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Satisfying
the need
to know
Annual Report
2018
Daily Mail and General Trust plc
Overview
Financial Highlights
Statutory Results†
Adjusted Measures
Revenue
Operating profit/(loss)
Revenue
1,426m
2017: £1,564m
£169m
2017: £(129)m
£1,426m
2017#: £1,660m
2017 pro formaΩ: £1,564m
Operating margin*
10%
2017#: 12%
2017 pro formaΩ: 11%
Profit/(loss) before tax
Profit for the year
Profit before tax*
Earnings per share*
£692m
2017: £(112)m
£688m
2017#: £342m
£182m
2017#: £226m
2017 pro formaΩ: £216m
42.2p
2017#: 55.6p
2017 pro formaΩ: 54.8p
Earnings per share
Dividend per share
Cash operating income*
Net cash/(debt)§:EBITDA
194.7p
2017#: 97.8p
23.3p
2017: 22.7p
£155m
2017#: £199m
2017 pro formaΩ: £181m
0.8x
2017: (1.4)x
£ million
Statutory profit/(loss) before tax
Discontinued operations
Exceptional operating costs
Impairment of plant
Intangible impairment and amortisation
Profit on sale of assets
Pension finance (credit)/charge
Other adjustments
Adjusted profit before tax
For explanations i to vii and more detailed tables please refer to pages 27 and 28.
†
Statutory revenue, operating profit and profit before tax figures are for continuing operations only
(excluding Euromoney).
FY 2018
692
–
25
–
95
(658)
(2)
30
182
FY 2017
Explanation
(112)
523
50
42
282
(530)
5
(33)
226
i
ii
iii
iv
v
vi
vii
# From continuing and discontinued operations.
*
Before exceptional items, other gains and losses, impairment of goodwill and intangible assets,
amortisation of intangible assets arising on business combinations, pension finance charges or credits
and fair value adjustments; see Consolidated Income Statement on page 89 and the reconciliation in
Note 13 to the Accounts.
Pro forma FY 2017 figures have been restated to treat Euromoney as a c.49% owned associate for the
whole year, consistent with the ownership profile during FY 2018. See reconciliation on page 25.
See Note 16 for details of Net cash. Net cash includes £237 million of short-term deposits maturing
in December 2018.
Ω
§
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Go online to www.dmgt.com to find out more
Daily Mail and General Trust plc Annual Report 2018
DMGT is an international business
built on entrepreneurialism
and innovation.
DMGT manages a diverse, multinational portfolio of companies,
with total revenues of around £1.4 billion, that provides
businesses and consumers with compelling information,
analysis, insight, events, news and entertainment. DMGT is also
a founding investor and the largest shareholder of Euromoney
Institutional Investor PLC.
02
Chairman’s Statement
Maintaining a strong
portfolio of businesses
10
CEO Review
Delivering against
clear strategic
priorities
06
Our Business Model
16
Operating Business
Reviews
Strategic Report
Chairman’s Statement
DMGT at a Glance
Our Business Model
Market Overview
CEO Review
Key Performance Indicators
Operating Business Reviews
Insurance Risk: RMS
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
JVs & Associates
Financial Review
Our People and Our Stakeholders
Principal Risks
02
05
06
08
10
14
16
17
17
18
18
19
20
21
22
30
32
Governance
Board of Directors and Company Secretary 36
38
Chairman’s Statement on Governance
40
Corporate Governance
54
Remuneration Report
77
Statutory Information
80
Annual General Meeting 2019: Resolutions
Financial Statements
Independent Auditor’s Report
Financial Statements
Shareholder Information
82
89
195
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Strategic Report
Maintaining a strong portfolio of businesses
Chairman’s Statement
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The Viscount Rothermere
Chairman
DMGT has significantly enhanced its
financial flexibility and continues to
benefit from the resilience of its
diversified portfolio.
The quality of our businesses,
combined with our balance sheet
strength, creates opportunities for
growth and the ability to deliver
long-term returns to shareholders.”
The strategic decisions that we have
taken are enhancing our business model
and underpin our commitment to
delivering profitable growth across
a diversified and resilient portfolio.
As your Chairman, I am proud that we
have continued to focus on creating
sustainable value for our shareholders
and remain confident in our strategy that
reinforces our long-term approach to
investment. We back entrepreneurial
businesses with patient capital. We look for
opportunities in markets that are undergoing
rapid change, recognising that there is a
balance between reward and risk. We seek
to nurture young companies as they grow
and develop them into the strong cash
generators of the future.
2
Daily Mail and General Trust plc Annual Report 2018
Business highlights
I am pleased that FY 2018 provided evidence
of the merits of this approach. We continued
to deliver strong cash flows from our
‘Operating at scale’ businesses, such as the
Mail Newspapers, and the combination of
increased revenues and an improving margin
from our ‘Focused growth’ businesses. We
also moved into a net cash position following
the sale of our c.30% stake in ZPG Plc, the
owner of Zoopla.
These actions, combined with our ongoing
focus on improving operational execution
and active portfolio management, give us
confidence in the long-term outlook for
the Group.
The Board is pleased to recommend a 3%
increase in the final dividend per share
for FY 2018, giving a total dividend for the
year of 23.3 pence per share, an increase
of 3%, continuing DMGT’s long-standing
commitment to delivering sustainable
annual real dividend growth.
DMGT received £642 million for its stake in
ZPG Plc, taking our total cash returns from
property portals to c.£880 million since
first investing in 2004, or 14 times our
total investment.
The investment, support and exit strategy
epitomises DMGT’s entrepreneurial and
long-term approach to developing
businesses. We were prepared to invest early
and to increase our exposure as we learned
more about the scale of the opportunity. We
combined our Digital Property Group, built
from the purchases of Find a Property and
PrimeLocation, with Zoopla as the online
property market continued to develop.
We supported Zoopla through its initial
public offering and acquisition of uSwitch,
the price comparison site. Finally, we were
able to create considerable value for
shareholders when ZPG Plc was acquired by
Silver Lake earlier this year. That is patient
capital in action.
The continuing resilient performance
of the Group’s newspapers, despite the
long-established challenging industry trends,
is another tribute to DMGT’s long-term
approach. We have continued to invest in
and manage our titles efficiently for the long
term. Our commitment to popular, high-
quality journalism has allowed our titles to
outperform the market while continuing to
deliver strong cash flows, providing capital
for investment in the future of the Group.
Alongside this, MailOnline continues to be
one of the world’s most popular online news
sites. Even in a tougher year, impacted by
reduced traffic from search and social
platforms, MailOnline continued to increase
its advertising revenues and to improve
engagement with its audience, increasing the
total minutes spent on its website and apps.
The success of dmg media would not have
been possible without the enormous
contribution of Paul Dacre, who has retired
as Editor of the Daily Mail after 26 years.
Paul is the greatest Fleet Street editor of his
generation and I am delighted that DMGT
will continue to benefit from Paul’s
experience and guidance in his new role
as Chairman and Editor-in-Chief of
Associated Newspapers.
I am confident that the popular high-quality
journalism that has defined the Daily Mail
for generations will remain a hallmark
of the newspaper under Geordie Grieg,
Paul’s successor.
Our B2B portfolio delivered broad-based
revenue growth during the year and an
improved operating margin. DMGT’s
long-term approach was demonstrated by
our commitment to continued investment,
despite some challenging market conditions,
essential to harnessing today’s technology
to meet customer needs.
Strategic focus
Under the leadership of Paul Zwillenberg,
our CEO, the Group has continued to deliver
against three strategic priorities: improving
operational execution; increasing portfolio
focus, and enhancing financial flexibility.
The financial performance of the B2B
businesses reflects the increased emphasis
on operational execution. In addition,
DMGT’s portfolio focus has been further
increased by disposals, including the sale
of EDR.
The proceeds from disposals and continuing
strong cash flow enabled DMGT to end its
financial year with net cash of £233 million.
DMGT’s enhanced financial flexibility will
enable us to continue with our balanced
approach to capital allocation, focused on
driving growth within the business as well as
providing good levels of shareholder returns.
The Board will also consider potential
investment opportunities and will remain
highly disciplined about the prices we are
prepared to pay.
Read more in CEO Review,
pages 10 to 13
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3
Strategic Report
Maintaining a strong portfolio of businesses
Chairman’s Statement
Governance
The composition of our Board reflects
the business and geographic mix of our
operations, ensuring we continue to seize
strategic opportunities and manage the
changes sweeping our markets. The Board’s
commitment to the high governance
standards our shareholders expect
remains paramount.
I would like to thank our Non-Executive
Directors for their contribution over the past
year. JP Rangaswami joined DMGT’s Board
as an Independent Non-Executive Director
in February 2018. JP brings extensive
knowledge and experience in the fields
of data and computer science.
Paul Dacre stepped down from the Board
in September 2018, having contributed
insights and immense media experience
for over 20 years.
Read more in Governance Report,
pages 40 to 53
People and culture
On behalf of the Board, I would like to
thank all our employees for their continued
hard work, dedication and significant
contribution to the Group, as well as their
wider communities.
We continue to invest in talent, nurturing
the next generation of entrepreneurs and
managers and developing the individuals
who create the products and distribute the
content that our audiences value.
In line with our strategic priority of improving
operational execution, we continue to invest
in our innovation and technology talent.
The Board recognises the importance of
attracting the talent of the future in all levels
of the organisation.
Read more in Our People and
Our Stakeholders, pages 30 and 31
Remuneration
Remuneration and incentives drive focus
on performance aligned to our strategic
priorities. Our value creation metrics
and related payments are set out in the
Remuneration Report.
Read more in Remuneration Report,
pages 54 to 76
Outlook
The foundations have now been laid
on which to build. The quality of our
businesses’ earnings, combined with
our balance sheet strength, creates
opportunities for growth and the ability to
deliver long-term returns to shareholders.
DMGT benefits from our ownership
structure, which enshrines a long-term
perspective on value creation.
We will continue to focus on our strategic
priorities, including operational execution,
enabling us to navigate and take advantage
of structural and cyclical changes in the
markets in which we operate.
Your Board remains confident that the
Group has excellent long-term growth
prospects to deliver on our potential. In the
coming year, we will continue to pursue
growth opportunities through further
organic investment and, where appropriate,
through acquisitions that promise to
strengthen the Group. The outlook for
DMGT remains positive and we look
forward to making further good progress.
The Viscount Rothermere
Chairman
4
Revenue by business FY 2018 (%)
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
16
19
5
6
8
46
Dividend per share
The Board’s policy is to grow the
dividend in real terms and, in the
medium term, to aim to distribute
around one-third of the Group’s
adjusted earnings.
25
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10
5
0
6.5p
1998
Dividend
Inflation
23.3p
9.7p
2018
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Daily Mail and General Trust plc Annual Report 2018
Who we are
DMGT at a glance
DMGT’s diversified portfolio of companies, operating across B2B and consumer
markets, has continued to evolve as we position ourselves for long-term growth.
Our sectors
B2B
Insurance Risk
RMS produces risk models and software applications, and provides analytical data services
used by the global risk and insurance industry to quantify and manage catastrophe risk.
Read more, page 17
Property Information
Our Property Information companies provide technology, data and workflow solutions
to clients involved in commercial and residential property markets as well as risk and
valuation services to the Commercial Mortgage-Backed Securities (CMBS) market.
Read more, page 17
EdTech
Hobsons is the leading provider of student success solutions in the US through its
Naviance, Starfish and Intersect platforms.
Read more, page 18
Energy Information
Genscape provides data, workflow tools and predictive analytics to improve market
transparency and efficiency across several energy and power asset classes to better
manage volatility and increase supply chain efficiency.
Read more page 18
Events and Exhibitions
dmg events is an international B2B exhibitions and conference organiser,
focusing on the energy, construction, interiors, hotel, hospitality and leisure sectors,
operating across several geographies.
Read more, page 19
Consumer
Consumer Media
dmg media is a modern news media company with two of the UK’s most-read paid-for
newspapers and one of the world’s most popular free newspapers. It includes MailOnline,
whose readers spend 145 million minutes on the site and apps each day.
Read more, page 20
JVs and Associates
DMGT holds a significant associate interest in Euromoney (c.49%) and, until July 2018,
held a c.30% stake in ZPG. Other JVs and Associates include Yopa, which became an
associate in August 2018, and Real Capital Analytics. DailyMailTV was a joint venture
but became a wholly-owned subsidiary in October 2018.
Read more, page 21
Go online to www.dmgt.com for more information about our businesses
5
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Strategic Report
How we create value
Our Business Model
Satisfying the
need to know
Which we monetise
through five
revenue models
DMGT creates first-choice products,
combining data, technology and
consumer know-how to connect
people with intelligent insight and
engaging content.
Proprietary
data
Innovative
technology
Compelling
content
Consumer
know-how
6
Subscription
Our B2B businesses have a strong subscription revenue
component with high renewal rates demonstrating the
strength of our client relationships.
Advertising
Our Consumer Media business generates advertising
revenue both in print and digital formats. Growth in
our digital advertising revenues continues to help offset
structural declines 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 hold strong market-leading positions in the
context of declining industry volumes.
Events attendance and sponsorship
Exhibitor fees, delegate fees and sponsorship revenues
are earned from the growing portfolio of B2B shows
run by dmg events.
Transactions
Revenues from property information businesses
are influenced by property transaction volumes. The
customer base is stable, providing a high degree of repeat
business, and consequently a large proportion of these
revenues have subscription-like characteristics.
Read more in Financial Review, pages 22 to 29
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Daily Mail and General Trust plc Annual Report 2018
Supported by
our values
Enabling us to
create value for
our stakeholders
Entrepreneurialism
As a home for entrepreneurs, working at the cutting
edge of technology, DMGT fosters constant innovation,
growth and talent development across our
international businesses.
For our shareholders
We have a track record of investing in and supporting
a diversified portfolio of entrepreneurial businesses.
Our strategy aims to achieve sustainable long-term
earnings and dividend growth.
Purpose
Long-term perspective and businesses with a clear
sense of purpose for their customers and society.
Excellence
Commitment to quality, craftsmanship and
delivering excellence. We seek the best talent,
leadership and expertise.
Total shareholder return FY 2008 – FY 2018
12% CAGR
For our employees
We nurture entrepreneurial talent and encourage our
people to make their own mark on DMGT, a diverse
international portfolio with over 120 years of heritage.
Employees worldwide
5,924
For our 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 2018
8%
For our communities
DMGT businesses have developed strategic partnerships
with a number of charitable organisations, with a focus on
making a difference in the communities where our people
work and live.
Amount donated to charity FY 2018
£1 million
7
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Strategic Report
Adapting to continuous change
Market Overview
DMGT comprises a portfolio of businesses working across diverse
marketplaces. While each has its own individual characteristics,
some common features exist:
• Fast-paced and evolving to adopt new technology and business models
• Technology-enabled with high degrees of innovation
• Content and information-driven
• Enduring and resilient
Increased
volatility
Political
uncertainty
Cyber
security
Context to DMGT
• Political policy decisions have direct
and often unexpected impacts on the
geographies and industries in which
DMGT operates and will continue to
shape where and how DMGT pursues
commercial and strategic opportunities.
Market trend
• There is still long-term geopolitical
uncertainty for UK companies’ operations
abroad. Furthermore, changing
political landscapes throughout the
world each add to the climate
of political uncertainty.
Our approach
• DMGT closely follows political changes
and implications for the geographies
and industries in which it participates.
In many instances, the uncertainty
of changing political and regulatory
norms presents commercial opportunities,
as we help our customers anticipate
implications for their business.
• We continually review our operations
against changes to global sanctions
and diplomatic relations.
Context to DMGT
• As a provider of business-critical data,
analytic tools for global industries and
news media, DMGT is exposed to cyber
security risks across its operations.
Market trend
• Cyber security threat is a permanent
business risk in the digital age.
Governments and regulatory bodies
have awakened to the threat posed to
individuals and society by data breaches.
• As customer confidence is easily eroded,
enforcing the highest possible cyber
security standards is critical for
maintaining customer and market trust.
Our approach
• DMGT continues to strengthen its
information security controls. The Group
Chief Information Security Officer has led
the roll-out of revised information security
standards, compliance roadmaps and
regular cyber security audits.
• The CEO-led Information Security Steering
Committee ensures senior level
engagement across the Group.
• RMS has developed a cyber risk
management tool that seeks to provide
insurers with a framework to capture
and report on all cyber exposure and
facilitate risk transfer in the market.
Context to DMGT
• As a provider of proprietary, hard-to-
obtain information, DMGT benefits from
growing uncertainty in the world as its
customers rely more heavily on data
and analysis to inform critical decisions.
Market trend
• Global economic uncertainty, political
tensions and supply and demand
disruptions continue to influence our
customers and their markets. The
uncertainty while we await confirmation
of the terms of the UK’s exit from the EU
continues to unsettle the UK economy.
• Extreme weather events, commodity
price fluctuations and continued
exchange-rate swings have directly
impacted the economic and social
environments for both investment
and business operations.
Our approach
• Our diversification provides beneficial
offsets in an increasingly volatile world:
as one industry may be facing headwinds,
another may benefit from the forces
of volatility.
• In this sustained volatile environment,
DMGT is providing its customers with
fundamental data, analytics and insights
that enable them to move away from
instinct-driven decision-making and
to embrace market-relevant data as
a means to navigate uncertain times.
• DMGT’s businesses are not dependent on
trade between the UK and the remaining
EU members, other than the sourcing
of newsprint for the Consumer Media
business. Notwithstanding a period of
political and macroeconomic uncertainty,
the future is viewed with confidence.
8
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Daily Mail and General Trust plc Annual Report 2018
Our businesses are constantly looking towards the future to identify and manage current and future trends.
The most significant of these are identified here.
Read more on the trends affecting the Group in Principal Risks, pages 32 to 35
Continuous
innovation
Machine
learning
A competitive
talent pool
Context to DMGT
• Technological change and customer
Context to DMGT
• An ever-growing number of
adoption rates of new technologies in
our key markets are accelerating at a
pace never seen before, irrevocably
changing and erasing more traditional
business models.
Market trend
• The speed of technology evolution is
increasing the capital intensity of IT
investment and product development
such that business investment horizons
have changed compared with previous
economic cycles.
Our approach
• As an entrepreneurial Group focused
on digital growth, DMGT stays ahead
by continually fostering innovation
and embracing new ideas. This is
reflected by DMGT’s expectation
of investing at least 5% of revenue
in organic initiatives each year.
• DMGT has a family heritage which
encourages long-term thinking and
the application of patient capital.
Consequently, the Group can invest
for the future, seeding, incubating
and nurturing innovative opportunities.
Throughout DMGT’s history, innovation
and diversification have been essential
elements of how we do business, and
have given us a wealth of experience
to draw on in order to adapt to
market changes.
machines 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
helping to unearth insights in discrete
datasets that were previously impossible
to see.
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 embracing the opportunity.
• We are developing products and services
across a number of our businesses,
including sensing technology at
Genscape and statistical analytics
at Hobsons and RMS.
• DMGT’s investment approach enables
• We have established a central technology
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.
function with expertise in artificial
intelligence and machine learning,
which is being leveraged by the
operating companies.
Context to DMGT
• Across the global workforce but
especially with millennials, top
talent is drawn to companies that
offer a compelling employee value
proposition, incorporating purpose
beyond profit, ongoing learning and
development opportunities as well
as competitive remuneration.
Market trend
• Demand for top talent is always fierce,
however, in the critical areas of big data
analytics, artificial intelligence and data
science, demand in many labour markets
outstrips supply.
Our approach
• In competing for key employees,
especially critical technology talent,
DMGT is committed to enhancing its
Group-wide employee proposition,
defining the jobs of the future, for
instance through its work in data science
and predictive analytics.
• DMGT supports training and development
in order to enhance employees’ capabilities
and transfer skills throughout the
businesses. We also provide Group-wide
initiatives such as our talent development
programmes to actively encourage rising
talent within DMGT.
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Delivering against clear strategic priorities
CEO Review
Overview
Over the past year, we have continued
to execute against DMGT’s three
strategic priorities, aimed at delivering
solid financial results and creating
sustainable returns.
Those priorities have been to improve
our operational execution, increase our
portfolio focus and enhance our financial
flexibility. I am confident this strategy,
including our Performance Improvement
Programme (PIP), will drive the profitable
growth that is vital to long-term
value creation.
I am encouraged that actions taken in
FY 2018 have strengthened our balance
sheet and the resources with which we
can continue to transition the Group.
Business Highlights
The performance during the past year was
consistent with our expectations. We are
entering FY 2019 from an improved position
of financial and operational strength, upon
which we can build.
That strength was enhanced by a number
of performance improvement initiatives that
we undertook across the portfolio in FY 2018.
The disposals we made during the year,
including the sale of our stake in ZPG Plc
(ZPG), have resulted in DMGT now being
in a net cash position. This has materially
strengthened our balance sheet and
provides us with significant additional
financial flexibility, one of our three key
strategic priorities.
The disposal of our shareholding in ZPG
demonstrated DMGT’s successful long-term
approach to value creation and our ability to
secure significant financial returns from the
assets that we have nurtured over the years.
DMGT originally identified the opportunity
in online property nearly 20 years ago, as
property advertising began to migrate from
traditional media to the internet. The Group
built, supported and grew the business
through its evolution, culminating in the
disposal of its remaining c.30% stake in ZPG
for £642 million in July 2018, bringing total
cash returns to c.£880 million, a multiple
of 14 times our initial investment.
This is the latest demonstration of DMGT’s
business model of patient, long-term value
creation; successfully identifying new
opportunities, incubating young businesses
and supporting their growth to create value
10
Key Strategic Priorities
Delivering on our potential
Improving operational
execution
Increasing portfolio
focus
Enhancing/maintaining
financial flexibility
for shareholders. Other examples of this
approach include Euromoney Institutional
Investor PLC (Euromoney) and Wowcher.
Our balance sheet is now in the strongest
position it has been for many years. These
disposals reflect our willingness to exit or
reduce our holdings in companies where
we can realise value, generating proceeds
with which to reinvest.
We have increased our ability to make
bolt-on acquisitions, while maintaining
an extremely disciplined and balanced
approach to capital allocation.
At the operating level, we delivered a
resilient performance in many parts of the
Group. In our B2B businesses, we saw good,
broad-based underlying revenue growth
across the portfolio with especially strong
revenue growth in EdTech, Energy
Information and Insurance Risk, while
our Property Information business faced
challenging market conditions in the UK.
Our Consumer Media businesses continued
to outperform their markets.
Following the 2017 restructuring of Hobsons,
the EdTech business, the continued growth
across all three remaining segments and the
improved cash operating income of the
retained business during FY 2018 were
particularly encouraging. Similarly, increased
operational focus at Genscape, the Energy
Information business, resulted in cash
operating income growth. In Events and
Exhibitions, the commitment to organic
expansion was demonstrated by the launch
of five new events.
I was delighted that Karen White joined as
CEO of RMS, the Insurance Risk business,
in March, bringing extensive enterprise
software experience. RMS’s strategy has
recently been enhanced to deliver long-term
growth, reflecting the evolution of
technology and the insurance sector’s
acceptance of cloud computing as well as
demand from RMS’s customer base for a
broader set of solutions to deliver value
across more areas of risk. Consequently, the
decision has been taken to re-architect the
RMS(one) platform to take advantage of the
growing benefits of new technology. This
development is expected to significantly
reduce the running costs for customers
while also improving performance.
Given the decision to re-architect the
platform, it was appropriate to impair
the RMS(one) asset, which related to pre
August 2016 capitalised software.
RMS will be increasing its investment
in software, data, data analytics and
applications and I am confident
that Karen and her team will drive RMS
to realise its full potential as a core part
of our B2B portfolio.
The Consumer Media business continued
to outperform in challenging markets.
Although revenues decreased, our content
and high-quality popular journalism
remains in high demand. This is reflected
in MailOnline’s traffic and the Mail
newspaper titles’ significant market share.
In FY 2018, MailOnline was impacted by a
marked reduction in indirect traffic from
social media and search platforms, resulting
in slower revenue growth. The management
team continues to execute its clear strategy
of prioritising direct traffic and engagement
with this core audience continues to grow.
MailOnline has an excellent long-term track
record and I remain confident in its future
growth opportunities.
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Paul Zwillenberg
CEO
We now have more flexibility to invest behind
our businesses, both organically and through
acquisitions, to support DMGT’s long-term
growth and value creation.
(pages 22 to 29). An update on the
progression of DMGT’s Key Performance
Indicators (KPIs), used as a measure of our
performance at a Group level, can be found
on pages 14 and 15 of the Strategic Report.
As part of this effort, we have introduced
a disciplined approach to portfolio
management and have established three
categories for our different businesses,
each with distinct contribution objectives.
Strategy update
We have made good progress against our
goals of driving shareholder returns and
realising sustainable long-term value. We can
take satisfaction from the implementation
to date of our three strategic priorities:
improving operational execution,
increasing portfolio focus and enhancing
financial flexibility.
This effort is ongoing and further action will
be necessary to realise our full potential. We
are focused on disciplined capital allocation,
prioritising fast-growth assets and those
businesses with the potential to deliver
long-term predictable profitability at scale.
Increasing portfolio focus
We have made significant progress in
increasing the focus of our portfolio over
the past year. As well as disposing of our
stake in ZPG, we sold EDR and Hobsons’
Solutions business, reduced our ownership
in SiteCompli, restructured Genscape and
Xceligent was closed. In September, the
solar business Locus Energy was merged into
AlsoEnergy, in which we retain a minority
stake, driving consolidation in the sector.
Accordingly, we now have a more focused
portfolio of businesses with leading market
positions in large, growing sectors that
are benefiting from digitisation, such
as Insurance Risk, EdTech and Energy
Information. Our emphasis on an efficient
portfolio positioned in growth sectors will
be a major theme of the current financial
year and beyond.
1.
Operating at scale: these businesses
provide strong, predictable cash flow
that cover our fixed costs, including
our dividend, and finance investments
into our early bets. We have several
businesses in the Operating at scale
category, including dmg events,
Landmark and Trepp in the Property
Information sector, and our Consumer
newspaper titles. These are strong scale
businesses that are highly cash
generative and with a strong presence
in their respective marketplaces.
2. Focused growth: we have an
3.
opportunity to extract further value and
growth from businesses that can deliver
a combination of revenue growth and
improving profitability. We aim to scale
them to become the strong cash
generators of tomorrow. Our Focused
growth businesses include RMS, Hobsons,
Genscape and MailOnline; all with
opportunities to grow revenues and to
improve their operating profit margins
over time.
Early bets: this is a unique strength of
DMGT; our ability to grow early stage
businesses, nurture entrepreneurial
businesses through the cycle, and expand
the best ones to scale. BuildFax, in
the Property Information sector, is an
example. In addition, dmg ventures,
our venture and early stage investment
division, manages a portfolio of minority
investments with a focus on disruptive
technology start-ups. It is actively
exploring additional growth opportunities
in the converging space between B2B
and consumer markets.
11
In the Consumer Media business and
in large parts of our B2B operations, the
performance in the past financial year has
shown the benefits of providing trusted
content, data and information. We will
continue to focus on driving sustainable
returns from our presence in these
businesses, seizing opportunities for growth
and maximising value wherever we can.
Financial Performance
Group revenues were stable on an
underlying basis as the growth from our B2B
portfolio was offset by Consumer Media,
which continues to face challenging market
conditions. Operating profit declined by an
underlying 17%, largely due to Consumer
Media and increased Corporate costs as we
focus on transitioning the Group.
Adjusted profit before tax decreased by 16%
on a pro forma basis, adjusting the prior year
for the Euromoney transaction, reflecting
disposals and the weaker US dollar. Similarly,
adjusted earnings per share were down a
pro forma 23% as a result of an increased
effective tax rate.
The gains on disposals, notably from
the stake in ZPG, resulted in statutory
profit before tax improving £804 million,
to £692 million. Statutory profit for the year
increased by £346 million to £688 million,
reflecting the gain on the reduction in our
Euromoney holding in the prior year, and
statutory earnings per share grew 99%.
As well as illustrating the challenging
conditions in many sectors and DMGT’s
commitment to investing through the cycle,
these figures reflect the impact of disposals,
which have considerably strengthened the
balance sheet to a net cash position.
Tim Collier, Group Chief Financial Officer,
describes DMGT’s financial performance
in further detail in the Financial Review
Strategic Report
Strategic Report
Delivering against clear strategic priorities
CEO Review
The overall shape of the portfolio and the
role that each business plays in delivering
the Group’s ambitions is clear within this
framework. This is important as it informs
our thinking about the expectations,
objectives and aspirations for each individual
business, as well as our decision-making
regarding capital allocation across the
whole portfolio.
The shape of our portfolio will combine
our long-term view of value enhancing
acquisitions, particularly in adjacent
business segments to our existing content
operations and specialist B2B information,
with a willingness to enter markets that
are being disrupted by digitisation.
As we pursue this strategy, we have
strengthened the management team that
will help develop our portfolio by appointing
a Chief Investment Officer, Origination.
Improving operational execution
The second area of strategic focus is
improving operational execution. This is
being driven by our Group-wide Performance
Improvement Programme (‘PIP’) which
includes operating initiatives that are aligned
with each business’s role within the Group.
The PIP is targeting a variety of initiatives
implemented across five categories of
product, commercial, operations, people
and technology. Good initial progress has
been made during FY 2018 but we have
more to do and there is a need for
continued focus on addressing challenges
posed by rapid technological change and
the intense competition seen in some of
our core markets.
As we execute on the PIP, we are undertaking
several initiatives that reflect the operational
focus and determination to expand our
presence in the right market segments and
at the right pace. I would like to highlight
a few examples:
In Product, Hobsons successfully delivered
the new Naviance student product.
In Commercial, at MailOnline we have
introduced a new format in the US with the
highly successful DailyMailTV. In Operations,
Genscape has introduced a new process,
the Product Launch Pad, for developing
new products from inception to launch.
This will ensure a more coordinated launch
of those opportunities that will really move
the needle. Encouragingly, other DMGT
businesses are also looking to incorporate
the Launch Pad into their innovation
processes. Lastly, across People and
Technology, Rob Chandhok joined DMGT
as our new Group Chief Technology Officer
and has been appointed to DMGT’s Executive
Committee. Our businesses are already
benefiting from his and his team’s expertise
in new technologies, such as machine
learning and artificial intelligence, to
drive innovative product development,
improve information security and provide
inputs as they modernise their own
technology platforms.
As you would expect, the shift away from
light touch to performance management has
resulted in a major cultural change at DMGT.
I’m very pleased with the way the businesses
are adapting. Over the past year, I’ve put in
place a single executive leadership team that
spans both the B2B and Consumer Media
businesses to share knowledge. We now
have the right level of expertise in the centre
to provide support and also challenge our
businesses, working with our devolved
business management teams to
maximise returns.
Clear portfolio roles
We have established clear roles for each business within the portfolio.
The expectations and Performance Improvement Programme initiatives for each business reflect their role.
Operating at scale
Predictable performers
Focused growth
Growing and delivering
Early bets
Businesses for the future
Predictable profit and cash to meet
DMGT’s obligations, fund investment
and incubate early bets
Revenue growth and margin
improvement driving value creation
Option value for future, tomorrow’s
focused growth businesses
• Innovate and extend core;
seed early bets
• Optimise efficient operations
• Leverage scale
• Scale breakthrough products
• Harness operational gearing to
drive margin
• Exploit niche opportunities
• Establish scalable processes
and infrastructure
• Prioritise customer retention;
• Innovate and act on rapid
grow market share
market feedback
12
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Delivering sustainable returns over the long term
DMGT’s businesses have market leading positions in growing sectors that are digitising. The strategy is built
around a long-term vision, applying the expertise learnt from our consumer businesses to our B2B businesses,
and is comprised of three priorities: increasing portfolio focus, improving operational execution and
enhancing/maintaining financial flexibility. We expect this position and strategy to drive sustainable revenue,
profit, cash and EPS growth over the long term.
ortfolio roles
ar p
Cle
Increasing
ortfolio focus
p
Market leading
positions
Growing,
digitising
sectors
Perform
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Satisfying
the need
to know
P
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a
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m
e
(
P
I
P
)
Revenue, profit
and cash
growth
Sustained EPS
and dividend
growth
Strong balance
sheet
Enhancing/ma i n t a i n i n
financial flex i b i
y
Enabling balanced and flexib l e c a p i
i
t
l
g
a tio n
c
a l a ll o
t
Enhancing financial flexibility
The disposals of EDR and our stake in ZPG,
combined with continued healthy cash
generation, have resulted in a significant
step change in the strength of our balance
sheet and we are now in a net cash position.
Accordingly, this strategic priority has been
revised to Maintaining financial flexibility,
reflecting our current position and to ensure
we have sufficient balance sheet strength to
take advantage of attractive opportunities
at the right price as they arise.
We now have more flexibility to invest behind
our businesses, both organically and through
acquisitions, to support DMGT’s long-term
growth and value creation. Organic
investment was 8% of revenues in FY 2018,
with increased focus on the return on
investment from these initiatives, and will
continue to be a priority within our capital
allocation framework. Importantly, we will
remain highly disciplined in our approach
to any potential acquisitions. We will also
continue to rigorously apply our five
investment criteria when assessing potential
acquisitions: attractive and value creating,
scalability, long-term competitive advantage,
affordability, and achievability.
The dividend remains the primary
mechanism for delivering returns to
shareholders and we are committed to real
dividend growth. We are confident that our
capital allocation framework, underpinned
by a strong balance sheet, will drive
shareholder value.
Outlook
The strategic and operational actions
undertaken in the past year have improved
our underlying capabilities despite market
challenges. We have started FY 2019 with
the businesses performing in line with our
expectations, although several operations
face near-term headwinds in a time of
geopolitical uncertainty.
As we adjust and manage our portfolio for
this environment, FY 2019 will be another
important period of transition for DMGT
as we continue to lay the necessary
groundwork for a future characterised
by increasing portfolio focus and growth.
The businesses within the portfolio, the
operating initiatives being implemented
and the optionality created by our balance
sheet strength give the Board confidence
that DMGT has good long-term prospects.
The foundations have now been laid on
which to build and DMGT’s growth potential
will be enhanced by our ability to invest in
the technologies, talent and sectors that
promise sustainable growth. As we pursue
those opportunities, we will continue
to preserve the entrepreneurialism and
purpose that are so distinctive across DMGT.
I am confident that our strategy will
generate long-term sustainable value
and will help us navigate the near-term
challenging trading conditions. This will,
in turn, enable us to maintain our progressive
dividend policy, with a commitment to
growing shareholder returns.
Paul Zwillenberg
CEO
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Measuring our performance
Key Performance Indicators
The Board seeks to deliver sustained long-term growth for DMGT’s shareholders.
Due to DMGT holding a changing portfolio of different companies, many Key Performance Indicators (KPIs) that are targeted by individual
businesses are not appropriate at a consolidated Group level. Examples include customer numbers, revenue per customer, employee
productivity and employee engagement. 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.
2018 0%
2017
+1%
2016
0%
2015
+1%
2014
Group
adjusted
profit
before tax
DMGT actively manages
its portfolio and allocates
capital to increase
adjusted profit before
tax over the long term.
Adjusted
earnings
per share
Management seeks
sustained long-term
growth in adjusted
earnings per share to
maximise overall returns
for DMGT’s shareholders.
Group
adjusted
cash
operating
income
This metric adds back
depreciation and
amortisation and deducts
capital expenditure from
Group adjusted operating
profit. It reflects the
cash generation of the
Group’s businesses.
2018
2017
2016
2015
2014
2018
2017
2016
2015
2014
2018
2017
2016
2015
2014
Underlying revenue growth
0%
2017: +1%
+5%
The stable underlying revenue
performance reflects broad-based B2B
growth and a resilient Consumer Media
performance despite challenging
market conditions in many sectors.
£182m
£226m
£260m
£281m
£291m
Group adjusted profit
before tax*
£182m
2017#: £226m
2017Ω: £216m
Group adjusted profit before tax
decreased by £44 million or £34 million
on a pro formaΩ basis, reflecting B2B
disposals, the reduced profits from
Consumer Media and increased
Corporate costs.
42.2p
Adjusted earnings per share*
55.6p
56.0p
59.7p
55.7p
42.2p
2017#: 55.6p
2017Ω: 54.8p
Adjusted earnings per share decreased
by 24% or by 23% on a pro formaΩ basis,
reflecting the reduction in adjusted
profit before tax and an increase in the
effective tax rate.
£155m
£199m
Group adjusted cash
operating income*
£155m
2017: £199m
2017Ω: £181m
£254m
£278m
£267m
Group adjusted cash operating
income decreased by £26 million
on a pro formaΩ basis, reflecting the
improving cash generation from the
B2B businesses, more than offset
by reduced cash generation from
Consumer Media and increased
Corporate costs.
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Key strategic priorities
Improving operational execution
Increasing portfolio focus
Enhancing/maintaining
financial flexibility
Description
Relevance
Performance
Narrative
Strategic priority
Net cash§/
(debt):
EBITDA
ratio
Management aims
to maintain a strong
balance sheet and retain
DMGT’s investment-
grade status and
consequently targets
the net (debt):EBITDA
ratio to be no more than
(2.0) throughout the year.
(1.4)x
(1.8)x
(1.8)x
(1.5)x
2018
0.8x
Net cash/(debt):EBITDA
2017
2016
2015
2014
0.8x
2017: (1.4)x
Through increasing portfolio focus,
including the disposal of DMGT's stake
in ZPG Plc, and strong operational cash
flows, DMGT is in a net cash position.
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.
25
20
15
10
5
0
6.5p
1998
Dividend
Inflation
23.3p
9.7p
2018
Dividend per share
23.3p
2017: 22.7p
We have proposed a full-year dividend
of 23.3 pence, up by 3% from last year,
continuing our strong track record of
dividend growth and delivering a 7%
cumulative annual growth rate over the
past 20 years.
Organic
investment¥
as a
percentage
of revenues
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% of
revenues to be used
for organic investment.
2018
2017
2016
2015
2014
8%
Organic investment
as a % of revenues
9%
9%
8%
2017: 9%
DMGT continued to reinvest
in the businesses during the year,
notably in the B2B portfolio.
7%
7%
^
§
#
*
Ω
¥
Underlying revenue growth is on a like-for-like basis, adjusted for constant exchange rates, the exclusion of disposals and closures, the inclusion of the year-on-year organic growth from
acquisitions and for the consistent timing of revenue recognition. For events, the comparisons are between events held in the year and the same events held the previous time. For Consumer
Media, underlying revenues exclude low-margin newsprint resale activities. See pages 28 and 29.
See Note 16 for details of net cash.
From continuing and discontinued operations.
Before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, pension finance charges or
credits and fair value adjustments; see Consolidated Income Statement on page 89 and the reconciliation in Note 13 to the Accounts.
Pro forma FY 2017 figures have been restated to treat Euromoney as a c.49% owned associate for the whole year, consistent with the ownership profile during FY 2018. See reconciliation on page 25.
Organic investment is expenditure that is incurred with the objective of delivering long-term growth. It includes expenditure on product development, whether capitalised or expensed directly,
and the adjusted operating losses of early-stage businesses.
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Strategic Report
Strategic Report
Operating Business Reviews
B2B
Summary
Our B2B companies operate in five sectors, namely Insurance Risk,
Property Information, EdTech, Energy Information, and Events and Exhibitions.
Total B2B
Revenue
Operating profit*
Operating margin*
2018
£m
773
128
17%
2017
Pro formaΩ
£m
881
133
15%
Movement
%
(12)%
(4)%
Underlying^
%
+3%
(1)%
* Adjusted operating profit and operating margin; see pages 27 and 28 for details.
^
Ω
Underlying growth rates give a like-for-like comparison; see pages 28 and 29 for details.
Pro forma FY 2017 figures have been restated to treat Euromoney as a c.49% owned associate for the whole year, consistent
with the ownership profile during FY 2018.
Performance
Revenues from B2B totalled £773 million,
up 3% on an underlying basis, with growth
from EdTech, Energy Information, Insurance
Risk, and Events and Exhibitions partially
offset by Property Information, which
experienced challenging market conditions
in the UK. Revenues decreased by 12% on
a pro forma basis, following disposals of
Property Information and EdTech businesses
and reflecting the weaker US dollar.
B2B adjusted operating profits were
£128 million, down an underlying 1% due
to growth from Insurance Risk and EdTech
being largely offset by reductions from
Property Information and Energy
Information. The overall B2B operating
margin increased to 17% and included the
benefit of a stronger Property Information
margin following the closure of the loss-
making Xceligent business in December 2017.
Despite the £5 million pro forma reduction
in operating profit, B2B cash operating
income increased £11 million to £131 million,
reflecting the impact of the Performance
Improvement Programme (PIP).
Outlook
The B2B financial performance will be
affected by the disposal of EDR, which
occurred in April 2018. FY 2018 revenues,
restated based on the current portfolio of
businesses, were £725 million. In FY 2019,
the B2B businesses are collectively expected
to deliver underlying revenue growth in the
low-single digits and the adjusted operating
margin is expected to be in the mid-teens,
reflecting the benefits of the PIP offset
by the continued investment to support
our long-term growth.
Revenue (%)
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Operating profit (%)
Insurance Risk
Property Information
EdTech
Energy Information*
Events and Exhibitions
* Energy Information delivered a break-even
adjusted operating profit performance.
30
35
9
11
15
27
45
6
0
22
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Daily Mail and General Trust plc Annual Report 2018
Insurance Risk: RMS
2018
£m
229
35
Move-
ment
%
Under-
lying^
%
2017
£m
233
(2)% +5%
33
+5% +16%
Revenue
Operating profit*
Operating margin*
15% 14%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The Insurance Risk business, RMS, is
focused on operational execution and
investment in its core modelling, data,
risk and analytical services. During
FY 2018, RMS continued to improve
and expand its modelling solutions with
updates to the US storm surge model,
new and updated earthquake and
typhoon models for the Asia Pacific
region and further expansion into new
lines of risk with the third release of the
RMS cyber model.
Business model
RMS’s solutions help insurers, reinsurers,
brokers, financial markets and public
agencies evaluate and manage catastrophe
risks throughout the world. RMS leads the
catastrophe risk modelling industry that it
helped to pioneer, delivering models, data,
analytical services and software to its
customers, mainly through multi-year
subscriptions. RMS also offers a variety
of managed and hosted services.
Insurers, reinsurers, brokers and other
financial institutions trust RMS’s solutions
to better understand and manage the risks
of natural and human-made catastrophes,
including hurricanes, earthquakes, floods,
terrorism and pandemics.
Performance highlights
Insurance Risk revenues increased by 5%
on an underlying basis, mainly benefiting
from one-off project revenues as well as
subscription revenues across the core
modelling, software and data businesses.
Reported revenues decreased 2% to
£229 million due to the weaker US dollar.
Adjusted operating profit grew by 5%,
despite the impact of the weaker US dollar,
and by 16% on an underlying basis, with the
adjusting operating margin increasing to 15%.
RMS continues to invest in model
development, reflecting an ongoing
commitment to build upon the business’s
market-leading position. RiskLink18 was
released in July 2018 and included updates
to five models including North America
Hurricane-Storm Surge, Australia Cyclone
and Earthquake and India Earthquake, as
well as five new models including India Flood
and South Korea Earthquake, expanding
coverage across the Asia Pacific region. The
third-generation model for the cyber risk
market was also released in the year.
In line with the PIP, the management team’s
collective experience of enterprise software
was significantly enhanced, notably with the
appointment of Karen White as RMS CEO
in March 2018. RMS also strengthened its
executive team and reorganised its software
development, sales, account management
and customer success teams to improve
delivery of its full suite of products across
the client base.
RMS has recently made an important change
to enhance its strategy to deliver long-term
growth. Earlier investments in the RMS(one)
platform, dating back to 2011 when
RMS(one) was conceived, reflected available
technologies and the market’s attitude to the
cloud at that time. The platform was also
relatively narrowly focused on natural
catastrophe risk management for the
property insurance sector. Since then,
technology and the insurance sector’s
acceptance of cloud computing have evolved
considerably. There is also demand from
RMS’s customer base for a broader set of
solutions to deliver greater strategic value,
across more areas of risk.
Consequently, the decision has been taken
to re-architect the RMS(one) platform to
take advantage of the growing benefits
of new technology, better matching capacity
to demand. This development is expected
to reduce significantly the running costs
for customers whilst also improving
performance, facilitating more modular
delivery and enabling new products and
solutions starting in 2019. Throughout 2019
and beyond, RMS will be incorporating
modern and innovative technologies, such as
artificial intelligence and machine learning,
to deliver a platform that will be scalable,
secure, flexible and extensible, thereby
addressing the evolving and future market
for risk.
Since August 2016, all RMS(one) development
costs have been expensed as incurred.
Historic development costs prior to then
were capitalised. Given the decision to
re-architect the platform, the historically
capitalised development costs incurred prior
to August 2016 have been fully impaired,
resulting in a charge of £58 million.
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Priorities in the year ahead
During FY 2019, as one of DMGT’s Focused
growth businesses, RMS will be increasing its
investment in software, data, data analytics
and applications. The investment will deliver
new strategic benefits to customers and
position the business for the long term, by
opening up adjacent market opportunities
to catastrophe modelling, such as data
analytics. Future releases of high-definition
(HD) models will be made exclusively on
the new RMS(one) platform, starting with
US Inland Flood in spring 2019. The model
pipeline for 2019 covers a wide range of
perils, including US Inland Flood HD and
North American Wildfire HD. Revenues
are expected to grow in FY 2019 and the
adjusted operating profit margin will reflect
the absence of RMS(one) amortisation
charges offset by the increased platform
investment, with development costs
continuing to be expensed as incurred.
Property Information
2018
£m
272
58
Move-
ment
%
Under-
lying^
%
2017
£m
328 (17)% (2)%
52 +12% (8)%
Revenue
Operating profit*
Operating margin*
21% 16%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The Property Information portfolio
operates in the US and Europe, primarily
the UK. The focus of the US portion was
increased considerably during the year.
Despite challenging market conditions
in the UK, the Property Information
businesses delivered a resilient
performance and both Trepp and
Landmark Information Group continue
to play an important Operating at scale
role as strong cash generators for DMGT.
Business model
Companies within the portfolio derive their
revenues from providing services that use
technology, data and workflow to streamline
and help reduce the risk associated with
commercial and residential property
transactions. In addition, Trepp in the US
provides risk, valuation and data solutions
for the commercial mortgage-backed
securities market as well as robust tools,
analytics and models for commercial real
estate investors and lenders. Revenues are
generated from subscriptions as well as
volume-related transactions.
17
Strategic Report
Strategic Report
Operating Business Reviews
B2B
Performance highlights
The focus within the US element of the
Property Information portfolio was
significantly increased during the year.
Xceligent, which was fully impaired in the
prior year, ceased trading in December 2017.
In April 2018, the disposal of EDR was
completed for US$205 million, better
enabling that business to pursue growth
opportunities in managed services. In the
same month, DMGT reduced its stake in
SiteCompli to c.49%, with the founding
management team now holding a majority
stake; SiteCompli is now classified as an
associate rather than a DMGT subsidiary.
The US Property Information portfolio
now comprises Trepp, a leading provider
of data, analytics and technology solutions
to the global securities and investment
management industries, and one of DMGT’s
Operating at scale businesses; and BuildFax,
an early-stage but leading provider of
property condition and history data.
The European Property Information portfolio
continues to consist of the Landmark
Information Group, including Landmark and
SearchFlow in the UK and On-geo in Germany.
Property Information revenues decreased
by 2% on an underlying basis. Revenue
growth in the US was more than offset by the
European business, which continued to face
challenging conditions in the UK residential
market where mortgage approval volumes
were down 4% on the prior year. The 17%
reported decrease in revenues reflected the
reduced US portfolio and the weaker US
dollar. Adjusted operating profit decreased
by 8% on an underlying basis, including the
cost of initiatives to extend Trepp’s product
offering and reflecting the challenges in the
UK market. The adjusted operating margin
increased to 21%, benefiting from the
absence of loss-making Xceligent for nine
months of the year and from central US
costs, that were historically allocated to
dmg information’s cost base, being included
in Group Corporate costs in FY 2018.
During the year, as part of the PIP,
SearchFlow launched a new search ordering
platform that significantly improves the
customer experience. Trepp continued
to build-out its TreppLoan platform by
enhancing portfolio and workflow capabilities
and expanding the breadth of data. The
product benefits from the extension of
Trepp’s existing data and intellectual
property, making it relevant to a broader
customer segment. BuildFax, the Early bets
business, significantly reduced its sales
18
cycle, better positioning it to grow quickly
in the future.
Priorities in the year ahead
In the coming year, there will be continued
product development at the Operating at
scale businesses, Trepp and Landmark
Information Group, to enhance their
market-leading positions and help generate
future revenue growth. This includes Trepp’s
development of proprietary analytics for the
collateralised loan obligations (CLO) market.
In the UK, the challenging market conditions
are expected to continue. BuildFax, the Early
bets business, will continue to focus on
expanding its client base in its core insurance
market as well as exploring opportunities to
monetise its proprietary data in other areas.
EdTech
2018
£m
2017
£m
Move-
ment
%
Under-
lying^
%
Revenue
Operating profit*
68
7
115 (41)% +9%
16 (55)% +205%
Operating margin*
11% 14%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The EdTech business, Hobsons, is a
leading provider of college and career
readiness and student success solutions
to the North American market. Having
been restructured during 2017, the
remaining business delivered underlying
growth and an improving profit margin
during the year.
Business model
Hobsons offers college, career and life
readiness tools to middle and high schools;
student match and fit solutions for college
admissions offices; and a student success
platform for colleges and universities to help
guide students from enrolment through to
degree completion. Hobsons’ revenues are
mainly derived from subscription contracts
with schools and colleges, with the balance
from training and consulting services.
Performance highlights
EdTech revenues continued to grow on an
underlying basis, increasing 9%. There was
continued growth from each of Hobsons’
three product lines: Naviance, the K-12
college and career readiness solution;
Intersect, the higher education matching
business; and Starfish, the higher education
student retention and success platform.
The disposal of the Admissions and Solutions
businesses, in September and October 2017
respectively, resulted in a decrease in reported
revenues. Similarly, although there was a
reduction in adjusted operating profit due
to the disposals, there was an underlying
improvement in the business’s profitability,
reflecting the impact of the PIP.
During the year, the business delivered a new
Naviance Student product, which increases
end-user engagement, by providing students
and parents with an intuitive mobile-friendly
experience. Nearly 11 million students now
have access to Naviance, including over 40%
of high school students in the US, as the
product is used by over 13,000 schools.
Enhancements were also made to the
Intersect and Starfish product suites during
the year, including an improved mobile
experience and the full integration of analytics
into Starfish. Over 1,000 US colleges and
universities are now using Hobsons’ higher
education products, Intersect and Starfish.
Priorities in the year ahead
In the coming year, there will be further
investment to modernise the core EdTech
product platforms, improve security and add
new client-facing features and functionality.
Hobsons will continue to focus on delivering
the combination of underlying revenue
growth and improving cash generation,
with the PIP helping to support its progress
as one of DMGT’s Focused growth businesses.
Energy Information
2018
£m
2017
£m
Move-
ment
%
Under-
lying^
%
Revenue
Operating profit*
Operating margin*
86
–
0%
88
(3)% +7%
2 (83)% (64)%
2%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The Energy Information business,
Genscape, delivers innovative solutions
to improve market transparency and
efficiency across several asset classes
including oil, power, natural gas, liquid
natural gas and maritime. The business
continued to deliver underlying revenue
growth during the year and improving
cash generation whilst its focus was
increased through restructuring and
the merger of its solar business into
AlsoEnergy.
Business model
Genscape provides its customers with
fundamental data, intelligence and real-time
alerts, workflow tools, and predictive
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Daily Mail and General Trust plc Annual Report 2018
analytics to better manage volatility,
make complex decisions and increase the
efficiency of their supply chains. Revenues
are mainly subscription based through
annual and multi-year client contracts.
Performance highlights
Energy Information revenues grew by an
underlying 7%, with continued growth from
the core businesses operating in the oil,
power and gas sectors.
The new management team has been
implementing the PIP to deliver efficiencies
as well as increasing the focus within the
business: several sub-scale business lines
were divested or closed to increase
leadership focus on growth opportunities;
the technology team was reorganised to
bring additional scale and expertise to top
priorities; a new process, the Product Launch
Pad, was introduced for developing products
from concept through to commercial launch,
to ensure consistent vetting and a more
co-ordinated approach for opportunities
that can have a significant impact; and the
pricing policy was revised to reflect
customer value.
The elimination of peripheral products
and the streamlining of support functions
resulted in some restructuring costs that
are included in adjusted operating profit.
In addition, a larger proportion of payroll
costs were expensed directly, with reduced
capitalisation. These two factors resulted in
reduced adjusted operating profit, although
the cash operating income of the business
improved by £7 million.
During the year, the business also increased
the use of automation, notably machine
learning, to generate its proprietary content.
In September 2018, the solar business Locus
Energy was merged into AlsoEnergy, a leader
in renewable energy software solutions in
which DMGT retains a minority stake. The
combined business benefits from greater
scale and an improved ability to innovate
on behalf of its clients.
Priorities in the year ahead
In the coming year, Genscape will aim to
accelerate growth in its core power, oil
and gas businesses by investing in product,
sales and service. There will also be a focus
on offering a more seamless customer
experience across Genscape’s various
products. As one of DMGT’s Focused
growth businesses, Genscape is expected
to continue to deliver underlying revenue
growth during FY 2019 and is well positioned
to grow its profits.
Events and Exhibitions
2018
£m
118
28
Move-
ment
%
Under-
lying^
%
+1% +5%
(9)% (8)%
2017
£m
117
31
Revenue
Operating profit*
Operating margin*
24% 26%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The Events and Exhibitions business,
dmg events, is an organiser of B2B
exhibitions and associated conferences
with industry-leading events in the
energy, construction, interiors, hotel,
hospitality and leisure sectors.
dmg events continues to seek new
opportunities for customers in emerging
markets, with five new events launched
in FY 2018 and six more planned for
FY 2019. dmg events hosts over 50 events
per year, attracting over 300,000 visitors
and exhibitors from more than 100
different countries.
Business model
dmg events’ strong market and brand
positions, emerging market experience and
entrepreneurial culture create opportunities
for growth through geo-cloning existing
events into new locations and by creating
spin-off sections to become stand-alone
events. The key branded events are Big 5,
ADIPEC, Gastech, INDEX and The Hotel Show,
which all provide opportunities to develop
the spin-off and geo-clone strategy.
dmg events is one of the Operating at scale
businesses with revenues being derived from
exhibitor, sponsorship and delegate fees
with over half of the revenues generated
from the top three events.
Performance highlights
Events and Exhibitions revenues grew by 5%
on an underlying basis despite Gastech, one
of the business’s three large events, moving
to Barcelona from the larger Japanese
market where it was held in the prior year.
Big 5 Dubai and ADIPEC, the two other large
events, collectively delivered mid-single
digit underlying growth. Reported revenues
increased by 1% to £118 million despite
the impact of the weaker US dollar relative
to sterling.
The business continued to geo-clone existing
shows by launching into new locations,
including a Big 5 Construct Egypt event, and
to launch spin-off events, including a Global
Power & Energy Exhibition event that ran in
parallel with Gastech. Two small businesses,
Hypenica and Hi-Design, were also acquired
in the year, with events in the construction
and hotel interior design sectors.
During the year, as part of the PIP, dmg
events strengthened its technology team
and invested in technology to improve the
overall experience for attendees, including
the efficiency of attendee time at events.
The operating profit margin was 24%,
a reduction compared to the prior year,
due to expected increased costs for the
major shows, notably ADIPEC, and holding
two separate Index events in Dubai to
accommodate the timing of Ramadan.
As a result, operating profits decreased
by 9%, including the adverse effect of the
weaker US dollar, and by an underlying 8%.
Priorities in the year ahead
dmg events will remain focused on
developing its key large-scale market-leading
events. Gastech is changing to an annual
format, having previously been held
approximately every 18 months, and the
greater frequency is expected to deliver an
increase in cumulative revenues and profits
over time. The reduced interval between
shows is, however, expected to have an
adverse effect on the absolute revenues and
operating margin of the individual event
being held in Houston in September 2019,
relative to the September 2018 event.
Big 5 Dubai and ADIPEC, two of the three
large events of the year, occurred in
November 2018 and are expected to
collectively deliver a stable performance,
reflecting increasingly challenging conditions
in the Middle East, notably the UAE
construction market. In addition, the six
launches planned for FY 2019 in Africa,
Middle East, South East Asia and Spain
illustrate DMGT’s willingness to invest to
support longer term revenue growth.
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19
Strategic Report
Strategic Report
Operating Business Reviews
Consumer Media
2018
£m
654
64
Move-
ment
%
Under-
lying^
%
(4)% (4)%
2017
£m
683
77
(17)% (22)%
Revenue
Operating profit*
Operating margin*
10% 11%
* Adjusted operating profit and operating margin;
see pages 27 and 28 for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 28 and 29 for details.
The Consumer Media business, dmg media,
remains resolutely focused on delivering
high-quality, popular journalism to a large
global audience. A multi-year investment
programme, positioning dmg media as a
modern news company, has ensured that the
business has prospered in an increasingly
digital-oriented consumer media market.
The combined strength of the Mail and Metro
brands continues to create innovative and
exciting opportunities for advertisers
through a sophisticated and targeted
multi-channel approach.
Business model
dmg media’s portfolio of news media
businesses includes two of the UK’s most
read paid-for newspapers, the Daily Mail
and The Mail on Sunday; Metro, its free
newspaper, which is the UK’s highest
circulation weekday newspaper with the
largest weekday newspaper readership in
the UK each month; and MailOnline, whose
large audience spends 145 million minutes
engaged with its content each day.
The Mail news media brand has the largest
reach of any commercial news media brand
in the UK and has achieved scale in other
geographic markets, including the US and
Australia. Combined, the Mail and Metro
brands reach c.63% of the UK’s adult
population each month.
dmg media’s revenues are generated mainly
from advertising and circulation revenues.
While the Operating at scale newspaper
businesses continue to generate strong
profits and cash flow, the Focused growth
digital businesses, MailOnline and
metro.co.uk, are expected to be the
driver of dmg media’s future growth.
Performance highlights
The Consumer Media business’s revenues
declined by 4% to £654 million, with the 5%
underlying growth from MailOnline being
more than offset by a 5% decrease in
circulation revenues and a 5% decline
in print advertising revenues. Adjusted
operating profit for the year decreased by
17% to £64 million, including the benefit
20
from disposing of the loss-making Elite Daily
in April 2017. Profits decreased by 22% on
an underlying basis, as the reduction in the
Mail Newspapers’ cost base and improved
contribution from MailOnline only partially
offset the adverse effect of decreasing
circulation and print advertising revenues.
The operating margin was 10% as expected,
down from 11% in the prior year.
Mail businesses
Revenues from the combined newspaper
and website businesses (the Daily Mail, The
Mail on Sunday and MailOnline) decreased
by an underlying 5% to £546 million,
including £122 million from MailOnline.
Total advertising revenues across the Mail
businesses decreased by an underlying 3%
to £239 million, including a 9% decline in
print advertising revenues, reflecting the
continued structural and competitive
challenges facing the UK national newspaper
advertising market. MailOnline’s advertising
revenues grew by an underlying 5% which
resulted in it accounting for over half of
total advertising across the combined
Mail businesses, a significant milestone.
The Mail brands remain strong, which is
reflected in the growing UK retail market
shares held by the Daily Mail and The Mail on
Sunday, averaging 24.8% and 21.9% for the
year respectively. Circulation revenues
decreased by 5% to £291 million due to
declining volumes being only partly offset
by the benefit of the October 2017 6% cover
price increase of The Mail on Sunday. In
September 2018, the cover price of the
Monday to Friday editions of the Daily Mail
increased from 65p to 70p.
MailOnline continues to focus on attracting
traffic directly to its homepages on desktop
or mobile or its apps. Indirect traffic, notably
via social media and search platforms, has
reduced and resulted in total average daily
global unique browsers during the year
decreasing by 13% to 12.9 million.
Engagement with its core target audience
continued to grow, however, and total
minutes spent on the site increased 2% to
a daily average of 145 million, of which 77%
came from direct traffic compared to 74%
in the prior year.
MailOnline is one of our Focused growth
businesses and its growth strategy is
far-reaching, including providing new
advertising formats and working with our
key commercial partners, Snapchat, Google
and Facebook. It also includes DailyMailTV
in the US, which is currently in its second
season and attracts an average of 1.3 million
viewers a day. It became a wholly-owned
subsidiary in October 2018 and will therefore
be included within Consumer Media’s results
in FY 2019.
Metro
Metro delivered a robust revenue
performance in the context of a declining
print advertising market, growing revenues
by an underlying 4% to £71 million, including
the benefit of taking on four franchises from
Trinity Mirror (now Reach plc) in January
2017, a further two in January 2018 and one
in July 2018. Metro has the largest circulation
of any weekday newspaper in the UK, read
by an average of 2.8 million people each day,
and has the largest Monday to Friday
advertising market share by volume. During
the year, as part of the PIP, the advertising
operations of the Metro and Mail were
integrated to deliver improved service to
customers and to take advantage of dmg
media’s scale to reduce costs.
Priorities in the year ahead
dmg media will continue to harness the
value of the Mail brands for both readers
and advertisers and invest in the quality
of its popular journalism to drive and engage
its global audiences. The cost base of the
newspaper businesses will continue to
be further reduced, albeit in a measured
approach that ensures the quality of the
content is not compromised, consistent with
DMGT’s strategy of supporting the longevity
of the newspapers’ strong cash generation.
Outlook
The Consumer Media business is expected
to benefit, despite the recent challenging
market conditions, from digital advertising
growth and to experience circulation
volume and print advertising declines, with
advertising revenues likely to remain volatile.
FY 2018 revenues, restated for the current
portfolio of businesses, were £663 million
and the underlying rate of decline of
Consumer Media revenues in FY 2019 is
expected to be in the mid-single digits.
The operating margin is expected to be in
the high-single digits in FY 2019. This reflects
the revenue reduction, increased newsprint
costs and investment in DailyMailTV being
partly offset by the benefit of continued
cost efficiencies within the newspapers and
by an improving contribution from the rest
of MailOnline.
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Operating Business Reviews
JVs and Associates
Euromoney
Institutional
Investor PLC
ZPG Plc
Other
Total share of
operating profit
2018
£m
2017Ω
£m
Movement
%
56
23
(5)
74
56
25
(2)
79
0%
(5)%
+130%
(6)%
Ω Pro forma FY 2017 figures have been restated to treat
Euromoney as a c.49% associate for the whole year,
consistent with the ownership profile during FY 2018.
See reconciliation on page 25.
As well as a diverse portfolio of operating
companies, DMGT holds a c.49%
associate interest in Euromoney
Institutional Investor PLC (Euromoney)
and, for most of the year, held a c.30%
interest in ZPG Plc (ZPG). Euromoney
is a UK listed company and as at
30 September 2018 had a market value
to DMGT of £721 million.
Other current JVs and associates include:
• Insurance Risk – c.26% stake in Praedicat,
which is dedicated to improving the
underwriting and management of
casualty risk;
• Property Information – c.40% stake in
Real Capital Analytics, an authority on
the deals, the players and the trends
that drive the commercial real estate
investment markets;
• Consumer Media – c.24% stake in
Excalibur, which operates the online
discount businesses Wowcher and
LivingSocial UK; and, since August 2018
• Consumer Media – c.26% stake in Yopa,
a UK hybrid estate agent.
Also DailyMailTV, which produces the
eponymous US TV show, was a 50% joint
venture during the year and became a
wholly-owned subsidiary within the
Consumer Media division in October 2018.
In FY 2018, the Group’s share of operating
profits from its JVs and associates was
£74 million, a pro forma reduction of
£5 million compared to FY 2017, reflecting
the absence of ZPG results for the final three
and a half months of the year.
Euromoney – DMGT holding c.49%
Euromoney was founded in 1969 by the
then City editor of the Daily Mail and has
grown into a FTSE-250 global multi-brand
information business that provides critical
data, price reporting, insight, analysis and
events. Euromoney operates out of over
20 offices around the world and its portfolio
consists of specialist businesses, spread
across three primary categories:
• Asset management – provides
independent research, critical news and
data and runs networks and conferences
for the asset management industry
– e.g. BCA Research, Institutional Investor
and Ned Davis Research;
• Pricing, data and market intelligence
– provides information and analysis
critical to clients’ business processes
and workflows across the metals and
mining, telecoms, insurance, airline,
banking and forest product industries –
e.g. Fastmarkets MB, Fastmarkets AMM,
RISI and Insurance Insider; and
• Banking and finance – provides market
intelligence, news, training and
conferences to the global finance industry
– e.g. Euromoney, IMN and Global Capital.
During the year, Euromoney grew its
revenues by an underlying 3%. Adjusted
profit before tax increased by 3% and results
were adversely affected by the disposal
of its Global Markets Intelligence Division,
which completed in April 2018. DMGT’s share
of adjusted operating profits were in line
with the prior year on a pro forma basis.
Euromoney ended the year with £78 million
of net cash on its balance sheet.
ZPG – Disposal
DMGT acquired Find a Property and
PrimeLocation in 2004 and 2006 respectively
for a total cost of £62 million and grew them
into the second largest UK property portal
business, the Digital Property Group. In 2012,
the business merged with Zoopla to form
Zoopla Property Group, in which DMGT held
a c.55% stake. There was a successful IPO
of the company in 2014 for £2.20 per share,
when DMGT realised £180 million of
proceeds, enabling ZPG to pursue a
growth strategy using its own independent
balance sheet.
ZPG was acquired by Silver Lake in July 2018
for £4.90 per share and DMGT’s proceeds
from the disposal of its remaining c.30%
stake were £642 million. The substantial
return to DMGT from the IPO and subsequent
disposal is a clear demonstration of DMGT’s
long-term approach to value creation.
Other JVs and associates
The share of operating profits and losses
from other joint ventures and associates,
which are mainly early stage businesses,
was a net loss of £5 million. The increase,
from £2 million in the prior year, was largely
due to investment in DailyMailTV, which is
currently in its second season following its
successful launch in September 2017.
Investments
DMGT invests in and develops early-stage
businesses, including companies in which
the Group holds smaller stakes. Since the
percentage holdings are too small for the
companies to be associates, the Group does
not recognise a share of profits or losses
from these investments. Investments are
in the Consumer Media and B2B sectors,
primarily through dmg ventures, which backs
disruptive consumer propositions that need
to scale and which can leverage the Group’s
assets to do so. A notable example is Yopa,
a business in which DMGT previously held
a c.17% stake and was treated as an
investment accordingly, but received
further investment during the year and
consequently became an associate.
The year ahead
The financial performance in the coming
year will be affected by the disposal of
DMGT’s stake in ZPG, by Euromoney’s
disposal of its Global Markets Intelligence
division and by the inclusion of DMGT’s share
of Yopa’s losses. This will be partly offset by
the absence of DailyMailTV, which is now
a subsidiary. The total share of operating
profits from joint ventures and associates
in FY 2019 is expected to be at least
£40 million.
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21
Strategic Report
Strategic Report
Focused on driving long-term shareholder value
Financial Review
DMGT has a strong balance sheet and
the foundations in place to deliver
long-term growth.
Tim Collier
Group Chief Financial Officer
DMGT’s clear portfolio roles, strong
balance sheet and clear and disciplined
approach to value creation position the
Group well to invest in opportunities
and to deliver sustained growth over
the long term.
The Financial Review details DMGT’s
performance during a year of transition,
where the Group increased the focus within
its portfolio and continued its investment
to drive long-term growth.
The statutory results include gains on
disposals and exceptional items. Profit for
the year was £688 million, a 101% increase
on the prior year. The year-on-year profit
growth was primarily due to reduced
impairment charges with substantial gains
on disposals being made in both years.
Statutory earnings per share increased
by 99%. DMGT’s balance sheet was
strengthened significantly, with the
Group ending the year with £233 million of
net cash and the defined benefit pension
schemes in an improved net surplus position.
The recommended final dividend of
16.2 pence per share gives a total for the year
of 23.3 pence, up 3% on the prior year. This
continues DMGT’s track record of delivering
annual real dividend growth and reflects the
Board’s confidence in the Group’s ability to
deliver long-term earnings growth.
The Board and management team use
adjusted results and measures, rather
than statutory results, as the primary basis
for providing insight into the financial
performance of the Group and the way it
is managed. Similarly, adjusted results are
used in setting management remuneration.
Adjusted results exclude certain items which,
if included, could distort the understanding
of comparative performance of the business
during the year. Consequently, the rest of
this Financial Review focuses on adjusted
measures. The explanations for the
adjustments and the reconciliations to
statutory results are shown on pages 27
and 28.
When assessing revenue and operating profit
growth, the Board and management focus
on underlying growth rates as the most
meaningful like-for-like comparison between
the current year and the prior year. A more
detailed explanation and the calculations
are shown on pages 28 and 29. Our holding
in Euromoney Institutional Investor PLC
(Euromoney) was reclassified as an associate
during the prior year, reflecting the reduction
in DMGT’s shareholding in December 2016.
To give a more meaningful year-on-year
comparison, prior year pro forma figures
have been prepared treating Euromoney
as a c.49% associate for the whole year,
consistent with FY 2018, as shown on
page 25.
22
Financial highlights:
statutory results
Revenue
£1,426m
2017: £1,564m
Operating profit/(loss)
£169m
2017: £(129)m
Profit/(loss) before tax
£692m
2017: £(112)m
Profit for the year
£688m
2017#: £342m
Earnings per share
194.7p
2017#: 97.8p
Dividend per share
23.3p
2017: 22.7p
Go online to www.dmgt.com
to read more about our
Financial highlights
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Daily Mail and General Trust plc Annual Report 2018
Performance highlights
DMGT’s financial performance in the year
was consistent with our expectations.
It reflected the impact of disposals and
challenging market conditions faced by some
of our businesses, particularly UK Property
Information and advertising. Nevertheless,
the Group’s performance demonstrates the
benefits of our diversified portfolio and the
strength of our market-leading businesses.
Group revenue was in line with the prior year
on an underlying basis. Subscription revenue
grew by an underlying 4%, with broad-based
growth across the EdTech, Energy
Information, Property Information and
Insurance Risk sectors. Events revenue grew
by an underlying 5% and digital advertising
by 6%. Transaction revenues were stable on
an underlying basis, reflecting increased
project revenues in the Insurance Risk sector
and lower transaction volumes in the UK
residential property market. As expected,
print advertising revenues continued
to decline and there was a decrease
in circulation.
Adjusted operating profit decreased 19%
on a pro forma basisΩ and by 17% on
an underlying basis. The underlying
performance reflected growth in profits from
Insurance Risk and EdTech being more than
offset by the rest of the Group, as expected,
notably by Consumer Media and increased
Corporate costs. Group adjusted operating
margin was 10%, compared to a pro forma
margin of 11% in the prior year, due to
Consumer Media and Corporate costs.
Adjusted profit before tax was £182 million,
a 16% decrease on a pro forma basis,
reflecting the decrease in operating profit
and a reduction in the share of operating
profits from joint ventures and associates.
The portfolio focus was increased during
the year, as explained in the CEO Review,
including the disposals of DMGT’s c.30%
stake in ZPG Plc (ZPG) and EDR. The
Group ended the year with net cash§ of
£233 million and a net cash:EBITDA ratio
of 0.8, significantly enhancing DMGT’s
financial flexibility.
Revenue performance
Group revenues in the financial year were
in line with the prior year on an underlying
basis. On a pro formaΩ basis, revenues
decreased 9% to £1,426 million reflecting
disposals and the weaker US dollar relative
to sterling. The average exchange rate during
the year was £1:$1.35 compared with
£1:$1.27 in the prior year.
Revenues from B2B businesses grew 3%
on an underlying basis, to £773 million, with
growth from EdTech, Energy Information,
Insurance Risk and Events and Exhibitions
partially offset by Property Information,
which experienced weakness in the UK. B2B
revenues decreased by 12% on a pro forma
basis, following the exit of certain Property
Information and EdTech businesses and
reflecting the weaker US dollar.
Revenues from the Consumer Media
business, dmg media, were £654 million,
down 4% on an underlying basis. As
expected, the growth from MailOnline was
more than offset by a decrease in circulation
revenues and a continuing decline in
print advertising.
The charts on page 24 demonstrate the
diverse profile of DMGT’s revenues.
Read more on each operating business’s
revenue performance, pages 16 to 21
Operating profit performance
Adjusted operating profit of £145 million
was down by 17% on an underlying basis
and by 19% on a pro formaΩ reported basis.
The reported operating profit was adversely
affected by disposals and by the weaker
US dollar.
The operating profit of the Group’s B2B
operations decreased by an underlying 1%
to £128 million, with growth from Insurance
Risk and EdTech being more than offset
by reductions elsewhere. The profit from
Consumer Media decreased by an underlying
22% to £64 million as the reduction in the
Mail Newspapers’ cost base and improved
contribution from MailOnline only partially
offset the adverse effect of decreasing
circulation and print advertising revenues.
As expected, Corporate costs increased
by an underlying 25% to £47 million,
reflecting the strengthening of the central
functions, including strategy and technology,
to support our revised strategy and assess
potential capital allocation decisions.
Financial highlights:
adjusted measures*
Underlying^ revenue growth
0%
2017: +1%
Underlying^ operating profit decline
(17)%
2017: (2)%
Operating margin
10%
2017Ω: 11%
PBT growth
(16)Ω
2017µ: +4%
Cash operating income growth
(14)%Ω
2017µ: +16%
EPS growth
(23)%Ω
2017µ: +7%
Net cash/(debt)§
£233m
2017: £(464)m
Net cash/(debt)§:EBITDA
0.8x
2017: (1.4)x
Footnotes are defined on the inside front cover with
the exception of those below.
^
Underlying revenue or profit is revenue or operating
profit on a like-for-like basis, see pages 28 and 29.
Underlying results are adjusted for constant
exchange rates, the exclusion of disposals and
closures, the inclusion of the year-on-year organic
growth from acquisitions and for the consistent
timing of revenue recognition. For events, the
comparisons are between events held in the year
and the same events held the previous time. For
Consumer Media, underlying revenues exclude low
margin newsprint resale activities. For FY 2017,
central dmg information costs allocated to Property
Information, EdTech and Energy Information are
reclassified to Corporate costs, consistent with all
US central costs being included in Corporate costs
in FY 2018.
µ 2017 growth rates based on FY 2017 results but
pro forma FY 2016 results, treating Euromoney as
a c.67% subsidiary for the first three months of the
year and as a c.49% associate for the remaining
nine months, consistent with the ownership profile
during FY 2017.
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23
Strategic Report
Strategic Report
Focused on driving long-term shareholder value
Financial Review
Revenue profile
By business (%)
By type (%)
By destination (%)
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
16
19
5
6
8
46
Subscriptions
Circulation
Events
Digital advertising
Print advertising
Transactions and other
28
20
8
10
13
21
UK
North America
Rest of the World
54
29
17
Cash operating income
Cash operating income is a performance
metric used by DMGT to assess the cash
generation of its businesses. It is calculated
by adding back depreciation and
amortisation expenses, which are non-cash
items, to adjusted operating profit and
then deducting capital expenditure. In the
financial year, cash operating income for
the Group as a whole was £155 million,
a decrease of £26 million on a pro formaΩ
basis, from £181 million in the prior year,
due to the £34 million pro forma reduction
in operating profit and £17 million reduction
in depreciation and amortisation being
partly offset by a £25 million reduction
in capital expenditure. There was pleasing
growth from the B2B portfolio, especially
from our Focused growth businesses which
are now all generating positive cash
operating income.
Joint ventures and associates
The Group’s share of the operating profits*
of its joint ventures and associates was
£74 million compared to £69 million in the
prior year, although there was a decrease
of 6% on a pro forma basis. DMGT’s c.30%
stake in ZPG was disposed of during the year
and consequently the results exclude
the final three and a half months of
ZPG’s performance.
Business performance
Revenues (FY 2017 pro formaΩ)
Operating profit* (FY 2017 pro formaΩ)
FY 2018
FY 2017
Growth
FY 2018
FY 2017
Growth
£m
£m
Reported
Underlying^
229
272
68
86
118
773
654
233
328
115
88
117
881
683
(2)%
(17)%
(41)%
(3)%
+1%
(12)%
(4%)
+5%
(2)%
+9%
+7%
+5%
+3%
(4)%
1,426
1,564
(9)%
0%
£m
35
58
7
–
28
128
64
(47)
145
£m
Reported
Underlying^
33
52
16
2
31
133
77
(32)
179
+5%
+12%
(55)%
(83)%
(9)%
(4)%
(17)%
+50%
(19)%
+16%
(8)%
+205%
(64)%
(8)%
(1)%
(22)%
+25%
(17)%
B2B
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
Corporate costs
DMGT
Cash operating income
£ million
Adjusted Group operating profit
Add: Depreciation of tangible fixed assets
Add: Amortisation of intangible fixed assets (e.g. products and software)
Less: Purchase of tangible fixed assets
Less: Expenditure on intangible fixed assets (e.g. products and software)
Add: Proceeds from tangible fixed assets
DMGT Cash operating income
24
Source
Tables on page 28
Note 3
Note 3
Cash flow
Cash flow
Cash flow
FY 2018
FY 2017
FY 2017
pro formaΩ
145
27
33
(30)
(20)
–
155
198
35
44
(21)
(58)
1
199
179
34
43
(18)
(57)
1
181
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Daily Mail and General Trust plc Annual Report 2018
Further information on our JVs and
associates’ performance can be found
on page 21 of this report.
Financing costs
Adjusted net finance costs, including DMGT’s
£4 million share of associates’ interest costs,
were £37 million, an 11% pro forma
reduction on the prior year. DMGT benefited
from lower average net debt levels during
the year.
The pension finance credit, which is excluded
from adjusted results, was £2 million
compared to a £5 million charge in the
prior year.
Results before taxation
Adjusted profit before tax was £182 million,
a 16% decrease on a pro forma basis,
reflecting the pro forma reduction in
operating profit and the exclusion of the
share of ZPG’s profits for the last three
and a half months of the year.
Taxation
The adjusted tax charge for the year, after
adjusting for the effect of exceptional items,
was £33 million, see note 11, compared to
£27 million in the prior year on a pro forma
basis. As expected, the adjusted tax rate was
18.2%, an increase on the pro forma basis
12.6% in FY 2017, due to new legislation
substantively enacted at the start of the
year restricting the use of historic UK losses.
Due to the geographical mix of profits, the
effective tax rate is expected to increase
to around 20% in FY 2019 and gradually
increase further over the next few years.
The statutory tax charge for the year was
£4 million. This excludes the share of joint
ventures’ and associates’ tax charges of
£31 million.
Profit after tax
Adjusted Group profit after tax and minority
interests was £149 million, a decline of 23%
on a pro forma basis.
Earnings per share
Adjusted basic earnings per share were
42.2 pence, down 23% on a pro forma basis.
The weighted average number of shares
in issue during the year was 354.1 million,
up slightly from 353.1 million in the
previous year.
Net cash and cash flow
Net cash§ at the end of the year was
£233 million, an improvement of £697 million
compared to the £464 million net debt
position at the start of the year. The net
cash:EBITDA ratio was 0.8 at the year end.
The Group’s operating cash flow was
£117 million, including £50 million of capital
expenditure. The conversion rate of
operating profits to operating cash flow
was 80%, compared to the 87% pro forma
rate in the prior year. Operating cash flow
was adversely affected by the timing of
payments for newsprint.
Net proceeds from disposals, including
expenditure on acquisitions and
investments, were £738 million and
included £642 million gross proceeds from
the disposal of DMGT’s stake in ZPG and
£152 million from the disposal of EDR. Cash
out flows included dividends of £81 million,
interest payments of £37 million, taxation
of £22 million and pension funding of
£13 million. The Group broadly matches
the profile of its net debt by currency to the
components of its operating cash flow by
currency. The stronger US dollar at year end,
relative to the prior year end, resulted in
an adverse debt revaluation of £4 million.
At the year end, the Group’s cash, cash
equivalents and short term deposits totalled
£675 million. Bond debt was £424 million,
with £219 million maturing in December
2018, £9 million maturing in April 2021 and
£197 million maturing in June 2027. There
was also £18 million of net debt in respect
of loan notes, collateral and derivatives.
The Group’s committed bank facilities
were £431 million, which were
completely unutilised.
In December 2017, Standard & Poor’s
revised its corporate credit rating for DMGT
from BBB- to BB+, following the reduction
in DMGT’s profit margin due to the
deconsolidation of Euromoney. In January
2018, Fitch reaffirmed its BBB- investment
grade rating. The Group’s preferred upper
limit for gearing remains a net debt to
adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA)
ratio of 2.0, below the requirements of the
Group’s bank covenants.
Capital allocation framework
DMGT prioritises organic investment
opportunities and takes a long-term
approach, investing through the cycle.
DMGT is also committed to its policy of
delivering dividend growth in excess of
inflation with the dividend remaining the
primary mechanism for returning capital
to shareholders.
The Group adopts a balanced and flexible
approach to uses of capital across two
remaining categories: acquisitions and
shareholder returns. DMGT is committed
to its disciplined approach to acquisitions
Pro formaΩ
Euromoney ceased to be a c.67% owned subsidiary and became a c.49% owned
associate in December 2016. As a subsidiary, 100% of Euromoney’s revenue and
operating profit was included in DMGT’s results whereas as an associate, DMGT
recognises its share of operating profits. The table below makes revisions to FY 2017
to treat Euromoney as a c.49% owned associate for the whole year, consistent with
the ownership profile during FY 2018.
£ million
Revenue
Operating profit
Income from JVs and Associates
Net finance costs
Profit before tax
Tax charge
Minority interests
Group profit
Earnings per share
Revenue: B2B
Operating profit: B2B
FY 2018
Reported
Revision
Pro formaΩ
FY 2017
1,426
1,660
145
74
(37)
182
(33)
–
149
198
69
(42)
226
(29)
(1)
196
(95)
(19)
9
–
(10)
2
5
(3)
1,564
179
79
(41)
216
(27)
4
194
Pro forma
Growth
(9)%
(19)%
(16)%
42.2p
55.6p
(0.8)p
54.8p
(23)%
773
128
976
153
(95)
(19)
881
133
25
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Focused on driving long-term shareholder value
Financial Review
and will prioritise bolt-on targets to
complement its existing portfolio of
businesses. The Group also aims to prioritise
the allocation of capital towards growth
opportunities, particularly those that can
benefit from technological or market
disruption. Maintaining financial flexibility
remains a strategic priority, enabling
DMGT to be acquisitive in the future,
as opportunities arise.
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 net surplus
on the schemes increased from £62 million
at the start of the year to £244 million at
30 September 2018, calculated in accordance
with IAS 19 (Revised). During the year, the
value of the assets increased and there
was a reduction in the value of the defined
benefit obligation.
Funding payments into the main schemes
were £13 million in the year and are
expected to be £13 million in FY 2019, in
accordance with the existing 2016 funding
plan, since the schemes remain in deficit on
an actuarial basis. The funding plan includes
payments of approximately £16 million p.a.
from FY 2020 to FY 2027. 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 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 16.2 pence which, if
approved, would make the total dividend for
the year 23.3 pence, an increase of 3% over
the prior year. The recommended full year
dividend is equivalent to 55% of adjusted
earnings per share and continues DMGT’s
track record of increasing the dividend in
excess of inflation. 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
26
Viability Statement
In accordance with provision C.2.2 of the 2016 Corporate Governance Code, the
Directors have assessed the prospects of the Company. The Board adopts a long-term
approach to portfolio management and performance review and has continued to
rebalance the business portfolio. This has left the Group with £675 million of cash
reserves and £431 million of undrawn committed bank facilities at the year end.
Following repayment of the 2018 bond in December 2018, amounting to £219 million,
the Company’s only remaining substantial bond maturity occurs in 2027. Whilst the
net cash and available facilities afford the Group significant headroom for taking a
long-term view, the viability assessment is intended to stress test a collection of
potential but extreme scenarios which could have a significant negative impact on
the Group.
Notwithstanding the significant changes already made to our portfolio, an increasing
focus on portfolio management remains a short term strategic priority. This priority
together with the impact of rapid changes in technology on certain of our business and
the impact of portfolio rebalancing – which will require improved operational execution
in the short term – indicates that our viability period should consider a shorter time
frame. Accordingly the Board has chosen a period of three years which is consistent
with the Group’s business planning cycle and includes the next maturity date for the
Group’s long-term bond financing, being our 5.75% bonds due December 2018.
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. The key factors affecting the Group’s future prospects and viability are:
• DMGT manages a portfolio of operating companies with diversity across sector,
revenue stream and geography. See page 24 in the Financial Review for the Group’s
revenue profile.
• Financial flexibility through a strong balance sheet with continued good cash flow
generation and net debt to EBITDA ratio comfortably below our preferred upper limit.
• The Group’s ability to restructure quickly through the portfolio management
of operating company subsidiaries and investments in JVs and associates.
• The long-term view of the Company afforded by the family shareholding.
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 hypothetical and severe adverse scenarios. This was focused
on the impact of a number of the Group’s principal risks crystallising, including:
• The impact of successive key product investment failures across the Group.
• The impact of a significantly accelerated decline in circulation volumes and print
advertising and lower growth in digital advertising affecting profits from the
Consumer Media businesses.
• The impact of a significant decline in UK housing transaction volumes affecting
profits of the European Property Information businesses.
• The impact of a severe cyberattack resulting in the loss of high volumes of personal
data, considering both the reputational impact, recovery costs and regulatory fines.
• The impact of macroeconomic factors including large foreign exchange fluctuations,
significant increases in interest rates and corporation tax increases.
Mitigations considered as part of the stress testing included a number of cost reduction
programmes and disposals of operating company subsidiaries and dilution of the
Group’s stake in JVs and associates.
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.
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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.
Exceptional items, impairments
and amortisation
As explained in more detail below,
certain items, including exceptional costs,
impairments and some amortisation
are excluded from adjusted results. The
exceptional cash costs in the year were
£3 million, a significant reduction compared
to £43 million in the prior year, reflecting
the absence of exceptional severance
and consultancy costs. Total exceptional
operating costs, including those of joint
ventures and associates, were £25 million
(2017 £50 million).
The charge for amortisation of intangible
assets arising on business combinations,
including the share from joint ventures
and associates, was £32 million
(2017 £50 million). Following the decision
to re-architect the RMS(one) platform, the
carrying value of the RMS(one) asset, which
related to costs incurred prior to August
2016, was fully impaired resulting in a charge
of £58 million. Total impairment charges
in the year were £63 million, including
DMGT’s share of associates’ charges.
This was a significant reduction compared
to the prior year, when the Group incurred
£231 million of impairment charges against
goodwill and intangible assets and
£42 million of charges for impairment
of plant.
The Group recorded other net gains on
disposal of businesses and investments
of £658 million, including DMGT’s share of
associates’ gains, compared to a net gain
of £530 million in the prior year. DMGT
recognised a £508 million of gain on the
disposal of its stake in ZPG and a £52m gain
on the disposal of EDR, the US Property
Information business.
Outlook
In FY 2019, we will continue to invest and
to deliver further operational efficiencies.
Expectations are that the B2B portfolio will
deliver low-single digit underlying revenue
growth and a mid-teens margin; the
underlying reduction in Consumer Media
revenues will be in the mid-single digits
and the Consumer Media margin will be
high-single digit; Corporate costs to be less
than £45 million and to be reduced further in
FY 2020; the share of operating profits from
JVs and associates to be at least £40 million;
net finance charges to be around £15 million
and the effective tax rate to be around 20%.
Our strategy, and balanced and flexible
approach to capital allocation, positions us
to deliver on the Group’s long-term revenue,
profit and cash flow potential.
Adjusted results
The Board and management team use
adjusted results and measures, rather than
statutory results, to give greater insight to
the financial performance of the Group and
the way it is managed. The tables on page 28
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 2018 and FY 2017.
Note 13 on page 122 shows the full list
of adjustments between statutory and
adjusted results. The table on page 28 shows
a summarised version of the reconciliation
from statutory profit before tax to adjusted
profit before tax.
The explanation for each type of adjustment
is as follows:
i.
ii.
Discontinued operations: the adjusted
results for FY 2017 include the pre-
disposal results of discontinued
operations, namely Euromoney, in which
DMGT reduced its stake from c.67%
to c.49% in December 2016, whereas
statutory results only include
continuing operations.
Exceptional operating costs: businesses
occasionally incur exceptional costs,
including severance and consultancy
fees, in respect of a reorganisation that
is incremental to normal operations.
Similarly, for the Group’s B2B businesses,
there may be legal costs in respect of
litigation that are outside the ordinary
course of business and sufficiently
material to be treated as an exceptional
cost. These are excluded from
adjusted results.
iii. Impairment of plant: occasionally the
carrying value of an asset in the balance
sheet is considered to be greater than the
value in use or the fair value less costs
to sell and it is appropriate to impair it.
The associated charge is excluded from
adjusted results since it is unrelated to
the ongoing cost of doing business. 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 during
FY 2017 when the Consumer Media
division closed its Didcot printing plant,
and this expense is excluded from
adjusted results.
iv. Intangible impairment and amortisation:
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 historical M&A activity and
future expectations rather than the
trading performance of the business
during the year. An example is the
impairment in FY 2017 of the goodwill
and intangible assets associated
with Xceligent, the US Property
Information business.
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Focused on driving long-term shareholder value
Financial Review
v.
Profit on sale of assets: the Group makes
gains or losses when disposing of
businesses, for example on the disposal
of EDR, the US Property Information
business. These 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. Similarly, the gains or losses made
by joint ventures or associates when
disposing of businesses are excluded
from adjusted results.
vi. Pension finance credit: the finance
credit or 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.
vii. Other adjustments: other items that are
excluded from adjusted results include
changes in the fair value of certain
financial instruments and changes to
future acquisition payments. They are
considered to be unrelated to 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 2018 were adversely affected
by the weakening of the US dollar relative
to sterling. To calculate underlying growth,
the prior year comparatives are restated
using the FY 2018 exchange rates.
Reconciliation of statutory operating profit to adjusted operating profit: FY 2018
£ million
Statutory operating profit
Exceptional operating costs
Intangible impairment
and amortisation
Exclude JVs and Associates
Adjusted operating profit
Insurance
Risk
Property
Information
EdTech
Energy
Information
Events and
Exhibitions
Consumer
Media
Corporate
costs
JVs and
Associates
Group Explanation
(24)
–
58
35
48
2
9
58
5
–
3
7
–
(4)
4
–
27
–
1
28
46
18
–
64
118
5
21
144
(52)
5
–
(47)
169
25
95
(144)
145
ii
iv
Reconciliation of statutory operating profit to adjusted operating profit: FY 2017
£ million
Statutory operating profit
Discontinued operations
Exceptional operating costs
Impairment of plant
Intangible impairment
and amortisation
Exclude JVs and Associates
Adjusted operating profit
Insurance
Risk
Property
Information
EdTech
Energy
Information
Events and
Exhibitions Euromoney
Consumer
Media
Corporate
costs
JVs and
Associates
Group Explanation
30
–
3
–
–
33
(39)
–
12
–
79
52
(3)
–
8
–
12
16
(154)
–
7
–
149
2
28
–
3
–
–
31
–
13
1
–
5
19
26
–
9
42
(33)
–
2
–
1
–
77
(32)
17
(1)
7
–
36
59
(129)
12
50
42
282
(59)
198
i
ii
iii
iv
Pro formaΩ adjusted operating profit of £179 million for Group.
Reconciliation of statutory profit before tax to adjusted profit before tax
£ million
Statutory profit/(loss) before tax
Discontinued operations
Exceptional operating costs
Impairment of plant
Intangible impairment and amortisation
Profit on sale of assets
Pension finance (credit)/charge
Other adjustments
Adjusted profit before tax
Pro formaΩ FY 2017 adjusted profit before tax of £216 million.
28
FY 2018
FY 2017
Explanation
692
–
25
–
95
(658)
(2)
30
182
(112)
523
50
42
282
(530)
5
(33)
226
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iii
iv
v
vi
vii
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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.
The timing of events within Events and
Exhibitions can also be a distortion. To
give a fair like-for-like comparison when
calculating underlying growth, the FY 2017
comparative is amended to include the
revenues and profits from the previously
held events for each FY 2018 show.
In FY 2018, DMGT’s revenues decreased by
9% on a pro formaΩ basis and the adjusted
operating profit decreased by 19% on the
same basis. The growth rates were adversely
affected by disposals and by the weaker
US dollar. After adjusting for these factors as
well as others, such as acquisitions and the
timing of events, the underlying growth rates
were 0% for revenues and a 17% decrease in
adjusted operating profit, as shown in the
table below.
Tim Collier
Group Chief Financial Officer
Underlying performance
FY 2018
£ million
Reported
M&A
Other Underlying
Reported
M&A
FY 2017
Exchange
rates
Other Underlying
Underlying
growth
Revenue
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
B2B
Consumer Media
DMGT
Operating profit
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
B2B
Consumer Media
Corporate costs
DMGT
229
272
68
86
118
–
773
654
1,426
35
58
7
–
28
–
128
64
(47)
145
–
(34)
–
(13)
–
–
(48)
–
(48)
–
(1)
–
2
–
–
1
–
–
1
–
–
–
–
–
–
–
(35)
(35)
–
–
–
–
–
–
–
–
–
–
229
237
68
72
118
–
725
619
233
328
115
88
117
95
976
683
1,344
1,660
35
57
7
2
27
–
129
64
(47)
146
33
52
16
2
31
19
153
77
(32)
198
–
(83)
(45)
(17)
1
(95)
(239)
(5)
(244)
–
7
(11)
3
–
(19)
(20)
5
–
(15)
(14)
(3)
(4)
(3)
(5)
–
(30)
(3)
(32)
(3)
(1)
–
–
(2)
–
(6)
–
–
(6)
–
–
(4)
–
–
–
(4)
(34)
(38)
–
5
(3)
1
–
–
3
–
(6)
(3)
219
242
63
68
112
–
704
642
1,346
30
63
2
5
30
–
130
82
(38)
174
+5%
(2)%
+9%
+7%
+5%
N/A
+3%
(4)%
0%
+16%
(8)%
+205%
(64)%
(8)%
N/A
(1)%
(22)%
+25%
(17)%
29
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Entrepreneurialism, Purpose and Excellence
Our People and Our Stakeholders
DMGT encourages curiosity and
innovation amongst our people, and
is built around a set of values that are
common across our diverse portfolio of
operating companies – entrepreneurialism,
purpose and excellence.
Our people are encouraged to be open to
new thinking and great ideas, embracing
their company’s purpose: to act with
compassion and to challenge their own
limits. In turn, they can expect the
support of experienced leaders, high-
quality learning and development tools
and the type of career opportunities
afforded by working within a diverse,
international portfolio of businesses.
Our values
The way DMGT thinks about its
business and its people is embodied
in our three overarching values:
Entrepreneurialism
Purpose
Excellence
Entrepreneurialism
Since brothers Alfred and Harold
Harmsworth invented popular journalism
in 1896 with the launch of the Daily Mail,
entrepreneurs have been a driving force
for DMGT’s business.
DMGT is dedicated to backing great ideas
and the people who make them a reality.
DMGT seeks out entrepreneurs renowned
in their industries for growing businesses
and provides them with the backing and
resources of a multinational public company.
DMGT’s culture of nurturing and developing
talented entrepreneurial people remains
a distinctive strength of the Group.
Purpose
Alongside our commitment to
entrepreneurialism, DMGT’s businesses
and our people operate with a clear sense
of purpose, beyond profit.
DMGT is able to invest for long-term
sustainable growth and quality and in
businesses that share our ethos, whether
that’s providing insights that make it possible
to ‘insure the uninsurable’, driving towards
ever-greater transparency across property
markets, enriching connections between
businesses and communities with industry-
leading exhibitions or holding authority to
account through high-quality journalism.
30
DMGT is a responsible business, dedicated
to its people and communities, and operates
to a clear set of principles and ethical
standards. DMGT also supports and
encourages purpose within our community.
This is achieved through a range of local
partnerships within the communities
our businesses serve and Group-wide
programmes such as our Corporate
Responsibility (CR) Champions network.
Go online to www.dmgt.com
to read more about our
communities programme
Excellence
DMGT is committed to excellence,
demonstrated through its dedication
to creating the highest quality content,
proprietary data and products.
Our aim is to be at the forefront of
cutting-edge technology and within new,
exciting, high-potential growth sectors.
As a driver in technological innovation,
DMGT is defining the jobs of the future
through its work in data science, artificial
intelligence, machine learning and
predictive analytics found across businesses
including Insurance Risk, EdTech and
Energy Information.
DMGT holds a wealth of top leadership talent
and sector expertise at Group level and
across its operating companies. Our people
are supported by a range of tailored local
learning and development programmes.
In FY 2018, the Group continued its
programme to leverage our scale and the
expertise of our people to improve sharing
best practice across the Group, supporting
DMGT’s operating companies.
DMGT established and upgraded a number
of business functions including technology,
M&A and performance management,
building on expert knowledge and best
practice from around the Group.
Our people
DMGT’s people play a key role in helping the
Group deliver against its strategic priorities,
particularly improving operational execution.
We believe that talented, motivated people
are the key to our success and are committed
to providing a working environment that
allows people to reach their full potential.
Talent and development
We have continued to invest in our people
and develop high-potential leaders at early
stages in their career. Our Emerging Leaders
programme was designed to equip talented
people with stretching experiences to
accelerate their development and realise their
potential. Our ambition is to enable people
to be the best they can be to deliver today
and build for tomorrow. Our people have the
chance to develop at DMGT doing meaningful
and interesting work that will stretch them,
taking advantage of all the opportunities that
our diverse group of businesses can offer.
Keeping our people informed
One of the challenges of a geographically
diverse organisation is ensuring that we
can effectively communicate with all of
our people.
DMGT is dedicated to enhancing employee
engagement across the Group by creating
local brand advocates, embracing best
practices and driving corporate responsibility.
This year we have enhanced employee
collaboration by adopting platforms such as
Slack, and refining our internal newsletters,
daily email news bulletins, weekly round-ups,
and Group-wide intranet driven by an
increased focus on measurement to better
target and understand our audiences.
HRIS project
DMGT has invested in a technology upgrade
to its current HR systems, by implementing
a common HR information platform across
the portfolio. The system will empower
employees, managers and leaders to view
and manage aspects of their employment
in a more efficient manner.
Responsible business
DMGT is a responsible business that adheres
to strong ethical standards with a clear,
robust Code of Conduct.
In a climate where employees, customers and
other stakeholders are increasingly interested
in the way companies do business, the things
we do to encourage responsible business
practice and respond to the needs of our
different stakeholders contribute to the
credibility and value of DMGT’s reputation
and employer brand.
These include:
• Strong governance and leadership which
promote responsible business attitudes
and actions across the Group;
• Clear and robust Code of Conduct
and supporting Group policies;
• Ensuring DMGT employees understand
key legal and reputational issues;
• Operating effective risk management
and internal controls; and
• Business level participation in CR
and community support.
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Code of Conduct and Group Policies
Our Code of Conduct sets the standards
for our corporate and individual conduct.
The Code of Conduct includes standards for
equal opportunities, anti-bribery, conflicts of
interest, share dealing and fair competition
among other topics. The Code of Conduct
contains clear guidance regarding equality,
diversity and inclusion. Many of the topics
in the Code are supported by detailed
policies and procedures for our employees.
In addition, policies regarding equal
opportunities, entertainment and gifts,
information security, data privacy and health
and safety apply to DMGT employees. These
policies, as well as our Code of Conduct,
safeguard the welfare of our employees.
All DMGT policies are available for
employees to access on the Group-wide
intranet. Where appropriate, certain policies
are housed on the DMGT website. DMGT’s
equal opportunities statement can be found
on the DMGT website and applies to both
employees and DMGT supervisory bodies.
We have a rolling review programme to
update DMGT policies and conduct
continuous training to reinforce compliance.
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, modern slavery,
bribery and corruption. In addition, new
suppliers are evaluated with a questionnaire
to ensure they are ethical and lawful.
Carbon footprint
Whistleblowing
Employees who have concerns regarding
criminal activity, gross misconduct and/or
a breach of the DMGT Code of Conduct or
supporting policies have a duty to report
such activity. DMGT operates a confidential
Speak Up facility to aid any such reports.
The Speak Up facility is managed externally
by a specialist third party. All incidents are
tracked to ensure appropriate follow-up.
The Audit & Risk committee is provided
with a summary of any incidents.
Gender breakdown of our employees
The Company upholds equal opportunities
and does not discriminate. 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.
Board Directors
Operating company
CEOs, and direct
reports to the
Group CEO*
All employees*
Male
Female
At 30 September 2018
10 83%
2 17%
6 50%
6 50%
3,574 60% 2,348 40%
* Excluding Executive Board Directors.
Gender Pay reporting
For the first time in 2018, two of DMGT’s
UK-based operating companies with over
250 employees reported on their Gender
Pay Gap. Both Landmark and dmg media
published their data in April 2018 on their
respected websites. DMGT as an employer
believes in ‘Equal pay for equal work’ and
is committed to equal pay and conducts
ongoing reviews to ensure we have the
best possible processes in place.
Reporting on Gender Pay will now be
an ongoing requirement and will be
overseen by DMGT’s Remuneration &
Nominations Committee.
Payments Practices reporting
Similarly, in April 2018 DMGT’s UK-based
operating companies Landmark and dmg
media published their Payment Practices
data. DMGT is committed to ensuring that
all of its suppliers are paid within the
agreed terms.
Six-monthly reporting on Payment
Practices will now be an ongoing
requirement will be overseen by DMGT’s
Audit & Risk Committee.
Our communities
As a diverse, international business,
DMGT focuses its community efforts on a
combination of Group-level partnerships
that allow it to make the most of its scale
and size, and support for local community
initiatives and relief efforts, through its
CR Champions network.
Total charitable donations during the
year were over £1 million. Funds donated
include CR initiatives carried out at our
operating companies.
Go online to www.dmgt.com/
corporate-responsibility
DMGT’s most significant environmental
impact comes from the printing plants
in our Consumer Media businesses. The
majority of the Group’s newspapers are
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.
DMGT is, and has for many years been,
committed to comprehensive and
transparent reporting of its environmental
performance. The Group has collected CO2
emissions data from each of its operating
companies. This data is collated and
independently reviewed by environmental
consultancy ICF International, which
calculates the Group’s emissions following
the Greenhouse Gas Protocol. The
reduction in the Group’s carbon footprint
for FY 2018 can be seen in the table below.
Carbon footprint
The table below shows the evolution of our carbon footprint since 2016:
Year
2018
2017
2016
Tonnes of CO2e
tCO2e/£million revenue
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
1,400
1,200
1,400
13,000
15,300
17,200
13,300
14,700
14,500
14.4
16.2
17.3
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Strategic Report
Strategic Report
Actively monitoring and managing our risks
Principal Risks
The Directors confirm that they have completed a robust assessment of the
Group’s principal risks and a thorough review of risk management processes.
The Group’s risks are categorised as either strategic or operational. Strategic risks are linked to the Group’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 principal 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 Governance Report on pages 40 to 53
Strategic risks
Description and impact
Market disruption
Market disruption creates opportunities as well as risks. Disruption
enables us to move into new markets and geographies and encourages
us to innovate to grow the business.
Failure to anticipate and respond to market disruption may affect
demand for our products and services and our ability to drive
long-term growth.
Examples
Market disrupters include changes to customer behaviours and demands, new
technologies, the emergence of competitors or structural changes to markets.
Examples from the operating companies include:
• Consumer Media: decline in print advertising revenue.
• Consumer Media: changes in algorithms and strategies of tech giants
materially impacting traffic and digital advertising revenue across
properties, demanding constant oversight and agility.
• Insurance Risk: structural decline in client markets and consolidation in
insurance industry. Changing consumer expectations of insurers’ utilisation
of technology.
• EdTech: declining foreign student enrolment pressuring higher
education budgets.
Success of new product launches and internal investments
A lack of innovation or failure to successfully evolve our products
and services may compromise their appeal.
Some may fail to achieve customer acceptance and yield expected
benefits. This could result in lower than expected revenue and/or
impairment losses.
Uncertainty also results from geographic expansion into new and
emerging markets.
The Group is continually investing in our products and services, developing
new offerings and enriching existing products and services. Examples include:
• Consumer Media: increased monetisation of online user base.
• Insurance Risk: re-architecture of the RMS(one) platform to take advantage
of the growing benefits of new technology.
• Property Information: Trepp’s launch and development of Collateralized
Loan Obligation analytics service.
• Events and Exhibitions: innovation within and expansion of events
and launches across new locations.
Portfolio management
Increasing portfolio focus is key to the Group’s strategy. This could be
compromised by portfolio changes not delivering expected benefits,
failure to deliver acquisition or operating targets, and/or delay or
delinquency in divesting from non-core businesses at the right time.
• Growth opportunities and potential synergies lost through failure
to identify or succeed with acquisition and investment targets.
• Lost acquisitions may allow competitors to gain footholds in key markets.
• Underperforming acquisitions and investments may lead to reduced return
on capital and/or impairment losses, as well as diversion of management
time and bandwidth.
• Optimal value may not be achieved from divestments.
Economic and geopolitical uncertainty
Group performance could be adversely impacted by factors beyond
our control such as the economic conditions in key markets and sectors
and political uncertainty.
• Uncertainty surrounding the conditions of Brexit directly impacts
the UK macroeconomic climate (Consumer Media) and UK property
transaction volumes (Property Information).
• Fluctuations in the global energy and commodity markets could impact
revenue for both Genscape (Energy Information) and associated trade
shows (Events and Exhibitions).
• Political and economic uncertainty, particularly in the Middle East,
could negatively impact Genscape’s customers, as well as the exhibitors
and attendees of events and exhibitions.
• Sustained global low interest rate environment will continue to impact
margins for global investors, including in insurance (Insurance Risk)
and property (Property Information).
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Mitigation
Trend
• The Group’s diverse and balanced portfolio of businesses and products reduces the
overall Group impact of any single market disruption.
• Organic investment initiatives across the Group to innovate our products and services
and to remain competitive in the markets we serve. Organic investment was 8% of total
revenues in FY 2018.
• The Executive Committee, supported by the Performance Management and Strategy
function and operating companies’ management teams, monitor markets, the
competitive landscape and technological developments; regular dialogue and in-person
meetings ensure proactive, coordinated responses.
• Performance Improvement Programme sets business-specific priorities and actively
monitors improvements.
• Analysis of the performance management dashboard and detailed financial
management information for each operating company to highlight and react to early
indicators of market disruption.
• DMGT executive membership of operating company boards.
• The autonomous culture of the Group encourages an entrepreneurial approach
to identifying growth opportunities and new products.
• Central capital allocation ensures focused investment in quality business cases.
• A new innovation or business line is ring-fenced where required, to ensure it receives
autonomous execution, dedicated talent, budget and undiluted management focus.
• Direct engagement from DMGT functional leads and DMGT Board Directors contribute
relevant expertise and guidance.
• Performance Management and Strategy team partner with each operating company
to support achievement of key milestones, KPIs and financial plans.
• Significant investments are approved by the Investment & Finance Committee and/or
the Board.
• The Executive Committee continues to evaluate the Group’s portfolio in order to
optimise resource allocation according to portfolio roles, business opportunities and
• Investments and divestments are approved by the Investment & Finance Committee
risk-adjusted execution.
and, where warranted, the Board.
• Extensive due diligence conducted pre-acquisition and comprehensive integration plans
implemented post-acquisition by dedicated integration managers.
• Proactive, detailed divestment roadmaps, including sell-side narrative, seller due
diligence and talent incentives/retention.
• The Executive and Investment & Finance Committees supported by the Performance
Management and Strategy function monitor post-acquisition performance.
• DMGT executive membership of operating company boards and associate boards
(e.g. Euromoney, Yopa, Wowcher, WellAware, TreppPort).
• The Group’s diverse and balanced portfolio of businesses and products reduces the
overall impact of any single trend.
• Quarterly Emerging Risk papers provided to the Audit & Risk Committee ensure both
DMGT and operating company management consider and remain vigilant regarding
emerging risks and their potential impact.
This risk increased over FY 2018 due to the uncertainty
created as a result of Brexit in the UK, as well as the
challenging political and economic climate in the
Middle East.
Daily Mail and General Trust plc Annual Report 2018
Examples
Mitigation
Trend
Risk increased
Risk did not change
Risk decreased
• The Group’s diverse and balanced portfolio of businesses and products reduces the
overall Group impact of any single market disruption.
• Organic investment initiatives across the Group to innovate our products and services
and to remain competitive in the markets we serve. Organic investment was 8% of total
revenues in FY 2018.
• The Executive Committee, supported by the Performance Management and Strategy
function and operating companies’ management teams, monitor markets, the
competitive landscape and technological developments; regular dialogue and in-person
meetings ensure proactive, coordinated responses.
• Performance Improvement Programme sets business-specific priorities and actively
monitors improvements.
• Analysis of the performance management dashboard and detailed financial
management information for each operating company to highlight and react to early
indicators of market disruption.
• DMGT executive membership of operating company boards.
• The autonomous culture of the Group encourages an entrepreneurial approach
to identifying growth opportunities and new products.
• Central capital allocation ensures focused investment in quality business cases.
• A new innovation or business line is ring-fenced where required, to ensure it receives
autonomous execution, dedicated talent, budget and undiluted management focus.
• Direct engagement from DMGT functional leads and DMGT Board Directors contribute
relevant expertise and guidance.
• Performance Management and Strategy team partner with each operating company
to support achievement of key milestones, KPIs and financial plans.
• Significant investments are approved by the Investment & Finance Committee and/or
the Board.
• The Executive Committee continues to evaluate the Group’s portfolio in order to
optimise resource allocation according to portfolio roles, business opportunities and
risk-adjusted execution.
• Investments and divestments are approved by the Investment & Finance Committee
and, where warranted, the Board.
• Extensive due diligence conducted pre-acquisition and comprehensive integration plans
implemented post-acquisition by dedicated integration managers.
• Proactive, detailed divestment roadmaps, including sell-side narrative, seller due
diligence and talent incentives/retention.
• The Executive and Investment & Finance Committees supported by the Performance
Management and Strategy function monitor post-acquisition performance.
• DMGT executive membership of operating company boards and associate boards
(e.g. Euromoney, Yopa, Wowcher, WellAware, TreppPort).
• The Group’s diverse and balanced portfolio of businesses and products reduces the
overall impact of any single trend.
• Quarterly Emerging Risk papers provided to the Audit & Risk Committee ensure both
DMGT and operating company management consider and remain vigilant regarding
emerging risks and their potential impact.
This risk increased over FY 2018 due to the uncertainty
created as a result of Brexit in the UK, as well as the
challenging political and economic climate in the
Middle East.
33
Strategic risks
Description and impact
Market disruption
Market disruption creates opportunities as well as risks. Disruption
enables us to move into new markets and geographies and encourages
us to innovate to grow the business.
Failure to anticipate and respond to market disruption may affect
demand for our products and services and our ability to drive
long-term growth.
Market disrupters include changes to customer behaviours and demands, new
technologies, the emergence of competitors or structural changes to markets.
Examples from the operating companies include:
• Consumer Media: decline in print advertising revenue.
• Consumer Media: changes in algorithms and strategies of tech giants
materially impacting traffic and digital advertising revenue across
properties, demanding constant oversight and agility.
• Insurance Risk: structural decline in client markets and consolidation in
insurance industry. Changing consumer expectations of insurers’ utilisation
• EdTech: declining foreign student enrolment pressuring higher
of technology.
education budgets.
Success of new product launches and internal investments
A lack of innovation or failure to successfully evolve our products
The Group is continually investing in our products and services, developing
new offerings and enriching existing products and services. Examples include:
and services may compromise their appeal.
Some may fail to achieve customer acceptance and yield expected
benefits. This could result in lower than expected revenue and/or
impairment losses.
emerging markets.
Uncertainty also results from geographic expansion into new and
• Consumer Media: increased monetisation of online user base.
• Insurance Risk: re-architecture of the RMS(one) platform to take advantage
of the growing benefits of new technology.
• Property Information: Trepp’s launch and development of Collateralized
Loan Obligation analytics service.
• Events and Exhibitions: innovation within and expansion of events
and launches across new locations.
Portfolio management
Increasing portfolio focus is key to the Group’s strategy. This could be
compromised by portfolio changes not delivering expected benefits,
failure to deliver acquisition or operating targets, and/or delay or
delinquency in divesting from non-core businesses at the right time.
• Growth opportunities and potential synergies lost through failure
to identify or succeed with acquisition and investment targets.
• Lost acquisitions may allow competitors to gain footholds in key markets.
• Underperforming acquisitions and investments may lead to reduced return
on capital and/or impairment losses, as well as diversion of management
time and bandwidth.
• Optimal value may not be achieved from divestments.
Economic and geopolitical uncertainty
Group performance could be adversely impacted by factors beyond
our control such as the economic conditions in key markets and sectors
and political uncertainty.
• Uncertainty surrounding the conditions of Brexit directly impacts
the UK macroeconomic climate (Consumer Media) and UK property
transaction volumes (Property Information).
• Fluctuations in the global energy and commodity markets could impact
revenue for both Genscape (Energy Information) and associated trade
shows (Events and Exhibitions).
• Political and economic uncertainty, particularly in the Middle East,
could negatively impact Genscape’s customers, as well as the exhibitors
and attendees of events and exhibitions.
• Sustained global low interest rate environment will continue to impact
margins for global investors, including in insurance (Insurance Risk)
and property (Property Information).
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Actively monitoring and managing our risks
Principal Risks
Strategic risks continued
Description and impact
Talent
Our ability to identify, attract, retain and develop the right people for
senior and business-critical roles could impact the Group’s performance.
Examples
• Entrepreneurship and leadership skills are a priority for the Group
and key to the continued success of many of our operating companies.
• Technology and software development skills remain crucial to many
of our businesses where there is significant investment in software
platforms and technology infrastructure to support next-generation
product development.
• The strategy to build out our data analytics capabilities places focus
on developing and attracting data scientists and specialists in machine
learning, artificial intelligence and other emerging technologies. These
skills are in high demand, which makes attracting and retaining people
with these skills more competitive.
• Enterprise sales and operational execution expertise with market and
product knowledge are vital.
Operational risks
Description and impact
Examples
Information security breach or cyberattack
An information security breach, including a failure to prevent or detect
a malicious cyberattack, could cause reputational damage and financial
loss. The investigation and management of an incident would result in
remediation costs and the diversion of management time.
A breach of data protection legislation could result in financial penalties
for the affected business and potentially the Group.
The risk is relevant to all businesses in the Group due to the nature of products
and services across the portfolio. Examples which could impact the Group include:
• Loss or unauthorised access to personal information and sensitive client data.
• Unavailability or disruption of online products and services.
• Integrity of online products, services and data compromised.
• Disruption to critical systems that support business operations.
• Theft of intellectual property.
Reliance on key third parties
Certain third parties are critical to the operations of our businesses.
A failure of one of our critical third parties may cause disruption to
business operations, impact our ability to deliver products and services
and result in financial loss.
The reputation of our businesses may be damaged by poor performance
or a regulatory breach by critical third parties, particularly outsourced
service providers.
Key third parties include:
• Data centre and cloud service providers.
• Search engine traffic partners.
• IT development support.
• Data providers for core product.
• Newsprint, flexographic plate and ink suppliers.
• Newspaper distributors and wholesalers.
• Event venues.
Compliance with laws and regulations
The Group operates across multiple jurisdictions and sectors.
Increasing regulation 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.
Particular areas of focus for DMGT businesses are:
• Data protection, including the EU General Data Protection Regulation (GDPR)
and the proposed ePrivacy Regulation.
• Competition and anti-trust legislation.
• EU Market Abuse Regulation.
• Libel legislation.
• Tax compliance.
• Trade sanctions.
• Entering regulated markets or sectors.
Pension scheme deficit
Defined benefit pension schemes, although now closed to new entrants,
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.
Future pension costs and funding requirements could be increased by:
• Adverse changes in investment performance.
• Valuation assumptions and methodology.
• Inflation and interest rate risks.
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Mitigation
Trend
• Local HR specialists focused on recruitment, critical skills planning, identifying and
developing internal talent combined with central oversight of reward.
• Central technology function with specialised expertise in artificial intelligence, machine
learning, data architecture and management, platform development and scaling.
• Technology Council oversight of technology hires.
• Central Strategy and Performance Management function partners with operating
companies’ management advising on critical skills to improve operational and
commercial performance, including pricing and packaging strategies, go-to-market
and sales execution and business case development and planning.
• Executive management is involved in the recruitment of all operating company
leadership roles and their ongoing development.
• Payment of competitive rewards for key senior roles, developed using industry
benchmarks and external specialist input.
Mitigation
Trend
• Information Security Steering Committee led by the DMGT CEO, providing oversight
of information security initiatives in the Group.
• The newly appointed Group Chief Information Security Officer is responsible for
reviewing and recommending actionable roadmaps to improve information security
procedures and protections at each operating company.
• Group information security policy and detailed information security standards with
regular reviews reported to the Information Security Steering Committee. Periodic
reviews of the standards themselves are performed to ensure they keep pace with
best practice.
• Information security is reviewed as part of every internal audit of an operating company.
• Cyber insurance policies in place.
• Dedicated budget for information security investments.
• The Group’s diverse and balanced portfolio of businesses and products reduces
the overall impact of the failure of an individual third party.
• Operational and financial due diligence is undertaken for key suppliers on an
ongoing basis.
and outputs.
• Close management of key supplier relationships including contracts, service levels
• Robust business continuity arrangements for the disruption to key third parties.
• 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
• Implementation and monitoring of Group-wide policies to address new legislation
Audit & Risk Committee.
and regulation where applicable.
• Group-wide working groups for key compliance areas, such as the GDPR.
• Monitoring and management of tax risks is performed by the DMGT Tax Sub-Committee.
• 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 increased over FY 2018 as the inherent threat of
an information security breach or cyberattack continues
to increase, as does the sophistication of potential
cyberattack methods. This is partially offset by
continuous improvement in information security controls.
This risk has decreased over FY 2018 as the Group’s
defined benefit schemes’ accounting surplus increased,
and exposure to future investment and inflation risk was
further reduced.
Daily Mail and General Trust plc Annual Report 2018
Strategic risks continued
Description and impact
Talent
Our ability to identify, attract, retain and develop the right people for
senior and business-critical roles could impact the Group’s performance.
Examples
Mitigation
Trend
• Entrepreneurship and leadership skills are a priority for the Group
and key to the continued success of many of our operating companies.
• Technology and software development skills remain crucial to many
of our businesses where there is significant investment in software
platforms and technology infrastructure to support next-generation
product development.
• The strategy to build out our data analytics capabilities places focus
on developing and attracting data scientists and specialists in machine
learning, artificial intelligence and other emerging technologies. These
skills are in high demand, which makes attracting and retaining people
with these skills more competitive.
• Local HR specialists focused on recruitment, critical skills planning, identifying and
developing internal talent combined with central oversight of reward.
• Central technology function with specialised expertise in artificial intelligence, machine
learning, data architecture and management, platform development and scaling.
• Technology Council oversight of technology hires.
• Central Strategy and Performance Management function partners with operating
companies’ management advising on critical skills to improve operational and
commercial performance, including pricing and packaging strategies, go-to-market
and sales execution and business case development and planning.
• Executive management is involved in the recruitment of all operating company
leadership roles and their ongoing development.
• Enterprise sales and operational execution expertise with market and
• Payment of competitive rewards for key senior roles, developed using industry
product knowledge are vital.
benchmarks and external specialist input.
Operational risks
Description and impact
Examples
Mitigation
Trend
Information security breach or cyberattack
An information security breach, including a failure to prevent or detect
a malicious cyberattack, could cause reputational damage and financial
loss. The investigation and management of an incident would result in
remediation costs and the diversion of management time.
A breach of data protection legislation could result in financial penalties
for the affected business and potentially the Group.
The risk is relevant to all businesses in the Group due to the nature of products
and services across the portfolio. Examples which could impact the Group include:
• Loss or unauthorised access to personal information and sensitive client data.
• Unavailability or disruption of online products and services.
• Integrity of online products, services and data compromised.
• Disruption to critical systems that support business operations.
• Theft of intellectual property.
Reliance on key third parties
Key third parties include:
Certain third parties are critical to the operations of our businesses.
A failure of one of our critical third parties may cause disruption to
business operations, impact our ability to deliver products and services
and result in financial loss.
The reputation of our businesses may be damaged by poor performance
or a regulatory breach by critical third parties, particularly outsourced
service providers.
• Data centre and cloud service providers.
• Search engine traffic partners.
• IT development support.
• Data providers for core product.
• Newsprint, flexographic plate and ink suppliers.
• Newspaper distributors and wholesalers.
• Event venues.
Compliance with laws and regulations
Particular areas of focus for DMGT businesses are:
• Data protection, including the EU General Data Protection Regulation (GDPR)
The Group operates across multiple jurisdictions and sectors.
Increasing regulation 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.
and the proposed ePrivacy Regulation.
• Competition and anti-trust legislation.
• EU Market Abuse Regulation.
• Libel legislation.
• Tax compliance.
• Trade sanctions.
• Entering regulated markets or sectors.
Pension scheme deficit
Future pension costs and funding requirements could be increased by:
Defined benefit pension schemes, although now closed to new entrants,
remain ultimately funded by DMGT, with Pension Fund Trustees (Trustees)
controlling the investment allocation.
• Adverse changes in investment performance.
• Valuation assumptions and methodology.
• Inflation and interest rate risks.
There is a risk that the funding of the deficit could be greater than expected.
• Information Security Steering Committee led by the DMGT CEO, providing oversight
of information security initiatives in the Group.
• The newly appointed Group Chief Information Security Officer is responsible for
reviewing and recommending actionable roadmaps to improve information security
procedures and protections at each operating company.
• Group information security policy and detailed information security standards with
regular reviews reported to the Information Security Steering Committee. Periodic
reviews of the standards themselves are performed to ensure they keep pace with
best practice.
• Information security is reviewed as part of every internal audit of an operating company.
• Cyber insurance policies in place.
• Dedicated budget for information security investments.
• The Group’s diverse and balanced portfolio of businesses and products reduces
the overall impact of the failure of an individual third party.
• 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.
• Robust business continuity arrangements for the disruption to key third parties.
• 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 working groups for key compliance areas, such as the GDPR.
• Monitoring and management of tax risks is performed by the DMGT Tax Sub-Committee.
• 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 increased over FY 2018 as the inherent threat of
an information security breach or cyberattack continues
to increase, as does the sophistication of potential
cyberattack methods. This is partially offset by
continuous improvement in information security controls.
This risk has decreased over FY 2018 as the Group’s
defined benefit schemes’ accounting surplus increased,
and exposure to future investment and inflation risk was
further reduced.
The Strategic Report was approved by the Board
on 28 November 2018 and signed on its behalf by
the Group Chief Financial Officer.
By order of the Board
Tim Collier
Group Chief Financial Officer
35
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Governance
Governance
Board of Directors
and Company Secretary
1.
4.
7.
2.
5.
8.
3.
6.
9.
10.
11.
12.
Key to Board and Committees
Audit & Risk Committee
Remuneration & Nominations Committee
Investment & Finance Committee
36
Paul Dacre served on the Board until
26 September 2018.
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Daily Mail and General Trust plc Annual Report 2018
1. The Viscount Rothermere
Chairman
Appointed to the Board: 1995
Appointed Chairman: 1998
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.
Other appointments: Euromoney Institutional
Investor PLC Board (until November 2017); ZPG Plc
(from November 2017 until July 2018) and
Independent Television News Limited (until
November 2018).
2. P A Zwillenberg
CEO
Appointed to the Board and CEO: 2016
Skills and experience:
Paul Zwillenberg has over 30 years’ experience across
the media industry. He has 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
of Media Sector and Senior Partner and Managing
Director at The Boston Consulting Group. Before
that he founded an early interactive media company
and launched a European technology services firm.
Other appointments: Euromoney Institutional
Investor PLC Board and its Remuneration and
Nominations Committees until November 2017.
3. T G Collier
Group Chief Financial Officer
Appointed to the Board and Group Chief Financial
Officer: 2017
Skills and experience:
Prior to joining DMGT, Tim Collier was Chief Financial
Officer of Thomson Reuters Financial and Risk
Business where he was responsible for driving
financial and risk performance, optimising resources
and enhancing growth through organic and strategic
investments. Tim’s experience has spanned media
and business information industries and functions
including banking, corporate finance, treasury,
insurance, internal audit, accounting and M&A.
Other appointments: Euromoney Institutional
Investor PLC Board and its Nominations and Audit
Committees from November 2017.
4. K J Beatty
Executive Director
Appointed to the Board: 2004
Skills and experience:
Kevin Beatty brings many years of media industry
experience and is now Chief Executive of dmg media.
Before joining the group 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
Associated New Media and Managing Director of
Northcliffe Newspapers.
Other appointments: ZPG Plc (until November
2017); Euromoney Institutional Investor PLC Board
and its Remuneration and Nominations Committees
(from November 2017); PA Group (until November
2018); Excalibur, which operates the Wowcher and
Living Social daily deals businesses.
He is a board member of the NMA and Chairman
of the RFC, the body that funds IPSO (Independent
Press Standards Organisation).
5. 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 the former Director of the Centre of Policy
Studies and was, until recently, its Deputy Chairman.
She was the 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 2013, Lady Keswick
was elected Chancellor of the University
of Buckingham.
No other appointments.
6. A H Lane
Non-Executive Director
Appointed to the Board: 2013
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.
Other appointments: Trustee of the Pension
Fund of the Royal Agricultural Society of England.
7. F L Morin
Non-Executive Director
(Canadian)
Appointed to the Board: 2017
Skills and experience:
François Morin brings a broad range of
experience and skills to the Board arising from
his role as Partner at the Canadian law firm Borden
Ladner Gervais. He is a qualified lawyer admitted
to the Québec Bar. In particular, he brings an
international perspective relevant to the Group’s
global operations and experience of regulatory
matters across a range of areas. François also has a
strong record of community involvement including
as director on a number of charitable boards.
No other appointments.
8. D H Nelson
Non-Executive Director
Appointed to the Board: 2009
Skills and experience:
David Nelson provides the Board and its Committees
with relevant financial expertise, gained through a
career in accounting. He is a Partner at Dixon Wilson,
Chartered Accountants. 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.
Other appointments: Mind Gym plc (Non-Executive
Director); Dulwich Preparatory Schools Trust
(a registered charity – Chairman), and The Rye,
Winchelsea & District Memorial Hospital Limited.
9. K A H Parry OBE
Independent Non-Executive Director
Appointed to the Board: 2014
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, Knight Frank LLP and the Homes
and Communities Agency. He has extensive
experience chairing companies as well as audit,
risk and nominations committees. He was CFO
of Schroders plc, CEO of Management Consulting
Group PLC and the managing partner of KPMG’s
information, communications and entertainment
practice in London.
Other appointments: Intermediate Capital Group
plc (chairman), Nationwide Building Society,
Standard Life Aberdeen plc (Senior Independent
Director) and Royal National Children’s SpringBoard
Foundation (chairman).
10. JP Rangaswami
Independent Non-Executive Director
Appointed to the Board: 2017
Skills and experience:
JP Rangaswami brings extensive knowledge and
experience in the fields of data and computer
science. He was the Chief Data Officer and Group
Head of Innovation at Deutsche Bank until
September 2018. He is a director and trustee
of the Web Science Trust and adjunct professor in
Electronics and Computer Science at the University
of Southampton.
Other appointments: Allfunds Bank S.A.
11. J H Roizen
Independent Non-Executive Director
(American)
Appointed to the Board: 2012
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.
She is a Partner at DFJ, a venture capital firm
in California.
Other appointments: DFJ.
12. D Trempont
Independent Non-Executive Director
(American)
Appointed to the Board: 2011
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 software and digital data/content
businesses, artificial intelligence, machine learning,
cyber security, online B2C and B2B markets. He is
currently on the board of companies focusing on
disruptive innovation and emerging markets.
Other appointments: Airspan, ON24, Real Networks.
F L Sallas
Company Secretary
Appointed as Company Secretary: 2017
Skills and experience:
Fran Sallas is Secretary to the Board, Audit &
Risk Committee, Remuneration & Nominations
Committee and the Investment & Finance
Committee. Fran is a Fellow of the Institute
of Chartered Secretaries and Administrators.
37
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Governance
Governance
Chairman’s Statement on Governance
Board composition
Our Board was strengthened during the year
by the appointment of JP Rangaswami as
Independent Non-Executive in February 2018
as detailed on page 2.
In addition to my comments in the
Chairman’s Statement on page 2 the
Board would like to thank Paul Dacre for his
brilliant stewardship of the Daily Mail and
other titles within the Group over three
decades and also for his contribution to the
DMGT Board.
Go online to www.dmgt.com/
about-us/board-and-governance
The Viscount Rothermere
Chairman
Strong governance is
essential to the way
DMGT operates.”
I am pleased to present the Corporate
Governance Report for FY 2018. Strong
governance is essential to the way DMGT
operates; it is promoted by the Board
and cascades 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. DMGT’s approach to
governance is distinctive; in addition
to typical corporate procedures,
we are able to rely on and utilise the
significant benefits from the family
shareholding and the long-term view
that this engenders.
Our approach to governance
Our governance framework sets out clear
parameters for decision-making. This is
achieved through delegated authorities
which ensures decisions are made by the
appropriate body and that there is clear
accountability to the DMGT Board.
Governance practice continues to evolve.
The 2018 UK Corporate Governance Code
will apply to DMGT from FY 2020. As per our
current approach to the 2016 UK Corporate
Governance Code (Code), we will voluntarily
apply the new provisions where appropriate
and explain when we are not in compliance
but believe our approach to be better
aligned with all our shareholders’ needs.
Areas of focus
The Board continues to work closely
with the executive team, offering support
and robust challenge in a spirit of openness
and transparency. 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.
Read more in CEO Review,
pages 10 to 13
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The Viscount Rothermere
Chairman
In this section
Chairman’s Statement
on Governance
Corporate Governance
Executive Committee Report
Investment & Finance
Committee Report
Audit & Risk Committee Report
Remuneration & Nominations
Committee Report
Remuneration Report
Statutory Information
Annual General Meeting 2019:
Resolutions
38
40
45
45
46
53
54
77
80
38
Daily Mail and General Trust plc Annual Report 2018
Committee structure
The Board and Committee structure is set out below:
DMGT
DMGT Board
Collectively responsible for the long-term success of the Company.
Executive Committee
The Executive Committee meets regularly to discuss
all aspects of the Group’s performance and strategy,
particularly performance management, capital allocation
and senior talent considerations.
Investment & Finance Committee
The Investment & Finance Committee evaluates investment
opportunities and financing proposals and monitors returns
on investments made.
Audit & Risk Committee
The Audit & Risk Committee has responsibility for:
• the Company’s financial reporting;
• narrative reporting;
• the Internal and External Audit processes; and
• the signing off of external disclosures.
The Committee also oversees:
• the Group’s system of internal controls and risk management;
• the Group’s risk register, risk appetite and tolerance,
including as part of the Viability Statement; and
• developments in relevant legislation and regulation.
Time is allocated at each meeting for both Audit and Risk
matters, to ensure that all items are adequately addressed.
Remuneration & Nominations Committee
The Remuneration & Nominations Committee ensures that
remuneration arrangements support the strategic aims of
the business and enables 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.
Family shareholding
Rothermere Continuation Limited (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 François Morin.
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 voluntarily observe the UK
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 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.
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39
Governance
Governance
Corporate Governance
UK Corporate Governance Code
The 2016 UK Corporate Governance Code
(Code) is an important part of how we
operate. It 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 provisions of the Code. This allows
us to recognise our requirements under the
Code and the benefits of our shareholding
structure. Our explanations, where we
deviate from the Code, are set out in
the relevant sections of this Corporate
Governance Report. DMGT will report
on the 2018 UK Corporate Governance
Code from FY 2020.
Information required under DTR 7.2.6
is provided on page 77 and forms part
of this Report. The full Code can be found
at the Financial Reporting Council website
https://www.frc.org.uk/.
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 Managerial
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, Executive
Committee and regular attendees at the
Investment & Finance 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 companies.
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 45 to 53.
Go online to www.dmgt.com/
about-us/board-and-governance
for full Terms of Reference
Division of Chairman and CEO
responsibilities
In accordance with the provision A.2.1 of the
Code, the roles of Chairman and CEO are
separate. 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 the Shares
of the Company through the Trust and the
Board feels that there is no need for a
Senior Independent Director to represent
Shareholders. Accordingly the Board has
not appointed a Senior Independent Director
as recommended under Code provision
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).
Independence
The Board has determined that Lady
Keswick, Kevin Parry, JP Rangaswami,
Heidi Roizen and Dominique Trempont are
independent within the meaning of provision
B.1.1 of the Code.
Andrew Lane, François Morin and
David Nelson are not considered to be
independent within the meaning of the
Code. Andrew Lane and David Nelson are
each advisers to the Chairman and François
Morin is a Director of 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.
Less than half of the Board are Independent
Non-Executive Directors, which is not in line
with provision B.1.2 of the Code. The Board
believes that its current composition is
appropriate taking into account the heritage
of the Group, the interests of our operating
companies 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.
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Daily Mail and General Trust plc Annual Report 2018
Effectiveness
The Board reviewed its effectiveness within
the context of the provisions of Section B
of the Code. In addition to its review of
independence and the Board evaluation
process, discussed separately, 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 53;
• Time: the time commitment of each
Non-Executive Director is set out in
his/her Letter of Engagement. Each Letter
of Engagement is renewed annually
following consideration by the
Remuneration & Nominations Committee
and a shareholder vote at the Annual
General Meeting (AGM);
• Multiple commitments: the Remuneration
& Nominations Committee recognises
that Board members may be directors
of other companies and that this
additional experience is likely to enhance
discussions at the Board. Details of any
additional directorships are on pages 36
and 37. Executive Directors are generally
permitted to hold non-executive
directorships as long as they do 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 Company Secretary
and Legal Adviser, the Executive Directors
and a range of senior managers across the
Group. During the year, as part of a rolling
training programme, the Board has
received updates on key areas of finance
and governance as well as detailed
presentations by operating companies; and
• Re-election: in line with principle B.7 of
the Code, all Directors are eligible to stand
for re-election annually and will do so at
the 2019 AGM.
Relations with shareholders
Any concerns raised by shareholders in
relation to the Company and its affairs are
communicated to the Board through regular
briefings. Summaries of analysts’ reports
are circulated to the Board. Feedback
from institutional shareholder meetings
held with the executive management,
or the Investor Relations team is also
communicated to the Board.
DMGT understands the importance of
considering a company’s responsibilities to
a broad stakeholder group. When making
decisions, the Board considers the impact on
its employees, customers, the communities
in which we operate, its shareholders and
its suppliers, in line with s172 of the
Companies Act 2006.
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 relevant to shareholders
regarding the Group.
Board evaluation
In FY 2018, the Board undertook a
review of its own performance and
those of its Committees, which built
on the results of the FY 2017 review.
The review was conducted through
an internal process facilitated by
the Company Secretary. An online
questionnaire was used, focusing on
the remit and key issues facing 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 content with the progress during
the year and that the Board and its
Committees continue to function well.
There was a continuous monitoring
programme to ensure that items
addressed in the FY 2017 evaluation
were also addressed during the year.
Actions arising from the evaluation
included ensuring that time on the
Board agenda was allocated to
the continued review of Board
composition in relation to technology
skills and experience; and oversight
of operating companies through
regular strategy updates.
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Governance
Governance
Corporate Governance
Board composition and diversity
We have continued to review the composition
of the Board during FY 2018 to ensure that we
have the right combination of members to
contribute effectively to the development of
our strategy and how we operate. We consider
diversity in its broadest sense in reviewing
how the Board operates and its composition.
JP Rangaswami was appointed to the Board
on 7 February 2018 to ensure the mix of skills
and expertise represented complements our
strategic goals.
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, including international
and specific sector 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 53.
DMGT Board – membership
Member
Chairman
The Viscount Rothermere
CEO
P A Zwillenberg
Group Chief Financial Officer
T G Collier
Executive Directors
K J Beatty
P M Dacre
Non-Executive Directors
Lady Keswick
A H Lane
F L Morin
D H Nelson
K A H Parry
JP Rangaswami
J H Roizen
D Trempont
Member for
the full period
Meetings held
Meetings attended
Yes
Yes
Yes
Yes
No (until 26
September 2018)
Yes
Yes
Yes
Yes
Yes
No (joined
01/12/2017)
Yes
Yes
5
5
5
5
5
5
5
5
5
5
4 (after
01/12/2017)
5
5
5
5
5
5
4
5
5
5
5
5
4
4
5
The Board’s focus in FY 2018
Board members have visited, received presentations and functional area updates from DMGT’s operating companies on a rolling basis.
During the year, as part of the Directors’ ongoing development and follow-up from the FY 2017 Board evaluation process, these updates
were a combination of presentations to the whole Board and smaller groups as deemed appropriate and detailed below.
Portfolio management and strategy
People
Governance
• A strategic review of the portfolio.
• Future size and shape of the Group.
• Non-Executive Directors David Nelson
and Dominique Trempont attended RMS
Exceedance in Miami in May 2018.
• Presentations by the operating companies.
• A visit by Non-Executive Directors
to Landmark Information Group.
• The New York Board meeting incorporated
a site visit to Trepp and demonstration of
the Trepp CLO product.
Read more in CEO Review,
pages 10 to 13
Risk management
• With the support of the Audit & Risk
Committee, review of the Group’s
principal risks, other key risk areas and
performance against risk appetite.
• Approval of the Group’s Viability
Statement and risk appetite for FY 2019.
Read more in Principal Risks,
pages 32 to 35
42
• Approval of the appointment of
• Regular updates throughout the year
JP Rangaswami as an Independent
Non-Executive Director.
• Discussions regarding senior
appointments and succession planning.
• Updates on talent management.
• Presentation to Non-Executive Directors
on succession and senior executives.
• Non-Executive Directors were given the
opportunity to meet with emerging
leaders across the Group.
including on Market Abuse Regulation,
2018 UK Corporate Governance Code,
Payments Practices Reporting, Gender
Pay Gap Reporting, Modern Slavery
and Human Trafficking, General Data
Protection Regulation as well as reports
from the Committee Chairmen.
• Approval and changes to updated Terms
of Reference and matters reserved to
the Board.
• Review of the quality of the
Finance and capital
External Audit.
• Review of ‘DMGT Essentials’, the Group
internal governance guide for operating
companies.
• 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.
Read more in Financial Review,
pages 22 to 29
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Daily Mail and General Trust plc Annual Report 2018
The Board formally evaluated the system
of risk management and internal control in
conjunction with the Audit & Risk Committee
during the year (see pages 45 to 52). This
evaluation focused on material controls
relating to principal risks and entity-level
controls, as well as additional controls
and processes required to support the
Company’s Viability Statement (see page 26).
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.
Although DMGT does not have the ability
to dictate or modify controls at its material
associates, notably Euromoney Institutional
Investor PLC (Euromoney), the Directors
review the effectiveness of the systems of
risk management and internal control at
these entities via Board representation.
Monitoring and oversight
The Group operates a ‘three lines of defence’
model. The benefits of this approach are
shown in the table on page 44. The Board
delegates day-to-day responsibility for
internal controls to operational management
with oversight by the Executive Committee
and the Audit & Risk Committee.
Board oversight of risk
management and internal controls
The Board delegates day-to-day oversight
of management’s operations of internal
controls and risk management to the Audit
& Risk Committee. The Board considers
that the Audit & Risk Committee possesses
the requisite skills and experience to meet
its obligations and provide the relevant
assurance to the Board. Operating and
investment decisions are delegated to the
Investment & Finance Committee. Further
details of the activities of these Committees
are on pages 45 to 53.
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’s operating companies have
a level of autonomy regarding the
establishment of risk management and
internal control systems, but are overseen
by 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;
and Insurance.
The Board has established an ongoing
process for identifying, evaluating and
managing the principal risks faced by the
Company. This process has continued
throughout 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.
Read more in Principal Risks,
pages 32 to 35
Risk management function
Throughout the year, the Group had
separate Risk and Internal Audit functions.
This separation minimises the threat of
self-review across our ‘three lines of defence’
model (see page 44). The Risk function
provides an increased focus on priority risk
areas. It is responsible for maintaining the
Group risk management process, facilitating
change for selected risks, evolving our
approach to operational compliance,
and working with other Group functions.
The Risk function engages specialist
external expertise to maintain best practice
approaches. To ensure an open discussion
of emerging risks, the Chairman of the
Audit & Risk Committee met separately with
the Senior Risk Managers during the year,
independent of operational 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. Internal Audit seeks to
comply with relevant professional standards,
notably those issued by the Institute of
Internal Auditors.
The Internal Audit Charter (the Charter) sets
out the purpose and objectives of Internal
Audit. The Charter takes a systematic and
disciplined approach to the evaluation and
improvements in control and governance
processes. It 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 & 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 and updated as required to
take account of changing practices and
standards. The Audit & Risk Committee
is satisfied that the provisions of the
Charter have been achieved in the year.
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43
Governance
Governance
Corporate Governance
Three lines of defence table
First line of defence
Second line of defence
Third line of defence
Each operating company is responsible for
the identification and assessment of risks,
understanding the Group’s risk strategy
and operating appropriate controls.
Benefits
• Ownership and responsibility remains
close to the operating companies 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.
Key features of the risk management
and internal controls system
The main features of the system of risk
management and internal controls in
relation to the financial reporting process
are described below:
1. Confirmation of key internal controls,
and the fraud and bribery assessment
Each operating company confirms the
operation of key internal controls to
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.
Risk, supported as appropriate by other
functional areas, particularly information
technology, 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
companies.
2. Review of relevant and timely
financial information
Each of the operating companies and DMGT
executive management regularly review
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
by the Executive Committee and confirmed
by the Investment & Finance Committee.
3. Senior Accounting Officer sign-off
The Group Chief Financial Officer 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.
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.
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 & Risk 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 companies 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 &
Risk Committee and the Board are satisfied
with the overall fairness, balance and
understandability of the Annual Report.
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44
Daily Mail and General Trust plc Annual Report 2018
Key activities
• Reviewing all acquisitions,
disposals and capital expenditure
within its remit, including
presentations made by operating
companies 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 triennial valuations.
• Reviewing the Company’s dividend
planning activities.
• Reviewing and approving the
Company’s tax strategy.
• Reviewing the Committee’s
effectiveness.
Board Committees
Executive Committee
The Executive Committee is
responsible for the day-to-day
operation of the Group in line
with the overall strategic aims
set by the Board.
Membership
Member
The Viscount Rothermere
(Chairman)
P A Zwillenberg
T G Collier
K J Beatty
R Chandhok
Member for
the full period
Yes
Yes
Yes
Yes
No
Joined
01/03/2018
The Executive Committee meets regularly.
It has a broad remit covering strategy
and its execution, and operational
performance oversight.
Key activities
• Business reviews with all operating
companies at least twice yearly.
• Performance management review
and analysis.
• Talent acquisition and
management.
• Review of key investment and
divestment opportunities and
capital allocation decisions.
• Budget approval and tracking
against budget.
Governance
The Executive Committee is designed to
represent key businesses and functions. It
ensures that there is appropriate support for
and challenge to the operating companies.
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 Investment
& Finance Committee provides
regular updates to the Board
including monitoring returns on
investments made and progress
against agreed targets.
Membership
There were eight meetings held in the year.
Member
The Viscount Rothermere
(Chairman)
P A Zwillenberg
T G Collier
A H Lane
D H Nelson
K A H Parry*
*
Independent.
Member for
the full period
Yes
Yes
Yes
Yes
Yes
Yes
Governance
• The Investment & Finance Committee
reviewed its membership and approved
that Lord Rothermere continue as
its Chairman.
• The Investment & Finance Committee
reviewed its Terms of Reference and those
of the Pensions and Tax Sub-Committees
and these were updated to reflect any
changes during the year.
• The Investment & Finance Committee
confirmed that it and its Sub-Committees
had complied with their Terms of
Reference and had been effective
throughout the year.
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45
Governance
Governance
Corporate Governance
Dear Shareholders
I am pleased to present the Audit & Risk
Committee Report.
We operate as a combined Audit and Risk
Committee. This year, the external audit in
respect of the year ended 30 September 2017
was reviewed by the Financial Reporting
Council’s Audit Quality Review Team. The
Committee was pleased with the outcome
of their assessment with no significant
issues raised.
During the year we maintained our emphasis
on threats to cyber security and closely
monitored and encouraged diligent
preparations for the General Data Protection
Regulation (GDPR). We will also continue
to monitor the potential impact of Brexit
on DMGT.
The Group has maintained its focus on
operational effectiveness during the year.
The Committee focuses on ensuring
risk management procedures and the
internal and external audits address
changing requirements.
Kevin Parry
Audit & Risk Committee Chairman
Membership
Member
K A H Parry (Chairman)*
A H Lane
D H Nelson
D Trempont*
*
Independent.
Member for
full period
Meetings
held
Meetings
attended
Yes
Yes
Yes
Yes
6
6
6
6
6
5
6
6
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Audit & Risk Committee:
Chairman’s Introduction
In the context of our changing
business, we have focused
our audit work on judgemental
areas of accounting and
auditing, and our risk work on
high-impact possible events.
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.
The following pages set out the
Audit & Risk Committee’s Report
for the financial year. The report
is structured in four parts:
•
How the Audit & Risk Committee
operates: membership, key
responsibilities, governance,
effectiveness and operating
practices;
Review of the year: key activities
and the significant financial
reporting and auditing issues
and other financial matters;
Oversight: risk and controls,
and internal audit; and
External Auditor: auditor
independence; and audit quality
and materiality.
•
•
•
46
Daily Mail and General Trust plc Annual Report 2018
The Audit & Risk Committee meets at least
five times a year. This year the Committee
met six times, reflecting the work associated
with the implementation of the GDPR and
ongoing emphasis on cybersecurity.
All members of the Audit & Risk Committee
are Non-Executive Directors and two are
Independent Non-Executive Directors. The
Committee as a whole has competence
relevant to the sectors in which DMGT
operates, providing an effective level of
challenge to management. Kevin Parry
is a former senior audit partner, former
chief financial officer and has extensive
experience as an audit committee chairman.
David Nelson is a partner of an accounting
practice. Dominique Trempont is a former
chief financial officer and has extensive
experience as an audit committee chairman
and member. Consequently Kevin Parry,
David Nelson and Dominique Trempont
are designated under provision C.3.1 of
the Code as the financial experts with
competence in accounting and auditing.
Key responsibilities
The Audit & Risk Committee’s terms of
reference are on our website at www.dmgt.
com/about-us/board-and-governance.
Governance
The integrity of the Group’s financial results
and internal control systems are important
to the Directors and the shareholders.
Consequently, the Audit & Risk Committee
encourages and seeks to safeguard high
standards of integrity and conduct in
financial reporting and internal control.
The Committee tests and challenges the
results and controls in conjunction with
management and the Internal and
External Auditors.
The 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 Committee
is permitted to obtain its own external
advice at the Company’s expense. No such
advice was sought during the year.
Andrew Lane and David Nelson are
advisers to RCL and not Independent
Directors. This is a deviation from Code
Provision C.3.1. The Board considers that
their membership adds to the deliberations
of the Audit & Risk Committee and the
Committee Chairman confirmed there was
no conflict of interest during the year.
Effectiveness
The Audit & Risk Committee reviews its
Terms of Reference and effectiveness
annually. The review confirmed that the
Committee is effective at meeting its
objectives, under principle B.6 of the Code
and the needs of the Group.
The Committee embraced continued
emphasis being placed on cyber risks
and restructurings of businesses
and management.
Operating practices
During the year the Audit & Risk Committee
meetings were scheduled to take place just
prior to Board meetings to maximise the
efficiency of interactions. Reports are made
to each Board meeting on the activities
of the Committee, focusing on matters of
particular relevance to the Board in the
conduct of its work.
The Committee has been supported in its
activities during the year by the CEO, Group
Chief Financial Officer, Risk team, Director
of Internal Audit, Group Chief Technology
Officer and Group Chief Information Security
Officer, Group Financial Controller and the
Deputy Finance Director as well as the
External Auditor. These individuals generally
sponsor Committee papers, which are
typically distributed one week prior to
meetings. The Committee works with all
contributors to discuss judgemental issues
at an early and relevant opportunity.
The Group Chief Financial Officer, the Deputy
Finance Director, the Group Financial
Controller, the Director of Internal Audit,
the Risk team and the External Auditor are
invited to each meeting but are recused
when appropriate. This approach results in
informed decisions based on quality papers
and discussion which provides a thorough
understanding of facts and circumstances.
The Committee met regularly and separately
with the External Auditor, Director of Internal
Audit, the Group Chief Financial Officer and
Senior Risk Manager, without other executive
management being present.
Review of the year
Key activities
Key activities undertaken by the
Audit & Risk Committee during the
year included:
Audit
• Agreeing the scope of internal
and external audit work.
• Challenging management’s
accounting judgements.
• Reviewing and discussing Internal
Audit reports to maintain their
contribution to improving the
control environment.
• Reviewing the basis of alternative
performance measures.
• Reviewing the effectiveness of the
External Audit.
Risk
• Reviewing the 2018 Corporate
Governance Code DMGT compliance.
• Reviewing the Group’s risk
management processes and the
Group risk register.
• Robust challenge to the assumptions
supporting the Group’s Viability
Statement.
• A rolling programme of focused risk
topics including information security
and cyber resilience.
• Preparing for compliance with GDPR.
• Reviewing payment practices.
• Compliance with legislation relating
to anti-bribery and corruption, trade
sanctions, health and safety, and
modern slavery.
• Business continuity and incident
management.
• Reviewing the Group’s
whistleblowing arrangements
(which will become a Board matter
under the new 2018 UK Corporate
Governance Code).
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47
Governance
Governance
Corporate Governance
Financial reporting and auditing issues
The Audit & Risk Committee considered and discussed the significant matters relating to financial reporting and auditing,
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
Half-Year Reports and trading updates
needs to be appropriate, complying
with laws and regulation.
We specifically reviewed:
• All accounting policies for continued
appropriateness, consistency of application
and impact of new accounting standards;
• All sections of the Annual Report having particular
regard for the Audit & Risk 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.
Taken as a whole, the Annual Report
needs to be fair, balanced and
understandable so that it is relevant
to readers.
We continued our practice of comparing our Annual
Report with those of other relevant companies
and asked our External Auditor for improvement
recommendations.
Drafts of the Annual Report were reviewed by both
the Audit & Risk Committee and the Board. We used
the Executive Directors’, the External Auditor’s
and the Committee’s knowledge to determine the
overall fairness, balance and understandability of
the Report, prior to its final approval by the Board.
A materiality threshold of £5 million has
been set for exceptional items unless there
was continuation of an activity previously
disclosed as exceptional.
There were no significant changes to
accounting policies. Based on our enquiries
with management and the External Auditor,
we concluded the policies were being
properly applied.
We were satisfied that judgemental matters
were explained and increased disclosures
made in respect of sensitivities of
assumptions to impairment reviews.
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 & Risk 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, outlook 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.
Given a continued focus on portfolio
management and rapid changes in
technology we were satisfied that the
Viability Statement should be over a
three-year period, which is consistent
with the Group’s business planning cycle.
We will continue to monitor feedback for
future enhancements to the Annual Report.
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The issue and its significance
Focus of work
Comments and conclusion
The Annual Report includes a number
of non-GAAP measures. See Notes 13
and 16 on pages 122 and 125.
Accounting judgements
The Group has capitalised software
development costs, other intangible
assets and goodwill associated with
acquisitions. Goodwill and intangible
assets represent 20% (2017 40%) and
8% (2017 23%) respectively of net
assets. The carrying values need to
be justified by reference to future
economic benefits to the Group
(see Notes 21 and 22).
The Group carries deferred tax assets
in respect of brought-forward losses
and deferred interest that represent
3% (2017 7%) of net assets
(see Note 37).
In addition to the disclosure of operating profit,
before and after specified adjustments, other
non-GAAP measures, known as alternative
performance measures (APMs), are disclosed in the
Annual Report, e.g. underlying revenue growth and
net cash to EBITDA ratio. We commissioned Internal
Audit to review our APMs to ensure whenever
possible, that they were either sourced from
third parties or otherwise robustly compiled.
We ensured that equal prominence was given to
statutory measures and that explanations and
reconciliations accompanied all alternative
measures including pro forma figures quoted
throughout the accounts.
We decided to continue to adjust operating
profit for the amortisation of acquired
intangible assets, as they relate to historic
M&A activity rather than current trading.
Additional adjustments have been made
to exclude the impact of exceptional
costs, impairments and other fair value
adjustments. These adjustments assist
understanding the outcome for the
reporting period.
We confirmed the prominence of GAAP
numbers and reviewed the reconciliation
of APMs to GAAP.
We determined that the published data was
of a high quality and helps shareholders
understand progress (particularly in the
digital arena). Sources of data are disclosed.
We have ensured that capitalised costs were
separately identifiable and met the requirements
of the relevant accounting standards.
We were satisfied that costs that had been
capitalised were appropriately held on the
balance sheet.
Capitalised costs amounted to £20 million in
the year, much reduced from £58 million in 2017
following the sale of EDR and SiteCompli, the closure
of Xceligent and the cessation of capitalisation of
costs relating to RMS(one).
As part of our review of the carrying values of our
goodwill and intangible assets, we have considered
whether there have been any events which triggered
an impairment and have reviewed reports prepared
by executive management to determine whether an
impairment event had taken place.
In addition we have reviewed value in use
calculations, based on the Board-approved
budgets and two-year forecasts, focusing on
long-term growth rates and discount rates. We have
received input directly from both operational and
financial management.
As there was a significant impairment in the second
half we have specifically assessed the timing of the
recognition of the impairment charge to ensure that
this was recorded in the correct period.
At the year end, the Group held deferred tax assets
of £57 million (2017 £62 million) in respect of
brought-forward losses and deferred interest.
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 RMS, Genscape and Hobsons.
We concluded no impairment was
necessary at Hobsons following significant
improvements in recent years. RMS
appointed a new CEO in March 2018
and has recently enhanced its strategy.
Consequently, the decision has been taken
to re-architect the RMS(one) platform to
take advantage of the growing benefits
of new technology. This has resulted in
an impairment charge of £58 million.
The Audit & Risk Committee noted that
the conclusions were sensitive to future
outcomes. Some combined downside
sensitivities could trigger impairments if they
occur in the future. Appropriate disclosures
are included in the financial statements.
The assets on the balance sheet 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.
Where required, tax assets were written off
in the year.
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Governance
Governance
Corporate Governance
The issue and its significance
Focus of work
Comments and conclusion
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, £19 million was
incurred on acquisitions and
£784 million was realised on disposals,
of which £642 million related to the
ZPG Plc disposal (see Notes 8, 17
and 18).
The Audit & Risk Committee carefully considers
judgemental accounting and the carrying value
of intangible assets and goodwill.
We reviewed the valuation of the fair value of the
Group’s stake in Euromoney and AlsoEnergy.
The Internal Audit team audits all significant
acquisitions within 12 months of the relevant
acquisition where consideration exceeds
£10 million.
The Group has multiple sources of
revenue, including subscriptions,
software sales, display and native
advertising, branded and pre-roll
videos and licence fees. Consequently
revenue recognition can be intricate.
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.
Other financial matters
In addition to the significant matters
addressed above, the Audit & Risk
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. The Audit Quality Review
(AQR) team of the Financial Reporting
Council reviewed the External Audit for the
year ended 30 September 2017. The AQR
suggested PwC further evidence their review
of the disclosure made by management on
the impairment of Genscape, and, if material,
challenge the sensitivity disclosures made
within the financial statements. We
welcomed their independent review and are
pleased to have discussed both the process,
best practices identified and the reported
matters with the External Auditor and have
embraced the agreed actions. There was
no interaction with the FRC Corporate
Reporting team during the year and no
disagreement over accounting or reporting
outcomes with management or the External
Auditor during the reporting period.
Oversight
The Audit & Risk Committee has oversight
responsibility for risks and controls and
direct responsibility for the operation of the
Internal Audit function.
The Committee approves separate annual
audit and risk plans that are flexible enough
to embrace intra-year changes due to
changed circumstances, such as acquisitions,
disposals, extensive management change etc.
At each Committee, the Risk Managers and
the Director of Internal Audit address key
matters which have arisen, focusing on the
most significant findings. Additionally,
common themes are drawn out so that
50
The Investment & Finance Committee
oversees all acquisition and disposal activity.
There are three common Committee
members. We were satisfied with the
judgements made in the year.
We performed a robust review of the
treatment of disposals during the year and
were satisfied with the treatments and
calculations.
We considered the appropriateness of
the associate accounting treatment for
Euromoney, the liquidation of Xceligent the
sale of ZPG Plc, EDR, Hobsons Solutions,
Locus Energy and dilution of SiteCompli.
We considered the accounting treatment
for investments in Yopa.
IFRS 15, the new revenue recognition
standard, effective for the 2019 fiscal year,
introduces additional guidance surrounding
performance obligations within sales
contracts and the timing of revenue
recognition. In addition the standard
introduces changes to the recognition of
incremental costs incurred when obtaining
a contract with a customer. Due to the
complexity of this standard and the number
of different revenue streams across the
Group, we commenced a project in 2016 to
evaluate the impact of IFRS 15. We
concluded that IFRS 15 will not change the
cash flows associated with our revenue
streams and will have an immaterial impact
on the Group’s reported revenues and net
asset position.
management can make early enquiries
of businesses not recently visited by the
assurance functions with a view to heading
off potential issues.
In addition to formal reporting, the Audit &
Risk Committee Chairman meets with the
Senior Risk Manager and the Director of
Internal Audit.
Risk and controls
During the year a Group-wide risk
assessment process was managed
biannually by the Risk function at the
half year and year end, reviewing risks
to the achievement of business plans in
operating companies. This process assisted
management in identifying internal and
external threats and prioritising responses
to them. The results were collated and an
overall Group-wide risk plan was derived
from these results and was approved by the
Audit & Risk Committee. The work evaluated
whether the system, including reporting and
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controls, adequately supported the Board
in its risk oversight. The Audit & Risk
Committee focused on insights into material
changes and trends in the risk profile.
Information security also continues to be
a focus for the Committee as the threat
landscape evolves. The principal risks and
mitigating actions are set out on pages 32
to 35.
The Committee’s view is that financial risks
are not the principal risks that the Group
faces but it places emphasis on the
maintenance of high standards for
controlling financial risks. In addition to
an annual confirmation from financial
officers that the environment has operated
effectively, it gains independent assurance
from internal audits. During the year the
Committee reviewed the top financial risks
facing the Group, including: foreign exchange
and interest rates; liquidity; credit;
counterparty and capital management.
All operational CFOs report to the Group
Chief Financial Officer, Tim Collier, directly in
addition to their CEOs. The Committee was
satisfied that the direct reporting line of
operating companies to the central finance
function aids transparency. The Audit & Risk
Committee closely monitored changes in
financial management and reviewed the
competence and quantity of the financial
management resource in discussion with
the Group Chief Financial Officer. The
Committee was also satisfied that the
Company remained able to fulfil its first line
of defence duties and that there is a culture
of continuous improvement.
The Committee reviewed the whistleblowing
arrangements in place, which enable
employees to raise concerns in confidence.
The Committee received analysis of the
types of concerns raised by employees.
No significant matters were reported in
the year and the low number of reports
made was consistent with prior years of
operation. Further information on the
Group’s whistleblowing arrangements
can be found in the Our People and Our
Stakeholders section of the Strategic Report.
Internal Audit
The Audit & Risk Committee reviewed and
approved the Internal Audit Charter.
The scope of Internal Audit work is
considered for each operating company
(including head office) and takes account
of assessments of risk, input from senior
management and the Committee, and
previous findings. Some thematic audits
are undertaken for the Group as a whole.
For example, this year there was a further
Group-wide emphasis on information
security (including GDPR), cyber crime and
anti-fraud and bribery procedures. Other
issues selectively audited included revenue
recognition and payroll. At each meeting, the
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.
Throughout the year, there was a range of
outcomes from internal audits. The Audit &
Risk 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 & Risk Committee’s
emphasis is on the appropriateness of the
reaction to the identified issue. The
Committee looks to management to take
timely and proportionate steps to eliminate
weaknesses. The Audit & Risk Committee
monitors adherence to agreed timescales.
The Audit & Risk Committee met directly
with one management team to ensure an
acceleration in addressing audit findings.
An external review, in February 2017, of the
effectiveness of the Internal Audit function
was conducted by Deloitte LLP. Their overall
assessment was that in delivering its remit,
the Internal Audit function is providing an
effective service to DMGT. The Internal Audit
function has acted upon the majority of the
best practice recommendations made in the
review. Some of the enhancements made
include: the function widening its scope to
include specific procedures reviews; and
programme assurance. A comprehensive
‘Risk Assurance mapping’ exercise was
carried out across the three-lines of defence
model to understand what level and type
of assurance should be provided and where
thematic and trend analysis reporting on
control deficiencies should be made. The
function has also increased its use of audit
technology, including automated workflow
and compliance solutions.
In accordance with the IIA Standards,
external assessments are undertaken at a
minimum of five-year intervals. As a result,
there will be no effectiveness review
scheduled for FY 2019, but one will be
taken into consideration for FY 2020.
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External Auditor
PricewaterhouseCoopers (PwC) is DMGT’s
External Auditor. The Group lead audit
partner is Neil Grimes, who has led the audit
since the beginning of the relationship. Its
first audit of DMGT was in respect of the year
ended 30 September 2015, following a
competitive tender process. The Audit & Risk
Committee has responsibility for making
recommendations to the Board on the
reappointment of the External Auditor,
for determining its fee and for ensuring
its independence of the Group and
management. The External Auditor stands
for reappointment at the Annual General
Meeting, but absent concerns over the
quality of its service or opinion prior to that,
we anticipate retaining PwC as our External
Auditor into a second five-year period, albeit
with the normal rotation of audit partners.
Auditor independence
The Audit & Risk Committee considered the
safeguards in place to protect the External
Auditor’s independence. In particular,
the 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 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 & Risk Committee
reviewed and approved the policy on
non-audit services. The review included
consideration of the process to manage
the engagement of PwC, regulatory changes
and good practice.
The audit fee payable to PwC amounts to
£3.0 million (2017 £3.0 million). The Audit &
Risk 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 its internal
policy on the provision of non-audit services.
The cap on non-audit service fees is set
at 70% of the average audit fees for the
preceding three years. The total non-audit
fees paid to PwC amounted to £0.5 million
(2017 £0.8 million) which is within the 70% of
audit fees. The Committee is satisfied that
PwC was selected based on individuals’
51
Governance
Governance
Corporate Governance
particular expertise, knowledge and
experience and that the work did not impair
PwC’s independence as External Auditor (see
Note 5 to the accounts). All non-audit work
undertaken by PwC was approved by the
Committee unless it was clearly trivial and
not prohibited under our policy.
The 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 & Risk Committee places great
importance on ensuring that there are high
standards of quality and effectiveness in the
external audit process.
The Committee has reviewed the quality
of PwC’s audit by way of interviews and
completion of a questionnaire by Audit &
Risk Committee members, by regular
attendance at Audit & Risk Committees
and by financial management and by
reference to the FRC review. The Audit
& Risk Committee is satisfied that its
requirements were met with some minor
improvement actions.
In addition, the 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. The
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 82 to 89). The Committee
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. 84% (2017 82%) of the revenue and
70% (2017 76%) of adjusted profit was fully
audited; 78% (2017 78%) of revenue was
subjected to specific procedures and the
balance of revenue and profit was covered
by desktop reviews.
We have discussed the accuracy of financial
reporting (known as materiality) with PwC,
both as regards to accounting errors that will
be brought to the Audit & Risk Committee’s
attention, and as regards to 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), 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
£7.2 million (2017 £9.0 million). This equates
to approximately 4% (2017 4%) of adjusted
pre-tax profit, as reported in the income
statement. 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 £5.4 million (2017 £6.8 million). PwC has
drawn the 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 £0.4 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 Committee
did not require any adjustment to be
made to the financial statements as a result
of the audit differences reported by the
External Auditor.
We asked PwC to explain how they would
respond to the findings of the Audit Quality
Review team of the FRC in its review of our
audit. Additionally, the Committee Chairman,
the Group Chief Financial Officer and the
Group Financial Controller discussed with
PwC in detail the work it carried out on the
audit of DMGT’s Annual Report. The Audit &
Risk Committee was satisfied with the
specific responses to both sets of enquiries.
PwC has outlined to the Audit & Risk
Committee the professional development
programme applicable to the partners
and employees engaged on our audit, has
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 latest available
transparency report. The audit of DMGT
was subject to a quality assurance process
undertaken externally by the FRC. We have
reviewed and discussed their findings with
PwC. There were two matters noted for
52
limited improvement required, and we were
satisfied with their response. The Audit &
Risk 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.
During the year, the Audit & Risk Committee
reviewed the quality of the FY 2017 audit,
taking account of PwC’s internal assessment,
management’s assessment and the
Committee’s assessment. The Committee
was satisfied with the robustness of the
opinion and with the audit service. In
particular, the Audit & Risk Committee was
pleased with an overall improvement in
service scores. Based on the information
currently available, which draws on the
enquiries outlined above and informal
soundings of management, the Audit & Risk
Committee anticipates it will conclude there
has been a robust, high-quality audit for the
year ended 30 September 2018, both in
respect of PwC’s opinion and service. The
Committee has consequently recommended
that PricewaterhouseCoopers LLP be
reappointed as Auditor at the 2019 AGM.
The Audit Report was approved by
the Board on 28 November 2018 and
signed on its behalf by the Audit & Risk
Committee Chairman.
By order of the Board
Kevin Parry
Audit & Risk Committee Chairman
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Daily Mail and General Trust plc Annual Report 2018
Remuneration & Nominations Committee
The Remuneration & Nominations Committee meetings are held together.
Remuneration items are taken separately to the Nominations items.
The Remuneration element of the Committee is described within the Remuneration Report
on pages 54 to 76.
The Nominations element of the Committee is described below. It 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 Remuneration & Nominations Committee has been supported in its activities during
the year by the CEO, the Group Chief Financial Officer, the Reward Director and the Global
HR Director. Membership and meetings are shown below.
Member
The Viscount Rothermere (Chairman)
D H Nelson
J H Roizen*
D Trempont*
Member for
full period
Yes
Yes
Yes
No (joined
01/11/2017)
Meetings
held
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8
8
6 (after
01/11/2017)
Meetings
attended
8
8
8
6 (after
01/11/2017)
• In line with Code Provision A.4.2 the
Non-Executive Directors met with
the Chairman 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 provision 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.
*
Independent.
Governance
• The combined Remuneration &
Nominations Committee reviewed its
Terms of Reference during the year.
• 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 who has served a term in excess
of six years.
• The Committee reviewed the
independence of Non-Executive Directors
and agreed to recommend that Lady
Keswick, Kevin Parry, JP Rangaswami,
Heidi Roizen and Dominique Trempont
continued to be considered independent
in accordance with the Code provisions
B.1.1. Andrew Lane, David Nelson and
François Morin were not considered
independent due to their connection
to Rothermere Continuation Limited.
• The process for appointing Directors
depends on which role is being filled.
External recruiters and other
methods have been used to identify
potential candidates.
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Key activities of the
Nominations element
of the Remuneration &
Nominations Committee
• Reviewing potential candidates
for Board appointments resulting in
the appointment of JP Rangaswami
during the year.
• 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 principle B.7 of
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 the Committee’s
effectiveness and governance
activities against best practice.
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 diverse balance
of skills and experience reflected;
• Continuing to review succession
planning for the Executive
Directors; and
• Reviewing the Committee’s
effectiveness.
This Governance Report was approved
by the Board on 28 November 2018 and
signed on its behalf by the Chairman.
The Viscount Rothermere
Chairman
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Remuneration Report
The Viscount Rothermere
Chairman
Chairman’s statement
on remuneration
Remuneration at a glance
Annual Report on Remuneration
Remuneration Policy
Implementation of Remuneration
Policy in FY 2019
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Chairman’s statement
on remuneration
As Chairman of the Remuneration &
Nominations Committee (the Committee),
I am pleased to present the Directors’
Remuneration Report.
Pay for performance continues to be a key
objective for DMGT and we believe that the
refinements we have made this year to our
annual bonus and long-term incentives plans
will ensure we continue to achieve this.
Our incentive plans across our operating
companies are designed to reward
sustainable profitable growth. We focus
on ensuring that performance measures
and targets are consistent with business
objectives and circumstances, the Group’s
long-term strategy and the creation of
sustained shareholder value.
For each operating company, we also
consider its sector, geography and portfolio
role within the Group.
Pay review for FY 2019
We regularly review the competitive
position of remuneration for the Company’s
Executive Directors by undertaking periodic
benchmarking as required. The base salaries
for the Executive Chairman and the CEO of
dmg media had been frozen since the start
of FY 2016. Similarly, the CEO and Group
Chief Financial Officer had not received any
increase since their date of appointment.
The Committee (without me present)
therefore decided to award base salary
increases of 2.5% to each of the Executive
Directors from the start of FY 2019. This is
in line with the typical base salary increase
awarded to employees across the Group
this year.
Executive Directors’ bonus payments
for FY 2018
In FY 2018, as disclosed in last year’s
Directors’ Remuneration Report, we used
two metrics in the annual Executive Bonus
Plan, revenue and cash operating income,
weighted evenly. Cash operating income
(operating profit plus depreciation and
amortisation less capital expenditure)
is a metric that captures both profit and
underlying cash generation of the Group.
We will continue to use the same two metrics
in the annual bonus plan for FY 2019.
The FY 2018 plan included an adjustment,
to ensure that participants did not benefit
from, and were not penalised by, short-term
currency fluctuations beyond management’s
control. This will also continue in FY 2019.
The purpose of the annual bonus plan, unlike
the long-term incentive plan, is to focus the
participants on delivering short-term
financial expectations. In a year of transition
where we have continued to rebalance and
reposition the DMGT portfolio, performance
against our revenue and cash operating
income targets for the year has been good
and the Executive Directors’ annual bonus
payments for the year reflect this.
The bonus paid to Kevin Beatty, as CEO of
dmg media, reflects the relatively strong
performance of the Consumer Media
business in a challenging environment.
Paul Dacre did not participate in the annual
bonus plan.
For the CEO, Group Chief Financial Officer
and CEO of dmg media, the part of annual
bonus payable above the target level
has been deferred into DMGT shares for
a period of two years in line with our
stated Remuneration Policy (the Policy).
Details of the Executive Directors’ bonuses
for FY 2018 performance are shown on
page 59.
Remuneration Policy
In accordance with the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended), 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
8 February 2017 and the policy
has been operated, as described,
from that date.
54
We focus on ensuring that performance
measures and targets are consistent
with business objectives and
circumstances, the Group’s long-term
strategy and the creation of sustained
shareholder value.”
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Key Strategic Priorities
Improving operational execution
Increasing portfolio focus
Enhancing/maintaining
financial flexibility
Changes to the Executive Directors
Paul Dacre was paid his normal salary and
benefits package for the full financial year
until 30 September 2018 when he retired
from his role as an Executive Director and
as Editor in Chief of the Daily Mail. The
Committee has confirmed that he will be
treated as a ‘good leaver’ under the rules
of the Daily Mail and General Trust 2012
Long Term Incentive Plan and the EIP.
Paul Dacre’s share awards will therefore vest
in accordance with the normal timetable.
Directors’ Remuneration Policy
The current Directors’ Remuneration Policy
was approved by shareholders at the
February 2017 AGM and will apply for three
years including FY 2019. During the next year
the Committee will review all aspects of the
Policy before proposing any changes for
a new Policy which will be submitted for
approval at the AGM in 2020.
The Viscount Rothermere
Chairman
2017 Long-term incentive award
The Long-Term Executive Incentive Plan (EIP)
was introduced in 2017. The performance
period for the 2017 award will be from
FY 2018 to the end of FY 2020.
The EIP is intended to provide a direct link
between pay and performance of the Group
– with the opportunity for exceptional levels
of reward linked to truly exceptional
business performance. To achieve this
the 2017 EIP award is based on DMGT’s
cumulative profits over the period FY 2018
to FY 2020 inclusive, together with a charge
for the use of capital. An Executive Director
is not rewarded unless a minimum
performance threshold is reached and the
payment for each participant is subject
to a cap.
The outcome of the 2017 EIP award will be
delivered in shares upon vesting at the end
of FY 2020.
The 2018 award will be made in FY 2019 on
the same basis as the 2017 award with the
performance period being from FY 2019 to
FY 2021.
Long-term incentive awards vesting
in FY 2018
The vesting of the LTIP award made in
December 2013 was measured against the
following priorities:
• grow the B2B businesses;
• continue to grow and invest in strong
brands of digital consumer media –
particularly MailOnline;
• grow sustainable earnings and
•
dividends; and
increase DMGT’s exposure to growth
economies and to international
opportunities.
We have continued to make progress
against these priorities. Over the last five
years B2B revenues (excluding Euromoney)
achieved an average increase of 5% on
an underlying basis; MailOnline revenues
have grown from £41 million in FY 2013 to
£122 million in FY 2018 and profitability has
been significantly improved; and dividends
continue to grow in real terms. DMGT’s
strategy was revised in 2016, following
the appointment of Paul Zwillenberg as
CEO. Increasing portfolio focus became
a strategic priority and growing the share
of international revenue ceased to be an
objective. Given the performance, the
Committee has determined that the award
should vest in full in December 2018. For
more information see table 5.1 on page 61.
The LTIP award made to Paul Dacre in
December 2015 was measured against the
following priorities:
• continue to grow and invest in strong
brands of digital consumer media –
particularly MailOnline; and
• ensure the financial stability of the Mail
businesses by:
− reducing editorial costs in line with
agreed targets to 2018 and
potentially beyond.
− working collaboratively with the
commercial teams to maximise revenue
opportunities; whilst continuing to
ensure that we maintain the highest
levels of editorial integrity across
our titles.
We have made good progress against these
priorities and the Committee has determined
that the LTIP award made to Paul Dacre
should vest in full in December 2018. For
more information see table 5.3 on page 63.
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Governance
Governance
Remuneration Report
Remuneration at a glance
FY 2018 Remuneration outcomes for the Executive Directors
The table below summarises the remuneration for the Executive Directors in FY 2018:
Salary 2018
Bonus (including deferred amounts)
As a % of salary
Taxable benefits
Pension benefits
LTIP awards vesting in year and dividend equivalents
Total remuneration FY 2018
Total remuneration FY 2017
1. Partial year as Tim Collier was appointed in May 2017.
The Viscount
Rothermere
£000
P A
Zwillenberg
£000
837
1,229
147%
54
310
–
2,430
1,842
750
856
114%
36
225
–
1,867
1,450
T G
Collier
£000
500
571
114%
33
125
–
1,229
3891
K J
Beatty
£000
744
303
41%
24
275
663
2,010
2,270
P M
Dacre
£000
1,448
–
–
66
–
1,170
2,684
2,313
Total
£000
4,279
2,959
213
935
1,833
10,219
8,264
Key elements of remuneration for the Executive Directors
The key elements of remuneration applicable for the Executive Directors in FY 2018 are shown below:
The Viscount
Rothermere
P A
Zwillenberg
Salary
£837,000
(including
Euromoney
and ITN board
fees)
£750,000
(including
Euromoney
board fees)
T G Collier
K J Beatty
£500,000
(including
Euromoney
board fees)
£744,000
(including
Euromoney
board fees)
Annual bonus
opportunity
180% of salary
maximum
90% of salary
on target
140% of salary
maximum
70% of salary
on target
140% of salary
maximum
70% of salary
on target
60% of salary
maximum
30% of salary
on target
Annual bonus deferral
None applies
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
LTIP
Percentage of eligible
profit with calibrated
on-target value of 90%
of salary vesting after
three years
Percentage of eligible
profit with calibrated
on-target value of 100%
of salary vesting after
three years
Percentage of eligible
profit with calibrated
on-target value of 90%
of salary vesting after
three years
Percentage of eligible
profit with calibrated
on-target value of 60%
of salary vesting after
three years
P M Dacre
£1,448,000
–
–
–
Award with a value
equivalent to 70% of
salary vesting after three
years subject to
performance conditions
Pension
Allowance of
37% of salary
Benefits
Car allowance
and driver
Allowance of
30% of salary
Allowance of
25% of salary
Allowance of
37% of salary
Family medical
insurance, Life
assurance
Car allowance
and driver
Family medical
insurance, Life
Assurance, Tax
assistance
Car allowance
Family medical
insurance, Life
Assurance, Tax
assistance
Car allowance
and driver
Family medical
insurance, Life
assurance
Company car and
driver, car allowance
Fuel benefit
Family medical
insurance
Annual Report on Remuneration
The report has been audited in accordance with CA 2006.
Remuneration & Nominations Committee role and activities
The Committee’s responsibilities with respect to remuneration 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 in line with the Committee’s Terms of Reference.
56
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The Committee’s Terms of Reference are available on the Company’s website. The Committee is chaired by Lord Rothermere with Committee
members David Nelson, Heidi Roizen and Dominique Trempont.
The 2016 UK Corporate Governance Code (the Code) recommends that a remuneration committee should be composed entirely of
independent non-executive directors. The Board, however, 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 shareholders’ long-term 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.
As part of the transitioning and restructuring of the DMGT portfolio, including leadership changes in dmg media Editorial and RMS, the
Committee spent considerable time in FY 2018 on remuneration arrangements for new hires and for changes in roles and responsibilities
as well as severance agreements for executive leavers.
The Committee spends a large portion of its time reviewing the remuneration and incentive plans of the different 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 and locations it operates in and aims to incentivise the delivery
of the business’ 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 LTIPs.
Committee performance and effectiveness
In September 2018, the Committee conducted a formal review of its effectiveness and concluded that it had fulfilled its remit and had been
effective during 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 annual bonus and LTIP’s in the Company are compatible with DMGT’s risk policies and systems.
Advice to the Remuneration & Nominations Committee
The Committee received advice from members of the senior management team during the year.
Remuneration & Nominations Committee discussion topics
Date
October 2017
November 2017
February 2018
May 2018 (2 meetings)
July 2018
September 2018
Agenda items
• Vesting of FY 2012 DMGT LTIP awards.
• Vesting of FY 2014 DMGT LTIP award for Paul Dacre.
• Vesting of FY 2014 dmgi LTIP awards.
• Operating companies’ compensation and appointments.
• Vesting of operating company LTIPs.
• FY 2017 outcome of executive bonus schemes.
• Approval of FY 2018 executive bonus targets.
• Review of Board composition and appointment letters.
• Operating company LTIP awards for FY 2018.
• Approval of 2017 DMGT EIP participants, awards and targets.
• Preparation for Gender Pay reporting.
• Operating companies’ compensation and appointments.
• Gender Pay reporting update.
• Operating companies’ compensation and appointments.
• Editorial changes for FY 2019.
• Operating companies’ compensation and appointments.
• Summary of half-year bonus positions.
• Review of Remuneration & Nominations Committee effectiveness.
• Annual salary review and Executive Director salary increases.
• Approval of FY 2019 annual bonus targets.
• Governance Code update.
• New long term incentive plans for operating companies.
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Governance
Governance
Remuneration Report
Table 1: Single figure of remuneration paid to Executive Directors for FY 2018 (Audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in FY 2018 and FY 2017. Details of
the calculation of the annual bonus figure for FY 2018 can be found in the section variable pay awards vesting in FY 2018, on page 59.
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
P M Dacre
Total
Financial
year
Salary and
fees1
£000
Taxable
benefits2
£000
Pension
benefits
£000
2018
2017
2018
2017
2018
20176
2018
2017
2018
2017
2018
2017
837
837
750
750
500
207
744
744
1,448
1,448
4,279
3,986
54
55
36
29
33
6
24
29
66
68
213
187
310
310
225
225
125
52
275
275
–
–
935
862
Total
fixed
£000
1,201
1,202
1,011
1,004
658
265
1,043
1,048
1,514
1,516
5,427
5,035
Annual
bonus3
£000
Total annual
remuneration
£000
LTIP and
dividend
equivalents4,5
£000
Total
remuneration
£000
1,229
640
856
446
571
124
303
304
–
–
2,956
1,514
2,430
1,842
1,867
1,450
1,229
389
1,346
1,352
1,514
1,516
8,386
6,549
–
–
–
–
–
–
663
918
1,170
797
1,833
1,715
2,430
1,842
1,867
1,450
1,229
389
2,009
2,270
2,684
2,313
10,219
8,264
Notes
1.
Salary shown for Lord Rothermere and Paul Zwillenberg includes fees of £7,008 as Directors of Euromoney for the period 1 October 2017 to 17 November 2017 and fees of £12,784 for
Lord Rothermere as Director of ITN for the period 28 March 2018 to 30 September 2018. Salary shown for Tim Collier and Kevin Beatty includes fees of £43,182 as Directors of Euromoney
for the period 17 November 2017 to 30 September 2018.
Taxable benefits comprise car or equivalent allowances which are £34,000 p.a. for Lord Rothermere; £18,000 p.a. for Paul Zwillenberg; £16,000 p.a. for Tim Collier; and £16,000 p.a. for
Kevin Beatty. Paul Dacre had a company car with a taxable value of £32,255 p.a. plus a car allowance of £10,000 p.a.. Paul Dacre also received a fuel benefit of £13,989 p.a.. Lord Rothermere,
Paul Zwillenberg, Kevin Beatty and Paul Dacre also received benefits in respect of home-to-work travel. Amounts, including tax paid by the company, are £16,994; £1,240; £10,594 and £7,093
respectively for 2018 and £18,042; £7,371; £9,898 and £6,745 respectively for 2017. Lord Rothermere, Paul Zwillenberg, Kevin Beatty and Paul Dacre received medical benefits with a cost to the
Company of approximately £3,000 p.a.. Tim Collier received US medical benefits with a cost to the Company of £13,392 (converted at a rate of £1:$1.35). Paul Zwillenberg and Tim Collier received
£13,450 and £3,308 respectively in relation to their tax compliance requirements paid for by the Company.
The bonuses shown include amounts that will be deferred into shares but do not have any further performance conditions attached other than continued service during the deferral period.
Deferrals apply to bonuses above target in FY 2018. Details of the calculation of the bonus and deferral are shown on page 59.
The award made to Kevin Beatty under the 2012 Long-Term Executive Incentive Plan in December 2013 and the award made to Paul Dacre under the 2012 Long-Term Executive Incentive Plan in
December 2015 vest in full in December 2018. The value of the awards shown is calculated using the average share price for the fourth quarter of FY 2018 which was £7.47. Under the rules of the
2012 Long-Term Executive Incentive Plan, participants are entitled to the value of the dividends that they would have received between the award date and the exercise date, the amount shown
includes accrued payments of £82,554 for Kevin Beatty and £62,883 for Paul Dacre in 2018.
In 2017, the award for Kevin Beatty realised at a share price of £6.02 with a cash dividend equivalent payment of £133,242 and for Paul Dacre, the award realised at a share price of £6.01 with
a cash dividend equivalent payment of £77,283 ( the figures shown have been adjusted from the estimated payments stated in the 2017 report).
2.
3.
4.
5.
6. Partial year as Tim Collier was appointed in May 2017.
58
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Variable pay awards vesting in FY 2018
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 2018
and included in the single figure on table 1 on page 58 are shown below. The performance measures for FY 2018 are a combination of revenue
and cash operating income, both equally weighted. The resulting bonus amounts are shown in the table below:
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
Weightings
Opportunity as a % of salary
Cash
operating
income
50%
50%
50%
50%
Revenue
50%
50%
50%
50%
Threshold
Target
Maximum
0%
0%
0%
0%
90%
70%
70%
30%
180%
140%
140%
60%
Actual
outcome
as a %
of salary
147%
114%
114%
41%
Actual
outcome
£000
1,229
856
571
303
Table 2.2: DMGT annual bonus targets (Audited)
The financial measures are split into two categories and weighted evenly (shown in table 2.1). Kevin Beatty’s bonus is weighted 70% against
targets specific to dmg media and 30% against DMGT targets.
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 final targets were adjusted to reflect the final US$/£ average exchange rate over the year.
The following tables illustrate performance against DMGT and dmg media bonus targets and the corresponding outcome:
DMGT bonus targets (All)
Revenue
Cash operating income
dmg media bonus targets (Kevin Beatty only)
Revenue
Cash operating income
Below
0%
Threshold
0%
Target
100%
Maximum
200%
Outcome as
a % of target
127%
200%
Below
0%
Threshold
0%
Target
100%
Maximum
200%
Outcome as
a % of target
95%
119%
Table 3: Deferred annual bonus (Audited)
The Committee agreed the following deferral requirements would apply to the annual bonus with no further performance conditions except
for continued employment over the two year deferral period:
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
Deferral requirement
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
Type of deferral
None
Nil cost options
Nil cost options
Nil cost options
Amount
deferred
FY 2018
£000
Amount
deferred
as a % of
FY 2018 bonus
0
331
221
80
0%
39%
39%
26%
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Governance
Governance
Remuneration Report
Awards made under share schemes
The Company funds the purchase of shares by an Employee Benefits Trust in order to ensure that its obligations under its share schemes are
adequately funded and this also ensures that there is no impact on share dilution. Share awards made to Lord Rothermere are settled using
Treasury Shares.
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. 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 except for continued employment. The January 2018
award was based on the average price of the first three days of trading after the announcement of the financial results for FY 2017 of £5.63.
A deferral applied to Kevin Beatty’s bonus for FY 2017.
Award date
Award type
Relating to
Exercisable from
Expiry date
Status of awards
Award price
Dec 2011
Nil cost
options
2011
Bonus
Dec 2014
Dec 2018
Vested
£3.98
Dec 2012
Nil cost
options
2012
Bonus
Dec 2015
Dec 2019
Vested
£5.27
Dec 2013
Nil cost
options
2013
Bonus
Dec 2015
Dec 2020
Vested
£9.16
Dec 2014
Nil cost
options
2014
Bonus
Dec 2016
Dec 2015
Nil cost
options
2015
Bonus
Dec 2017
Jan 2018
Nil cost
options
2017
Bonus
Dec 2020
Dec 2021
Dec 2025
Dec 2022
Vested Outstanding Outstanding
£5.63
£7.06
£8.29
Outstanding awards
The Viscount Rothermere
K J Beatty
Total outstanding
Shaded columns show options that have vested.
110,464
–
110,464
129,635
–
129,635
–
–
–
–
–
–
–
12,804
12,804
–
14,404
14,404
Total
outstanding
during the year
240,099
27,208
267,307
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Table 5.1: Awards made under the 2012 Long-Term Executive Incentive Plan (LTIP) (Audited)
Outstanding awards subject to performance conditions under the LTIP are summarised in the table below. Awards are share based. 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 2013 LTIP award made to Kevin Beatty vested in full during the year based on an evaluation by the Committee of the performance against
the performance measures detailed below. Following the realisation 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. No further awards are being made under the LTIP.
Award name
Award date
Performance period ends
Standard award as a % of salary
Award price
Price at vesting
Performance measures
2012 LTIP
award
Dec 2012
Sep 2017
100%
£5.27
£6.30
2013 LTIP
award1
Dec 2013
Sep 2018
100%
£9.16
£7.48
2014 LTIP
award
Dec 2014
Sep 2019
100%
£8.29
N/A
2015 LTIP
award
Dec 2015
Sep 2020
100%
£7.06
N/A
• Grow B2B business.
• 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.
Status of award
Maximum percentage of face value that could vest
Vested
100%
Vested
100%
Outstanding
100%
Outstanding
100%
Outstanding awards
K J Beatty
Total outstanding
Realised during year
K J Beatty
Total exercised/realised during year2
Shaded columns show options that have vested.
–
–
77,226
77,226
87,937
87,937
105,382
105,382
130,246
130,246
–
–
–
–
Total
outstanding
during the year
270,545
270,545
Total
realised
during the year
130,246
130,246
Notes
1.
2.
The value of the 2013 LTIP award at vesting was £577,894 for Kevin Beatty calculated using the average share price for the fourth quarter of FY 2018 which was £7.47.
Under the rules of the LTIP, participants are entitled to the value of the dividends that they would have received between the award date and the exercise date. Kevin Beatty received
cash dividend equivalent payments of £133,241 in relation to the realisation of the 2012 award made under this plan in FY 2018 and will receive £82,554 in FY 2019 in relation to the 2013 award
made under this plan.
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Table 5.2: Awards made under the 2017 Executive Incentive Plan (EIP) (Audited)
Outstanding awards subject to performance conditions under the 2017 Long-Term Executive Incentive Plan (EIP) are summarised in the table
below. Awards are made annually in line with policy and will be equity settled. Following the realisation 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 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 2017 EIP awards were made in June 2018
based on the average price of the first three days of trading after the announcement of the financial results for FY 2017 of £5.63.
Award name
Award date
Performance period ends
Performance period starts
Award price
Status of award
Basis on which award is made
Percentage receivable if maximum
performance achieved
2017 EIP
Jun 2018
Sep 2020
Oct 2017
£5.632
Outstanding
2016 EIP
Jun 2017
Sep 2019
Oct 2016
£7.88/£7.171
Outstanding
Percentage share of growth in eligible profit over the performance period, converted at the end of the
performance period to shares based on share price immediately before start of the performance period.
If the performance level is on target or above,
Lord Rothermere and Paul Zwillenberg would
receive 1.25% and Tim Collier and Kevin Beatty
0.75% of eligible profits. No amounts are payable
if there are no eligible profits.
There is a cap on the maximum amounts payable
which is five times base salary at the time the award
was made with the number of shares being
calculated by reference to the award price above.
If the performance level is on target or above,
Lord Rothermere and Paul Zwillenberg would
receive 2.5% and Tim Collier and Kevin Beatty
1.25% of eligible profits. No amounts are payable
if there are no eligible profits.
There is a cap on the maximum amounts payable
which is five times target at the time the award was
made with the number of shares being calculated
by reference to the award price above.
Performance measures
Outcomes are linked to stretching profit targets over a minimum threshold, subject to fair adjustment for
any change in capital usage.
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
Maximum shares
that could vest
531,091
475,888
280,851
318,655
Shares vesting
at target
95,178
95,178
62,762
57,107
Maximum shares
that could vest
666,271
666,271
399,763
399,763
Shares vesting
at target3
133,254
133,254
79,953
79,953
Notes
1. The 2016 awards made to Lord Rothermere, Paul Zwillenberg and Kevin Beatty were based on the average share price for the first three days following the release of FY 2016 financial results of
£7.88. The award made to Tim Collier was based on the closing share price on his employment start date of £7.17.
The 2017 awards were based on the average share price for the first three days following the release of FY 2017 financial results of £5.63.
2.
3. The value of the 2017 at target EIP awards at issue was £750,000 for Lord Rothermere and Paul Zwillenberg and £450,000 for Tim Collier and Kevin Beatty.
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Table 5.3: Long-Term Executive Incentive Plan (LTIP) awards to Paul Dacre (Audited)
The outstanding awards subject to performance conditions made to Paul Dacre are summarised in the table below. Awards were share-based
and made annually in line with the Policy. 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 2017 EIP award made to Paul Dacre in January 2018
was based on the average price of the first three days of trading after the announcement of the financial results for FY 2017 of £5.63.
The 2015 LTIP award made to Paul Dacre under the 2012 Long-Term Executive Incentive Plan vested in full during the year based on an
evaluation by the Committee of the performance against the measures detailed below. Following the realisation 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.
Award name
Award date
Performance period ends
Standard award as a % of salary
Award price
Price at vesting
Performance measures
2014 LTIP
award
Dec 2014
Sep 2017
70%
£8.29
£6.30
2015 LTIP
award
Dec 2015
Sep 2018
70%
£7.06
£7.48
2016 EIP
award
Feb 2017
Sep 2019
70%
£7.88
N/A
2017 EIP
award1
Jan 2018
Sep 2020
70%
£5.63
N/A
• Continue to invest in strong brands of digital consumer media, particularly MailOnline.
• Ensure the financial sustainability of the Mail Titles.
Status of award
Maximum percentage of face value that could vest
Vested
100%
Vested
100%
Outstanding
100%
Outstanding
100%
Outstanding awards
P M Dacre
Total outstanding
143,5692
143,569
128,629
128,629
180,036
180,036
Realised during the year
P M Dacre
Total realised during the year
Shaded columns show options that have vested.
119,8193
119,819
Total
outstanding
during the year
452,234
452,234
Total
outstanding
during the year
119,819
119,819
Notes
1. The value of the 2017 EIP awards at issue was £1,013,600 for Paul Dacre. This award was made under the rules of the 2017 EIP.
2.
The value of the 2015 LTIP awards at vesting was £1,074,349 for Paul Dacre calculated using the average share price for the fourth quarter FY 2017 which was £7.48 .
This award was made under the rules of the 2012 LTIP.
Under the rules of the 2012 LTIP, participants are entitled to the value of the dividends that they would have received between the award date and the exercise date. Paul Dacre received
cash dividend equivalent payments of £77,283 in relation to the realisation of the 2014 award made under this plan in FY 2018 and will receive £95,760 in FY 2019 in relation to the 2015 award.
3.
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Remuneration Report
Payments to past Directors (Audited)
Martin Morgan vested share options and awards
The Committee was satisfied that the performance conditions had been met for the award made to Martin Morgan in December 2013
of 104,500 shares under the DMGT 2012 Long-Term Incentive Plan.
Martin Morgan received an amount of £1,059,437 in relation to the realisation of the 2012 award made under this DMGT 2012 Long-Term
Incentive Plan in January 2018 and an amount of £73,528 in relation to the exercise of nil cost options under the deferred bonus plan in
June 2018.
Table 6: 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 and benefits in kind are not pensionable.
The Company did not make any contributions on behalf of Paul Dacre. No Executive Directors are now accruing further pension in the DMGT
Senior Executives’ Pension Fund. The normal retirement age under the Fund for the Executive DIrectors is 60.
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
P M Dacre
Defined benefit: accrued annual
benefit as at 30 September 2018
based on normal retirement age
£000
80
N/A
N/A
N/A
735
Defined
benefit: normal
retirement age
3 December 2027
–
–
–
14 November 2008
Defined benefit:
additional value
of benefits if early
retirement taken
Weighting of
pension benefit
value as shown
in single figure table
–
–
–
–
N/A
Cash allowance: 100%
Cash allowance: 97%;
Defined contribution: 3%
Cash allowance: 97%;
Defined contribution: 3%
Cash allowance: 100%
N/A
Table 7: 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 (NED) in FY 2018 and FY 2017.
During FY 2018, the fees for the two US-based NEDs were reviewed. Heidi Roizen and Dominique Trempont are now both paid a single annual
fee of $285,000 which covers the base fee, sub-committee membership fees, one set of travel fees to overseas Board meetings, fees for their
regular project work and fees for ad hoc contributions for DMGT.
Travel allowances of £4,000 are paid for each Board meeting that requires a single (one way) flight of between five and 10 hours and
£10,000 for each Board meeting that requires a single (one way) flight of more than 10 hours. Additional fees are paid for membership
and chairmanship of sub-committees and subsidiary boards.
Following a review of fee levels in September 2018, no changes to UK or US NEDs’ fees will be made for FY 2019.
2017
Travel
allowance
£000
–
–
20
–
–
–
30
50
100
Fees
£000
39
78
20
138
92
–
161
56
648
Total
£000
39
78
40
138
92
–
191
106
748
2018
Travel
allowance
£000
4
4
16
8
4
–
14
34
84
Fees
£000
50
89
50
149
105
42
211
250
946
Total
£000
54
93
66
157
109
42
255
284
1,030
Lady Keswick
A H Lane
F L Morin
D H Nelson
K A H Parry
JP Rangaswami
J H Roizen
D Trempont
Total
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Chart 1: Percentage change in remuneration of the CEO
The chart below sets out the remuneration delivered to the CEO compared to total employee remuneration.
Chief Executive remuneration
(excluding LTIP)1
£000
Total employee
remuneration
£000
Average
remuneration2
£000
2018
2017
2018
2017
2018
2017
Notes
1.
2. The change in average employee remuneration is partly due to movement in the US$ exchange rate.
Remuneration includes salaries, wages and incentives, but excludes pension benefits.
Chart 2: Comparison of overall performance of DMGT vs comparators
£1,450
£446,965
% increase/decrease
£1,867
+29%
£523,300
£71
£63
-15%
+13%
The chart compares the
Company’s TSR with
the Media Sector Total
Return Index and the
FTSE 100 Index over the
past 10 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.
Source: Thomson Reuters
Datastream
DMGT
Media UK
FTSE 100 (all rebased to 100)
£
400
350
300
250
200
150
100
50
0
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
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Table 8: Chief Executive remuneration outcomes FY 2009 to FY 2018
Financial year ending
Total remuneration (single figure)
Annual variable pay1
(% maximum)
LTIP achieved (% maximum)
Share price at vesting
FY 2009
£000
2,312
63%
FY 2010
£000
2,961
98%
FY 2011
£000
1,722
40%
0%
N/A
25% 25%/100%
£4.14 £5.72/£3.68
FY 2012
£000
2,809
63%
52.5%
£4.82
FY 2013
£000
2,949
88%
37.5%
£7.62
FY 2014
£000
2,021
54%
40%
£8.31
FY 2015
£000
1,944
58%
–
–
FY 20162
£000
3,342
63%
100%
£6.95
FY 20173
£000
1,450
42.5%
FY 20183
£000
1,867
81%
–
–
–
–
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 from FY 2010
to FY 2017 when it increased to 140%.
The single figure shown for FY 2016 combines the period of Martin Morgan’s service to 31 May 2016 and his successor Paul Zwillenberg from 1 June 2016.
2.
3. The figure for FY 2017 and FY 2018 is for Paul Zwillenberg.
Chart 3: 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
£ millions
800
700
600
500
400
300
200
100
0
-13%
604
528
-19%
226
182
4%
78
81
FY 2018
FY 2017
FY 2018
FY 2017
FY 2018
FY 2017
Total employment pay
Buy-back
Dividend
Adjusted profit before tax
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Table 9: Statement of Directors’ shareholding and share interests (Audited)
The number of shares of the Company in which Executive and Non-Executive Directors or their families had a beneficial or non-beneficial
interest during FY 2018 and details of Long-Term Incentive (LTI) interests as at 30 September 2018 are set out in the table below. The
shareholding guideline for Executive Directors is 5x (500%) of salary for Lord Rothermere and Paul Zwillenberg and 1.5x (150%) of salary
for Tim Collier and Kevin Beatty. The value as a multiple of salary has been calculated using the 28 September 2018 share price of £7.02.
Beneficial
As at 30 September 2018
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
P M Dacre
K A H Parry
Non-beneficial
The Viscount Rothermere
D H Nelson
Ordinary
19,890,3645
–
–
–
–
A Ordinary
Non-Voting
61,644,654
24,899
14,250
368,351
–
–
23,499
LTI interests
not subject to
performance
conditions1
Vested
LTI interests
not subject to
performance
conditions1
Unvested
240,099
–
–
12,804
–
–
–
109,569
324,965
14,404
–
–
19,890,364
62,075,653
252,903
448,938
Value (as
a multiple
of salary)2
Guideline
met
686
1.3
4.8
3.7
–
N/A
Yes
No
Yes
Yes
–
N/A
LTI interests
subject to
performance
conditions3
1,197,362
1,142,159
680,614
988,963
452,234
Total
outstanding
interests4
1,437,461
1,251,728
1,005,579
1,016,171
452,234
N/A
N/A
4,461,332
5,163,173
–
–
4,880,000
212,611
5,092,611
Total Directors’ interests
Less duplications
19,890,364
–
67,168,214
(212,611)
19,890,364
66,955,603
Notes
1.
The LTI interests not subject to performance conditions (vested and unvested) are the nil cost options awarded as the bonus deferral; full details can be found in table 4 on page 60. The LTI
interests not subject to performance conditions (unvested) also includes the recruitment awards made to Paul Zwillenberg and Tim Collier of 109,569 and 324,965 shares respectively. These were
awarded under the EIP as Conditional Share Awards.
The value as a multiple of salary includes LTI interests not subject to performance conditions.
The LTI interests subject to performance conditions are detailed in tables 5.1 to 5.3 on pages 61 to 63 and include those shares which have vested but are not realisable as well as those that
are outstanding.
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.
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 2017.
2.
3.
4.
5.
None of the other directors held any shares in the Company, either beneficial or non-beneficial.
At 30 September 2018, Lord Rothermere was beneficially interested in 756,700 Ordinary Shares of Rothermere Continuation Limited, the Company’s ultimate holding company.
For Paul Zwillenberg and Kevin Beatty, purchase of shares were made between 30 September 2018 and 30 November 2018 through the share purchase+ plan. These purchases increased the
beneficial holdings of these Executive Directors by 43 shares for Paul Zwillenberg and 36 shares for Kevin Beatty.
Voting at general meeting
At the February 2017 AGM, the advisory vote on the Remuneration Report received 19,890,364 (100%) votes for, with no votes against and
no abstentions. The Committee consults with major shareholders prior to any major changes to remuneration policy and practice.
Non-Executive Directors’ appointment
The Non-Executive Directors are appointed for specified terms under the Company’s Articles of Association and 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
Lady Keswick
A H Lane
F L Morin
D H Nelson
K A H Parry
JP Rangaswami
J H Roizen
D Trempont
23 September 2013
6 February 2013
8 February 2017
1 July 2009
22 May 2014
7 February 2018
26 September 2012
9 February 2011
7 February 2018
7 February 2018
7 February 2018
7 February 2018
7 February 2018
7 February 2018
7 February 2018
7 February 2018
Directors’ service contracts/letters of appointment are available for inspection at DMGT’s registered office.
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Remuneration Report
Directors’ Remuneration Policy
This part of the report sets out the Company’s policy for the remuneration of Directors (Policy). The Policy was last approved by shareholders
at the AGM on 8 February 2017. The Committee has reviewed the Policy and is satisfied that it remains appropriate. The Policy can be found
on the Company website.
The Policy, as set out on pages 68 to 71 below, is intended to apply for a three-year period from the date of the 2017 AGM. The Committee will
next submit a new Policy for approval at the 2020 AGM.
Policy overview
The Committee aims to structure remuneration packages which motivate and retain Directors, drive the right behaviours and pay at market
rates. The Committee considers that a successful 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 Director pay is variable and linked to the success of the Group.
The Long-Term Executive Incentive Plan (EIP) was approved at the AGM in February 2017. The plan directly links payouts to business
performance by awarding management a share of profits, over and above a minimum threshold, after deducting a charge for additional
capital. The EIP 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 its three year life.
Policy applied to Executive Directors
Operation
Opportunity
Performance metrics
Not performance related.
Not performance related.
Annual base salary increases,
where made, 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 base salary 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.
Base salaries for FY 2019 are
set out on page 73.
For Executive Directors who
previously participated in
the defined benefit scheme,
the pension allowance has
been set at a higher level
(up to 37% of base salary).
30% of base salary or less
for new recruits.
Purpose and link to strategy
Base salary
To recruit, retain and
reflect responsibilities of
the Executive Directors
and be competitive with
peer companies.
The base 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.
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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.
Benefits (e.g. car and pension
allowance) may vary by role
and individual circumstances.
Benefits, including the DMGT
SharePurchase+ plan are not
performance related.
The cost of benefits changes
periodically and may be
determined by outside
providers.
Maximum annual bonus
opportunity is as follows:
• for Lord Rothermere,
180% of salary;
• for Paul Zwillenberg,
140% of salary;
• for Tim Collier, 140%
of salary; and
• for Kevin Beatty, 60%
of salary.
Paul Dacre did 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.
Bonuses are subject to the
achievement of financial
measures set by the Committee.
These measures may be varied
from year to year. The measures
for determining the annual bonus
in FY 2018 were revenue and cash
operating income.
The performance required for
a 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 forecast, then typically an
on-target level of the annual
bonus will be paid.
The weightings that were applied
to the FY 2018 bonus targets
are as reported in table 2.1
on page 59.
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.
Benefits typically include cash allowances
and non-cash benefits such as medical
insurance and life assurance. 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.
Executive Directors 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 objectives.
The performance targets and measures are
determined annually by the Committee
and may change from year to year:
• 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 the Group
as well as 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 table 2.2 on
page 59.
Annual bonus 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.
Annual 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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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 Long-Term
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 59.
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.
The Company adopted the EIP, following
shareholder approval at the February 2017
AGM. The EIP will be used to grant
long-term incentive awards to
Executive Directors.
Awards are made annually, 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.
70
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 except
for continued employment.
In order to incentivise
and allow the potential
to appropriately reward
Executive Directors for truly
exceptional performance,
the maximum annual value
of shares which can vest
is capped at 500% of salary.
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 Group profits over a
minimum threshold, subject to
fair adjustment for any change
in capital usage. The minimum
threshold feature is designed
to ensure that the awards are
appropriately challenging
and Executive Directors are not
rewarded unless the Company
achieves 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.
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Purpose and link to strategy
Operation
Opportunity
Performance metrics
Long-term incentives
continued
Shareholding
requirement
To align the interests
of Executive Directors
and shareholders.
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 relevant 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.
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.
The Committee sets the
applicable performance targets
prior to, or at the time the awards
are made, 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.
The Committee recommends
a minimum shareholding of
500% of base salary for the
Chairman and the CEO,
and 150% for all other
Executive Directors.
There is no time frame over
which the guidelines should
be met.
Notes to the Policy table
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 1 on page 65.
• Pension:
− Employees in the UK are auto-enrolled into the Company defined contribution pension scheme. There are a number of defined contribution schemes in operation across the Group, all of which
offer levels of employer matching contributions.
− Employees in the US are typically offered 401(k) retirement plan benefits.
• Benefits:
Allowances and benefits for employees reflect the local labour market in which they are based.
• Annual bonus:
− The majority of employees participate in some form of cash-based annual incentive, bonus or commission plan.
− The annual bonus plan for the Executive Directors forms the basis of the annual bonus plan for the other 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 bonus 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 other 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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Pay scenario charts
Chart 4: 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
0
6,627
58%
2,766
28%
28%
13%
31%
23%
5%
13%
1,222
30%
70%
4,413
52%
24%
6%
17%
2,337
33%
23%
11%
33%
1,003
25%
75%
Minimum
On-target Maximum
Minimum
On-target Maximum
The Viscount Rothermere
P A Zwillenberg
3,809
60%
12%
8%
20%
1,750
26%
13%
17%
44%
1,063
28%
72%
3,695
62%
19%
5%
14%
671
24%
76%
1,491
31%
24%
11%
34%
Minimum
On-target Maximum
Minimum
On-target Maximum
K J Beatty
T G Collier
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.
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Implementation of Remuneration Policy in FY 2019
Executive Directors’ base fees
and salary
Salary increases for each of the Executive Directors for FY 2019 were approved in line with increases
across the UK business of 2.5%. Revised annual salaries including Directors’ fees from 1 October 2018 are
£858,000 for Lord Rothermere, £769,000 for Paul Zwillenberg, £512,500 for Tim Collier and £762,500 for
Kevin Beatty.
Executive Directors’ pension
No change to prior year. Pension allowances are reported in the single figure table 1 on page 58 with further
details in the pension entitlements and cash allowances section in table 6 on page 64.
Benefits in kind
Executive Directors’
annual bonus
No change to nature of benefits since prior year. Allowances and benefits for FY 2018 are reported in detail
in the notes to the single figure table 1 on page 58.
Annual bonus payments for FY 2018 are reported in detail in tables 2.1 and 2.2 on page 59.
Awards in FY 2019 will be measured against two metrics: Group level revenue and cash operating income.
In addition to Group level performance, Kevin Beatty will be measured on the performance of dmg media
against the same metrics (weighting 30% Group, 70% divisional).
The Board considers the specific targets and relative weightings for each measure to be commercially
sensitive and they will not be disclosed.
Bonus deferral
The nil cost options awarded in FY 2018 were for Kevin Beatty and relate to the deferred part of his FY 2017
bonus. The deferred amounts that apply for the FY 2018 bonus are shown in table 2.1 on page 59.
Executive Directors’
long-term incentive
Executive Directors’
service contracts
External appointments
Bonus deferral requirements for FY 2018 remain as stated in table 3 on page 59.
The Long-Term Executive Incentive Plan (EIP) (approved by shareholders at the 2017 AGM), directly links
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 EIP 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 on pages 70 and 71.
Individual awards will be determined each year and will be subject to the performance conditions outlined
in the Policy.
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 tables 5.1, 5.2 and 5.3 on pages 61 to 63.
The Board considers the specific targets and relative weightings for each measure to be commercially
sensitive and they will not be disclosed.
No changes to service contracts are planned for FY 2019.
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. Lord Rothermere is on the Board of ITN; Tim Collier and Kevin Beatty are on
the Board of Euromoney Institutional Investor PLC (Euromoney).
Executive Directors’
shareholding guidelines
The guideline is 500% of base salary for Lord Rothermere and Paul Zwillenberg and 150% of base salary
for all other Executive Directors.
Executive Directors’ pension
Pension allowances for any new Executive Director will be limited to a maximum of 30%.
Directors’ interests are reported in detail in table 9 on page 67.
Pension allowances are reported in the single figure table 1 on page 58 with further details in the Pension
entitlements and cash allowances section in table 6 on page 64.
Recruitment award
Exit payments
None.
None.
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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
Trust plc
3 months
P A Zwillenberg CEO
1 June 2016
Daily Mail and General
Holdings Limited
12 months
T G Collier
Group Chief
Financial Officer
2 May 2017
Daily Mail and General
Trust plc
12 months
K J Beatty
Executive Director
19 May 2002
Associated Newspapers
Limited
12 months
Base salary, benefits, pension
entitlement and, as appropriate,
a prorated bonus payment for the
notice period.
Base 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.
Base 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.
Base salary, benefits, pension
entitlement and, as appropriate,
a prorated bonus payment for the
notice period.
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. Tim Collier and Kevin Beatty are
Directors of Euromoney and receive fees of £50,000 per annum. Lord Rothermere is a Director at ITN and receives fees of £25,000 per annum.
Fees paid are included in the single figure table shown on page 58.
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 Policy in effect at the time they were given.
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.
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The Committee may make use of any of the below components in the (recruitment) remuneration package.
Component
Approach
Base salary
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.
Maximum annual grant level
Not applicable.
Pension
Benefits
Annual bonus
Long-term
incentives
Replacement
awards
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.
Not applicable.
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.
200% of base salary.
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 70) 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.
500% of base salary at the time
the award is made.
Not applicable.
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 base 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 annual 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 base 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+
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.
Annual bonus
Deferred bonus plan
Long-term incentive plans
If identified as a ‘good leaver’ for the purposes of the bonus, the Committee may determine that the leaver’s
contribution was significant against targets, in which case, it may decide to make a payment which is
equivalent of up to a full year’s 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.
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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.
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 medical 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.
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 geographies and sectors
in which it operates) when determining annual base salary increases and to external benchmarks 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
where appropriate.
Implementation of Policy for Non-Executive Directors FY 2019
Non-Executive Directors’ fees
The actual fees paid to Non-Executive Directors in FY 2018 are shown in table 7 on page 64.
A market review of Non-Executive Directors fees was undertaken in July 2018 and a single fee was
introduced for the US-based Non-Executive Directors of $285,000. This fee covers the base fee,
Committee membership fees, one set of travel fees to a US Board meeting and fees for project work and
ad-hoc contributions for DMGT. This is applicable for Heidi Roizen and Dominique Trempont.
This report covers the reporting period to 30 September 2018 and has been prepared in accordance with the relevant requirements of
the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 and of the Listing Rules of the Financial
Conduct Authority.
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Daily Mail and General Trust plc Annual Report 2018
Statutory Information
Directors’ Report
Other statutory information
Required information can be found in
the Strategic Report on pages 2 to 35, which
is incorporated into this report by reference.
Information on employees, community
and social issues is given in the Our People
and Our Stakeholders section on pages 30
and 31.
In accordance with the 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 44.
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.
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.
Tangible fixed assets and investments
The Company’s subsidiaries are set out on
page 179. 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 36
and 37. Directors held office throughout
the year with the exception of Paul Dacre
and JP Rangaswami. In accordance with
the UK Corporate Governance Code, all
existing Directors will stand for re-election
at the Annual General Meeting (AGM) on
6 February 2019.
JP Rangaswami was elected at the AGM
on 7 February 2018.
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 35.
Results and dividends
The profit for the year of the Group
amounted to £688 million. After excluding
the £1 million loss element attributable to
non-controlling interests, the Group profit
for the year attributable to owners of the
Company amounted to £689 million. The
Board recommends a final dividend of
16.2 pence per share. If approved at the
2019 AGM, the final dividend will be paid on
8 February 2019 to shareholders at the close
of business on 7 December 2018. Together
with the interim dividend of 7.1 pence per
share paid on 29 June 2018, this makes a
total dividend for the year of 23.3 pence
per share (2017 22.7 pence).
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 67.
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 2018, the Employee Trust’s
shareholding totalled 2,981,109 A Shares.
Between 30 September 2018 and
28 November 2018 the Employee Trust
transferred nil A Shares to satisfy the
exercise of awards under employee
share plans.
Significant shareholdings
As at 28 November 2018, the Company had
been notified that Rothermere Continuation
Limited held 100% of the issued Ordinary
Shares. There has been no movement in
this position since 30 September 2018.
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 67.
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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 38.
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
2.9 million shares out of Treasury and the
Employee Benefit Trust, representing 0.9%
of called-up A Shares, in order to satisfy
incentive schemes. The Company held
7,793,528 shares in Treasury and the DMGT
Employee Benefit Trust with a nominal value
of £1.0 million at 30 September 2018. The
maximum number of shares held in Treasury
and by the DMGT Employee Benefit Trust
during the year was 8,523,183, which had a
nominal value of £1.1 million. The Company
also purchased 2.2 million shares for holding
in Treasury having a nominal value of
£0.3 million in order to match obligations
under various incentive plans. The
consideration paid for these shares was
£14.3 million. Shares purchased during
the year represented 0.6% of the called-up
A Share capital as at 30 September 2018.
On 28 November 2018 the Company held
4,812,419 Treasury Shares.
Details of allotments of share capital which
arose solely from the exercise of options are
given at Note 39.
Authority to purchase shares
At the Company’s AGM on 7 February 2018,
the Company was authorised to make
market purchases of up to 34,216,678
A Shares representing approximately 10%
of the total number of A Shares in issue.
During the period from 29 November 2017
to 30 September 2018, the Company
purchased nil shares into Treasury,
at a total cost of £nil (see Note 39).
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
77
Governance
Governance
Statutory Information
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 6 February 2019.
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 22 to 29 and in the Notes to the
accounts on page 95.
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 26.
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 35 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.
Relationship agreements
Daily Mail and General Trust plc entered
into a Relationship Deed with Euromoney
Institutional Investor PLC on 8 December
2016, and ZPG 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. The ZPG
Plc Relationship Deed ceased with the sale
of the Group’s interest in the company.
Political donations
No political donations were made during
the period.
Principal risks
The principal risks and how they are
being managed or mitigated are shown on
pages 32 to 35. 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
Details are provided in Note 45.
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Daily Mail and General Trust plc Annual Report 2018
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
2018, nor was entered into during the year
for any Director and/or connected person
except as detailed in Note 44 (2017 none).
Annual General Meeting
The AGM will be held at 9.00 am on
Wednesday 6 February 2019 at Northcliffe
House, 2 Derry Street, London W8 5TT.
The resolutions to be put to the meeting
are set out on pages 80 and 81. 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 2019 AGM.
By order of the Board
F Sallas
Company Secretary
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 41 as regards to ink and printing, where
arrangements are in place until FY 2020
and FY 2022 respectively in order to obtain
competitive prices and to secure supplies.
Arrangements are made biannually with
a range of newsprint suppliers to ensure
the security of supply at the best available
prices, having regard to the need for the
necessary quality. Since the Group is a
diversified international portfolio of
businesses, DMGT 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.
Employees
Details in respect of employees are in the
Our People and Our Stakeholders section
on pages 30 and 31.
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.
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79
Governance
Governance
Annual General Meeting 2019: Resolutions
The Company’s Annual General Meeting
(AGM) will be held at 9.00 am on Wednesday
6 February 2019. 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 2018.
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 54 to 76 of the Annual Report and
Accounts for the financial year ended
30 September 2018, in accordance with
section 439 of the Companies Act 2006
(the Act).
Dividend
3.
To declare the final dividend
recommended by the Directors of 16.2
pence per Ordinary Share or A Ordinary
Non-Voting Share (each an ‘A Share’)
for the year ended 30 September 2018
to all holders of Ordinary Shares and/or
A Shares on the register at the close of
business on 7 December 2018.
Directors
4.
To re-elect Viscount Rothermere
as a Director
Auditor
16. To reappoint PricewaterhouseCoopers
LLP as the Company’s External Auditor
until the end of the next general
meeting at which accounts are laid
before the Company.
17. To authorise the Directors to determine
the Company’s External Auditor’s
remuneration.
As Special Business
18. That the Company be and is hereby
This authority revokes and replaces
all unexercised authorities previously
granted to the Directors to allot A Shares
but without prejudice to any allotment of
A Shares or grant of rights already made,
offered or agreed to be made pursuant
to such authority.
As Ordinary Business
19. That the Directors be generally and
unconditionally authorised pursuant
to s551 of the Act to:
generally and unconditionally authorised
for the purposes of s701 of the Act to
make market purchases (within the
meaning of s693(4) of the Act) of
A Shares on the London Stock Exchange
provided that:
(a) the maximum aggregate number of
A Shares which may be purchased
is 33,739,205;
(b) the minimum price (excluding
expenses) which may be paid for each
A Share of 12.5 pence each in its share
capital is not less than 12.5 pence
per share;
(c) the maximum price (excluding
expenses) which may be paid for each
A Share of 12.5 pence each in its share
capital does not exceed the higher of:
(i)
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
(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 £2,108,700 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 6 May 2020, 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
to 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.
This authority revokes and replaces
all unexercised authorities previously
granted to the Directors to allot A Shares
but without prejudice to any allotment of
A Shares or grant of rights already made,
offered or agreed to be made pursuant to
such authority.
5. To re-elect Mr Beatty as a Director.
(ii) the higher of the price of the
6. To re-elect Mr Collier as a Director.
7. To re-elect Lady Keswick as a Director.
8. To re-elect Mr Lane as a Director.
9. To re-elect Mr Morin as a Director.
10. To re-elect Mr Nelson as a Director.
11. To re-elect Mr Parry as a Director.
12. To re-elect Mr Rangaswami as a Director.
13. To re-elect Ms Roizen as a Director.
14. To re-elect Mr Trempont as a Director.
15. To re-elect Mr Zwillenberg as a Director.
last independent trade and the
highest current independent
bid as stipulated by Regulatory
Technical Standards adopted by
the European Commission under
Article 5(6) of the Market Abuse
Regulation (EU) No 596/2014; and
(d) the authority conferred by this
Resolution shall expire on the date of
the AGM next held after the passing
of this Resolution or on 6 May 2020
whichever is the earlier (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).
80
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Governance
Annual General Meeting 2019: Resolutions
Daily Mail and General Trust plc Annual Report 2018
Notice
22. That, a general meeting other than an
Annual General Meeting may be called
on not less than 14 clear days’ notice.
By order of the Board
F Sallas
Company Secretary
Daily Mail and General Trust plc
Northcliffe House, 2 Derry Street,
London W8 5TT
28 November 2018
As Special Business
20. If Resolution 19 is passed, that the
Directors be generally empowered
pursuant to s570 and s573 of the Act to
allot A Shares or grant rights to subscribe
for or to convert any security into A
Shares, for cash, or sell A Shares held by
the Company as Treasury Shares for cash,
pursuant to the authority conferred by
Resolution 19, as if s561(1) of the Act did
not apply to the allotment. This power:
21. If Resolution 19 is passed, that the
Directors be generally and unconditionally
empowered, in addition to any authority
granted under Resolution 20, pursuant to
s570 and s573 of the Act to allot equity
securities for cash pursuant to the
authority conferred by Resolution 19,
and/or to sell A Shares held by the
Company as Treasury Shares for cash,
as if s561(1) of the Act did not apply to
the allotment or sale. This power:
(a) expires (unless previously renewed,
(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 6 May
2020, 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 A Shares, the grant of rights
to subscribe for or to convert any
security into A Shares or the sale
of A Shares held by the Company
as Treasury Shares for cash, up to
an aggregate nominal amount
of £2,108,700.
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
6 May 2020, 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;
(b) shall be limited to the allotment of
equity securities and/or the sale of
A Shares held by the Company as
Treasury Shares for cash, up to an
aggregate nominal amount of
£2,108,700; and
(c) shall be used only for the purposes
of financing (or refinancing, if the
authority is to be used within six
months after the original transaction)
a transaction which the Board
determines to be an acquisition or
other capital investment of a kind
contemplated by the Statement of
Principles on Disapplying Pre-Emption
Rights most recently published by the
Pre-Emption Group prior to the date of
this notice.
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81
Financial Statements
Financial Statements
Independent auditor’s report to the members
of Daily Mail and General Trust plc
Report on the audit of the
financial statements
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
2018 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 parent Company financial statements
have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting Practice
(United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
• 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.
We have audited the financial statements,
included within the Annual Report, which
comprise: Company and Consolidated
Statement of Financial Position;
Consolidated Income Statement;
Consolidated Statement of Comprehensive
Income; Company and Consolidated
Statement of Changes in Equity;
Consolidated Cash Flow Statement; and the
Notes to the financial statements, which
include a description of the significant
accounting policies.
Our opinion is consistent with our reporting
to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditor’s responsibilities for
the audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have
fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided
to the Group or the parent Company.
Other than those disclosed in Note 5 to the
financial statements, we have provided no
non-audit services to the Group or the parent
Company in the period from 1 October 2017
to 30 September 2018.
Our audit approach
Overview
Materiality
• Overall Group materiality: £7.2 million
(2017: £9 million), based on 4% of adjusted
profit before tax.
• Overall parent Company materiality:
£38 million (2017: £9 million), based
on 1% of total assets (2017: Overall
Group materiality).
Audit scope
• Of the Group’s six trading reporting
divisions, we obtained full scope audits
for Consumer Media and Insurance Risk.
• For Events and Exhibitions, Property
Information, EdTech and Energy
Information we scoped our audit at
a business level, and identified ten
businesses over which we performed
either a full scope audit or specified
audit procedures on certain balances
or transactions.
• A full scope audit was also performed
for the Group’s material associate,
Euromoney Institutional Investor PLC.
Specified audit procedures were
performed for ZPG Plc up to the date
of disposal.
• Taken together, the components where we
performed audit work accounted for 84%
of Group revenue and 70% of absolute
adjusted profit before taxation.
Key audit matters
• Impairment of intangible assets and
goodwill (Group).
• Accounting for disposals (Group).
• Presentation of adjusted profit (Group).
• Accounting for deferred taxation
and uncertain tax positions (Group).
• Carrying value of investments
in subsidiaries (Parent).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
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.
We gained an understanding of the legal
and regulatory framework applicable to
the Group and the industries in which it
operates, and considered the risk of acts by
the Group which were contrary to applicable
laws and regulations, including fraud. We
designed audit procedures at Group and
significant component level to respond to
the risk, recognising that the risk of not
detecting a material misstatement due to
fraud is higher than the risk of not detecting
one resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery or intentional
misrepresentations, or through collusion.
We focused on laws and regulations that
could give rise to a material misstatement
in the Group and parent Company financial
statements, including, but not limited to,
International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our tests
included, but were not limited to, review of
the financial statement disclosures to
underlying supporting documentation,
enquiry with internal counsel and
confirmations with external counsel, review
of significant component auditors’ work and
review of internal audit reports in so far as
they related to the financial statements.
There are inherent limitations in the audit
procedures described above and the further
removed non-compliance with laws and
regulations is from the events and
transactions reflected in the financial
statements, the less likely we would become
aware of it.
We did not identify any key audit matters
relating to irregularities, including fraud. As
in all of our audits we also addressed the risk
of management override of internal controls,
including testing journals and evaluating
whether there was evidence of bias by the
directors that represented a risk of material
misstatement due to fraud.
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Daily Mail and General Trust plc Annual Report 2018
Key audit matters
Key audit matters are those matters that, in the auditor’s professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
Impairment of intangible assets and goodwill (Group)
Refer to the Audit & Risk Committee report on pages 46 to 52
and to Notes 21 and 22 in the Consolidated Financial Statements.
The Group had £333 million of goodwill and a further £131 million
of intangible assets on the balance sheet at 30 September 2018.
Impairment charges of £58 million have been recorded against
intangible assets relating to RMS(one) following management’s
change in strategy.
How our audit addressed the key audit matter
As part of our audit of the directors’ impairment reviews (for both
goodwill and intangible assets) we evaluated future cash flow forecasts
and the process by which they were drawn up. This included
comparing them to the latest Board approved budgets and
management’s three year plans, and testing the underlying calculations.
For the impairment assessment of goodwill and intangible assets we
tested all key assumptions, including:
The carrying values of the remaining goodwill and intangible assets
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 some of these assets will be impaired.
• revenue and profit assumptions included within budgets and future
forecasts, by considering the historical accuracy of budgets against
actual results;
• the 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 the directors’
valuation models, including discount and long term growth rates.
In addition, we corroborated the value in use assessment by reference
to implied multiples of comparable companies, recent transactions
and other third party reports where available.
With regards to RMS(one) we met with relevant directors, software
staff, and sales staff to gain an understanding of the change in strategy
and corroborate facts and circumstances around the full impairment
loss taken of £58 million.
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 Hobsons.
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.
83
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Financial Statements
Financial Statements
Independent auditor’s report to the members
of Daily Mail and General Trust plc
Key audit matter
How our audit addressed the key audit matter
Accounting for disposals (Group)
Refer to the Audit & Risk Committee report on pages 46 to 52
and to Notes 8 and 18 in the Consolidated Financial Statements.
During the year, the Group executed a number of disposals
of subsidiaries including:
• disposal of Locus Energy, Inc. in exchange for a 17.9% interest
in AlsoEnergy Holdings, Inc.;
• disposal of the Environmental Data Resources (EDR) business;
and disposal of the Group’s 29.9% shareholding in ZPG Plc.
The calculation of the profit on disposals can be complex.
For the Group’s 17.9% interest in AlsoEnergy Holdings resulting from
the sale of Locus, we considered and concluded that DMGT has the
ability to exert significant influence over the business given sufficient
voting rights and board presence to be considered an associate in
accordance with IAS 28 Investments in Associates and Joint Ventures.
We considered the valuation of the Group’s holding in AlsoEnergy
with reference to multiples derived by a third party from comparable
market transactions and applied sensitivities to management’s
calculations to demonstrate the valuation was reasonable.
With regards to the calculation of the profit on disposals, we:
• obtained and recalculated the directors’ calculation of the profit
on disposal;
• verified the fair value of consideration received to underlying
support including cash transactions and the Share Purchase
Agreements; and
• recalculated foreign exchange differences that were appropriately
recycled on disposal.
Based on the procedures performed, we concluded that the
accounting for the disposals was accurate and the disclosures
were sufficient.
Presentation of adjusted profit (Group)
Refer to the Audit & Risk Committee report on pages 46 to 52 and
to Note 13 in the Consolidated Financial Statements.
We have considered the appropriateness of the adjustments made to
statutory profit before taxation to derive adjusted profit before tax.
The Group presents adjusted profit before taxation to enable users
of the financial statements to gain a better understanding of the
underlying results. In arriving at adjusted profit a number of items
are considered ‘exceptional’ by management and are excluded from
underlying earnings.
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, are consistent year on year, and are in
accordance with the Group’s accounting policy.
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 continues
to attract scrutiny from the financial reporting regulators.
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 the rationale for including or excluding items
from adjusted profit has been consistently applied across gains and
losses and year on year.
We consider the Group’s disclosures setting out the reasons for its use
of alternative performance measures and the reconciliations of these
measures to the statutory amounts to be in line with the FRC guidance
in this area.
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Daily Mail and General Trust plc Annual Report 2018
Key audit matter
How our audit addressed the key audit matter
Accounting for deferred taxation and uncertain tax
positions (Group)
Refer to the Audit & Risk Committee report on pages 46 to 52
and to Note 37 in the Consolidated Financial Statements.
The Group’s 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 provisions for uncertain tax positions
relating to both historic and current tax arrangements.
The recognition and measurement of these items in the financial
statements is judgemental, and we focussed 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.
Carrying value of investments in subsidiaries (Parent)
Refer to Note 8 to the Company financial statements.
Investments in subsidiaries of £3,034 million are accounted
for at cost less impairment in the Company balance sheet
at 30 September 2018.
Investments are tested for impairment if impairment indicators
exist. If such indicators exist, the recoverable amounts of the
investments in subsidiaries are estimated in order to determine
the extent of the impairment loss, if any. Any such impairment loss
is recognised in the income statement.
During the year, impairments of £320 million were recognised
against the Company’s investments following the sale of EDR
and ZPG plc and resulting dividend distribution from the Group
undertakings to the Company.
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 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, including US tax reform.
We consider the valuation of the deferred tax assets and the level
of tax provisions to be acceptable in the context of the Group
financial statements.
We evaluated management’s assumption whether any indicators of
impairment existed by comparing the net assets of the subsidiaries at
30 September 2018 with the Company’s investment carrying values.
For those investments where the net assets were lower than the
carrying values, management prepared a discounted cash flow model.
We have tested the value in use methodology and key assumptions,
including profit growth rates, terminal value and discount rates
management has applied, leveraging our work over the carrying value
of goodwill and intangible assets. We performed our own independent
sensitivity analysis to understand the impact of changes in
management’s assumptions.
As a result of our work, we considered the £320 million impairment
charge to be appropriate and that the remaining carrying values of
the investments held by the Company are supportable in the context
of the Company financial statements taken as a whole.
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Financial Statements
Financial Statements
Independent auditor’s 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 structure of the Group and the parent
Company, the accounting processes and
controls, and the industry in which
they operate.
The Group consists of a head office and six
trading reporting divisions: Insurance Risk;
Consumer Media; Property Information;
EdTech; Energy Information; and Events and
Exhibitions. As each of these prepares a
sub-consolidation, we considered each of
these to be separate divisions. We scoped
our audit of Consumer Media and Insurance
Risk at a divisional level. For Property
Information, EdTech, Energy Information,
and Events and Exhibitions, we scoped
our audit at business level, with divisional
consolidation adjustments audited at the
Group level.
We identified Consumer Media as requiring
an audit of their complete financial
information due to its size. In order to obtain
sufficient and appropriate audit evidence
over the Group as a whole we also instructed
our component team to complete a full
scope audit of the Insurance Risk.
Within Property Information, we identified
two UK businesses, Searchflow Ltd and
Landmark Information Group Ltd, for which
we performed accelerated statutory audits
to align with the Group audit timetable.
Within EdTech, we instructed our component
team to perform a full scope audit of
Hobsons Inc, a US business.
Within Energy Information, we performed
a full scope audit of Genscape Inc,
a US business.
Within Events and Exhibitions, we performed
full scope audits of DMG World Media Dubai
(2006) Ltd and dmg world media (Abu Dhabi)
Ltd, as well as performed an accelerated
statutory audit of dmg events (UK) Ltd, a UK
business, to align with the Group timetable.
For one US business for which statutory
audits are not required, Trepp LLC, within
Property Information, we conducted
specified procedures over higher risk
financial statement line items, including
revenue and capitalised development spend.
A full scope audit was also performed by
our component team for the Euromoney
Institutional Investor PLC. Specified
procedures were performed over ZPG Plc,
which rely on work performed by Deloitte
LLP, who are ZPG Plc’s auditors, and we
centrally performed additional procedures
to calculate the Group’s share of these
results prior to disposal.
Taken together, the components where we
performed audit work accounted for 84% of
Group revenue and 70% 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.
This, together with additional procedures
performed at the Group level (including audit
procedures over impairment of goodwill and
intangibles, material head office entities, tax,
pensions 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
in aggregate 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 materiality
How we determined it
Rationale for
benchmark applied
Group financial statements
£7.2 million (2017: £9 million).
4% of adjusted profit before tax.
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 underlying performance of the
Group. Due to the inherent judgement in
classification of certain items as non-trading,
and therefore non-underlying, we have applied
a 4% rule of thumb, which is lower than the 5%
suggested by ISAs (UK) for the audit of profit-
oriented entities.
Parent Company financial statements
£38 million (2017: £9 million).
1% of total assets (2017: Overall Group
materiality).
The parent Company is not profit oriented. Total
assets is used as the benchmark as the parent
Company’s principal activity is to hold investments,
creditors, and debtors balances. We have applied
a 1% rule of thumb suggested by ISAs (UK) as the
parent Company is a public interest entity.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was between £0.68 million and £5 million.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £0.5 million (Group
audit) (2017: £0.5 million) and £1.9 million (parent Company audit) (2017: £0.5 million) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
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Daily Mail and General Trust plc Annual Report 2018
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
We are required to report if we have anything material to add or draw attention to in
respect of the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting in preparing the
financial statements and the directors’ identification of any material uncertainties to the
Group’s and the parent Company’s ability to continue as a going concern over a period of
at least twelve months from the date of approval of the financial statements.
Outcome
We have nothing material to add or to draw
attention to. However, because not all future
events or conditions can be predicted, this
statement is not a guarantee as to the Group’s
and parent Company’s ability to continue as a
going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06) and ISAs (UK)
require us also to report certain opinions and matters as described below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report
for the year ended 30 September 2018 is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements. (CA06)
In light of the knowledge and understanding of the Group and parent Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)
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 2016 UK Corporate Governance Code (the Code), we are required
to report to you if we have anything material to add or draw attention to regarding:
• The directors’ confirmation on pages 32 to 35 of the Annual Report 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.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 26 of the Annual Report 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 to report in respect of this responsibility.
Other Code Provisions
As a result of the directors’ voluntary reporting on how they have applied the Code, we are required to report to you if, in our opinion:
• The statement given by the directors, on page 44, that they consider the Annual Report taken as a whole to be fair, balanced and
understandable, and provides the information necessary for the 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 obtained in the
course of performing our audit.
• The section of the Annual Report on pages 46 to 52 describing the work of the Audit & Risk Committee does not appropriately address
matters communicated by us to the Audit & Risk Committee.
We have nothing to report in respect of this responsibility.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006. (CA06)
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Financial Statements
Financial Statements
Independent auditor’s report to the members
of Daily Mail and General Trust plc
Responsibilities for the financial
statements and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Directors’
Responsibilities set out on page 78, the
directors are responsible for the preparation
of the financial statements in accordance
with the applicable framework and for being
satisfied that they give a true and fair view.
The directors are also responsible for
such internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the parent Company’s ability
to continue as a going concern, disclosing
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the Group or the parent
Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are
considered material if, individually or
in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities
for the audit of the financial statements is
located on the FRC’s website at: www.frc.org.
uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of this report
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.
Other required reporting
Companies Act 2006 exception reporting
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
• certain disclosures of directors’
remuneration specified by law are not
made; 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.
Appointment
Following the recommendation of the
Audit Committee, we were appointed by the
members on 4 February 2015 to audit the
financial statements for the year ended
30 September 2015 and subsequent
financial periods. The period of total
uninterrupted engagement is 4 years,
covering the years ended 30 September 2015
to 30 September 2018.
Other voluntary reporting
Going concern
The directors have requested that we review
the statement on page 78 in relation to going
concern as if the parent Company were a
premium listed company. We have nothing
to report having performed our review.
The directors’ assessment of the
prospects of the Group and of the
principal risks that would threaten
the solvency or liquidity of the Group
The directors have requested that we
perform a review of the directors’
statements on pages 32 to 35 that they
have carried out a robust assessment of
the principal risks facing the Group and in
relation to the longer-term viability of the
Group, as if the parent Company were a
premium listed company. Our review was
substantially less in scope than an audit and
only consisted of making inquiries and
considering the directors’ process supporting
their statements; checking that the
statements are in alignment with the
relevant provisions of the Code; and
considering whether the statements are
consistent with the knowledge and
understanding of the Group and parent
Company and their environment obtained
in the course of the audit. We have nothing
to report having performed this review.
Other Code provisions
The directors have prepared a corporate
governance statement and requested
that we review it as though the parent
Company were a premium listed company.
We have nothing to report in respect of the
requirement for the auditors of premium
listed companies to report when the
directors’ statement relating to the parent
Company’s compliance with the Code does
not properly disclose a departure from a
relevant provision of the Code specified,
under the Listing Rules, for review by
the auditors.
Neil Grimes (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
London
28 November 2018
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88
Daily Mail and General Trust plc Annual Report 2018
Consolidated Income Statement
For the year ended 30 September 2018
CONTINUING OPERATIONS
Revenue
Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
Note
3
1,426.4
1,564.3
Adjusted operating profit
Exceptional operating costs, impairment of internally generated and acquired computer software,
property, plant and equipment
Amortisation and impairment of acquired intangible assets arising on business combinations
and impairment of goodwill
3, (i)
3
3, 21, 22
4
7
8
9
10
10
11
19
39
40
14
Operating profit/(loss) before share of results of joint ventures and associates
Share of results of joint ventures and associates
Total operating profit/(loss)
Other gains and losses
Profit/(loss) before investment revenue, net finance costs and tax
Investment revenue
Finance expense
Finance income
Net finance costs
Profit/(loss) before tax
Tax
Profit/(loss) 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/(loss) 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
*Continuing operations
Discontinued operations
144.9
179.0
(78.9)
(15.8)
50.2
118.4
168.6
553.0
721.6
4.8
(40.0)
5.5
(34.5)
691.9
(3.7)
688.2
–
688.2
689.4
(1.2)
688.2
194.7p
192.4p
–
–
194.7p
192.4p
42.2p
41.7p
(1.2)
–
(1.2)
(166.2)
(158.2)
(145.4)
16.9
(128.5)
14.0
(114.5)
2.5
(43.8)
43.5
(0.3)
(112.3)
(64.7)
(177.0)
519.3
342.3
345.3
(3.0)
342.3
(49.3)p
(48.5)p
147.1p
144.8p
97.8p
96.3p
55.6p
54.7p
(6.4)
3.4
(3.0)
(i) Adjusted operating profit is defined as total operating profit from continuing operations before share of results of joint ventures and associates,
exceptional operating costs, impairment of goodwill and intangible assets, amortization of acquired intangible assets arising on business
combinations and impairment of property, plant and equipment.
89
89
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Financial Statements
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2018
Profit for the year
Items that will not be reclassified to Consolidated Income Statement
Actuarial 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
Total items that will not be reclassified to Consolidated Income Statement
Items that may be reclassified subsequently to Consolidated Income Statement
(Losses)/gains on hedges of net investments in foreign operations
Cash flow hedges:
Gains/(losses) arising during the year
Transfer of (gains)/losses on cash flow hedges from translation reserve to Consolidated
Income Statement
Share of joint ventures’ and associates’ items of other comprehensive income/(expense)
Translation reserves recycled to Consolidated Income Statement on disposals
Foreign exchange differences on translation of foreign operations
Total items that may be reclassified subsequently to Consolidated Income Statement
Other comprehensive income for the year
Total comprehensive income for the year
Attributable to:
Owners of the Company
Non-controlling interests
Continuing operations
Discontinued operations
Total comprehensive income/(expense) for the year from continuing operations attributable to:
Owners of the Company
Non-controlling interests
Note
39, 40
40
40
39
39, 40
39, 40
7, 39
18, 39
39
Year ended
30 September
2018
£m
688.2
Year ended
30 September
2017
£m
342.3
183.6
–
0.2
(31.2)
299.1
(5.5)
11.4
(49.3)
152.6
255.7
(2.1)
4.9
(4.9)
14.7
(10.4)
(8.9)
(6.7)
145.9
834.1
835.1
(1.0)
834.1
834.1
–
834.1
835.1
(1.0)
834.1
4.5
(0.6)
1.1
(9.7)
49.4
8.7
53.4
309.1
651.4
645.7
5.7
651.4
51.7
599.7
651.4
54.2
(2.5)
51.7
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90
90
Daily Mail and General Trust plc Annual Report 2018
Consolidated Statement of Changes in Equity
Called-up
share
capital
£m
45.3
–
Share
premium
account
£m
17.8
–
Capital
redemption
reserve
£m
5.0
–
Own
shares
£m
(88.7)
–
Translation
reserve
£m
11.9
–
Retained
earnings
£m
359.8
345.3
Equity
attributable
to owners of
the Company
£m
351.1
345.3
Non-
controlling
interests
£m
178.2
(3.0)
Total
equity
£m
529.3
342.3
For the year ended 30 September 2018
At 30 September 2016
Profit/(loss) for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Issue of share capital
Dividends
Own shares acquired in the year
Disposal of Euromoney treasury shares
held by Euromoney
Own shares transferred on exercise
of share options
Changes in non-controlling interests
following disposal of Euromoney
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
Deferred tax on other items
recognised in equity
Note
39, 40
39, 40
40
39
38, 39
38, 39
39
39
40
39
39
39
39
37, 39, 40
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(28.6)
14.1
38.9
–
–
–
–
–
–
–
At 30 September 2017
45.3
17.8
5.0
(64.3)
74.9
Profit/(loss) for the year
Other comprehensive income/(expense)
for the year
Total comprehensive income/(expense)
for the year
Dividends
Own shares acquired in the year
Own shares transferred on exercise
of share options
Changes in non-controlling interests
following disposal and closure
of businesses
Credit to equity for share-based payments
Settlement of exercised share options
of subsidiaries
Corporation tax on share-based payments
Deferred tax on other items
recognised in equity
39, 40
39, 40
12, 39
38, 39
39
40
39
39
37, 39, 40
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(14.3)
21.4
–
–
–
–
–
63.0
237.4
300.4
8.7
309.1
63.0
582.7
645.7
–
(78.3)
(28.6)
14.1
38.9
–
–
5.7
0.5
–
–
–
–
651.4
0.5
(78.3)
(28.6)
14.1
38.9
(171.1)
(171.1)
(0.1)
(0.1)
–
(78.3)
–
–
–
–
–
0.4
0.4
(2.6)
(2.2)
(0.3)
4.0
(0.3)
4.0
(38.4)
(38.4)
(0.4)
829.5
689.4
(0.4)
908.2
689.4
0.3
0.1
–
–
11.0
(1.2)
–
4.1
(38.4)
(0.4)
919.2
688.2
(21.4)
167.1
145.7
0.2
145.9
(21.4)
856.5
835.1
(81.0)
(14.3)
(1.0)
(0.2)
–
834.1
(81.2)
(14.3)
(81.0)
–
–
21.4
–
21.4
–
10.8
(13.8)
2.3
–
10.8
(13.8)
2.3
(6.8)
(6.8)
3.7
–
–
–
–
3.7
10.8
(13.8)
2.3
(6.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 September 2018
45.3
17.8
5.0
(57.2)
53.5
1,597.5
1,661.9
13.5
1,675.4
91
91
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Financial Statements
Financial Statements
Consolidated Statement of Financial Position
At 30 September 2018
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
92
92
At
30 September
2018
£m
At
30 September
2017
£m
Note
21
22
23
24
24
25
27
28
34
35
37
26
27
31
28
34
29
20
30
31
32
33
34
36
20
30
32
33
34
35
36
37
333.2
131.2
99.7
1.0
769.5
20.4
27.3
18.4
9.0
249.1
49.5
1,708.3
31.5
264.3
5.4
245.3
0.7
437.8
–
985.0
2,693.3
(492.9)
(6.1)
(0.6)
(222.3)
(6.6)
(38.8)
–
(767.3)
(2.0)
(7.6)
(205.7)
(13.5)
(5.6)
(10.0)
(6.2)
(250.6)
(1,017.9)
363.1
213.0
103.3
0.2
735.2
30.6
20.5
15.5
4.6
73.4
75.9
1,635.3
26.6
236.8
9.6
14.5
3.0
14.6
107.8
412.9
2,048.2
(502.7)
(1.7)
(0.6)
(9.4)
(0.4)
(43.6)
(29.0)
(587.4)
(2.9)
(7.4)
(470.3)
(18.8)
(11.0)
(19.1)
(12.1)
(541.6)
(1,129.0)
1,675.4
919.2
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Daily Mail and General Trust plc Annual Report 2018
Note
38
39
39
39
39
39
40
At
30 September
2018
£m
At
30 September
2017
£m
45.3
17.8
63.1
5.0
(57.2)
53.5
1,597.5
1,661.9
13.5
1,675.4
45.3
17.8
63.1
5.0
(64.3)
74.9
829.5
908.2
11.0
919.2
At 30 September 2018
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
The financial statements of DMGT plc (Company number 184594) on pages 89 to 184 were approved by the Directors and authorised for issue on
29 November 2018. They were signed on their behalf by
The Viscount Rothermere
P A Zwillenberg
Directors
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93
Financial Statements
Financial Statements
Consolidated Cash Flow Statement
For the year ended 30 September 2018
Cash generated by operations
Taxation paid
Taxation received
Net cash generated by 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 and plant and equipment
Proceeds on disposal of available-for-sale investments
Purchase of subsidiaries
Settlements and collateral payments on treasury derivatives
Investment in joint ventures and associates
Loans advanced to joint ventures and associates
Loans to joint ventures and associates repaid
Proceeds on disposal of subsidiaries
Proceeds on disposal of joint ventures and associates
Purchase of other financial assets
Net cash generated by 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 receipt on settlement of subsidiary share options
Interest paid
Loan notes repaid
Repayments of obligations under finance lease agreements
Inception of finance leases
Decrease in bank borrowings
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain on cash and cash equivalents
Net cash and cash equivalents at end of year
94
94
Year ended
30 September
2018
£m
137.3
(27.1)
4.8
115.0
Year ended
30 September
2017
£m
232.7
(18.1)
4.9
219.5
0.9
23.1
0.1
(30.4)
(19.5)
(0.2)
(19.3)
0.1
1.0
(19.1)
7.7
(1.8)
(8.4)
0.2
146.3
637.9
(237.3)
2.4
35.9
0.1
(21.1)
(57.7)
(0.2)
(19.4)
0.7
–
(26.7)
2.8
(2.3)
(2.7)
8.6
215.8
2.4
–
481.3
138.6
–
(81.0)
(0.2)
–
(14.3)
7.6
(37.7)
(0.1)
–
–
(43.7)
(2.1)
(78.3)
–
0.5
(28.6)
0.5
(34.7)
(0.6)
(0.7)
0.5
(224.9)
(169.4)
(368.4)
426.9
7.4
1.6
435.9
(10.3)
17.5
0.2
7.4
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Note
15
24
9
23
22
22
25
17
24
18
8, 24
28
17
12, 39
40
40
39
16
16
16
16
16
29
16
29
Daily Mail and General Trust plc Annual Report 2018
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
Interpretations Committee (IFRIC) 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 2018.
Other than the Daily Mail, The Mail on Sunday and Metro businesses, the Group prepares accounts for a year ending on 30 September. The Daily
Mail, The Mail on Sunday and Metro 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 derivative
financial instruments, hedged items, contingent consideration, put options and the pension scheme surplus/(deficit) all of which are measured at
fair value.
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.
Prior period amounts have been re-presented to conform to the current period’s presentation, as prescribed by IFRS 5, Non-current Assets Held for
Sale and Discontinued Operations.
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 Note 33 and 34 to the financial statements, 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 2023. 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
Annual improvements to International Financial Reporting Standards (IFRSs)
The following new and amended IFRSs have been adopted during the year:
• Amendments 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) and
• Amendments to IFRS 12, Disclosure of Interests in Other Entities (effective 1 January 2017)
The above amendments have not had any significant impact on the Group’s Consolidated 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 2018. These new pronouncements are listed below:
• Amendments to IAS 28, Investments in Associates and Joint Ventures (effective 1 January 2018)
• Amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards (effective 1 January 2018)
• IFRS 9, Financial Instruments (effective 1 January 2018)
• IFRS 15, Revenue from Contracts with Customers (effective 1 January 2018)
• IFRS 16, Leases (effective 1 January 2019)
• Amendment to IFRS 2 Share Based Payments – benefits (effective 1 January 2019 but not yet endorsed by the EU)
• IFRIC 22, Foreign Currency Transactions and advance consideration (effective 1 January 2019 but not yet endorsed by the EU)
• IFRIC 23, Uncertainty over Income Tax Treatments (effective 1 January 2019 but not yet endorsed by the EU)
Other than IFRS 16, the adoption of standards, amendments and interpretations which have been issued but are not yet effective is not expected
to have a material impact on the Group’s Consolidated Financial Statements.
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Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
IFRS 9, effective for the 2019 fiscal year, replaces IAS 39, Financial Instruments: Recognition and Measurement.
The new standard introduces changes to three key areas – the classification and measurement of financial instruments; a new impairment model
based on expected credit losses (ECL) and a simplified hedge accounting process through closer alignment with risk management methodology.
We have considered the implications of these changes and our findings are as follows:
• Since the Group’s available for sale investments are not held for trading, only qualifying dividends will be recognised in the income statement,
with changes in fair value recognised in other comprehensive income. We have reviewed the values of our available for sale unlisted investments
currently held at cost less provision for impairment and other financial assets and have concluded that the application of IFRS 9 is not expected
to have a material impact on the value of these investments.
• The Group will recognise a loss allowance from the point of initial recognition for all financial assets based on ECL. This will result in the earlier
recognition of bad debt provisions. We have reviewed the impact of this change and do not expect the impact of the ECL model to have a material
impact on the carrying values of our financial assets.
• Since IFRS 9 is more closely aligned with our risk management activities, we do not expect any change to the effectiveness of our hedge
derivatives. We do expect a change to the designation and hedge accounting treatment of our cross currency interest rate swaps. Accordingly,
following our review of IFRS 9, we have decided to exclude currency basis from hedge designation retrospectively. This will result in an opening
adjustment to reserves on transition representing a re-classification from translation reserves to retained earnings. The estimated impact on
opening retained earnings at 1 October 2018 is not expected to be material.
The Group expects to adopt IFRS 9 on a modified retrospective basis such that the Group will recognise the cumulative effect of initially applying the
standard as an adjustment to the opening balance of retained earnings i.e. as at 1 October 2018 with no restatement of prior periods. Following
adoption of the standard the Group does not expect any significant adjustment required on the measurement, presentation or disclosure of
financial assets and liabilities in the Group’s Consolidated Financial Statements.
IFRS 15, is effective for the 2019 fiscal year. The standard introduces additional guidance surrounding performance obligations within sales
contracts and the timing of revenue recognition. The standard introduces a five-step model that will require judgement in their application.
These steps are as follows:
• Identify the contract(s) with a customer
• Identify the separate performance obligations in the contract
• Determine the contract price
• Allocate the transaction price to the performance obligations in the contract
• Recognise revenue when each performance obligation has been satisfied
The adoption of the new standard is not expected to have a material impact on the Group’s reported revenues nor will the standard change the
cashflows associated with our revenue streams.
A small number of revenue contracts have been identified across the Group’s operating segments which have been impacted by the new standard,
leading to a difference in the timing of revenue recognition. The majority of this change is due to revenues being recorded over a period of time
rather than a point in time.
In addition to changes in the timing of revenue recognition, IFRS 15 also introduces changes to the recognition of incremental costs incurred when
obtaining a contract with a customer known as contract acquisition costs. These include sales commissions paid to employees. The standard
requires such costs to be recognised as an asset, when the Group expects to recover them, and charged to the Consolidated Income Statement on
a systematic basis – rather than being expensed immediately.
Judgement is required to determine this period and whether this is the contract term or a longer period such as the estimated customer life for
contracts which are expected to renew. Such deferred costs are de-recognised and charged immediately to the Consolidated Income Statement
when no future economic benefits are expected.
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The preliminary results of our assessment of the impact of IFRS 15 on the Consolidated Income Statement for the year ended 30 September 2018 is
set out in the table below:
Segment
Insurance Risk
Property Information
EdTech
Energy Information
Total
Increase/
(decrease) in
Revenue
£m
(0.4)
0.1
(0.4)
–
(0.7)
Increase/
(decrease) in
Operating profit
£m
(1.8)
–
(0.4)
0.3
(1.9)
The preliminary results of our assessment of the corresponding impact on receivables and payables as at 30 September 2018 is set out in the table
below:
Prepayments
Deferred Revenue
£m
3.4
(6.6)
Increased prepayments
Increased deferred revenue and accruals
The Group will adopt IFRS 15 on a modified retrospective basis such that the Group will recognise the cumulative effect of initially applying the
standard as an adjustment to the opening balance of retained earnings i.e. as at 1 October 2018 with no restatement of prior periods.
An adjustment to brought forward retained earnings of £3.2 million will be recognised in the Statement of Changes in Equity. This represents the
reversal of certain revenues which met the criteria for recognition under previously applicable accounting standards but does not do so under IFRS
15 together with contract acquisition costs which were expensed immediately under previously applicable accounting standards which are now
deferred and recognised on a systematic basis under IFRS 15.
IFRS 16, effective for the 2020 fiscal year, eliminates the distinction between operating and finance leases for lessees. The standard requires lessees
to recognise right of use assets and corresponding liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has
a low value. The new standard replaces the operating lease expense with a depreciation charge on the underlying asset and an interest expense
on the liability.
Lessors will continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting largely unchanged from its predecessor,
IAS 17. The Group expects to adopt IFRS 16 on a modified retrospective basis such that the Group will recognise the cumulative effect of initially
applying the standard as an adjustment to the opening balance of retained earnings i.e. as at 1 October 2019 with no restatement of prior periods.
The Group is in the process of quantifying the impact of this standard although based on the undiscounted operating lease commitments in Note 41,
there will be a large increase in total assets – largely in the land and buildings category, together with an increase in financial liabilities as liabilities
relating to current operating leases are recognised.
Since existing operating lease charges will be replaced with a depreciation and finance charge, EBITDA will increase. These changes will also have an
impact on the Group’s tax charge. The standard will also require the Group to make key accounting judgements in particular around lease renewal
assumptions and discount rates.
Since the financial impact is dependent on circumstances at the date of transition, it is not yet practicable to determine a reliable estimate of the
financial impact on the Group.
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97
Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
Business combinations
The acquisition of subsidiaries and businesses is 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 date of acquisition. Subsequent changes in fair values are adjusted through the Consolidated Income Statement in Financing.
Changes in the fair value of contingent consideration classified as equity is not recognised.
Put options granted to non-controlling interests are recorded at present value as a reduction in equity on initial recognition, since the arrangement
represents a transaction with equity holders. Changes in present 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 at the
date of the acquisition that, if known, would have affected the amounts recognised as at 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 at 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.
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 it 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.
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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 period 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 interest’s 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.
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99
Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
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, associate 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.
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.
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 13.25% to 15.28% (2017 11.45% to 19.20%) the choice
of rates depending on the risks specific to that CGU. The Directors’ estimate of the Group’s post tax weighted average cost of capital is 8.5%
(2017 8.0%). The cash flow projections consist of Board-approved budgets for the following year, together with forecasts for up to two additional
years and nominal long-term growth rates beyond these periods. The 3.0% nominal long-term growth rate (2017 between 1.5% and 3.0%) used
varies with management’s view of the CGU’s market position, maturity of the relevant market and does 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.
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Other intangible assets
Other intangible assets with finite lives are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to
Operating Profit in 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 intangible assets not arising on business combinations are included within Adjusted Operating Profit in the Consolidated
Income Statement.
The Group has no intangible assets with indefinite lives.
Impairment of intangible assets
At each period end date, reviews are carried out of the carrying amounts of intangible assets 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:
(i) whether the asset’s market value has increased significantly during the period;
(ii) 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
(iii) 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
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 Consumer Media segment for newsprint and the First In First Out method for all other inventories.
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Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
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
All marketing and promotional costs are charged to the Consolidated Income Statement in the period in which they are incurred. Direct event costs
are charged to the Consolidated Income Statement within Direct Event Costs.
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 consumer 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.
The board and management team believe these adjusted results, used in conjunction with statutory IFRS results, give a greater insight into the
financial performance of the Group and the way it is managed. Similarly, adjusted results are used in setting management remuneration.
A description of each adjustment is set out in the Financial Review, together with a reconciliation of operating profit to adjusted operating profit.
See Note 13 for a reconciliation of profit before tax to adjusted profit before and after tax. See the Financial Review section in the Strategic Report for
a reconciliation of operating profit to adjusted profit.
The Group also presents a measure of net debt, see Note 16.
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.
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102
Daily Mail and General Trust plc Annual Report 2018
EBITDA
The Group discloses EBITDA, being adjusted operating profit before depreciation of property, plant and equipment. 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 34.
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 net finance income/(charge) 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.
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.
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103
Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
Taxation continued
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 investments 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 investments 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 investments is determined based on quoted market prices. Unlisted investments 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.
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Daily Mail and General Trust plc Annual Report 2018
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.
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105
Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
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 Trust comprise shares in DMGT plc and cash balances. The Trust 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 Trust in
the consolidated financial statements and shares held by the Trust are recorded at cost as a deduction from shareholders’ equity. Consideration
received for the sale of shares held by the Trust 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 has made the
following judgements concerning the amounts recognised in the consolidated financial statements:
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. See the Financial Review section in the Strategic Report
for a reconciliation of operating profit to adjusted operating profit.
The Group also presents a measure of net debt, see Note 16 for further detail.
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106
Daily Mail and General Trust plc Annual Report 2018
Investment in Euromoney
Following loss of control the Group has also considered factors which may indicate de facto control. The Group has determined that it does not have
de facto control over Euromoney since it cannot block any ordinary resolutions, which comprise the majority of corporate actions, has no control
over the remuneration of Euromoney’s directors and has no control over Euromoney’s day-to-day operations nor budgets. In addition, the Group
has no material trading activities or relationships which are critical for Euromoney to carry out its business. The Group’s relationship with
Euromoney is monitored on an ongoing basis to ensure no change in this assessment.
Retirement benefits
After considering the principles set out in IFRIC 14, the Group has recognised a net surplus on its pension schemes amounting to £243.5 million
(2017 £62.4 million).
The following represent key sources of estimation uncertainty that have the most significant effect on the amounts recognised in the
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 key assumptions used and associated
sensitivity analysis in relation to Genscape, Landmark and Hobsons is shown in Note 21. The carrying amount of goodwill and intangible assets
within these CGUs at the year end was £301.8 million.
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 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. 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. 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 estimates 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. In the current period, the Group’s uncertain tax positions relate mainly to Euromoney,
further detail is provided in Note 11.
In addition, 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.
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 and mortality rates. 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 fair value of the Group’s pension scheme assets include quoted and unquoted investments. The value of unquoted investments require more
judgement as their values are not directly observable. Accordingly the assumptions used in valuing unquoted investments are affected by current
market conditions and trends which could result in changes in their fair value after the measurement date. A 1.0% movement in the value of
unquoted pension scheme assets is estimated to change the value of the Group’s pension scheme assets by £21.0 million.
The carrying amount of the retirement benefit obligation at 30 September 2018 was a surplus of £243.5 million (2017 £62.4 million).
The assumptions used and the associated sensitivity analysis can be found in Note 35.
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107
Financial Statements
Financial Statements
Notes to the accounts
3 Segment analysis
The Group’s business activities are split into six operating divisions: Insurance Risk (previously named RMS), Property Information, EdTech, Energy
Information (all previously known as dmg information), Events and Exhibitions (previously named dmg events) and Consumer Media (previously
named 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.
Note
21, 22
22
Year ended 30 September 2018
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
Corporate costs
Adjusted operating profit
Exceptional operating costs, impairment of internally generated
and acquired computer software, property, plant and equipment
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
Finance expense
Finance income
Profit before tax
Tax
Profit for the year
Segment
operating
profit/(loss)
£m
33.8
58.0
7.4
(0.5)
27.7
83.6
210.0
Less
operating
profit/(loss)
of joint ventures
and associates
£m
(0.8)
–
–
(0.8)
–
19.3
17.7
Adjusted
operating
profit/(loss)
£m
34.6
58.0
7.4
0.3
27.7
64.3
192.3
12.8
60.2
(47.4)
Total and
external
revenue
£m
229.4
271.6
68.3
85.5
117.8
653.8
1,426.4
–
1,426.4
144.9
(78.9)
(0.3)
(15.5)
50.2
118.4
168.6
553.0
721.6
4.8
(40.0)
5.5
691.9
(3.7)
688.2
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Daily Mail and General Trust plc Annual Report 2018
An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs by segment is as follows:
Year ended 30 September 2018
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
Corporate costs
Total and continuing operations
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
(15.0)
(3.9)
(5.2)
(3.4)
(0.1)
(5.2)
(32.8)
Amortisation of
intangible assets
arising on business
combinations
(Note 22)
£m
–
(8.7)
(2.8)
(3.3)
(0.6)
(0.1)
(15.5)
Impairment of
goodwill and
intangible assets
arising on business
combinations
(Note 21,22)
£m
–
–
–
(0.3)
–
–
(0.3)
Impairment of
internally
generated and
acquired computer
software
(Note 22)
£m
(58.3)
–
–
(0.1)
–
–
(58.4)
–
(32.8)
–
(15.5)
–
(0.3)
–
(58.4)
Exceptional
operating costs
£m
–
(1.5)
–
3.8
–
(18.2)
(15.9)
(4.6)
(20.5)
The Group’s exceptional operating costs are analysed as follows:
Year ended 30 September 2018
Property Information
EdTech
Energy Information
Consumer Media
Corporate costs
Total and continuing operations
Severance
costs
£m
0.1
0.2
–
(0.1)
0.2
–
0.2
(i)
LTIP
£m
–
–
–
(0.8)
(0.8)
(4.7)
(5.5)
(ii)
Pension past
service cost
£m
–
–
–
(17.3)
(17.3)
–
(17.3)
Property
£m
–
(0.2)
–
–
(0.2)
–
(0.2)
(iii)
Legal fees
£m
(1.6)
–
3.8
–
2.2
0.1
2.3
Total
£m
(1.5)
–
3.8
(18.2)
(15.9)
(4.6)
(20.5)
The Group’s tax charge includes a related credit of £4.3 million in relation to these exceptional operating costs.
(i) During the period, the Group sold its investment in ZPG resulting in a profit on sale of £508.4 million. As a direct consequence of this disposal
the value of the DMGT 2017 Long Term Incentive Plan (the LTIP) is estimated to have increased by £16.5 million. As the LTIP includes a service
period condition, IFRS 2 Share Options requires the LTIP charge to be spread over the service period until the award vests. The LTIP charge
recognised in the period which relates to the disposal of ZPG amounts to £5.5 million which is anticipated to be repeated for the following two
years. Since the profit on the sale of ZPG is excluded from our adjusted profit measure we have treated the incremental increase in the LTIP
charge as an adjusting item and will continue to do so until the award vests.
(ii) The pension past service cost represents a non-cash charge. This follows a change to the scheme rules in one of the Group’s defined benefit
(DB) pension plans capping future pension increases at 5%. This aligns the pension increases of this scheme with all other Group DB
pension plans.
(iii) Exceptional charges in the Property Information segment relate to fees paid to the Group’s lawyers in defence of various claims brought
against businesses in this segment. The exceptional credit in the Energy Information segment relates to a release of provisions no
longer required.
An analysis of the depreciation of property, plant and equipment, research costs, investment revenue, and finance income and expense by segment
is as follows:
Year ended 30 September 2018
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Consumer Media
Corporate costs
Total and continuing operations
Depreciation of
property, plant
and equipment
(Note 23)
£m
(4.9)
(2.8)
(0.6)
(3.3)
(0.5)
(14.9)
(27.0)
(0.2)
(27.2)
Research
costs
£m
(37.2)
(0.1)
–
(4.0)
–
(0.5)
(41.8)
–
(41.8)
Investment
revenue
(Note 9)
£m
0.3
–
1.4
–
–
–
1.7
3.1
4.8
Finance
Income
(Note 10)
£m
–
–
–
–
–
2.0
2.0
3.5
5.5
Finance
expense
(Note 10)
£m
–
–
–
(2.5)
–
(1.1)
(3.6)
(36.4)
(40.0)
109
109
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Financial Statements
Financial Statements
Notes to the accounts
3 Segment analysis continued
Year ended 30 September 2017
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer Media
Corporate costs
Discontinued operations
Adjusted operating profit
Exceptional operating costs, impairment of internally generated
and acquired computer software, property, plant and equipment
Impairment of goodwill and acquired intangible assets arising
on business combinations
Amortisation of acquired intangible assets arising on
business combinations
Operating loss before share of results of joint ventures and associates
Share of results of joint ventures and associates
Total operating loss
Other gains and losses
Loss before investment revenue, net finance costs and tax
Investment revenue
Finance expense
Finance income
Loss before tax
Tax
Profit from discontinued operations
Profit for the year
Note
(i)
19
21,22
22
19
Segment
operating profit
£m
32.0
52.0
16.1
1.1
30.6
67.3
99.2
298.3
Less operating
profit/(loss) of
joint ventures and
associates
£m
(0.8)
0.1
(0.2)
(0.7)
–
48.0
22.0
68.4
–
(67.3)
0.9
(48.0)
Total and
external
revenue
£m
233.2
328.0
114.9
87.8
117.0
95.2
683.4
1,659.5
–
(95.2)
1,564.3
Adjusted
operating
profit/(loss)
£m
32.8
51.9
16.3
1.8
30.6
19.3
77.2
229.9
(31.6)
(19.3)
179.0
(166.2)
(131.7)
(26.5)
(145.4)
16.9
(128.5)
14.0
(114.5)
2.5
(43.8)
43.5
(112.3)
(64.7)
519.3
342.3
(i) Revenue and adjusted operating profit relating to the discontinued operations of Euromoney have been deducted in order to reconcile total
segment result to Group loss before tax from continuing operations.
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Daily Mail and General Trust plc Annual Report 2018
An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs and impairment of property, plant
and equipment by segment is as follows:
Note
Year ended 30 September 2017
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
19
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
(17.8)
(5.7)
(8.5)
(6.4)
(0.1)
(0.9)
(4.8)
(44.2)
Amortisation of
intangible assets
arising on business
combinations
(Note 22)
£m
–
(13.6)
(4.3)
(8.2)
(0.2)
(5.4)
(0.2)
(31.9)
Impairment of
goodwill and
intangible assets
arising on
business
combinations
(Notes 21, 22)
£m
–
(31.6)
(2.2)
(97.9)
–
–
–
(131.7)
Impairment of
internally
generated and
acquired computer
software
(Note 22)
£m
–
(33.7)
(5.3)
(42.4)
–
–
(0.3)
(81.7)
–
(44.2)
0.9
(43.3)
–
(31.9)
5.4
(26.5)
–
(131.7)
–
(131.7)
–
(81.7)
–
(81.7)
(i)
Impairment of
property,
plant and
equipment
(Note 23)
£m
–
–
–
–
–
–
(42.0)
(42.0)
–
(42.0)
–
(42.0)
Exceptional
operating costs
£m
(2.8)
(11.8)
(7.9)
(6.8)
(2.6)
(0.9)
(8.8)
(41.6)
(1.8)
(43.4)
0.9
(42.5)
(i)
Following continued declines in the UK printing market the Group decided to close its Didcot print site, resulting in an impairment charge of
£41.3 million.
The Group’s exceptional operating costs are analysed as follows:
Year ended 30 September 2017
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer Media
Corporate costs
Total and continuing operations
Relating to discontinued operations
Continuing operations
Note
19
Severance
costs
£m
0.5
(4.8)
(5.5)
(0.9)
–
–
(4.0)
(14.7)
(1.8)
(16.5)
–
(16.5)
Consultancy
charges
£m
(3.3)
–
(1.9)
–
–
(0.1)
–
(5.3)
–
(5.3)
0.1
(5.2)
Other
restructuring
costs
£m
–
–
(0.5)
–
(2.6)
–
(4.8)
(7.9)
–
(7.9)
–
(7.9)
(i)
Legal fees
£m
–
(7.0)
–
(5.9)
–
(0.8)
–
(13.7)
–
(13.7)
0.8
(12.9)
Total
£m
(2.8)
(11.8)
(7.9)
(6.8)
(2.6)
(0.9)
(8.8)
(41.6)
(1.8)
(43.4)
0.9
(42.5)
The Group’s tax charge includes a related credit of £11.1 million in relation to these exceptional operating costs.
(i)
Includes dispute settlements and fees paid to the Group’s lawyers. The charge relates principally to a claim by CoStar Inc. (CoStar) against
Xceligent, Inc. (Xceligent) asserting, inter alia, misuse by Xceligent of CoStar’s intellectual property. Xceligent filed a motion to dismiss on the
basis that CoStar’s actions are contrary to a Federal Trade Commission (FTC) consent order which was put in place when Xceligent was spun
out of CoStar’s acquisition of LoopNet. The damages claimed have not been quantified and the Group has made no provision for any claim.
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111
Financial Statements
Financial Statements
Notes to the accounts
3 Segment analysis continued
An analysis of the depreciation of property, plant and equipment, research costs, investment revenue, and net finance costs by segment is
as follows:
Note
Year ended 30 September 2017
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
19
Depreciation of
property, plant
and equipment
and investment
property
(Note 23)
£m
(5.9)
(4.5)
(1.8)
(4.0)
(0.5)
(0.8)
(16.8)
(34.3)
(0.2)
(34.5)
0.8
(33.7)
Research
costs
£m
(40.3)
(0.1)
(0.6)
(1.1)
–
(2.5)
(1.4)
(46.0)
–
(46.0)
2.5
(43.5)
Investment
revenue
(Note 9)
£m
0.3
0.5
–
–
–
–
1.5
2.3
0.2
2.5
–
2.5
Finance Income
(Note 10)
£m
–
11.5
1.4
25.9
–
–
–
38.8
Finance expense
(Note 10)
£m
(0.1)
(0.1)
–
(0.2)
–
(0.7)
(3.5)
(4.6)
4.7
43.5
–
43.5
(39.9)
(44.5)
0.7
(43.8)
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
2018
Total and
continuing
operations
£m
187.0
135.9
291.4
399.1
116.2
296.8
1,426.4
Year ended
30 September
2017
Total
£m
203.6
142.7
307.8
517.4
140.9
347.1
1,659.5
Year ended
30 September
2017
Discontinued
operations
(Note 19)
£m
7.1
2.0
–
63.5
24.7
(2.1)
95.2
Year ended
30 September
2017
Continuing
operations
£m
196.5
140.7
307.8
453.9
116.2
349.2
1,564.3
Transactions and other within discontinued operations in the prior period include a £3.8 million foreign exchange loss on forward contracts in the
Euromoney segment.
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 of Group
revenue below is based on the location of Group companies in these regions.
Year ended
30 September
2018
Total and
continuing
operations
£m
812.0
475.4
40.1
8.7
90.2
1,426.4
Year ended
30 September
2017
Total
£m
873.8
615.5
43.0
22.6
104.6
1,659.5
Year ended
30 September
2017
Discontinued
operations
(Note 19)
£m
30.9
50.6
4.4
0.4
8.9
95.2
Year ended
30 September
2017
Continuing
operations
£m
842.9
564.9
38.6
22.2
95.7
1,564.3
UK
North America
Rest of Europe
Australia
Rest of the World
112
112
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Daily Mail and General Trust plc Annual Report 2018
The analysis of Group revenue 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
2018
Total and
continuing
operations
£m
772.4
410.8
143.2
10.2
89.8
1,426.4
Year ended
30 September
2017
Total
£m
808.1
557.9
155.7
23.3
114.5
1,659.5
Year ended
30 September
2017
Discontinued
operations
(Note 19)
£m
9.1
43.9
18.6
2.0
21.6
95.2
Year ended
30 September
2017
Continuing
operations
£m
799.0
514.0
137.1
21.3
92.9
1,564.3
The closing net book value of goodwill, intangible assets, property, plant and equipment is analysed by geographic area as follows:
UK
North America
Rest of Europe
Australia
Rest of the World
Closing net book
value of
property, plant
and equipment
(Note 23)
2018
£m
76.1
20.3
2.5
–
0.5
99.7
Closing net book
value of
property, plant
and equipment
(Note 23)
2017
£m
79.1
19.3
3.3
–
1.0
103.3
Closing net book
value of
goodwill
(Note 21)
2018
£m
94.1
204.2
22.5
–
12.4
333.2
Closing net book
value of
goodwill
(Note 21)
2017
£m
92.0
231.2
25.7
2.3
11.9
363.1
Closing net book
value of
intangible assets
(Note 22)
2018
£m
44.6
72.0
12.6
–
2.0
131.2
Closing net book
value of
intangible assets
(Note 22)
2017
£m
47.4
145.7
18.2
–
1.7
213.0
The additions to non-current assets are analysed as follows:
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer Media
Corporate costs
Property, plant
and equipment
(Note 23)
Year ended
30 September
2018
£m
4.7
9.8
0.2
2.0
0.2
–
7.9
24.8
5.6
30.4
Property, plant
and equipment
(Note 23)
Year ended
30 September
2017
£m
2.5
6.6
1.0
2.6
0.4
2.8
4.7
20.6
0.5
21.1
Goodwill
(Note 21)
Year ended
30 September
2018
£m
–
–
–
0.2
3.0
–
–
3.2
–
3.2
Goodwill
(Note 21)
Year ended
30 September
2017
£m
–
0.4
–
–
–
–
–
0.4
–
0.4
Intangible assets
(Note 22)
Year ended
30 September
2018
£m
0.1
7.4
10.9
1.3
2.6
–
–
22.3
–
22.3
Intangible assets
(Note 22)
Year ended
30 September
2017
£m
–
26.6
17.0
13.1
0.2
0.5
1.2
58.6
–
58.6
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Year ended
30 September
2018
Total and
continuing
operations
£m
1,426.4
Year ended
30 September
2017
Total
£m
1,659.5
Year ended
30 September
2017
Discontinued
operations
Note 19
£m
95.2
Year ended
30 September
2017
Continuing
operations
£m
1,564.3
Financial Statements
Financial Statements
Notes to the accounts
4 Operating profit analysis
Operating profit before the share of results of joint ventures and associates is further analysed as follows:
Note
21, 22
22
22
23
23
Revenue
Decrease in stocks of finished goods and work in progress
Raw materials, consumables and direct staff 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
Venue and delegate costs
Editorial and production costs
Distribution and transportation costs
Royalties and similar charges
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Rental of property
Other property costs
Rental of plant and equipment
Foreign exchange translation differences
Other expenses
Operating profit/(loss)
5 Auditor’s remuneration
(3.6)
(230.7)
(234.3)
(495.4)
(58.7)
(15.5)
(32.8)
(33.5)
(35.5)
(109.3)
(40.5)
(39.1)
(27.2)
–
(25.9)
(22.0)
(19.2)
1.3
(188.6)
50.2
(4.3)
(236.8)
(241.1)
(588.3)
(213.4)
(31.9)
(44.2)
(41.9)
(41.6)
(111.0)
(42.5)
(51.2)
(34.5)
(42.0)
(29.5)
(26.9)
(22.8)
(0.2)
(228.9)
(132.4)
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
Assurance services
Other non-audit services
Total remuneration
114
114
–
–
–
(38.3)
–
(5.4)
(0.9)
(1.6)
(8.2)
(3.5)
(0.6)
–
(0.8)
–
–
(3.6)
–
(0.3)
(19.0)
13.0
(4.3)
(236.8)
(241.1)
(550.0)
(213.4)
(26.5)
(43.3)
(40.3)
(33.4)
(107.5)
(41.9)
(51.2)
(33.7)
(42.0)
(29.5)
(23.3)
(22.8)
0.1
(209.9)
(145.4)
Year ended
30 September
2018
£m
0.3
Year ended
30 September
2017
£m
0.3
2.7
3.0
0.2
0.3
–
0.5
3.5
2.6
2.9
0.5
0.3
0.1
0.9
3.8
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6 Employees
The average monthly number of persons employed by the Group including Directors is analysed as follows:
Insurance Risk
Property Information
EdTech
Energy Information
Events and Exhibitions
Euromoney
Consumer media
Corporate costs
Note
(i)
(ii)
Year ended
30 September
2018
Number
1,348
2,320
382
467
340
–
2,249
87
7,193
Year ended
30 September
2017
Number
1,149
2,487
755
498
359
2,192
2,417
88
9,945
(i)
Includes the average monthly number of persons employed by Xceligent for the period ended 30 November 2017 and EDR and SiteCompli for
the period ended 31 March 2018 when these businesses ceased to be subsidiary undertakings.
(ii) The prior period represents the average monthly number of persons employed by Euromoney for the period ended 31 December 2016 when
Euromoney ceased to be a subsidiary undertaking.
The total average number of persons employed by the Group in the year, for the purposes of calculating an average cost per employee, is 6,267
(2017 8,301).
Total staff costs comprised:
Wages and salaries
Share-based payments
Social security costs
Pension costs
Year ended
30 September
2018
£m
448.6
10.1
40.4
28.5
527.6
Year ended
30 September
2017
£m
539.7
3.9
47.3
13.3
604.2
115
115
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Financial Statements
Financial Statements
Notes to the accounts
7 Share of results of joint ventures and associates
Share of adjusted operating losses 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 associates’ other gains and losses
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
Share of impairment of intangibles arising on business combinations of associates
Share of impairment of goodwill in associates
Share of fair value movement of contingent consideration payable of associates
Impairment of carrying value of joint ventures
Impairment of carrying value of associates
Share of associates’ items of other comprehensive income
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 associates’ items of other comprehensive income
Share of results of joint ventures and associates
Year ended
30 September
2018
£m
(3.2)
77.2
Year ended
30 September
2017
£m
(0.1)
68.6
Note
(i)
11, 13
11, 13
13
13, 24, (ii)
13, 24, (iii)
74.0
102.9
(4.9)
–
(16.7)
(4.0)
(0.1)
(31.2)
–
(1.5)
0.7
–
(0.8)
118.4
14.7
133.1
(3.3)
122.5
–
(0.8)
118.4
14.7
133.1
68.5
–
(6.7)
(0.1)
(17.1)
(4.5)
–
(5.2)
(13.7)
–
–
(3.3)
(1.0)
16.9
(9.7)
7.2
(0.2)
21.4
(3.3)
(1.0)
16.9
(9.7)
7.2
(i) Share of adjusted operating profits from associates includes £55.9 million (2017 £47.2 million) from the Group’s interest in Euromoney and
£23.4 million (2017 £27.4 million) from the Group’s interest in ZPG Plc (ZPG) in the Consumer Media segment.
(ii)
In the prior period, represents a £3.0 million write-down in the carrying value of Knowlura in the EdTech segment and a £0.3 million write-down
in the carrying value of Artirix in the Consumer Media segment.
(iii) Represents a £0.3 million write-down in the carrying value of RLTO Ltd in the Property Information segment and a £0.5 million write-down in
the carrying value of Eatfirst UK Ltd held centrally. In the prior period, represents a £0.5 million write-down in the carrying value of Carspring
in the Consumer Media segment and £0.5 million write-down in the carrying value of iProf Learning Solutions in the EdTech segment.
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Note
13, 25
20
13, 18, (i)
13, 18, 39, 40, (ii)
24, (iii)
13, (iv)
13, (v)
Year ended
30 September
2018
£m
1.0
(1.8)
–
37.1
10.4
0.7
(3.5)
509.1
553.0
Year ended
30 September
2017
£m
–
(0.5)
(4.1)
(6.5)
4.7
18.0
–
2.4
14.0
8 Other gains and losses
Profit on disposal of available-for-sale investments
Impairment of available-for-sale assets
Impairment of held-for-sale-assets
Profit/(Loss) on disposal and closure of businesses
Recycled cumulative translation differences
Gain on dilution of stake in associate
Loss on change in control
Profit on disposal of joint ventures and associates
There is a tax charge of £17.6 million in relation to these other gains and losses (2017 £0.2 million).
(i)
In the current period this principally relates to a £51.7 million profit on the sale of EDR in the Property Information segment, £6.3 million loss on
the sale of Locus Energy, a £0.9 million profit on disposal of assets in acquiring an interest in Linevision and a £7.2 million loss on the disposal
Digital H2O in the Energy segment, a £4.8 million loss on Hobsons Solutions and additional costs of £3.5 million on the sale of Hobsons
Admissions and Edumate on in the EdTech segment.
Additionally a loss of £4.8 million was recognised on the closure of Xceligent, gains on various disposals amounting to £0.4 million recognised
in the Consumer Media segment and £0.1 million in the Events segment.
In the prior period this principally relates to a £6.2 million profit on disposal of Elite Daily in the Consumer Media segment offset by a loss
of £6.5 million representing an adjustment to the net assets sold with Wowcher in the Consumer Media segment and a loss of £4.4 million
on sale of various businesses in the EdTech segment.
(ii) Represents cumulative translation differences required to be recycled through the Consolidated Income Statement on disposals.
(iii) This represents a gain on dilution of the Group’s stakes in Praedicat and Skymet. In accordance with IAS 28, Investments in Associates and
Joint Ventures, this dilution has been treated as a deemed disposal. The carrying value of these investments has increased resulting in a gain
on dilution of £0.7 million. In the prior period, this represents a gain on dilution of the Group’s investment in ZPG.
(iv) During the period the Group reduced its interest in SiteCompli in the Property Information Segment and SiteCompli became an associate.
In accordance with IFRS3, Business Combinations, the difference between the fair value of the investment retained less a capital contribution
and the carrying value is treated as a loss on change in control.
(v) Principally relates to the disposal of ZPG for gross proceeds of £641.7 million, resulting in a profit on disposal of £508.4 million. During the prior
period, this principally relates to the disposal of the Group’s holding in Fortunegreen and Spaceway Storage Services in the Consumer Media
segment and Clipper Data in the Energy Information segment.
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117
Financial Statements
Financial Statements
Notes to the accounts
9 Investment revenue
Dividend income
Interest receivable from short-term deposits
Interest receivable on loan notes
10 Net finance costs
Interest, arrangement and commitment fees payable on bonds, bank loans and loan notes
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 contingent consideration payable
Finance expense
Profit on derivatives, or portions thereof, not designated for hedge accounting
Finance income on defined benefit pension schemes
Fair value movement of contingent consideration payable
Fair value movement of undesignated financial instruments
Change in present value of acquisition put options
Finance income
Net finance costs
Year ended
30 September
2018
£m
0.1
1.7
3.0
4.8
Year ended
30 September
2017
£m
0.1
1.0
1.4
2.5
Year ended
30 September
2018
£m
(35.9)
(1.7)
–
(2.3)
2.3
(0.2)
(2.2)
(40.0)
Year ended
30 September
2017
£m
(37.2)
(1.7)
(4.9)
(4.7)
4.7
–
–
(43.8)
0.4
2.0
–
3.1
–
5.5
–
–
28.6
7.5
7.4
43.5
(34.5)
(0.3)
Note
13, 35
16, 34
16, 34
36, (ii)
36, 13, (i)
35
36, 13, (i)
13
13, 34
(i) 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.
(ii) The finance 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.
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Daily Mail and General Trust plc Annual Report 2018
Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
Note
(0.7)
(0.2)
(0.9)
(24.3)
(0.6)
(24.9)
(25.8)
22.1
–
22.1
(3.7)
–
(3.7)
–
0.3
0.3
(12.0)
–
(12.0)
(11.7)
(62.4)
5.4
(57.0)
(68.7)
4.0
(64.7)
37
19
11 Tax
The charge on the profit for the period consists of:
UK tax
Corporation tax at 19.0% (2017 19.5%)
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
Relating to discontinued operations
In December 2017 the Tax Cuts and Jobs Act was enacted in the US which included a broad range of tax changes. One key provision was a reduction
in the corporate tax rate from 35.0% to 21.0% from 1 January 2018. US deferred tax balances have been re-measured to reflect this reduced rate as
this is the rate that will apply on reversal. The other key provision impacting the Group was a one off toll charge arising from the deemed mandatory
repatriation of previously undistributed earnings and profits of non-US corporations owned by the Group’s US subsidiaries.
The current and deferred tax implications of Brexit on the Group have been considered by management and are not expected to have any
material impact.
The EU Commission has opened a State Aid investigation into the Group Financing Exemption included within the UK’s controlled foreign company
(CFC) rules. The Group finances its US operations through a Luxembourg resident finance company which has received clearance from HM Revenue
& Customs that it benefits from this exemption. If the State Aid investigation leads to a reversal of the benefits that the Group has accrued through
the exemption, the tax cost to the Group would be approximately £7.4 million. The Directors do not assess this outcome as more than likely and
accordingly have made no provision in these financial statements.
A deferred tax credit of £31.2 million (2017 £49.3 million) relating to the actuarial movement on defined benefit pension schemes was recognised
directly in the Consolidated Statement of Comprehensive Income. A deferred tax of charge of £6.8 million (2017 £0.4 million) and a current tax credit
of £2.3 million (2017 £nil) were recognised directly in equity.
Legislation was enacted in September 2016 to reduce the UK corporation tax rate to 17.0% from 1 April 2020. UK deferred tax balances therefore
have been measured 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.
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Financial Statements
Financial Statements
Notes to the accounts
11 Tax continued
The tax charge for the year is lower than the standard rate of corporation tax in the UK of 19.0% (2017 19.5%) representing the weighted average
annual corporate tax rate for the full financial year. The differences are explained below:
Profit/(loss) 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 and associate
Effect of change in tax rate
Adjustment in respect of prior years
Total tax charge on the profit for the year – continuing and discontinued operations
Year ended
30 September
2018
£m
691.9
–
691.9
Year ended
30 September
2017
£m
(112.3)
523.3
411.0
(131.5)
(80.1)
(2.2)
(1.0)
4.3
0.3
(5.2)
22.6
1.9
97.2
10.7
(0.8)
(3.7)
(28.4)
0.4
7.7
(109.9)
21.6
4.5
7.7
102.3
(0.2)
5.7
(68.7)
Note
19
(i)
(ii)
(iii)
13
(i) Additional items deductible for tax purposes amounting to £4.3 million (2017 £7.7 million) primarily relates to Research and Development tax
credits and financing arrangements that result in asymmetrical tax treatments in the territories involved. Some of these are expected to recur
in the short term.
(ii)
Includes £96.6 million relating to the profit of sale of ZPG which was non-taxable by virtue of the Substantial Shareholder Exemption.
(iii) The adjustment in respect of prior years charge of £0.8 million (2017 credit of £5.7 million) arose largely from a reassessment
of temporary differences.
Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and non-recurring items (adjusted tax charge)
amounted to a charge of £33.2 million (2017 £29.0 million) and the resulting rate is 18.2% (2017 12.8%). 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
2018
£m
(3.7)
(31.3)
(22.6)
–
24.4
(33.2)
Year ended
30 September
2017
£m
(68.7)
(4.9)
(29.6)
108.9
(34.7)
(29.0)
Note
7, 19
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 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 £nil (2017 charge of £100.4 million ) relating to the derecognition of overseas tax losses and a net
charge of £nil (2017 charge of £8.5 million) relating to the derecognition of UK tax losses which are treated as exceptional due to their distortive
impact on the Group’s adjusted tax charge.
Included in tax on other adjusting items are items arising from tax reform in the US comprising deferred tax credit of £12.5 million (2017 £nil)
relating to the re-measurement of US deferred tax balances following the reduction in the US corporate tax rate, a current tax charge of £6.1 million
(2017 £nil) in respect of the transitional toll charge and a deferred tax charge of £4.0 million relating to the impact of the internal refinancing of the
US group.
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Uncertain tax positions
At 30 September 2018 the Group’s 49.8% associate, Euromoney held provisions for uncertain tax of £12.9 million (2017 £10.2 million) relating
to permanent establishment risk and challenges by tax authorities. The maximum potential additional exposure to Euromoney in relation
to challenges by tax authorities not provided for is approximately £20.0 million which is for the challenge by the Canadian Revenue Agency (CRA)
and Quebec Tax Authorities (Revenu Quebec) on a foreign currency trade in 2009. On 23 October 2017, the CRA issued a Notice of Reassessment
to BCA Research Inc (BCA) based on the CRA view that the loss sustained by BCA on an intra-group derivative transaction cannot be deducted
in computing income. Euromoney is confident that it will be able to set aside these reassessments through the normal litigation process,
which has already begun. Nonetheless, BCA has provided satisfactory security for payment to both the CRA and Revenu Québec for 50.0%
of the tax owing which amounted to £3.5 million and £3.2 million respectively.
The Group has previously disclosed a potential exposure of £11.0 million relating to an HMRC enquiry into Euromoney’s investment in Dealogic of
which £2.8 million had been provided in prior periods. Following receipt of a closure notice from HMRC confirming that the tax being pursued is
£10.7 million, the associated provision has been increased for accounting purposes to £10.7 million at 30 September 2018. A notice of appeal was
filed with HMRC.
12 Dividends paid
Amounts recognisable as distributions to equity holders in the year
Ordinary Shares – final dividend for the year ended 30 September 2017
A Ordinary Non-Voting Shares – final dividend for the year ended 30 September 2017
Ordinary Shares – final dividend for the year ended 30 September 2016
A Ordinary Non–Voting Shares – final dividend for the year ended 30 September 2016
Ordinary Shares – interim dividend for the year ended 30 September 2018
A Ordinary Non-Voting Shares – interim dividend for the year ended 30 September 2018
Ordinary Shares – interim dividend for the year ended 30 September 2017
A Ordinary Non-Voting Shares – interim dividend for the year ended 30 September 2017
Year ended
30 September
2018
Pence per share
Year ended
30 September
2018
£m
Year ended
30 September
2017
Pence per share
Year ended
30 September
2017
£m
15.8
15.8
–
–
–
7.1
7.1
–
–
–
–
3.1
52.8
–
–
55.9
1.4
23.7
–
–
25.1
81.0
–
–
15.3
15.3
–
–
–
6.9
6.9
–
–
–
–
3.0
50.9
53.9
–
–
1.4
23.0
24.4
78.3
The Board has declared a final dividend of 16.2 pence per Ordinary/A Ordinary Non-Voting Share (2017 15.8 pence) which will absorb an estimated
£57.3 million (2017 £55.8 million) of shareholders’ equity for which no liability has been recognised in these financial statements. It will be paid on
8 February 2019 to shareholders on the register at the close of business on 7 December 2018.
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121
Financial Statements
Financial Statements
Notes to the accounts
13 Adjusted profit
Profit/(loss) before tax – continuing operations
Profit before tax – discontinued operations
Profit on disposal of discontinued operations including recycled cumulative translation differences
Adjust for:
Amortisation of intangible assets in Group profit, including joint ventures and associates,
arising on business combinations
Impairment of goodwill and intangible assets arising on business combinations
Impairment of goodwill and intangible assets arising on business combinations of joint ventures
and associates
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
Share of joint ventures’ and associates’ other gains and losses
Impairment of carrying value of joint ventures and associates
Other gains and losses:
Impairment of available-for-sale assets
Impairment of held-for-sale-assets
Profit on disposal of available-for-sale investments
Profit on disposal of businesses, joint ventures, associates, change of control and recycled cumulative
translation differences
Profit on disposal of discontinued operations including recycled cumulative translation differences
Finance costs:
Finance (income)/charge on defined benefit pension schemes
Fair value movements including share of joint ventures and associates
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
Current tax on foreign exchange tax equalisation contracts
Agreement of open issues with tax authorities
Tax on other adjusting items
Non-controlling interests
Adjusted profit after taxation and non-controlling interests
Note
3
19
19
3, 7, 19
3, 19
7
3, 19
7, 19
7
7
8
8
8
8,19
19
10
(i),10,19
7,11
11
7
11
11
11
11
11
(ii)
Year ended
30 September
2018
£m
691.9
–
–
Year ended
30 September
2017
£m
(112.3)
14.0
509.3
32.2
0.3
1.5
78.9
4.9
(102.9)
0.8
1.8
–
(1.0)
50.3
131.7
13.7
167.1
6.7
–
4.3
0.5
4.1
–
(553.8)
–
(21.0)
(509.3)
(2.0)
(1.6)
31.3
182.3
(3.7)
(31.3)
(22.6)
–
–
–
24.4
0.2
149.3
4.9
(42.8)
4.9
226.1
(68.7)
(4.9)
(29.6)
108.9
–
–
(34.7)
(0.8)
196.3
(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 losses for the year of £0.2 million (2017 £0.8 million share of profit) is stated after eliminating
a credit of £1.0 million (2017 £3.8 million credit), being the non-controlling interests’ share of adjusting items.
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14 Earnings per share
Basic earnings per share of 194.7 pence (2017 97.8 pence) and diluted earnings per share of 192.4 pence (2017 96.3 pence) are calculated, in
accordance with IAS 33, Earnings per share, on Group profit for the financial year of £689.4 million (2017 £345.3 million) as adjusted for the effect
of dilutive Ordinary Shares of £nil (2017 £0.1 million) and earnings from discontinued operations of £nil (2017 £519.3 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 42.2 pence (2017 55.6 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 £149.3 million (2017 £196.3 million), as set out in Note 13 and on the basic weighted
average number of Ordinary Shares in issue during the year.
Basic and diluted earnings per share:
Earnings/(losses) 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/(losses) per share from continuing operations
Effect of dilutive Ordinary Shares
Earnings per share from discontinued operations
Earnings per share from continuing and discontinued operations
Year ended
30 September
2018
Diluted earnings
£m
689.4
–
–
689.4
Year ended
30 September
2017
Diluted earnings
£m
(174.0)
(0.1)
519.3
345.2
Year ended
30 September
2018
Basic earnings
£m
689.4
–
–
689.4
Year ended
30 September
2017
Basic earnings
£m
(174.0)
–
519.3
345.3
149.3
–
149.3
196.3
(0.1)
196.2
149.3
–
149.3
196.3
–
196.3
Year ended
30 September
2018
Diluted pence per
share
192.4
–
–
192.4
Year ended
30 September
2017
Diluted pence per
share
(48.5)
–
144.8
96.3
Year ended
30 September
2018
Basic pence per
share
194.7
–
–
194.7
Year ended
30 September
2017
Basic pence per
share
(49.3)
–
147.1
97.8
Adjusted earnings per share from continuing and discontinued operations
Effect of dilutive Ordinary Shares
Adjusted earnings per share from continuing and discontinued operations
41.7
–
41.7
54.7
–
54.7
42.2
–
42.2
55.6
–
55.6
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
2018
Number
m
362.1
(8.0)
354.1
4.3
358.4
Year ended
30 September
2017
Number
m
362.1
(9.0)
353.1
5.5
358.6
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Financial Statements
Notes to the accounts
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
Share of charge of depreciation and amortisation of internally generated and acquired computer
software of joint ventures and associates
Dividend income
Discontinued operations
Adjusted operating profit
Non-exceptional depreciation charge
Amortisation of internally generated and acquired computer software
Share of profits from operations of joint ventures and associates
EBITDA
Adjustments for:
Share-based payments
Loss on disposal of property, plant and equipment
Share of profits from joint ventures and associates
Exceptional operating costs
Non-cash pension past service cost
Dividend income
Share of depreciation charge of joint ventures and associates
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Decrease in provisions
Additional payments into pension schemes
Cash generated by operations
Note
3
3, 19
3, 22
7
9
19
19
19
19
39, 40
7, 19
3
9
35
Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
144.9
27.2
32.8
74.0
8.7
0.1
–
–
–
–
287.7
10.8
1.4
(74.0)
(20.5)
17.3
(0.1)
(8.7)
(5.7)
(46.5)
(10.5)
(1.1)
(12.8)
137.3
179.0
33.7
43.3
68.5
4.0
0.1
19.3
0.8
0.9
0.8
350.4
4.1
–
(69.3)
(43.4)
–
(0.1)
(4.0)
3.6
8.0
0.4
(3.9)
(13.1)
232.7
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Note
29
29, 33
At
30 September
2017
£m
14.6
(7.2)
7.4
Cash flow
£m
421.6
5.3
426.9
Fair value
hedging
adjustments
Note 10
£m
–
–
–
On disposal of
subsidiaries
Note 18
£m
–
–
–
Foreign
exchange
movements
£m
1.6
–
1.6
(i)
Other
non-cash
movements
£m
–
–
–
At
30 September
2018
£m
437.8
(1.9)
435.9
33
33
33
33
33
33
(ii)
28
28
–
(1.8)
(0.4)
(423.5)
(46.3)
(0.5)
(465.1)
(13.7)
14.5
–
–
0.1
–
–
43.7
–
470.7
(6.2)
(6.5)
237.3
–
–
–
2.3
–
–
2.3
(2.3)
–
–
–
–
0.4
–
–
0.5
0.9
–
–
–
–
–
–
–
2.6
–
4.2
(0.2)
–
–
(218.7)
–
–
215.5
–
–
(3.2)
–
–
–
(464.3)
695.3
–
0.9
4.0
(3.2)
(218.7)
(1.7)
–
(205.7)
–
–
9.8
(22.4)
8.0
237.3
232.7
234.3
16 Analysis of net debt
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Debt due within one year
Bonds
Loan notes
Finance lease obligations
Debt due after one year
Bonds
Bank loans
Finance lease obligations
Net cash/(debt) before effect
of derivatives
Effect of derivatives on debt
Collateral deposits
Other financial assets
Net cash/(debt)at closing
exchange rate
Net cash/(debt) at average
exchange rate
(482.2)
The net cash inflow of £426.9 million (2017 £10.3 million) includes a cash outflow of £9.7 million (2017 £45.8 million) in respect of operating
exceptional items.
(i) Other non-cash movements comprise the unwinding of bond issue discount amounting to £2.9 million (2017 £2.6 million), amortisation of
bond issue costs of £0.3 million (2017 £0.3 million) together with the inception of new finance leases of £nil (2017 £0.5 million). Also included
is the reclassification of bonds maturing December 2018 of £218.7 million between due within one year and due after more than one year.
(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.
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Financial Statements
Notes to the accounts
17 Summary of the effects of acquisitions
On 31 October 2017, the Events and Exhibitions segment acquired 100% of Atticus Events Ltd and Atticus Events MEA Ltd for total consideration
of £3.3 million (Atticus). Atticus runs three Hotel Interior Design forum events which take place annually in Europe, Asia and the Middle East.
Atticus contributed £1.9 million to the Group’s revenue, £0.7 million to the Group’s operating profit and £0.6 million to the Group’s profit after tax for
the period between the date of acquisition and 30 September 2018.
If the acquisition had been completed on the first day of the financial period, Atticus would have contributed £1.9 million to the Group’s revenue,
£0.7 million to the Group’s operating profit and £0.6 million to the Group’s adjusted profit after tax.
On 21 December 2017, the Events and Exhibitions segment acquired 100% of the assets of the following assets, African Construction Expo held
annually in Johannesburg, Cape Construction Expo held annually in Cape Town, KwaZulu Natal Construction Expo held annually in Durban, African
Ports Evolution Forum held annually in Durban, African Ports Evolution West held annually in Nigeria and Concrete Trends Publication and Concrete
TV (Hypenica) for total consideration of £1.3 million.
Hypenica contributed £0.8 million to the Group’s revenue, £0.1 million to the Group’s operating profit and £0.1 million to the Group’s profit after tax
for the period between the date of acquisition and 30 September 2018.
If the acquisition had been completed on the first day of the financial period, Hypenica would have contributed £1.1 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.
On 20 May 2018, the Events and Exhibitions segment acquired 50% of Plastex and the controlling voting rights for total consideration of £0.4 million.
Plastex is the leading international trade fair dedicated to the plastics and rubber machinery, components, raw materials and chemicals in Africa.
The next show will take place in Egypt in January 2020.
Plastex contributed £nil to the Group’s revenue, £nil to the Group’s operating profit and £nil to the Group’s profit after tax for the period between the
date of acquisition and 30 September 2018.
If the acquisition had been completed on the first day of the financial period, Plastex would have contributed £0.9 million to the Group’s revenue,
£0.6 million to the Group’s operating profit and £0.6 million to the Group’s adjusted profit after tax.
Provisional fair value of net assets acquired with all acquisitions:
Goodwill
Intangible assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Group share of net assets acquired
Cost of acquisitions:
Cash paid in current year
Contingent consideration
Total consideration at fair value
Note
21, (i)
22
37
36, (ii)
Atticus
£m
2.2
1.5
0.7
0.3
(1.0)
(0.1)
(0.3)
3.3
3.3
–
3.3
Hypenica
£m
0.8
0.7
–
–
–
–
(0.2)
1.3
1.1
0.2
1.3
Plastex
£m
–
0.4
–
–
–
–
–
0.4
0.4
–
0.4
Other
£m
0.2
–
–
–
–
–
–
0.2
0.2
–
0.2
Total
£m
3.2
2.6
0.7
0.3
(1.0)
(0.1)
(0.5)
5.2
5.0
0.2
5.2
(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 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 within one year.
The estimated range of undiscounted outcomes for contingent consideration relating to acquisitions in the year is £nil to £0.2 million.
The contingent consideration has been discounted back to current values in accordance with IFRS 3, Business Combinations. In each case,
the Group has used acquisition accounting to account for the purchase.
All of the companies acquired during the period contributed £2.7 million to the Group’s revenue and £0.6 million to the Group’s profit after tax for
the period between the date of acquisition and 30 September 2018.
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Acquisition-related costs, amounting to £0.1 million, have been 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 £1,430.3 million and Group
profit attributable to equity holders of the parent would have been a profit of £690.6 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
During the year, the Group acquired additional shares in controlled entities amounting to £nil (2017 £2.1 million).
Reconciliation to purchase of subsidiaries as shown in the Consolidated Cash Flow Statement:
Year ended
30 September
2018
£m
–
Year ended
30 September
2017
£m
2.1
Cash consideration
Cash paid to settle contingent consideration in respect of acquisitions
Cash paid to settle acquisition put options
Cash and cash equivalents acquired with subsidiaries
Purchase of subsidiaries
Note
36, (i)
Year ended
30 September
2018
£m
5.0
14.4
–
(0.3)
19.1
Year ended
30 September
2017
£m
0.5
8.2
18.0
–
26.7
(i) Cash paid to settle contingent consideration in respect of acquisitions includes £1.5 million (2017 £0.3 million) within the Property Information
segment, £0.2 million (2017 £0.2 million) within the EdTech segment, £12.5 million (2017 £7.0 million) in the Energy Information segment,
£0.2 million (2017 £0.2 million) within the Events and Exhibitions segment and £nil (2017 £0.5 million) in the Euromoney segment.
18 Summary of the effects of disposals
In October 2017, the EdTech segment disposed of the Hobsons Solutions business for total consideration of £1.6 million. This was recognised
as held-for-sale in the prior year.
In December 2017, Xceligent, in the property segment, filed for Chapter 7 liquidation. Under US law, a trustee with expertise in liquidating
companies was appointed to distribute Xceligent’s assets and this business has been treated as closed.
On 5 April 2018 the Property segment reduced its shareholding in SiteCompli to 49.9%, by a transfer of 6.1% of its shareholding to other
shareholders pro rata for no consideration. The remaining shareholding has been treated as an associate.
On 20 September 2018 the Energy Information segment disposed of the Locus Energy business for consideration of £16.2 million.
On 13 March 2018 the Property segment disposed of the Environmental Data Resources (EDR) business for consideration of £166.7 million.
This was recognised as held-for-sale in the prior year.
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Financial Statements
Financial Statements
Notes to the accounts
18 Summary of the effects of disposals continued
The impact of the disposal of businesses completed during the period on net assets is as follows:
Goodwill
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Finance leases
Current tax payable
Provisions
Deferred tax liabilities
Net assets/(liabilities) disposed
Non–controlling interest share of net
assets disposed
Profit/(loss) on sale of businesses
including recycled cumulative
exchange differences
Satisfied by:
Cash received
Impact of cashflow hedges
Directly attributable costs paid
Fair value of investment in associate
Working capital adjustment cash paid
Working capital adjustment
Recycled cumulative translation
differences
Note
21
22
23
36
37
Xceligent
£m
0.2
–
1.6
–
1.2
–
(5.7)
(0.9)
–
–
2.4
SiteCompli
£m
0.1
–
0.4
–
3.5
–
(2.7)
–
–
(0.4)
–
Locus Energy
£m
25.9
0.6
0.1
1.4
2.5
–
(10.4)
–
0.1
–
2.3
(1.2)
0.9
22.5
Prior year
assets held for
sale disposed
in current year
£m
70.9
8.6
8.7
0.1
19.5
–
(16.8)
–
(5.3)
–
(6.9)
Adjustment on
sale of assets
held for sale in
current year
£m
0.4
(0.1)
3.4
–
11.5
(0.6)
(11.5)
–
6.8
–
0.1
Sub Total
£m
35.4
0.7
2.1
1.4
7.8
–
(19.0)
(0.9)
0.1
(0.4)
4.7
31.9
78.8
10.0
Other
£m
9.2
0.1
–
–
0.6
–
(0.2)
–
–
–
–
9.7
Total
£m
106.7
9.2
14.2
1.5
38.8
(0.6)
(47.3)
(0.9)
1.6
(0.4)
(2.1)
120.7
40
4.8
(1.1)
–
–
3.7
(2.7)
0.9
(0.5)
(0.7)
(6.3)
16.2
(8.9)
0.8
(18.4)
17.2
–
–
78.8
–
3.7
62.4
72.4
44.0
168.4
–
–
(1.2)
–
–
–
2.1
0.9
–
–
(3.7)
–
–
–
3.0
(0.7)
3.0
–
–
13.2
–
–
–
16.2
0.7
–
(1.4)
–
–
(0.2)
1.7
0.8
3.7
–
(6.3)
13.2
–
(0.2)
6.8
17.2
(i)
39
153.5
4.9
(7.1)
–
(3.7)
–
3.6
151.2
157.2
4.9
(13.4)
13.2
(3.7)
(0.2)
10.4
168.4
(i) The investment in AlsoEnergy received as part of the consideration on sale of Locus Energy involves an estimation of the fair value of the
Group’s equity holding in AlsoEnergy. A 10% increase/(decrease) in the fair value of the Group’s stake would decrease/(increase) the loss on
sale of Locus Energy by £1.3 million.
Reconciliation to disposal of businesses as shown in the Consolidated Cash Flow Statement:
Cash consideration net of disposal costs
Impact of cashflow hedges
Working capital adjustment cash paid
Cash consideration received in the current year relating to businesses sold in the prior year
Cash and cash equivalents disposed with subsidiaries
Proceeds on disposal of businesses
Year ended
30 September
2018
£m
143.8
4.9
(3.7)
0.7
0.6
146.3
Year ended
30 September
2017
£m
247.8
–
–
–
(32.0)
215.8
During the period Hobsons Solutions generated £nil 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 Xceligent absorbed £7.1 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 EDR absorbed £0.4 million of the Group’s net operating cash flows, paid £3.5 million in respect of investing activities and paid £nil
in respect of financing activities.
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During the period SiteCompli absorbed £1.1 million of the Group’s net operating cash flows, paid £0.1 million in respect of investing activities and
paid £nil in respect of financing activities.
During the period Locus Energy absorbed £16.1 million of the Group’s net operating cash flows, paid £0.1 million in respect of investing activities and
paid £nil in respect of financing activities.
All of the businesses disposed of during the period absorbed £24.7 million of the Group’s net operating cash flows, paid £3.7 million in investing
activities and paid £nil in financing activities.
The Group’s tax charge includes £17.6 million in relation to these disposals.
19 Discontinued operations
In the prior year, the Group announced its intention to reduce its holding in Euromoney from 67.9% to 49.9%, after which Euromoney ceased to be a
subsidiary and became an associate. The results of Euromoney up to the point of disposal are included in discontinued operations for the prior year.
The Group’s Consolidated Income Statement includes the following results from discontinued operations:
Revenue
Expenses
Depreciation
Amortisation of intangible assets not arising on business combinations
Adjusted operating profit
Exceptional operating costs
Amortisation of intangible assets arising on business combinations
Operating profit before share of results of joint ventures and associates
Share of adjusted operating profits from operations of joint ventures and associates
Share of amortisation of intangibles arising on business combinations of associates
Share of interest payable of associates
Share of tax in associates
Total operating profit
Other gains and losses
Profit before net finance costs and tax
Change in present value of acquisition put options
Finance costs
Profit before tax
Tax charge
Profit after tax attributable to discontinued operations
Profit on disposal of discontinued operations
Recycled cumulative translation differences on disposal of discontinued operations
Profit attributable to discontinued operations
Note
3
3
3
3
3, 13
3, 13
13
13
13
13
11
13, 18
13, 18
Year ended
30 September
2018
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Year ended
30 September
2017
£m
95.2
(74.2)
(0.8)
(0.9)
19.3
(0.9)
(5.4)
13.0
0.8
(1.2)
(0.6)
0.3
12.3
2.4
14.7
(0.7)
(0.7)
14.0
(4.0)
10.0
563.4
(54.1)
519.3
During the prior period as a subsidiary undertaking Euromoney generated £15.3 million of the Group’s net operating cash flows, paid £3.0 million
in respect of investing activities and paid £0.8 million in respect of financing activities.
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Financial Statements
Financial Statements
Notes to the accounts
20 Total assets and liabilities of businesses held for sale
At 30 September 2018 there were no assets and liabilities of businesses held for sale.
At 30 September 2017, the assets and liabilities held-for-sale principally related to EDR, in the Property Information segment and Hobsons Solutions,
in the EdTech 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.
Note
21
22
23
26
27
30
31
37
At
30 September
2018
£m
–
–
–
–
–
–
At
30 September
2017
£m
70.9
8.6
8.7
0.1
19.5
107.8
–
–
–
–
–
Note
20
17
18
(16.8)
(5.3)
(6.9)
(29.0)
78.8
Goodwill
£m
1,073.9
0.4
(504.2)
(72.7)
8.8
506.2
3.2
(90.6)
3.6
422.4
Goodwill
Intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Total assets associated with businesses held for sale
Trade and other payables
Current tax
Deferred tax
Total liabilities associated with businesses held for sale
Net assets of the disposal group
21 Goodwill
Cost
At 30 September 2016
Additions
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2017
Additions
Disposals
Exchange adjustment
At 30 September 2018
130
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Note
Goodwill
£m
3
20
3
18
92.3
117.0
(63.6)
(1.8)
(0.8)
143.1
0.3
(54.8)
0.6
89.2
981.6
363.1
333.2
Accumulated impairment losses
At 30 September 2016
Impairment
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2017
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Net book value – 2016
Net book value – 2017
Net book value – 2018
Goodwill impairment losses recognised in the year amounted to £0.3 million (2017 £117.0 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 or where there is a change in key assumptions that may result
in an impairment.
Using this criteria the only significant items of goodwill included in the net book value above relate to Genscape, Landmark and Hobsons.
Following disposals in the period, Genscape goodwill has a carrying value of £65.4 million (2017 £100.5 million) together with intangible assets with
a carrying value of £34.8 million (2017 £40.4 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 2019. The Directors believe these to be reasonably achievable;
(ii) subsequent cash flows for two additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the three-year period extrapolated using a long-term nominal growth rate of 3.0%; and
(iv) a pre-tax discount rate of 15.3%
Using the above methodology the recoverable amount exceeded the total carrying value by £10.2 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 be increased by 1.10% to 16.40%, the long-term growth rate would need to be reduced by 0.97% to 2.03%, or the CGU would need to miss
budget by 32.6%. In the prior year, the recoverable amount was lower than the carrying value by £140.3 million. Accordingly a goodwill and
intangible asset impairment charge was recorded amounting to £140.3 million.
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Financial Statements
Financial Statements
Notes to the accounts
21 Goodwill continued
Landmark goodwill has a carrying value of £81.5 million (2017 £80.9 million) together with intangible assets with a carrying value of £22.8 million
(2017 £22.0 million). The carrying value of Landmark 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 2019. The Directors believe these to be reasonably achievable;
(ii) subsequent cash flows for two additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the three-year period extrapolated using a long-term nominal growth rate of 3.0%; and
(iv) a pre-tax discount rate of 13.3%.
Using the above methodology the recoverable amount exceeded the total carrying value by £175.2 million (2017 £169.9 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 be increased by 10.85% to 24.15% (2017 by 15.47% to 26.47%), the long-term growth rate would need to decline
by 23.66% to -20.66% (2017 by 22.69% to -20.69%), or the CGU would need to miss budget by 62.0% (2017 62.4%).
Hobsons goodwill has a carrying value of £71.2 million (2017 £69.6 million) together with intangible assets with a carrying value of £26.1 million
(2017 £22.4 million). The carrying value of Hobsons 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 2019. The Directors believe these to be reasonably achievable;
(ii) subsequent cash flows for two additional years increased in line with growth expectations of the business;
(iii) cash flows beyond the three-year period extrapolated using a long-term nominal growth rate of 3.0%; and
(iv) a pre-tax discount rate of 15.3%.
Using the above methodology the recoverable amount exceeded the total carrying value by £9.9 million (2017 £25.2 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 be increased by 1.10% to 16.40% (2017 by 1.96% to 12.96%), the long-term growth rate would need to decline by 1.00%
to 2.00% (2017 by 2.23% to 0.77%), or the CGU would need to miss budget by 50.2% (2017 21.3%).
The impairment charge is analysed by major CGU as follows:
CGU
Segment
Goodwill
Impairment
£m
Intangible asset
Impairment
£m
Recoverable
amount
£m
RMS (one)
Other
Total
Insurance Risk
–
0.3
0.3
58.3
0.1
58.4
–
–
–
Reason for Impairment charge
The insurance market’s growing acceptance of cloud
computing and demand for a modular approach
resulted in the recent decision to re-architect the
RMS(one) platform. The RMS(one) platform is now fully
impaired. Further detail can be found in the Insurance
Risk section of the Operating Business Review.
Recoverable amounts have been determined using value in use calculations for all of the above CGUs.
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22 Other intangible assets
Cost
At 30 September 2016
Additions from business combinations
Other additions
Internally generated
Disposals
Classified as held for sale
Transfer from property, plant and equipment
Exchange adjustment
At 30 September 2017
Additions from business combinations
Other additions
Internally generated
Disposals
Exchange adjustment
At 30 September 2018
Accumulated amortisation
At 30 September 2016
Charge for the year
Impairment
Disposals
Classified as held for sale
Transfer from property, plant and equipment
Exchange adjustment
At 30 September 2017
Charge for the year
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Net book value – 2016
Net book value – 2017
Net book value – 2018
Publishing
rights,
mastheads
and titles
£m
Note
20
23
17
18
Note
3
3
20
23
3
3
17, 18
275.1
–
–
–
(185.1)
(0.2)
–
6.1
95.9
–
–
–
(2.7)
0.5
93.7
Publishing
rights,
mastheads and
titles
£m
197.4
4.1
1.0
(124.4)
(0.2)
–
3.1
81.0
1.3
–
(2.7)
0.4
80.0
77.7
14.9
13.7
Market- and
customer-related
databases and
customer
relationships
£m
Computer
software
£m
(i)
260.3
0.1
–
–
(150.9)
(8.0)
–
4.1
105.6
1.8
–
–
(3.9)
0.5
104.0
492.6
0.5
0.2
57.7
(114.8)
(9.0)
(47.1)
(7.6)
372.5
–
0.2
19.5
(56.2)
8.1
344.1
Market- and
customer-related
databases and
customer
relationships
£m
Computer
software
£m
(i)
139.9
13.7
10.4
(105.6)
(3.3)
–
2.6
57.7
7.4
–
(3.9)
0.3
61.5
120.4
47.9
42.5
242.1
52.6
81.7
(94.8)
(5.1)
(41.1)
(6.2)
229.2
36.4
58.4
(55.6)
5.3
273.7
250.5
143.3
70.4
Brands
£m
99.3
0.1
–
–
(48.9)
(1.2)
–
(0.8)
48.5
0.8
–
–
(0.5)
1.1
49.9
Brands
£m
54.5
4.2
0.6
(13.9)
(1.2)
–
(1.0)
43.2
3.1
–
(0.5)
0.9
46.7
44.8
5.3
3.2
Other
£m
11.2
–
–
–
(4.7)
–
–
–
6.5
–
–
–
–
0.1
6.6
Other
£m
5.4
1.5
2.7
(4.9)
–
–
0.2
4.9
0.1
–
–
0.2
5.2
5.8
1.6
1.4
Total
£m
1,138.5
0.7
0.2
57.7
(504.4)
(18.4)
(47.1)
1.8
629.0
2.6
0.2
19.5
(63.3)
10.3
598.3
Total
£m
639.3
76.1
96.4
(343.6)
(9.8)
(41.1)
(1.3)
416.0
48.3
58.4
(62.7)
7.1
467.1
499.2
213.0
131.2
(i) Computer software includes purchased and internally generated intangible assets, not forming part of a business combination, as follows:
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Financial Statements
Financial Statements
Notes to the accounts
22 Other intangible assets continued
Cost
At 30 September 2016
Additions
Disposals
Analysis reclassifications
Classified as held for sale
Exchange adjustment
At 30 September 2017
Additions
Disposals
Exchange adjustment
At 30 September 2018
Accumulated amortisation
At 30 September 2016
Analysis reclassifications
Charge for the year
Impairment
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2017
Charge for the year
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Net book value – 2016
Net book value – 2017
Net book value – 2018
Note
£m
20
20
414.8
57.9
(88.0)
(39.5)
(7.4)
(7.8)
330.0
19.7
(48.0)
7.6
309.3
210.5
(33.5)
44.2
57.8
(69.5)
(4.1)
(5.7)
199.7
32.8
58.3
(47.1)
4.4
248.1
204.3
130.3
61.2
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 2016
Additions
Impairment
Projects completed
Exchange adjustment
At 30 September 2017
Additions
Projects completed
Exchange adjustment
At 30 September 2018
£m
40.4
18.4
(21.9)
(16.9)
(0.5)
19.5
10.3
(15.6)
0.6
14.8
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.
134
134
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The carrying values of the Group’s ten largest intangible assets are further analysed as follows:
DIIG customer relationships
Genscape intellectual property
Instant Services customer relationships
Genscape tradenames
Landmark valuation hub technology platform*
Genscape real time power platform
Petrotranz proprietary knowledge
Estate Technical Solutions customer relationships
Hobsons naviance modernisation
Starfish customer relationships
* Not yet in use.
23 Property, plant and equipment
Cost
At 30 September 2016
Additions
Disposals
Classified as held for sale
Owned by subsidiaries disposed
Transfers to intangible fixed assets
Reclassifications
Exchange adjustment
At 30 September 2017
Additions
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2018
At
30 September
2018
Carrying
value
£m
19.0
8.9
7.7
4.7
4.7
4.3
3.8
3.6
3.5
3.3
At
30 September
2017
Carrying
value
£m
22.8
9.8
8.7
5.2
2.4
5.3
4.5
4.1
2.5
3.7
At
30 September
2018
Remaining
amortisation
period
Years
6.0
7.5
7.5
6.6
–
3.8
6.1
6.4
4.6
7.0
At
30 September
2017
Remaining
amortisation
period
Years
7.0
8.5
8.5
7.6
–
4.8
7.1
7.4
5.6
8.0
Segment
Property
Energy
Property
Energy
Property
Energy
Energy
Property
EdTech
EdTech
Note
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
20
22
18
57.9
–
–
–
–
–
–
–
57.9
4.7
(21.7)
–
(0.1)
(0.4)
40.4
1.7
0.2
(0.1)
–
(1.3)
–
–
0.1
0.6
0.1
–
(0.3)
–
(0.4)
–
42.7
1.9
(0.1)
–
(16.3)
–
(1.6)
(0.3)
26.3
0.5
(0.7)
(0.2)
(5.6)
0.4
20.7
335.6
19.0
(10.4)
(27.5)
(27.1)
47.1
1.6
(1.8)
336.5
25.1
(53.5)
(8.7)
5.6
2.1
307.1
Total
£m
437.9
21.1
(10.6)
(27.5)
(44.7)
47.1
–
(2.0)
421.3
30.4
(75.9)
(9.2)
(0.1)
1.7
368.2
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Financial Statements
Notes to the accounts
23 Property, plant and equipment continued
Note
3
20
3
18
Accumulated depreciation and impairment
At 30 September 2016
Charge for the year
Impairment
Impairment of assets held for sale
Disposals
Classified as held for sale
Owned by subsidiaries disposed
Transfers to intangible fixed assets
Reclassifications
Exchange adjustment
At 30 September 2017
Charge for the year
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2018
Net book value – 2016
Net book value – 2017
Net book value – 2018
24 Investments in joint ventures and associates
Joint ventures
At 30 September 2016
Reclassification
Additions – cash
Disposals
Owned by subsidiaries disposed
Share of retained reserves
Dividends received
Impairment
Exchange adjustment
At 30 September 2017
Disposals
Share of retained reserves
Dividends received
Reclassification from other financial assets
Exchange adjustment
At 30 September 2018
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
14.2
1.9
22.4
–
–
–
–
–
–
0.1
38.6
1.2
(21.7)
–
(1.3)
–
16.8
43.7
19.3
23.6
0.7
0.1
–
–
(0.1)
–
(0.6)
–
–
(0.1)
–
–
–
–
–
–
–
1.0
0.6
–
Note
(i)
7
(ii)
7
(iii)
7
(iv)
25.2
2.8
0.6
–
(0.1)
–
(9.3)
–
(1.5)
–
17.7
2.3
(0.7)
(0.1)
(5.3)
0.4
14.3
17.5
8.6
6.4
221.7
29.7
19.0
0.4
(9.8)
(18.8)
(21.4)
41.1
1.5
(1.7)
261.7
23.7
(52.0)
(3.6)
6.7
0.9
237.4
113.9
74.8
69.7
Cost
of shares
£m
Share of post-
acquisition
retained reserves
£m
19.7
1.0
0.3
(10.5)
(4.7)
–
–
(3.3)
0.3
2.8
(1.1)
–
–
5.1
0.1
6.9
(14.9)
(1.0)
–
10.5
4.5
(0.5)
(0.6)
–
(0.6)
(2.6)
0.7
(3.3)
(0.5)
–
(0.2)
(5.9)
Total
£m
261.8
34.5
42.0
0.4
(10.0)
(18.8)
(31.3)
41.1
–
(1.7)
318.0
27.2
(74.4)
(3.7)
0.1
1.3
268.5
176.1
103.3
99.7
Total
£m
4.8
–
0.3
–
(0.2)
(0.5)
(0.6)
(3.3)
(0.3)
0.2
(0.4)
(3.3)
(0.5)
5.1
(0.1)
1.0
(i) During the prior period, the Group the Group disposed of Mail Today Newspapers Pte Ltd in the Consumer Media segment.
(ii) During the prior period, the Group received dividends from Decision First Ltd in the Property Information segment.
(iii) During the period, the Group disposed of Artirix in the Consumer Media segment.
(iv) During the period, the Group received dividends from Decision First Ltd and from HypoPort On-Geo GmbH in the Property Information segment.
136
136
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Daily Mail and General Trust plc Annual Report 2018
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 2018
Property Information
Consumer Media
At 30 September 2018
Property Information
Consumer Media
Year ended 30 September 2017
Property Information
Consumer Media
At 30 September 2017
Property Information
Consumer Media
Revenue
£m
9.9
9.8
19.7
Current
assets
£m
4.8
19.6
24.4
Revenue
£m
10.9
–
10.9
Current
assets
£m
3.1
–
3.1
Operating
(loss)/profit
£m
0.9
(8.8)
(7.9)
Total
assets
£m
4.8
19.6
24.4
Operating
(loss)/profit
£m
1.6
(1.9)
(0.3)
Total
assets
£m
3.7
–
3.7
Total
expenses
£m
(9.2)
(18.6)
(27.8)
Current
liabilities
£m
(1.9)
(6.1)
(8.0)
Total
expenses
£m
(9.5)
(1.9)
(11.4)
Current
liabilities
£m
(1.6)
(1.9)
(3.5)
(Loss)/profit
for the year
£m
0.7
(8.8)
(8.1)
Total
comprehensive
(expense)/income
£m
0.7
(8.8)
(8.1)
Total
liabilities
£m
(1.9)
(6.1)
(8.0)
Net
assets
£m
2.9
13.5
16.4
(Loss)/profit
for the year
£m
1.4
(1.9)
(0.5)
Total
comprehensive
(expense )/income
£m
1.4
(1.9)
(0.5)
Total
liabilities
£m
(1.6)
(1.9)
(3.5)
Net assets/
(liabilities)
£m
2.1
(1.9)
0.2
Non-current
assets
£m
0.6
–
0.6
At 30 September 2018 the Group’s joint ventures had capital commitments amounting to £nil (2017 £nil). There were no material contingent
liabilities (2017 none).
Information on principal joint ventures:
Unlisted
The Sanborn Map Company, Inc.
(incorporated and operating in the US)
Knowlura, Inc.
(incorporated and operating in the US)
Daily Mail On-Air LLC (DailyMailTV)
(incorporated and operating in the US)
Segment
Principal activity
Year ended
Description
of holding
Group interest %
Energy Information
Photogrammetric mapping
and GIS data conversion
30 September
2018 Preferred stock
EdTech
Provider of online
educational services
30 September
2018
Common
Consumer Media
Producer of DailyMailTV
30 September
2018
Membership
interests
49.00
50.00
50.00
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Financial Statements
Financial Statements
Notes to the accounts
24 Investments in joint ventures and associates continued
Associates
At 30 September 2016
Reclassification
Additions – cash
Additions – non cash Euromoney
Additions – non cash
Share of retained reserves
Dividends received
Impairment
Deemed disposal of investment in associates
Transfer from available-for-sale investments
Transfer from derivatives
Disposals
Owned by subsidiaries disposed
Exchange adjustment
At 30 September 2017
Additions – cash
Additions – non cash
Share of retained reserves
Dividends received
Impairment
Deemed disposal of investment in associates
Transfer from available-for-sale investments
Disposals
Exchange adjustment
At 30 September 2018
Note
Cost of shares
£m
Share of post-
acquisition
retained reserves
£m
161.4
0.2
2.0
613.1
0.2
–
–
(1.0)
18.0
1.4
10.2
(0.6)
(32.4)
(1.2)
771.3
1.8
15.6
–
–
(0.8)
0.7
29.4
(95.9)
1.4
723.5
(16.1)
(0.2)
–
–
–
11.3
(35.3)
–
–
–
–
0.7
2.6
0.9
(36.1)
–
–
137.2
(22.6)
–
–
–
(32.9)
0.4
46.0
7
(i)
7
8
25
(ii)
18
(iii)
7
(i)
7
8
25
(iv)
Total
£m
145.3
–
2.0
613.1
0.2
11.3
(35.3)
(1.0)
18.0
1.4
10.2
0.1
(29.8)
(0.3)
735.2
1.8
15.6
137.2
(22.6)
(0.8)
0.7
29.4
(128.8)
1.8
769.5
The cumulative unrecognised share of losses of the Group’s associates principally comprises £17.4 million (2017 £23.5 million) in relation to the
Group’s investment in ITN.
During the year the Group reduced its shareholding in SiteCompli to 49.9%. Accordingly the Group lost control and has recognised SiteCompli as an
associate held centrally.
Joint ventures and associates have been accounted for under the equity method using unaudited financial information to 30 September 2018.
(i) Dividends received in the current and prior period principally relate to the Group’s investments in ZPG (2018 £5.0 million, 2017 £7.3 million) in
the Consumer Media segment, Euromoney (2018 £17.1 million, 2017 £18.8 million) in the Euromoney segment and RGJ Destiny LLC (2018 £nil,
2017 £9.2 million) held centrally.
(ii) During the prior period the Group disposed of its investment in Clipper Data in the Energy Information segment and Fortunegreen, IntoStuff
and Spaceway Storage Services UK in the Consumer Media segment.
(iii) During the period the Energy Information segment disposed of its investment in Locus Energy, Inc. in exchange for £3.0 million cash
consideration together with a 17.9% ownership share of AlsoEnergy Holdings, Inc. (Also), representing 20.0% of Also voting rights.
In addition the Group has representation on the Also Board. As a result the Group has significant influence over Also and has treated
the stake in Also as an associated undertaking.
(iv) During the period the Group disposed of its investment in Shopcreator, Social metrix, Carsping Ltd and ZPG plc in the Consumer Media
segment and RGJ Destiny LLC held centrally.
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Daily Mail and General Trust plc Annual Report 2018
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 2018
Insurance Risk
Property Information
Energy Information
Events and Exhibitions
Consumer Media
Centrally held
At 30 September 2018
Insurance Risk
Property Information
Events and Exhibitions
Consumer Media
Centrally held
Year ended 30 September 2017
Insurance Risk
Property Information
Energy Information
Events and Exhibitions
Consumer Media
Centrally held
At 30 September 2017
Insurance Risk
Property Information
Events and Exhibitions
Consumer Media
Centrally held
Revenue
£m
5.0
1.8
1.4
1.0
–
560.4
569.6
Current
assets
£m
7.6
2.8
0.3
–
249.0
259.7
Revenue
£m
3.8
2.5
1.5
1.6
157.7
642.7
809.8
Current
assets
£m
6.5
6.1
0.3
101.6
209.3
323.8
Operating
profit/(loss)
£m
1.8
(4.1)
(8.2)
(0.1)
(3.2)
139.1
125.3
Total
assets
£m
10.4
2.9
0.3
–
888.3
901.9
Operating
profit/(loss)
£m
(2.8)
(4.9)
(7.8)
0.1
(37.7)
132.5
79.4
Total
assets
£m
9.6
6.2
0.3
111.3
1,376.4
1,503.8
Total
expenses
£m
(7.1)
(5.9)
(9.8)
(1.1)
(3.2)
(389.1)
(416.2)
Current
liabilities
£m
(1.1)
(1.6)
(0.3)
(3.2)
(304.5)
(310.7)
Total
expenses
£m
(7.5)
(7.4)
(9.5)
(1.5)
(169.8)
(564.0)
(759.7)
Current
liabilities
£m
(1.3)
(2.6)
(0.2)
(20.7)
(374.2)
(399.0)
Profit/(loss)
for the year
£m
(2.1)
(4.1)
(8.4)
(0.1)
(3.2)
171.3
153.4
Non-current
liabilities
£m
–
–
–
–
(151.6)
(151.6)
Profit/(loss)
for the year
£m
(3.7)
(4.9)
(8.0)
0.1
(12.1)
78.7
50.1
Non-current
liabilities
£m
(4.7)
–
–
(203.2)
(454.1)
(662.0)
Other
comprehensive
income
£m
–
–
–
–
–
28.7
28.7
Total
comprehensive
income/(expense)
£m
(2.1)
(4.1)
(8.4)
(0.1)
(3.2)
200.0
182.1
Total
liabilities
£m
(1.1)
(1.6)
(0.3)
(3.2)
(456.1)
(462.3)
Net
assets/(liabilities)
£m
9.3
1.3
–
(3.2)
432.2
439.6
Other
comprehensive
income
£m
–
–
–
–
1.1
3.5
4.6
Total
comprehensive
income/(expense)
£m
(3.7)
(4.9)
(8.0)
0.1
(11.0)
82.2
54.7
Total
liabilities
£m
(6.0)
(2.6)
(0.2)
(223.9)
(828.3)
(1,061.0)
Net
assets/(liabilities)
£m
3.6
3.6
0.1
(112.6)
548.1
442.8
Non-current
assets
£m
2.8
0.1
–
–
639.3
642.2
Non-current
assets
£m
3.1
0.1
–
9.7
1,167.1
1,180.0
At 30 September 2018 the Group’s associates had capital commitments amounting to £nil (2017 £nil). Further details of the contingent liabilities
of Euromoney amounting to £15.5 million (2017 £14.7 million) can be found in Note 41.
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139
Financial Statements
Financial Statements
Notes to the accounts
24 Investments in joint ventures and associates continued
Information on principal associates:
Segment
Note
Principal activity
Year ended
Description
of holding
Group
interest %
Listed
Euromoney Insititutional Investor PLC
(incorporated and operating in the UK)
Euromoney
(i)
Provider of information focused on the
global asset management, capital
markets and commodities sectors
30 September
2018
Energy
Information
Consumer
Media
Unlisted
LineVision, Inc.
(incorporated and operating in the US)
Excalibur Holdco Ltd
(incorporated and operating in the UK)
Real Capital Analytics, Inc.
(incorporated and operating in the US) Centrally held
Consumer
Independent Television News Ltd
Media
(incorporated and operating in the UK)
Praedicat, Inc.
(incorporated and operating in the US)
Yopa Property Ltd
(incorporated and operating in the UK) Centrally held
Insurance Risk
Ordinary
49.80
Series A
55.90
B Ordinary
23.90
31 December
2018
30 September
2018
30 September
Provider of transmission line monitoring
and asset management for utilities
(ii)
Operator of online discount businesses
Provider of real estate
information
Independent TV news provider
Provision of catastrophe
risk analytics
2018 Preferred stock
39.73
31 December
2017
30 September
Ordinary
20.00
2018 Preferred stock
25.93
Online property portal
31 December
2017
Ordinary D
25.80
(i) The market value of the Group’s investment in Euromoney at 30 September 2018 was £720.7 million (2017 £627.0 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 49.8% the Group has
treated this investment as an associated undertaking.
(ii) Since the Group’s share of voting rights in the investment in LineVision, Inc. is 49%, the Group does not have significant control therefore the
investment has been treated as an associated undertaking.
140
140
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Daily Mail and General Trust plc Annual Report 2018
Summary financial information for Euromoney, extracted on a 100% basis from Euromoney’s own financial statements, for the year to
30 September 2018 is set out below:
Revenue
Depreciation and amortisation
Profit from continuing operations
Share of results in joint ventures and associates
Interest income
Interest expense
Tax charge
Post-tax profit from discontinued operations
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 (49.8%, 2017 49.9%)
Goodwill and intangibles carrying value
Group carrying value
25 Available for sale investments
At 30 September 2016
Additions – cash
Additions – non cash
Owned by subsidiaries disposed
Transfer to investment in associates
Impairment charge
Exchange adjustment
At 30 September 2017
Additions – cash
Additions – non cash, conversion of loan note
Transfer to investment in associates
Impairment charge
Exchange adjustment
At 30 September 2018
Year ended
30 September
2018
£m
390.3
(29.0)
161.9
0.2
5.2
(6.0)
(51.4)
91.3
201.2
28.7
229.9
At
30 September
2018
£m
615.6
78.3
87.4
781.3
(245.3)
(42.4)
(287.7)
493.6
Year ended
30 September
2017
£m
386.9
(28.0)
43.4
(1.9)
3.3
(4.1)
(3.4)
5.9
43.2
3.5
46.7
At
30 September
2017
£m
648.8
4.4
123.4
776.6
(267.5)
(212.3)
(479.8)
296.8
245.8
450.5
696.3
Note
18
18
24
8
24, (i)
8
148.1
449.8
597.9
Unlisted
£m
15.8
19.4
3.4
(5.8)
(1.4)
(0.5)
(0.3)
30.6
19.3
1.5
(29.4)
(1.8)
0.2
20.4
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.
(i) During the period, the Group acquired an additional interest in Yopa Ltd, taking its overall holding to 25.8%. By virtue of the Group’s board
representation and shareholder rights the Group now has significant influence over Yopa Ltd and has treated this investment as an associate
(see Note 24).
141
141
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Financial Statements
Financial Statements
Notes to the accounts
25 Available for sale investments continued
Available-for-sale investments are analysed as follows:
Unlisted
Brit Media, Inc. (incorporated and operating in the US)
BDG Media, Inc. (incorporated and operating in the US)
Hambro Perks Ltd (incorporated and operating in the UK)
Taboola.com Ltd (incorporated and operating in Israel)
Cue Ball Capital LP (incorporated and operating in the US)
Evening Standard Ltd (incorporated and operating in the UK)
Kortext Ltd (incorporated and operating in the UK)
CompStak, Inc. (incorporated and operating in the US)
Live Better With Ltd (incorporated and operating in the UK)
Other
Note
Class of Holding
Group interest %
At
30 September
2018
£m
At
30 September
2017
£m
Ordinary
(i)
(ii) Common Stock
Ordinary
(iii)
(iv)
Ordinary
(v) Limited Partner
Ordinary
(vi)
Ordinary
(vii)
Ordinary
(viii)
Ordinary
(ix)
9.1
3.2
3.1
0.4
2.5
10.0
2.4
2.0
0.5
6.2
4.9
2.0
2.0
1.5
1.1
0.7
0.5
0.5
1.0
20.4
5.3
3.2
–
2.0
1.4
0.3
–
0.5
–
17.9
30.6
(i) 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.
(ii) BDG Media, Inc. operates a website with news, entertainment, fashion and beauty, books and lifestyle content.
(iii) Hambro Perks Ltd is a growth investment firm.
(iv) 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.
(v) Cue Ball Capital LP is a venture capital and private equity firm specialising in start-ups, early-stage, mid-venture, growth equity scale-ups and
buy-out investments.
(vi) Evening Standard Ltd publishes a weekday newspaper, distributed for free throughout Greater London.
(vii) Kortext Ltd provides a digital learning platform and supplies digital textbooks.
(viii) CompStak, Inc. provides commercial real estate information to brokers, appraisers, researchers, landlords, lenders and investors.
(ix) Live Better With Ltd provides a range of products to help improve the quality of day-to-day life for cancer patients.
Interest analysis of available-for-sale investments is as follows:
Non-interest bearing
At
30 September
2018
£m
20.4
At
30 September
2017
£m
30.6
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Daily Mail and General Trust plc Annual Report 2018
Note
20
At
30 September
2018
£m
6.9
24.6
–
31.5
–
31.5
At
30 September
2017
£m
7.5
17.6
1.6
26.7
(0.1)
26.6
At
30 September
2018
£m
At
30 September
2017
£m
Note
20
182.5
(5.1)
177.4
69.7
17.2
264.3
–
264.3
3.0
2.6
5.4
16.3
27.3
291.6
170.4
(5.1)
165.3
72.2
18.8
256.3
(19.5)
236.8
3.6
1.3
–
15.6
20.5
257.3
At
30 September
2018
£m
(5.1)
(4.3)
1.8
0.3
2.5
(0.3)
(5.1)
At
30 September
2017
£m
(16.1)
(4.3)
6.6
0.8
7.9
–
(5.1)
26 Inventories
Raw materials and consumables
Work in progress
Finished goods
Classified as held for sale
27 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
Interest receivable
Other receivables
Movement in the allowance for doubtful debts is as follows:
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
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.
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Financial Statements
Financial Statements
Notes to the accounts
27 Trade and other receivables continued
Ageing of impaired trade receivables:
0 – 30 days
31 – 60 days
61 – 90 days
91 – 120 days
121+ days
Total
At
30 September
2018
£m
0.6
0.2
0.5
0.4
3.4
5.1
At
30 September
2017
£m
0.2
0.1
0.1
0.2
4.5
5.1
Included in the Group’s trade receivables are debtors with a carrying value of £70.8 million (2017 £94.8 million) which are past due at 30 September
2018 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.
Ageing of past due but not impaired receivables is as follows:
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.
28 Other financial assets
Current assets
Collateral
Cash deposits
Non-current assets
Loans to associates and joint ventures
At
30 September
2018
£m
28.5
12.0
9.1
21.2
70.8
At
30 September
2017
£m
32.3
9.8
34.3
18.4
94.8
Note
(i)
(ii)
At
30 September
2018
£m
At
30 September
2017
£m
8.0
237.3
245.3
18.4
18.4
14.5
–
14.5
15.5
15.5
(i) The Group deposits collateral with its bank counterparties with whom it has entered into a credit support annex to an ISDA (International
Swaps and Derivatives Association) Master Agreement. This represents cash that cannot be readily used in operations.
(ii) Represents cash deposits held with the Group’s bank counterparties with an original maturity date of three months or more. As required by
IAS 7, Statement of Cash Flows, these have been classified within other financial assets.
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29 Cash and cash equivalents
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
Fixed rate interest
The carrying amount of cash and cash equivalents equates to their fair values.
30 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.
Daily Mail and General Trust plc Annual Report 2018
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30 September
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£m
437.8
(1.9)
435.9
At
30 September
2017
£m
14.6
(7.2)
7.4
Note
33
16
333.9
89.4
0.2
0.8
5.4
8.1
437.8
2.0
435.8
437.8
0.9
2.9
0.2
0.4
3.7
6.5
14.6
14.6
–
14.6
At
30 September
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£m
At
30 September
2017
£m
Note
39.9
14.2
10.8
8.1
185.5
234.4
492.9
–
492.9
2.0
494.9
20
83.1
14.2
10.7
13.5
154.8
243.2
519.5
(16.8)
502.7
2.9
505.6
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Financial Statements
Financial Statements
Notes to the accounts
31 Current tax
Corporation tax payable
Classified as held for sale
Corporation tax receivable
32 Acquisition put option commitments
Current
Non-current
The carrying amount of put option commitments approximates to their fair value.
33 Borrowings
The Group’s borrowings are unsecured and are analysed as follows:
Note
20
At
30 September
2018
£m
6.1
–
6.1
(5.4)
0.7
At
30 September
2017
£m
7.0
(5.3)
1.7
(9.6)
(7.9)
At
30 September
2018
£m
0.6
7.6
8.2
At
30 September
2017
£m
0.6
7.4
8.0
Overdrafts
£m
Bank loans
£m
Bonds
£m
Loan notes
£m
Finance leases
£m
1.9
–
–
–
1.9
7.2
–
–
–
–
7.2
–
–
–
–
–
–
–
46.3
–
46.3
46.3
218.7
9.1
196.6
205.7
424.4
1.7
–
–
–
1.7
–
1.8
216.2
10.0
197.3
423.5
423.5
–
–
–
–
1.8
–
–
–
–
–
0.4
0.3
0.2
–
0.5
0.9
Total
£m
222.3
9.1
196.6
205.7
428.0
9.4
216.5
56.5
197.3
470.3
479.7
At 30 September 2018
Within one year
Between two and five years
Over five years
At 30 September 2017
Within one year
Between one and two years
Between two and five years
Over five years
146
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The Group’s borrowings are analysed by currency and interest rate type as follows:
At 30 September 2018
Fixed rate interest
Floating rate interest
At 30 September 2017
Fixed rate interest
Floating rate interest
Sterling
£m
424.4
0.3
424.7
423.5
28.2
451.7
US dollar
£m
–
3.1
3.1
0.9
27.1
28.0
Euro
£m
–
0.2
0.2
–
–
–
Total
£m
424.4
3.6
428.0
424.4
55.3
479.7
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 2018
Fixed rate interest
Floating rate interest
At 30 September 2017
Fixed rate interest
Floating rate interest
Sterling
£m
US dollar
£m
317.1
(11.6)
305.5
214.7
(71.3)
143.4
320.7
(198.3)
122.4
334.5
1.8
336.3
Euro
£m
–
0.1
0.1
–
–
–
Total
£m
637.8
(209.8)
428.0
549.2
(69.5)
479.7
Committed borrowing facilities
During the period, the Group renewed its committed bank facilities for a further five-year term. The terms of the new facilities are substantially the
same as those of the previous 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. 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 is shown in Note 34.
The Group’s total committed bank facilities amount to £431.2 million. Of these facilities £205.0 million are denominated in sterling and
£226.2 million (US$294.0 million) are denominated in US dollars. Drawings are permitted in all major currencies.
The Group’s committed bank facilities analysed by maturity are as follows:
Expiring in more than one year but not more than two years
Expiring in more than four years but not more than five years
Total bank facilities
At
30 September
2018
£m
–
431.2
431.2
At
30 September
2017
£m
611.4
–
611.4
147
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Financial Statements
Notes to the accounts
33 Borrowings continued
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 one year but not more than two years
Expiring in more than four years but not more than five years
Total undrawn committed bank facilities
The Group has issued standby letters of credit amounting to £3.3 million (2017 £3.5 million).
Bonds
The nominal, carrying and fair values of the Group’s bonds and the coupons payable are as follows:
At
30 September
2018
£m
–
431.2
431.2
At
30 September
2017
£m
565.1
–
565.1
Maturity
7 December 2018
9 April 2021
21 June 2027
Annual coupon %
5.75
10.00
6.375
At
30 September
2018
Fair value
£m
220.2
8.4
228.8
457.4
At
30 September
2017
Fair value
£m
229.4
9.0
235.8
474.2
At
30 September
2018
Carrying value
£m
218.7
9.1
196.6
424.4
At
30 September
2017
Carrying value
£m
216.2
10.0
197.3
423.5
At
30 September
2018
Nominal value
£m
218.5
7.2
200.0
425.7
At
30 September
2017
Nominal value
£m
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 £0.6 million (2017 £0.9 million) and the unamortised premia £1.2 million (2017 £4.1 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 3.0%. 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.
34 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.
Capital risk management
The Group manages its capital, defined as equity shareholders’ funds and net borrowings, to ensure that 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 BB+ with Standard & Poor’s
and BBB- with Fitch 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 3.50 times together with a minimum interest cover ratio of 3.0 times measured in March and September. These
covenants were met at the relevant testing dates during the year. The bank covenant ratio uses the average exchange rate in the calculation of net
debt. Excluding cash deposits with an original maturity of more than three months amounting to £237.3 million, the resultant net debt to EBITDA
ratio is 0.01 times (2017 1.38 times). Using a closing rate basis for the valuation of net cash, the ratio was 0.02 times (2017 1.33 times).
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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 whilst 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 155 of this note.
Market risk management
The Group’s primary market risks are interest rate fluctuations and exchange rate movements.
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 9.28 times
(2017 10.07 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 70.0% to 80.0% 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
£93.1 million (2017 £93.1 million) with the Group paying floating rates of between 0.33% and 0.94% (2017 0.29% and 0.99%).
(ii) Floating-to-fixed 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 (2017 US$67.0 million) with the Group
receiving floating US dollar interest at rates of between 1.33% and 2.35% (2017 0.86% and 1.33%).
(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
(2017 £96.3 million/US$155.0 million) resulting in the Group paying fixed US dollar interest at rates of between 5.56% and 6.99% (2017 5.56%
and 6.99%).
(iv) The Group also had a number of outstanding interest rate caps. These amounted to US$195.0 million and £105.0 million notional
(2017 US$225.0 million) at rates of between 2.09% and 3.50% (2017 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 2018 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, forward contracts and US dollar bank borrowings 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.
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Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
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
38 days (2017 32 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 historic 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 153.
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 cash 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 or 25.0% surplus cash balances deposited (or at risk) with any ‘AA’ or UK ring-fenced banking
counterparty or £10.0 million or 10.0% surplus cash balances with ‘A’ rated counterparties but with no more than the higher of £50.0 million or
50.0% of surplus cash balances in aggregate. 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 153.
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.
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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 2018 were:
Sterling interest rate swaps
Sterling debt
Total
At
30 September
2016
£m
7.5
(7.5)
–
Fair value
movement
gain/(loss)
£m
(4.7)
4.7
–
At
30 September
2017
£m
2.8
(2.8)
–
Fair value
movement
gain/(loss)
£m
(2.3)
2.3
–
At
30 September
2018
£m
0.5
(0.5)
–
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 2018.
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 2018.
The Group’s derivative financial instruments, other than acquisition option commitments, and their maturity profiles are summarised as follows:
Derivative financial assets:
Fair value
hedges
£m
Net
investment
hedges
£m
Derivatives
not qualifying
for hedge
accounting
£m
Derivative
financial
assets
£m
At 30 September 2018
Within one year
Between one and two years
Between two and five years
Over five years
At 30 September 2017
Within one year
Between one and two years
Between two and five years
Over five years
0.7
–
1.9
–
1.9
2.6
–
1.4
2.7
–
4.1
4.1
–
–
–
–
–
–
3.0
–
–
–
–
3.0
–
–
1.1
6.0
7.1
7.1
–
–
0.4
0.1
0.5
0.5
0.7
–
3.0
6.0
9.0
9.7
3.0
1.4
3.1
0.1
4.6
7.6
151
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Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Derivative financial liabilities:
At 30 September 2018
Within one year
Between one and two years
Between two and five years
Over five years
At 30 September 2017
Within one year
Between one and two years
Between two and five years
Over five years
Fair value
hedges
£m
Net
investment
hedges
£m
Derivative
financial
liabilities
£m
–
–
–
(2.1)
(2.1)
(2.1)
–
–
–
(1.3)
(1.3)
(1.3)
(6.6)
–
–
(11.4)
(11.4)
(18.0)
(0.4)
(5.7)
–
(11.8)
(17.5)
(17.9)
(6.6)
–
–
(13.5)
(13.5)
(20.1)
(0.4)
(5.7)
–
(13.1)
(18.8)
(19.2)
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 statutory results.
At 30 September 2018 it is estimated that an increase of 1.0% in interest rates would have decreased the Group’s finance costs by £8.1 million
(2017 £3.7 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 2018 it is estimated that a decrease of 1.0% in interest rates would have increased the Group’s finance costs by £5.8 million
(2017 £3.0 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.
At 30 September 2018 it is estimated that a 10.0% strengthening of sterling against the US dollar would have increased the net gain taken to equity
by £13.3 million (2017 decreased the net loss by £33.2 million) and decreased the net loss taken to income by £0.4 million (2017 no change to the net
gain taken to income). A 10.0% weakening of sterling against the US dollar would have decreased the net gain taken to equity by £16.3 million
(2017 increased the net loss by £40.5 million) and increased the net loss taken to income by £0.5 million (2017 increased the net gain by £0.1 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 2018, 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 £nil (2017 £nil).
At 30 September 2018, 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 £nil (2017 £nil).
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Daily Mail and General Trust plc Annual Report 2018
The carrying amounts and gains and losses on financial instruments are as follows:
At
30 September
2018
Carrying
amount
£m
20.4
20.4
Year ended
30 September
2018
(Loss)/gain
to income
£m
(1.7)
(1.7)
Year ended
30 September
2018
Gain/(loss)
to equity
£m
0.2
0.2
At
30 September
2017
Carrying
amount
£m
30.6
30.6
Year ended
30 September
2017
Gain/(loss)
to income
£m
(0.5)
(0.5)
Year ended
30 September
2017
(Loss)/gain
to equity
£m
(0.3)
(0.3)
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 swaps
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
Interest rate swaps
Fixed to fixed cross currency swaps
Forward foreign currency contracts
Derivative liabilities in effective hedging relationships
Acquisition put option commitments
Derivative liabilities not designated as hedging
instruments
180.4
33.4
263.7
437.8
915.3
–
0.1
0.1
2.6
–
2.6
3.2
3.9
7.1
(39.9)
(1.9)
(424.4)
–
(1.7)
–
(467.9)
(4.8)
(4.8)
(2.1)
(18.0)
–
(20.1)
(8.2)
(8.2)
2.2
–
3.0
1.7
6.9
–
–
–
–
(1.7)
(1.7)
3.4
0.4
3.8
–
–
(26.8)
(6.9)
(5.0)
–
(38.7)
(2.4)
(2.4)
(1.0)
(1.4)
4.9
2.5
–
–
3.2
1.5
–
1.6
6.3
–
–
–
–
–
–
–
–
–
(0.1)
–
–
2.6
–
–
2.5
(0.1)
(0.1)
–
(0.5)
(1.6)
(2.1)
(0.2)
(0.2)
149.4
34.1
30.0
14.6
228.1
–
0.3
0.3
4.1
3.0
7.1
0.1
0.4
0.5
(66.3)
(7.2)
(423.5)
(46.3)
(1.8)
(0.9)
(546.0)
(17.0)
(17.0)
(1.3)
(17.5)
(0.4)
(19.2)
(8.0)
(8.0)
Total for financial instruments
449.6
(31.3)
6.6
(323.6)
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f
o
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m
a
t
i
o
n
(3.1)
–
1.4
1.0
(0.7)
2.9
–
2.9
(1.4)
(1.7)
(3.1)
1.8
–
1.8
–
–
(24.2)
(6.6)
(0.2)
(0.2)
(31.2)
28.6
28.6
–
(1.7)
–
(1.7)
7.4
7.4
3.5
(1.7)
(1.6)
–
0.1
(3.2)
–
–
–
–
(2.8)
(2.8)
–
–
–
0.6
0.1
–
(3.5)
–
–
(2.8)
(0.6)
(0.6)
–
5.5
(3.2)
2.3
(0.9)
(0.9)
(8.3)
153
153
Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Reconciliation of net gain/(loss) taken to equity is as follows:
Change in fair value of hedging derivatives
Translation of financial instruments of overseas operations
Transfer of gain on cash flow hedges from translation reserve to the Consolidated Income Statement
Total gain/(loss) on financial instruments to equity
Reconciliation of loss taken through income to net finance costs is as follows:
Total (loss)/gain 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 is as follows:
At 30 September 2018
Future minimum lease payments
Present value of minimum lease payments
At 30 September 2017
Future minimum lease payments
Present value of minimum lease payments
Note
39, 40
39, 40
Year ended
30 September
2018
£m
2.8
8.7
(4.9)
6.6
Year ended
30 September
2017
£m
(3.7)
(7.9)
3.3
(8.3)
Year ended
30 September
2018
£m
(31.3)
Year ended
30 September
2017
£m
3.5
(2.2)
1.8
(0.1)
(4.7)
2.0
(34.5)
3.1
0.5
(0.1)
(2.4)
(4.9)
(0.3)
Due in less
than one year
£m
–
–
Due between one
and five years
£m
–
–
Due in less
than one year
£m
0.4
0.4
Due between one
and five years
£m
0.5
0.5
Note
27
8
9
9
10
10
Total
£m
–
–
Total
£m
0.9
0.9
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Daily Mail and General Trust plc Annual Report 2018
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 2018
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 2017
Trade payables
Bank loans
Bank overdrafts
Bonds
Loan notes
Finance leases
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Currency swaps
Forward contracts
(39.9)
–
(1.9)
(234.3)
(1.7)
–
(1.2)
(0.6)
0.4
(36.7)
–
(315.9)
(66.3)
–
(7.3)
(26.0)
(1.8)
(0.4)
(3.4)
(0.6)
0.4
(7.2)
(36.9)
(149.5)
–
–
–
(13.5)
–
–
–
–
0.4
(5.7)
–
(18.8)
–
–
–
(234.3)
–
(0.3)
(6.9)
–
0.4
(35.7)
–
(276.8)
–
–
–
(45.8)
–
–
(3.7)
(7.7)
1.1
(17.1)
–
(73.2)
–
(47.6)
–
(46.5)
–
(0.2)
(7.8)
(7.4)
1.1
(16.6)
–
(125.0)
–
–
–
(247.5)
–
–
–
–
1.3
(109.8)
–
(356.0)
–
–
–
(260.2)
–
–
–
–
1.7
(112.1)
–
(370.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
(39.9)
–
(1.9)
(541.1)
(1.7)
–
(4.9)
(8.3)
3.2
(169.3)
–
(763.9)
(66.3)
(47.6)
(7.3)
(567.0)
(1.8)
(0.9)
(18.1)
(8.0)
3.6
(171.6)
(36.9)
(921.9)
Included in the maturity table above are interest rate swaps with a notional value of US$67.0 million (2017 US$67.0 million) and currency swaps with
a notional value of US$90.0 million (2017 US$90.0 million) with mutual break clauses at fair value every five years.
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155
Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Reconciliation of undiscounted liabilities to amounts on the Consolidated Statement of Financial Position is as follows:
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
At 30 September 2018
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 2017
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
(39.9)
–
(1.9)
(541.1)
(1.7)
–
(4.9)
(8.3)
3.2
(169.3)
–
(763.9)
(66.3)
(47.6)
(7.3)
(567.0)
(1.8)
(0.9)
(18.1)
(8.0)
3.6
(171.6)
(36.9)
(921.9)
–
–
–
115.4
–
–
–
–
(3.2)
10.3
–
122.5
–
1.3
0.1
141.4
–
–
–
–
(3.6)
9.1
–
148.3
–
–
–
0.6
–
–
–
–
–
–
–
0.6
–
–
–
0.9
–
–
–
–
–
–
–
0.9
–
–
–
1.2
–
–
–
–
–
–
–
1.2
–
–
–
4.1
–
–
–
–
–
–
–
4.1
–
–
–
(0.5)
–
–
0.1
0.1
(2.1)
4.9
–
2.5
–
–
–
(2.9)
–
–
1.1
–
(1.3)
2.0
(0.3)
(1.4)
–
–
–
–
–
–
–
–
–
136.1
–
136.1
–
–
–
–
–
–
–
–
–
143.0
36.8
179.8
Total
£m
(39.9)
–
(1.9)
(424.4)
(1.7)
–
(4.8)
(8.2)
(2.1)
(18.0)
–
(501.0)
(66.3)
(46.3)
(7.2)
(423.5)
(1.8)
(0.9)
(17.0)
(8.0)
(1.3)
(17.5)
(0.4)
(590.2)
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).
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At 30 September 2018
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
Financial liabilities
Fair value through profit and loss
Provision for contingent consideration payable
Derivative instruments in designated hedge accounting relationships
At 30 September 2017
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
25
36
Note
25
Financial liabilities
Fair value through profit and loss
Provision for contingent consideration payable
36
Derivative instruments in designated hedge accounting relationships
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
–
–
7.1
–
2.6
9.7
–
(20.1)
(20.1)
20.4
–
0.1
–
20.5
(4.8)
–
(4.8)
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
–
–
–
0.5
–
–
7.1
7.6
–
(19.2)
(19.2)
30.6
–
–
0.3
–
30.9
(17.0)
–
(17.0)
Total
£m
20.4
7.1
0.1
2.6
30.2
(4.8)
(20.1)
(24.9)
Total
£m
30.6
0.5
–
0.3
7.1
38.5
(17.0)
(19.2)
(36.2)
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.
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157
Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Reconciliation of level 3 fair value measurement of financial liabilities is as follows:
At 30 September 2016
Cash paid to settle contingent consideration in respect of acquisitions
Change in fair value of contingent consideration in income
Additions to contingent consideration
Exchange adjustment
At 30 September 2017
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
At 30 September 2018
Note
36
10, 36
36
36
10, 36
10, 36
36
£m
(52.6)
8.2
28.6
(0.6)
(0.6)
(17.0)
14.4
(2.2)
(0.2)
(0.2)
0.4
(4.8)
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 £nil to £19.4 million (2017 £1.1 million to
£233.0 million).
The increase in fair value of contingent consideration of £2.2 million (2017 reduction of £28.6 million) and finance charge on discounting of
contingent consideration of £0.3 million (2017 £nil) were charged or credited to the Income statement within 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 2018 increasing or decreasing by £0.4 million and £0.4 million respectively (2017 £1.7 million increase and £1.3 million
decrease), with the corresponding change to the value at 30 September 2018 charged or credited to the Consolidated Income Statement in
future periods.
The rates used to discount contingent consideration range from 0.8% to 1.1% (2017 0.0% to 0.2%). 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 2018 decreasing or increasing
by £0.1 million and £0.1 million respectively (2017 £0.3 million and £0.1 million), with the corresponding change to the value at 30 September 2018
charged or credited to the Consolidated Income Statement in future periods.
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Daily Mail and General Trust plc Annual Report 2018
35 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 2018 were £9.3 million (2017 £18.2 million).
The schemes include a number of defined contribution pension arrangements, in addition to funded defined benefit pension arrangements which
are closed to future accrual. The defined benefit schemes in the UK, together with some defined contribution plans, are administered by Trustees
or Trustee Companies.
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 closed to new entrants and to further accrual.
Full actuarial valuations of the defined benefit schemes are carried out triennially by the scheme actuary. 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, £18.3 million on 5 October 2019, £16.2 million on 5 October 2020 to 2025 and £76.2 million on 5 October 2026. The Company considers
that these contribution rates are sufficient to eliminate any deficit over the agreed period. This Recovery Plan will be reviewed at the next triennial
funding valuation of the main schemes which is due to be completed with an effective date of 31 March 2019.
In addition 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 20.0% of the capital reduction. Contributions of £nil (2017 £nil)
relating to this agreement were made in the year to 30 September 2018.
Limited Partnership investment vehicle
HPS owns a beneficial interest in a Limited Partnership investment vehicle (LP). The LP has been designed to facilitate annual 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, the interest of HPS 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.
Strategic Plan
The Trustee has developed a comprehensive approach to managing the schemes’ investment strategy to ensure it is always aligned with the
Strategic Plan. The schemes’ financial performance has been sufficiently better than envisaged so the Trustee has reduced risk largely by decreasing
the equity allocation and increasing its interest rate and inflation rate hedging which is reflected in the analysis of the schemes’ assets. In addition
the Strategic Plan has been amended to target an asset allocation that may enable all pension obligations to be under written with insurance
policies by 2030.
The Strategic Plan may involve the Trustee reducing risk further.
This framework defines a series of triggers which present opportunities for the Trustee to reduce risk either by reducing the allocation to return
seeking assets, such as equities and increasing the interest rate and inflation hedge or a combination of the two.
The figures in this note are based on calculations using membership data as at 30 September 2018 along with asset valuations and cash flow
information from the schemes for the year to 30 September 2018.
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
Surplus/(deficit) reported in the
Consolidated Statement of Financial Position
At
30 September
2018
Schemes
in surplus
£m
(2,541.5)
2,790.6
At
30 September
2018
Schemes
in deficit
£m
(53.4)
47.8
At
30 September
2018
Total
£m
(2,594.9)
2,838.4
At
30 September
2017
Schemes
in surplus
£m
(2,631.9)
2,705.3
At
30 September
2017
Schemes
in deficit
£m
(58.8)
47.8
At
30 September
2017
Total
£m
(2,690.7)
2,753.1
249.1
(5.6)
243.5
73.4
(11.0)
62.4
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Financial Statements
Financial Statements
Notes to the accounts
35 Retirement benefit obligations continued
The IAS 19 accounting surplus/(deficit) data above differs to the triennial actuarial surplus/(deficit) calculation used in the assessment of future
funding obligations. There are a number of reasons for this – the actuarial valuation is as at the schemes’ year end date of 31 March and is calculated
triennially based on more prudent assumptions including those covering discount rates and mortality. IAS 19 requires the Company to use best
estimate assumptions.
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.
In relation to HPS and the SEPF, having taken account of the rules of the schemes, the Company has an unconditional right to a refund of any
surplus under IFRIC 14 and considers that the recognition of surpluses in these schemes on its Statement of Financial Position is in accordance with
the interpretations of IFRIC 14. In relation to the AVC, having taken account of the rules of the scheme, the Company does not have an unconditional
right to a refund under IFRIC 14. However, at 30 September 2018 the AVC Plan showed a deficit and no contributions are payable into the AVC Plan.
Therefore no asset ceiling needs to be applied to restrict surplus on the balance sheet and no additional minimum funding liability is needed under
IFRIC 14.
IFRIC 14 is in the process of being revised which may lead to a reassessment of the Company’s recognition of any pension surplus on its Statement
of Financial Position.
The surplus/(deficit) for the year, set out above, excludes a related deferred tax liability of £41.0 million (2017 £9.9 million).
A reconciliation of the present value of the defined benefit obligation is shown in the following table:
Defined benefit obligation at start of year
Attributable to subsidiaries disposed
Interest cost
Past service cost
Net benefit payments
Actuarial gain 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
Attributable to subsidiaries disposed
Interest income on scheme assets
Company contributions
Net benefit payments
Return on plan assets, excluding amounts included in interest income on scheme assets
Fair value of assets at end of year
Note
10
3
39, 40
39, 40
39, 40
Note
10
15
39, 40
Year ended
30 September
2018
£m
(2,690.7)
–
(68.7)
(17.3)
99.2
58.7
15.8
8.1
(2,594.9)
Year ended
30 September
2018
£m
2,753.1
–
70.7
12.8
(99.2)
101.0
2,838.4
Year ended
30 September
2017
£m
(2,998.9)
72.2
(62.6)
–
106.8
140.7
47.3
3.8
(2,690.7)
Year ended
30 September
2017
£m
2,752.9
(71.1)
57.7
13.1
(106.8)
107.3
2,753.1
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Daily Mail and General Trust plc Annual Report 2018
The fair value of assets is categorised as follows:
Equity
– Investment funds
– Private equity
Liability Driven Investments
Bonds and loans
Property
Hedge funds
Infrastructure
Cash / Other
Total Assets
Note
(i)
(ii)
(iii)
(iv)
Year ended
30 September
2018
£m
Year ended
30 September
2018
%
Year ended
30 September
2017
£m
Year ended
30 September
2017
%
464.6
212.0
565.1
817.6
521.3
–
215.3
42.5
2,838.4
16
7
20
29
18
–
8
2
100
655.6
222.1
507.3
707.1
405.7
3.5
205.6
46.2
2,753.1
24
8
18
26
15
0
7
2
100
(i) Equities include hedge funds and infrastructure funds. Quoted securities in active markets are valued at the latest available bid price at the
reporting date.
Private equity and infrastructure funds are valued by investment managers using appropriate valuation techniques. These are derived from
market based multiples and discount rates of comparable quoted businesses or market transactions which have been determined by the
Trustees’ investment advisors to represent fair value.
(ii) Liability Driven Investment funds (LDI) are a collateralised portfolio of gilt repo and swap contracts designed to hedge approximately 65% (by
value of assets) of the schemes’ inflation and discount rate risks. These are independently valued using quoted prices and for OTC instruments
by the investment manager using recognised discounting techniques.
(iii) Bonds and loans include corporate bonds, distressed credit and loans. Corporate bonds are held in unitised pooled investment vehicles and
are valued at the latest available bid price provided by the pooled investment manager. Distressed credit and loans are valued by the
investment managers using relevant valuation techniques.
(iv) The schemes’ property portfolio represent a mixture of industrial, retail, office and leisure. These assets are independently valued at open
market value at 31 March each year with subsequent changes in value based on changes in the Investment Property Databank Index (IPD)
which tracks retail, office and industrial property transactions.
The value of employer-related assets held on behalf of the schemes at 30 September 2018 was £nil (0.0% of assets), (2017 £nil, 0.0% of assets).
The main financial assumptions are shown in the following table:
Price inflation
Pension increases
Discount rate
Year ended
30 September
2018
%
3.25
3.10
2.80
Year ended
30 September
2017
%
3.20
3.00
2.60
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 (0.20% p.a.), 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 18 years (2017 20 years).
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161
Financial Statements
Financial Statements
Notes to the accounts
35 Retirement benefit obligations continued
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
2018
Future life
expectancy from
age 60 (years)
26.2
28.2
26.7
29.2
Year ended
30 September
2017
Future life
expectancy from
age 60 (years)
26.4
28.3
26.8
29.2
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:
Past service cost
Charge to operating profit
Finance income/(charge)
Total charge to the Consolidated Income Statement
Note
10
Year ended
30 September
2018
£m
(17.3)
(17.3)
2.0
Year ended
30 September
2017
£m
–
–
(4.9)
(15.3)
(4.9)
The fair value of some of our pension assets are made up of quoted and unquoted investments. The latter require more judgement as their values
are not directly observable. The assumptions used in valuing unquoted investments are affected by current market conditions and trends which
could result in changes in fair value after the measurement date.
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
Increase in pension obligation at 30 September 2018 from a one-year increase in life expectancy
Change in projected pension cost for the year to 30 September 2019 from a one-year increase
Inflation rate
Decrease in pension obligation at 30 September 2018 from a 0.1 % p.a. increase (excluding hedging)
Change in projected pension cost for the year to 30 September 2019 from a 0.1 % p.a. increase
Discount rate
Decrease in pension obligation at 30 September 2018 from a 0.1 % p.a. decrease (excluding hedging)
Change in projected pension cost for the year to 30 September 2019 from a 0.1 % p.a. decrease
Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
+/-
+/-
+/-
87.7
2.4
44.2
1.1
50.0
1.5
78.9
2.0
46.5
1.1
53.2
1.3
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162
Daily Mail and General Trust plc Annual Report 2018
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 obligations.
The Trustees have sought to acquire certain assets with exposure to inflationary uplifts in order to negate a proportion of this risk. Monetary assets
such as bonds and loans hedge approximately 65% of the schemes’ risk (by value of assets).
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 bonds
and the LDI investment funds which reduce the gilt rate risk by hedging approximately 65% of the schemes’ risk (by value of assets).
Amounts recognised in the Consolidated Statement of Comprehensive Income (SOCI) are shown in the following table:
Actuarial gain recognised in SOCI
Cumulative actuarial gain/(loss) recognised in SOCI at beginning of year
Cumulative actuarial gain recognised in SOCI at end of year
A history of experience gains and losses is shown in the following table:
Year ended
30 September
2018
£m
183.6
147.7
331.3
Year ended
30 September
2017
£m
299.1
(151.4)
147.7
Present value of defined benefit obligation
Fair value of scheme assets
Combined surplus/(deficit) in schemes
Experience adjustments on defined benefit obligation
Experience adjustments on fair value of scheme assets
At
30 September
2018
£m
(2,594.9)
2,838.4
243.5
82.6
101.0
At
30 September
2017
£m
(2,690.7)
2,753.1
62.4
191.8
107.3
At
30 September
2016
£m
(2,998.9)
2,752.9
(246.0)
(574.9)
460.2
At
30 September
2015
£m
(2,437.4)
2,278.1
(159.3)
(47.0)
54.5
At
30 September
2014
£m
(2,381.9)
2,170.1
(211.8)
(195.7)
145.8
The Group expects to contribute approximately £18.3 million to the schemes during the year to 30 September 2019 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 £140.1 million (2017 £130.5 million) at the year end. The pension cost attributable
to these plans during the year amounted to £13.5 million (2017 £13.1 million).
Overseas pension plans
Overseas subsidiaries of certain Group segments operate defined contribution retirement benefit plans, primarily in North America. The pension
cost attributable to these plans during the year amounts to £3.2 million (2017 £4.5 million).
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163
Financial Statements
Financial Statements
Notes to the accounts
36 Provisions
Contract
discounts
and rebates
£m
Note
Coupon
discount
£m
Onerous
leases
£m
Reorganisation
costs
£m
Contingent
consideration
£m
(ii)
Claims
and legal
£m
(i)
Other
£m
Total
£m
Current liabilities
At 30 September 2016
Additions
Charged during year
Utilised during year
Owned by subsidiaries disposed
Transfer from non-current liabilities
Contingent consideration paid
Fair value adjustment to contingent consideration
Exchange adjustment
At 30 September 2017
Additions
Charged during year
Utilised during year
Transfer from non-current liabilities
Contingent consideration paid
Notional interest on contingent consideration
Fair value adjustment to contingent consideration
Exchange adjustment
At 30 September 2018
17
18
17
10
17
17
10
10
20.9
–
20.7
(21.9)
–
–
–
–
–
19.7
–
23.8
(21.5)
0.1
–
–
–
–
22.1
0.6
–
(0.1)
–
–
–
–
–
–
0.5
–
(0.3)
–
–
–
–
–
–
0.2
1.5
–
(0.5)
(0.6)
(0.2)
0.4
–
–
0.2
0.8
–
1.5
(0.7)
0.5
–
–
–
–
2.1
5.1
–
0.1
(3.6)
–
–
–
–
(0.1)
1.5
–
0.3
(1.5)
–
–
–
–
–
0.3
9.3
0.1
–
–
–
5.3
(8.2)
(3.3)
0.2
3.4
0.2
–
–
10.9
(14.4)
0.2
0.9
–
1.2
4.8
–
13.0
(9.2)
–
–
–
–
(0.3)
8.3
–
5.6
(9.6)
–
–
–
–
–
4.3
12.2
–
0.6
(3.5)
(0.1)
0.4
–
–
(0.2)
9.4
–
2.8
(3.6)
(0.1)
–
–
–
0.1
8.6
54.4
0.1
33.8
(38.8)
(0.3)
6.1
(8.2)
(3.3)
(0.2)
43.6
0.2
33.7
(36.9)
11.4
(14.4)
0.2
0.9
0.1
38.8
Non-current liabilities
At 30 September 2016
Additions
Charged during year
Utilised during year
Owned by subsidiaries disposed
Transfer to current liabilities
Fair value adjustment to contingent consideration
Exchange adjustment
At 30 September 2017
Charged during year
Utilised during year
Owned by subsidiaries disposed
Transfer to current liabilities
Fair value adjustment to contingent consideration
Exchange adjustment
At 30 September 2018
Onerous
leases
£m
Reorganisation
costs
£m
Contingent
consideration
£m
(ii)
Claims
and legal
£m
Note
(i)
Other
£m
Total
£m
17
18
10
18
10
4.1
–
–
–
(0.5)
(0.4)
–
0.1
3.3
1.3
–
–
(0.5)
–
0.1
4.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43.3
0.5
–
–
–
(5.3)
(25.3)
0.4
13.6
–
–
(0.4)
(10.9)
1.3
–
3.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.4
–
0.3
(0.1)
(2.7)
(0.4)
–
(0.3)
2.2
0.3
(0.1)
–
–
–
(0.2)
2.2
52.8
0.5
0.3
(0.1)
(3.2)
(6.1)
(25.3)
0.2
19.1
1.6
(0.1)
(0.4)
(11.4)
1.3
(0.1)
10.0
(i) Other current provisions principally comprise provisions for VAT of £nil (2017 £1.8 million), end of service provisions of £3.8 million
(2017 £3.1 million), dilapidation provisions of £2.0 million (2017 £2.1 million) and provisions for national insurance contributions of £1.7 million
(2017 £nil).
Other non-current provisions principally comprise dilapidation provisions of £1.0 million (2017 £0.9 million), end of service provisions
amounting to £0.6 million (2017 £0.5 million) and a provision for amounts payable to the Newspaper Society following the cessation of
membership on disposal of Northcliffe Newspapers Ltd in 2012 of £0.7 million (2017 £0.8 million).
164
164
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(ii) 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
2018
£m
1.2
–
3.6
4.8
At
30 September
2017
£m
3.4
5.8
7.8
17.0
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 £0.2 million. Certain
contingent consideration arrangements are not capped since they are based on future business performance.
37 Deferred taxation
At 30 September 2016
Disclosed within non-current liabilities
Disclosed within non-current assets
(Charge)/credit to income
Charge to equity
Owned by subsidiaries sold
Classified as held for sale
Exchange adjustment
At 30 September 2017
Disclosed within non-current liabilities
Disclosed within non-current assets
Credit/(charge) to income
Credit/(charge) to income due to change
in US tax rate
Charge to equity
Charge to equity due to change in US tax rate
Owned by subsidiaries acquired
Owned by subsidiaries sold
Exchange adjustment
At 30 September 2018
Disclosed within non-current liabilities
Disclosed within non-current assets
At 30 September 2018
(i) All attributable to continuing operations.
Note
11, (i)
39, 40
18
20
11, (i)
11
39, 40
39,40
17
18
Accelerated
capital
allowances
£m
39.0
–
39.0
12.9
–
(0.5)
0.7
–
52.1
8.6
43.5
(11.6)
Goodwill and
intangible
assets
£m
(156.0)
(23.9)
(132.1)
43.7
–
36.2
7.6
(0.2)
(68.7)
(61.9)
(6.8)
17.0
Share-based
payments
£m
17.3
–
17.3
(5.5)
(0.4)
(0.1)
–
–
11.3
9.5
1.8
0.3
Deferred
interest
£m
130.9
–
130.9
(92.6)
–
(4.3)
–
–
34.0
–
34.0
(4.0)
Trading
losses and
tax credits
£m
38.4
0.3
38.1
(5.4)
–
(5.4)
–
(0.1)
27.5
19.1
8.4
(0.7)
(2.4)
–
–
–
(2.3)
0.1
35.9
–
35.9
35.9
19.5
–
–
(0.5)
0.7
(2.8)
(34.8)
(6.2)
(28.6)
(34.8)
(0.9)
(3.9)
(2.9)
–
–
(0.1)
3.8
–
3.8
3.8
–
–
–
–
–
–
30.0
–
30.0
30.0
(0.1)
–
–
–
(0.1)
0.4
27.0
–
27.0
27.0
Pension
scheme
deficit
£m
50.8
–
50.8
(6.4)
(49.3)
(1.7)
–
–
(6.6)
–
(6.6)
0.3
–
(31.2)
–
–
–
–
(37.5)
–
(37.5)
(37.5)
Other
£m
33.2
(0.2)
33.4
(3.7)
–
(13.6)
(1.4)
(0.3)
14.2
12.6
1.6
8.3
(3.6)
–
–
–
(3.1)
3.1
18.9
–
18.9
18.9
Total
£m
153.6
(23.8)
177.4
(57.0)
(49.7)
10.6
6.9
(0.6)
63.8
(12.1)
75.9
9.6
12.5
(35.1)
(2.9)
(0.5)
(4.8)
0.7
43.3
(6.2)
49.5
43.3
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Financial Statements
Financial Statements
Notes to the accounts
37 Deferred taxation continued
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
At
30 September
2018
£m
40.1
1.2
15.7
57.0
At
30 September
2017
£m
41.2
1.5
18.8
61.5
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 £5.0 million (2017 £18.9 million) have expiry dates between 2033 and 2038.
There is an unrecognised deferred tax asset of £49.7 million (2017 £75.4 million) which relates to revenue losses and £96.1 million (2017 £131.4 million)
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 £113.9 million (2017 £127.4 million). Of these assets £0.8 million
(2017 £40.1 million) have expiry dates between 2033 and 2038.
No deferred tax liability is recognised on temporary differences of £74.6 million (2017 £58.8 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 2018 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.
38 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
2018
£m
2.5
42.8
45.3
Allotted, issued
and fully paid
At 30 September
2017
£m
2.5
42.8
45.3
Allotted, issued
and fully paid
At 30 September
2018
Number of shares
19,890,364
342,204,470
362,094,834
Allotted, issued
and fully paid
At 30 September
2017
Number of shares
19,890,364
342,204,470
362,094,834
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.
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Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
Note
17.8
17.8
5.0
5.0
(64.3)
(14.3)
–
21.4
(57.2)
(88.7)
(28.6)
14.1
38.9
(64.3)
38, (ii)
18
(i)
39 Reserves
Share premium account
At start and end of the year
Capital redemption reserve
At start and end of the year
Own shares
At start of year
Purchase of DMGT shares
Disposal of Group share of Euromoney own shares acquired
Own shares released on vesting of share options
At end of year
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) During the period, the Company utilised 2.9 million A Ordinary Non-Voting Shares in order to satisfy incentive schemes. This represented 0.9%
of the called-up A Ordinary Non-Voting Share capital at 30 September 2018.
(ii) The Company also purchased 2.2 million A Ordinary Non-Voting Shares having a nominal value of £0.3 million to match obligations under
incentive plans. The consideration paid for these shares was £14.3 million.
At 30 September 2018, this investment comprised 4,812,419 A Ordinary Non-Voting Shares (2017 4,812,419 shares) held in treasury and
2,981,109 A Ordinary Non-Voting Shares (2017 3,710,764 shares) held in the employee benefit trust. The market value of the Treasury Shares
at 30 September 2018 was £33.8 million (2017 £31.2 million) and the market value of the shares held in the employee benefit trust at
30 September 2018 was £20.9 million (2017 £24.1 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 2018 options were outstanding under the terms of the Company’s Executive Share Option Schemes, Long-Term Incentive Plans
and nil-cost options, over a total of 3,075,745 A Ordinary Non-Voting Shares (2017 4,052,581 shares).
Year ended
30 September
2018
£m
Year ended
30 September
2017
£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
Transfer of (profit)/loss on cash flow hedges from translation reserve to Consolidated Income Statement
Change in fair value of cash flow hedges
(Loss)/gain on hedges of net investments in foreign operations
8, 18, 19
At end of year
74.9
3.5
(8.9)
(10.4)
4.9
(2.1)
53.5
11.9
8.7
49.4
2.2
(1.8)
4.5
74.9
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Financial Statements
Financial Statements
Notes to the accounts
39 Reserves continued
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.
Retained earnings
At start of year
Profit for the period
Dividends paid
Actuarial gain on defined benefit pension schemes
Credit to equity for share-based payments
Settlement of exercised share options of subsidiaries
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 other items recognised directly in equity
Share of items recognised in Statement of Comprehensive Income by the Group’s associated undertakings
At end of year
At end of year – total reserves
40 Non-controlling interests
At start of year
Share of loss for the period
Dividends paid
Shares issued
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 gain on defined benefit pension schemes
Credit to equity for share-based payments
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
Recycled to Consolidated Income Statement on disposals
At end of year
Year ended
30 September
2018
£m
Year ended
30 September
2017
£m
Note
12
35
15
37
37
7
Note
35
15
8, 18
829.5
689.4
(81.0)
183.6
10.8
(13.8)
–
–
2.3
(31.2)
(6.8)
14.7
1,597.5
359.8
345.3
(78.3)
296.4
4.0
(38.4)
0.4
(0.3)
–
(49.3)
(0.4)
(9.7)
829.5
1,616.6
862.9
Year ended
30 September
2018
£m
11.0
(1.2)
(0.2)
–
–
–
–
0.2
–
–
–
–
–
3.7
13.5
Year ended
30 September
2017
£m
178.2
(3.0)
–
0.5
(5.5)
1.1
(0.9)
11.4
2.7
0.1
0.3
(2.6)
(0.2)
(171.1)
11.0
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The movement in the non-controlling interest in Euromoney is as follows:
At start of year
Share of profit for the period
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
Recycled to Consolidated Income Statement on disposals
At end of year
41 Commitments and contingent liabilities
Commitments
At 30 September 2018, the Group had outstanding capital expenditure commitments as follows:
Property, plant and equipment
Contracted but not provided in the financial statements
Year ended
30 September
2018
£m
–
–
–
–
–
–
–
Year ended
30 September
2017
£m
158.9
3.4
0.3
0.1
8.4
(171.1)
–
At
30 September
2018
£m
At
30 September
2017
£m
–
–
At 30 September 2018, 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
2018
Properties
£m
26.9
22.8
45.8
11.4
106.9
At
30 September
2017
Properties
£m
25.1
23.8
49.4
11.7
110.0
At
30 September
2018
Plant and
equipment
£m
1.3
1.0
0.7
–
3.0
At
30 September
2017
Plant and
equipment
£m
1.4
1.0
1.0
–
3.4
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 operating lease commitments relate to the DMGT head office premises at 2 Derry Street,
London W8 5TT, which expires in December 2022, and to the RMS head office premises at 7575 Gateway Blvd, Newark, California which expires
in December 2020.
At 30 September 2018, the Group had outstanding commitments under non-cancellable agreements made to secure venues for future events and
exhibitions which fall due as follows:
Within one year
Between one and two years
Between two and five years
At
30 September
2018
£m
17.1
6.2
–
23.3
At
30 September
2017
£m
12.6
13.3
7.6
33.5
We identified that the lease commitment relating to a new lease entered into in 2017 had not been recorded in the lease commitment note in 2017.
All charges related to the lease has been accurately recorded and hence the only adjustment required is to this note. The impact of this change was
to increase the lease commitment in 2017 from £14.8 million to £33.5 million.
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Financial Statements
Financial Statements
Notes to the accounts
41 Commitments and contingent liabilities continued
The Group has entered into arrangements with ink suppliers to obtain ink for the period to December 2020 at competitive prices and to secure
supply. At 30 September 2018, the commitment to purchase ink over this period was £21.7 million (2017 £24.2 million).
The Group has entered into agreements with various printers for periods up to December 2022 at competitive prices and to secure supply.
At 30 September 2018, the commitment to purchase printing capacity over this period was £29.1 million (2017 £39.4 million).
The Group has entered into a number of arrangements with Microsoft to provide cloud infrastructure to the Insurance Risk segment until June 2019.
At 30 September 2018, the remaining balance was prepaid resulting in no further outstanding commitment (2017 £12.1 million commitment).
Contingent liabilities
The Group has issued standby letters of credit amounting to £3.3 million (2017 £3.5 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 and provides for any settlement costs when such an outcome is judged probable.
Four writs claiming damages for libel were issued in Malaysia against Euromoney, an associate, and three of Euromoney’s 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
Euromoney on 22 October 1996. Two of these writs have been discontinued. The total outstanding amount claimed on the two remaining writs
is Malaysian Ringgit 83.4 million (£15.5 million). No provision has been made for these claims by Euromoney as Euromoney does not believe it has
any material liability in respect of these writs.
In January 2018, the European Commission conducted an unannounced inspection at Euromoney’s Brussels office of RISI Sprl (RISI), a
wholly-owned subsidiary of Euromoney, as part of an investigation into the sector of kraft paper and industrial paper sacks in the European
Union/European Economic Area. Provision is made for the outcome of tax, legal and other disputes where it is both probable that the Company
will suffer an outflow of funds and it is possible to make a reliable estimate of that outflow. No proceedings have been issued and Euromoney
is unable to make a reliable estimate of any potential liability, therefore no provision has been recognised by Euromoney.
The Group’s Energy Information business (Genscape) provided a real-time third-party auditor service verifying Renewable Identification Numbers
(RINs) for renewable fuel production activities in the US, as part of the Renewable Fuel Standard Quality Assurance Program (Program), a regulatory
program administered by the US Environmental Protection Agency (EPA).
Following discovery and self-reporting to the EPA by Genscape of potential fraudulent RINs generated by third parties but verified by Genscape
under the Program, the EPA issued a notice of intent to revoke the ability of Genscape to verify RINs as a third-party auditor.
EPA regulations for the Program set a liability cap on replacement of invalid RINs of 2.0% of the RINs. Genscape voluntarily paid the 2.0% liability
cap associated with the invalid RINs at a cost of $1.3 million, based on the then-prevailing market rates, subject to a reservation of rights. The EPA
regulations allow for situations where the cap does not apply - including auditor fraud and negligence.
The EPA has not formally alleged any wrongdoing by Genscape but the EPA continues to consider a proposed action to seek Genscape to retire, at
the current market price, a maximum of 68 million of RINs verified by Genscape. RINs trade in a volatile range currently averaging approximately
45 cents which equates to a theoretical maximum claim of approximately $31.0 million. Genscape has made no provision for any future claim which
may be payable.
Genscape continues to co-operate with EPA and discussions are ongoing.
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42 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, Insurance Risk, Energy Information, Property Information and Consumer Media segments. 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.
The charge to the Consolidated Income Statement is as follows:
Segment
DMGT Board and Corporate Costs
Insurance Risk
Euromoney
Energy Information
Property Information
Consumer Media
Social security costs
Scheme
Executive Share Option Scheme
Equity-Settled Executive Bonuses
Long-Term Incentive Plan
Option Plan
Capital Appreciation Plan
Option Plan
Option Plan
Long-Term Incentive Plan
Year ended
30 September
2018
£m
–
0.1
5.6
1.1
–
0.1
0.3
2.9
1.4
11.5
Year ended
30 September
2017
£m
(0.1)
(0.2)
0.7
1.0
0.2
0.2
0.1
2.0
0.1
4.0
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 historic 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 period.
Further details of the Group’s significant schemes are set out below:
DMGT 2006 Executive Share Option Scheme
Under the DMGT 2006 Executive Share Option Scheme, 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 period.
Outstanding at 1 October 2017
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at 30 September 2018
Exercisable at 30 September 2018
Exercisable at 1 October 2017
Year ended
30 September
2018
Number of share
options
885,743
100,000
(8,000)
(242,626)
(321,803)
413,314
178,314
472,409
Year ended
30 September
2018
Weighted average
exercise price
£
6.16
6.40
5.05
4.66
7.50
6.21
Year ended
30 September
2017
Number of share
options
1,527,614
75,000
(555,232)
(157,163)
(4,476)
885,743
Year ended
30 September
2017
Weighted average
exercise price
£
6.34
7.88
7.17
5.08
6.88
6.16
5.12
5.28
472,409
550,579
5.28
4.65
The aggregate of the estimated fair values of the options granted during the period is £0.1 million (2017 £0.6 million). The options outstanding
at 30 September 2018 had a weighted average remaining contractual life of 5.6 years (2017 4.8 years).
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Financial Statements
Financial Statements
Notes to the accounts
42 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 (%)
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 (£)
172
172
26 January 2009
2.53
2.53
1,887
10
7
2.53
3.00
5.81
40.00
0.56
14 December 2009
4.04
4.04
13,427
10
7
4.04
3.00
3.64
40.00
1.13
6 December 2010
5.39
5.39
6,000
10
7
5.39
2.00
2.97
30.00
1.22
5 December 2011
3.98
3.98
9,000
10
7
3.98
1.50
4.27
30.00
0.71
27 June 2012
3.91
3.91
100,000
10
7
3.91
1.00
4.43
30.00
0.70
17 December 2012
5.27
5.27
8,000
10
7
5.27
1.00
3.42
30.00
0.98
9 December 2013
9.16
9.16
25,000
10
5
9.16
1.50
2.00
25.00
1.69
10 December 2014
8.29
8.29
15,000
10
5
8.29
1.08
2.77
25.70
1.31
14 December 2015
7.06
7.06
60,000
3
7
7.06
1.19
3.26
25.10
0.93
6 December 2016
7.88
7.88
75,000
3
2
7.88
1.25
3.02
26.00
0.83
8 February 2018
6.40
6.40
100,000
3
7
6.40
0.82
3.24
27.88
0.94
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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 period in which they are
earned. Further details are shown in the Remuneration Report.
Outstanding at 1 October 2017
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at 30 September 2018
Exercisable at 30 September 2018
Exercisable at 1 October 2017
Year ended
30 September
2018
Number of
share options
263,796
14,404
–
(10,893)
267,307
252,903
250,992
Year ended
30 September
2018
Weighted average
exercise price
£
–
–
–
–
–
–
–
Year ended
30 September
2017
Number of
share options
792,274
–
(15,666)
(512,812)
263,796
250,992
735,803
Year ended
30 September
2017
Weighted average
exercise price
£
–
–
–
–
–
–
–
The aggregate of the estimated fair values of the awards granted during the period is £nil (2017 £nil). The awards outstanding at 30 September 2018
had a weighted average remaining contractual life of 1.2 years (2017 2.0 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 2017
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at 30 September 2018
Exercisable at 30 September 2018
Exercisable at 1 October 2017
Year ended
30 September
2018
Number of share
options
2,903,042
372,598
–
(646,985)
(233,531)
2,395,124
Year ended
30 September
2018
Weighted average
exercise price
£
–
–
–
–
–
–
Year ended
30 September
2017
Number of
share options
3,521,726
626,615
(441,662)
(803,637)
–
2,903,042
Year ended
30 September
2017
Weighted average
exercise price
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The aggregate of the estimated fair values of the awards granted during the period is £2.2 million (2017 £4.5 million).
The awards outstanding at 30 September 2018 had a weighted average remaining contractual life of 1.4 years (2017 1.4 years).
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Financial Statements
Financial Statements
Notes to the accounts
42 Share-based payments continued
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 (£)
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 (£)
9 December 2013
9.16
Nil
258,976
5
Nil
Nil
Nil
Nil
Nil
9.16
22 December 2014
8.11
Nil
291,331
5
Nil
Nil
Nil
Nil
Nil
8.11
14 December 2015
6.71
Nil
499,387
3
Nil
Nil
Nil
Nil
Nil
6.71
14 December 2015
6.71
Nil
346,217
4
Nil
Nil
Nil
Nil
Nil
6.71
28 February 2017
6.71
Nil
301,650
3
Nil
Nil
Nil
Nil
Nil
6.71
30 May 2017
7.17
Nil
136,681
2
Nil
Nil
Nil
Nil
Nil
7.17
18 January 2018
5.63
Nil
22,202
2
Nil
Nil
Nil
Nil
Nil
5.63
30 May 2017
7.17
Nil
188,284
1
Nil
Nil
Nil
Nil
Nil
7.17
14 December 2017
5.63
Nil
57,605
3
Nil
Nil
Nil
Nil
Nil
5.63
16 January 2018
6.06
Nil
53,911
3
Nil
Nil
Nil
Nil
Nil
6.06
18 January 2018
5.63
Nil
180,036
3
Nil
Nil
Nil
Nil
Nil
5.63
14 June 2018
5.63
Nil
22,202
3
Nil
Nil
Nil
Nil
Nil
5.63
13 August 2018
7.19
Nil
36,642
3
Nil
Nil
Nil
Nil
Nil
7.19
DMGT Long-Term Executive Incentive Plan Award 2017
This plan entitles certain executives to a percentage share of eligible profit growth over a three-year performance period.
The award is settled in A Ordinary Non-Voting Shares based on the later of the average share price for the first three days following release of the
current year financial results or the date of employment.
The charge for the period in the Consolidated Income Statement for this award amounts to £6.9 million (2017 £0.5 million) and is included in the
Long-Term Incentive Plan charge.
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Daily Mail and General Trust plc Annual Report 2018
Insurance Risk (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 plan following this change of settlement feature of stock issued under the plan. After 30 September 2011 options under the 2001 and
2005 plan 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$40.0 or RSUs where eligible.
In 2015 RMS introduced the 2015 stock option plan which was adopted in January 2016. Options granted under this plan vest on satisfaction of two
conditions – a four year service period and the occurrence of an initial public offering of RMS or an event in which the Group ceases to hold at least
50.0% of the voting rights of RMS.
Outstanding at 1 October 2017
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at 30 September 2018
Exercisable at 30 September 2018
Exercisable at 1 October 2017
Year ended
30 September
2018
Number of
share options
15,031,520
3,896,106
(8,594,253)
(1,174,800)
9,158,573
453,824
1,648,124
Year ended
30 September
2018
Weighted average
exercise price
US$
9.31
9.62
9.27
10.00
9.35
10.16
10.04
Year ended
30 September
2017
Number of
share options
12,954,350
5,244,596
(2,943,930)
(223,496)
15,031,520
1,648,124
1,537,824
Year ended
30 September
2017
Weighted average
exercise price
US$
9.18
9.52
9.08
9.68
9.31
10.04
10.03
The weighted average share price at the date of exercise for share options exercised during the period was US$10.24 (2017 US$10.11).
The options outstanding at 30 September 2018 had a weighted average remaining contractual life of 8.2 years (2017 8.0 years).
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (US$)
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$)
During 2014
14.59
14.59
16,000
7
3-6
14.59
1.25
2.91
28.81
2.70
During 2015
10.00
10.00
437,824
7
4-5
10.00
1.25
3.63
25.63
1.44
During 2016
9.04
9.04
3,596,010
10
6
9.04
1.10
Nil
25.60
2.58
During 2017
10.11
9.52
2,280,264
10
4
9.52
1.00
Nil
35.00
4.00
During 2018
10.24
9.63
2,828,475
10
6
9.63
1.71
Nil
25.60
2.75
Expected volatility was determined by calculating the historical volatility of comparable companies.
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Financial Statements
Financial Statements
Notes to the accounts
42 Share-based payments continued
Insurance Risk (RMS) RSU awards
Outstanding at 1 October 2017
Forfeited during the period
Vested during the period
Expired during the period
Outstanding at 30 September 2018
Year ended
30 September
2018
Number of RSUs
269,781
(14,332)
(244,535)
–
10,914
Year ended
30 September
2018
Weighted average
exercise price
US$
–
–
–
–
–
Year ended
30 September
2017
Number of RSUs
1,406,356
–
(889,499)
(247,076)
269,781
Year ended
30 September
2017
Weighted average
exercise price
US$
–
–
–
–
–
43 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 is the only company in the Group to prepare consolidated financial statements.
44 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.
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.
Ultimate controlling party
RCL is a holding company incorporated in Bermuda. The main asset of RCL is its 100.0% 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 period, Forsters LLP in which Mr A Lane, a Non-Executive Director of the Company, is a partner, provided legal services to the Company
amounting to £14,820 (2017 £13,970).
Transactions with joint ventures and associates
Details of the Group’s principal joint ventures and associates are set out in Note 24.
Associated Newspapers Ltd (ANL) holds a 50.0% (2017 50.0%) shareholding in Artirix Ltd (Artirix), a joint venture. During the period, the Group
received services totalling £nil (2017 £0.2 million) from Artirix. ANL disposed of its shareholding in Artirix during the period.
ANL has a 50.0% (2017 50.0%) shareholding in Northprint Manchester Ltd, a joint venture. The net amount due to ANL of £5.8 million
(2017 £5.8 million) has been fully provided.
Mail Media, Inc. has a 50.0% (2017 50.0%) shareholding in Daily Mail On Air, a joint venture. During the period, Mail Media, Inc. provided funding
amounting to £4.9 million (2017 £0.2 million). At 30 September 2018, £5.9 million (2017 £0.2 million) was owed by Daily Mail On Air.
DMG US Investments, Inc. has a 45.0% (2017 45.0%) shareholding in Truffle Pig LLC, an associate. Funding provided by DMG US Investments, Inc.
in a prior period amounting to £0.2 million remained outstanding at 30 September 2018.
DMGV Ltd (DMGV, formerly known as DMG Media Investments Ltd) has a 23.9% (2017 23.9%) shareholding in Excalibur Holdco Ltd (Excalibur), an
associate. During the period, services provided to Excalibur amounted to £0.6 million (2017 £0.7 million). At 30 September 2018, amounts due from
Excalibur amounted to £0.1 million (2017 £3.8 million), together with loan notes of £17.3 million (2017 £13.6 million). The loan notes carry a coupon
of 10.0% and £4.0 million (2017 £2.3 million) was outstanding in relation to this coupon at 30 September 2018.
DMGV has a 19.9% (2017 22.1%) shareholding in Zipjet Ltd (Zipjet), an associate. Services provided to Zipjet during the period amounted to £nil
(2017 £0.1 million).
DMGV has a 25.8% shareholding in Yopa Property Ltd (Yopa), an unlisted investment. During the period, the Consumer Media segment provided
services to Yopa amounting to £0.5 million. At 30 September 2018, £0.1 million was owed by Yopa.
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Daily Mail and General Trust plc Annual Report 2018
DMGZ Ltd (DMGZ) has a 49.8% (2017 49.9%) shareholding in Euromoney Institutional Investor PLC (Euromoney), an associate. During the period,
services were recharged to Euromoney amounting to £0.1 million (2017 £0.4 million) and consortium relief losses were surrendered under
an agreement between Euromoney and the Group amounting to a rebate of £0.1 million (2017 £0.4 million). At 30 September 2018, £nil
(2017 £0.5 million) was owed by Euromoney. During the prior period, on 6 January 2017, Euromoney completed an off-market purchase
of 19,247,173 Euromoney ordinary shares from the Group for cancellation at a price of £9.75 per share.
During the period, DMGZ and DMG Charles Ltd received dividends totalling £17.1 million (2017 £18.8 million) from Euromoney.
During the period, DMG World Media (2006) Ltd recharged costs amounting to £0.3 million (2017 £0.2 million) to BCA Research, Inc.,
a Euromoney subsidiary.
During the period, ANL recharged costs amounting to £1.4 million (2017 £0.2 million) to Euromoney. At 30 September 2018, £0.3 million
(2017 £0.1 million) was owed by Euromoney.
During the period, Euromoney provided services to Risk Management Solutions Ltd amounting to £0.1 million (2017 £0.1 million).
DMGZ had a 29.9% (2017 29.8%) shareholding in ZPG Plc (ZPG), an associate. During the period, DMGZ received dividends of £5.0 million
(2017 £7.3 million) from ZPG. On 18 June 2018, DMGZ disposed of its entire shareholding in ZPG.
During the period, Landmark Information Group Ltd (Landmark) charged management fees of £0.3 million (2017 £0.3 million) and recharged costs
of £0.1 million (2017 £0.2 million) to Point X Ltd (Point X), a joint venture. Point X received royalty income from Landmark of £0.1 million
(2017 £0.1 million).
Decision Insight Information Group (UK) Ltd (DIIG UK) has a 50.0% (2017 50.0%) shareholding in Decision First Ltd (DF), a joint venture. During
the period, DIIG UK recharged costs to DF amounting to £0.2 million (2017 £0.2 million), charged management fees amounting to £0.1 million
(2017 £nil) and received dividends from DF of £0.4 million (2017 £0.6 million).
On-Geo GmbH (On-Geo) has a 50.0% (2017 50.0%) shareholding in HypoPort On-Geo (HypoPort), a joint venture. During the period, HypoPort made
purchases from On-Geo amounting to £9.1 million (2017 £8.2 million). During the period, On-Geo received dividends of £0.1 million (2017 £nil) from
HypoPort. At 30 September 2018, £1.5 million (2017 £1.2 million) was owed by HypoPort.
RMSI Ltd (RMSI), a company which shares a common director with the Landmark Group, invoiced sales amounting to £2.7 million
(2017 £1.6 million). Costs were recharged by Landmark to RMSI amounting to £0.7 million (2017 £0.8 million). At 30 September 2018, £0.4 million
(2017 £0.4 million) was owed to RMSI by Landmark.
Hobsons, Inc. (Hobsons) has a 50.0% (2017 50.0%) shareholding in Knowlura, a joint venture. At 30 September 2018, £0.3 million (2017 £nil) was
owed by Knowlura.
Risk Management Solutions, Inc. (RMS, Inc.) has a 20.0% (2017 20.0%) shareholding in OYO RMS Corporation (OYO), an associate. During the period,
RMS, Inc. received a dividend of £0.4 million (2017 £nil) from OYO.
RMS, Inc. has a 25.9% (2017 29.6%) shareholding in Praedicat, Inc. (Praedicat), an associate. During the period, RMS, Inc. provided funding
of £1.5 million (2017 £nil) to Praedicat.
Genscape, Inc. (Genscape) has a 55.9% shareholding in LineVision, Inc. (LineVision), an associate acquired in the period. During the period, Genscape
sold assets with a net book value of US$0.1 million to LineVision for their fair value of US$2.1 million for nil cash proceeds. Since the Group’s share
of voting rights in the investment in LineVision is 49.0%, the Group does not have control but does have significant influence, therefore the
investment has been treated as an associate.
Other related party disclosures
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 period amounting to
£0.3 million (2017 £0.5 million). At 30 September 2018, £0.1 million (2017 £0.1 million) was owed to the Harmsworth Pension Scheme by the Group.
At 30 September 2018, the Group owed £0.8 million (2017 £0.8 million) to the pension schemes which it operates. This amount comprised
employees’ and employer’s contributions in respect of September 2018 payrolls.
The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged during the period
was £0.3 million (2018 £0.3 million).
Contributions made during the period to the Group’s retirement benefit plans are set out in Note 35, 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 Group, was used
to commit £10.8 million funding p.a. to the Harmsworth Pension Scheme. Interest payable to DMG Pension Partnership LP in the period totalled
£11.0 million (2017 £11.0 million).
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Financial Statements
Financial Statements
Notes to the accounts
45 Post balance sheet events
Pension equalisation
In October 2018, the High Court ruled in the Lloyds Banking Group (“LBG”) case that UK pension schemes which had contracted out of the State
Earnings Related Pension Scheme will need to equalise benefits for the effect of unequal Guaranteed Minimum Pensions (GMP) between men and
women. The judgement also provided comments on the method to be adopted to equalise these benefits. Assuming that there is not a successful
appeal, it is expected that the ruling will result in a non-cash past service charge.
Due to the timing of this ruling we cannot yet estimate the impact on DMGT with any reasonable certainty until our Scheme Actuary has carried out
a full impact assessment.
Acquisitions
In October 2018, the Consumer Media segment acquired the remaining 50.0% of the share capital of DailyMailTV, previously a 50.0% joint venture for
consideration of £4.7 million and DailyMailTV became a wholly-owned subsidiary.
46 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 ended
30 September 2018:
Subsidiary name
Northcliffe Media Ltd
DMG Events International Ltd
Daily Mail International Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
DMG Business Media Ltd
DMG Charles Ltd
DMG Information Ltd
Company
registration number
Subsidiary name
03403993 DMG Investment Holdings Ltd
04118004 DMG Minor Investments Ltd
01966438 DMGRH Finance Ltd
05528329 DMGZ Ltd
04521108 Harmsworth Royalties Ltd
02823743
04211684
03708142
Kensington Finance Ltd
Ralph US Holdings
Young Street Holdings Ltd
Company
registration number
03263138
04228751
03191181
00272225
04219212
03960683
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 Companies Act 2006.
No dormant subsidiaries have taken the exemption from filing with the registrar individual accounts by virtue of Section 448A of 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 ended 30 September 2018:
Subsidiary name
Justice for Sgt Blackman Ltd
The Mail on Sunday Ltd
AgRisk Ltd
Decision Insight Packco Ltd
Pico Information Ltd
Richards Gray Holdings Ltd
Richards Gray Ltd
Company
Subsidiary name
registration number
Kensington US Holdings Ltd
09761390
Lincolnshire Media Ltd
01160545
02615156 Northcliffe Trustees Ltd
05193569
11149692
05778231
03209331
South West Wales Media Ltd
The Conveyancing Report Agency Ltd
The Western Gazette Co Ltd
Trepp Ltd
Company
registration number
06320636
00037928
03394992
00120013
04666668
00022796
03087851
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47 Full list of Group undertakings
Subsidiary name
A&N International Media Ltd
Registered office
Northcliffe House, 2 Derry Street, London W8 5TT
A&N Media Finance Services Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
AgRisk Ltd
15 Canada Square, London E14 5GL
AN Mauritius Ltd
Argyll Environmental Ltd
Asia Risk Centre Pte Ltd
10th Floor, Standard Chartered Tower, 19 Cybercity, Ebène,
Republic Of Mauritius, Mauritius
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
3F, 19 Cecil Street, Singapore 049704
Associated Metro Holdings Ltd
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
Associated Newspapers (Ireland) Ltd
Third Floor, Embassy House, Herbert Park Lane, Ballsbridge,
Dublin 4 662817
Associated Newspapers Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Country of
incorporation or
registration
UK
UK
UK
Mauritius
UK
Singapore
Jersey
Ireland
UK
Classes of
shares held
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Associated Newspapers North America, Inc.
Atticus Events Ltd
Atticus Events MEA Ltd
AVMGE GmbH
Corporation Service Company, 2711 Centerville Road, Suite
400, Wilmington, DE 19808, United States
Invision House, Wilbury Way, Hitchin, Hertfordshire SG4 0TY
Invision House, Wilbury Way, Hitchin, Hertfordshire SG4 0TY
USA
UK
UK
Common, Series A
Ordinary
Ordinary, B ordinary,
C ordinary
ParsevalstraBe 2, 99092, Erfurt, Germany
Germany
Ordinary
BuildFax, Inc.
42 N French Broad Ave, Asheville NC 28801, United States
Central Independent News and Media Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Commodity Vectors (Ireland) Ltd
Commodity Vectors Ltd
Conveyancing Searches Ltd
Courier Media Group Ltd
c/o Anne Brady McQuillans DFK, Iveagh Court,
Harcourt Road, Dublin 2
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail and General Holdings Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail and General Investments Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail and General Trust plc
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail International Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Dailymail.com Australia Pty Ltd
Level 12, 207 Kent Street, Sydney, NSW 2000
Decision Insight Hub Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Decision Insight Information Group (Europe) Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Decision Insight Information Group (Ireland) Ltd
(in process of liquidation)
39/40 Upper Mount Street, Dublin 2, Ireland
Decision Insight Information Group (UK) Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Decision Insight Packco Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Derby Telegraph Media Group Ltd
PO Box 6795, St George Street, Leicester LE1 1ZP
Digital H20, Inc.
DMG Angex Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
DMG Business Media Ltd
DMG Charles Ltd
DMG Comet S.á.r.l.
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
595 Rue De Neudorf, L-2220, Luxembourg
DMG Comet S.á.r.l. US branch
2201 West Royal Lane, Irving, Texas 75603, United States
DMG Conference & Exhibition Services
(Shanghai) Ltd
Room 428, Level 4, No 55 Xiya Road (Plot 5 Of Zone F),
Shanghai, China
DMG Consolidated Holdings Pty Ltd
Level 2, 452 Flinders Street, Melbourne VIC 3000, Australia
DMG Development Co
DMG Events (Canada), Inc.
DMG Events (Doha), LLC
DMG Events (MEA) Ltd
DMG Events (UK) Ltd
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
302, 1333 8 St SW, Calgary, Alberta T2R 1M6, Canada
Level 14/15 Commercial Bank Plaza, West Bay, Doha, Qatar
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
USA
UK
Ireland
UK
UK
UK
UK
UK
UK
UK
UK
Australia
UK
UK
Ireland
UK
UK
UK
USA
UK
UK
UK
UK
UK
Luxembourg
USA
China
Australia
USA
Canada
Qatar
UK
UK
Common, Series A, B,
C, D, E, G Preferred
Stock
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary and A
ordinary non voting
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
S
t
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g
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G
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I
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f
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r
m
a
t
i
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n
% shareholding
(% held directly
by parent)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
89.9%
90.0%
100%
100%
100%
100%
100%
100%
100%
N/A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
179
179
Financial Statements
Financial Statements
Notes to the accounts
47 Full list of Group undertakings continued
Subsidiary name
DMG Events (USA,) Inc.
DMG Events Asia Pacific Pte Ltd
DMG Events Egypt Ltd
DMG Events Energy Japan KK
DMG Events India Private Ltd
DMG Events International Ltd
DMG Events, LLC,
DMG Exhibition Management Services (PTY) Ltd
DMG India Private Ltd
DMG Information Asia Pacific Pte Ltd
Registered office
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
8 Marina Boulevard #05-02, Marina Bay Financial Centre,
Singapore 018981
Office 1, Mezzanine Floor, Hall 2, Egypt International
Exhibition Centre, Elmoushir Tantawy Axis, New Cairo, Egypt
Roppongi Hills Keyakizaka Terrace, 6151, Roppongi,
Minatoku, Tokyo, Japan
Unit 1, Level 2, B Wing, Times Square, Andheri Kurla Road,
Andheri, Mumbai, 400059, India
Northcliffe House, 2 Derry Street, London W8 5TT
Office 408, Salama Tower, Al Madinah, Al Munawarah Road,
As Salamah District, PO Box 3650, Jeddah, Saudi Arabia
76 Eleventh Street, Parkmore, Johannesburg, 2196,
South Africa
402-409 4th Floor Of Square One, Saket District Centre,
Delhi, South Delhi, Delhi – 110017
8 Marina Boulevard #05-02, Marina Bay Financial Centre,
Singapore 018981
DMG Information Hong Kong Company Ltd
27/F 248 Queen’s Road East, Wanchai, Hong Kong
DMG Information Ltd
DMG Investment Holdings Ltd
DMG Ireland Holdings Ltd
DMG Loanco Ltd
DMG Media Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Barry Caldwell & Co, 135 Hillside, Greystones, Co Wicklow
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
DMG Minor Investments Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
DMG Oceans Ltd
DMG Plymouth Ltd
DMG US Investments, Inc.
Scottish Daily Mail, 20 Waterloo Street, Glasgow, G2 6DB
15 Canada Square, London E14 5GL
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
DMG World Media Abu Dhabi Ltd
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
DMG World Media Dubai (2006) Ltd
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
DMGB Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
dmgi Land & Property Europe Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
DMGRH Finance Ltd
DMGT US Employee Services, Inc.
DMGT US, Inc.
DMGV Ltd
DMGZ Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
EDR Landmark Management Services Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
EI Cap II, LLC.
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Energytics, Inc.
Ensura Ltd
Enva Power, Inc.
Environmental Data Resources Holdings, Inc.
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Services Company, 251 Little Falls Drive,
Wilmington DE 19808, United States
Estate Technical Solutions Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Eve 4 Ltd
Ex TTH Ltd
Fortress Digital Holdings, Inc.
180
180
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 2711 Centerville Road, Suite
400, Wilmington, DE 19808, United States
S
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i
o
n
Country of
incorporation or
registration
Classes of
shares held
% shareholding
(% held directly
by parent)
USA
Common
100%
Singapore
Ordinary
100%
Egypt
Japan
India
UK
Ordinary
100%
Ordinary
100%
Ordinary
Ordinary
100%
100%
Saudi Arabia
Ordinary
100%
South Africa
Ordinary
100%
India
Ordinary
100%
Singapore
Hong Kong
UK
UK
Ireland
UK
UK
UK
UK
UK
USA
Jersey
Jersey
UK
UK
UK
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Common
100%
USA
Common, Series A
UK
UK
UK
Ordinary
Ordinary
Ordinary
USA Membership interests
Common
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
USA
UK
USA
USA
UK
Jersey
UK
Common
100%
Common
100%
Ordinary A, Ordinary
B, Ordinary C,
Ordinary D, Ordinary E
Ordinary
Ordinary
100%
100%
100%
USA
Ordinary
100%
Energy Fundamentals GmbH
Technoparkstrasse 1, 8005, Zurich, Switzerland
Switzerland
Ordinary
Daily Mail and General Trust plc Annual Report 2018
Country of
incorporation or
registration
Classes of
shares held
% shareholding
(% held directly
by parent)
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
Common
100%
Common
100%
Subsidiary name
Genscape Asia, Inc.
Genscape Belgium SA
Registered office
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Pegasuslaan 5, 1831 Brussels Deigem, Belgium
Genscape Czech Republic s.r.o.
Empiria Na Strzi, 65/1702, 140 00 Parague 4, Prague
Czech Republic
Genscape France
Genscape Germany GmbH
Genscape Iberia SL
Genscape, Inc.
Genscape Intangible Holding, Inc.
Genscape International, Inc.
Genscape Italy
Genscape Japan, K.K.
6 Place De La Madeleine, 75008, Paris, France
Prinzenallee 7, 40549, Dusseldorf, Germany
C/Conde De Aranda, 1 2 DO Izquierda, 28001, Madrid, Spain
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Via Torino 2, 20123, Milan, Italy
Ark Hills Sengokuyama Mori Tower 28F, 1-9-10 Roppongi,
Minato, Tokyo, Japan
Genscape Mex, S. de R.L. de C.V.
1140 Garvin Place, Louisville, KY 40203, United States
Genscape Natural Gas, Inc.
Genscape Netherlands
Genscape Poland SA
Genscape Slovakia s.r.o.
Genscape UK Ltd
Gloucestershire Media Ltd
GP Energy Management, LLC
Gridfit, LLC.
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Damrak 20A, 1012 LH, Amsterdam, Netherlands
Ul. Rzymowskiego, 02-697, Warsaw, Poland
Kapitulska 18/A, Bratislava-Stare Mesto, 81101, Slovakia
Northcliffe House, 2 Derry Street, London W8 5TT
Begbies Traynor (London) LLP, 31st Floor, 40 Bank Street,
London E14 5NR
131 Varick Street, Suite 1006, New York 10013, United States
3500 South Dupont Highway, c/o Interstate Agent Services,
LLC, Dover 19901, United States
Harmsworth Printing (Didcot) Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Harmsworth Printing Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Harmsworth Quays Printing Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Harmsworth Royalties Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Hobsons, Inc.
Inframation GmbH
Instant Service AG
Justice for Sgt Blackman Ltd
Kensington Finance Ltd
Kensington US Holdings Ltd
Landmark Analytics Ltd
Landmark FAS Ltd
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
ParsevalstraBe 2, 99092, Erfurt, Germany
Peterstr. 1, 99084 Erfurt, Germany
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Landmark Information Group Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Landmark International Holdings Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Lawlink (UK) Ltd
Lincolnshire Media Ltd
Locus Energy, Inc.
Mail Media, Inc.
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
MailLife Financial Services Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Millar & Bryce Ltd
10th Floor 133 Finnieston Street, Glasgow, G3 8HB Scotland
Naviance, Inc.
Northcliffe Media Ltd
Northcliffe Trustees Ltd
Corporation Service Company, 251 Little Falls Drive,
Wilmington DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Ochresoft Technologies Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
USA
Belgium
France
Germany
Spain
USA
USA
USA
Italy
Japan
Mexico
USA
Netherlands
Poland
Slovakia
UK
UK
USA
Common
Ordinary
Ordinary
Common
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership units
USA
Membership units
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
USA
Common
Germany Ordinary, Preference
Germany
Ordinary
UK Limited by Guarantee
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, Ordinary A,
Redeemable
Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
UK Ordinary A, Ordinary B
Deferred, Ordinary,
Ordinary A, Preference
UK
UK
UK
UK
UK
UK
UK
UK
UK
USA
USA
UK
UK
USA
UK
On-Geo GmbH
ParsevalstraBe 2, 99092, Erfurt, Germany
Germany
Ordinary
Common
100%
S
t
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g
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p
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G
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h
o
l
d
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r
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n
f
o
r
m
a
t
i
o
n
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49.9%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50.0%
100%
100%
100%
100%
100%
100%
89.9%
181
181
Financial Statements
Financial Statements
Notes to the accounts
47 Full list of Group undertakings continued
Subsidiary name
Petrotranz Holdings, Inc.
Petrotranz, Inc.
Pico Information Ltd
Power Supply, LLC.
Registered office
855 – 2 Street SW, Suite 3500, Calgary AB T2P 4J8 Canada
855 – 2 Street SW, Suite 3500, Calgary AB T2P 4J8 Canada
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
131 Varick Street, Suite 1008-1009, New York 10013,
United States
Quest End Computer Services Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Ralph US Holdings
Richards Gray Holdings Ltd
Richards Gray Ltd
Risk Management Solutions (Bermuda) Ltd
Risk Management Solutions (Swiss)
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.
Northcliffe House, 2 Derry Street, London W8 5TT
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Milner House, 18 Parliament Street, Hamilton,
HM 12 Bermuda
Zweigniederlassung Zürich, Stampfenbachstrasse 85,
CH-8006 Zurich, Switzerland
7515 Gateway Blvd, Newark, CA 94560, United States
Northcliffe House, 2 Derry Street, London W8 5TT
12th Floor, Office 1205F, Beijing Excel Centre, No.6
Wudinghou Street, Xicheng District Beijing , 100033, PR China
Akasaka Kikyo Building 4th Floor, 11-15 Akasaka 3-Chome,
Minato-Ku, Tokyo, 107-0052 Japan
406-407, Pooja Complex 22, Veer Savarkar Block, Shakarpur,
Delhi 110092 India
Northcliffe House, 2 Derry Street, London W8 5TT
7515 Gateway Blvd, Newark, CA 94560, United States
Rochford Brady Legal Services Ltd
39/40 Upper Mount Street, Dublin 2, Ireland
SearchFlow Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
South West Wales Media Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Springthorpe Drake, Inc.
Starfish Retention Solutions, Inc.
Stennet Websites Plc
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Barry Caldwell & Co, 135 Hillside, Greystones, Co Wicklow
The Conveyancing Report Agency Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
The Mail on Sunday Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
The Petrochemical Standard, Inc.
The Western Gazette Co Ltd
Trepp Holdings, Inc.
Trepp, LLC.
Trepp Ltd
Trepp Port, LLC.
Trepp UK Ltd
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Vesseltracker.com GmbH
Mundsburger Damm 14, D-22087, Hamburg, Germany
Watervale Ltd
Web2 d.o.o.
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Park Rajhl Ferenca 8, 24000 Subotica, Severno-Bački – Serbia
Young Street Holdings Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
All subsidiaries are included in the consolidated financial statements of the Group.
Country of
incorporation or
registration
Canada
Canada
UK
Classes of
shares held
Ordinary
Ordinary
Ordinary
Class A membership
units
Ordinary
Ordinary
Ordinary A
Ordinary
USA
UK
UK
UK
UK
% shareholding
(% held directly
by parent)
100%
100%
100%
100%
100%
100%
100%
100%
Bermuda
Ordinary
98.0%
Switzerland
USA
UK
China
Japan
India
UK
USA
Ireland
UK
UK
USA
USA
Ireland
UK
UK
USA
UK
USA
Ordinary
Common
Ordinary
98.0%
98.0%
98.0%
Common
98.0%
Ordinary
98.0%
Ordinary Voting
Ordinary
Common
Ordinary
Ordinary
Ordinary
100%
100%
98.0%
100%
100%
100%
Ordinary
100%
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
100%
71.0%
100%
100%
100%
100%
100%
100%
100%
51.0%
100%
100%
100%
51.0%
100%
UK
USA
UK
Germany
UK
Serbia
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
S
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*
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.
182
182
477 Madison Avenue, New York, NY 10022, United States
USA Membership Interests
Daily Mail and General Trust plc Annual Report 2018
Joint Venture name
Daily Mail On-Air, LLC
Decision First Ltd
Address of principal place of business
137 N Larchmont Blvd, #705, Los Angeles, California, 90004,
United States
Cardinal House, 9 Manor Road, Leeds, West Yorkshire, LS11 9AH
Hypoport On-Geo GmbH
Klosterstr. 71, 10179 Berlin, Germany
Knowlura, Inc.
Corporation Service Company, 251 Little Falls Drive, Wilmington,
DE 19808, United States
Northprint Manchester Ltd
PO Box 68164, Kings Place, 90 York Way, London N1P 2 AP
Point X Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
The Sanborn Map Company, Inc.
Corporation Service Company, 251 Little Falls Drive, Wilmington,
DE 19808, United States
Classes of
shares held
Financial
year end
% capital included in
consolidation
Membership interests
Ordinary
Ordinary
Common
Ordinary
Ordinary B
30 December
31 December
31 December
30 September
31 March
31 March
Ordinary
31 December
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
49.0%
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).
Country of
incorporation or
registration
Classes of
shares held
% shareholding
Associate name
AlsoEnergy Holdings, Inc.
Eatfirst UK Ltd
ES London Ltd
Address of principal place of business
Corporation Trust Centre, 1209 Orange Street, Wilmington,
DE 19801, United States
203 Railway Arches, Barnardo Street, London E1 0LL
Northcliffe House, 2 Derry Street, London W8 5TT
Euromoney Institutional Investor PLC 8 Bouverie Street, London EC4Y 8AX
Excalibur Holdco Ltd
Fortress Digital, LLC
Wowcher Towers, 12-27 Swan Yard, Islington, London N1 1SD
48 West 21st Street 4th Floor, New York NY 10010, United States
Funcent DMG Information Technology
Hong Kong Company Ltd
27/F 248 Queen’s Road East, Wanchai, Hong Kong
Hong Kong
Global Event Partners Ltd
Suite 1, 3rd Floor, 11-12 St. James’s Square, London SW1Y 4LB
Independent Television News Ltd
200 Grays Inn Road, London WC1X 8XZ
iProf Learning Solutions India Pte Ltd G-15 / G-3, Gf Dilshad Colony, New Delhi, 110095, India
Liases Foras Real Estate Rating and
Research Private Ltd
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
LineVision, Inc.
501 Boylston St, Suite 4102, Boston, MA 02116 USA
Mercatus, Inc.
OYO RMS Corporation
Praedicat, Inc.
Propstack Services Private Ltd
Real Capital Analytics, Inc.
1735 Technology Dr, Suite 250, San Jose, California 95110,
United States
Akasaka Kikyo Building 4th Floor, 11-15 Akasaka 3-Chome,
Minato-Ku, Tokyo, 107-0052 Japan
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
1st & 2nd Floor, Nyay Sagar Bdlg, Kalanagar, Bandra (East),
Mumbai – 400 051
32 Union Square East, Suite 1100, New York, NY10003,
United States
RLTO Ltd
Office 7 35-37 Ludgate Hill, London EC4M 7JN
Skymet Weather Services Private Ltd
109, Kushal Bazar, Nehru Place, New Delhi – 110019
Truffle Pig, LLC
WellAware Holdings, Inc.
3411 Silverside Road, Rodney Building, Suite 104, Wilmington,
New Castle, Delaware, United States
2330 N Loop 1604 W, Ste 110, San Antonio, TX 78248,
United States
Wellington Weekly News Ltd
The Old Court House, Union Road, Farnham, Surrey
Whereoware, LLC
Yopa Property Ltd
Zipjet Ltd
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
22 Arlington Street, London, SW1A 1RD
Unit 2, York House, 2 Avonmore Road, London, W14 8RL
USA
Series A, Common
UK
UK
UK
UK
USA
UK
UK
India
India
USA
USA
Series A1
Ordinary
Ordinary
B Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Share, Series
A Compulsary,
Cumulative
Convertible
Preference Shares
Series A
Ordinary
Japan
Ordinary
USA
Preference
India
USA
UK
India
Ordinary
Common Preference
shares
Ordinary
Ordinary
USA
Common Units
USA
UK
USA
UK
UK
Preference
Ordinary
Membership
Interests
C-2 Preference
Series A1
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20.0%
7.7%
100%
49.8%
23.9%
49.9%
23.6%
15.0%
20.0%
10.8%
30.5%
55.9%
10.8%
19.6%
25.9%
21.8%
39.7%
20.0%
14.7%
45.0%
8.2%
20.0%
19.5%
25.8%
22.1%
183
183
Financial Statements
Financial Statements
Notes to the accounts
47 Full list of Group undertakings continued
Investment name
BDG Media, Inc.
Brit Media, Inc.
Compstak, Inc.
Cue Ball Capital LP
Address of principal place of business
559 Driggs Avenue, Suite 2, Brooklyn, NY 11211, United States
556 Sutter Street, San Francisco, CA 94102, United States
Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, DE 19808, United States
The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE 19801, United States
Evening Standard Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Financial Network Analytics Ltd
4 Crown Place, London EC2A 4BT
Hambro Perks Ltd
8 Greencoat Place, London SW1P 1PL
Kortext Ltd
Labrador Ltd
26-32 Oxford Road, Suite B, 6th Floor, Avalon House,
Bournemouth, Dorset, BH8 8EZ
8 Greencoat Place, London, SW1P 1PL
Live Better With Ltd
Rocketspace, 40 Islington High Street, London N1 8XB
London Real Estate Exchange Ltd
Cannon Place, 78 Cannon Street, London EC4N 6AF
PA Group Ltd
PA News Centre, 292 Vauxhall Bridge Road, London SW1V 1AV
Pascal Metrics, Inc.
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
Pembroke Holdings, LLC
46 Southfield Ave Ste 400, Stamford CT 06902, United States
Taboola.com Ltd
7 Totseret Haaretz St., Tel-Aviv Israel
233 Wilshire Boulevard, Suite 525, Santa Monica,
California 90401, United States C/O Mesa Global
Corporation Service Company, 251 Little Falls Drive, Wilmington,
DE 19808, United States
Nazca IT Solutions BV
Standerdmolen 20, 3995 AA Houten, Netherlands
Netherlands
Country of
incorporation or
registration
USA
USA
USA
Classes of
shares held
Ordinary
Ordinary
Common
USA
Partnership Units
UK
UK
UK
UK
UK
UK
UK
UK
USA
USA
Israel
USA
USA
Ordinary, Ordinary
Non Voting
Ordinary
C Ordinary
Ordinary
Ordinary
B Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership
Interests
Ordinary
Membership
interests
Ordinary
Membership
interests
Common
13th Avenue, Suite 202 Brooklyn, New York, 11228, United States
100 Corporate Pointe, Suite 100, Culver City, CA 90230
Argentina
USA
TigerBeat Media, LLC
Upstream Group, Inc.
Workana, LLC
Xap Corporation
184
184
% shareholding
3.2%
9.1%
2.0%
2.5%
10.0%
10.0%
3.1%
2.4%
8.6%
5.0%
2.8%
15.0%
15.6%
4.3%
10.0%
0.4%
12.8%
3.6%
4.0%
19.4%
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Daily Mail and General Trust plc Annual Report 2018
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/(loss) before share of results from joint ventures
and associates
Share of results of joint ventures and associates
Total operating profit/(loss)
Other gains and losses
Profit/(loss) before investment revenue, net finance costs and tax
Investment revenue
Net finance costs
Profit/(loss) before tax
Tax
Profit/(loss) for the year after tax
Discontinued operations
Equity interests of minority shareholders
Profit for the year
52 weeks
ended
30 September
2014
£m
1,811.2
296.2
Year
ended
30 September
2015
£m
1,842.7
287.0
Year
ended
30 September
2016
£m
1,514.2
177.0
Year
ended
30 September
2017
£m
1,564.3
179.0
Year
ended
30 September
2018
£m
1,426.4
144.9
(112.2)
(80.2)
(91.4)
(324.4)
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
85.6
4.9
90.5
130.8
221.3
2.2
(21.8)
201.7
(19.9)
181.8
32.4
(10.0)
204.2
(145.4)
16.9
(128.5)
14.0
(114.5)
2.5
(0.3)
(112.3)
(64.7)
(177.0)
519.3
3.0
345.3
(94.7)
50.2
118.4
168.6
553.0
721.6
4.8
(34.5)
691.9
(3.7)
688.2
–
1.2
689.4
Adjusted profit before tax and non-controlling interests
291.1
280.5
259.6
226.1
182.3
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
391.1
376.8
363.7
350.4
Adjusted profit after taxation and non-controlling interests
207.4
215.5
197.8
196.3
Earnings/(loss) 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
372.4
378.2
(0.7)
61.4p
60.2p
9.2p
9.1p
70.6p
69.3p
55.7p
54.6p
360.8
366.5
(0.3)
46.2p
45.4p
13.9p
13.6p
60.1p
59.0p
59.7p
58.7p
353.4
360.6
(0.9)
48.6p
47.4p
9.2p
9.0p
57.8p
56.4p
56.0p
54.7p
353.1
358.6
(0.1)
(49.3)p
(48.5)p
147.1p
144.8p
97.8p
96.3p
55.6p
54.7p
287.7
149.3
354.1
358.4
–
194.7p
192.4p
–
–
194.7p
192.4p
42.2p
41.7p
185
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Financial Statements
Financial Statements
Five-Year Financial Summary
Consolidated Cash Flow Statement
Net cash inflow from operating activities
Investing activities
Financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain/(loss) on cash and cash equivalents
Cash and cash equivalents at end of year
Net increase/(decrease) 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
2014
£m
218.4
26.0
(302.7)
(58.3)
88.5
(1.2)
29.0
(58.3)
31.3
(27.0)
(3.0)
0.2
(29.8)
2015
£m
259.7
(44.2)
(212.2)
3.3
29.0
(0.8)
31.5
3.3
(86.9)
(83.6)
–
(15.1)
(98.7)
2016
£m
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
Net debt at start of year
Net cash/(debt) at end of year
(573.0)
(602.8)
(602.8)
(701.5)
(701.5)
(678.7)
Consolidated Statement of Financial Position
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
2014
£m
1,125.3
202.0
145.9
213.6
1,686.8
(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
2015
£m
1,332.6
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
£10.74
2016
£m
1,480.8
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
186
2017
£m
219.5
138.6
(368.4)
(10.3)
17.5
0.2
7.4
(10.3)
217.0
206.7
–
7.7
214.4
(678.7)
(464.3)
2017
£m
576.1
103.3
766.0
189.9
1,635.3
(174.5)
(541.6)
919.2
45.3
17.8
15.6
11.0
829.5
919.2
2017
22.70p
£6.06
£8.36
2018
£m
115.0
481.3
(169.4)
426.9
7.4
1.6
435.9
426.9
268.4
695.3
–
1.7
697.0
(464.3)
232.7
2018
£m
464.4
99.7
785.8
358.4
1,708.3
217.6
(250.6)
1,675.3
45.3
17.8
1.3
13.5
1,597.4
1,675.3
2018
23.30p
£5.00
£7.81
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Daily Mail and General Trust plc Annual Report 2018
Company Statement of Financial Position
At 30 September 2018
ASSETS
Fixed assets
Property, plant and equipment
Shares in Group undertakings
Other investments
Trade and other receivables
Current assets
Trade and other receivables
Other financial assets
Cash at bank and in hand
Deferred tax
Total assets
LIABILITIES
Creditors: amounts falling due within one year
Trade and other payables
Borrowings
Creditors: amounts falling due after more than one year
Borrowings
Derivative financial liabilities
Total liabilities
Net assets
CAPITAL AND RESERVES
Called-up share capital
Share premium account
Share capital
Reserve for own shares
Capital redemption reserve
Profit and loss account
Equity shareholders’ funds
At
30 September
2018
£m
At
30 September
2017
£m
Note
5
8
9
10
10
11
12
15
13
13
14
14
16
16
17
18
0.9
3,033.6
6.5
167.7
3,208.7
59.3
237.3
363.8
3.8
664.2
3,872.9
(102.7)
(218.7)
(321.4)
(205.7)
(20.1)
(225.8)
(547.2)
–
3,349.0
5.7
169.1
3,523.8
81.2
–
0.1
2.5
83.8
3,607.6
(140.2)
(2.5)
(142.7)
(469.8)
(18.8)
(488.6)
(631.3)
3,325.7
2,976.3
45.3
17.8
63.1
(57.2)
5.2
3,314.6
45.3
17.8
63.1
(64.3)
5.2
2,972.3
3,325.7
2,976.3
The financial statements on pages 187 to 194 were approved by the Directors and authorised for issue on 29 November 2018. They were signed on
their behalf by:
The Viscount Rothermere
P Zwillenberg
Directors
187
187
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Financial Statements
Financial Statements
Company Statement of Changes in Equity
Called-up
share
capital
£m
45.3
–
Share
premium
account
£m
17.8
–
Capital
redemption
reserve
£m
5.2
–
Reserve for own
shares
£m
(74.6)
–
Profit and loss
account
£m
2,928.7
127.9
For the year ended 30 September 2018
At 30 September 2016
Profit for the period
Total comprehensive income for the period
Dividends paid
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the period
Own shares released on vesting of share options
–
–
–
–
–
–
–
–
–
–
–
–
At 30 September 2017
Profit for the period
45.3
–
17.8
–
Total comprehensive income for the period
Dividends paid
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the period
Own shares released on vesting of share options
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
2,922.4
127.9
127.9
(78.3)
(3.8)
(1.5)
(28.6)
38.2
127.9
(78.3)
(3.8)
(1.5)
–
(0.7)
2,972.3
417.9
2,976.3
417.9
417.9
(81.0)
7.6
(1.5)
–
(0.7)
417.9
(81.0)
7.6
(1.5)
(14.3)
20.7
–
–
–
–
–
–
5.2
–
–
–
–
–
–
–
–
–
–
–
(28.6)
38.9
(64.3)
–
–
–
–
–
(14.3)
21.4
At 30 September 2018
45.3
17.8
5.2
(57.2)
3,314.6
3,325.7
188
188
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Daily Mail and General Trust plc Annual Report 2018
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 £417.9 million (2017 £127.9 million). This includes dividends receivable from subsidiary
undertakings amounting to £781.8 million (2017 £152.2 million).
Impact of amendments to accounting standards
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 period.
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 and other receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable
amounts. The majority of other receivables relate to amounts owed by subsidiary undertakings. Further information concerning interest charged
on these receivables is set out in Note 10.
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 and other payables
Trade payables 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.
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Financial Statements
Financial Statements
Notes to the Company Statement
of Financial Performance
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 34 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 34 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.
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 44 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 42 of the Group’s
Annual Report.
Retirement benefits
The defined benefit pension schemes’ surpluses/deficits have been allocated to Group companies on a buy-out basis – that is of an estimate of the
liabilities and assets of the defined benefit schemes as at 30 September 2018. Accordingly the Company has not recorded an asset or liability in
relation to the Group’s defined benefit scheme.
Further information can be found in Note 35 of the Group’s Annual Report.
Critical accounting judgements and key sources of estimation uncertainty
The following represents the key source of estimation uncertainty that has the most significant effect on the amounts recognised in the
financial statements:
Impairment reviews are performed when there is an indicator that the carrying value of the shares in Group undertakings could exceed their
recoverable values based on their 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 Group undertaking operates. Risk adjusted pre-tax discount rates used by the Company in its
impairment tests range from 10.2% to 16.0%, the choice of rates depending on the risks specific to that cash generating unit (CGU). The cash flow
projections consist of Board-approved budgets for the following year, together with forecasts for up to two additional years and nominal long-term
growth rates beyond these periods. The nominal long-term (decline)/growth rates range from (3.0%) to 7.00% and vary with management’s view
of the CGU’s market position, maturity of the relevant market and do not exceed the long-term average growth rate for the market in which the
CGU operates.
The carrying value of the investment in Group undertakings is £3.0 billion (2017 £3.3 billion). If the growth rate assumptions were reduced or the
discount rate was increased this would result in an additional impairment charge.
3 Auditor’s remuneration
Statutory audit fees relating to the Company amounted to £0.3 million (2017 £0.3 million).
4 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
2018
Number
18
2017
Number
14
2018
£m
4.2
5.6
2.1
0.1
12.0
2017
£m
5.6
(1.1)
0.4
0.1
5.0
The remuneration of the Directors of the Company during the year are disclosed in the Remuneration Report of the Group’s Annual Report.
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Daily Mail and General Trust plc Annual Report 2018
Fixtures, fittings
and artwork
£m
–
–
–
–
0.9
0.9
–
0.9
5 Property, plant and equipment
Cost
At 30 September 2016
Additions
Disposals
At 30 September 2017
Additions
At 30 September 2018
Net book value – 2017
Net book value – 2018
6 Tax
There was a current tax credit for the year of £8.7 million (2017 £7.8 million).
7 Dividends
During the year, the Company paid a final dividend for the year ended 30 September 2017 of 15.3 pence per share and an interim dividend for the
year ended 30 September 2018 of 6.9 pence to Ordinary and A Ordinary shareholders amounting to £81.0 million (2017 £78.3 million).
The Board has declared a final dividend for the year ended 30 September 2018 of 16.2 pence per Ordinary/A Ordinary Non-Voting Share
(2017 15.8 pence) which will absorb an estimated £57.3 million (2017 £55.8 million) of shareholders’ equity for which no liability has been recognised
in these financial statements. It will be paid on 8 February 2019 to shareholders on the register at the close of business on 7 December 2018.
8 Shares in Group undertakings (listed on pages 179 to 182)
At 30 September 2017
Additions
Impairment charge
Disposals
At 30 September 2018
Analysis of movements in the year
Daily Mail and General Holdings Ltd
9 Other investments
At 30 September 2017
Additions
At 30 September 2018
10 Trade and other receivables
Amounts falling due after more than one year
Amounts owed by Group undertakings
Other financial assets
Derivative financial assets
(i)
Included within amounts owed by Group undertakings is an amount owed by a subsidiary company, DMGZ Ltd, of £150.0 million
(2017 £150.0 million). The loan bears interest at 6.3% p.a. and is repayable on 30 September 2024.
(ii) Details of the Company’s derivative financial assets are set out in Note 34 of the Group’s Annual Report.
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Cost
£m
3,533.0
4.6
–
(184.0)
3,353.6
Provision
£m
(184.0)
–
(320.0)
184.0
(320.0)
Net book value
£m
3,349.0
4.6
(320.0)
–
3,033.6
Additions
£m
4.6
Cost and net book
value
£m
5.7
0.8
6.5
Note
(i)
(ii)
2018
£m
150.0
8.0
9.7
167.7
2017
£m
150.0
14.5
4.6
169.1
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Financial Statements
Financial Statements
Notes to the Company Statement
of Financial Performance
10 Trade and other receivables continued
Amounts falling due within one year
Amounts owed by Group undertakings
Prepayments and accrued income
Other receivables
Corporation tax
11 Other financial assets
Cash deposits
2018
£m
48.7
0.9
0.2
9.5
59.3
2018
£m
237.3
2017
£m
70.7
2.6
0.2
7.7
81.2
2017
£m
–
Represents cash deposits held with the Group’s bank counterparties with an original maturity date of three months or more. As required by IAS 7,
Statement of Cash Flows, these have been classified within other financial assets.
12 Cash at bank and in hand
Cash at bank and in hand
13 Trade and other payables falling due within one year
5.75 % Bonds 2018
Bank overdrafts
Interest payable
Amounts owing to Group undertakings
Accruals and deferred income
Other payables
Note
(i)
(i) Amounts owing to Group undertakings are repayable on demand and bear interest of UK bank base rate plus 0.5%.
14 Trade and other payables falling due after more than one year
5.75 % Bonds 2018
10.00 % Bonds 2021
6.375 % Bonds 2027
Bank loans
Derivative financial liabilities
The nominal values of the bonds are as follows:
5.75 % Bonds 2018
10.00 % Bonds 2021
6.375 % Bonds 2027
Note
(i)
2018
£m
363.8
2018
£m
218.7
–
14.2
79.5
8.8
0.2
321.4
2018
£m
–
9.1
196.6
–
20.1
225.8
2018
£m
218.5
7.2
200.0
425.7
2017
£m
0.1
2017
£m
–
2.5
14.2
121.5
4.5
–
142.7
2017
£m
216.2
10.0
197.3
46.3
18.8
488.6
2017
£m
218.5
7.2
200.0
425.7
(i) Details of the Company’s derivative financial liabilities are set out in Note 34 of the Group’s Annual Report.
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Daily Mail and General Trust plc Annual Report 2018
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 £0.6 million (2017 £0.9 million) and the unamortised premia amounts to £1.2 million (2017 £4.1 million).
Details of the fair value of the Company’s bonds are set out in Note 33 of the Group’s Annual Report.
The bonds are subject to fair value hedging using derivatives as set out in Note 34 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 is as follows:
2018
High
1.99%
2.96%
2018
Low
0.98%
2.30%
2017
High
1.95%
2.75%
Overdrafts
£m
Bank loans
£m
Bonds
£m
Owed to group
undertakings
£m
2017
Low
0.98%
1.46%
Total
£m
218.7
79.5
298.2
–
–
–
–
–
2.5
–
–
–
–
2.5
–
–
–
–
–
–
–
46.3
–
46.3
46.3
2018
Within one year
Between two and five years
Over five years
2017
Within one year
Between one and two years
Between two and five years
Over five years
15 Deferred tax
Movements on the deferred tax asset were as follows:
At start of year
Share-based payments
Tax charge/(credit) for the year
At end of year
9.1
196.6
205.7
424.4
–
216.2
10.0
197.3
423.5
423.5
–
–
–
79.5
–
–
–
–
–
–
2018
£m
2.5
0.3
1.0
3.8
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.
9.1
196.6
205.7
503.9
2.5
216.2
56.3
197.3
469.8
472.3
2017
£m
5.1
(1.5)
(1.1)
2.5
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Financial Statements
Financial Statements
Notes to the Company Statement
of Financial Performance
16 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
At end of year
2018
£m
17.8
2018
£m
(64.3)
(14.3)
21.4
(57.2)
2017
£m
17.8
2017
£m
(74.6)
(28.6)
38.9
(64.3)
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 2018, this investment comprised the cost of 4,812,419 A Ordinary Non-Voting Shares (2017 4,812,419) held in treasury
and 2,981,109 A Ordinary Non-Voting Shares (2017 3,710,764) held in the employee benefit trust. The market value of the Treasury Shares
at 30 September 2018 was £33.8 million (2017 £31.2 million) and the market value of the shares held in the employee benefit trust at
30 September 2018 was £20.9 million (2017 £24.1 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.
17 Capital redemption reserve
At start and end of year
18 Profit and loss account
At start of year
Net profit for the period
Dividends paid
Other movements on share option schemes
At end of year
Total reserves
£m
5.2
2017
£m
2,928.7
127.9
(78.3)
(6.0)
2,972.3
2018
£m
2,972.3
417.9
(81.0)
5.4
3,314.6
3,280.4
2,931.0
The Directors estimate that £1,511.9 million of the Company’s profit and loss account reserve is not distributable (2017 £1,422.0 million).
19 Contingent liabilities
At 30 September 2018 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £ nil
(2017 £2.6 million) and letters of credit with a principal value of £3.3 million (2017 £3.5 million). The Company is the guarantor of a loan note
amounting to £150.0 million (2017 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
20 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.
21 Post balance sheet events
Details of the Company’s post balance sheet events can be found within Note 45 of the Group’s Annual Report.
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Shareholder Information
Company Secretary and Registered Office
Fran Sallas
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’s website (www.dmgt.com) gives information on the Company and its operating companies and includes details of significant
Group announcements.
Financial calendar 2019
24 January
6 February
8 February
31 March
9 April
30 May
6 June
7 June
21 June
28 June
25 July
30 September
5 December
12 December
13 December
Trading update
Annual General Meeting
Payment of final dividend
Half year end
Payment of interest on bonds
Half yearly financial report released
Interim ex-dividend date
Interim record date
Payment of interest on bonds
Payment of interim dividend
Trading update
Year end
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 Annual 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.
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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, 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, whose email address is adam.webster@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 its website at www.sharegift.org
or by writing to ShareGift, 17 Carlton House Terrace, London SW1Y 5AH.
Shareholdings at 30 September 2018
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
758
430
172
109
67
39
63
57
44.72%
25.37%
10.15%
6.43%
3.95%
2.30%
3.72%
3.36%
1,695
100.00%
252,315
1,082,471
1,248,251
1,602,554
2,120,441
2,688,037
15,207,760
318,002,641
342,204,470
0.07%
0.32%
0.36%
0.47%
0.62%
0.79%
4.44%
92.93%
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
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
Telephone: +44 (0)20 7777 2000
196
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone: +44 (0)371 384 2302
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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 7938 6000
enquiries@dmgt.com
www.dmgt.com
Design and production
This report is printed on UPM Fine offset
which is FSC® certified, as well as having
ISO 14001 EMS, EMAS and the European
EcoLabel. Printed in the UK by Pureprint
who are a CarbonNeutral® company.
Both manufacturing mill and the printer are
registered to the Environmental Management
System ISO 14001 and are Forest Stewardship
Council® (FSC) chain-of-custody certified.
See our online
report at
dmgt.com