIP awards at issue were £1,006,000 for Martin Morgan, £714,000 for Stephen Daintith, £744,000 for Kevin Beatty and £1,013,600 for Paul Dacre.
3. Paul Dacre’s performance measures for awards made from December 2012 onwards are to continue to invest in strong brands of digital consumer media – particularly
MailOnline and to ensure the financial sustainability of the Mail Titles and vest three years after award date.
68
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Annual report on remuneration table 7: Executive Directors’ accrued entitlements under DMGT Senior Executives’
Pension Fund – Audited
The defined benefit scheme is closed for future accrual. It is the Company’s policy that annual bonuses, payments under the
Executive Bonus Scheme and benefits in kind are not pensionable.
The Company does not make any contributions on behalf of Paul Dacre or David Dutton. Suresh Kavan participates in a US 401(k)
retirement plan. No Executive Directors are now accruing further pension in the DMGT Senior Executives’ Pension Fund. The normal
retirement age under the Fund for this group is 60.
The Viscount Rothermere
M W H Morgan
K J Beatty1
P M Dacre
Defined benefit: Accrued annual
benefit as at 30 September 2016
based on normal retirement age
£000
77
89
0
688
Defined
benefit: normal
retirement age
3 Dec 2027
16 Feb 2010
–
14 Nov 2008
Defined benefit:
Additional value
of benefits if early
retirement taken
Weighting of
pension benefit
value as shown
in single figure table
– Cash allowance: 100%
N/A Cash allowance: 100%
–
N/A
–
N/A
Note
1. Kevin Beatty transferred his deferred pension to a personal retirement plan in September 2016.
Payments to past Directors
Martin Morgan
After stepping down from the Board on 31 May Martin Morgan received salary £83,833, usual benefits £1,762 and pension
allowance of £31,018 for the month of June when he was still employed by the Company for a period of transition.
David Dutton
David Dutton has been engaged on a one-year agreement from the date of his termination (see below) to provide consultancy
services at a fee of £35,000 per annum.
Payments for loss of office
Martin Morgan and David Dutton left the Company this year. They have together in their various roles helped to diversify the
Group into the B2B sector. Payments for loss of office reflect the transition arrangements that have been put in place.
Martin Morgan
Martin Morgan stepped down from the Board of DMGT and his role as Chief Executive on 31 May 2016. Martin Morgan remained
an employee of DMGT until 30 June 2016 during which time he continued to receive salary, benefits and pension allowance.
Martin Morgan’s notice period was 12 months and ran from 12 January 2016.
1. Termination payments
In accordance with his service contract he received a payment in lieu of notice of £1,110,981 in respect of his salary, pension
allowance, bonus (based on an average of the last three years) and car allowance for the period from the termination date to
12 January 2017, being the date on which his notice period will expire. Martin Morgan also continues to be covered under the
private medical and life insurance plans for this period.
2. FY 2016 bonus
Under the terms of his service contract and the DMGT bonus plan, Martin Morgan received a bonus for the 2016 financial year,
scaled back on a time apportioned basis by reference to the termination date (see page 65).
The Remuneration Committee exercised its discretion and agreed that any bonus awarded would not be deferred into shares.
3. Unvested deferred bonus awards
In accordance with the rules of the plan, share options under the DMGT 2012 Deferred Bonus Plan (the ‘DBP’) over a total of
15,163 A ordinary non-voting shares in DMGT (‘Shares’) become exercisable in full on their respective normal vesting dates in 2016
and 2017.
4. Unvested Long-Term Incentive Plan awards
The Remuneration Committee has determined that:
a. In accordance with the rules of the plan an outstanding share award made in 2010 over 110,220 shares under the DMGT 2001
Long-Term Incentive Plan (the ‘2001 LTIP’), which had already satisfied applicable performance conditions, would vest on the
termination date and be realised within 30 days; and
b. Given Martin Morgan’s considerable contribution throughout his 27 years of service to DMGT, and the progress that has
already been made towards achievement of the relevant performance targets, outstanding share awards under the DMGT
2012 Long-Term Incentive Plan (the ‘2012 LTIP’) over a total of 748,524 Shares will vest on their normal respective vesting dates
between December 2016 and December 2020.
5. Vested share options and awards (not yet exercised/realised)
In accordance with the rules of the relevant plan any outstanding share options and awards which have vested and are already
exercisable/realisable will remain realisable/exercisable following the termination date.
6. Share Incentive Plan
Entitlements under DMGT’s Share Incentive Plan were treated in accordance with the rules of that plan.
7. Consultancy
Martin Morgan will be engaged on a one-year consultancy agreement commencing January 2017 to provide advisory services
to the Company at a fee of £30,000 per month.
69
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Executive Directors: annual report on remuneration continued
David Dutton
David Dutton stepped down from the Board of DMGT and left DMGT’s employment on 30 June 2016.
1. Termination payments
In accordance with his service contract he received a payment of £415,000 for accrued but untaken holiday and payment in lieu
of notice in respect of his salary from the termination date to 30 June 2017, being the date on which his 12-month notice period
will expire.
2. FY 2016 bonus
Under the terms of his service contract and the DMGT bonus plan, David Dutton is entitled to a bonus for the 2016 financial year.
The amount of the bonus was determined in December 2016 based on achievement against performance targets during the
year (see page 65).
3. Share Incentive Plan
Entitlements under DMGT’s Share Incentive Plan will be treated in accordance with the rules of that plan.
Annual report on remuneration table 8: Percentage change in remuneration of the Chief Executive
The table below sets out the remuneration delivered to the Chief Executive compared to total employee remuneration.
Chief Executive
remuneration
(excluding LTIP)1
£000
Total employee
remuneration
£000
Average remuneration2
£000
2016
2015
2016
2015
2016
2015
£1,586
% increase/decrease
-4.5%
£1,944
£578,800
£548,100
£57.3
£53.9
+6%
+6%
Notes
1. Total employee remuneration includes salaries, wages and incentives, but excludes pension benefits. Reflects Martin Morgan’s earnings to 31 May 2016
and Paul Zwillenberg’s earnings from 1 June 2016.
2. The change in average employee remuneration is partly due to movement in the US$ exchange rate.
70
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Annual report on remuneration chart 1: Comparison of overall performance and remuneration of the CEO
DMGT
Media Sector Total Return Index
FTSE 100
The chart compares
the Company’s TSR with
the Media Sector Total
Return Index and the
FTSE 100 Index over the
past eight financial
years, assuming
an initial investment
of £100.
The Company is a
constituent of the
Media Sector Total
Return Index and,
accordingly, this is
considered to be the
most appropriate
comparison to
demonstrate the
Company’s relative
performance.
£
500
400
300
200
100
0
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
Annual report on remuneration table 9: Chief Executive remuneration outcomes FY 2009 to FY 2016
Financial year ending
FY 20091
£000
FY 20102
£000
FY 20113
£000
Total remuneration (single figure)
Annual variable pay (% maximum)
LTIP achieved (% maximum)
2,312
63%
0%
1,722
2,961
40%
98%
25% 25%/100%
FY 20124
£000
2,809
63%
52.5%
FY 20135
£000
2,949
88%
37.5%
FY 20146
£000
2,021
54%
40%
FY 20157
£000
1,944
58%
–
FY 20168
£000
3,342
63%
100%
Notes
1. In FY 2009 maximum bonus opportunity was 200% of salary. No LTIP awards were made in that year or vested in that year. Maximum bonus opportunity was 100%
of salary in all other years.
2. In FY 2010 the price on 31 December 2009 (£4.14) is used for the 2003 LTIP award which vested 75% out of a maximum 300% in December 2009.
3. Two awards vested in FY 2011. The price on 31 December 2010 (£5.72) is used for the 2004 award which vested 75% out of a maximum 300% in December 2010. The price
on 30 September 2011 (£3.68) is used for the 2008 transition award which vested 100% in September 2011.
4. In FY 2012 the price on 30 September 2012 (£4.82) is used for the 2009 award which vested 52.5% out of a maximum 100% in September 2012.
5. In FY 2013 the price on 30 September 2013 (£7.62) is used for the 2010 award which vested 37.5% out of a maximum 100% in September 2013 and the 2006 award lapsed.
6. In FY 2014 the price on realisation on 23 June 2014 (£8.31) is used for the 2007 award which vested at 120% out of a maximum 300% in December 2013.
7. No LTIP vested in FY 2015.
8. Awards made to Martin Morgan in February 2012 under the 2012 Long-Term Incentive Plan vested in full during the year. The average share price for the last of quarter
of FY 2016 is used (£6.95). The single figure shown combines the period of his service to 31 May 2016 and his successor Paul Zwillenberg from 1 June 2016. It does not
include the value of Martin’s termination payments, see page 69.
Annual report on remuneration chart 2: Relative importance of spend on pay in the financial year
The chart sets out the
relative importance
of spend on pay in
the financial year.
£ millions
800
700
600
500
400
300
200
100
0
+8%
705
651
-7%
260
281
-50%
89
75
6
76
FY 2016
FY 2015
FY 2016
FY 2015
FY 2016
FY 2015
Total employment pay
Buy-back
Dividend
Buy-back
Dividend
Adjusted profit before tax
71
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Directors’ Remuneration Policy
This part of the report sets out the Company’s policy for the remuneration of Directors (Policy). The Company’s Directors’
Remuneration Policy was last approved by shareholders at the AGM on 4 February 2015. The Committee has taken the
opportunity to review the Policy and is satisfied that, subject to some amendments, it remains appropriate.
A summary of the key changes proposed to the Policy is set out in the notes on page 76.
The revised Policy, as set out on pages 72 to 83, is intended to apply for a three-year period from the date of the 2017 AGM,
subject to a binding shareholder vote at that meeting, after which it will be available to view at www.dmgt.com. The Committee
will continue to review the Policy on an annual basis.
Policy overview
The Committee aims to structure remuneration packages which motivate and retain Directors, and drive the right behaviours.
The Committee considers that a successful remuneration policy needs to be sufficiently flexible to take account of commercial
demands, changing market practice and shareholder expectations. Our approach is to align base salary with reference to
market levels of pay and to ensure that a significant part of executive pay is variable and linked to the success of the Company.
The CEO’s Strategy Review has highlighted the paramount importance of realising the full revenue, profit and cash flow potential
within our existing portfolio, as part of our drive for long-term growth and shareholder value creation. Supporting our strategy, the
Committee is proposing the adoption of a new Long-Term Executive Incentive Plan (subject to shareholder approval at the AGM),
which will directly link payouts to business performance by awarding management a share of profit growth, over and above
a minimum threshold, after deducting a charge for additional capital. The new Long-Term Executive Incentive Plan provides for
exceptional pay in cases of truly exceptional performance, while not over-rewarding average performance.
The Committee regularly reviews remuneration structures to ensure they are aligned to business strategy. The Policy incorporates
a degree of flexibility to allow the Committee to manage remuneration over the next three years.
Policy applied to Executive Directors
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Base salary
To recruit, retain and
reflect responsibilities of
the Executive Directors
and be competitive
with peer companies.
The basic salary for each Executive
Director is reviewed annually for the
following year taking into account
contractual agreements, general
economic and market conditions
and the level of increases made
across the Group as a whole.
Given the location of the
Company’s principal operations,
a particular focus is put on US
and UK market conditions.
Benchmarking based on media
and other relevant companies
is performed periodically and
the Committee’s intention is to
apply judgement in evaluating
market data.
Pension
To recruit, retain and
reflect responsibilities of
the Executive Directors
and be competitive
with peer companies.
Executive Directors may participate
in a defined contribution pension
scheme or may receive a cash
allowance in lieu of pension
contribution. Any contributions
paid to the Company pension
scheme will be offset from the
cash allowance.
Annual increases are
normally in line with
average UK and US-based
employees, subject to
particular circumstances,
such as changes in roles,
responsibilities or
organisation, or as the
Committee determines
otherwise based on factors
listed under ‘Operation’.
The maximum salary level
for each Executive Director is
set at a level the Committee
considers appropriate taking
account of the individual’s
skills, experience and
performance, and the
external environment.
Current salary levels are set
out on page 63.
For executives who
participated in the defined
benefit scheme the pension
allowance has been set at
a higher level (up to 37%).
30% for new recruits.
Not performance related.
Not performance related.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Benefits
To recruit, retain and
reflect responsibilities of
the Executive Directors
and be competitive
with peer companies.
Annual bonus
To focus Executive
Directors on the delivery
of financial
performance and
strategic objectives
which create value for
the Company and
shareholders.
To reward individual
contribution to the
success of the
Company.
Not performance related.
Benefits may vary by role and
individual circumstances.
The cost of benefits changes
periodically and may be
determined by outside
providers.
Bonuses are subject to the
achievement of financial
measures set prior to grant
by the Committee. Measures
currently include profit,
revenue and cash flow targets
and may be varied from year
to year.
The selection and weighting of
performance measures takes
into account the strategic
objectives and business
priorities for the year. The
weightings that were applied
to the FY 2016 bonus targets
are as reported in table 2.2
and 2.3 on page 65.
The Board considers the
specific targets and relative
weightings for each measure
to be commercially sensitive
and they will not be disclosed.
Performance against targets in
the year that bonus awards are
made will be disclosed along
with the relevant weightings
in the Annual Report following
the payment.
Maximum opportunity is
as follows:
• for Lord Rothermere,
180% of salary;
• for Paul Zwillenberg,
140% of salary
• for Kevin Beatty,
60% of salary; and
• for Suresh Kavan,
150% of salary.
Paul Dacre does not
participate in the annual
bonus plan.
The maximum level for new
recruits will not exceed
200% of salary.
The achievement of stretch
targets results in maximum
payout. On-target bonus is
normally 50% of maximum.
There is normally no payout
for performance below
threshold. Payout between
threshold and target is on
a straight-line basis.
The performance range sets
a balance between upside
opportunity and downside
risk and is normally based on
targets in accordance with
the annual budget.
Benefits typically include cash
allowances and non-cash
benefits such as medical and
car benefits. Where appropriate,
the Committee may also offer
allowances for relocation or other
benefits where it concludes that it
is in the interest of the Company
to do so, having regard to the
particular circumstances and
to market practice.
Allowances do not form part
of pensionable earnings.
Executives are also eligible
to participate in the DMGT
SharePurchase+ plan, an all-
employee Share Incentive Plan, on
the same basis as other employees.
The annual bonus is based on
in-year performance against
financial and strategic objectives:
• up to 100% of total bonus
opportunity is based on financial
performance at corporate and
business unit level; and
• a proportion of total bonus
opportunity may be based on
performance against strategic
non-financial objectives.
The bonus weightings applied for
each of the Executive Directors may
vary from time to time and may
include financial measures and
targets relating to their specific
business. The weightings that apply
to the bonus may vary if the
Committee determines that it is
appropriate in order to achieve
the strategic aims of the business.
Performance is measured
separately for each item as shown
in tables 2.2 and 2.3 on page 65.
Annual incentive payments do not
form part of pensionable earnings.
Annual bonus plans are
discretionary and the Committee
reserves the right to make
adjustments to payments up or
down if it believes that exceptional
circumstances warrant doing so.
Bonuses are subject to malus prior
to payment, and to clawback
for two years after payment, in
circumstances including a material
misstatement in results, an error in
calculating/assessing satisfaction
of any condition, the participant
causing material reputational
damage to any member of the
Group or serious misconduct by
the participant causing loss to
any member of the Group.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Policy applied to Executive Directors continued
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Bonus deferral
To provide an element
of retention and align
Executive Directors’
interests with those
of shareholders.
Long-term incentives
To focus Executive
Directors on the delivery
of strategic priorities
creating sustainable
long-term value for the
Company and
shareholders, thereby
aligning Executive
Directors’ interests with
the interests of the
Company and
shareholders.
Specifically, the key
objective is to incentivise
Executive Directors to
grow Company profits in
an appropriate manner.
Please see the notes to
this table for further
details about the link
between the Executive
Incentive Plan (EIP)
and the Group’s
strategic goals.
Awards are delivered through a
grant of nil cost options.
A proportion of some Executive
Directors’ annual bonus is deferred
for a period of two years.
Annual bonus deferral requirements
are reported in detail in table 3
on page 65.
Following the exercise of an option, a
cash payment with a value equivalent
to the sum of all of the dividends
declared for the award between the
grant date and the date of delivery
of the shares will be made.
Clawback of vested and unvested
awards is possible in the event of
material misstatement of information
or misconduct.
Subject to shareholder approval at
the AGM, the Company will adopt a
new long-term incentive plan known
as the DMGT Long-Term Executive
Incentive Plan 2017 which will be
used to grant long-term incentive
awards to Executive Directors.
The 2012 Long-Term Incentive Plan
(2012 LTIP) will currently continue
to be used for long-term incentive
awards made to Suresh Kavan
and Paul Dacre.
There will be an annual grant of
awards, which may be in the form of
conditional share awards, options,
restricted shares or cash at the
discretion of the Committee.
Awards may vest at the end of a
performance period of a minimum
duration of three years, subject to
achievement of performance
targets and continued service.
In exceptional cases (e.g. recruitment)
awards may be made without
performance conditions if the
Committee considers this appropriate.
Awards will typically be paid out
in shares, calculated by reference
to the share price as at the date
of grant, in order to ensure further
alignment of the Executive Directors’
interests with those of shareholders.
The Committee may determine that
awards will alternatively be settled in
cash if it considers this appropriate.
Awards may be granted on terms
that the value of any dividends paid
to Shareholders on their shares in the
period between the date of grant
and the date of vesting (or exercise)
is paid to the individual following the
end of that period.
74
All Executive Directors
(with the exception of
Lord Rothermere) are
required to defer any
above-target annual
bonus into nil cost options
for two years.
No further performance
conditions are imposed. This is
reflective of market practice.
In order to incentivise and
allow the potential to
appropriately reward
Executive Directors for truly
exceptional performance,
the maximum annual value
of shares at grant and which
can vest is capped at 500%
for each Executive Director.
On-target performance
typically warrants one-third
vesting, in order to ensure
that higher levels of payouts
are only delivered in return
for truly exceptional
performance.
For the moment Suresh
Kavan and Paul Dacre will
remain on their existing
arrangements with
a maximum award of 150%
and 70% respectively.
On-target vesting for Suresh
Kavan currently warrants
two-thirds vesting. On-target
vesting for Paul Dacre
currently warrants full vesting.
Performance below
threshold results in
zero payout.
The Committee may set
different performance
measures, in terms of type of
measure and the weighting
given to each measure, for
awards granted on different
dates, provided the Committee
considers that such measures
are aligned with the Company’s
strategic goals and with the
interests of its shareholders.
Performance conditions may
also be set on an individual
basis to reflect a particular
individual’s role.
The performance measures
are designed to reflect
progress towards the
achievement of key strategic
goals which may vary from
year to year.
For awards granted to
Executive Directors under
the EIP, current performance
measures link awards to
cumulative growth in Group
profits over a minimum growth
threshold, subject to fair
adjustment for any change in
capital usage. The minimum
growth threshold feature is
designed to ensure that the
awards are appropriately
challenging and Executive
Directors are not rewarded
unless they achieve a minimum
performance threshold. The
capital charge/credit feature
is designed to ensure that
Executive Directors use capital
efficiently over the long term,
by requiring higher profits to be
made if more capital is used.
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Purpose and link to strategy
Operation
Opportunity
Performance metrics
For Suresh Kavan,
performance is currently
measured by reference to
growth in revenue and profit
for the dmgi and dmge
businesses.
For Paul Dacre performance
is currently measured against
the delivery of strategic
objectives for the Mail titles.
The Committee sets the
applicable performance
targets prior to or at the time
of the grant of awards in
accordance with its strategic
planning. The Board
considers the specific
performance targets for
each measure and the
relative performance
measure weightings to
be commercially sensitive.
Performance against targets
and the relative weightings
will be disclosed at the time
the awards vest.
Not performance related.
Not performance related.
Long-term incentives
continued
The Committee has discretion, within
the rules of the EIP and the 2012 LTIP,
to make adjustments taking into
account exceptional factors that
distort underlying business
performance, such as (for example)
material M&A activity.
EIP awards are subject to malus prior
to vesting, and to clawback for three
years after vesting, in circumstances
including a material misstatement in
results, an error in calculating/assessing
satisfaction of any condition, the
participant causing material
reputational damage to any member
of the Group or serious misconduct
by the participant causing loss to
any member of the Group.
Awards under the 2012 LTIP are subject
to clawback (whether vested or
unvested) in the event of material
misstatement of information
or misconduct.
All awards are subject to the rules of
the plan (as may be amended from
time to time in accordance with
the rules) and any other terms and
conditions applicable to the awards
as the Committee may determine.
The Committee
recommends a minimum
shareholding of 500% of
base salary for the CEO and
the Chairman, and 150% for
all other Executive Directors.
Suresh Kavan has a guideline
of 250%.
There is no time frame over
which the guidelines
should be met.
Current fee levels are set out
on page 83.
A travel allowance is
payable of £4,000 for travel
involving between five and
10 hours and £10,000 for
travel involving more than
10 hours.
Shareholding requirement
To align the interests of
Executive Directors and
shareholders.
Executive Directors are encouraged
to build up a substantial
shareholding in the Company.
Shares which have been
awarded subject to satisfaction
of performance measures are not
included in the calculation of the
value of the Executive Director’s
shareholding.
Hedging by Executive Directors of
any shares held in the Company
is prohibited.
Policy applied to Non-Executive Directors
Non-Executive Directors’
fees and benefits
To pay Non-Executive
Director fees and
allowances which
are reflective of
responsibilities and to
be competitive with
peer companies.
Non-Executive Directors’ fees and
allowances are payable in cash
and reviewed regularly.
An annual base fee is paid to the
Non-Executive Directors, with
additional fees paid for additional
responsibilities such as chairing a
Board Committee, membership of
various sub-committees or leading
a project.
The Board as a whole considers
and approves the fees of the
Non-Executive Directors.
In addition, a travel allowance is
payable to Non-Executive Directors.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Notes to the policy table
1. Benefits
• The DMGT all-employee SharePurchase+ plan does not operate performance conditions.
2. Annual bonus performance measures and targets
• The Committee has selected the following financial performance measures for determination of annual bonuses for 2017: profit; revenue; and cash flow to provide
a balanced reflection of the performance of the business. Targets are against the budget.
• Divisional business heads may have part of the bonus based on divisional performance and part based on Group performance.
• The performance targets and measures are determined annually by the Committee and may change from year to year.
• The performance required for maximum payout is set at a stretch performance level that is above the level of the Company’s forecasts. If performance is in line with
the forecast then typically an on-target level of the annual bonus would be paid.
3. Long-term incentive performance measures and targets
• In 2017 we plan to introduce a new long-term incentive scheme (EIP) which is intended to:
– provide a more direct link between pay and performance – with the opportunity for exceptional levels of reward linked to truly exceptional business performance;
– hold participants to account for the efficient use of capital and delivery of profitable growth; and
– ensure the Executive Directors are aligned to the delivery of overall Group performance and the long-term interests of the Group and shareholders.
• Long-term incentive awards granted under the EIP will be subject to the achievement of financial measures set prior to grant (except in exceptional circumstances,
e.g. recruitment, where they may be granted without performance conditions if the Committee considers this appropriate). The EIP will initially be used to award
management (with the exception of Suresh Kavan and Paul Dacre) a share of profit growth above threshold and after charges for extra capital. Current performance
measures for awards made to Suresh Kavan and Paul Dacre relate to their specific businesses.
• Incentives will be awarded annually and will run over a minimum period of three years.
• Grants will be made in shares to ensure further alignment with shareholder interests.
• At the end of the performance period the nominal share of profit will be calculated and will determine the proportion of shares which vest from the original award
(if any).
• The performance targets and measures are determined annually by the Committee and disclosed in the Annual Report on Remuneration at the time of vesting.
4. Key changes made to the Policy
• Pension:
As an alternative (or in addition) to receiving a cash allowance in lieu of pension contribution, Executive Directors may participate in a defined contribution pension
scheme.
• Annual bonus:
The financial measures used in determining annual bonuses will initially be profit, revenue and cash flow. These will usually be measured by reference to the
Company’s performance but, in some cases, will also be measured by reference to the performance of specific divisions within the Group. Previously, bonuses were
subject to the achievement of profit targets for B2B, Consumer and DMGT overall.
• Long-term incentives:
– Subject to shareholder approval at the AGM, the Company will adopt the EIP. The Committee considers that the EIP will be a more effective means of achieving
the objectives outlined in note 3 to the policy table above.
– The 2012 LTIP will continue to be used for long-term incentive awards for Suresh Kavan and Paul Dacre given their divisional roles as leaders of businesses.
– The EIP will be used both for normal long-term incentive arrangements (i.e. annual grants) and for one-off awards on the recruitment of new executives (see further
the ‘Approach to recruitment remuneration’ on page 79).
– The Chairman is no longer expressly excluded from participating and it is expected that he will participate in future awards.
– Performance targets for awards granted under the new EIP will be more stretching than those for awards granted under the 2012 LTIP and, in order to provide
a stronger incentive to achieve truly exceptional performance, the maximum value of awards which may be granted under the EIP has been increased. Under
the previous Policy, a maximum award of up to 300% of salary was permitted in exceptional circumstances. Under the new Policy, awards may be made of up
to 500% of base salary (except that, for Executive Directors who continue to receive awards under the 2012 LTIP under this Policy, awards will be subject to the
maximum specified in the rules of the 2012 LTIP, being 300% of salary). However, payout on EIP awards for on-target performance has been calibrated to be in line
with amounts which would have been paid out under the 2012 LTIP for on-target performance. Under the new EIP, on-target performance will typically result in a
pay-out of one-fifth of the value of the award.
– Performance periods have been decreased from five years to three years.
– The circumstances in which awards granted under the EIP could be adjusted or clawed back will be broader than under the 2012 LTIP, as summarised in the
table above.
• Shareholding requirement:
This remains at 150% of base salary for most Executive Directors but has been increased from 150% to 500% for the Chairman and the CEO. Suresh Kavan remains
at 250%.
The Committee considers that the changes described above will increase the alignment between the interests of the Executive Directors and those of shareholders.
5. Differences in remuneration policy for all employees
• Base salary:
Base salary increases elsewhere in the Group are set at a business level, taking into account economic factors, competitive market rates, roles, skills, experience and
individual performance. The change in wages and salaries for the Company as a whole is reported in chart 2 on page 71.
• Pension:
– Employees in the UK are auto-enrolled into the Company defined contribution pension scheme. There are a number of schemes in operation, all of which offer
levels of employer matching contributions.
– Employees in the US are typically offered 401(k) retirement plans.
• Benefits:
Allowances and benefits for employees reflect the local labour market in which they are based.
• Annual bonus:
– Many employees participate in some form of cash-based annual incentive, bonus or commission plan.
– The annual incentive plan for the Executive Directors forms the basis of the annual incentive plan for the head office Executives. Plans across the Group are
designed and tailored for each business, with the purpose of incentivising the achievement of their annual targets.
• Bonus deferral:
Most annual incentive plans around the Group do not include a requirement for deferral.
• Long-term incentives:
– The EIP for the Executive Directors forms the basis of annual awards for the head office Executives.
– Plans for Executives in other businesses across the Group are considered and approved by the Committee. Plans are designed to be appropriate to the stage
of development of the business and to incentivise the achievement of the mid- to long-term strategic aims of the business in which they operate.
• Shareholding requirement:
There is no shareholding requirement for employees below Executive Director level.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Pay scenario charts
Policy report chart 1: Illustrations of application of Executive Directors’ remuneration policy
The elements of remuneration have been categorised into three components: (i) Fixed; (ii) Annual variable; and (iii) Multiple
reporting period variable, which are set out in the future policy table below:
£000s
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
£000s
7,000
6,000
5,000
4,000
3,000
2,000
1,000
6,876
61%
22%
5%
12%
2,774
30%
27%
13%
30%
1,184
29%
71%
Minimum
On-target
The Viscount Rothermere
Maximum
5,803
65%
18%
4%
13%
2,278
33%
23%
11%
33%
1,003
25%
75%
Minimum
On-target
P A Zwillenberg
Maximum
2,005
37%
11%
15%
37%
2,228
33%
20%
13%
33%
1,038
28%
72%
2,521
40%
2%
58%
2,521
40%
2%
58%
1,507
4%
96%
1,003
2,656
33%
33%
0.6%
33%
895.3
2%
98%
3,536
37%
37%
0.4%
25%
0
Minimum
On-target
K J Beatty
Maximum
Minimum
On-target
P M Dacre
Maximum
Minimum
On-target
S Kavan
Maximum
Fixed (Salary)
Fixed (Benefits)
Annual variable (Bonus incl deferral)
Multiple reporting variable (LTIP)
Notes
Potential reward opportunities illustrated above are based on this Policy, applied to the latest known base salaries and incentive opportunities.
Minimum in the graphs above is fixed remuneration only (salary, pension and benefits). On-target assumes that the standard long-term incentive award and target
bonus have been awarded as stated in the policy table.
Maximum assumes that the standard long-term incentive award and the maximum bonus have been awarded as stated in the policy table.
Share awards valued at share price at date of award. No allowance is made for potential share price changes. Future share price changes form a key part of the
remuneration linkage to performance and alignment of long-term shareholder returns.
Amounts for Suresh Kavan are converted from US dollars at $1.42 = £1.
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Remuneration Report
External appointments
The Company allows its Executive Directors to take a very limited number of outside directorships. Individuals retain the payments
received from such services since these appointments are not expected to impinge on their principal employment.
Legacy arrangements
For the avoidance of doubt, in approving this Policy, authority is given to the Company to honour any commitments entered
into with current or former Directors prior to the approval and implementation of this Policy (such as payment of pensions or the
vesting/exercise of past share awards), provided that such commitments complied with any Remuneration Policy in effect at the
time they were given.
Consideration of pay and employment conditions elsewhere across the Group
The Committee considers pay and employment conditions elsewhere in the Group when making decisions on remuneration
matters affecting the Directors. The Committee receives a report annually on the salary budget for each business. The Committee
makes reference, where appropriate, to pay and employment conditions elsewhere in the Group (whilst remaining aware of the
variety of jurisdictions and markets in which it operates) when determining annual salary increases and to external evidence of
remuneration levels in other companies.
The Committee makes reference to data provided by and advice sought from internal and external advisers when making
decisions on remuneration matters affecting the Directors. It does not specifically consult with employees over the effectiveness
and appropriateness of the Remuneration Policy and framework.
Consideration of shareholder views
The Committee receives annual updates on the views and best practices of shareholders and their representative bodies and,
notwithstanding the Company shareholder structure, takes these into account. The Committee seeks the views of shareholders
on matters of remuneration that it thinks shareholders are interested in. An example of this was the adoption of the 2012 LTIP,
when major shareholders were consulted.
Policy implementation – Executive Directors FY 2017
Executive Directors’
basic fees and salary
Executive Directors’
pension
Benefits in kind
Executive Directors’
annual bonus
There are no intentions to increase base salaries for Executive Directors during FY 2017 other than
to increase Paul Zwillenberg’s bonus potential to 140% maximum 70% on target.
No change to prior year. Pension allowances are reported in the single figure table 1 on page 64
with further details in the Pension entitlements and cash allowances section in table 7 on page 69.
No change to policy since prior year. Allowances and benefits for FY 2016 are reported in detail
in the notes to the single figure table 1 on page 64.
Annual bonus payments for FY 2016 are reported in detail in tables 2.1, 2.2, 2,3.
Paul Zwillenberg’s bonus potential will be 70% on target and 140% at maximum. Bonus potential for
other Executive Directors will not change. Awards in FY 2017 will not include strategic objectives
and will be measured against Group level revenue, profit and cash flow targets.
In addition to Group level performance, Suresh Kavan and Kevin Beatty will be measured on
the performance of their respective divisions against the same metrics (weighting 30% Group,
70% Divisional).
Bonus deferral
There were no nil cost option awards made under the plan for FY 2016. The cash amounts that apply
for the FY 2016 bonus are shown in table 2.1 on page 65.
Executive Directors’
long term incentive
Bonus deferral requirements for FY 2017 remain as stated in table 3 on page 65.
A new Long Term Executive Incentive Plan (subject to shareholder approval at the AGM), will
be introduced in FY 2017 which will directly link pay-outs to business performance by awarding
management a share of profit growth, over and above a minimum threshold, after deducting a
charge for additional capital. The new Long Term Executive Incentive Plan provides for exceptional
pay in cases of truly exceptional performance, while not over-rewarding average performance.
Further details of the applicable performance criteria are included in the policy table.
Individual award amounts will be determined at the time of the award and will be subject to the
performance conditions outlined in the new policy. In addition, subject to approval, the Chairman
will be eligible to participate in the long term incentive plan.
Stephen Daintith will not receive a long-term incentive award in FY 2017.
Suresh Kavan and Paul Dacre will remain on their existing long-term incentive arrangements under
the 2012 Long Term Incentive Plan.
Suresh Kavan receives an award of DMGT equity equivalent to 150% of salary subject to three year
performance against revenue and profit targets for RMS, dmgi and dmge.
Outstanding awards will continue to vest according to the Rules of the Plans they were awarded
under. Details of outstanding awards and their status are shown in detail in table 6 on page 68.
Executive Directors’
service contracts
No changes to service contracts are planned for FY 2017 other than to increase Paul Zwillenberg’s
bonus potential to 140% maximum, 70% on-target.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
External appointments
Executive Directors’
shareholding guidelines
The Company allows its Executive Directors to take a very limited number of outside directorships.
Individuals retain the payments from such services since these appointments are not expected to
impinge on their principal employment. Martin Morgan was appointed to the Board of the City of
London Investment Trust on 1 March 2012 and received a fee of £20,287 in FY 2016.
For FY 2017 the guideline will increase to 500% of base salary for Lord Rothermere and Paul Zwillenberg.
All others will remain unchanged at 150% of base salary, except for Suresh Kavan who will remain
unchanged at 250% of base salary.
Executive Directors’
pension
Recruitment Award
Exit Payments
Directors’ interests are reported in detail in table 10 on page 80.
Pension allowances for any new Executive Director will be limited to a maximum of 30%.
Pension allowances are reported in the single figure table 1 on page 64 with further details in the
Pension entitlements and cash allowances section in table 7 on page 69.
In accordance with the terms of his recruitment Paul Zwillenberg will receive a one-off award of
DMGT shares with a value of £750,000 as at 1 June 2016, which will vest subject to his continuing
employment on 1 June 2019.
Stephen Daintith is expected to leave the Company during FY 2017. Details of his exit arrangements
will be disclosed at that time.
Policy implementation – Non-Executive Directors FY 2017
Non-Executive
Directors’ fees
No changes to fees were made during FY 2016. The actual fees paid to Non-Executive Directors
in FY 2016 are shown in table 14.
There is currently no intention to increase fees or allowances in FY 2017 but fees may be reviewed
within the policy terms.
Approach to recruitment remuneration
When appointing or recruiting a new Executive Director from outside the Company, the Committee will normally aim to set
remuneration at a level which is consistent with the remuneration policy in place for other Executive Directors and in particular
the Executive Director who previously filled the relevant role, although it is recognised that, in order to secure the best candidate
for a role, the Company may need to pay a new Executive Director more than it pays its existing Executive Directors. Pre-existing
contractual agreements for internal candidates may be maintained on promotion to an Executive Director role.
The Committee may make use of any of the below components in the remuneration package.
Component
Approach
Base salary
Pension
Benefits
Annual bonus
Long-term
incentives
Replacement
awards
Maximum annual grant level
Not applicable.
Base salary will be determined by reference to the individual’s role
and responsibilities, location of employment, and the salary paid to the
previous incumbent.
The appointed Executive Director will be eligible to participate in the Group’s
defined contribution pension plan and/or receive a cash pension allowance.
30% of base salary.
New appointments may be eligible to receive benefits in line with the Policy
for current Executive Directors as well as benefits relating to relocation such
as (but not limited to) cost of living, housing and tax equalisation support.
The appointed Executive Director will be eligible to participate in the
Company’s annual bonus plan in accordance with the Policy for current
Executive Directors and may be required to defer some or all of any bonus
granted in accordance with the Policy.
The appointed Executive Director will be eligible to participate in the
Executive Incentive Plan in accordance with the Policy for current Executive
Directors, save that the Committee may provide that an initial award under
EIP (within the salary multiple limits on page 74) is subject to a requirement
of continued service over a specified period, rather than the usual
performance conditions.
If in joining DMGT a new Executive Director would forfeit any existing award
under variable remuneration arrangements with a previous employer, the
Committee will consider on a case-by-case basis what replacement
awards (if any) are reasonably necessary to facilitate that individual’s
recruitment, taking into account all relevant factors such as performance
achieved or likely to be achieved, the proportion of the performance
period remaining and the form of the award due to be forfeited.
Not applicable.
200% of base salary.
500% of base salary.
Not applicable.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Annual report on remuneration: Directors’ shareholdings
Annual report on remuneration table 10: Statement of Directors’ shareholding and share interests – Audited
The number of shares of the Company in which current Directors or their families had a beneficial interest and details of long-term
incentive (LTI) interests as at 30 September 2016 are set out in the table below. The shareholding guideline for Executive Directors is
currently 1.5x (150%) of salary. The value as a multiple of salary has been calculated using the 30 September 2016 share price of £7.45.
Beneficial
As at 30 September 2016
The Viscount Rothermere
P Zwillenberg
S W Daintith
K J Beatty
P M Dacre
S Kavan
M W H Morgan
D M M Dutton
J G Hemingway
K A H Parry
Non-beneficial
The Viscount Rothermere
J G Hemingway
D H Nelson
Total Directors’ interests
Less duplications
Ordinary
A Ordinary
Non-Voting
19,890,3645
–
61,531,183
5,058
–
–
–
–
1,426
96,038
–
271,624
–
–
–
–
19,890,364
1,062,376
282,950
200,000
5,711
63,456,313
–
–
–
–
19,890,364
–
19,890,364
4,880,000
14,500
212,611
5,107,111
68,563,424
(5,752,611)
62,810,813
LTI interests
not subject to
performance
conditions1
Value (as
a multiple
of salary)2
Guideline
met
LTI interests
subject to
performance
conditions3
427,680
0
41,339
126,696
–
700,000
196,559
–
–
–
1,492,274
728.5
0.1
0.4
2.2
–
6.3
9.3
5.8
–
–
Yes
No
No
Yes
No
Yes
Yes
Yes
n/a
n/a
–
–
531,277
670,334
263,388
320,942
748,524
–
–
–
2,534,465
Total
outstanding
interests4
427,680
–
572,616
797,030
263,388
1,070,942
945,083
–
–
–
4,076,739
Notes
1. The LTI interests not subject to performance conditions are the nil cost options awarded as the bonus deferral; full details can be found in table 4 on page 66.
2. The value as a multiple of salary includes LTI interests not subject to performance conditions.
3. The LTI interests subject to performance conditions are detailed in table 6 on page 68 and include those shares which have vested but are not realisable as well as those
that are outstanding. The figure also includes all of the matching shares that were awarded under the 2009 and 2010 LTIP awards. Details of these awards are in tables
5.1 and 5.2 on page 67. Awards show for S Kavan were made in December 2015 before he joined the Board.
4. Total outstanding interests are the sum of the LTI interests (both subject to and not subject to performance conditions) and options subject to performance conditions.
5. The Company has been notified that under Sections 793 and 824 of the Companies Act 2006, Lord Rothermere was deemed to have been interested as a shareholder
in 19,890,364 Ordinary Shares at 30 September 2016.
At 30 September 2016, Lord Rothermere was beneficially interested in 756,700 Ordinary Shares of Rothermere Continuation Limited, the Company’s ultimate holding company.
The figures in the table above include shares purchased by participants in the DMGT 2010 Share Incentive Plan. For Paul Zwillenberg, Martin Morgan, Stephen Daintith,
Kevin Beatty and David Dutton, purchase of shares were made between 30 September 2016 and 30 November 2016. These purchases increased the beneficial holdings
of these Executive Directors by 17 shares for Martin Morgan and David Dutton, 32 shares for Stephen Daintith and Kevin Beatty and 58 shares for Paul Zwillenberg.
Annual report on remuneration table 11: Directors’ interests in Euromoney – Audited
Executive Directors’ beneficial shareholdings in Euromoney were as follows:
The Viscount Rothermere
M W H Morgan
Total Directors’ interests
30 Sep 2016
0
7,532
7,532
Disclosable transactions by the Group under IAS 24, Related Party Disclosures, are set out in Note 45 on pages 175 and 176. There
have been no other disclosable transactions by the Company and its subsidiaries with Directors of Group companies and with
substantial shareholders since the publication of the last Annual Report.
Annual report on remuneration table 12: Voting at general meeting
The table below shows the advisory vote on the 2016 Remuneration Report and the binding vote on future policy at the February
2016 AGM. The Committee consults with major shareholders prior to any major changes.
Remuneration Report
19,890,364
100%
–
Votes for
%
Votes against
%
0%
Abstentions
–
%
0%
80
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Annual report on remuneration: Remuneration Committee role and activities
Annual report on remuneration table 13: Remuneration Committee attendance
The Viscount Rothermere
N W Berry
D H Nelson
H Roizen
Member for the year
Meetings held
Meetings attended
Yes
Yes
Yes
Yes
9
9
9
9
9
7
9
9
Note
Lord Rothermere does not attend any part of a meeting while matters affecting his own remuneration are discussed.
Remuneration Committee role and activities
The Committee’s responsibilities include:
• Group remuneration policy; and
• setting the remuneration, benefits and terms and conditions of employment of the Company’s Executive Directors and other
senior executives.
The Committee’s terms of reference are available on the Company’s website. The Committee is chaired by Lord Rothermere
with Committee members Nicholas Berry, David Nelson and Heidi Roizen.
The UK Corporate Governance Code (the Code) recommends that a remuneration committee should be composed entirely
of independent non-executive directors. The Board considers that, as the beneficiary of the Company’s largest shareholder,
Lord Rothermere’s interests are fully aligned with those of other shareholders. The Committee is confident that its make-up
ensures that it carries out all aspects of its role with proper and appropriate regard to long-term shareholders’ interests and that
this alignment is, in fact, stronger as a direct consequence of its membership. The Non-Executive Directors meet regularly and
independently outside of the formal meetings.
The Committee spends a large portion of its time reviewing the remuneration and incentive plans of businesses which are
diverse both in geography and sector. There are a variety of incentive plans requiring significant consideration and oversight,
which are designed to reflect each business type and stage of development, the market it operates in and aims to incentivisation
of the delivery of its strategic plan. The Committee’s objective is to combine the necessary attention to short-term financial
performance, through annual bonus plans, with a stronger focus on the fundamentals that drive long-term growth, through
long-term incentive schemes.
In September 2016, the Committee conducted a formal review of its effectiveness and concluded that it had fulfilled its remit and
had been effective in the year.
Risk and reward
During the year, the Committee reviewed and confirmed that the plans in operation throughout the Group did not incentivise
excessive risk and, in particular, that the remuneration incentives in the Company are compatible with its risk policies and systems.
Executive Directors’ service contracts
The Executive Directors are employed under service contracts, the principal terms of which are summarised below.
Executive Director Position
Effective date
of contract
Employer
Notice period
(by either party)
Compensation on termination
by employer without notice or cause
The Viscount
Rothermere
Chairman
17 October 1994 Daily Mail and General
3 months
Trust plc
P Zwillenberg CEO
1 June 2016
Daily Mail and General
Holdings Limited
12 months
K J Beatty
Executive
Director
19 May 2002
Associated Newspapers
Limited
12 months
P M Dacre
Executive
Director
13 July 1998
Associated Newspapers
Limited
12 months
S Kavan
Executive
Director
24 June 2008
DMG Information Inc.
12 months
Basic salary, benefits, pension
entitlement and, as appropriate,
a prorated bonus payment for
the notice period.
Basic salary, pension allowance,
car allowance and cash
equivalent value of other
benefits for the notice period.
Compensation is subject to
mitigation if the Director obtains an
alternative remunerated position.
Basic salary, benefits, pension
entitlement and, as appropriate,
a prorated bonus payment for
the notice period.
Basic salary, benefits, pension
entitlement and, as appropriate,
a prorated bonus payment for
the notice period.
Basic salary, benefits, accelerated
vesting of long-term incentives
for the notice period. Pro-rated
bonus for fiscal year in which
termination occurs.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Non-Executive Directors’ appointment
The Non-Executive Directors are appointed for specified terms under the Company’s Articles of Association and are subject
to re-election by ordinary shareholders at the AGM following appointment. The Non-Executive Directors are subject to annual
re-election at the AGM. Each appointment can be terminated before the end of the one-year period with no notice or fees due.
The dates of each Non-Executive Director’s original appointment and latest reappointment are set out below:
Non-Executive Director
Appointment commencement date
Latest reappointment date
F P Balsemão
N W Berry
J G Hemingway
Lady Keswick
A H Lane
D H Nelson
K A H Parry
H Roizen
D Trempont
27 November 2002
7 February 2007
14 February 1978
23 September 2013
6 February 2013
1 July 2009
22 May 2014
26 September 2012
9 February 2011
10 February 2016
10 February 2016
10 February 2016
10 February 2016
10 February 2016
10 February 2016
10 February 2016
10 February 2016
10 February 2016
Directors’ service contracts/letters of appointment are available for inspection at DMGT’s registered office.
Exit payment policy
The Company normally sets the notice period of Executive Directors as 12 months, but may decide to vary this in circumstances
it deems appropriate.
On termination, the Company will normally make a payment in lieu of notice (PILON) which is equal to the aggregate of: the
basic salary at the date of termination for the applicable notice period; the pension allowance over the relevant period; the
cost to the Company of providing all other benefits (excluding pension allowance and bonus) or a sum equal to the amount of
benefits as specified in the Company’s most recent Annual Report; and a bonus payment calculated in accordance with the
service contract of the Director. The treatment of awards under the Company’s Long-Term Incentive Plans on termination will
be in accordance with the rules of the Plan and, where appropriate, at the discretion of the Committee.
The Company may pay the PILON either as a lump sum or in equal monthly instalments from the date on which the employment
terminates until the end of the relevant period. If alternative employment (paid above a pre-agreed rate) is commenced,
for each month that instalments of the PILON remain payable, the amounts, in aggregate (excluding the pension payment),
may be reduced by half of one month’s basic salary in excess of the pre-agreed rate.
In the event that a participant’s employment is terminated, treatment of outstanding awards under the Group’s incentive plans
will be determined based on the relevant plan rules, which are summarised below:
Incentive plan
Treatment of awards
DMGT SharePurchase+
Annual bonus
Deferred bonus plan
Long-term incentive plans
(both the 2012 LTIP and the
new Executive Incentive Plan,
assuming that the rules of
the new EIP are approved
at the AGM)
All leavers have to exit DMGT SharePurchase+ and either sell or transfer their shares. If identified
as a ‘Good Leaver’, under the rules of DMGT SharePurchase+, no tax or National Insurance
Contributions are paid.
If identified as a ‘Good Leaver’ for the purposes of the bonus, the Committee may determine
that the leaver’s contribution was significant in early or high achievement of targets, in which
case, it may decide to make a payment which is equivalent of up to a full year bonus.
If identified as a ‘Good Leaver’ under the deferred bonus plan rules (including those identified
at the discretion of the Committee), outstanding awards shall vest in full on the normal vesting
date or on such earlier date as the Committee may determine.
If identified as a ‘Good Leaver’ under the rules (including those identified at the discretion
of the Committee), outstanding awards will vest, either on the normal vesting date or on such
earlier date as the Committee may determine, to the extent determined by the Committee
taking into account the performance conditions, the proportion of the performance period
which has elapsed at the date of termination and any other factors it considers appropriate.
If, in the judgement of the Committee, greater progress towards achievement of targets has
been made as a result of the performance of the leaver, it may, at its absolute discretion,
decide to vest up to 100% of the outstanding award.
The Committee may make payments it considers reasonable in settlement of potential legal claims, e.g. unfair dismissal or where
agreed under a settlement agreement. This may include an entitlement to compensation in respect of their statutory rights under
employment protection legislation and such reasonable reimbursement of fees for legal and/or tax advice in connection with
such agreements and/or costs of outplacement services.
82
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Remuneration Report
Where an Executive Director is a ‘Good Leaver’, the Committee reserves the discretion to approve any or all of the following
additional benefits:
• continuation of private health insurance or life assurance for a period of time following termination;
• use of business premises for a period after termination;
• retention of IT equipment by the Executive Director; and/or
• use of a company car and/or driver for a period after termination.
Non-Executive Directors: annual report on remuneration
Annual report on remuneration table 14: Single figure of remuneration paid to Non-Executive Directors – Audited
The table below sets out the single total figure of remuneration for each Non-Executive Director in 2015 and 2016. There is a basic
Non-Executive Director fee of £35,000 p.a. Additional fees are paid for membership and chairmanship of sub-committees and
subsidiary boards.
Travel allowances of £4,000 are paid for travel involving between five and 10 hours and £10,000 for meetings involving more than
10 hours’ travel.
F P Balsemão
N W Berry
J G Hemingway
Lady Keswick
A H Lane
D H Nelson
K A H Parry
H Roizen1
D Trempont1
Total
2015
Travel
allowance
£000
4
0
4
4
4
14
4
34
34
102
Fees
£000
39
100
78
35
66
142
88
110
148
806
Total
£000
43
100
82
39
70
156
92
144
182
908
2016
Travel
allowance
£000
4
–
4
4
–
4
4
48
48
116
Fees
£000
37
98
76
35
78
195
123
99
87
828
Total
£000
41
98
80
39
78
199
127
147
135
944
Note
1. During the year Heidi Roizen was a member of the MailOnline advisory board. Fees shown above include the fees and travel allowances for Board participation. Travel
allowances with the exception of Heidi Roizen and Dominique Trempont relate to the September 2015 Board meeting in New York which were paid in October 2015.
Amounts for David Nelson, Heidi Roizen, Andrew Lane and Dominique Trempont include project fees.
Annual report on remuneration
Annual report on remuneration table 15: Advice to the Remuneration Committee
In 2015 Willis Towers Watson was appointed as DMGT’s primary remuneration adviser. This decision was made based on Willis
Towers Watson’s global capabilities, independence and expertise. They also supported management with reward related
advice for employees below Board level.
In 2016 we worked with Kepler (part of Mercer) to benchmark our executive team and to provide input into the design of our
long-term incentives. They were appointed on the basis of their expertise.
Grant Thornton (appointed for RMS) and Greenhill Associates also provided advice in relation to valuation of subsidiaries for
the purpose of long-term incentive schemes. Both firms have extensive capabilities in conducting independent valuations.
Fees paid to advisers to the Committee in relation to remuneration advice are shown below.
Adviser
Grant Thornton (fixed fee)
Greenhill (fixed fee)
Kepler (fixed fee)
Willis Towers Watson (time spent)
Fees in relation to
remuneration advice
£000
10
459
35
56
This report covers the reporting period to 30 September 2016 and has been prepared in accordance with the relevant
requirements of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (the Regulations)
and of the Listing Rules of the Financial Services Authority. As required by the Regulations, a separate resolution to approve the
policy and implementation reports will be proposed at the Company’s AGM.
Audited information
The tables in the Annual Report on remuneration that have been subject to audit are clearly identified.
83
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc STATUTORY INFORMATION
Directors’ Report
Other statutory information
Required information can be found in the Strategic Report
on pages 2 to 41, which is incorporated into this Report
by reference. Information on the environment, employees,
community and social issues is given in the Our People and
Our Communities section on pages 38 to 41.
In accordance with the UK Financial Conduct Authority’s
Listing Rules (LR 9.8.4C), the information to be included in the
Annual Report, where applicable, under LR 9.8.4, is set out
in the Governance section, with the exception of details of
transactions with controlling shareholders (if any) which are
set out in Note 45.
Forward-looking statements
This Annual Report contains certain forward-looking
statements with respect to principal risks and uncertainties
facing the Group. By their nature, these statements involve risk
and uncertainty because they relate to events and depend
on circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results
or developments to differ materially from those expressed or
implied by those forward-looking statements. No assurances
can be given that the forward-looking statements are
reasonable as they can be affected by a wide range
of variables.
Directors’ interests
The number of shares of the Company and of securities of
other Group companies in which the Directors, or their families,
had an interest at the year end, are stated in the Remuneration
Report on page 60.
Employee Benefit Trust
The Executive Directors of the Company, together with
other employees of the Group, are potential beneficiaries
of the DMGT Employee Benefit Trust (Employee Trust) and,
as such, are deemed to be interested in any A Shares held
by the Employee Trust. At 30 September 2016, the Employee
Trust’s shareholding totalled 4,887,935 A Shares.
Between 30 September 2016 and 9 December 2016 the
Employee Trust transferred no A Shares to satisfy the exercise
of awards under employee share plans.
Significant shareholdings
As at 9 December 2016, the Company had been notified of
the following significant interests of the issued Ordinary Shares:
Rothermere Continuation Limited
100%
The Board regards holdings in the Company’s securities of
greater than 15% to be significant. There are no significant
holdings in the Company’s A Shares other than those shown
in the Remuneration Report on page 60.
The forward-looking statements reflect the knowledge and
information available at the date of preparation of this Annual
Report and will not be updated during the year. Nothing in
this Annual Report should be construed as a profit forecast.
Share capital
The Company has two classes of shares. Its total share capital is
comprised of 5% Ordinary Shares and 95% A Shares. Full details
of the Company’s share capital are given in Note 39.
Tangible fixed assets and investments
The Company’s subsidiaries are set out on page 178. Changes
to the Group’s tangible fixed assets and investments during
the year are set out in Notes 23 to 26. There was no material
difference in value between the book value and the market
value of the Group’s land and buildings.
Directors
The names of the Directors, plus brief biographical details are
given on pages 42 and 43. Directors held office throughout
the year with the exception of Martin Morgan, David Dutton,
Paul Zwillenberg and Suresh Kavan. In accordance with the UK
Corporate Governance Code, all existing Directors will stand
for re-election at the Annual General Meeting (AGM) on
8 February 2017. John Hemingway and Francisco Balsemão
will not seek re-election. Paul Zwillenberg and Suresh Kavan
will stand for election at the AGM.
Principal activities
A description of the principal activities of the Group and likely
future developments and important events occurring since
the end of the year are given in the Strategic Report on
pages 2 to 41.
Results and dividends
The profit after taxation of the Group amounted to £214million.
After excluding the £10 million element attributable to
non-controlling interests, the Group profit for the year
attributable to owners of the Company amounted to
£204 million. The Board recommends a final dividend of
15.3 pence per share. If approved at the 2017 AGM, the final
dividend will be paid on 10 February 2017 to shareholders
registered in the books of the Company at the close of business
on 9 December 2016. Together with the interim dividend of
6.7 pence per share paid on 1 July 2016, this makes a total
dividend for the year of 22.0 pence per share (2015 21.4 pence).
Holders of Ordinary and A Shares are entitled to receive the
Company’s Annual Report. Holders of Ordinary Shares are
entitled to attend and speak at General Meetings and to
appoint proxies and exercise voting rights.
During the year, the Company transferred £1.4 million shares
out of Treasury, representing 0.4% of called-up A Shares,
in order to satisfy incentive schemes. The Company held
9,887,935 shares in Treasury and the DMGT Employee Benefit
Trust with a nominal value of £1.2 million at 30 September 2016.
The maximum number of shares held in Treasury and by the
DMGT Employee Benefit Trust during the year was 9,888,111,
which had a nominal value of £1.2 million. The Company also
purchased £3.5 million shares for holding in Treasury having
a nominal value of £0.4 million in order to match obligations
under various incentive plans. The consideration paid for
these shares was £23.8 million. Excluding the share buy-back
programmes, shares purchased during the year represented
1.0% of the called-up A Share capital as at 30 September 2016.
On 9 December 2016 the Company held 5,000,000
Treasury Shares.
Details of allotments of share capital which arose solely from
the exercise of options are given at Note 38.
Authority to purchase shares
At the Company’s AGM on 10 February 2016, the Company
was authorised to make market purchases of up to 34,201,672
A Shares representing approximately 10% of the total number
of A Shares in issue. During the period from 8 December 2015 to
30 September 2016, under the share buy-back programme,
the Company purchased nil shares into Treasury, at a total cost
of £nil (see Note 38).
84
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Statutory Information
External Auditor and disclosure of information
to the External Auditor
So far as the Directors are aware, there is no relevant audit
information of which the Company’s External Auditor is
unaware. The Directors have taken all the steps that they ought
to have taken as Directors in order to make themselves aware
of any relevant audit information and to establish that the
Company’s External Auditor is aware of that information.
The Company’s External Auditor PwC has indicated its
willingness to serve and, in accordance with Section 489
of the Companies Act 2006, a resolution proposing
the reappointment of PwC will be put to the AGM on
8 February 2017.
Directors’ indemnity
A qualifying third-party indemnity (QTPI), as permitted by the
Company’s Articles of Association and Sections 232 and 234 of
the Companies Act 2006, has been granted by the Company
to each of the Directors of the Company. Under the provisions
of the QTPI, the Company undertakes to indemnify each
Director against liability to third parties (excluding criminal and
regulatory penalties) and to pay Directors’ defence costs as
incurred, provided that they are reimbursed to the Company
if the Director is found guilty or, in an action brought by the
Company, judgment is given against the Director.
Going concern
A full description of the Group’s business activities, financial
position, cash flows, liquidity position, committed facilities and
borrowing position, together with the factors likely to affect
its future development and performance, is set out in the
Strategic Report, particularly the Financial Review on pages 32
to 37 and in the Notes to the accounts on page 102.
The Group has significant financial resources and the Directors,
having reviewed the Group’s operating budgets, investment
plans and financing arrangements, have assessed the future
funding requirements of the Group and compared this to the
level of committed facilities and cash resources. The Directors
have a reasonable expectation that the Company and the
Group have adequate resources to continue in operation for
the foreseeable future. Accordingly, the Directors are satisfied
that it is appropriate to adopt the going concern basis in
preparing the Annual Report.
Viability Statement
A Viability Statement in respect of the Company can be found
on page 35.
Modern Slavery Act Transparency Statement
In accordance with the Modern Slavery Act 2015 our Modern
Slavery Act Transparency Statement can be found on the
DMGT website.
www.dmgt.com/modern-slavery-act-transparency-statement
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
the Directors’ Remuneration Report and the Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law, the
Directors have prepared the Group Financial Statements in
accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union, and the parent
Company Financial Statements in accordance with
applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
Under company law, the Directors must not approve the
Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group for that period.
In preparing these Financial Statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether IFRS as adopted by the European Union and
applicable United Kingdom Accounting Standards have
been followed, subject to any material departures disclosed
and explained in the Group and parent Company Financial
Statements respectively; and
• prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the Financial
Statements and the Directors’ Remuneration Report comply
with the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the International Accounting
Standards Regulation. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions. Each of the Directors confirms that, to the best
of his/her knowledge:
• the Group Financial Statements, which have been prepared
in accordance with IFRS as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
• the Strategic Report contained on pages 2 to 41 includes
a fair review of the development and performance of the
business and the position of the Group, together with a
description of the principal risks and uncertainties that
it faces.
85
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Statutory Information
Relationship agreements
Daily Mail and General Trust plc entered into a Relationship
Deed with Euromoney Institutional Investor PLC on 16 July 2014,
and Zoopla Property Group Plc on 5 June 2014, in each case
in accordance with the Listing Rules and have acted in
accordance with the terms of the Deeds since execution.
Charitable and political donations
The Company made charitable donations of £1.3 million
during the period. In the prior year, the Company donated
£1.2 million. No political donations were made during
the period.
Principal risk factors
These risks and how they are being managed or mitigated
are shown on pages 28 to 31. The Directors have reviewed
the Group’s principal risks including those that would threaten
the Group’s business model, future performance, solvency
or liquidity.
Events after the balance sheet date of 9 December 2016
Details are provided in Note 46.
Material contracts
Group companies undertake business with a range of
customers and suppliers. There is no dependence on any
particular contractual arrangement other than those
disclosed in Note 42 as regards ink and printing, where
arrangements are in place until 2018 and 2024 respectively
in order to obtain competitive prices and to secure supplies.
As regards the Group’s principal commodity requirements,
newsprint, arrangements are made biannually with a range
of suppliers to ensure the security of supply at the best
available prices, having regard to the need for the necessary
quality. Particularly in light of its strategy to create a diversified
international portfolio of businesses, the Group is not dependent
on any supplier of other commodities for its revenue or any
particular customer. Distribution arrangements are in place
to ensure the delivery of newspapers to retail outlets.
Creditor payment policy
The Company has no trade creditors (2015 nil). The Group is
responsible for agreeing the terms and conditions, including
terms of payment, under which business transactions with the
Group’s suppliers are conducted. Whilst the Group does not
follow any single external code or standard, in line with Group
policy, payments to suppliers are made in accordance with
agreed terms and conditions.
Employees
Details in respect of employees are in the Our People and
Our Communities section on pages 38 and 41.
Human rights
The Company believes that our exposure to the associated
risks in the context of human rights frameworks is minimal.
DMGT does not have a specific human rights policy but has a
number of policies that cover areas such as health and safety,
bribery and corruption, and a questionnaire for evaluating
whether new suppliers are ethical and lawful.
Group policies
The Company upholds equal opportunities and does not
discriminate. DMGT’s businesses are required to follow
DMGT policies that safeguard the welfare of our employees.
These include policies on equal opportunities, anti-bribery,
entertainment and gifts, information security, share dealing,
and health and safety, in addition to our Code of Conduct.
We have an active and rolling training programme to reinforce
compliance and to ensure there is a high level of awareness
of the Company’s standards.
Gender breakdown of our employees
The table below sets out the gender breakdown of our
employees. Our aim is to promote equality and diversity
in accordance with our Group Code of Conduct.
Male
Female
At 30 September 2016
Board Directors
Individuals reporting to the
Group CEO or divisional CEOs*
13
72
2
12
All employees*
5,806
57%
4,435
43%
* Excluding Executive Board Directors.
Carbon footprint
The Company’s most significant environmental impact comes
from the printing plants in our consumer media businesses. The
majority of the Company’s newspapers are now produced
at plants designed to be as efficient as possible; this reduces
energy usage, vehicle movements and the volume of waste
generated. There is also a considerable effort to maximise the
volume of waste recycled including newsprint waste, water
and heat recovery.
The Company is, and has for many years been, committed to
comprehensive and transparent reporting of its environmental
performance. The Company has collected CO2 emissions
data from each of its businesses. This data is collated and
independently reviewed by environmental consultancy ICF
International, which calculates the Group’s emissions following
the Greenhouse Gas Protocol. The Group’s carbon footprint
can be seen in the table below.
Carbon footprint
The table below shows the evolution of our carbon footprint since 2012:
Year
2012
2013
2014
2015
2016
Scope 1:
Combustion of fuel and
operation of facilities
Scope 2:
Electricity, heat, steam and
cooling purchased for own use
Scope 3:
Business travel and
outsourced delivery
Total scope 1, 2 & 3
emissions/revenue
Tonnes of CO2e
tCO2e/£million revenue
11,400
11,000
8,000
6,300
5,900
36,300
32,200
27,800
24,800
23,000
86
24,900
26,800
26,600
22,400
21,200
41.6
39.9
33.5
28.5
25.6
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Statutory Information
Annual General Meeting
The Annual General Meeting will be held at 9.00 am on
Wednesday 8 February 2017 at Northcliffe House, 2 Derry
Street, London W8 5TT. The resolutions to be put to the meeting
are set out on page 89. A notice of meeting will be issued
to the holders of Ordinary Shares and their nominees only.
Only Ordinary Shareholders will be entitled to attend.
A resolution to reappoint the Group’s External Auditor
PricewaterhouseCoopers LLP, will be proposed at the
2017 AGM.
By order of the Board
Claire Chapman
General Counsel & Company Secretary
Articles of Association
The appointment and replacement of Directors is governed
by the Company’s Articles of Association. Any changes to the
Articles of Association must be approved by the shareholders
in accordance with the legislation in force from time to time.
The Directors have authority to issue and allot A Shares
pursuant to Article 9 of the Articles of Association and
shareholder authority is requested at each AGM. The Directors
have authority to make market purchases of A Shares.
This authority is also renewed annually at the AGM.
Conflicts of interest
The Articles of Association permit the Board to authorise a
conflict of interest in respect of any matter which would
otherwise involve a Director breaching his duty under the
Companies Act 2006 to avoid conflicts of interest.
When authorising a conflict of interest the Board must do
so without the conflicting Director counting as part of the
quorum. In the event that the Board considers it appropriate,
the conflicted Director may be permitted to participate in the
debate, but will neither be permitted to vote nor count in the
quorum when the decision is being agreed. The Directors are
aware that it is their responsibility to inform the Board of any
potential conflicts as soon as possible. Procedures are in
place to facilitate disclosure. The Board reviews its position
on conflicts of interest annually and at such other times as
are appropriate.
Change of control
The Company is not party to any significant agreements that
would take effect, alter or terminate upon a change of control
of the Company following a takeover bid. However, certain
of the Group’s third-party funding arrangements would
terminate upon a change of control of the Company.
The Company does not have agreements with any Director
or employee providing compensation for loss of office or
employment that occurs because of a takeover bid, except
for provisions in the rules of the Company’s share schemes
which may result in options or awards granted to employees
vesting on a takeover.
Transactions with Directors
No transaction, arrangement or agreement required to be
disclosed in terms of the Companies Act 2006 and IAS 24
‘Related Parties’, was outstanding at 30 September 2016,
nor was entered into during the year for any Director and/or
connected person except as detailed in Note 45 (2015 none).
87
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc
ANNUAL GENERAL MEETING 2017: RESOLUTIONS
The Company’s Annual General Meeting (AGM) will be held at
9.00 am on 8 February 2017. Only the holders of Ordinary Shares
are entitled to attend and vote. For information, below are the
resolutions that will be put to the Ordinary Shareholders at the
AGM. The results will be posted on the Company’s website
following the meeting in the usual way.
As ordinary business
Report and Accounts
1.
To receive the Directors’ Report, the Accounts and
the Auditor’s Report for the financial year ended
30 September 2016.
Remuneration Report
2.
To receive and approve the Directors’ Remuneration
Report (other than the part containing the Directors’
Remuneration Policy) as set out on pages 60 to 83 of the
Annual Report for the financial year ended 30 September
2016, in accordance with Section 439 of the Companies
Act 2006.
Remuneration Policy
3.
To receive and approve the Directors’ Remuneration Policy
(contained in the Directors’ Remuneration Report) as set
out on pages 72 to 83 of the Annual Report for the financial
year ended 30 September 2016, in accordance with
section 439A of the Companies Act 2006.
Daily Mail and General Trust Long-Term Incentive Plan
4.
To approve the adoption of the proposed Daily Mail and
General Trust Long-Term Executive Incentive Plan 2017.
Dividend
5.
To declare a final dividend on the Ordinary and A Ordinary
Non-Voting Shares (A Shares).
Directors
6.
To re-elect the Viscount Rothermere, Mr Beatty, Mr Dacre,
Mr Daintith*, Mr Berry, Lady Keswick, Mr Lane, Mr Nelson,
Mr Parry, Ms Roizen and Mr Trempont as Directors.
7.
To elect Mr Zwillenberg and Mr Kavan as Directors.
Auditor
8.
To reappoint PricewaterhouseCoopers LLP as
External Auditor.
9.
To authorise the Directors to determine the External
Auditor’s remuneration.
As special business
10. That the Company be and is hereby generally and
unconditionally authorised to make market purchases
(within the meaning of Section 693(3) of the Act) on the
London Stock Exchange of up to:
(a) aggregate of 34,201,672 A Shares of 12.5 pence each
in its share capital at not more than the lower of 5%
above the average of the middle market quotation
taken from the London Stock Exchange Daily Official
List for the five business days immediately preceding
the date of purchase and £18.75 per share and at not
less than 12.5 pence per share (in each case exclusive
of expenses);
(b) and that the authority conferred by this Resolution
shall expire on the date of the AGM next held after
the passing of this Resolution (except in relation to
the purchase of shares the contract for which was
concluded before such date and which would or might
be executed wholly or partly after such date); and
(c) that upon the passing of this Resolution, the Resolution
passed as Resolution 8 at the AGM on 10 February 2016
shall be of no further force or effect.
As ordinary business
11. That the Directors be generally and unconditionally
authorised pursuant to Section 551 of the Act to:
(a) allot A Shares in the Company, and to grant rights to
subscribe for or to convert any security into A Shares
in the Company up to an aggregate nominal amount
of £2,137,604 for a period expiring (unless previously
renewed, varied or revoked by the Company in a
general meeting) at the next AGM of the Company
after the date on which this Resolution is passed or
on 8 May 2017 whichever is the earlier; and
(b) make an offer or agreement which would or might
require A Shares to be allotted, or rights to subscribe
for or convert any security into A Shares to be granted,
after expiry of this authority and the Directors may allot
A Shares and grant rights in pursuance of that offer
or agreement as if this authority had not expired.
As special business
12. That the Directors be generally empowered pursuant to
Section 570 and Section 573 of the Act to allot A Shares or
grant rights to subscribe for or to convert any security into
A Shares, for cash, pursuant to the authority conferred by
Resolution 11 and/or where the allotment is treated as an
allotment of such securities under Section 560(3) of the Act,
as if Section 561(1) of the Act did not apply to the allotment.
This power:
(a) expires (unless previously renewed, varied or revoked by
the Company in a general meeting) at the next AGM of
the Company after the date on which this Resolution is
passed or on 8 May 2017, whichever is the earlier, but
the Company may make an offer or agreement which
would or might require such securities to be allotted
after expiry of this power and the Directors may allot
such securities in pursuance of that offer or agreement
as if this power had not expired; and
(b) shall be limited to the allotment of such securities
for cash up to an aggregate nominal amount
of £2,137,604.
Notice
13. That a general meeting other than an AGM may be called
on not less than 14 clear days’ notice.
*
As announced on 22 September 2016, Stephen Daintith has resigned from
DMGT. Subject to his leaving date being confirmed he may decide not to
seek re-election at the AGM.
88
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF DAILY MAIL AND GENERAL TRUST PLC
Report on the financial statements
Our opinion
In our opinion:
• Daily Mail and General Trust plc’s Group financial
statements and parent company financial statements (the
‘financial statements’) give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
30 September 2016 and of the Group’s profit and cash flows
for the year then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (‘IFRSs’) as adopted by the
European Union;
• the Consolidated Statement of Comprehensive Income
for the year ended 30 September 2016;
• the Consolidated Statement of Changes in Equity as at
30 September 2016;
• the Consolidated Statement of Financial Position as at
30 September 2016;
• the Consolidated Cash Flow Statement for the year ended
30 September 2016;
• the Company Statement of Financial Position as at
30 September 2016;
• the Company Statement of Changes in Equity for the year
then ended; and
• the parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the Notes to the Financial Statements, which include a
summary of significant accounting policies and other
explanatory information.
• the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation.
What we have audited
The financial statements, included within the Annual Report,
comprise:
• the Consolidated Income Statement for the year ended
30 September 2016;
Certain required disclosures have been presented elsewhere
in the Annual Report, rather than in the Notes to the Financial
Statements. These are cross-referenced from the financial
statements and are identified as audited.
The financial reporting framework that has been applied in
the preparation of the Group financial statements is IFRSs as
adopted by the European Union, and applicable law. The
financial reporting framework that has been applied in the
preparation of the parent Company financial statements is
United Kingdom Accounting Standards, comprising FRS 101
‘Reduced Disclosure Framework’ (United Kingdom Generally
Accepted Accounting Practice), and applicable law.
Our audit approach
Overview
Materiality
Audit scope
Materiality
• Overall Group materiality: £10 million which represents approximately 4% of adjusted profit
before tax.
Audit scope
• Of the Group’s five trading reporting divisions, we identified dmg media and Euromoney which in
our view required full scope audits due to their size. In addition we obtain full scope audit opinions
for the RMS and dmg events divisions.
• For dmg information we scoped our audit at a business level, and identified six businesses over
which we performed either a full scope audit or specified audit procedures on certain balances
or transactions.
• We used local teams in the US, Canada, and Dubai to perform those full scope audits or specified
procedures relating to the relevant overseas businesses within RMS, Euromoney, dmg information
and dmg events divisions. The Group audit team held regular meetings with these locations, and
visited the US, to ensure sufficient involvement and oversight of the work of these local teams and
to make sure that we had a full and comprehensive understanding of the results of their work –
particularly insofar as it related to the identified areas of focus.
Areas of focus
Areas of focus
• Impairment of intangible assets and goodwill.
• Accounting for acquisitions and disposals.
• Presentation of adjusted profit, including restructuring costs.
• Capitalisation of development costs.
• Accounting for deferred taxation and uncertain tax positions.
89
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
The scope of our audit and our areas of focus
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’).
evaluating whether there was evidence of bias by the
Directors that represented a risk of material misstatement
due to fraud.
We designed our audit by determining materiality and
assessing the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors
made subjective judgements, for example in respect of
significant accounting estimates that involved making
assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk
of management override of internal controls, including
The risks of material misstatement that had the greatest effect
on our audit, including the allocation of our resources and
effort, are identified as ‘areas of focus’ in the table below. We
have also set out how we tailored our audit to address these
specific areas in order to provide an opinion on the financial
statements as a whole, and any comments we make on the
results of our procedures should be read in this context. This is
not a complete list of all risks identified by our audit.
Area of focus
Impairment of intangible assets and goodwill
Refer to the Audit Committee report on pages 52 to 57 and
to Notes 21 and 22 in the Consolidated Financial Statements.
The Group had £981.6 million of goodwill and a further
£499.2 million of intangible assets on the balance sheet
at 30 September 2016. The carrying values of goodwill
and intangibles are contingent on future cash flows of the
underlying CGUs and there is a risk that if these cash flows
do not meet the Directors’ expectations that the assets will
be impaired.
We focused our testing on those CGUs where headroom was
limited or where the Directors had identified an impairment.
Impairment charges of £53.6 million have been taken in the
year principally in relation to Indaba, Elite Daily, Hedge Fund
Intelligence and Total Derivatives. The Directors’ impairment
reviews also identified limited headroom in Genscape,
Xceligent and RMS(one).
How our audit addressed the area of focus
As part of our audit of the Directors’ impairment reviews (for
both goodwill and intangibles) we evaluated future cash flow
forecasts, and the process by which they were drawn up,
including comparing them to the latest Board-approved
budgets and management’s five-year plans, and testing
the underlying calculations.
For the impairment assessment of goodwill and intangibles
we tested all key assumptions, including:
• revenue and profit assumptions included within budgets
and future forecasts, by considering the historical accuracy
of budgets against actual results;
• key assumptions for long-term growth rates in the forecasts by
comparing them to historical results, economic and industry
forecasts, and comparable companies;
• the discount rate by comparing the cost of capital for the
Group with comparable organisations, and assessed the
specific risk premium applied to the business in question; and
• the Directors’ potential bias through performance of our own
sensitivity analysis on key assumptions particularly those driving
underlying cash flows.
We engaged our valuation specialists to assist us in evaluating
the appropriateness of key market-related assumptions in
management’s valuation models, including discount and
long term growth rates.
In addition, with regards to RMS(one) we met with relevant
directors, sales staff and external consultants to obtain
corroborative evidence of expected pricing packages
and client uptake and to understand the product
development roadmap.
We performed our own sensitivity analysis to understand the
impact of reasonable changes in the key assumptions on the
available headroom.
In addition, with regards to Genscape and Xceligent, we
reviewed the implied earnings multiples and compared these
against comparable companies.
We considered the need for additional sensitivity disclosures for
CGUs with limited headroom as required by IAS 36 ‘Impairment
of assets’ and we agree with the Directors’ decision to provide
these additional disclosures for Genscape and Xceligent.
As a result of our work, we determined that the impairment
charge recognised in 2016 was appropriate. For those assets
where the Directors determined that no impairment was required
and that no additional sensitivity disclosures were necessary,
we found that these judgements were supported by reasonable
assumptions that would require significant downside changes
before any additional material impairment was necessary.
90
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
Area of focus
How our audit addressed the area of focus
Accounting for acquisitions and disposals
Refer to the Audit Committee report on pages 52 to 57 and
to Notes 17 and 18 in the Consolidated Financial Statements.
The Group continues to make significant investment in
business acquisitions. During the year the Group made a
number of acquisitions including ETSOS, Instant Services
and FastMarkets, with consideration of £75.3 million.
We read the minutes of the Investment and Finance Committee
and enquired of the Directors to identify acquisition and disposals
during the year. For all material and complex transactions
we obtained and read the sale and purchase agreements
(‘SPAs’) and obtained and audited management’s detailed
accounting papers.
In testing acquisitions during the year we:
IFRS 3 ‘Business Combinations’ (IFRS 3) requires the fair value
of consideration paid to be allocated firstly to the fair value
of net assets acquired, then to the fair value of separately
identifiable intangible assets and finally to goodwill,
which involves a number of estimates and judgements.
• assessed the appropriateness of the Directors’ identification of
intangible assets acquired by reviewing the SPAs to identify any
assets listed, considered the assets based on those in comparative
companies and comparing the ratio of the value of goodwill
acquired to the intangible assets to comparable transactions;
The Group continues to dispose of stakes in subsidiaries,
including Local World, Wowcher and Gulf Publishing
Company Inc in the current year.
We focused our work on the more material acquisitions
and disposals during the year.
Presentation of adjusted profit, including restructuring costs
Refer to the Audit Committee report on pages 52 to 57
and to Note 13 in the Consolidated Financial Statements.
The Group presents adjusted profit before taxation to
enable users of the financial statements to gain a better
understanding of the underlying results.
Current year exceptional charges relating to restructuring
initiatives are material and have been treated as
exceptional with regards to their disclosure. These
charges relate predominantly to severance costs and
consulting fees.
The classification of items as non-trading or exceptional
is an area of judgement and the appropriateness and
consistency of the presentation of adjusted measures of
performance are attracting increasing levels of scrutiny
from the financial reporting regulators.
• obtained the Directors’ calculation of the fair value of intangible
assets acquired, and corroborated the appropriateness of the
assumptions over levels of customer attrition, useful economic
lives and forecast cash flows to external benchmarks, historical
performance and the acquisition plans; and
• verified the fair value of consideration paid of acquisitions,
including any deferred or contingent element, to cash
transactions and the SPAs.
For disposals we agreed the assets and liabilities and the
consideration received to the SPAs and cash receipts. Where, in
our reading of SPAs, we identified clauses which give rise to future
obligations, we assessed the recognition and fair value of assets or
liabilities arising from these as well as their commercial substance.
Based on the procedures performed, we concluded that the
accounting for acquisitions and disposals was appropriate and
in line with the requirements of IAS 28 ‘Investments in Associates
and Joint Ventures’ (IAS 28) and IFRS3.
We have considered the appropriateness of the adjustments
made to statutory profit before taxation to derive adjusted profit
before tax. We have understood the rationale for classifying items
as exceptional or non-trading and considered whether this is
reasonable and consistent, in that it includes items that both
increase and decrease the adjusted profit measure, and are
in accordance with the Group’s accounting policy.
We have additionally considered the completeness of items
classified as exceptional with regards to severance and consulting
fees incurred in the normal course of business.
In particular we considered the appropriateness of those costs
determined to be exceptional, specifically the restructuring
initiatives relating to severance costs and consulting fees. We:
• verified severance costs and confirmed that these reflect
permanent reductions in head count and where not settled are
supported by appropriate evidence that these redundancies
were sufficiently communicated prior to year end; and
• considered the nature and scope of the consulting
engagements and confirmed the fees classified as exceptional
were sufficiently linked to the Group restructuring initiatives.
We have also audited the reconciliation of adjusted profit to
statutory profit in Note 13, and agreed all material adjustments
to underlying accounting records and our audit work performed
over other balances.
We have determined that this rationale for including or excluding
items from adjusted profit has been consistently applied across
gains and losses, and provides a balanced view of the
performance of the Group.
We considered the need for enhanced disclosures for the
accounting policy in respect of alternative performance measures
as well as clear reconciliations of these measures to their statutory
counterparts. We agree with the improved disclosures made by
the Directors.
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GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
Area of focus
How our audit addressed the area of focus
Capitalisation of development costs
Refer to the Audit Committee report on pages 52 to 57
and to Note 22 in the Consolidated Financial Statements.
We tested a sample of the internal costs capitalised in the year
to determine whether they meet the criteria of IAS 38, agreeing
the costs selected to supporting evidence.
In the year ended 30 September 2016 £58.3 million of
internal costs were capitalised in relation to projects
undertaken by the Group, primarily relating to the
development of new computer software within the dmg
information and RMS businesses.
IAS 38 ‘Intangible assets’ (‘IAS 38’) requires that the Group
demonstrates that internal costs satisfy certain requirements
to qualify for capitalisation some of which require the
application of judgement. Our testing focused on the
requirements that the Group has the ability to reliably
measure the expenditure attributable to the intangible
and that the Group has the intention and the ability to
complete the asset.
Accounting for deferred taxation and uncertain tax positions
Refer to the Audit Committee report on pages 52 to 57
and to Note 38 in the Consolidated Financial Statements.
The recognition of deferred tax assets in respect of trading
and non-trading tax losses in the Group is an area of focus
due to the quantum of the losses and the requirement to
make estimates of future taxable profits in determining the
valuation of deferred tax assets.
In addition the Group has some provisions for uncertain
tax positions relating to both historical and current
tax arrangements.
The recognition and measurement of these items in the
financial statements is judgemental, and we focused on the
Directors’ forecasts of future profits against which to utilise
accumulated losses, and the technical interpretation of
taxation law in respect to transactions giving rise to deferred
tax assets and uncertain tax positions.
Where these capitalised costs related to time spent by staff
developing intangible assets, we also:
• agreed that these salary costs were directly attributable to
the creation of the asset;
• agreed the salary costs capitalised to payroll records; and
• verified time spent and the associated allocations to individual
projects to timesheets or other supporting evidence.
Based on our testing, we determined that the Directors were able
to reliably measure project costs.
We considered the Directors’ intention and ability to complete
the project by obtaining and assessing the business cases and
current budgets for material intangible asset additions.
We also assessed the consistency of the application of the
Group’s accounting policy across costs capitalised in the different
operating divisions.
We found that the Group’s accounting policy for capitalisation
of intangible assets was in accordance with the requirements
of with IAS 38 and had been consistently applied.
We involved our in-house tax specialists in our testing of the
appropriateness of the estimates and judgements taken in relation
to deferred taxation and in respect of uncertain tax positions
recognised in the financial statements.
In assessing the likelihood of the Group being able to generate
sufficient future taxable profits against which to offset
accumulated losses, we considered:
• key inputs to the calculation including revenue and profit
assumptions, in line with our work over the carrying value
of goodwill and intangible assets; and
• the Directors’ ability to accurately forecast future profits.
In understanding and evaluating the Directors’ technical
interpretation of tax law in respect of specific transactions
that gave rise to deferred tax assets and uncertain tax positions
we considered:
• third-party tax advice received by the Group;
• the status of recent and current tax authority audits
and enquiries;
• the outturn of previous claims;
• judgemental positions taken in tax returns and current
year estimates; and
• developments in the tax environment.
From the evidence obtained, we consider the valuation of
deferred tax assets and provisions for uncertain tax positions
recognised to be supportable and the level of provisioning to
be acceptable in the context of the Group financial statements.
92
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc
Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the
geographic structure of the Group, the accounting processes
and controls, and the industry in which the Group operates.
The Group consists of head office and five trading reporting
divisions: RMS; dmg media; dmg information; dmg events; and
Euromoney. As each of these prepares a sub-consolidation,
we considered each of these to be a separate component,
with the exception of dmg information. While there are
consolidated results for dmg information, each business
is run separately and management primarily reviews the
performance of the individual businesses rather than the
division as a whole. As such we scoped our audit of
dmg information at a business level.
Of the five divisions we identified two, dmg media and
Euromoney, which in our view required an audit of their
complete financial information due to their size. In order to
obtain sufficient and appropriate audit evidence over the
Group as a whole we also instructed component teams
to complete full scope audits of the RMS and dmg
events divisions.
Within dmg information we identified two UK businesses,
SearchFlow Ltd and Landmark Information Group Ltd, for
which we perform accelerated statutory audits to align with
the Group audit timetable. For three US businesses for which
statutory audits are not required (Trepp LLC; Environmental
Data Resources Inc; and Genscape Inc), we conducted
specified procedures over higher risk financial statement line
items, including revenue, the accounting for acquisitions and
disposals, capitalised development spend and impairment
of goodwill and intangibles. In addition we performed a full
scope audit of Hobsons Inc this year.
For the audit of Zoopla Property Group Plc we rely on an
audit opinion from Deloitte LLP, who are Zoopla’s auditors,
and performed additional procedures to calculate the
Group’s share of these results.
Taken together, the components where we performed audit
work accounted for 83% of Group revenue and 71% of absolute
adjusted profit before taxation.
We sent detailed instructions to all component audit teams,
which included communication of the areas of focus above
and other required communications. In addition, regular
meetings were held with the UK and overseas audit teams
and members of the Group audit team visited our US and UK
component audit teams.
This, together with additional procedures performed at the
Group level (including audit procedures over material head
office entities, tax and consolidation adjustments), gave us the
evidence we needed for our opinion on the Group financial
statements as a whole.
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually
and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
£10 million (2015 £11 million).
How we determined it
Approximately 4% of adjusted profit before tax.
Rationale for
benchmark applied
Component materiality
The Group is profit oriented. Adjusted profit before taxation is the adjusted performance
measure that is reported to investors and shareholders and is the measure which the Directors
consider best represents the performance of the Group. Due to the inherent judgement in
classification of certain items as non-trading, we have applied a 4% rule of thumb, which is lower
than the 5% suggested by ISAs (UK&I) for the audit of profit-oriented entities.
For each component in our audit scope, we allocated a materiality that is less than our overall
Group materiality. The range of materiality allocated across components was between
£1.2 million and £7 million.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
£0.5 million (2015 £0.5 million) as well as misstatements
below that amount that, in our view, warranted reporting
for qualitative reasons.
Going concern
The Directors have voluntarily complied with Listing Rule
9.8.6(R)(3)(a) of the Financial Conduct Authority and provided
a statement in relation to going concern, set out on page 85,
required for companies with a premium listing on the London
Stock Exchange.
The Directors have requested that we review the statement
on going concern as if the parent Company were a premium
listed company. We have nothing to report having performed
our review.
The Directors have chosen to voluntarily report how they
have applied the UK Corporate Governance Code (Code)
as if the parent Company were a premium listed company.
Under ISAs (UK & Ireland) we are required to report to you if
we have anything material to add or to draw attention to
in relation to the Directors’ statement about whether they
considered it appropriate to adopt the going concern basis
in preparing the financial statements. We have nothing
material to add or to draw attention to.
As noted in the Directors’ statement, the Directors have
concluded that it is appropriate to adopt the going concern
basis in preparing the financial statements. The going concern
basis presumes that the Group and parent Company have
adequate resources to remain in operation, and that the
Directors intend them to do so, for at least one year from the
date the financial statements were signed. As part of our
audit we have concluded that the Directors’ use of the going
concern basis is appropriate. However, because not all future
events or conditions can be predicted, these statements are
not a guarantee as to the Group’s and parent Company’s
ability to continue as a going concern.
93
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc GOVERNANCE
Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
Other required reporting
Consistency of other information
Companies Act 2006 reporting
In our opinion, the information given in the Strategic Report and the Statutory Information for the financial year for which the
financial statements are prepared is consistent with the financial statements.
ISAs (UK & Ireland) reporting
As a result of the Directors’ voluntary reporting on how they have applied the Code, under ISAs (UK & Ireland) we are required
to report to you if, in our opinion:
• information in the Annual Report is:
We have no exceptions to report.
– materially inconsistent with the information in the audited financial statements; or
– apparently materially incorrect based on, or materially inconsistent with, our
knowledge of the Group and parent Company acquired in the course of
performing our audit; or
– otherwise misleading.
• the statement given by the Directors on page 51, in accordance with provision C.1.1 of
the Code, that they consider the Annual Report taken as a whole to be fair, balanced
and understandable and provides the information necessary for members to assess the
Group’s and parent Company’s position and performance, business model and strategy
is materially inconsistent with our knowledge of the Group and parent Company
acquired in the course of performing our audit.
• the section of the Annual Report on page 53, as required by provision C.3.8 of the Code,
describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We have no exceptions to report.
We have no exceptions to report.
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency
or liquidity of the Group
As a result of the Directors’ voluntary reporting on how they have applied the Code, under ISAs (UK & Ireland) we are required
to report to you if we have anything material to add or to draw attention to in relation to:
• the Directors’ confirmation on page 28 of the Annual Report, in accordance with
provision C.2.1 of the Code, that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business model,
future performance, solvency or liquidity.
We have nothing material to
add or to draw attention to.
• the disclosures in the Annual Report that describe those risks and explain how they are
being managed or mitigated.
• the Directors’ explanation on page 35 of the Annual Report, in accordance with
provision C.2.2 of the Code, as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as they fall due over
the period of their assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
We have nothing material to
add or to draw attention to.
We have nothing material to
add or to draw attention to.
Adequacy of accounting records and information and
explanations received
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we have not received all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Directors’ remuneration report – Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion, certain disclosures of Directors’
remuneration specified by law are not made. We have no
exceptions to report arising from this responsibility.
94
NOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Independent Auditors’ Report to the Members of Daily Mail and General Trust plc
We primarily focus our work in these areas by assessing the
Directors’ judgements against available evidence, forming
our own judgements, and evaluating the disclosures in the
financial statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to
provide a reasonable basis for us to draw conclusions. We
obtain audit evidence through testing the effectiveness of
controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we
become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Neil Grimes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 December 2016
Responsibilities for the financial statements and
the audit
Our responsibilities and those of the Directors
As explained more fully in the Directors’ responsibilities, the
Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and
fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
ISAs (UK & Ireland). Those standards require us to comply with
the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for
and only for the parent Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed
by our prior consent in writing.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of:
• whether the accounting policies are appropriate to the
Group’s and the parent Company’s circumstances and
have been consistently applied and adequately disclosed;
• the reasonableness of significant accounting estimates
made by the Directors; and
• the overall presentation of the financial statements.
95
GOVERNANCEAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2016
CONTINUING OPERATIONS
Revenue
Adjusted operating profit
Exceptional operating costs, impairment of internally generated and acquired computer software,
property, plant and equipment and investment property
Amortisation and impairment of acquired intangible assets arising on business combinations and
impairment of goodwill
Operating profit before share of results of joint ventures and associates
Share of results of joint ventures and associates
Total operating profit
Other gains and losses
Profit before investment revenue, net finance costs and tax
Investment revenue
Net finance costs
Profit before tax
Tax
Profit after tax from continuing operations
DISCONTINUED OPERATIONS
Profit from discontinued operations
PROFIT FOR THE YEAR
Attributable to:
Owners of the Company
Non-controlling interests*
Profit for the year
Earnings per share
From continuing operations
Basic
Diluted
From discontinued operations
Basic
Diluted
From continuing and discontinued operations
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
* All attributable to continuing operations.
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
3
3
3
1,917.3
1,842.7
277.0
287.0
(54.7)
(22.5)
3, 21, 22
(95.9)
(57.7)
4
7
8
9
10
11
19
40
41
14
126.4
3.0
129.4
137.9
267.3
2.5
(22.9)
246.9
(32.7)
214.2
–
214.2
204.2
10.0
214.2
57.8p
56.4p
–
–
57.8p
56.4p
56.0p
54.7p
206.8
11.3
218.1
82.4
300.5
4.0
(88.4)
216.1
(20.8)
195.3
50.0
245.3
216.6
28.7
245.3
46.2p
45.4p
13.9p
13.6p
60.1p
59.0p
59.7p
58.7p
96
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2016
Profit for the year
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
214.2
245.3
Note
Items that will not be reclassified to Consolidated Income Statement
Actuarial (loss)/gain on defined benefit pension schemes
Losses on hedges of net investments in foreign operations of non-controlling interests
Foreign exchange differences on translation of foreign operations of non-controlling interests
Tax relating to items that will not be reclassified to Consolidated Income Statement
36, 40, 41
41
41
(114.7)
(14.0)
31.2
6.4
10.3
(2.8)
7.5
(2.1)
Total items that will not be reclassified to Consolidated Income Statement
(91.1)
12.9
Items that may be reclassified subsequently to Consolidated Income Statement
Losses on hedges of net investments in foreign operations
40
(72.9)
(18.6)
Cash flow hedges:
Losses arising during the year
Transfer of (gain)/loss on cash flow hedges from translation reserve to Consolidated Income Statement
Translation reserves recycled to Consolidated Income Statement on disposals
Foreign exchange differences on translation of foreign operations
Tax relating to derivative financial instruments
40, 41
40, 41
18, 40, 41
40
(5.2)
(2.1)
(0.6)
116.0
1.4
(5.0)
1.3
(2.1)
20.0
0.6
Total items that may be reclassified subsequently to Consolidated Income Statement
36.6
(3.8)
Other comprehensive (expense)/income for the year
Total comprehensive income for the year
Attributable to:
Owners of the Company
Non-controlling interests
(54.5)
9.1
159.7
254.4
136.9
22.8
221.4
33.0
159.7
254.4
97
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2016
At 30 September 2014
Profit for the year
Other comprehensive income/(expense)
for the year
Total comprehensive income/(expense)
for the year
Cancellation of A Ordinary Shares
Issue of share capital
Dividends
Own shares acquired in the year
Note
40,41
40,41
40
41
12, 40
39, 40
Movement in financial liability for closed
period purchases
37, 40, 46
Own shares transferred on exercise of
share options
Exercise of acquisition put option commitments
Other transactions with non-controlling interests
Adjustment to equity following increased
stake in controlled entity
Adjustment to equity following decreased
stake in controlled entity
Credit to equity for share-based payments
Settlement of exercised share options
of subsidiaries
Initial recording of put options granted
to non-controlling interests in subsidiaries
Non-controlling interest recognised on
acquisition
Deferred tax on other items recognised
in equity
At 30 September 2015
Profit for the year
Other comprehensive (expense)/income
for the year
Total comprehensive income for the year
Cancellation of A Ordinary Shares
Issue of share capital
Dividends
Own shares acquired in the year
Own shares transferred on exercise of share
options
Exercise of acquisition put option commitments
Other transactions with non-controlling interests
Adjustment to equity following increased
stake in controlled entity
Adjustment to equity following decreased
stake in controlled entity
Credit to equity for share-based payments
Settlement of exercised share options
of subsidiaries
Initial recording of put options granted
to non-controlling interests in subsidiary
undertakings
Non-controlling interest recognised on
acquisition
Corporation tax on share-based payments
40
40
41
40
40
40
40
40
40,41
38, 40,41
40,41
40,41
40
41
12, 40
39, 40
40
40
40
40
40
40
40
40,41
40
Deferred tax on other items recognised
in equity
38, 40, 41
Called-up
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Own
shares
£m
Translation
reserve
£m
Retained
earnings
£m
Non-
controlling
interests
£m
Total
£m
Total
equity
£m
49.2
17.8
1.1
(219.1)
(22.7)
446.5 272.8
117.8
390.6
–
–
–
(3.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.8
217.2
–
–
–
–
–
(127.1)
–
20.0
–
–
–
–
–
–
–
–
–
–
32.7
–
–
–
–
–
–
–
–
–
–
216.6
216.6
28.7
245.3
(3.2)
8.0
4.8
4.3
9.1
(3.2)
224.6
221.4
33.0
254.4
(217.2)
–
–
–
–
0.8
–
0.8
(75.0)
(75.0)
(9.8)
(84.8)
–
(127.1)
–
(127.1)
–
20.0
–
32.7
0.7
–
0.7
–
–
–
(0.7)
(0.6)
(5.9)
(5.9)
5.9
(0.2)
17.9
(0.2)
17.9
0.2
(0.6)
20.0
32.7
–
(0.6)
–
–
17.3
–
–
–
–
–
–
–
–
–
–
–
(33.5)
(33.5)
–
(33.5)
–
(20.5)
(20.5)
–
(20.5)
–
–
–
–
9.1
9.1
1.6
1.6
(0.2)
1.4
45.4
17.8
4.9
(76.3)
(25.9)
339.0 304.9
154.9
459.8
–
204.2 204.2
10.0
214.2
–
–
–
(0.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
6.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(29.8)
10.9
–
–
–
–
–
–
–
–
–
–
37.8
37.8
(105.1)
(67.3)
99.1
136.9
(6.5)
–
–
–
12.8
22.8
–
0.3
–
–
–
–
–
–
–
–
–
–
(76.4)
(76.4)
(12.7)
–
(29.8)
–
10.9
(0.3)
(0.3)
–
–
–
–
–
0.2
(4.9)
(4.9)
(0.2)
(0.2)
15.8
15.8
4.9
0.2
0.2
(54.5)
159.7
–
0.3
(89.1)
(29.8)
10.9
(0.3)
0.2
–
–
16.0
–
(12.1)
(12.1)
–
(12.1)
–
–
–
–
(0.5)
(0.5)
(0.2)
(0.7)
–
5.4
–
5.4
1.4
1.4
7.6
–
–
7.6
5.4
1.4
At 30 September 2016
45.3
17.8
5.0
(88.7)
11.9
359.8
351.1
178.2
529.3
98
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2016
ASSETS
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in joint ventures
Investments in associates
Available-for-sale investments
Trade and other receivables
Other financial assets
Derivative financial assets
Retirement benefit assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Other financial assets
Derivative financial assets
Cash and cash equivalents
Total assets of businesses held-for-sale
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax payable
Acquisition put option commitments
Borrowings
Derivative financial liabilities
Provisions
Total liabilities of businesses held-for-sale
Non-current liabilities
Trade and other payables
Acquisition put option commitments
Borrowings
Derivative financial liabilities
Retirement benefit obligations
Provisions
Deferred tax liabilities
Total liabilities
Net assets
99
At
30 September
2016
£m
At
30 September
2015
£m
Note
21
22
23
25
25
26
28
29
35
36
38
27
28
32
29
35
30
20
31
32
33
34
35
37
20
31
33
34
35
36
37
38
981.6
499.2
176.1
4.8
145.3
15.8
18.7
21.0
28.3
40.1
908.7
423.9
181.1
1.3
141.9
13.8
11.6
3.6
19.7
27.7
177.4
2,108.3
168.1
1,901.4
30.8
346.2
15.6
17.1
0.4
25.7
5.0
440.8
31.4
322.2
7.4
–
1.3
31.6
28.7
422.6
2,549.1
2,324.0
(756.2)
(27.0)
(18.5)
(11.0)
(11.5)
(54.4)
(5.5)
(884.1)
(5.7)
(26.3)
(693.7)
(47.3)
(286.1)
(52.8)
(23.8)
(699.3)
(18.9)
–
(3.4)
(5.3)
(53.2)
(5.7)
(785.8)
(4.2)
(51.2)
(727.1)
(23.8)
(187.0)
(61.0)
(24.1)
(1,135.7)
(2,019.8)
(1,078.4)
(1,864.2)
529.3
459.8
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2016
SHAREHOLDERS’ EQUITY
Called-up share capital
Share premium account
Share capital
Capital redemption reserve
Own shares
Translation reserve
Retained earnings
Equity attributable to owners of the Company
Non-controlling interests
At
30 September
2016
£m
At
30 September
2015
£m
Note
39
40
40
40
40
40
41
45.3
17.8
63.1
5.0
(88.7)
11.9
359.8
351.1
178.2
529.3
45.4
17.8
63.2
4.9
(76.3)
(25.9)
339.0
304.9
154.9
459.8
The financial statements of DMGT plc (Company number 184594) on pages 96 to 184 were approved by the Directors and
authorised for issue on 9 December 2016. They were signed on their behalf by:
The Viscount Rothermere
P A Zwillenberg
Directors
100
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2016
Cash generated by operations
Taxation paid
Taxation received
Net cash from operating activities
Investing activities
Interest received
Dividends received from joint ventures and associates
Dividends received from available-for-sale investments
Purchase of property, plant and equipment
Expenditure on internally generated intangible fixed assets
Expenditure on other intangible assets
Purchase of available-for-sale investments
Proceeds on disposal of property, plant and equipment and investment property
Proceeds on disposal of available-for-sale investments
Purchase of subsidiaries
Settlements and collateral payments on treasury derivatives
Purchase of option over equity instrument
Investment in joint ventures and associates
Loans advanced to joint ventures and associates
Loans to joint ventures and associates repaid
Proceeds on disposal of businesses
Proceeds on disposal of joint ventures and associates
Proceeds from redemption of preference share capital
Net cash used in investing activities
Financing activities
Purchase of additional interests in controlled entities
Equity dividends paid
Dividends paid to non-controlling interests
Issue of shares by Group companies to non-controlling interests
Purchase of own shares
Net payment on settlement of subsidiary share options
Interest paid
Premium on redemption of bonds
Bonds redeemed
Loan notes repaid
Repayments of obligations under finance lease agreements
Inception of finance leases
(Decrease)/increase in bank borrowings
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange profit/(loss) on cash and cash equivalents
Net cash and cash equivalents at end of year
101
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
261.0
(29.7)
0.8
232.1
1.6
5.3
–
(27.2)
(58.3)
(3.0)
(1.6)
1.5
0.1
(29.5)
(40.4)
(6.5)
(4.7)
(0.2)
1.2
39.5
72.0
14.4
281.3
(25.0)
3.4
259.7
1.0
26.6
3.1
(28.7)
(53.1)
(3.4)
(11.3)
19.0
–
(95.0)
(8.5)
–
(14.9)
(2.5)
–
113.4
10.1
–
(35.8)
(44.2)
(0.2)
(76.4)
(12.7)
0.3
(29.8)
(1.2)
(33.9)
–
–
(0.5)
(0.2)
0.6
(60.6)
(0.2)
(75.0)
(9.8)
0.8
(127.1)
(0.7)
(40.9)
(39.9)
(153.2)
(0.5)
–
–
234.3
(214.6)
(212.2)
(18.3)
31.5
4.3
17.5
3.3
29.0
(0.8)
31.5
Note
15
25
9
23
22
22
26
17
35
25
18
8, 25
18
17
12, 40
41
41
40
10
10
16
16
16
16
16
30
16
30
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE ACCOUNTS
1 Basis of preparation
DMGT plc is a company incorporated and domiciled in the United Kingdom. The address of the registered office is Northcliffe
House, 2 Derry Street, London W8 5TT.
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and
related IFRS IC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable
to companies preparing their accounts under IFRS.
These financial statements have been prepared for the year ended 30 September 2016.
Other than the Daily Mail, The Mail on Sunday, Metro and Wowcher businesses, the Group prepares accounts for a year ending
on 30 September. The Daily Mail, The Mail on Sunday, Metro and Wowcher businesses prepare financial statements for a 52- or
53- week financial period ending on a Sunday near to the end of September and do not prepare additional financial statements
corresponding to the Group’s financial year for consolidation purposes as it would be impracticable to do so. The Group
considers whether there have been any significant transactions or events between the end of the financial year of these
businesses and the end of the Group’s financial year and makes any material adjustments as appropriate.
The significant accounting policies used in preparing this information are set out in Note 2.
The Group’s financial statements incorporate the financial statements of the Company and all of its subsidiaries together with the
Group’s share of all of its interests in joint ventures and associates. The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain financial instruments which are held at fair value through profit or loss.
All amounts presented have been rounded to the nearest £0.1 million.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set
out in the Financial Review and the Strategic Report.
As highlighted in Notes 34 and 35 to the Accounts, the Company has long-term financing in the form of bonds and meets its
day-to-day working capital requirements through bank facilities which expire in March 2019. The Board’s forecasts and projections,
after taking account of reasonably possible changes in trading performance, show that the Group is expected to operate
within the terms of its current facilities. Accordingly, the Directors continue to adopt the going concern basis in preparing these
financial statements.
2 Significant accounting policies
The following new and amended IFRSs have been adopted during the year:
Amendment to IAS 19, Defined Benefit Plans: Employee Contributions
Annual improvements 2010–2012 cycles
• Amendments to IFRS 2, Share-based Payments
• Amendments to IFRS 3, Business Combinations, Accounting for contingent consideration in a business combination
• Amendments to IFRS 8, Operating Segments
• Amendments to IFRS 13, Fair Value Measurement
• Amendments to IAS 16, Property, Plant and Equipment
• Amendments to IAS 24, Related Party Disclosures
• Amendments to IAS 38, Intangible Assets
Annual improvements 2011–2013 cycles
• Amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards
• Amendments to IFRS 3, Business Combinations
• Amendments to IFRS 13, Fair Value Measurement
• Amendments to IAS 40, Investment Property
The above amendments have not had any significant impact on the Group’s financial statements.
The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have
been published but are only effective for the Group’s accounting periods beginning on or after 1 October 2016. These new
pronouncements are listed below:
• Amendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations (effective 1 January 2016)
• Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of Depreciation and Amortisation (effective
1 January 2016)
• Amendments to IFRS 10 and IAS 28, Accounting for the sale or contribution of assets between an investor and its associate
or joint venture (effective 1 January 2016)*
• Amendment to IAS 1, disclosure initiative (effective 1 January 2016)
• Annual improvements 2012 – 2014 (effective 1 January 2016)
102
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc • Amendment to IAS 7, Statement of cash flows (effective 1 January 2017)*
• Amendment to IAS 12, Recognition of deferred tax assets for unrealised losses (effective 1 January 2017)*
• IFRS 15, Revenue from Contracts with Customers (effective 1 January 2018)
• IFRS 9, Financial Instruments (effective 1 January 2018)
• IFRS 16, Leases (effective 1 January 2019)*
* Not yet endorsed for use in the EU.
Other than IFRS 15 and IFRS 16, the adoption of these standards, amendments and interpretations is not expected to have a
material impact on the Group’s financial statements. The Directors are in the process of evaluating the impact of these standards.
Business combinations
The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of fair values of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the Consolidated
Income Statement as incurred.
Where the consideration for an acquisition includes any asset or liability resulting from a contingent arrangement, this is measured
at its discounted fair value on the acquisition date. Subsequent changes in such fair values are adjusted through the Consolidated
Income Statement in Financing. All other changes in the fair value of contingent consideration classified as an asset or liability are
measured at fair value at each reporting date and changes in fair value shall be recognised in profit or loss. Changes in the fair
value of contingent consideration classified as equity are not recognised.
Put options granted to non-controlling interests are recorded at present value as a reduction in equity on initial recognition,
as the arrangement represents a transaction with equity holders. Changes in value after initial recognition are recorded in the
Consolidated Income Statement in Financing.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts
are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained
about facts and circumstances that existed as of the date of the acquisition that, if known, would have affected the amounts
recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about
facts and circumstances that existed as of the acquisition date and is a maximum of one year.
Business combinations achieved in stages
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to
fair value at the date the Group attains control and the resulting gain or loss is recognised in the Consolidated Income Statement.
Amounts arising from interests in the acquiree prior to the acquisition date that were recognised in other comprehensive income
are reclassified to the Consolidated Income Statement where such treatment would be appropriate if the interest were disposed of.
Purchases and sales of shares in a controlled entity
Where the Group’s interest in a controlled entity increases, the non-controlling interests’ share of net assets, excluding any
allocation of goodwill, is transferred to retained earnings. Any difference between the cost of the additional interest and the
existing carrying value of the non-controlling interests’ share of net assets is recorded in retained earnings.
Where the Group’s interest in a controlled entity decreases, but the Group retains control, the share of net assets disposed,
excluding any allocation of goodwill, is transferred to the non-controlling interests. Any difference between the proceeds of
the disposal and the existing carrying value of the net assets or liabilities transferred to the non-controlling interests is recorded
in retained earnings.
Disposal of controlling interests where non-controlling interest retained
Where the Group disposes of a controlling interest but retains a non-controlling interest in the business, the Group accounts
for the disposal of a subsidiary and the subsequent acquisition of a joint venture, associate or available-for-sale investment
at fair value on initial recognition. On disposal of a subsidiary all amounts deferred in equity are recycled to the Consolidated
Income Statement.
Contingent consideration receivable
Where the consideration for a disposal includes consideration resulting from a contingent arrangement, the contingent
consideration receivable is discounted to its fair value, with any subsequent movement in fair value being recorded in the
Consolidated Income Statement in Financing.
Discontinued operations
The Group presents the results from discontinued operations separately from those of continuing operations. An operation is
classed as discontinued if it has been, or is in the process of being disposed and represents either a separate major line of business
or a geographical area of operations, or is part of a single coordinated plan to dispose of a separate major line of business or exit
a major geographical area of operations.
103
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 2 Significant accounting policies continued
Assets and liabilities of businesses held-for-sale
An asset or disposal group is classified as held-for-sale if its carrying amount is intended to be recovered principally through sale
rather than continuing use, is available for immediate sale and is highly probable that the sale will be completed within 12 months
of classification as held-for-sale. Assets classified as held-for-sale are measured at the lower of their carrying amount and fair
value less costs to sell. Any impairment is recognised in the Consolidated Income Statement and is first allocated to the goodwill
associated with the disposal group and then to the remaining assets and liabilities on a pro rata basis. No further depreciation
or amortisation is charged on non-current assets classified as held-for-sale from the date of classification.
Accounting for subsidiaries
A subsidiary is an entity controlled by the Group. Control is achieved where the Group has power over an investee; exposure,
or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the
amount of the returns.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the
effective date control is obtained or up to the date control is relinquished, as appropriate. Where necessary, adjustments are
made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members
of the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Non-controlling interests
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein,
either at fair value or at the non-controlling interests’ share of the net assets of the subsidiary, on a case-by-case basis. The total
comprehensive income of a subsidiary is apportioned between the Group and the non-controlling interest, even if it results in
a deficit balance for the non-controlling interest.
Interests in joint ventures and associates
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject
to joint control, that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous
consent of the parties sharing control.
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not
control or joint control over those policies.
The post-tax results of joint ventures and associates are incorporated in the Group’s results using the equity method of accounting.
Under the equity method, investments in joint ventures and associates are carried in the Consolidated Statement of Financial
Position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture and associate,
less any impairment in the value of investment. Losses of joint ventures and associates in excess of the of the Group’s interest in that
joint venture or associate are not recognised. Additional losses are provided for, and a liability is recognised, only to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture or associate.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of the joint venture or associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included
within the carrying amount of the investment.
Foreign currencies
For the purpose of presenting consolidated financial statements, the assets and liabilities of entities with a functional currency
other than sterling are translated into sterling using exchange rates prevailing on the period end date. Income and expense items
and cash flows are translated at the average exchange rates for the period and exchange differences arising are recognised
directly in equity. On disposal of a foreign operation, the cumulative amount recognised in equity relating to that operation is
recognised in the Consolidated Income Statement as part of the gain or loss on sale.
The Group records foreign exchange differences arising on retranslation of foreign operations within the translation reserve
in equity.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency are recorded at the exchange rate prevailing on the date of the transaction. At each period end date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the period end date.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing on
the date when fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included
in the Consolidated Income Statement for the period.
Goodwill, intangible assets and fair value adjustments arising on the acquisition of foreign operations after transition to IFRS are
treated as part of the assets and liabilities of the foreign operation and are translated at the closing rate. Goodwill which arose
pre-transition to IFRS is not translated.
In respect of all foreign operations, any cumulative exchange differences that have arisen before 4 October 2004, the date
of transition to IFRS, were reset to £nil and will be excluded from the determination of any subsequent profit or loss on disposal.
104
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Goodwill and intangible assets
Goodwill and intangible assets acquired arising on the acquisition of an entity represents the excess of the cost of acquisition over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the
date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated
impairment losses. Negative goodwill arising on an acquisition is recognised directly in the Consolidated Income Statement.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and are translated at the closing exchange rates on the period end date.
On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the
profit or loss recognised in the Consolidated Income Statement on disposal.
Impairment of goodwill
The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired.
The Group has no other intangible assets with indefinite lives.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash
flows, known as cash-generating units (CGUs). If the recoverable amount of the CGU is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit, prorated on the basis of the carrying amount of each asset in the unit, but subject to not reducing any asset
below its recoverable amount. An impairment loss recognised for goodwill is not reversed in a subsequent period.
When testing for impairment, the recoverable amounts for all of the Group’s CGUs are measured at the higher of value in use or
fair value less costs to sell. Value in use is calculated by discounting future expected cash flows. These calculations use cash flow
projections based on Board-approved budgets and projections which reflect management’s current experience and future
expectations of the markets in which the CGU operates. Risk-adjusted pre-tax discount rates used by the Group in its impairment
tests range from 11.25% to 25.0% (2015 11.9% to 19.2%) with the choice of rates depending on the risks specific to that CGU.
The Directors’ estimate of the Group’s weighted average cost of capital is 8.0% (2015 9.5%). The cash flow projections consist of
Board-approved budgets for the following year, together with forecasts for up to five additional years and nominal long-term
growth rates beyond these periods. The nominal long-term growth rates range between 1.0% and 5.0% (2015 2.0% and 7.0%)
and vary with management’s view of the CGU’s market position and maturity of the relevant market, and do not exceed the
long-term average growth rate for the market in which the CGU operates.
An impairment loss recognised for goodwill is charged immediately in the Consolidated Income Statement and is not
subsequently reversed.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated
intangible asset arising from the Group’s development activity, including software for internal use, is recognised only if the asset
can be separately identified, it is probable the asset will generate future economic benefits, the development cost can be
measured reliably, the project is technically feasible and the project will be completed with a view to sell or use the asset.
Additionally, guidance in Standing Interpretations Committee (SIC) 32 has been applied in accounting for internally developed
website development costs.
Internally generated intangible assets are amortised on a straight-line basis over their estimated useful lives, when the asset is
available for use, and are reported net of impairment losses. Where no internally generated intangible asset can be recognised,
such development expenditure is charged to the Consolidated Income Statement in the period in which it is incurred.
Licences
Computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software.
These costs are amortised over their estimated useful lives, being three to five years.
Costs that are directly associated with the production of identifiable and unique software products controlled by the Group,
and that are expected to generate economic benefits exceeding costs and directly attributable overheads, are capitalised
as intangible assets.
Computer software which is integral to a related item of hardware equipment is accounted for as property, plant and equipment.
Costs associated with maintaining computer software programs are recognised as an expense as incurred.
Other intangible assets
Other intangible assets with finite lives are stated at cost less accumulated amortisation and impairment losses. Amortisation is
charged to the Consolidated Income Statement on a reducing balance or straight-line basis over the estimated useful lives of
the intangible assets from the date they become available for use. The estimated useful lives are as follows:
Publishing rights, mastheads and titles
Brands
Market- and customer-related databases and customer relationships
Computer software
5 – 30 years
3 – 20 years
3 – 20 years
2 – 5 years
Amortisation of intangibles not arising on business combinations is included within operating profit in the Income Statement.
105
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 2 Significant accounting policies continued
Impairment of intangible assets
At each period end date, reviews are carried out of the carrying amounts of tangible and intangible assets and goodwill
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount, which is the higher of value in use and fair value less costs to sell, of the asset is estimated in order to
determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from
other assets, value in use estimates are made based on the cash flows of the CGU to which the asset belongs.
If the recoverable amount of an asset or CGU is estimated to be less than its net carrying amount, the net carrying amount
of the asset or CGU is reduced to its recoverable amount. Impairment losses are recognised immediately in the Consolidated
Income Statement.
The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognised in
prior periods, for an asset other than goodwill, may no longer exist or may have decreased. If any such indication exists, the Group
estimates the recoverable amount of that asset. In assessing whether there is any indication that an impairment loss recognised
in prior periods for an asset other than goodwill may no longer exist or may have decreased, the Group considers, as a minimum,
the following indications:
(a) whether the asset’s market value has increased significantly during the period;
(b) whether any significant changes with a favourable effect on the entity have taken place during the period, or will take place
in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market
to which the asset is dedicated; and
(c) whether market interest rates or other market rates of return on investments have decreased during the period, and those
decreases are likely to affect the discount rate used in calculating the asset’s value in use and increase the asset’s
recoverable amount materially.
Property, plant and equipment
Land and buildings held for use are stated in the Consolidated Statement of Financial Position at their cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Assets in the course of construction are carried at cost, less any recognised impairment loss. Depreciation of these assets
commences when the assets are ready for their intended use.
Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in the Consolidated Income Statement.
Depreciation is charged so as to write off the cost of assets, other than property, plant and equipment under construction using
the straight-line method, over their estimated useful lives as follows:
Freehold buildings and long leasehold properties
Short leasehold premises
Plant and equipment
Depreciation is not provided on freehold land
50 years
the term of the lease
3 – 25 years
Investment property
The Group transfers property from property, plant and equipment to investment property when owner occupation ends.
Investment properties are stated in the Consolidated Statement of Financial Position at their cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Depreciation is charged so as to write off the cost of these assets, using the straight-line method, over their estimated useful lives
as follows:
Freehold buildings and long leasehold properties
Depreciation is not provided on freehold land
50 years
106
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Inventory
Inventory is stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
The Group uses the average cost method in the dmg media segment for newsprint and the first in first out method for all
other inventories.
Exhibitions, training and event costs
Directly attributable costs relating to future exhibitions, training and events are deferred within work in progress and measured at
the lower of cost and net realisable value. These costs are charged to the Consolidated Income Statement when the exhibition,
training or event takes place.
Pre-publication costs
Pre-publication costs represent direct costs incurred in the development of titles prior to their publication. These costs are
recognised as work in progress on the Consolidated Statement of Financial Position to the extent that future economic benefit
is virtually certain and can be measured reliably. These are recognised in the Consolidated Income Statement on publication.
Marketing costs
Marketing and promotional costs are charged to the Consolidated Income Statement in the period in which they are incurred.
Cash and cash equivalents
Cash and cash equivalents shown in the Consolidated Statement of Financial Position includes cash, short-term deposits and
other short-term highly liquid investments with an original maturity of three months or less. For the purpose of the Consolidated
Cash Flow Statement, cash and cash equivalents are as defined above, net of bank overdrafts.
Revenue
Revenue is stated at the fair value of consideration, net of value added tax, trade discounts and commission where applicable
and is recognised using methods appropriate for the Group’s businesses.
Where revenue contracts have multiple elements (such as software licences, data subscriptions and support), all aspects of the
transaction are considered to determine whether these elements can be separately identified. Where transaction elements can
be separately identified and revenue can be allocated between them on a fair and reliable basis, revenue for each element is
accounted for according to the relevant policy below. Where transaction elements cannot be separately identified, revenue
is recognised over the contract period.
The dmg media segment enters into agreements with advertising agencies and certain clients, which are subject to a minimum
spend and typically include a commitment to deliver rebates to the agency or client based on the level of agency spend over
the contract period.
The principal revenue recognition policies, as applied by the Group’s major businesses, are as follows:
• subscriptions revenue, including revenue from information services, is recognised over the period of the subscription
or contract;
• publishing and circulation revenue is recognised on issue of the publication or report;
• advertising revenue is recognised on issue of the publication or over the period of the online campaign;
• contract print revenue is recognised on completion of the print contract;
• exhibitions, training and events revenues are recognised over the period of the event;
• software revenue is recognised on delivery of the software or the technology or over a period of time where the transaction is a
licence (the licence term). If support is unable to be separately identified from hosting and revenue is unable to be allocated on
a fair and reliable basis, support revenue is recognised over the licence term. Commissions paid to acquire software and
services contracts are capitalised in prepayments and recognised over the term of the contract;
• support revenue associated with software licences and subscriptions is recognised over the term of the support contract; and
• long-term contract revenue is recognised using the percentage of completion method according to the percentage of work
completed at the period end date.
Adjusted measures
The Group presents adjusted operating profit and adjusted profit before tax by making adjustments for costs and profits which
management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect on current
year earnings.
Such items would include, but are not limited to, costs associated with business combinations, gains and losses on the disposal of
businesses, finance costs relating to premia on bond buy-backs, fair value movements, exceptional operating costs, impairment
of goodwill, and amortisation and impairment of intangible assets arising on business combinations.
Exceptional operating costs include reorganisation costs and similar items of a significant and a non-recurring nature.
In addition the Group presents an adjusted profit after tax measure by making adjustments for certain tax charges and credits
which management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect.
The Group uses these adjusted measures to evaluate performance and as a method to provide shareholders with clear and
consistent reporting.
See Note 13 for a reconciliation of profit before tax to adjusted profit before and after tax and page 115 for a reconciliation
of operating profit to adjusted operating profit.
107
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 2 Significant accounting policies continued
Other gains and losses
Other gains and losses comprise profit or loss on sale of trading investments, profit or loss on sale of property, plant and equipment,
impairment of available-for-sale assets, profit or loss on sale of businesses and profit or loss on sale of joint ventures and associates.
EBITDA
The Group discloses EBITDA, being adjusted operating profit before depreciation of property, plant and equipment and
investment property. EBITDA is broadly used by analysts, rating agencies, investors and the Group’s banks as part of their
assessment of the Group’s performance. A reconciliation of EBITDA from operating profit is shown in Note 15 and the ratio
of net debt to EBITDA is disclosed in Note 35.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
of the asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments as determined at the inception of the lease. The corresponding liability
to the lessor is included in the Consolidated Statement of Financial Position as a finance lease obligation. Lease payments are
apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognised in the Consolidated Income Statement.
Rentals payable under operating leases are charged to the Consolidated Income Statement on a straight-line basis over the
term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread
on a straight-line basis over the lease term.
Dividends
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.
Dividends are recognised as a distribution in the period in which they are approved by the shareholders. Interim dividends
are recorded in the period in which they are paid.
Borrowing costs
Unless capitalised under IAS 23, Borrowing Costs, all borrowing costs are recognised in the Consolidated Income Statement in
the period in which they are incurred. Finance charges, including premiums paid on settlement or redemption and direct issue
costs and discounts related to borrowings, are accounted for on an accruals basis and charged to the Consolidated Income
Statement using the effective interest method.
Retirement benefits
Pension scheme assets are measured at market value at the period end date. Scheme liabilities are measured using the
projected unit credit method and discounted at a rate reflecting current yields on high-quality corporate bonds having regard
to the duration of the liability profiles of the schemes.
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the
plan liabilities is recognised as an asset or liability on the Consolidated Statement of Financial Position. Actuarial gains and losses
arising in the year are taken to the Consolidated Statement of Comprehensive Income. For this purpose, actuarial gains and
losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising because of differences
between the previous actuarial assumptions and what has actually occurred. For defined benefit schemes, the cost of
providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out triennially.
In accordance with the advice of independent qualified actuaries in assessing whether to recognise a surplus, the Group has
regard to the principles set out in IFRIC 14.
Other movements in the net surplus or deficit are recognised in the Consolidated Income Statement, including the current service
cost, any past service cost and the effect of any curtailment or settlements. The interest cost less the expected return on assets
is also charged to the Consolidated Income Statement within net finance costs.
The Group’s contributions to defined contribution pension plans are charged to the Consolidated Income Statement as they fall due.
Taxation
Income tax expense represents the sum of current tax and deferred tax for the year.
The current tax payable or recoverable is based on the taxable profit for the year. Taxable profit differs from profit as reported
in the Consolidated Income Statement because some items of income or expense are taxable or deductible in different years
or may never be taxable or deductible. The Group’s liability for current tax is calculated using the UK and foreign tax rates that
have been enacted or substantively enacted by the period end date.
Current tax assets and liabilities are set off and stated net in the Consolidated Statement of Financial Position when there is a
legally enforceable right to set off current tax assets against current tax liabilities and when they either relate to income taxes
levied by the same taxation authority or on the same taxable entity or on different taxable entities which intend to settle the
current tax assets and liabilities on a net basis.
108
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary differences arise from the initial recognition of goodwill or from the initial recognition other than in a business
combination of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising in investments in subsidiaries, joint ventures
and associates except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Goodwill arising on business combinations also includes amounts corresponding to deferred tax liabilities recognised in respect
of acquired intangible assets. A deferred tax liability is recognised to the extent that the fair value of the assets for accounting
purposes exceeds the value of those assets for tax purposes and will form part of the associated goodwill on acquisition.
The carrying amount of deferred tax assets is reviewed at each period end date, and is reduced or increased as appropriate
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered, or it becomes probable that sufficient taxable profits will be available.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised,
based on tax rates that have been enacted or substantively enacted by the period end date, and is not discounted.
Deferred tax assets and liabilities are set off when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current
assets and liabilities on a net basis.
Tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or credited directly
to equity, in which case the tax is also recognised directly in equity.
Actual tax liabilities or refunds may differ from those anticipated due to changes in tax legislation, differing interpretations of tax
legislation and uncertainties surrounding the application of tax legislation. In situations where uncertainties exist, provision is
made for contingent tax liabilities and assets when it is more likely than not that there will be a cash impact. These provisions are
made for each uncertainty individually on the basis of management judgement following consideration of the available relevant
information. The measurement basis adopted represents the best predictor of the resolution of the uncertainty which is usually
based on the most likely cash outflow. The Company reviews the adequacy of these provisions at the end of each reporting
period and adjusts them based on changing facts and circumstances.
Financial instruments
Financial assets and financial liabilities are recognised on the Consolidated Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position when
there is a legally enforceable right to settle on a net basis, or realise the asset and liability simultaneously and where the Group
intends to net settle.
Financial assets
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Available-for-sale investments
Investments and financial assets are recognised and derecognised on a trade date where a purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the time frame established by the market concerned,
and are measured at fair value, including transaction costs.
Investments are classified as either fair value through profit or loss or available-for-sale. Where securities are held-for-trading
purposes, gains and losses arising from changes in fair value are included in net profit or loss for the period. For available-for-sale
investments, gains and losses arising from changes in fair value are recognised directly in equity, until the security is disposed of
or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net
profit or loss for the period.
The fair value of listed securities is determined based on quoted market prices. Unlisted securities are recorded at cost less
provision for impairment, as since there is no active market upon which they are traded, their fair values cannot be reliably
measured. The recoverable amount is determined by discounting future cash flows to present value using market interest rates.
109
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 2 Significant accounting policies continued
Financial liabilities and equity instruments
Trade payables
Trade payables are non-interest bearing and are stated at their nominal value.
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract
that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for
specific financial liabilities and equity instruments are set out below:
Capital market and bank borrowings
Interest bearing loans and overdrafts are initially measured at fair value (which is equal to net proceeds at inception), and are
subsequently measured at amortised cost, using the effective interest rate method. A portion of the Group’s bonds are subject
to fair value hedge accounting as explained below and this portion is adjusted for the movement in the hedged risk to the
extent hedge effectiveness is achieved. Any difference between the proceeds, net of transaction costs and the settlement
or redemption of borrowings is recognised over the term of the borrowing.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of transaction costs.
Derecognition
The Group derecognises a financial asset, or a portion of a financial asset, from the Consolidated Statement of Financial Position
where the contractual rights to cash flows from the asset have expired, or have been transferred, usually by sale, and with them
either substantially all the risks and rewards of the asset or significant risks and rewards, along with the unconditional ability to sell
or pledge the asset.
Financial liabilities are derecognised when the liability has been settled, has expired or has been extinguished.
Derivative financial instruments and hedge accounting
Derivative financial instruments are used to manage exposure to market risks. The principal derivative instruments used by the
Group are foreign currency swaps, interest rate swaps, foreign exchange forward contracts and options. The Group does not
hold or issue derivative financial instruments for trading or speculative purposes.
Changes in the fair value of derivative instruments which do not qualify for hedge accounting are recognised immediately
in the Consolidated Income Statement.
Where the derivative instruments do qualify for hedge accounting, the following treatments are applied:
Fair value hedges
Changes in the fair value of the hedging instrument are recognised in the Consolidated Income Statement for the year together
with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. When the
hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting, hedge accounting
is discontinued.
Cash flow hedges
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows
are recognised directly in equity and the ineffective portion is recognised immediately in the Consolidated Income Statement.
If a hedged firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, then, at the time
that the asset or liability is recognised, the associated gains and losses on the derivative that had previously been recognised
in equity are included in the initial measurement of the asset or liability.
For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the
Consolidated Income Statement in the same period in which the hedged item affects the Consolidated Income Statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer
qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is
retained in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative
gain or loss previously recognised in equity is included in the Consolidated Income Statement for the period.
Net investment hedges
Exchange differences arising from the translation of the net investment in foreign operations are recognised directly in equity in
the translation reserve. Gains and losses arising from changes in the fair value of the hedging instruments are recognised in equity
to the extent that the hedging relationship is effective. Any ineffectiveness is recognised immediately in the Consolidated Income
Statement for the period.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. Gains and losses accumulated in the translation reserve are included in the Consolidated Income
Statement on disposal of the foreign operation.
110
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, and it is
probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of
the expenditure required to settle the obligation at the period end date, and are discounted to present value where the effect
is material.
Onerous contract provisions are recognised for losses on contracts where the forecast costs of fulfilling the contract throughout
the contract period exceed the forecast income receivable. The provision is calculated based on cash flows to the end of the
contract. Vacant property provisions are recognised when the Group has committed to a course of action that will result in the
property becoming vacant.
Share-based payments
The Group issues equity-settled and cash-settled share-based payments to certain Directors and employees. Equity-settled
share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date
of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect
of non-market-based vesting conditions.
Fair value is measured using a binomial pricing model which is calibrated using a Black-Scholes framework. The expected life
used in the models has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise
restrictions and behavioural considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each period
end date for cash-settled share-based payments.
Investment in own shares
Treasury shares
Where the Company purchases its equity share capital as Treasury Shares, the consideration paid, including any directly
attributable incremental costs (net of income taxes) is recorded as a deduction from shareholders’ equity until such shares are
cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is recognised in equity, with any difference
between the proceeds from the sale and the original cost being taken to retained earnings.
Employee Benefit Trust
The Company has established an Employee Benefit Trust (EBT) for the purpose of purchasing shares in order to satisfy outstanding
share options and potential awards under long-term incentive plans. The assets of the EBT comprise shares in DMGT plc and cash
balances. The EBT is administered by independent trustees and its assets are held separately from those of the Group. The Group
bears the major risks and rewards of the assets held by the EBT until the shares vest unconditionally with employees. The Group
recognises the assets and liabilities of the EBT in the consolidated financial statements and shares held by the EBT are recorded
at cost as a deduction from shareholders’ equity. Consideration received for the sale of shares held by the EBT is recognised
in equity, with any difference between the proceeds from the sale and the original cost being taken to retained earnings.
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 have 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 and three-year outlooks. These are used to
support judgements made in the preparation of the Group’s financial statements including the recognition of deferred tax assets
in different jurisdictions, the Group’s going concern assessment and for the purposes of impairment reviews. Longer term forecasts
use long-term growth rates applicable to the relevant businesses.
Impairment of goodwill and intangible assets
Determining whether goodwill and intangible or other assets are impaired or whether a reversal of an impairment should be
recorded requires a comparison of the balance sheet carrying value with the recoverable amount of the asset or CGU. The
recoverable amount is the higher of the value in use and fair value less costs to sell.
The value in use calculation requires management to estimate the future cash flows expected to arise from the asset or CGU
and calculate the net present value of these cash flows using a suitable discount rate. A key area of judgement is deciding the
long-term growth rate and the operating cash flows of the applicable businesses and the discount rate applied to those cash
flows (Note 21). The carrying amount of goodwill and intangible assets at the year end was £1,480.8 million (2015 £1,332.6 million)
after a net impairment charge of £53.6 million (2015 £18.5 million) was recognised during the year (Notes 21 and 22).
Acquisitions and intangible assets
The Group’s accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of
identifiable assets, liabilities and contingent liabilities acquired with any excess consideration representing goodwill. Determining
the fair value of assets, liabilities and contingent liabilities acquired requires significant estimates and assumptions, including
assumptions with respect to cash flows and unprovided liabilities and commitments, including in respect to tax, to be used. The
Group recognises intangible assets acquired as part of a business combination at fair value at the date of the acquisition. The
determination of these fair values is based upon management’s judgement and includes assumptions on the timing and amount
of future cash flows generated by the assets and the selection of an appropriate discount rate. Additionally, management must
estimate the expected useful economic lives of intangible assets and charge amortisation on these assets accordingly.
111
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 2 Significant accounting policies continued
Contingent consideration and put options payable
Estimates are required in respect of the amount of contingent consideration and put options payable on acquisitions, which is
determined according to formulae agreed at the time of the business combination, and normally related to the future earnings
of the acquired business. The Directors review the amount of contingent consideration and put options likely to become payable
at each period end date, the major assumption being the level of future profits of the acquired business. The Group has made
a provision for outstanding contingent consideration amounting to £52.6 million (2015 £54.3 million) and put options payable
amounting to £44.8 million (2015 £51.2 million).
Contingent consideration receivable
Estimates are required in respect of the amount of contingent consideration receivable on disposals, which is determined
according to formulae agreed at the time of the disposal and is normally related to the future earnings of the disposed business.
The Directors review the amount of contingent consideration likely to be receivable at each period end date, the major
assumption being the level of future profits of the disposed business. The Group has outstanding contingent consideration
receivable amounting to £1.4 million (2015 £2.3 million). During the year the Group received £nil (2015 £0.2 million) of previously
unrecognised contingent consideration.
Adjusted measures
The Group presents adjusted operating profit and adjusted profit before tax by making adjustments for costs and profits which
management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect on current
year earnings.
Such items would include, but are not limited to, costs associated with business combinations, gains and losses on the disposal of
businesses, finance costs relating to premia on bond buy-backs, fair value movements, exceptional operating costs, impairment
of goodwill, and amortisation and impairment of intangible assets arising on business combinations.
Exceptional operating costs include reorganisation costs and similar items of a significant and a non-recurring nature.
In addition the Group presents an adjusted profit after tax measure by making adjustments for certain tax charges and credits
which management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect.
The Group uses these adjusted measures to evaluate performance and as a method to provide shareholders with clear and
consistent reporting.
See Note 13 for a reconciliation of profit before tax to adjusted profit before and after tax and page 36 for a reconciliation
of operating profit to adjusted operating profit.
Share-based payments
The Group makes share-based payments to certain employees. These payments are measured at their estimated fair value at
the date of grant, calculated using an appropriate option pricing model. The fair value determined at the grant date is expensed
on a straight-line basis over the vesting period, based on the estimate of the number of shares that will eventually vest. The key
assumptions used in calculating the fair value of the options are the discount rate, the Group’s share price volatility, dividend yield,
risk-free rate of return, and expected option lives. Management regularly performs a true-up of the estimate of the number of
shares that are expected to vest; this is dependent on the anticipated number of leavers. See Note 43 for further detail.
Taxation
Being a multinational Group with tax affairs in many geographic locations inherently leads to a highly complex tax structure
which makes the degree of estimation and judgement more challenging. The resolution of issues is not always within the control
of the Group and is often dependent on the efficiency of legal processes. Such issues can take several years to resolve. The Group
accounts for unresolved issues based on its best estimate of the final outcome, however, the inherent uncertainty regarding these
items means that the eventual resolution could differ significantly from the accounting estimates and, therefore, impact the
Group’s results and future cash flows. As described above, the Group makes estimates regarding the recoverability of deferred
tax assets relating to losses based on forecasts of future taxable profits which are, by their nature, uncertain.
The two key tax risk areas the Group faces are: (1) challenges by tax authorities where arrangements that have been adopted on
the basis of professional advice are challenged by tax authorities, which may lead to a cash outflow or reduction in deferred tax
assets; and (2) changes of law that impact the Group’s ability to carry forward and utilise tax attributes recognised as deferred
tax assets.
Retirement benefit obligations
The cost of defined benefit pension plans is determined using actuarial valuations prepared by the Group’s actuaries. This involves
making certain assumptions concerning discount rates, future salary increases, mortality rates and future pension increases. Due
to the long-term nature of these plans, such estimates are subject to significant uncertainty. The assumptions and the resulting
estimates are reviewed annually and, when appropriate, changes are made which affect the actuarial valuations and, hence,
the amount of retirement benefit expense recognised in the Consolidated Income Statement and the amounts of actuarial
gains and losses recognised in the Consolidated Statement of Changes in Equity. The carrying amount of the retirement benefit
obligation at 30 September 2016 was a deficit of £246.0 million (2015 £159.3 million). Further details are given in Note 36.
112
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 3 Segment analysis
The Group’s business activities are split into five operating divisions: RMS; dmg information; dmg events; Euromoney; and
dmg media. These divisions are the basis on which information is reported to the Group’s Chief Operating Decision Maker, which
has been determined to be the Group Board. The segment result is the measure used for the purposes of resource allocation and
assessment and represents profit earned by each segment, including share of results from joint ventures and associates but before
exceptional operating costs, amortisation of acquired intangible assets arising on business combinations, impairment charges,
other gains and losses, net finance costs and taxation.
Details of the types of products and services from which each segment derives its revenues are included within the
Strategic Report.
The accounting policies applied in preparing the management information for each of the reportable segments are the same
as the Group’s accounting policies described in Note 2.
Total external
revenue
£m
Note
Segment
operating
profit
£m
Less operating
profit/(loss)
of joint ventures
and associates
£m
Adjusted
operating
profit
£m
205.0
498.2
105.4
403.1
705.6
1,917.3
35.5
76.3
29.0
104.3
96.4
341.5
(0.5)
(0.3)
–
4.3
19.4
22.9
(i)
Year ended 30 September 2016
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
Adjusted operating profit
Exceptional operating costs, impairment of internally generated and
acquired computer software, property, plant and equipment and
investment property
Impairment of goodwill and acquired intangible assets arising on
business combinations
21, 22
Amortisation of acquired intangible assets arising on business
combinations
Operating profit before share of results of joint ventures and associates
Share of results of joint ventures and associates
Total operating profit
Other gains and losses
Profit before investment revenue, net finance costs and tax
Investment revenue
Net finance costs
Profit before tax
Tax
Profit for the year
22
7
8
9
10
11
36.0
76.6
29.0
100.0
77.0
318.6
(41.6)
277.0
(54.7)
(53.6)
(42.3)
126.4
3.0
129.4
137.9
267.3
2.5
(22.9)
246.9
(32.7)
214.2
(i)
Included within corporate costs is a credit of £0.9 million which adjusts the pensions charge recorded in each operating
segment from a cash rate to the net service cost in accordance with IAS 19 (Revised), Employee Benefits.
113
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc –
–
–
–
(0.2)
(0.2)
–
(0.2)
Total
£m
(2.7)
(5.7)
(0.9)
(12.9)
(23.6)
(8.7)
(54.5)
3 Segment analysis continued
An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs and impairment
of property, plant and equipment and investment property by segment is as follows:
Year ended 30 September 2016
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
Continuing operations
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
Amortisation of
intangible assets
arising on business
combinations
(Note 22)
£m
Impairment of
goodwill and
intangible assets
arising on business
combinations
(Notes 21, 22)
£m
Impairment of
property, plant and
equipment and
investment property
(Notes 23, 24)
£m
Exceptional
operating costs
£m
(6.2)
(13.3)
–
(3.7)
(4.4)
(27.6)
–
(27.6)
–
(23.7)
(0.7)
(17.6)
(0.3)
(42.3)
–
(42.3)
–
–
–
(28.7)
(24.9)
(53.6)
–
(53.6)
(2.7)
(5.7)
(0.9)
(12.9)
(23.6)
(45.8)
(8.7)
(54.5)
In Euromoney the impairment charge includes £12.9 million relating to Indaba, £8.2 million to Total Derivatives, £5.9 million to
Hedge Fund Intelligence and £1.7 million to Euromoney Indices (Note 21) reflecting the challenging market conditions in the
energy and financial sectors and weakness in the commodity markets.
In dmg media the impairment charge of £24.9 million relates to Elite Daily (Note 21) following continued poor performance
in that business.
The Group’s tax charge includes a related credit of £2.8 million in respect of impairment of goodwill and intangible assets.
The Group’s exceptional operating costs are analysed as follows:
Severance
costs
£m
Consultancy
charges
£m
Other
restructuring
costs
£m
Supplier
entering
voluntary
administration
£m
(2.7)
(4.4)
(0.5)
(3.3)
(9.8)
(4.1)
–
(0.9)
–
(0.3)
(4.5)
(4.5)
(24.8)
(10.2)
–
(0.4)
(0.4)
–
(1.2)
–
(2.0)
–
–
–
–
(5.1)
–
(5.1)
Overseas
sales tax (i)
Legal fees (i)
£m
–
–
–
(7.9)
–
–
(7.9)
£m
–
–
–
(1.4)
–
(0.1)
(1.5)
Contingent
consideration
required to be
shown as
remuneration
£m
–
–
–
–
(3.0)
–
(3.0)
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
The Group’s tax charge includes a related credit of £15.0 million in relation to these exceptional operating costs.
(i)
In the Euromoney segment the provision for overseas sales tax of £7.9 million relates to a claim by tax authorities in the US
which is being challenged. Exceptional legal fees in Euromoney relate to a legal dispute with the previous owners of Centre
for Investor Education.
An analysis of the depreciation of property, plant and equipment and investment property, research costs, investment revenue,
and net finance costs by segment is as follows:
Year ended 30 September 2016
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
Continuing operations
Depreciation of
property, plant
and equipment
and investment
property
(Notes 23, 24)
£m
Research
costs
£m
Investment
revenue
(Note 9)
£m
Net finance
(Note 10)
£m
(6.6)
(9.5)
(0.5)
(2.8)
(16.8)
(36.2)
–
(36.2)
(28.7)
(7.2)
–
(8.3)
(1.8)
(46.0)
–
(46.0)
0.2
0.2
–
0.3
1.8
2.5
–
2.5
–
27.0
–
(1.1)
(3.5)
22.4
(45.3)
(22.9)
114
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc External
revenue
£m
Inter-segment
revenue
£m
Total revenue
£m
186.7
429.9
94.5
403.4
730.9
0.8
–
–
–
–
187.5
429.9
94.5
403.4
730.9
1,845.4
0.8
1,846.2
Year ended 30 September 2015
Note
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
Discontinued operations
Adjusted operating profit
Exceptional operating costs,
impairment of internally generated
and acquired computer software,
property, plant and equipment and
investment property
Impairment of goodwill and acquired
intangible assets arising on business
combinations
Amortisation of acquired intangible
assets arising on business combinations
Operating profit before share of results
of joint ventures and associates
Share of results of joint ventures and
associates
Total operating profit
Other gains and losses
Profit before investment revenue,
net finance costs and tax
Investment revenue
Net finance costs
Profit before tax
Tax
Profit from discontinued operations
Profit for the year
(i)
19, (ii)
(2.7)
1,842.7
21, 22
22
7
8
9
10
11
19
Segment
operating
profit
£m
Less operating
profit/(loss) of
joint ventures
and associates
£m
Adjusted
operating profit
£m
26.2
74.4
20.2
110.6
125.2
356.6
(0.3)
(0.2)
–
3.9
29.1
32.5
26.5
74.6
20.2
106.7
96.1
324.1
(36.0)
(1.1)
287.0
(22.5)
(18.5)
(39.2)
206.8
11.3
218.1
82.4
300.5
4.0
(88.4)
216.1
(20.8)
50.0
245.3
(i)
Included within corporate costs is a credit of £1.3 million which adjusts the pensions charge recorded in each operating
segment from a cash rate to the net service cost in accordance with IAS 19 (Revised), Employee Benefits.
(ii) Revenue and adjusted operating profit relating to the discontinued operations of dmg media’s digital recruitment businesses
have been deducted in order to reconcile total segment result to Group profit before tax from continuing operations.
An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs and impairment
of property, plant and equipment and investment property by segment is as follows:
Year ended 30 September 2015
RMS
dmg information
dmg events
Euromoney
dmg media
Continuing operations
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
Amortisation
of intangible
assets arising
on business
combinations
(Note 22)
£m
Impairment of
goodwill and
intangible assets
arising on
business
combinations
(Notes 21, 22)
£m
Impairment of
property, plant
and equipment
and investment
property
(Notes 23, 24)
£m
Exceptional
operating costs
£m
(5.8)
(10.4)
–
(2.7)
(4.3)
(23.2)
–
(18.6)
(2.1)
(17.9)
(0.6)
(39.2)
–
–
–
(18.5)
–
(18.5)
–
–
–
(3.2)
(17.7)
(20.9)
–
–
–
–
(1.6)
(1.6)
The Group’s tax charge includes a related credit of £7.0 million in relation to these items.
115
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 3 Segment analysis continued
In Euromoney exceptional operating costs comprise restructuring and other exceptional costs following the reorganisation
of certain businesses, office move costs and CIE legal costs. The impairment charge of £18.5 million relates to HedgeFund
Intelligence, CIE and Indaba.
In the dmg media segment exceptional costs comprise £8.6 million severance, £4.5 million consultancy costs, office move costs
of £3.9 million and £0.7 million relating to contingent consideration required to be treated as remuneration.
An analysis of the depreciation of property, plant and equipment and investment property, research costs, investment revenue,
and net finance costs by segment is as follows:
Year ended 30 September 2015
RMS
dmg information
dmg events
Euromoney
dmg media
Corporate costs
Continuing operations
Depreciation of
property, plant
and equipment
and investment
property
(Notes 23, 24)
£m
Research
costs
£m
Investment
revenue
(Note 9)
£m
Net finance
costs
(Note 10)
£m
(6.2)
(8.4)
(0.6)
(2.6)
(15.1)
(32.9)
(0.1)
(33.0)
(49.6)
(3.6)
(0.1)
(11.2)
(1.7)
(66.2)
–
(66.2)
0.2
0.2
0.1
0.4
–
0.9
3.1
4.0
–
(0.6)
–
1.3
(1.4)
(0.7)
(87.7)
(88.4)
The Group’s revenue comprises sales excluding value added tax, less discounts and commission where applicable and
is analysed as follows:
Print advertising
Digital advertising
Circulation
Subscriptions
Events, conferences and training
Transactions and other
Year ended
30 September
2016
Total and
continuing
operations
£m
Year ended
30 September
2015
Total
£m
Year ended
30 September
2015
Discontinued
operations
(Note 19)
£m
Year ended
30 September
2015
Inter-segment
£m
Year ended
30 September
2015
Continuing
operations
£m
247.9
131.6
314.7
623.2
233.9
366.0
281.0
134.4
312.2
561.9
224.2
332.5
–
(2.7)
–
–
–
–
–
–
–
(0.8)
–
–
281.0
131.7
312.2
561.1
224.2
332.5
1,917.3
1,846.2
(2.7)
(0.8)
1,842.7
Investment revenue is shown in Note 9 and finance income in Note 10.
116
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc By geographic area
The majority of the Group’s operations are located in the United Kingdom, North America, Rest of Europe, and Australia.
The analysis below is based on the location of companies in these regions. Export sales and related profits are included in the
areas from which those sales are made.
UK
North America
Rest of Europe
Australia
Rest of the World
Year ended
30 September
2016
Total and
continuing
operations
£m
Year ended
30 September
2015
Total
£m
1,023.0
714.9
47.6
17.5
114.3
1,917.3
1,048.5
632.1
39.2
16.8
108.8
1,845.4
Year ended
30 September
2015
Discontinued
operations
(Note 19)
£m
Year ended
30 September
2015
Continuing
operations
£m
(2.7)
1,045.8
–
–
–
–
(2.7)
632.1
39.2
16.8
108.8
1,842.7
The analysis below is based on the geographic location of customers in these regions.
UK
North America
Rest of Europe
Australia
Rest of the World
Year ended
30 September
2016
Total and
continuing
operations
£m
Year ended
30 September
2015
Total
£m
Year ended
30 September
2015
Discontinued
operations
(Note 19)
£m
Year ended
30 September
2015
Continuing
operations
£m
891.2
638.0
193.0
24.2
170.9
932.2
563.4
165.8
24.0
160.0
(2.7)
–
–
–
–
929.5
563.4
165.8
24.0
160.0
1,917.3
1,845.4
(2.7)
1,842.7
The closing net book value of goodwill, intangible assets, property, plant and equipment and investment property is analysed by
geographic area as follows:
UK
North America
Rest of Europe
Australia
Rest of the World
Closing net
book value
of goodwill
(Note 21)
2016
£m
Closing net
book value
of goodwill
(Note 21)
2015
£m
Closing net
book value
of intangible
assets
(Note 22)
2016
£m
Closing net
book value
of intangible
assets
(Note 22)
2015
£m
Closing net
book value of
property, plant
and equipment
(Note 23)
2016
£m
Closing net
book value of
property, plant
and equipment
(Note 23)
2015
£m
234.4
687.7
30.2
5.1
24.2
981.6
248.7
627.9
8.7
3.8
19.6
122.5
345.4
25.0
1.3
5.0
121.0
286.5
11.7
1.3
3.4
132.8
36.6
3.8
0.7
2.2
143.1
32.6
3.3
0.4
1.7
908.7
499.2
423.9
176.1
181.1
The additions to non-current assets are analysed as follows:
RMS
dmg information
dmg events
Euromoney
dmg media
Goodwill
(Note 21)
Year ended
30 September
2016
£m
Goodwill
(Note 21)
Year ended
30 September
2015
£m
Intangible
assets
(Note 22)
Year ended
30 September
2016
£m
Intangible
assets
(Note 22)
Year ended
30 September
2015
£m
Property, plant
and equipment
(Note 23)
Year ended
30 September
2016
£m
–
24.2
1.6
8.9
4.4
39.1
–
121.0
0.4
–
18.7
140.1
14.1
66.4
1.3
14.0
5.5
101.3
24.7
73.7
0.6
1.8
10.9
111.7
2.2
11.2
0.4
3.8
9.9
27.5
Property,
plant and
equipment
(Note 23)
Year ended
30 September
2015
£m
3.1
9.9
0.6
6.5
8.9
29.0
117
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 4 Operating profit analysis
Operating profit before the share of results of joint ventures and associates is further analysed as follows:
Revenue
(Decrease)/increase in stocks of finished goods and work in progress
Raw materials, consumables and direct event costs
Inventories recognised as an expense in the year
Staff costs
Impairment of goodwill and intangible assets
Amortisation of intangible assets arising on business combinations
Amortisation of internally generated and acquired computer software
Promotion and marketing costs
Editorial and production costs
Distribution and transportation costs
Royalties and similar charges
Depreciation of property, plant and equipment and investment property
Impairment of property, plant and equipment and investment property
Note
21, 22
22
22
23, 24
23, 24
Rental of property
Other property costs
Rental of plant and equipment
Foreign exchange translation differences
Other expenses
Operating profit
5 Auditor’s remuneration
Year ended
30 September
2016
Total and
continuing
operations
£m
Year ended
30 September
2015
Total
£m
Year ended
30 September
2015
Discontinued
operations
(Note 19)
£m
Year ended
30 September
2015
Continuing
operations
£m
1,917.3
1,845.4
2.7
1,842.7
(0.9)
(317.2)
(318.1)
(682.0)
(53.6)
(42.3)
(27.6)
(59.2)
(117.3)
(40.4)
(79.5)
(36.2)
(0.2)
(23.2)
(36.6)
(28.4)
2.7
(249.0)
126.4
9.2
(311.6)
(302.4)
(641.1)
(18.5)
(39.2)
(23.2)
(60.6)
(114.2)
(43.1)
(77.1)
(33.0)
(1.6)
(21.8)
(34.9)
(26.2)
(0.7)
(199.9)
207.9
–
–
–
(0.6)
–
–
–
(0.5)
–
–
–
–
–
–
–
–
–
(0.5)
1.1
9.2
(311.6)
(302.4)
(640.5)
(18.5)
(39.2)
(23.2)
(60.1)
(114.2)
(43.1)
(77.1)
(33.0)
(1.6)
(21.8)
(34.9)
(26.2)
(0.7)
(199.4)
206.8
Fees payable to the Company’s Auditor for the audit of the Company’s annual accounts
Fees payable to the Company’s Auditor and its associates for the audit of the Company’s subsidiaries
pursuant to legislation
Audit services provided to all Group companies
Audit-related assurance services
Services relating to tax compliance
Services relating to tax advisory
Services relating to corporate finance transactions
Other non-audit services
Total remuneration
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
0.2
2.5
2.7
0.3
0.1
0.1
0.1
0.2
0.8
3.5
0.3
1.9
2.2
0.4
–
0.2
0.1
0.2
0.9
3.1
118
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
6 Employees
The average monthly number of persons employed by the Group including Directors is analysed as follows:
RMS
dmg information
dmg events
Euromoney
dmg media
DMGT Board and head office
Total staff costs comprised:
Wages and salaries
Share-based payments
Social security costs
Pension costs
7 Share of results of joint ventures and associates
Share of adjusted operating profits from operations of joint ventures
Share of adjusted operating profits from operations of associates
Share of profits before exceptional operating costs, amortisation, impairment of goodwill,
interest and tax
Share of exceptional operating costs of associates
Share of amortisation of intangibles arising on business combinations of joint ventures
Share of amortisation of intangibles arising on business combinations of associates
Share of associates’ interest payable
Share of joint ventures’ tax
Share of associates’ tax
Impairment of carrying value of joint ventures
Impairment of carrying value of associates
Share of results of joint ventures and associates
Share of results from operations of joint ventures
Share of results from operations of associates
Impairment of carrying value of joint ventures
Impairment of carrying value of associates
Share of results of joint ventures and associates
Year ended
30 September
2016
Number
Year ended
30 September
2015
Number
1,106
3,591
342
2,262
2,734
73
1,104
3,427
396
2,322
2,836
77
10,108
10,162
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
604.6
16.6
59.5
15.3
696.0
559.4
16.8
56.7
18.3
651.2
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
0.5
22.4
22.9
(3.5)
–
(9.2)
(3.2)
(0.3)
(2.2)
(0.1)
(1.4)
3.0
0.2
4.3
(0.1)
(1.4)
3.0
0.3
32.2
32.5
(4.2)
(0.1)
(8.4)
(2.3)
(0.3)
(4.2)
(1.7)
–
11.3
(0.1)
13.1
(1.7)
–
11.3
Note
43
36
Note
(i)
11, 13
11, 13
13, 25, (ii)
13, 25, (iii)
13, 25, (ii)
13, 25, (iii)
(i) Share of adjusted operating profits from associates includes £21.4 million (2015 £14.0 million) from the Group’s interest in Zoopla
Plc and £nil (2015 £16.8 million) from the Group’s interest in Local World in the dmg media segment.
(ii) Represents a write-down in the carrying value of Mail Today Newspapers Pte Ltd in the dmg media segment. In the prior year
this represented a write-down in the carrying value of Artirix Ltd in the dmg media segment.
(iii) Represents a write-down in the carrying value of Spaceway Storage Services UK Ltd in the dmg media segment.
119
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
8 Other gains and losses
Profit on disposal of available-for-sale investments
Impairment of available-for-sale assets
Profit on disposal of property, plant and equipment
Profit on disposal of businesses
Recycled cumulative translation differences
Gain on change in control
Profit on disposal of joint ventures and associates
Note
13, (i)
13, 26
13
13, 18, (ii)
13, 18, 40, 41, (ii)
13, (iii)
13, (iv)
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
–
–
0.5
73.5
0.6
13.5
49.8
137.9
45.2
(1.0)
3.1
6.5
2.1
19.8
6.7
82.4
There is a tax charge of £3.5 million in relation to these other gains and losses (2015 £nil).
(i)
In the prior year this principally relates to a £45.5 million profit on disposal of Capital DATA Ltd within the Euromoney segment.
(ii) Principally relates to a £60.5 million profit on disposal of Wowcher Ltd in the dmg media segment, £5.3 million profit on sale of
Gulf Publishing and £1.7 million profit on sale of The Petroleum Economist both in the Euromoney segment. In the prior year this
principally relates to a £7.6 million profit on disposal of Lewtan in the dmg information segment, together with a £2.5 million
profit on disposal of various newsletter publications and website services titles within the Euromoney segment, inclusive of
recycled cumulative translation differences.
(iii) During the current period, the Group increased its interests in Dailymail.com Australia Pty Ltd in the dmg media segment and
Instant Services AG, The Petrochemical Standard Inc. and Ochresoft Technologies Ltd, in the dmg information segment and
obtained control. In the prior year the Group increased its interests in Petrotranz Inc, Commodity Vectors Ltd and TreppPort
LLC within the dmg information segment and obtained control. In accordance with IFRS 3, Business Combinations, the
difference between the fair value of these investments and their carrying value at the date control passed to the Group
is treated as a gain during the relevant period.
(iv) Principally relates to the disposal of the Group’s 38.7% equity stake in Local World Holdings Ltd, held by the dmg media
segment. In the prior year this principally relates to a £2.9 million profit on disposal of Capital NET Ltd within the Euromoney
segment, £2.2 million profit on disposal of 1.38% of the Group’s holding in Zoopla Plc in the dmg media segment and
£1.4 million profit on disposal of Cougar Software Pty Ltd in the dmg information segment.
9 Investment revenue
Dividend income – Press Association
Interest receivable from short-term deposits
Interest receivable on loan notes
Note
(i)
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
–
0.7
1.8
2.5
3.1
0.9
–
4.0
(i) Distributions in the prior year followed the Press Association’s disposal of its investment in MeteoGroup.
120
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 10 Net finance costs
Interest, arrangement and commitment fees payable on bonds, bank loans and loan notes
Premium on bond redemption
Loss on derivatives, or portions thereof, not designated for hedge accounting
Finance charge on defined benefit pension schemes
Change in fair value of derivative hedge of bond
Change in fair value of hedged portion of bond
Finance charge on discounting of contingent consideration payable
Fair value movement of undesignated financial instruments
Fair value movement of contingent consideration receivable
Fair value movement of contingent consideration payable
Finance costs
Finance income on discounting of contingent consideration receivable
Fair value movement of contingent consideration payable
Change in present value of acquisition put options
Finance income
Net finance costs
Note
13, (i)
13, 36
16
16
37, (ii)
13
13
13
(ii)
13, 37, (ii)
13, 35
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
(38.0)
–
(1.5)
(4.6)
2.3
(2.3)
(0.1)
(5.4)
–
–
(35.9)
(39.9)
(2.4)
(6.8)
2.1
(2.1)
(0.6)
(4.9)
(1.9)
(0.4)
(49.6)
(92.8)
–
12.3
14.4
26.7
0.2
–
4.2
4.4
(22.9)
(88.4)
(i)
In the prior year the Company announced its invitation to holders of its outstanding £165.0 million 2021 bonds and its
outstanding £349.7 million 2018 bonds to tender their bonds for purchase by the Company for cash. On 30 September 2014
the Company announced the results and cash price payable of validly tendered 2018 and 2021 bonds. The total cash price
payable by the Company amounted to £193.1 million, including a premium of £39.9 million, which was paid on 1 October 2014.
(ii) The fair value movement of contingent consideration arises from the requirement of IFRS 3, Business Combinations, to measure
such consideration at fair value with changes in fair value taken to the Income Statement.
The finance income/charge on the discounting of contingent consideration arises from the unwinding of the discount following
the requirement under IFRS 3, Business Combinations, to record contingent consideration at fair value using a discounted cash
flow approach.
11 Tax
The charge on the profit for the period consists of:
UK tax
Corporation tax at 20% (2015 20.5%)
Adjustments in respect of prior years
Overseas tax
Corporation tax
Adjustments in respect of prior years
Total current tax
Deferred tax
Origination and reversals of temporary differences
Adjustments in respect of prior years
Total deferred tax
Total tax charge
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
(0.6)
(1.9)
(2.5)
(33.0)
0.8
(32.2)
(34.7)
(12.0)
14.0
2.0
(32.7)
(4.6)
(1.1)
(5.7)
(25.1)
3.3
(21.8)
(27.5)
5.9
0.8
6.7
(20.8)
38
A deferred tax credit of £6.4 million (2015 £2.1 million charge) relating to the actuarial movement on defined benefit pension
schemes and a deferred tax credit of £1.4 million (2015 £0.6 million) relating to derivative financial instruments were recognised
directly in the Consolidated Statement of Comprehensive Income. A deferred tax credit of £1.4 million (2015 £1.4 million) and a
current tax credit of £5.4 million (2015 £nil) was recognised directly in equity (Notes 40 and 41).
121
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
11 Tax continued
Legislation was passed in November 2015 to reduce the UK corporation tax rate from 20.0% to 19.0% from 1 April 2017. A further 2.0%
reduction was enacted in September 2016. As a result of this change, UK deferred tax balances have been remeasured at 17.0%
as this is the tax rate that will apply on reversal unless the timing difference is expected to reverse before April 2020, in which case
the appropriate tax rate has been used.
The tax charge for the year is lower than the standard rate of corporation tax in the UK of 20.0% (2015 20.5%) representing the
weighted average annual corporate tax rate for the full financial year. The differences are explained below:
Profit on ordinary activities before tax – continuing operations
Profit before tax – discontinued operations
Total profit before tax
Tax on profit on ordinary activities at the standard rate
Effect of:
Amortisation and impairment of goodwill and intangible assets
Other expenses not deductible for tax purposes
Additional items deductible for tax purposes
Derecognition of previously recognised deferred tax assets
Effect of overseas tax rates
Effect of associates tax
Unrecognised tax losses utilised
Write off/disposal of subsidiaries
Effect of change in tax rate
Adjustment in respect of prior years
Other
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
246.9
–
246.9
(49.4)
(7.9)
(0.1)
17.0
(30.2)
(0.9)
0.9
0.1
25.5
(2.4)
12.9
1.8
216.1
50.0
266.1
(54.6)
(1.0)
(0.9)
15.3
(4.4)
(6.4)
2.9
4.3
20.9
(0.2)
3.0
0.3
Total tax charge on the profit for the year
13
(32.7)
(20.8)
The net prior year credit of £12.9 million (2015 £3.0 million) arose largely from a reassessment of the level of tax provisions required
and a reassessment of temporary differences.
Additional items deductible for tax purposes of £17.0 million primarily relate to financing arrangements that result in asymmetrical
tax treatments in the territories involved. These are expected to recur in the short term.
Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and non-recurring items
(adjusted tax charge) amounted to a charge of £37.4 million (2015 £41.4 million) and the resulting rate is 14.4% (2015 14.8%).
The differences between the tax charge and the adjusted tax charge are shown in the reconciliation below:
Total tax charge on the profit for the year
Share of tax in joint ventures and associates
Deferred tax on intangible assets
Reassessment of temporary differences
Tax on other adjusting items
Adjusted tax charge on the profit for the year
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
(32.7)
(2.5)
(12.0)
24.0
(14.2)
(37.4)
(20.8)
(4.5)
(8.4)
4.4
(12.1)
(41.4)
Note
7
13
In calculating the adjusted tax rate, the group excludes the potential future impact of the deferred tax effects of intangible assets
(other than internally generated and acquired computer software), as the Group prefers to give users of its accounts a view of the
tax charge based on the current status of such items. Deferred tax would only ever crystallise on a sale of the relevant businesses,
which is not anticipated at the current time, and such a sale, being an exceptional item, would result in an exceptional tax impact.
Reassessment of temporary differences includes a net charge of £31.4 million (2015 £4.4 million) relating to the derecognition of
deferred interest and overseas tax losses and a credit of £9.7 million (2015 £nil) relating to the reassessment of other temporary
differences which are treated as exceptional due to their distortive impact on the Group’s adjusted tax charge.
122
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 12 Dividends paid
Amounts recognisable as distributions to equity holders in the year
Ordinary Shares – final dividend for the year ended 30 September 2015
A Ordinary Non-Voting Shares – final dividend for the year ended 30 September 2015
Ordinary Shares – final dividend for the year ended 30 September 2014
A Ordinary Non-Voting Shares – final dividend for the year ended 30 September 2014
Ordinary Shares – interim dividend for the year ended 30 September 2016
A Ordinary Non-Voting Shares – interim dividend for the year ended 30 September 2016
Ordinary Shares – interim dividend for the year ended 30 September 2015
A Ordinary Non-Voting Shares – interim dividend for the year ended 30 September 2015
Year ended
30 September
2016
Pence per
share
Year ended
30 September
2016
£m
Year ended
30 September
2015
Pence per
share
Year ended
30 September
2015
£m
14.9
14.9
–
–
6.7
6.7
–
–
3.0
49.7
–
–
52.7
1.3
22.4
–
–
23.7
76.4
–
–
14.2
14.2
–
–
6.5
6.5
–
–
2.8
48.9
51.7
–
–
1.3
22.0
23.3
75.0
The Board has declared a final dividend of 15.3 pence per Ordinary/A Ordinary Non-Voting Share (2015 14.9 pence) which will
absorb an estimated £55.4 million (2015 £52.9 million) of shareholders’ equity for which no liability has been recognised in these
financial statements. It will be paid on 10 February 2017 to shareholders on the register at the close of business on 9 December 2016.
13 Adjusted profit
Profit before tax – continuing operations
Profit before tax – discontinued operations
Adjust for:
Amortisation of intangible assets in Group profit from operations, including joint ventures and
associates, arising on business combinations
Impairment of goodwill and intangible assets arising on business combinations
Exceptional operating costs, impairment of internally generated and acquired computer
software, property, plant and equipment and investment property
Share of exceptional operating costs of joint ventures and associates
Impairment of carrying value of joint ventures and associates
Other gains and losses:
Profit on disposal of available-for-sale investments
Impairment of available-for-sale assets
Profit on disposal of property, plant and equipment
Profit on disposal of businesses, joint ventures, associates, change of control and recycled
cumulative translation differences
Investment revenue:
Dividend income – Press Association
Finance costs:
Premium on bond redemption
Finance charge on defined benefit pension schemes
Fair value movements
Tax:
Share of tax in joint ventures and associates
Adjusted profit before tax and non-controlling interests
Total tax charge on the profit for the year
Adjust for:
Share of tax in joint ventures and associates
Deferred tax on intangible assets
Reassessment of temporary differences
Tax on other adjusting items
Non-controlling interests
Adjusted profit after taxation and non-controlling interests
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
246.9
–
51.5
53.6
54.7
3.5
1.5
–
–
(0.5)
216.1
1.1
47.7
18.5
22.5
4.2
1.7
(45.2)
1.0
(3.1)
(137.4)
(35.1)
–
(3.1)
–
4.6
(21.3)
2.5
259.6
(32.7)
(2.5)
(12.0)
24.0
(14.2)
(24.4)
197.8
39.9
6.8
3.0
4.5
280.5
(20.8)
(4.5)
(8.4)
4.4
(12.1)
(23.6)
215.5
Note
3
19
3, 7
3
3
7
7
8
8
8
8
9
10
10
10, (i)
7, 11
11
7
11
11
(ii)
(i) Fair value movements include movements on undesignated financial instruments, contingent consideration payable and
receivable and change in value of acquisition put options.
(ii) The adjusted non-controlling interests’ share of profits for the year of £24.4 million (2015 £23.6 million) is stated after eliminating
a charge of £14.4 million (2015 credit £5.1 million), being the non-controlling interests’ share of adjusting items.
123
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 14 Earnings per share
Basic earnings per share of 57.8 pence (2015 60.1 pence) and diluted earnings per share of 56.4 pence (2015 59.0 pence) are
calculated in accordance with IAS 33, Earnings per share, on Group profit for the financial year of £204.2 million (2015 £166.6 million)
as adjusted for the effect of dilutive Ordinary Shares of £0.9 million (2015 £0.3 million), earnings from discontinued operations
of £nil (2015 £50.0 million) and on the weighted average number of Ordinary Shares in issue during the year, as set out below.
As in previous years, adjusted earnings per share have also been disclosed since the Directors consider that this alternative
measure gives a more comparable indication of the Group’s underlying trading performance. Adjusted earnings per share of
56.0 pence (2015 59.7 pence) are calculated on profit for continuing and discontinued operations before exceptional operating
costs, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, other
gains and losses and exceptional financing costs after taxation and non-controlling interests associated with those profits, of
£197.8 million (2015 £215.5 million), as set out in Note 13 above, and on the basic weighted average number of Ordinary Shares
in issue during the year.
Basic and diluted earnings per share
Earnings from continuing operations
Effect of dilutive Ordinary Shares
Earnings from discontinued operations
Adjusted earnings from continuing and discontinued operations
Effect of dilutive Ordinary Shares
Earnings per share from continuing operations
Effect of dilutive Ordinary Shares
Earnings per share from discontinued operations
Earnings per share from continuing and discontinued operations
Adjusted earnings per share from continuing and discontinued operations
Effect of dilutive Ordinary Shares
Adjusted earnings per share from continuing and discontinued operations
Year ended
30 September
2016
Diluted
earnings
£m
Year ended
30 September
2015
Diluted
earnings
£m
Year ended
30 September
2016
Basic
earnings
£m
Year ended
30 September
2015
Basic
earnings
£m
204.2
(0.9)
–
203.3
197.8
(0.9)
196.9
166.6
(0.3)
50.0
216.3
215.5
(0.3)
215.2
204.2
–
–
204.2
197.8
–
197.8
166.6
–
50.0
216.6
215.5
–
215.5
Year ended
30 September
2016
Diluted
pence
per share
Year ended
30 September
2015
Diluted
pence
per share
Year ended
30 September
2016
Basic
pence
per share
Year ended
30 September
2015
Basic
pence
per share
56.6
(0.2)
–
56.4
54.9
(0.2)
54.7
45.5
(0.1)
13.6
59.0
58.8
(0.1)
58.7
57.8
–
–
57.8
56.0
–
56.0
46.2
–
13.9
60.1
59.7
–
59.7
The weighted average number of Ordinary Shares in issue during the year for the purpose of these calculations is as follows:
Number of Ordinary Shares in issue
Own shares held
Basic earnings per share denominator
Effect of dilutive share options
Dilutive earnings per share denominator
Year ended
30 September
2016
Number
m
Year ended
30 September
2015
Number
m
362.4
(9.0)
353.4
7.2
360.6
372.4
(11.6)
360.8
5.7
366.5
124
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
277.0
36.2
27.6
22.9
–
363.7
16.0
0.4
(0.9)
(22.9)
(54.5)
4.2
(11.2)
2.6
(2.4)
(34.0)
261.0
287.0
33.0
23.2
32.5
1.1
376.8
17.3
1.6
(1.3)
(32.5)
(20.9)
(8.1)
(19.7)
18.8
(2.6)
(48.1)
281.3
At
30 September
2016
£m
25.7
(8.2)
17.5
(2.4)
(0.4)
(425.3)
(267.7)
(0.7)
(679.0)
(16.8)
17.1
(678.7)
15 EBITDA and cash generated by operations
Continuing operations
Adjusted operating profit
Non-exceptional depreciation charge
Amortisation of internally generated and acquired computer software
Operating profits from joint ventures and associates
Discontinued operations
Adjusted operating profit
EBITDA
Adjustments for:
Share-based payments
Loss on disposal of property, plant and equipment
Pension charge less than cash contributions
Share of profits from joint ventures and associates
Exceptional operating costs
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase in trade and other payables
Decrease in provisions
Additional payments into pension schemes
Cash generated by operations
16 Analysis of net debt
Note
3
3, 19
3, 22
7
3
7
3
At
30 September
2015
£m
32.2
(0.7)
Note
30
30, 34
Cash flow
£m
(11.3)
(7.0)
31.5
(18.3)
34
34
34
34
34
(ii)
29
(2.5)
(0.2)
(420.2)
(306.7)
(0.2)
(698.3)
(3.2)
–
(701.5)
0.5
0.1
–
60.6
0.1
43.0
26.1
14.1
83.2
Fair value
hedging
adjustments
(Note 10)
£m
On acquisition
of subsidiaries
(Note 17)
£m
Foreign
exchange
movements
£m
–
–
–
–
–
(2.3)
–
–
(2.3)
2.3
–
–
–
–
–
–
(0.2)
–
–
–
(0.2)
–
–
(0.2)
4.8
(0.5)
4.3
(0.4)
–
–
(21.6)
(0.1)
(17.8)
(42.0)
–
(59.8)
Other non-cash
movements (i)
£m
–
–
–
–
(0.1)
(2.8)
–
(0.5)
(3.4)
–
3.0
(0.4)
Cash and cash equivalents
Bank overdrafts
Net cash and cash
equivalents
Debt due within one year
Loan notes
Finance lease obligations
Debt due after one year
Bonds
Bank loans
Finance lease obligations
Net debt before effect
of derivatives
Effect of derivatives on debt
Collateral deposits
Net debt
The net cash outflow of £18.3 million (2015 £3.3 million) includes a cash outflow of £26.1 million (2015 £20.0 million) in respect
of operating exceptional items.
(i) Other non-cash movements comprise the unwinding of bond issue discount amounting to £2.5 million (2015 £2.2 million),
amortisation of bond issue costs of £0.3 million (2015 £0.3 million), accrued collateral payments of £3.0 million (2015 £nil)
together with the inception of new finance leases of £0.6 million (2015 £nil).
(ii) The effect of derivatives on debt is the net currency gain or loss on derivatives entered into with the intention of economically
converting the currency borrowings into an alternative currency.
125
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 17 Summary of the effects of acquisitions
On 1 October 2015, the dmg information segment acquired the entire share capital of Estate Technical Solutions Ltd (ETSOS)
for total consideration of £12.9 million. ETSOS is a UK-based property search company, primarily delivering residential and
commercial property information to legal professionals.
ETSOS contributed £11.6 million to the Group’s revenue, £0.7 million to the Group’s operating profit and £0.5 million to the Group’s
profit after tax for the period between the date of acquisition and 30 September 2016.
On 23 December 2015, the dmg information segment acquired assets from Par Framework Inc (PAR) for total consideration of
£4.7 million. PAR is a is a provider of analytics-as-a-service to improve higher education student retention and graduation rates.
PAR contributed £0.8 million to the Group’s revenue, a loss of £0.6 million to the Group’s operating profit and a loss of £0.6 million
to the Group’s profit after tax for the period between the date of acquisition and 30 September 2016.
If the acquisition had been completed on the first day of the financial period, PAR would have contributed £1.1 million to the
Group’s revenue, a loss of £0.6 million to the Group’s operating profit and a loss of £0.6 million to the Group’s adjusted profit
after tax.
On 29 February 2016, the dmg events segment acquired the entire share capital of Exhibition Management Services Pty Ltd (EMS)
for total consideration of £2.5 million. EMS operates a number of annual and biennial shows including SAITEX, a generalist trade
show and Africa Big 7, a food and food services show, both of which are run annually in Johannesburg.
EMS contributed £2.2 million to the Group’s revenue, £0.6 million to the Group’s operating profit and £0.4 million to the Group’s
profit after tax for the period between the date of acquisition and 30 September 2016.
If the acquisition had been completed on the first day of the financial period, EMS would have contributed £2.2 million to the
Group’s revenue, a profit of £0.4 million to the Group’s operating profit and a profit of £0.3 million to the Group’s adjusted profit
after tax.
On 1 April 2016, the dmg information segment acquired a controlling interest in Instant Services AG (ISAG) a provider of property
inspection services.
ISAG contributed £6.8 million to the Group’s revenue (including £5.0 million to Group companies), £1.0 million to the
Group’s operating profit and £0.7 million to the Group’s profit after tax for the period between the date of acquisition and
30 September 2016.
If the acquisition had been completed on the first day of the financial period, ISAG would have contributed £14.0 million
to the Group’s revenue, £1.9 million to the Group’s operating profit and £1.6 million to the Group’s adjusted profit after tax.
On 14 June 2016, the dmg information segment acquired the entire share capital of GP Energy Management, LLC (GP) for
consideration of £5.6 million. GP is a multifaceted energy services company which provides energy management solutions
including demand forecasts, customisable reporting and analytics.
GP contributed £0.7 million to the Group’s revenue, a loss of £0.1 million to the Group’s operating profit and a loss of £0.1 million
to the Group’s profit after tax for the period between the date of acquisition and 30 September 2016.
If the acquisition had been completed on the first day of the financial period, GP would have contributed £2.7 million to the
Group’s revenue, a loss of £0.2 million to the Group’s operating profit and a loss of £0.1 million to the Group’s adjusted profit
after tax.
On 2 September 2016, the Euromoney segment acquired the entire share capital of FastMarkets (FM) for total consideration
of £13.8 million. FM is a leading provider of real-time metals market information.
FM contributed £0.4 million to the Group’s revenue, £24,000 to the Group’s operating profit and £19,000 to the Group’s profit
after tax for the period between the date of acquisition and 30 September 2016.
If the acquisition had been completed on the first day of the financial period, FM would have contributed £4.5 million to
the Group’s revenue, £0.1 million to the Group’s operating profit and £0.1 million to the Group’s adjusted profit after tax.
126
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Provisional fair value of net assets acquired with all acquisitions:
Goodwill
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Finance lease obligations
Corporation tax
Provisions
Deferred tax
Net assets acquired
Non-controlling interest share of net
assets acquired
Group share of net assets acquired
Cost of acquisitions:
Cash paid in current year
Fair value of investment in associate
on acquisition of control
Fair value of investment in joint
venture on acquisition of control
Contingent consideration
Working capital adjustment
Total consideration at fair value
Note
21, (i)
22
23
(ii)
16
37
38
41, (iii)
Note
(iv)
(v)
37, (vi)
ETSOS
£m
7.0
6.3
–
–
1.3
0.9
(1.1)
–
(0.1)
–
(1.4)
12.9
–
12.9
£m
12.8
–
–
0.1
–
12.9
PAR
£m
1.9
3.8
–
–
0.2
–
(1.2)
–
–
–
–
4.7
–
4.7
£m
2.8
–
–
1.9
–
4.7
EMS
£m
1.6
1.2
–
0.1
0.3
1.5
(1.9)
–
–
–
(0.3)
2.5
–
2.5
£m
2.2
–
–
0.3
–
2.5
ISAG
£m
16.1
9.9
–
–
1.5
3.0
(1.5)
–
–
–
(3.0)
26.0
(7.1)
18.9
£m
–
–
18.9
–
–
18.9
GP
£m
1.0
4.2
–
–
0.4
0.1
(0.1)
–
–
–
–
5.6
–
5.6
£m
3.3
–
–
2.3
–
5.6
FM
£m
7.2
10.1
–
–
0.8
0.7
(3.3)
–
–
–
(1.7)
13.8
–
13.8
£m
13.3
–
–
0.5
–
13.8
Other
£m
4.3
4.5
0.3
–
2.1
2.0
(10.8)
(0.2)
–
(0.1)
(0.4)
1.7
(0.5)
1.2
£m
3.0
1.5
–
0.2
(3.5)
1.2
Total
£m
39.1
40.0
0.3
0.1
6.6
8.2
(19.9)
(0.2)
(0.1)
(0.1)
(6.8)
67.2
(7.6)
59.6
Total
£m
37.4
1.5
18.9
5.3
(3.5)
59.6
(i)
The amount of goodwill which is deductible for the purposes of calculating the Group’s tax charge is £nil.
Goodwill arising on these 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.
(ii) The fair value of trade and other receivables includes trade receivables with a fair value of £4.9 million. The gross contractual
amount of trade receivables due is £4.9 million, of which £nil is expected to be uncollectable.
(iii) The non-controlling interest arising during the period relates to the acquisition of Instant Services AG and Ochresoft
Technologies Limited in the dmg information segment and World Bulk Wine Exhibition S.L. in the Euromoney segment.
The value of the non-controlling interest was measured using the share of net assets acquired method.
(iv) During the period the Group increased its interest in Ochresoft Technologies Limited and The Petrochemical Standard Inc
held by the dmg information segment and World Bulk Wine Exhibition S.L in the Euromoney segment, and obtained control.
(v) During the period the Group increased its interest in ISAG held by the dmg information segment and obtained control.
(vi) The contingent consideration recognised during the period is based on future business valuations and profit multiples and
has been estimated using available data forecasts. It is expected to fall due as follows: £1.2 million within one year; £0.8 million
between one and two years; and £3.3 million between two and five years.
The estimated range of undiscounted outcomes for contingent consideration relating to acquisitions in the year is £nil
to £21.9 million. Certain contingent consideration arrangements are not capped since they are based on future
business performance.
The contingent consideration has been discounted back to current values in accordance with IFRS 3, Business Combinations.
127
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
17 Summary of the effects of acquisitions continued
A summary of other notable acquisitions completed during the year is as follows:
Name of acquisition
Segment
% voting
rights
acquired
Date of
acquisition
The Petrochemical Standard Inc
dmg
information
100.0
October
2015
Ochresoft Technologies Ltd
dmg
information
30.0
April
2016
Codean Ltd
information Assets only
dmg
Weft Inc
dmg
information Assets only
World Bulk Wine Exhibition S.L.
Euromoney
100.0
May
2016
June
2016
June
2016
Business description
Global petrochemical
market price reporting
agency
Provider of workflow
software for solicitors
performing residential
property transactions
within England and Wales
and probate workflow
Provides a web-based,
interactive software and
data platform to structure
investments, and enables
investors to analyse and
track their portfolios
Tracks public, private and
proprietary data sets to
enable global supply
chain optimisation
for manufacturers,
freight forwarders and
shipping lines
Event for the
commercialisation
of bulk wine
Reinsurance Security
(Consultancy).Co.UK Ltd
Euromoney
100.0
August
2016
High-value counterparty
risk market insurance
Consideration
£m
Intangible
assets acquired
£m
Goodwill
arising
£m
0.2
–
–
0.7
1.9
1.0
0.7
0.7
–
0.6
0.3
0.3
0.9
1.7
0.7
0.8
0.4
1.3
All of the companies acquired during the period contributed £28.1 million to the Group’s revenue and a loss of £2.8 million
to the Group’s profit after tax for the period between the date of acquisition and 30 September 2016.
Acquisition-related costs, amounting to £1.0 million, are charged against profits for the period in the Consolidated
Income Statement.
If all acquisitions had been completed on the first day of the period, Group revenues for the period would have been £1,936.4 million
and Group profit attributable to equity holders of the parent would have been a profit of £204.6 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 period.
Purchase of additional shares in controlled entities
Cash consideration
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
0.2
0.2
During the year, the Group acquired additional shares in controlled entities amounting to £0.2 million (2015 £0.2 million). Under the
Group’s accounting policy for the acquisition of shares in controlled entities, no adjustment has been recorded to the fair value
of assets and liabilities already held on the Consolidated Statement of Financial Position. The difference between the cost of the
additional shares and the carrying value of the non-controlling interests’ share of net assets is adjusted in retained earnings.
The adjustment to retained earnings in the year was a charge of £nil (2015 £5.9 million).
128
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Reconciliation to purchase of subsidiaries as shown in the Consolidated Cash Flow Statement
Cash consideration
Cash paid to settle contingent consideration in respect of acquisitions
Cash and cash equivalents acquired with subsidiaries
Purchase of subsidiaries
Note
37
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
37.4
0.3
(8.2)
29.5
85.5
15.1
(5.6)
95.0
Cash paid to settle contingent consideration in respect of acquisitions includes £nil (2015 £11.6 million) within the Euromoney segment,
£0.3 million (2015 £3.3 million) within the dmg information segment and £nil (2015 £0.2 million) within the dmg events segment.
The businesses acquired during the year absorbed £5.5 million of the Group’s net operating cash flows, had £nil attributable
to investing activities and £nil attributable to financing activities.
18 Summary of the effects of disposals
On 26 November 2015 the dmg media segment disposed of 96.1% of the ordinary share capital of Wowcher Ltd (Wowcher),
to a newly formed company, Excalibur Bidco Ltd. The Group received cash consideration of £27.3 million, together with a 23.9%
shareholding in the new company and £20.5 million 10.0% loan notes in Excalibur Debtco Ltd.
On 19 April 2016, the Euromoney segment disposed of 100% of the ordinary share capital of Gulf Publishing Company Inc (Gulf)
and The Petroleum Economist (PE), part of the business publishing division, for total cash consideration £11.1 million.
The net (liabilities)/assets disposed were as follows:
Note
21
22
23
37
38
8
Goodwill
Intangible assets
Property, plant and equipment
Trade and other receivables
Trade and other payables
Provisions
Deferred tax
Net (liabilities)/assets disposed
Profit on sale of businesses including recycled
cumulative exchange differences
Satisfied by:
Cash received
Deferred consideration
Fair value of investment in joint venture
Fair value of investment in associate
Loan notes issued by associate
Directly attributable costs paid
Working capital adjustment
Recycled cumulative translation differences
40, 41
Wowcher
£m
–
1.0
0.6
7.1
(14.0)
(0.9)
0.4
(5.8)
60.5
54.7
27.3
–
–
0.1
20.5
–
6.8
–
54.7
Gulf
£m
5.0
–
–
1.0
(0.9)
–
–
5.1
5.3
10.4
9.8
0.3
–
–
–
(0.3)
–
0.6
10.4
PE
£m
0.2
–
–
0.3
(0.9)
–
–
(0.4)
1.7
1.3
1.3
0.1
–
–
–
(0.1)
–
–
1.3
Other
£m
–
0.2
–
1.1
(3.6)
–
–
(2.3)
6.6
4.3
1.5
–
2.8
–
–
–
–
–
4.3
Total
£m
5.2
1.2
0.6
9.5
(19.4)
(0.9)
0.4
(3.4)
74.1
70.7
39.9
0.4
2.8
0.1
20.5
(0.4)
6.8
0.6
70.7
During the period Wowcher generated £0.2 million of the Group’s net operating cash flows, paid £nil in respect of investing
activities and paid £nil in respect of financing activities.
During the period Gulf generated £0.3 million of the Group’s net operating cash flows, paid £nil in respect of investing activities
and paid £nil in respect of financing activities.
During the period PE absorbed £0.7 million of the Group’s net operating cash flows, paid £nil in respect of investing activities and
paid £nil in respect of financing activities.
In addition, the Group’s interest in Euromoney was diluted during the period by 0.03% (2015 0.05%). Under the Group’s accounting
policy for the disposal of shares in controlled entities, no adjustment has been recorded to the fair value of assets and liabilities
already held on the Condensed Consolidated Statement of Financial Position. The difference between the Group’s share of
net assets before and after this dilution is adjusted in retained earnings. The adjustment to retained earnings in the period was
a charge of £0.2 million (2015 £0.2 million).
129
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 18 Summary of the effects of disposals continued
Reconciliation to disposal of businesses as shown in the Consolidated Cash Flow Statement:
Cash consideration net of disposal costs
Cash and cash equivalents disposed with subsidiaries
Proceeds on disposal of businesses
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
39.5
–
39.5
117.8
(4.4)
113.4
The Group’s tax charge includes £2.9 million in relation to these disposals.
All of the businesses disposed of during the period absorbed £0.1 million (2015 generated £3.9 million) of the Group’s net operating
cash flows, had £nil attributable to investing activities and £nil attributable to financing activities.
Proceeds from redemption of preference share capital
During the period the Group received £14.4 million relating to preference share capital following the prior year sale of Capital
DATA Ltd in the Euromoney segment.
19 Discontinued operations
On 31 October 2014, Jobsite, the Group’s remaining digital recruitment asset, was sold for consideration of £92.1 million. The results
of Jobsite up to the point of disposal are included in discontinued operations for the prior period.
The Group’s Consolidated Income Statement includes the following results from these discontinued operations:
Revenue
Expenses
Total operating profit
Tax charge
Profit after tax attributable to discontinued operations
Profit on disposal of discontinued operations
Profit attributable to discontinued operations
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
–
–
–
–
–
–
–
2.7
(1.6)
1.1
–
1.1
48.9
50.0
Note
3
11
13, 18
In the prior period, cash flows associated with discontinued operations comprise operating cash flows of £2.2 million, investing
cash flows of £nil and financing cash flows of £nil.
20 Total assets and liabilities of businesses held-for-sale
At 30 September 2016, the assets and liabilities held-for-sale principally relate to Euromoney Indices, HedgeFund Intelligence and
the assets of II Searches, all within the Euromoney segment. The main classes of assets and liabilities comprising the operations
classified as held-for-sale are set out in the table below. These assets and liabilities are recorded at their fair value with all losses
taken to the Consolidated Income Statement.
In the prior year, the assets and liabilities held for sale represent the remaining Digital Marketing assets of the dmg events segment
and the Group’s associate investment in Local World Holdings Ltd in the dmg media segment.
Goodwill
Intangible assets
Property, plant and equipment
Interests in associates
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets associated with businesses held-for-sale
Trade and other payables
Provisions
Total liabilities associated with businesses held-for-sale
At
30 September
2016
£m
At
30 September
2015
£m
Note
21
22
23
25
27
28
30
31
37
4.0
0.3
–
–
–
0.7
–
5.0
(5.5)
–
(5.5)
0.3
–
0.1
24.6
0.6
2.5
0.6
28.7
(5.4)
(0.3)
(5.7)
Net (liabilities)/assets of the disposal group
(0.5)
23.0
130
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 21 Goodwill
Cost
At 30 September 2014
Additions
Adjustment to previous year estimate of contingent consideration
Disposals
Exchange adjustment
At 30 September 2015
Additions
Disposals
Classified as held-for-sale
Exchange adjustment
At 30 September 2016
Accumulated impairment losses
At 30 September 2014
Impairment
Disposals
Exchange adjustment
At 30 September 2015
Impairment
Disposals
Classified as held-for-sale
Exchange adjustment
At 30 September 2016
Net book value – 2014
Net book value – 2015
Net book value – 2016
Note
Goodwill
£m
817.3
140.1
(0.5)
(18.9)
28.3
966.3
39.1
(7.1)
(14.7)
90.3
1,073.9
17
18
20
Note
Goodwill
£m
3
3
18
20
52.7
18.5
(14.3)
0.7
57.6
46.8
(1.9)
(10.7)
0.5
92.3
764.6
908.7
981.6
Goodwill impairment losses recognised in the year amounted to £46.8 million (2015 £18.5 million).
The Group’s policy on impairment of goodwill is set out in Note 2.
Further disclosures, in accordance with paragraph 134 of IAS 36, Impairment of assets, are provided where the Group holds an
individual goodwill item relating to a cash-generating unit (CGU) that is significant. The Group considers this to be the case when
the goodwill carrying value of the individual CGU is 15.0% or more of the Group’s total carrying value of goodwill.
Using this criteria the only significant items of goodwill included in the net book value above relate to BCA Research Inc (BCA),
a business within Metal Bulletin plc in the Euromoney segment and Genscape Inc (Genscape) in the dmg information segment.
BCA goodwill has a carrying value of £177.7 million (2015 £153.0 million) together with intangible assets with a carrying value
of £51.8 million (2015 £50.8 million). The recoverable amount of BCA has been determined using a value in use calculation in
line with IAS 36. The methodology applied to the value in use calculations reflects past experience and external sources of
information including:
(i) cash flows for the business for the following year derived from budgets for 2017. The Directors believe these to be
reasonably achievable;
(ii) subsequent cash flows for three additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the four-year period extrapolated using a long-term nominal growth rate of 1.60%; and
(iv) a pre-tax discount rate of 13.7%.
The key underlying assumptions relevant in determining the cash flows for BCA include continued revenue growth from the
investment of new research and digital products.
Using the above methodology the recoverable amount exceeded the total carrying value by £175.8 million (2015 £150.3 million).
For this business the Directors performed a sensitivity analysis on the total carrying value of the CGU. For the recoverable amount
to be equal to the carrying value the discount rate would need to increase by 10.0% to 23.7% (2015 increase by 10.2% to 22.7%),
the long-term growth rate would need to decline by 16.0% from 1.6% to -14.4% (2015 decline by 29.1% from 2.0% to -27.1%) or the
CGU would need to miss budget by 43.4% (2015 44.5%).
131
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
21 Goodwill continued
Genscape goodwill has a carrying value of £196.3 million (2015 £170.0 million) together with intangible assets with a carrying value
of £97.3 million (2015 £73.3 million). The recoverable amount of Genscape has been determined using a value in use calculation
in line with IAS 36. The methodology applied to the value in use calculations reflects past experience and external sources of
information including:
(i) cash flows for the business for the following year derived from budgets for 2017. The Directors believe these to be
reasonably achievable;
(ii) subsequent cash flows for four additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the five-year period extrapolated using a long-term nominal growth rate of 3.0%; and
(iv) a pre-tax discount rate of 20.0%.
The key underlying assumptions relevant in determining the cash flows for Genscape include the acquisition of several
investment-stage businesses that are dilutive to near-term profits, and continued investment in both organic product
development and its sales teams to drive revenue growth.
Using the above methodology the recoverable amount exceeded the total carrying value by £10.3 million (2015 £34.9 million).
For this business the Directors performed a sensitivity analysis on the total carrying value of the CGU. For the recoverable amount
to be equal to the carrying value the discount rate would need to increase by 0.26% to 20.26% (2015 increase by 0.99% to 20.16%),
the long-term growth rate would need to decline by 0.35% from 3.0% to 2.65% (2015 decline by 1.38% from 3.0% to 1.62%) or the
CGU would need to miss budget by 3.2% (2015 44.8%).
For the other CGUs, IAS 36 provides that, if there is any reasonably possible change to a key assumption that would cause the
CGU’s carrying amount to exceed its recoverable amount, further disclosures are required.
The Group has therefore provided additional disclosures for its investments in Ned Davis Research Inc (NDR), a business within
the Euromoney segment and Xceligent Inc (Xceligent), a business within the dmg information segment.
NDR goodwill has a carrying value of £44.6 million (2015 £68.2 million) together with intangible assets with a carrying value of
£25.9 million (2015 £25.5 million). The recoverable amount of NDR has been determined using a value in use calculation in line
with IAS 36. The methodology applied to the value in use calculations reflects past experience and external sources of
information including:
(i) cash flows for the business for the following year derived from budgets for 2017. The Directors believe these to be
reasonably achievable;
(ii) subsequent cash flows for three additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the four-year period extrapolated using a long-term nominal growth rate of 1.60%; and
(iv) a pre-tax discount rate of 14.40%.
The key underlying assumptions relevant in determining the cash flows for NDR include investment plans for key growth initiatives
including a new product structure with unbundled pricing around data, application and other premium services, and the
expansion of international presence in Europe and Asia Pacific.
Using the above methodology the recoverable amount exceeded the total carrying value by £15.8 million (2015 £16.1 million).
For this business the Directors performed a sensitivity analysis on the total carrying value of the CGU. For the recoverable amount
to be equal to the carrying value the discount rate would need to increase by 3.0% to 17.4% (2015 increase by 3.2% to 16.2%),
the long-term growth rate would need to decline by 5.0% from 1.6% to -3.4% (2015 decline by 29.1% from 1.6% to -27.1%) or the CGU
would need to miss budget by 16.7% (2015 19.2%).
Xceligent goodwill has a carrying value of £12.0 million (2015 £9.4 million) together with intangible assets with a carrying value
of £17.4 million (2015 £9.5 million). The recoverable amount of Xceligent has been determined using a value in use calculation
in line with IAS 36. The methodology applied to the value in use calculations reflects past experience and external sources of
information including:
(i) cash flows for the business for the following year derived from budgets for 2017. The Directors believe these to be
reasonably achievable;
(ii) subsequent cash flows for eight additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the five-year period extrapolated using a long-term nominal growth rate of 3.0%; and
(iv) a pre-tax discount rate of 25.0%.
The key underlying assumptions relevant in determining the five year cash flows for Xceligent include the successful launch of the
new customer platform in 2017 and the timing and pricing of new markets along with achievement of existing market pricing.
Using the above methodology the recoverable amount exceeded the total carrying value by £36.3 million (2015 £5.4 million).
For this business the Directors performed a sensitivity analysis on the total carrying value of the CGU. For the recoverable amount
to be equal to the carrying value the discount rate would need to increase by 5.7% to 30.5% (2015 decline by 1.05% to 20.25%),
the long-term growth rate would need to decline by 9.21% from 3.0% to -6.21% (2015 decline by 1.86% from 3.0% to 1.14%) or the
CGU would need to beat budget by 52.7% (2015 7.3%).
132
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The impairment charge is analysed by major CGU as follows:
CGU
Segment
Goodwill
impairment
£m
Intangible asset
impairment
£m
Recoverable
amount
£m
2016 discount
rate
%
2015 discount
rate
% Reason for impairment charge
Elite Daily
dmg media
19.8
5.1
–
15.0%
12.9%
Indaba
Euromoney
12.9
Total Derivatives
Euromoney
8.2
HedgeFund Intelligence
Euromoney
5.9
–
–
–
17.9
15.4%
13.5%
0.6
12.0%
12.9%
4.0
12.0%
12.9%
Euromoney Indices
Euromoney
Total
–
46.8
1.7
6.8
0.3
22.8
12.0%
12.9%
Recoverable amounts have been determined using value in use calculations for all of the above CGUs.
22 Other intangible assets
Deterioration in trading
conditions
Challenging market
conditions and the
depreciation of the
South African rand
Deterioration in trading
conditions
Classified as held for sale.
Goodwill has been valued
at fair value less cost to sell.
Classified as held for sale.
Intangible assets have
been valued at fair value
less cost to sell.
Cost
At 30 September 2014
Analysis reclassifications
Additions from business combinations
Other additions
Internally generated
Disposals
Exchange adjustment
At 30 September 2015
Additions from business combinations
Other additions
Internally generated
Disposals
Classified as held-for-sale
Exchange adjustment
At 30 September 2016
Publishing rights,
mastheads
and titles
£m
Note
Brands
£m
Market- and
customer-
related
databases
and customer
relationships
£m
Computer
software (i)
£m
Other
£m
248.3
(0.2)
–
–
–
(1.3)
7.8
254.6
1.9
–
–
–
–
18.6
275.1
103.4
205.2
0.5
6.3
–
–
(30.0)
3.9
84.1
5.9
–
–
(0.1)
–
9.4
99.3
(1.8)
17.1
–
–
(8.1)
6.7
219.1
24.2
–
–
–
(3.4)
20.4
260.3
277.1
(1.4)
31.9
3.4
53.1
(2.1)
14.2
376.2
8.0
3.0
58.3
(5.0)
–
52.1
492.6
7.4
2.9
(0.1)
–
–
(0.4)
0.6
10.4
–
–
–
–
(1.2)
2.0
11.2
17
(i)
18
20
Total
£m
841.4
–
55.2
3.4
53.1
(41.9)
33.2
944.4
40.0
3.0
58.3
(5.1)
(4.6)
102.5
1,138.5
133
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 22 Other intangible assets continued
Accumulated amortisation
At 30 September 2014
Analysis reclassifications
Charge for the year
Disposals
Exchange adjustment
At 30 September 2015
Charge for the year
Impairment
Disposals
Classified as held-for-sale
Exchange adjustment
At 30 September 2016
Net book value – 2014
Net book value – 2015
Net book value – 2016
Publishing rights,
mastheads
and titles
£m
Note
3
3
18
20
163.8
5.8
7.7
(1.3)
3.5
179.5
8.3
–
–
–
9.6
197.4
84.5
75.1
77.7
Market- and
customer-
related
databases
and customer
relationships
£m
Computer
software (i)
£m
Other
£m
99.6
(0.2)
16.7
(7.9)
4.2
112.4
18.9
0.6
–
(3.1)
11.1
139.9
105.6
106.7
120.4
150.2
(0.5)
29.8
(1.0)
7.3
185.8
36.7
–
(3.9)
–
23.5
242.1
126.9
190.4
250.5
2.9
0.5
0.9
(0.3)
0.1
4.1
0.6
1.0
–
(1.2)
0.9
5.4
4.5
6.3
5.8
Brands
£m
64.2
(5.6)
7.3
(29.8)
2.6
38.7
5.4
5.2
–
–
5.2
54.5
39.2
45.4
44.8
(i) Computer software includes purchased and internally generated intangible assets, not forming part of a business
combination, as follows:
Cost
At 30 September 2014
Additions
Disposals
Exchange adjustment
At 30 September 2015
Additions
Disposals
Exchange adjustment
At 30 September 2016
Accumulated amortisation
At 30 September 2014
Charge for the year
Disposals
Exchange adjustment
At 30 September 2015
Charge for the year
Disposals
Exchange adjustment
At 30 September 2016
Net book value – 2014
Net book value – 2015
Net book value – 2016
134
Total
£m
480.7
–
62.4
(40.3)
17.7
520.5
69.9
6.8
(3.9)
(4.3)
50.3
639.3
360.7
423.9
499.2
£m
246.9
56.5
(0.3)
12.7
315.8
61.3
(5.0)
42.7
414.8
137.3
23.2
(0.5)
6.6
166.6
27.6
(3.9)
20.2
210.5
109.6
149.2
204.3
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The following table analyses intangible assets in the course of construction included in the internally generated intangibles
above, on which no amortisation has been charged in the year since they have not been brought into use.
Cost
At 30 September 2014
Additions
Projects completed
Exchange adjustment
At 30 September 2015
Additions
Projects completed
Exchange adjustment
At 30 September 2016
£m
53.9
36.8
(9.4)
5.4
86.7
29.1
(78.0)
2.6
40.4
The Group’s most significant individual internally developed intangible asset is RMS(one). The development of RMS(one) was
completed during the period and the asset was transferred out of the assets in the course of construction category and
amortisation commenced. The RMS(one) intangible asset has a carrying value of £89.1 million (2015 £67.5 million) which has been
assessed for recoverability using a value in use calculation in line with IAS 36, Impairment of assets. The methodology applied to
the value in use calculations reflects past experience and external sources of information including:
(i) budget and forecast data which the Directors believe to be reasonably achievable;
(ii) cash flows over six years post launch;
(iii) the rate at which core clients start to use the RMS(one) platform;
(iv) a pre-tax discount rate of 17.4%; and
(v) average annual growth rates of 9–13% in the core underlying business.
Using the above methodology the recoverable amount exceeded the carrying value and accordingly no impairment charge
was recorded in the year.
It is possible that outcomes within the next financial year could be different from the assumptions used above which may result
in a reduction in the carrying value of the asset.
The methodologies applied to the Group’s CGUs when testing for impairment and details of the above impairment charge
are set out in Note 2.
The carrying values of the Group’s larger intangible assets are further analysed as follows:
RMS(one)
BCA mastheads
DIIG customer relationships
Ned Davis Research Group customer relationships
Locus Energy proprietary technology platform
Indaba brand
Metal Bulletin mastheads
Genscape intellectual property
Associated Mediabase software
Instant Services customer relationships
At
30 September
2016
Carrying
value
£m
At
30 September
2015
Carrying
value
£m
At
30 September
2016
Remaining
amortisation
period
Years
At
30 September
2015
Remaining
amortisation
period
Years
89.1
46.0
26.5
18.7
13.6
12.9
12.1
11.3
10.7
9.6
67.5
43.5
30.2
18.4
13.0
13.6
13.4
10.7
13.9
n/a
5.8
19.8
8.0
6.8
9.0
18.0
19.8
9.5
0.7
9.5
n/a
20.8
9.0
7.8
10.0
19.0
20.8
10.5
1.7
n/a
Segment
RMS
Euromoney
dmg information
Euromoney
dmg information
Euromoney
Euromoney
dmg information
dmg media
dmg information
135
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 23 Property, plant and equipment
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
Note
Cost
At 30 September 2014
Owned by subsidiaries acquired
Additions
Disposals
Classified as held-for-sale
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2015
Owned by subsidiaries acquired
Additions
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2016
Accumulated depreciation and impairment
At 30 September 2014
Charge for the year
Impairment
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2015
Charge for the year
Impairment
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2016
Net book value – 2014
Net book value – 2015
Net book value – 2016
20
17
18
Note
3
3
3
18
65.3
–
–
(6.4)
–
–
–
–
58.9
–
–
–
–
(1.0)
–
57.9
5.7
–
0.1
(2.6)
–
–
(2.5)
0.1
0.8
–
0.7
–
–
–
0.2
1.7
40.7
–
3.5
(10.3)
–
–
2.5
1.5
37.9
–
1.3
–
–
–
3.5
42.7
286.6
0.3
25.1
(21.2)
(0.1)
(0.7)
–
6.1
296.1
0.3
25.2
(6.9)
(1.1)
1.0
21.0
335.6
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
Total
£m
398.3
0.3
28.7
(40.5)
(0.1)
(0.7)
–
7.7
393.7
0.3
27.2
(6.9)
(1.1)
–
24.7
437.9
Total
£m
12.8
1.8
–
(0.6)
–
–
–
14.0
1.8
–
–
–
(1.6)
–
14.2
52.5
44.9
43.7
1.2
0.1
–
(0.5)
–
(0.5)
0.1
0.4
0.1
–
–
–
–
0.2
0.7
4.5
0.4
1.0
22.5
2.8
–
(6.9)
–
0.5
0.8
19.7
3.2
–
–
–
–
2.3
25.2
18.2
18.2
17.5
164.1
200.6
28.2
1.6
(19.2)
(0.4)
–
4.2
178.5
31.1
0.2
(5.4)
(0.5)
1.6
16.2
221.7
122.5
117.6
113.9
32.9
1.6
(27.2)
(0.4)
–
5.1
212.6
36.2
0.2
(5.4)
(0.5)
–
18.7
261.8
197.7
181.1
176.1
136
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 24 Investment property
Cost
At 30 September 2014
Disposals
At 30 September 2015
Disposals
At 30 September 2016
Accumulated depreciation and impairment
At 30 September 2014
Disposals
Charge for the year
At 30 September 2015
Disposals
At 30 September 2016
Net book value – 2014
Net book value – 2015
Net book value – 2016
Freehold
properties
£m
25.6
(25.1)
0.5
(0.5)
–
Freehold
properties
£m
Note
3
21.3
(20.9)
0.1
0.5
(0.5)
–
4.3
–
–
The fair value of the Group’s investment properties in the prior year was £0.3 million. This was arrived at by reference to market
evidence for similar properties and was carried out by an officer of the Group’s property department. Property rental income
earned by the Group from its investment properties amounted to £nil (2015 £0.2 million). Direct operating expenses arising on
the investment properties in the year amounted to £nil (2015 £0.5 million).
25 Investments in joint ventures and associates
Joint ventures
At 30 September 2014
Reanalysis
Additions – cash
Impairment
Share of retained reserves
Dividends received
Reclassification from other debtors
Transfer to investment in subsidiaries
Exchange adjustment
At 30 September 2015
Additions – cash
Additions – non-cash
Disposals
Share of retained reserves
Impairment
Reclassification from other debtors
Transfer to investment in subsidiaries
Exchange adjustment
At 30 September 2016
Note
Cost of shares
£m
Share of
post-acquisition
retained
reserves
£m
7
(i)
(ii)
7
7
17 (iii)
11.2
1.8
2.1
(1.7)
–
–
1.0
(1.9)
0.1
12.6
0.3
2.8
–
–
(0.1)
2.4
–
1.7
19.7
(10.7)
(1.8)
–
–
(0.1)
(0.1)
–
1.5
(0.1)
(11.3)
–
–
2.1
0.2
–
(3.4)
(1.4)
(1.1)
(14.9)
Total
£m
0.5
–
2.1
(1.7)
(0.1)
(0.1)
1.0
(0.4)
–
1.3
0.3
2.8
2.1
0.2
(0.1)
(1.0)
(1.4)
0.6
4.8
(i)
The Group received dividends in the prior year from Point X Ltd in the dmg information segment.
(ii) During the year, the dmg information segment disposed of the assets of Enrolment Management Services in exchange
for a 50% interest in Knowlura, Inc.
(iii) During the year the Group increased its interest in Instant Services AG, held by the dmg information segment and
obtained control.
137
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
25 Investments in joint ventures and associates continued
Summary aggregated financial information for the Group’s joint ventures, extracted on a 100% basis from the joint ventures’ own
financial information is set out below:
Year ended 30 September 2016
dmg information
Euromoney
At 30 September 2016
dmg information
Euromoney
Year ended 30 September 2015
dmg information
dmg media
At 30 September 2015
dmg information
dmg media
Revenue
£m
19.7
0.1
19.8
Operating
profit/(loss)
£m
Total
expenses
£m
Profit/(loss)
for the year
£m
2.1
(0.1)
2.0
(18.3)
(0.2)
(18.5)
1.4
(0.1)
1.3
Other
comprehensive
income
£m
Total
comprehensive
income/
(expense)
£m
–
–
–
1.4
(0.1)
1.3
Non-current
assets
£m
Current assets
£m
Total assets
£m
Current and
total liabilities
£m
Net assets/
(liabilities)
£m
6.1
–
6.1
4.7
–
4.7
10.8
–
10.8
(2.7)
(0.1)
(2.8)
8.1
(0.1)
8.0
Revenue
£m
33.5
6.8
40.3
Operating
profit/(loss)
£m
Total
expenses
£m
Profit/(loss)
for the year
£m
Other
comprehensive
income
£m
Total
comprehensive
income
£m
4.1
(2.1)
2.0
(30.8)
(9.4)
(40.2)
2.7
(2.6)
0.1
–
–
–
2.7
(2.6)
0.1
Non-current
assets
£m
8.4
1.7
10.1
Current assets
£m
Total assets
£m
Current
liabilities
£m
Non-current
liabilities
£m
Total
liabilities
£m
Net assets/
(liabilities)
£m
18.1
3.0
21.1
26.5
4.7
31.2
(11.2)
(10.7)
(21.9)
(11.9)
(2.1)
(14.0)
(23.1)
(12.8)
(35.9)
3.4
(8.1)
(4.7)
At 30 September 2016 the Group’s joint ventures had capital commitments amounting to £nil (2015 £nil). There were no material
contingent assets (2015 none).
Information on principal joint ventures:
Unlisted
Segment
Principal activity
Year ended
Description
of holding
Group
interest %
Mail Today Newspapers Pte Ltd
(incorporated and operating in India)
dmg media
Publisher of classified
publications
30 September
2016
Ordinary
26.00
The Sanborn Map Company Inc
(incorporated and operating in the US)
dmg information
Knowlura Inc (incorporated and operating
in the US)
dmg information
Photogrammetric
mapping and GIS data
conversion
30 September
2016
Provider of online
educational services
30 September
2016
Preferred stock
49.00
Common
50.00
138
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Note
Cost of shares
£m
Share of
post-acquisition
retained
reserves
£m
Total
£m
138.6
12.8
32.0
13.1
(26.5)
(4.2)
3.2
(3.4)
(24.6)
0.9
141.9
–
4.4
0.1
4.3
(5.3)
(1.4)
(2.1)
3.4
Associates
At 30 September 2014
Additions – cash
Additions – non-cash
Share of retained reserves
Dividends received
Transfer to investment in subsidiaries
Transfer from available-for-sale investments
Disposals
Classified as held-for-sale
Exchange adjustment
At 30 September 2015
Reanalysis
Additions – cash
Additions – non-cash
Share of retained reserves
Dividends received
Impairment
Transfer to investment in subsidiaries
Exchange adjustment
At 30 September 2016
148.9
12.8
32.0
–
–
(4.2)
1.1
(4.1)
(25.0)
0.8
162.3
(3.6)
4.4
0.1
–
–
(1.4)
(3.8)
3.4
161.4
(i)
(iii)
20
7
(i)
7
17 (ii)
(10.3)
–
–
13.1
(26.5)
–
2.1
0.7
0.4
0.1
(20.4)
3.6
–
–
4.3
(5.3)
–
1.7
–
(16.1)
145.3
The cumulative unrecognised share of losses of the Group’s associates principally comprises £14.7 million (2015 £13.2 million)
in relation to the Group’s investment in Independent Television News Ltd.
Joint ventures and associates have been accounted for under the equity method using unaudited financial information
to 30 September 2016. Net assets amounting to £nil (2015 £24.6 million) within the dmg media segment are held-for-sale.
(i) Dividends received in the current and prior year principally relate to the Group’s investments in Zoopla (2016 £5.2million,
2015 £2.7 million) and Local World (2016 £nil, 2015 £23.2 million) in the dmg media segment.
(ii) During the year the Group increased its interest in Ochresoft Technologies Ltd, held by the dmg information segment,
and World Bulk Wine Exhibition S.L., held by the Euromoney segment, and obtained control.
(iii) During the prior year, the Group acquired an additional interest in WellAware Holdings Inc (WellAware), taking its overall
holding to 8.2%. By virtue of the Group’s board representation and shareholder rights the Group now has significant influence
over WellAware and has treated this investment as an associate.
139
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 25 Investments in joint ventures and associates continued
Summary aggregated financial information for the Group’s associates, extracted on a 100% basis from the associates’ own
financial information is set out below:
Year ended 30 September 2016
RMS
dmg information
dmg events
Euromoney
dmg media
At 30 September 2016
RMS
dmg information
dmg events
Euromoney
dmg media
Year ended 30 September 2015
RMS
dmg information
dmg events
Euromoney
dmg media
At 30 September 2015
RMS
dmg information
dmg events
Euromoney
dmg media
Revenue
£m
Operating profit/
(loss)
£m
Total
expenses
£m
Profit/(loss)
for the year
£m
Other
comprehensive
income
£m
Total
comprehensive
(expense)/
income
£m
3.6
35.8
0.9
105.9
300.3
446.5
(0.9)
(12.1)
–
0.7
50.2
37.9
(5.4)
(49.7)
(0.9)
(115.4)
(263.3)
(434.7)
(1.8)
(13.9)
–
(9.5)
37.0
11.8
–
–
–
–
–
–
(1.8)
(13.9)
–
(9.5)
37.0
11.8
Non-current
assets
£m
Current assets
£m
Total assets
£m
Current
liabilities
£m
Non-current
liabilities
£m
Total liabilities
£m
Net assets
£m
3.4
12.5
–
505.4
328.6
849.9
8.3
52.3
0.5
58.6
86.2
11.7
64.8
0.5
564.0
414.8
205.9
1,055.8
(1.1)
(24.4)
(0.2)
(280.1)
(106.9)
(412.7)
(3.1)
(6.7)
–
(5.3)
(238.8)
(253.9)
(4.2)
(31.1)
(0.2)
(285.4)
(345.7)
(666.6)
7.5
33.7
0.3
278.6
69.1
389.2
Revenue
£m
Operating profit/
(loss)
£m
Total
expenses
£m
Profit/(loss)
for the year
£m
Other
comprehensive
income
£m
Total
comprehensive
income/
(expense)
£m
3.5
28.5
1.3
75.4
345.6
454.3
(1.1)
(15.1)
0.1
4.4
69.9
58.2
(4.6)
(44.2)
(1.2)
(79.8)
(364.9)
(494.7)
(1.1)
(15.7)
0.1
(4.4)
(19.3)
(40.4)
–
–
–
–
(16.8)
(16.8)
(1.1)
(15.7)
0.1
(4.4)
(36.1)
(57.2)
Non-current
assets
£m
Current assets
£m
Total assets
£m
Current
liabilities
£m
Non-current
liabilities
£m
Total liabilities
£m
Net assets
£m
6.0
8.8
0.3
485.1
326.7
826.9
2.2
53.0
–
25.8
134.8
215.8
8.2
61.8
0.3
510.9
461.5
1,042.7
(0.8)
(21.7)
(0.1)
(259.0)
(93.5)
(375.1)
–
(25.5)
(0.2)
(7.5)
(203.0)
(236.2)
(0.8)
(47.2)
(0.3)
(266.5)
(296.5)
(611.3)
7.4
14.6
–
244.4
165.0
431.4
At 30 September 2016 the Group’s associates had capital commitments amounting to £nil (2015 £nil). There were no material
contingent liabilities (2015 none).
140
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Information on principal associates:
Unlisted
Zoopla Property Group Plc
(incorporated and operating in the UK)
Real Capital Analytics Inc
(incorporated and operating in the US)
Independent Television News Ltd
(incorporated and operating in the UK)
Praedicat Inc (incorporated and
operating in the US)
Segment
Note
Principal activity
Year ended
Description
of holding
Group
interest %
dmg media
(i) Online property portal
30 September
2016
dmg information
dmg media
RMS
Provider of real estate
information
30 September
2016
Independent TV news
provider
31 December
2015
Provision of catastrophe
risk analytics
30 September
2016
Ordinary
Preferred
stock
Ordinary
Preferred
stock
31.32
39.73
20.00
29.60
Diamond Topco Ltd (Dealogic)
(incorporated and operating in the UK)
Euromoney
Provision of data and
analytics, market
intelligence and capital
markets software
solutions to investment
banks
31 December
2015
Ordinary
15.50
(i)
The market value of the Group’s investment in Zoopla at 30 September 2016 was £426.0 million (2015 £273.6 million).
The Group does not have the power to control the majority of shareholder voting rights nor the board of directors. With an
effective interest of 31.32% the Group has treated this investment as an associated undertaking.
Summary financial information for Zoopla, extracted on a 100% basis from Zoopla’s own financial statements, for the year to
September 2016 is set out below:
£m
197.7
(11.2)
49.7
0.1
(3.6)
(9.5)
36.7
–
36.7
£m
333.0
3.4
36.6
373.0
(68.1)
(162.7)
(230.8)
142.2
44.5
41.8
86.3
Revenue
Depreciation and amortisation
Profit from continuing operations
Interest income
Interest expense
Tax charge
Post-tax profit from operations
Other comprehensive income
Total comprehensive income
Non-current assets
Cash and cash equivalents
Other current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Group interest (31.32%)
Goodwill and intangibles carrying value
Group carrying value
141
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 26 Available-for-sale investments
At 30 September 2014
Additions
Disposals
Transfer to investment in associates
Impairment charge
Exchange adjustment
At 30 September 2015
Additions
Disposals
Exchange adjustment
At 30 September 2016
Note
Unlisted
£m
8
6.8
11.3
(0.3)
(3.2)
(1.0)
0.2
13.8
1.6
(0.1)
0.5
15.8
The investments above represent unlisted securities, which are recorded as non-current assets unless they are expected to be sold
within one year, in which case they are recorded as current assets. Since there is no active market upon which they are traded,
unlisted securities are recorded at cost less provision for impairment, as their fair values cannot be reliably measured.
Available-for-sale investments are analysed as follows:
Unlisted
Zanbato Inc
Estimize Inc
Taboola.com Ltd
CompStak Inc
Propstack Services Private Ltd
Pascal Metrics Inc
Pharmacy 2U Ltd
Cue Ball Capital LLC
Yopa Property Ltd
Brit Media Inc
Other
Note
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
At
30 September
2016
£m
At
30 September
2015
£m
3.5
2.3
2.0
0.5
1.4
1.5
0.5
1.1
0.5
1.5
1.0
3.5
2.3
2.0
0.5
0.6
1.3
–
1.1
–
1.4
1.1
15.8
13.8
(i) Zanbato Inc offers a technology platform which connects institutional investors with alternative investment opportunities.
(ii) Estimize Inc is an open financial estimates platform which aggregates fundamental estimates from independent analysts,
private investors and students.
(iii) Taboola.com Ltd provides a content marketing platform that provides a web widget to content creators on their website
to show contents that include relevant links within the site and from other publishers.
(iv) CompStak Inc provides commercial real estate information to brokers, appraisers, researchers, landlords, lenders
and investors.
(v) Propstack Services Private Ltd provides commercial real estate information to its clients in India.
(vi) Pascal Metrics Inc is used by healthcare organisations, including hospitals, to improve patient safety and clinical reliability
by measuring and using workforce and clinical data.
(vii) Pharmacy 2U Ltd is the holding company for ChemistDirect, an online pharmacy-led health and beauty retailer.
(viii) Cue Ball Capital LLC is a venture capital and private equity firm specialising in seed/start-ups, early-stage, mid-venture,
growth equity scale-ups, and buyout investments.
(ix) Yopa Property Ltd provides an online estate agency service.
(x) Brit Media Inc owns and operates an online media and e-commerce platform that provides tools to teach, inspire
and enable creativity among women and girls.
142
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Information on principal available-for-sale investments, taken from the latest published accounts is as follows:
Evening Standard Ltd (incorporated and operating in the UK)
Press Association Ltd (incorporated and operating in the UK)
Nazca IT Solutions B.V. (incorporated and operating in the Netherlands)
Tigerbeat Media LLC (incorporated and operating in the US)
PropStack Services Ltd (incorporated and operating in India)
Estimize Inc (incorporated and operating in the US)
Financial Network Analytics Ltd (incorporated and operating in the UK)
Zanbato Inc (incorporated and operating in the US)
Pharmacy 2U Ltd (incorporated and operating in the UK)
Pascal Metrics Inc (incorporated and operating in the US)
Upstream Consulting (incorporated and operating in the US)
Cue Ball Capital LP (incorporated and operating in the US)
CompStak (incorporated and operating in the US)
Yopa Property Ltd (incorporated and operating in the UK)
Brit Media Inc (incorporated and operating in the US)
Taboola.com Ltd (incorporated and operating in the US)
Note
(i)
Class of holding Group interest %
Ordinary
Ordinary
Ordinary
B Preferred
Ordinary
Ordinary
Ordinary
Ordinary
A Preferred
Ordinary
Ordinary
Limited Partner
Ordinary
Ordinary
Ordinary
Ordinary
24.9
15.6
15.0
12.8
12.5
10.0
10.0
9.9
5.0
4.3
3.6
2.5
2.0
1.7
1.6
0.4
(i)
The Group has no board representation and no influence over the day-to-day management of the Evening Standard Ltd.
Accordingly the Group has treated this investment as an available-for-sale investment.
Currency analysis of available-for-sale investments:
Sterling
US dollar
Euro
Interest analysis of available-for-sale investments:
Non-interest bearing
27 Inventories
Raw materials and consumables
Work in progress
Finished goods
Classified as held-for-sale
At
30 September
2016
£m
At
30 September
2015
£m
10.9
4.7
0.2
15.8
10.0
3.5
0.3
13.8
At
30 September
2016
£m
At
30 September
2015
£m
15.8
13.8
At
30 September
2016
£m
At
30 September
2015
£m
Note
7.0
20.8
3.0
30.8
–
30.8
7.3
23.6
1.1
32.0
(0.6)
31.4
20
143
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 28 Trade and other receivables
Current assets
Trade receivables
Allowance for doubtful debts
Prepayments and accrued income
Other receivables
Classified as held-for-sale
Non-current assets
Trade receivables
Prepayments and accrued income
Other receivables
Movement in the allowance for doubtful debts:
At start of year
Impairment losses recognised
Amounts written off as uncollectable
Amounts recovered during the year
Owned by subsidiaries disposed
Exchange adjustment
At end of year
At
30 September
2016
£m
At
30 September
2015
£m
Note
20
245.9
(16.1)
229.8
90.8
26.3
346.9
(0.7)
346.2
8.0
8.0
3.4
7.3
18.7
364.9
209.2
(14.6)
194.6
85.7
44.4
324.7
(2.5)
322.2
2.5
2.5
4.5
4.6
11.6
333.8
At
30 September
2016
£m
At
30 September
2015
£m
(14.6)
(8.7)
5.1
3.7
0.1
(1.7)
(16.1)
(12.8)
(8.3)
3.1
3.6
0.2
(0.4)
(14.6)
In determining the allowance for doubtful debts the Group considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the period end date.
Ageing of impaired trade receivables:
0 – 30 days
31 – 60 days
61 – 90 days
91 – 120 days
121+ days
Total
At
30 September
2016
£m
At
30 September
2015
£m
1.8
0.6
1.3
0.8
11.6
16.1
1.7
0.6
2.3
2.6
7.4
14.6
Included in the Group’s trade receivables are debtors with a carrying value of £85.8 million (2015 £84.0 million) which are past due
at 30 September 2016 for which no allowance has been made. The Group is not aware of any deterioration in the credit quality of
these customers and considers that the amounts are still recoverable.
144
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Ageing of past due but not impaired receivables:
1 – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
91+ days overdue
Total
The carrying amount of trade and other receivables approximates to their fair value.
29 Other financial assets
Current assets
Collateral
Non-current assets
Loans to associates and joint ventures
At
30 September
2016
£m
At
30 September
2015
£m
35.6
18.0
12.0
20.2
85.8
36.5
18.2
6.3
23.0
84.0
Note
16, (i)
At
30 September
2016
£m
At
30 September
2015
£m
17.1
17.1
21.0
21.0
–
–
3.6
3.6
(i)
The Group deposits collateral with counterparties with whom it has entered into a credit support annex to the ISDA (International
Swaps and Derivatives Association) Master Agreement. This represents cash that cannot be readily used in operations.
30 Cash and cash equivalents
Cash and cash equivalents
Classified as held-for-sale
Cash and cash equivalents
Unsecured bank overdrafts
Cash and cash equivalents in the cash flow statement
Analysis of cash and cash equivalents by currency:
Sterling
US dollar
Australian dollar
Canadian dollar
Euro
Other
Analysis of cash and cash equivalents by interest type:
Floating rate interest
The carrying amount of cash and cash equivalents equates to their fair values.
Note
20
34
16
At
30 September
2016
£m
At
30 September
2015
£m
25.7
–
25.7
25.7
(8.2)
17.5
2.4
2.3
0.3
0.8
3.9
16.0
25.7
32.2
(0.6)
31.6
32.2
(0.7)
31.5
4.5
2.7
0.1
4.5
6.0
13.8
31.6
25.7
31.6
145
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 31 Trade and other payables
Current liabilities
Trade payables
Interest payable
Other taxation and social security
Other creditors
Accruals
Deferred income
Classified as held-for-sale
Non-current liabilities
Other creditors
The carrying amount of trade and other payables approximates to their fair value.
32 Current tax
Corporation tax payable
Corporation tax receivable
33 Acquisition put option commitments
Current
Non-current
The carrying amount of put option commitments approximates to their fair value.
34 Borrowings
The Group’s borrowings are unsecured and are analysed as follows:
At
30 September
2016
£m
At
30 September
2015
£m
Note
67.9
14.7
17.8
34.1
253.0
374.2
761.7
(5.5)
756.2
5.7
761.9
66.8
14.2
21.5
45.0
232.2
325.0
704.7
(5.4)
699.3
4.2
703.5
20
At
30 September
2016
£m
At
30 September
2015
£m
27.0
(15.6)
11.4
18.9
(7.4)
11.5
At
30 September
2016
£m
At
30 September
2015
£m
18.5
26.3
44.8
–
51.2
51.2
At 30 September 2016
Within one year
Between one and two years
Between two and five years
Over five years
At 30 September 2015
Within one year
Between one and two years
Between two and five years
Over five years
Overdrafts
£m
Bank loans
£m
Bonds
£m
Loan notes
£m
Finance leases
£m
–
–
223.6
201.7
425.3
425.3
–
–
211.7
208.5
420.2
420.2
2.4
–
–
–
–
2.4
2.5
–
–
–
–
2.5
0.4
0.1
0.6
–
0.7
1.1
0.2
0.1
0.1
–
0.2
0.4
–
–
267.7
–
267.7
267.7
–
–
306.7
–
306.7
306.7
8.2
–
–
–
–
8.2
0.7
–
–
–
–
0.7
146
Total
£m
11.0
0.1
491.9
201.7
693.7
704.7
3.4
0.1
518.5
208.5
727.1
730.5
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The Group’s borrowings are analysed by currency and interest rate type as follows:
At 30 September 2016
Fixed rate interest
Floating rate interest
At 30 September 2015
Fixed rate interest
Floating rate interest
Sterling
£m
US dollar
£m
425.3
98.9
524.2
420.2
133.6
553.8
1.1
179.4
180.5
0.4
176.3
176.7
Total
£m
426.4
278.3
704.7
420.6
309.9
730.5
The Group’s borrowings, analysed by currency and interest rate type, adjusting the principal borrowed and interest rate type by
the notional amount of interest rate swaps and by the notional amount of currency derivatives, are as follows:
At 30 September 2016
Fixed rate interest
Floating rate interest
At 30 September 2015
Fixed rate interest
Floating rate interest
Sterling
£m
US dollar
£m
231.9
36.0
267.9
250.0
143.4
393.4
345.2
91.6
436.8
289.7
47.4
337.1
Total
£m
577.1
127.6
704.7
539.7
190.8
730.5
Committed borrowing facilities
The Group’s bank loans bear interest charged at LIBOR plus a margin. The margin varies by bank and is based on the Group’s
ratio of net debt to EBITDA or the Group’s credit rating. Each committed bank facility contains covenants based on a maximum
3.75 times net debt to EBITDA ratio and a minimum interest cover ratio of 3.0 times. EBITDA for these purposes is defined as the
aggregate of the Group’s consolidated operating profit including share of results of joint ventures and associates before
deducting depreciation, amortisation and impairment of goodwill, intangible and tangible assets, before exceptional items
and before interest and finance charges, and the ratio is shown in Note 35. These covenants were met at the relevant test dates
during the year.
The Group’s total committed bank facilities amount to £624.2 million. Of these facilities £195.0 million are denominated in sterling
and £429.2 million (US$558.0 million) are denominated in US dollars. Drawings are permitted in all major currencies.
The Group’s committed bank facilities and their maturity dates are as follows:
Expiring in more than two years but not more than three years
Expiring in more than three years but not more than four years
Total bank facilities
At
30 September
2016
£m
At
30 September
2015
£m
624.2
–
624.2
–
564.5
564.5
The following undrawn committed borrowing facilities were available to the Group in respect of which all conditions precedent
had been met:
Expiring in more than two years but not more than three years
Expiring in more than three years but not more than four years
Total undrawn committed bank facilities
The Group has issued standby letters of credit of £3.8 million (2015 £2.2 million).
At
30 September
2016
£m
At
30 September
2015
£m
366.5
–
366.5
–
278.2
278.2
147
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 34 Borrowings continued
Bonds
The nominal, carrying and fair values of the Group’s bonds and the coupons payable are as follows:
Maturity
2018
2021
2027
Coupon %
5.75
10.00
6.375
At
30 September
2016
Fair value
£m
At
30 September
2015
Fair value
£m
At
30 September
2016
Carrying value
£m
At
30 September
2015
Carrying value
£m
At
30 September
2016
Nominal value
£m
At
30 September
2015
Nominal value
£m
237.4
9.6
251.5
498.5
240.6
9.6
240.0
490.2
214.1
9.5
201.7
425.3
211.7
10.3
198.2
420.2
218.5
7.2
200.0
425.7
218.5
7.2
200.0
425.7
The Group’s bonds have been adjusted from their nominal values to take account of the premia, direct issue costs, discounts
and movements in hedged risks. The issue costs, premia and discounts are being amortised over the expected lives of the bonds
using the effective interest method. The unamortised issue costs amount to £1.2 million (2015 £1.5 million) and the unamortised
premia £6.8 million (2015 £9.3 million).
The fair value of the Group’s bonds have been calculated on the basis of quoted market rates.
Further details of the Group’s borrowing arrangements are set out in the Financial Review.
Loan notes
The Group has issued loan notes which attract interest at rates which range between approximately 6.0% to LIBID minus 1.0%.
The loan notes are repayable at the option of the loan Note holders with a six-month notice period and are treated as
current liabilities.
35 Financial instruments and risk management
The Group is exposed to credit, interest rate and currency risks arising in the normal course of business. Derivative financial
instruments are used to manage exposures to fluctuations in foreign currency exchange rates and interest rates but are not
employed for speculative purposes. Full details of the Group’s treasury policies are set out in the Financial Review.
Capital risk management
The Group manages its capital, defined as equity shareholders’ funds and net borrowings, to ensure that all entities in the Group
are able to continue as going concerns for the foreseeable future.
Debt management
The Group borrows on an unsecured basis and arranges its debt to ensure an appropriate maturity profile. The Group’s principal
sources of funding are the long-term sterling bond market and committed bank facilities. The Group is mindful of its credit rating,
currently BBB- and ensures it has sufficient committed bank facilities in order to meet short-term business requirements, after taking
into account the Group’s holding of cash and cash equivalents together with any distribution restrictions which exist. The Group
aims to maximise the term and flexibility of indebtedness and retain headroom in the form of undrawn committed bank facilities
of approximately £100.0 million. Additionally, the Group arranges its currency borrowings in order that they are in proportion to the
ratio of earnings in that particular currency to total Group earnings.
The Directors consider that the Group’s bond issuances together with its bank facilities are sufficient to cover the likely medium-term
cash requirements of the Group.
Associates, joint ventures and other investments in general arrange and maintain their own financing and funding requirements.
In all cases such financing is on a non-recourse basis to the Company.
Whilst the Group’s internal target of a 12-month rolling net debt to EBITDA ratio of no greater than 2.0 times at any point, the limit
imposed by its bank covenants is no greater than 3.75 times measured in March and September. The bank covenant ratio uses the
average exchange rate in the calculation of net debt. The resultant net debt to EBITDA ratio is 1.77 times (2015 1.84 times). Using a
closing rate basis for the valuation of net debt, the ratio was 1.87 times (2015 1.86 times).
Cash and liquidity risk management
The Group monitors its cash balances to ensure that sufficient resources are available to meet operational requirements as they
fall due. Short-term money market deposits are used to manage liquidity while maximising the rate of return on cash resources,
giving due consideration to credit risk. A detailed maturity analysis of both derivative and non-derivative financial instruments
are analysed in the table on page 154 of this Note.
Market risk management
The Group’s primary market risks are interest rate fluctuations and exchange rate movements.
148
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Interest rate risk management
The limit imposed by the Group’s bank covenants is at least 3.0 times EBITDA to net interest. The actual ratio for the year was
9.4 times (2015 10.1 times).
Group debt is largely comprised of floating rate sterling (GBP) and US dollar (USD) bank borrowings and fixed GBP bond debt.
The Group’s interest rate exposure management policy is aimed at reducing the exposure of the consolidated businesses
to changes in interest rates. Group policy is to have 70% to 80% of interest rate exposures fixed with the balance floating.
This is achieved by issuing fixed rate GBP bond debt and entering into derivative contracts that economically swap fixed rate
interest into floating rate. Derivatives are used to hedge or reduce the risks of interest rate and exchange rate movements
and are not entered into unless such risks exist.
To meet policy the Group:
• swaps a portion of its fixed GBP bond debt into GBP floating debt using interest rate swaps;
• swaps a portion of its fixed GBP bond debt into USD fixed bond debt by using cross currency fixed to fixed swaps;
• buys USD caps to fix its USD debt; and
• enters forward contracts, selling USD and buying GBP to swap its GBP floating rate debt into USD floating rate debt.
The derivatives in place to meet Group policy are as follows:
(i) Fixed to floating interest rate swaps hedging a portion of the Group’s bonds; changes in the fair value of the swaps are
recognised in the income statement and at the same time the carrying value of the hedged bonds is adjusted for
movements in the hedged risk to the extent effective and those adjustments are also recognised in the income statement.
The notional value of these interest rate swaps amounts to £73.9 million (2015 £73.9 million) with the Group paying floating
rates of between 0.38% and 1.05% (2015 0.56% and 0.91%).
(ii) Fixed to floating interest rate swaps which are not designated as hedging instruments; changes in the fair value of the
swaps are recognised in the income statement. The notional value of these interest rate swaps amounts to US$67.0 million
(2015 US$67.0 million) with the Group receiving floating USD interest at rates of between 0.35% and 0.86% (2015 0.23%
and 0.28 %).
(iii) Cross currency fixed to fixed interest rate swaps. The notional value of these cross currency swaps amounts to £96.3 million/
US$155.0 million (2015 £96.3 million/US$155 million) resulting in the Group paying fixed USD interest at rates of between 5.56 %
and 6.99% (2015 5.56% and 6.99%).
(iv) The Group also had a number of outstanding interest rate caps. These amounted to US$225.0 million notional
(2015 US$225.0 million) at rates of between 1.00% and 2.75% (2015 1.00% and 2.75%).
Derivative financial instruments are measured at fair value at the date the derivatives are entered into and are subsequently
remeasured to fair value at each reporting date. The fair value is determined by using market rates of interest and exchange
as at 30 September 2016 and the use of established estimation techniques such as discounted cash flow and option valuation
models. The fair value of long-term borrowings has been calculated by discounting expected future cash flows at market rates.
Foreign exchange rate risk management
Translation exposures arise on the earnings and net assets of business operations in entities with functional currencies other
than that of the parent company. The net asset exposures are economically hedged, to a significant extent, by a policy of
denominating borrowings in currencies where significant translation exposures exist, most notably US dollars.
The Group also designates currency swaps and forward contracts as net investment hedges, hedging the Group’s
overseas investments.
Credit risk management
The Group’s principal credit risk relates to its trade and other receivables and non-performance by counterparties to financial
instrument contracts.
Trade and other receivables
The Group’s customer base is diversified geographically and by segment with customers generally of a good financial standing.
Before accepting any new customers, the Group assesses the potential customers’ credit quality and sets credit limits by
customer. The average credit period is 39 days (2015 38 days). The Group considers the credit risk of trade receivables to be low,
although the Group remains vigilant in the current economic climate. The Group reserves the right to charge interest on overdue
receivables, although the Group does not hold collateral over any trade receivable balances. The Group makes an allowance
for bad and doubtful debts specific to individual debts. This provision is reviewed regularly in conjunction with a detailed
analysis of historical payment profiles and past default experience.
The Group’s receivables are stated net of allowances for doubtful debts and allowances for impairment are made
where appropriate.
The maximum exposure to credit risk from trade and other receivables at the reporting date is the amount of each class
disclosed in the table on page 152.
149
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 35 Financial instruments and risk management continued
Institutional counterparty risk
The Group seeks to limit interest rate and foreign exchange risks, described above, by the use of financial instruments. As a result,
credit risk arises from the potential non-performance by the counterparties to those financial instruments, which are unsecured.
The amount of this credit risk is normally restricted to the amounts of any hedge gain and not the principal amount being hedged.
The Group also has a credit exposure to counterparties for the full principal amount of cash and cash equivalents.
Credit risk is controlled by monitoring the credit quality of these counterparties, principally licensed commercial banks and
investment banks with strong long-term credit ratings, and of the amounts outstanding with each of them.
The credit risk on short-term deposits and derivative financial instruments is considered low since the counterparties are banks
with high credit ratings. Group policy is to have no more than £20.0 million deposited (or at risk) with any ‘AA’ counterparty or
£10.0 million for ‘A’ rated counterparties. The Group has no significant concentration of risk with exposure spread over a large
number of counterparties and customers.
The maximum exposure to credit risk from derivative assets and cash and cash equivalents at the reporting date is the amount
of each class disclosed in the table on page 152.
Derivative financial instruments and hedge accounting
The Group designates certain derivatives as:
(i) hedges of the change in fair value of recognised assets and liabilities (fair value hedges); or
(ii) hedges of highly probable forecast transactions (cash flow hedges); or
(iii) hedges of net investment in foreign operations (net investment hedges).
To qualify for hedge accounting, each individual hedging relationship must be expected to be effective, be designated and
documented at its inception and throughout the life of the hedge relationship.
Fair value hedges
The Group’s policy is to use interest rate swaps to convert a proportion of its fixed rate debt to floating rates in order to hedge the
interest rate risk.
Gains and losses on the borrowings and related derivatives designated as fair value hedges included in the Consolidated Income
Statement for the year ended 30 September 2016 were:
Sterling interest rate swaps
Sterling debt
Total
At
30 September
2014
£m
Fair value
movement
gain/(loss)
£m
At
30 September
2015
£m
Fair value
movement
gain/(loss)
£m
At
30 September
2016
£m
3.1
(3.1)
–
2.1
(2.1)
–
5.2
(5.2)
–
2.3
(2.3)
–
7.5
(7.5)
–
Cash flow hedges
The Group’s policy is to use certain derivative financial instruments in order to hedge the foreign exchange risk arising from
certain firm commitments or forecast highly probable transactions in currencies other than the functional currency of the relevant
Group entity.
All cash flow hedges were effective throughout the year ended 30 September 2016. All amounts deferred in equity at the year
end are expected to impact the Consolidated Income Statement in the next 18 months when the related cash flows are
expected to occur.
Net investment hedges
The Group seeks to manage the foreign currency exposure arising on retranslation of the reporting entity’s share of net assets
of foreign operations at each reporting date by designating certain derivative financial instruments and foreign currency
borrowings as net investment hedging instruments.
All net investment hedges were effective throughout the year ended 30 September 2016.
150
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The Group’s derivative financial instruments, other than acquisition option commitments, and their maturity profiles are
summarised as follows:
Derivative financial assets:
At 30 September 2016
Within one year
Between two and five years
Over five years
At 30 September 2015
Within one year
Between two and five years
Over five years
Fair value
hedges
£m
Cash flow
hedges
£m
Derivatives
not qualifying
for hedge
accounting
£m
–
4.4
16.4
20.8
20.8
–
2.5
16.1
18.6
18.6
0.4
–
–
–
0.4
1.3
–
–
–
1.3
–
0.4
–
0.4
0.4
–
0.3
0.8
1.1
1.1
Option over
equity
instrument (i)
£m
–
7.1
–
7.1
7.1
–
–
–
–
–
Derivative
financial
assets
£m
0.4
11.9
16.4
28.3
28.7
1.3
2.8
16.9
19.7
21.0
(i) During the period the dmg information segment purchased an option to acquire an 18.7% equity instrument in Axiometrics
LLC. The option does not represent an equity interest since dmg information is not entitled to any economic benefits
associated with this option.
The option has been recognised as a derivative asset and recorded at a fair value of £7.1 million. Changes in the fair value of this
instrument will be recognised in the Consolidated Income Statement in Financing.
Derivative financial liabilities:
At 30 September 2016
Within one year
Between one and two years
Between two and five years
Over five years
At 30 September 2015
Within one year
Between one and two years
Between two and five years
Over five years
Cash flow
hedges
£m
Net investment
hedges
£m
Derivatives
not qualifying
for hedge
accounting
£m
Derivative
financial
liabilities
£m
(9.7)
(0.8)
–
–
(0.8)
(10.5)
(3.3)
(0.7)
–
–
(0.7)
(4.0)
(1.8)
–
(6.9)
(16.1)
(23.0)
(24.8)
(2.0)
–
(2.2)
(2.7)
(4.9)
(6.9)
–
–
–
(23.5)
(23.5)
(23.5)
–
–
–
(18.2)
(18.2)
(18.2)
(11.5)
(0.8)
(6.9)
(39.6)
(47.3)
(58.8)
(5.3)
(0.7)
(2.2)
(20.9)
(23.8)
(29.1)
In managing the Group’s interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations.
However, changes in foreign exchange rates and interest rates may have an impact on the Group’s results.
At 30 September 2016 it is estimated that an increase of 1.0% in interest rates would have decreased the Group’s finance costs by
£4.6 million (2015 £3.5 million). There would have been no effect on amounts recognised directly in equity. This sensitivity has been
calculated by applying the interest rate change to the Group’s variable rate borrowings, net of any interest rate swaps, at the
year-end date.
At 30 September 2016 it is estimated that a decrease of 1.0% in interest rates would have increased the Group’s finance costs by
£3.8 million (2015 £4.6 million). There would have been no effect on amounts recognised directly in equity. This sensitivity has been
calculated by applying the interest rate change to the Group’s variable rate borrowings, net of any interest rate swaps, as at the
year-end date.
151
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 35 Financial instruments and risk management continued
At 30 September 2016 it is estimated that a 10.0% strengthening of sterling against the US dollar would have decreased the net loss
taken to equity by £50.8 million (2015 £42.4 million) and decreased the net loss taken to income by £2.1 million (2015 increased the
net loss by £0.1 million). A 10.0% weakening of sterling against the US dollar would have increased the net loss taken to equity by
£60.5 million (2015 £51.7 million) and increased the net loss taken to income by £2.6 million (2015 £2.3 million). This sensitivity has
been calculated by applying the foreign exchange change to the Group’s financial instruments which are affected by changes
in foreign exchange rates.
At 30 September 2016 it is estimated that an increase of 1.0% in the rate used to discount the expected gross value of payments
would lead to a decrease in the present value of acquisition put option commitments of £1.0 million (2015 £1.6 million).
At 30 September 2016 it is estimated that a decrease of 1.0% in the rate used to discount the expected gross value of payments
would lead to an increase in the present value of acquisition put option commitments of £1.0 million (2015 £1.4 million).
The carrying amounts and gains and losses on financial instruments are as follows:
At
30 September
2016
Carrying
amount
£m
Year ended
30 September
2016
(Loss)/gain
to income
£m
Year ended
30 September
2016
(Loss)/gain
to equity
£m
At
30 September
2015
Carrying
amount
£m
Year ended
30 September
2015
(Loss)/gain
to income
£m
Year ended
30 September
2015
Gain/(loss)
to equity
£m
Investments
Available-for-sale investments
Trade receivables
Other receivables
Other financial assets
Cash and cash equivalents
Loans and receivables
Option over equity instrument
Contingent consideration
Assets at fair value through profit or loss
Interest rate swaps
Forward foreign currency contracts
Derivative assets in effective hedging relationships
Interest rate caps
Derivative assets not designated as hedging
instruments
Trade payables
Bank overdrafts
Bonds
Bank loans
Loan notes
Amounts payable under finance leases
Liabilities at amortised cost
Contingent consideration
Liabilities at fair value through profit or loss
Fixed to fixed cross currency swaps
Forward foreign currency contracts
Derivative liabilities in effective hedging relationships
Acquisition put option commitments
Interest rate swaps
Derivative liabilities not designated as
hedging instruments
Total for financial instruments
–
–
(0.1)
–
1.8
0.7
2.4
–
–
–
5.8
–
5.8
(0.7)
(0.7)
–
(0.1)
(31.1)
(9.3)
(0.1)
(0.1)
(40.7)
12.2
12.2
(0.6)
(0.8)
(1.4)
14.4
(7.9)
6.5
(15.9)
15.8
15.8
237.1
32.2
38.1
25.7
333.1
7.1
1.4
8.5
20.8
0.4
21.2
0.4
0.4
(62.4)
(8.2)
(425.3)
(267.7)
(2.4)
(1.1)
(767.1)
(52.6)
(52.6)
(23.0)
(12.3)
(35.3)
(44.8)
(23.5)
(68.3)
(544.3)
152
0.5
0.5
21.4
11.5
–
4.8
37.7
–
0.1
0.1
–
(5.2)
(5.2)
–
–
(2.6)
(0.5)
–
(21.6)
(0.4)
(0.1)
(25.2)
(7.5)
(7.5)
(18.1)
(27.4)
(45.5)
(7.5)
–
(7.5)
(52.6)
13.8
13.8
194.9
46.5
3.6
31.6
276.6
–
2.3
2.3
18.6
1.3
19.9
1.1
1.1
(66.5)
(0.7)
(420.2)
(306.7)
(2.5)
(0.4)
(797.0)
(54.3)
(54.3)
(4.9)
(6.0)
(10.9)
(51.2)
(18.2)
(69.4)
(617.9)
2.1
2.1
1.6
–
–
0.9
2.5
–
(1.7)
(1.7)
5.4
–
5.4
(2.4)
(2.4)
–
–
(70.6)
(7.8)
(0.1)
(0.1)
(78.6)
(1.0)
(1.0)
(0.2)
0.1
(0.1)
4.2
(7.4)
(3.2)
(77.0)
0.2
0.2
7.1
1.5
–
(0.8)
7.8
–
0.2
0.2
–
(5.0)
(5.0)
–
–
(0.5)
–
–
(12.5)
(0.1)
–
(13.1)
(1.5)
(1.5)
(7.0)
(4.3)
(11.3)
(0.8)
–
(0.8)
(23.5)
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Reconciliation of net loss taken to equity:
Change in fair value of hedging derivatives
Other losses on translation of investments in foreign operations
Translation of financial instruments of overseas operations
Transfer of (gain)/loss on cash flow hedges from fair value reserves
to Consolidated Income Statement
Total loss on financial instruments to equity
Reconciliation of loss taken through income to net finance costs:
Total loss on financial instruments to income
Add back:
Impairment of trade receivables
Impairment of available-for-sale assets
Dividend income
Interest receivable
Interest on pension scheme liabilities less expected return on pension scheme assets
Net finance costs
Reconciliation of amounts due under finance lease agreements:
At 30 September 2016
Present value of future minimum lease payments
At 30 September 2015
Present value of future minimum lease payments
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
(52.6)
(43.4)
(1.8)
(2.1)
(99.9)
(23.5)
(8.8)
(7.2)
1.3
(38.2)
Note
40, 41
40, 41
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
(15.9)
(77.0)
28
8
9
9
10
10
0.1
–
–
(2.5)
(4.6)
(22.9)
Due in less
than one year
£m
Due between
one and five
years
£m
(0.4)
(0.7)
Due in less than
one year
£m
Due between
one and five
years
£m
(0.2)
(0.2)
(1.6)
1.0
(3.1)
(0.9)
(6.8)
(88.4)
Total
£m
(1.1)
Total
£m
(0.4)
153
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc (676.5)
(104.9)
(303.8)
(1,495.6)
35 Financial instruments and risk management continued
The remaining undiscounted contractual liabilities and their maturities are as follows:
Within one year
£m
Between one
and two years
£m
Between two
and five years
£m
Between five
and ten years
£m
Between ten
and fifteen
years
£m
At 30 September 2016
Trade payables
Bank loans
Bank overdrafts
Bonds
Loan notes
Finance leases
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Currency swaps
Forward contracts
At 30 September 2015
Trade payables
Bank loans
Bank overdrafts
Bonds
Loan notes
Finance leases
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Currency swaps
Forward contracts
(62.4)
–
(8.4)
(26.0)
(2.4)
(0.4)
(9.3)
(18.5)
(2.5)
(7.4)
(210.0)
(347.3)
(66.5)
–
(0.7)
(26.0)
(2.6)
(0.2)
(5.2)
–
(2.5)
(6.4)
(128.2)
(238.3)
–
–
–
–
(278.2)
–
–
–
–
–
–
–
(26.0)
(268.1)
(63.8)
(209.2)
–
(0.1)
(5.0)
–
(2.5)
(7.4)
(22.1)
(63.1)
–
(0.6)
(38.5)
(35.4)
(7.6)
(48.1)
–
–
–
–
–
(12.6)
(28.5)
–
–
–
–
–
(1.9)
(92.7)
–
–
–
–
–
(322.0)
–
–
–
–
–
–
–
(26.0)
(273.8)
(71.3)
(222.1)
–
(0.1)
(7.6)
(31.2)
(2.6)
(6.4)
(32.4)
(106.3)
–
(0.1)
(43.8)
(11.6)
(7.6)
(42.9)
–
(701.8)
–
–
(0.1)
(12.6)
(12.6)
(24.5)
–
(121.1)
–
–
–
–
(4.4)
(84.7)
–
Total
£m
(62.4)
(278.2)
(8.4)
(593.1)
(2.4)
(1.1)
(52.8)
(53.9)
(27.1)
(184.1)
(232.1)
(66.5)
(322.0)
(0.7)
(619.2)
(2.6)
(0.4)
(56.7)
(55.4)
(29.7)
(164.9)
(160.6)
(311.2)
(1,478.7)
Included in the maturity table above are interest rate swaps with a notional value of US$67.0 million (2015 US$67.0 million) and
currency swaps with a notional value of US$90.0 million (2015 US$90.0 million) with mutual break clauses at fair value every five years.
154
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Reconciliation of undiscounted liabilities to amounts on the Consolidated Statement of Financial Position:
At 30 September 2016
Trade payables
Bank loans
Bank overdrafts
Bonds
Loan notes
Finance leases
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Fixed to fixed cross currency swaps
Forward foreign currency contracts
At 30 September 2015
Trade payables
Bank loans
Bank overdrafts
Bonds
Loan notes
Finance leases
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Fixed to fixed cross currency swaps
Forward foreign currency contracts
Undiscounted
value of
financial
liabilities
£m
Interest
£m
Unamortised
issue costs
£m
Discount/
premium
on issue
£m
Discounting
and mark
to market
adjustments
£m
Undiscounted
value of
financial asset
£m
(62.4)
(278.2)
(8.4)
(593.1)
(2.4)
(1.1)
(52.8)
(53.9)
(27.1)
(184.1)
(232.1)
–
10.5
0.2
167.3
–
–
–
–
27.1
18.8
–
–
–
–
1.2
–
–
–
–
–
–
–
–
–
–
6.8
–
–
–
–
–
–
–
(1,495.6)
223.9
1.2
6.8
(66.5)
(322.0)
(0.7)
(619.2)
(2.6)
(0.4)
(56.7)
(55.4)
(29.7)
(164.9)
(160.6)
(1,478.7)
–
15.3
–
193.5
0.1
–
–
–
29.7
3.7
–
242.3
–
–
–
1.5
–
–
–
–
–
–
–
–
–
–
9.3
–
–
–
–
–
–
–
1.5
9.3
–
–
–
(7.5)
–
–
0.2
9.1
(23.5)
(6.6)
0.6
(27.7)
–
–
–
(5.3)
–
–
2.4
4.2
(18.2)
1.4
(1.2)
(16.7)
–
–
–
–
–
–
–
–
–
148.9
219.2
368.1
–
–
–
–
–
–
–
–
–
154.9
155.8
310.7
Total
£m
(62.4)
(267.7)
(8.2)
(425.3)
(2.4)
(1.1)
(52.6)
(44.8)
(23.5)
(23.0)
(12.3)
(923.3)
(66.5)
(306.7)
(0.7)
(420.2)
(2.5)
(0.4)
(54.3)
(51.2)
(18.2)
(4.9)
(6.0)
(931.6)
Valuation techniques and assumptions applied for the purpose of measuring fair value
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into levels 1 to 3 based on the degree to which the fair value is observable:
• level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities;
• level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
At 30 September 2016
Financial assets
Available-for-sale financial assets
Fair value through profit and loss
Derivative instruments not designated in hedge accounting
relationships
Option over equity instrument
Provision for contingent consideration receivable
Derivative instruments in designated hedge accounting relationships
Note
26
Financial liabilities
Fair value through profit and loss
Derivative instruments not designated in hedge accounting
relationships
Provision for contingent consideration payable
37
Derivative instruments in designated hedge accounting relationships
Level 1
£m
Level 2 (i)
£m
Level 3 (ii)
£m
Total
£m
–
–
–
–
–
–
–
–
–
–
–
15.8
15.8
0.4
–
–
21.2
21.6
(23.5)
–
(35.3)
(58.8)
–
7.1
1.4
–
24.3
–
(52.6)
–
(52.6)
0.4
7.1
1.4
21.2
45.9
(23.5)
(52.6)
(35.3)
(111.4)
155
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 35 Financial instruments and risk management continued
At 30 September 2015
Financial assets
Available-for-sale financial assets
Fair value through profit and loss
Derivative instruments not designated in hedge accounting
relationships
Provision for contingent consideration receivable
Derivative instruments in designated hedge accounting relationships
Note
26
Financial liabilities
Fair value through profit and loss
Derivative instruments not designated in hedge accounting
relationships
Provision for contingent consideration payable
37
Derivative instruments in designated hedge accounting relationships
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
–
–
–
–
–
–
–
–
–
–
13.8
13.8
1.1
–
19.9
21.0
(18.2)
–
(10.9)
(29.1)
–
2.3
–
16.1
–
(54.3)
–
(54.3)
1.1
2.3
19.9
37.1
(18.2)
(54.3)
(10.9)
(83.4)
There were no transfers between categories in the period.
(i)
The fair value of derivative instruments is determined using market rates of interest and exchange, and established estimation
techniques such as discounted cash flow and option valuation models.
(ii) Available-for-sale financial assets are recorded at cost less provision for impairment, as since there is no active market upon
which they are traded their fair values cannot be reliably measured. The recoverable amount is determined by discounting
future cash flows to present value using market interest rates.
Contingent consideration is valued based on the future profitability of the businesses to which the contingent consideration
relates, discounted at market rates of interest.
Reconciliation of level 3 fair value measurement of financial liabilities:
At 30 September 2014
Cash paid to settle contingent consideration in respect of acquisitions
Change in fair value of contingent consideration in income
Finance charge on discounting of contingent consideration
Additions to contingent consideration
Contingent consideration owned by subsidiaries disposed
Adjustment to goodwill
Exchange adjustment
At 30 September 2015
Cash paid to settle contingent consideration in respect of acquisitions
Change in fair value of contingent consideration in income
Finance charge on discounting of contingent consideration
Additions to contingent consideration
Reclassification of amounts held in escrow
Exchange adjustment
At 30 September 2016
Note
37
10
10
37
£m
(20.2)
15.1
(0.4)
(0.6)
(48.0)
0.8
0.5
(1.5)
(54.3)
0.3
12.3
(0.1)
(5.3)
2.0
(7.5)
(52.6)
The key inputs into the significant level 3 financial liabilities are the future profitability of the businesses to which the contingent
consideration relate and the discount rate. The estimated range of possible outcomes for the fair value of these liabilities is
£2.2 million to £311.3 million (2015 £1.4 million to £355.5 million).
The reduction in fair value of contingent consideration of £12.3 million (2015 £0.4 million increase) and finance charge on
discounting of contingent consideration of £0.1 million (2015 £0.6 million) were charged/credited to the income statement
under the fair value movement of contingent consideration payable and the finance charge on discounting of contingent
consideration payable lines under net finance costs (Note 10).
A one percentage point increase or decrease in the growth rate used in estimating the expected profits results in the contingent
consideration liability at 30 September 2016 increasing or decreasing by £0.5 million and £0.6 million respectively (2015 £0.5 million
and £0.5 million), with the corresponding change to the value at 30 September 2016 charged or credited to the income
statement in future periods.
156
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The rates used to discount contingent consideration range from 0.0% to 1.3% (2015 0.3% to 3.0%). A one percentage point increase
or decrease in the discount rate used to discount the expected gross value of payments results in the liability at 30 September 2016
decreasing or increasing by £1.1 million and £0.3 million respectively (2015 £1.7 million and £1.7 million), with the corresponding
change to the value at 30 September 2016 charged or credited to the income statement in future periods.
36 Retirement benefit obligations
The Group operates a number of pension schemes under which contributions are paid by the employer and employees.
The total net pension costs of the Group for the year ended 30 September 2016 were £19.9 million (2015 £25.2 million).
The schemes include a number of defined contribution pension arrangements, in addition to funded defined benefit pension
arrangements. Only one defined benefit scheme, The Metal Bulletin Pension Scheme, in the Euromoney segment, remains open
to future accrual. The defined benefit schemes in the UK, together with some defined contribution plans, are administered by
trustees or trustee companies.
In compliance with the Pension Act 2008, the Group commenced automatic enrolment of relevant employees into defined
contribution pension plans from September 2013. This process was completed during the period.
Defined benefit schemes
Background
The Company operates two main defined benefit schemes, the Harmsworth Pension Scheme (HPS) and the Senior Executive
Pension Scheme (SEPF), both of which are now closed to new entrants and to further accrual.
Full actuarial valuations of the defined benefit schemes are carried out triennially by the scheme actuary. Prior to its closure to
future accrual on 1 January 2016, the Group made annual contributions of 12.0% or 18.0% of members’ basic pay (depending
on membership section) to HPS. Following the results of the latest triennial valuation as at 31 March 2016, the Company agreed a
Recovery Plan involving a series of annual funding payments, of £13.0 million on 5 October 2016 to 2018, £16.2 million on 5 October
2019 to 2025 and £76.2 million on 5 October 2026. The Company considers that these contribution rates are sufficient to eliminate
the deficit over the agreed period. This Recovery Plan will be reviewed at the next triennial funding valuation of the main schemes
due to be completed with an effective date of 31 March 2019.
The Company has agreed with the trustees, that should it make any permanent reductions in the Company’s capital, including
share buy-backs, it will make additional contributions to the schemes amounting to 20% of the capital reduction. Contributions
of £3.5 million relating to this agreement were made in the year to 30 September 2016.
Limited Partnership investment vehicle
HPS owns a beneficial interest in a Limited Partnership investment vehicle (LP). The LP has been designed to facilitate payments
of £10.8 million as part of the deficit funding payments described above over the period to 2026. In addition, the LP is required to
make a final payment to the scheme of £149.9 million, or the funding deficit within the scheme on an ongoing actuarial valuation
basis, at the end of the period to 2026 if this is less. The Recovery Plan above assumes £60.0 million of the £149.9 million final
payment is required. For funding purposes, HPS’s interest in the LP is treated as an asset of the scheme and reduces the actuarial
deficit within the scheme. However, under IAS 19, Employee benefits, the LP is not included as an asset of the scheme and therefore
is not included in the disclosures below.
The figures in this note are based on calculations using membership data as at 30 September 2016 along with asset valuations
and cash flow information from the schemes for the year to 30 September 2016.
A reconciliation of the net pension obligation reported in the Consolidated Statement of Financial Position is shown in the
following table:
Present value of defined benefit obligation
Assets at fair value
(Deficit)/surplus reported in the Consolidated
Statement of Financial Position
At
30 September
2016
Schemes
in surplus
£m
At
30 September
2016
Schemes
in deficit
£m
At
30 September
2016
Total
£m
At
30 September
2015
Schemes
in surplus
£m
At
30 September
2015
Schemes
in deficit
£m
At
30 September
2015
Total
£m
(296.8)
336.9
(2,702.1)
2,416.0
(2,998.9)
2,752.9
(255.2)
282.9
(2,182.2)
1,995.2
(2,437.4)
2,278.1
40.1
(286.1)
(246.0)
27.7
(187.0)
(159.3)
The International Financial Reporting Interpretations Committee, in its document IFRIC 14, has interpreted the extent to which
a company can recognise a pension surplus on its Statement of Financial Position. Having taken account of the rules of the
schemes, the Company considers that recognition of surpluses in the schemes on its Statement of Financial Position would be
in accordance with the interpretations of IFRIC 14.
The deficit for the year, set out above, excludes a related deferred tax asset of £42.8 million (2015 £31.8 million).
157
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 36 Retirement benefit obligations continued
A reconciliation of the present value of the defined benefit obligation is shown in the following table:
Defined benefit obligation at start of year
Current service cost
Current service cost in respect of salary sacrifice
Interest cost
Member contributions
Net benefit payments
Actuarial gain/(loss) as a result of:
– changes in financial assumptions
– changes in demographic assumptions
– membership experience
Defined benefit obligation at end of year
A reconciliation of the fair value of assets is shown in the following table:
Fair value of assets at start of year
Interest income on scheme assets
Company contributions
Member contributions
Net benefit payments
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
(2,437.4)
(2,381.9)
Note
(1.7)
(0.6)
(88.3)
–
104.0
(720.3)
27.4
118.0
(6.6)
(2.6)
(93.4)
(0.2)
94.3
(55.4)
58.7
(50.3)
(2,998.9)
(2,437.4)
40, 41
40, 41
40, 41
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
2,278.1
2,170.1
Note
83.7
34.9
–
(104.0)
460.2
2,752.9
86.6
61.1
0.1
(94.3)
54.5
2,278.1
Return on plan assets, excluding amounts included in interest income on scheme assets
40, 41
Fair value of assets at end of year
The fair value of the assets are categorised as follows:
At 30 September 2016
Quoted (£m)
Unquoted (£m)
% of assets held
At 30 September 2015
Quoted (£m)
Unquoted (£m)
% of assets held
Equities (i) Bonds/Credit
LDI (ii)
Property
Other assets
Total
788.3
393.7
42.94
870.0
434.0
57.24
97.6
475.9
20.83
336.6
296.1
27.77
–
617.0
22.41
–
–
0.00
–
320.7
11.65
–
286.1
12.56
57.4
2.3
2.17
49.9
5.4
2.43
943.3
1,809.6
100.00
1,256.5
1,021.6
100.00
(i) Equities include hedge funds and infrastructure funds.
(ii) During the year HPS and SEPF invested in Liability Driven Investment funds (LDI) that hedge approximately 50% of the scheme’s
inflation and discount rate risks.
The value of employer-related assets held on behalf of the schemes at 30 September 2016 was £nil (0% of assets), (2015 £13.4 million,
0.6% of assets).
The main financial assumptions are shown in the following table:
Price inflation
Salary increases
Pension increases
Discount rate
158
Year ended
30 September
2016
%
Year ended
30 September
2015
%
2.95
2.50
2.80
2.15
2.95
2.80
2.80
3.70
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The discount rate for both scheme liabilities and the fair value of scheme assets reflects yields at the year-end date on high-quality
corporate bonds and are based on a cash flow-based yield curve, calculating a single equivalent discount rate reflecting the
average duration of the schemes’ liabilities, rounded to the nearest 0.05% p.a. This methodology incorporates bonds given an
AA rating from at least two of the main four rating agencies (Standard and Poors, Moody’s, Fitch and DBRS).
RPI inflation is derived in a similar way to the discount rate but with reference to the Bank of England spot curve at the duration
of the schemes’ weighted averaged duration with an appropriate allowance for inflation risk premium (0.30% p.a.), rounded to
the nearest 0.05% p.a. In previous years this was derived from the annualised Bank of England spot curve at the duration of the
schemes’ weighted averaged duration with an appropriate allowance for an inflation risk premium, rounded to the nearest
0.05 % p.a.
Mortality assumptions take account of scheme experience, and also allow for further improvements in life expectancy based on
the Continuous Mortality Investigation (CMI) projections but with a long-term rate of improvement in future mortality rates of 1.25%
p.a. Allowance is made for the extent to which employees have chosen to commute part of their pension for cash at retirement.
The average duration of the defined benefit obligation at the end of the year is approximately 20 years (2015 17 years).
The table below illustrates examples of the assumed average life expectancies from age 60 for the principal schemes:
For a current 60-year-old male member of the scheme
For a current 60-year-old female member of the scheme
For a current 50-year-old male member of the scheme
For a current 50-year-old female member of the scheme
Year ended
30 September
2016
Future life
expectancy
from age
60 (years)
Year ended
30 September
2015
Future life
expectancy
from age
60 (years)
26.5
28.6
27.2
29.8
26.7
28.5
27.3
29.6
The amounts charged to the Consolidated Income Statement relating to the Group’s defined benefit schemes, based on the
above assumptions are shown in the following table:
Current service cost
Current service cost in respect of salary sacrifice
Charge to operating profit
Finance cost
Total charge to the Consolidated Income Statement
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
(1.7)
(0.6)
(2.3)
(4.6)
(6.9)
(6.6)
(2.6)
(9.2)
(6.8)
(16.0)
10
Pension costs and the size of any pension surplus or deficit are sensitive to the assumptions adopted. The table below indicates the
effect from changes in the principal assumptions used above:
Mortality
Change in pension obligation at 30 September 2016 from a one-year increase in life expectancy
Change in pension cost from a one-year increase
Inflation rate
Change in pension obligation at 30 September 2016 from a 0.1% p.a. increase
Change in pension cost from a 0.1% p.a. increase
Discount rate
Change in pension obligation at 30 September 2016 from a 0.1% p.a. decrease
Change in pension cost from a 0.1% p.a. decrease
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
+/-
+/-
+/-
+/-
+/-
+/-
89.4
1.9
54.1
1.1
61.7
1.0
64.0
2.4
34.0
1.3
40.0
1.4
159
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 36 Retirement benefit obligations continued
There are significant risks in connection with running defined benefit schemes, and the key risks are highlighted below:
Inflation rate risk
A significant proportion of the defined benefit obligation is linked to inflation, therefore increased inflation will result in a higher
pension obligation. The trustees have sought to acquire certain assets with exposure to inflationary uplifts in order to negate
a proportion of this risk, including the LDI investment funds which reduce this risk by 50.0%.
Life expectancy risk
The present value of the defined benefit obligation is calculated with reference to the best estimate of the mortality of scheme
members. An increase in assumed life expectancy will result in an increase in the defined benefit obligation. Regular reviews
of mortality experience are performed to ensure life expectancy assumptions remain appropriate.
Investment risk
This is a measure of the uncertainty that the return on the schemes’ assets meet the return necessary to fund pension obligations.
The schemes hold a significant proportion of equities, but during the period have been reallocating some of these investments
into credit and property investments which exhibit lower volatility of return and the LDI investments.
Discount rate risk
The present value of the defined benefit obligation is calculated using a discount rate set with reference to high-quality corporate
bond yields. A decrease in corporate bond yields will increase the present value of the defined benefit obligation, although
this will be partially offset by the LDI investment funds which reduce the gilt rate risk by 50.0% and an increase in the value of
corporate bonds held by the schemes.
Amounts recognised in the Consolidated Statement of Comprehensive Income (SOCI) are shown in the following table:
Actuarial (loss)/gain recognised in SOCI
Cumulative actuarial loss recognised in SOCI at beginning of year
Cumulative actuarial loss recognised in SOCI at end of year
A history of experience gains and losses is shown in the following table:
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
(114.7)
(36.7)
(151.4)
10.3
(47.0)
(36.7)
Present value of defined benefit obligation
Fair value of scheme assets
Combined deficit in schemes
Experience adjustments on defined benefit obligation
Experience adjustments on fair value of scheme assets
At
30 September
2016
£m
At
30 September
2015
£m
At
30 September
2014
£m
At
30 September
2013
£m
(2,998.9)
2,752.9
(246.0)
(574.9)
460.2
(2,437.4)
2,278.1
(159.3)
(47.0)
54.5
(2,381.9)
2,170.1
(211.8)
(195.7)
145.8
(2,169.7)
1,962.0
(207.7)
(73.8)
168.1
At
3 October
2012
£m
(2,089.0)
1,764.6
(324.4)
(137.8)
99.6
The Group expects to contribute approximately £13.0 million to the schemes during the year to 30 September 2017 including the
deficit funding payments described above.
UK defined contribution plans
The Group has introduced a number of PensionSaver Group personal pension plans that have replaced the trust-based defined
contribution pension plans previously offered to employees. These plans create a consistent pensions savings vehicle across all
Group segments. The benefits for all members of the trust-based plans have been transferred to individual policies held in the
member’s own name and the scheme is now wound up. Insured death benefits previously held under this trust have already been
transferred to a new trust-based arrangement specifically for life assurance purposes.
The aggregate value of the Group personal pension plans was £105.4 million (2015 £71.8 million) at the year end. The pension cost
attributable to these plans during the year amounted to £14.0 million (2015 £6.3 million).
Overseas pension plans
Overseas subsidiaries of certain Group segments operate defined contribution retirement benefit plans, primarily in North
America and Australia. The pension cost attributable to these plans during the year amounts to £4.2 million (2015 £4.6 million).
160
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 37 Provisions
Current liabilities
At 30 September 2014
Additions
Charged during year
Movement in financial liability for closed period
purchases
Utilised during year
Disposal during year
Owned by subsidiaries disposed
Transfer from non-current liabilities
Contingent consideration paid
Notional interest on contingent consideration
Adjustment to goodwill/contingent consideration
Fair value adjustment to contingent
consideration
Exchange adjustment
At 30 September 2015
Owned by subsidiaries acquired
Additions
Charged during year
Utilised during year
Owned by subsidiaries disposed
Transfer (to)/from non-current liabilities
Reclassification of amounts held in escrow
Contingent consideration paid
Fair value adjustment to contingent
consideration
Exchange adjustment
At 30 September 2016
Non-current liabilities
At 30 September 2014
Additions
Charged during year
Utilised during year
Transfer to current liabilities
Contingent consideration paid
Notional interest on contingent consideration
Adjustment to goodwill/contingent consideration
Fair value adjustment to contingent
consideration
Exchange adjustment
At 30 September 2015
Additions
Charged during year
Utilised during year
Transfer (to)/from current liabilities
Notional interest on contingent consideration
Fair value adjustment to contingent
consideration
Exchange adjustment
At 30 September 2016
17
17
18
17
10
17
10
10
Contract
discounts
and rebates
£m
Note
Coupon
discount
£m
Onerous
leases
£m
Reorganisation
costs
£m
Contingent
consideration
£m
Legal
£m
Other (i)
£m
Total
£m
26.2
–
26.6
–
(27.2)
–
–
–
–
–
–
–
–
1.8
–
5.0
–
(5.8)
–
–
–
–
–
–
–
–
2.4
–
0.1
–
(1.9)
–
–
1.2
–
–
–
–
–
25.6
1.0
1.8
–
–
17.6
(22.4)
–
–
–
–
–
0.1
20.9
–
–
–
(0.4)
–
–
–
–
–
–
–
–
–
(0.8)
–
0.5
–
–
–
–
0.6
1.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.1
–
(1.8)
(0.2)
(1.2)
–
–
–
–
–
7.9
–
–
(3.4)
(0.5)
–
–
0.1
4.1
3.2
–
2.1
–
(0.9)
–
–
0.5
–
–
–
–
–
4.9
–
–
5.0
(4.9)
–
–
–
–
–
0.1
5.1
–
–
0.1
–
–
–
–
–
–
–
0.1
–
–
(0.1)
–
–
–
–
–
13.7
4.8
–
–
–
–
(0.8)
1.0
(14.7)
0.4
(0.3)
0.8
0.3
5.2
–
1.3
–
–
–
1.8
(2.0)
(0.3)
2.2
1.1
9.3
6.5
43.2
–
–
(1.0)
(0.4)
0.2
(0.2)
(0.4)
1.2
49.1
4.0
–
–
(1.8)
0.1
(14.5)
6.4
43.3
4.0
–
1.8
31.2
–
2.2
82.5
4.8
37.8
–
(20.0)
(20.0)
(2.4)
–
–
–
–
–
–
–
–
3.4
–
–
4.6
(3.2)
–
–
–
–
–
–
4.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.9)
(0.1)
–
(0.5)
–
–
–
–
0.4
11.3
0.1
–
3.6
(1.5)
(0.9)
(0.8)
–
–
–
0.4
12.2
4.4
–
(0.5)
(0.1)
–
–
–
–
–
0.1
3.9
–
0.7
(0.1)
0.8
–
–
0.1
5.4
(40.1)
(0.1)
(0.8)
2.2
(14.7)
0.4
(0.3)
0.8
0.7
53.2
0.1
1.3
30.8
(33.2)
(0.9)
1.5
(2.0)
(0.3)
2.2
1.7
54.4
22.0
43.2
(2.2)
(0.3)
(2.2)
(0.4)
0.2
(0.2)
(0.4)
1.3
61.0
4.0
0.7
(3.6)
(1.5)
0.1
(14.5)
6.6
52.8
(i) Other current provisions principally comprise dilapidation provisions of £2.1 million (2015 £1.8 million), provisions for the future
funding of a joint venture of £1.3 million (2015 £1.2 million), provisions for VAT of £1.1 million (2015 £1.5 million), provisions for
potential claims from customers of £0.2 million (2015 £0.7 million), gratuity provisions of £2.1 million (2015 £1.4 million), sales
ledger provisions of £0.2 million (2015 £0.2 million), national insurance provisions of £0.2 million (2015 £0.1 million), property
provisions of £1.0 million (2015 £nil) and loyalty programme provisions of £3.3 million (2015 £3.5 million).
161
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 37 Provisions continued
Other non-current provisions principally comprise dilapidation provisions of £3.8 million (2015 £2.5 million), a provision for amounts
payable to the Newspaper Society following cessation of membership on the disposal of Northcliffe Newspapers Limited in 2012
of £0.8 million (2015 £0.9 million) and provisions for remuneration following business combinations of £0.4 million (2015 £0.3 million).
The maturity profile of the Group’s contingent consideration provision is as follows:
Expiring in one year or less
Expiring between one and two years
Expiring between two and five years
At
30 September
2016
£m
At
30 September
2015
£m
9.3
5.1
38.2
52.6
5.2
7.5
41.6
54.3
The contingent consideration is based on future business valuations and profit multiples and has been estimated using
available data forecasts. The estimated range of undiscounted outcomes for contingent consideration relating to acquisitions
in the year is £nil to £21.9 million. Certain contingent consideration arrangements are not capped since they are based on future
business performance.
38 Deferred taxation
Disclosed within non-current liabilities
Disclosed within non-current assets
At 30 September 2014
Credit/(charge) to income
(Charge)/credit to equity
Owned by subsidiaries acquired
Owned by subsidiaries sold
Exchange adjustment
At 30 September 2015
Disclosed within non-current liabilities
Disclosed within non-current assets
Credit/(charge) to income
Credit to equity
Owned by subsidiaries acquired
Owned by subsidiaries sold
Exchange adjustment
At 30 September 2016
Disclosed within non-current liabilities
Disclosed within non-current assets
At 30 September 2016
Accelerated
capital
allowances
£m
Note
Goodwill
and
intangible
assets
£m
Share-
based
payments
£m
Deferred
interest
£m
Trading
losses and
tax credits
£m
Pension
scheme
deficit
£m
11
40, 41
11, (i)
40, 41
17
18
(0.5)
21.5
21.0
10.4
–
–
–
–
31.4
(0.2)
31.6
6.8
–
–
(0.2)
1.0
39.0
–
39.0
39.0
(30.5)
(61.7)
(92.2)
(9.4)
–
(19.4)
(3.1)
(5.1)
(129.2)
(38.1)
(91.1)
(5.5)
–
(6.8)
–
(14.5)
(156.0)
(23.9)
(132.1)
(156.0)
0.9
9.0
9.9
2.7
1.4
–
–
0.4
14.4
–
14.4
0.1
1.4
–
–
1.4
17.3
–
17.3
17.3
0.4
124.4
124.8
16.9
–
–
–
5.8
147.5
2.9
144.6
(28.8)
–
–
–
12.2
130.9
–
130.9
130.9
2.1
27.6
29.7
(5.1)
–
–
–
(0.4)
24.2
4.8
19.4
9.2
–
–
–
5.0
38.4
0.3
38.1
38.4
1.0
51.3
52.3
(7.1)
(2.1)
–
–
–
43.1
0.4
42.7
1.3
6.4
–
–
–
50.8
–
50.8
50.8
Other
£m
5.4
8.3
13.7
(1.7)
0.6
–
0.1
(0.1)
12.6
6.1
6.5
18.9
1.4
–
(0.2)
0.5
33.2
(0.2)
33.4
33.2
Total
£m
(21.2)
180.4
159.2
6.7
(0.1)
(19.4)
(3.0)
0.6
144.0
(24.1)
168.1
2.0
9.2
(6.8)
(0.4)
5.6
153.6
(23.8)
177.4
153.6
(i) All attributable to continuing operations.
The net deferred tax asset disclosed in the Consolidated Statement of Financial Position in respect of deferred interest, tax losses
and tax credits is analysed as follows:
UK
Rest of Europe
North America
Australia
At
30 September
2016
£m
At
30 September
2015
£m
55.2
1.5
101.6
11.0
169.3
64.6
1.6
97.1
8.4
171.7
162
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc These losses have been recognised on the basis that the Directors are of the opinion, based on recent and forecast trading,
that sufficient suitable taxable profits will be generated in the relevant territories in future accounting periods, such that it is
considered probable that these assets will be recovered. Of these assets £21.1 million (2015 £6.3 million) have expiry dates
between 2017 and 2035.
Included within other deferred tax are deferred tax assets of £1.7 million (2015 £0.3 million) in respect of financial instruments.
The £1.4 million credit to equity (2015 £0.6 million) relates entirely to financial instruments.
There is an unrecognised deferred tax asset of £72.2 million (2015 £74.3 million) which relates to revenue losses and £34.3 million
(2015 £nil) which relates to deferred interest where there is insufficient certainty that these losses will be utilised in the foreseeable
future. There is an additional unprovided deferred tax asset relating to capital losses carried forward of £131.2 million (2015
£133.0 million). Of these assets £42.7 million (2015 £28.1million) have expiry dates between 2022 and 2036.
No deferred tax liability is recognised on temporary differences of £321.5 million (2015 £281.0 million) relating to the unremitted
earnings of overseas subsidiaries as the Group is able to control the timing of the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable future. The temporary differences at 30 September 2016 represent only the
unremitted earnings of those overseas subsidiaries where remittance to the UK of those earnings may still result in a tax liability,
principally as a result of dividend withholding taxes levied by the overseas tax jurisdictions in which these subsidiaries operate.
39 Called-up share capital
Ordinary Shares of 12.5 pence each
A Ordinary Non-Voting Shares of 12.5 pence each
Ordinary Shares
A Ordinary Non-Voting Shares
Allotted, issued
and fully paid
At 30 September
2016
£m
Allotted, issued
and fully paid
At 30 September
2015
£m
2.5
42.8
45.3
2.5
42.9
45.4
Allotted, issued
and fully paid
At 30 September
2016
Number
of shares
Allotted, issued
and fully paid
At 30 September
2015
Number
of shares
19,890,364
19,890,364
342,204,470
343,066,342
362,094,834
362,956,706
The two classes of shares are equal in all respects, except that the A Ordinary Non-Voting Shares do not have voting rights and
hence their holders are not entitled to vote at general meetings of the Company.
A reconciliation of the movements in the number of shares during the year is provided below:
At 30 September 2014
Shares cancelled
At 30 September 2015
Shares cancelled
At 30 September 2016
Ordinary Shares
A Ordinary
Non-Voting Shares
19,890,364
373,966,557
–
(30,900,215)
19,890,364
343,066,342
–
(861,872)
19,890,364
342,204,470
163
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 40 Reserves
Share premium account
At start and end of year
Capital redemption reserve
At start of year
On cancellation of A Ordinary Non-Voting Shares
At end of year
Own shares
At start of year
Purchase of DMGT shares
Own shares released on vesting of share options
Movement in financial liability for closed period purchases
On cancellation of A Ordinary Non-Voting Shares
At end of year
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
17.8
17.8
4.9
0.1
5.0
(76.3)
(29.8)
10.9
–
6.5
(88.7)
1.1
3.8
4.9
(219.1)
(127.1)
32.7
20.0
217.2
(76.3)
39, (i)
(ii)
37, 46
(iii)
The Group’s investment in its own shares represents shares held in treasury or shares held by an employee benefit trust to satisfy
incentive schemes.
(i)
The Company purchased 3.5 million A Ordinary Non-Voting Shares having a nominal value of £0.4 million to match
obligations under incentive plans. The consideration paid for these shares was £23.8 million.
The Company also purchased 0.9 million A Ordinary Non-Voting Shares having a nominal value of £0.1 million as part
of a share buy-back programme. The consideration paid for these shares was £6.1 million.
Shares repurchased during the year represented 0.3% of the called-up A Ordinary Non-Voting Share capital at
30 September 2016.
(ii) During the year the Company utilised 1.4 million A Ordinary Non-Voting Shares in order to satisfy incentive schemes.
This represented 0.4% of the called-up A Ordinary Non-Voting Share capital at 30 September 2016.
(iii) During the year the Company cancelled 0.9 million A Ordinary Non-Voting shares held in treasury.
At 30 September 2016, this investment comprised 5,000,000 A Ordinary Non-Voting Shares (2015 5,000,000 shares) held in
treasury and 4,887,935 A Ordinary Non-Voting Shares (2015 2,690,766 shares) held in the Employee Benefit Trust. The market
value of the Treasury Shares at 30 September 2016 was £37.2 million (2015 £37.7 million) and the market value of the shares held
in the Employee Benefit Trust at 30 September 2016 was £36.4 million (2015 £20.3 million).
The Employee Benefit Trust is independently managed and purchases shares in order to satisfy outstanding share options
and potential awards under long-term incentive plans.
At 30 September 2016 options were outstanding under the terms of the Company’s 1997 and 2006 Executive Share Option
Schemes, together with nil cost options, over a total of 2,319,888 A Ordinary Non-Voting Shares (2015 1,674,579 shares).
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
Translation reserve
At start of year
Foreign exchange differences on translation of foreign operations
Translation reserves recycled to Consolidated Income Statement on disposals
8, 18
Transfer of loss on cash flow hedges from translation reserve to Consolidated Income Statement
Change in fair value of cash flow hedges
Loss on hedges of net investments in foreign operations
At end of year
(25.9)
116.0
(0.4)
(1.4)
(3.5)
(72.9)
11.9
(22.7)
20.0
(2.1)
0.9
(3.4)
(18.6)
(25.9)
The translation reserve arises on the translation into sterling of the net assets of the Group’s foreign operations, offset by changes in
fair value of financial instruments used to hedge this exposure.
164
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
Retained earnings
At start of year
Profit for the year
Dividends paid
Actuarial (loss)/gain on defined benefit pension schemes
Credit to equity for share-based payments
Settlement of exercised share options of subsidiaries
Initial recording of put options granted to non-controlling interests in subsidiary undertakings
Exercise of acquisition put option commitments
Cancellation of shares held in treasury
Adjustment to equity following increased stake in controlled entity
Adjustment to equity following decreased stake in controlled entity
Corporation tax on share-based payments
Deferred tax on actuarial movement
Deferred tax on financial instruments
Deferred tax on other items recognised directly in equity
At end of year
At end of year – total reserves
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
12
36
(i)
38
38
38
339.0
204.2
(76.4)
(112.0)
15.8
(12.1)
(0.5)
(0.3)
(6.5)
(4.9)
(0.2)
5.4
5.9
1.0
1.4
446.5
216.6
(75.0)
9.5
17.9
(33.5)
(20.5)
0.7
(217.2)
(5.9)
(0.2)
–
(1.9)
0.4
1.6
359.8
339.0
305.8
259.5
(i) £0.5 million (2015 £20.5 million) representing the present value of written put options granted to non-controlling interests in
the year has been recorded as a reduction in equity on initial recognition, as the arrangement represents a transaction
with equity holders. Changes in value after initial recognition are recorded in the Consolidated Income Statement.
41 Non-controlling interests
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
At start of year
Share of profit for the year
Dividends paid
Shares issued
Non-controlling interests arising from business combinations
Loss on hedges of net investments in foreign operations
Transfer of loss on cash flow hedges to Consolidated Income Statement
Change in fair value of cash flow hedges
Foreign exchange differences on translation of foreign operations
Actuarial (loss)/gain on defined benefit pension schemes
Exercise of acquisition put option commitments
Credit to equity for share-based payments
Deferred tax on actuarial movement
Deferred tax on financial instruments
Deferred tax on other items recognised directly in equity
Adjustment to non-controlling interest following decreased stake in controlled entity
Adjustment to non-controlling interest following increased stake in controlled entity
Other transactions with non-controlling interests
Initial recording of put options granted to non-controlling interests in subsidiaries
17
36
38
38
38
Recycled to Consolidated Income Statement on disposals
8, 18
154.9
10.0
(12.7)
0.3
7.6
(14.0)
(0.7)
(1.7)
31.2
(2.7)
–
0.2
0.5
0.4
–
0.2
4.9
0.2
(0.2)
(0.2)
117.8
28.7
(9.8)
0.8
9.1
(2.8)
0.4
(1.6)
7.5
0.8
(0.7)
(0.6)
(0.2)
0.2
(0.2)
0.2
5.9
(0.6)
–
–
At end of year
178.2
154.9
165
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 41 Non-controlling interests continued
Set out below is summarised financial information of Euromoney Institutional Investor PLC (Euromoney) which has a 32.2%
(2015 32.1%) non-controlling interest that is material to the Group. The summarised financial information is extracted on a
100% basis from Euromoney’s own financial statements as at 30 September 2016.
Euromoney is listed on the London Stock Exchange and is a leading international B2B media group focused primarily on the
international finance, metals and commodities sectors.
Revenue
Operating profit before share of results of joint ventures and associates
Share of results of joint ventures and associates
Interest income
Interest expense
Tax
Profit after tax
Other comprehensive income
Total comprehensive income
Non-current assets
Cash and cash equivalents
Other current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
2016
£m
403.1
47.5
(1.8)
0.7
(2.4)
(12.9)
31.1
31.1
62.2
2016
£m
601.9
10.6
159.7
772.2
(249.4)
(45.3)
(294.7)
477.5
For the year ended 30 September 2016, the movement in the non-controlling interest in Euromoney is as follows:
2015
£m
403.4
123.1
(0.4)
5.1
(4.6)
(17.6)
105.6
14.4
120.0
2015
£m
579.1
8.9
101.2
689.2
(205.1)
(39.2)
(244.3)
444.9
2015
£m
119.6
0.5
33.8
(9.8)
0.2
3.6
(1.1)
0.3
2016
£m
147.1
0.3
10.3
(9.9)
0.2
9.6
–
1.3
158.9
147.1
Opening balance
Shares issued
Share of profit for the year
Dividends paid
Adjustment to non-controlling interest following decreased stake in controlled entity
Other transactions with non-controlling interests
Exercise of acquisition put option commitments
Exchange adjustment
Closing balance
166
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 42 Commitments and contingent liabilities
Commitments
Property, plant and equipment
Contracted but not provided in the financial statements
At
30 September
2016
£m
At
30 September
2015
£m
–
0.1
At 30 September 2016 the Group had outstanding commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Within one year
Between one and two years
Between two and five years
After five years
At
30 September
2016
Properties
£m
At
30 September
2015
Properties
£m
At
30 September
2016
Plant and
equipment
£m
At
30 September
2015
Plant and
equipment
£m
32.2
26.2
63.9
22.1
144.4
32.4
25.8
63.7
30.3
152.2
6.3
1.4
1.8
–
9.5
8.2
3.5
0.7
–
12.4
The Group’s most significant leasing arrangements relate to rented properties. The Group negotiates lease contracts according
to the Group’s needs with a view to balancing stability, security of tenure and lease terms against the risk of entering into
excessively long or onerous arrangements.
Of the Group’s rented properties, the most significant commitments relate to the DMGT head office premises at 2 Derry Street,
London W8 5TT, where the lease expires in December 2022, Euromoney’s head office premises at 4 and 8 Bouverie Street, London
which expires in May 2029 and of the RMS head office at 7575 Gateway Blvd, Newark, California which expires in December 2020.
Future payments under non-cancellable agreements made to secure venues for future events and exhibitions are separately
disclosed below.
Within one year
Between one and two years
Between two and five years
At
30 September
2016
£m
At
30 September
2015
£m
13.1
–
–
13.1
10.5
6.4
0.3
17.2
The Group entered into arrangements with its ink suppliers to obtain ink for the period to September 2018 at competitive prices
and to secure supply. At the year end, the commitment to purchase ink over this period was £31.1 million (2015 £42.0 million).
The Group has entered into agreements with certain printers for periods up to 2024 at competitive prices and to secure supply.
At the year end, the commitment to purchase printing capacity over this period was £49.2 million (2015 £54.2 million).
During the year the Group entered into a number of arrangements with Microsoft to provide cloud infrastructure to the RMS
segment until June 2019. At the year end the commitment under this agreement was £11.6 million (2015 £nil).
Contingent liabilities
The Group has issued standby letters of credit of £3.8 million (2015 £2.2 million).
The Group is exposed to libel claims in the ordinary course of business and vigorously defends against claims received. The Group
makes provision for the estimated costs to defend such claims when incurred and provides for any settlement costs when such an
outcome is judged probable.
Four writs claiming damages for libel were issued in Malaysia against the Company and three of its employees in respect of an
article published in one of the Company’s magazines, International Commercial Litigation, in November 1995. The writs were
served on the Company on 22 October 1996. Two of these writs have been discontinued. The total outstanding amount claimed
on the two remaining writs is Malaysian ringgit 82.9 million (£15.4 million). No provision has been made for these claims in these
financial statements as the Directors do not believe the Company has any material liability in respect of these writs.
167
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 43 Share-based payments
The Group offers a number of share-based remuneration schemes to Directors and certain employees. The principal schemes
comprise share options under the DMGT, Euromoney and within dmg information, Risk Management Solutions (RMS), Genscape
and Trepp Executive Share Option Schemes (ESOS), the Euromoney Capital Appreciation Plan and the Company’s LTIP. Share
options are exercisable after three years, subject in some cases to the satisfaction of performance conditions, and up to 10 years
from the date of grant at a price equivalent to the market value of the respective shares at the date of grant. Details of the
performance conditions relating to the DMGT schemes are explained in the Remuneration Report.
For equity-settled share-based payment transactions, IFRS 2, Share-based payments applies to grants of shares, share options
or other equity instruments made after 7 November 2002 that had not vested by 1 January 2005.
The charge to the Consolidated Income Statement is as follows:
Segment
Scheme
DMGT Board and head office
Executive Share Option Scheme
RMS
Euromoney
dmg information
dmg media
Social security costs
Executive Bonuses
Long-Term Incentive Plan
Option Plan
SAYE and Recruitment Award/CAP Award
Cash-settled options
Option Plan
Long-Term Incentive Plan
Year ended
30 September
2016
£m
Year ended
30 September
2015
£m
Note
0.2
–
7.0
4.6
0.7
0.5
1.7
1.9
3.2
6
19.8
0.3
0.1
2.2
13.4
(2.0)
(0.5)
2.0
1.3
0.5
17.3
The fair value of share options for each of these schemes was determined using a Black-Scholes model. Full details of inputs to the
models, particular to each scheme, are set out below. With respect to all schemes, expected volatility has been estimated, based
upon relevant historical data in respect of the DMGT A Ordinary Non-Voting Share price. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability.
The Group did not reprice any of its outstanding options during the year.
Further details of the Group’s significant schemes are set out below:
DMGT 2006 ESOS
Under the DMGT 2006 ESOS, each award of options has a maximum life of 10 years. The maximum award limit is 100% of salary in
any year in normal circumstances and 200% of salary in exceptional circumstances. Awards will not normally vest until three years
after the award and the performance conditions have been met. No options were outstanding to Directors during the year.
Outstanding at 1 October 2015
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Number of
share options
Year ended
30 September
2016
Weighted
average
exercise price
£
Year ended
30 September
2015
Number of
share options
Year ended
30 September
2015
Weighted
average
exercise price
£
921,668
795,000
(60,000)
(69,054)
(60,000)
1,527,614
550,579
421,383
5.90
6.93
8.12
5.23
6.98
6.34
4.65
5.02
1,459,052
133,566
–
(670,950)
–
921,668
421,383
857,333
4.71
8.29
–
4.14
–
5.90
5.02
4.62
The aggregate of the estimated fair values of the options granted during the year is £0.2 million (2015 £0.2 million).
The options outstanding at 30 September 2016 had a weighted average remaining contractual life of 5.8 years (2015 5.6 years).
168
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
27 November
2006
17 December
2007
24 November
2008
26 January
2009
14 December
2009
6 December
2010
6.88
6.88
52,476
10.00
7.00
6.88
4.30
1.90
20.00
1.51
5.05
5.05
46,000
10.00
7.00
5.05
4.30
2.84
20.00
1.18
2.50
2.50
27,000
10.00
7.00
2.50
3.00
5.89
40.00
0.56
2.53
2.53
27,887
10.00
7.00
2.53
3.00
5.81
40.00
0.56
4.04
4.04
82,768
10.00
7.00
4.04
3.00
3.64
40.00
1.13
5.39
5.39
77,198
10.00
7.00
5.39
2.00
2.97
30.00
1.22
5 December
2011
27 June
2012
17 December
2012
9 December
2013
10 December
2014
14 December
2015
3.98
3.98
28,000
10.00
7.00
3.98
1.50
4.27
30.00
0.71
3.91
3.91
100,000
10.00
7.00
3.91
1.00
4.43
30.00
0.70
5.27
5.27
109,250
10.00
7.00
5.27
1.00
3.42
30.00
0.98
9.16
9.16
83,469
10.00
5.00
9.16
1.50
2.00
25.00
1.69
8.10
8.29
118,566
10.00
5.00
8.29
1.08
2.77
25.70
1.31
7.06
7.06
75,000
5.00
5.00
7.06
1.19
3.26
25.10
0.93
22 December
2015
22 December
2015
22 December
2015
7.06
7.06
7.06
7.06
7.06
7.06
233,334
233,333
233,333
3.00
2.00
7.06
0.77
3.26
24.10
0.81
4.00
2.00
7.06
0.96
3.26
24.00
0.90
5.00
2.00
7.06
1.19
3.26
25.10
1.04
169
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 43 Share-based payments continued
Nil cost options under the DMGT Executive Bonus Scheme
Since December 2009 a portion of the bonus earned by Executive Directors under the Executive Bonus Scheme has been
deferred into shares in the form of nil cost options. These options are to the value of the equity portion of the bonus and are
fully expensed in the year in which they are earned. Further details are shown in the Remuneration Report.
Outstanding at 1 October 2015
Granted during the year
Exercised during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Number of
share options
Year ended
30 September
2016
Weighted
average
exercise price
£
Year ended
30 September
2015
Number of
share options
Year ended
30 September
2015
Weighted
average
exercise price
£
752,911
39,363
–
792,274
735,803
512,604
–
–
–
–
–
–
863,625
32,271
(142,985)
752,911
512,604
396,019
–
–
–
–
–
–
The aggregate of the estimated fair values of the awards granted during the year is £nil (2015 £nil).
The awards outstanding at 30 September 2016 had a weighted average remaining contractual life of 2.3 years (2015 3.1 years).
DMGT Long-Term Incentive Plan
Details of the terms and conditions relating to this scheme are set out in the Remuneration Report.
Outstanding at 1 October 2015
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Number of
share options
2,801,711
1,212,733
(21,858)
(470,860)
3,521,726
–
111,110
Year ended
30 September
2016
Weighted
average
exercise price
£
6.08
6.71
7.32
4.51
6.50
–
4.04
Year ended
30 September
2015
Number of
share options
2,273,571
612,703
–
(84,563)
2,801,711
111,110
–
Year ended
30 September
2015
Weighted
average
exercise price
£
5.41
8.29
–
4.07
6.08
4.04
–
The aggregate of the estimated fair values of the awards granted during the year is £8.1 million (2015 £5.0 million).
The awards outstanding at 30 September 2016 had a weighted average remaining contractual life of 1.8 years (2015 1.9 years).
Options under the DMGT Long-Term Incentive Scheme
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
20 December
2010
20 December
2010
20 December
2010
20 December
2010
20 December
2010
5.59
5.59
5.59
5.59
5.59
5.59
5.59
5.59
5.59
5.59
45,583
22,791
22,791
22,791
22,791
2.78
Nil
Nil
3.00
2.86
30.00
5.59
3.00
Nil
Nil
3.00
2.86
30.00
5.59
4.00
Nil
Nil
3.00
2.86
30.00
5.59
5.00
Nil
Nil
3.00
2.86
30.00
5.59
6.00
Nil
Nil
2.00
2.86
30.00
5.59
170
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (£)
13 February
2012
10 December
2012
9 December
2013
22 December
2014
22 December
2014
4.37
4.37
5.27
5.27
9.16
9.16
8.11
8.11
8.11
8.11
643,614
585,699
345,680
215,133
391,638
5.00
Nil
Nil
1.00
Nil
30.00
4.37
5.00
Nil
Nil
1.00
Nil
30.00
5.27
5.00
Nil
Nil
1.50
Nil
25.00
9.07
5.00
Nil
Nil
1.08
Nil
25.70
8.11
3.00
Nil
Nil
0.65
Nil
24.10
8.11
14 December
2015
14 December
2015
14 December
2015
14 December
2015
6.71
6.71
6.71
6.71
6.71
6.71
6.71
6.71
63,711
213,531
519,387
406,586
1.00
Nil
Nil
0.77
Nil
24.00
6.71
2.00
Nil
Nil
0.58
Nil
26.00
6.71
3.00
Nil
Nil
0.77
Nil
24.00
6.71
4.00
Nil
Nil
0.77
Nil
24.00
6.71
RMS option plan
RMS options are granted at market value. The options become exercisable after a four-year vesting period and lapse ten years
and five years from grant date under the 2001 and 2005 option plans respectively. The stock issued under the plan is subject to put
or call options where DMGT has the right to settle in DMGT A Ordinary Non-Voting Shares or cash. The option plan classification
changed from a cash-settled plan in June 2005 to an equity-settled plans following this change of settlement feature of stock
issued under the plan. After 30 September 2011 options under the 2001 and 2005 plans were no longer awarded.
During the year ended 30 September 2011 RMS introduced the Executive Incentive Plan (EIP) and the Long-Term Incentive Plan
(LTIP). Under the EIP options and Restricted Stock Units (RSU) were awarded to senior management. Under the LTIP RSUs were
awarded to key employees. The options and RSUs were granted at market value under both plans. The options vest based on the
conditions of time and company performance at three and five years from date of grant. The options lapse after seven years from
grant date. The RSUs under both plans vest annually over three years.
A 2014 Equity Award Plan (the Plan) was introduced during the year ended 30 September 2014. Under the Plan options and RSUs,
both time and performance based, are granted to employees who are deemed to be in a position to contribute to the long-term
success of RMS.
The RSU expense is determined by the fair market value of RMS stock at the date of grant. The expense is amortised using an
accelerated method. Under this method the RSUs are equally allocated to each of the three annual vesting components and
the related expense is amortised over 12, 24, and 36 months respectively.
In November 2014, RMS approved an option exchange programme allowing RMS option holders to exchange their existing
out-of-the-money options for new options with a strike price of US$40.0 or RSUs where eligible.
In 2015 RMS introduced the 2015 stock option plan which was adopted in January 2016. Options granted under this plan vest
on satisfaction of two conditions: a four-year service period; the occurrence of an initial public offering of RMS or an event
in which the Group ceases to hold at least 50% of the voting rights of RMS.
171
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 43 Share-based payments continued
Outstanding at 1 October 2015
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Weighted
average
exercise price
US$
Year ended
30 September
2015
Restated
Number of
share options
Year ended
30 September
2015
Restated
Weighted
average
exercise price
US$
10.05
9.04
9.33
–
–
9.18
10.03
10.04
8,194,192
2,143,436
(8,264,076)
(25,128)
(7,504)
2,040,920
1,297,024
2,901,144
11.78
10.00
12.83
3.83
4.15
10.05
10.04
11.53
Year ended
30 September
2016
Number of
share options
2,040,920
11,539,810
(626,380)
–
–
12,954,350
1,537,824
5,188,096
The weighted average share price at the date of exercise for share options exercised during the year was US$nil (2015 US$15.53).
The options outstanding at 30 September 2016 had a weighted average remaining contractual life of 8.5 years (2015 6.1 years).
The comparatives have been amended in the above table to reflect a four for one stock split which occurred during the year.
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (US$)
Option price (US$)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (US$)
Risk-free rate (%)
Expected dividend yield (%)
Volatility (%)
Fair value per option (US$)
During 2014
During 2015
During 2016
14.59
14.59
10.00
10.00
9.04
9.04
16,000
1,840,540
11,097,810
7.00
3–6
14.59
1.25
2.91
28.81
2.70
7.00
4–5
10.00
1.25
3.63
25.63
1.44
10.00
6.00
9.04
1.10
0.00
25.60
2.58
Expected volatility was determined by calculating the historical volatility of comparable companies.
RMS RSU awards
Outstanding at 1 October 2015
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Weighted
average
exercise price
US$
Year ended
30 September
2015
Restated
Number
of RSUs
Year ended
30 September
2015
Restated
Weighted
average
exercise price
US$
–
–
–
–
–
–
–
2,806,164
2,946,236
–
(1,119,036)
(1,896,596)
2,736,768
16,750
–
–
–
–
–
–
–
–
Year ended
30 September
2016
Number
of RSUs
2,736,768
78,192
(355,556)
(1,053,048)
–
1,406,356
–
16,750
The weighted average share price at the date of exercise for RSUs exercised during the year was US$9.61 (2015 US$10.00).
The number of RSUs in 2015 have been amended in the above table to reflect a four for one stock split which occurred during
the year.
172
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Euromoney Capital Appreciation Plan 2014 (CAP 2014)
The CAP 2014 was approved by Euromoney’s shareholders on 30 January 2014 as a replacement for CAP 2010. Each CAP 2014
award comprises two equal instalments: an option to subscribe for Ordinary Shares of 0.25 pence each in Euromoney for nil
consideration; and a right to receive a cash payment. The value of the awards is linked directly to the growth in profits over the
performance period. The award pool comprises a maximum of 3.5 million Euromoney shares and cash of £7.6 million, limiting the
cost of the scheme to £41.0 million over its life. Awards will vest in three equal tranches, subject to the performance conditions and
lapse to the extent unexercised by 30 September 2023.
Year ended
30 September
2016
Number of
share options
Year ended
30 September
2016
Weighted
average
exercise price
£
Year ended
30 September
2015
Number of
share options
Year ended
30 September
2015
Weighted
average
exercise price
£
Outstanding at 1 October 2015 and 30 September 2016
2,097,363
0.0025
2,097,363
0.0025
Exercisable at 30 September 2016
Exercisable at 1 October 2015
–
–
–
–
–
–
–
–
The options outstanding at 30 September 2016 had a weighted average remaining contractual life of 6.81 years (2015 8.01 years).
The aggregate of the estimated fair values of the options granted during the year is £nil (2015 £nil).
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (£)
Option price (pence)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (pence)
Risk-free rate (%)
Expected dividend yield (%)
Fair value per option (£)
20 June 2014
20 June 2014
20 June 2014
11.16
0.25
11.16
0.25
11.16
0.25
140,412
832,998
1,123,953
9.28
4.00
0.25
1.50
8.43
9.89
9.28
5.00
0.25
1.90
8.43
9.57
9.28
6.00
0.25
2.30
8.43
9.19
The CAP 2014 options were valued using a fair value model that adjusted the share price at the date of grant for the net present
value of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the
models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
Euromoney Share Option Plan (CSOP 2014)
The CSOP 2014 was approved by Euromoney’s shareholders on 30 January 2014. Each CSOP 2014 option enables each UK
participant to purchase up to 2,688 shares and each Canadian participant to purchase up to 8,963 shares in Euromoney at a
price of £11.15 per share, the market value at the date of grant. The options vested and became exercisable at the same time as
the corresponding share award under the CAP 2014. The CSOP 2014 has the same performance criteria as that of the CAP 2014.
The number of CSOP 2014 awards that vest proportionally reduced the number of shares that vest under the CAP 2014. The CSOP
2014 is effectively a delivery mechanism for part of the CAP 2014 award. The CSOP 2014 options have an exercise price of £11.15
which will be satisfied by a funding award mechanism which is in place and results in a net gain on these options being delivered
in the equivalent number of shares to participants as if the same gain had been delivered using the CAP 2014 options. The amount
of the funding award will depend on the Euromoney share price at the date of exercise.
Year ended
30 September
2016
Number of
share options
Year ended
30 September
2016
Weighted
average
exercise price
£
Year ended
30 September
2015
Number of
share options
Year ended
30 September
2015
Weighted
average
exercise price
£
Outstanding at 1 October 2015 and 30 September 2016
517,031
0.0025
517,031
0.0025
Exercisable at 30 September 2016
Exercisable at 1 October 2015
–
–
–
–
–
–
–
–
The options outstanding at 30 September 2016 had a weighted average remaining contractual life of 6.81 years (2015 8.01 years).
The aggregate of the estimated fair values of the options granted during the year is £nil (2015 £nil).
173
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 43 Share-based payments continued
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (£)
Option price (£)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (£)
Risk-free rate (%)
Expected dividend yield (%)
Fair value per option (£)
20 June 2014
11.16
11.16
517,031
9.28
4.0
11.16
1.50
8.43
9.89
Euromoney Capital Appreciation Plan 2010 (CAP 2010)
The CAP 2010 executive share option scheme was approved by Euromoney shareholders on 21 January 2010. Each CAP 2010
award comprises two equal elements: an option to subscribe for Ordinary Shares of 0.25 pence each in Euromoney at an exercise
price of 0.25 pence per Ordinary Share; and a right to receive a cash payment.
The award pool comprised 3,500,992 Euromoney Ordinary Shares with an option value of £15.0 million and cash of £15.0 million,
limiting the total accounting cost to £30.0 million over its life.
The awards will vest in two equal tranches. The first tranche of awards became exercisable in February 2013 on satisfaction of the
primary performance condition in 2012. The second tranche became exercisable in February 2014 in which the primary
performance condition was again satisfied. The vesting of the second tranche is subject to an additional performance condition,
applicable for the vesting of the second tranche of awards, which requires the profits of each business in the subsequent vesting
period be at least 75% of that achieved in the year the first tranche of awards became exercisable. The options lapse to the extent
unexercised by 30 September 2020.
The number of options received under the share award of CAP 2010 is reduced by the number of options vesting with participants
from the 2010 Euromoney Share Option Plan.
The CAP 2010 options were valued using a fair value model that adjusted the share price at the date of grant for the net present
value of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the
models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
Outstanding at 1 October 2015
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 September 2016
Exercisable at 30 September 2016
Exercisable at 1 October 2015
Year ended
30 September
2016
Number of
share options
40,933
(3,664)
(21,743)
–
0.0025
0.0025
0.0025
–
15,526
0.0025
–
–
40,933
0.0025
Year ended
30 September
2016
Weighted
average
exercise price
£
Year ended
30 September
2015
Number of
share options
Year ended
30 September
2015
Weighted
average
exercise price
£
55,421
0.0025
–
(6,599)
(7,889)
40,933
40,933
55,421
–
0.0025
0.0025
0.0025
0.0025
0.0025
The weighted average share price at the date of exercise for share options exercised during the year was £9.68 (2015 £10.47).
The options outstanding at 30 September 2016 had a weighted average remaining contractual life of 4.0 years (2015 5.0 years).
The aggregate of the estimated fair values of the options granted during the year is £nil (2015 £nil).
174
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (£)
Option price (pence)
Number of share options outstanding
Term of option (years)
Assumed period of exercise after vesting (years)
Exercise price (pence)
Risk-free rate (%)
Expected dividend yield (%)
Fair value per option (£)
30 March 2010
5.01
0.25
15,526
10.00
5.00
0.25
2.75
7.00
4.20
Cash-settled options
Euromoney has a liability in respect of the CAP 2010 scheme classified by IFRS 2 as cash settled. The total carrying value at
30 September 2016 included in the Consolidated Statement of Financial Position is a liability of £0.5 million (2015 £0.1 million).
Options with an intrinsic value of £nil (2015 £nil) had vested but are not yet exercised.
44 Ultimate holding company
The Company’s immediate parent Company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda.
Daily Mail and General Trust plc and Euromoney Institutional Investor PLC are the only companies in the Group to prepare
consolidated financial statements.
45 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not disclosed in this Note. The transactions between the Group and its joint ventures and associates are disclosed below.
Ultimate controlling party
RCL is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT Ordinary Shares. RCL has
controlled the Company for many years and as such is its immediate parent Company. RCL is owned by a trust (the Trust) which
is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party of the
Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, the Trust and its
beneficiaries are related parties of the Company.
Transactions with Directors
During the prior year, in an arm’s length transaction, Euromoney sold a property to Mintel Ltd for consideration of £2.3 million.
Nicholas Berry, a Director of DMGT plc, owns 97.0% of Mintel Ltd through a family holding.
There were no other material transactions with Directors of the Company during the year, except for those relating to
remuneration and shareholdings, disclosed in the Remuneration Report.
For the purposes of IAS 24, Related Party Disclosures, executives below the level of the Company’s Board are not regarded as
related parties.
The remuneration of the Directors at the year end, who are the key management personnel of the Group, is set out in aggregate
in the audited part of the Directors’ Remuneration Report.
Transactions with joint ventures and associates
Details of the Group’s principal joint ventures and associates are set out in Note 25.
Associated Newspapers Ltd (ANL) has a 33.3% (2015 33.3%) shareholding in Fortune Green Ltd, an associate. During the year,
the Group provided computer and office services of £nil (2015 £0.1 million). The amount due from Fortune Green Ltd at
30 September 2016 was £nil (2015 £nil) after writing off £nil (2015 £0.3 million) following closure of the business during the year.
Daily Mail and General Holdings Ltd (DMGH) previously held a 38.7% shareholding in Local World Holdings Ltd (Local World) which
was sold to Trinity Mirror plc on 13 November 2015 for £73.0 million net of transaction costs. During the period prior to disposal, the
Group provided printing and newspaper services of £1.5 million (2015 £18.2 million) to Local World and the amounts paid to Local
World in respect of receivables, collected on their behalf and revenue shares amounted to £7.1 million (2015 £52.0 million). The net
amount due by the Group to Local World at 30 September 2016 was £nil (2015 £2.0 million). During the period prior to disposal,
Local World were charged £nil (2015 £0.6 million) by the Group for rent and service charges in relation to leasehold properties.
During the period prior to disposal the Group received dividends of £nil (2015 £23.2 million) from Local World.
During the year, Landmark Information Group Ltd (Landmark) charged management fees of £0.3 million (2015 £0.3 million)
to Point X Ltd, a joint venture, and recharged costs of £0.1 million (2015 £0.1 million). Point X Ltd received royalty income from
Landmark of £0.1 million (2015 £nil). The amount due from Point X Ltd to Landmark at 30 September 2016 was £nil (2015 £0.1 million).
Trepp Inc. has a 15.1% (2015 18.8%) interest and loan note receivable of £nil (2015 £0.3 million) in Mercatus Inc, an associate.
During the period Mercatus Inc issued additional share capital and the loan note receivable was converted into equity.
On 1 April 2016, DMGI Land and Property Europe Ltd (LPE Ltd) received an option to purchase the remaining shares in Ochresoft
Technologies Ltd (OTL), an associate in which LPE previously held a 30.0% interest (2015 30.0%) and the Group gained control.
At 30 September 2016 OTL had a loan balance of £nil (2015 £0.6 million).
175
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 45 Related party transactions continued
Decision Insight Information Group (UK) Ltd (DIIG UK) has a 50.0% (2015 50.0%) interest in Decision First Ltd (DF), a joint venture.
During the year, DIIG UK recharged costs to DF amounting to £0.2 million (2015 £0.2 million).
On-Geo GmbH (On-Geo) has a 50.0% (2015 50.0%) interest in HypoPort On-Geo GmbH (HypoPort), a joint venture. During the
year, HypoPort made purchases from On-Geo amounting to £8.4 million (2015 £4.9 million). At 30 September 2016, £1.8 million
(2015 £1.0 million) was owed by HypoPort to On-Geo.
On-Geo previously had a 50.0% (2015 50.0%) interest in Instant Service GmbH (ISAG), a joint venture. On 1 April 2016 the Group
received an option to purchase the remaining shares in ISAG and the Group gained control. During the period to 1 April 2016 ISAG
received revenues from On-Geo amounting to £5.8 million (2015 £9.6 million) and was recharged costs from On-Geo amounting
to £0.1 million (2015 £0.2 million).
Hobsons Inc acquired a 50.0% stake in Knowlura, a joint venture, following the sale of Enrolment Management Solutions. Hobsons
Inc is obligated to fund Knowlura’s working capital up to US$1.0 million (£0.8 million). Interest is charged at 6.0% on the outstanding
amount. No amounts were outstanding at 30 September 2016 (2015 £nil). A deferred revenue balance payable by Knowlura of
£0.4 million was recognised as part of the sale and remains outstanding at 30 September 2016.
On 26 November 2015 DMG Media Investments Ltd acquired a 23.9% stake in Excalibur Holdco Ltd (Excalibur), an associate.
During the year, services provided to Excalibur amounted to £1.5 million (2015 £nil). At 30 September 2016 amounts due from
Excalibur amounted to £1.1 million (2015 £nil), together with loan notes of £20.5 million (2015 £nil). The loan notes carry a coupon
of 10% and £1.8 million (2015 £nil) was due from Excalibur at 30 September 2016 in relation to this coupon.
ANL holds a 50.0% (2015 50.0%) shareholding in Artirix Ltd (Artirix), a joint venture. During the year the Group provided services
totalling £0.1 million (2015 £0.1 million) to Artirix, with £nil (2015 £nil) remaining due at 30 September 2016.
The Group has a 31.3% (2015 31.3%) shareholding in Zoopla Property Group Plc (Zoopla), an associate. During the year, the Group
received dividends of £5.2 million (2015 £2.7 million) from Zoopla.
AN Mauritius Ltd has a 26.0% (2015 26.0%) interest in Mail Today Newspapers Pte Ltd, a joint venture. During the year, additional
share capital of £0.1 million (2015 £0.1 million) was invested in Mail Today Newspapers Pte Ltd.
ANL has a 50.0% (2015 50.0%) shareholding in Northprint Manchester Ltd, a joint venture. The net amount due to ANL of £5.8 million
(2015 £5.8 million) has been fully provided.
ANL had a 50.0% (2015 50.0%) interest in Daily Mail.com Australia Pty Ltd (Mail Online Australia), a joint venture. In January 2016
ANL acquired the remaining 50.0% in Mail Online Australia. During the period prior to acquisition ANL provided services
amounting to £0.9 million (2015 £0.8 million). At 30 September 2016, amounts owed from Mail Online Australia amounted to £nil
(2015 £1.6 million).
DMG US Holdings Inc. has a 45.0% (2015 45.0%) shareholding in Truffle Pig LLC, an associate. A £0.2 million (2015 £nil) loan
advanced by DMG US Holdings Inc. during the year remains outstanding at 30 September 2016.
Mail Media Inc. has a 50.0% (2015 50.0%) shareholding in Daily Mail On Air LLC, a joint venture. A £0.2 million loan (2015 £nil)
advanced by Mail Media Inc. remains outstanding at 30 September 2016.
During the year the Group received a dividend of £nil (2015 £0.1 million) from Capital NET Ltd, an associate. The Group disposed
of its investment in Capital NET Ltd during the prior year.
Other related party disclosures
During the prior year RCL received a payment of £52,200 relating to legal fees incurred in respect of Zoopla’s acquisition of
uSwitch and a payment of £10,000 in relation to an Australian tax enquiry.
During the prior year Lady Rothermere received a payment of £0.1 million relating to consultancy services provided during the
refurbishment of Northcliffe House.
Under an agreement to guarantee the income generated from certain property assets held by the Harmsworth Pension Scheme
which were purchased from the Group during a prior period, the Group was charged for rent and service charges in relation to
the current year amounting to £1.1 million (2015 £1.2 million). At 30 September 2016, the Harmsworth Pension Scheme was owed
£0.4 million (2015 £0.1 million) by the Group.
At 30 September 2016 the Group owed £0.8 million (2015 £0.8 million) to the pension schemes which it operates. This amount
comprised employees’ and employer’s contributions in respect of September 2016 payrolls which were paid to the pension
schemes in October 2016.
The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged
during the year was £0.1 million (2015 £0.5 million).
Contributions made during the year to the Group’s retirement benefit plans are set out in Note 36, along with details of the Group’s
future funding commitments.
In July 2012, the Group entered into a contingent asset partnership whereby a £150.0 million loan note, guaranteed by the
Company, was used to commit funding of £10.8 million p.a. to the Harmsworth Pension Scheme. Interest payable to DMG Pensions
Partnership LP in the year amounted to £11.1 million (2015 £11.1 million).
176
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 46 Post balance sheet events
Disposals
Following a post year-end evaluation dmg media has entered into a period of consultation with a view to closing its print site
in Didcot.
The consultation process is expected to be complete by the end of December 2016. Should the site be closed, costs associated
with the closure are estimated to be in the region of £47.0 million.
On 8 December 2016 the Group announced its intention to reduce its holding in Euromoney Institutional Investor PLC (Euromoney)
to approximately 49% by a sale of approximately 32.3 million shares in Euromoney.
The sale is to comprise two parts: (i) a placing and (ii) a buy-back by Euromoney and subsequent cancellation of the bought back
shares. The effect of the sale will be to reduce DMGT’s holding from 67.9% of Euromoney’s issued share capital to approximately
49% when Euromoney will cease to be a subsidiary and will be accounted for as an associate.
47 Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006
for the year ending 30 September 2016:
Subsidiary name
Company registration number
Subsidiary name
Company registration number
A&N International Media Ltd
Associated London Distribution Ltd
EX ERH Ltd
Northcliffe Media Ltd
DMG Information Ltd
DMG Angex Ltd
DMG Events International Ltd
DMG Events Ltd
CTF Asset Finance Ltd
Daily Mail International Ltd
Derry Street Investments Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
04147978
03961514
05910261
03403993
03708142
02302189
04118004
01150306
03178533
01966438
04485760
05528329
04521108
DMG Business Media Ltd
DMG Charles Ltd
DMG Investment Holdings Ltd
DMG Minor Investments Ltd
DMG Plymouth Ltd
DMGRH Finance Ltd
DMGZ Ltd
Harmsworth Royalties Ltd
Kensington Finance Ltd
Kensington US Holdings Ltd
Ralph US Holdings
Young Street Holdings Ltd
02823743
04211684
03263138
04228751
09198500
03191181
00272225
04219212
03960683
06320636
06341444
04485808
The Directors of Daily Mail and General Trust plc have confirmed that the Company will provide a guarantee under Section 479C
in relation to the subsidiaries listed above.
No dormant subsidiaries have taken the exemption from preparing individual accounts by virtue of Section 394A of the
Companies Act 2006.
No dormant subsidiaries have taken the exemption from filing with the registrar individual accounts by virtue of Section 448A
of the Companies Act 2006.
The following UK subsidiaries will take advantage of the audit exemption set out within Section 480 of the Companies Act 2006,
exemption from audit for dormant companies for the year ending 30 September 2016:
Subsidiary name
Company registration number
Subsidiary name
Company registration number
Associated Newspapers (USA) Ltd
03016861
The PSA Group Ltd
Associated Newspapers (Ireland)
Holdings Ltd
Daily Mail Ltd
Derby Telegraph Media Group Ltd
EX TTH Ltd
04042170
01160542
00218661
04282263
Grimsby & Scunthorpe Media Group Ltd 02642787
Harmsworth Printing (Stoke) Ltd
Mail Life Financial Services Ltd
North Cornwall Post & Diary Ltd
Rentalsystems.com Ltd
The Mail on Sunday Ltd
Richards Gray Holdings Ltd
DKA Ltd
Lee & Co (Belfast) Ltd
Property Search Agency Ltd
Propertyflow Ltd
Richards Gray Ltd
The Conveyancing Channel Ltd
Legal Media Group Ltd
04148861
01063950
04865549
04404934
01160545
05778231
SC292312
NI028688
02027265
05155901
03209331
04149551
04252163
Bath News & Media
Central Independent News
and Media Ltd
Conveyancing Searches Ltd
Cornwall & Devon Media Ltd
Courier Media Group Ltd
Express & Echo News & Media Ltd
Gloucestershire Media Ltd
Leicester Mercury Media Group Ltd
Northcliffe Trustees Ltd
South West Media Group Ltd
South West Wales Media Ltd
03480282
03215208
03015855
05063368
00348987
00101944
00070992
00163659
00226937
03394992
00210591
00120013
The Conveyancing Report Agency Ltd 04666668
The Western Gazette Co Ltd
ABF1 Ltd
ABF2 Ltd
Euromoney ESOP Trustee Ltd
Euromoney Guarantee Ltd
00022796
02386168
03101837
02662861
08871434
177
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Note
Country of incorporation
or registration
Classes of shares held
% shareholding (% held
directly by parent)
48 Full list of Group undertakings
Subsidiary name
A&N International Media Ltd
A&N Media Finance Services Ltd
ABF1 Ltd
ABF2 Ltd
Adhesion Asia Ltd
Adhesion Group SA
AgRisk Ltd
AN Mauritius Ltd
Apply Yourself Inc
Argyll Environmental Ltd
Asia Business Forum (Singapore) Pte Ltd
Asia Business Forum (Thailand) Ltd
Asia Business Forum SDN.BHD
Asia Risk Centre Pte Ltd
Asia Risk Centre, Inc
Associated London Distribution Ltd
UK
UK
UK
UK
Hong Kong
France
UK
Mauritius
USA
UK
Singapore
Thailand
Malaysia
Singapore
USA
UK
Associated Metro Holdings Ltd
(i)
Jersey
Associated Newspapers (Ireland) Holdings Ltd
Associated Newspapers (Ireland) Ltd
Associated Newspapers (USA) Ltd
Associated Newspapers Ltd
Associated Newspapers North America, Inc
AVMGE GmbH
AY Software Services Inc
Bath News & Media
BCA Research Inc
Benchmark Financials Ltd
BPR Associados Ltda
BPR Benchmark Ltda
BPR Holdings Ltd
Bright Milestone Ltd
Brixspan, LLC
BSG (USA), Inc
BuildFax Inc
Business Forum Group Holdings Ltd
Catchpole Communications FZ-LLC
CEIC Data – Internet Securities Japan K.K.
CEIC Data (SG) Pte Ltd
CEIC Data (Shanghai) Co Ltd
CEIC Data (Thailand) Co Ltd
CEIC Data Co Ltd
CEIC Data Korea Ltd
CEIC Holdings Ltd
CEICdata.com (Malaysia) Sdn Bhd
Central Independent News and Media Ltd
Centre For Investor Education (UK) Ltd
Centre For Investor Education Pty Ltd
Commodity Vectors (Ireland) Ltd
Commodity Vectors Ltd
Company Information Direct Ltd
Conveyancing Searches Ltd
Cornwall & Devon Media Ltd
Courier Media Group Ltd
CTF Asset Finance Ltd
Dailymail.com Australia Pty Ltd
UK
Ireland
UK
UK
USA
Germany
USA
UK
Canada
Colombia
Colombia
Colombia
Colombia
Hong Kong
USA
USA
USA
Thailand
Dubai
Japan
Singapore
China
Thailand
Hong Kong
Korea
Hong Kong
Malaysia
UK
UK
Australia
Ireland
UK
Ireland
UK
UK
UK
UK
Australia
Daily Mail and General Holdings Ltd
*
UK
178
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary, Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common, Preference, Series A
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Common, Series A, B, C, D, E, G
Preferred Stock
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
67.9
67.9
67.9
67.9
100
100
100
100
67.9
67.9
67.9
100
100
100
100
100
100
100
100
100
89.9
100
100
67.9
67.9
67.9
67.9
67.9
67.9
56.4
100
90.0
67.9
100
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
100
50.9
50.9
100
100
100
100
100
100
100
50%
100
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Classes of shares held
Ordinary
% shareholding (% held
directly by parent)
100
Ordinary and A Ordinary Non-voting N/A
Subsidiary name
Daily Mail and General Investments Ltd
Daily Mail and General Trust plc
Daily Mail International Ltd
Daily Mail Ltd
David Kirk & Associates (Leven) Ltd
Decision Insight Hub Ltd
Decision Insight Information Group (Europe) Ltd
Note
Country of incorporation
or registration
UK
UK
UK
UK
UK
UK
UK
Decision Insight Information Group (Ireland) Ltd
Ireland
Decision Insight Information Group (UK) Ltd
Decision Insight Packco Ltd
Derby Telegraph Media Group Ltd
Derry Street Investments Ltd
Digital H20 Inc
DKA Ltd
DMG Angex Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
DMG Business Media Ltd
DMG Charles Ltd
DMG Comet Sarl
DMG Comet Sarl US branch
DMG Conference & Exhibition Services (Shanghai) Ltd
DMG Consolidated Holdings Pty Ltd
DMG Events Ltd
DMG Events Pty Ltd
DMG Exhibition Management Services (PTY) Ltd
DMG Guernsey Ltd
DMG Hobsons Pty Ltd
DMG Holdings (Iceland) ehf
DMG India Private Ltd
DMG Information Asia Pacific Pte Ltd
DMG Information Holdings Inc
DMG Information Hong Kong Company Ltd
(ii)
(ii)
DMG Information Inc
DMG Information Ltd
DMG Information US Inc
DMG Investment Holdings Ltd
DMG Ireland Holdings Ltd
DMG Loanco Ltd
DMG Media Investments Ltd
DMG Media Ltd
DMG Minor Investments Ltd
DMG Nederland BV
DMG Oceans Ltd
DMG Plymouth Ltd
UK
UK
UK
UK
USA
UK
UK
UK
UK
UK
UK
Luxembourg
USA
China
Australia
UK
Australia
South Africa
Guernsey
Australia
Iceland
India
Singapore
USA
Hong Kong
USA
UK
USA
UK
Ireland
UK
UK
UK
UK
Netherlands
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, Preference
Ordinary
Ordinary
Ordinary
Ordinary
A Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, A Ordinary
Ordinary
Ordinary
Common
Ordinary
Common, Series A
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
DMG Radio Australia Partnership
Australia
Partnership Units
DMG US Holdings Inc
DMG US Investments Inc
DMG US, L.P.
DMG World Media Abu Dhabi Ltd
DMG World Media Dubai (2006) Ltd
DMGB Ltd
dmgi Land & Property Europe Ltd
DMGRH Finance Ltd
DMGZ Ltd
EDR Landmark Management Services Ltd
EI Cap II LLC
EII (Ventures) Ltd
(i)
(i)
USA
USA
USA
Jersey
Jersey
UK
UK
UK
UK
UK
USA
UK
179
Common
Common
Series A Partnership, Series B
Partnership
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership Interests
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
67.9
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 48 Full list of Group undertakings continued
Subsidiary name
EII Holdings Inc
EII US Inc
EIMN LLC
Elite Daily, Inc
Note
Country of incorporation
or registration
USA
USA
USA
USA
Energy Fundamentals GmbH
Switzerland
Energytics Inc
Ensura Ltd
Enva Power Inc
Environmental Data Resources, Inc
Epropertydata.com LLC
Estate Technical Solutions Ltd
Euromoney (Singapore) Pte Ltd
Euromoney Canada Ltd
Euromoney Charles Ltd
Euromoney Consortium 2 Ltd
Euromoney Consortium Ltd
Euromoney Employee Share Trust
Euromoney ESOP Trustee Ltd
Euromoney Global Ltd
Euromoney Guarantee Ltd
Euromoney Holdings US Inc
USA
UK
USA
USA
USA
UK
Singapore
UK
UK
UK
UK
Jersey
UK
UK
UK
USA
Euromoney Institutional Investor (Jersey) Ltd
(iii)
Jersey
Euromoney Institutional Investor PLC
Euromoney Jersey Ltd
Euromoney Luxembourg S.a r.l.
Euromoney Luxembourg S.a.r.l US branch
Euromoney Partnership LLP
Euromoney Polska SP Zoo
Euromoney Publications (Jersey) Ltd
Euromoney Services Inc
Euromoney Trading Ltd
Euromoney Training Inc
Eve 3 Ltd
Eve 4 Ltd
EX ERH Ltd
EX TTH Ltd
Excido Pty Ltd (D)
Express & Echo News & Media Ltd
Fantfoot Ltd
FastMarkets Inc.
FastMarkets Ltd
FastMarkets Pte Ltd
First Search Mid West LLC
First Search Technology Corporation
Fortress Digital Holdings, Inc
Fortress Digital, LLC
Genscape Asia, Inc
Genscape Belgium SA
Genscape Czech Republic sro
Genscape France
Genscape Germany GmbH
Genscape Iberia SL
Genscape Inc
Genscape Intangible Holding Inc
Genscape International Inc
Genscape Italy
Genscape Japan, K.K.
UK
(ii)
Jersey
Luxembourg
USA
UK
Poland
Jersey
USA
UK
USA
* (ii)
Jersey
*
Jersey
UK
UK
Australia
UK
UK
USA
UK
Singapore
USA
USA
USA
USA
USA
Belgium
Czech Republic
France
Germany
Spain
USA
USA
USA
Italy
Japan
180
Classes of shares held
Common, Preference
Common
Ordinary
Ordinary
Ordinary
Common
Ordinary
Common
Common
Membership Interests
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, Preference
Ordinary
Ordinary
Ordinary
Ordinary Limited Guarantee
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common Stock
Ordinary
Ordinary
Ordinary A
Ordinary, Ordinary A
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Common
Common
Ordinary
Ordinary
% shareholding (% held
directly by parent)
67.9
67.9
67.9
100
100
100
100
100
100
81.0
100
67.9
67.9
100
67.9
100
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
100
100
100
100
100
100
67.9
67.9
67.9
67.9
100
100
100
56.4
100
100
100
100
100
100
100
100
100
100
100
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Subsidiary name
Genscape Natural Gas Inc
Genscape Netherlands
Genscape Poland SA
Genscape Slovakia
Genscape UK Ltd
GGA Pte Ltd
Glenprint Ltd
Global Commodities Group S.a.r.l.
Gloucestershire Media Ltd
GP Energy Management, LLC
Gridfit, LLC
Grimsby & Scunthorpe Media Group Ltd
GSquared, LLC
Harmsworth Printing (Didcot) Ltd
Harmsworth Printing (Stoke) Ltd
Harmsworth Printing Ltd
Harmsworth Quays Printing Ltd
Harmsworth Royalties Ltd
Hobsons Asia SDN BHD
Hobsons Australia Pty Ltd
Hobsons Inc
Hobsons PLC
Inframation GmbH
Insider Publishing Ltd
Instant Services GmbH
Institutional Investor LLC
Institutional Investor Networks UK Ltd
Internet Data Services (I) Pvt Ltd
Internet Securities Hong Kong Ltd
Internet Securities (BVI) Ltd
Internet Securities Argentina S.A.
Internet Securities Brazil Ltda
Internet Securities Bulgaria EOOD
Internet Securities Colombia Ltd
Internet Securities de Chile Ltda
Internet Securities de Mexico SDeRLdeCV
Internet Securities Egypt Ltd
Internet Securities Inc
Internet Securities Istanbul Bilgo Merkezi LD STI
Internet Securities Ltd
Internet Securities Shanghai Ltd
Ireland on Sunday Ltd
Justice for Sgt Blackman Ltd
Karnes Research Company LLC
Kensington Finance Ltd
Kensington US Holdings Ltd
KWG Inc
Landmark Analytics Ltd
Landmark FAS Ltd
Landmark Information Group Ltd
Landmark International Holdings Ltd
Latin American Financial Publications Inc
Lawlink (UK) Ltd
Lawlink Ltd
Lee & Co (Belfast) Ltd
Legal Media Group Ltd
Leicester Mercury Media Group Ltd
Locus Energy Inc
Note
Country of incorporation
or registration
Classes of shares held
% shareholding (% held
directly by parent)
USA
Netherlands
Poland
Slovakia
UK
Singapore
UK
Switzerland
UK
USA
USA
UK
USA
UK
UK
UK
UK
UK
Malaysia
Australia
USA
UK
Germany
UK
Germany
USA
UK
India
Hong Kong
Colombia
Argentina
Brazil
Bulgaria
Colombia
Chile
Mexico
Egypt
USA
Turkey
UK
China
Ireland
UK
USA
UK
UK
USA
UK
UK
UK
UK
USA
UK
Ireland
UK
UK
UK
USA
181
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership units
Membership units
Ordinary
Membership Interests
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary, Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Limited by Guarantee
Membership Interests
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary, Ordinary A, Redeemable
Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
100
100
100
100
100
67.9
67.9
67.9
100
100
100
100
59.0
100
100
100
100
100
100
100
100
100
100
67.9
49.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
67.9
100
70.0
100
100
56.4
100
100
100
100
67.9
100
100
100
67.9
100
100
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc
48 Full list of Group undertakings continued
Note
Country of incorporation
or registration
Classes of shares held
% shareholding (% held
directly by parent)
Subsidiary name
Mail Life Financial Services Ltd
Mail Media Inc
Metal Bulletin Holdings, LLC
Microdot, LLC
Millar & Bryce Ltd
Mistview Holdings Ltd
Naviance Education Information consulting
(Nanjing) Co Ltd
Naviance, Inc
Ned Davis Research Inc
Northcliffe Media Ltd
Northcliffe Trustees Ltd
On-Geo GmbH
The Petrochemical Standard (Singapore) Pte Ltd
Petrotranz Holdings Inc
Petrotranz Inc
Pipeline & Energy Expo, LLC
Power Supply, LLC
Property Search Agency Ltd
Propertyflow Ltd
Quest End Computer Services Ltd
Ralph US Holdings
Real Data Insights, LLC
Redquince Ltd
Reflex Publishing ME FZ LLC
Reinsurance Security (Consultancy).co.uk Ltd
Rental Systems.com Ltd
Richards Gray Holdings Ltd
Richards Gray Ltd
UK
USA
USA
USA
UK
Ireland
China
USA
USA
UK
UK
Germany
Singapore
Canada
Canada
USA
USA
UK
UK
UK
UK
USA
UK
Dubai
UK
UK
UK
UK
Risk Management Solutions (Bermuda) Ltd
Bermuda
Risk Management Solutions Inc
Risk Management Solutions Ltd
Risk Management Solutions Ltd (China)
RMS Japan KK
RMS Risk Management Solutions India Pte Ltd
RMS Technologies Ltd
RMS Worldwide, Inc
Rochford Brady Legal Services Ltd
Rochford Brady Online Services Ltd
SearchFlow Ltd
Siatka Ltd
USA
UK
China
Japan
India
UK
USA
Ireland
Ireland
UK
UK
Softec Immobilicense Software GmbH
Germany
South West Media Group Ltd
South West Wales Media Ltd
Starfish Retention Solutions Inc
Steel First Ltd
Stennent Website Plc
Storas Holdings Pte Ltd
The Conveyancing Channel Ltd
The Conveyancing Report Agency Ltd
The Mail on Sunday Ltd
The Petrochemical Standard, Inc
The PSA Group Ltd
The Sanborn Library, LLC
The Western Gazette Co Ltd
Tipall Ltd
Title Media (IOS) Ltd
UK
UK
USA
UK
Ireland
Singapore
UK
UK
UK
USA
UK
USA
UK
UK
Ireland
182
Ordinary
Ordinary
Ordinary
Ordinary A
Ordinary
Ordinary
Registered Capital
Common
Ordinary
Ordinary
Ordinary A, Ordinary B
Ordinary
Ordinary
Ordinary
Ordinary
Common
Class A membership units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, Preference
Ordinary
Ordinary
Ordinary
Common
Ordinary
Common
Ordinary
Ordinary Voting
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary A, Ordinary B
Ordinary
Ordinary
Ordinary
Common
Ordinary A
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership Interests
Ordinary
Ordinary
Ordinary
100
100
67.9
100
100
100
100
100
57.4
100
100
89.9
100
100
100
50.4
100
100
100
100
100
56.4
67.9
100
67.9
100
100
100
98.0
98.0
98.0
98.0
98.0
100
100
98.0
100
100
100
100
100
100
100
100
67.9
71.0
67.9
100
100
100
100
100
100
100
67.9
100
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc Subsidiary name
Title Media Ltd
Trepp Holdings Inc
Trepp LLC
Trepp Ltd
Trepp Port LLC
Trepp UK Ltd
TTI Technologies LLC
Vesseltracker.com GmbH
Watervale Ltd
Web2 d.o.o.
World Bulk Wine Exhibition S.L
Xceligent Inc
Young Street Holdings Ltd
Note
Country of incorporation
or registration
Classes of shares held
% shareholding (% held
directly by parent)
Ireland
Ordinary, Ordinary A, B, C, D, E, F
USA
USA
UK
USA
UK
USA
Germany
UK
Serbia
Spain
USA
UK
Common
Membership Interests
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common, Series A Preferred
Ordinary
100
100
100
100
51.0
100
67.9
100
100
51.0
57.0
70.0
100
All subsidiaries are included in the consolidated financial statements of the Group.
* Direct investment held by the parent Company Daily Mail and General Trust plc (DMGT). All other subsidiaries are held
indirectly through subsidiaries of DMGT.
(i) Principal place of business in the UAE.
(ii) Principal place of business in the UK.
(iii) Principal place of business in Hong Kong.
Joint venture name
Address of principal place of business
Artirix Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Financial year end
30 September
Daily Mail On-Air LLC
137 N. Larchmont Blvd, 705, Los Angeles, CA United States
Decision First Ltd
EIIZ Discovery LLC
Cardinal House, 9 Manor Road, Leeds, West Yorkshire LS11 9AH
31 December
225 Park Avenue. South, New York
Excalibur Holdco Ltd
Wowcher Towers, 12–27 Swan Yard, London N1 1SD
Hypoport On-Geo GmbH
Klosterstr. 71, 10179 Berlin, Germany
Independent Television News Ltd
20 Grays Inn Road, London WC1X 8XZ
Institutional Investor Zanbato Ltd
8 Bouverie Street, London EC4Y 8AX
Knowlura, Inc
2711 Centerville Road, Suite 400, Wilmington, DE 19808
Living Social Europe Ltd
Wowcher Towers, 12–27 Swan Yard, London N1 1SD
Living Social Ltd
Wowcher Towers, 12–27 Swan Yard, London N1 1SD
Mail Today Newspapers Pte Ltd
F-26, Connaught Place, New Delhi – 110 001, India
Northcliffe Print Manchester
Kings Place, 90 York Way, London N1P 2AP
Point X Ltd
5–7 Abbey Court, Eagle Way, Exeter, Devon EX2 7HY
Sanborn Colorado Government LLC
1935 Jamboree Drive, Suite 100, Colorado Springs,
Colorado, 80920 USA
Sanostro Institutional AG
Allmendstrasse 140, 8041 Zurich, Switzerland
The Sanborn Map Company Inc
160 Greentree Drive, Suite 101, Dover DE 19904 United States
This is Essex Ltd
Loud Water Mill, Station Road, High Wycombe,
Buckinghamshire HP10 9TY
30 September
50.0
The Group has joint control over all of the joint ventures listed above because key operating decisions require the unanimous
consent of the Group and the other investor(s).
183
% capital included
in consolidation
50.0
50.0
50.0
50.0
23.9
50.0
20.0
50.0
50.0
23.9
23.9
26.0
50.0
50.0
49.0
50.0
49.0
30 September
2 October
31 December
31 December
30 September
30 September
30 September
30 September
30 September
31 March
31 March
31 December
30 September
31 December
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc 48 Full list of Group undertakings continued
Associate name
Axiometrics Inc
Carspring Ltd
Clipper Data LLC
Diamond Topco Ltd (Dealogic)
Eatfirst UK Ltd
Funcent DMG Information Technology
Hong Kong Company Ltd
Global Events Partners Ltd
iProf Learning Solutions India Pte Ltd
Liases Foras Real Estate Rating
and Research Private Ltd
Mercatus Inc
North Cornwall Post & Diary Ltd
Ochresoft Technologies Ltd
OYO RMS
Praedicat, Inc
Real Capital Analytics, Inc
RLTO Ltd
Skymet Weather Services Private Ltd
Social Metrix SA
Spaceways Storage Services UK Ltd
Truffle Pig LLC
WellAware Holdings Inc
Wellington Weekly News Ltd
Whereoware LLC
Zipjet Ltd
Zoopla Property Group Plc
Country of incorporation
or registration
USA
UK
USA
UK
UK
Hong Kong
UK
India
India
USA
UK
UK
Japan
USA
USA
UK
India
Argentina
UK
USA
USA
UK
USA
UK
UK
Investment name
Country of incorporation
or registration
Agriculture Geospatial Coalition, LLC
USA
Baoshu Information Technology (Shenzhen) Co Ltd
China
Brit Media Inc
Chemd Holdings Ltd
Compstak Inc
Cue Ball Capital LP
Estimize,Inc
ES London Ltd
Evening Standard Ltd
Financial Network Analytics Ltd
JEGI Internet Economy Partners, L.P.
KCI/Sanborn Joint Venture Partnership, LLC
National RE/Sources LLC
Nazca IT Solutions BV
Pascal Metrics Inc
Pembroke Holdings, L.L.C
Pharmacy 2u Ltd
Press Association Ltd
Propstack Services Private Ltd
Shanghai Maili Marine Technology Co Ltd
Taboola.com Ltd
TigerBeat Media LLC
Upstream Group Inc
Workana LLC
Yopa Property Ltd
XAP Corporation
Zanbato Inc
USA
UK
USA
USA
USA
UK
UK
UK
USA
USA
USA
Netherlands
USA
USA
UK
UK
India
China
Israel
USA
USA
Classes of shares held
Class A membership units
Series A1
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Share, Series A Compulsory,
Cumulative Convertible Preference Shares
Ordinary
Ordinary
Deferred, Ordinary, Ordinary A, Preference
Ordinary
Preference
Common Preference shares
Ordinary
Ordinary
Ordinary
Ordinary
Common Units
Preference
Ordinary
Membership Interests
Ordinary
Ordinary
Classes of shares held
Membership interests
Ordinary
Ordinary
A Preferred
Common
Partnership Units
Ordinary
Ordinary
Ordinary, Ordinary Non-voting
Ordinary A
Membership Interests
Membership Interests
Membership Interests
Ordinary
Ordinary
Membership Interests
Ordinary
Ordinary
Ordinary
Registered Capital
Ordinary
Membership Interests
Ordinary
% shareholding
18.7
25.0
14.1
15.5
25.0
12.1
15.0
10.0
28.5
15.1
25.0
30.0
19.6
29.6
39.7
20.0
20.8
34.7
25.0
45.0
8.1
20.0
19.5
25.0
31.3
% shareholding
16.7
12.1
1.6
5.0
2.0
2.5
10.0
30.0
24.9
10.0
17.0
23.0
2
15.0
4.3
10.0
1.0
15.6
9
20.0
0.4
12.8
3.6
5.2
1.7
19.4
9.9
Argentina
Membership Interests
UK
USA
USA
Ordinary
Common
Ordinary
184
FINANCIAL STATEMENTSNOTES TO THE ACCOUNTSAnnual Report 2016Daily Mail and General Trust plc FIVE-YEAR FINANCIAL SUMMARY
Consolidated Income Statement
Revenue
Adjusted operating profit
Exceptional operating costs, impairment of internally generated and
acquired computer software, property, plant and equipment and
investment property, amortisation and impairment of acquired
intangible assets arising on business combinations and impairment
of goodwill
Operating profit before share of results from joint ventures
and associates
Share of results of joint ventures and associates
Total operating profit
Other gains and losses
Profit before investment revenue, net finance costs and tax
Investment revenue
Net finance costs
Profit before tax
Tax
Profit for the year after tax
Discontinued operations
Equity interests of minority shareholders
Profit for the year
Audited 52
weeks ended
30 September
2012
£m
Audited 52
weeks ended
30 September
2013
£m
Audited 52
weeks ended
30 September
2014
£m
Audited
year ended
30 September
2015
£m
Audited
year ended
30 September
2016
£m
1,688.0
263.0
1,674.2
280.3
1,811.2
296.2
1,842.7
287.0
1,917.3
277.0
(127.4)
(66.8)
(112.2)
(80.2)
(150.6)
135.6
(1.8)
133.8
114.4
248.2
2.3
(79.1)
171.4
26.1
197.5
59.8
(22.7)
234.6
213.5
5.3
218.8
27.6
246.4
3.1
(71.0)
178.5
(34.2)
144.3
43.7
(23.4)
164.6
184.0
14.3
198.3
138.9
337.2
10.1
(80.3)
267.0
(18.3)
248.7
34.3
(20.1)
262.9
206.8
11.3
218.1
82.4
300.5
4.0
(88.4)
216.1
(20.8)
195.3
50.0
(28.7)
216.6
126.4
3.0
129.4
137.9
267.3
2.5
(22.9)
246.9
(32.7)
214.2
–
(10.0)
204.2
Adjusted profit before tax and non-controlling interests
246.9
266.6
291.1
280.5
259.6
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
378.3
374.4
391.1
376.8
363.7
Adjusted profit after taxation and non-controlling interests
181.5
188.2
207.4
215.5
197.8
Earnings per share
Number of shares for basic
Number of shares for diluted
Profit effect of dilutive shares
From continuing operations
Basic
Diluted
From discontinued operations
Basic
Diluted
From continuing and discontinued operations
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
382.8
393.7
(0.6)
377.5
386.8
(0.3)
372.4
378.2
(0.7)
360.8
366.5
(0.3)
353.4
360.6
(0.9)
45.7p
44.2p
15.6p
15.2p
61.3p
59.4p
47.4p
45.9p
32.1p
31.2p
11.5p
11.3p
43.6p
42.5p
49.9p
48.5p
61.4p
60.2p
9.2p
9.1p
70.6p
69.3p
55.7p
54.6p
46.2p
45.4p
13.9p
13.6p
60.1p
59.0p
59.7p
58.7p
57.8p
56.4p
0.0p
0.0p
57.8p
56.4p
56.0p
54.7p
185
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc 232.1
(35.8)
(214.6)
(18.3)
31.5
4.3
17.5
(18.3)
101.5
83.2
(0.2)
(60.2)
22.8
Five-year Financial Summary
Consolidated Cash Flow Statement
Audited 52
weeks ended
30 September
2012
£m
Audited 52
weeks ended
30 September
2013
£m
Audited 52
weeks ended
30 September
2014
£m
Audited
year ended
30 September
2015
£m
Audited
year ended
30 September
2016
£m
Net cash inflow from operating activities
Investing activities
Financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain/(loss) on cash and cash equivalents
254.0
(12.1)
(304.7)
(62.8)
171.7
(1.6)
347.2
(87.7)
(277.5)
(18.0)
107.3
(0.8)
218.4
26.0
(302.7)
(58.3)
88.5
(1.2)
259.7
(44.2)
(212.2)
3.3
29.0
(0.8)
Cash and cash equivalents at end of year
107.3
88.5
29.0
31.5
Net (decrease)/increase in cash and cash equivalents
Cash inflow/(outflow) from change in debt and finance leases
Change in net debt from cash flows
Loan notes issued and loans arising from acquisitions
Other non-cash items
Decrease/(increase) in net debt in the year
Net debt at beginning of year
Net debt at end of year
Consolidated Statement of Financial Position
(62.8)
126.2
63.4
–
43.2
106.6
(719.6)
(613.0)
(18.0)
17.8
(0.2)
–
40.2
40.0
(58.3)
31.3
(27.0)
(3.0)
0.2
(29.8)
3.3
(86.9)
(83.6)
–
(15.1)
(98.7)
(613.0)
(573.0)
(573.0)
(602.8)
(602.8)
(701.5)
(701.5)
(678.7)
Goodwill and intangible assets
Tangible assets
Fixed asset investments
Other non-current assets
Fixed assets
Net current liabilities
Long-term liabilities
Net assets
Shareholders’ equity
Called-up share capital
Share premium account
Other reserves
Minority interests
Retained earnings
Total equity
Shareholder information
Dividend per share*
Price of A Ordinary Non-Voting Shares:
Lowest
Highest
At
30 September
2012
£m
At
30 September
2013
£m
At
30 September
2014
£m
At
30 September
2015
£m
At
30 September
2016
£m
968.5
244.9
150.3
243.9
1,607.6
(268.0)
(1,087.9)
251.7
49.1
13.5
(75.3)
95.3
169.1
251.7
2012
18.00p
£3.48
£4.97
1,056.8
1,125.3
1,332.6
1,480.8
214.0
188.3
203.3
202.0
145.9
213.6
1,662.4
1,686.8
(338.9)
(986.8)
336.7
49.2
16.3
(152.5)
113.6
310.1
336.7
2013
19.20p
£4.51
£8.35
(511.1)
(785.1)
390.6
49.2
17.8
(240.7)
117.8
446.5
390.6
2014
20.40p
£6.99
£10.74
181.1
157.0
230.7
1,901.4
(363.2)
(1,078.4)
459.8
45.4
17.8
(97.3)
154.9
339.0
459.8
2015
21.40p
£6.99
£9.90
176.1
165.9
285.5
2,108.3
(443.3)
(1,135.7)
529.3
45.3
17.8
(71.8)
178.2
359.8
529.3
2016
22.00p
£5.71
£7.90
* Represents the dividends declared by the Directors in respect of the above years.
186
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc COMPANY STATEMENT OF FINANCIAL POSITION
At 30 September 2016
ASSETS
Fixed assets
Shares in Group undertakings
Available-for-sale investments
Trade and other debtors
Current assets
Trade and other debtors
Cash at bank and in hand
Deferred tax
Total assets
LIABILITIES
Creditors: amounts falling due within one year
Trade and other creditors
Bank loans and overdrafts
Creditors: amounts falling due after more than one year
Trade and other creditors
Bank loans and overdrafts
Derivative financial liabilities
Provisions for liabilities
Total liabilities
Net assets
SHAREHOLDERS’ EQUITY
Called-up share capital
Share premium account
Share capital
Reserve for own shares
Capital redemption reserve
Profit and loss account
At
30 September
2016
£m
At
30 September
2015
£m
Note
4
5
6
6
7
11
8
8
9
9
9
10
12
12
13
14
3,109.5
2,643.2
1.8
643.3
3,754.6
1.8
452.9
3,097.9
165.8
0.1
5.1
171.0
3,925.6
132.8
0.1
6.8
139.7
3,237.6
(251.5)
(3.3)
(254.8)
(8.9)
(693.0)
(46.5)
–
(748.4)
(280.5)
(2.7)
(283.2)
(9.2)
(726.9)
(23.1)
(0.5)
(759.7)
(1,003.2)
(1,042.9)
2,922.4
2,194.7
45.3
17.8
63.1
(74.6)
5.2
45.4
17.8
63.2
(61.6)
5.1
2,928.7
2,188.0
2,922.4
2,194.7
The accounts on pages 187 to 194 were approved by the Directors and authorised for issue on 9 December 2016. They were signed
on their behalf by:
The Viscount Rothermere
P A Zwillenberg
Directors
187
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc COMPANY STATEMENT OF CHANGES IN EQUITY
Reserve for
own shares
£m
Profit and
loss account
£m
(204.4)
2,046.5
–
217.2
–
–
–
(127.1)
20.0
32.7
(61.6)
–
6.5
–
–
–
(29.8)
10.3
(74.6)
430.6
(217.2)
(75.0)
2.3
(0.3)
–
–
1.1
2,188.0
820.1
(6.5)
(76.4)
5.4
(0.6)
–
(1.3)
Total
£m
1,910.4
430.6
–
(75.0)
2.3
(0.3)
(127.1)
20.0
33.8
2,194.7
820.1
–
(76.4)
5.4
(0.6)
(29.8)
9.0
2,928.7
2,922.4
For the year ended 30 September 2016
At 30 September 2014
Profit and total comprehensive income for the year
Cancellation of A Ordinary Shares
Dividends paid
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the year
Movement in financial liability for closed period
purchases
Own shares released on vesting of share options
At 30 September 2015
Profit and total comprehensive income for the year
Cancellation of A Ordinary Shares
Dividends paid
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the year
Own shares released on vesting of share options
Called-up
share capital
£m
49.2
–
(3.8)
–
–
–
–
–
–
45.4
–
(0.1)
–
–
–
–
–
Share
premium
account
£m
17.8
–
–
–
–
–
–
–
–
17.8
–
–
–
–
–
–
–
Capital
redemption
reserve
£m
1.3
–
3.8
–
–
–
–
–
–
5.1
–
0.1
–
–
–
–
–
At 30 September 2016
45.3
17.8
5.2
188
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT
OF FINANCIAL PERFORMANCE
1 Basis of preparation
The financial statements of Daily Mail and General Trust plc have been prepared in accordance with Financial Reporting
Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared under the historical cost
convention, and in accordance with the Companies Act 2006. The preparation of financial statements in conformity with FRS 101
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of
applying the Company’s accounting policies. See Note 2 for further detail.
Profit for the financial year
As permitted by Section 408 of the Companies Act 2006, a separate profit and loss account for the Company has not been
included in these accounts. The Company’s profit after tax for the year was £820.0 million (2015 £430.5 million).
Impact of amendments to accounting standards
None of the standards, interpretations and amendments effective for the first time from 1 October 2015 have had a material
effect on the financial statements. The impact of the conversion to FRS 101 is disclosed in Note 16.
The Company has applied the exemption available under FRS 101 in relation to paragraphs 30 and 31 of IAS 8 ‘Accounting
policies, changes in accounting estimates and errors’ (requirement for the disclosure of information when an entity has not
applied a new IFRS that has been issued and is not yet effective).
2 Significant accounting policies
Foreign exchange
Transactions in currencies other than the Company’s reporting currency are recorded at the exchange rate prevailing on the
date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies
are retranslated at the rate prevailing on the date when fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in the profit and loss account for the year.
Available-for-sale investments
Available-for-sale investments are stated at cost, less any provision for impairment, where appropriate.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is provided in full on
timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date,
at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of
items of income and expenditure in taxation computations in periods different from those in which they are included in financial
statements. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no
commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where there is no commitment to remit
these earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be
recovered. Deferred tax is not discounted.
Financial instruments disclosures
Financial assets
Trade debtors
Trade debtors do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, short-term deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Trade creditors
Trade creditors are non-interest bearing and are stated at their nominal value.
Capital market and bank borrowings
Interest bearing loans and overdrafts are initially measured at fair value (which is equal to net proceeds at inception), and are
subsequently measured at amortised cost, using the effective interest rate method. A portion of the Company’s bonds are
subject to fair value hedge accounting and this portion of the carrying value is adjusted for the movement in the hedged risk to
the extent hedge effectiveness is achieved. Any difference between the proceeds, net of transaction costs and the settlement
or redemption of borrowings is recognised over the term of the borrowing.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to settle on a net basis, or realise the asset and liability simultaneously.
189
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT OF FINANCIAL PERFORMANCE
2 Significant accounting policies continued
Derivative financial instruments and hedge accounting
The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses
various derivative financial instruments to manage its exposure to these risks.
The use of financial derivatives is set out in Note 35 of the Group’s Annual Report. The Company does not use derivative financial
instruments for speculative purposes.
The Company does not apply hedge accounting except for fair value hedges. Gains and losses arising on derivatives that form
part of net investment hedge or cash flow hedge relationships in the consolidated financial statements are recorded in the profit
and loss account in the Company.
Financial instruments – disclosures
The Company has taken advantage of the exemption provided in IFRS 7, Financial Instruments: Disclosures, and included
disclosures relating to financial instruments in Note 35 of the Group’s Annual Report.
Cash flow statement
The Company has utilised the exemptions provided under IAS 7, Statement of Cash Flows, and has not presented a cash flow
statement. A consolidated cash flow statement has been presented in the Group’s Annual Report on page 101.
Related party transactions
The Company has taken advantage of the exemptions of IAS 24, Related Party Disclosures, and included disclosures relating
to related parties in Note 45 of the Group’s Annual Report.
Share-based payments
The Company operates the Group’s LTIP and other Group share-based payment schemes, details of which can be found in
Note 43 of the Group’s Annual Report.
Further information can be found in Note 36 of the Group’s Annual Report.
3 Employees
Average number of persons employed by the Company including Directors:
Total staff costs comprised:
Wages and salaries
Share-based payments
Social security costs
Pension costs
2016
Number
27
2015
Number
18
2016
£m
7.7
3.8
1.2
0.1
12.8
2015
£m
8.5
2.2
2.2
0.1
13.0
The remuneration of the Directors of the Company during the year is disclosed in the Remuneration Report of the Group’s
Annual Report.
4 Shares in Group undertakings (listed on pages 177 to 184)
At 30 September 2015
Additions
Disposals
At 30 September 2016
Analysis of movements in the year:
DMGB Ltd
DMGZ Ltd
Daily Mail and General Holdings Ltd
Cost
£m
Provision
£m
Net book value
£m
2,827.2
(184.0)
2,643.2
644.3
(178.0)
–
–
3,293.5
(184.0)
644.3
(178.0)
3,109.5
Additions
Disposals
463.2
178.0
3.1
644.3
–
(178.0)
–
(178.0)
190
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT OF FINANCIAL PERFORMANCE
5 Available-for-sale investments
At 30 September 2015 and 30 September 2016
6 Trade and other debtors
Amounts falling due after more than one year:
Amounts owed by Group undertakings
Other financial assets
Derivative financial assets
Cost
£m
1.8
Provision
£m
Net book value
£m
–
1.8
2016
£m
605.4
17.1
20.8
643.3
2015
£m
434.3
–
18.6
452.9
Included within amounts owed by Group undertakings is an amount owed by a subsidiary company, DMGB Ltd, totalling
£455.4 million. The principal loan amount of £455.4 million bears interest of 4.0% p.a. and is repayable on 31 March 2023.
Also included within this balance is an amount owed by a subsidiary company, Northcliffe Media Holdings Ltd, of £150.0 million.
The loan bears interest of 6.3% p.a. and is repayable on 30 September 2018.
Amounts falling due within one year:
Amounts owed by Group undertakings
Prepayments and accrued income
Other receivables
Corporation tax
7 Cash at bank and in hand
Cash at bank and in hand
8 Trade and other creditors falling due within one year
Bank overdrafts
Interest payable
Amounts owing to Group undertakings
Accruals and deferred income
Other payables
2016
£m
2015
£m
144.6
102.3
7.7
3.4
10.1
165.8
2016
£m
0.1
2016
£m
3.3
14.2
225.3
11.9
0.1
254.8
8.0
3.6
18.9
132.8
2015
£m
0.1
2015
£m
2.7
14.2
259.1
7.1
0.1
283.2
Note
(i)
(i) Amounts owing to Group undertakings are repayable on demand and bear interest of UK bank base rate plus 0.5%.
191
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT OF FINANCIAL PERFORMANCE
9 Trade and other creditors falling due after more than one year
5.75% Bonds 2018
10.00% Bonds 2021
6.375% Bonds 2027
Bank loans
Amounts owing to Group undertakings
Derivative financial liabilities
The nominal values of the bonds are as follows:
5.75% Bonds 2018
10.00% Bonds 2021
6.375% Bonds 2027
2016
£m
214.1
9.5
201.7
267.7
8.9
46.5
748.4
2016
£m
218.5
7.2
200.0
425.7
2015
£m
211.7
10.3
198.2
306.7
9.2
23.1
759.2
2015
£m
218.5
7.2
200.0
425.7
The Company’s bonds have been adjusted from their nominal values to take account of the premia, direct issue costs, discounts
and movements in hedged risks. The issue costs, premia and discounts are being amortised over the expected lives of the bonds
using the effective interest method. The unamortised issue costs amount to £1.2 million (2015 £1.5 million) and the unamortised
premia amounts to £6.8 million (2015 £9.3 million).
Details of the fair value of the Company’s bonds are set out in Note 34 of the Group’s Annual Report.
The bonds are subject to fair value hedging using derivatives as set out in Note 35 of the Group’s Annual Report. Consequently,
their carrying value is also adjusted to take into account the effects of this hedging activity.
The book value of the Company’s other borrowings equates to fair value.
The interest rate charged on the Company’s bank loans during the year ranged as follows:
Sterling
US dollar
The maturity profile of the Company’s borrowings over one year is as follows:
2016
High
2.19%
2.16%
2016
Low
1.02%
0.90%
2015
High
2.26%
2.02%
2015
Low
1.38%
0.87%
2016
Between two and five years
Over five years
2015
Between two and five years
Over five years
Bonds
£m
Bank loans
£m
Owed to Group
undertakings
£m
Derivative
financial
liabilities
£m
223.6
201.7
425.3
211.7
208.5
420.2
267.7
–
267.7
306.7
–
306.7
8.9
–
8.9
9.2
–
9.2
6.9
39.6
46.5
2.2
20.9
23.1
Total
£m
507.1
241.3
748.4
529.8
229.4
759.2
192
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT OF FINANCIAL PERFORMANCE
10 Provisions for liabilities
Other provisions
Movements on other provisions were as follows:
At 30 September 2015
Utilised during year
At 30 September 2016
11 Deferred tax
Other timing differences
Movements on the deferred tax asset were as follows:
At start of year
Share-based payments
Tax credit for the year
At end of year
2016
£m
–
–
0.5
(0.5)
–
2016
£m
5.1
2016
£m
6.8
(0.6)
(1.1)
5.1
2015
£m
0.5
0.5
20.5
(20.0)
0.5
2015
£m
6.8
2015
£m
5.3
(0.3)
1.8
6.8
In the opinion of the Directors, it is more likely than not that the Company will be able to recover the deferred tax asset against
suitable future taxable profits generated by its subsidiary undertakings.
12 Capital and reserves
Share premium account
At start and end of year
Own shares
At start of year
Additions
Own shares released on vesting of share options
Movement in financial liability for closed period purchases
Own shares cancelled
At end of year
2016
£m
17.8
2016
£m
(61.6)
(29.8)
10.3
–
6.5
(74.6)
2015
£m
17.8
2015
£m
(204.4)
(127.1)
32.7
20.0
217.2
(61.6)
Note
10
The Company’s investment in its own shares are shares held in treasury or shares held by an employee benefit trust to satisfy
incentive schemes. At 30 September 2016, this investment comprised the cost of 5,000,000 A Ordinary Non-Voting Shares
(2015 5,000,000) held in treasury and 4,887,935 A Ordinary Non-Voting Shares (2015 2,690,766) held in the employee benefit trust.
The market value of the Treasury Shares at 30 September 2016 was £37.2 million (2015 £37.7 million) and the market value of the
shares held in the employee benefit trust at 30 September 2016 was £36.4 million (2015 £20.3 million).
The employee benefit trust is independently managed and has purchased shares in order to satisfy outstanding share options
and potential awards under the long-term incentive plan.
The Treasury Shares are considered to be a realised loss for the purposes of calculating distributable reserves.
193
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc NOTES TO THE COMPANY STATEMENT OF FINANCIAL PERFORMANCE
13 Capital redemption reserve
At start of year
On cancellation of A Ordinary Non-Voting Shares
At end of year
14 Profit and loss account
At start of year
Net profit for the year
Dividends paid
On cancellation of A Ordinary Non-Voting Shares
Other movements on share option schemes
At end of year
Total reserves – 2015
Total reserves – 2016
£m
5.1
0.1
5.2
£m
2,188.0
820.1
(76.4)
(6.5)
3.5
2,928.7
2,149.3
2,877.1
The Directors estimate that £1,422.0 million of the Company’s profit and loss account reserve is not distributable (2015 £1,422.0 million).
15 Contingent liabilities
At 30 September 2016 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability
valuation of £11.9 million (2015 £4.7 million) and letters of credit with a principal value of £3.8 million (2015 £2.2 million). The Company
is the guarantor of a loan note amounting to £150.0 million (2015 £150.0 million) in respect of the contingent asset partnership
referred to in Note 45 of the Group’s Annual Report.
16 First time adoption of FRS 101
This is the first year which the Company has prepared its financial statements under FRS 101. The previous financial statements
for the year ended 30 September 2015 were prepared under old UK GAAP. The date of transition to FRS 101 for the Company is
1 October 2014.
The impact of the changes in accounting policies as a result of the transition from old UK GAAP as previously reported and FRS 101
were immaterial so none of the prior year balances have been restated.
17 Ultimate holding company
The Company’s immediate parent Company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda.
Ultimate controlling party
RCL is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT Ordinary Shares. RCL has
controlled the Company for many years and as such is its immediate parent Company. RCL is owned by a trust (the Trust) which
is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party of the
Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands.
18 Post balance sheet events
Details of the Company’s post balance sheet events can be found within Note 46 of the Group’s Annual Report.
194
FINANCIAL STATEMENTSAnnual Report 2016Daily Mail and General Trust plc SHAREHOLDER INFORMATION
Company Secretary and Registered Office
Claire Chapman
Northcliffe House
2 Derry Street
London
W8 5TT
Telephone: +44 (0)20 7938 6000
E-mail: enquiries@dmgt.com
England Registered Number: 184594
Website
The Group has a website (www.dmgt.com) which gives information on the Company and its operating subsidiaries and provides
details of significant Group announcements.
Financial calendar 2017
26 January
8 February
10 February
31 March
31 March
25 May
1 June
2 June
30 June
27 July
28 September
30 September
2 October
30 November
7 December
8 December
Trading update
Annual General Meeting
Payment of final dividend
Payment of interest on loan notes
Half year end
Half yearly financial report released
Interim ex-dividend date
Interim record date
Payment of interim dividend
Trading update
Full-year pre-close trading update
Year end
Payment of interest on loan notes
Preliminary announcement of annual results
Ex-dividend date
Record date
Capital gains tax
The market value of both the Ordinary and A Ordinary Non-Voting Shares (A Shares) in the Company on 31 March 1982 (adjusted
for the 1994 bonus issue of A Shares and for the four-for-one share split in 2000) was 9.75 pence.
Registrars
All enquiries regarding shareholdings, dividends, lost share certificates, loan notes in the Company and in Daily Mail and General
Investments Limited or changes of address should be directed to Equiniti, the Company’s Registrars, at the address set out on the
following page.
Electronic communications
Equiniti operates Shareview, a free online service which enables shareholders to check their shareholdings and other related
information and to register to receive notification by email of the release of the Annual Report. It also offers practical help on
matters such as transferring shares or updating contact details. Shareholders may register for the service at www.shareview.co.uk.
This Report is available electronically on the Company’s website which contains a link to Shareview to enable shareholders to
register for electronic mailings. Notification by email has been given of the availability of this Annual Report on the Company’s
website to those shareholders who have registered.
Low-cost share dealing service
Equiniti provides a simple low-cost dealing service for the Company’s A Shares, details of which are available at www.shareview.
co.uk/dealing or by calling +44 (0) 3456 037 037. Details of this and other low-cost dealing services can be found on the
Company’s website at www.dmgt.com.
Share price information
The current price of the Company’s A Shares can be found on the home page of the Company’s website at www.dmgt.com.
195
SHAREHOLDER INFORMATIONAnnual Report 2016Daily Mail and General Trust plc SHAREHOLDER INFORMATION
Shareholder Information
Eurobond paying agent
The principal paying agent for the Company’s 10% Bonds due 2021 and the 6.375% Bonds due 2027 is Deutsche Trustee Company
Limited, Winchester House, 1 Great Winchester St, London EC2N 2DB. The principal paying agent for the Company’s 5.75%
Bonds due 2018 is HSBC Trustee (CI) Limited, HSBC House, Esplanade, Jersey, Channel Islands JE1 1GT. Enquiries should be directed
to John Donegan, Group Financial Controller, who can be contacted on +44 (0)20 3615 2917, and whose email address is
john. donegan@dmgt.com.
CREST
Shareholders have the choice either of holding their shares in electronic form in an account on the CREST system or in the physical
form of share certificates.
Investor relations
Investor relations are the responsibility of Adam Webster. The investor relations email address is investor.relations@dmgt.com.
ShareGift
In the UK, DMGT supports ShareGift, which is administered by the Orr Mackintosh Foundation (registered charity number 1052686)
and which operates a charity share donation scheme for shareholders wishing to give small holdings of shares to benefit charitable
causes. It may be especially useful for those who wish to dispose of a small parcel of shares which would cost more to sell than they
are worth. There are no capital gains tax implications (i.e. no gain or loss) on gifts of shares to charity and it is also possible to obtain
income tax relief. If you would like to use ShareGift or receive more information about the scheme, ShareGift can be contacted by
visiting their website at www.sharegift.org or by writing to ShareGift, 17 Carlton House Terrace, London SW1Y 5AH.
Shareholdings at 30 September 2016
Ordinary Shares
Balance ranges
1–1,000
1,001–5,000
5,001–10,000
10,001–20,000
20,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Totals
A Shares
Balance ranges
1–1,000
1,001–5,000
5,001–10,000
10,001–20,000
20,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Totals
Total number of holdings
Percentage of holders
Total number of shares
Percentage issued capital
0
0
0
0
0
0
0
3
3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
100.00%
100.00%
0
0
0
0
0
0
0
19,890,364
19,890,364
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
100.00%
100.00%
Total number of holdings
Percentage of holders
Total number of shares
Percentage issued capital
870
520
203
128
81
48
91
63
43.41%
25.95%
10.13%
6.39%
4.04%
2.40%
4.54%
3.14%
313,883
1,321,575
1,471,459
1,826,785
2,613,943
33,86,398
21,098,736
310,171,691
0.09%
0.39%
0.43%
0.53%
0.76%
0.99%
6.17%
90.64%
2,004
100.00%
342,204,470
100.00%
Advisers
Credit Suisse Securities (Europe) Limited
One Cabot Square
London E14 4QJ
Telephone: +44 (0)20 7888 8888
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Telephone: +44 (0)20 7583 5000
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Telephone: +44 (0)20 7260 1000
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone: +44 (0)371 384 2302
196
Annual Report 2016Daily Mail and General Trust plc Visit www.dmgt.com to see what is
happening across our business and the
marketplaces in which we operate.
Contact Details
DMGT Head Office
Northcliffe House
2 Derry Street
London W8 5TT
UK
Tel +44 (0)20 3615 0000
enquiries@dmgt.com
www.dmgt.com
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