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Satisfying
the need
to know
Annual Report
2019
Daily Mail and General Trust plc
Overview
Financial Highlights
Statutory Results†
Adjusted Measures
Revenue
Operating profit/(loss)
Revenue
Operating margin*
£1,337m
2018: £1,341m
£67m
2018: £168m
£1,411m
2018: £1,426m
10%
2018: 10%
Profit/(loss) before tax
Profit for the year
Profit before tax*
Earnings per share*
£134m
2018: £707m
£91m
2018: £688m
£145m
2018: £182m
38.6p
2018: 42.2p
Earnings per share
Dividend per share
Cash operating income*
Net cash§:EBITDA
30.7p
2018: 194.7p
23.9p
2018: 23.3p
£162m
2018: £155m
1.2x
2018: 0.8x
£ million
Statutory profit before tax
Discontinued operations
Exceptional operating costs
Intangible impairment and amortisation
Profit on sale of assets
Pension finance (credit)
Other adjustments
Adjusted profit before tax
FY 2019
FY 2018
Explanation
134
(33)
36
69
(67)
(7)
13
145
707
(15)
25
95
(658)
(2)
30
182
i
ii
iii
iv
v
vi
For explanations i to vi and more detailed tables please refer to pages 28 and 30.
†
*
§
Statutory revenue, operating profit and profit before tax figures are for continuing operations only (excluding Energy Information).
The FY 2018 statutory results have been reclassified accordingly.
Before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets
arising on business combinations, pension finance credits and fair value adjustments; see Consolidated Income Statement on page 90
and the reconciliation in Note 13 to the Accounts.
See Note 16 for details of net cash. The actual net cash:EBITDA ratio as at 30 September 2019 was 0.4 but £117 million of net cash
has been made available to the pension schemes and £282 million of gross proceeds from the disposal of Genscape, the Energy
Information business, were received in November 2019. The 2019 net cash:EBITDA ratio of 1.2 is stated after adjusting net cash
to exclude the £117 million and include the £282 million. The 2018 ratio includes £237 million of short-term deposits that matured
in December 2018.
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Go online to www.dmgt.com to find out more
Daily Mail and General Trust plc Annual Report 2019
DMGT is an international business
built on entrepreneurialism
and innovation.
DMGT manages a portfolio of companies that provide businesses
and consumers with compelling information, analysis, insight,
events, news and entertainment. The Group takes a long-term
approach to investment and has market-leading positions in
consumer media, insurance risk, property information, education
technology and events & exhibitions. In total, DMGT generates
revenues of around £1.4 billion.
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
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
JVs, Associates and dmg ventures
Financial Review
Our People and Our Stakeholders
Principal Risks
02
05
06
08
10
14
16
17
17
18
19
19
20
21
22
31
34
Governance
Board of Directors and Company Secretary 40
42
Chairman’s Statement on Governance
43
Corporate Governance
55
Remuneration Report
78
Statutory Information
81
Annual General Meeting 2020: Resolutions
Financial Statements
Independent Auditor’s Report
Financial Statements
Shareholder Information
83
90
197
1
Strategic ReportGovernanceFinancial StatementsShareholder Information
Strategic Report
Maintaining a strong portfolio of businesses
Chairman’s Statement
The Viscount Rothermere
Chairman
DMGT has significant financial
flexibility and continues to
benefit from the resilience
of its diversified portfolio.
During the past year, DMGT took
further important strides to improve
the focus of the portfolio, and I am
enthused by the potential of the next
phase of DMGT’s development.”
I am pleased to report that the
transformation of DMGT continues
to enhance the performance of our
businesses and demonstrate our
ability to create sustainable value for
our shareholders. During the past year,
DMGT took further important strides
to improve the focus of the portfolio,
and I am enthused by the potential of the
next phase of the Group’s development.
Above all, DMGT prides itself on its
long-term approach to investment which
is underpinned by our ownership structure.
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 strong cash generators of the future.
2
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Group revenue
+2%
underlying growth
Minutes spent on MailOnline daily
Sale of Genscape
139 million
US$364 million
There are few better examples of the
merits of this approach than Euromoney
Institutional Investor PLC (Euromoney).
It was 50 years ago last April that Patrick
Sergeant, then the City editor of the Daily
Mail, told my father about his idea for a new
monthly magazine to cover the nascent
Eurobond markets. When Associated
Newspapers agreed to back Euromoney
with a £6,000 investment, it was impossible
to envisage the extent to which financial
markets would grow, nor the myriad of
opportunities that would arise as Sergeant
and his successors built the substantial
business that exists today.
DMGT is proud of its role in Euromoney’s
success, which remained a subsidiary of the
Group until 2016 when DMGT’s stake was
reduced from c.67% to c.49%. Euromoney
also provided DMGT with its first experience
of investing in business-to-business markets,
which has become such an important part
of the Group in recent years. It was therefore
an important milestone when, during the
year, the Board decided to distribute
DMGT’s holding of Euromoney shares to
our shareholders, along with £200 million
in cash (April 2019 Distributions). I was
delighted at the exceptionally high level
of support we received from shareholders
for this complicated transaction.
Business highlights
DMGT delivered a good performance
for the year ended 30 September 2019,
with financial results in line with market
expectations. Revenues grew by 2% on an
underlying basis while adjusted earnings
per share of 38.6 pence reflected disposals.
Cash operating income, which we regard as
an important indicator of our performance,
increased by 4% to £162 million even though
the portfolio now has fewer businesses.
On a statutory basis, revenues were
£1,337 million and earnings per share were
30.7 pence.
The Board is pleased to recommend an
increase in the final dividend per share
for FY 2019, giving a total dividend for the
year of 23.9 pence per share, an increase
of 3%, continuing DMGT’s long-standing
commitment to delivering sustainable
annual real dividend growth.
We were particularly pleased by the
performance of our Consumer Media
business, which reported adjusted
operating profits of £67 million on revenues
of £672 million. The strength of the Mail and
Metro brands, and our long-term investment
in high-quality journalism, has allowed us
to continue to take market share in the
declining UK newspaper market. MailOnline,
one of the world’s most popular online
news sources, had an excellent year with
underlying revenue growth of 13% and
nearly 140 million minutes spent on the site
each day. The growth in MailOnline’s
advertising revenues more than offset the
expected decline from print advertising.
Our B2B portfolio delivered revenue growth
of 2% on an underlying basis, with our
educational technology business, Hobsons,
a notable highlight. We held a successful
Investor Briefing event to explain the
opportunities for RMS, our Insurance
Risk business, and the progress made
by the new management team.
Following our stated strategy, we have
continued to focus the portfolio. Having
distributed our Euromoney shares in April,
we sold our stake in Real Capital Analytics,
a US Property Information business, for
US$89 million in May. On-geo, a German
Property Information business, was sold
in June. In August, we announced the
US$364 million sale of Genscape,
our Energy Information company. Most
recently, we sold BuildFax, the US Property
Information business, in October.
As a result of these transactions, we had
nearly £250 million net cash on our balance
sheet at year end, providing us with the
financial flexibility to take advantage
of the opportunities we see, as with the
recent acquisition of the ‘i’, the UK national
newspaper and website. While we will
remain patient and financially disciplined,
prioritising organic investments ahead
of external acquisitions, we are well placed
to take advantage of any downturn in
asset valuations.
I am excited by the gathering momentum
within DMGT’s businesses.
3
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Maintaining a strong portfolio of businesses
Chairman’s Statement
Governance
The Board remains committed to the high
governance standards our shareholders
expect. We are fortunate to have Directors
with experience of an extensive range of
businesses and international markets, which
supports rigorous and high-quality debate
of DMGT’s strategic opportunities. I would
like to thank our Non-Executive Directors for
their contribution over the past year, with a
special mention for Kevin Parry, who chaired
the independent committee that assessed
the fairness of the April 2019 Distributions.
Read more in Governance report,
pages 40 to 54
People and culture
The continued success of DMGT will rely on
our ability to attract the talent of the future
at all levels of our business. This year, for
example, the executive team at Landmark
was strengthened and I am pleased by the
progress that they are already making.
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 customers value.
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.
Read more in Our People and
Our Stakeholders, pages 31 to 33
Remuneration
We are conscious that remuneration
remains an issue of importance both
for our shareholders and for the wider
community of stakeholders that we serve.
DMGT continues to set remuneration and
incentives to ensure focus on performance
in line with our strategic priorities. The
details of our approach are set out in the
Remuneration Report.
Read more in Remuneration Report,
pages 55 to 77
Outlook
The three strategic priorities established
by our CEO Paul Zwillenberg – improving
operational execution, increasing portfolio
focus and maintaining financial flexibility
– are serving shareholders well. DMGT’s
more tightly concentrated portfolio is
delivering an improved quality of earnings
from businesses with leadership in their
markets; and, together with the strength
of our balance sheet, this has created
the foundation for future growth. I am
increasingly encouraged by the momentum
I see across our Group, and confident in
our ability to deliver long-term returns to
shareholders. We look forward to making
further progress in the year ahead.
The Viscount Rothermere
Chairman
Adjusted revenue by business
FY 2019 (%)
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
17
16
6
8
5
48
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
20
15
10
5
0
7.3p
1999
Dividend
Inflation
23.9p
10.9p
2019
4
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Who we are
DMGT at a Glance
DMGT’s portfolio of companies operates across B2B and consumer markets
and has become more focused, positioning the Group for long-term growth
and value creation.
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.
The disposal of BuildFax occurred in October 2019.
Read more, page 17
EdTech
Hobsons is the leading provider of student success solutions in the US through its
Naviance, Intersect and Starfish platforms.
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
Energy Information
Genscape provides data, workflow tools and predictive analytics.
The disposal of Genscape was announced in August 2019 and completed in November.
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 139 million minutes on the site and apps each day. In November
2019, the ‘i’, the UK national newspaper and website, was added to the portfolio.
Read more, page 20
JVs, Associates and dmg ventures
dmg ventures invests in disruptive consumer propositions that need to scale and which can
leverage DMGT’s assets to do so. These include Yopa, the UK hybrid estate agent, and Cazoo,
which aims to change the way people buy used cars in the UK. The Group also invests in
B2B businesses, including Praedicat in the Insurance Risk sector.
Read more, page 21
Go online to www.dmgt.com for more information about our businesses
5
Strategic ReportGovernanceFinancial StatementsShareholder Information 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 operating companies have a strong subscription
revenue component with high renewal rates
demonstrating the strength of our client relationships.
Circulation
Circulation revenues are generated from sales of
the Daily Mail and The Mail on Sunday newspapers,
which continue to hold market-leading positions
and gain market share in a declining market.
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.
Events attendance and sponsorship
Exhibitor fees, sponsorship revenues and delegate fees
are earned from the growing portfolio of B2B shows run
by dmg events.
Transactions
Our Property Information revenues are influenced
by UK residential and commercial property
transaction volumes.
Read more in Financial Review, pages 22 to 30
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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 for the long term to
deliver value creation across a diversified portfolio of
entrepreneurial operating companies. 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.
Total shareholder return FY 2009 – FY 2019
11% 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.
Excellence
Commitment to quality, craftsmanship and
delivering excellence. We seek the best talent,
leadership and expertise.
Employees worldwide
5,950
For our customers
Our deep understanding of customer needs enables us
to innovate constantly and create content, products and
solutions that provide our operating companies with
a competitive edge and make us even more relevant
to our customers.
Organic investment as a percentage of revenues FY 2019
9%
For our communities
DMGT operating companies 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 2019
£1.2 million
7
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Adapting to continuous change
Market Overview
DMGT comprises a portfolio of businesses working across diverse markets.
While each sector has its own individual characteristics, some common
features exist:
• Content and information-driven
• Fast-paced and evolving to adopt new technology and business models
• Technology-enabled with high degrees of innovation
• Enduring and resilient
Increased
volatility
Political
uncertainty
Cyber
security
Context to DMGT
• As a provider of proprietary, hard-to-
Context to DMGT
• Political policy decisions have direct
and often unexpected impacts on the
geographies and sectors 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.
• Changing political landscapes throughout
the world add to the climate of political
uncertainty, notably in the Middle East.
Our approach
• DMGT closely follows political changes
and implications for the geographies and
sectors 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.
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 the outcome of
the UK general election (December 2019)
and the conditions of Brexit 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 diversified portfolio provides balance
in an increasingly volatile world: as one
sector may be facing headwinds, another
may benefit.
• DMGT is providing its customers
with fundamental content, data,
analytics and insights. This enables them
to move away from decisions based on
instinct and embrace data as a means
to navigate volatility.
• 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
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
are increasingly alert to the threat
posed to individuals and society
by security 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 leads
a continuous review of the cyber security
landscape in order to roll out revised
information security standards,
compliance road maps and perform
regular cyber security audits.
• The Executive Committee ensures
senior-level engagement across the
Group and appropriate investment
in risk reduction.
• Incident reports, responses and best
practices are shared across the Group
to help ensure appropriate mitigation
of any threat.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Our businesses are constantly looking to the future to identify and manage current and future trends.
The most significant of these are identified here as well as DMGT’s approach to the trends.
Read more on the trends affecting the Group in Principal Risks, pages 34 to 39
Continuous
innovation
Artificial
intelligence
A competitive
talent pool
Context to DMGT
• Technological change and customer
adoption rates of new technologies
in our key sectors are accelerating,
changing and erasing traditional
business models.
Market trend
• The speed of technology evolution is
increasing the capital intensity of IT
investment and product development,
reducing business investment horizons.
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.
• DMGT’s investment approach enables
us to remain close to customers through
our portfolio of businesses. This provides
greater insight into exactly what our
customers value, engage with and,
ultimately, want to buy.
Context to DMGT
• There is an increasing prevalence of
systems and devices that are designed to
act intelligently. There is also continued
growth in the amount of data being
generated, stored and made available
for analysis. With the benefit of artificial
intelligence, a smart system can quickly
process and use data to inform and
change its future behaviour. These
developments create opportunities
for DMGT and its businesses.
Market trend
• Artificial intelligence, including machine
learning, enables businesses to perform
analysis on immense quantities of data
and derive insights 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
can be used to improve processes and
understanding. This area is evolving
quickly and DMGT’s businesses are
embracing the opportunity to develop
new products to increase efficiency.
Context to DMGT
• Across the global workforce, top talent
is drawn to companies that offer a
compelling employee value proposition.
This includes purpose beyond profit,
competitive remuneration and ongoing
learning and development opportunities.
Market trend
• Demand for top talent is always fierce,
particularly in the critical areas of big data
analytics, artificial intelligence and data
science, where demand in many labour
markets outstrips supply.
Our approach
• In competing for key employees, especially
critical technology talent, DMGT is
committed to enhancing its employee
proposition.
• The central technology function
coordinates Group-wide communication
and mobility for technological talent.
• DMGT supports training and development
in order to enhance employees’ capabilities
and transfer skills throughout the
businesses. We also provide initiatives such
as our talent development programmes
to encourage rising talent within DMGT.
• Statistical analytics are integral to many
of the products and services that we
continue to develop across our businesses.
• Our Board of Directors meets emerging
leaders at the operating companies as part
of the schedule of Board meetings.
• We have a central technology function
with expertise in artificial intelligence,
which is leveraged by the operating
companies.
9
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Delivering against clear strategic priorities
CEO Review
Overview
I am pleased to report that DMGT
delivered a robust performance in
FY 2019. This has been a direct result
of continued successful execution
against our three key strategic priorities
of improving operational execution,
increasing portfolio focus and
maintaining financial flexibility.
This year’s performance marks an important
milestone in the Group’s transformation.
Over the last three years, we have moved
from 10 sectors to five, from 40 operating
companies to eight, and from net debt to
EBITDA of 1.8 times to pro forma net cash
of nearly £250 million. We have made
substantial returns to shareholders in the
process, with distributions of over £3.80 per
share. We have also embedded a culture
of improving operational execution across
our portfolio of businesses, helping them
to become more effective and more efficient
with a disciplined approach to return on
investment (ROI).
As a result, our portfolio is streamlined and
we are focused on those assets which we
believe have the most potential to generate
cash flow and capital value, whilst ensuring
we have significant financial flexibility.
We are now transitioning to the next phase
of the Group’s transformation, focused on
delivering profitable growth, improved
cash generation and sustainable long-term
value creation.
Business highlights
Our performance over the last year included
a strong performance from Consumer Media
and, consistent with our expectations,
a mixed performance across our B2B
businesses. Our portfolio now comprises
businesses with leading market positions
in attractive segments and which are
increasingly well placed to realise their
potential over the medium to long term.
In April 2019, we returned almost
£900 million in capital to our shareholders,
in the form of shares in Euromoney
Institutional Investor PLC (Euromoney) and
a £200 million cash special dividend, which
equated to approximately 38% of our
market capitalisation at the time. To recap,
we had previously sold down DMGT’s
holding in Euromoney from 67% to 49%
in December 2016. We then realised a
fundamental milestone for DMGT this year
10
Key strategic priorities
Delivering on our potential
Improving operational
execution
Increasing portfolio
focus
Maintaining financial
flexibility
by redistributing our remaining stake in
Euromoney to our shareholders. This was the
biggest return of capital in DMGT’s history
and 95% of those shareholders who voted
at the Class Meeting voted in favour of
the distributions.
On a symbolic level, it was a defining
moment for the Group. Not only has it
made the Group more focused, it was also
a statement of confidence by our Board in
the future of DMGT.
The distribution of our holding in Euromoney
was another compelling example of DMGT’s
successful long-term approach of supporting
our portfolio companies to secure significant
value creation for our shareholders. This was
also demonstrated by the sale of our stake
in ZPG Plc (ZPG) in 2018 and of Genscape,
On-geo, BuildFax and Real Capital Analytics
in 2019.
The disposal of Genscape, our Energy
Information business, completed in
November 2019, having been agreed
in August. The Genscape management
team had made significant progress with
restructuring the business and improving
operational execution over the past two
years, resulting in a US$364 million
valuation. As well as returning significant
capital to DMGT’s shareholders during the
year, we have retained the financial flexibility
to invest in our businesses and be acquisitive.
We continue to maintain a highly disciplined
approach to capital allocation.
At an operating level, the Group delivered
a solid performance. Our Consumer Media
businesses outperformed their respective
markets and grew revenues by an underlying
2%. This is an excellent performance in an
industry that continues to face structural
headwinds. Across our B2B businesses,
we saw modest growth with strong revenue
growth in EdTech offset by our Property
Information business, which continued to
face challenging conditions in the UK. In
addition, in Insurance Risk, a good rate of
contract renewals was partially offset by
industry consolidation and historic RMS(one)
delivery issues.
The good progress that we are making
against the three strategic priorities is
reflected in our financial results in general
and in cash operating income (Cash OI) in
particular. Cash OI focuses our management
teams on the underlying cash generation
of their businesses. By successfully
implementing a performance management
culture across the portfolio, we have seen an
especially impressive improvement during
FY 2019 in the Cash OI margins at Hobsons,
the EdTech business, and Genscape ahead
of its disposal.
At RMS, the new leadership team hosted
an Investor Briefing event in London in July.
They discussed the strength of RMS’s
catastrophe risk modelling business and
set out their plans to enter the large and
high-growth Insurance Risk Analytics
market, where their new software platform,
Risk Intelligence, which was launched in May,
will be an important enabler in the delivery
of new products and services. RMS has
already made good progress on its new
architecture as well as in product
development, including the launch of SiteIQ
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Paul Zwillenberg
CEO
We have the flexibility to invest behind our
businesses, both organically and through
acquisitions, to support DMGT’s long-term
growth and value creation.
in June 2019. Given the attractive market
dynamics and strength of the business’s
customer proposition, we are confident
that RMS is well placed to create significant
long-term value for shareholders. RMS is
expected to continue to deliver modest
revenue growth over the next two to three
years before gradually accelerating as the
new products and services gain traction.
Profitability is expected to improve as the
ongoing investment programme peaks
and revenue growth accelerates.
The Consumer Media business’s revenue
growth is a result of our continued
commitment to invest in high-quality
journalism, which is reflected in MailOnline’s
direct traffic and the Mail newspapers’
significant, and increasing, market share.
MailOnline delivered an excellent
performance as it continued to execute
its strategy of prioritising direct traffic. In
FY 2019, the solidly profitable MailOnline site
returned to double-digit revenue growth
and there was strong organic growth from
DailyMailTV, in which we continue to invest,
and Metro.
The financial performance for FY 2019 across
our Consumer Media and B2B businesses
is a good demonstration of our deliberate
strategy to maintain a well-balanced and
diversified portfolio of businesses across
different sectors and economic cycles.
We will continue to focus on improving the
performance across the portfolio, investing
prudently where opportunities exist, to drive
long-term returns for our shareholders.
Financial performance
Group revenues grew 2% on an underlying
basis with growth from both the Consumer
Media business and, although market
conditions were challenging in some sectors,
the B2B portfolio. Operating profit increased
by an underlying 6%, reflecting growth from
Consumer Media, Insurance Risk and Energy
Information and reduced Corporate costs.
Cash operating income increased 10%
on an underlying basis as the growth from
Consumer Media, EdTech and Energy
Information and reduced Corporate costs
more than offset the increased organic
investment in the B2B businesses.
Adjusted profit before tax was £145 million,
a 21% decrease on the prior year due to
disposals, but an underlying increase of 19%.
Similarly, disposals resulted in adjusted
earnings per share decreasing by 8%.
Statutory profit before tax was £134 million,
a £573 million decrease largely due to the
prior year including a gain on disposal of
DMGT’s stake in ZPG. Statutory profit for the
year decreased by £597 million to £91 million
and statutory earnings per share were
30.7 pence.
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.
DMGT has maintained a strong balance
sheet with a pro forma net cash position
whilst also returning significant capital to
shareholders and making additional funds
available to the pension schemes during
the year.
Tim Collier, Group Chief Financial Officer,
describes DMGT’s financial performance in
further detail in the Financial Review (pages
22 to 30). 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.
Strategy update
I am pleased by the progress we have
made against our strategic priorities since
I first communicated them to the market
three years ago. Since I was appointed
CEO, we have streamlined the portfolio
significantly, focused on those assets which
have the most potential and built capabilities
within the businesses which will position
them well for the long term. The focus on
operational execution has been successfully
integrated and a performance management
culture embedded.
DMGT is on its way to becoming a
higher-performance business, but there
is a lot more to do. Going forward, we will
continue to focus on the three strategic
priorities which have served DMGT well in its
transformation to date. The same priorities
will underpin the next phase of the Group’s
transformation which will be focused on
delivering profitable growth, improved
cash generation and sustainable long-term
value creation.
11
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Delivering against clear strategic priorities
CEO Review
Increasing portfolio focus
We have made further progress in increasing
the focus of our portfolio over the past year.
Further to the distribution of our Euromoney
stake to shareholders, we sold Genscape,
On-geo, BuildFax and our c.40% stake in
Real Capital Analytics.
Although DMGT is in five sectors today,
compared to 10 three years ago, the Group
remains diversified by sector, geography
and revenue stream. Our portfolio is well
positioned for the future, with a number
of businesses in markets with long-term
growth characteristics that are well placed to
benefit from digitisation, including Insurance
Risk and EdTech.
As a portfolio manager, DMGT owns
businesses at different stages of their life
cycles. We are highly focused on achieving
the full potential of our portfolio and
we evaluate each business against our
aspirations for their future. That may be to
generate predictable cash flows to invest
back into the business or to support the
payment of the dividend; to be a future
generator of growth and profitability;
or to generate capital value. Equally, should
a business be worth substantially more
to somebody else than it is to us, we will
continue to look to monetise that value.
In that context, I frame my thinking on the
roles of our businesses into the following
three groups:
3.
1.
Predictable performers. These are
among our largest businesses, are
typically more mature and predictable,
and form the economic bedrock of the
Group. They are strong brands which play
an important role in their individual
markets and include Daily Mail, The Mail
on Sunday, Metro, Landmark and Trepp.
If an attractive opportunity arises where
we can take advantage of our scale
and where it will create value for our
shareholders, we will invest in this space.
2. Growing and delivering. These are
businesses that are well positioned in
attractive markets with long runways for
future growth. Over the longer term, they
are expected to deliver the majority of
our revenue and profit growth. This group
includes RMS, MailOnline, dmg events
and Hobsons. Future growth for this group
is expected to be driven both organically
and through bolt-on acquisitions.
Businesses for the future. This is a
unique strength of DMGT; our ability to
take a long-term approach to create the
‘Growing and delivering’ businesses of
the future. These are essentially start-up
businesses where technological changes
create opportunities for us. This group
includes DailyMailTV, Yopa and Cazoo.
dmg ventures, our venture and early-stage
investment division, is actively exploring
additional growth opportunities and will
play an important role in expanding our
investments in this area.
Improving operational execution
The second area of strategic focus is
improving operational execution and I am
pleased with the progress that has been
made in this regard. Importantly, the
performance management culture has
been embraced by the management teams
of the individual businesses and improving
operational execution is increasingly
becoming business as usual for our people.
Throughout FY 2019, we continued to
undertake a number of initiatives which
reflected our operational focus and I have
included some examples below.
Clear portfolio roles
We have established clear roles for each business within the portfolio and the expectations for each business reflect their role.
Predictable performers
Growing and delivering
Businesses for the future
Predictable profit and cash generation
to meet DMGT’s obligations, fund
investment and incubate ‘Businesses
for the future’
Revenue growth and margin
improvement driving value creation
Option value for the future, tomorrow’s
‘Growing and delivering’ businesses
• Innovate and extend core;
seed ‘Businesses for the future’.
• 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
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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
maintaining financial flexibility. We expect this position and strategy to drive sustainable revenue, profit,
cash and EPS growth over the long term.
P
erfor
m
ortfolio roles
ar p
Cle
Increasing
ortfolio focus
p
Market-leading
positions
Growing,
digitising
sectors
a
n
c
e
m
a
n
a
g
e
m
e
n
t
c
u
l
t
u
r
e
operatio
I
m
p
r
n
o
a
l
v
i
e
n
x
g
e
c
u
t
i
o
n
Satisfying
the need
to know
Revenue,
profit and
cash growth
Sustained EPS
and dividend
growth
Strong balance
sheet
Maintaini n g
financial flex i b i
Enabling balanced and flexib l e c a p i
i
y
l
t
a tio n
c
a l a ll o
t
In Product, MailOnline tested its paywall
outside of its main geographical markets
and Hobsons enhanced its user experience,
features and functions. In Commercial,
meanwhile, RMS implemented a new broker
structure. In Operations, dmg events
implemented an efficiency review, while
Genscape successfully delivered its
cost-efficiency programme. In People,
we were delighted with the appointment
of a new CEO and Executive Chairman at
Landmark Information Group. In Technology,
we have harmonised dmg events’ back
office systems. At Hobsons, we have
increased the focus on shared services
and common architecture.
Although good progress has been made, we
are not complacent and there is still more
work to be done. We are fully committed to
ensuring that a high-performance culture
pervades everything that we do through a
clear ROI mindset and a focus on cash OI,
and this will remain a key focus.
Maintaining financial flexibility
Following the payment of a £200 million
special dividend in April and an additional
£117 million being made available to the
pension schemes, the balance sheet still
remains very strong. Pro forma net cash was
£247 million at the period end, including the
gross proceeds from the November 2019
disposal of Genscape; see page 25 for more
details. As a result, we have maintained our
financial flexibility to ensure we are well
placed to take advantage of attractive
opportunities, at the right price, as they
arise. The acquisition of the ‘i’, the UK
national newspaper and website, in
November 2019, is a good example; a
strategically and financially compelling
acquisition of a content-led business.
Our capital allocation framework remains
the same. Organic investment will continue
to be the priority and was equivalent to 9%
of revenues in FY 2019. We will remain highly
disciplined in our approach to M&A and
continue to prioritise bolt-on acquisitions
in our chosen sectors as we target those
segments which are growing and are set
to benefit from digitisation.
The dividend remains the primary
mechanism for delivering returns to
shareholders and we are committed to
real dividend growth. We remain confident
that our capital allocation framework,
underpinned by a strong balance sheet,
will drive shareholder value creation.
Outlook
The financial performance in FY 2020 will
reflect the significant portfolio changes over
the past year. Group revenues are expected
to be broadly stable on an underlying basis.
The cash operating income margin is
expected to exceed the operating profit
margin, which is expected to be around 10%.
DMGT will continue to invest to drive
long-term value creation.
Paul Zwillenberg
CEO
13
Strategic ReportGovernanceFinancial StatementsShareholder Information
Strategic Report
Measuring our performance
Key Performance Indicators
The Board seeks to deliver sustained long-term growth and value creation
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.
Key strategic priorities
Improving operational execution
Increasing portfolio focus
Maintaining financial flexibility
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.
2019
2018
0%
2017
+1%
2016
0%
2015
+1%
+2%
Underlying revenue growth
+2%
2018: 0%
The underlying revenue
performance reflects a strong
Consumer Media performance
and continued B2B growth.
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.
2019
£145m
2018
2017
2016
2015
2019
2018
2017
2016
2015
£182m
£226m
£260m
£281m
38.6p
42.2p
55.6p
56.0p
59.7p
Group adjusted profit
before tax
£145m
2018: £182m
Group adjusted profit before tax
decreased by £37 million,
reflecting the disposal of B2B
businesses and associates. Group
adjusted profit before tax grew
19% on an underlying basis.
Adjusted earnings per share
38.6p
2018: 42.2p
Adjusted earnings per share
decreased by 8%, reflecting the
reduction in adjusted profit before
tax and an increase in the effective
tax rate, partially offset by a
reduction in the number of shares
in issue that occurred in April 2019.
14
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Description
Relevance
Performance
Narrative
Strategic priority
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.
2019
2018
2017
2016
2015
£162m
£155m
£199m
£254m
£278m
Group adjusted cash
operating income
£162m
2018: £155m
Group adjusted cash operating
income increased by £7 million
as the increased investment in
the B2B businesses was more
than offset by improved
operational execution.
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.
2019
2018
2017
2016
2015
(1.4)x
(1.8)x
(1.8)x
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
7.3p
1999
Dividend
Inflation
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.
2019
2018
2017
2016
2015
1.2x
Net cash/(debt):EBITDA
0.8x
1.2x
2018: 0.8x
DMGT continues to maintain
significant financial flexibility and
remains in a net cash position.
During the year, the Group
distributed a £200 million special
dividend to shareholders and
made a further £117 million
available to the pension schemes.
23.9p
Dividend per share
10.9p
2019
23.9p
2018: 23.3p
We have proposed a full-year
dividend of 23.9 pence, up by 3%
from last year, continuing our
strong track record of dividend
growth and delivering a 6%
cumulative annual growth rate
over the past 20 years.
8%
9%
9%
9%
7%
Organic investment
as a % of revenues
9%
2018: 8%
DMGT continued to reinvest
in the businesses during the year,
notably in the B2B portfolio.
^
§
*
¥
Underlying revenue growth is on a like-for-like basis, adjusted for constant exchange rates, the exclusion of disposals and business 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. The September 2019 Gastech event revenue is compared to two-thirds of the September 2018 event’s revenue, having changed from an 18-month to an annual cycle. For Consumer
Media, underlying revenues exclude low-margin newsprint resale activities. See pages 29 and 30.
See Note 16 for details of net cash. The actual net cash:EBITDA ratio as at 30 September 2019 was 0.4 but £117 million of net cash has been made available to the pension schemes and
£282 million of gross proceeds from the disposal of Genscape, the Energy Information business, were received in November 2019. The 2019 net cash:EBITDA ratio of 1.2 is stated after
adjusting net cash to exclude the £117 million and include the £282 million.
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 90 and the reconciliation in Note 13 to the Accounts.
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.
15
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Operating Business Reviews
B2B
Summary
Our B2B companies operated in five sectors during the year, namely Insurance Risk,
Property Information, EdTech, Energy Information, and Events and Exhibitions.
Following the disposal of the Energy Information business, Genscape, which
completed in November 2019, the B2B companies now operate across four sectors.
Total B2B
Revenue
Cash operating income*
Operating profit*
Cash operating income margin*
Operating margin*
2019
£m
738
126
117
17%
16%
2018
£m
773
131
128
17%
17%
* Adjusted results rather than statutory; see pages 28 and 30 for details.
^ Underlying growth rates give a like-for-like comparison; see pages 29 and 30 for details.
Movement
%
(4)%
(4)%
(9)%
Underlying^
%
+2%
(4)%
(8)%
Performance
Revenues from B2B totalled £738 million,
up 2% on an underlying basis. The
performance reflects growth from EdTech,
Insurance Risk and Events and Exhibitions
partially offset by a decrease in Property
Information, which continued to experience
challenging market conditions in the UK,
and Energy Information. Revenues decreased
by 4% in absolute terms due to disposals
within the Property Information and
Energy Information sectors in FY 2018.
B2B cash operating income decreased
by an underlying 4% to £126 million,
reflecting increased investment in product
development, notably to take advantage of
the attractive growth opportunities available
to RMS, the Insurance Risk business. The
overall B2B cash operating income margin
remained at 17%, with improvements from
Property Information, EdTech and Energy
Information offset by lower margins in
Insurance Risk and Events and Exhibitions.
B2B adjusted operating profits were
£117 million, down an underlying 8%,
due to growth from Insurance Risk and
Energy Information being more than offset
by reductions from the other sectors. The
performance reflected a larger proportion
of technology costs being expensed, not
capitalised, and the overall B2B operating
margin decreased to 16%.
Outlook
The B2B financial performance will be
affected by the disposal of Genscape and the
On-geo and BuildFax Property Information
businesses during 2019. FY 2019 revenues,
based on the current portfolio of businesses,
were £638 million. In FY 2020, the B2B
portfolio’s revenues are expected to grow on
an underlying basis. There will be significant
organic investment, reflecting the
opportunities to create value over time,
but which will likely impact the cash
operating income and operating margin
in the short term.
Read more on the risks affecting our
B2B businesses in Principal Risks,
pages 34 to 39
Adjusted revenue (%)
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
33
30
11
16
10
Adjusted operating profit (%)
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
35
35
4
19
7
16
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Insurance Risk
2019
£m
244
41
40
2018
£m
Move-
ment
%
Under-
lying^
%
229
+6% +1%
50 (18)% (24)%
35
+17% +6%
17% 22%
17% 15%
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 29 and 30 for details.
The Insurance Risk business, RMS, is
focused on technological innovation,
which continues to underpin its market-
leading position in the catastrophe risk
modelling market. During FY 2019, RMS
increased its investment in software, data,
data analytics and applications, and
launched Risk Intelligence. This new
software platform will be an important
enabler in the delivery of RMS’s new
products and services, particularly for
the large and high-growth Insurance
Risk Analytics market that the business
is expanding into.
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 improve their understanding and manage
the risks of natural and human-made
catastrophes, including hurricanes,
earthquakes, floods, wildfires, cyber attacks
and terrorism.
Performance highlights
Insurance Risk revenues grew by 1% on an
underlying basis as the benefit of favourable
contract renewals during the year more than
offset the impact of industry consolidation
and historic RMS(one) delivery issues.
Reported revenues grew 6% to £244 million
including the benefit of the stronger US dollar.
The cash operating income margin decreased
to 17% from 22% in the prior year as the
business increased its investment to drive
future growth. RMS continued to expense
development costs as they were incurred.
The adjusted operating profit margin of 17%
benefitted, however, from the absence of
RMS(one) amortisation, which was
£15 million in the prior year, following the
impairment of the asset in September 2018.
The substantial amount of product
development that occurred in FY 2019 reflects
the strengthening of the executive team
over the past two years and the significant
increase in the management team’s
collective experience in enterprise software.
In May 2019, RMS held its annual client
conference and announced the launch
of Risk Intelligence, an open and flexible
platform to enable better risk management.
Risk Intelligence is a modern, cloud-based,
unified risk management platform. It enables
higher performance risk model execution at
a lower cost, as well as rich data analytics,
and supersedes the RMS(one) platform
which was retired during the year.
RMS also released two new analytics
applications that are available on the Risk
Intelligence platform. SiteIQ synthesises
risk data across millions of global locations,
at the level of a single location or a portfolio
of locations, and allows underwriters to
gain an immediate better understanding
of property risk. ExposureIQ is aimed at
exposure management. The applications
are expected to facilitate RMS’s entry
into the large and high-growth Insurance
Risk Analytics market as it expands beyond
the natural catastrophe modelling market
it serves today. Similarly, RMS Location
Intelligence was launched for the Property
Data market in June 2019, making trillions
of data points accessible to customers.
The business also continues to invest in
model development, reflecting an ongoing
commitment to build upon RMS’s market-
leading position. The US Inland Flood
high-definition (HD) model and US Wildfire
HD model were both released on Risk
Intelligence during the year.
Priorities in the year ahead
RMS continues to take a disciplined
approach to investing in the long-term
growth opportunities that have been
identified. Given the strength of the
business’s customer proposition, the Board
of DMGT remains confident that, with the
new management team in place, RMS is well
placed to create good long-term value for
shareholders. RMS is expected to continue
to deliver modest revenue growth over the
next two years before a gradual acceleration
as the new products and services gain
traction. We are encouraged by the level
of customer engagement and in response
to the feedback will be accelerating elements
of the product roadmap to align best with
customers’ priorities. The FY 2020 operating
margin will reflect this investment and
continue at a similar level to the H2 2019 run
rate. Beyond FY 2020, profitability is expected
to improve following the peak in investment
and as revenue growth accelerates.
Property Information
2019
£m
222
44
41
2018
£m
Move-
ment
%
Under-
lying^
%
272 (18)% (1)%
48
(8)% (4)%
58 (29)% (25)%
20% 18%
19% 21%
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 29 and 30 for details.
The Property Information portfolio
operates in the UK, US and Ireland.
The businesses delivered a resilient
performance, although market conditions
in the UK were challenging, and both
Trepp and Landmark Information Group
continue to play an important role
as strong cash generators for DMGT.
Business model
In the UK and Ireland, Landmark Information
Group derives 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 the US,
Trepp provides risk, valuation and data
solutions for the commercial mortgage-
backed securities market as well as tools,
analytics and models for commercial real
estate investors and lenders. Revenues are
generated from volume-related transactions
as well as subscriptions.
17
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Operating Business Reviews
B2B
Priorities in the year ahead
In the coming year, there will be continued
product development and investment
in technology to enhance Trepp and
Landmark Information Group’s market-
leading positions and drive future revenue
growth. Notably, there will be investment in
launching TreppCLO early in the new year
and in further enhancing the product, which
will affect margins in the short term. In the
UK, the challenging market conditions are
expected to continue due to ongoing
political uncertainty.
EdTech
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
2019
£m
80
8
4
2018
£m
Move-
ment
%
Under-
lying^
%
68
+17% +12%
2
N/A1
N/A1
7 (41)% (34)%
3%
10%
6% 11%
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
1
see pages 29 and 30 for details.
Cash operating income increased by £6 million and by an
underlying £7 million.
The EdTech business, Hobsons, is a
leading provider of college and career
readiness and student success solutions
to the North American market. The
business delivered strong underlying
revenue growth and an improving cash
operating income 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,
increasing 12% on an underlying basis.
There was continued growth from each of
Hobsons’ three product lines: Naviance, the
K-12 college and career readiness solution;
Intersect, the higher education match and fit
business; and Starfish, the higher education
student retention and success platform.
Reported revenues grew 17% including the
benefit of the stronger US dollar relative
to sterling.
The improved operational execution
delivered high cash conversion from
revenue growth and a transformation in
cash operating income and margin, which
improved from 3% to 10%. Good progress
was made during the year with the
modernisation of the core EdTech product
platforms and addition of new client-facing
features and functionality, which will help
to drive revenue growth. In FY 2019, a larger
proportion of expenditure on technology
was expensed directly to the income
statement rather than capitalised,
contributing to a decrease in the adjusted
operating margin from 11% to 6%.
Intersect launched its improved search and
match feature set, expanding the criteria
students can use to find their ‘best fit’
institution. The enhanced search features
are available to over 13 million students,
including over 40% of US high school
students, as over 13,000 schools subscribe
to the Naviance platform. Additional
enhancements were also made to the
Naviance and Starfish product suites
during the year. Over 1,100 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 and add new client-facing
features and functionality. The business
is well positioned to deliver continued
growth and improving cash generation,
supported by a continued focus on
operational execution.
Performance highlights
The focus within the portfolio was further
increased in 2019 with the disposal of
On-geo, the German business, in June
and BuildFax, the early-stage US business,
in October. The disposals followed those
of EDR and SiteCompli in April 2018
and Xceligent’s cessation of trading
in December 2017.
Trepp is now DMGT’s sole US business in
Property Information. Trepp is a leading
provider of data, analytics and technology
solutions to the global securities and
investment management industries. In
Europe, the Landmark Information Group
includes Landmark and SearchFlow.
Property Information revenues decreased by
1% 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. The 18% reported decrease in
revenues reflected the reduced number of
businesses in the portfolio, slightly offset
by the stronger US dollar.
There was significant product development
in the period across all businesses. Notably,
Trepp introduced new analytics for lending
institutions in the commercial real estate
market and made considerable progress
with the development of TreppCLO,
which will provide data analytics to the
collateralised loan obligations (CLO) market.
There was an underlying decrease in cash
operating income and adjusted operating
profit as a result of the increased cost base
of the remaining businesses and increased
investment. Margins, however, benefitted
from changes to the portfolio mix.
Landmark Information Group has expanded
into conveyancing panel management
services following the acquisition of its
Optimus business in July 2019. Optimus’s
technology integrates with conveyancers
and introducers, such as mortgage brokers,
to ensure a faster and more transparent
residential property transaction process.
The acquisition enables Landmark to
work more closely with introducers while
continuing to serve existing complementary
markets such as legal conveyancing,
estate agency and mortgage lending.
18
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Events and Exhibitions
2019
£m
119
22
22
2018
£m
Move-
ment
%
Under-
lying^
%
118
+1% +4%
28 (21)% (14)%
28 (19)% (12)%
19% 24%
19% 24%
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 29 and 30 for details.
The Events and Exhibitions business,
dmg events, is an organiser of B2B
exhibitions and 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 six new events
launched in 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 has strong market and brand
positions, emerging market experience and
an entrepreneurial culture. This creates
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 derives its revenues
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
4% on an underlying basis due to Gastech,
one of the three largest events in the
portfolio, successfully transitioning to an
annual format having previously been held
every 18 months. Gastech grew absolute
revenues and delivered particularly strong
underlying growth.
ADIPEC and Big 5 Dubai, the two other
largest events, occurred in November 2018
and collectively delivered underlying growth,
although market conditions in the Middle
East have deteriorated since then. ADIPEC,
the Abu Dhabi-based energy event,
benefitted from additional conference
content on artificial intelligence and
technology. dmg events’ reported revenues
increased by 1% to £119 million, including
the benefit of the stronger US dollar relative
to sterling.
The business continued to geo-clone existing
shows by launching into new locations,
including a Big 5 Nigeria construction
exhibition and an INDEX Saudi interior
design event. Other new events were
successfully launched in Thailand and
South Africa.
The cash operating income margin and
operating profit margin were 19%
respectively, a reduction compared to the
prior year. This reflected the impact of
reduced revenues from most Middle East
events as well as investment to support the
future growth of major events and new
launches. As a result, operating profit
decreased by an underlying 12%.
Priorities in the year ahead
dmg events will remain focused on
developing its key large-scale market-leading
events. Market conditions in the Middle East
remain challenging, exacerbated by political
tension in the region. Big 5 Dubai and ADIPEC
occurred in November 2019 and, collectively,
revenues were stable. The business will
continue to launch new events, including in
Africa and the US. We also remain committed
to the Middle East events, illustrating DMGT’s
appetite to invest to support longer-term
revenue growth.
Energy Information
2019
£m
2018
£m
Move-
ment
%
Under-
lying^
%
74
12
8
86 (14)% (2)%
4 +208% +112%
N/A1
N/A1
–
16%
11%
4%
0%
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
1
see pages 29 and 30 for details.
Adjusted operating profit increased by £8 million and by an
underlying £6 million.
DMGT no longer operates an Energy
Information division, following the
disposal of Genscape for US$364 million
in November 2019.
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’s
focus on improving operational
execution, following the elimination of
peripheral products and streamlining
of support functions in the prior year,
delivered a significant improvement
in cash generation.
Business model
Genscape provides its customers with
fundamental data, intelligence and real-time
alerts, workflow tools, and predictive
analytics to manage volatility, make complex
decisions and increase the efficiency of their
supply chains. Genscape operates the
world’s largest private network of in-field
monitors in the sector and aims to improve
market transparency and efficiency.
Revenues are mainly subscription based
through annual and multi-year client contracts.
Performance highlights
Energy Information revenues decreased 2%
on an underlying basis to £74 million, with
continued growth from the oil and gas
sectors more than offset by challenging
market conditions in the power sector
and the rationalisation of product lines.
Revenues decreased by 14% in absolute
terms following the merger of Genscape’s
solar business into AlsoEnergy in
September 2018.
Significant progress was made during
the year with the consolidation of the
development team across the company,
the removal of management layers and the
streamlining of decision-making processes.
The management team’s focus on delivering
efficiencies resulted in a transformation in
cash generation, with the cash operating
income margin increasing from 4% to 16%
and cash operating income more than
doubling on an underlying basis to £12 million.
Similarly, the adjusted operating margin
increased from 0% to 11%.
The significant progress made with
improving operational execution during the
year resulted in a pleasing valuation for the
business at disposal.
Priorities in the year ahead
Genscape ceased being a DMGT business
in November 2019.
19
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Operating Business Reviews
Consumer Media
2019
£m
672
2018
£m
654
Move-
ment
%
Under-
lying^
%
+3%
+2%
78
67
77
64
+2% +12%
+4% +18%
12% 12%
10% 10%
Revenue
Cash operating
income*
Operating profit*
Cash operating
income margin*
Operating margin*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 29 and 30 for details.
The Consumer Media business, dmg media,
is focused on delivering high-quality,
popular journalism to a large global
audience. dmg media 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; and MailOnline, whose audience
spends 139 million minutes engaged with its
content each day.
The Mail brand reaches over 25 million UK
adults every month across its print and
digital platforms and has achieved scale in
other geographic markets, including the US
and Australia. Combined, the Mail and Metro
brands reach c.61% of the UK’s adult
population each month.
dmg media’s revenues are generated mainly
from advertising and circulation revenues.
While the newspaper businesses continue
to generate strong profits and cash flow,
the digital businesses are expected to be
the driver of dmg media’s future growth.
Performance highlights
The Consumer Media business’s revenues grew
an underlying 2% to £672 million, benefitting
from relatively favourable conditions in the
advertising market. The 13% underlying
growth from MailOnline and 61% from
DailyMailTV more than offset a 3% decrease
in circulation revenues and a 1% decline in
print advertising revenues. Revenues grew
3% in absolute terms, benefitting from the
inclusion of DailyMailTV, which became
a wholly-owned business in October 2018.
20
Cash operating income and adjusted
operating profit grew by an underlying 12%
and 18% to £78 million and £67 million
respectively. The growth reflected the
continued focus on improving operational
execution and the flow-through of revenue
growth to profits. The cash operating income
margin was 12% and the operating margin
10%, in line with the prior year.
Mail businesses
Revenues from the combined newspaper,
website and TV businesses (the Daily Mail,
The Mail on Sunday, MailOnline and
DailyMailTV) grew by an underlying 1% to
£559 million, including £140 million from
MailOnline. The Mail brands remain strong,
which is reflected in the large and growing
UK retail market shares held by the Daily Mail
and The Mail on Sunday, averaging 25.5%
and 22.8% for the year respectively.
Circulation revenues decreased by 3% to
£284 million with the continued decline
in volumes being only partly offset by the
benefit of the 5 pence cover price increase
in September 2018 of the weekday editions
to 70 pence.
An 8% decline in print advertising revenue
to £108 million was more than offset by
MailOnline’s growth. FY 2019 was a relatively
benign year for print advertising despite
the continued long-term structural and
competitive challenges facing the UK
national newspaper advertising market.
MailOnline continues to focus on attracting
traffic directly to its homepages on desktop
or mobile or its apps. Indirect traffic,
primarily via social media and search
platforms, decreased year-on-year and
resulted in total average daily global unique
browsers during the year decreasing by 3%
to 12.6 million. Total minutes spent on the
site decreased by 4% to a daily average of
139 million. The direct audience accounted
for 79% of minutes spent, compared to 77%
in the prior year, reflecting continued high
levels of engagement with the direct audience.
MailOnline is one of our ‘Growing and
delivering’ businesses and its growth
strategy is far-reaching, including providing
new advertising formats and working with
our key commercial partners, Snapchat,
Google and Facebook.
DailyMailTV, the US business, grew revenues
by an underlying 61% to £13 million.
The show is currently in its third season and
attracts an average of 1.1 million viewers
a day.
Metro
Following the integration of the advertising
operations of the Metro and Mail in April
2018, Metro delivered a strong performance.
Revenues grew by 11% to £79 million, a good
achievement in the context of a declining
print advertising market. Revenues also
benefitted from the addition of two regional
franchises in January 2018, one in July 2018
and a further one in January 2019. Metro is
read by an average of 2.4 million people each
day and has the largest Monday to Friday
share by volume of the UK newspaper
advertising market, excluding supplements.
The ‘i’
The ‘i’, the UK national newspaper and
website, was acquired for £50 million in
November 2019. The business has an
established reputation for quality journalism
with a loyal and engaged readership. In 2018,
the ‘i’ generated £11 million in cash
operating income and operating profit from
£34 million revenue. The acquisition is both
strategically and financially compelling and
there is scope for potential synergies in the
future, notably from dmg media’s existing
infrastructure and in advertising sales.
It is anticipated that the acquisition will
be reviewed by the UK Competition and
Markets Authority.
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 well managed with 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
Digital advertising revenues are expected
to grow, helping to offset anticipated
underlying print advertising declines. The
advertising market continues to lack visibility
and conditions are likely to remain volatile.
Circulation volumes are expected to decline.
The cash operating income margin and
operating margin will reflect a mix of the
expected underlying revenue reduction, the
benefit of continued cost efficiencies within
the newspapers, MailOnline’s growing
profitability and the inclusion of the ‘i’.
Read more on the risks affecting
our Consumer Media businesses in
Principal Risks, pages 34 to 39
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
The year ahead
The financial performance in FY 2020 will be
affected by the absence of Euromoney and,
much less significantly, RCA.
Yopa is expected to have the most significant
impact on future financial performance.
DMGT’s stake has increased to c.45% from
c.26% for most of FY 2019 and the business
continues to invest in disrupting the estate
agency market.
Yopa and DMGT’s other joint ventures and
associates are primarily investment-stage
businesses and DMGT does not control them,
unlike subsidiaries. The current expectation
is that they will generate cumulative net
losses in excess of £10 million in FY 2020.
Operating Business Reviews
Joint ventures, Associates
and dmg ventures
2019
£m
2018
£m
Move-
ment
%
Under-
lying^
%
23
–
56
(59)%
23 (100)%
N/A
N/A
(10)
(5)
+96%
-3%
13
74 (83)% -3%
Euromoney
Institutional
Investor PLC
ZPG Plc
Other joint
ventures and
associates
Total share
of adjusted
operating profit*
* Adjusted results rather than statutory; see pages 28 and 30
for details.
^ Underlying growth rates give a like-for-like comparison;
see pages 29 and 30 for details.
As well as a diverse portfolio of operating
companies, DMGT holds minority stakes
in early-stage businesses.
Current notable associates include:
• c.45% stake in Yopa, a UK hybrid estate
agent;
• c.27% stake in Praedicat, which is
dedicated to improving the underwriting
and management of casualty risk; and
• c.24% stake in Excalibur, which operates
the online discount businesses Wowcher
and LivingSocial UK.
DMGT’s most significant investment is its
c.19% stake in Cazoo, which aims to change
the way people buy used cars in the UK.
Until recently DMGT also held stakes in
two UK-listed companies that it founded.
In April 2019, DMGT distributed £662 million
of shares in Euromoney Institutional Investor
PLC (Euromoney), all of its c.49% stake, to
DMGT’s shareholders; see page 25 for more
information. This followed the sale of DMGT’s
c.30% stake in ZPG Plc (ZPG) for £642 million
in July 2018.
In May 2019, the focus of the portfolio was
further increased by the disposal of DMGT’s
c.40% stake in Real Capital Analytics (RCA),
the US-based Property Information business,
for US$89 million.
In FY 2019, the Group’s share of operating
profits from its joint ventures and associates
was £13 million, an 83% decrease compared
to FY 2018. Following its disposal, no profits
were generated from ZPG, compared to
£23 million in the prior year. Similarly, since
DMGT only owned a stake in Euromoney for
the first six months of the year, the share of
profits from Euromoney was £23 million
compared to £56 million in FY 2018.
The net share of operating losses from other
joint ventures and associates was £10 million,
notably from Yopa, which became an
associate in August 2018. The year-on-year
performance benefitted from the absence
of DailyMailTV, another early-stage business
which is now part of dmg media. On an
underlying basis, excluding ZPG, Euromoney,
DailyMailTV and RCA and including Yopa’s
organic year-on-year performance, the share
of net losses was in line with the prior year.
Investments and dmg ventures
As well as joint ventures and associates,
DMGT invests in and develops early-stage
businesses in which the Group holds smaller
stakes. As 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.
dmg ventures is responsible for DMGT’s
minority and early-stage investments,
including some associates. It focuses on
investing in companies with disruptive
consumer propositions which need to scale
and can leverage the Group’s assets to do so.
In some cases, equity stakes are acquired by
providing advertising in DMGT’s Consumer
Media products, reflecting the extensive
reach of the Mail and Metro brands.
Cazoo is currently in the process of launching
its service to market and has the potential to
develop into a major business.
Kortext, the leading supplier to UK
universities of digital textbook solutions,
is another notable investment.
21
Strategic ReportGovernanceFinancial StatementsShareholder Information 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 when DMGT
completed the first stage of its
transformation and made a substantial
return of capital to shareholders.
The statutory results reflect the exclusion of
discontinued operations, namely Genscape,
the Energy Information business, from
revenue, operating profit and profit before
tax. They include gains on disposals and
exceptional items. Profit for the year was
£91 million, a £597 million decrease on the
prior year. This reduction was primarily due
to the inclusion of a substantial gain on the
disposal of ZPG Plc (ZPG) in the prior year.
Similarly, statutory earnings per share
decreased by 84%.
DMGT’s balance sheet remains strong, with
pro forma net cash of £247 million, including
gross proceeds from the November 2019
disposal of Genscape. During the year, as
well as maintaining financial flexibility, DMGT
also paid a £200 million special dividend and
made £117 million available to the Group’s
defined benefit pension schemes, which
are in an improved pro forma net surplus
position on an accounting basis.
22
The recommended final dividend of
16.6 pence per share gives a total for the
year of 23.9 pence, up 3% on the prior year.
This continues DMGT’s track record of
delivering annual real dividend per share
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 28
and 30.
When assessing revenue and 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 29 and 30.
Financial highlights:
statutory results
Revenue
£1,337m
2018: £1,341m
Operating profit
£67m
2018: £168m
Profit before tax
£134m
2018: £707m
Profit for the year
£91m
2018: £688m
Earnings per share
30.7p
2018: 194.7p
Dividend per share
23.9p
2018: 23.3p
Go online to www.dmgt.com
to read more about our
Financial highlights
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Performance highlights
The Group’s overall financial performance
in the year was consistent with our
expectations. It reflected the impact of
disposals, a good year for Consumer Media
and a mixed B2B performance with
challenging market conditions faced by
some of our businesses, notably UK Property
Information. Nevertheless, the Group’s
results demonstrate the benefit of our
diversified portfolio and the strength of
our market-leading businesses.
Group revenue grew 2% on an underlying
basis. Subscription revenue grew by an
underlying 4%, with growth across the
EdTech and Property Information sectors.
Events revenue grew by an underlying 4%
and digital advertising by 11%. Transaction
revenues decreased by 1% on an underlying
basis, reflecting lower transaction volumes
in the UK property market. Although print
advertising and circulation revenues
continued to decrease, the reductions were
at slower rates than the previous year.
Adjusted operating profit grew 6% on an
underlying basis. The performance reflected
underlying growth in profits from Consumer
Media, Insurance Risk and Energy
Information as well as reduced Corporate
costs. Group adjusted operating margin was
10%, in line with the prior year. Adjusted
profit before tax was £145 million, a 21%
decrease on the prior year, reflecting the
benefit of reduced finance costs being more
than offset by a reduction in the share of
operating profits from associates. On an
underlying basis, adjusted profit before tax
grew 19%.
The portfolio focus was increased further
during the year, as explained in the CEO
Review, including the distribution of the
Group’s c.49% stake in Euromoney
Institutional Investor PLC (Euromoney)
to DMGT’s shareholders. The Group ended
the year with pro forma net cash§ of
£247 million and a net cash:EBITDA ratio
of 1.2, maintaining DMGT’s significant
financial flexibility.
Revenue performance
Group revenues in the financial year grew 2%
on an underlying basis. Adjusted revenues
decreased 1% in absolute terms to
£1,411 million as the benefit of the stronger
US dollar relative to sterling was more
than offset by the impact of disposals.
The average exchange rate during the year
was £1:$1.28 compared with £1:$1.35 in
the prior year.
Revenues from B2B businesses grew 2%
on an underlying basis, to £738 million, with
growth from EdTech, Insurance Risk and
Events and Exhibitions partially offset by
Property Information, which experienced
weakness in the UK, and Energy Information.
B2B revenues decreased by 4% on an
absolute basis, following the exit of
certain Property Information and Energy
Information businesses, primarily in 2018.
Revenues from the Consumer Media
business, dmg media, grew 2% on an
underlying basis to £672 million. The strong
growth from MailOnline and DailyMailTV
more than offset the decrease in circulation
revenues and 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 17 to 20
Operating profit performance
Adjusted operating profit of £144 million
grew 6% on an underlying basis and was in
line with the prior year on a reported basis.
The adjusted operating profit of the Group’s
B2B operations decreased by an underlying
8% to £117 million, with growth from
Insurance Risk and Energy Information being
more than offset by reductions elsewhere.
The performance was affected by increased
investment, notably in Insurance Risk, and
a larger proportion of technology costs being
expensed, not capitalised. The adjusted
operating profit from Consumer Media grew
by an underlying 18% to £67 million as the
profit growth from MailOnline, reduced
losses from DailyMailTV and reduction in the
Mail Newspapers’ cost base more than offset
the adverse effect of decreasing circulation
and print advertising revenues. As expected,
Corporate costs decreased by an underlying
17% to £40 million, reflecting the Group’s
more focused portfolio.
Financial highlights:
adjusted measures*
Underlying^ revenue growth
+2%
2018: 0%
Underlying^ cash operating
income growth
+10%
2018: (20)%
Underlying^ operating
profit growth
+6%
2018: (17)%
Operating margin
10%
2018: 10%
Underlying^ PBT growth
+19%
2018: (14)%
EPS growth
(8)%
2018: (23)%µ
Net cash§
£247m
2018: £233m
Net cash§:EBITDA
1.2x
2018: 0.8x
Footnotes are defined on the inside front cover with
the exception of those below.
^ Underlying growth rates are on a like-for-like basis, see
pages 29 and 30. Underlying revenues, cash operating
income and operating profits are adjusted for constant
exchange rates, the exclusion of disposals and business
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. The September 2019 Gastech
event’s revenue, cash operating income and profit
are compared to two-thirds of the September 2018
event’s, having changed from an 18-month to an annual
cycle. For Consumer Media, underlying revenues
exclude low-margin newsprint resale activities. The
underlying change in the share of operating profits
from joint ventures and associates excludes ZPG,
Euromoney, DailyMailTV and Real Capital Analytics,
which have ceased to be associates, but includes the
year-on-year organic growth from Yopa, which became
an associate in August 2018. The underlying net finance
costs exclude the share of finance costs from ZPG and
Euromoney and the underlying FY 2018 costs have
also been adjusted to include an assumed £10 million
additional benefit from £642 million proceeds on the
disposal of ZPG.
µ 2018 growth rates based on FY 2018 results but pro
forma FY 2017 results, treating Euromoney as a c.49%
associate for the whole year, consistent with the
ownership profile during FY 2018.
23
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Focused on driving long-term shareholder value
Financial Review
Adjusted revenue profile
By business (%)
By type (%)
By destination (%)
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
17
16
6
8
5
48
Subscriptions
Circulation
Events
Digital advertising
Print advertising
Transactions and other
31
20
8
10
13
18
UK
North America
Rest of the World
53
30
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 £162 million,
Business performance
a £7 million increase compared to the prior
year, due to the £13 million reduction in
depreciation and amortisation being more
than offset by a £20 million reduction in
capital expenditure. Cash operating income
grew by 10% on an underlying basis as the
growth from Consumer Media and reduced
Corporate costs more than offset the
increased investment in the B2B businesses.
Joint ventures and associates
The Group’s share of the operating profits*
of its joint ventures and associates was
£13 million, an 83% reduction on the prior
year. The reduction resulted from the disposal
of DMGT’s stake in ZPG in 2018 and the
distribution to shareholders in April 2019
of the Group’s c.49% stake in Euromoney.
Further information on our JVs and
associates’ performance can be found
on page 21 of this report.
Revenues
Cash operating income*
Operating profit*
FY 2019
FY 2018
Growth
FY 2019
FY 2018
Growth
FY 2019
FY 2018
Growth
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
B2B
Consumer Media
Corporate costs
DMGT
£m
244
222
80
119
74
738
672
£m Reported Underlying^
+1%
229
(1)%
272
+6%
(18)%
68
118
86
773
654
+17%
+1%
(14)%
(4)%
+3%
+12%
+4%
(2)%
+2%
+2%
1,411
1,426
(1)%
+2%
£m
41
44
8
22
12
126
78
(43)
162
1. EdTech cash operating income increased by £6 million and by an underlying £7 million.
2. Energy Information operating profit increased by £8 million and by an underlying £6 million.
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)
DMGT Cash operating income
£m Reported Underlying^
(24)%
50
(4)%
48
N/A1
(14)%
+112%
(18)%
(8)%
N/A1
(21)%
+208%
2
28
4
131
77
(53)
155
(4)%
+2%
(20)%
+4%
(4)%
+12%
(20)%
+10%
£m
40
41
4
22
8
117
67
(40)
144
£m Reported Underlying^
+6%
35
(25)%
58
+17%
(29)%
7
28
–
128
64
(47)
145
(41)%
(19)%
N/A2
(9)%
+4%
(16)%
0%
(34)%
(12)%
N/A2
(8)%
+18%
(17)%
+6%
Source
Tables on page 28
Note 3
Note 3
Cash flow
Cash flow
FY 2019
FY 2018
144
25
22
(16)
(14)
162
145
27
33
(30)
(20)
155
Amounts in the tables are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.
24
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Financing costs
As expected, adjusted net finance costs were
£12 million, a 67% reduction on the prior
year. This reflected lower average levels of
net debt, the maturing of £219 million of
bond debt in December 2018 and a reduced
share of associates’ interest payable.
The pension finance credit, which is excluded
from adjusted results, was £7 million
compared to £2 million in the prior year.
Results before taxation
Adjusted profit before tax was £145 million,
underlying growth of 19%, reflecting the
reduction in net finance costs, though
£37 million less than the prior year in
absolute terms due to the disposal of ZPG
and distribution of Euromoney shares.
Taxation
The adjusted tax charge for the year, after
adjusting for the effect of exceptional items,
was £29 million, see note 11, compared to
£33 million in the prior year. The adjusted
tax rate was 20.3%, an increase on 18.2%
in the prior year, due to the geographical
mix of profits.
The statutory tax charge for the year was
£20 million. In addition, the statutory tax
credit on discontinued operations was
£10 million and the share of associates’
tax charges amounted to £6 million.
Go online to www.dmgt.com
to read our tax policy
Profit after tax
Adjusted Group profit after tax and minority
interests was £115 million, a decrease
of 23%.
Earnings per share
Adjusted basic earnings per share were
38.6 pence, down 8%. In April 2019,
127.3 million shares were returned to
DMGT and cancelled in conjunction with
the distribution of Euromoney shares and
a £200 million special dividend to DMGT’s
shareholders. Consequently, the weighted
average number of shares in issue during
the year was 296.4 million, a significant
reduction from 354.1 million in the previous
year. The total number of shares in issue at
the end of the year, excluding shares held in
Treasury and the Employee Benefit Trust,
was 228.1 million.
Net cash and cash flow
Pro forma net cash§ at the end of the year
was £247 million, a £14 million increase
compared to the £233 million net cash
position at the start of the year. Pro forma
net cash is stated after adjusting to:
i) exclude £117 million of cash that has
been made available to the Group’s
pension schemes but which currently
remains as cash on DMGT’s balance
sheet; and
ii) include £282 million of gross proceeds
received in November 2019 from the
disposal of the Energy Information
business, Genscape, which was agreed
in August 2019.
The pro forma net cash:EBITDA ratio was
1.2 at the year end.
The Group’s cash operating income
of £162 million is stated after £30 million
of capital expenditure, a significant
reduction on £50 million in the prior year
which reflects a larger proportion of
technology costs being expensed directly.
The Group remains committed to investing
for the long term and organic investment
was equivalent to 9% of revenues in the year.
April 2019 Distributions: Euromoney shares and £200 million special dividend
On 3 March 2019, DMGT announced
its intention to return all of DMGT’s
shares in Euromoney (Euromoney
Distribution) together with a £200 million
cash special dividend (Cash Distribution)
to holders of DMGT’s A Ordinary
Non-Voting Shares (A Shares). This
followed a review by the DMGT Board
that concluded that the Group’s capital
and cash resources were in excess of
its requirements and that a significant
distribution to shareholders was
appropriate. The Board also believed that
the value of DMGT was not fully optimised
since investors had an indirect holding in
Euromoney, a separately listed company,
via their holding in DMGT, resulting in
a discount being applied to the market
price of the A Shares.
Following an approval process, the
Euromoney Distribution occurred on
1 April 2019 and the Cash Distribution on
15 April 2019. The distributions totalled
£862 million and were fully aligned
with DMGT’s strategic priorities
of increasing portfolio focus and
maintaining financial flexibility.
Since Rothermere Continuation Limited
and Rothermere Investments Limited
exist primarily to hold the Rothermere
family’s interests in DMGT, they did
not participate in the Euromoney
Distribution and limited their receipt
of the Cash Distribution. Similarly, since
they own all of DMGT’s voting Ordinary
Shares, these shares did not participate
in the distributions.
The number of A Shares held by each
shareholder were reduced in respect of
the distributions received. The terms were
set so that participants in the Euromoney
Distribution benefitted from receiving
Euromoney shares at a 14.5% discount,
based on the 30-day volume weighted
average market value of the Euromoney
shares and A Shares when the proposal
was announced.
As the terms of the proposal were different
for ‘Rothermere Affiliated Shareholders’
and all other holders of A Shares, the
‘Fully Participating Shareholders’, an
Independent Committee of independent
Non-Executive Directors was established.
The Independent Committee assessed
the proposal and concluded that it was
in the best interests of Fully Participating
Shareholders. A Class Meeting of Fully
Participating Shareholders was held on
26 March 2019 and participation was high,
with 87% of all Fully Participating
Shareholders voting; 95% of the votes
cast were in favour of the proposal.
As a result of the Distributions, the
number of A Shares in issue was reduced
by 127.3 million which will help to improve
key financial metrics including DMGT’s
dividend coverage ratio and earnings
per share.
In light of the Board’s wider stakeholder
obligations and the return of capital
to shareholders, DMGT also made
£117 million available to the Group’s
defined benefit pension schemes. DMGT is
working with the Trustees of the pension
schemes to finalise these arrangements.
Go online to www.dmgt.com/
investors/shareholders
25
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Focused on driving long-term shareholder value
Financial Review
Viability Statement
In accordance with provision C.2.2 of the 2016 UK Corporate Governance Code, the
Directors have assessed the prospects of the Company. The Board used a three year
review period which is consistent with the Group's business planning cycle and with the
performance measurement period of the Group's long-term incentive plans.
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 for the Group’s revenue profile;
• financial flexibility through a strong balance sheet with continued good cash flow
generation and a 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
• 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 severe but plausible 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
from the European Property Information business;
• 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;
and
• the impact of macroeconomic factors including large foreign exchange fluctuations,
significant increases in interest rates and corporation tax increases.
The Group has also considered the specific uncertainties of Brexit on its future viability
by modelling scenarios which include the impact of a reduction in the number of
housing transactions on its European Property Information business and increases in
the cost and reductions in the availability of newsprint on its Consumer Media business.
Mitigations considered as part of the stress testing included a number of cost reduction
programmes and disposals of operating company subsidiaries.
In addition, the Board has also considered a reverse stress test scenario to establish
the level of stress which would cause the Group's viability to be put into doubt.
This scenario testing indicates that the Group's viability would be threatened by an
unexpected cash outflow of £330 million in each year of its three year review period or
a reduction in pre-tax profits of £170 million in each year of its three year review period.
The Directors consider that unexpected outflows of this magnitude are unlikely to occur.
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.
Other operating cash net outflows totalled
£5 million including the expected increase in
trade debtors for dmg media, following the
cessation of a trade finance arrangement.
Group operating cash flow was £157 million
and the conversion rate of operating profits
to operating cash flow was 109%, compared
to the 80% in the prior year.
Pro forma net proceeds from disposals,
including expenditure on acquisitions and
investments, were £288 million. These
included the gross proceeds from Genscape
described above and US$89 million from
the disposal of DMGT’s c.40% stake in
Real Capital Analytics. Dividend payments
totalled £275 million, including a £200 million
special dividend, and pro forma pension
funding totalled £130 million, including
£117 million made available to the defined
benefit pension schemes in respect of the
distribution of Euromoney shares and the
special dividend. Other cash outflows
included interest payments of £22 million
and taxation of £10 million. The stronger
US dollar at year end, relative to the prior
year end, resulted in a favourable cash
revaluation of £6 million.
The Group’s cash, cash equivalents and
short-term deposits, net of overdrafts,
totalled £289 million at year end. On a pro
forma basis, excluding £117 million made
available for the pension schemes and
including £282 million of cash gross proceeds
from the disposal of Genscape, the Group's
pro forma cash, cash equivalents and
short-term deposits totalled £454 million.
At year end, bond debt was £203 million,
with £1 million maturing in April 2021
and £202 million maturing in June 2027.
There was also £5 million of net debt
in respect of loan notes, collateral and
derivatives. The Group’s committed bank
facilities were £381 million, which were
completely unutilised.
In April 2019, Standard & Poor’s revised
its corporate credit rating for DMGT from
BB+ to BB, following the distribution of
Euromoney shares and £200 million cash
to shareholders. In February 2019, Fitch
reaffirmed DMGT’s 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.
26
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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 per share 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 the two
remaining categories: acquisitions and
shareholder returns. DMGT is committed
to its disciplined approach to acquisitions
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 £244 million
at the start of the year to pro forma
£332 million at 30 September 2019,
calculated in accordance with IAS 19
(Revised). The pro forma surplus includes
£117 million that has been made available
to the pension schemes but which currently
remains as cash on DMGT’s balance sheet,
as well as the statutory net surplus of
£215 million. During the year, the increase
in the value of the assets, including the
£117 million described above, exceeded
the increase in the value of the defined
benefit obligation.
Excluding the £117 million referred to above,
funding payments into the main schemes
were £13 million in the year. The existing
2016 funding plan includes payments of
£16 million p.a. from FY 2020 to FY 2027, as
well as requiring, in certain circumstances,
that a contribution of up to 20% of any share
buy-backs shall be contributed to the
schemes. Contributions will be discontinued
should the schemes’ actuary agree the
schemes are no longer in deficit, calculated
on an actuarial basis.
An actuarial valuation of the pension
schemes as at 31 March 2019 is in the
process of being completed and is expected
to conclude that the schemes remain in
deficit on an actuarial basis. Potential
revisions to the existing funding plan are
currently being discussed with the Trustees.
The next actuarial valuation is scheduled
for 31 March 2022.
Dividends
In April 2019, DMGT paid a £200 million
special dividend to shareholders. The
recommended final dividend is 16.6 pence
which, if approved, would make the total
dividend for the year, excluding the special
dividend, 23.9 pence, an increase of 3% over
the prior year. The recommended FY 2019
full-year dividend is equivalent to 62% 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 per
share 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 per share in
real terms and, in the medium term, to
distribute around one-third of the Group’s
adjusted earnings. This policy reflects the
combined objectives of delivering a reliable
and predictable dividend growth trajectory
while also being sufficiently prudent to
retain the flexibility to make significant
investments in the long-term future growth
of the business.
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. Following
a significant reduction in exceptional
operating costs in FY 2018, costs remain
at low levels compared to previous years.
The exceptional cash costs in the year were
£9 million, compared to £3 million in the
prior year, reflecting the continued absence
of exceptional severance and consultancy
costs. Total exceptional operating costs,
including those of discontinued operations,
joint ventures and associates, were
£36 million (2018 £25 million).
The charge for amortisation of intangible
assets arising on business combinations,
including the share from joint ventures and
associates, was £20 million (2018 £32 million).
Total impairment charges in the year were
£49 million, primarily in respect of the
Euromoney distribution and disposal of
On-geo, the German Property Information
business, compared to £63 million in the
prior year.
The Group recorded other net gains on
disposal of businesses and investments
of £67 million, including discontinued
operations, compared to a net gain
of £658 million in the prior year.
Adoption of IFRS 16
IFRS 16, the new lease accounting standard,
will apply to DMGT from 1 October 2019.
Prior periods will not be restated and
adoption of IFRS 16 will result in the Group
recognising additional lease liabilities of
c.£93 million and right-to-use assets of
c.£92 million on the balance sheet as at
1 October 2019. The adoption of IFRS 16 is
expected to impact FY 2020 results, reducing
rental costs by c.£25 million, increasing
depreciation charges by c.£23 million and
increasing finance costs by c.£2 million.
There will be no impact on total cash flow.
Outlook
The financial performance in FY 2020 will
reflect the changes to the Group over the
past year. The revenues of the current
portfolio of businesses would have been
£1,344 million in FY 2019, including the 2018
revenues of the ‘i’, and are expected to be
broadly stable on an underlying basis in
FY 2020.
In the coming year, we will continue to
invest. The Group cash operating income
margin is expected to exceed the operating
profit margin, which is expected to be
around 10%.
In FY 2020, we expect the net share of
operating losses from JVs and associates
to exceed £10 million and net finance charges
to be in the £10 million to £15 million range.
The effective tax rate is expected to reflect
changes to the share of losses from
associates, notably where a tax credit is not
recognised, and is expected to be around 22%.
Our strategy, combined with a balanced
and flexible approach to capital allocation,
positions us to deliver on the Group’s long-term
revenue, profit and cash flow potential.
27
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Focused on driving long-term shareholder value
Financial Review
Reconciliation of statutory operating profit to adjusted operating profit: FY 2019
£ million
Statutory operating profit
Discontinued operations
Exceptional operating costs
Intangible impairment
and amortisation
Exclude JVs and Associates
Adjusted operating profit
Insurance
Risk
Property
Information
EdTech
Events and
Exhibitions
Energy
Information
Consumer
Media
Corporate
costs
JVs and
Associates
Group Explanation
40
–
–
–
40
15
–
–
26
41
3
–
–
2
4
21
–
–
1
22
–
(26)
31
3
8
65
–
2
–
67
(50)
–
10
–
(40)
(28)
–
(7)
36
1
67
(26)
36
69
(1)
144
i
ii
iii
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
Events and
Exhibitions
Energy
Information
Consumer
Media
Corporate
costs
JVs and
Associates
Group Explanation
(24)
–
58
35
48
2
9
58
5
–
3
7
27
–
1
28
–
(4)
4
–
46
18
–
64
118
5
21
144
(52)
5
–
(47)
168
25
95
(144)
145
ii
iii
Reconciliation of statutory profit before tax to adjusted profit before tax
£ million
Statutory profit/(loss) before tax
Discontinued operations
Exceptional operating costs
Intangible impairment and amortisation
Profit on sale of assets
Pension finance credit
Other adjustments
Adjusted profit before tax
FY 2019
FY 2018
Explanation
134
(33)
36
69
(67)
(7)
13
145
707
(15)
25
95
(658)
(2)
30
182
i
ii
iii
iv
v
vi
Reconciliation of adjusted operating profit to cash operating income
£ million
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
B2B
Consumer Media
Corporate costs
DMGT
FY 2019
FY 2018
Adjusted
operating
profit
Depreciation
and
amortisation¹
Purchase
of fixed
assets¹
Cash
operating
income
Adjusted
operating
profit
Depreciation
and
amortisation¹
Purchase
of fixed
assets¹
Cash
operating
income
40
41
4
22
8
117
67
(40)
144
5
9
8
–
7
29
17
1
47
(5)
(6)
(4)
(1)
(3)
(20)
(6)
(4)
(30)
41
44
8
22
12
126
78
(43)
162
35
58
7
28
–
128
64
(47)
145
20
7
6
–
7
40
20
–
60
(5)
(17)
(11)
–
(3)
(36)
(8)
(6)
(50)
50
48
2
28
4
131
77
(53)
155
1.
Amortisation of intangible assets and expenditure on purchasing intangible assets refers to products and software, not assets acquired as part of business combinations.
Amounts in the tables are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.
28
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Underlying performance
FY 2019
£ million
Reported
M&A
Other Underlying
Reported
M&A
FY 2018
Exchange
rates
Other Underlying
Underlying
growth
Revenue
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
B2B
Consumer Media
DMGT
Cash operating income
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
B2B
Consumer Media
Corporate costs
DMGT
244
222
80
119
74
738
672
1,411
41
44
8
22
12
126
78
(43)
162
–
(20)
–
–
–
(21)
–
(21)
–
(1)
–
–
–
(1)
–
–
(1)
–
–
–
–
–
–
(32)
(32)
–
–
–
–
–
–
–
–
–
2. EdTech cash operating income increased by £6 million and by an underlying £7 million.
Adjusted operating profit
and profit before tax
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
B2B
Consumer Media
Corporate costs
DMGT adjusted operating profit
Income from JVs and associates
Net finance costs
DMGT adjusted profit before tax
40
41
4
22
8
117
67
(40)
144
13
(12)
145
–
(2)
–
–
–
(2)
–
–
(2)
(22)
–
(24)
–
–
–
–
–
–
–
–
–
–
–
–
244
202
80
119
73
718
640
229
272
68
118
86
773
654
1,358
1,426
41
43
8
22
12
125
78
(43)
160
40
39
4
22
8
114
67
(40)
142
(9)
(12)
120
50
48
2
28
4
131
77
(53)
155
35
58
7
28
–
128
64
(47)
145
74
(37)
182
–
(73)
–
–
(14)
(88)
8
(79)
–
(4)
–
–
2
(2)
(7)
–
(9)
–
(6)
–
–
2
(5)
(7)
–
(12)
(84)
14
(82)
12
5
4
5
4
29
2
31
4
1
–
1
–
6
–
(1)
6
3
1
–
1
–
6
–
(1)
6
–
–
6
–
–
(1)
(8)
–
(9)
(35)
(44)
–
–
(1)
(4)
–
(5)
–
–
(5)
–
–
(1)
(4)
–
(5)
–
–
(5)
–
–
(5)
241
204
71
114
75
705
629
1,334
54
45
1
25
5
130
69
(53)
146
38
53
7
25
2
124
57
(48)
134
(10)
(23)
101
3. Energy Information operating profit increased by £8 million and by an underlying £6 million.
Amounts in the tables are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.
+1%
(1)%
+12%
+4%
(2)%
+2%
+2%
+2%
(24)%
(4)%
N/A2
(14)%
+112%
(4)%
+12%
(20)%
+10%
+6%
(25)%
(34)%
(12)%
N/A3
(8)%
+18%
(17)%
+6%
(3)%
(46)%
+19%
29
Strategic ReportGovernanceFinancial StatementsShareholder Information Similarly, adjustments are made to exclude
disposals from both years completely.
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 2018
comparative is amended to include the
performance from the previously held
events for each FY 2019 show.
In FY 2019, on a reported basis, DMGT’s
revenues decreased 1%, cash operating
income increased 4%, adjusted operating
profit was in line with the prior year and
adjusted profit before tax decreased by 21%.
The growth rates were adversely affected by
disposals and the distribution of Euromoney
shares but benefitted from the stronger
US dollar. After adjusting for these factors
as well as others, such as acquisitions and
the timing of events, there was underlying
growth of 2% in revenues, 10% in cash
operating income, 6% in adjusted operating
profit and 19% in adjusted profit before tax,
as shown in the tables on page 29.
Tim Collier
Group Chief Financial Officer
Strategic Report
Focused on driving long-term shareholder value
Financial Review
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 2019 and FY 2018.
Note 13 on page 125 shows the full list
of adjustments between statutory and
adjusted results.
The explanation for each type of adjustment
is as follows:
i.
ii.
Discontinued operations: the adjusted
results include the pre-disposal results
of discontinued operations, namely
Genscape, the Energy Information
business, 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.
These are excluded from adjusted results.
iii. 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. Software, including
products, is also recognised as an
intangible asset on the balance sheet.
Occasionally the carrying value of
software is considered to be greater than
the value in use or the fair value less costs
to sell, as was the case for the Insurance
Risk RMS(one) asset in FY 2018, and it is
appropriate to impair it. The impairment
charge is excluded from adjusted results
since it is unrelated to the ongoing cost of
doing business. The ongoing amortisation
30
of software is, however, similar to the
depreciation of tangible assets and is
an everyday cost of doing business,
so is included in both statutory and
adjusted results.
iv. 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, in FY 2018. 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.
v.
Pension finance credit: the finance credit
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 credit and is excluded from
adjusted results.
vi. 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 2019 benefitted from the
stronger US dollar relative to sterling.
To calculate underlying growth, the prior
year comparatives are restated using the
FY 2019 exchange rates.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Entrepreneurialism, Purpose and Excellence
Our People and Our Stakeholders
Our values
DMGT encourages curiosity and
innovation amongst its people, and is
built around a set of values common
across our portfolio of operating
companies. These are:
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 businesses.
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 an international 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.
DMGT is a responsible business, dedicated
to its people and communities. Through
a range of local partnerships within the
communities our operating companies serve,
and Group-wide programmes such as our
Corporate Responsibility (CR) Champions
network, DMGT supports and encourages
purpose within our community.
We believe that supporting our operating
companies’ local communities is particularly
important as it allows our employees
to choose a cause close to their heart.
This is actioned by the CR Champions
network which has volunteers from across
the operating companies.
Go online to www.dmgt.com
to read more about our corporate
responsibility 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 and EdTech.
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.
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 careers. Our leadership
programmes are 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.
We continue to enhance employee
collaboration by adopting platforms such as
instant messaging, developing a Group-wide
microsite to share policies and information,
refining our internal newsletters, circulating
a daily email news bulletin and holding
regular ‘town hall’ meetings.
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.
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.
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 actively promoted
to employees and 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.
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
microsite. 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 deliver continuous
training to reinforce compliance.
31
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
Entrepreneurialism, Purpose and Excellence
Our People and Our Stakeholders
Human rights
DMGT 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.
Gender breakdown of our employees
The table below sets out the gender
breakdown of our employees. Our aim is to
promote equality and diversity in accordance
with our Group Code of Conduct and
Diversity Policy.
Board Directors
Operating company
CEOs, and direct
reports to the
Group CEO*
All employees*
Male
Female
At 30 September 2019
10 83%
2 17%
6 55%
5 45%
3,600 61% 2,346 39%
* Excluding Executive Board Directors.
Diversity and inclusion
Our Equal Opportunities Policy is designed
to comply with the Equality Act 2010 and
the Equality and Human Rights Commission
Employment Statutory Code of Practice, and
to promote best practice. Managers must set
an appropriate standard of behaviour, lead
by example and ensure that those they
manage adhere to this policy. This policy
applies to all aspects of the employee
relationship. All decisions must be based on
merit. This includes but is not limited to:
job adverts;
• recruitment and selection;
•
• training and development;
• opportunities for promotion;
• conditions of service;
• pay and benefits; and
• conduct at work.
We have a suite of policies designed to
promote the health and well-being of our
employees, including a range of fitness
and mindfulness programmes.
We partner with a number of external
programmes and take part in volunteering
activities to support diversity in media; one
of our new programmes connects women
from BAME backgrounds in the media
industry with experienced female mentors.
32
We run a number of training programmes
on equality, diversity and inclusion, as well
as provide tools and resources for hiring
managers to assist them in ensuring an
objective hiring process that attracts the
best talent regardless of background. We are
introducing marketing tools that target a
diverse range of job applicants. Our Career
Boards ensure job opportunities are open
to internal candidates, with training and
mentoring offered to support promotions
and internal mobility.
For our UK-based businesses, we also provide
an inclusive apprenticeship programme
for new talent and existing employees as
development opportunities range up to MBA
level. We believe this is a highly effective and
sustainable way to support the progression
of more people in our business.
DMGT has invested in a new Human
Resources Information System that enables
us to monitor the levels of diversity in our
business, and also promote an inclusive
culture. Diversity data including gender,
ethnicity, race and disability is tracked across
job levels and assessed against a number of
key areas, including recruitment processes,
attrition and promotions. We regularly ask
employees for their feedback on diversity
and inclusion, supported with regular internal
communications on a range of activities that
promote a collaborative and inclusive culture.
Gender pay reporting
Two of DMGT’s UK-based operating
companies with over 250 employees
reported on their Gender Pay Gap for the
second time in 2019. Both Landmark and
dmg media published their data in April 2019
on their respective websites. DMGT as an
employer believes in ‘Equal pay for equal
work’, is committed to equal pay and
conducts ongoing reviews to ensure we
have the best possible processes in place.
Go online to www.landmark.co.uk/
www.dmgmedia.co.uk
Flexible working
DMGT supports its employees to maintain a
work-life balance. Policies and guidance to
enable this are in place across the Group.
Our stakeholders
Payments practices reporting
Similarly, in April 2019 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.
Go online to www.gov.uk/check-when-
businesses-pay-invoices
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 £1.2 million. Funds donated
include CR initiatives carried out at our
operating companies.
Go online to www.dmgt.com/
corporate-responsibility
Environmental impact
At DMGT we evaluate and manage our
environmental impact by measuring and
reporting on our greenhouse gas (GHG)
emissions. As a minimum, our operating
companies comply with current regulation
of the country that they operate in and are
prepared for future legislation. However,
we expect our operating companies to
further mitigate against the negative impacts
from their activities wherever possible.
DMGT’s most significant environmental
impact comes from the printing plants in our
Consumer Media businesses. We have made
a concerted effort to ensure our printing
has circular systems wherever possible.
At Harmsworth Printing, 100% of our
waste paper, cardboard and packaging
is recycled. Our printed production waste
from the presses has been reduced to only
4% on average. This is due to our use of
flexographic printing, which enables lower
production waste and less energy use.
We have been systematically reducing
our specialist waste streams, through
improvements in the recycling process.
Our waste from this stream has been
reduced by 15% in FY 2019. At Harmsworth
Printing, we have a 100-tonne rainwater
harvesting tank which meets approximately
80% of our water demand, reducing our
reliance on mains water.
We endeavour to ensure that the paper we
buy is sourced from PEFC and FSC certified
forests. We ensure our paper matches the
industry standard ratio for Combined Waste
Paper and Certified Virgin Fibre Content,
ensuring that raw material use is at the
lowest possible, whilst producing high-
quality newspapers.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Carbon footprint
DMGT is committed to comprehensive
and transparent reporting of our
environmental performance. CO2
emissions data has been collected from
each of our operating companies. This
data is collated and independently
reviewed by environmental consultancy
ICF International (ICF), who calculate our
carbon footprint, in accordance with the
GHG Protocol Corporate Accounting and
Reporting Standards.
We strive to reduce our impact on the
environment wherever possible and DMGT
has succeeded in this is by reducing our
GHG emissions. Our FY 2019 emissions were
23,800 tonnes CO2e, a decrease from 27,000
tonnes CO2e in FY 2018. The Group’s carbon
footprint for FY 2019 can be seen in the
table below.
At DMGT we have actively reduced
our energy consumption across our
offices and printing facilities through
implementing operational efficiency
enhancements and building modifications
as recommended by ICF.
Go online to www.dmgt.com/
corporate-responsibility to read
our Environment Policy
Carbon footprint
The table below shows our carbon footprint since FY 2017. For the purposes of comparability, the FY 2017 and FY 2018 figures have been
restated to be consistent with the businesses in the portfolio during FY 2019.
Year
2019
2018
2017
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
Tonnes of CO2e
1,500
1,400
1,200
11,000
12,300
14,800
11,400
13,300
14,300
tCO2e/£million revenue
Total scope 1, 2 & 3
emissions/revenue
16.9
19.3
20.8
Non-Financial Information Statement
We aim to comply with the non-financial reporting requirements contained in Sections 414CA and 414CB of the Companies Act 2006.
The table below, and the information it refers to, is intended to help stakeholders understand our position on key non-financial matters.
Reporting requirement
Environmental matters
Policies and standards which govern our approach
• Carbon footprint
• Environment Policy
Risk management and additional information
• Our People and Our Stakeholders,
pages 31 to 33
Our people
Human rights
Social matters
• Code of Conduct
• Equal Opportunities Policy
• Health and Safety Policy
• Whistleblowing Policy
• Modern Slavery Statement
• Privacy Policy
• Information Security Policy
• Responsible Business
Anti-bribery and anti-corruption
Policy embedding, due diligence
and outcomes
• Anti-Bribery and Corruption Policy
• Code of Conduct
• Tax Policy
Description of principal risks
and impact of business activity
Description of the business model
• Directors’ Report, pages 40 to 82
• Our People and Our Stakeholders,
pages 31 to 33
• Audit & Risk Committee Report,
pages 48 to 53
• Directors’ Report, pages 40 to 82
• Responsible Business
• Our People and Our Stakeholders,
pages 31 to 33
• Directors’ Report, pages 40 to 82
• Financial Review, pages 22 to 30
• Principal Risks, pages 34 to 39
• Financial Review, pages 22 to 30
• Directors’ Report, pages 40 to 82
• Responsible Business, pages 31 to 33
• Audit & Risk Committee Report,
pages 48 to 53
• Principal Risks, pages 34 to 39
• DMGT at a Glance, page 5
• Our Business Model, pages 6 and 7
33
Strategic ReportGovernanceFinancial StatementsShareholder Information The Board formally evaluated the system
of risk management and internal control in
conjunction with the Audit & Risk Committee
during the year. 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.
Monitoring and oversight
The Group operates a ‘three lines of defence’
model. The benefits of this approach are
shown in the table on page 35. The Board
delegates day-to-day responsibility for
internal controls to operational management
with oversight by the Executive Committee
and the Audit & Risk Committee.
During the year it was noted that there
were no detected breakdowns in material
controls that protect against the Group’s
principal risks.
Strategic Report
Actively monitoring and managing our risks
Principal Risks
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 43 to 54.
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.
It is the responsibility of the Group’s
operating companies to ensure that they
have established an appropriate level of risk
and internal control systems, but which
are overseen by the Executive Committee.
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
Group. This process has been updated during
the year and up to the date of approval of the
financial statements. Monitoring is an ongoing
process and principal risks are reviewed at
operating company Board meetings, the
Executive Committee and at half year and
year end by the Audit & Risk Committee.
Risk management function
Care has been taken to avoid the threat of
self-review across our ‘three lines of defence’
model (see page 35). The Risk function, led
by the Company Secretary, 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
Company Secretary 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. 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 both the evaluation
of 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 Group
Assurance Director 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.
34
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Three lines of defence table
First line of defence
Second line of defence
Third line of defence
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.
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 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.
The Executive Committee and Company
Secretary, 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.
35
Strategic ReportGovernanceFinancial StatementsShareholder Information 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 82.
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
Mitigation
Trend
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: launch of Risk Intelligence 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.
• Continued 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 associated trade shows (Events and Exhibitions).
• Political and economic uncertainty, particularly in the Middle East,
could negatively impact 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).
36
• The Group’s presence in different market segments 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 9% of total
revenues in FY 2019.
• The Executive Committee, supported by the Portfolio Solutions function and operating
companies’ management teams, monitor markets, the competitive landscape and
technological developments; regular dialogue and in-person meetings ensure proactive,
coordinated responses.
• 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 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.
• Central Portfolio Solutions function partners 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 Portfolio
Solutions function monitor post-acquisition performance.
• DMGT executive membership of operating company boards and the boards of
associates and investments (e.g. Yopa, Cazoo).
• 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
The significance of this risk has increased given the
imminent UK general election (December 2019).
emerging risks and their potential impact.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Examples
Mitigation
Trend
Risk increased
Risk did not change
Risk decreased
• The Group’s presence in different market segments 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 9% of total
revenues in FY 2019.
• The Executive Committee, supported by the Portfolio Solutions function and operating
companies’ management teams, monitor markets, the competitive landscape and
technological developments; regular dialogue and in-person meetings ensure proactive,
coordinated responses.
• 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 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.
• Central Portfolio Solutions function partners 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 Portfolio
Solutions function monitor post-acquisition performance.
• DMGT executive membership of operating company boards and the boards of
associates and investments (e.g. Yopa, Cazoo).
• 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.
The significance of this risk has increased given the
imminent UK general election (December 2019).
37
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: launch of Risk Intelligence 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.
• Continued 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 associated trade shows (Events and Exhibitions).
• Political and economic uncertainty, particularly in the Middle East,
could negatively impact 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).
Strategic ReportGovernanceFinancial StatementsShareholder Information Strategic Report
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
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 specialists in 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 continue to be a strategic imperative.
• 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.
• Central Technology function oversight of technology hire.
• Central Portfolio Solutions 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.
The decreased size of the portfolio may have a
detrimental impact on the internal mobility of talent.
This combined with the record low levels of
unemployment in the UK will result in an additional
challenge to attracting the right calibre of talent.
While the above is not deemed enough to alter the trend
of this risk, extra provisions will be assessed in order to
help manage this trend.
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
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.
• The Technology Council provides oversight of information security initiatives Group-wide.
• The 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 Technology Council. 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.
• Monitoring and management of pension risks is performed by the DMGT Pension
Sub-Committee.
• Company-appointed Trustees.
While risk transference is mitigated by the way in
which DMGT manages its IT architecture, the profile
and prevalence of this type of risk has increased.
38
Strategic ReportGovernanceFinancial StatementsShareholder Information 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.
• 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 specialists in 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 continue to be a strategic imperative.
Operational risks
Description and impact
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.
Examples
the Group include:
client data.
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
• Loss or unauthorised access to personal information and sensitive
• 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.
Daily Mail and General Trust plc Annual Report 2019
Examples
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.
• Central Technology function oversight of technology hire.
• Central Portfolio Solutions 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.
The decreased size of the portfolio may have a
detrimental impact on the internal mobility of talent.
This combined with the record low levels of
unemployment in the UK will result in an additional
challenge to attracting the right calibre of talent.
While the above is not deemed enough to alter the trend
of this risk, extra provisions will be assessed in order to
help manage this trend.
Mitigation
Trend
While risk transference is mitigated by the way in
which DMGT manages its IT architecture, the profile
and prevalence of this type of risk has increased.
• The Technology Council provides oversight of information security initiatives Group-wide.
• The 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 Technology Council. 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.
• Monitoring and management of pension risks is performed by the DMGT Pension
Sub-Committee.
• Company-appointed Trustees.
The Strategic Report was approved by the Board
on 4 December 2019 and signed on its behalf by
the Group Chief Financial Officer.
By order of the Board
Tim Collier
Group Chief Financial Officer
39
Strategic ReportGovernanceFinancial StatementsShareholder Information 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
40
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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: Independent Television News
Limited (until November 2018), Cazoo (from
December 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.
No other appointments.
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 (until April 2019).
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 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: Euromoney Institutional
Investor PLC Board and its Remuneration and
Nominations Committees (until April 2019), Excalibur
Board, which operates the Wowcher and Living
Social daily deals businesses, PA Media Group Board
and its Remuneration Committee (until March 2019),
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 2017, 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: The Royal London
Mutual Insurance Society Limited (chairman),
Intermediate Capital Group plc (until November
2019), and Nationwide Building Society.
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 Threshold Ventures, a venture
capital firm in California.
Other appointments: Threshold Ventures.
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
until 31 October 2019).
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.
41
Strategic ReportGovernanceFinancial StatementsShareholder Information
Governance
Governance
Chairman’s Statement on Governance
I am pleased to present the Corporate
Governance Report for FY 2019. 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; because our
corporate procedures are strengthened
by the significant benefits we derive
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 ensure decisions are made by the
appropriate body and that there is clear
accountability to the DMGT Board.
Governance practice continues to evolve.
DMGT applies the 2016 UK Corporate
Governance Code (the Code). The 2018 UK
Corporate Governance Code will apply to
DMGT from FY 2020. Where possible we have
begun to disclose our position in relation to
the 2018 Code in this Annual Report. We
voluntarily apply the new provisions where
appropriate and explain when we are not
in compliance.
April 2019 Distributions
Following a review, the Board concluded
that the Group’s capital and cash resources
were in excess of its requirements and that
a significant distribution was appropriate.
It was decided to distribute the entirety
of DMGT’s shareholding in Euromoney
Institutional Investor plc (Euromoney) and
a further £200 million in cash. The April 2019
Distributions were in support of the Group’s
stated strategy of increasing portfolio focus.
The Board established an Independent
Committee to assess the fairness of the
distributions. This was expertly led by
Kevin Parry, Independent Non-Executive
Director and, based on a thorough analysis
of the proposed Distributions by a panel
of external advisers, recommended that
shareholders should vote in favour and the
Distributions were subsequently approved.
I would like to thank Kevin Parry and the
other members of the Independent
Committee, JP Rangaswami and Dominique
Trempont, for their stewardship of this
important part of DMGT’s history.
Read more about the April 2019
Distributions on page 25
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
Read more in Financial Review,
pages 22 to 30
Read more in Our People and
Our Stakeholders, pages 31 to 33
The Viscount Rothermere
Chairman
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 2020:
Resolutions
42
43
47
47
48
54
55
78
81
Strong governance is
essential to the way
DMGT operates.”
42
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Governance
Corporate Governance
Committee structure
The Board and Committee structure is set out below:
DMGT
DMGT Board
Collectively responsible for the long-term success of the Company.
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.
Investment & Finance Committee
The Investment & Finance Committee evaluates investment
opportunities and financing proposals and monitors returns
on investments made.
Executive Committee
The Executive Committee meets regularly to discuss
all aspects of the Group’s performance and strategy,
particularly performance management, capital allocation,
risk management and senior talent considerations.
Family shareholding
Rothermere Continuation Limited (RCL) is a
holding company incorporated in Bermuda.
The main asset of RCL was its holding of
DMGT Ordinary Shares. RCL is controlled by
a discretionary trust (Trust) which is held for
the benefit of Lord Rothermere and his
immediate family. As explained on page 78,
the Board anticipates that as of 5 December
2019, Rothermere Investments Limited (RIL)
will become the holder of the DMGT Ordinary
Shares, however there will be no change in
the Trust’s ultimate control of DMGT. 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.
RCL have indicated that this will continue
to be the case under the 2018 UK
Corporate Governance Code; 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.
UK Corporate Governance Code
The Code forms 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.
The Code is available at ww.frc.co.uk.
Information required under DTR 7.2.6
is provided on page 78 and forms part
of this Report. Key features of the risk
management and internal control systems
can be found on pages 34 and 35.
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
43
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Corporate Governance
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 43 to 54.
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 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.
44
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 additionally. Accordingly
the Board has not appointed a Senior
Independent Director as recommended
under Code provision A.4.1. 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),
as was the case during the year for the April
2019 Distributions with the formation of the
Independent Committee led by Kevin Parry.
Chairman evaluation
The Remuneration & Nominations Committee
(without the Chairman being present) annually
assesses the Chairman’s performance.
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. 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. They are independent of the
Executive Directors, and are aligned with
shareholders’ interests.
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, however, that its current
composition is appropriate taking into
account the heritage of the Group, the
interests of our operating companies as
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.
The Chairman, Lord Rothermere, having been
appointed in 1998 is not considered to be
independent under the Code. For Companies
Act 2006 disclosure purposes, Lord Rothermere
is treated as holder of all the Ordinary Shares
of the Company. In addition, Lord Rothermere
and his immediate family have the largest
economic interest in DMGT through their
holding of A Ordinary Non-Voting shares.
The Board therefore considers that Lord
Rothermere’s interests are fully aligned
with those of other shareholders.
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 54;
• 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 40 and 41.
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, 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 2020 AGM.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Relations with shareholders
There is a unity of interests between the
family and other shareholders. Any concerns
raised by shareholders in relation to the
Company and its affairs are communicated
to the Board through regular briefings.
Shareholders have access to the Company
Secretary and Company’s Registrars to
discuss queries or raise issues they may face.
Senior executives hold regular Investor
Relations (IR) meetings with institutional
investors; IR roadshows follow the half
and full-year results. The Chairman
also meets DMGT’s largest shareholders.
Institutional feedback is provided to the
Board through a broker report distributed
prior to meetings and investor feedback
is circulated to Directors following results
and trading updates. In addition:
• An Investor Briefing was held on 2 July
2019 and focused entirely on RMS, the
Insurance Risk business. The event
included presentations from the RMS
management team and a Q&A session.
During the April 2019 Distributions, a
number of large shareholders expressed
a keen interest in RMS’s prospects and
potential to create value. The event gave
investors an update on RMS’s progress
and the opportunity to meet RMS’s
management.
• Following the April 2019 Distributions,
DMGT engaged an external adviser to
review interactions with investors. This
included feedback on the April 2019
Distributions, interaction with
management, DMGT’s IR team,
shareholder messaging and corporate
governance. The findings were satisfactory
and no significant concerns were raised.
Board activities and
stakeholder engagement
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, suppliers,
the communities in which we operate,
its shareholders and its suppliers, in line
with section 172 of the Companies Act 2006.
As described throughout the Annual Report,
during FY 2019 the Board met with employees
to hear their views, including attending an
emerging leaders event with representatives
from the operating companies. It has heard
from shareholders both through regular
updates and also during the April 2019
Distributions. The Board considers the
importance of key suppliers when making
commercial decisions, in particular their
practices and approach to items such as data
privacy. The Board also heard more about
DMGT’s Corporate Responsibility programme
when it attended a ceremony to present the
Hobsons winner of the DMGT Community
Champions Awards, when visiting the
business in September 2019.
Go online to www.dmgt.com/careers
to find out more
Website
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 composition and diversity
The Board has continued to review its
composition during FY 2019 to ensure that
it has the right combination of members to
contribute effectively to the development
of strategy and how DMGT operates. DMGT
considers diversity in its broadest sense
when reviewing how the Board operates
and its composition.
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 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 54.
Diversity
Read more about DMGT’s approach
to diversity in Our People and
Our Stakeholders, pages 31 to 33
Read more about the scheme and
winners on DMGT.com
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
Board evaluation
In FY 2019, the Board undertook a
review of its own performance and
those of its Committees, which built
on the results of the FY 2018 review.
The review was conducted through
an internal process facilitated by
the Company Secretary. An online
questionnaire was used, focusing
on the Board’s remit and key issues
faced. The review focused on a
series of specific questions covering
key areas reserved to the Board.
In particular, the Board considered
how it was discharging its strategic
remit and review of key issues facing
the Group and its businesses.
Completed questionnaires were
submitted and reviewed by the
Chairman. A summary of findings was
presented to the Board in a manner
that did not identify individual specific
responses, ensuring that the
follow-up discussion with the entire
Board was open. The responses
showed that the Board welcomed the
process and that overall, the Board
was happy with the progress during
the year and that the Board and its
Committees continue to function well.
There was a continuous monitoring
programme to ensure that items
addressed in the FY 2018 evaluation
were also addressed during the year.
Actions arising from the FY 2019
evaluation included ensuring that
time on the Board agenda was
allocated to the continued review
of Board composition in relation to
B2B experience; cyber security; and
oversight of operating companies
through regular strategy updates.
The Board believes that an internal
evaluation process facilitated by the
Company Secretary is appropriate.
The Board will keep this under review.
45
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Governance
Corporate Governance
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 content 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.
DMGT Board – membership
Member
Chairman
The Viscount Rothermere
CEO
P A Zwillenberg
Group Chief Financial Officer
T G Collier
Executive Directors
K J Beatty
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
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
9
9
9
9
9
9
9
9
9
9
9
9
8
9
9
9
8
9
9
9
9
9
9
9
Additional meetings were held during FY 2019 to consider items relating to the April 2019
Distributions and disposal of Genscape.
The Board’s focus in FY 2019
Board members have visited, and 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 2018 Board evaluation process, these
updates were a combination of presentations to the whole Board and smaller groups as deemed appropriate, as detailed below.
Portfolio management and strategy
People
Governance
• A strategic review of the portfolio.
• Future size and shape of the Group.
• Non-Executive Directors Andrew Lane
and Dominique Trempont attended
RMS Exceedance in Miami in May 2019.
• Presentations by the operating companies.
• A visit by Non-Executive Directors to
Hobsons and Landmark Information
Group.
• The September Board meeting
incorporated a site visit to Hobsons,
including product demonstrations.
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 2020.
Read more in Principal Risks,
pages 34 to 39
46
• Discussions regarding senior
• Regular updates throughout the year
appointments and succession planning.
• Updates on talent management
and diversity.
• 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.
Finance and capital
• 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.
• Assessment and monitoring of the
April 2019 Distributions.
Read more in Financial Review,
pages 22 to 30
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 External Audit.
• Review of ‘DMGT Essentials’, the
Group internal governance guide for
operating companies.
Technology
• Review of tech debt, mission-critical
outsourcing, cyber security and
business continuity.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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.
• Reviewing options for the proposed
distribution of Euromoney shares
and cash special dividend to
shareholders.
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
Member for
the full period
The Viscount Rothermere
(Chairman)
P A Zwillenberg
T G Collier
K J Beatty
R Chandhok
Yes
Yes
Yes
Yes
Yes
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.
• Review of operating company
and Group risk registers.
• 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.
The Investment & Finance
Committee provides regular
updates to the Board including
monitoring returns on
investments made and progress
against agreed targets.
Membership
There were six 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 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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Governance
Corporate Governance
Audit & Risk Committee:
Chairman’s Introduction
In the context of our changing
Group, we have focused
our audit work on judgmental
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.
Dear Shareholders
I am pleased to present the Audit & Risk
Committee Report.
We operate as a combined Audit & Risk
Committee.
The Audit & Risk Committee reviewed
financial information connected with
acquisitions and disposals to ensure
appropriate accounting, including
information included in the circular issued
for the April 2019 Distributions.
During the year we maintained our focus
on threats to our cyber security and closely
monitored the Group’s compliance with the
General Data Protection Regulation (GDPR).
We continue to monitor the potential impact
of Brexit on DMGT. The Committee
considered the risks associated with Brexit
and concluded that our preparations were
such that there would be no material impact
on the Group’s businesses.
The Group has maintained its attention on
operational effectiveness during the year.
The Committee focuses on ensuring our
risk management procedures and
internal and external audits address
changing requirements.
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.
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
7
7
7
7
7
7
7
7
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The Audit & Risk Committee meets at least
six times a year. In FY 2019 the Audit & Risk
Committee met seven times due to the April
2019 Distributions.
Andrew Lane and David Nelson did not take
part in discussions relating to the Audit &
Risk Committee’s duties in connection with
the April 2019 Distributions.
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, a 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, except
in respect of the April 2019 Distributions.
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 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 Group Chief
Financial Officer, Company Secretary, Group
Assurance Director, Group Chief Technology
Officer, Group Chief Information Security
Officer, Group Financial Controller and the
Director of Group Finance, 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 judgmental issues
at an early and relevant opportunity.
The Group Chief Financial Officer, Director
of Group Finance, Group Financial Controller,
Group Assurance Director, Company Secretary
and the External Auditor are invited to each
meeting but are recused when appropriate.
The CEO is invited to the Half Year and Full
Year meetings. The Chief Technology Officer,
Chief Information Security Officer and UK
and US Data Privacy Counsel are also invited
to attend when appropriate. This approach
results in informed decisions based on
quality papers and discussion which
provides for a thorough understanding
of facts and circumstances.
The Committee met regularly and separately
with the External Auditor, Group Assurance
Director (who is responsible for Internal
Audit and Risk Assurance), the Group Chief
Financial Officer and Company Secretary,
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
• Review of financial information
relating to the April 2019
Distributions.
• Agreeing the scope of Internal
and External Audit work.
• Challenging management’s
accounting judgments.
• 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 and DMGT’s
proposed compliance.
• Reviewing the Group’s risk
management processes and the
Group risk register.
• Robust challenge to the assumptions
supporting the Group’s Viability
Statement (see page 26).
• A rolling programme of focused risk
topics, including information security
and cyber resilience.
• Review of compliance with GDPR
post-launch.
• 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 with
findings reported to the Board.
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Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Corporate Governance
Financial reporting and auditing matters
The Audit & Risk Committee considered and discussed the significant matters relating to financial reporting and auditing,
as set out in the table below.
The matter and its significance
Focus of work
Comments and conclusion
A materiality threshold of £5 million has been set
for exceptional items unless there was continuation
of an activity previously disclosed as exceptional.
During the year the Group adopted two new
accounting standards, IFRS 15, Revenue from
Customers and IFRS 9, Financial Instruments.
The new revenue recognition standard introduced
additional guidance surrounding performance
obligations within sales contracts and the timing
of revenue recognition. In addition, IFRS 15 also
introduced changes to the recognition of incremental
costs incurred when obtaining a contract with
a customer, known as contract acquisition costs.
IFRS 9 contains three principal classification categories
for financial assets: Measured at Amortised Cost;
Fair Value through Other Comprehensive Income;
and Fair Value through Profit and Loss.
The main effect resulting from this reclassification
relates to the Group’s equity investments which are now
classified as Fair Value through Other Comprehensive
Income. As a result, all fair value movements are now
recorded in Other Comprehensive Income.
IFRS 9 also introduced an expected credit loss model
which requires an impairment provision to be made
on initial recognition of a receivable.
Finally, the Group has adopted the new general hedge
accounting model in IFRS 9, which aligns hedge
accounting with the Group’s risk management strategy.
Based on our enquiries with management and the
External Auditor we have concluded that all our
accounting policies have been properly applied.
We continued to adjust operating profit for the
amortisation of acquired intangible assets, as they
relate to historical 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 information was
of a high quality and helps shareholders understand
progress. Sources of data are disclosed.
Financial reporting
The content of the Annual and
Half-year Reports and trading
updates should be appropriate,
complying with laws and
regulation.
We specifically reviewed:
• all accounting policies for continued
appropriateness, consistency of application
and the 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.
The Annual Report includes
a number of non-GAAP measures.
See Notes 13, 15 and 16 on pages
125, 127 and 128.
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, cash
operating income 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.
Read more on page 45 regarding Fair,
balanced and understandable
50
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
The matter and its significance
Focus of work
Comments and conclusion
Accounting judgments
The Group has capitalised
software development costs,
other intangible assets and
goodwill associated with
acquisitions. Goodwill and
intangible assets represent 32%
(2018 20%) and 9% (2018 8%)
respectively of net assets.
In addition the Company holds
shares in Group undertakings
with a carrying value of
£3,238 million.
These 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 8% (2018
3%) of net assets (see Note 37).
Capitalised computer software costs
amounted to £14 million in the year
compared to £20 million in 2018.
We have ensured that capitalised costs
were separately identifiable and met the
requirements of the relevant accounting
standards.
As part of our review of the carrying values
of our intangible assets, we have considered
whether there has been any event which
triggered an impairment and have reviewed
reports prepared by executive management
to determine whether an impairment event
has taken place.
In addition, to justify the carrying values of
shares in Group undertakings, goodwill and
intangible assets, we have reviewed value in
use calculations, based on the Board-approved
three-year forecasts, focusing on long-term
growth rates and discount rates. We have
received input directly from both operational
and financial management.
At the year end the Group held deferred tax
assets of £58 million (2018 £57 million) in
respect of brought forward losses and
deferred interest.
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, £73 million
was incurred on acquisitions
and £70 million was realised on
disposals. (see Notes 8, 17 and 18).
We carefully consider judgmental accounting
and the carrying value of intangible assets
and goodwill.
We reviewed the valuation of the fair value
of the Company’s equity investments.
Internal Audit reviews all significant acquisitions
within 12 months of the relevant acquisition.
As there was an additional impairment charge
recognised in reserves in the second half of
the year relating to Euromoney, we have
specifically assessed the rationale and the
timing of the recognition of the impairment
charge to ensure this was recorded in the
correct period having regard to the principles
of IFRIC 17.
We were satisfied that costs that had been capitalised
were appropriately held on the balance sheet.
Our reviews included sensitivities to changes in
assumptions which allowed us to understand the
materiality of conclusions in the context of our
financial reporting.
We focused on our EdTech segment and concluded
no impairment was necessary following trading
improvement which resulted in headroom of
£35 million associated with this business. In addition,
we concluded that no impairment was necessary
to the Company’s shares in Group undertakings.
We noted that these conclusions are 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.
In addition we are satisfied that judgmental matters
have been explained and appropriate disclosures made.
During the year, a dispute with HMRC regarding the
timing of the tax deductibility of a number of intra
group deferred interest payments was settled. As a
result £81 million of deferred interest in respect of
which no deferred tax asset had been recognised was
converted to £69 million of usable tax losses and
£10 million of capital allowances and a corresponding
increase of £13 million in the Group’s recognised
deferred tax asset. Also during the year, the Group
paid £39 million of UK deferred interest, to enable a
deduction to be taken against current year UK profits,
with a resultant net reduction in the Group’s
recognised deferred tax asset of £6 million.
The Investment & Finance Committee oversees all
acquisition and disposal activity. There are three
common Audit & Risk Committee members. We were
satisfied with the judgments made in the year.
We performed a robust review of the treatment of
acquisitions and disposals during the year and were
satisfied with the treatments and calculations.
We considered the appropriateness of the accounting
treatment of Euromoney, the disposal of Real Capital
Analytics, On-geo, and SiteCompli, the reduced stake
in TreppPort and the acquisitions of DailyMailTV and
Optimus. We noted that in accordance with IFRS 9, the
fair value of the Group’s stake in Euromoney at the half
year was £674 million based on the closing share price
at 31 March 2019. This resulted in a first-half impairment
charge of £24 million. Following a fall in the share price
on 2 April 2019, the date of the Euromoney Distribution,
we noted that an additional impairment of £12 million
was necessary, which was recognised in reserves
following the principles of IFRIC 17.
51
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Corporate Governance
The matter and its significance
Focus of work
Comments and conclusion
Accounting judgments
continued
The Group has many operating
lease agreements with differing
terms which will be impacted
by IFRS 16, the new accounting
standard on leases.
The Committee has received regular updates
from management outlining the impact of
this new accounting standard, including the
judgments and key assumptions used in the
estimation of the impact.
We reviewed the claim brought by the US
Environmental Protection Agency (Note 19)
including the timeline of events leading to
the provision and the calculation of the
potential maximum amount which may
be payable.
Accounting estimates
The Group records provisions
for lawsuits and claims when it is
probable that a liability will be
incurred and the amount of the
loss can be reasonably estimated.
The amounts accrued for legal
contingencies often result from
complex judgments about future
events and uncertainties that rely
heavily on estimates and assumptions.
IFRS 16, the new leasing standard, is effective for
the FY 2020. The Group has decided to adopt IFRS 16
using the modified retrospective transition approach
meaning the comparative period will not be restated
and the cumulative effect of initially applying the
standard will be recognised as an adjustment to the
opening balance of retained earnings.
Due to the volume of lease agreements across the
Group and the subjectivity inherent in calculating the
rate implicit in a lease, we commenced a project in 2016
to collect and analyse the Group’s lease agreements
and to evaluate the impact of this standard.
The Committee has reviewed the results of this
project with management and is satisfied that the
assumptions used are appropriate.
We are satisfied that outflow is now probable and
the Group has made a provision in line with the
potential maximum amount payable. The basis for
the calculation of the provision using a two-year
average price for Renewable Identification Numbers
was reviewed and considered reasonable taking
account of the liquidity and volatility in the market
price of Renewable Identification Numbers.
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. 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; this is described
in detail in the Risk section.
Read more about our approach to
Internal Audit, pages 34 and 35.
External Auditor
PricewaterhouseCoopers (PwC) is DMGT’s
External Auditor. The lead audit partner is
Neil Grimes, who has led the audit since the
beginning of the relationship. The FY 2019
audit will be his last for DMGT. The Audit &
Risk Chairman and David Nelson met with
potential replacement PwC partners prior
to the selection of Philip Stokes as the
successor to Neil Grimes as the Group’s lead
audit partner.
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. There are no concerns over the
quality of the service or opinion. Therefore,
the Audit & Risk Committee recommended
to the Board that it recommends to the
shareholders that PwC be re-elected with
a view to serving a second five-year term
in office.
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 criterion 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.
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Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
During the year, the Audit & Risk Committee
reviewed the quality of the FY 2018 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 2019, both
in respect of PwC’s opinion and service.
The Committee has consequently
recommended that PricewaterhouseCoopers
LLP be reappointed as Auditor at the
2020 AGM.
The Audit & Risk Committee Report was
approved by the Board on 4 December 2019
and signed on its behalf by the Audit & Risk
Committee Chairman.
By order of the Board
Kevin Parry
Audit & Risk Committee Chairman
The audit fee payable to PwC amounts to
£2.7 million (2018 £3 million). The Audit &
Risk Committee is satisfied that the fee is
commensurate with the quality of audit
provided by PwC. 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 £0.8 million
(2018 £0.5 million) which translates to a
non-audit fee to audit fee percentage of 29%
(2018 17%). The Committee is satisfied that
PwC was selected based on individuals’
particular expertise, knowledge and
experience and that the work did not impair
PwC’s independence as External Auditor
(see Note 5 to the Accounts). All non-audit
work undertaken by PwC was approved
by the Committee.
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.
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 83 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. 83% (2018 84%) of the revenue and
78% (2018 70%) of adjusted profit was fully
audited; 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
£7.25 million (2018 £7.2 million). This equates
to approximately 5% (2018 4%) of adjusted
profit before tax, 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 (2018 £5.4 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 judgment
of net adjusted profit before tax was
£3.4 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.
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 judgments taken during the
course of the audit, and confirmed the audit
complies with its 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 2018 audit of DMGT
was not subject to re-review by the FRC or
PwC’s internal audit process.
53
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Corporate Governance
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 55 to 77.
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 and the Head of Reward and Benefits.
Membership and meetings are shown below.
Member
Member for
full period
Meetings
held
Meetings
attended
7
7
7
7
7
7
7
7
• 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 the holder of all the Ordinary Shares
and the largest holder of A 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.
The Viscount Rothermere (Chairman)
D H Nelson
J H Roizen*
D Trempont*
Yes
Yes
Yes
Yes
*
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 Code Provision 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.
54
Key activities of the
Nominations element
of the Remuneration &
Nominations Committee
• Reviewing arrangements for Share
Plans in light of the April 2019
Distributions.
• 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 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 4 December 2019 and signed
on its behalf by the Chairman.
The Viscount Rothermere
Chairman
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Governance
Remuneration Report
The Viscount Rothermere
Chairman
Chairman’s statement
on remuneration
Remuneration at a glance
Directors’ Remuneration Policy
Annual Report on Remuneration
Implementation of Remuneration
Policy in FY 2020
55
58
59
67
77
Chairman’s statement
on remuneration
As Chairman of the Remuneration &
Nominations Committee (Committee),
I am pleased to present the Directors’
Remuneration Report.
Policy Review
This year the Committee, and specifically
the Non-executive Directors (NEDs) on the
Committee, have reviewed all aspects of
the Directors’ Remuneration Policy (Policy),
in view of the requirement to submit a new
Policy for shareholder approval at the
February 2020 Annual General Meeting (AGM).
The review concluded that although most of
the existing Policy continues to be appropriate
for current business circumstances, changes
to the annual bonus and long-term incentive
plan (LTIP) arrangements are appropriate to
better align with the next phase of DMGT’s
development and to deliver long-term value
to shareholders:
1.
to optimise revenue and income and thus
capital value through the organic growth
of the DMGT portfolio of businesses
(financial objectives); and
2. to effectively manage the DMGT Group’s
portfolio, balance sheet and financial
gearing, as well as making key strategic
decisions including acquisitions and
disposals (management objectives).
The following changes are proposed for
FY 2020 onwards, subject to shareholder
approval:
Annual Bonus
The target bonus for the Executive Chairman,
CEO and Group Chief Financial Officer will
be aligned at 100% of base salary. The
Chief Executive of dmg media’s target bonus
is unchanged at 30% of base salary.
The proposed changes
to our incentive
arrangements are
designed to promote
the execution of the
next phase of DMGT’s
development, and to
continue to deliver
long-term value
to shareholders.”
Remuneration Policy
In accordance with the S439A
Companies Act 2006 shareholders
are provided with the opportunity
to endorse the Company’s
Remuneration Policy through a
binding vote. The new policy will be
put forward for shareholder vote
at the next Annual General Meeting
(AGM) on 5 February 2020.
The maximum annual bonus opportunity
continues to be set at two times target.
The above target portion of the annual
bonus will continue to be deferred into
shares to be held for two years for the CEO,
Group Chief Financial Officer and Chief
Executive of dmg media.
Long-Term Incentives
The 2017 Executive Incentive Plan (EIP) for
Executive Directors (EDs) will be replaced by
a new long-term incentive plan (2020 LTIP)
split into two parts to meet the financial and
management objectives previously defined:
(i) Performance LTIP
Performance will be measured against Group
financial targets over a three year period.
The target award for the Performance LTIP
will be 100% of base salary for the Executive
Chairman, CEO and Group Chief Financial
Officer and 60% of base salary for the
Chief Executive of dmg media.
Maximum awards will be set at two times
target for the Performance LTIP. All awards
will be paid in shares at the end of the
performance period, except for the Executive
Chairman’s which will be paid in cash
(see page 57 for further details).
(ii) Conditional share award
An annual conditional share award (CSA)
will be based on the NED members of the
Committee’s assessment of the management
objectives outlined above.
It is recognised that the impact of strategic
decisions cannot always be measured over
the course of a single year and this will be
taken into account by the NEDs as well as
actual and forecast payments for the EDs’
annual bonus and Performance LTIP,
when determining the annual CSA.
In the normal course of business, an annual
CSA of up to 200% of base salary may be
made at the Committee’s discretion.
The quantum of CSA will be determined
at the end of the first year, as noted above.
There will then be a holding period, of up
to four years, at the Committee’s discretion,
before the CSA can vest.
The first CSAs will be made in respect
of FY 2020.
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Key Strategic Priorities
Improving operational execution
Increasing portfolio focus
Maintaining financial flexibility
LTIP opportunity
The changes, as described above, mean
that the maximum LTIP award, in normal
business circumstances, will reduce from
500% of base salary to 400% of base salary,
with a maximum of 200% for the Performance
LTIP and a maximum of 200% for the CSA.
In truly exceptional circumstances, however,
the Committee retains the flexibility to
increase the award of the annual CSA to
300% of base salary, in line with the rules
of the EIP, under which all 2020 LTIP awards
will be made.
Pay review for FY 2020
The Committee regularly reviews all aspects
of the competitive position of remuneration
for the EDs by undertaking periodic market
benchmarking. This year, the Committee
(without me present), decided to award base
salary increases of 2% to each of the EDs
from the start of FY 2020.
This is in line with the typical base salary
increase awarded to employees across DMGT
this year.
Executive Directors’ bonus payments
for FY 2019
In FY 2019, as disclosed in last year’s
Directors’ Remuneration Report, we used
two metrics in the annual bonus; revenue
and cash operating income, weighted evenly.
Cash operating income, which is operating
profit plus depreciation and amortisation
less capital expenditure, is a metric that
captures both profit and the underlying cash
generation of the Group. The same two
metrics will continue to be used in the
annual bonus plan for FY 2020.
The FY 2019 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 2020.
The purpose of the annual bonus plan is
to focus the participants on delivering
short-term financial expectations. In a year
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 annual bonus payments at 80%
of maximum for the year reflects this.
The bonus paid to Kevin Beatty, Chief
Executive of dmg media, at 92% of
maximum, reflects the strong performance
of the Consumer Media business in a
challenging environment.
For the CEO, Group Chief Financial Officer
and Chief Executive of dmg media, the part
of annual bonus payable above the target
level will be deferred into DMGT shares
for a period of two years, in line with the
stated Policy.
Details of the EDs bonuses for FY 2019 are
shown in tables 2.1 to 2.2 on page 69.
2018 Long-term incentive award
The Long-Term Executive Incentive Plan (EIP)
was approved by shareholders in February
2017. The performance period for the 2018
award is from the beginning of FY 2019 to the
end of FY 2021.
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 2018 EIP
award is based on DMGT’s cumulative profits
over the period FY 2019 to FY 2021 inclusive,
together with a charge for the use of capital.
Participants are not rewarded under the EIP
unless a minimum performance threshold is
reached and the payment for each participant
is subject to a cap of five times target.
The outcome of the 2018 EIP award will be
delivered in shares, vesting at the end of
FY 2021.
No further awards will be made under the
current profit-share design through the EIP.
April 2019 Distributions
In respect of the April 2019 Distributions,
an independent committee of the Board
(Independent Committee) approved the
principle that participants in DMGT share
plans should neither be advantaged
nor disadvantaged, as compared to
participating shareholders.
April 2019 Distributions – discretionary
payment
The Board, at the recommendation of
the Independent Committee, however
determined that EDs and certain other senior
executives should not trade in DMGT shares
in advance of the April 2019 Distributions.
Solely for this reason, these individuals
were therefore placed at a disadvantage
compared to participating shareholders as
they were unable to sell shares before an
income tax liability arose. The Committee
therefore decided to make a discretionary
payment to cover the costs for all affected.
Details of the payments to three of the EDs
are shown in table 1 on page 68. Since these
payments are made outside of the approved
Policy, agreement will be sought from
shareholders at the February 2020 AGM.
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Operating company incentive plans
Our incentive plans across our operating
companies are designed to reward
sustainable revenue and 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 shareholder value.
For each operating company, we also
consider its sector, geography and portfolio
role within the Group.
Directors’ Remuneration Policy
As noted above, the new Directors’
Remuneration Policy will be submitted for
approval by shareholders at the February
2020 AGM and will apply for three years from
FY 2020 to FY 2022.
The Viscount Rothermere
Chairman
Remuneration of the Executive
Chairman
The Committee is committed to a Policy
where a significant part of ED remuneration
is paid in shares in order to:
• align the interests of the executive with
that of shareholders over the long term;
and
• provide a retention element to the
remuneration package.
The Committee, without Lord Rothermere
present, have concluded that as the
beneficiary of the largest shareholder of
DMGT (RCL) these reasons are not applicable
to the Executive Chairman.
Under the new Policy, Lord Rothermere will
therefore continue to participate in the same
annual bonus and LTIP as the other EDs, and
in both parts of the LTIP he will be aligned in
terms of DMGT share price movement over
the period and benefitting from dividend
equivalent payments made. All incentive
awards to Lord Rothermere will, however,
be paid in cash only.
The new Policy aligns the percentage
of both the annual bonus and LTIP of the
Executive Chairman with that of the CEO
and the Group Chief Financial Officer.
Long-term incentive awards vesting
in FY 2019
2016 LTIP
The first LTIP award under the EIP over the
period FY 2017 to FY 2019 is based on the
EDs receiving a percentage of the growth in
profit above a defined threshold (eligible
profit) over the three year performance
period.
The Committee, without me present,
reviewed the calculated result of 29% of
Target and are of the view that it does not
truly reflect actual performance during the
period and, in particular, does not take
account of the ZPG Plc sale and April 2019
Distributions (disposal of Euromoney).
The Committee recognised the significant
value that management has created for
shareholders from these two transactions
and therefore used its discretion to agree a
final vesting outcome of 100% of target for
the 2016 LTIP award. Further details are
shown in table 5.2 on page 72.
2014 LTIP
The vesting of the LTIP award made in
December 2014 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 annual increase of 4%
on an underlying basis; MailOnline revenues
have grown from £62 million in FY 2014 to
£140 million in FY 2019; profitability has
improved and dividends per share continued
to grow in real terms; and international
revenues remained stable at 47% of total
revenues. Given this performance, the
Committee has determined that the 2014
LTIP award should vest in full in December
2019. For more information see table 5.1
on page 71.
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FY 2019 Remuneration outcomes for the Executive Directors
The table below summarises the remuneration for the Executive Directors in FY 2019:
Salary 2019
Bonus (including deferred amounts)
As a % of salary
Taxable benefits
Pension benefits
LTIP awards vesting in year including dividend equivalents
Other awards realised in year including dividend equivalents
April 2019 Distributions discretionary payment
Total remuneration FY 2019
Total remuneration FY 2018
The Viscount
Rothermere
£000
P A
Zwillenberg
£000
858
1,229
143%
56
317
858
350
–
3,669
2,430
769
857
111%
38
231
858
926
57
3,736
1,867
T G
Collier
£000
513
571
111%
31
128
448
1,126
476
3,293
1,229
K J
Beatty
£000
763
420
55%
24
282
1,335
12
957
3,792
1,868
Total
£000
2,902
3,077
149
958
3,499
2,414
1,490
14,489
7,394
Key elements of remuneration for the Executive Directors in FY 2020
The key elements of remuneration applicable for the Executive Directors in FY 2020 are shown below:
The Viscount
Rothermere
Salary
£875,200
P A Zwillenberg
£784,400
T G Collier
£522,750
K J Beatty
£777,750
Annual bonus
opportunity
100% of
salary on
target.
200% of
salary
maximum.
100% of
salary on
target.
200% of
salary
maximum.
100% of
salary on
target.
200% of
salary
maximum.
30% of salary
on target.
60% of salary
maximum.
Annual bonus
deferral
Performance LTIP
None applies. On-target value
of 100% of salary
vesting after three
years based on
Group financial
performance paid
in cash.
On-target value
of 100% of salary
vesting after three
years based on
Group financial
performance paid
in shares.
On-target value
of 100% of salary
vesting after three
years based on
Group financial
performance paid
in shares.
On-target value
of 60% of salary
vesting after three
years based on
Group financial
performance paid
in shares.
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.
Conditional Shares
Maximum of 200%
of salary based on
management of
Group and business
strategic priorities
for the year paid in
cash at the end of
the period.
Maximum of 200%
of salary based on
management of
Group and business
strategic priorities
for the year paid in
shares at the end
of the period.
Maximum of 200%
of salary based on
management of
Group and business
strategic priorities
for the year paid in
shares at the end
of the period.
Maximum of 200%
of salary based on
management of
Group and business
strategic priorities
for the year paid in
shares at the end
of the period.
Pension
Allowance
of 37% of
salary
Benefits
Car allowance
and driver.
Family medical
insurance, Life
assurance.
Allowance
of 30% of
salary
Allowance
of 25% of
salary
Car allowance
and driver.
Family medical
insurance,
Life Assurance,
Tax assistance.
Car allowance.
Family medical
insurance,
Life Assurance,
Tax assistance.
Allowance
of 37% of
salary
Car allowance
and driver.
Family medical
insurance, Life
assurance.
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Directors’ Remuneration Policy
This part of the report sets out the Company’s proposed policy for the proposed remuneration of Directors (Policy) for FY 2020 to FY 2022
which will be put forward for approval by shareholders at the AGM on 5 February 2020. The current and proposed Policy can be found on the
Company website.
At the AGM in February 2017 the current Policy was approved by shareholders, the Policy received 19,890,364 (100%) votes for, with no votes
against and no abstentions.
The Committee has reviewed all aspects of the Directors’ Remuneration Policy (Policy), in view of the requirement to submit a new Policy for
shareholder approval at the February 2020 AGM. The proposed changes to annual bonus and LTIP arrangements are set out in the Chairman’s
statement on remuneration and described in the Policy set out on pages 59 to 62 below. This Policy is intended to apply for a three-year
period from the date of the 2020 AGM.
Policy overview
The Committee aims to structure remuneration packages which attract, motivate and retain Directors, drive the right behaviours and pay at
competitive 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 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
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, B2B, technology
and other relevant companies is performed
periodically and the Committee’s intention is
to apply judgment 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.
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 2020 are
set out on page 58.
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.
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Purpose and link to strategy
Operation
Opportunity
Performance metrics
Benefits typically include cash allowances such
as car and pension 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 of the executive
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 HMRC approved 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 69.
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.
Benefits may vary by role and
individual circumstances.
The cost of benefits changes
periodically and may be
determined by outside providers.
Benefits, including the DMGT
SharePurchase+ plan are not
performance related.
Target and Maximum annual
bonus opportunity are
as follows:
• for the Executive Chairman,
CEO and Group Chief
Financial Officer,
100%/200% of salary; and
• for Chief Executive of dmg
media, 30%/60% of salary.
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 set
at 50% of maximum. There
is normally no payout for
performance below threshold.
Payout between threshold
and target is calculated 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 2019 were revenue and
cash operating income and
this will continue to be the
case for FY 2020.
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 2019 bonus
targets are as reported in
table 2.2 on page 69.
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
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.
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Purpose and link to strategy
Operation
Opportunity
Performance metrics
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 during the
two year period.
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 financial
and 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.
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
under both parts of the LTIP
is capped at 500% of salary at
the time the award is made.
Performance below threshold
results in zero payout.
The maximum opportunity for
the Performance LTIP will be
set at 200% of base salary.
In the normal course of
business an annual CSA of up
to 200% of base salary may
be made at Committee
discretion. In truly exceptional
circumstances however, the
Committee retain the flexibility
to increase the annual
quantum of the CSA to 300%
of base salary in line with the
maximum under the rules of
the EIP.
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 financial
and 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.
Amounts above target of some Executive
Directors’ annual bonus is deferred for a period
of two years into nil-cost options.
Annual bonus deferral requirements are reported
in detail in table 3 on page 69.
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 continue to be used to grant
long-term incentive awards to
Executive Directors but the previous profit share
design for the LTIP has now been discontinued.
The new long-term incentive plan (2020 LTIP)
is split into two parts:
i. Performance LTIP
Awards will be made annually with performance
being measured against Group financial targets
over a three year period.
ii. Conditional Share Award
An annual conditional share award (CSA) based
on the Executive Directors management of the
DMGT portfolio, financial balance sheet and
gearing, as well as acquisitions, disposals and
other strategic decisions taken during the year.
The holding period of the CSA, of up to four
years, will be set annually at the discretion
of the Committee.
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.
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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.
All 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.
Differences in remuneration policy for all employees
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
non-confidential 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.
Base salary increases elsewhere in the Group are set at a business level, taking into account economic factors, business
sector, location and circumstances, competitive market rates, roles, skills, experience and individual performance.
The change in wages and salaries for the Company as a whole is reported in chart 2 on page 74.
Employees in the UK are auto-enrolled into a 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
to employee contributions. Employees in the US participate in 401(k) retirement plans.
Cash and non-cash benefits for employees reflect the local labour market in which they are based.
The majority of employees participate in some form of cash-based annual bonus or commission plan. The annual bonus
plan for the Executive Directors forms the basis of the annual bonus plan for 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. Most annual bonus plans around the Group do not include a requirement for bonus deferral.
The LTIP for the Executive Directors forms the basis of annual awards for other selected head office executives.
LTIPs 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.
There is no shareholding requirement for employees below Executive Director level.
Base Salary
Pension
Benefits
Annual bonus
Long-term
incentives
Shareholding
requirement
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Pay scenario charts
Chart 1: Illustrations of application of Executive Directors’ remuneration policy
The elements of remuneration have been categorised into three components: (i) Fixed; (ii) Annual variable; and (iii) Multiple reporting period
variable, which are set out in the future policy chart 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
6,506
54%
27%
6%
13%
3,881
45%
23%
10%
23%
1,255
30%
70%
5,764
54%
27%
5%
14%
3,411
46%
23%
8%
23%
1,058
26%
74%
Minimum
On-target Maximum
Minimum
On-target Maximum
The Viscount Rothermere
P A Zwillenberg
4,045
62%
12%
8%
19%
2,567
48%
9%
12%
30%
1,090
29%
71%
3,821
55%
27%
4%
14%
2,253
46%
23%
7%
23%
684
24%
76%
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
Numbers may not add up due to roundings.
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 an on-target LTIP award (performance LTIP and CSA) and target bonus have been awarded as stated in the Policy table.
Maximum assumes a maximum LTIP award (performance LTIP and CSA) 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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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
Executive Chairman 17 October 1994
Daily Mail and General
Holdings Limited
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
Chief Executive
of dmg media
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 stepped
down as Directors of Euromoney in March 2019. Lord Rothermere stepped down as a Director of ITN in November 2018. Lord Rothermere
was appointed a Director of Cazoo Ltd in December 2018.
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 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 for
new recruits.
New appointments will be eligible to receive benefits in line with the Policy for current
Executive Directors and potentially 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.
The appointed Executive Director will be eligible to participate in the LTIP 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 61) 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.
200% of base salary.
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) or a sum equal to the amount of benefits as specified in the Company’s most recent Annual
Report; and an annual bonus payment calculated in accordance with the service contract of the Executive 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. Under the rules of the Plan, participants will be considered ‘good leavers’ if their participation ceases due to
death, retirement, long-term sickness, disability and any other reason, at the discretion of the Committee (such discretion being applied fairly
and reasonably).
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.
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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+
Under HMRC regulations, 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 judgment of the Committee, greater progress towards achievement of targets has
been made as a result of the performance of the leaver, it may, at its absolute discretion, decide to vest up to 100%
of the outstanding award.
The Committee may make payments it considers reasonable in settlement of potential legal claims, e.g. unfair dismissal or where agreed
under a settlement agreement. This may include an entitlement to compensation in respect of their statutory rights under employment
protection legislation and such reasonable reimbursement of fees for legal and/or tax advice in connection with such agreements and/or costs
of outplacement services.
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 Executive Directors. The Committee receives a report annually on the salary increase 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.
This report covers the reporting period to 30 September 2019 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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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 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. 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 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.
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 the 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 2019, the Committee conducted a formal review of its effectiveness and concluded that it had fulfilled its remit and had been
effective during the year.
Remuneration & Nominations Committee agenda items (selected)
Date
Agenda items
October 2018
November 2018
December 2018
March 2019
May 2019
July 2019
September 2019
• Vesting of FY 2013 DMGT LTIP awards.
• Vesting of FY 2015 DMGT LTIP award for Paul Dacre.
• Performance targets for the FY 2019 operating company LTIP awards.
• Vesting of operating company LTIPs.
• FY 2018 outcome of executive bonus schemes.
• Recruitment of operating company senior employees and associated
compensation packages.
• Funding of employee benefits trust for share awards.
• RMS compensation for FY 2018 and FY 2019.
• Approval of FY 2019 DMGT share awards.
• Euromoney distributions and DMGT share plans.
• New LTIP for RMS.
• Transaction bonus arrangements for Genscape and Buildfax.
• Performance targets for FY 2019 DMGT EIP awards.
• New remuneration policy for FY 2020 onwards – initial discussions.
• Summary of half-year bonus positions.
• Operating company LTIPs.
• New remuneration policy for FY 2020 onwards – continued discussions.
• Review of Board composition.
• NEDs met with Willis Towers Watson to discuss executive remuneration advice.
• Salary review for FY 2020.
• Annual bonus structure and targets for FY 2020.
• Termination of Genscape LTIP due to sale of business.
• Review of Remuneration and Nominations Committee effectiveness and terms
of reference.
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Risk and reward
During the year, the Committee reviewed and confirmed that the plans in operation throughout the Group did not incentivise taking excessive
risk and, in particular, that the annual bonus and LTIPs in the Company are aligned with DMGT’s risk policies and systems.
Advice to the Remuneration & Nominations Committee
The Committee received independent advice on executive remuneration from Willis Towers Watson; on RMS remuneration from FW Cook;
legal input on the implications of the 2019 April Distributions from Slaughter and May in addition to advice from members of the senior
management team during the year.
Table 1: Single figure of remuneration paid to Executive Directors for FY 2019 (Audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in FY 2019 and FY 2018. Details of
the calculation of the annual bonus figure for FY 2019 can be found in the section variable pay awards vesting in FY 2019, on page 69. Details of
the calculation of LTIP Awards that are vesting this year can be found in tables 5.1 and 5.2 on pages 71 and 72 respectively. Details of nil-cost
options that were realised during the year can be found in table 4 on page 70.
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
Total
Financial
year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Salary and
fees
£000
8581
837
769
750
5131
500
7631
744
2,902
2,831
Taxable
benefits2
£000
Pension
benefits
£000
56
54
38
36
31
33
24
24
149
147
317
310
231
225
128
125
282
275
958
935
Total
fixed
£000
1,231
1,201
1,038
1,011
672
658
1,069
1,043
4,009
3,913
Annual
bonus3
£000
Total annual
remuneration
£000
1,229
1,229
857
856
571
571
420
303
3,077
2,959
2,460
2,430
1,895
1,867
1,243
1,229
1,489
1,346
7,086
6,872
LTIP and
dividend
equivalents
£000
8584
–
8586
–
4488
–
1,33510
52212
3,499
522
Other
Awards
£000
3505
–
9267
–
1,1269
–
1211
–
April 2019
Distribution
payments13
Total
remuneration
£000
3,669
2,430
3,736
1,867
3,293
1,229
3,792
1,868
£000
–
–
57
–
476
–
957
–
2,414
–
1,490
–
14,489
7,394
Notes
1.
Salary shown for Lord Rothermere includes fees of £3,787 as Director of ITN for the period October 2018 to 8 November 2018. Salary shown for Tim Collier and Kevin Beatty includes fees of
£25,189 as Directors of Euromoney for the period 1 October 2018 to 2 April 2019.
Taxable benefits comprise car 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.
Lord Rothermere, Paul Zwillenberg and Kevin Beatty also received benefits in respect of home-to-work travel. Amounts, including tax paid by the Company, are £17,037; £8,745; and £6,321
respectively. Lord Rothermere and Paul Zwillenberg received UK medical benefits with a cost to the Company of £5,073 p.a. and Kevin Beatty received UK medical benefits with a cost to the
Company of £2,352 p.a.. Tim Collier received US medical benefits with a cost to the Company of £14,765 p.a. (converted at a rate of £1:$1.28). Paul Zwillenberg received £6,174 in relation to 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 2019. Details of the calculation of the bonus and deferral are shown in tables 2.1 and 2.2 on page 69.
The figure shown for Lord Rothermere is the vesting value of the 2016 award under the EIP which will be realised in December 2019, details of which can be found in table 5.2 on page 72.
The figure shown for Lord Rothermere is the value of the cash dividend equivalent received in respect of his 2011 and 2012 nil cost option awards which were exercised in December 2018 and June
2019 respectively details of which can be found in table 4 on page 70.
2.
3.
4.
5.
6. The figure shown for Paul Zwillenberg is the vesting value of the 2016 award under the EIP which will be realised in December 2019, details of which can be found in table 5.2 on page 72.
7. The figure shown for Paul Zwillenberg is the value of his recruitment award (adjusted to reflect the April 2019 Distributions) of 114,809 shares which vested and was realised in accordance with
the terms of his award in June 2019 at a share price of £7.42 and a cash dividend equivalent payment of £74,507.
8.
The figure shown for Tim Collier is the vesting value of the pro-rated 2016 award under the EIP which will be realised in December 2019, details of which can be found in table 5.2 on page 72.
9. The figure shown for Tim Collier is the value of the first tranche of his recruitment award of 188,284 shares which vested and was realised in accordance with the terms of his award in December
2018 at a share price of £5.69 and a cash dividend equivalent payment of £54,619.
10. The figure shown for Kevin Beatty is the vesting value of the 2014 award made under the 2012 Long-Term Executive Incentive Plan which will be realised in December 2019, details of which can be
found in table 5.1 on page 71 and the vesting value of the 2016 award under the EIP which will be realised in December 2019, details of which can be found in table 5.2 on page 72.
11. The figure shown for Kevin Beatty is the value of the cash dividend equivalent received in respect of his 2015 nil cost option award which was exercised in September 2019, details of which can be
found in table 4 on page 70.
12. The figure shown for Kevin Beatty in 2018 has been adjusted from the estimated payments stated in the 2018 report to reflect the actual amount realised in December 2018. Details can be found
in table 5.1 on page 71.
13. The discretionary payments related to the April 2019 Distributions have been made to compensate the Directors for the additional tax payable as a result of the decision by the Board that the EDs
and certain other senior executives should not trade in DMGT shares in advance of the distributions. Since these payments are made outside of the approved Policy, agreement will be sought
from shareholders at the February 2020 AGM.
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Variable pay awards vesting in FY 2019
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 2019
and included in the single figure in table 1 on page 68 are shown below. The performance measures for FY 2019 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 Beatty1
Notes
1.
See 2.2 below
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
143%
111%
111%
55%
Actual
outcome
£000
1,229
857
571
420
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
118%
200%
Below
0%
Threshold
0%
Target
100%
Maximum
200%
Outcome as
a % of target
188%
200%
Table 3: Deferred annual bonus (Audited)
The Committee agreed the following deferral requirements would apply to the above target amount of the FY 2019 annual bonus with no
further performance conditions except for continued employment over the two year deferral period:
P A Zwillenberg
T G Collier
K J Beatty
Deferral requirement
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
Nil cost options
Nil cost options
Nil cost options
Amount
deferred
FY 2019
£000
Amount
deferred
as a % of
FY 2019 bonus
318
212
191
37%
37%
46%
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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 the employees continued employment.
The December 2019 award was based on the average price of the first three days of trading after the announcement of the financial results for
FY 2018 of £6.29.
Outstanding awards that were made before the April 2019 Distributions will be adjusted at exercise by 4.7825%.
A deferral applies to Paul Zwillenberg, Tim Collier and Kevin Beatty’s bonuses for FY 2019, details of the deferral are shown in table 3 on
page 69.
Award date
Award type
Relating to
Exercisable from
Expiry date
Status of awards
Award price
Outstanding awards
P A Zwillenberg
T G Collier
K J Beatty
Total outstanding
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
–
–
–
–
Exercised during year
The Viscount Rothermere
K J Beatty
Total exercised during year
Shaded columns show options that have vested.
110,4642
–
110,464
135,8341,2
–
135,834
Dec 2015
Nil cost
options
2015
Bonus
Dec 2017
Jan 2018
Nil cost
options
2017
Bonus
Jan 2020
Dec 20184
Nil cost
options
2018
Bonus
Dec 2020
Dec 2022
Outstanding
£7.06
Jan 2025
Outstanding
£5.63
Dec 2025
Outstanding
£6.29
–
–
–
–
–
13,4161,3
13,416
–
–
14,404
14,404
–
–
–
52,6854
35,1244
12,7294
Total
52,685
35,124
27,133
100,538
114,942
–
–
–
Total
246,298
13,416
259,714
Notes
1. Reflects the adjustment for the April 2019 Distributions made at exercise to the number of options originally awarded.
2.
Lord Rothermere received cash dividend equivalent payments of £157,411 in respect of his 2011 bonus award and £192,768 in respect of his 2012 bonus award which were exercised during the year.
The awards were exercised at a share price of £6.21 and £7.70 respectively with a value at exercise of £685,650 and £1,045,952 respectively.
3. Kevin Beatty received cash dividend equivalent payments of £11,549 in relation to the exercise of his 2015 bonus award exercised during the year. The award was exercised at a share price of £8.26
with a value at exercise of £110,816.
4. The value of the awards made in December 2018 was £331,388 for Paul Zwillenberg, £220,926 for Tim Collier and £80,062 for Kevin Beatty.
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Table 5.1: Awards made under the 2012 Long-Term Executive Incentive Plan (LTIP) (Audited)
Outstanding share based awards subject to performance conditions under the LTIP are summarised in the table below. 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.
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. Outstanding awards that were made before the April 2019 Distributions
will be adjusted at vesting by 4.7825%.
The 2014 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, further details can be found on page 57. 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
2013 LTIP
award1
Dec 2013
Sep 2018
100%
£9.16
£7.48
2014 LTIP
award
Dec 2014
Sep 2019
100%
£8.29
£7.95
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
Vesting level as a percentage of maximum
Vested
100%
100%
Vested
100%
100%
Outstanding
100%
N/A
Outstanding awards
K J Beatty
Value (including cash dividend equivalent)
Realised during year
K J Beatty
Value (including cash dividend equivalent)
Shaded columns show options that have vested.
–
–
92,1421
£819,6941
105,382
N/A
77,226
£521,9392
–
N/A
–
N/A
Total
197,524
£819,694
Total
77,226
£521,939
Notes
1.
2.
The value of the 2014 LTIP award for Kevin Beatty (adjusted for the April 2019 Distributions) at vesting was £732,529 calculated using the average share price for the fourth quarter of FY 2019
which was £7.95. A cash dividend equivalent payment of £87,165 will be paid at realisation with a total value of £819,694.
The value of the 2013 LTIP award for Kevin Beatty on realisation at a share price of £5.69 in December 2018 was £439,384. A cash dividend equivalent payment of £82,555 was also paid with a total
value of £521,939.
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Table 5.2: Awards made under the 2017 Executive Incentive Plan (EIP) (Audited)
Outstanding share based awards subject to performance conditions under the EIP are summarised in the table below. 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.
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 beginning of the performance period and the date of delivery of the shares is made. Outstanding awards that were made before
the April 2019 Distributions will be adjusted at vesting by 4.7825%.
The 2018 EIP awards were made in June 2019 based on the average price of the first three days of trading after the announcement of the
financial results for FY 2018 of £6.29. The 2016 LTIP award vested at 100% of target during the year, further details can be found on page 57.
Award date
Performance period
ends
Performance period
starts
Award price
Status of award
Vesting level as a
percentage of
maximum
Basis on which award
is made
Maximum payable
Percentage receivable
if maximum
performance achieved
2016 EIP
Jun 2017
Sep 2019
Oct 2016
£7.88/£7.171
Vested
20%2
2017 EIP
Jun 2018
Sep 2020
Oct 2017
£5.63
Outstanding
N/A
2018 EIP
Jun 2019
Sep 2021
Oct 2018
£6.29
Outstanding
N/A
Percentage share of growth in eligible profit over the performance period, converted at the end of the performance
period to shares based on the average share price for the first three days following the release of the financial results
of the preceding financial year in which the awards were made.
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.
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.
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.
If the performance level is on
target or above, Lord Rothermere
and Paul Zwillenberg would receive
2.6% and Tim Collier and Kevin
Beatty 1.5% of eligible profits.
No amounts are payable if there
are no eligible profits.
Performance measures
Outcomes are linked to stretching profit targets over a minimum threshold, subject to fair adjustment for any change
in capital usage.
2016 EIP
2017 EIP
2018 EIP
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
Vesting shares
99,728
99,728
52,970
59,837
Value at vesting
including cash
dividend equivalents
£858,1293
£858,1293
£448,0573
£514,8793
Maximum shares
that could vest
666,271
666,271
399,763
399,763
Shares vesting
at target
133,254
133,254
79,953
79,953
Maximum shares
that could vest
613,831
611,287
366,653
363,672
Shares vesting
at target
122,7663
122,2573
73,3303
72,7343
Notes
1. The 2016 awards made to Tim Collier were based on the closing share price on his employment start date in May 2017 of £7.17. His award outcome has been pro-rated to reflect his start date.
The Committee determined to exercise discretion to allow the 2016 EIP awards to vest at 100% of target, recognising the significant value that management has created for shareholders as a
2.
result of the ZPG Plc sale and the April 2019 Distributions (disposal of Euromoney) during the performance period. The value created by these transactions was not reflected by the formulaic
outcome from the performance conditions.
The value of the 2016 LTIP award at vesting (adjusted for the April 2019 Distributions) calculated using the average share price for the fourth quarter of FY 2019 which was £7.95, was £792,838 for
Lord Rothermere and Paul Zwillenberg, £421,112 for Tim Collier and £475,704 for Kevin Beatty. A cash dividend equivalent payment will be paid at realisation of £65,291 for Lord Rothermere and
Paul Zwillenberg, £26,945 for Tim Collier and £39,175 for Kevin Beatty.
The value of the 2018 at target EIP awards at issue was £772,200 for Lord Rothermere, £769,000 for Paul Zwillenberg, £461,250 for Tim Collier and £457,500 for Kevin Beatty.
3.
4.
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Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Payments to past Directors (Audited)
Martin Morgan vested share awards
The Committee was satisfied that the performance conditions had been met for the 2014 award made to Martin Morgan in December 2014
under the DMGT 2012 Long-Term Incentive Plan. The award of 124,626 shares (after adjustment for the April 2019 Distributions) will vest at
100% and be realised in December 2019.
Martin Morgan received a total amount of £706,273 in December 2018 in relation to the realisation of the 2013 award made under the DMGT
2012 Long-Term Incentive Plan. The award of 104,500 shares was realised at a share price of £5.69 with a value of £594,562 and a dividend
equivalent payment of £111,711.
Paul Dacre vested share awards
The Committee was satisfied that the performance conditions had been met in full for the 2016 award made to Paul Dacre in February 2017
under the DMGT 2017 Executive Incentive Plan. The award of 134,780 shares (after adjustment for the April 2019 Distributions) will vest and be
realised in December 2019.
Paul Dacre received a total amount of £917,693 in December 2018 in relation to the realisation of the 2015 award made under the DMGT 2012
Long-Term Incentive Plan. The award of 143,569 shares was realised at a share price of £5.73 with a value of £821,933 and a dividend
equivalent payment of £95,761.
Payments for loss of office (Audited)
There were no payments for loss of office to any Directors during the year.
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.
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
82
3 December 2027
–
Cash allowance: 100%
Defined benefit: accrued annual
benefit as at 30 September 2019
based on normal retirement age
£000
Defined
benefit: normal
retirement age
Defined benefit:
additional value
of benefits if early
retirement taken
Weighting of
pension benefit
value as shown
in single figure table
Notes
1. The key elements of remuneration for the Executive Directors table on page 58 shows the cash allowances paid to each director as percentage of salary in lieu of pension.
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 2019 and FY 2018.
There were no changes to NED fees during FY 2019.
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.
Lady Keswick
A H Lane
F L Morin
D H Nelson
K A H Parry
JP Rangaswami
J H Roizen
D Trempont
Total
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
2019
Travel
allowance
£000
4
8
16
4
4
4
10
44
94
Fees
£000
50
1141
50
1741
2051
601
224
223
1,100
Notes
1.
Additional fees of £25,000 to Andrew Lane, David Nelson and JP Rangaswami, and £100,000 to Kevin Parry were paid for their work in relation to the April 2019 Distributions.
Total
£000
54
122
66
178
209
64
234
267
1,194
73
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Remuneration Report
Chart 2: 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 remuneration1
£000
Total employee
remuneration
£000
Average
remuneration2
£000
2019
2018
2019
2018
2019
2018
£1,867
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 LTIP awards made in the year and pension benefits.
Chart 3: Comparison of overall performance of DMGT vs comparators
% increase/decrease
£3,736
+100.1%
£455,249
£446,965
£75.26
£71.32
+1.9%
+5.5%
DMGT
Media UK
FTSE 100 (all rebased to 100)
£
400
350
300
250
200
150
100
50
0
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
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
74
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Table 8: Chief Executive remuneration outcomes FY 2010 to FY 2019
Financial year ending
CEO
Total remuneration (single figure)
Annual variable pay1
(% maximum)
LTIP achieved (% maximum)
Share price at vesting
FY 2010
£000
FY 2011
£000
FY 2012
£000
FY 2013
£000
FY 2014
£000
FY 2015
£000
FY 20162
£000
FY 2017
£000
FY 2018
£000
FY 2019
£000
Martin Morgan
2,961
98%
1,722
40%
25% 25%/100%
£4.14 £5.72/£3.68
2,809
63%
52.5%
£4.82
2,949
88%
37.5%
£7.62
2,021
54%
40%
£8.31
1,944
58%
–
–
3,342
63%
100%
£6.95
Paul Zwillenberg
1,450
42.5%
1,867
81%
–
–
–
–
3,736
80%
20%
£7.95
Notes
1. Maximum bonus opportunity was 100% of salary from FY 2010 to FY 2017 when it increased to 140%.
2.
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.
Chart 4: 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
1,000
900
800
700
600
500
400
300
200
100
0
+1,055.6%
936
+0.9%
533
528
-20.3%
182
145
81
FY 2019
FY 2018
FY 2019
FY 2018
FY 2019
FY 2018
Total employment pay
Dividend
Adjusted profit before tax
75
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Remuneration Report
Table 9: Statement of Directors’ shareholding and share interests (Audited)
The number of shares of the Company in which the Executive and Non-Executive Directors or their families had a beneficial or non-beneficial
interest during FY 2019 and details of Long-Term Incentive (LTI) interests as at 30 September 2019 are set out in the table below. The shareholding
guideline for Executive Directors is 500% of salary for Lord Rothermere and Paul Zwillenberg and 150% of salary for Tim Collier and Kevin Beatty.
The value as a percentage of salary has been calculated using the 28 September 2019 share price of £7.02.
LTI interests
not subject to
performance
conditions1
Vested
LTI interests
not subject to
performance
conditions1
Unvested
Value (as
a percentage
of salary)2
Guideline
met
–
–
–
–
–
–
–
52,685
171,805
27,133
–
251,623
64,766%
116%
384%
234%
N/A
Yes
No
Yes
Yes
N/A
LTI interests
subject to
performance
conditions3
1,379,830
1,377,286
819,386
1,020,796
N/A
Total
outstanding
interests4
1,379,830
1,429,971
991,191
1,047,929
N/A
4,597,298
4,848,921
Beneficial
As at 30 September 2019
The Viscount Rothermere
P A Zwillenberg
T G Collier
K J Beatty
K A H Parry
Non-beneficial
The Viscount Rothermere
D H Nelson
Ordinary
19,890,3645
–
–
–
–
A Ordinary
Non-Voting
59,268,078
74,283
108,539
226,850
12,565
19,890,364
59,690,315
–
–
4,687,424
204,221
4,891,645
Total Directors’ interests
Less duplications
19,890,364
–
64,581,960
(204,221)
19,890,364
64,377,739
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 70. The LTI
interests not subject to performance conditions (unvested) includes the unvested tranche of the recruitment award made to Tim Collier of 136,681 shares. These were awarded under the DMGT
2017 Long-Term Incentive Plan 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 5.2 on pages 71 and 72 and include those shares which have vested but are not yet realised as well as those that
are outstanding.
Total outstanding interests are the sum of the LTI interests subject to performance conditions and unvested LTI interests not 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 2019.
2.
3.
4.
5.
None of the other directors held any shares in the Company, either beneficial or non-beneficial.
At 30 September 2019, 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, purchases of shares were made between 30 September 2019 and 30 November 2019 through the share purchase+ plan. These purchases increased the
beneficial holdings of these Executive Directors by 35 shares for Paul Zwillenberg and 29 shares for Kevin Beatty. There were no other changes in Directors share interests between these dates.
Voting at general meeting
At the February 2019 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
6 February 2019
6 February 2019
6 February 2019
6 February 2019
6 February 2019
6 February 2019
6 February 2019
6 February 2019
Directors’ service contracts/letters of appointment are available for inspection at DMGT’s registered office.
76
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Implementation of Remuneration Policy in FY 2020
Executive Directors’
base salary
Executive Directors’
pension
Executive Directors’
benefits in kind
Executive Directors’
annual bonus
Executive Directors’
Bonus deferral
Executive Directors’
long-term incentive
Executive Directors’
service contracts
External appointments
Salary increases for each of the Executive Directors of 2.0% for FY 2020 were approved in line with increases
across the Group. Revised annual salaries including Directors’ fees from 1 October 2019 are £875,200 for
Lord Rothermere, £784,400 for Paul Zwillenberg, £522,750 for Tim Collier and £777,750 for Kevin Beatty.
No change to prior year. Pension allowances are reported in table 6 on page 73.
No change to nature of benefits since prior year.
Awards in FY 2020 will be measured against two financial 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 financial 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.
Amounts above target of bonus for Paul Zwillenberg, Tim Collier and Kevin Beatty will be deferred into nil-cost
options for two years. No deferral will apply for Lord Rothermere.
The new long-term incentive plan (2020 LTIP) is split into two parts:
i. Performance LTIP
In order to incentivise the Executive Directors to continue to focus on increasing income and capital value
through the organic growth of the DMGT portfolio of business, performance will be measured against Group
financial targets over the three year period.
ii. Conditional Share Award
An annual conditional share award (CSA) vesting over a period of up to five years based on the EDs management
of the DMGT portfolio, financial balance sheet and gearing, as well as acquisitions, disposals and other strategic
decisions taken during the year.
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 2020.
The Company allows EDs 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.
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. Directors’ interests are reported in detail in table 9 on page 76.
Recruitment award
Exit payments
None.
None.
Implementation of Policy for Non-Executive Directors FY 2020
Non-Executive Directors’ fees No change to prior year.
77
Strategic ReportGovernanceFinancial StatementsShareholder Information Governance
Governance
Statutory Information
Directors’ Report
Other statutory information
Required information can be found in
the Strategic Report on pages 1 to 39, 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 31
to 33.
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 25. 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 40
and 41. All Directors held office throughout
the year. In accordance with the UK
Corporate Governance Code, all existing
Directors will stand for re-election at the
Annual General Meeting (AGM) on
5 February 2020.
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 1 to 39.
Results and dividends
The profit for the year of the Group and the
profit for the year attributable to owners
of the Company amounted to £91 million.
The Board recommends a final dividend
of 16.6 pence per share. If approved at the
2020 AGM, the final dividend will be paid on
7 February 2020 to shareholders at the close
of business on 13 December 2019. Together
with the interim dividend of 7.3 pence per
share paid on 28 June 2019, this makes a
total dividend for the year of 23.9 pence
per share (2018 23.3 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 76.
Employee Benefit Trust
The Executive Directors of the Company,
together with other employees of the Group,
are potential beneficiaries of the Employee
Benefit Trust (EBT) and, as such, are deemed
to be interested in any A Shares held by the
EBT. At 30 September 2019, the EBT’s
shareholding totalled 2,157,613 A Shares.
The EBT has waived its right to dividends
on the shares held.
Between 30 September 2019 and
4 December 2019 the EBT transferred nil
A Shares to satisfy the exercise of awards
under employee share plans.
78
Significant shareholdings
Until 4 December 2019, Rothermere
Continuation Limited (RCL) held 100% of
the issued Ordinary Shares. The Company
anticipates that as of 5 December 2019,
pursuant to a consolidation of the Company’s
holding structure, RCL will be acquired by
Rothermere Investments Limited (RIL), a
company incorporated in Jersey. RIL and its
directors are related parties of the Company
as explained in Note 44 on page 175.
RIL will be the Company’s holding company
and hold 100% of the issued Ordinary
Shares. This will not result in any change
to the underlying control of the Company,
and the Company’s ultimate controlling
shareholder will be as stated in the
Corporate Governance Report on page 40.
RIL proposes to rename itself RCL before
the end of the calendar year.
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 securities other
than those shown in the Remuneration
Report on page 76.
Share capital
The Company has two classes of shares.
Its total share capital is comprised of 8%
Ordinary Shares and 92% 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
1.5 million shares out of Treasury and the
EBT, representing 0.7% of called-up A Shares,
in order to satisfy incentive schemes. The
Company held 6,723,734 shares in Treasury
and the DMGT EBT with a nominal value of
£0.8 million at 30 September 2019. The
maximum number of shares held in Treasury
and by the DMGT EBT during the year was
7,793,528, which had a nominal value of
£1 million. The Company also purchased
0.4 million shares for holding in Treasury
having a nominal value of £0.1 million in
order to match obligations under various
incentive plans. The consideration paid
for these shares was £2.5 million. Shares
purchased during the year represented
0.2% of the called-up A Share capital as
at 30 September 2019.
On 4 December 2019 the Company held
4,566,121 Treasury Shares.
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
Details of allotments of share capital which
arose solely from the exercise of options are
given at Note 39.
April 2019 Distributions
In April 2019 there was a reduction of
127.3 million A shares. These were cancelled
as part of the April 2019 Distributions,
read more on page 25.
Authority to purchase shares
At the Company’s AGM on 6 February 2019,
the Company was authorised to make
market purchases of 21,491,333 A Shares
representing approximately 10% of the total
number of A Shares in issue at the time.
During the period from 29 November 2018
to 30 September 2019, 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
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 5 February 2020.
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 30 and in the Notes to the
Accounts on page 96.
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. 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 (EU), 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 judgments 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 1 to 39 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 (Euromoney) on
8 December 2016, in accordance with the
Listing Rules and has acted in accordance
with the terms of the Deed since execution.
The Euromoney Relationship Deed ceased
as a result of the April 2019 Distributions.
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The AGM will be held at 9.00 am on
Wednesday 5 February 2020 at Northcliffe
House, 2 Derry Street, London W8 5TT.
The resolutions to be put to the meeting
are set out on pages 81 and 82. 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 2020 AGM.
By order of the Board
F Sallas
Company Secretary
Governance
Governance
Statutory Information
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 their duty, under the
Companies Act 2006, to avoid conflicts
of interest.
When authorising a conflict of interest the
Board must do so without the conflicting
Director counting as part of the quorum.
In the event that the Board considers it
appropriate, the conflicted Director may be
permitted to participate in the debate, but
will neither be permitted to vote nor count
in the quorum when the decision is being
agreed. The Directors are aware that it is
their responsibility to inform the Board of
any potential conflicts as soon as possible.
Procedures are in place to facilitate
disclosure. The Board reviews its position
on conflicts of interest annually and at
such other times as are appropriate.
Change of control
The Company is not party to any significant
agreements that would take effect, alter or
terminate upon a change of control of the
Company following a takeover bid. However,
certain of the Group’s third-party funding
arrangements would terminate upon
a change of control of the Company.
The Company does not have agreements
with any Director or employee providing
compensation for loss of office or
employment that occurs because of a
takeover bid, except for provisions in the
rules of the Company’s share schemes
which may result in options or awards
granted to employees vesting on a takeover.
Transactions with Directors
No transaction, arrangement or agreement
required to be disclosed in terms of the
Companies Act 2006 and IAS 24, Related
Parties, was outstanding at 30 September
2019, nor was entered into during the year
for any Director and/or connected person
except as detailed in Note 44 (2018 none).
Political donations
No political donations were made during
the year.
Principal risks
The principal risks and how they are
being managed or mitigated are shown
on pages 34 to 39. 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.
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. Six month contracts with different
start dates are agreed 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.
Distribution arrangements are in place
to ensure the delivery of newspapers to
retail outlets.
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.
Employees
Details in respect of employees are in the
Our People and Our Stakeholders section
on pages 31 to 33.
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 at the 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.
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Daily Mail and General Trust plc Annual Report 2019
Governance
Annual General Meeting 2020: Resolutions
The Company’s Annual General Meeting
(AGM) will be held at 9.00 am on Wednesday
5 February 2020. 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.
Report and Accounts
1.
To receive the Directors’ Report, the
Accounts and the Auditor’s Report for the
financial year ended 30 September 2019.
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 55 to 77 of the Annual Report and
Accounts for the financial year ended
30 September 2019, in accordance with
Section 439 of the Companies Act 2006
(the Act).
Remuneration Policy
3.
To receive and approve the Directors’
Remuneration Policy (contained in the
Directors’ Remuneration Report) as set
out on pages 55 to 77 of the Annual
Report and Accounts for the financial
year ended 30 September 2019, in
accordance with Section 439A of the Act.
4.
To approve the payments to Directors
outside of the Remuneration Policy,
details of which are set out in the
Remuneration Report in table 1
on page 68.
Dividend
5.
To declare the final dividend recommended
by the Directors of 16.6 pence per
Ordinary Share or A Ordinary Non-Voting
Share (A Share) for the year ended
30 September 2019 to all holders of
Ordinary Shares and/or A Shares on
the register at the close of business
on 13 December 2019.
Directors
6.
To re-elect Viscount Rothermere
as a Director.
7. To re-elect Mr Beatty as a Director.
8. To re-elect Mr Collier as a Director.
9. To re-elect Lady Keswick as a Director.
10. To re-elect Mr Lane as a Director.
11. To re-elect Mr Morin as a Director.
(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 5 May 2021
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). 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.
21. That the Directors be generally and
unconditionally authorised pursuant
to Section 551 of the Act to:
(a) allot A Shares in the Company, and
to grant rights to subscribe for or to
convert any security into A Shares
in the Company up to an aggregate
nominal amount of £1,343,208 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 5 May 2021, 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.
12. To re-elect Mr Nelson as a Director.
13. To re-elect Mr Parry as a Director.
14. To re-elect Mr Rangaswami as a Director.
15. To re-elect Ms Roizen as a Director.
16. To re-elect Mr Trempont as a Director.
17. To re-elect Mr Zwillenberg as a Director.
Auditor
18. 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.
19. To authorise the Directors to determine
the Company’s External Auditor’s
remuneration.
20. That the Company be and is hereby
generally and unconditionally authorised
for the purposes of s701 of the Act to
make market purchases (within the
meaning of Section 693(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 21,491,333;
(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
(ii) the higher of the price of the
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
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Governance
Governance
Annual General Meeting 2020: Resolutions
Notice
24. 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
4 December 2019
22. If Resolution 21 is passed, that the
Directors be generally empowered
pursuant to Section 570 and Section 573
of the Act to allot A Shares or grant rights
to subscribe for or to convert any security
into A Shares, for cash, or sell A Shares
held by the Company as Treasury Shares
for cash, pursuant to the authority
conferred by Resolution 21, as if s561(1)
of the Act did not apply to the allotment.
This power:
23. If Resolution 21 is passed, that the
Directors be generally and unconditionally
empowered, in addition to any authority
granted under Resolution 22, pursuant to
s570 and s573 of the Act to allot equity
securities for cash pursuant to the
authority conferred by Resolution 21,
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 5 May
2021, 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 £1,343,208.
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
5 May 2021, 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
£1,343,208; 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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Governance
Annual General Meeting 2020: Resolutions
Financial Statements
Independent auditor’s report to the members
of Daily Mail and General Trust plc
Daily Mail and General Trust plc Annual Report 2019
Report on the audit of the
financial statements
Opinion
In our opinion:
• Daily Mail and General Trust plc’s Group
financial statements and Company
financial statements (the “financial
statements”) give a true and fair view
of the state of the Group’s and of the
Company’s affairs as at 30 September
2019 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 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: the Consolidated and Company
Statements of Financial Position as at
30 September 2019; the Consolidated
Income Statement and Consolidated
Statement of Comprehensive Income, the
Consolidated and Company Statements of
Changes in Equity, and the Consolidated
Cash Flow Statement for the year then
ended; 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 Auditors’ 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 Company.
Other than those disclosed in Note 5 to the
financial statements, we have provided no
non-audit services to the Group or the
Company in the period from 1 October 2018
to 30 September 2019.
Our audit approach
Overview
Materiality
• Overall Group materiality: £7.25 million
(2018: £7.20 million), based on 5% of
adjusted profit before tax and non-
controlling interests as identified in Note
13 of the Annual Report (‘adjusted profit
before tax and non-controlling interests’).
• Overall Company materiality: £33 million
(2018: £38 million), based on 1% of
total assets.
Audit scope
• Of the Group’s six operating 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 six
businesses over which we performed
a full scope audit and two businesses
over which we performed 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,
which was disposed on 2 April 2019.
• Taken together, the components where
we performed audit work accounted
for 83% of Group revenue and 78% of
absolute adjusted profit before taxation
and non-controlling interests.
Key audit matters
• Impairment of intangible assets
and goodwill (Group).
• Accounting for acquisitions and
disposals (Group).
• Presentation of adjusted profit (Group).
• Accounting for deferred taxation
and uncertain tax positions (Group).
• Carrying value of shares in Group
undertakings (Company).
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.
Capability of the audit in detecting
irregularities, including fraud
Based on our understanding of the Group
and industry, we identified that the principal
risks of non-compliance with laws and
regulations related to 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, and tax
legislation, and we considered the extent to
which non-compliance might have a material
effect on the financial statements. We also
considered those laws and regulations that
have a direct impact on the preparation of
the financial statements, including but not
limited to, the Companies Act 2006. We
evaluated management’s incentives and
opportunities for fraudulent manipulation
of the financial statements (including the
risk of override of controls), and determined
that the principal risks were related to
posting inappropriate journal entries and
management bias in accounting estimates.
The Group engagement team shared this risk
assessment with the component auditors so
that they could include appropriate audit
procedures in response to such risks in their
work. Audit procedures performed by the
Group engagement team and/or component
auditors included:
• review of the financial statement
disclosures to underlying supporting
documentation;
• enquiry with senior management and
internal counsel and confirmations with
external counsel;
• review of material component
auditors’ work;
• review of internal audit reports in so far as
they related to the financial statements;
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Independent auditor’s report to the members
of Daily Mail and General Trust plc
• review of the Directors’ Litigation report and bribery, fraud, whistleblowing and internal controls review report; and
• testing journal entries, in particular those with unusual financial statement line item combinations.
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. Also, 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.
Key audit matters
Key audit matters are those matters that, in the auditors’ 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 48 to 53
and to Notes 21 and 22 in the Group financial statements.
The Group had £251.2 million of goodwill and a further £69.9 million
of intangible assets on the balance sheet at 30 September 2019.
No impairment charges have been recorded against intangible
assets and goodwill for businesses which remain in the statement
of financial position at 30 September 2019.
The carrying values of the remaining goodwill and intangible assets
are based on subjective judgements about the future performance
of the underlying cash generating units (‘CGUs’) with key
assumptions including future cash flows, long-term growth rates
and discount rates. There is a risk that if these cash flows do not
meet the Directors’ expectations, some of these assets may
be impaired.
Our work focussed principally on the carrying value of the CGU
most at risk of impairment, being the EdTech CGU.
How our audit addressed the key audit matter
As part of our audit of the Directors’ impairment assessments (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 two-year
plans, and testing the mathematical accuracy of the assessments.
For the impairment assessment of goodwill and intangible assets
allocated to the EdTech CGU, we tested all key assumptions, including:
• revenue and profit assumptions included within the future forecasts,
by considering the historical accuracy of forecasts against actual
performance, retention rates and new contracts;
• the long-term growth rates in the forecasts by comparing them
to historical results, market data, and economic and industry
forecasts using our valuation expertise;
• the discount rate by comparing the cost of capital for the Group with
comparable organisations, and assessing the specific risk premium
applied to the business using our valuation expertise; and
• the Directors’ potential bias by performing our own sensitivity
analysis on key assumptions, particularly those driving underlying
cash flows.
We assessed the appropriateness of the related disclosures in Note 21,
including the sensitivities provided in respect of Hobsons and
considered them to be reasonable.
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 material impairment was necessary.
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Key audit matter
How our audit addressed the key audit matter
Accounting for acquisitions and disposals (Group)
Refer to the Audit & Risk Committee report on pages 48 to 53
and to Notes 8, 17, 18, 19, and 20 in the Group financial statements.
The Group has made a number of acquisitions and disposals
during the year. The focus of our work has been in relation to the
following disposals where the judgements are more significant:
• disposal of the Group’s remaining stake in Euromoney through
dividend in specie and cash distribution;
• disposal of the On-Geo GmbH business;
• disposal of the Group’s 49.9% stake in SiteCompli; and
• disposal of the Group’s c. 40% stake in Real Capital Analytics, Inc.
For the Group’s disposal of its remaining 49.9% stake in Euromoney, we:
• validated the appropriateness of the accounting treatment of the
dividend in specie distribution;
• verified the fair value of the distribution to underlying support
including the share price at distribution date for the dividend in
specie and vouched the cash paid;
• tested the impairment charge required by comparing the investment
value to the fair value of the shares on the date of distribution; and
• validated disposal costs to underlying support.
With regards to the calculation of the profit on disposals of On-Geo
GmbH, SiteCompli, and Real Capital Analytics, Inc., 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 sale agreements; and
• validated disposal costs to underlying support.
Based on the procedures performed, we concluded that the
accounting for acquisitions and disposals was accurate.
Presentation of adjusted profit (Group)
Refer to the Audit & Risk Committee report on pages 48 to 53
and to Notes 2, 13, 19 and 41 in the Group financial statements.
The Group presents adjusted profit before taxation and
non-controlling interests 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 to have a
distortive effect on current year earnings by management and
as a result are excluded from underlying earnings.
We have understood the rationale for classifying items as adjustments
to profit before taxation and considered whether this was reasonable
and consistent, in that it includes items that both increase and decrease
the adjusted profit measure, the adjustments were consistent year
on year, and were in accordance with the Group’s accounting policy.
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.
The classification of items as an adjustment to profit 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 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 regulatory
guidance in this area.
During the current year, the Group recorded a provision for
69.2 million Renewable Identification Numbers (RINs), valued at
£32.5 million, in relation to the Environmental Protection Agency
(‘EPA’) litigation, which has been classified as an adjustment to
profit before tax. This provision requires estimation of the future
outcome and valuation of the RINs.
Specifically, with regards to the Environmental Protection Agency
(‘EPA’) litigation provision expense, we:
• enquired with internal and external counsel and obtained a legal
confirmation from external counsel;
• obtained and reviewed the Final Determination issued by the EPA
and the Directors’ settlement offer letter;
• recalculated the value of the Renewable Identification Numbers
(RINs) using pricing data independently obtained from external
data sources;
• considered the tax implications of the provision against applicable
tax regulations; and
• concluded that the after tax provision recorded is appropriate and
that the Group financial statements appropriately disclosed the
range of possible outcomes given the estimation uncertainty.
Based on the procedures performed, we concluded that the
accounting for the EPA provision was reasonable. Given the magnitude
and nature of the EPA litigation, we considered the exclusion of this
item from adjusted profit before tax and non-controlling interests
to be in line with the Group’s accounting policy.
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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 deferred taxation and uncertain
tax positions (Group)
Refer to the Audit Committee report on pages 48 to 53 and to
Notes 11 and 37 in the Group 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.
The recognition and measurement of these items in the financial
statements involves estimation, 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 shares in Group undertakings (Company)
Refer to Notes 2 and 8 to the Company financial statements.
Shares in Group undertakings of £3,237.6 million are accounted
for at cost less impairment in the Company balance sheet at
30 September 2019.
Shares in Group undertakings are tested for impairment if
impairment indicators exist. If such indicators exist, the
recoverable amounts of the shares in Group undertakings are
estimated in order to determine the extent of the impairment loss,
if any. The key assumptions included in those estimates include
cash flow projections, nominal long-term (decline)/growth rates
and discount rates of the CGUs.
During the year, impairments of £15.1 million were recognised
to the Company’s investments.
We involved our tax specialists in our testing of the appropriateness of
the estimates taken in relation to deferred taxation and in respect of
uncertain tax positions recognised in the Group financial statements.
In assessing the likelihood of the Group being able to generate
sufficient future taxable profits against which to offset accumulated
losses, we considered:
• key inputs to the calculation including revenue and profit
assumptions, in line with our work over the carrying value
of goodwill and intangible assets; and
• the Directors’ ability to accurately forecast future profits.
In understanding and evaluating the Directors’ technical interpretation
of tax law in respect of specific transactions that gave rise to deferred
tax assets and uncertain tax positions we considered:
• third party tax advice received by the Group;
• the status of recent and current tax authority audits and enquiries;
• the outturn of previous claims;
•
judgemental positions taken in tax returns and current year
estimates; and
• developments in the tax environment, including the continuing
impact of US tax reform.
We consider the valuation of the deferred tax assets and amounts
recorded for uncertain tax positions to be supportable based on
our evaluation of the technical interpretations outlined above.
Management identified an impairment indicator as the carrying
value of investments in subsidiaries exceeds the market capitalisation
of the Group.
For each discounted cash flow prepared for the relevant undertakings,
we tested all key assumptions, including:
• cash flow projections by considering the historical accuracy
of forecasts against actual performance;
• the nominal long-term (decline)/growth rates by comparing them
to historical results and industry forecasts; and
• the discount rates applied in the models by comparing the cost of
capital for the Group with comparable organisations and assessing
the specific risk premium applied to each business using our
valuation expertise.
Where applicable, we have performed an independent sensitivity
analysis to understand the impact of reasonable changes in
management’s assumptions on the available headroom. We also
considered the implied multiples of the individual CGUs and the
business as a whole in comparison to available external market data.
As a result of our work, we considered the £15.1 million impairment
charge to be appropriate and that the remaining carrying values
of the shares in undertakings held by the Company are supportable
in the context of the Company financial statements taken as a whole.
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Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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 Company,
the accounting processes and controls,
and the industry in which they operate.
The Group consists of a head office and
six operating 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 the divisional level. For Property
Information, EdTech, Energy Information,
and Events and Exhibitions, we scoped our
audit at the 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 significance to the Group. In order
to obtain sufficient and appropriate audit
evidence over the Group as a whole we also
instructed our Information Risk component
team to complete an audit of the division’s
complete financial information.
Within Property Information; EdTech; and
Events and Exhibitions, we identified six
businesses, for which we instructed our
component team to complete an audit of
their complete financial information, either
due to their relative size or risk. These
businesses are located in the United States,
the United Kingdom and the United Arab
Emirates. A full scope audit was also
performed by our component team for
Euromoney Institutional Investor PLC,
which was disposed on 2 April 2019.
Within Energy Information, we performed
an audit of specific financial statements line
items of a business in the United States.
Further, for one Property Information
business in the United States, we conducted
specified procedures over higher risk
financial statement line items.
Taken together, the components where we
performed audit work accounted for 83%
of Group revenue and 78% of absolute
adjusted profit before taxation and
non-controlling interests.
At the group level, we also carried out
analytical and other procedures on the
reporting components not covered by
the procedures described above.
Where the work was performed by
component auditors, we determined the
level of involvement we needed to have in
the audit work at those locations to be able
to conclude whether sufficient appropriate
audit evidence had been obtained as a
basis for our opinion on the group financial
statements as a whole. We issued formal,
written instructions to component
auditors setting out the work to be
performed by each of them and maintained
regular communication throughout the
audit cycle. These interactions included
attending component clearance meetings
and holding regular conference calls, as
well as reviewing and assessing matters
reported. The group engagement team
also reviewed selected audit working
papers for material components.
This, together with audit procedures
performed at the Group level (including
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
£7.25 million (2018: £7.20 million).
5% of adjusted profit before tax and non-
controlling interests.
The Group is profit-oriented. Adjusted profit
before taxation and non-controlling interests 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. We have
applied a 5% rule of thumb, which is the rule of
thumb suggested by ISAs (UK) for the audit of
profit-oriented entities.
Company financial statements
£33 million (2018: £38 million).
1% of total assets.
The Company is not profit-oriented.
Total assets is used as the benchmark as the
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
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 £6.2 million. Certain components were audited to a local statutory
audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.5 million (Group audit)
(2018: £0.5 million) and £1.6 million (Company audit) (2018: £1.9 million) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
87
Strategic ReportGovernanceFinancial StatementsShareholder Information Financial Statements
Financial Statements
Independent auditor’s report to the members
of Daily Mail and General Trust plc
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 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
Company’s ability to continue as a going concern. For example,
the terms on which the United Kingdom may withdraw from the
European Union are not clear, and it is difficult to evaluate all
of the potential implications on the Group’s trade, customers,
suppliers and the wider economy.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ 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 2019 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 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 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 34 to 39 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 pages 45 and 46, 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 Company’s position and performance,
business model and strategy is materially inconsistent with our knowledge of the Group and Company obtained in the course of performing
our audit.
• The section of the Annual Report on pages 48 to 53 describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit 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)
88
Strategic ReportGovernanceFinancial StatementsShareholder Information Daily Mail and General Trust plc Annual Report 2019
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 79, 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 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
Company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ 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 auditors’ report.
Use of this report
This report, including the opinions, has been
prepared for and only for the 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 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 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 5 years,
covering the years ended 30 September 2015
to 30 September 2019.
Other voluntary reporting
Going concern
The Directors have requested that we review
the statement on page 79 in relation to going
concern as if the 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 34 to 39 and 26 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 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 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 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 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
4 December 2019
89
Strategic ReportGovernanceFinancial StatementsShareholder Information Financial Statements
Financial Statements
Consolidated Income Statement
For the year ended 30 September 2019
CONTINUING OPERATIONS
Revenue
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
Note
3
1,337.0
1,340.9
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 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
Net finance costs
Profit before tax
Tax
Profit after tax from continuing operations
DISCONTINUED OPERATIONS
Loss 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
* All attributable to continuing operations.
135.8
144.6
(11.9)
(29.3)
94.6
(28.1)
66.5
73.7
140.2
11.5
(24.5)
7.1
(17.4)
134.3
(20.4)
113.9
(22.6)
91.3
90.9
0.4
91.3
38.3p
37.8p
(7.6)p
(7.5)p
30.7p
30.3p
38.6p
38.1p
(82.6)
(12.2)
49.8
118.4
168.2
565.5
733.7
4.8
(37.5)
5.5
(32.0)
706.5
(7.6)
698.9
(10.7)
688.2
689.4
(1.2)
688.2
197.7p
196.0p
(3.0)p
(3.6)p
194.7p
192.4p
42.2p
41.7p
(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, amortisation of acquired intangible assets arising on business
combinations and impairment of property, plant and equipment.
90
90
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2019
Profit for the year
Items that will not be reclassified to Consolidated Income Statement
Actuarial (loss)/gain on defined benefit pension schemes
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
Fair value movement of financial assets through other comprehensive income
Year ended
30 September
2019
£m
91.3
Year ended
30 September
2018
£m
688.2
(45.3)
(0.1)
7.7
(4.5)
183.6
0.2
(31.2)
–
Note
39
40
39
25, 39
Total items that will not be reclassified to Consolidated Income Statement
(42.2)
152.6
Items that may be reclassified subsequently to Consolidated Income Statement
Loss on hedges of net investments in foreign operations
Costs of hedging
Cash flow hedges:
Change in fair value of cash flow hedges
Transfer of gain on cash flow hedges from translation reserve to Consolidated Income Statement
Share of joint ventures’ and associates’ items of other comprehensive (expense)/income
Translation reserves recycled to Consolidated Income Statement on disposals
Foreign exchange differences on translation of foreign operations
39
39
39
39
7, 39
8, 18, 19, 39
39
Total items that may be reclassified subsequently to Consolidated Income Statement
Other comprehensive (expense)/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
91
(13.5)
(0.1)
–
–
(0.7)
(3.6)
16.2
(1.7)
(2.1)
–
4.9
(4.9)
14.7
(10.4)
(8.9)
(6.7)
(43.9)
145.9
47.4
834.1
47.1
0.3
47.4
67.4
(20.0)
47.4
67.1
0.3
67.4
835.1
(1.0)
834.1
848.4
(14.3)
834.1
849.4
(1.0)
848.4
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 30 September 2019
At 30 September 2017
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 released 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
At 30 September 2018
Adjustment for transition to IFRS 15
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Profit for the year
Other comprehensive expense for the year
Total comprehensive income/(expense)
for the year
Cancellation of A Ordinary Non-Voting Shares
Dividends
Euromoney dividend in specie
Euromoney impairment
Euromoney cash distribution
Own shares acquired in the year
Own shares released 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
Deferred tax on other items recognised
in equity
Note
39, 40
39, 40
12, 39, 40
39
39
40
39
39
39
37, 39
2, 39
2, 39
39, 40
39, 40
38, 39
12, 39, 40
12, 39
39
12, 39
39
39
40
39
39
37, 39
Called-up
share
capital
£m
45.3
–
Share
premium
account
£m
17.8
–
Capital
redemption
reserve
£m
5.0
–
Own
shares
£m
(64.3)
–
Translation
reserve
£m
74.9
–
Retained
earnings
£m
829.5
689.4
Equity
attributable
to owners of
the Company
£m
908.2
689.4
Non-
controlling
interests
£m
11.0
(1.2)
Total
equity
£m
919.2
688.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(14.3)
21.4
–
–
–
–
–
(21.4)
167.1
145.7
0.2
145.9
(21.4)
856.5
(81.0)
–
835.1
(81.0)
(14.3)
(1.0)
(0.2)
–
834.1
(81.2)
(14.3)
–
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)
45.3
17.8
5.0
(57.2)
53.5 1,597.5
1,661.9
13.5 1,675.4
–
–
–
–
–
–
–
–
–
–
(2.4)
(2.9)
(2.4)
(2.9)
–
–
(2.4)
(2.9)
45.3
17.8
5.0
(57.2)
53.5 1,592.2
1,656.6
13.5 1,670.1
–
–
–
(16.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2.5)
10.6
–
–
–
–
–
(1.0)
90.9
(42.8)
(1.0)
48.1
–
(74.1)
(661.8)
(11.8)
(200.0)
–
90.9
(43.8)
47.1
–
(74.1)
(661.8)
(11.8)
(200.0)
(2.5)
0.4
(0.1)
0.3
–
(1.0)
–
–
–
–
91.3
(43.9)
47.4
–
(75.1)
(661.8)
(11.8)
(200.0)
(2.5)
–
10.6
–
10.6
–
21.1
–
21.1
(12.8)
–
(12.8)
21.1
(11.5)
(11.5)
0.6
0.6
774.3
–
–
–
(11.5)
0.6
774.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 September 2019
29.3
17.8
21.0
(49.1)
52.5
702.8
92
92
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Consolidated Statement of Financial Position
At 30 September 2019
ASSETS
Non–current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in joint ventures
Investments in associates
Financial assets at fair value through other comprehensive income
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
At
30 September
2019
£m
At
30 September
2018
£m
Note
21
22
23
24
24
25
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
251.2
69.9
74.4
8.1
90.9
33.8
–
26.6
12.0
3.6
225.7
54.9
851.1
26.8
288.7
0.8
15.4
–
299.1
153.5
784.3
1,635.4
(478.0)
(3.5)
–
(11.8)
(18.7)
(44.7)
(72.6)
(629.3)
(2.3)
–
(202.8)
(5.7)
(10.7)
(7.8)
(2.5)
(231.8)
(861.1)
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)
774.3
1,675.4
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Financial Statements
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
At 30 September 2019
At 30 September 2019
SHAREHOLDERS’ EQUITY
Called-up share capital
SHAREHOLDERS’ EQUITY
Share premium account
Called-up share capital
Share capital
Share premium account
Capital redemption reserve
Share capital
Own shares
Capital redemption reserve
Translation reserve
Own shares
Retained earnings
Translation reserve
Equity attributable to owners of the Company
Retained earnings
Non-controlling interests
Equity attributable to owners of the Company
Non-controlling interests
Note
Note
38
39
38
39
39
39
39
39
39
39
39
39
40
40
At
30 September
2019
At
£m
30 September
2019
£m
29.3
17.8
29.3
47.1
17.8
21.0
47.1
(49.1)
21.0
52.5
(49.1)
702.8
52.5
774.3
702.8
–
774.3
774.3
–
774.3
At
30 September
2018
At
£m
30 September
2018
£m
45.3
17.8
45.3
63.1
17.8
5.0
63.1
(57.2)
5.0
53.5
(57.2)
1,597.5
53.5
1,661.9
1,597.5
13.5
1,661.9
1,675.4
13.5
1,675.4
The financial statements of DMGT plc (Company number 184594) on pages 90 to 183 were approved by the Directors and authorised for issue
on 4 December 2019. They were signed on their behalf by
The financial statements of DMGT plc (Company number 184594) on pages 90 to 183 were approved by the Directors and authorised for issue
on 4 December 2019. They were signed on their behalf by
The Viscount Rothermere
P A Zwillenberg
The Viscount Rothermere
Directors
P A Zwillenberg
Directors
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Daily Mail and General Trust plc Annual Report 2019
Consolidated Cash Flow Statement
For the year ended 30 September 2019
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 financial assets held at fair value through other comprehensive income
Purchase of property, plant and equipment
Expenditure on internally generated intangible fixed assets
Expenditure on other intangible assets
Purchase of financial assets held at fair value through other comprehensive income
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 businesses and subsidiary undertakings
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
(Costs)/proceeds on disposal of businesses and subsidiary undertakings
Proceeds on disposal of joint ventures and associates
Sale/(purchase) of other financial assets
Net cash generated by investing activities
Financing activities
Equity dividends paid
Dividends paid to non-controlling interests
Purchase of own shares
Net (payment)/receipt on settlement of subsidiary share options
Interest paid
Bonds repaid
Bonds redeemed
Premium on redemption of bonds
Loan notes repaid
Decrease in bank borrowings
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain on cash and cash equivalents
Net cash and cash equivalents at end of year
Note
15
24
9
23
22
22
25
25
17
24
18
8, 24
28
12, 39
40
39
16
16
10
16
16
16
29
16
16, 29
Year ended
30 September
2019
£m
165.0
(20.0)
9.8
154.8
Year ended
30 September
2018
£m
137.3
(27.1)
4.8
115.0
7.4
12.3
–
(15.9)
(13.9)
–
(6.1)
–
9.3
–
(27.6)
(12.3)
(39.4)
–
0.2
(11.6)
81.4
237.3
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)
221.1
481.3
(274.1)
(1.0)
(2.5)
(0.8)
(28.7)
(218.5)
(6.7)
(0.9)
(0.1)
–
(81.0)
(0.2)
(14.3)
7.6
(37.7)
–
–
–
(0.1)
(43.7)
(533.3)
(169.4)
(157.4)
435.9
10.7
289.2
426.9
7.4
1.6
435.9
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Financial Statements
Financial Statements
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 (IFRS IC) interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable
to companies preparing their accounts under IFRS.
These financial statements have been prepared for the year ended 30 September 2019.
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, equity investments, 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 surplus cash balances and committed 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
The following new and amended IFRSs have been adopted during the period:
• IFRS 9, Financial Instruments (effective 1 October 2018)
• IFRS 15, Revenue from Contracts with Customers (effective 1 October 2018)
• IFRIC 22, Foreign Currency Transactions and Advance Consideration (effective 1 January 2018)
IFRS 9, Financial Instruments replaced IAS 39, Financial Instruments: Recognition and Measurement. The key areas of IFRS 9 which affect the Group
are those which relate to the recognition of impairment provisions against receivables, the treatment of available for sale investments and new
hedging requirements.
In accordance with the transitional provisions of IFRS 9 the Group has adopted IFRS 9 on a modified retrospective basis such that comparative
figures have not been restated and remain in line with the requirements of IAS 39.
IFRS 9 contains three principal classification categories for financial assets – Measured at Amortised Cost, Fair Value through Other Comprehensive
Income (FVTOCI) and Fair Value through Profit and Loss (FVTPL) and eliminates the IAS 39 categories of held to maturity, loans and receivables and
available for sale. The main effect resulting from this reclassification relates to the Group’s equity investments which under IAS 39 were classified
as available for sale whilst under IFRS 9 are now classified as Fair Value through Other Comprehensive Income. As a result, all fair value movements
are now recorded in Other Comprehensive Income and gains and losses will not be recycled to the Consolidated Income Statement on disposal
although dividend income will continue to be recorded in the Consolidated Income Statement. A fair value gain of £9.4 million has been recorded
on transition to IFRS 9.
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With regard to impairment provisions, IFRS 9 introduces the expected credit loss (ECL) model which requires an impairment provision to be made
on initial recognition of the receivable which under IAS 39 was required only when a loss event occurred. IFRS 9 requires ECLs to be recognised by
reference to historical recovery rates and forward-looking indicators. The Group has applied the simplified approach to trade receivables, contract
assets and other receivables. The IFRS 9 ECL model has resulted in an ECL loss of £0.3 million on transition to IFRS 9 in relation to other receivables.
The IFRS 9 ECL model also applies to long-term receivables due from associates and joint ventures. The Group has recorded an ECL loss
of £12.0 million on transition to IFRS 9 in relation to amounts due from its associates.
The Group has adopted the new general hedge accounting model in IFRS 9 which aligns hedge accounting with the Group’s risk management
strategy. All hedge relationships designated under IAS 39 are treated as continuing hedges under IFRS 9. Under the new standard, the Group has
excluded the currency basis from its hedge designation retrospectively.
A summary of the transition impact of IFRS 9 is shown below:
Financial assets at FVTOCI
Non-current other receivables
Other financial assets
Total
As at
1 October 2018
IFRS 9 transition
adjustment
£m
9.4
(0.3)
(12.0)
(2.9)
Previously
reported
£m
20.4
27.3
18.4
66.1
Note
25
27
28
Restated
£m
29.8
27.0
6.4
63.2
IFRS 15 Revenue from Contracts with Customers replaced IAS 18 Revenue. In accordance with the transitional provisions of IFRS 15 the Group has
adopted IFRS 15 on a modified retrospective basis such that comparative figures have not been restated and remain in line with the requirements
of IAS 18.
The new revenue recognition standard introduced additional guidance surrounding performance obligations within sales contracts and the timing
of revenue recognition. The standard introduces a five step model which will require judgement in their application, which are as follows:
• Identify the contract(s) with the 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
In addition to changes to 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 commissions paid to employees. The standard requires
such costs to be recognised as an asset, when the Group expects to recover them, and charge them 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.
The adoption of IFRS 15 resulted in a reduction in net assets of £2.4 million which is summarised as follows:
Segment
Insurance Risk
Property Information
EdTech
Energy Information
Total
Increased contract
acquisition costs
£m
1.1
1.0
–
1.6
(Increased)/
decreased deferred
revenue and
accruals
£m
1.2
(1.1)
(7.3)
–
Increased/
(decreased)
deferred tax assets
£m
(0.6)
–
1.9
(0.2)
IFRS 15 transition
adjustment
£m
1.7
(0.1)
(5.4)
1.4
3.7
(7.2)
1.1
(2.4)
The IFRS 15 transition adjustment represents the reversal of certain revenues which met the criteria for recognition under IAS 18 but do not so under
IFRS 15 together with contract acquisition costs which were expensed immediately under IAS 18 and which are now deferred and recognised on
a systemic basis under IFRS 15.
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 2019. These new pronouncements
are listed below:
• 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 23, Uncertainty over Income Tax Treatments (effective 1 January 2019 but not yet endorsed by the EU)
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Financial Statements
Notes to the accounts
2 Significant accounting policies continued
Other than IFRS 16, the adoption of standards, amendments and interpretations which have been issued but are not yet effective are not expected
to have a material impact on the Group’s Consolidated Financial Statements.
IFRS 16, effective for the 2020 fiscal year, eliminates the distinction between operating and finance leases for lessees and requires lessees
to recognise right of use assets and corresponding liabilities for all leases. The new standard replaces the operating lease expense with a
depreciation charge included within operating costs on the underlying right of use asset and an interest expense included within finance costs
on the lease 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 will 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.
As permitted by IFRS 16 the Group will apply the following practical expedients:
• The Group has not brought onto the balance sheet short-term leases (those with 12 months or less to run as at 1 October 2019 including
reasonably certain options to extend) or low-value assets. Costs for these items will therefore continue to be expensed directly in the
Income Statement.
• The Group has relied on its onerous lease assessments under IAS 37 to impair right of use assets in place of performing an impairment assessment
on adoption of IFRS 16.
• The Group has measured right of use assets at an amount equal to the lease liability on adoption of IFRS 16 as adjusted by existing lease accruals,
prepayments and dilapidations and onerous lease provisions.
• The Group also expects to separate non-lease components from lease components as part of the transition adjustment.
At 1 October 2019, on the adoption of IFRS 16 the Group will recognise right of use assets of approximately £91.6 million and lease liabilities of
approximately £93.4 million. This includes right of use assets of approximately £7.3 million and lease liabilities of approximately £7.5 million relating
to businesses held for sale. The additional lease liability will not equal the operating lease commitment in Note 41 largely because the lease
liabilities are discounted under IFRS 16 and lease terms determined under IFRS 16 may be longer than under IAS 17.
The impact on the Consolidated Income Statement for the year to 30 September 2020 will depend on factors which may occur during that year
including new leases entered into, changes to exchange rates and discount rates.
The operating lease charge for the year ended 30 September 2019 amounted to £43.7 million and this will be replaced with a depreciation charge
and an interest charge, other than for those leases which are short-term and low-value assets which will continue to be charged to the Consolidated
Income Statement.
From continuing operations for the year ended 30 September 2020, the Group estimates the depreciation charge on IFRS 16 right of use assets will
be approximately £22.6 million and interest on additional IFRS 16 lease liabilities will be approximately £1.9 million. Lease rentals of approximately
£25.2 million will no longer be charged to the Consolidated Income Statement.
In the Consolidated Cash Flow Statement there will be no impact in the total change in cash and cash equivalents. Under IFRS 16 the repayment of
the lease liabilities will be included in financing activities and interest on IFRS 16 leases will be shown in operating activities whereas under IAS 17
lease rental payments were in operating activities.
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.
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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 financial assets at fair value through other comprehensive income
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.
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.
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Financial Statements
Financial Statements
Notes to the accounts
2 Significant accounting policies continued
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.
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.
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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 10.50% to 15.28% (2018 13.25% to 15.28%) 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% (2018 8.5%). 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 growth rates range between 2.0% and 3.0% (2018 nominal
long-term growth rate of 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.
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.
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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.
At the end of each reporting period the Group assesses 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.
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 and which are subject to insignificant changes in value. For the purpose
of the Consolidated Cash Flow Statement, cash and cash equivalents are as defined above, net of bank overdrafts.
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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 performance obligations are:
• 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
Adjusted measures
The Group presents adjusted operating profit and adjusted profit before tax adjusting 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.
In the Director’s judgement such items would include, but are not limited to, costs associated with business combinations, gains and losses
on the disposal of businesses and subsidiary undertakings, finance costs relating to premium 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.
See Note 13 for a reconciliation of profit before tax to adjusted profit before and after tax.
The Group also presents a measure of net debt. In the judgement of the Directors this measure should include the currency gain or loss on
derivatives entered into with the intention of economically converting the currency borrowings into an alternative currency. See Note 16 for
further detail.
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 subsidiary undertakings and profit or loss on sale of joint ventures and associates.
EBITDA
The Group discloses EBITDA, being adjusted operating profit before depreciation of property, plant and equipment. 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.
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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.
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 recognised directly in equity.
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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 interest and are recognised initially at the value of the invoice sent to the customer i.e. amortised cost and
subsequently reduced by allowances for estimated irrecoverable amounts.
Other receivables include loans which are held at the capital sum outstanding plus unpaid interest.
Estimates are used in determining the level of receivables that will not, in the opinion of the Directors, be collected. In the current period the Group
applies the simplified approach permitted by IFRS 9, which requires the use of the lifetime expected loss provision for all receivables, including
contract assets. These estimates are based on historic credit losses, macro-economic and specific country-risk considerations with higher default
rates applied to older balances.
In addition if specific circumstances exist which would indicate that the receivable is irrecoverable a specific provision is made. A provision is made
against trade receivables and contract assets until such time as the Group believes there to be no reasonable expectation of recovery, after which
the trade receivable or contract asset balance is written off.
In the prior period, under IAS 39, impairment losses relating to trade receivables were recorded when a loss event occurred.
Financial assets at fair value through other comprehensive income
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.
In the current period, as permitted by IFRS 9, the Group classifies its equity investments at Fair Value through Other Comprehensive Income.
All fair value movements are recorded in Other Comprehensive Income and gains and losses are not recycled to the Consolidated Income Statement
on disposal.
Dividend income from Financial assets held at fair value through Other Comprehensive Income is recorded in the Consolidated Income Statement.
Unlisted equity investments are valued using a variety of approaches including comparable company valuation multiples and discounted cash flow
techniques. In extremely limited circumstances, where insufficient recent information is available to measure fair value or when there is a wide
range of possible fair value measurements, cost is used since this represents the best estimate of fair value in the range of possible valuations.
The fair value of listed equity investments is determined based on quoted market prices.
Available for sale investments
In the prior period available for sale investments were classified as either fair value through profit or loss or available for sale. Where investments
were held-for-trading purposes, gains and losses arising from changes in fair value were included in net profit or loss for the period. For available
for sale investments, gains and losses arising from changes in fair value were recognised directly in equity, until the investment 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 was determined based on quoted market prices. Unlisted investments were recorded at cost less provision
for impairment with their recoverable amount determined by discounting future cash flows to present value using market interest rates.
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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 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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Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, and it is probable that the Group
will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation
at the period end date, and are discounted to present value where the effect is material.
Onerous contract provisions are recognised for losses on contracts where the forecast costs of fulfilling the contract throughout the contract period
exceed the forecast income receivable. The provision is calculated based on cash flows to the end of the contract. Vacant property provisions are
recognised when the Group has committed to a course of action that will result in the property becoming vacant.
Share-based payments
The Group issues equity-settled and cash-settled share-based payments to certain Directors and employees. Equity-settled share-based payments
are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the
shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.
Fair value is measured using a binomial pricing model which is calibrated using a Black-Scholes framework. The expected life used in the models
has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each period end date for
cash-settled share-based payments.
Investment in own shares
Treasury shares
Where the Company purchases its equity share capital as Treasury Shares, the consideration paid, including any directly attributable incremental
costs (net of income taxes) is recorded as a deduction from shareholders’ equity until such shares are cancelled, reissued or disposed of. Where such
shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, is recognised in equity, with any difference between the proceeds from the sale and the original cost being taken to retained
earnings.
Employee Benefit Trust
The Company has established an Employee Benefit Trust (EBT) for the purpose of purchasing shares in order to satisfy outstanding share options
and potential awards under long-term incentive plans. The assets of the EBT comprise shares in DMGT plc and cash balances. The EBT is
administered by independent trustees and its assets are held separately from those of the Group. The Group bears the major risks and rewards of
the assets held by the EBT until the shares vest unconditionally with employees. The Group recognises the assets and liabilities of the EBT in the
consolidated financial statements and shares held by the EBT are recorded at cost as a deduction from shareholders’ equity. Consideration received
for the sale of shares held by the EBT is recognised in equity, with any difference between the proceeds from the sale and the original cost being
taken to retained earnings.
Critical accounting judgements and key sources of estimation uncertainty
In addition to the judgement taken by management in selecting and applying the accounting policies set out above, management has made the
following judgements concerning the amounts recognised in the Consolidated Financial Statements:
Adjusted measures
Management believes that the adjusted profit and adjusted earnings per share measures provide additional useful information to users of the
Report and Accounts on the performance of the business. Accordingly the Group presents adjusted operating profit and adjusted profit before tax
by adjusting for costs and profits which management judge to be significant by virtue of their size, nature or incidence or which have a distortive
effect on current year earnings.
In management’s judgement such items would include, but are not limited to, costs associated with business combinations, gains and losses
on the disposal of businesses and subsidiary undertakings, finance costs relating to premium 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 judge 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.
The Group also presents a measure of net debt. In the judgement of management this measure should include the currency gain on loss on
derivatives entered into with the intention of economically converting the currency borrowings into an alternative currency. See Note 16 for
further detail.
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Critical accounting judgements and key sources of estimation uncertainty continued
Investment in Euromoney
The Directors have considered factors which may indicate de facto control following the reduction in its shareholding to below 50.0% in a
prior period.
The Directors have judged 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. Accordingly, the Group has equity accounted for Euromoney during the year.
The Group’s investment in Euromoney was distributed to shareholders by way of a dividend in specie on 2 April 2019, see Note 12 for further detail.
Retirement benefits
When a surplus on a defined benefit pension scheme arises, management are required to consider the rights of the Trustees in preventing the Group
from obtaining a refund of that surplus in the future. Where the Trustees are able to exercise this right the Group would be required to restrict the
amount of surplus recognised.
After considering the principles set out in IFRIC 14, the Directors have judged it appropriate to recognise a surplus of £225.7 million
(2018 £249.1 million) and report a net surplus on its pension schemes amounting to £215.0 million (2018 £243.5 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 two-year outlooks. These are used to support estimates 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. See Note 21 for a sensitivity assessment of these long-term growth rates on the carrying values of certain of the Group’s goodwill and
intangible assets.
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 estimation 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 Group’s EdTech segment is shown in Note 21. The carrying amount of goodwill and intangible assets within this
segment at the year end amounted to £96.9 million (2018 £97.3 million)
Acquisitions and intangible assets
The Group’s accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of identifiable assets,
liabilities and contingent liabilities acquired with any excess consideration representing goodwill. Determining the fair value of assets, liabilities and
contingent liabilities acquired requires significant estimates and assumptions, including assumptions with respect to cash flows and unprovided
liabilities and commitments, including in respect to tax, to be used. The Group recognises intangible assets acquired as part of a business
combination at fair value at the date of acquisition. The determination of these fair values is based upon management’s estimate and includes
assumptions on the timing and amount of future cash flows generated by the assets and the selection of an appropriate discount rate. Additionally,
management must estimate the expected useful economic lives of intangible assets and charge amortisation on these assets accordingly.
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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 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 based on management’s 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 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. See Note 37 for further information concerning recognised and unrecognised deferred tax assets.
Retirement benefits
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 are estimated
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 £23.4 million.
The carrying amount of the retirement benefit obligation at 30 September 2019 was a surplus of £215.0 million (2018 £243.5 million).
The assumptions used and the associated sensitivity analysis can be found in Note 35.
Legal claim provision
DMGT and certain of its subsidiaries are involved in various lawsuits and claims which arise in the course of business. The Group records a provision
for these matters when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated.
The amounts accrued for legal contingencies often result from complex judgments about future events and uncertainties that rely heavily on
estimates and assumptions.
As disclosed in Note 19, Genscape has been involved in a dispute with the US Environmental Protection Agency (EPA) since 2016. In 2017 Genscape
voluntarily paid a 2.0% liability cap associated with invalid Renewable Identification Numbers (RINs) at a cost of US$1.3 million, based on the
then-prevailing market rates, subject to a reservation of rights. However, during 2019 the EPA ordered Genscape to replace 69.2 million RINs it
had validated. By way of settlement Genscape has made an offer to replace 4.6 million RINs at a cost of approximately US$2.5 million but the EPA
have not responded to this offer. Discussions with the EPA are ongoing but considering the uncertainties involved, the length of time involved and
taking note of the order from the EPA, the Group, without admitting any wrongdoing, has made a provision for the potential maximum replacement
RINs cost of US$40.0 million, including directly attributable costs. This estimate was based on the average two-year RIN price due to the liquidity
and volatility of the market price of RINs. If the provision was made using the year end price of 41 cents, the potential maximum claim would
be US$29.7 million, including directly attributable costs. This provision could change substantially over time as the dispute progresses and
new facts emerge.
109
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
3 Segment analysis
The Group’s business activities are split into six operating divisions: Insurance Risk, Property Information, EdTech, Events and Exhibitions, Energy
and Consumer 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.
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.
The Group’s revenues are disaggregated by major product line as follows:
Segment
operating
profit/(loss)
£m
39.7
41.9
4.4
22.3
8.4
67.9
184.6
(27.8)
(8.4)
Less operating
profit/(loss)
of joint
ventures and
associates
£m
(0.7)
0.5
–
–
–
0.8
0.6
12.0
–
Total and
external
revenue
£m
244.3
222.1
79.7
118.7
73.6
672.2
1,410.6
–
(73.6)
1,337.0
Adjusted
operating
profit/(loss)
£m
40.4
41.4
4.4
22.3
8.4
67.1
184.0
(39.8)
(8.4)
135.8
(11.9)
(19.1)
(10.2)
94.6
(28.1)
66.5
73.7
140.2
11.5
(24.5)
7.1
134.3
(20.4)
(22.6)
91.3
Year ended 30 September 2019
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
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 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
Loss from discontinued operations
Profit for the year
Note
19
21
22
19
110
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs by segment is as follows:
Year ended 30 September 2019
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
The Group’s exceptional operating costs are analysed as follows:
Note
19
Note
Year ended 30 September 2019
EdTech
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
19
Continuing operations
Pension past
service cost
(Note 35)
(ii)
£m
–
–
(1.9)
(1.9)
(1.2)
(3.1)
–
(3.1)
LTIP
(i)
£m
–
–
(1.5)
(1.5)
(8.1)
(9.6)
–
(9.6)
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
(0.1)
(6.3)
(7.7)
–
(4.1)
(3.0)
(21.2)
Amortisation of
intangible assets
arising on business
combinations
(Note 22)
£m
–
(7.1)
(1.6)
(1.4)
(3.2)
(0.1)
(13.4)
Impairment of
goodwill and
intangible assets
arising on business
combinations
(Note 21)
£m
–
(19.1)
–
–
–
–
(19.1)
Exceptional
operating costs
£m
–
–
0.1
–
(31.3)
(2.0)
(33.2)
(0.8)
(22.0)
4.1
(17.9)
–
(13.4)
3.2
(10.2)
Property
£m
0.1
–
2.4
2.5
–
2.5
–
2.5
Legal fees
and claims
£m
–
(31.3)
–
(31.3)
–
(31.3)
31.3
–
–
(19.1)
–
(19.1)
Others
£m
–
–
(1.0)
(1.0)
(0.7)
(1.7)
–
(1.7)
(10.0)
(43.2)
31.3
(11.9)
Total
£m
0.1
(31.3)
(2.0)
(33.2)
(10.0)
(43.2)
31.3
(11.9)
The Group’s tax charge includes a related credit of £9.1 million in relation to these exceptional operating costs of which £6.6 million relates to
discontinued operations.
(i) During the prior period, the Group sold its investment in ZPG resulting in a profit on sale of £508.4 million and in the current period, the Group
disposed of its investment in Euromoney. As a direct consequence of these disposals the value of the DMGT Long Term Incentive Plans (LTIPs)
are estimated to have increased by £21.9 million. As the LTIPs include a service period condition, IFRS 2 Share Options requires the LTIP charge
to be spread over the service period until the awards vest. The LTIP charge recognised in the period, which relates to the disposals of ZPG and
Euromoney, amounts to £9.6 million. Since the profit on the sale of ZPG and the capital benefit of the Euromoney disposal are 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 awards vest.
(ii) The pension past service cost represents a non-cash charge. This follows a High Court ruling in the Lloyds Banking Group case to equalise
benefits for the effect of unequal Guaranteed Minimum Pensions (GMP) between men and women for UK pension schemes which had
contracted out of the State Earnings Related Pension Scheme.
111
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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 finance income and expense by segment
is as follows:
Year ended 30 September 2019
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
19
Continuing operations
Year ended 30 September 2018
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
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 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
Loss from discontinued operations
Profit for the year
Note
Depreciation
of property, plant
and equipment
(Note 23)
£m
(5.3)
(2.3)
(0.3)
(0.3)
(2.6)
(14.0)
(24.8)
Investment
revenue
(Note 9)
£m
0.4
–
1.4
–
–
–
1.8
9.7
11.5
–
11.5
Segment
operating
profit/(loss)
£m
33.8
58.0
7.4
27.7
0.3
83.6
210.8
12.0
(0.3)
Finance
income
(Note 10)
£m
–
–
–
–
–
7.1
7.1
–
7.1
–
7.1
Less operating
profit/(loss)
of joint ventures
and associates
£m
(0.8)
–
–
–
–
19.3
18.5
59.4
–
Research
costs
£m
(39.7)
(0.1)
–
–
(5.2)
(0.5)
(45.5)
–
(45.5)
5.2
(40.3)
Total and
external
revenue
£m
229.4
271.6
68.3
117.8
85.5
653.8
1,426.4
–
(85.5)
1,340.9
Finance
expense
(Note 10)
£m
–
(0.1)
(0.1)
–
(0.1)
(0.3)
(0.6)
(24.0)
(24.6)
0.1
(24.5)
Adjusted
operating
profit/(loss)
£m
34.6
58.0
7.4
27.7
0.3
64.3
192.3
(47.4)
(0.3)
144.6
(82.6)
–
(12.2)
49.8
118.4
168.2
565.5
733.7
4.8
(37.5)
5.5
706.5
(7.6)
(10.7)
688.2
(0.5)
(25.3)
2.6
(22.7)
Note
19
21, 22
22
19
(i) Revenue and adjusted operating profit relating to the discontinued operations of Energy Information have been deducted in order to reconcile
total segment result to Group profit before tax from continuing operations.
112
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
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
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
Note
19
The Group’s exceptional operating costs are analysed as follows:
Note
Year ended 30 September 2018
Property Information
EdTech
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
19
Severance
costs
£m
0.1
0.2
–
(0.1)
0.2
–
0.2
–
0.2
Amortisation of
intangible assets
not arising on
business
combinations
(Note 22)
£m
(15.0)
(3.9)
(5.2)
(0.1)
(3.4)
(5.2)
(32.8)
Amortisation of
intangible assets
arising on business
combinations
(Note 22)
£m
–
(8.7)
(2.8)
(0.6)
(3.3)
(0.1)
(15.5)
Impairment of
goodwill and
intangible assets
arising on business
combinations
(Notes 21, 22)
£m
–
–
–
–
(0.3)
–
(0.3)
Impairment of
internally
generated and
acquired computer
software
(Note 22)
£m
(58.3)
–
–
–
(0.1)
–
(58.4)
Exceptional
operating costs
£m
–
(1.5)
–
–
3.8
(18.2)
(15.9)
–
(32.8)
3.4
(29.4)
LTIP
(i)
£m
–
–
–
(0.8)
(0.8)
(4.7)
(5.5)
–
(5.5)
–
(15.5)
3.3
(12.2)
Pension past
service cost
(Note 35)
(ii)
£m
–
–
–
(17.3)
(17.3)
–
(17.3)
–
(17.3)
–
(0.3)
0.3
–
Property
£m
–
(0.2)
–
–
(0.2)
–
(0.2)
–
(0.2)
–
(58.4)
0.1
(58.3)
Legal fees
(iii)
£m
(1.6)
–
3.8
–
2.2
0.1
2.3
(3.8)
(1.5)
(4.6)
(20.5)
(3.8)
(24.3)
Total
£m
(1.5)
–
3.8
(18.2)
(15.9)
(4.6)
(20.5)
(3.8)
(24.3)
The Group’s tax charge includes a related credit of £4.3 million in relation to these exceptional operating costs.
(i) During the prior 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 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 5.0%. 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.
113
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Strategic ReportGovernanceFinancial StatementsShareholder Information
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 finance income and expense by segment
is as follows:
Year ended 30 September 2018
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Relating to discontinued operations
Continuing operations
Depreciation of
property, plant
and equipment
(Note 23)
£m
(4.9)
(2.8)
(0.6)
(0.5)
(3.3)
(14.9)
(27.0)
(0.2)
(27.2)
3.3
(23.9)
Note
19
Research
costs
£m
(37.2)
(0.1)
–
–
(4.0)
(0.5)
(41.8)
–
(41.8)
4.0
(37.8)
Investment
revenue
(Note 9)
£m
0.3
–
1.4
–
–
–
1.7
3.1
4.8
–
4.8
Finance
income
(Note 10)
£m
–
–
–
–
–
2.0
2.0
3.5
5.5
–
5.5
Finance
expense
(Note 10)
£m
–
–
–
–
(2.5)
(1.1)
(3.6)
(36.4)
(40.0)
2.5
(37.5)
The Group’s revenue comprises sales excluding value added tax, less discounts and commission where applicable and is analysed as follows:
Year ended
30 September
2019
Total
Under IFRS 15
£m
184.5
145.1
284.1
Year ended
30 September
2019
Total
Point in time
Under IFRS 15
£m
184.5
0.8
284.1
Year ended
30 September
2019
Total
Over time
Under IFRS 15
£m
–
144.3
–
Year ended
30 September
2019
Discontinued
operations
Total
Under IFRS 15
(Note 19)
£m
–
–
–
Year ended
30 September
2019
Discontinued
operations
Point in time
Under IFRS 15
(Note 19)
£m
–
–
–
Year ended
30 September
2019
Discontinued
operations
Over time
Under IFRS 15
(Note 19)
£m
–
–
–
Year ended
30 September
2019
Continuing
operations
Total
Under IFRS 15
£m
184.5
145.1
284.1
Year ended
30 September
2019
Continuing
operations
Point in time
Under IFRS 15
£m
184.5
0.8
284.1
Year ended
30 September
2019
Continuing
operations
Over time
Under IFRS 15
£m
–
144.3
–
428.8
118.0
250.1
1,410.6
7.7
118.0
225.8
820.9
421.1
–
24.3
589.7
72.6
–
1.0
73.6
6.5
–
1.0
7.5
66.1
–
–
66.1
356.2
118.0
249.1
1,337.0
1.2
118.0
224.8
813.4
355.0
–
24.3
523.6
Year ended
30 September
2018
Total
£m
187.0
135.9
291.4
399.1
116.2
296.8
1,426.4
Year ended
30 September
2018
Total
Point in time
£m
187.0
1.3
291.4
9.6
116.2
263.8
869.3
Year ended
30 September
2018
Total
Over time
£m
–
134.6
–
389.5
–
33.0
557.1
Year ended
30 September
2018
Discontinued
operations
Total
(Note 19)
£m
–
1.2
–
73.2
–
11.1
85.5
Year ended
30 September
2018
Discontinued
operations
Point in time
(Note 19)
£m
–
1.2
–
0.5
–
8.0
9.7
Year ended
30 September
2018
Discontinued
operations
Over time
(Note 19)
£m
–
–
–
72.7
–
3.1
75.8
Year ended
30 September
2018
Continuing
operations
Total
£m
187.0
134.7
291.4
325.9
116.2
285.7
1,340.9
Year ended
30 September
2018
Continuing
operations
Point in time
£m
187.0
0.1
291.4
9.1
116.2
255.8
859.6
Year ended
30 September
2018
Continuing
operations
Over time
£m
–
134.6
–
316.8
–
29.9
481.3
Print advertising
Digital advertising
Circulation
Subscriptions and recurring
licenses
Events, conferences and training
Transactions and other
Print advertising
Digital advertising
Circulation
Subscriptions
Events, conferences and training
Transactions and other
114
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Daily Mail and General Trust plc Annual Report 2019
By geographic area
The majority of the Group’s operations are located in the United Kingdom and North America. The analysis of Group revenue below is based on the
location of Group companies in these regions.
Year ended
30 September
2019
Total
Under IFRS 15
£m
814.5
467.6
128.5
1,410.6
Year ended
30 September
2019
Total
Point in time
Under IFRS 15
£m
674.2
38.3
108.4
820.9
Year ended
30 September
2019
Total
Over time
Under IFRS 15
£m
140.3
429.3
20.1
589.7
Year ended
30 September
2019
Discontinued
operations
Total
Under IFRS 15
(Note 19)
£m
–
68.0
5.6
73.6
Year ended
30 September
2019
Discontinued
operations
Point in time
Under IFRS 15
(Note 19)
£m
–
7.2
0.3
7.5
Year ended
30 September
2019
Discontinued
operations
Over time
Under IFRS 15
(Note 19)
£m
–
60.8
5.3
66.1
Year ended
30 September
2019
Continuing
operations
Total
Under IFRS 15
£m
814.5
399.6
122.9
1,337.0
Year ended
30 September
2019
Continuing
operations
Point in time
Under IFRS 15
£m
674.2
31.1
108.1
813.4
Year ended
30 September
2019
Continuing
operations
Over time
Under IFRS 15
£m
140.3
368.5
14.8
523.6
Year ended
30 September
2018
Total
£m
812.0
475.4
139.0
1,426.4
Year ended
30 September
2018
Total
Point in time
£m
687.4
66.0
115.9
869.3
Year ended
30 September
2018
Total
Over time
£m
124.6
409.4
23.1
557.1
Year ended
30 September
2018
Discontinued
operations
Total
(Note 19)
£m
–
78.9
6.6
85.5
Year ended
30 September
2018
Discontinued
operations
Point in time
(Note 19)
£m
–
9.4
0.3
9.7
Year ended
30 September
2018
Discontinued
operations
Over time
(Note 19)
£m
–
69.5
6.3
75.8
Year ended
30 September
2018
Continuing
operations
Total
£m
812.0
396.5
132.4
1,340.9
Year ended
30 September
2018
Continuing
operations
Point in time
£m
687.4
56.6
115.6
859.6
Year ended
30 September
2018
Continuing
operations
Over time
£m
124.6
339.9
16.8
481.3
UK
North America
Rest of the World
UK
North America
Rest of the World
The analysis of Group revenue below is based on the geographic location of customers in these regions.
Year ended
30 September
2019
Total
Under IFRS 15
£m
748.0
421.6
241.0
1,410.6
Year ended
30 September
2019
Total
Point in time
Under IFRS 15
£m
640.1
48.1
132.7
820.9
Year ended
30 September
2019
Total
Over time
Under IFRS 15
£m
107.9
373.5
108.3
589.7
Year ended
30 September
2019
Discontinued
operations
Total
Under IFRS 15
(Note 19)
£m
4.3
58.1
11.2
73.6
Year ended
30 September
2019
Discontinued
operations
Point in time
Under IFRS 15
(Note 19)
£m
–
7.3
0.2
7.5
Year ended
30 September
2019
Discontinued
operations
Over time
Under IFRS 15
(Note 19)
£m
4.3
50.8
11.0
66.1
Year ended
30 September
2019
Continuing
operations
Total
Under IFRS 15
£m
743.7
363.5
229.8
1,337.0
Year ended
30 September
2019
Continuing
operations
Point in time
Under IFRS 15
£m
640.1
40.8
132.5
813.4
Year ended
30 September
2019
Continuing
operations
Over time
Under IFRS 15
£m
103.6
322.7
97.3
523.6
Year ended
30 September
2018
Total
£m
772.4
410.8
243.2
1,426.4
Year ended
30 September
2018
Total
Point in time
£m
662.6
63.3
143.4
869.3
Year ended
30 September
2018
Total
Over time
£m
109.8
347.5
99.8
557.1
Year ended
30 September
2018
Discontinued
operations
Total
(Note 19)
£m
4.2
71.3
10.0
85.5
Year ended
30 September
2018
Discontinued
operations
Point in time
(Note 19)
£m
–
9.3
0.4
9.7
Year ended
30 September
2018
Discontinued
operations
Over time
(Note 19)
£m
4.2
62.0
9.6
75.8
Year ended
30 September
2018
Continuing
operations
Total
£m
768.2
339.5
233.2
1,340.9
Year ended
30 September
2018
Continuing
operations
Point in time
£m
662.6
54.0
143.0
859.6
Year ended
30 September
2018
Continuing
operations
Over time
£m
105.6
285.5
90.2
481.3
UK
North America
Rest of the World
UK
North America
Rest of the World
115
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Financial Statements
Financial Statements
Notes to the accounts
3 Segment analysis continued
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 the World
At
30 September
2019
Closing net book
value of property,
plant and
equipment
(Note 23)
£m
59.7
13.3
1.4
74.4
At
30 September
2018
Closing net book
value of property,
plant and
equipment
(Note 23)
£m
76.1
20.3
3.3
99.7
At
30 September
2019
Closing net book
value of goodwill
(Note 21)
£m
101.6
132.9
16.7
251.2
At
30 September
2018
Closing net book
value of goodwill
(Note 21)
£m
94.1
204.2
34.9
333.2
At
30 September
2019
Closing net book
value of
intangible assets
(Note 22)
£m
39.3
25.9
4.7
69.9
At
30 September
2018
Closing net book
value of
intangible assets
(Note 22)
£m
44.6
72.0
14.6
131.2
The additions to non-current assets are analysed as follows:
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Year ended
30 September
2019
Property, plant
and equipment
(Note 23)
£m
5.1
1.9
0.4
0.5
1.7
6.1
15.7
0.2
15.9
Year ended
30 September
2018
Property, plant
and equipment
(Note 23)
£m
4.7
9.8
0.2
0.2
2.0
7.9
24.8
5.6
30.4
Year ended
30 September
2019
Goodwill
(Note 21)
£m
–
17.5
–
1.2
–
3.3
22.0
–
22.0
Year ended
30 September
2018
Goodwill
(Note 21)
£m
–
–
–
3.0
0.2
–
3.2
–
3.2
Year ended
30 September
2019
Intangible assets
(Note 22)
£m
–
6.0
3.8
2.3
1.8
–
13.9
Year ended
30 September
2018
Intangible assets
(Note 22)
£m
0.1
7.4
10.9
2.6
1.3
–
22.3
4.0
17.9
–
22.3
116
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4 Operating profit/(loss) analysis
Operating profit/(loss) before the share of results of joint ventures and associates is further analysed as follows:
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 not arising on
business combinations
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
Rental of property
Other property costs
Rental of plant and equipment
Foreign exchange translation differences
Net credit losses on financial assets
Other expenses
Operating profit/(loss) before share of results
of joint ventures and associates
Year ended
30 September
2019
Total
£m
1,410.6
Note
Year ended
30 September
2019
Discontinued
operations
(Note 19)
£m
73.6
Year ended
30 September
2019
Continuing
operations
£m
1,337.0
Year ended
30 September
2018
Total
£m
1,426.4
Year ended
30 September
2018
Discontinued
operations
(Note 19)
£m
85.5
Year ended
30 September
2018
Continuing
operations
£m
1,340.9
21, 22
22
22
23
(4.9)
(221.8)
(226.7)
(527.2)
(19.1)
–
–
–
(34.7)
–
(4.9)
(3.6)
–
(3.6)
(221.8)
(230.7)
(5.5)
(225.2)
(226.7)
(492.5)
(19.1)
(234.3)
(495.4)
(58.7)
(5.5)
(44.7)
(0.4)
(228.8)
(450.7)
(58.3)
(13.4)
(3.2)
(10.2)
(15.5)
(3.3)
(12.2)
(22.0)
(30.4)
(38.8)
(105.7)
(40.5)
(33.4)
(25.3)
(25.6)
(22.3)
(18.1)
(0.2)
(0.8)
(192.6)
(4.1)
–
–
–
–
(4.7)
(2.6)
(1.7)
–
–
0.1
(0.5)
(48.3)
(17.9)
(30.4)
(38.8)
(105.7)
(40.5)
(28.7)
(22.7)
(23.9)
(22.3)
(18.1)
(0.3)
(0.3)
(144.3)
(32.8)
(33.5)
(35.5)
(109.3)
(40.5)
(39.1)
(27.2)
(25.9)
(22.0)
(19.2)
1.3
(4.1)
(184.5)
(3.4)
–
–
–
–
(6.5)
(3.3)
(1.8)
–
–
0.1
(0.8)
(15.5)
(29.4)
(33.5)
(35.5)
(109.3)
(40.5)
(32.6)
(23.9)
(24.1)
(22.0)
(19.2)
1.2
(3.3)
(169.0)
68.5
(26.1)
94.6
50.2
0.4
49.8
117
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Financial Statements
Financial Statements
Notes to the accounts
5 Auditor’s remuneration
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 pursuant to legislation
for the audit of the Company’s subsidiaries
for the audit of the Company’s associates
Audit services provided to all Group companies
Audit-related assurance services
Assurance services
Total non-audit services
Total remuneration
Year ended
30 September
2019
£m
0.5
Year ended
30 September
2018
£m
0.3
1.4
0.8
2.7
0.2
0.6
0.8
3.5
1.5
1.2
3.0
0.2
0.3
0.5
3.5
Included within non-audit services in the table above are audit-related assurance services of £0.1 million and assurance services of £0.1 million
provided to Euromoney prior to its disposal.
6 Employees
The average monthly number of persons employed by the Group including Directors is analysed as follows:
Insurance Risk
Property Information
EdTech
Events and Exhibitions
Energy Information
Consumer Media
Corporate costs
Note
(i)
Year ended
30 September
2019
Number
1,483
1,124
386
393
350
2,292
73
6,101
Year ended
30 September
2018
Number
1,348
2,320
382
340
467
2,249
87
7,193
(i)
Includes the average monthly number of persons employed by On-geo for the period ended 12 June 2019 when the business ceased to be
a subsidiary undertaking.
The prior year 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.
The total average number of persons employed by the Group in the year, for the purposes of calculating an average cost per employee,
is 6,049 (2018 6,267).
Total staff costs comprised:
Wages and salaries
Share-based payments
Social security costs
Pension costs
118
118
Note
42
Year ended
30 September
2019
£m
455.1
21.1
42.0
14.4
532.6
Year ended
30 September
2018
£m
448.6
10.1
40.4
28.5
527.6
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
7 Share of results of joint ventures and associates
Share of adjusted operating profits/(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 income/(costs) of associates
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 goodwill in associates
Share of fair value movement of contingent consideration payable of associates
Impairment of carrying value of Euromoney
Share of Euromoney prior year tax exposures
Share of Euromoney tax on prior year tax exposures
Adjustment to impairment of carrying value of Euromoney following Euromoney prior year
tax exposures
Impairment of carrying value of other associates
Note
(i)
13
13
13
11, 13
11, 13
13
13
13, 24, (ii)
13, 24, (iii)
11, 13, 24, (iii)
13, 24, (iii)
13, 24, (iv)
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 associates
Share of associates’ items of other comprehensive income
Share of results of joint ventures and associates
24
24
24
24
Year ended
30 September
2019
£m
1.7
10.9
Year ended
30 September
2018
£m
(3.2)
77.2
12.6
–
7.0
(6.5)
(0.1)
(0.2)
(7.1)
–
–
(27.7)
–
(6.1)
(28.1)
(0.7)
(28.8)
1.5
–
(29.6)
(28.1)
(0.7)
(28.8)
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
(5.3)
1.1
4.2
(i) Share of adjusted operating profits from associates includes £23.0 million (2018 £55.9 million) from the Group’s interest in Euromoney held
centrally for the period to 2 April 2019.
(ii) At 31 March 2019 the Group’s investment in Euromoney was transferred to Assets Held for Sale at the lower of carrying value and fair value less
costs to sell. This resulted in an impairment charge of £27.7 million for the period to 31 March 2019 which was taken to the Consolidated Income
Statement in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.
(iii) During the period Euromoney engaged external advisors to undertake an audit of their compliance with the off-payroll working rules. As a result
of the review Euromoney identified an underpayment of payroll taxes to HMRC for the six years to 30 September 2019 amounting to £8.2 million
including interest and penalties.
During the period Euromoney also discovered a VAT exposure in the UK relating to the understatement of VAT on supplies made between
entities within the Euromoney Group in respect of the four years ended 30 September 2018. Based on their current assessment Euromoney’s
exposure as at 30 September 2019 is £11.3 million including interest.
The total impact on Euromoney as at 30 September 2019 amounts to an understatement of taxes, penalties and interest of £17.0 million net
of deferred and corporation taxes. Euromoney consider this to be material and have corrected these understatements of their prior period
accounts in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The DMGT Group disposed of its 49.9% interest in Euromoney on 2 April 2019 and the post-tax impact of these adjustments on DMGT at that
date amounts to a charge of £4.2 million. This has been corrected in the current period since the Directors do not consider this to be material
for DMGT. The charge against profits has been treated as an adjusting item due to its significance and non-recurring nature.
This adjustment has reduced the impairment charge booked in the first half in relation to the Group’s investment in Euromoney from
£27.7 million to £23.5 million.
(iv) Represents a £1.3 million write-down in the carrying value of Skymet Weather Services Pvt (Skymet), a £0.9 million write-down in the carrying
value of Liases Foras, a £3.0 million write-down in the carrying value of Funcent, and a £0.9 million write-down in the carrying value of Propstack
all held centrally. In the prior period, represents a £0.5 million write-down in the carrying value of Eatfirst UK Ltd held centrally and £0.3 million
write-down in the carrying value of RLTO in the Property Information segment.
119
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Financial Statements
Notes to the accounts
8 Other gains and losses
Profit on disposal of available for sale investments
Impairment of available for sale assets
Profit on disposal of property, plant and equipment
(Loss)/profit on disposal and closure of businesses
Recycled cumulative translation differences
(Loss)/gain on dilution of stake in associate
Loss on change in control
Profit on disposal of joint ventures and associates
Note
13, 25
13, 25
13
13, 18, (i)
13, 18, 39, (ii)
13, 24, (iii)
13, (iv)
13, (v)
Year ended
30 September
2019
£m
–
–
1.1
(1.8)
(3.6)
(0.7)
(0.8)
79.5
73.7
Year ended
30 September
2018
£m
1.0
(1.8)
–
51.3
8.7
0.7
(3.5)
509.1
565.5
There is a tax charge of £15.0 million in relation to these other gains and losses (2018 £17.6 million).
(i)
In the current period this principally relates to a loss of £2.3 million relating to the disposal of On-geo in the Property Information Segment.
In the prior 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.
(ii) Represents cumulative translation differences required to be recycled through the Consolidated Income Statement on disposals.
(iii) In the current period this represents a loss on dilution of the Group’s stakes in Skymet and Laundrapp Ltd (formerly known as Zipjet Ltd).
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 decreased resulting in a loss on dilution of £0.7 million.
In the prior period 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.
(iv) In the current period the Group reduced its interest in Trepp Port, LLC (TreppPort) in the Property Information segment. The remaining
shareholding in TreppPort has been treated as a joint venture. In accordance with IFRS 3, Business Combinations, the difference between
the fair value of the investment retained and the carrying value of £0.7 million is treated as a gain on change in control.
Additionally, in the current period the Group purchased the remaining 50.0% of Daily Mail On-Air LLC (DailyMailTV) in the Consumer Media
segment, a joint venture in the prior period, increasing its existing shareholding from 50.0% to 100% and became a wholly owned subsidiary.
The difference between the fair value of the joint venture and the net assets acquired of £1.5 million is treated as a loss on change in control.
In the prior 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) In the current period this principally represents a profit of £59.7 million on the sale of Real Capital Analytics, Inc. in the Corporate costs segment
and profit of £27.2 million on disposal of SiteCompli in the Property information segment, offset by costs of £7.9 million incurred in relation
to the Group’s distribution of Euromoney to shareholders.
In the prior period this principally relates to the disposal of ZPG for gross proceeds of £641.7 million, resulting in a profit on disposal
of £508.4 million.
120
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Daily Mail and General Trust plc Annual Report 2019
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
Premium on bond redemption
Loss on derivatives, or portions thereof, not designated for hedge accounting
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
Change in fair value of undesignated financial instruments
Change in fair value of contingent consideration payable
Finance expense
Profit on derivatives, or portions thereof, not designated for hedge accounting
Finance income on defined benefit pension schemes
Change in fair value of undesignated financial instruments
Finance income
Net finance expense
Year ended
30 September
2019
£m
–
7.6
3.9
11.5
Year ended
30 September
2018
£m
0.1
1.7
3.0
4.8
Year ended
30 September
2019
£m
(19.0)
(0.9)
(3.5)
2.8
(2.8)
–
(0.9)
(0.2)
(24.5)
–
7.1
–
7.1
Year ended
30 September
2018
£m
(35.8)
–
(1.7)
(2.3)
2.3
(0.1)
–
0.1
(37.5)
0.4
2.0
3.1
5.5
(17.4)
(32.0)
Note
(i)
16, 34
16, 34
36, (ii)
13
13, 36, (iii)
13, 35
13
(i) During the period the Company bought back £6.4 million nominal of its outstanding 2021 bonds incurring a premium of £0.9 million.
(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.
(iii) 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.
121
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Financial Statements
Financial Statements
Notes to the accounts
11 Tax
The charge on the profit for the period consists of:
UK tax
Corporation tax at 19.0% (2018 19.0%)
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
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
Note
–
0.3
0.3
(17.7)
7.1
(10.6)
(10.3)
0.3
(0.4)
(0.1)
(10.4)
(10.0)
(20.4)
(0.7)
(0.2)
(0.9)
(24.3)
(0.6)
(24.9)
(25.8)
22.1
–
22.1
(3.7)
(3.9)
(7.6)
37
19
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 were re-measured in the prior period to reflect this
reduced rate as this is the rate that will apply on reversal. The other key provision impacting the Group in the prior period 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.
In April 2019 the EU Commission released its final decision on the State Aid investigation into the Group Financing Exemption (GFE) included within
the UK’s controlled foreign company (CFC) rules. The Commission ruled that the GFE constituted State Aid to the extent that non-trade finance
profits of a CFC arose as a result of Significant People Functions (SPFs) in the UK. Up until 2018 the Group financed its US operations through a
Luxembourg resident finance company which had received clearance from HM Revenue & Customs (HMRC) that it benefitted from the GFE. If the
State Aid investigation ultimately leads to a reversal of the benefits that the Group has accrued through the GFE, the cost to the Group would be
in the range from £nil to £7.5 million tax and interest. It is not currently possible to quantify the exposure of the Group as HMRC have not yet
released guidance on how UK SPFs should be calculated. In October 2019 the Group lodged its appeal to the General Court of the EU against the
Commission’s decision. The Directors consider that the Group’s appeal is more than likely to be successful, and accordingly have made no provision
in these financial statements.
A deferred tax credit of £7.7 million (2018 charge of £31.2 million) relating to the actuarial movement on defined benefit pension schemes was
recognised directly in the Consolidated Statement of Comprehensive Income. A deferred tax credit of £0.6 million (2018 charge of £6.8 million)
and a current tax charge of £nil (2018 credit of £2.3 million) 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.
122
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Daily Mail and General Trust plc Annual Report 2019
The tax charge for the year is lower than the standard rate of corporation tax in the UK of 19.0% (2018 19.0%) representing the weighted average
annual corporate tax rate for the full financial year. The differences are explained below:
Profit on ordinary activities before tax – continuing operations
Loss 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
Recognition of previously unrecognised deferred tax assets
Effect of overseas tax rates
Effect of associates tax
Unrecognised tax losses utilised
Write off/disposal of subsidiaries and associates
Effect of change in tax rate
Adjustment in respect of prior years
Other
Total tax charge on the profit for the year – continuing and discontinued operations
Year ended
30 September
2019
£m
134.3
(32.6)
101.7
Year ended
30 September
2018
£m
706.5
(14.6)
691.9
(19.3)
(131.5)
(4.0)
(1.1)
2.5
11.5
(1.8)
0.3
2.3
(7.5)
(0.9)
7.0
0.6
(10.4)
(2.2)
(1.0)
4.3
0.3
(5.2)
22.6
1.9
97.2
10.7
(0.8)
–
(3.7)
Note
19
(i)
(ii)
(iii)
(iv)
13
(i) Additional items deductible for tax purposes amounting to £2.5 million (2018 £4.3 million) primarily relates to Research and Development
tax credits and in the prior year also included financing arrangements that result in asymmetrical tax treatments in the territories involved.
Some of these are expected to recur in the short term.
(ii) Recognition of previously unrecognised deferred tax assets of £11.5 million relates to tax losses agreed with HM Revenue & Customs following
the settlement of a prior year enquiry.
(iii) In the prior period includes £96.6 million relating to the profit on sale of ZPG which was non-taxable by virtue of the Substantial Shareholding
Exemption.
(iv) The adjustment in respect of prior years credit of £7.0 million (2018 charge of £0.8 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 £29.4 million (2018 £33.2 million) and the resulting rate is 20.3% (2018 18.2%). 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 gains and losses
Tax on exceptional operating costs
Tax on other adjusting items
Share of tax on associates other adjusting items
Adjusted tax charge on the profit for the year
Year ended
30 September
2019
£m
(10.4)
(6.2)
(3.8)
(13.5)
15.0
(9.1)
(2.7)
1.3
(29.4)
Year ended
30 September
2018
£m
(3.7)
(31.3)
(22.6)
–
17.6
(4.3)
11.1
–
(33.2)
Note
7, 19
13
123
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
11 Tax continued
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 of £13.5 million mainly relates to recognition of tax losses agreed with HM Revenue & Customs.
Included in tax on other adjusting items are items arising from tax reform in the US comprising a deferred tax credit of £nil (2018 £12.5 million)
relating to the re-measurement of US deferred tax balances following the reduction in the US corporate tax rate, a current tax charge of £nil
(2018 £6.1 million) in respect of the transitional toll charge and a deferred tax charge of £nil (2018 £4.0 million) relating to the impact of the internal
refinancing of the US group.
12 Dividends paid
Year ended
30 September
2019
Pence per share
Year ended
30 September
2019
£m
Year ended
30 September
2018
Pence per share
Year ended
30 September
2018
£m
Note
Amounts recognisable as distributions to equity holders in the year
Ordinary Shares – final dividend for the year ended 30 September 2018
A Ordinary Non-Voting Shares – final dividend for the year ended 30 September 2018
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 – interim dividend for the year ended 30 September 2019
A Ordinary Non-Voting Shares – interim dividend for the year ended
30 September 2019
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
Euromoney cash distribution – B shares
Euromoney cash distribution – C shares
Euromoney dividend in specie
(i)
(i)
(i)
16.2
16.2
–
–
–
7.3
7.3
–
–
146.8
647.0
691.3
–
–
3.2
54.2
–
–
57.4
1.5
15.2
–
–
183.0
17.0
661.8
878.5
935.9
–
–
15.8
15.8
–
–
–
7.1
7.1
–
–
–
–
–
–
–
3.1
52.8
55.9
–
–
1.4
23.7
–
–
–
25.1
81.0
(i) During the period the Group disposed of its remaining stake in Euromoney by way of a dividend in specie together with a cash distribution
to shareholders. The dividend in specie was distributed on 2 April 2019 and the cash distribution on 15 April 2019.
Before these distributions were made c46.4% of the A shares held by Fully Participating Shareholders were converted into a new class
of B Shares and c4.0% of the A Shares held by Rothermere Affiliated Shareholders converted into a new class of C Shares.
The dividend in specie was paid to Fully Participating Shareholders and amounted to £661.8 million. This was based on the Euromoney share
price of £12.38 at 8am on 2 April 2019.
The cash distribution of £183.0 million in cash was paid to Fully Participating Shareholders in respect of the B Shares and a restricted special
dividend of £17.0 million in cash was paid to the Rothermere Affiliated Shareholders in respect of C Shares. Once these distributions were made
the B Shares and the C Shares were converted into Deferred B Shares and Deferred C Shares respectively before being transferred to the
Company for no valuable consideration and cancelled shortly thereafter.
The Board has declared a final dividend of 16.6 pence per Ordinary/A Ordinary Non-Voting Share (2018 16.2 pence) which will absorb an estimated
£37.8 million (2018 £57.4 million) of shareholders’ equity for which no liability has been recognised in these financial statements. It will be paid on
7 February 2020 to shareholders on the register at the close of business on 13 December 2019.
124
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Daily Mail and General Trust plc Annual Report 2019
13 Adjusted profit
Profit before tax – continuing operations
Loss before tax – discontinued operations
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
and property, plant and equipment
Share of exceptional operating costs and prior year tax exposures 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
Profit on disposal of available for sale investments
Profit on disposal of property, plant and equipment
Profit on disposal of businesses, joint ventures, associates, change of control and recycled
cumulative translation differences
Finance costs:
Year ended
30 September
2019
£m
134.3
(32.6)
Year ended
30 September
2018
£m
706.5
(14.6)
19.9
19.1
–
43.2
(1.7)
–
29.6
–
–
(1.1)
32.2
0.3
1.5
78.9
4.9
(102.9)
0.8
1.8
(1.0)
–
Note
3
19
3, 7, 19
3, 19
7
3, 19
7
7
7
8
8
8
8, 19
(66.2)
(553.8)
Finance income on defined benefit pension schemes
Fair value movements including share of joint ventures and associates
10
7, 10, 19, (i)
Tax:
Share of tax in joint ventures and associates
Adjusted profit before tax and non-controlling interests
Total tax charge on the profit for the year
Adjust for:
Share of tax in joint ventures and associates
Deferred tax on intangible assets
Reassessment of temporary differences
Tax on other gains and losses
Tax on exceptional operating costs
Tax on other adjusting items
Share of tax on associates other adjusting items
Non-controlling interests
Adjusted profit after taxation and non-controlling interests
7, 11
11
7, 11
11
11
11
11
11
11
(ii)
(7.1)
1.1
6.2
144.7
(10.4)
(6.2)
(3.8)
(13.5)
15.0
(9.1)
(2.7)
1.3
(0.8)
114.5
(2.0)
(1.6)
31.3
182.3
(3.7)
(31.3)
(22.6)
–
17.6
(4.3)
11.1
–
0.2
149.3
(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 profits for the year of £0.8 million (2018 losses of £0.2 million) is stated after eliminating a credit
of £0.4 million (2018 £1.0 million), being the non-controlling interests’ share of adjusting items.
125
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Financial Statements
Financial Statements
Notes to the accounts
14 Earnings per share
Basic earnings per share of 30.7 pence (2018 194.7 pence) and diluted earnings per share of 30.3 pence (2018 192.4 pence) are calculated, in
accordance with IAS 33, Earnings per share, on Group profit for the financial year of £90.9 million (2018 £689.4 million) as adjusted for the effect
of dilutive Ordinary Shares of £nil (2018 £nil) and losses from discontinued operations of £22.6 million (2018 £10.7 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 38.6 pence (2018 42.2 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 £114.5 million (2018 £149.3 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 from continuing operations
Effect of dilutive Ordinary Shares
Losses from discontinued operations
Adjusted earnings from continuing and discontinued operations
Effect of dilutive Ordinary Shares
Earnings per share from continuing operations
Effect of dilutive Ordinary Shares
Earnings per share from discontinued operations
Earnings per share from continuing and discontinued operations
Year ended
30 September
2019
Diluted earnings
£m
113.5
–
(22.6)
90.9
Year ended
30 September
2018
Diluted earnings
£m
700.1
–
(10.7)
689.4
Year ended
30 September
2019
Basic earnings
£m
113.5
–
(22.6)
90.9
Year ended
30 September
2018
Basic earnings
£m
700.1
–
(10.7)
689.4
114.5
–
114.5
149.3
–
149.3
114.5
–
114.5
149.3
–
149.3
Year ended
30 September
2019
Diluted pence
per share
37.8
–
(7.5)
30.3
Year ended
30 September
2018
Diluted pence
per share
196.0
–
(3.6)
192.4
Year ended
30 September
2019
Basic pence
per share
38.3
–
(7.6)
30.7
Year ended
30 September
2018
Basic pence
per share
197.7
–
(3.0)
194.7
Adjusted earnings per share from continuing and discontinued operations
Effect of dilutive Ordinary Shares
Adjusted earnings per share from continuing and discontinued operations
38.1
–
38.1
41.7
–
41.7
38.6
–
38.6
42.2
–
42.2
The weighted average number of Ordinary Shares in issue during the year for the purpose of these calculations is as follows:
Year ended
30 September
2019
Number
m
303.5
(7.1)
296.4
3.8
300.2
Year ended
30 September
2018
Number
m
362.1
(8.0)
354.1
4.3
358.4
Number of Ordinary Shares in issue
Own shares held
Basic earnings per share denominator
Effect of dilutive share options
Dilutive earnings per share denominator
126
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Daily Mail and General Trust plc Annual Report 2019
15 EBITDA and cash generated by operations
Continuing operations
Adjusted operating profit
Non-exceptional depreciation charge
Amortisation of internally generated and acquired computer software not arising on business combinations
Operating profits from joint ventures and associates
Share of charge of depreciation and amortisation of internally generated and acquired computer software
not arising on business combinations of joint ventures and associates
Dividend income
Note
3
3, 23
3, 22
7
9
Discontinued operations
Adjusted operating profit
Non-exceptional depreciation charge
Amortisation of internally generated and acquired computer software not arising on business combinations
19
19, 23
3, 19, 22
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
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Additional payments into pension schemes
Cash generated by operations
39
7
3
3, 35
9
35
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
135.8
22.7
17.9
12.6
1.5
–
8.4
2.6
4.1
205.6
21.1
0.6
(12.6)
(43.2)
3.1
–
(1.5)
5.9
(40.9)
0.9
38.8
(12.8)
165.0
144.6
23.9
29.4
74.0
8.7
0.1
0.3
3.3
3.4
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
127
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
16 Analysis of net debt
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Debt due within one year
Bonds
Loan notes
Debt due after one year
Bonds
Net cash before effect of derivatives
Effect of derivatives on debt
Collateral deposits
Other financial assets
Net cash at closing exchange rate
Net cash at average exchange rate
Note
29
29, 33
33
33
33
(ii)
28
28
At
30 September
2018
£m
437.8
(1.9)
435.9
(218.7)
(1.7)
(205.7)
9.8
(22.4)
8.0
237.3
232.7
234.3
Cash flow
£m
(147.5)
(9.9)
(157.4)
218.5
0.1
6.7
67.9
7.1
7.4
(237.3)
(154.9)
Fair value
hedging
adjustments
£m
–
–
–
Foreign
exchange
movements
£m
10.8
(0.1)
10.7
Other
non-cash
movements
(i)
£m
–
–
–
At
30 September
2019
£m
301.1
(11.9)
289.2
0.7
–
(3.4)
(2.7)
2.7
–
–
–
–
–
–
10.7
(5.8)
–
–
4.9
(0.5)
–
(0.4)
(0.9)
0.1
–
–
(0.8)
–
(1.6)
(202.8)
84.8
(18.3)
15.4
–
81.9
76.2
The net cash outflow of £157.4 million (2018 inflow of £426.9 million) includes a cash inflow of £0.1 million (2018 outflow of £9.7 million) in respect
of operating exceptional items.
(i) Other non-cash movements comprise the unwinding of bond issue discount amounting to £0.7 million (2018 £2.9 million) and amortisation
of bond issue costs of £0.1 million (2018 £0.3 million).
(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.
17 Summary of the effects of acquisitions
On 1 October 2018, the Consumer Media segment acquired a further 50.0% of Daily Mail-On-Air LLC (DailyMailTV), increasing its existing
shareholding from 50.0% to 100%, for total consideration of £4.8 million. DailyMailTV produces a US TV entertainment news programme which airs
for one hour every weekday across the US on various channels.
DailyMailTV contributed £13.1 million to the Group’s revenue, reduced the Group’s operating profit by £2.5 million and reduced the Group’s profit
after tax by £2.0 million for the period between the date of acquisition and 30 September 2019.
On 31 January 2018, the Consumer Media segment acquired 100% of the assets of Rcoaster.ie (RollerCoaster) for total consideration of £0.7 million.
RollerCoaster is an Irish website providing information about pregnancy and parenting.
RollerCoaster contributed £0.1 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 2019.
If the acquisition had been completed on the first day of the financial period, RollerCoaster would have contributed £0.1 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 24 July 2019, the Property Information segment acquired the entire share capital of Aventria Limited for total consideration of £19.0 million.
Aventria Limited was subsequently renamed Landmark Optimus Limited (Optimus). Optimus is a conveyancing panel management business.
Optimus contributed £0.2 million to the Group’s revenue, reduced the Group’s operating profit by £0.2 million and reduced the Group’s profit after
tax by £0.1 million for the period between the date of acquisition and 30 September 2019.
If the acquisition had been completed on the first day of the financial period, Optimus would have contributed £0.8 million to the Group’s revenue,
reduced the Group’s operating profit by £0.2 million and reduced the Group’s adjusted profit after tax by £0.1 million.
On 20 February 2019, the Events and Exhibitions segment acquired EGYPS for total consideration of £3.5 million. EGYPS is the largest oil and gas
show in North Africa.
EGYPS 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 2019.
If the acquisition had been completed on the first day of the financial period, EGYPS would have contributed £nil to the Group’s revenue, £nil to the
Group’s operating profit and £nil to the Group’s adjusted profit after tax.
128
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Daily Mail and General Trust plc Annual Report 2019
Provisional fair value of net assets acquired with all acquisitions:
Goodwill
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax
Group share of net assets acquired
Cost of acquisitions:
Cash paid in current year
Contingent consideration
Cash consideration payable
Total consideration at fair value
Note
21, (i)
22
23
37
Note
36, (ii)
DailyMailTV
£m
3.0
–
–
2.5
2.2
(2.9)
–
4.8
RollerCoaster
£m
0.4
–
–
0.1
0.2
–
–
0.7
DailyMailTV
£m
4.8
–
–
4.8
RollerCoaster
£m
0.7
–
–
0.7
Optimus
£m
17.4
1.7
0.1
0.6
–
(0.5)
(0.3)
19.0
Optimus
£m
15.7
1.6
1.7
19.0
EGYPS
£m
1.2
2.3
–
–
–
–
–
3.5
EGYPS
£m
3.5
–
–
3.5
Total
£m
22.0
4.0
0.1
3.2
2.4
(3.4)
(0.3)
28.0
Total
£m
24.7
1.6
1.7
28.0
(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 estimated range of undiscounted outcomes for contingent consideration relating to acquisitions in the year is £nil to £1.6 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 £13.4 million to the Group’s revenue and reduced the Group’s profit after tax by
£2.0 million for the period between the date of acquisition and 30 September 2019.
Acquisition-related costs, amounting to £0.4 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 £1,337.6 million and Group
profit attributable to equity holders of the parent would have been a profit of £90.9 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.
Reconciliation to purchase of businesses and subsidiary undertakings as shown in the Consolidated Cash Flow Statement:
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 businesses and subsidiary undertakings
Note
36, (i)
32
Year ended
30 September
2019
£m
24.7
4.7
0.6
(2.4)
27.6
Year ended
30 September
2018
£m
5.0
14.4
–
(0.3)
19.1
(i) Cash paid to settle contingent consideration in respect of acquisitions includes £0.2 million (2018 £1.5 million) within the Property Information
segment, £0.4 million (2018 £0.2 million) within the EdTech segment, £4.1 million (2018 £12.5 million) in the Energy Information segment and
£nil (2018 £0.2 million) within the Events and Exhibitions segment.
129
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Financial Statements
Financial Statements
Notes to the accounts
18 Summary of the effects of disposals
On 1 October 2018 the Property Information segment reduced its shareholding in Trepp Port, LLC (TreppPort) from 51.0% to 50.0% for cash
consideration of £0.2 million before directly attributable costs of £0.3 million. Since the Group now has joint control of TreppPort the remaining
shareholding has been treated as a joint venture.
On 12 June 2019 the Property Information segment disposed of the On-geo business for consideration of £6.9 million.
The impact of the disposal of businesses and subsidiary undertakings completed during the period on net assets is as follows:
Goodwill
Intangible assets
Property, plant and equipment
Investments in joint ventures
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Current tax payable
Deferred tax liabilities
Net assets disposed
Non-controlling interest share of net assets disposed
(Loss)/profit on sale of businesses including recycled cumulative
exchange differences
Satisfied by:
Cash received
Directly attributable costs paid
Deferred consideration
Fair value of investment in joint venture
Recycled cumulative translation differences
Note
21
22
23
24
37
40
24, (i)
39
TreppPort
£m
5.3
3.7
–
–
2.0
4.4
(2.8)
–
(1.0)
11.6
(3.3)
(0.5)
7.8
0.2
(0.3)
–
6.8
1.1
7.8
On-geo
£m
3.3
11.3
0.9
0.5
11.0
3.9
(4.3)
0.2
(3.2)
23.6
(9.5)
(4.7)
9.4
5.1
(3.0)
4.8
–
2.5
9.4
Other
£m
–
–
–
–
0.5
–
(0.2)
–
–
0.3
–
0.5
0.8
0.9
(0.1)
–
–
–
0.8
Total
£m
8.6
15.0
0.9
0.5
13.5
8.3
(7.3)
0.2
(4.2)
35.5
(12.8)
(4.7)
18.0
6.2
(3.4)
4.8
6.8
3.6
18.0
(i) The investment in the TreppPort joint venture involves an estimation of the fair value of the Group’s equity holding in TreppPort. A 10.0%
increase/(decrease) in the fair value of the Group’s stake would decrease/(increase) the loss on change in control of TreppPort by £0.7 million.
Reconciliation to disposal of businesses and subsidiary undertakings as shown in the Consolidated Cash Flow Statement:
Cash consideration net of disposal costs
Impact of cashflow hedges
Cash consideration net of disposal costs – discontinued operations
Working capital adjustment cash paid – discontinued operations
Cash consideration received in the current year relating to businesses sold in the prior year
Cash and cash equivalents disposed with subsidiaries
(Costs)/proceeds on disposal of businesses and subsidiary undertakings
Year ended
30 September
2019
£m
2.8
–
(5.2)
(0.9)
–
(8.3)
(11.6)
Year ended
30 September
2018
£m
143.8
4.9
–
(3.7)
0.7
0.6
146.3
All of the businesses and subsidiary undertakings disposed of during the period absorbed £15.0 million of the Group’s net operating cash flows,
paid £1.8 million in respect of investing activities and paid £nil in respect of financing activities.
The Group’s tax charge includes £11.2 million in relation to these disposals.
130
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19 Discontinued operations
On 26 August 2019, the Group announced that it had agreed the sale of its Energy Information segment to Verisk. The sale completed on 5
November 2019 following the completion of customary closing conditions. The results of the Energy Information segment for the full year are
included in discontinued operations for the current and prior period.
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
Impairment of goodwill and intangible assets
Amortisation of intangible assets arising on business combinations
Operating (loss)/profit
Other gains and losses
Loss before net finance costs and tax
Interest, arrangement and commitment fees payable on bonds, bank loans and loan notes
Finance charge on discounting of contingent consideration payable
Change in fair value of contingent consideration payable
Finance costs
Loss before tax
Tax credit
Loss after tax attributable to discontinued operations
Note
3
3
3
3
3, 13, (i)
3
3, 13
4
13
13
3
11
Year ended
30 September
2019
£m
73.6
(58.5)
(2.6)
(4.1)
8.4
(31.3)
–
(3.2)
(26.1)
(6.4)
(32.5)
(0.1)
–
–
(0.1)
(32.6)
10.0
(22.6)
Year ended
30 September
2018
£m
85.5
(78.5)
(3.3)
(3.4)
0.3
3.8
(0.4)
(3.3)
0.4
(12.5)
(12.1)
(0.1)
(0.1)
(2.3)
(2.5)
(14.6)
3.9
(10.7)
(i) The Group’s Energy Information business (Genscape) provided a 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 two companies but verified by
Genscape in 2014 under the Program, the EPA issued a notice of intent to revoke the ability of Genscape to verify RINs as a third-party auditor
on 4 January 2017. Following the EPA investigation of the two companies in April 2016, the two companies pleaded guilty of fraud in connection
with generating the RINs.
EPA regulations for the audit Program set a liability cap on replacement of invalid RINs of 2.0% of the RINs. In April 2017 Genscape voluntarily
paid the 2.0% liability cap associated with the invalid RINs at a cost of US$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 fraud, auditor error and negligence.
The EPA has not formally alleged any fraud or intentional wrongdoing by Genscape, but in its May 2019 final determination letter, EPA did find
grounds for auditor error and negligence by Genscape and ordered Genscape to replace 69.2 million RINs it had verified.
In July 2019, Genscape filed a petition for review with the Sixth Circuit Court of Appeals and a motion to stay the EPA’s order to replace the
69.2 million RINs which was accepted for the duration of Genscape’s petition for review.
Since RINs trade in a volatile range, averaging approximately 56 cents over the previous 24 months, this equates to a potential maximum
claim of approximately US$38.4 million. Using the year end price of 41 cents the potential maximum claim would be US$28.1 million.
Genscape continues to co-operate with EPA and in October 2019 Genscape made an offer to replace 4.6 million RINs at a cost of approximately
US$2.5 million but the EPA have not responded to this offer. Discussions with the EPA are ongoing but considering the uncertainties involved,
the length of time involved and taking note of the order from the EPA, the Group, without admitting any wrongdoing, has made a provision for
the potential maximum replacement RINs cost of US$40.0 million (£31.3 million), including directly attributable costs. This estimate was based
on the average two-year RIN price due to the liquidity and volatility of the market price of RINs. This provision could change substantially over
time as the dispute progresses and new facts emerge.
A deferred tax credit of US$8.4 million arises on this provision.
In future periods, as new facts emerge and circumstances change in relation to this provision, any adjustment will be disclosed as an
exceptional operating item within discontinued operations.
Cash flows associated with discontinued operations comprise operating cash flows of £11.9 million (2018 £3.5 million), investing cash flows
of £13.3 million (2018 £12.4 million) and financing cash flows of £0.2 million (2018 £0.7 million).
131
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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 2019, the assets and liabilities held for sale relate to the Group’s Energy Information segment, together with BuildFax, Inc. and
Inframation AG which are included in the Property segment. The main classes of assets and liabilities comprising the operations classified as held for
sale are set out in the table below. The proceeds of disposal less costs to sell exceed the net carrying amount of the relevant assets and liabilities
and, accordingly, no impairment loss has been recognised on the classification of these operations as held for sale.
At 30 September 2018 there were no assets and liabilities of businesses held for sale.
Goodwill
Intangible assets
Deferred tax
Property, plant and equipment
Trade and other receivables:
Trade receivables
Expected credit losses
Prepayments
Contract acquisition costs
Contract assets
Other receivables
Cash and cash equivalents
Current tax receivable
Total assets associated with businesses held for sale
Trade and other payables
Bank overdrafts
Loan notes
Provisions
Total liabilities associated with businesses held for sale
Net assets of the disposal group
Note
21
22
37
23
27
27
27
27
27
27
29
31
30
33
33
36
At
30 September
2019
£m
83.3
32.0
5.9
7.1
At
30 September
2018
£m
–
–
–
–
10.0
(0.4)
3.3
3.1
0.3
6.3
2.0
0.6
153.5
(36.7)
(0.1)
(1.6)
(34.2)
(72.6)
80.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
132
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Daily Mail and General Trust plc Annual Report 2019
Note
Goodwill
£m
17
18
20
Note
3
3
18
20
506.2
3.2
(90.6)
3.6
422.4
22.0
(27.7)
(145.2)
8.1
279.6
Goodwill
£m
143.1
0.3
(54.8)
0.6
89.2
19.1
(19.1)
(61.9)
1.1
28.4
363.1
333.2
251.2
21 Goodwill
Cost
At 30 September 2017
Additions
Disposals
Exchange adjustment
At 30 September 2018
Additions
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
Accumulated impairment losses
At 30 September 2017
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Impairment
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
Net book value – 2017
Net book value – 2018
Net book value – 2019
The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. Intangible assets,
all of which have finite lives, are tested separately from goodwill only where impairment indicators exist.
Goodwill impairment losses recognised in the period amounted to £19.1 million relating to On-geo in the Property Information segment. There is
a tax credit of £nil associated with this impairment charge.
In the prior year ended 30 September 2018, the Group recorded a goodwill impairment charge of £0.3 million relating to Genscape in the Energy
Information segment. There was a tax credit of £nil associated with this impairment charge.
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 a reasonably possible change in key
assumptions may result in an impairment.
Using this criteria the Group has provided a sensitivity analysis of the key assumptions used in the EdTech segment.
133
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Financial Statements
Financial Statements
Notes to the accounts
21 Goodwill continued
The Group’s EdTech segment holds goodwill with a carrying value of £75.0 million (2018 £71.2 million) together with intangible assets with a carrying
value of £21.9 million (2018 £26.1 million). The carrying value of EdTech 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 2020. 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 2.0%; and
(iv) a pre-tax discount rate of 15.28%.
Using the above methodology the recoverable amount exceeded the total carrying value by £35.0 million (2018 £9.9 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 5.30% to 20.58% (2018 by 1.10% to 16.40%), the long-term growth rate would need to decline by 4.36%
to -2.36% (2018 by 1.00% to 2.00%), or the CGU would need to miss budget by 44.9% (2018 50.2%).
The impairment charge is analysed by major CGU as follows:
CGU
On-geo
Total
Segment
Property
Goodwill
Impairment
£m
19.1
19.1
Intangible asset
Impairment
£m
–
Recoverable
amount
£m
–
–
–
Reason for Impairment charge
Goodwill was impaired to fair value prior to the sale of On–geo
Recoverable amounts have been determined using value in use calculations for all of the above CGUs.
22 Other intangible assets
Publishing
rights,
mastheads
and titles
£m
Note
Cost
At 30 September 2017
Additions from business combinations
Other additions
Internally generated
Disposals
Exchange adjustment
At 30 September 2018
Analysis reclassifications
Additions from business combinations
Internally generated
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
17
18
20
95.9
–
–
–
(2.7)
0.5
93.7
(8.8)
–
–
–
(14.7)
0.9
71.1
Market- and
customer-related
databases and
customer
relationships
£m
105.6
1.8
–
–
(3.9)
0.5
104.0
–
3.6
–
(13.9)
(10.8)
0.9
83.8
Brands
£m
48.5
0.8
–
–
(0.5)
1.1
49.9
8.8
–
–
(0.6)
(25.3)
2.5
35.3
Computer
software
(i)
£m
372.5
–
0.2
19.5
(56.2)
8.1
344.1
–
0.4
13.9
(12.2)
(49.6)
16.3
312.9
Other
£m
6.5
–
–
–
–
0.1
6.6
–
–
–
–
(6.8)
0.4
0.2
Total
£m
629.0
2.6
0.2
19.5
(63.3)
10.3
598.3
–
4.0
13.9
(26.7)
(107.2)
21.0
503.3
134
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Accumulated amortisation
At 30 September 2017
Charge for the year
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Charge for the year
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
Net book value – 2017
Net book value – 2018
Net book value – 2019
Note
3
3
3
18
20
Publishing
rights,
mastheads
and titles
£m
81.0
1.3
–
(2.7)
0.4
80.0
0.8
–
(10.6)
0.7
70.9
14.9
13.7
0.2
Market- and
customer-related
databases and
customer
relationships
£m
Computer
software
(i)
£m
57.7
7.4
–
(3.9)
0.3
61.5
7.5
(5.1)
(8.4)
0.7
56.2
47.9
42.5
27.6
229.2
36.4
58.4
(55.6)
5.3
273.7
24.4
(6.2)
(33.0)
14.2
273.1
143.3
70.4
39.8
Brands
£m
43.2
3.1
–
(0.5)
0.9
46.7
2.0
(0.4)
(17.1)
1.9
33.1
5.3
3.2
2.2
Other
£m
4.9
0.1
–
–
0.2
5.2
0.7
–
(6.1)
0.3
0.1
1.6
1.4
0.1
Total
£m
416.0
48.3
58.4
(62.7)
7.1
467.1
35.4
(11.7)
(75.2)
17.8
433.4
213.0
131.2
69.9
(i) Computer software includes purchased and internally generated intangible assets, not arising on business combinations, as follows:
Note
£m
Cost
At 30 September 2017
Additions
Disposals
Exchange adjustment
At 30 September 2018
Additions
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
Accumulated amortisation
At 30 September 2017
Charge for the year
Impairment
Disposals
Exchange adjustment
At 30 September 2018
Charge for the year
Disposals
Classified as held for sale
Exchange adjustment
At 30 September 2019
Net book value – 2017
Net book value – 2018
Net book value – 2019
3
3
330.0
19.7
(48.0)
7.6
309.3
14.3
(7.8)
(36.0)
15.3
295.1
199.7
32.8
58.3
(47.1)
4.4
248.1
22.0
(4.0)
(23.5)
13.4
256.0
130.3
61.2
39.1
135
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
22 Other intangible assets continued
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 2017
Additions
Projects completed
Exchange adjustment
At 30 September 2018
Additions
Projects completed
Exchange adjustment
At 30 September 2019
£m
19.5
10.3
(15.6)
0.6
14.8
5.1
(13.8)
0.1
6.2
The methodologies applied to the Group’s CGUs when testing for impairment and details of the above impairment charge are set out in Note 2.
The carrying values of the Group’s ten largest intangible assets are further analysed as follows:
DIIG Customer relationships
Landmark Valuation Hub
Human Resources Central Information system
Estate Technical Solutions Limited Customer relationships
Starfish Customer relationships
Naviance Modernisation
TreppCLO Analytics
Intersect Presence
Millar & Bryce Modernisation*
Naviance Institutional Student Success*
* Not yet in use.
At
30 September
2019 Carrying
Value
£m
15.3
4.5
3.2
3.1
2.9
2.9
2.2
1.7
1.6
1.4
At
30 September
2018 Carrying
Value
£m
19.0
4.7
–
3.6
3.3
3.5
2.0
0.5
1.0
–
At
30 September 2019
Remaining
amortisation
period
Years
5.0
4.2
2.4
5.4
6.0
3.6
3.4
1.8
–
–
At
30 September
2018 Remaining
amortisation
period
Years
6.0
–
–
6.4
7.0
4.6
4.0
2.8
–
–
Segment
Property
Property
Central
Property
EdTech
EdTech
Property
EdTech
Property
EdTech
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Daily Mail and General Trust plc Annual Report 2019
23 Property, plant and equipment
Cost
At 30 September 2017
Additions
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2018
Owned by subsidiaries acquired
Additions
Disposals
Classified as held for sale
Owned by subsidiaries disposed
Exchange adjustment
At 30 September 2019
Accumulated depreciation and impairment
At 30 September 2017
Charge for the year
Disposals
Owned by subsidiaries disposed
Reclassifications
Exchange adjustment
At 30 September 2018
Charge for the year
Disposals
Classified as held for sale
Owned by subsidiaries disposed
Exchange adjustment
At 30 September 2019
Net book value – 2017
Net book value – 2018
Net book value – 2019
Note
3
17
3
20
18
Note
3
3
20
18
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
57.9
4.7
(21.7)
–
(0.1)
(0.4)
40.4
–
0.2
(8.2)
–
–
–
32.4
0.6
0.1
–
(0.3)
–
(0.4)
–
–
–
–
–
–
–
–
26.3
0.5
(0.7)
(0.2)
(5.6)
0.4
20.7
–
0.7
(0.3)
–
–
1.0
22.1
336.5
25.1
(53.5)
(8.7)
5.6
2.1
307.1
0.1
15.0
(17.8)
(23.4)
(5.1)
3.7
279.6
Freehold
properties
£m
Long leasehold
properties
£m
Short leasehold
properties
£m
Plant and
equipment
£m
38.6
1.2
(21.7)
–
(1.3)
–
16.8
1.3
–
–
–
–
18.1
19.3
23.6
14.3
–
–
–
–
–
–
–
–
–
–
–
–
–
0.6
–
–
17.7
2.3
(0.7)
(0.1)
(5.3)
0.4
14.3
2.7
(0.3)
–
–
0.8
17.5
8.6
6.4
4.6
261.7
23.7
(52.0)
(3.6)
6.7
0.9
237.4
21.3
(17.2)
(16.3)
(4.2)
3.1
224.1
74.8
69.7
55.5
Total
£m
421.3
30.4
(75.9)
(9.2)
(0.1)
1.7
368.2
0.1
15.9
(26.3)
(23.4)
(5.1)
4.7
334.1
Total
£m
318.0
27.2
(74.4)
(3.7)
0.1
1.3
268.5
25.3
(17.5)
(16.3)
(4.2)
3.9
259.7
103.3
99.7
74.4
137
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
24 Investments in joint ventures and associates
Joint ventures
At 30 September 2017
Disposals
Share of retained reserves
Dividends received
Reclassification from other debtors
Exchange adjustment
At 30 September 2018
Additions – non cash
Owned by subsidiaries disposed
Share of retained reserves
Dividends received
Reclassification from other financial assets
Transfer to investment in subsidiaries
Exchange adjustment
At 30 September 2019
Note
(i)
7
(ii)
8, (iii)
18
7
(iv)
8
Cost of
shares
£m
Share of post-
acquisition
retained reserves
£m
2.8
(1.1)
–
–
5.1
0.1
6.9
6.8
–
–
–
0.1
(5.2)
0.4
9.0
(2.6)
0.7
(3.3)
(0.5)
–
(0.2)
(5.9)
–
(0.5)
1.5
(0.3)
–
4.5
(0.2)
(0.9)
Total
£m
0.2
(0.4)
(3.3)
(0.5)
5.1
(0.1)
1.0
6.8
(0.5)
1.5
(0.3)
0.1
(0.7)
0.2
8.1
(i) During the prior period, the Group disposed of Artirix in the Consumer Media segment.
(ii) During the prior period, the Group received dividends from Decision First Ltd and from HypoPort On-Geo GmbH in the Property Information
segment.
(iii) Non-cash additions during the year relate to a fair-value adjustment on the transfer of TreppPort from an investment in subsidiary to
a joint venture.
(iv) During the period, the Group received dividends from PointX and TreppPort in the Property Information segment.
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 2019
Property Information
At 30 September 2019
Property Information
Year ended 30 September 2018
Property Information
Consumer Media
At 30 September 2018
Property Information
Consumer Media
Revenue
£m
8.3
8.3
Operating
profit
£m
1.0
1.0
Total expenses
£m
(8.0)
(8.0)
Profit for
the year
£m
0.3
0.3
Total
comprehensive
income
£m
0.3
0.3
Current assets
£m
4.6
4.6
Total assets
£m
4.6
4.6
Current liabilities
£m
(1.9)
(1.9)
Total liabilities
£m
(1.9)
(1.9)
Net assets
£m
2.7
2.7
Revenue
£m
9.9
9.8
19.7
Operating
(loss)/profit
£m
0.9
(8.8)
(7.9)
Total expenses
£m
(9.2)
(18.6)
(27.8)
(Loss)/profit
or the year
£m
0.7
(8.8)
(8.1)
Total
comprehensive
(expense)/income
£m
0.7
(8.8)
(8.1)
Current assets
£m
4.8
19.6
24.4
Total assets
£m
4.8
19.6
24.4
Current liabilities
£m
(1.9)
(6.1)
(8.0)
Total liabilities
£m
(1.9)
(6.1)
(8.0)
Net assets
£m
2.9
13.5
16.4
At 30 September 2019 the Group’s joint ventures had capital commitments amounting to £nil (2018 £nil). There were no material contingent
liabilities (2018 none).
138
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Segment
Principal activity
Year ended
Description
of holding
Group interest %
Centrally held
EdTech
Photogrammetric
mapping and GIS data
conversion
Provider of online
educational services
Provider of a ‘Points of
Interest’ database
covering Great Britain
Provider of an end-to-
end lending, surveillance
and risk management
web-based platform
30 September
2019 Preferred stock
30 September
2019
Common
49.0
50.0
31 March 2019
Ordinary B
50.0
30 September
2019
Membership
interests
50.0
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)
PointX Ltd
(incorporated and operating in the UK)
Property Information
Trepp Port LLC,
(incorporated and operating in the US)
Property Information
Associates
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
Additions – cash
Additions – non cash
Share of retained reserves
Dividends received
Impairment of Euromoney
Adjustment to impairment of carrying value of Euromoney following correction of
Euromoney prior year tax exposures
Impairment of other associates
Impairment of Euromoney following dividend in specie
Deemed disposal of investment in associates
Transfer to financial assets at fair value through Other Comprehensive Income
Disposal of other associates
Disposal of Euromoney
Exchange adjustment
At 30 September 2019
Note
Cost of shares
£m
Share of post-
acquisition
retained reserves
£m
(i)
7
(ii)
7
8
25
(iii)
(iv)
(v)
7
(ii)
7
7
7
39
8
25
(vi)
771.3
1.8
15.6
–
–
(0.8)
0.7
29.4
(95.9)
1.4
723.5
39.4
7.8
–
–
(27.7)
4.2
(6.1)
(11.8)
(0.7)
(2.9)
(20.8)
(573.6)
2.2
133.5
(36.1)
–
–
137.2
(22.6)
–
–
–
(32.9)
0.4
46.0
–
–
(0.7)
(12.0)
–
–
–
–
–
1.7
11.3
(88.2)
(0.7)
(42.6)
Total
£m
735.2
1.8
15.6
137.2
(22.6)
(0.8)
0.7
29.4
(128.8)
1.8
769.5
39.4
7.8
(0.7)
(12.0)
(27.7)
4.2
(6.1)
(11.8)
(0.7)
(1.2)
(9.5)
(661.8)
1.5
90.9
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Financial Statements
Financial Statements
Notes to the accounts
24 Investments in joint ventures and associates continued
The cumulative unrecognised share of losses of the Group’s associates principally comprises £17.8 million (2018 £17.4 million) in relation to the
Group’s investment in ITN.
Joint ventures and associates have been accounted for under the equity method using unaudited financial information to 30 September 2019.
(i) During the prior 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.
(ii) Dividends received in the current and prior period principally relate to the Group’s investments in ZPG (2019 £nil, 2018 £5.0 million) in the
Consumer Media segment and Euromoney (2019 £11.9 million, 2018 £17.1 million) held centrally.
(iii) During the prior 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.
(iv) Cash additions during the year relate to additions in Mercatus, Inc. in the Property Information segment, Praedicat in the Insurance Risk
segment, and Also Energy Holdings, Yopa, Cazoo, Bricklane Technologies and Entale all held centrally.
(v) Non-cash additions during the year relate additions in Zipjet, Yopa, Cazoo and Bricklane Technologies all held centrally paid for with
media credits.
(vi) During the period the Group disposed of its investment in Truffle Pig LLC, Real Capital Analytics, Inc. and Wellington Weekly held centrally.
Summary aggregated financial information for the Group’s associates, extracted on a 100% basis from the associates’ own financial information
is set out below:
Revenue
£m
6.5
3.4
1.3
159.1
170.3
Operating loss
£m
(1.9)
(2.2)
–
(25.6)
(29.7)
Total expenses
£m
(8.4)
(4.4)
(1.3)
(198.4)
(212.5)
Loss for
the year
£m
(1.9)
(1.0)
–
(39.3)
(42.2)
Other
comprehensive
income
£m
–
–
–
–
–
Total
comprehensive
expense
£m
(1.9)
(1.0)
–
(39.3)
(42.2)
Non-current
assets
£m
3.0
0.1
–
70.6
73.7
Current assets
£m
7.9
2.1
0.4
156.9
167.3
Revenue
£m
5.0
1.8
1.0
1.4
–
560.4
569.6
Total assets
£m
10.9
2.2
0.4
227.5
241.0
Operating
profit/(loss)
£m
1.8
(4.1)
(0.1)
(8.2)
(3.2)
139.1
125.3
Current
liabilities
£m
(2.6)
(1.8)
–
(116.5)
(120.9)
Non-current
liabilities
£m
(0.1)
(0.5)
–
(154.9)
(155.5)
Total liabilities
£m
(2.7)
(2.3)
–
(271.4)
(276.4)
Net
(liabilities)/assets
£m
8.2
(0.1)
0.4
(43.9)
(35.4)
Total expenses
£m
(7.1)
(5.9)
(1.1)
(9.8)
(3.2)
(389.1)
(416.2)
Profit/(loss)
for the year
£m
(2.1)
(4.1)
(0.1)
(8.4)
(3.2)
171.3
153.4
Other
comprehensive
income
£m
–
–
–
–
–
28.7
28.7
Total
comprehensive
income/(expense)
£m
(2.1)
(4.1)
(0.1)
(8.4)
(3.2)
200.0
182.1
Year ended 30 September 2019
Insurance Risk
Property Information
Events and Exhibitions
Centrally held
At 30 September 2019
Insurance Risk
Property Information
Events and Exhibitions
Centrally held
Year ended 30 September 2018
Insurance Risk
Property Information
Events and Exhibitions
Energy Information
Consumer Media
Centrally held
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At 30 September 2018
Insurance Risk
Property Information
Events and Exhibitions
Consumer Media
Centrally held
Non-current
assets
£m
2.8
0.1
–
–
639.3
642.2
Current assets
£m
7.6
2.8
0.3
–
249.0
259.7
Total assets
£m
10.4
2.9
0.3
–
888.3
901.9
Current
liabilities
£m
(1.1)
(1.6)
(0.3)
(3.2)
(304.5)
(310.7)
Non-current
liabilities
£m
–
–
–
–
(151.6)
(151.6)
Total liabilities
£m
(1.1)
(1.6)
(0.3)
(3.2)
(456.1)
(462.3)
Net
(liabilities)/assets
£m
9.3
1.3
–
(3.2)
432.2
439.6
At 30 September 2019 the Group’s associates had capital commitments amounting to £nil (2018 £nil). There were no material contingent liabilities
(2018 none).
Information on principal associates:
Unlisted
LineVision, Inc.
(incorporated and operating in the US)
Excalibur Holdco Ltd
(incorporated and operating in the UK)
Entale Media Ltd
(incorporated and operating in the UK)
Independent Television News Ltd
(incorporated and operating in the UK)
Cazoo Ltd
(incorporated and operating in the UK)
Praedicat, Inc.
(incorporated and operating in the US)
Propstack Services Private Ltd
(incorporated and operating in India)
Yopa Property Ltd
(incorporated and operating in the UK)
Segment
Note
Principal activity
Year ended
Description
of holding
Group
interest
%
Centrally held
(i)
Centrally held
Provider of transmission line
monitoring and asset
management for utilities
Operator of online discount
businesses
31 December 2018
Series A
55.9
30 September 2019
B Ordinary
23.9
Centrally held
Provider of a podcast platform
31 March 2019
Ordinary
36.8
Centrally held
Centrally held
Insurance Risk
Centrally held
Independent TV news provider
Provider of an online used car
sales platform
Provision of catastrophe
risk analytics
Provider of commercial real
estate information
31 December 2018
Ordinary
20.0
31 December 2019
Series A
21.1
30 September 2019
Preferred
stock
26.6
31 March 2019
Ordinary
22.7
Centrally held
Online property portal
31 December 2018
Ordinary D
45.3
(i) Since the Group’s share of voting rights in the investment in LineVision, Inc. is 49.0%, the Group does not have control therefore the investment
has been treated as an associated undertaking.
141
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Financial Statements
Financial Statements
Notes to the accounts
25 Financial assets at fair value through Other Comprehensive Income
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 Available for sale investments
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Additions – cash
Additions – non cash
Transfer from investment in associates
Fair value movement in the period
Exchange adjustment
At 30 September 2019 Financial assets at fair value through Other Comprehensive Income
Note
24, (i)
8
2
24, (ii)
39
Unlisted
£m
30.6
19.3
1.5
(29.4)
(1.8)
0.2
20.4
9.4
29.8
6.1
0.8
1.2
(4.5)
0.4
33.8
The financial assets 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.
(i)
In the prior 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).
(ii) In the current period, the Group’s investments in Skymet and Laundrapp Ltd (formerly Zipjet Ltd), previously associates, have been diluted
and therefore these have been classified as financial assets above.
Financial assets at fair value through Other Comprehensive Income at 30 September 2019 and available for sale investments at 30 September 2018
are analysed as follows:
Note
Class of Holding
Group interest %
At
30 September
2019
£m
At
30 September
2018
£m
Unlisted
BDG Media, Inc. (incorporated and operating in the US)
PA Media Group Ltd (incorporated and operating in the UK)
Kortext Ltd (incorporated and operating in the UK)
Cue Ball Capital LP (incorporated and operating in the US)
Hambro Perks Ltd (incorporated and operating in the UK)
Taboola.com Ltd (incorporated and operating in Israel)
Farewill Ltd (incorporated and operating in the UK)
Air Mail, LLC (incorporated and operating in the US)
Live Better With Ltd (incorporated and operating in the UK)
CompStak, Inc. (incorporated and operating in the US)
Quick Move Ltd (incorporated and operating in the UK)
Evening Standard Ltd (incorporated and operating in the UK)
Brit Media, Inc. (incorporated and operating in the US)
Other
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
Common Stock
Ordinary
Ordinary
Limited Partner
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
3.2
15.6
11.3
2.5
2.9
0.4
7.2
5.0
4.6
2.0
5.7
10.0
8.9
7.9
6.9
3.8
3.0
2.3
2.3
1.2
1.2
1.0
0.6
0.5
0.4
–
2.7
33.8
4.9
–
0.7
1.5
2.0
2.0
–
–
0.5
0.5
–
1.1
6.2
1.0
20.4
(i) BDG Media, Inc. operates a website with news, entertainment, fashion and beauty, books and lifestyle content.
(ii) PA Media Group Ltd provides news, sport and entertainment information to the media and other customers.
(iii) Kortext Ltd provides a digital learning platform and supplies digital textbooks.
(iv) 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.
(v) Hambro Perks Ltd is a growth investment firm.
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(vi) 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.
(vii) Farewill Ltd provides online-based will-writing services.
(viii) Air Mail, LLC owns and operates an online media that provides weekly digital newsletter covering politics, business, the environment, the arts,
literature, film and television, food, design, travel, architecture, society, fashion, and crime.
(ix) Live Better With Ltd provides a range of products to help improve the quality of day-to-day life for cancer patients.
(x) CompStak, Inc. provides commercial real estate information to brokers, appraisers, researchers, landlords, lenders and investors.
(xi) Quick Move Ltd is the serviced marketplace for the purchase and resale of second-hand luxury goods.
(xii) Evening Standard Ltd publishes a weekday newspaper, distributed for free throughout Greater London.
(xiii) 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.
Interest analysis of financial assets at fair value through Other Comprehensive Income at 30 September 2019 and of available for sale investments
at 30 September 2018 is as follows:
Non-interest bearing
26 Inventories
Raw materials and consumables
Work in progress
27 Trade and other receivables
Current assets
Trade receivables
Impairment allowance
Prepayments
Contract acquisition costs
Contract assets
Other receivables
Classified as held for sale
Non-current assets
Trade receivables
Prepayments
Contract acquisition costs
Contract assets
Interest receivable
Other receivables
Impairment allowance
At
30 September
2019
£m
33.8
At
30 September
2018
£m
20.4
At
30 September
2019
£m
6.1
20.7
26.8
At
30 September
2018
£m
6.9
24.6
31.5
At
30 September
2019
£m
At
30 September
2018
£m
Note
20
231.5
(3.7)
227.8
54.9
8.5
5.0
15.1
311.3
(22.6)
288.7
2.4
0.7
3.7
0.1
2.9
17.1
(0.3)
26.6
182.5
(5.1)
177.4
69.7
–
–
17.2
264.3
–
264.3
3.0
2.6
–
–
5.4
16.3
–
27.3
315.3
291.6
143
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Financial Statements
Financial Statements
Notes to the accounts
27 Trade and other receivables continued
Movement in the impairment allowance is as follows:
At start of year – calculated under IAS 39
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Impairment losses recognised
Amounts written off as uncollectable
Amounts recovered during the year
Owned by subsidiaries disposed
Exchange adjustment
Classified as held for sale
At end of year
Note
2
20
At
30 September
2019
£m
(5.1)
(0.3)
(5.4)
(1.7)
2.3
0.9
–
(0.1)
(4.0)
0.4
(3.6)
At
30 September
2018
£m
(5.1)
–
(5.1)
(4.3)
1.8
0.3
2.5
(0.3)
(5.1)
–
(5.1)
IFRS 9 introduced an expected credit loss (ECL) model which requires an impairment provision to be made on initial recognition of the receivable
which in the prior year under IAS 39 was required only when a loss event occurred. Accordingly, the Group now recognises an ECL by reference
to historical recovery rates and forward-looking indicators.
The Group applies the IFRS 9 simplified approach to measuring impairment allowances using a lifetime expected credit loss allowance for trade
receivables, contract assets and other short-term receivables. To measure expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and ageing.
The expected loss rates are based on the Group’s historical credit losses experience as adjusted for current and forward-looking information and
macroeconomic factors in the countries where the debtor is located.
For trade receivables the expected credit loss allowance is calculated using a provision matrix, with higher default rates applied to older balances.
The provision rates are based on days past due for groupings of customers with similar loss patterns.
Trade receivables and contract assets with a contractual amount of £1.6 million written off during the period are still subject to enforcement activity.
The Group applies IFRS 9 in measuring impairment allowances using a 12-month expected credit loss allowance for long-term other receivables.
To estimate a range of expected credit losses, the probability of default tables based on the debtor’s proxy credit rating was estimated and applied
to the carrying amount outstanding at 30 September 2019. The IFRS 9 ECL model has resulted in an ECL loss of £0.3 million on transition to IFRS 9
in relation to other long-term receivables.
At 30 September 2019 the lifetime expected loss provision for trade receivables, contract assets and other receivables is as follows:
At 30 September 2019
Expected loss rate
Gross carrying amount (£m)
Loss allowance provision (£m)
Current
More than 30 days
past due
More than 60 days
past due
More than 90 days
past due
0.4%
145.9
0.6
0.2%
45.1
0.1
1.4%
14.1
0.2
5.2%
52.4
2.7
Total
1.4%
257.5
3.6
Ageing of impaired trade receivables, contract assets and other receivables:
0 – 30 days
31 – 60 days
61 – 90 days
91 – 120 days
121+ days
Total
At
30 September
2019
£m
0.2
0.2
0.2
0.2
2.8
3.6
At
30 September
2018
£m
0.6
0.2
0.5
0.4
3.4
5.1
Included in the Group’s trade receivables are amounts owed with a carrying value of £53.8 million (2018 £70.8 million) which are past due at
30 September 2019 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.
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Ageing of past due but not impaired trade receivables and contract assets 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 with original maturities of three months or more
Non-current assets
Loans to associates and joint ventures
At
30 September
2019
£m
24.7
6.1
4.3
18.7
53.8
At
30 September
2018
£m
28.5
12.0
9.1
21.2
70.8
Note
(i)
(ii)
At
30 September
2019
£m
At
30 September
2018
£m
15.4
–
15.4
12.0
12.0
8.0
237.3
245.3
18.4
18.4
(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.
Movement in the impairment allowance is as follows:
At start of year – calculated under IAS 39
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Movement in the year
At end of year
Note
2
At
30 September
2019
£m
–
12.0
12.0
–
12.0
At
30 September
2018
£m
–
–
–
–
–
IFRS 9 introduced an expected credit loss (ECL) model which requires an impairment provision to be made on initial recognition of the receivable
which in the prior year under IAS 39 was required only when a loss event occurred. The Group applies the IFRS 9 simplified approach to measuring
impairment allowances using a lifetime expected credit loss provision for long-term receivables from associates. To estimate a range of expected
credit losses for long-term receivables from associates and joint ventures, the probability of default tables based on the associates’ proxy credit
rating were used together with EBITDA multiples of the associates based on the total projected amount outstanding at maturity date.
The IFRS 9 ECL model has resulted in an ECL loss of £12.0 million on transition to IFRS 9 in relation to long-term receivables from associates.
At 30 September 2019 the loan receivable net of expected credit loss provision is as follows:
Total gross loans to associates and joint ventures
Loss allowance provision
Loan receivable net of expected credit loss provision
At
30 September
2019
£m
24.0
(12.0)
12.0
145
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Financial Statements
Financial Statements
Notes to the accounts
29 Cash and cash equivalents
Cash and cash equivalents
Classified as held for sale
Cash and cash equivalents
Unsecured bank overdrafts
Cash and cash equivalents in the cash flow statement
Analysis of cash and cash equivalents by currency:
Sterling
US dollar
Australian dollar
Canadian dollar
Euro
Other
Analysis of cash and cash equivalents by interest type:
Floating rate interest
Fixed rate interest
Note
(i)
20
(i)
33
16
At
30 September
2019
£m
301.1
(2.0)
299.1
At
30 September
2018
£m
437.8
–
437.8
301.1
(11.9)
289.2
50.3
236.0
0.1
0.5
0.9
11.3
299.1
90.8
208.3
299.1
437.8
(1.9)
435.9
333.9
89.4
0.2
0.8
5.4
8.1
437.8
2.0
435.8
437.8
(i) Cash and cash equivalents include £117.0 million which the Company intends to make available for the benefit of the Group’s defined benefit
pension schemes following the distribution of its shareholding in Euromoney.
The carrying amount of cash and cash equivalents equates to their fair values.
30 Trade and other payables
At
30 September
2019
£m
At
30 September
2018
£m
Note
36.7
3.6
11.7
12.9
191.3
258.5
514.7
(36.7)
478.0
2.3
480.3
39.9
14.2
10.8
8.1
185.5
234.4
492.9
–
492.9
2.0
494.9
20
Current liabilities
Trade payables
Interest payable
Other taxation and social security
Other creditors
Accruals
Deferred revenue
Classified as held for sale
Non-current liabilities
Other creditors
The carrying amount of trade and other payables approximates to their fair value.
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31 Current tax
Corporation tax payable
Corporation tax receivable
Classified as held for sale
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
2019
£m
3.5
At
30 September
2018
£m
6.1
(1.4)
0.6
(0.8)
2.7
(5.4)
–
(5.4)
0.7
At
30 September
2019
£m
–
–
–
At
30 September
2018
£m
0.6
7.6
8.2
At 30 September 2019
Within one year
Classified as held for sale
Between one and two years
Over five years
At 30 September 2018
Within one year
Between two and five years
Over five years
The Group’s borrowings are analysed by currency and interest rate type as follows:
At 30 September 2019
Fixed rate interest
Floating rate interest
At 30 September 2018
Fixed rate interest
Floating rate interest
Sterling
£m
US dollar
£m
202.8
10.5
213.3
424.4
0.3
424.7
–
1.2
1.2
–
3.1
3.1
Note
20
Overdrafts
£m
Bonds
£m
Loan notes
£m
11.9
(0.1)
11.8
–
–
–
11.8
–
–
–
0.8
202.0
202.8
202.8
1.6
(1.6)
–
–
–
–
–
Total
£m
13.5
(1.7)
11.8
0.8
202.0
202.8
214.6
1.9
218.7
1.7
222.3
–
–
–
1.9
9.1
196.6
205.7
424.4
Euro
£m
–
–
–
–
0.2
0.2
–
–
–
1.7
Other
£m
–
0.1
0.1
–
–
–
9.1
196.6
205.7
428.0
Total
£m
202.8
11.8
214.6
424.4
3.6
428.0
147
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
33 Borrowings continued
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, interest rate caps and currency derivatives, are as follows:
At 30 September 2019
Fixed rate interest
Floating rate interest
At 30 September 2018
Fixed rate interest
Floating rate interest
Sterling
£m
US dollar
£m
141.2
(21.4)
119.8
317.1
(11.6)
305.5
170.7
(76.0)
94.7
320.7
(198.3)
122.4
Euro
£m
–
–
–
–
0.1
0.1
Other
£m
–
0.1
0.1
–
–
–
Total
£m
311.9
(97.3)
214.6
637.8
(209.8)
428.0
Committed borrowing facilities
The Group’s bank loans bear interest charged at LIBOR plus a margin. The margin varies by bank and is based on the Group’s ratio of net debt to
EBITDA or the Group’s credit rating. 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.
During the current period the Group cancelled committed bank facilities amounting to US$77.0 million (£62.6 million), after which the Group’s total
committed bank facilities amount to £381.4 million (2018 £431.2 million). Of these facilities £205.0 million (2018 £205.0 million) are denominated
in sterling and £176.4 million (US$217.0 million) (2018 £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 three years but not more than four years
Expiring in more than four years but not more than five years
Total bank facilities
At
30 September
2019
£m
381.4
–
381.4
At
30 September
2018
£m
–
431.2
431.2
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 three years but not more than four 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 £2.9 million (2018 £3.3 million).
At
30 September
2019
£m
381.4
–
381.4
At
30 September
2018
£m
–
431.2
431.2
148
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Bonds
The nominal, carrying and fair values of the Group’s bonds and the coupons payable are as follows:
Maturity
7 December 2018
9 April 2021
21 June 2027
Annual coupon %
5.75
10.00
6.375
At
30 September
2019
Fair value
£m
–
0.8
237.1
237.9
At
30 September
2018
Fair value
£m
220.2
8.4
228.8
457.4
At
30 September
2019
Carrying value
£m
–
0.8
202.0
202.8
At
30 September
2018
Carrying value
£m
218.7
9.1
196.6
424.4
At
30 September
2019
Nominal value
£m
–
0.8
200.0
200.8
At
30 September
2018
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 direct issue costs, discounts and movements in hedged risks.
The issue costs and discount are being amortised over the expected lives of the bonds using the effective interest method. The unamortised issue
costs amount to £0.5 million (2018 £0.6 million) and the unamortised discount amounts to £0.7 million (2018 £1.2 million).
The fair value of the Group’s bonds have been calculated on the basis of quoted market rates.
The Company’s 2018 bonds matured during the period and were repaid in full. In addition the Company bought back £6.4 million nominal of its
outstanding 2021 bonds incurring a premium of £0.9 million.
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. At 30 September 2019, all loan notes were classified as held for sale.
34 Financial instruments and risk management
The Group’s financial instruments are classified into the following categories:
Derivative instruments
Trade receivables, contract assets and other receivables
Trade payables
Overdrafts, loan notes, finance leases and bank loans
Bonds
Equity investments
Acquisition put option commitments
Provision for contingent consideration payable
Loans to joint ventures and associates
Collateral
Cash and cash equivalents
Cash deposits with original maturities of three months or more
Provision for contingent consideration receivable
Note
(i)
IFRS 9
measurement
category
FVTPL
IAS 39
measurement
category
FVTPL
Amortised cost Amortised cost
Amortised cost Amortised cost
Amortised cost Amortised cost
(ii) Amortised cost Amortised cost
FVTOCI Amortised cost
FVTPL
FVTPL
FVTPL
FVTPL
Amortised cost Amortised cost
Amortised cost Amortised cost
Amortised cost Amortised cost
Amortised cost Amortised cost
FVTPL
FVTPL
(i) To the extent that net investment hedges are effective, changes in fair value of the derivative are taken to the translation reserve through
Other Comprehensive Income.
(ii) The Group’s bonds are measured at amortised cost as adjusted for fair value hedging.
149
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Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
The carrying amounts and gains and losses on financial instruments are as follows:
At
30 September
2019
Carrying value
£m
Year ended
30 September
2019
(Loss)/gain to
income
£m
Year ended
30 September
2019
Gain/(loss) to
equity
£m
At
30 September
2018
Carrying value
£m
Year ended
30 September
2018
(Loss)/gain to
income
£m
Year ended
30 September
2018
Gain/(loss) to
equity
£m
Note
Financial assets
Fair value through profit and loss
Derivative instruments in designated hedge
accounting relationships
Interest rate swaps
Forward foreign currency contracts
Derivative instruments not in designated hedge
accounting relationships
Interest rate swaps
Interest rate caps
Provision for contingent consideration receivable
Fair value through Other Comprehensive Income
Financial assets
Amortised cost
Available for sale investments
Trade receivables and contract assets
Other receivables
Collateral
Cash deposits with original maturities of three months or more
Loans to joint ventures and associates
Cash and cash equivalents
(i)
(ii)
(iii)
(iv)
Financial liabilities
Fair value through profit and loss
Derivative instruments in designated hedge
accounting relationships
Interest rate swaps
Fixed–to–fixed cross–currency swaps
Forward foreign currency contracts
Provision for contingent consideration payable
Acquisition put option commitments
Amortised cost
Trade payables
Bank overdrafts
Bonds
Bank loans
Loan notes
3.2
–
–
0.4
0.3
4.3
–
(1.2)
(3.5)
–
–
–
–
–
–
33.8
–
(4.0)
–
225.4
25.3
15.4
–
12.0
299.1
614.9
–
(24.4)
–
(2.1)
–
(35.9)
(11.8)
(202.8)
–
–
(277.0)
–
(1.5)
–
–
–
3.9
7.6
9.6
–
(1.7)
–
(0.2)
–
–
–
(19.8)
(2.3)
(0.1)
(24.1)
–
6.6
3.0
–
–
–
10.8
16.4
–
(13.6)
–
(0.2)
(0.1)
(0.5)
(0.1)
–
–
–
(14.5)
2.6
–
3.2
3.9
0.1
–
20.4
180.4
33.4
8.0
237.3
18.4
437.8
945.5
(2.1)
(18.0)
–
(4.8)
(8.2)
(39.9)
(1.9)
(424.4)
–
(1.7)
(501.0)
–
(1.7)
3.4
0.4
–
–
(1.7)
2.2
–
3.0
–
–
1.7
7.3
(1.0)
(1.4)
4.9
–
–
–
–
(26.8)
(6.8)
(5.0)
(36.1)
–
–
–
–
–
–
0.2
3.2
1.5
–
–
–
1.6
6.5
–
(0.5)
(1.6)
(0.1)
(0.2)
(0.1)
–
–
2.6
–
0.1
Total for financial instruments
337.9
(14.5)
1.9
444.5
(28.8)
6.6
(i) Other receivables include a 9.0% fixed rate unsecured loan note, repayable on 27 September 2022 with a carrying value of £16.3 million
(2018 £15.4 million).
(ii) The Group deposits collateral with counterparties with whom it has entered into a credit support annex to an ISDA (International Swaps
and Derivatives Association) Master Agreement. These collateral deposits, which represents cash that cannot be readily used in the Group’s
operations, are disclosed within Other financial assets (Note 28).
150
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Daily Mail and General Trust plc Annual Report 2019
(iii) As required by IAS 7, Statement of Cash Flows, cash deposits held with the Group’s bank counterparties with an original maturity date of three
months or more are classified within Other financial assets.
(iv) Loans to joint ventures and associates (included within other financial assets) include a 10.0% fixed rate unsecured loan note, repayable on
31 December 2025 with a carrying value of £12.0 million (30 September 2018 £17.3 million).
Reconciliation of net gain taken to equity is as follows:
Change in fair value of hedging derivatives
Costs of hedging
Fair value movement in financial assets at fair value through Other Comprehensive Income
Translation of financial instruments of overseas operations
Transfer of gain on cash flow hedges from translation reserve to the Consolidated Income Statement
Total gain on financial instruments to equity
Reconciliation of loss taken through income to net finance costs is as follows:
Total loss on financial instruments to income
Add back:
Impairment of trade receivables, contract assets and other receivables
Impairment of available for sale investments
Dividend income
Interest receivable
Interest on pension scheme liabilities less expected return on pension scheme assets
Net finance costs
Year ended
30 September
2019
£m
(13.5)
(0.1)
(4.5)
20.0
–
1.9
Year ended
30 September
2018
£m
2.8
–
–
8.7
(4.9)
6.6
Year ended
30 September
2019
£m
(14.5)
Year ended
30 September
2018
£m
(28.8)
1.5
–
–
(11.5)
7.1
(17.4)
(2.2)
1.8
(0.1)
(4.7)
2.0
(32.0)
Note
39
39
25, 39
39
Note
27
8
9
9
10
10
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 cash or 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 and cash balances are sufficient to cover the likely
medium-term funding requirements of the Group.
Associates, joint ventures and other equity 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 is 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 three months or more amounting to £nil (2018 £237.3 million), the resultant net cash to
EBITDA ratio is 0.37 times (2018 0.01 times net debt to EBITDA). Using a closing rate basis for the valuation of net cash, the net cash to EBITDA ratio
is 0.40 times (2018 0.02 times net debt to EBITDA).
151
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Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
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 liabilities are analysed in the table on page 156 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 24.2 times
(2018 9.2 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 fixed-to-fixed cross-currency swaps;
• buys caps to fix its 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, designated as fair value hedges of a portion of the Group’s bonds; changes in the fair value of the swaps
are recognised in the Consolidated Income Statement and at the same time the carrying value of the hedged bonds are adjusted for movements
in the hedged risk to the extent effective and those adjustments are also recognised in the Consolidated Income Statement. The notional value
of these interest rate swaps amounts to £73.1 million (2018 £93.1 million) with the Group paying floating rates of between 0.77% and 0.96%
(2018 0.33% and 0.94%). The average hedged interest rate for the period was 0.86% (2018 0.63%).
(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 Consolidated Income Statement. These swaps were closed out during the year. The notional value of these interest rate swaps amounts
to US$nil (2018 US$67.0 million) with the Group receiving floating US dollar interest at a rate of 2.35% (2018 rates between 1.33% and 2.35%).
(iii) Fixed-to-fixed cross-currency swaps designated as hedges of the Group’s net investments in foreign operations. The notional value of these
cross-currency swaps amounts to £72.0 million/US$115.0 million (2018 £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% (2018 5.56% and 6.99%). The average hedged GBP/USD exchange rate for the period
was 1.60 (2018 1.61).
(iv) The Group also had a number of outstanding interest rate caps. These amounted to US$95.0 million and £105.0 million notional
(2018 US$195.0 million and £105.0 million) at rates of between 2.09% and 3.50% (2018 2.09% and 3.50%).
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 2019 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 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.
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Daily Mail and General Trust plc Annual Report 2019
Credit risk management
The Group’s principal credit risk relates to its trade and other receivables and non-performance by counterparties to financial instrument contracts.
Trade and other receivables
The Group’s customer base is diversified geographically and by segment with customers generally of a good financial standing. Before accepting
any new customers, the Group assesses the potential customers’ credit quality and sets credit limits by customer. The average credit period is
48 days (2018 38 days). The Group considers the credit risk of trade receivables to be low, although the Group remains vigilant in the current
economic climate. The Group reserves the right to charge interest on overdue receivables, although the Group does not hold collateral over any
trade receivable balances. The Group makes an impairment allowance which is reviewed regularly in conjunction with an analysis of historical
payment profiles, past default experience together with relevant forward looking information. Further information on impairment allowances
relating to trade receivables, contract assets and other receivables can be found in Note 27.
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 150.
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 of 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 the higher of £20.0 million or 25.0% of surplus cash balances deposited (or at risk) with any ‘AA’ or UK ring-
fenced banking counterparty and no more than the higher of £10.0 million or 10.0% of 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.
Expected credit losses on cash and cash equivalents (which includes cash deposits with an original maturity of less than three months) were
reviewed at the reporting date and determined to be immaterial.
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 150.
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 investments in foreign operations (net investment hedges).
To qualify for hedge accounting, each individual hedging relationship must be expected to be effective, be designated and documented at its
inception and throughout the life of the hedge relationship.
Fair value hedges
The Group’s policy is to use interest rate swaps to convert a proportion of its fixed rate debt to floating rates. The swaps are designated as a hedge
of the change in fair value of the Group’s fixed rate debt.
The notional amount of the interest rate swaps is used to hedge an equivalent notional amount of fixed rate debt. Accordingly, the hedge ratio
is deemed to be 100%.
Since the critical terms of the swaps match those of the fixed rate debt the Group expects a highly effective hedging relationship. The fair value
of the designated fixed rate debt is expected to move in the opposite direction to the fair value of the interest rate swaps as a result of changes
in external market interest rates.
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Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
The nominal and carrying amounts of hedged fixed rate debt are as follows:
Nominal amount
Carrying amount
At
30 September
2019
£m
73.1
75.8
At
30 September
2018
£m
93.1
93.1
The carrying amount of debt in the table above is included within borrowings in the Consolidated Statement of Financial Position.
The Change in value of the hedged fixed rate debt is used as the basis for recognising hedge ineffectiveness for the period. The following table shows
the fair value adjustment to sterling debt (which is included in the carrying amount above) and the fair value of related derivatives designated in fair
value hedging relationships included in the Consolidated Statement of Financial Position, together with the fair value gains and losses thereon
included in the Consolidated Income Statement for the current and prior periods:
Sterling interest rate swaps
Sterling debt
Total
Fair value at
30 September
2017
£m
2.8
(2.8)
–
Year ended
30 September
2018
fair value
(loss)/gain
£m
(2.3)
2.3
–
Fair value at
30 September
2018
£m
0.5
(0.5)
–
Year ended
30 September
2019 fair value
gain/(loss)
£m
2.7
(2.7)
–
Fair value at
30 September
2019
£m
3.2
(3.2)
–
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.
There were no cash flow hedging relationships during the year ended 30 September 2019. All cash flow hedges were effective throughout the prior
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.
The carrying amount of the Group’s net investments in foreign operations exceeds the amount of the hedging instruments, such that the amount
of net investments designated in the hedge relationship is equal to the amount of the hedging instruments. Accordingly, the hedge ratio is deemed
to be 100%.
Since the critical terms of the hedging instruments match those of the net investments in foreign operations the Group expects a highly effective
hedging relationship. The carrying value of the designated net investments in foreign operations is expected to move in the opposite direction to the
mark-to-market value of the hedging instruments as a result of changes in market exchange rates.
Hedge effectiveness
Since the Group expects the hedge relationships described above to be highly effective, a qualitative assessment of effectiveness is performed
on inception, at each reporting date, and upon any material change in circumstances affecting the hedge effectiveness requirements.
The key sources of ineffectiveness for the designated relationships described above are:
(i) A reduction to the amount of the Group’s hedged fixed rate debt to an amount that is less than the notional amount of the interest rate swaps.
(ii) An insufficient amount of net investments in foreign operations (i.e. less than the amount of the hedging instruments).
(iii) A material change in the Group’s credit risk or that of its swap counterparties.
If changes in circumstances cause the critical terms of the hedging instrument to no longer match those of the hedged item, ineffectiveness is
monitored using the hypothetical derivative method.
All designated hedge relationships were effective throughout the year ended 30 September 2019. There was no ineffectiveness recognised in the
Consolidated Income Statement for the current or prior year.
The Group’s derivative financial instruments, other than acquisition option commitments, and their maturity profiles are summarised as follows:
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Derivative financial assets:
At 30 September 2019
Between one and two years
Between two and five years
Over five years
At 30 September 2018
Within one year
Between two and five years
Over five years
Derivative financial liabilities:
At 30 September 2019
Within one year
Over five years
At 30 September 2018
Within one year
Over five years
Daily Mail and General Trust plc Annual Report 2019
Derivatives not
qualifying
for hedge
accounting
£m
Fair value
hedges
£m
Derivative
financial assets
£m
1.3
–
1.9
3.2
3.2
0.7
1.9
–
1.9
2.6
–
0.1
0.3
0.4
0.4
–
1.1
6.0
7.1
7.1
1.3
0.1
2.2
3.6
3.6
0.7
3.0
6.0
9.0
9.7
Fair value
hedges
£m
Net
investment
hedges
£m
Derivative
financial
liabilities
£m
–
–
–
–
(2.1)
(2.1)
(18.7)
(5.7)
(24.4)
(6.6)
(11.4)
(18.0)
(18.7)
(5.7)
(24.4)
(6.6)
(13.5)
(20.1)
155
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Maturity profile of financial liabilities
The remaining undiscounted contractual liabilities and their maturities are as follows:
At 30 September 2019
Trade payables
Bank overdrafts
Bonds
Contingent consideration
Fixed-to-fixed cross-currency swaps
At 30 September 2018
Trade payables
Bank overdrafts
Bonds
Loan notes
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Fixed-to-fixed cross-currency swaps
Within
one year
£m
Between one and
two years
£m
Between two
and five years
£m
Between five
and ten years
£m
(35.9)
(12.0)
(12.8)
(0.6)
(77.1)
(138.4)
(39.9)
(1.9)
(234.3)
(1.7)
(1.2)
(0.6)
0.4
(36.7)
(315.9)
–
–
(13.5)
(1.5)
(1.4)
(16.4)
–
–
(13.5)
–
–
–
0.4
(5.7)
(18.8)
–
–
(38.3)
–
(4.2)
(42.5)
–
–
(45.8)
–
(3.7)
(7.7)
1.1
(17.1)
(73.2)
–
–
(234.7)
–
(24.2)
(258.9)
–
–
(247.5)
–
–
–
1.3
(109.8)
(356.0)
Total
£m
(35.9)
(12.0)
(299.3)
(2.1)
(106.9)
(456.2)
(39.9)
(1.9)
(541.1)
(1.7)
(4.9)
(8.3)
3.2
(169.3)
(763.9)
Included in the maturity table above are interest rate swaps with a notional value of US$nil (2018 US$67.0 million) and currency swaps with a
notional value of US$90.0 million (2018 US$90.0 million) with mutual break clauses at fair value every five years. At 30 September 2019 these break
clauses are exercisable within less than one year from the balance sheet date, therefore the cash flows associated with these fixed-to-fixed cross-
currency swaps have been included in within one year.
Reconciliation of undiscounted liabilities to amounts on the Consolidated Statement of Financial Position is as follows:
At 30 September 2019
Trade payables
Bank overdrafts
Bonds
Contingent consideration
Fixed-to-fixed cross-currency swaps
At 30 September 2018
Trade payables
Bank overdrafts
Bonds
Loan notes
Contingent consideration
Acquisition put option commitments
Interest rate swaps
Fixed-to-fixed cross-currency swaps
Undiscounted
value of
financial
liabilities
£m
Interest
£m
Unamortised
issue costs
£m
Unamortised
premium
on issue
£m
Discounting
and mark to
market
adjustments
£m
Undiscounted
value of
financial asset
£m
(35.9)
(12.0)
(299.3)
(2.1)
(106.9)
(456.2)
(39.9)
(1.9)
(541.1)
(1.7)
(4.9)
(8.3)
3.2
(169.3)
(763.9)
–
0.2
98.5
–
3.6
102.3
–
–
115.4
–
–
–
(3.2)
10.3
122.5
–
–
0.5
–
–
0.5
–
–
0.6
–
–
–
–
–
0.6
–
–
0.7
–
–
0.7
–
–
1.2
–
–
–
–
–
1.2
–
–
(3.2)
–
(2.9)
(6.1)
–
–
(0.5)
–
0.1
0.1
(2.1)
4.9
2.5
–
–
–
–
81.8
81.8
–
–
–
–
–
–
–
136.1
136.1
Total
£m
(35.9)
(11.8)
(202.8)
(2.1)
(24.4)
(277.0)
(39.9)
(1.9)
(424.4)
(1.7)
(4.8)
(8.2)
(2.1)
(18.0)
(501.0)
At 30 September 2019, all interest rate swaps were in an asset position. Since interest rate swaps are settled on a net basis, no liability is included
in the above maturity tables.
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Sensitivity analysis
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 2019 it is estimated that an increase of 1.0% in interest rates would have decreased the Group’s finance costs by £1.2 million
(2018 £8.1 million). There would have been no effect on amounts recognised directly in equity. A decrease of 1.0% in interest rates would have
decreased the Group’s finance costs by £0.4 million (2018 £5.8 million increase). 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 2019 it is estimated that a 10.0% strengthening of sterling against the US dollar would have increased the net gain taken to equity
by £11.9 million (2018 £13.3 million) and decreased the net loss taken to income by £1.6 million (2018 increased the net loss by £0.4 million). A 10.0%
weakening of sterling against the US dollar would have decreased the net gain taken to equity by £14.5 million (2018 £16.3 million) and increased
the net loss to income by £2.0 million (2018 decreased the net loss by £0.5 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 2019, there were no outstanding acquisition put option commitments. At 30 September 2018, it was estimated that an increase or
decrease of 1.0% in the rate used to discount the expected gross value of payments would not lead any change to the present value of acquisition
put option commitments.
Valuation techniques and assumptions applied for the purpose of measuring fair value
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into
levels 1 to 3 based on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
At 30 September 2019 by valuation method under IFRS 9
Financial assets
Financial assets at fair value through Other Comprehensive Income
Fair value through profit and loss
Derivative instruments not in designated 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 2018 by valuation method under IAS 39
Financial assets
Available for sale investments
Fair value through profit and loss
Derivative instruments not in designated 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
Note
25, (i)
(ii)
(iii)
(ii)
36, (iii)
(ii)
Note
25, (i)
(ii)
(iii)
(ii)
36, (iii)
(ii)
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
–
25.7
0.4
–
3.2
29.3
–
(24.4)
(24.4)
8.1
–
0.3
–
8.4
(2.1)
–
(2.1)
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)
Total
£m
33.8
0.4
0.3
3.2
37.7
(2.1)
(24.4)
(26.5)
Total
£m
20.4
7.1
0.1
2.6
30.2
(4.8)
(20.1)
(24.9)
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Financial Statements
Financial Statements
Notes to the accounts
34 Financial instruments and risk management continued
Sensitivity analysis continued
Equity investments classified as available for sale in the prior year were considered level 3 fair value instruments in line with the requirements
of IAS 39. These instruments have been classified as FVTOCI as of 30 September 2019 and transferred to level 2 category as the observable market
data used in the valuation became available during this reporting period.
(i) Unlisted equity investments are valued using a variety of techniques including comparable company valuation multiples and discounted
cashflows. In extremely limited circumstances, where insufficient recent information is available to measure fair value or when there is a wide
range of possible fair value measurements, cost is used since this represents the best estimate of fair value in the range of possible valuations.
Available for sale 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.
(ii) 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.
(iii) Contingent consideration is valued based on the future profitability of the businesses to which the contingent consideration relates, discounted
at market rates of interest.
Reconciliation of level 3 fair value measurement of financial assets is as follows:
At 30 September 2017
Additions
Contingent consideration received
Transfer to investment in associates
Impairment charge
Exchange adjustment
At 30 September 2018
Adjustment for transition to IFRS 9
Transfer from Level 3 to Level 2 on transition to IFRS 9
Restated at 1 October 2018
Transfer from investment in associates
Fair value movement in financial assets at fair value through Other Comprehensive Income
Exchange adjustment
At 30 September 2019
Reconciliation of level 3 fair value measurement of financial liabilities is as follows:
At 30 September 2017
Cash paid to settle contingent consideration in respect of acquisitions
Change in fair value of contingent consideration
Finance charge on discounting of contingent consideration
Additions to contingent consideration
Contingent consideration owned by subsidiaries disposed
At 30 September 2018
Cash paid to settle contingent consideration in respect of acquisitions
Change in fair value of contingent consideration
Additions to contingent consideration
Exchange adjustment
At 30 September 2019
158
158
Note
2
Note
36
10, 19, 36
10, 19, 36
36
36
36
10, 36
36
36
£m
30.9
20.8
(0.2)
(29.4)
(1.8)
0.2
20.5
9.4
(21.9)
8.0
0.3
(0.1)
0.2
8.4
£m
(17.0)
14.4
(2.2)
(0.2)
(0.2)
0.4
(4.8)
4.7
(0.2)
(1.6)
(0.2)
(2.1)
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Daily Mail and General Trust plc Annual Report 2019
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 £2.9 million (2018 £nil to £19.4 million).
The increase in fair value of contingent consideration of £0.2 million (2018 increase of £2.2 million) and finance charge on discounting of contingent
consideration of £nil (2018 £0.2 million) were charged to the Consolidated 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 2019 increasing or decreasing by £nil and £nil respectively (2018 £0.4 million and £0.4 million), with the corresponding
change to the value at 30 September 2019 charged or credited to the Consolidated Income Statement in future periods.
The rates used to discount contingent consideration range from 0.0% to 1.0% (2018 0.8% to 1.1%). 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 2019 decreasing or increasing by
£nil and £nil respectively (2018 £0.1 million and £0.1 million), with the corresponding change to the value at 30 September 2019 charged or credited
to the Consolidated Income Statement in future periods.
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 2019 were £7.3 million (2018 £9.3 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, £16.3 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 (2018 £nil)
relating to this agreement were made in the year to 30 September 2019.
The Company intends to make available £117.0 million from the Group’s cash resources to the Group’s defined benefit pension schemes following
the disposal of Euromoney. In light of the forthcoming actuarial valuation as at 31 March 2019, the Group and the Trustees of the pension schemes
are in discussions to finalise these arrangements.
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.
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Financial Statements
Notes to the accounts
35 Retirement benefit obligations continued
Defined benefit schemes continued
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 2019 along with asset valuations and cash flow
information from the schemes for the year to 30 September 2019.
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
2019
Schemes
in surplus
£m
(2,918.7)
3,144.4
At
30 September
2019 Schemes
in deficit
£m
(57.1)
46.4
At
30 September
2019
Total
£m
(2,975.8)
3,190.8
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
225.7
(10.7)
215.0
249.1
(5.6)
243.5
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 2019 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 £39.9 million (2018 £41.0 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
Interest cost
Past service cost
Net benefit payments
Actuarial (loss)/gain as a result of:
– changes in financial assumptions
– changes in demographic assumptions
– membership experience
Defined benefit obligation at end of year
160
160
Note
10
3
39
39
39
Year ended
30 September
2019
£m
(2,594.9)
(71.0)
(3.1)
112.6
(411.6)
(7.1)
(0.7)
(2,975.8)
Year ended
30 September
2018
£m
(2,690.7)
(68.7)
(17.3)
99.2
58.7
15.8
8.1
(2,594.9)
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Daily Mail and General Trust plc Annual Report 2019
A reconciliation of the fair value of assets is shown in the following table:
Fair value of assets at start of year
Interest income on scheme assets
Company contributions
Net benefit payments
Return on plan assets, excluding amounts included in interest income on scheme assets
Fair value of assets at end of year
The fair value of assets is categorised as follows:
Note
10
15
39
Year ended
30 September
2019
£m
2,838.4
78.1
12.8
(112.6)
374.1
3,190.8
Year ended
30 September
2018
£m
2,753.1
70.7
12.8
(99.2)
101.0
2,838.4
Equity
– Investment funds
– Private equity
Liability Driven Investments
Bonds
Property
Infrastructure
Cash/Other
Total Assets
Note
(i)
(ii)
(iii)
(iv)
Year ended
30 September
2019
£m
Year ended
30 September
2019
%
Year ended
30 September
2018
£m
Year ended
30 September
2018
%
360.4
209.1
831.8
1,008.8
488.4
220.3
72.0
3,190.8
11
7
26
32
15
7
2
100
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
(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 2019 was £nil (0.0% of assets), (2018 £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
2019
%
3.10
3.00
1.80
Year ended
30 September
2018
%
3.25
3.10
2.80
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 & Poor’s, 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.
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Financial Statements
Financial Statements
Notes to the accounts
35 Retirement benefit obligations continued
Defined benefit schemes continued
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 (2018 18 years).
The table below illustrates examples of the assumed average life expectancies from age 60 for the principal schemes:
For a current 60-year-old male member of the scheme
For a current 60-year-old female member of the scheme
For a current 50-year-old male member of the scheme
For a current 50-year-old female member of the scheme
Year ended
30 September
2019
Future life
expectancy from
age 60 (years)
26.7
28.3
27.1
29.0
Year ended
30 September
2018
Future life
expectancy from
age 60 (years)
26.2
28.2
26.7
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
Total credit/(charge) to the Consolidated Income Statement
Note
3
10
Year ended
30 September
2019
£m
(3.1)
(3.1)
7.1
4.0
Year ended
30 September
2018
£m
(17.3)
(17.3)
2.0
(15.3)
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 2019 from a one-year increase in life expectancy
Change in projected pension cost for the year to 30 September 2020 from a one-year increase
Inflation rate
Decrease in pension obligation at 30 September 2019 from a 0.1 % p.a. increase (excluding hedging)
Change in projected pension cost for the year to 30 September 2020 from a 0.1 % p.a. increase
Discount rate
Decrease in pension obligation at 30 September 2019 from a 0.1 % p.a. decrease (excluding hedging)
Change in projected pension cost for the year to 30 September 2020 from a 0.1 % p.a. decrease
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
+/-
+/-
+/-
115.0
2.0
24.0
0.4
51.5
1.0
87.7
2.4
44.2
1.1
50.0
1.5
There are significant risks in connection with running defined benefit schemes, and the key risks are highlighted below:
Inflation rate risk
A significant proportion of the defined benefit obligation is linked to inflation, therefore increased inflation will result in a higher pension obligation.
The Trustees have sought to acquire certain assets with exposure to inflationary uplifts in order to negate a proportion of this risk. 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.
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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 (loss)/gain recognised in SOCI
Cumulative actuarial gain 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:
Note
39
Year ended
30 September
2019
£m
(45.3)
331.3
286.0
Year ended
30 September
2018
£m
183.6
147.7
331.3
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
2019
£m
(2,975.8)
3,190.8
215.0
(419.4)
374.1
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
The Group expects to contribute approximately £16.3 million to the schemes during the year to 30 September 2019 relating to the deficit funding
payments described above.
In addition, the Company intends to make available £117.0 million from the Group’s cash resources to the Group’s defined benefit pension schemes
following the disposal of Euromoney. In light of the forthcoming actuarial valuation as at 31 March 2019, the Group and the Trustees of the pension
schemes are in discussions to finalise these arrangements.
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 £159.2 million (2018 £140.1 million) at the year end. The pension cost attributable
to these plans during the year amounted to £14.9 million (2018 £13.5 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 £2.5 million (2018 £3.2 million).
163
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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
(ii)
£m
Claims
and legal
£m
Other
(i)
£m
Current liabilities
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
Additions
Charged during year
Utilised during year
Reclassification between categories
Transfer from non-current liabilities
Contingent consideration paid
Fair value adjustment to contingent consideration
Classified as held for sale
Exchange adjustment
At 30 September 2019
17
10
17
17
10
20
19.7
–
23.8
(21.5)
0.1
–
–
–
–
22.1
–
24.1
(17.1)
–
–
–
–
–
–
29.1
0.5
–
(0.3)
–
–
–
–
–
–
0.2
–
–
(0.1)
–
–
–
–
–
–
0.1
0.8
–
1.5
(0.7)
0.5
–
–
–
–
2.1
–
(0.3)
(0.3)
–
–
–
–
–
–
1.5
Non-current liabilities
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
Additions
Charged during year
Utilised during year
Transfer to current liabilities
Exchange adjustment
At 30 September 2019
1.5
–
0.3
(1.5)
–
–
–
–
–
0.3
–
–
–
(0.3)
–
–
–
–
–
–
3.4
0.2
–
–
10.9
(14.4)
0.2
0.9
–
1.2
0.3
–
–
–
3.5
(4.7)
0.2
–
0.1
0.6
8.3
–
5.6
(9.6)
–
–
–
–
–
4.3
–
36.6
(5.1)
–
–
–
–
(32.5)
–
9.4
–
2.8
(3.6)
(0.1)
–
–
–
0.1
8.6
–
1.5
(0.1)
0.3
–
–
–
(1.7)
1.5
3.3
10.1
Onerous
leases
£m
Contingent
consideration
(ii)
£m
Note
10
17
3.3
1.3
–
–
(0.5)
–
0.1
4.2
–
(0.6)
–
–
0.1
3.7
13.6
–
–
(0.4)
(10.9)
1.3
–
3.6
1.3
–
–
(3.5)
0.1
1.5
Other
(i)
£m
2.2
0.3
(0.1)
–
–
–
(0.2)
2.2
–
0.4
(0.1)
–
0.1
2.6
Total
£m
43.6
0.2
33.7
(36.9)
11.4
(14.4)
0.2
0.9
0.1
38.8
0.3
61.9
(22.7)
–
3.5
(4.7)
0.2
(34.2)
1.6
44.7
Total
£m
19.1
1.6
(0.1)
(0.4)
(11.4)
1.3
(0.1)
10.0
1.3
(0.2)
(0.1)
(3.5)
0.3
7.8
(i) Other current provisions principally comprise tax provisions of £1.7 million (2018 £nil), end of service provisions of £4.8 million (2018 £3.8 million),
dilapidation provisions of £2.0 million (2018 £2.0 million) and provisions for national insurance contributions of £1.7 million (2018 £1.7 million).
Other non-current provisions principally comprise dilapidation provisions of £1.1 million (2018 £1.0 million), end of service provisions
amounting to £0.9 million (2018 £0.6 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 £0.6 million (2018 £0.7 million).
164
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Daily Mail and General Trust plc Annual Report 2019
(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
2019
£m
0.6
1.5
–
2.1
At
30 September
2018
£m
1.2
–
3.6
4.8
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 £1.6 million. Certain contingent
consideration arrangements are not capped since they are based on future business performance.
37 Deferred taxation
At 30 September 2017
Disclosed within non-current liabilities
Disclosed within non-current assets
(Charge)/credit to income
(Charge)/credit to income due to change in tax rate
Charge to equity
Charge to equity due to change in tax rate
Owned by subsidiaries acquired
Owned by subsidiaries disposed
Exchange adjustment
Note
11, (i)
11
39, 40
41
Accelerated
capital
allowances
£m
52.1
8.6
43.5
(11.6)
(2.4)
–
–
–
(2.3)
0.1
Goodwill and
intangible
assets
£m
(68.7)
(61.9)
(6.8)
17.0
19.5
–
–
(0.5)
0.7
(2.8)
Share-based
payments
£m
11.3
9.5
1.8
0.3
(0.9)
(3.9)
(2.9)
–
–
(0.1)
Deferred
interest
£m
34.0
–
34.0
(4.0)
–
–
–
–
–
–
Trading
losses and
tax credits
£m
27.5
19.1
8.4
(0.7)
(0.1)
–
–
–
(0.1)
0.4
At 30 September 2018
Disclosed within non-current liabilities
Disclosed within non-current assets
Adjustment for transition to IFRS 15
Restated at 1 October 2018
(Charge)/credit to income
Charge to equity
Owned by subsidiaries acquired
Owned by subsidiaries disposed
Classified as held for sale
Exchange adjustment
At 30 September 2019
Disclosed within non-current liabilities
Disclosed within non-current assets
At 30 September 2019
11, (i)
39
17
18
20
35.9
–
35.9
–
35.9
(3.2)
–
–
–
(1.2)
0.3
31.8
–
31.8
31.8
(34.8)
(6.2)
(28.6)
–
(34.8)
7.4
–
(0.3)
4.2
7.5
(1.6)
(17.6)
(2.5)
(15.1)
(17.6)
3.8
–
3.8
–
3.8
1.9
0.6
–
–
–
–
6.3
–
6.3
6.3
30.0
–
30.0
–
30.0
(5.6)
–
–
–
–
–
24.4
–
24.4
24.4
27.0
–
27.0
–
27.0
4.8
–
–
–
(2.6)
2.3
31.5
–
31.5
31.5
Pension
scheme
deficit
£m
(6.6)
–
(6.6)
0.3
–
(31.2)
–
–
–
–
(37.5)
–
(37.5)
–
(37.5)
(4.0)
7.7
–
–
–
–
(33.8)
–
(33.8)
(33.8)
Other
£m
14.2
12.6
1.6
8.3
(3.6)
–
–
–
(3.1)
3.1
18.9
–
18.9
1.1
20.0
(1.4)
–
–
–
(9.6)
0.8
9.8
–
9.8
9.8
Total
£m
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
1.1
44.4
(0.1)
8.3
(0.3)
4.2
(5.9)
1.8
52.4
(2.5)
54.9
52.4
(i)
Includes £7.6 million credit attributable to discontinuing operations in the year ended 30 September 2019 (£nil year ended 30 September 2018).
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
North America
Rest of the World
At
30 September
2019
£m
45.8
9.0
1.1
55.9
At
30 September
2018
£m
40.1
15.7
1.2
57.0
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.
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Financial Statements
Financial Statements
Notes to the accounts
37 Deferred taxation continued
There is an unrecognised deferred tax asset of £56.0 million (2018 £49.7 million) which relates to revenue losses and £88.3 million (2018 £96.1 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 £115.0 million (2018 £113.9 million).
No deferred tax liability is recognised on temporary differences of £278.5 million (2018 £74.6 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 2019 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
2019
£m
2.5
26.8
29.3
Allotted, issued
and fully paid
At 30 September
2018
£m
2.5
42.8
45.3
Note
(i)
Allotted, issued and
fully paid
At 30 September
2019
Number of shares
19,890,364
214,913,327
234,803,691
Allotted, issued and
fully paid
At 30 September
2018
Number of shares
19,890,364
342,204,470
362,094,834
Note
(i)
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.
(i) On 3 March 2019, the Group announced its intention to distribute all of the Euromoney Institutional Investor PLC (Euromoney) shares owned by
the Group to certain holders of DMGT’s A Ordinary Non-Voting Shares (A Shares), by way of a dividend in specie (the Euromoney Distribution),
as well as a £200.0 million cash distribution (the Cash Distribution).
The terms were such that Fully Participating Shareholders would participate in the Euromoney Distribution and Cash Distribution whilst
Rothermere Affiliated Shareholders would only participate in the Cash Distribution and on a limited basis.
The proposal was approved at a Class Meeting of the Fully Participating Shareholders on 26 March 2019. The Euromoney Distribution occurred
at 8am on 2 April 2019 and the Cash Distribution on 15 April 2019.
Before these distributions were made c.46.4% of the A Shares held by Fully Participating Shareholders were converted into a new class of
B Shares and c.4.0% of the A Shares held by Rothermere Affiliated Shareholders converted into a new class of C Shares.
The Euromoney Distribution and a special dividend of £183.0 million in aggregate in cash was then paid to the Fully Participating Shareholders
in respect of the B Shares and a restricted special dividend of £17.0 million in aggregate in cash was paid to the Rothermere Affiliated
Shareholders in respect of the C Shares.
Once these distributions were made the B Shares and the C Shares were converted into Deferred B Shares and Deferred C Shares respectively
before being transferred to the Company for no valuable consideration and cancelled shortly thereafter. Consequently, these distributions
resulted in a reduction in the share capital of DMGT. The voting Ordinary Shares did not participate in the distributions.
For each A Share held at 6.00pm on 29 March 2019, the conversion record time, the Fully Participating Shareholders received c.0.19933 of a
Euromoney Share and c.68.13p in cash, and there was a reduction in their holding of c.0.46409 of an A Share. For each A Share held by the
Rothermere Affiliated Shareholders, they received c.25.53p in cash and there was a reduction in their holding of c.0.03946 of an A Share.
The Rothermere Affiliated Shareholders’ proportionate interest in the total number of A Shares in issue increased from 20.0% of the issued
A Shares before the distributions to 30.0% after and their combined shareholding of A Shares and Ordinary Shares increased from 24.0% of the
issued A Shares and Ordinary Shares before the distributions to 36.0% after.
The Company intends to make available £117.0 million from the Group’s cash resources to the Group’s defined benefit pension schemes. In light
of the forthcoming actuarial valuation as at 31 March 2019, the Group and the Trustees of the pension schemes are in discussions to finalise
these arrangements.
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Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
Note
17.8
17.8
5.0
16.0
21.0
(57.2)
(2.5)
10.6
(49.1)
5.0
–
5.0
(64.3)
(14.3)
21.4
(57.2)
(i)
(ii)
39 Reserves
Share premium account
At start and end of year
Capital redemption reserve
At start of year
On cancellation of A Ordinary Non-Voting Shares
At end of year
Own shares
At start of year
Purchase of DMGT shares
Own shares released on vesting of share options
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.
At 30 September 2019, this investment comprised 4,566,121 A Ordinary Non-Voting Shares (2018 4,812,419 shares) held in treasury and 2,157,613
A Ordinary Non-Voting Shares (2018 2,981,109 shares) held in the employee benefit trust. The market value of the Treasury Shares at 30 September
2019 was £38.9 million (2018 £33.8 million) and the market value of the shares held in the employee benefit trust at 30 September 2019 was
£18.4 million (2018 £20.9 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.
(i) The Company purchased 0.4 million A Ordinary Non-Voting Shares having a nominal value of £0.1 million to match obligations under incentive
plans. The consideration paid for these shares was £2.5 million.
(ii) During the period, the Company utilised 1.5 million A Ordinary Non-Voting Shares in order to satisfy incentive schemes. This represented 0.7%
of the called-up A Ordinary Non-Voting Share capital at 30 September 2019. The carrying value of these shares was £10.6 million.
At 30 September 2019 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 2,728,139 A Ordinary Non-Voting Shares (2018 3,075,745 shares).
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 gain on cash flow hedges from translation reserve to Consolidated Income Statement
Change in fair value of cash flow hedges
Loss on hedges of net investments in foreign operations
Costs of hedging
At end of year
Note
8, 18
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
53.5
16.2
(3.6)
–
–
(13.5)
(0.1)
52.5
74.9
(8.9)
(10.4)
(4.9)
4.9
(2.1)
–
53.5
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.
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Financial Statements
Financial Statements
Notes to the accounts
39 Reserves continued
Retained earnings
At start of year
Adjustment for transition to IFRS 15
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Profit for the period
Dividends paid
Euromoney dividend in specie
Adjustment to Euromoney dividend in specie
Impairment of Euromoney following dividend in specie
Euromoney cash distribution
Actuarial (loss)/gain on defined benefit pension schemes
Credit to equity for share-based payments
Settlement of exercised share options of subsidiaries
Fair value movement in financial assets at fair value through other comprehensive income
Corporation tax on share-based payments
Deferred tax on actuarial movement
Deferred tax on other items recognised directly in equity
Share of joint ventures’ and associates’ items of other comprehensive (expense)/income
At end of year
At end of year – total reserves
Note
2
2
12
12, (i)
12, (i)
12, (ii)
12, (i)
35
15
25
37
37
7
(673.6)
11.8
Year ended
30 September
2019
£m
Year ended
30 September
2018
£m
1,597.5
(2.4)
(2.9)
1,592.2
90.9
(74.1)
(661.8)
(11.8)
(200.0)
(45.3)
21.1
(11.5)
(4.5)
–
7.7
0.6
(0.7)
702.8
829.5
–
–
829.5
689.4
(81.0)
–
–
–
183.6
10.8
(13.8)
–
2.3
(31.2)
(6.8)
14.7
1,597.5
745.0
1,616.6
(i) At 31 March 2019, in relation to the disposal of Euromoney, the Group made provision for a cash dividend payable on 15 April 2019 of
£200.0 million in accordance with IAS 32 Financial Instruments, and a dividend in specie of £673.6 million, based on the fair value of Euromoney
at 31 March 2019, in accordance with IFRIC 17 Distributions of non-cash assets to owners.
The dividend in specie paid on 2 April 2019 amounted to £661.8 million and was calculated using a Euromoney share price of £12.36 at 8am
on that date. This reduced the dividend provided at 31 March 2019 by £11.8 million, from £673.6 million to £661.8 million.
(ii) At 31 March 2019 the Group’s investment in Euromoney was transferred to Assets Held for Sale at the lower of carrying value and fair value less
costs to sell. This resulted in an impairment charge of £23.5 million for the period to 31 March 2019 which was taken to the Consolidated Income
Statement in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.
Following the Group’s half year end, the Euromoney share price fell from £12.58 on 31 March 2019 to £12.36 at 8am on 2 April 2019, the time and
date of the distribution which reduced the dividend in specie provided at 31 March 2019 by £11.8 million. In addition, the fall in the Euromoney
share price resulted in a further impairment charge of £11.8 million in the second half which, under the principles of IFRIC 17 was charged to
retained earnings.
40 Non-controlling interests
At start of year
Share of profit/(loss) for the period
Dividends paid
Foreign exchange differences on translation of foreign operations
Recycled to Consolidated Income Statement on disposals
At end of year
168
168
Note
18
Year ended
30 September
2019
£m
13.5
0.4
(1.0)
(0.1)
(12.8)
–
Year ended
30 September
2018
£m
11.0
(1.2)
(0.2)
0.2
3.7
13.5
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
41 Commitments and contingent liabilities
Commitments
At 30 September 2019, the Group had outstanding capital expenditure commitments as follows:
Property, plant and equipment
Contracted but not provided in the financial statements
At
30 September
2019
£m
At
30 September
2018
£m
–
–
At 30 September 2019, 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
2019
Properties
£m
28.1
23.4
39.8
9.3
100.6
At
30 September
2018
Properties
£m
26.9
22.8
45.8
11.4
106.9
At
30 September
2019
Plant and
equipment
£m
1.4
0.8
0.7
–
2.9
At
30 September
2018
Plant and
equipment
£m
1.3
1.0
0.7
–
3.0
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 2019, 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
At
30 September
2019
£m
16.8
–
16.8
At
30 September
2018
£m
17.1
6.2
23.3
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 2019, the commitment to purchase ink over this period was £21.7 million (2018 £21.7 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 2019, the commitment to purchase printing capacity over this period was £40.0 million (2018 £29.1 million).
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Notes to the accounts
41 Commitments and contingent liabilities continued
Contingent liabilities
The Group has issued standby letters of credit amounting to £2.9 million (2018 £3.3 million).
The Group is exposed to libel claims in the ordinary course of business and vigorously defends against claims received. The Group makes provision
for the estimated costs to defend such claims and provides for any settlement costs when such an outcome is judged probable.
The Group’s Energy Information business (Genscape) provided a 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 two companies but verified by
Genscape in 2014 under the Program, the EPA issued a notice of intent to revoke the ability of Genscape to verify RINs as a third-party auditor
on 4 January 2017. Following the EPA investigation of the two companies in April 2016, the two companies pleaded guilty of fraud in connection
with generating the RINs.
EPA regulations for the audit Program set a liability cap on replacement of invalid RINs of 2.0% of the RINs. In April 2017 Genscape voluntarily paid
the 2.0% liability cap associated with the invalid RINs at a cost of US$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 fraud, auditor error and negligence.
The EPA has not formally alleged any fraud or intentional wrongdoing by Genscape, but in its May 2019 final determination letter, EPA did find
grounds for auditor error and negligence by Genscape and ordered Genscape to replace 69.2 million RINs it had verified.
In July 2019, Genscape filed a petition for review with the Sixth Circuit Court of Appeals and a motion to stay the EPA’s order to replace the
69.2 million RINs which was accepted for the duration of Genscape’s petition for review.
Since RINs trade in a volatile range, averaging approximately 56 cents over the previous 24 months, this equates to a potential maximum claim of
approximately US$38.4 million. Using the year end price of 41 cents the potential maximum claim would be US$28.1 million. Genscape continues to
co-operate with EPA and in October 2019 Genscape made an offer to replace 4.6 million RINs at a cost of approximately US$2.5 million but the EPA
have not responded to this offer. Discussions with the EPA are ongoing but considering the uncertainties involved, the length of time involved and
taking note of the order from the EPA, the Group, without admitting any wrongdoing, has made a provision for the potential maximum replacement
RINs cost of US$40.0 million, including directly attributable costs. This estimate was based on the average two-year RIN price due to the liquidity
and volatility of the market price of RINs. This provision could change substantially over time as the dispute progresses and new facts emerge.
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, 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
Energy Information
Property Information
Consumer Media
Social security costs
Scheme
Equity-Settled Executive Bonuses
Long-Term Incentive Plan
Option Plan
Option Plan
Option Plan
Long-Term Incentive Plan
Year ended
30 September
2019
£m
–
13.9
1.6
–
0.7
4.9
2.1
23.2
Year ended
30 September
2018
£m
0.1
5.6
1.1
0.1
0.3
2.9
1.4
11.5
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:
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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 100.0%
of salary in any year in normal circumstances and 200.0% of salary in exceptional circumstances. Awards will not normally vest until three years after
the award and the performance conditions have been met. No options were outstanding to Directors during the year.
Outstanding at 1 October 2018
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Modified during the period
Outstanding at 30 September 2019
Exercisable at 30 September 2019
Exercisable at 1 October 2018
Note
(i)
Year ended
30 September
2019
Number of
share options
413,314
300,000
–
(46,074)
(30,000)
23,865
661,105
168,903
178,314
Year ended
30 September
2019
Weighted average
exercise price
£
6.21
5.91
–
5.16
7.06
4.08
5.87
5.23
5.12
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
5.12
5.28
The aggregate of the estimated fair values of the options granted during the period is £0.6 million (2018 £0.1 million). The options outstanding
at 30 September 2019 had a weighted average remaining contractual life of 6.9 years (2018 5.6 years).
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 (£)
5 December 2011
3.81
3.81
4,144
10.00
7.00
3.81
1.50
4.27
30.00
0.71
27 June 2012
3.74
3.74
103,624
10.00
7.00
3.74
1.00
4.43
30.00
0.70
17 December 2012
5.07
5.07
4,144
10.00
7.00
5.07
1.00
3.42
30.00
0.97
9 December 2013
8.81
8.81
25,906
10.00
5.00
8.81
1.50
2.00
25.00
1.69
10 December 2014
7.98
7.98
15,543
10.00
5.00
7.98
1.08
2.77
25.70
1.31
14 December 2015
6.81
6.81
15,542
10.00
7.00
6.81
1.19
3.26
25.10
0.93
6 December 2016
7.59
7.59
77,718
5.00
2.00
7.59
1.25
3.02
26.00
1.13
8 February 2018
6.18
6.18
103,621
10.00
7.00
6.18
0.82
3.24
27.88
0.94
25 January 2019
5.69
5.69
310,863
10.00
7.00
5.69
0.81
3.59
27.95
0.84
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Financial Statements
Financial Statements
Notes to the accounts
42 Share-based payments continued
Nil-cost options under the DMGT Executive Bonus Scheme
Since December 2009 a portion of the bonus earned by Executive Directors under the Executive Bonus Scheme has been deferred into shares in the
form of nil-cost options. These options are to the value of the equity portion of the bonus and are fully expensed in the period in which they are
earned. Further details are shown in the Remuneration Report.
Outstanding at 1 October 2018
Granted during the period
Exercised during the period
Modified during the period
Outstanding at 30 September 2019
Exercisable at 30 September 2019
Exercisable at 1 October 2018
Note
(i)
Year ended
30 September
2019
Number of
share options
267,307
100,538
(259,714)
12,305
120,436
–
252,903
Year ended
30 September
2019
Weighted average
exercise price
£
–
–
–
–
–
–
–
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
£
–
–
–
–
–
–
–
The aggregate of the estimated fair values of the awards granted during the period is £nil (2018 £nil). The awards outstanding at 30 September 2019
had a weighted average remaining contractual life of 6.1 years (2018 1.2 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 2018
Granted during the period
Exercised during the period
Expired during the period
Modified during the period
Outstanding at 30 September 2019
Exercisable at 30 September 2019
Exercisable at 1 October 2018
Note
(i)
Year ended
30 September
2019
Number of
share options
2,395,124
518,856
(796,460)
(264,996)
94,074
1,946,598
Year ended
30 September
2019
Weighted average
exercise price
£
–
–
–
–
–
–
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
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The aggregate of the estimated fair values of the awards granted during the period is £13.6 million (2018 £2.2 million).
The awards outstanding at 30 September 2019 had a weighted average remaining contractual life of 1.2 years (2018 1.4 years).
(i) As part of the Euromoney disposal, the DMGT Remuneration Committee’s approved principle was that participants in DMGT share awards
should neither be advantaged nor disadvantaged as compared to participating shareholders. In order to meet this principle all unvested share
awards prior to the Euromoney distribution on 2 April 2019, were uplifted by 4.8%. In the tables above this has been described as a modification.
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28 February 2017
6.94
Nil
201,266
3.00
Nil
Nil
Nil
Nil
Nil
6.94
18 January 2018
5.43
Nil
23,263
2.00
Nil
Nil
Nil
Nil
Nil
5.43
30 May 2017
6.92
Nil
143,217
2.00
Nil
Nil
Nil
Nil
Nil
6.92
14 December 2017
5.43
Nil
60,359
3.00
Nil
Nil
Nil
Nil
Nil
5.43
14 June 2018
5.43
Nil
23,263
3.00
Nil
Nil
Nil
Nil
Nil
5.43
13 August 2018
7.24
Nil
38,394
3.00
Nil
Nil
Nil
Nil
Nil
7.24
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 (£)
22 December 2014
8.00
Nil
305,261
5.00
Nil
Nil
Nil
Nil
Nil
8.00
14 December 2015
6.81
Nil
362,772
5.00
Nil
Nil
Nil
Nil
Nil
6.81
16 January 2018
5.85
Nil
56,489
3.00
Nil
Nil
Nil
Nil
Nil
5.85
18 January 2018
5.43
Nil
188,646
3.00
Nil
Nil
Nil
Nil
Nil
5.43
14 December 2018
6.29
Nil
333,171
2.00
Nil
Nil
Nil
Nil
Nil
6.29
14 December 2018
6.29
Nil
210,497
3.00
Nil
Nil
Nil
Nil
Nil
6.29
DMGT Long-Term Executive Incentive Plan Award 2017, 2018 and 2019
These plans entitle certain executives to a percentage share of eligible profit growth over a three-year performance period.
The awards are 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 these awards including social security costs amounts to £13.6 million
(2018 £6.9 million) and is included in the Long-Term Incentive Plan charge.
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Financial Statements
Notes to the accounts
42 Share-based payments continued
Insurance Risk (RMS) option plans
RMS maintains the following equity award plans: 2014 Equity Award Plan (“2014 Plan”) and the 2015 Equity Incentive Plan (“2015 Plan”).
Awards from previous plans are no longer outstanding.
The 2014 Plan was introduced during the year ended 30 September 2014. Under the 2014 Plan options and Restricted Stock Units (“RSUs”),
both time and performance based, are granted to employees, officers, directors and consultants, who are deemed to be in a position to contribute
to the long-term success of RMS.
The 2015 Plan was introduced during the year ended 30 September 2016. Under the 2015 Plan, options are granted to employees, officers, directors
and consultants of RMS. Options granted under this plan vest on satisfaction of two conditions – a 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.
RMS options under all plans were granted at market value. The options lapse 10 years from grant date.
RMS estimated the fair value of each option award on the date of grant using the Black-Scholes option pricing model. RMS assumptions about
stock price volatility were based exclusively on the implied volatilities of publicly traded options to buy stock with contractual terms closest to the
expected life of options granted to RMS employees. The risk-free interest rate for periods within the contractual life of the award were based on the
U.S. Government securities constant maturities in effect. The RSU fair value is determined by the fair market value of RMS stock at the date of grant.
The expense is amortised using the graded vesting method.
RMS share options
Outstanding at 1 October 2018
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at 30 September 2019
Exercisable at 30 September 2019
Exercisable at 1 October 2018
Year ended
30 September
2019
Number of
share options
9,158,573
3,309,136
(1,980,245)
–
–
10,487,464
Year ended
30 September
2019
Weighted average
exercise price
US$
9.35
9.63
9.47
–
–
9.46
417,448
453,824
10.18
10.16
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
The weighted average share price at the date of exercise for share options exercised during the period was $nil (2018 $10.24 million).
The options outstanding at 30 September 2019 had a weighted average remaining contractual life of 7.4 years (2018 8.2 years).
The inputs into the Black-Scholes model are as follows:
Date of grant
Market value of shares at date of grant (US$)
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$)
During 2014
14.59
14.59
16,000
7
3-6
14.59
1.25
2.91
28.81
2.70
During 2015
10.00
10.00
401,448
7
4-5
10.00
1.25
3.63
25.63
1.44
During 2016
9.04
9.04
3,105,270
10
6
9.04
1.10
Nil
25.60
2.58
During 2017
10.11
9.52
1,897,314
10
4
9.52
1.00
Nil
35.00
4.00
During 2018
10.24
9.63
2,182,400
10
6
9.63
1.71
Nil
25.60
2.75
During 2019
10.24
9.63
2,885,032
10
6
9.63
1.71
Nil
25.60
2.58
Expected volatility was determined by calculating the historical volatility of comparable companies.
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RMS RSU awards
Outstanding at 1 October 2018
Forfeited during the period
Vested during the period
Outstanding at 30 September 2019
Year ended
30 September
2019
Number of
share options
Weighted average
exercise price
US$
–
–
–
–
Year ended
30 September
2019
Number
of RSUs
10,914
–
(10,914)
–
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
$
–
–
–
–
43 Ultimate holding company
The Company’s immediate parent Company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 for further detail).
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
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
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, and the Trust are related parties
of the Company.
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
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 £nil (2018 £14,820).
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Financial Statements
Notes to the accounts
44 Related party transactions continued
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) has a 50.0% (2018 50.0%) shareholding in Northprint Manchester Ltd, a joint venture. The net amount due to ANL
of £5.8 million (2018 £5.8 million) has been fully provided.
Mail Media, Inc. had a 50.0% (2018 50.0%) shareholding in Daily Mail On Air LLC (DailyMailTV), a joint venture in the prior period. In the prior period,
Mail Media, Inc. provided funding amounting to £4.9 million. At 30 September 2019, £nil (2018 £5.9 million) was owed by DailyMailTV. During the
period, Mail Media, Inc. acquired the remaining 50.0% shareholding in DailyMailTV and DailyMailTV became a wholly-owned subsidiary.
DMG US Investments, Inc. had a 45.0% (2018 45.0%) shareholding in Truffle Pig LLC, an associate, which was disposed of during the period. Funding
of £nil (2018 £0.2 million) remained outstanding at 30 September 2019.
DMGV Ltd (DMGV) has a 23.9% (2018 23.9%) shareholding in Excalibur Holdco Ltd (Excalibur), an associate. During the period, services provided
to Excalibur amounted to £0.5 million (2018 £0.6 million). At 30 September 2019, amounts due from Excalibur amounted to £0.1 million
(2018 £0.1 million), together with loan notes of £17.3 million (2018 £17.3 million). The loan notes carry a coupon of 10.0% and £6.5 million
(2018 £4.0 million) was outstanding in relation to this coupon at 30 September 2019. At 30 September 2019, the Group had made an expected
lifetime impairment allowance of £12.0 million (2018 on transition to IFRS 9 £12.0 million) in relation to amounts due from Excalibur.
DMGV has a 45.3% (2018 25.8%) shareholding in Yopa Property Ltd (Yopa), an associate. During the period, the Consumer Media segment provided
services to Yopa amounting to £0.6 million (2018 £0.5 million). At 30 September 2019, £0.1 million (2018 £0.1 million) was owed by Yopa to the
Consumer Media segment. During the period, Yopa provided services to the Property Information segment amounting to £0.1 million (2018 £nil).
DMGV has a 16.5% shareholding in Bricklane Technologies Ltd (Bricklane), an associate acquired during the period. During the period, the Consumer
Media segment provided services to Bricklane amounting to £0.4 million. DMGV provided funding amounting to £1.2 million cash and £0.8 million
of media credits.
DMGV has a 21.1% shareholding in Cazoo Ltd, an associate acquired during the period. DMGV provided cash funding amounting to £22.5 million
and £5.0 million of media credits during the period.
DMGV has a 36.8% shareholding in Entale Media Ltd, an associate acquired during the period. DMGV provided cash funding amounting to
£2.0 million during the period.
Daily Mail and General Trust plc (DMGT) had a 49.8% (2018 49.8% owned by DMGZ Ltd (DMGZ)) shareholding in Euromoney Institutional Investor
PLC (Euromoney). During the period, services were recharged to Euromoney amounting to £0.1 million (2018 £0.1 million) and consortium relief
losses were surrendered under an agreement between Euromoney and the Group amounting to a rebate of £nil (2018 £0.1 million). During the
period, all of the Euromoney shares were distributed to certain shareholders by way of dividend in specie.
During the period, DMGZ received dividends of £11.9 million from Euromoney (2018 £17.1 million received by DMGZ and DMG Charles Ltd),
an associate, prior to the shareholding in Euromoney being transferred from DMGZ to DMGT.
During the period, DMG World Media (2006) Ltd recharged costs amounting to £nil (2018 £0.3 million) to BCA Research, Inc., a Euromoney subsidiary.
During the period, ANL recharged costs amounting to £0.8 million (2018 £1.4 million) to Euromoney. At 30 September 2019, £nil (2018 £0.3 million)
was owed by Euromoney.
During the period, Euromoney provided services to Risk Management Solutions Ltd amounting to £0.1 million (2018 £0.1 million).
DMGI Land & Property Europe Ltd (DMGILP), of which Landmark Information Group Ltd (Landmark) is a subsidiary undertaking, has a 50.0%
(2018 50.0%) shareholding in Point X Ltd (Point X), a joint venture. During the period, Landmark charged management fees of £0.3 million
(2018 £0.3 million) and recharged costs of £0.1 million (2018 £0.1 million) to Point X. Point X received royalty income from Landmark of £0.1 million
(2018 £0.1 million). DMGILP received dividends of £0.2 million (2018 £nil) from Point X.
Decision Insight Information Group (UK) Ltd (DIIG UK) has a 50.0% (2018 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 (2018 £0.2 million) and charged management fees amounting to £0.1 million
(2018 £0.1 million) and received dividends from DF of £nil (2018 £0.4 million).
On-Geo GmbH (On-geo) has a 50.0% (2018 50.0%) shareholding in HypoPort On-Geo (HypoPort), a joint venture. During the period, HypoPort
made purchases from On-geo amounting to £4.6 million (2018 £9.1 million). During the period, On-geo received dividends of £nil (2018 £0.1 million)
from HypoPort. At 30 September 2019, £nil (2018 £1.5 million) was owed by HypoPort. The Group disposed of On-geo in the Property Information
segment during the period, and therefore, its shareholding in HypoPort was also disposed.
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RMSI Ltd (RMSI), a company which shares a common director with the Landmark Group, invoiced sales amounting to £1.7 million (2018 £2.7 million).
Costs were recharged by Landmark to RMSI amounting to £0.7 million (2018 £0.7 million). At 30 September 2019, £0.4 million (2018 £0.4 million)
was owed to RMSI by Landmark.
Hobsons, Inc. (Hobsons) has a 50.0% (2018 50.0%) shareholding in Knowlura, a joint venture. At 30 September 2019, £0.2 million (2018 £0.3 million)
was owed by Knowlura.
Risk Management Solutions, Inc. (RMS, Inc.) has a 20.0% (2018 20.0%) shareholding in OYO RMS Corporation (OYO), an associate. During the period,
RMS, Inc. received a dividend of £nil (2018 £0.4 million) from OYO.
RMS, Inc. has a 26.6% (2018 25.9%) shareholding in Praedicat, Inc. (Praedicat), an associate. During the period, RMS, Inc. provided funding
of £0.5 million (2018 £1.5 million) to Praedicat.
The Group has a 55.9% shareholding in LineVision, Inc. (LineVision). Since the Group’s share of voting rights in LineVision is 49.0%, the Group does
not have control but has significant influence, therefore the investment is treated as an associate. In the prior period, Genscape sold assets with a
net book value of US$0.1 million to LineVision for their fair value of US$2.1 million for US$nil cash proceeds.
The Group reduced its shareholding in Trepp Port, LLC (TreppPort) on 1 October 2018 from 51.0% to 50.0% and TreppPort became a joint venture.
During the period, Trepp, LLC. received dividends of £0.2 million (2018 £nil) from TreppPort.
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
£0.2 million (2018 £0.3 million). At 30 September 2019, £0.1 million (2018 £0.1 million) was owed to the Harmsworth Pension Scheme by the Group.
At 30 September 2019, the Group owed £0.9 million (2018 £0.8 million) to the pension schemes which it operates. This amount comprised
employees’ and employer’s contributions in respect of September 2019 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 (2018 £11.0 million).
ANL, which shares common control by Rothermere Continuation Limited, with DMGT Healthcare Trustees, paid contributions to the scheme
totalling £0.8 million (2018 £0.7 million). At 30 September 2019, a total of £1.3 million (2018 £1.3 million) was owed to the scheme by ANL.
45 Post balance sheet events
It is anticipated that until 5 December 2019, Rothermere Continuation Limited (RCL) will hold 100% of DMGT’s issued Ordinary Shares. The Board
anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
Investments Limited (RIL), a company incorporated in Jersey, in the Channel Islands. RIL will then hold 100% of the Company’s issued Ordinary
Shares. The underlying control of DMGT will, however, remain unchanged and continue to lie with a discretionary trust (the Trust) that is held for
the benefit of Lord Rothermere and his immediate family. Both RIL and the Trust are administered in Jersey. RIL and its directors, and the Trust
are related parties of the Company.
Disposals
On 26 August 2019 the Group announced that it had agreed the sale of Genscape, its Energy Information business, to Verisk, a leading data analytics
provider, for gross proceeds of US$364.0 million. Genscape will become part of Wood Mackenzie, a Verisk business, and will enhance Wood
Mackenzie’s existing and complementary sector intelligence business in short-term energy data and analytics. The sale completed on 5 November
2019 following the completion of customary closing conditions.
On 2 October 2019, the Group entered into a definitive agreement to dispose of Buildfax, a leading provider of property condition and history data,
also to Verisk for gross proceeds of US$42.5 million. The sale completed on 11 October 2019 following completion of customary closing conditions.
On 29 November 2019 the Group’s interest in Cazoo was diluted from 21.1% to 18.5%. The Group ceased to have significant influence over Cazoo
and from that date will cease to equity account.
Acquisitions
On 29 November 2019 the Group acquired the entire share capital of the ‘i’, the UK national newspaper and website, from JPI Media Limited.
Total cash consideration payable is £49.6 million.
The ‘i’ has an established reputation for quality journalism with retail sales of approximately 170,000 newspapers each weekday and over 190,000
copies of the iweekend each Saturday. The website, inews.co.uk, attracts approximately 300,000 daily unique browsers. The acquisition will be
reviewed by the UK Competition and Markets Authority. The ‘i’ reported pro-forma revenues of £34.4 million and pro-forma operating profits of
£10.6 million for the 12 months to 31 December 2018.
The Group has not presented a fair value table of the net assets acquired since, given the timing of the announcement, it is impractical to do so.
177
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Financial Statements
Financial Statements
Notes to the accounts
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 ending
30 September 2019:
Subsidiary name
Daily Mail International Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
DMG Business Media Ltd
DMG Charles Ltd
DMG Events International Ltd
DMG Information Ltd
DMG Investment Holdings Ltd
Company registration number
Subsidiary name
01966438 DMG Minor Investments Ltd
05528329 DMGRH Finance Ltd
04521108 DMGZ Ltd
02823743 Harmsworth Royalties Ltd
04211684 Kensington Finance Ltd
04118004 Northcliffe Media Ltd
03708142 Ralph US Holdings
03263138 Young Street Holdings Ltd
Company registration number
04228751
03191181
00272225
04219212
03960683
03403993
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 2019:
Subsidiary name
A&N International Media Ltd
Central Independent News and Media Ltd
Courier Media Group Ltd
Daily Mail Ltd
Derby Telegraph Media Group Ltd
DMG Media Ltd
Harmsworth Printing (Didcot) Ltd
Harmsworth Printing Ltd
Harmsworth Quays Printing Ltd
Justice for Sgt Blackman Ltd
Company registration number
04147978
03015855
00101944
01160542
00218661
05765286
05539456
02208579
02208582
09761390
Subsidiary name
Lincolnshire Media Ltd
MailLife Financial Services Ltd
Northcliffe Trustees Ltd
Pico Information Ltd
Richards Gray Ltd
South West Wales Media Ltd
The Mail on Sunday Ltd
The Western Gazette Co Ltd
Trepp Ltd
Watervale Ltd
Company registration number
00037928
01063950
03394992
11149692
03209331
00120013
01160545
00022796
03087851
05231066
178
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Daily Mail and General Trust plc Annual Report 2019
Country of
incorporation
or registration
UK
UK
Mauritius
UK
Singapore
Jersey
Ireland
UK
Classes of
shares held
Ordinary
Ordinary
% shareholding
(% held directly
by parent)
100%
100%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
47 Full list of Group undertakings
Subsidiary name
A&N International Media Ltd
A&N Media Finance Services Ltd
AN Mauritius Ltd
Argyll Environmental Ltd
Asia Risk Centre Pte Ltd
Associated Metro Holdings Ltd
Associated Newspapers (Ireland) Ltd
Associated Newspapers Ltd
Associated Newspapers North America, Inc.
Atticus Events Ltd
Atticus Events MEA Ltd
Registered office
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
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
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
Third Floor, Embassy House, Herbert Park Lane, Ballsbridge,
Dublin 4 662817
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
BuildFax, Inc.
Central Independent News and Media Ltd
Commodity Vectors (Ireland) Ltd
Commodity Vectors Ltd
Courier Media Group Ltd
Daily Mail and General Holdings Ltd*
Daily Mail and General Investments Ltd
42 N French Broad Ave, Asheville NC 28801, United States
Northcliffe House, 2 Derry Street, London W8 5TT
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
Northcliffe House, 2 Derry Street, London W8 5TT
Daily Mail and General Trust plc
Daily Mail International Ltd
Daily Mail Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
137 N Larchmont Blvd, #705, Los Angeles, California, 90004,
United States
Daily Mail On-Air, LLC
Level 12, 207 Kent Street, Sydney, NSW 2000
Dailymail.com Australia Pty Ltd
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 39/40 Upper Mount Street, Dublin 2, Ireland
Decision Insight Information Group (UK) Ltd
Decision Insight Packco Ltd
Derby Telegraph Media Group Ltd
DMG Angex Ltd
DMG Asset Finance Ltd
DMG Atlantic Ltd
DMG Business Media Ltd
DMG Charles Ltd
DMG Conference & Exhibition Services
(Shanghai) Ltd
DMG Consolidated Holdings Pty Ltd
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Centenary House, Peninsula Park, Rydon Lane, Exeter, EX2 7XE
PO Box 6795, St George Street, Leicester LE1 1ZP
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
Room 428, Level 4, No 55 Xiya Road (Plot 5 Of Zone F),
Shanghai, China
Level 2, 452 Flinders Street, Melbourne VIC 3000, Australia
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
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
DMG Development Co
DMG Events (Canada), Inc.
DMG Events (Doha), LLC
DMG Events (MEA) Ltd
DMG Events (UK) Ltd
DMG Events (USA), Inc.
DMG Events Asia Pacific Pte Ltd
DMG Events Egypt Ltd
DMG Events Energy Japan KK (in liquidation)
USA
UK
UK
USA
UK
Common, Series A
Ordinary
Ordinary
Common, Series A, B,
C, D, E, G Preferred
Stock
Ordinary
Ireland
UK
UK
UK
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary and A
ordinary non voting
Ordinary
Ordinary
USA Membership interests
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
UK
UK
Ireland
UK
UK
UK
UK
UK
UK
UK
UK
China
Australia
USA
Canada
Qatar
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
USA
Common
Singapore
Ordinary
Egypt
Japan
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
90.0%
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%
100%
100%
179
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Financial Statements
Financial Statements
Notes to the accounts
47 Full list of Group undertakings continued
Subsidiary name
DMG Events India Private Ltd
DMG Events International Ltd
Registered office
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
DMG Events, LLC
DMG Exhibition Management Services (PTY) Ltd 76 Eleventh Street, Parkmore, Johannesburg, 2196, South Africa
DMG Information Asia Pacific Pte Ltd
DMG Information Hong Kong Company Ltd
DMG Information Ltd
DMG Investment Holdings Ltd
DMG Loanco Ltd
DMG Media Ltd
DMG Minor Investments Ltd
DMG Oceans Ltd
DMG US Investments, Inc.
DMG World Media Abu Dhabi Ltd (i)
DMG World Media Dubai (2006) Ltd (i)
DMGB Ltd*
dmgi Land & Property Europe Ltd
DMGRH Finance Ltd
DMGT US Employee Services, Inc.
DMGT US, Inc.
DMGV Ltd
DMGZ Ltd
EDR Landmark Management Services Ltd
EI Cap II, LLC
Energy Fundamentals GmbH
Energytics, Inc.
EnvaPower, Inc.
Estate Technical Solutions Ltd
Eve 4 Ltd*
Genscape Asia, Inc.
Genscape Belgium SA
Genscape Czech Republic s.r.o.
Genscape France
Genscape Germany GmbH
Genscape Iberia SL
Genscape, Inc.
Genscape Intangible Holding, Inc.
Genscape International, Inc.
Genscape Italy
Genscape Japan, K.K.
Genscape Mex, S. de R.L. de C.V.
Genscape Natural Gas, Inc.
Genscape Netherlands
180
180
8 Marina Boulevard #05-02, Marina Bay Financial Centre,
Singapore 018981
27/F 248 Queen’s Road East, Wanchai, Hong Kong
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
Scottish Daily Mail, 20 Waterloo Street, Glasgow, G2 6DB
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
Northcliffe House, 2 Derry Street, London W8 5TT
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
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
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Technoparkstrasse 1, 8005, Zurich, Switzerland
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
15 Esplanade, St Helier, Jersey, JE1 1RB, Channel Islands
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Pegasuslaan 5, 1831 Deigem, Belgium
Empiria Na Strzi, 65/1702, 140 00, Prague 4, Prague,
Czech Republic
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
1140 Garvin Place, Louisville, KY 40203, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Damrak 20A, 1012 LH, Amsterdam, Netherlands
Country of
incorporation
or registration
Classes of
shares held
% shareholding
(% held directly
by parent)
India
UK
Saudi Arabia
South Africa
Singapore
Hong Kong
UK
UK
UK
UK
UK
UK
USA
Jersey
Jersey
UK
UK
UK
USA
USA
UK
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Common, Series A
Ordinary
Ordinary
Ordinary
USA Membership interests
Ordinary
Switzerland
USA
USA
UK
Jersey
USA
Belgium
Czech
France
Germany
Spain
USA
USA
USA
Italy
Japan
Mexico
USA
Netherlands
Common
Common
Ordinary A, Ordinary
B, Ordinary C,
Ordinary D,
Ordinary E
Ordinary
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Common
Common
Ordinary
Ordinary
Common
Common
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Country of
incorporation
or registration
Poland
Slovakia
UK
Classes of
shares held
Ordinary
Ordinary
Ordinary
% shareholding
(% held directly
by parent)
100%
100%
100%
Subsidiary name
Genscape Poland SA
Genscape Slovakia s.r.o.
Genscape UK Ltd
Gloucestershire Media Ltd (in liquidation)
GP Energy Management, LLC
Gridfit, LLC
Guildford Zoot, Inc.
Harmsworth Printing (Didcot) Ltd
Harmsworth Printing Ltd
Harmsworth Quays Printing Ltd
Harmsworth Royalties Ltd
Hobsons, Inc.
Inframation GmbH
Justice for Sgt Blackman Ltd
Kensington Finance Ltd
Landmark Analytics Ltd
Landmark FAS Ltd
Landmark Information Group Ltd
Landmark International Holdings Ltd
Landmark Optimus Ltd
Lawlink (UK) Ltd
Lincolnshire Media Ltd
Mail Finance Services Ltd
Mail Media, Inc.
MailLife Financial Services Ltd
Millar & Bryce Ltd
Naviance, Inc.
Northcliffe Media Ltd
Registered office
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
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
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
ParsevalstraBe 2, 99092, Erfurt, Germany
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
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Northcliffe House, 2 Derry Street, London W8 5TT
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
10th Floor 133 Finnieston Street, Glasgow, G3 8HB Scotland
Corporation Service Company, 251 Little Falls Drive, Wilmington
DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe Trustees Ltd
Northcliffe House, 2 Derry Street, London W8 5TT
Ochresoft Technologies Ltd
Petrotranz, Inc.
Pico Information Ltd
Power Supply Services, LLC
Quest End Computer Services Ltd
Ralph US Holdings
RCoaster.ie Ltd
Richards Gray Ltd
Risk Management Solutions (Bermuda) Ltd
Risk Management Solutions (Swiss)
Risk Management Solutions Holdings, Inc.
Risk Management Solutions Ltd
Risk Management Solutions Ltd (China)
Risk Management Solutions, Inc.
RMS Japan KK
RMS Risk Management Solutions India Pte Ltd
RMS Technologies Ltd
RMS UK Holdings, Inc.
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
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
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Northcliffe House, 2 Derry Street, London W8 5TT
Spinnaker House, Main Street, Kinvara, Co Galway, Ireland
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
251 Little Falls Drive, Wilmington, DE 19808, 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
7515 Gateway Blvd, Newark, CA 94560, United States
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
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
UK
USA
USA
USA
UK
UK
UK
UK
Ordinary
Membership units
Membership units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
USA
Common
Germany Ordinary, Preference
UK Limited by Guarantee
Ordinary
UK
Ordinary
UK
Ordinary
UK
Ordinary, Ordinary A,
Redeemable
Preference
Ordinary
Ordinary A
Ordinary
Ordinary
Ordinary
UK
UK
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Common
Ordinary
Ordinary A,
Ordinary B
Deferred, Ordinary,
Ordinary A,
Preference
Ordinary
Ordinary
Class A membership
units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
Ordinary
Common
Common
USA
UK
UK
USA
UK
UK
UK
Canada
UK
USA
UK
UK
Ireland
UK
Bermuda
Switzerland
USA
UK
China
USA
Japan
India
UK
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.3%
99.3%
100%
99.3%
99.3%
99.3%
Ordinary
99.3%
Ordinary Voting
Ordinary
Common
100%
100%
100%
181
181
Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Financial Statements
Notes to the accounts
Notes to the accounts
47 Full list of Group undertakings continued
47 Full list of Group undertakings continued
Subsidiary name
Subsidiary name
RMS Worldwide, Inc.
RMS Worldwide, Inc.
Rochford Brady Legal Services Ltd
Rochford Brady Legal Services Ltd
SearchFlow Ltd
SearchFlow Ltd
South West Wales Media Ltd
South West Wales Media Ltd
Springthorpe Drake, Inc.
Springthorpe Drake, Inc.
Starfish Retention Solutions, Inc.
Starfish Retention Solutions, Inc.
The Mail on Sunday Ltd
The Mail on Sunday Ltd
The Petrochemical Standard, Inc.
The Petrochemical Standard, Inc.
The Western Gazette Co Ltd
The Western Gazette Co Ltd
Trepp Holdings, Inc.
Trepp Holdings, Inc.
Trepp Ltd
Trepp Ltd
Trepp UK Ltd
Trepp UK Ltd
Trepp, LLC
Trepp, LLC
Vesseltracker.com GmbH
Vesseltracker.com GmbH
Watervale Ltd
Watervale Ltd
Young Street Holdings Ltd
Young Street Holdings Ltd
Registered office
Registered office
7515 Gateway Blvd, Newark, CA 94560, United States
7515 Gateway Blvd, Newark, CA 94560, United States
39/40 Upper Mount Street, Dublin 2, Ireland
39/40 Upper Mount Street, Dublin 2, Ireland
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
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
477 Madison Avenue, New York, NY 10022, United States
477 Madison Avenue, New York, NY 10022, United States
Mundsburger Damm 14, D-22087, Hamburg, Germany
Mundsburger Damm 14, D-22087, Hamburg, Germany
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Country of
Country of
incorporation
incorporation
or registration
or registration
USA
USA
Ireland
Ireland
UK
UK
UK
UK
Classes of
Classes of
shares held
shares held
Common
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
% shareholding
% shareholding
(% held directly
(% held directly
by parent)
by parent)
99.3%
99.3%
100%
100%
100%
100%
100%
100%
USA
USA
USA
USA
UK
UK
USA
USA
UK
UK
Ordinary
Ordinary
Common
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common
USA
Common
USA
Ordinary
UK
Ordinary
UK
Ordinary
UK
Ordinary
UK
USA Membership Interests
USA Membership Interests
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Germany
Germany
UK
UK
UK
UK
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All subsidiaries are included in the consolidated financial statements of the Group.
All subsidiaries are included in the consolidated financial statements of the Group.
* Direct investment held by the parent Company Daily Mail and General Trust plc (DMGT). All other subsidiaries are held indirectly through
* Direct investment held by the parent Company Daily Mail and General Trust plc (DMGT). All other subsidiaries are held indirectly through
subsidiaries of DMGT.
subsidiaries of DMGT.
(i) Principal place of business in the UAE.
(i) Principal place of business in the UAE.
Joint Venture name
Joint Venture name
Decision First Ltd
Decision First Ltd
Knowlura, Inc.
Knowlura, Inc.
Northprint Manchester Ltd
Northprint Manchester Ltd
PointX Ltd
PointX Ltd
The Sanborn Map Company, Inc.
The Sanborn Map Company, Inc.
Trepp Port, LLC
Trepp Port, LLC
Address of principal place of business
Address of principal place of business
Cardinal House, 9 Manor Road, Leeds, West Yorkshire, LS11 9AH
Cardinal House, 9 Manor Road, Leeds, West Yorkshire, LS11 9AH
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
PO Box 68164, Kings Place, 90 York Way, London N1P 2 AP
PO Box 68164, Kings Place, 90 York Way, London N1P 2 AP
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Wilmington, DE 19808, United States
Classes of shares
Classes of shares
held
held
Ordinary
Ordinary
Financial year end
Financial year end
31 December
31 December
% capital
% capital
included in
included in
consolidation
consolidation
50.0%
50.0%
Common
Common
Ordinary
Ordinary
Ordinary B
Ordinary B
30 September
30 September
31 March
31 March
31 March
31 March
Ordinary
Ordinary
31 December
31 December
Ordinary
Ordinary
30 September
30 September
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
49.0%
49.0%
50.0%
50.0%
The Group has joint control over all of the joint ventures listed above, because key operating decisions require the unanimous consent of the Group
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).
and the other investor(s).
Associate name
Associate name
AlsoEnergy Holdings, Inc.
AlsoEnergy Holdings, Inc.
Bricklane Technologies Ltd
Bricklane Technologies Ltd
Cazoo Ltd
Cazoo Ltd
Entale Media Ltd
Entale Media Ltd
ES London Ltd
ES London Ltd
Excalibur Holdco Ltd
Excalibur Holdco Ltd
Funcent DMG Information Technology
Funcent DMG Information Technology
Hong Kong Company Ltd
Hong Kong Company Ltd
Global Event Partners Ltd
Global Event Partners Ltd
Independent Television News Ltd
Independent Television News Ltd
iProf Learning Solutions India Pte Ltd
iProf Learning Solutions India Pte Ltd
(in liquidation)
(in liquidation)
LineVision, Inc.
LineVision, Inc.
Mercatus, Inc.
Mercatus, Inc.
182
182
182
Address of principal place of business
Address of principal place of business
Corporation Trust Centre, 1209 Orange Street, Wilmington,
Corporation Trust Centre, 1209 Orange Street, Wilmington,
DE 19801, United States
DE 19801, United States
Floor 3, 26 Finsbury Square, London, EC2A 1DS
Floor 3, 26 Finsbury Square, London, EC2A 1DS
40 Churchway, London NW1 1LW
40 Churchway, London NW1 1LW
C/O Founders Factory Limited, Northcliffe House, Young Street,
C/O Founders Factory Limited, Northcliffe House, Young Street,
London United Kingdom, W8 5EH
London United Kingdom, W8 5EH
Northcliffe House, 2 Derry Street, London W8 5TT
Northcliffe House, 2 Derry Street, London W8 5TT
Wowcher Towers, 12-27 Swan Yard, Islington, London N1 1SD
Wowcher Towers, 12-27 Swan Yard, Islington, London N1 1SD
27/F 248 Queen’s Road East, Wanchai, Hong Kong
27/F 248 Queen’s Road East, Wanchai, Hong Kong
Suite 1, 3rd Floor, 11-12 St. James’s Square, London SW1Y 4LB
Suite 1, 3rd Floor, 11-12 St. James’s Square, London SW1Y 4LB
200 Grays Inn Road, London WC1X 8XZ
200 Grays Inn Road, London WC1X 8XZ
Hong Kong
Hong Kong
UK
UK
UK
UK
G-15 / G-3, Gf Dilshad Colony, New Delhi, 110095, India
G-15 / G-3, Gf Dilshad Colony, New Delhi, 110095, India
501 Boylston St, Suite 4102, Boston, MA 02116 USA
501 Boylston St, Suite 4102, Boston, MA 02116 USA
1735 Technology Dr, Suite 250, San Jose, California 95110,
1735 Technology Dr, Suite 250, San Jose, California 95110,
United States
United States
India
India
USA
USA
USA
USA
Country of
Country of
incorporation
incorporation
or registration
or registration
Classes of
Classes of
shares held % shareholding
shares held % shareholding
USA
USA
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Series A, Common
Series A, Common
Preference
Preference
Series A
Series A
Preference
Preference
Ordinary
Ordinary
B Ordinary
B Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Series A1
Series A1
Ordinary
Ordinary
17.9%
17.9%
16.5%
16.5%
21.1%
21.1%
36.8%
36.8%
100%
100%
23.9%
23.9%
23.6%
23.6%
15.0%
15.0%
20.0%
20.0%
10.8%
10.8%
55.9%
55.9%
10.8%
10.8%
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Associate name
OYO RMS Corporation
Praedicat, Inc.
Propstack Services Private Ltd
RLTO Ltd
Skymet Weather Services Private Ltd
WellAware Holdings, Inc.
Whereoware, LLC
Address of principal place of business
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
Office 7 35-37 Ludgate Hill, London EC4M 7JN
109, Kushal Bazar, Nehru Place, New Delhi – 110019
2330 N Loop 1604 W, Ste 110, San Antonio, TX 78248,
United States
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE 19808, United States
Yopa Property Ltd
22 Arlington Street, London, SW1A 1RD
Investment name
Air Mail, LLC
BDG Media, Inc.
Brit Media, Inc.
Compstak, Inc.
Cue Ball Capital LP
Evening Standard Ltd
Farewill Ltd
Financial Network Analytics Ltd
Hambro Perks Ltd
IPSX Group Ltd
Kortext Ltd
Laundrapp Ltd
LDR Realisations 2019 Ltd
(previously Labrador Ltd)
Lindentor 226. V V GmbH
Live Better With Ltd
Media Investors 17, LLC
Nazca IT Solutions BV
PA Media Group Ltd
Pascal Metrics, Inc.
Pembroke Holdings, LLC
Plandek Ltd
Quick Move Ltd
Taboola.com Ltd
Upstream Group, Inc.
Workana, LLC
Address of principal place of business
Registered Agent Solutions, 9.E Loockerman Street, Suite 311,
Dover, Kent, Delaware 19901, United States
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
Northcliffe House, 2 Derry Street, London W8 5TT
Unit 7 1a Arbutus Street, London,E8 4DT
4 Crown Place, London EC2A 4BT
8 Greencoat Place, London SW1P 1PL
Cannon Place, 78 Cannon Street, London EC4N 6AF
26-32 Oxford Road, Suite B, 6th Floor, Avalon House,
Bournemouth, Dorset, BH8 8EZ
62-70 Shorts Gardens, Covent Garden, London WC2H 9AH
8 Greencoat Place, London, SW1P 1PL
Charlttenstr. 4, D-10969, Berlin, Germany
Rocketspace, 40 Islington High Street, London N1 8XB
The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE 19801, United States
Standerdmolen 20, 3995 AA Houten, Netherlands
The Point 37 North Wharf Road, Paddington, London, W2 1AF
Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, DE 19808, United States
46 Southfield Ave Ste 400, Stamford CT 06902, United States
Unit 10, 1 Luke Street, London, EC2A 4PX
86-90 Paul Street, London EC2A 4NE
7 Totseret Haaretz St., Tel-Aviv Israel
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
13th Avenue, Suite 202 Brooklyn, New York, 11228,
United States
Country of
incorporation
or registration
Classes of
shares held % shareholding
Japan
Ordinary
20.0%
USA
India
UK
India
USA
Preference
26.6%
Ordinary
Ordinary
Ordinary
22.7%
20.0%
14.7%
Preference
8.2%
USA Membership Interests
C-1 Preference, C-2
Preference, C-3
Preference
UK
19.5%
45.3%
Country of
incorporation or
registration
Classes of
shares held % shareholding
USA
USA
USA
USA
USA
UK
UK
UK
UK
UK
Preference
Ordinary
Ordinary
Common
Partnership Units
Ordinary,
Ordinary Non Voting
A Preference
Ordinary
C Ordinary
Ordinary
UK Ordinary, Preference
UK Ordinary, Preference
UK
Germany
UK
Ordinary
Common
B Ordinary
USA Membership interests
Ordinary
Ordinary
Netherlands
UK
USA
Ordinary
USA Membership Interests
Ordinary B
UK
Ordinary
UK
Ordinary
Israel
USA
Ordinary
Argentina Membership interests
5.0%
3.2%
8.9%
2.0%
2.5%
10.0%
7.2%
10.0%
2.9%
2.5%
11.3%
1.7%
8.6%
0.1%
4.6%
12.8%
15.0%
15.6%
4.4%
10.0%
2.5%
5.7%
0.4%
3.6%
4.0%
183
183
Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
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
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
1,340.9
144.6
Year ended
30 September
2019
£m
1,337.0
135.8
(80.2)
(91.4)
(324.4)
(94.8)
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
49.8
118.4
168.2
565.5
733.7
4.8
(32.0)
706.5
(7.6)
698.9
(10.7)
1.2
689.4
(41.2)
94.6
(28.1)
66.5
73.7
140.2
11.5
(17.4)
134.3
(20.4)
113.9
(22.6)
(0.4)
90.9
Adjusted profit before tax and non-controlling interests
280.5
259.6
226.1
182.3
144.7
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
376.8
363.7
350.4
287.7
Adjusted profit after taxation and non-controlling interests
215.5
197.8
196.3
149.3
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
184
184
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
354.1
358.4
–
197.7p
196.0p
(3.0)p
(3.6)p
194.7p
192.4p
42.2p
41.7p
205.6
114.5
296.4
300.2
–
38.3p
37.8p
(7.6)p
(7.5)p
30.7p
30.3p
38.6p
38.1p
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Consolidated Cash Flow Statement
Net cash inflow from operating activities
Investing activities
Financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gain/(loss) on cash and cash equivalents
Cash and cash equivalents at end of year
Net (decrease)/increase in cash and cash equivalents
Cash inflow/(outflow) from change in debt and finance leases
Change in net debt from cash flows
Loan notes issued and loans arising from acquisitions
Other non-cash items
(Increase)/decrease in net debt in the year
Net cash/(debt) at start of year
Net cash/(debt) at end of year
Consolidated Statement of Financial Position
Goodwill and intangible assets
Property, plant and equipment
Other investments including joint ventures and associates
Other non-current assets
Non-current assets
Net current assets/(liabilities)
Non-current 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
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)
(602.8)
(701.5)
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
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
(701.5)
(678.7)
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
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
790.9
353.3
1,708.3
217.7
(250.6)
1,675.4
45.3
17.8
1.3
13.5
1,597.5
1,675.4
2018
23.30p
£5.00
£7.81
2019
£m
154.8
221.1
(533.3)
(157.4)
435.9
10.7
289.2
(157.4)
2.5
(154.9)
–
4.1
(150.8)
232.7
81.9
2019
£m
321.1
74.4
132.8
322.8
851.1
155.0
(231.8)
774.3
29.3
17.8
24.4
–
702.8
774.3
2019
23.90p
£5.42
£8.54
* Represents the dividends declared by the Directors in respect of the above years excluding the Euromoney cash distributions and Euromoney
dividend in specie.
185
185
Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Financial Statements
Company Statement of Financial Position
At 30 September 2019
ASSETS
Fixed assets
Property, plant and equipment
Shares in Group undertakings
Financial assets at fair value through other comprehensive income
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
2019
£m
At
30 September
2018
£m
Note
5
8
9
9
10
10
11
12
15
13
13
14
14
16
16
17
18
0.6
3,237.6
1.0
–
3.6
3,242.8
40.3
–
40.1
5.6
86.0
3,328.8
(264.5)
(0.8)
(265.3)
(202.8)
(24.4)
(227.2)
(492.5)
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)
2,836.3
3,325.7
29.3
17.8
47.1
(49.1)
21.2
2,817.1
45.3
17.8
63.1
(57.2)
5.2
3,314.6
2,836.3
3,325.7
The financial statements on pages 186 to 196 were approved by the Directors and authorised for issue on 4 December 2019. They were signed on
their behalf by:
The Viscount Rothermere
P Zwillenberg
Directors
186
186
Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Company Statement of Changes in Equity
For the year ended 30 September 2019
At 30 September 2017
Profit for the year
Total comprehensive income for the year
Dividends paid
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the year
Own shares released on vesting of share options
At 30 September 2018
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Profit for the year
Total comprehensive income for the year
Cancellation of A Ordinary Non-Voting shares
Dividends paid
Euromoney dividend in specie
Euromoney cash distribution
Credit to equity for share-based payments
Deferred tax on share-based payments
Own shares acquired in the year
Settlement of exercised share options
Own shares released on vesting of share options
At 30 September 2019
Note
Called-up
share
capital
£m
45.3
–
–
–
–
–
–
–
45.3
–
45.3
–
–
(16.0)
–
–
–
–
–
–
–
–
29.3
(i)
(i)
(i)
Share
premium
account
£m
17.8
–
–
–
–
–
–
–
17.8
–
17.8
–
–
–
–
–
–
–
–
–
–
–
17.8
Capital
redemption
reserve
£m
5.2
–
–
Reserve for
own shares
£m
(64.3)
–
–
Profit and loss
account
£m
2,972.3
417.9
417.9
–
–
–
–
–
5.2
–
5.2
–
–
16.0
–
–
–
–
–
–
–
–
21.2
–
–
–
(14.3)
21.4
(57.2)
–
(57.2)
–
–
–
–
–
–
–
–
(2.5)
–
10.6
(81.0)
7.6
(1.5)
–
(0.7)
3,314.6
0.7
3,315.3
429.0
429.0
–
(74.1)
(661.8)
(200.0)
10.2
0.6
–
(0.7)
(1.4)
Total
£m
2,976.3
417.9
417.9
(81.0)
7.6
(1.5)
(14.3)
20.7
3,325.7
0.7
3,326.4
429.0
429.0
–
(74.1)
(661.8)
(200.0)
10.2
0.6
(2.5)
(0.7)
9.2
(49.1)
2,817.1
2,836.3
(i) On 3 March 2019, the Group announced its intention to distribute all of the Euromoney Institutional Investor PLC (Euromoney) shares owned
by the Group to certain holders of DMGT’s A Ordinary Non-Voting Shares (A Shares), by way of a dividend in specie (the Euromoney Distribution),
as well as a £200.0 million cash distribution (the Cash Distribution). The terms were such that Fully Participating Shareholders would participate
in the Euromoney Distribution and Cash Distribution whilst Rothermere Affiliated Shareholders would only participate in the Cash Distribution
and on a limited basis.
The proposal was approved at a Class Meeting of the Fully Participating Shareholders on 26 March 2019. The Euromoney Distribution occurred
at 8am on 2 April 2019 and the Cash Distribution on 15 April 2019.
Before these distributions were made c.46.4% of the A Shares held by Fully Participating Shareholders were converted into a new class
of B Shares and c.4.0% of the A Shares held by Rothermere Affiliated Shareholders converted into a new class of C Shares. The Euromoney
Distribution and a special dividend of £183.0 million in aggregate in cash was then paid to the Fully Participating Shareholders in respect of the
B Shares and a restricted special dividend of £17.0 million in aggregate in cash was paid to the Rothermere Affiliated Shareholders in respect of
the C Shares. Once these distributions were made the B Shares and the C Shares were converted into Deferred B Shares and Deferred C Shares
respectively before being transferred to the Company for no valuable consideration and cancelled shortly thereafter. Consequently, these
distributions resulted in a reduction in the share capital of DMGT. The voting Ordinary Shares did not participate in the distributions.
For each A Share held at 6.00pm on 29 March 2019, the conversion record time, the Fully Participating Shareholders received c.0.19933 of
a Euromoney Share and c.68.13p in cash, and there was a reduction in their holding of c.0.46409 of an A Share. For each A Share held by the
Rothermere Affiliated Shareholders, they received c.25.53p in cash and there was a reduction in their holding of c.0.03946 of an A Share.
The Rothermere Affiliated Shareholders’ proportionate interest in the total number of A Shares in issue increased from 20.0% of the issued
A Shares before the distributions to 30.0% after and their combined shareholding of A Shares and Ordinary Shares increased from 24.0% of the
issued A Shares and Ordinary Shares before the distributions to 36.0% after.
The Company intends to make available £117.0 million from the Group’s cash resources to the Group’s defined benefit pension schemes. In light
of the forthcoming actuarial valuation as at 31 March 2019, the Group and the Trustees of the pension schemes are in discussions to finalise
these arrangements.
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Financial Statements
Notes to the Company Statement
Notes to the Company Statement
of Financial Performance
of Financial Performance
1 Basis of preparation
19 Contingent liabilities and guarantees
Daily Mail and General Trust plc (DMGT) 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.
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
The financial statements of DMGT have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’
to £150.0 million (2018 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
(FRS 101). The financial statements have been prepared under the historical cost convention, and in accordance with the Companies Act 2006.
20 Ultimate holding company
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.
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
All amounts presented have been rounded to the nearest £0.1 million.
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
Profit for the financial year
Report for further detail).
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
Ultimate controlling party
accounts. The Company’s profit after tax for the year was £429.0 million (2018 £417.9 million). This includes dividends receivable from subsidiary
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
undertakings amounting to £537.8 million (2018 £781.8 million).
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
Impact of amendments to accounting standards
trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party
The Company has applied the exemption available under FRS 101 in relation to paragraphs 30 and 31 of IAS 8, Accounting policies, changes in
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
accounting estimates and errors (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued
of the Company.
and is not yet effective).
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
The following new and amended IFRS has been adopted during the period:
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
• IFRS 9, Financial Instruments (effective 1 January 2018)
related parties of the Company.
IFRS 9, Financial Instruments replaced IAS 39, Financial Instruments: Recognition and Measurement. The key areas of IFRS 9 which affect the
21 Post balance sheet events
Company are those which relate to the treatment of available-for-sale investments.
Details of the Company’s post balance sheet events can be found within Note 45 of the Group’s Annual Report.
In accordance with the transitional provisions of IFRS 9 the Company has adopted IFRS 9 on a modified retrospective basis such that comparative
figures have not been restated and remain in line with the requirements of IAS 39.
IFRS 9 contains three principal classification categories for financial assets – Measured at Amortised Cost, Fair Value through Other Comprehensive
Income (FVTOCI) and Fair Value through Profit and Loss (FVTPL) and eliminates the IAS 39 categories of held to maturity, loans and receivables and
held for sale. The main effect resulting from this reclassification relates to the Company’s equity investments which under IAS 39 were classified
as available for sale whilst under IFRS 9 are now classified as Fair Value through Other Comprehensive Income. As a result, all fair value movements
are now recorded in Other Comprehensive Income and gains and losses will not be recycled to the Profit and loss account on disposal although
dividend income will continue to be recorded in the Income Statement. A fair value gain of £0.7 million on transition has been recorded on transition
to IFRS 9.
A summary of the transition impact of IFRS 9 is shown below:
Financial assets at FVTOCI
Previously
reported
£m
0.3
0.3
As at 1 October
2018
IFRS 9 transition
adjustment
£m
0.7
0.7
Restated
£m
1.0
1.0
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 reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-
monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing on the date when fair value
was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences
arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the profit and loss account for the year.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are held at cost less any provision for impairment.
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Daily Mail and General Trust plc Annual Report 2019
Financial assets at fair value through Other Comprehensive Income
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.
In the current period, as permitted by IFRS 9, the Group classifies its equity investments at Fair Value through Other Comprehensive Income.
All fair value movements are recorded in Other Comprehensive Income and gains and losses are not recycled to the Income Statement on disposal.
Dividend income from Financial assets held at fair value through other comprehensive income is recorded in the Income Statement.
Unlisted equity investments are valued using a variety of approaches including comparable company valuation multiples and discounted cashflow
techniques. In extremely limited circumstances, where insufficient recent information is available to measure fair value or when there is a wide
range of possible fair value measurements, cost is used since this represents the best estimate of fair value in the range of possible valuations.
The fair value of listed equity investments is determined based on quoted market prices.
Available for sale investments
In the prior period available for sale investments were classified as either fair value through profit or loss or available for sale. Where investments
were held-for-trading purposes, gains and losses arising from changes in fair value were included in net profit or loss for the period. For available
for sale investments, gains and losses arising from changes in fair value were 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 was determined based on quoted market prices. Unlisted investments were recorded at cost less provision
for impairment with their recoverable amount determined by discounting future cash flows to present value using market interest rates.
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 reporting date. Deferred tax is provided in full on timing differences that result in an
obligation at the reporting 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.
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Financial Statements
Notes to the Company Statement
Notes to the Company Statement
of Financial Performance
of Financial Performance
2 Significant accounting policies continued
19 Contingent liabilities and guarantees
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right
to £150.0 million (2018 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
to settle on a net basis, or realise the asset and liability simultaneously.
20 Ultimate holding company
Derivative financial instruments and hedge accounting
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses various
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
derivative financial instruments to manage its exposure to these risks.
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
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
Report for further detail).
speculative purposes.
Ultimate controlling party
The Company does not apply hedge accounting except for fair value hedges. Gains and losses arising on derivatives that form part of net investment
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
hedge or cash flow hedge relationships in the consolidated financial statements are recorded in the profit and loss account in the Company.
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party
Financial instruments – disclosures
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
The Company has taken advantage of the exemption provided in IFRS 7, Financial Instruments: Disclosures and included disclosures relating
of the Company.
to financial instruments in Note 34 of the Group’s Annual Report.
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
Cash flow statement
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
The Company has utilised the exemptions provided under IAS 7, Statement of Cash Flows and has not presented a cash flow statement.
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
A consolidated cash flow statement has been presented in the Group’s Annual Report.
related parties of the Company.
Related party transactions
21 Post balance sheet events
The Company has taken advantage of the exemptions of IAS 24, Related Party Disclosures and included disclosures relating to related parties in
Details of the Company’s post balance sheet events can be found within Note 45 of the Group’s Annual Report.
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 2019. 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 9.6% 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 three years, 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%) and 7.0% and vary with management’s view of the CGU’s market position, maturity of the relevant market and do not
exceed the long-term average growth rate for the market in which the CGU operates.
The carrying value of the investment in Group undertakings is £3,237.6 million (2018 £3,033.6 million).
Using the criteria above the Company has provided a sensitivity analysis of the key assumptions used to support the carrying value of its
investments in Group undertakings.
If the growth rate assumptions above were reduced by 1.0% this would reduce the headroom by £289.4 million resulting in an impairment charge
of £137.7 million. If the growth rate assumptions above were increased by 1.0% this would increase the headroom by £443.1 million.
If the discount rate assumptions above were reduced by 1.0% this would increase the headroom by £381.0 million. If the discount rate assumptions
above were increased by 1.0% this would reduce the headroom by £278.2 million resulting in an impairment charge of £126.5 million.
3 Auditor’s remuneration
Statutory audit fees relating to the Company amounted to £0.5 million (2018 £0.3 million).
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Daily Mail and General Trust plc Annual Report 2019
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
2019
Number
19
2018
Number
18
2019
£m
9.5
9.0
1.7
0.1
20.3
2018
£m
4.2
5.6
2.1
0.1
12.0
The remuneration of the Directors of the Company during the period are disclosed in the Remuneration Report of the Group’s Annual Report.
5 Property, plant and equipment
Cost
At 30 September 2017
Additions
At 30 September 2018 and 2019
Accumulated depreciation
At 30 September 2017 and 2018
Depreciation
At 30 September 2019
Net book value – 2018
Net book value – 2019
Fixtures, fittings
and artwork
£m
–
0.9
0.9
–
(0.3)
(0.3)
0.9
0.6
6 Tax
There was a current tax credit for the year of £8.1 million (2018 £8.7 million).
7 Dividends
During the period, the Company paid a final dividend for the year ended 30 September 2018 of 16.2 pence per share and an interim dividend
for the year ended 30 September 2019 of 7.3 pence to Ordinary and A Ordinary shareholders amounting to £74.1 million (2018 £81.0 million).
The Board has declared a final dividend for the year ended 30 September 2019 of 16.6 pence per Ordinary/A Ordinary Non-Voting Share
(2018 16.2 pence) which will absorb an estimated £37.8 million (2018 £57.3 million) of shareholders’ equity for which no liability has been recognised
in these financial statements. It will be paid on 7 February 2020 to shareholders on the register at the close of business on 13 December 2019.
In addition, on 2 April 2019 the Group made a distribution to certain shareholders of its investment in Euromoney. Using the Euromoney share price
at 2 April 2019, the dividend in specie amounted to £661.8 million. On 15 April 2019 the Group also made a cash distribution of £200.0 million as part
of the distribution to shareholders.
Further detail can be found in Note 12 of the Group’s Annual Report.
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Financial Statements
Notes to the Company Statement
Notes to the Company Statement
of Financial Performance
of Financial Performance
8 Shares in Group undertakings (listed on pages 179 to 182)
19 Contingent liabilities and guarantees
Net book value
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
£m
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
3,033.6
At 30 September 2018
to £150.0 million (2018 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
Additions
219.1
20 Ultimate holding company
Impairment charge
(15.1)
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
3,237.6
At 30 September 2019
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
Report for further detail).
Provision
£m
(320.0)
–
(15.1)
Cost
£m
3,353.6
219.1
–
3,572.7
(335.1)
Cost
£m
Provision
£m
Net book value
£m
Ultimate controlling party
Analysis of movements in the period:
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
(8.6)
Daily Mail and General Holdings Ltd
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
DMGB Ltd
213.5
trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party
Eve 4 Ltd
(0.9)
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
of the Company.
(14.2)
–
(0.9)
5.6
213.5
–
(15.1)
219.1
204.0
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
9 Financial assets at fair value through Other Comprehensive Income
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
Cost and net
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
book value
related parties of the Company.
£m
6.5
At 30 September 2018 Available for sale investments
21 Post balance sheet events
Adjustment for transition to IFRS 9
0.7
Details of the Company’s post balance sheet events can be found within Note 45 of the Group’s Annual Report.
7.2
Restated at 1 October 2018
(6.2)
Disposals
At 30 September 2019 Financial assets at Fair value through Other Comprehensive Income
10 Trade and other receivables
Amounts falling due after more than one year
Amounts owed by Group undertakings
Other financial assets
Derivative financial assets
1.0
2018
£m
150.0
8.0
9.7
167.7
Note
(i)
(ii)
2019
£m
–
–
3.6
3.6
(i)
Included within amounts owed by Group undertakings is an amount owed by a subsidiary company, DMGZ Ltd, of £nil (2018 £150.0 million).
The loan bore interest of 6.3% p.a. and was repaid during the period.
(ii) Details of the Company’s derivative financial assets are set out in Note 34 of the Group’s Annual Report.
Amounts falling due within one year
Amounts owed by Group undertakings
Other financial assets
Prepayments and accrued income
Other receivables
Corporation tax
Note
(i)
2019
£m
16.6
15.4
0.2
0.2
7.9
40.3
2018
£m
48.7
–
0.9
0.2
9.5
59.3
(i) The Company 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.
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Daily Mail and General Trust plc Annual Report 2019
11 Other financial assets
Cash deposits
Note
(i)
2019
£m
–
2018
£m
237.3
(i) 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
10.00 % Bonds 2021
6.375 % Bonds 2027
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)
2019
£m
40.1
2019
£m
–
0.8
3.6
251.8
8.9
0.2
265.3
2019
£m
0.8
202.0
24.4
227.2
2019
£m
–
0.8
200.0
200.8
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
(i) Details of the Company’s derivative financial liabilities are set out in Note 34 of the Group’s Annual Report.
The Company’s bonds have been adjusted from their nominal values to take account of direct issue costs, discounts and movements in hedged
risks. The issue costs and discount are being amortised over the expected lives of the bonds using the effective interest method. The unamortised
issue costs amount to £0.5 million (2018 £0.6 million) and the unamortised discount amounts to £0.7 million (2018 £1.2 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.
During the period the Company bought back £6.4 million nominal of its outstanding 2021 bonds incurring a premium of £0.9 million.
The Company’s 2018 bonds matured during the period and were repaid in full.
The book value of the Company’s other borrowings equates to fair value.
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Financial Statements
Notes to the Company Statement
Notes to the Company Statement
of Financial Performance
of Financial Performance
2018
Low
0.98%
2.30%
2018
High
1.99%
2.96%
2019
High
1.70%
–
2019
Low
1.70%
–
14 Trade and other payables falling due after more than one year continued
19 Contingent liabilities and guarantees
The interest rate charged on the Company’s bank loans during the period ranged as follows:
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
to £150.0 million (2018 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
Sterling
US dollar
20 Ultimate holding company
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
The maturity profile of the Company’s borrowings is as follows:
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
Report for further detail).
2019
Ultimate controlling party
Within one year
252.6
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party
Between one and two years
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
Over five years
of the Company.
0.8
202.0
202.8
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
455.4
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
2018
related parties of the Company.
Within one year
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.
Between two and five years
Over five years
Owed to group
undertakings
£m
0.8
202.0
202.8
Overdrafts
£m
Bonds
£m
–
–
–
–
–
–
Total
£m
251.8
202.8
251.8
218.7
298.2
79.5
0.8
0.8
–
–
–
–
–
9.1
196.6
205.7
–
–
–
9.1
196.6
205.7
15 Deferred tax
Movements on the deferred tax asset were as follows:
At start of year
Share-based payments
Tax charge for the year
At end of year
–
424.4
79.5
503.9
2019
£m
3.8
0.6
1.2
5.6
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.
194
194
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
2019
£m
17.8
2019
£m
(57.2)
(2.5)
10.6
(49.1)
2018
£m
17.8
2018
£m
(64.3)
(14.3)
21.4
(57.2)
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
The Company’s investment in its own shares represents shares held in treasury or shares held by an employee benefit trust to satisfy incentive
schemes. At 30 September 2019, this investment comprised the cost of 4,566,121 A Ordinary Non-Voting Shares (2018 4,812,419 shares) held in
treasury and 2,157,613 A Ordinary Non-Voting Shares (2018 2,981,109 shares) held in the employee benefit trust. The market value of the Treasury
Shares at 30 September 2019 was £38.9 million (2018 £33.8 million) and the market value of the shares held in the employee benefit trust at
30 September 2019 was £18.4 million (2018 £20.9 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 of year
On cancellation of A Ordinary Non-Voting Shares
At end of year
18 Profit and loss account
At start of year
Adjustment for transition to IFRS 9
Restated at 1 October 2018
Net profit for the year
Dividends paid
Euromoney dividend in specie
Euromoney cash distribution
Other movements on share option schemes
At end of year
Total reserves
£m
5.2
16.0
21.2
2018
£m
2,972.3
–
2,972.3
417.9
(81.0)
–
–
5.4
3,314.6
2019
£m
3,314.6
0.7
3,315.3
429.0
(74.1)
(661.8)
(200.0)
8.7
2,817.1
2,807.0
3,280.4
The Directors estimate that £1,532.9 million of the Company’s profit and loss account reserve is not distributable (2018 £1,511.9 million).
195
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Financial Statements
Notes to the Company Statement
Notes to the Company Statement
of Financial Performance
of Financial Performance
19 Contingent liabilities and guarantees
19 Contingent liabilities and guarantees
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
At 30 September 2019 the Company had guaranteed subsidiaries’ outstanding derivatives which had a mark to market liability valuation of £nil
to £150.0 million (2018 £150.0 million) in respect of the contingent asset partnership referred to in Note 44 of the Group’s Annual Report.
(2018 £nil) and letters of credit with a principal value of £2.9 million (2018 £3.3 million). The Company is the guarantor of a loan note amounting
to £150.0 million (2018 £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
20 Ultimate holding company
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
The Company’s immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda. The Board anticipates
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere Investments Limited
Report for further detail).
(RIL), a company incorporated in Jersey. RIL will then hold 100% of the issued Ordinary Shares of the Company (see Note 45 of the Group’s Annual
Report for further detail).
Ultimate controlling party
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
Ultimate controlling party
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of DMGT’s issued
trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party
Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is controlled by a discretionary
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
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.
of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the Trust are related parties
of the Company.
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
The Board anticipates that as of 5 December 2019, pursuant to a consolidation of the Group’s holding structure, RCL will be acquired by Rothermere
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
Investments Limited (RIL), a company incorporated in Jersey. RIL will then hold 100% of the Company’s issued Ordinary Shares. The underlying
related parties of the Company.
control of DMGT will, however, remain unchanged and continue to lie with the Trust. RIL is administered in Jersey, and RIL and its directors are also
related parties of the Company.
21 Post balance sheet events
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.
Details of the Company’s post balance sheet events can be found within Note 45 of the Group’s Annual Report.
196
196
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Strategic ReportGovernanceFinancial StatementsShareholder Information
Daily Mail and General Trust plc Annual Report 2019
Shareholder Information
Company Secretary and Registered Office
Fran Sallas
Northcliffe House
2 Derry Street
London
W8 5TT
Telephone: +44 (0)20 3615 0000
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 2020
23 January
5 February
7 February
31 March
9 April
28 May
4 June
5 June
22 June
26 June
23 July
30 September
23 November
3 December
4 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 the 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.
Distribution of Euromoney shares
The distribution to DMGT’s shareholders of shares in Euromoney Institutional Investor PLC (Euromoney) on 2 April 2019 was treated as income
for UK tax purposes, in the same way as DMGT’s usual dividend payments. For the purposes of UK individual shareholders calculating dividend
income and the base cost of Euromoney shares for capital gains tax purposes, the value per Euromoney share was £13.00. The ‘Retail Investor
Tax FAQs’ document in the ‘Shareholders’ section of www.dmgt.com contains further information about the tax implications for UK individual
shareholders, including the base cost for capital gains tax purposes of their remaining shares in DMGT.
Registrars
All enquiries regarding shareholdings, dividends, lost share certificates, 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.
197
Strategic ReportGovernanceFinancial StatementsShareholder Information Shareholder Information
Shareholder Information
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.
Eurobond paying agent
The 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 Street, London EC2N 2DB. Enquiries should be directed to John Donegan, Group Financial Controller, whose email
address is john.donegan@dmgt.com.
CREST
Shareholders have the choice of either 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, 4th Floor Rear, 67/68 Jermyn Street, London SW1Y 6NY.
Shareholdings at 30 September 2019
Ordinary Shares
Balance ranges
1–500,000
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
3
3
0.00
100.00
100.00
0
19,890,364
19,890,364
0.00
100.00
100.00
Total number of holdings
Percentage of holders
Total number of shares
Percentage issued capital
879
389
110
45
56
29
47
32
55.39
24.51
6.93
2.84
3.53
1.83
2.96
2.02
1,587
100.00
241,470
931,150
764,997
640,162
1,867,681
1,990,497
11,432,633
197,044,737
214,913,327
0.11
0.43
0.36
0.30
0.87
0.93
5.32
91.69
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
198
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone: +44 (0)371 384 2302
Strategic ReportGovernanceFinancial StatementsShareholder Information 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
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