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InformaFor Footnotes, please see page 26 1 For Footnotes, please see page 26 2 For Footnotes, please see page 26 3 For Footnotes, please see page 26 4 For Footnotes, please see page 26 5 For Footnotes, please see page 26 6 For Footnotes, please see page 26 7 For Footnotes, please see page 26 8 For Footnotes, please see page 26 9 For Footnotes, please see page 26 10 For Footnotes, please see page 26 11 For Footnotes, please see page 26 12 For Footnotes, please see page 26 13 For Footnotes, please see page 26 14 For Footnotes, please see page 26 15 For Footnotes, please see page 26 16 For Footnotes, please see page 26 17 For Footnotes, please see page 26 18 For Footnotes, please see page 26 19 For Footnotes, please see page 26 20 For Footnotes, please see page 26 21 For Footnotes, please see page 26 22 For Footnotes, please see page 26 23 For Footnotes, please see page 26 24 For Footnotes, please see page 26 25 26 27 28 on assets intangible goodwill and a further £79.4 million of other the Consolidated Statement of Financial Position at 30 September 2022. There has been an impairment charge recorded of £8.5 million against goodwill and £0.5 million against other intangible assets for businesses which remain in the Consolidated Statement of Financial Position at 30 September 2022. the impairment For the groups of CGUs to which goodwill relates (which require an the annual test), determination of recoverable amount, being the higher of value in use (VIU) and fair value less costs of disposal (FVLCD), requires judgement and estimation by management. This is the determination of a because includes recoverable management’s consideration of key internal inputs and external market conditions such as future cash flows, the long-term growth determination of the most appropriate discount rate. There is a risk that if these cash flows do not meet the Directors’ expectations, some of these assets may be impaired. Therefore, we considered it to be a key audit matter. rates, and amount drawn up. This included comparing them to the latest Board approved budget and four-year plan, and testing the mathematical accuracy of the assessments. For the impairment assessment of goodwill and intangible assets allocated to the material individual lowest level CGUs, we tested all key assumptions, including: ● revenue and profit assumptions included within the future forecasts, by considering independent third-party support available and the recovery time from the impact of Covid-19, along with the impact of climate change built into the future cash flow forecasts; ● 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 and Note 22, including the sensitivities provided, and considered them to be reasonable. required and The impairment charges recorded for goodwill and intangibles are reasonable. For those assets where the Directors determined that no impairment was that no disclosures were additional necessary, we found that these judgements were supported by reasonable assumptions that would significant downside changes before any material impairment was necessary. sensitivity require Accounting for deferred tax (group) Refer to the Notes 11 and 36 in the group financial statements. The group’s recognition of deferred tax liabilities on the pension surplus (given We involved our tax specialists in our testing of the appropriateness of the estimates taken in relation to deferred taxation recognised in the group financial statements. 34 Other matter As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Philip Stokes (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 30 November 2022 42 Daily Mail and General Trust plc Annual Report 2022 Financial Statements Consolidated Income Statement For the year ended 30 September 2022 CONTINUING OPERATIONS Revenue Adjusted operating profit Exceptional operating costs, impairment of internally generated and acquired computer software Amortisation and impairment of acquired intangible assets arising on business combinations and impairment of goodwill Operating (loss)/profit before share of results and impairment of joint ventures and associates Share of results of joint ventures and associates Impairment of carrying value of associates and loans to associates Total operating loss Other gains and losses (Loss)/profit before investment revenue, net finance costs and tax Investment revenue Finance expense Finance income Net finance costs Loss before tax Tax (Loss)/profit after tax from continuing operations DISCONTINUED OPERATIONS Profit from discontinued operations (LOSS)/PROFIT FOR THE YEAR Attributable to: Owners of the Company Non-controlling interests* (Loss)/profit for the year Year ended 30 September 2022 £m Year ended 30 September 2021 £m Note 3 974.0 885.3 3, (i) 3 3 4 7 7 8 9 10 10 11 18 38 39 58.8 (79.9) (20.6) (41.7) (6.4) (38.9) (87.0) 30.8 (56.2) 2.8 (30.4) 23.7 (6.7) (60.1) (85.6) (145.7) 65.5 (33.4) (28.2) 3.9 (3.3) (6.5) (5.9) 14.3 8.4 2.3 (15.6) 2.5 (13.1) (2.4) 62.2 59.8 11.6 (134.1) 1,480.1 1,539.9 (133.8) (0.3) (134.1) 1,542.3 (2.4) 1,539.9 *All attributable to continuing operations. (i) Adjusted operating profit is defined as total operating profit from continuing operations before share of results and impairment 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. 43 Financial Statements Financial Statements Consolidated Statement of Comprehensive Income For the year ended 30 September 2022 (Loss)/profit for the year Items that will not be reclassified to Consolidated Income Statement Actuarial 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 2022 £m (134.1) Year ended 30 September 2021 £m 1,539.9 271.3 (0.2) (95.0) (646.0) 155.8 (0.1) (49.4) 370.8 Note 38 39 38 25, 38 Total items that will not be reclassified to Consolidated Income Statement (469.9) 477.1 Items that may be reclassified subsequently to Consolidated Income Statement (Loss)/gain on hedges of net investments in foreign operations Costs of hedging Costs of hedging recycled to Consolidated Income Statement on currency swap termination Translation reserves recycled to Consolidated Income Statement on disposals Foreign exchange differences on translation of foreign operations 38 38 10, 38 8, 17, 18, 38 38 (5.9) 0.4 (0.3) (6.4) 5.8 6.1 (0.2) - (52.2) (13.3) Total items that may be reclassified subsequently to Consolidated Income Statement (6.4) (59.6) Other comprehensive (expense)/income for the year Total comprehensive (expense)/income for the year Attributable to: Owners of the Company Non-controlling interests Continuing operations Discontinued operations Total comprehensive (expense)/income for the year from continuing operations attributable to: Owners of the Company Non-controlling interests (476.3) 417.5 (610.4) 1,957.4 (609.9) (0.5) (610.4) (622.0) 11.6 (610.4) (621.5) (0.5) (622.0) 1,959.9 (2.5) 1,957.4 544.4 1,413.0 1,957.4 546.9 (2.5) 544.4 44 Daily Mail and General Trust plc Annual Report 2022 Consolidated Statement of Changes in Equity For the year ended 30 September 2022 Called-up share capital Share premium account Capital redemption reserve Own shares Translation reserve At 1 October 2020 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 Credit to equity for share- based payments Settlement of exercised share options Deferred tax on other items recognised in equity At 30 September 2021 Loss for the year Other comprehensive expense for the year Total comprehensive expense for the year Cancellation of A Ordinary Non-Voting Shares Dividends Cazoo dividend in specie Transfers Own shares released on exercise of share options Credit to equity for share- based payments Settlement of exercised share options Deferred tax on other items recognised in equity At 30 September 2022 £m 29.3 £m 17.8 £m 21.0 £m (59.3) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1.0) 24.8 - - - Note 38, 39 38, 39 12, 38 38 38 38 38 36, 38 38, 39 38, 39 - - - 37, 38 (0.5) 12, 38 12, 25, 38 38 38 38 36, 38 - - - - - - - - - - - - - - - - - - - - - - - - 0.5 28.9 - - - - - - - - - - 6.6 - - - - Equity attributable to owners of the Company £m 1,145.2 1,542.3 Retained earnings £m 1,069.9 1,542.3 Non- controlling interests Total equity £m 1.0 £m 1,146.2 (2.4) 1,539.9 £m 66.5 - (59.6) 477.2 417.6 (0.1) 417.5 (59.6) 2,019.5 1,959.9 (2.5) 1,957.4 - - - - - - (55.0) (55.0) - - (1.0) 24.8 40.1 40.1 (34.0) (34.0) 3.6 3.6 - (133.8) (133.8) - - - - - - (55.0) (1.0) 24.8 40.1 (34.0) 3.6 (1.5) (0.3) 3,082.1 (134.1) (6.4) (469.7) (476.1) (0.2) (476.3) (6.4) (603.5) (609.9) (0.5) (610.4) - - - - - - - - (28.9) - (1,356.4) (109.8) (3.3) (1,356.4) (109.8) (3.3) - 6.6 58.8 58.8 (62.7) (62.7) (4.4) (4.4) - - - - - - - - - (1,356.4) (109.8) (3.3) 6.6 58.8 (62.7) (4.4) 0.5 933.9 1,002.5 (2.0) 1,000.5 29.3 17.8 21.0 (35.5) 6.9 3,044.1 3,083.6 28.8 17.8 21.5 45 Financial Statements Financial Statements Consolidated Statement of Financial Position At 30 September 2022 ASSETS Non-current assets Goodwill Other intangible assets Property, plant and equipment Right of use assets Investments in joint ventures Investments in associates Financial assets at fair value through Other Comprehensive Income 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 Borrowings Lease liabilities Provisions Total liabilities of businesses held for sale Non-current liabilities Trade and other payables Borrowings Lease liabilities Derivative financial liabilities Retirement benefit deficit Provisions Deferred tax liabilities Total liabilities Net assets 46 At 30 September 2022 £m At 30 September 2021 £m Note 20 21 22 23 24 24 25 27 28 33 34 36 26 27 31 28 33 29 19 30 31 32 32 35 19 30 32 32 33 34 35 36 201.5 79.4 50.2 31.3 1.3 34.7 62.8 1.3 15.9 11.9 1,009.2 31.4 1,530.9 27.7 247.1 - 5.1 - 53.0 - 332.9 1,863.8 (354.3) (4.2) (0.7) (7.3) (74.7) - (441.2) - (194.6) (21.5) (19.5) - (2.2) (184.3) (422.1) (863.3) 208.1 93.0 55.4 34.7 1.7 69.2 806.0 3.3 140.5 0.4 303.1 4.7 1,720.1 16.4 186.9 0.4 9.2 0.4 1,746.9 6.9 1,967.1 3,687.2 (264.4) (1.7) (1.7) (16.6) (61.4) (5.9) (351.7) - (199.5) (20.5) (17.2) (8.0) (2.3) (5.9) (253.4) (605.1) 1,000.5 3,082.1 Daily Mail and General Trust plc Annual Report 2022 Consolidated Statement of Financial Position At 30 September 2022 SHAREHOLDERS EQUITY Called-up share capital Share premium account Share capital Capital redemption reserve Own shares Translation reserve Retained earnings Equity attributable to owners of the Company Non-controlling interests At 30 September 2022 £m At 30 September 2021 £m 28.8 17.8 46.6 21.5 - 0.5 933.9 1,002.5 (2.0) 1,000.5 29.3 17.8 47.1 21.0 (35.5) 6.9 3,044.1 3,083.6 (1.5) 3,082.1 Note 37 38 38 38 38 38 39 The financial statements of DMGT plc (Company number 184594) on pages 43 to 134 were approved by the Directors and authorised for issue on 29 November 2022. They were signed on their behalf by The Viscount Rothermere Director 47 Financial Statements Financial Statements Consolidated Cash Flow Statement For the year ended 30 September 2022 Cash (used in)/generated by operations Taxation paid Taxation received Net cash (used in)/generated from 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 Proceeds on disposal of property and plant and equipment Proceeds on disposal of financial assets held at fair value through Other Comprehensive Income Purchase of businesses and subsidiary undertakings, net of cash acquired Collateral posted on Treasury derivatives Investment in joint ventures and associates Loans advanced to joint ventures and associates Proceeds on disposal of businesses and subsidiary undertakings Proceeds on disposal of joint ventures and associates Release from/(payment into) escrow Net cash generated from investing activities Financing activities Equity dividends paid Purchase of own shares Net payment on settlement of share options Interest paid on borrowings Premium paid on options Bonds repaid Settlement of derivatives Amounts received on sublease receivable Interest paid on lease liabilities Repayments of lease liabilities Net cash used in 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 Net cash and cash equivalents at end of year Year ended 30 September 2022 £m (369.7) (7.5) 0.7 Year ended 30 September 2021 £m 128.5 (26.1) 3.8 (376.5) 106.2 0.4 1.2 1.8 (13.5) (4.3) - (7.7) 0.1 - (1.5) 4.1 (3.4) (3.8) 7.7 16.9 120.7 1.1 1.0 - (8.3) (5.2) (2.1) (53.4) 0.3 22.1 (77.9) 12.5 (21.7) (4.2) 1,519.6 10.9 (120.7) 118.7 1,274.0 (1,356.4) - (56.1) (16.8) (7.2) - (12.9) 3.5 (0.9) (17.3) (55.0) (1.0) (9.3) (14.1) - (0.8) - 3.8 (3.4) (22.3) (1,464.1) (102.1) (1,721.9) 1,745.2 29.0 52.3 1,278.1 479.9 (12.8) 1,745.2 Note 14 24 9 22, 23 21 21 25 16 15 24 17 8, 24 28 12, 38 38 10 15 15 15 15 29 15 15, 29 48 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 UK adopted international accounting standards. These financial statements have been prepared for the year ended 30 September 2022. Other than the Daily Mail, The Mail on Sunday, Metro and the i businesses whose accounts have been prepared to 2 October 2022, the Group prepares accounts for a year ending on 30 September. The Daily Mail, The Mail on Sunday, Metro and the i businesses prepare financial statements for a 52 or 53 week period or for the period since acquisition if shorter, 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 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. 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 set out in Notes 32 and 33 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 cash balances and committed bank facilities which expire in May 2026, extendable at the banks option for a further one-year period. The Directors have reassessed the principal risks facing the Group and determined that there are no material uncertainties to disclose. In making their assessment of the Groups ability to continue as a going concern, the Directors have considered the projected performance of the Group and its financial resources after taking account of severe but plausible changes in trading performance. This assessment indicates that the Group is expected to operate as a going concern. The Directors assessment of the Group and Companys ability to continue as going concerns includes consideration of cash flow forecasts for the Group and the committed borrowing and debt facilities of the Group which were in place at 30 September 2022. These forecasts include consideration of future trading performance, working capital requirements and the wider economy and include the modelling of a number of severe but plausible scenarios. The base case scenario reflects assumptions of minimal growth in 2023 as described in the Strategic Report. The severe but plausible scenarios considered include the following: The impact of further cancellations in the Events and Exhibitions segment; The UK housing market operating at volumes at the floor of the functioning market in the Property Information segment; and A reduction in print advertising revenues and increases in newsprint prices offset by cost saving initiatives and price increases in the Consumer Media segment. Accordingly, the Consolidated Financial Statements have been prepared on a going concern basis as the Directors have a reasonable expectation that the Group has adequate resources for a period of at least 12 months from the date of approval of these financial statements. 49 Daily Mail and General Trust plc Annual Report 2022 2 Significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are not yet effective. These new pronouncements are listed below: Amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice Statement 2, Making Materiality Judgements - effective 1 October 2023. Definition of Accounting Estimates (Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors) - effective 1 October 2023. Amendments to IAS 12, Income Taxes - effective 1 October 2023. The above amendments will not have a significant impact on the Groups Consolidated Financial Statements. There have been no new IFRSs adopted during the year. Update on interest rate benchmark (IBOR) reform During the prior year, the Directors considered the Groups exposures to IBOR and implemented the following changes to documentation and systems: An amendment to IBOR language within the Groups revolving credit facilities maturing in March 2023, to ensure a switch to risk-free rates (RFR) following cessation of the relevant IBOR; and A system upgrade of the Groups treasury management system to incorporate new day-count and compounding conventions required for RFR. Subsequent to the prior year amendment of IBOR language in the Groups revolving credit facilities, on 6 May 2022 the Group renegotiated new facilities and terminated the facilities maturing in March 2023. The new facilities reference risk-free rates plus a margin. Further details are given in Note 32, Borrowings. The prior period assessment of exposures to IBOR also identified the need to amend IBOR language within derivative contracts. Accordingly, during the period the Group amended all interest rate swap and cap contracts that previously referenced GBP LIBOR such that they now reference three month compounded Sterling Overnight Index Average (SONIA) plus a credit adjustment spread (CAS). This change was effective from the first floating interest rate reset after 1 January 2022. The Group also replaced its USD LIBOR cap with a new cap referencing three month compounded Secured Overnight Financing Rate (SOFR). 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 Net finance costs. 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 Net finance costs. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as at the date of the acquisition that, if known, would have affected the amounts recognised as at that date. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as at the acquisition date and is a maximum of one year. Business combinations achieved in stages Where a business combination is achieved in stages, the Group's previously held interests in the acquired entity are remeasured to fair value at the date the Group attains control and the resulting gain or loss is recognised in the Consolidated Income Statement. Amounts arising from interests in the acquiree prior to the acquisition date that were recognised in Other Comprehensive Income are reclassified to the Consolidated Income Statement where such treatment would be appropriate if the interest were disposed of. 50 Financial Statements Financial Statements Notes to the accounts 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 in cumulative translation reserves 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 Net finance costs. 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 interests share of the net assets of the subsidiary, on a case-by-case basis. The total comprehensive income of a subsidiary is apportioned between the Group and the non-controlling interest, even if it results in a deficit balance for the non-controlling interest. Interests in joint ventures and associates A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. The post-tax results of joint ventures and associates are incorporated in the Group's results using the equity method of accounting. Under the equity method, investments in joint ventures and associates are carried in the Consolidated Statement of Financial Position at cost as adjusted for post- acquisition changes in the Group's share of the net assets of the joint venture and associate, less any impairment in the value of investment. Losses of joint ventures and associates in excess of the 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. 51 Daily Mail and General Trust plc Annual Report 2022 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. Goodwill and intangible assets Goodwill and intangible assets acquired arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Negative goodwill arising on an acquisition is recognised directly in the Consolidated Income Statement. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rates on the period end date. On disposal of a subsidiary, associate or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss recognised in the Consolidated Income Statement on disposal. Impairment of goodwill The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash- generating units (CGUs). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit, prorated on the basis of the carrying amount of each asset in the unit, but subject to not reducing any asset below its recoverable amount. When testing for impairment, the recoverable amounts for all of the Group's CGUs are measured at the higher of value in use or fair value less costs to sell. Value in use is calculated by discounting future expected cash flows. These calculations use cash flow projections based on Board-approved budgets and forecasts which reflect the Directors 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 12.1% to 25.9% (2021 10.9% to 30.0%) the choice of rates depending on the risks specific to that CGU. The Directors' estimate of DMGTs post tax weighted average cost of capital is 12.0% (2021 7.5%). The cash flow projections consist of Board-approved budgets for the following year, together with forecasts for up to four additional years and nominal long-term growth rates beyond these periods. The nominal long-term (decline)/growth rates used range from -3.0% to 6.9% (2021 -3.0% to 4.0%) and varies with the Directors view of the CGU's market position, maturity of the relevant market and does not exceed the long-term average growth rate for the industry 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. 52 Financial Statements Financial Statements Notes to the accounts 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 is included within Adjusted Operating Profit in the Consolidated Income Statement. The Group has no intangible assets with indefinite lives. Software-as-a-Service (SaaS) arrangements represent service contracts which provide the Group with the right to access a cloud providers application software over a contract period. Costs incurred to configure or customise, and any on-going fees to obtain access to the cloud providers application software are recognised as an operating expense when the services are received. These costs are capitalised as intangible assets and amortised over the useful life of the software if they represent the development of software code which enhances or modifies, or creates additional capability to existing on-premise systems and which meets the definition of and recognition criteria for an intangible asset under IAS 38, Intangible Assets. 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: whether the assets market value has increased significantly during the period; 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 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 assets value in use and increase the assets 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. 53 Daily Mail and General Trust plc Annual Report 2022 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 properties Short leasehold properties Plant and equipment Depreciation is not provided on freehold land or works of art 50 years the term of the lease 3 - 25 years Right of use assets Right of use assets are depreciated over the shorter of the assets useful economic life and the lease term on a straight-line basis. 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. Exhibition, training and event costs Directly attributable costs relating to future exhibition, 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. 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. 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. 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 Groups 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 when the control of performance obligations have been transferred. 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; circulation revenue is recognised on a sale or return basis at cover price less the contractual wholesaler and retail margins; publishing 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. 54 Financial Statements Financial Statements Notes to the accounts Adjusted measures The Group presents adjusted operating profit and adjusted profit before tax adjusting for costs and profits which the Directors believe to be significant by virtue of their size, nature or incidence or which have a distortive effect on current year earnings. In the Directors judgement such items would include, but are not limited to, costs associated with business combinations, gains and losses on the disposal and closure of businesses and subsidiary undertakings, finance costs relating to premium on bond buy backs, fair value movements, exceptional operating costs, impairment of goodwill, intangible assets and property, plant and equipment and amortisation 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/cash in Note 15. 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. Other gains and losses Other gains and losses comprise profit or loss on sale of property, plant and equipment, profit or loss on sale and closure of businesses and subsidiary undertakings, gain from bargain purchase and profit or loss on sale of joint ventures and associates. EBITDA The Group discloses EBITDA, being adjusted operating profit before depreciation of property, plant and equipment and right of use assets and amortisation of assets not arising on business combinations. 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 14. Leases The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration. The Group as a lessee Where the Group acts as a lessee it recognises a right of use asset and corresponding liability at the date at which a leased asset is made available for use by the Group, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The lease liability is measured at the present value of the future lease payments, discounted at the rate implicit in the lease, or if that cannot be readily determined, at the Groups incremental borrowing rate specific to the term, country, currency and start date of the lease. The Groups lease payments include: fixed payments; variable lease payments dependent on an index or rate, initially measured using the index or rate at commencement; and payments in an optional renewal period if the Group is reasonably certain to exercise an extension option or not exercise a break option less any lease incentives receivable. The lease liability is subsequently measured at amortised cost using the effective interest rate method. It is remeasured, with a corresponding adjustment to the right of use asset, when there is a change in future lease payments resulting from a rent review, change in an index or rate such as inflation, or change in the Groups assessment of whether it is reasonably certain to exercise a purchase, extension or break option. The right of use asset is initially measured at cost based on the value of the associated lease liability, adjusted for any payments made before inception, initial indirect costs and any dilapidation or restoration costs. The right of use asset is subsequently depreciated on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset. The right of use asset is tested for impairment if there are any indicators of impairment. Leases of low value assets and short-term leases of 12 months or less are expensed to the Consolidated Income Statement, as are non-lease service components. The Group as a lessor Leases for which the Group is a lessor are classified as finance or operating leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership to the lessee and classified as an operating lease if it does not. When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right of use asset arising from the head lease. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Groups net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Groups net investment in the lease. Rental income from operating leases is recognised on a straight- line basis over the term of the relevant lease. 55 Daily Mail and General Trust plc Annual Report 2022 Dividends Dividend income from investments is recognised when the shareholders' rights to receive payment have been established. Dividends are recognised as a distribution in the period in which they are approved by the shareholders. Interim dividends are recorded in the period in which they are paid. Borrowing costs Unless capitalised under IAS 23, Borrowing Costs, all borrowing costs are recognised in the Consolidated Income Statement in the period in which they are incurred. Finance charges, including premiums paid on settlement or redemption and direct issue costs and discounts related to borrowings, are accounted for on an accruals basis and charged to the Consolidated Income Statement using the effective interest method. Retirement benefits Pension scheme assets are measured at market value at the period end date. Scheme liabilities are measured using the projected unit credit method and discounted at a rate reflecting current yields on high-quality corporate bonds having regard to the duration of the liability profiles of the schemes. For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is recognised as an asset or liability on the Consolidated Statement of Financial Position. Actuarial gains and losses arising in the year are taken to the Consolidated Statement of Comprehensive Income. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising because of differences between the previous actuarial assumptions and what has actually occurred. For defined benefit schemes, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out triennially. In accordance with the advice of independent qualified actuaries in assessing whether to recognise a surplus, the Group has regard to the principles set out in IFRIC 14. Other movements in the net surplus or deficit are recognised in the Consolidated Income Statement, including the current service cost, any past service cost and the effect of any curtailment or settlements. The net finance income/(expense) 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. 56 Financial Statements Financial Statements Notes to the accounts 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. 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 the Directors 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 lifetime expected credit losses. Other receivables include loans which are held at the capital sum outstanding plus unpaid interest reduced by allowances for expected credit losses. Estimates are used in determining the level of receivables that will not, in the opinion of the Directors, be collected. The Group applies the simplified approach permitted by IFRS 9, Financial Instruments, 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. 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. 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. 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. 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. 57 Daily Mail and General Trust plc Annual Report 2022 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. 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. 58 Financial Statements Financial Statements Notes to the accounts Share-based payments Prior to going private, the Group issued 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 the Directors 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 Prior to going private, when the Company purchased its equity share capital as Treasury Shares, the consideration paid, including any directly attributable incremental costs (net of income taxes) was recorded as a deduction from shareholders equity until such shares were cancelled, reissued or disposed of. Where such shares were subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, was 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 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 comprised shares in DMGT plc and cash balances. The EBT was administered by independent trustees and its assets were held separately from those of the Group. The Group bore the major risks and rewards of the assets held by the EBT until the shares vested unconditionally with employees. The Group recognised the assets and liabilities of the EBT in the Consolidated Financial Statements and shares held by the EBT were recorded at cost as a deduction from shareholders equity. Consideration received for the sale of shares held by the EBT was 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 the Directors in selecting and applying the accounting policies set out above, the Directors have made the following judgements concerning the amounts recognised in the Consolidated Financial Statements: Adjusted measures The Directors believe that the adjusted profit measure provides additional useful information to users of the Consolidated Financial Statements 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 the Directors judge to be significant by virtue of their size, nature or incidence or which have a distortive effect on current year earnings. In the Directors 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, intangible assets and property, plant and equipment and amortisation of intangible assets arising on business combinations. Exceptional operating costs include 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 the Directors 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/cash. 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 15 for further detail. Retirement benefits When a surplus on a defined benefit pension scheme arises, the Directors 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 £1,009.2 million (2021 £303.1 million) and report a net surplus on its pension schemes amounting to £1,009.2 million (2021 £295.1 million). 59 Daily Mail and General Trust plc Annual Report 2022 Mail Force Charitable Incorporated Organisation (CIO) The Group established the Mail Force CIO in a prior year. The Group has assessed its relationship with the charity in accordance with IFRS 10, Consolidated Financial Statements and concluded that it does not have the power to affect returns to the Group from the Charitys activities and does not control Mail Force. Accordingly Mail Forces accounts have not been consolidated within the Groups financial statements. 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 four-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 and viability assessments and for the purposes of impairment reviews. Longer-term forecasts use long-term growth rates applicable to the relevant businesses. See Note 20 for a sensitivity assessment of these long-term growth rates on the carrying values of certain of the Groups 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 the Directors to estimate the future cash flows expected to arise from the asset or CGU including an assessment of climate change on the applicable businesses and calculate the net present value of these cash flows using a suitable discount rate. The key areas of estimation are the long-term growth rate, operating cash flows, and the discount rate applied to those cash flows. 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 the Directors 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 (i) the recoverability of deferred tax assets relating to losses based on forecasts of future taxable profits which are, by their nature, uncertain; and (ii) the amount of the pension scheme surplus that might be returned to the Group, thereby impacting the level of deferred tax liability arising thereon. See Note 36 for further information concerning recognised and unrecognised deferred tax assets and deferred tax liabilities. 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 Groups pension scheme assets includes 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 Groups pension scheme assets by £17.9 million (2021 £22.8 million). The carrying amount of the retirement benefit obligation at 30 September 2022 was a surplus of £1,009.2 million (2021 £295.1 million). The assumptions used and the associated sensitivity analysis can be found in Note 34. 60 Financial Statements Financial Statements Notes to the accounts Legal claim provisions 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 judgements about future events and uncertainties that rely heavily on estimates and assumptions. As disclosed in Note 18 Discontinued operations, 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 additional RINs it had verified. During the period a settlement agreement was reached with the EPA whereby the Company without admitting any wrongdoing, will replace 24 million RINs over a four-year period. At each period end IAS 37, Provisions, Contingent Liabilities and Contingent Assets requires DMGT to review this provision and make appropriate adjustments to reflect the current status of the claim. The Groups closing provision includes the cost of replacement RINs, estimated purchase costs, associated legal fees and currency fluctuations. The final settlement amount may be different than the provision made, however, it is not possible for the Group to predict with any certainty the potential impact of this litigation or to quantify the ultimate cost of a verdict or resolution. Accordingly, the provision could change substantially over time. RINs trade in a volatile range. Using the period end price of US$1.74 compared to the estimated future forecast price of US$1.51 replacing the 24 million RINs would increase the provision by approximately US$3.1 million (£2.7 million). 61 Daily Mail and General Trust plc Annual Report 2022 3 Segment analysis The Groups business activities are split into three continuing operating divisions: Property Information, Events and Exhibitions 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. Less operating (loss)/profit of joint ventures and associates £m 0.9 - - 0.9 (6.9) Segment operating profit/(loss) £m 33.4 8.9 52.0 94.3 (41.5) Total and external revenue £m 216.9 99.5 657.6 974.0 - 974.0 Adjusted operating profit/(loss) £m 32.5 8.9 52.0 93.4 (34.6) 58.8 (79.9) (9.3) (11.3) (41.7) (6.4) (38.9) (87.0) 30.8 (56.2) 2.8 (30.4) 23.7 (60.1) (85.6) 11.6 (134.1) Year ended 30 September 2022 Property Information Events and Exhibitions Consumer Media Corporate costs Adjusted operating profit Exceptional operating costs Impairment of goodwill and acquired intangible assets arising on business combinations Amortisation of acquired intangible assets arising on business combinations Operating loss before share of results and impairment of joint ventures and associates Share of results of joint ventures and associates Impairment of carrying value of associates and loans to associates Total operating loss Other gains and losses Loss before investment revenue, net finance costs and tax Investment revenue Finance expense Finance income Loss before tax Tax Profit from discontinued operations Loss for the year Note 20, 21 21 7 7 8 9 10 10 11 18 62 Financial Statements Financial Statements Notes to the accounts An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs by segment is as follows: Year ended 30 September 2022 Property Information Events and Exhibitions Energy Information Consumer Media Corporate costs Relating to discontinued operations Continuing operations Amortisation of intangible assets not arising on business combinations (Note 21) £m (3.9) - - - (3.9) (0.4) (4.3) - (4.3) Note 18 Amortisation of intangible assets arising on business combinations Impairment of goodwill and intangible assets arising on business combinations (Note 21) £m (Notes 20, 21) £m (5.3) 0.1 - (6.1) (11.3) - (11.3) - (11.3) - (0.8) - (8.5) (9.3) - (9.3) - (9.3) Exceptional operating costs £m (0.4) - (11.2) (22.4) (34.0) (57.1) (91.1) 11.2 (79.9) The Group's exceptional operating (costs)/income which have been disclosed separately due to their size, nature and incidence are analysed in the table below. The Directors believe this presentation provides users of these accounts with clear and consistent reporting: Year ended 30 September 2022 Property Information Energy Information Consumer Media Corporate costs Note Relating to discontinued operations 18 Continuing operations Severance and closure costs (i) £m (0.4) - (18.8) (19.2) (15.1) (34.3) - (34.3) LTIP (ii) £m - - (15.0) (15.0) (43.2) (58.2) - (58.2) Pension past service credit Professional fees and claims Total (iii) £m - - 11.4 11.4 6.4 17.8 - 17.8 (iv) £m - (11.2) - (11.2) (5.2) (16.4) 11.2 (5.2) £m (0.4) (11.2) (22.4) (34.0) (57.1) (91.1) 11.2 (79.9) (i) (ii) (iii) (iv) Following the prior years disposals of the Euromoney, Energy Information, EdTech and Insurance Risk segments, the Group is no longer operating at the scale it was before these disposals. Accordingly the Group has begun a review of its support functions. This has resulted in the loss of certain roles and functions which are no longer necessary as a consequence of the reduced size of the Group and the Companys delisting. During the year Rothermere Continuation Limited (RCL) acquired all of the issued DMGT A Shares not already owned by RCL. Following this transaction, certain of the Groups equity settled long term incentive plan (LTIP) arrangements early vested subject to pro-rata vesting and have been replaced or are expected to be replaced with cash settled awards. Where an equity settled LTIP is cancelled, IFRS 2, Share-based Payment requires this is treated as an acceleration of the original vesting period. The impact of this acceleration results in non-cash LTIP charges being charged against profits of the current period which normally would have been charged against profits of future periods. These accelerated charges have been treated as exceptional operating costs. The pension past service credit represents a non-cash reduction in the Groups Pension Scheme liabilities following the acceptance of a Pension Increase Exchange option by certain members of the Harmsworth Pension Scheme and Senior Executive Pension Fund during the year. Professional fees include costs in relation to the advice relating to the offer by Rothermere Continuation Limited (RCL) for the issued DMGT A Shares not already owned by RCL. The Group's tax charge includes net charges of £19.3 million in relation to these exceptional operating costs, including charges of £29.9 million in respect of the pension scheme and credits of £7.3 million in respect of severance and closure costs and £3.3 million in respect of LTIP. None of these net tax charges relates to discontinued operations. 63 Daily Mail and General Trust plc Annual Report 2022 An analysis of the depreciation of right of use assets and property, plant and equipment, investment revenue, other gains and losses and finance income and expense by segment is as follows: Depreciation of right of use assets Depreciation of property, plant and equipment Investment revenue Other gains and losses Finance income Finance expense (Note 23) (Note 22) (Note 9) (Note 8) (Note 10) (Note 10) £m - - - - - 2.8 2.8 - 2.8 Total and external revenue £m 223.0 227.1 33.5 34.4 623.8 1,141.8 - (256.5) 885.3 Year ended 30 September 2022 Note Insurance Risk Property Information Events and Exhibitions Consumer Media Corporate costs Relating to discontinued operations Continuing operations 18 £m - (1.9) (0.7) (11.2) (13.8) - (13.8) - (13.8) £m - (1.4) - (14.6) (16.0) (0.3) (16.3) - (16.3) Year ended 30 September 2021 Note Insurance Risk Property Information EdTech Events and Exhibitions Consumer Media Corporate costs Discontinued operations Adjusted operating profit Exceptional operating costs, impairment of internally generated and acquired computer software 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 and impairment of joint ventures and associates Share of results of joint ventures and associates Impairment of carrying value of associates and loans to associates Total operating loss Other gains and losses Profit before investment revenue, net finance costs and tax Investment revenue Finance expense Finance income Loss before tax Tax Profit from discontinued operations Profit for the year 18 20, 21 18, 21 7 7 8 9 10 10 11 18 64 £m 2.7 7.3 - (0.9) 9.1 24.4 33.5 (2.7) 30.8 £m - - - 7.6 7.6 16.1 23.7 - 23.7 £m - (0.4) (0.1) (0.5) (1.0) (29.4) (30.4) - (30.4) Less operating (loss)/profit of joint ventures and associates Segment operating profit/(loss) Adjusted operating profit/(loss) £m 39.4 44.7 1.1 0.4 59.7 145.3 (42.3) (40.5) £m (0.1) 1.2 - - - 1.1 (4.2) 0.1 £m 39.5 43.5 1.1 0.4 59.7 144.2 (38.1) (40.6) 65.5 (33.4) (13.0) (15.2) 3.9 (3.3) (6.5) (5.9) 14.3 8.4 2.3 (15.6) 2.5 (2.4) 62.2 1,480.1 1,539.9 Financial Statements Financial Statements Notes to the accounts An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs by segment is as follows: Year ended 30 September 2021 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)/income are analysed as follows: Year ended 30 September 2021 Property Information Energy Information Consumer Media Corporate costs Relating to discontinued operations Continuing operations Amortisation of intangible assets not arising on business combinations Amortisation of intangible assets arising on business combinations Impairment of goodwill and intangible assets arising on business combinations (Note 21) (Note 21) (Notes 20, 21) Exceptional operating (costs)/income Note 18 Note 18 £m (0.1) (4.5) (3.0) (0.1) - (0.4) (8.1) (1.4) (9.5) 3.1 (6.4) Severance and other closure costs £m (0.1) - 0.6 0.5 - 0.5 - 0.5 £m - (5.7) (0.2) (4.3) - (5.2) (15.4) - (15.4) 0.2 (15.2) LTIP (i) £m - - (2.4) (2.4) (13.5) (15.9) - (15.9) £m - - - (13.0) - - (13.0) - (13.0) - (13.0) Professional fees and claims (ii) £m (0.5) (5.3) - (5.8) (17.5) (23.3) 5.3 (18.0) £m - (0.6) - - (5.3) (1.8) (7.7) (31.0) (38.7) 5.3 (33.4) Total £m (0.6) (5.3) (1.8) (7.7) (31.0) (38.7) 5.3 (33.4) (i) During the year ended 30 September 2018, the Group sold its investment in ZPG Plc (ZPG) resulting in a profit on sale of £508.4 million and during the year ended 30 September 2019 the Group disposed of its investment in Euromoney Institutional Investor PLC (Euromoney). During the year ended 30 September 2021 Cazoo successfully listed on the New York Stock Exchange (NYSE) and the Group disposed of its Insurance Risk segment (RMS). As a direct consequence of these transactions the value of the DMGT Long Term Incentive Plans (LTIPs) are estimated to have increased by £35.8 million. As the LTIPs include a service period condition, IFRS 2, Share-based Payment 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 disposals of Euromoney and RMS and of Cazoos NYSE listing amounts to £15.9 million. Since the profit on sale of RMS and the capital benefit of the Euromoney disposal and Cazoo listing are excluded from our adjusted profit measure, the incremental increase in the LTIP charge was treated as an adjusting item. (ii) Professional fees and claims include costs in respect of restructuring advice relating to the offer by Rothermere Continuation Limited (RCL) to purchase the issued DMGT A Shares not already owned by RCL. The Group's tax credit includes £2.8 million in relation to these exceptional operating costs of which a charge of £0.4 million relates to discontinued operations. 65 Daily Mail and General Trust plc Annual Report 2022 An analysis of the depreciation of right of use assets and property, plant and equipment, research costs, investment revenue, other gains and losses and finance income and expense by segment is as follows: Depreciation of right of use assets Depreciation of property, plant and equipment Research costs Investment revenue Other gains and losses Year ended 30 September 2021 Insurance Risk Note Property Information EdTech Events and Exhibitions Energy Information Consumer Media Corporate costs (Note 23) £m (5.6) (2.0) (0.5) (0.7) - (11.5) (20.3) - (20.3) (Note 22) £m (3.9) (1.5) (0.1) (0.1) - (14.8) (20.4) (0.6) (21.0) Relating to discontinued operations Continuing operations 18 6.1 4.0 (14.2) (17.0) £m (27.6) - - - - (0.2) (27.8) - (27.8) 27.6 (0.2) (Note 9) £m 0.2 - - - - - 0.2 2.3 2.5 (Note 8) £m 1,319.6 9.2 230.6 (0.2) 1.0 3.9 1,564.1 1.4 1,565.5 (0.2) (1,551.2) 2.3 14.3 Finance income (Note 10) £m - - - - - 1.7 1.7 0.8 2.5 - 2.5 Finance expense (Note 10) £m (2.0) (0.4) (0.1) (0.2) - (0.7) (3.4) (14.3) (17.7) 2.1 (15.6) 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 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Total £m 129.0 170.9 257.6 Total Point in time £m 129.0 5.6 257.6 Total Over time £m - 165.3 - Discontinued operations Total (Note 18) £m - - - Discontinued operations Point in time (Note 18) £m - - - Discontinued operations Over time (Note 18) £m - - - 99.6 4.1 95.5 99.4 99.2 0.2 217.5 974.0 160.3 655.8 57.2 318.2 - - - - - - - - - - - - Year ended 30 September 2022 Continuing operations Total Year ended 30 September 2022 Continuing operations Point in time Year ended 30 September 2022 Continuing operations Over time £m 129.0 170.9 257.6 £m 129.0 5.6 257.6 £m - 165.3 - 99.6 4.1 95.5 99.4 99.2 0.2 217.5 974.0 160.3 655.8 57.2 318.2 Print advertising Digital advertising Circulation Subscriptions and recurring licences Events, conferences and training Transactions and other 66 Financial Statements Financial Statements Notes to the accounts Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Total £m 113.2 172.7 262.6 Total Point in time £m 113.2 5.3 262.6 Total Over time £m - 167.4 - Discontinued operations Total (Note 18) £m - - - Discontinued operations Point in time (Note 18) £m - - - Discontinued operations Over time (Note 18) £m - - - Year ended 30 September 2021 Continuing operations Total Year ended 30 September 2021 Continuing operations Point in time Year ended 30 September 2021 Continuing operations Over time £m 113.2 172.7 262.6 £m 113.2 5.3 262.6 £m - 167.4 - 324.0 0.6 323.4 243.6 0.4 243.2 80.4 0.2 80.2 34.9 34.7 0.2 0.4 0.4 - 34.5 34.3 0.2 234.4 1,141.8 224.4 640.8 10.0 501.0 12.5 256.5 12.5 13.3 - 243.2 221.9 885.3 211.9 627.5 10.0 257.8 Print advertising Digital advertising Circulation Subscriptions and recurring licences Events, conferences and training Transactions and other 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 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Total £m 820.2 73.7 80.1 974.0 Total Point in time £m 572.5 15.5 67.8 655.8 Total Over time £m 247.7 58.2 12.3 318.2 Discontinued operations Total (Note 18) £m - - - - Discontinued operations Point in time (Note 18) £m - - - - Discontinued operations Over time (Note 18) £m - - - - Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Total £m 777.6 317.7 46.5 1,141.8 Total Point in time £m 582.4 23.6 34.8 640.8 Total Over time £m 195.2 294.1 11.7 501.0 Discontinued operations Total (Note 18) £m - 256.5 - 256.5 Discontinued operations Point in time (Note 18) £m - 13.3 - 13.3 Discontinued operations Over time (Note 18) £m - 243.2 - 243.2 Year ended 30 September 2022 Continuing operations Total Year ended 30 September 2022 Continuing operations Point in time Year ended 30 September 2022 Continuing operations Over time £m 820.2 73.7 80.1 974.0 £m 572.5 15.5 67.8 655.8 £m 247.7 58.2 12.3 318.2 Year ended 30 September 2021 Continuing operations Total Year ended 30 September 2021 Continuing operations Point in time Year ended 30 September 2021 Continuing operations Over time £m 777.6 61.2 46.5 885.3 £m 582.4 10.3 34.8 627.5 £m 195.2 50.9 11.7 257.8 UK North America Rest of the World UK North America Rest of the World 67 Daily Mail and General Trust plc Annual Report 2022 The analysis of Group revenue below is based on the geographic location of customers in these regions. Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Year ended 30 September 2022 Total £m 590.3 209.7 174.0 974.0 Total Point in time £m 549.6 26.3 79.9 655.8 Total Over time £m 40.7 183.4 94.1 318.2 Discontinued operations Total (Note 18) £m - - - - Discontinued operations Point in time (Note 18) £m - - - - Discontinued operations Over time (Note 18) £m - - - - Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Year ended 30 September 2021 Total £m 698.0 299.6 144.2 1,141.8 Total Point in time £m 572.9 21.5 46.4 640.8 Total Over time £m 125.1 278.1 97.8 501.0 Discontinued operations Total (Note 18) £m 43.6 Discontinued operations Point in time (Note 18) £m 1.9 Discontinued operations Over time (Note 18) £m 41.7 159.7 53.2 256.5 9.4 2.0 13.3 150.3 51.2 243.2 Year ended 30 September 2022 Continuing operations Total Year ended 30 September 2022 Continuing operations Point in time Year ended 30 September 2022 Continuing operations Over time £m 590.3 209.7 174.0 974.0 £m 549.6 26.3 79.9 655.8 £m 40.7 183.4 94.1 318.2 Year ended 30 September 2021 Continuing operations Total Year ended 30 September 2021 Continuing operations Point in time Year ended 30 September 2021 Continuing operations Over time £m 654.4 139.9 91.0 885.3 £m 571.0 12.1 44.4 627.5 £m 83.4 127.8 46.6 257.8 UK North America Rest of the World UK North America Rest of the World The closing net book value of goodwill, intangible assets, property, plant and equipment and right of use assets is analysed by geographic area as follows: At 30 September 2022 Closing net book value of property, plant and equipment (Note 22) £m 46.4 3.4 0.4 50.2 At 30 September 2021 Closing net book value of property, plant and equipment (Note 22) £m 51.6 3.4 0.4 55.4 At 30 September 2022 At 30 September 2021 At 30 September 2022 At 30 September 2021 At 30 September 2022 At 30 September 2021 Closing net book value of right of use assets Closing net book value of right of use assets (Note 23) £m 14.7 12.4 4.2 31.3 (Note 23) £m 17.0 13.2 4.5 34.7 Closing net book value of goodwill (Note 20) £m 164.3 24.5 12.7 201.5 Closing net book value of goodwill (Note 20) £m 172.8 24.9 10.4 208.1 Closing net book value of intangible assets Closing net book value of intangible assets (Note 21) £m 79.2 0.1 0.1 79.4 (Note 21) £m 91.7 0.2 1.1 93.0 UK North America Rest of the World The additions to non-current assets are analysed as follows: Insurance Risk Property Information EdTech Events and Exhibitions Consumer Media Corporate costs Year ended 30 September 2022 Property, plant and equipment Year ended 30 September 2021 Property, plant and equipment (Note 22) £m - 0.6 - - 8.1 8.7 1.2 9.9 (Note 22) £m 1.1 0.6 0.2 - 17.2 19.1 0.5 19.6 Year ended 30 September 2022 Year ended 30 September 2021 Year ended 30 September 2022 Year ended 30 September 2021 Year ended 30 September 2022 Year ended 30 September 2021 Right of use assets Right of use assets Goodwill Goodwill Intangible assets Intangible assets (Note 23) £m 7.7 0.1 - 0.8 11.0 19.6 - 19.6 (Note 20) £m - - - - 0.2 0.2 - 0.2 (Note 20) £m - (0.7) - - 46.3 45.6 - 45.6 (Note 21) £m - 3.9 - - 0.4 4.3 - 4.3 (Note 21) £m - 5.2 1.5 - 35.7 42.4 - 42.4 (Note 23) £m - 1.8 - 0.7 8.7 11.2 - 11.2 68 Financial Statements Financial Statements Notes to the accounts 4 Operating (loss)/profit before the share of results and impairment of joint ventures and associates Operating (loss)/profit before the share of results and impairment of joint ventures and associates is further analysed as follows: Year ended 30 September 2022 Total £m 974.0 Note 3 3 3 3 3 8.4 (256.8) (248.4) (395.6) (9.3) (11.3) (4.3) (26.5) (32.2) (55.1) (35.6) (15.2) (16.3) (13.8) (30.2) (12.6) 3.8 (0.3) (1.1) (122.9) Year ended 30 September 2022 Discontinued operations (Note 18) £m - - - - - - - - - - - - - - - - - - - - (11.2) Year ended 30 September 2022 Continuing operations £m 974.0 8.4 (256.8) (248.4) (395.6) (9.3) Year ended 30 September 2021 Total £m 1,141.8 (1.5) (179.0) (180.5) (489.7) (13.0) Year ended 30 September 2021 Discontinued operations (Note 18) £m 256.5 (1.8) - (1.8) (155.7) - Year ended 30 September 2021 Continuing operations £m 885.3 0.3 (179.0) (178.7) (334.0) (13.0) (11.3) (15.4) (0.2) (15.2) (4.3) (26.5) (32.2) (55.1) (35.6) (15.2) (16.3) (13.8) (30.2) (12.6) 3.8 (0.3) (1.1) (111.7) (9.5) (26.9) (9.3) (84.3) (32.7) (18.7) (21.0) (20.3) (26.5) (5.5) (1.2) (1.5) (1.7) (145.1) (3.1) (1.9) - - (0.1) (3.6) (4.0) (6.1) (1.8) - - (0.1) (0.6) (42.4) (6.4) (25.0) (9.3) (84.3) (32.6) (15.1) (17.0) (14.2) (24.7) (5.5) (1.2) (1.4) (1.1) (102.7) (52.9) (11.2) (41.7) 39.0 35.1 3.9 Revenue Increase/(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 Depreciation of right of use assets Other property costs Rental of venue space Foreign exchange translation differences Net credit losses on financial assets Low-value asset lease expense Other expenses Operating (loss)/profit before share of results and impairment of joint ventures and associates 5 Auditor's remuneration Fees payable to the Company's Auditor for the audit of the Company's annual accounts for the audit of the Company's subsidiaries Audit services provided to all Group companies Audit-related assurance services Assurance services Total non-audit services Total remuneration Year ended 30 September 2022 £m 0.8 0.8 1.6 Year ended 30 September 2021 £m 1.1 1.3 2.4 - 0.1 0.1 1.7 0.3 0.3 0.6 3.0 69 Daily Mail and General Trust plc Annual Report 2022 6 Directors and 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 Consumer Media Corporate costs Note (i) (i) Year ended 30 September 2022 Number - Year ended 30 September 2021 Number 1,417 1,020 - 368 2,634 47 4,069 996 390 315 2,716 65 5,899 (i) The prior year represents the average monthly number of persons employed in the Insurance Risk segment for the period ended 15 September 2021 and in the EdTech segment for the period ended 2 March 2021 when these segments were disposed. The total average number of persons employed by the Group in the year, for the purposes of calculating an average cost per employee, is 4,069 (2021 5,683). Total staff costs comprised: Wages and salaries Share-based payments Social security costs Pension costs Total Directors remuneration comprised: Aggregate emoluments Aggregate pension allowances Aggregate gains made on exercise of share options Note 38, 41 Year ended 30 September 2022 £m 315.5 58.8 31.2 11.7 Year ended 30 September 2021 £m 409.7 40.1 39.8 12.2 417.2 501.8 Year ended 30 September 2022 £m 6.8 0.7 19.2 26.7 Year ended 30 September 2021 £m 8.5 1.0 25.0 34.5 During the year, the Company paid four (2021 four) Executive Directors (EDs) and eight (2021 eight) Non-Executive Directors (NEDs) for their services. All four EDs made gains on the exercise of share options in the current and prior periods. The total remuneration of the highest paid Director in the period was £8.4 million (2021 £11.0 million) analysed as follows: Aggregate emoluments Aggregate pension allowances Aggregate gains made on exercise of share options 70 Year ended 30 September 2022 £m 2.3 0.3 5.8 8.4 Year ended 30 September 2021 £m 2.5 0.3 8.2 11.0 Financial Statements Financial Statements Notes to the accounts 7 Share of results and impairment of joint ventures and associates Share of adjusted operating profits from operations of joint ventures Share of adjusted operating losses from operations of associates Share of adjusted operating losses from joint ventures and associates Share of associates' other gains Share of amortisation of intangibles arising on business combinations of associates Share of associates' interest payable Share of joint ventures' tax Impairment of carrying value of associates Impairment of carrying value of loans to associates Share of results of joint ventures and associates and impairment of carrying value of associates and loans to associates Share of results from operations of joint ventures Share of results from operations of associates Impairment of carrying value of associates Impairment of carrying value of loans to associates Share of results of joint ventures and associates and impairment of carrying value of associates and loans to associates Note 13 13 11, 13 13, 24, (i) 13, 28, (ii) 24 18, 24 24 28 Year ended 30 September 2022 £m 0.9 (6.8) Year ended 30 September 2021 £m 1.0 (4.1) (5.9) 0.1 (0.1) (0.3) (0.2) (30.7) (8.2) (45.3) 0.7 (7.1) (6.4) (30.7) (8.2) (38.9) (45.3) (3.1) 0.1 (0.1) (0.1) (0.1) (6.5) - (9.8) 0.9 (4.2) (3.3) (6.5) - (6.5) (9.8) (i) During the current year, this represents a write-down in the carrying value of Factory 14 S.a.r.l amounting to £3.0 million and Yopa Property Ltd amounting to £27.7 million both held centrally in light of current trading conditions. During the prior year, this represents a £1.7 million write-down in the carrying value of Entale Media Ltd and a £4.8 million write-down in the carrying value of WellAware Holdings, Inc. both held centrally. (ii) During the current year, this represents a write down in the carrying value of convertible loan notes in Factory 14 S.a.r.l of £4.4 million and in Yopa Property Ltd of £3.8 million. 8 Other gains and losses Loss on disposal of property, plant and equipment Profit on disposal and closure of businesses Recycled cumulative translation differences Gain from bargain purchase Profit on disposal of joint ventures and associates Note 13 13, 17, (i) 13, 17, 38, (ii) 13, (iii) 13, (iv) Year ended 30 September 2022 £m (0.8) 5.8 6.4 - 19.4 30.8 Year ended 30 September 2021 £m - 2.5 0.1 3.9 7.8 14.3 There is no tax charge in relation to these other gains and losses (2021 £nil). (i) (ii) (iii) In the current year this principally relates to the disposal of Landmark Insurance, a division of Landmark Information Group Ltd within the Property Information segment. In the prior year this principally relates to the sale of Rochford Brady Legal Services Ltd and Lawlink (UK) Ltd in the Property Information segment. Represents cumulative translation differences required to be recycled through the Consolidated Income Statement on disposal and closure of businesses. On 18 October 2020, the Consumer Media segment acquired JPI Medias print operations at Dinnington, Portsmouth and Carn in Northern Ireland for total consideration of £10.0 million. The consideration paid was less than the value of the identifiable net assets acquired and accordingly the gain on this acquisition was recognised in the Consolidated Income Statement in accordance with IFRS 3, Business Combinations. (iv) In the current year this represents additional unprovided proceeds from a prior year disposal of Also Energy Holdings, Inc. held centrally. 71 Daily Mail and General Trust plc Annual Report 2022 In the prior year this principally represents a profit of £6.8 million on the sale of Mercatus, Inc. and a profit of £1.0 million on the sale of TreppPort, LLC both in the Property Information segment. 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 Finance charge on lease liabilities Premium paid on options Change in fair value of derivative hedge of bond Change in fair value of hedged portion of bond Amortisation relating to terminated fair value hedge of bond Hedge ineffectiveness Change in fair value of contingent consideration payable Finance expense Change in fair value of derivatives, or portions thereof, not designated for hedge accounting Costs of hedging recycled on currency swap termination Finance income on defined benefit pension schemes Finance income on sublease receivable Finance income Net finance costs Year ended 30 September 2022 £m 1.8 Year ended 30 September 2021 £m - 0.4 0.6 2.8 0.9 1.4 2.3 Year ended 30 September 2022 £m (17.0) (0.9) (7.2) (5.3) 5.3 (0.3) (4.9) (0.1) (30.4) Year ended 30 September 2021 £m (14.2) (1.3) - (3.3) 3.3 - - (0.1) (15.6) 11.5 0.3 11.9 - 23.7 0.3 - 2.1 0.1 2.5 (6.7) (13.1) Note 13, (i) 15, 33 15, 33 13, 33,15 13, 33 13, 35, (ii) 13 13, 33,38 13, 34 (i) The premium paid on options represents the net cost of foreign exchange options (which do not meet the requirements for hedge accounting) used to economically hedge US$600.0 million of the Groups cash balances into sterling. During the year, the Group purchased US$600.0 million notional European call options, giving it the right, but not the obligation to buy GBP at an average GBP/USD exchange rate of 1.3555 exercisable for settlement at the end of January 2022. This economically hedged the conversion of the Groups USD cash balances into GBP, due to the highly probable expectation that a special GBP dividend would be paid to shareholders following Rothermere Continuation Limiteds (RCL) offer to acquire all the issued DMGT A Shares not already owned by RCL. Following the announcement on 17 December 2021 that the final cash offer for all of the issued DMGT A Shares not already owned by RCL had been declared unconditional, settlement of the special dividend (which was conditional on the final cash offer becoming or being declared unconditional) occurred on 30 December 2021. Accordingly the purchased call options were unwound. (ii) The fair value movement of contingent consideration arises from the requirement of IFRS 3, Business Combinations, to measure such consideration at fair value with changes in fair value taken to the Consolidated Income Statement. 72 Financial Statements Financial Statements Notes to the accounts 11 Tax The (charge)/credit on the (loss)/profit for the year consists of: UK tax Corporation tax at 19.0% (2021 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 Relating to continuing operations Year ended 30 September 2022 £m Year ended 30 September 2021 £m Note 0.3 0.4 0.7 (7.3) (2.6) (9.9) (9.2) (77.9) 21.6 (56.3) (65.5) 20.1 (85.6) (0.1) (0.4) (0.5) (47.0) (1.3) (48.3) (48.8) 6.8 - 6.8 (42.0) (104.2) 62.2 36 18 A deferred tax charge of £95.0 million (2021 £49.4 million) relating to the actuarial movement on defined benefit pension schemes was recognised directly in the Consolidated Statement of Comprehensive Income. A deferred tax charge of £4.4 million (2021 credit of £3.6 million) and a current tax charge of £nil (2021 £nil) relating to share based payments were recognised directly in equity. Legislation was enacted in June 2021 to increase the UK corporation tax rate from 19.0% to 25.0% with effect from 1 April 2023. Accordingly, for the year ended 30 September 2022, the UK deferred tax balances are measured at 25.0% unless the temporary difference is expected to reverse before 1 April 2023, in which case the rate used is the one applicable at the expected time of reversal. For the year ended 30 September 2021, the UK deferred tax balances were measured at 25.0% as this was the rate applicable for the reversal of all UK temporary differences as at 30 September 2021. On 23 September 2022, the UK Government announced that the main rate of corporation tax would no longer increase to 25% with effect from 1 April 2023 but would instead stay at 19%. On 14 October 2022, the UK Government announced that the tax rate would increase to 25% from 1 April 2023 as originally set out in the Spring Budget 2021. 73 Daily Mail and General Trust plc Annual Report 2022 The tax charge for the year is higher than the standard rate of corporation tax in the UK of 19.0% (2021 lower than 19.0%) representing the weighted average annual corporate tax rate for the full financial year. The differences are explained below: Loss on ordinary activities before tax - continuing operations (Loss)/profit before tax - discontinued operations Profit on disposal of discontinued operations Recycled cumulative translation differences on disposal of discontinued operations Total (loss)/profit before tax Tax on loss on ordinary activities at the standard rate Effect of: Amortisation and impairment of goodwill and intangible assets Other expenses not deductible for tax purposes Additional items deductible for tax purposes Derecognition of previously recognised deferred tax assets Recognition of previously unrecognised deferred tax assets Effect of overseas tax rates Effect of associates tax Current year tax losses not recognised/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 (loss)/profit for the year - continuing and discontinued operations Note 18 18 18 (i) (ii) (iii) (iv) (v) (vi) (vii) Year ended 30 September 2022 £m (60.1) Year ended 30 September 2021 £m (2.4) (11.2) 2.7 - (68.6) 13.0 (1.1) (9.8) - (29.8) - (0.3) (1.2) (29.3) (1.0) (23.2) 19.4 (2.2) (65.5) 33.1 1,499.1 52.1 1,581.9 (300.6) (2.0) (1.1) 22.8 - 53.8 (3.8) (0.7) (0.6) 181.6 12.5 (1.7) (2.2) (42.0) (i) (ii) (iii) (iv) (v) (vi) The tax impact of Other expenses not deductible for tax purposes includes £7.7 million (2021 £nil) in respect of the acceleration of stock option expense to the Income Statement for which no tax deduction is due. The tax impact of Additional items deductible for tax purposes includes £nil (2021 £16.4 million) in respect of stock option deductions in excess of cumulative deferred tax and £nil (2021 £6.3 million) in respect of Research and Development tax credits. Derecognition of previously recognised deferred tax assets £28.6 million (2021 £nil) relates to UK tax losses no longer expected to be offset against future profits. Recognition of previously unrecognised deferred tax assets of £nil (2021 £53.8 million) relates to UK tax losses and US deferred interest expected to be offset against future profits. The tax impact of Current year tax losses not recognised/unrecognised tax losses utilised includes £27.9 million (2021 £nil) in respect of current year UK tax losses not recognised following the large pension contributions made during the year. Write off/disposal of subsidiaries and associates relates to the actual tax charge on disposals being higher than the book profit on sale at the statutory tax rate by £1.0 million (2021 £181.6 million lower than book profit). (vii) The adjustment in respect of prior years includes the reassessment of prior year items following the filing of tax returns, of which a credit of £20.1 million relates to a reduction of the tax charge on sale of the Insurance Risk segment in 2021. 74 Financial Statements Financial Statements Notes to the accounts Adjusted tax on profits before amortisation and impairment of intangible assets and non-recurring items (adjusted tax charge) amounted to a charge of £9.7 million (2021 £17.2 million) and the resulting effective rate is 24.8% (2021 19.5%). The differences between the tax charge and the adjusted tax charge are shown in the reconciliation below: Total tax charge on the (loss)/profit for the year Share of tax in joint ventures and associates Deferred tax on amortisation and impairment of acquired intangible assets Current year losses not recognised Reassessment of temporary differences Tax on other gains and losses - continuing and discontinued operations Tax on exceptional payments to pension schemes Tax on exceptional operating costs Effect of difference between UK statutory rate and deferred tax rate Tax on other adjusting items Adjusted tax charge on the (loss)/profit for the year Year ended 30 September 2022 £m (65.5) (0.2) (1.6) 27.9 29.4 (20.1) 23.7 (4.4) (4.2) 5.3 (9.7) Year ended 30 September 2021 £m (42.0) (0.1) (2.5) - (56.7) 98.7 - (2.8) (12.5) 0.7 (17.2) Note 7 (i) (ii) (iii) (iv) (v) 13 (i) (ii) (iii) (iv) 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. The tax impact of Current year tax losses not recognised/unrecognised tax losses utilised includes £27.9 million (2021 £nil) in respect of current year UK tax losses not recognised following the large pension contributions made during the year. Reassessment of temporary differences includes the derecognition of previously recognised deferred tax assets of which £29.4 million (2021 £nil) relates to UK tax losses no longer expected to be offset against future profits. The prior year tax credits relate to the recognition of previously unrecognised deferred tax assets in respect of UK tax losses of £58.4 million and US deferred interest of £39.5 million. Tax on other gains and losses includes a tax charge of £nil (2021 £56.6 million) in respect of the sale of the EdTech segment, a tax credit of £20.1 million (2021 tax charge of £39.9 million) in respect of the sale of the Insurance Risk segment, and a tax charge of £nil (2021 £0.4 million) in respect of the sale of the Energy Information segment. (v) The numbers for the current and prior years include the impact on deferred tax of the enacted UK rate change with effect from 1 April 2023. 75 Daily Mail and General Trust plc Annual Report 2022 12 Dividends paid Amounts recognisable as distributions to equity holders in the year Ordinary Shares - final dividend for the year ended 30 September 2021 A Ordinary Non-Voting Shares - final dividend for the year ended 30 September 2021 Ordinary Shares - final dividend for the year ended 30 September 2020 A Ordinary Non-Voting Shares - final dividend for the year ended 30 September 2020 Ordinary Shares - interim dividend for the year ended 30 September 2022 A Ordinary Non-Voting Shares - interim dividend for the year ended 30 September 2022 Ordinary Shares - special dividend A Ordinary Non-Voting Shares - special dividend Cazoo shares distributed in specie - special dividend Ordinary Shares - interim dividend for the year ended 30 September 2021 A Ordinary Non-Voting Shares - interim dividend for the year ended 30 September 2021 Year ended 30 September 2022 Pence per share Year ended 30 September 2022 £m Year ended 30 September 2021 Pence per share Note 17.3 17.3 - - - 2.8 2.8 568.0 568.0 82.8 - - - - 3.4 36.4 - - 39.8 0.5 5.8 113.0 1,197.3 109.8 - - 1,426.4 1,466.2 - - 16.6 16.6 - - - - - - 7.6 7.6 - - (i) (i) 25, (i) Year ended 30 September 2021 £m - - 3.3 34.3 37.6 - - - - - 1.5 15.9 17.4 55.0 (i) On 14 December 2021, a special dividend was declared to all DMGT shareholders with a record date of 16 December 2021. It was comprised of a cash element of £5.68 per share and a share element of approximately 0.5749 shares in Cazoo Group Ltd (Cazoo) per DMGT share. Settlement of the cash element of £1,310.3 million occurred on 30 December 2021 and settlement of the Cazoo share element of £109.8 million occurred on 24 June 2022. Following the year end, the Board declared and paid an interim dividend of £5.4 million at its 1 November 2022 meeting (2.0 pence per Ordinary/A Ordinary Non-Voting Share). The Board declared a final dividend of 3.78 pence per Ordinary/A Ordinary Non-Voting Share at its 29 November 2022 meeting (2021 17.3 pence). It will absorb an estimated £8.7 million (2021 £39.8 million) of shareholders equity for which no liability has been recognised in these Consolidated Financial Statements. 76 Financial Statements Financial Statements Notes to the accounts 13 Adjusted profit 3 3 7 7 7 8 8 Year ended 30 September 2022 Total £m (71.3) Year ended 30 September 2022 Discontinued operations (Note 18) £m (11.2) Year ended 30 September 2022 Year ended 30 September 2021 Continuing operations £m (60.1) Total £m 30.7 Year ended 30 September 2021 Discontinued operations (Note 18) £m 33.1 Year ended 30 September 2021 Continuing operations £m (2.4) 2.7 2.7 - 1,551.2 1,551.2 - Note 3 18 3, 7 11.4 9.3 - - 11.4 15.5 0.2 15.3 9.3 13.0 - 13.0 91.1 11.2 79.9 38.7 5.3 33.4 (0.1) 30.7 8.2 0.8 (31.6) - - - - - (0.1) 30.7 8.2 0.8 (0.1) 6.5 - - (31.6) (14.3) - - - - - 18 (2.7) (2.7) - (1,551.2) (1,551.2) 10 10 10 10 10 10 7, 11 11 (i) 7.2 (11.9) (11.1) 4.9 (0.3) 1.8 0.2 39.3 (9.7) 0.2 29.8 - - - - - - - - - - - 7.2 (11.9) (11.1) 4.9 (0.3) 1.8 0.2 39.3 (9.7) 0.2 29.8 - (2.1) 0.1 - - - 0.1 88.1 (17.2) 0.4 71.3 - - - - - - - 38.6 (7.8) - 30.8 (0.1) 6.5 - - (14.3) - - (2.1) 0.1 - - - 0.1 49.5 (9.4) 0.4 40.5 (Loss)/profit before tax Profit on disposal of discontinued operations including recycled cumulative translation differences Adjust for: Amortisation of intangible assets in Group profit, including joint ventures and associates, arising on business combinations Impairment of goodwill and intangible assets arising on business combinations Exceptional operating costs, impairment of internally generated and acquired computer software Share of joint ventures' and associates' other gains and losses Impairment of carrying value of joint ventures and associates Impairment of carrying value of loans to associates Other gains and losses: Loss on disposal of property, plant and equipment Profit on disposal of businesses, joint ventures, associates, change of control and recycled cumulative translation differences Profit on disposal of discontinued operations including recycled cumulative translation differences Finance costs: Cost of buying options Finance income on defined benefit pension schemes Fair value movements including share of joint ventures and associates Hedge ineffectiveness Costs of hedging recycled on currency swap termination Upfront revolving credit facility fees Tax: Share of tax in joint ventures and associates Adjusted profit before tax and non- controlling interests Adjusted tax charge Non-controlling interests Adjusted profit after taxation and non- controlling interests (i) The adjusted non-controlling interests share of losses for the year of £0.2 million (2021 £0.4 million) is stated after eliminating a credit of £0.1 million (2021 £2.0 million), being the non-controlling interests share of adjusting items. 77 Daily Mail and General Trust plc Annual Report 2022 14 EBITDA and cash (used in)/generated by operations Continuing operations Adjusted operating profit Non-exceptional depreciation charge on property, plant and equipment Non-exceptional depreciation charge on right of use assets Amortisation of internally generated and acquired computer software not arising on business combinations Operating losses 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 Discontinued operations Adjusted operating profit Non-exceptional depreciation charge on property, plant and equipment Non-exceptional depreciation charge on right of use assets Amortisation of internally generated and acquired computer software not arising on business combinations Share of losses from operations of joint ventures and associates EBITDA Adjustments for: Share-based payments Loss on disposal of lease liability re right to use assets Share of losses from joint ventures and associates Exceptional operating costs Non-cash pension past service credit Dividend income Share of charge of depreciation and amortisation of internally generated and acquired computer software not arising on business combinations of joint ventures and associates Increase in inventories Increase in trade and other receivables Increase in trade and other payables Increase/(decrease) in provisions Additional payments into pension schemes Cash (used in)/generated by operations Note 3 3, 22 3, 23 3, 21 7 9 18 18, 22 18, 23 18, 21 18 38 7, 18 3 3 9 34 Year ended 30 September 2022 £m Year ended 30 September 2021 £m 58.8 16.3 13.8 4.3 (5.9) 0.4 1.8 - - - - - 89.5 58.8 (0.1) 5.9 (91.1) (17.8) (1.8) (0.4) (9.0) (38.2) 37.0 10.4 (412.9) (369.7) 65.5 17.0 14.2 6.4 (3.1) 0.3 - 40.6 4.0 6.1 3.1 (0.1) 154.0 40.1 - 3.2 (38.7) - - (0.3) (2.7) (22.6) 13.3 (3.6) (14.2) 128.5 78 Financial Statements Financial Statements Notes to the accounts 15 Analysis of net (debt)/cash Cash and cash equivalents Bank overdrafts At 1 October 2021 £m 1,746.9 (1.7) Cash flow £m (1,722.9) 1.0 Fair value hedging adjustments £m - - Note 29 29, 32 Net cash and cash equivalents 1,745.2 (1,721.9) Debt due within one year Lease liabilities Debt due after one year Bonds Lease liabilities 32, (i) (16.6) 18.2 32, (i) 32, (i) (199.5) (20.5) - - Net (debt)/cash before effect of derivatives 1,508.6 (1,703.7) Effect of derivatives Collateral deposits (ii) 28 (12.7) 9.2 12.9 (4.1) Net (debt)/cash at closing exchange rate 1,505.1 (1,694.9) Net (debt)/cash at average exchange rate 1,497.8 - - 5.3 - 5.3 (5.3) - - Foreign exchange movements £m 29.0 - 29.0 Other non- cash movements (i) £m - - At 30 September 2022 £m 53.0 (0.7) - 52.3 (0.8) (8.1) (7.3) - (2.2) 26.0 (10.9) - 15.1 (0.4) 1.2 (7.3) - - (7.3) (194.6) (21.5) (171.1) (16.0) 5.1 (182.0) (173.7) The net cash outflow of £1,721.9 million (2021 inflow of £1,278.1 million) includes a cash outflow of £70.3 million (2021 £3.1 million) in respect of operating exceptional items. (i) Other non-cash movements include the unwinding of bond issue discount and amortisation of bond issue costs amounting to £0.1 million (2021 £0.1 million) and amortisation relating to the terminated bond fair value hedge amounting to £0.3 million (2021 £nil), £0.9 million (2021 £3.4 million) finance charges relating to IFRS 16 Leases and £8.1 million (2021 £15.2 million) in relation to new lease commitments. (ii) Effect of derivatives includes the fair value interest rate swaps used to convert a portion of the Groups fixed rate debt to floating rates and the foreign exchange (FX) impact of fixed-to-fixed cross-currency swaps entered into with the intention of economically converting the currency of borrowings into an alternative currency. The movements in the year comprise a £5.3 million loss on fair value interest rate swaps and a £10.9 million FX loss on fixed-to-fixed cross-currency swaps. Further details on the Groups derivative instruments are provided in Note 33. 16 Summary of the effects of acquisitions There have been no material acquisitions during the year. 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 and cash equivalents acquired with subsidiaries Purchase of businesses and subsidiary undertakings Note 35, (i) Year ended 30 September 2022 £m 0.3 1.2 - 1.5 Year ended 30 September 2021 £m 84.0 1.4 (7.5) 77.9 (i) Cash paid to settle contingent consideration in respect of acquisitions includes £0.5 million (2021 £0.8 million) within the Property Information segment and £0.7 million (2021 £0.6 million) within the Events and Exhibitions segment. 79 Daily Mail and General Trust plc Annual Report 2022 17 Summary of the effects of disposals On 5 November 2021 the Group disposed of Landmark Insurance, a division of Landmark Information Group Ltd within the Groups Property Information segment for net proceeds of £4.8 million. This was recognised as held for sale in the prior year. The impact of the disposal of businesses completed during the period on net assets is as follows: Trade and other receivables Trade and other payables Net assets disposed Profit/(loss) on sale of businesses including recycled cumulative exchange differences Satisfied by: Cash received Directly attributable costs paid Working capital adjustment Recycled cumulative translation differences Note 8 38 Prior year assets held for sale disposed in current year £m 0.5 (0.2) 0.3 Adjustment on sale of assets held for sale in current year £m (0.2) 0.1 (0.1) (0.3) - 4.9 4.8 5.5 (0.7) - - 4.8 Other £m - - - 7.6 7.6 0.9 - 0.3 6.4 7.6 Total £m 0.3 (0.1) 0.2 12.2 12.4 6.4 (0.7) 0.3 6.4 12.4 Reconciliation to disposal of businesses and subsidiary undertakings as shown in the Consolidated Cash Flow Statement: Cash consideration net of disposal costs - continuing operations Cash consideration net of disposal costs - discontinued operations Cash and cash equivalents disposed with subsidiaries Bank overdrafts disposed with subsidiaries Proceeds on disposal of businesses and subsidiary undertakings Year ended 30 September 2022 £m 5.7 2.0 - - Year ended 30 September 2021 £m 3.6 1,560.4 (44.7) 0.3 7.7 1,519.6 All of the businesses disposed of during the year absorbed £0.1 million of the Groups net operating cash flows, contributed £nil in respect of investing activities and paid £nil in respect of financing activities. There is no tax in relation to these disposals. 80 Financial Statements Financial Statements Notes to the accounts 18 Discontinued operations On 26 August 2019, the Group announced the sale of its Energy Information segment to Verisk Analytics, Inc. which completed on 5 November 2019 following the completion of customary closing conditions. On 18 February 2021, the Group announced the sale of its EdTech segment to PowerSchool and EAB which completed on 4 March 2021. On 5 August 2021, the Group announced the sale of its Insurance Risk segment to Moodys Corporation which completed on 15 September 2021 following the completion of customary closing conditions. The Groups Consolidated Income Statement includes the following results from discontinued operations: Year ended 30 September 2022 Insurance Risk Energy Information Year ended 30 September 2021 Insurance Risk EdTEch Energy Information £m £m £m £m £m £m £m Note 3 3 - - - 3 3 3, 13, (i) - - (11.2) 3, 13 - 4 (11.2) 24 - 3 11 (11.2) - - (11.2) - (11.2) - - - - - - - - - - - - - - - - - - 256.5 (202.7) (10.1) 223.0 (173.9) (9.5) - - (11.2) (3.1) 40.6 (5.3) (0.1) 39.5 - 33.5 (28.8) (0.6) (3.0) 1.1 - - - - - - (5.3) - (0.2) - (0.2) - (11.2) 35.1 39.5 0.9 (5.3) - (0.1) (0.1) - - (11.2) - - (11.2) - 35.0 0.2 (2.1) 33.1 (1.7) 39.4 0.2 (2.0) 37.6 2.4 0.9 - (0.1) 0.8 (0.2) (5.3) - - (5.3) (3.9) (11.2) 31.4 40.0 0.6 (9.2) 3, 13, 17 2.7 2.7 - 1,499.1 1,267.1 232.0 - 3, 13, 17 - - 11 20.1 20.1 - - 52.1 52.5 (1.4) (102.5) (49.7) (56.3) 1.0 3.5 11.6 22.8 (11.2) 1,480.1 1,309.9 174.9 (4.7) Revenue Expenses Depreciation Amortisation of intangible assets not arising on business combinations Adjusted operating profit Exceptional operating costs Amortisation of intangible assets arising on business combinations Operating (loss)/profit before share of results of joint ventures and associates Share of adjusted operating losses from operations of joint ventures and associates (Loss)/profit before net finance costs and tax Investment revenue Finance costs (Loss)/profit before tax Tax (charge)/credit (Loss)/profit after tax attributable to discontinued operations Profit on disposal of discontinued operations Recycled cumulative translation differences on disposal of discontinued operations Tax credit/(charge) on profit on disposal of discontinued operations Profit/(loss) attributable to discontinued operations (i) The Groups 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 unconnected with DMGT but verified by Genscape between 2013 and 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 the broader scheme to generate 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. 81 Daily Mail and General Trust plc Annual Report 2022 The EPA had 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 additional 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 EPAs order to replace the 69.2 million RINs which was accepted for the duration of Genscapes petition for review. Notwithstanding the sale of Genscape to Verisk, DMGT is responsible for any costs, claims or awards and all settlement negotiations with the EPA. During the year a settlement agreement was reached with the EPA whereby DMGT, without admitting any wrongdoing, will replace 24 million RINs over a four year period. At each year end IAS 37 requires DMGT to review this provision and make appropriate adjustments to reflect the current status of the claim. The Groups closing provision includes the cost of replacement RINs, estimated purchase costs, associated legal fees and currency fluctuations. The final settlement amount may be different than the provision made, however, it is not possible for the Group to predict with any certainty the ultimate cost of settlement. Accordingly, the provision could change substantially over time. Any change to this provision will continue to be disclosed as an exceptional operating item within discontinued operations. RINs trade in a volatile range. Using the year end price of US$1.74 compared to the estimated future price of US$1.51 replacing the 24 million RINs would increase the provision by approximately US$3.1 million (£2.7 million). No deferred tax is recorded against this provision. Cash flows associated with discontinued operations comprise operating cash outflows of £nil (2021 £361.4 million), investing cash inflows of £2.2 million (2021 £1,559.4 million) and financing cash outflows of £nil (2021 £7.5 million). 82 Financial Statements Financial Statements Notes to the accounts 19 Total assets and liabilities of businesses held for sale The main classes of assets and liabilities comprising the operations classified as held for sale are set out in the table below. At 30 September 2021, the assets and liabilities held for sale relate to Landmark Solutions and Landmark Insurance, divisions of Landmark Information Group Ltd within the Groups Property Information segment. During the year, the Landmark Insurance business was disposed whilst the Landmark Solutions business was reclassified back out of assets and liabilities held for sale. Trade and other receivables: Trade receivables Prepayments Contract acquisition costs Total assets associated with businesses held for sale Trade and other payables Total liabilities associated with businesses held for sale Net assets of the disposal group Note 27 27 27 30 At 30 September 2022 £m At 30 September 2021 £m - - - - - - - 1.7 2.7 2.5 6.9 (5.9) (5.9) 1.0 83 Daily Mail and General Trust plc Annual Report 2022 20 Goodwill Cost At 1 October 2020 Additions from business combinations Transfer to other intangible assets Adjustment to previous year estimate of contingent consideration Disposals Exchange adjustment At 30 September 2021 Additions Transfer from other intangible assets At 30 September 2022 Accumulated impairment losses At 1 October 2020 Impairment Disposals Exchange adjustment At 30 September 2021 Impairment At 30 September 2022 Net book value 2020 Net book value 2021 Net book value 2022 Note Goodwill £m 3 21 35 3 21 294.5 45.6 (1.9) (0.1) (80.1) (4.0) 254.0 0.2 2.0 256.2 Note Goodwill £m 3 3 39.1 8.0 (1.0) (0.2) 45.9 8.8 54.7 255.4 208.1 201.5 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. Recoverable amounts have been determined using value in use calculations in accordance with IAS 36, Impairment of Assets. The discount rates and long-term growth rates used in the value in use calculations for CGUs with goodwill and intangible assets with a total carrying value greater than £10.0 million are as follows: CGU Property Information The 'i' Goodwill The 'i' Masthead New Scientist Goodwill New Scientist Brand New Scientist Customer Relations Segment Property Information Consumer Media Consumer Media Consumer Media Consumer Media Consumer Media Intangible asset £m 18.3 - 27.3 - 20.4 11.0 77.0 Goodwill £m 141.1 8.9 - 37.9 - - 187.9 Pre-tax discount rate 15.47% to 17.19% 14.31% 14.31% 14.31% 14.31% 14.31% Long term growth/(decline) rate 2.0% (3.0%) (3.0%) 2.0% 2.0% 2.0% 84 Financial Statements Financial Statements Notes to the accounts Goodwill impairment losses recognised in the period amounted to £8.5 million relating to New Scientist in the Consumer Media segment following a reduced forecast and £0.3 million relating to IPE in the Events and Exhibitions segment following a reduced forecast given the continued uncertainty caused by the Covid-19 pandemic. There is a tax charge of £nil associated with these impairment charges. In the prior year ended 30 September 2021, the Group recognised goodwill impairment losses amounting to £8.0 million relating to CWC in the Events and Exhibitions segment following a significantly reduced forecast given the continued uncertainty caused by the Covid-19 pandemic. There was a tax credit of £nil associated with this impairment charge. The Groups policy on impairment of goodwill is set out in Note 2. In accordance with paragraph 134 of IAS 36, further disclosures have been provided in relation to New Scientist where reasonably possible changes in the key assumptions would result in an increased impairment charge. The New Scientist CGU within the Consumer Media segment holds goodwill with a carrying value of £37.9 million (2021 £46.4 million) together with intangible assets with a carrying value of £31.4 million (2021 £33.7 million). The carrying value of the New Scientist CGU 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 2023. The Directors believe these to be reasonably achievable; (ii) subsequent cash flows for four additional years increased in line with growth expectations of the business; (iii) cash flows beyond the five-year period extrapolated using a long-term nominal growth rate of 2.0%; and (iv) a pre-tax discount rate of 14.31%. For this business the Directors have performed a sensitivity analysis on the total carrying value of the CGU. If the discount rate increased by 1.0% the impairment charge would increase by £7.7 million; if the long-term growth rate decreased by 1.0% the impairment charge would increase by £5.9 million; if the business missed budget by 10.0% the impairment charge would increase by £4.7 million. 85 Daily Mail and General Trust plc Annual Report 2022 21 Other intangible assets Cost At 1 October 2020 Analysis reclassifications Transfer from goodwill Additions from business combinations Other additions Internally generated Disposals Exchange adjustment At 30 September 2021 Transfer to goodwill Internally generated Disposals Exchange adjustment At 30 September 2022 Accumulated amortisation At 1 October 2020 Charge for the year Impairment Disposals Exchange adjustment At 30 September 2021 Charge for the year Impairment Disposals Exchange adjustment At 30 September 2022 Net book value 2020 Net book value 2021 Net book value 2022 Note 20 3 3 3 20 3 17 Note 3 3 3 3 17 Publishing rights, mastheads and titles £m 108.2 - - - - - (2.5) (0.1) 105.6 - - - - 105.6 Publishing rights, mastheads and titles £m 70.1 - - (2.5) (0.1) 67.5 - - - - 67.5 38.1 38.1 38.1 Market- and customer- related databases and customer relationships £m Computer software (i) £m Other £m Total £m 86.3 (0.7) 1.9 12.1 - - (10.9) (0.7) 88.0 (2.0) - - 1.7 87.7 310.1 (0.5) - - 2.1 5.2 (230.9) (15.2) 70.8 - 4.3 (0.1) 2.6 77.6 0.1 - - - - - - - 0.1 - - - - 0.1 541.7 (0.5) 1.9 35.1 2.1 5.2 (254.0) (16.7) 314.8 (2.0) 4.3 (0.1) 6.6 323.6 Market- and customer- related databases and customer relationships £m Computer software (i) £m Other £m Total £m 62.5 8.2 1.6 (8.7) (0.4) 63.2 4.5 0.1 - 1.6 69.4 23.8 24.8 18.3 279.9 10.6 - (219.0) (13.7) 57.8 5.0 - (0.1) 2.6 65.3 30.2 13.0 12.3 0.1 - - - - 0.1 - - - - 0.1 - - - 446.8 24.9 5.0 (239.8) (15.1) 221.8 15.6 0.5 (0.1) 6.4 244.2 94.9 93.0 79.4 Brands £m 37.0 0.7 - 23.0 - - (9.7) (0.7) 50.3 - - - 2.3 52.6 Brands £m 34.2 6.1 3.4 (9.6) (0.9) 33.2 6.1 0.4 - 2.2 41.9 2.8 17.1 10.7 Impairment losses recognised in the period amount to £0.5 million relating to Plastex in the Events and Exhibitions segment following a reduced forecast given the continued uncertainty caused by the Covid-19 pandemic. There is a tax credit of £0.1 million associated with this impairment charge. 86 Financial Statements Financial Statements Notes to the accounts (i) Computer software includes purchased and internally generated intangible assets, not arising on business combinations, as follows: Cost At 1 October 2020 Additions Disposals Analysis reclassifications Exchange adjustment At 30 September 2021 Additions Exchange adjustment At 30 September 2022 Accumulated amortisation At 1 October 2020 Charge for the year Disposals Exchange adjustment At 30 September 2021 Charge for the year Exchange adjustment At 30 September 2022 Net book value 2020 Net book value 2021 Net book value 2022 Note £m 289.3 7.3 (221.5) (1.0) (14.1) 60.0 4.3 2.2 66.5 262.2 9.5 (209.6) (13.2) 48.9 4.3 2.2 55.4 27.1 11.1 11.1 3 3 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 1 October 2020 Additions Projects completed At 30 September 2021 Additions Projects completed At 30 September 2022 £m 2.2 5.7 (1.9) 6.0 4.3 (2.6) 7.7 The methodologies applied to the Groups CGUs when testing for impairment and details of the above impairment charge are set out in Note 2. The Groups largest intangible assets with a carrying value greater than £10.0 million are further analysed as follows: The 'i' Masthead New Scientist Brand New Scientist Customer Relations At 30 September 2022 Carrying value £m 27.3 20.4 11.0 At 30 September 2021 Carrying value £m 31.1 22.1 11.6 At 30 September 2022 Remaining amortisation period Years 7.2 13.4 13.4 At 30 September 2021 Remaining amortisation period Years 8.2 14.4 14.4 Segment Consumer Media Consumer Media Consumer Media 87 Daily Mail and General Trust plc Annual Report 2022 22 Property, plant and equipment Cost At 1 October 2020 Owned by subsidiaries acquired Additions Disposals Owned by subsidiaries disposed Exchange adjustment At 30 September 2021 Additions Disposals Transfers from Right of use assets Exchange adjustment At 30 September 2022 Accumulated depreciation and impairment At 1 October 2020 Charge for the year Disposals Owned by subsidiaries disposed Exchange adjustment At 30 September 2021 Charge for the year Disposals Transfers from Right of use assets Exchange adjustment At 30 September 2022 Net book value 2020 Net book value 2021 Net book value 2022 Note 3 3 3 23 Note 3 3 23 Freehold properties £m Short leasehold properties £m Plant, equipment and other £m 32.9 7.9 0.5 - (0.1) - 41.2 - - 1.5 - 42.7 22.8 - 0.2 - (20.0) (1.1) 1.9 0.8 - - - 2.7 282.3 3.4 7.6 (3.2) (43.6) (2.9) 243.6 9.1 (2.9) 0.2 2.7 252.7 Freehold properties £m Short leasehold properties £m Plant, equipment and other £m 19.2 1.5 - (0.1) - 20.6 1.5 - - - 22.1 13.7 20.6 20.6 19.1 1.4 - (18.1) (1.0) 1.4 0.3 - - - 1.7 3.7 0.5 1.0 236.7 18.1 (3.1) (39.9) (2.5) 209.3 14.5 (1.8) 0.2 1.9 224.1 45.6 34.3 28.6 Total £m 338.0 11.3 8.3 (3.2) (63.7) (4.0) 286.7 9.9 (2.9) 1.7 2.7 298.1 Total £m 275.0 21.0 (3.1) (58.1) (3.5) 231.3 16.3 (1.8) 0.2 1.9 247.9 63.0 55.4 50.2 88 Financial Statements Financial Statements Notes to the accounts 23 Right of use assets Cost At 1 October 2020 Owned by subsidiaries acquired Additions Disposals Owned by subsidiaries disposed Exchange adjustment At 30 September 2021 Additions Disposals Transfers to freehold properties and plant and equipment Exchange adjustment At 30 September 2022 Accumulated depreciation At 1 October 2020 Charge for the year Disposals Owned by subsidiaries disposed Exchange adjustment At 30 September 2021 Charge for the year Disposals Transfers to freehold properties and plant and equipment Exchange adjustment At 30 September 2022 Net book value - 2020 Net book value - 2021 Net book value - 2022 Note 3 3 3 22 Note 3 3 22 Leasehold properties £m Plant and equipment £m 108.1 5.0 13.7 (7.6) (58.8) (3.8) 56.6 10.6 (3.4) (1.5) 4.3 66.6 2.5 0.2 0.7 (0.4) - - 3.0 0.6 (0.5) (0.2) - 2.9 Leasehold properties £m Plant and equipment £m 20.0 19.4 (3.1) (12.1) (0.7) 23.5 13.0 (1.6) - 1.8 36.7 88.1 33.1 29.9 0.8 0.9 (0.3) - - 1.4 0.8 (0.5) (0.2) - 1.5 1.7 1.6 1.4 Total £m 110.6 5.2 14.4 (8.0) (58.8) (3.8) 59.6 11.2 (3.9) (1.7) 4.3 69.5 Total £m 20.8 20.3 (3.4) (12.1) (0.7) 24.9 13.8 (2.1) (0.2) 1.8 38.2 89.8 34.7 31.3 89 Daily Mail and General Trust plc Annual Report 2022 24 Investments in joint ventures and associates Joint ventures At 1 October 2020 Disposals Owned by subsidiaries disposed Share of retained reserves Dividends received Exchange adjustment At 30 September 2021 Share of retained reserves Dividends received At 30 September 2022 Note Cost of shares £m Share of post- acquisition retained reserves £m (i) 7 (ii) 7 (iii) 7.8 (6.4) (1.1) - - (0.3) - - - - 0.8 (0.7) 1.1 0.9 (0.4) - 1.7 0.7 (1.1) 1.3 Total £m 8.6 (7.1) - 0.9 (0.4) (0.3) 1.7 0.7 (1.1) 1.3 (i) During the prior year, the Group sold its investment in TreppPort LLC in the Property Information segment. (ii) During the prior year, the Group received dividends from TreppPort LLC and PointX Ltd, both in the Property Information segment. (iii) During the year, the Group received dividends from Decision First Ltd and PointX Ltd, both in the Property Information segment. Summary aggregated financial information for the Groups joint ventures, extracted on a 100% basis from the joint ventures own financial information, is set out below: Year ended 30 September 2022 Property Information At 30 September 2022 Property Information Year ended 30 September 2021 Property Information At 30 September 2021 Property Information Revenue £m 4.6 Operating profit £m 1.7 Total expenses Profit for the year £m 1.4 £m (3.2) Total comprehensive income £m 1.4 Non-current assets £m 0.3 Current assets £m 3.6 Total assets Current liabilities £m (1.3) £m 3.9 Total liabilities £m (1.3) Net assets £m 2.6 Revenue £m 6.4 Operating profit £m 2.2 Total expenses Profit for the year £m 1.9 £m (4.5) Total comprehensive income £m 1.9 Non-current assets £m 0.4 Current assets £m 11.6 Total assets Current liabilities £m (3.6) £m 12.0 Total liabilities £m (3.6) Net assets £m 8.4 At 30 September 2022 the Group's joint ventures had capital commitments amounting to £nil (2021 £nil). There were no material contingent liabilities (2021 none). Information on principal joint ventures: Unlisted PointX Ltd (incorporated and operating in the UK) Decision First Ltd (incorporated and operating in the UK) Segment Principal activity Year ended Description of holding Group interest % Property Information Provider of a 'Points of Interest' database covering Great Britain 31 March 2022 Ordinary B 50.0 Property Information Developer of technology links to allow communication between mortgage lenders and service providers 31 December 2021 Ordinary 50.0 90 Financial Statements Financial Statements Notes to the accounts Associates At 1 October 2020 Additions - cash Additions - non cash Share of retained reserves Dividends received Impairment Transfer to financial assets at fair value through Other Comprehensive Income Transfer from financial assets at fair value through Other Comprehensive Income Disposal Owned by subsidiaries disposed Exchange adjustment At 30 September 2021 Additions - cash Additions - non cash Share of retained reserves Dividends received Impairment Transfer to financial assets at fair value through Other Comprehensive Income Disposals Exchange adjustment At 30 September 2022 Note Cost of shares £m Share of post- acquisition retained reserves £m (i) (ii) 7, 18 (iii) 7 25 25 (iv) (v) (vi) 7 (vii) 7 25 (viii) 94.1 21.7 0.3 - - (6.5) (2.5) 13.5 (3.8) (5.9) (1.2) 109.7 3.4 0.3 - - (30.7) (0.3) (0.3) 0.5 82.6 (45.7) - - (4.3) (0.6) - 0.6 - 4.0 5.0 0.5 (40.5) - - (7.1) (0.1) - - 0.3 (0.5) (47.9) Total £m 48.4 21.7 0.3 (4.3) (0.6) (6.5) (1.9) 13.5 0.2 (0.9) (0.7) 69.2 3.4 0.3 (7.1) (0.1) (30.7) (0.3) - - 34.7 The cumulative unrecognised share of losses of the Groups associates principally comprises £14.5 million (2021 £23.4 million) in relation to the Groups investment in Independent Television News Ltd and £21.8 million (2021 £18.9 million) in relation to Excalibur Holdco Ltd. Joint ventures and associates have been accounted for under the equity method using unaudited financial information for the year ended 30 September 2022. (i) During the prior year cash additions relate to additions in Bloobloom Ltd, Factory 14 S.a.r.l and Kortext Ltd, all held centrally. (ii) During the prior year non-cash additions relate to additions in Bloobloom Ltd held centrally and settled with media credits. (iii) During the prior year the Group received dividends from Whereoware, LLC in the Events and Exhibitions segment and from Mercatus, Inc. in the Property Information segment. (iv) During the prior year the Group disposed of its investment in Mercatus, Inc. in the Property Information segment. (v) Cash additions during the year relate to Bloobloom Ltd and Quick Move Ltd, all held centrally. (vi) Non-cash additions during the year relate to Quick Move Ltd held centrally and settled with media credits and accrued interest. (vii) During the year, the Group received dividends from Whereoware, LLC in the Events and Exhibitions segment. (viii) During the year the Group disposed of its investment in Entale Media Ltd and iProf Learning Solutions, all held centrally. Summary aggregated financial information for the Groups associates, extracted on a 100% basis from the associates own financial information is set out below: Year ended 30 September 2022 Events and Exhibitions Centrally held Revenue £m 0.9 187.5 188.4 Operating profit £m 0.8 33.3 34.1 Total expenses £m (0.1) (225.3) (225.4) (Loss)/Profit for the year £m 0.8 (37.8) (37.0) Other comprehensive income £m - 34.5 34.5 Total comprehensive (expense)/income £m 0.8 (3.3) (2.5) 91 Daily Mail and General Trust plc Annual Report 2022 At 30 September 2022 Centrally held Non-current assets £m 47.3 Current assets £m 143.9 Total assets Current liabilities £m (103.1) £m 191.2 Non-current liabilities £m (236.9) Total liabilities £m (340.0) Net liabilities £m (148.8) Year ended 30 September 2021 Property Information Events and Exhibitions Centrally held At 30 September 2021 Property Information Centrally held Operating profit/(loss) Total expenses (Loss)/profit for the year Other comprehensive expense Total comprehensive (expense)/income Revenue £m 3.9 0.6 181.6 186.1 £m (3.6) 0.6 18.6 15.6 £m (7.3) (0.1) (221.4) (228.8) Non-current assets £m - 80.8 80.8 Current assets Total assets Current liabilities £m 1.4 158.7 160.1 £m 1.4 239.5 240.9 £m (3.5) (211.2) (214.7) £m (3.4) 0.5 (39.8) (42.7) Non-current liabilities £m - (305.0) (305.0) £m - - (15.7) (15.7) £m (3.4) 0.5 (55.5) (58.4) Total liabilities Net liabilities £m (3.5) (516.2) (519.7) £m (2.1) (276.7) (278.8) At 30 September 2022 the Groups associates had capital commitments amounting to £nil (2021 £nil). There were no material contingent liabilities (2021 none). Information on principal associates: Unlisted LineVision, Inc. (incorporated and operating in the US) Excalibur Holdco Ltd (incorporated and operating in the UK) Independent Television News Ltd (incorporated and operating in the UK) Propstack Services Private Ltd (incorporated and operating in India) Quick Move Ltd (incorporated and operating in the UK) Kortext Ltd (incorporated and operating in the UK) Bloobloom Ltd (incorporated and operating in the UK) Yopa Property Ltd (incorporated and operating in the UK) Segment Principal activity Year ended Description of holding Group interest % Centrally held Provider of transmission line monitoring and asset management for utilities 31 December 2021 Series A1 24.1 Centrally held Operator of online discount businesses Centrally held Independent TV news provider 30 September 2022 31 December 2021 B Ordinary 23.9 Ordinary 20.0 Centrally held Centrally held Provider of commercial real estate information 31 March 2022 Preference, Equity Serviced marketplace for the purchase and resale of second-hand luxury goods 30 September 2022 22.7 33.9 22.0 Ordinary, Preference Ordinary, Preference Centrally held Online learning platform 30 June 2022 Centrally held Sales of prescription glasses and sunglasses Centrally held Online property portal 31 July 2022 Preference 21.5 31 December 2021 Preference 45.3 92 Financial Statements Financial Statements Notes to the accounts 25 Financial assets at fair value through Other Comprehensive Income At 1 October 2020 Additions - cash Additions - non cash Disposals Transfer from investment in associates Transfer to investment in associates Fair value movement in the period Exchange adjustment At 30 September 2021 Additions - cash Additions - non cash Distributed in specie Transfer from investment in associates Fair value movement in the period - Cazoo Fair value movement in the period - other Exchange adjustment At 30 September 2022 Note 24, (i) 24, (ii) 38 12, (iii) 24 38 38 £m 410.7 53.4 5.2 (22.0) 1.9 (13.5) 370.8 (0.5) 806.0 7.7 4.5 (109.8) 0.3 (653.6) 7.6 0.1 62.8 The financial assets above are non-interest bearing 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) During the prior year, the Groups investment in Bricklane Technologies Ltd, previously an associate, was reclassified as a financial asset. (ii) During the prior year, the Group increased its investment in Kortext Ltd which is now held as an associate. (iii) During the year, the Groups investment in Cazoo was distributed in specie. Financial assets at fair value through Other Comprehensive Income are analysed as follows: Listed Cazoo Group Ltd (incorporated and operating in the UK) Taboola.com Ltd (incorporated and operating in Israel) Stem, Inc. (incorporated and operating in the US) Unlisted PA Media Group Ltd (incorporated and operating in the UK) BDG Media, Inc. (incorporated and operating in the US) Farewill 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) Financial Network Analytics Ltd (incorporated and operating in the UK) Air Mail, LLC (incorporated and operating in the US) CompStak, Inc. (incorporated and operating in the US) Bricklane Technologies Ltd (incorporated and operating in the UK) Zilch Technology Ltd (incorporated and operating in the UK) Plum Fintech Ltd (incorporated and operating in the UK) Papier Ltd (incorporated and operating in the UK) Other Note Class of Holding Group interest % (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (xi) (xii) (xiii) (xiv) (xv) (xvi) Common Equity Common Equity Common Equity Ordinary Common, Preference Preference Limited Partner Ordinary Ordinary Preference Ordinary Preference Ordinary Preference Preference and Ordinary - 0.3 0.2 18.4 3.4 5.4 2.5 3.1 4.5 3.1 2.0 13.2 1.1 2.3 4.2 At 30 September 2022 At 30 September 2021 £m - 1.3 3.6 9.9 5.9 3.7 2.7 3.9 1.4 1.3 0.5 2.7 15.0 2.2 6.0 2.7 62.8 £m 763.4 4.9 - 9.3 6.0 3.7 2.7 3.9 1.4 0.9 0.5 2.7 5.0 - - 1.6 806.0 93 Daily Mail and General Trust plc Annual Report 2022 (i) Cazoo Group Ltd (Cazoo) provides an online used car sales platform. On 2 December 2021, Rothermere Continuation Limited (RCL) and the Non-conflicted DMGT Directors announced the terms of a recommended increased and final cash offer for all of the issued DMGT A Ordinary Non-Voting Shares not already owned by RCL (the Final Offer). On 16 December 2021, RCL announced that all of the conditions to the Final Offer had been satisfied or, where applicable, waived and the Final Offer was therefore unconditional in all respects. Following the Final Offer being declared unconditional DMGT declared a special dividend payable to all DMGT shareholders, including RCL. The special dividend comprised cash of £5.68 per share and approximately 0.5749 shares in Cazoo Group Ltd (Cazoo) per DMGT share, subject to a possible deduction for tax. The cash element was paid on 30 December 2021 and the settlement of the Cazoo shares component of the special dividend occurred in June 2022. The carrying value of Cazoo as at 30 September 2022 was £nil (2021 £763.4 million) and a loss of £653.6 million (2021 gain of £357.2 million) was recognised in Other Comprehensive Income during the year. (ii) Taboola.com Ltd is a content marketing platform provider. (iii) Stem, Inc. provides artificial intelligence driven clean energy storage systems. (iv) PA Media Group Ltd is a provider of news, sport and entertainment information. (v) BDG Media, Inc. operating as Bustle provides an online information platform covering fashion, politics, technology, diversity, celebrities, health and beauty. (vi) Farewill Ltd provides online-based will-writing services. (vii) 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. (viii) Hambro Perks Ltd is a venture capital firm. (ix) Financial Network Analytics Ltd provides a platform which allows financial regulators and financial market infrastructures to map and monitor complex financial networks and to simulate operational and financial risks. (x) GPNutrition Ltd provides direct to consumer nutritional supplements. (xi) Air Mail, LLC owns and operates an online media service that provides weekly digital newsletter covering politics, business, the environment, the arts, literature, film and television, food, design, travel, architecture, society, fashion and crime. (xii) CompStak, Inc. provides commercial real estate information to brokers, appraisers, researchers, landlords, lenders and investors. (xiii) Bricklane Technologies Ltd is a property investment platform provider. (xiv) Zilch Technology Ltd operates a buy now pay later application. (xv) Plum Fintech Ltd operates an application which automatically saves, invests and switches bills on behalf of the user. (xvi) Papier Ltd is a direct-to-consumer stationery provider. 94 Financial Statements Financial Statements Notes to the accounts 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 Sublease receivable Other receivables Classified as held for sale Non-current assets Other receivables The maturity analysis of the Groups sublease receivables is as follows: Within one year Total undiscounted cashflows Net investment in the lease Movement in the impairment allowance is as follows: At start of year Impairment losses recognised Amounts written off as uncollectable Amounts recovered during the year Owned by subsidiaries disposed Exchange adjustment At end of year At 30 September 2022 £m 11.6 16.1 27.7 At 30 September 2021 £m 8.7 7.7 16.4 At 30 September 2022 £m At 30 September 2021 £m Note 19 186.7 (6.1) 180.6 43.0 2.8 9.0 - 11.7 247.1 - 247.1 1.3 248.4 At 30 September 2022 £m - - - At 30 September 2022 £m (7.5) (1.8) 3.0 0.8 - (0.6) (6.1) 130.7 (7.5) 123.2 39.4 2.5 7.0 3.2 18.5 193.8 (6.9) 186.9 3.3 190.2 At 30 September 2021 £m 3.2 3.2 3.2 At 30 September 2021 £m (4.7) (4.1) 0.3 0.4 0.5 0.1 (7.5) IFRS 9 introduced an expected credit loss (ECL) model which requires an impairment provision to be made on initial recognition of the receivable which previously under IAS 39 was required only when a loss event occurred. Accordingly, the Group 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. 95 Daily Mail and General Trust plc Annual Report 2022 The expected loss rates are based on the Groups 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. There are no trade receivables and contract assets subject to enforcement activity which have been written off. 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 debtors proxy credit rating was estimated and applied to the carrying amount outstanding at 30 September 2022. The lifetime expected loss provision for trade receivables, contract assets, sublease receivable and other receivables is as follows: At 30 September 2022 Expected loss rate Gross carrying amount (£m) Loss allowance provision (£m) At 30 September 2021 Expected loss rate Gross carrying amount (£m) Loss allowance provision (£m) Current 0.7% 126.1 0.9 More than 30 days past due 0.3% 33.9 0.1 More than 60 days past due 1.1% 18.3 0.2 More than 90 days past due 16.1% 30.4 4.9 Current 2.1% 120.7 2.5 More than 30 days past due 2.3% 13.0 0.3 More than 60 days past due - 7.1 - More than 90 days past due 21.6% 21.8 4.7 Total 2.9% 208.7 6.1 Total 4.6% 162.6 7.5 Ageing of impaired trade receivables, contract assets, sublease receivables and other receivables: 0 - 30 days 31 - 60 days 61 - 90 days 91 - 120 days 121+ days Total At 30 September 2022 £m 0.9 0.1 0.2 0.3 4.6 6.1 At 30 September 2021 £m 2.5 0.3 - 0.1 4.6 7.5 Included in the Groups trade receivables are amounts owed with a carrying value of £28.3 million (2021 £14.0 million) which are past due at 30 September 2022 for which no allowance has been made. The Group is not aware of any deterioration in the credit quality of these customers and considers that the amounts are still recoverable. Ageing of past due but not impaired 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. At 30 September 2022 £m 12.5 8.5 1.0 6.3 28.3 At 30 September 2021 £m 4.2 2.9 0.2 6.7 14.0 96 Financial Statements Financial Statements Notes to the accounts 28 Other financial assets Current assets Collateral Non-current assets Escrow Loans to joint ventures and associates At 30 September 2022 £m At 30 September 2021 £m Note 15, (i) 5.1 9.2 (ii) (iii) - 15.9 15.9 120.7 19.8 140.5 (i) The Group deposits collateral with its bank counterparties with whom it has entered into a credit support annex to an ISDA (International Swaps and Derivatives Association) Master Agreement. This represents cash that cannot be readily used in operations. The collateral deposited at both the current and prior year end principally relates to fixed-to-fixed cross-currency swaps. At 30 September 2022 these swaps had a carrying value of £19.5 million liability (2021 £17.2 million). Further details relating to these swaps are disclosed in Note 33. (ii) Following the disposal of Euromoney in 2019, the Company made available £120.7 million from the Groups cash resources to the Groups Pension Schemes. Following the acceptance on 16 December 2021 of Rothermere Continuation Limiteds (RCL) offer for all of the issued DMGT A Ordinary Non-Voting Shares not already owned by RCL, the escrow balances were released to the Groups Pension Schemes as part of a £402.0 million cash pension funding payment. (iii) Loans to joint ventures and associates stated net of expected credit loss provision are as follows: Total gross loans to joint ventures and associates Loss allowance provision Loan receivable net of expected credit loss provision Movement in the impairment allowance is as follows: At start of year Movement in the year At end of year At 30 September 2022 £m 36.1 (20.2) 15.9 At 30 September 2022 £m 12.0 8.2 20.2 At 30 September 2021 £m 31.8 (12.0) 19.8 At 30 September 2021 £m 12.0 - 12.0 Note 7 97 Daily Mail and General Trust plc Annual Report 2022 29 Cash and cash equivalents Cash and cash equivalents Cash and cash equivalents Unsecured bank overdrafts Cash and cash equivalents in the Consolidated 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 rate type: Floating rate interest Fixed rate interest (i) The carrying amount of cash and cash equivalents equates to their fair values. 30 Trade and other payables Current liabilities Trade payables Interest payable Other taxation and social security Other creditors Accruals Deferred revenue Classified as held for sale The carrying amount of trade and other payables approximates to their fair value. 31 Current tax Corporation tax payable Corporation tax receivable 98 Note (i) (i) 32 15 At 30 September 2022 £m 53.0 53.0 (0.7) 52.3 27.2 19.4 0.4 0.7 1.2 4.1 53.0 19.1 33.9 53.0 At 30 September 2021 £m 1,746.9 1,746.9 (1.7) 1,745.2 1,254.6 486.7 0.2 0.6 0.5 4.3 1,746.9 361.5 1,385.4 1,746.9 At 30 September 2022 £m At 30 September 2021 £m Note 53.1 3.6 6.8 17.6 147.8 125.4 354.3 - 354.3 22.6 3.6 4.6 21.4 137.9 80.2 270.3 (5.9) 264.4 19 At 30 September 2022 £m 4.2 - 4.2 At 30 September 2021 £m 1.7 (0.4) 1.3 Financial Statements Financial Statements Notes to the accounts 32 Borrowings The Groups borrowings are unsecured and are analysed as follows: At 30 September 2022 Within one year Between one and two years Between two and five years Over five years At 30 September 2021 Within one year Between one and two years Between two and five years Over five years Overdrafts Bonds Lease liabilities £m 0.7 - - - - 0.7 £m - - 194.6 - 194.6 194.6 £m 7.3 8.2 10.8 2.5 21.5 28.8 Total £m 8.0 8.2 205.4 2.5 216.1 224.1 1.7 - 16.6 18.3 - - - - 1.7 - - 199.5 199.5 199.5 Euro £m 1.2 - 1.2 1.5 - 1.5 5.6 11.2 3.7 20.5 37.1 Other £m 2.7 - 2.7 1.4 - 1.4 5.6 11.2 203.2 220.0 238.3 Total £m 223.4 0.7 224.1 236.6 1.7 238.3 The Group's borrowings are analysed by currency and interest rate type as follows: Sterling US dollar Australian dollar At 30 September 2022 Fixed rate interest Floating rate interest At 30 September 2021 Fixed rate interest Floating rate interest £m £m 204.0 0.5 204.5 218.5 1.0 219.5 13.6 0.2 13.8 15.2 0.7 15.9 £m 1.9 - 1.9 - - - The Groups 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 2022 Fixed rate interest Floating rate interest At 30 September 2021 Fixed rate interest Floating rate interest Sterling US dollar Australian dollar £m £m 235.4 (84.5) 150.9 165.2 (30.9) 134.3 85.1 (17.7) 67.4 170.8 (69.7) 101.1 £m 1.9 - 1.9 - - - Euro £m 1.2 - 1.2 1.5 - 1.5 Other £m 2.7 - 2.7 1.4 - 1.4 Total £m 326.3 (102.2) 224.1 338.9 (100.6) 238.3 99 Daily Mail and General Trust plc Annual Report 2022 Committed borrowing facilities On 6 May 2022 the Group successfully renegotiated its committed bank facilities for a four year term extendable for a further one year at each banks option. The new total committed bank facilities amount to £209.1 million (2021 £315.7 million). Of these facilities £160.0 million (2021 £155.0 million) are denominated in sterling and £49.1 million (US$55.0 million) (2021 £160.7 million (US$217.0 million)) are denominated in US dollars. Drawings are permitted in all major currencies. The net debt to EBITDA covenant in the new bank facilities is no greater than 3.25 times (3.50 times for the previous facilities which were cancelled on 6 May 2022) temporarily increasing to 3.5 times following an acquisition. The interest cover covenant remains at 3.0 times. The Groups bank loans bear interest charged at the relevant term or compounded risk-free rate plus a margin. The margin varies by bank and is based on the Groups ratio of net debt to EBITDA. EBITDA for these purposes is defined as the aggregate of the Groups 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 14. For the purposes of calculating the Groups bank covenants, EBITDA is calculated on a pre-IFRS 16 basis and amounts to £74.8 million by deducting operating lease charges and adding sublease rental income. The Groups committed bank facilities and undrawn committed facilities available to the Group in respect of which all conditions precedent had been met are analysed by maturity as follows: Expiring in more than one year but not more than two years Expiring in more than three years but not more than four years Total bank facilities At 30 September 2022 Committed £m - 209.1 209.1 At 30 September 2021 Committed £m 315.7 - 315.7 At 30 September 2022 Undrawn £m - 209.1 209.1 At 30 September 2021 Undrawn £m 315.7 - 315.7 The Group has issued standby letters of credit amounting to £2.0 million (2021 £3.3 million). Bonds Following maturity of the Companys 2021 bonds in the prior year, the only remaining bonds are those maturing 21 June 2027 with an annual coupon of 6.375%. The nominal, carrying and fair values are as follows: Nominal value Carrying value Fair value At 30 September 2022 £m 200.0 194.6 170.3 At 30 September 2021 £m 200.0 199.5 221.6 The 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 £0.3 million (2021 £0.3 million) and the unamortised discount amounts to £0.5 million (2021 £0.6 million). The Group used interest rate swaps designated as hedges of a proportion of the change in fair value of the bonds. Following termination of the last remaining interest rate swap on 21 June 2022, the residual bond fair value adjustment of £4.9 million is required to be amortised over the period to 21 June 2027 being the maturity of the bond. Amortisation charged in the year amounts to £0.3 million leaving an unamortised residual fair value adjustment of £4.6 million (see Note 33). The fair value of the Groups bonds has been calculated on the basis of quoted market rates using level 2 fair value inputs. Following the year end, on 3 November 2022, the Company bought back and cancelled £50.0 million nominal of its bonds for cash consideration of £46.6 million. Lease liabilities The Group leases various office space, equipment and vehicles which are negotiated on an individual basis with differing terms and conditions. The Groups key lease arrangements relate to office space in the key cities in which it operates. The Group negotiates lease contracts according to the Groups needs with a view to balancing stability, security of tenure and lease terms against the risk of entering excessively long or onerous arrangements. Of the Groups leased properties, the most significant leases relate to the temporary DMGT head office premises at 9 Derry Street, London, W8 5TT which expires in June 2025, 51 Astor Place, New York in the Consumer Media segment which expires in December 2024 and 600 Fifth Avenue, New York in the Property Information segment which expires in November 2028. 100 Financial Statements Financial Statements Notes to the accounts The lease payments for Northcliffe House (NCH) made during the year amount to £10.5 million (2021 £10.0 million) which were adjusted each year in line with the Consumer Price Index of the preceding year. The lease at NCH expires in December 2022. Prior to this date, the employees currently working at NCH will move into temporary office space at 9 Derry Street whilst redevelopment works are being carried out. The target end date for these works is June 2024, at which point the Group will commence its own fit out works prior to employees moving back to NCH. The lease payments for 51 Astor Place made during the year amount to £2.4 million (US$2.7 million) and these are fixed until maturity of the lease in December 2024. The lease payments for 600 Fifth Avenue made during the year amount to £1.4 million (US$1.6 million) and these are fixed until 9 November 2023. Starting 10 November 2023, the annual lease payments will be £1.5 million (US$1.7 million) until maturity of the lease in November 2028. An analysis of the Groups finance lease liabilities is as follows: Northcliffe House 9 Derry Street 51 Astor Place 600 Fifth Avenue Other office space Motor vehicles Other equipment There are no leases with residual value guarantees or leases not yet commenced to which the Group is committed. At 30 September 2022 £m - 4.2 5.3 8.3 9.8 1.2 - 28.8 At 30 September 2021 £m 9.9 - 6.2 7.8 11.6 1.5 0.1 37.1 101 Daily Mail and General Trust plc Annual Report 2022 33 Financial instruments and risk management The carrying amounts of the Groups financial instruments together with the gains and losses thereon are as follows: At 30 September 2022 Carrying value Year ended 30 September 2022 (Loss)/gain to income Year ended 30 September 2022 (Loss)/gain to equity At 30 September 2021 restated (i) Carrying value Year ended 30 September 2021 restated (i) (Loss)/gain to income Year ended 30 September 2021 restated (i) Gain/(loss) to equity Note £m £m £m £m £m £m Financial assets Fair value through profit and loss Derivative instruments in designated hedge accounting relationships Interest rate swaps Derivative instruments not in designated hedge accounting relationships Interest rate caps Provision for contingent consideration receivable Loans to joint ventures and associates Fair value through Other Comprehensive Income Financial assets Amortised cost Trade receivables and contract assets Other receivables Sublease receivable Collateral Other financial assets - Escrow Loans to joint ventures and associates Cash and cash equivalents Financial liabilities Fair value through profit and loss Derivative instruments in designated hedge accounting relationships Fixed-to-fixed cross-currency swaps Provision for contingent consideration payable Amortised cost Trade payables Interest payable Other creditors Accruals Lease liabilities Bank overdrafts Bonds Bank loans Total for financial instruments (ii) (ii) (iii) 28 (iv) - (5.0) 11.9 11.5 - - - - - - - - 0.4 0.2 4.2 0.4 (2.2) 25 (v) 62.8 1.8 (645.8) 806.0 28 28 28 (iv) 29 (ii) (iii) 32 32 32 (vi) 189.6 13.0 - 5.1 - 15.9 53.0 351.3 (19.5) - (53.1) (3.6) (17.6) (147.8) (28.8) (0.7) (194.6) - (465.7) (114.4) 2.0 - - - - (7.6) 0.4 3.1 (5.8) (0.2) - - - - (0.9) - (7.8) (3.2) (17.9) (14.8) 7.1 4.0 - - - - 29.0 (605.7) 128.5 21.6 3.2 9.2 120.7 15.6 1,746.9 2,856.9 (5.8) (17.2) - (1.1) (0.6) - (0.5) (5.2) (3.0) - - - (15.1) (16.7) (3.6) (21.4) (137.9) (37.1) (1.7) (199.5) - (436.2) (620.8) 2,420.7 - - - - 370.3 (3.6) (1.9) - - - - (13.0) 351.8 5.9 - 0.3 - 0.3 3.3 3.4 0.2 - - 13.4 365.2 0.3 - - - (3.4) - 0.1 - 0.1 1.4 0.8 (2.9) (0.8) (0.1) - - - - (1.3) - (9.6) (1.6) (13.4) (16.3) (i) (ii) The 2021 financial liabilities have been restated to include accruals, interest payable and other creditors. Derivative instruments are measured at Fair Value Through Profit and Loss (FVTPL). Their fair values are determined using market rates of interest and exchange and established estimation techniques such as discounted cashflow and option valuation models. The Group has derivatives designated in the following hedging relationships: 102 Financial Statements Financial Statements Notes to the accounts hedges of the change in fair value of recognised assets and liabilities (fair value hedges) hedges of net investment in foreign operations (net investment hedges) 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. (iii) Contingent consideration is valued based on the future profitability of the business to which the contingent consideration relates, discounted at market rates of interest. (iv) Loans to joint ventures and associates (included within other financial assets) include the following: 10.0% fixed rate unsecured convertible loan note which was issued and fully impaired during the year, repayable on 21 November 2024 with a carrying value of £nil (2022 £nil) (at FVTPL); 8.0% fixed rate unsecured convertible loan note issued during the prior year (which was fully impaired in the year to 30 September 2022), repayable on 4 August 2023 with a carrying value (which includes accrued interest) of £nil (2021 £4.2 million) (at FVTPL); 10.0% fixed rate unsecured loan note, repayable on 31 December 2025 with a carrying value (which includes accrued interest) of £15.7 million at 30 September 2022 (2021 £15.6 million) (at Amortised cost). (v) 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. (vi) The Groups bonds are measured at amortised cost as adjusted for fair value hedging. 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. Further detail is provided in the Going Concern section of the Basis of Preparation (Note 1). Debt management The Group borrows on an unsecured basis and arranges its debt to ensure an appropriate maturity profile. The Groups 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 & Poors and BB+ with Fitch and ensures it has sufficient committed bank facilities in order to meet short-term business requirements, after taking into account the Groups 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 Groups cash generative businesses together with its bond issuances and bank facilities 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 Groups 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 3.25 times (3.50 times for the previous facilities which were cancelled on 6 May 2022, see Note 32) 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. For bank covenant purposes, net debt is calculated on a pre-IFRS 16 basis by excluding lease liabilities. The resultant Net Debt to EBITDA ratio for the year to 30 September 2022 is 1.97 times. Using a closing rate basis for the valuation of net debt, the ratio is 2.05 times. At 30 September 2021, the Group had net cash (at average exchange rates as adjusted for lease liabilities and excluding Escrow balances) amounting to £1,534.7 million. 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 profile of both derivative and non-derivative financial liabilities are analysed in the table later in this note. 103 Daily Mail and General Trust plc Annual Report 2022 Market risk management The Groups primary market risks are interest rate fluctuations and exchange rate movements. Interest rate risk management The limit imposed by the Groups bank covenants is at least 3.0 times EBITDA to net interest. The actual ratio for the year was 5.3 times (2021 11.3 times). Group debt is comprised largely of fixed GBP bond debt and, from time to time, floating rate sterling (GBP) and US dollar (USD) bank borrowings. The Groups interest rate exposure management policy is aimed at reducing the exposure of the consolidated businesses to changes in interest rates. The Groups long term policy aims to ensure that between 70.0% and 80.0% of interest rate exposures are fixed with the balance floating. Whilst recognising this, policy is subject to short term fluctuations as a result of the prevailing economic climate. This policy 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 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) (ii) Fixed-to-floating interest rate swaps, designated as fair value hedges of a portion of the Groups 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 last remaining swap was closed out during the year. The notional value of these interest rate swaps amounts to £nil (2021 £53.1 million) with the Group paying floating rates of between 0.0% and 0.9% (2021 0.0% and 0.5%). The average hedged interest rate for the year was 0.2% (2021 0.1%). Fixed-to-fixed cross-currency swaps designated as hedges of the Groups net investments in foreign operations. The notional value of these cross-currency swaps amounts to £37.6 million/US$60.0 million (2021 £72.0 million/US$115.0 million) with the Group paying fixed US dollar interest at rates of between 6.0% and 7.0% (2021 6.0% and 7.0%). The average hedged GBP/USD exchange rate for the year was 1.60 (2021 1.60). (iii) Interest rate caps amounting to US$20.0 million and £85.0 million notional (2021 US$95.0 million and £85.0 million) at rates of between 2.5% and 3.4% (2021 2.4% and 3.5% ). 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 Groups overseas investments. Credit risk management The Groups principal credit risk relates to its trade and other receivables and non-performance by counterparties to financial instrument contracts. 104 Financial Statements Financial Statements Notes to the accounts Trade and other receivables The Groups 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 56 days (2021 42 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, sublease receivable 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 at the start of this note. Institutional counterparty risk The Group seeks to limit interest rate and foreign exchange risks, described above, by the use of derivative 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 rated or UK ring-fenced banking counterparty and no more than the higher of £10.0 million or 15.0% of surplus cash balances deposited with any A rated counterparty. Additionally, no more than £75.0 million in aggregate should be deposited with any one AA rated banking group and no more than £65.0 million in aggregate should be deposited with any one A rated banking group. 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 at the start of this note. Derivative financial instruments and hedge accounting The Group designates certain derivatives as: (i) (ii) (iii) hedges of the change in fair value of recognised assets and liabilities (fair value hedges); or hedges of highly probable forecast transactions (cash flow hedges); or 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 Groups 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 Groups fixed rate debt. Up until termination of the last remaining swap on 21 June 2022, the notional amount of the interest rate swaps was used to hedge an equivalent notional amount of fixed rate debt. Accordingly, the hedge ratio was 100%. Since the critical terms of the swaps matched those of the fixed rate debt the Group expected a highly effective hedging relationship. The fair value of the designated fixed rate debt was 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. The nominal and carrying amounts of hedged fixed rate debt are as follows: Nominal amount Carrying amount 105 At 30 September 2022 £m - - At 30 September 2021 £m 53.1 53.0 Daily Mail and General Trust plc Annual Report 2022 The last remaining interest rate swap was closed out on 21 June 2022, therefore the amount of hedged fixed rate debt at 30 September 2022 is nil. In the prior year 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 year. The following table shows the fair value adjustment to sterling debt (in the prior year this 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 years: Fair value at 30 September 2020 £m 3.7 (3.7) - Year ended 30 September 2021 fair value gain/(loss) £m (3.3) 3.3 - Fair value at 30 September 2021 £m 0.4 (0.4) - Year ended 30 September 2022 fair value gain/(loss) £m (5.3) 5.3 - Termination of interest rate swap £m 4.9 - 4.9 Amortisation relating to terminated fair value hedge of bond £m - (0.3) (0.3) Fair value at 30 September 2022 £m - 4.6 4.6 Sterling interest rate swaps Sterling debt Total Following termination of the last remaining interest rate swap, the residual fair value adjustment to sterling debt of £4.9 million is required to be amortised over the period to maturity of the bond, being the remaining duration of the original hedge relationship. Cash flow hedges The Groups 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 current or prior year. Net investment hedges The Group seeks to manage the foreign currency exposure arising on retranslation of the reporting entitys 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 whole or part of the hedging instruments are designated in the hedge relationship in a 1:1 ratio against the Groups available net investments in foreign operations. 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 Groups 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 Groups 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 appropriate methodologies. All designated fair value hedge relationships were effective throughout the year ended 30 September 2022, until termination of the swap in June 2022. Hedge ineffectiveness in relation to net investment hedges of £4.9 million was recognised in the Consolidated Income Statement in Net finance costs (see Note 10), due to the amount of the hedging instruments exceeding the Groups net investments in foreign operations. There was no ineffectiveness recognised in the Consolidated Income Statement in the prior year. The Groups derivative financial instruments and their maturity profiles are summarised as follows: 106 Financial Statements Financial Statements Notes to the accounts Derivative financial assets: At 30 September 2022 Between two and five years Over five years At 30 September 2021 Within one year Over five years Derivative financial liabilities: At 30 September 2022 Between two and five years At 30 September 2021 Between two and five years Over five years Fair value hedges Derivatives not qualifying for hedge accounting Derivative financial assets £m £m £m - - - 0.4 - 0.4 5.5 6.4 11.9 - 0.4 0.4 5.5 6.4 11.9 0.4 0.4 0.8 Net investment hedges £m (19.5) (13.2) (4.0) (17.2) 107 Daily Mail and General Trust plc Annual Report 2022 Maturity profile of financial liabilities The remaining undiscounted contractual liabilities and their maturities together with a reconciliation to amounts included in the Consolidated Statement of Financial Position are as follows: Within one year Between one and two years Between two and five years Between five and ten years Total undiscounted liability Interest Undiscounted value of financial asset Discounting, mark to market and other adjustments Included in Consolidated Statement of Financial Position £m £m £m £m £m £m £m £m £m At 30 September 2022 Trade payables Interest payable Other creditors Accruals Bank overdrafts Bonds Lease liabilities Fixed-to-fixed cross-currency swaps At 30 September 2021 restated Trade payables Interest payable Other creditors Accruals Bank overdrafts Bonds Lease liabilities Contingent consideration Fixed-to-fixed cross-currency swaps (53.1) (3.6) (17.6) (147.8) (0.7) (9.2) (8.1) - - - - - (12.8) (8.8) - - - - - (234.6) (11.5) - - - - - - (2.6) (53.1) (3.6) (17.6) (147.8) (0.7) (256.6) (31.0) - - - - - 56.6 2.2 (3.4) (3.4) (55.1) - (61.9) 2.6 (243.5) (25.0) (301.2) (2.6) (572.3) 61.4 (16.7) (3.6) (21.4) (137.9) (1.7) (9.2) (17.5) (1.1) - - - - - (12.8) (6.1) - - - - - - (38.3) (12.0) - - - - - - (209.1) (3.8) - (16.7) (3.6) (21.4) (137.9) (1.7) (269.4) (39.4) (1.1) - - - - - 69.4 2.3 - (5.5) (5.5) (77.0) (19.5) (107.5) 3.8 (214.6) (24.4) (127.3) (232.4) (598.7) 75.5 - - - - - - - - - - - - 5.4 - (53.1) (3.6) (17.6) (147.8) (0.7) (194.6) (28.8) 43.3 43.3 (3.5) (19.5) 1.9 (465.7) - - - - - - - - 90.4 90.4 - - - - - 0.5 - - (3.9) (3.4) (16.7) (3.6) (21.4) (137.9) (1.7) (199.5) (37.1) (1.1) (17.2) (436.2) The 2021 financial liabilities have been restated to include accruals, interest payable and other creditors. Included in the maturity table above are currency swaps with a notional value of US$60.0 million (2021 US$90.0 million) with mutual break clauses at fair value every five years. At the prior year end 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. Following the year end, on 3 November 2022 the Company bought back and cancelled £50.0 million nominal of its bonds. The above maturity table reflects the position at 30 September 2022 and neither the cash flows relating to the buy back, nor the revised future cash flows relating to the remaining bond are included in the table. Sensitivity analysis In managing the Groups 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 Groups statutory results. At 30 September 2022 it is estimated that an increase of 1.0% in interest rates would have reduced the Groups finance costs by £2.9 million (2021 £0.1 million increase). There would have been no effect on amounts recognised directly in equity. A decrease of 1.0% in interest rates would have increased the Groups finance costs by £2.8 million (2021 £0.1 million). There would have been no effect on amounts recognised directly in equity. This sensitivity has been calculated by applying the interest rate change to the Groups variable rate borrowings, net of any interest rate swaps, at the year end date. 108 Financial Statements Financial Statements Notes to the accounts At 30 September 2022 it is estimated that a 10.0% strengthening of sterling against the US dollar would have reduced the net loss taken to equity by £3.0 million (2021 £10.2 million increase in the net gain) and reduced the net loss taken to income by £2.2 million (2021 no change to the net loss). A 10.0% weakening of sterling against the US dollar would have increased the net loss taken to equity by £3.8 million (2021 £12.6 million reduction to the net gain) and increased the net loss taken to income by £2.9 million (2021 no change to the net loss). This sensitivity has been calculated by applying the foreign exchange change to the Groups derivative financial instruments which are affected by changes in foreign exchange rates, at the year end date. Fair value hierarchy 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 2022 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 Note 25 Level 1 £m Level 2 £m Level 3 £m 4.9 - 4.9 51.8 11.9 63.7 6.1 - 6.1 Total £m 62.8 11.9 74.7 Financial liabilities Fair value through profit and loss Derivative instruments in designated hedge accounting relationships At 30 September 2021 Financial assets Financial assets at fair value through Other Comprehensive Income Fair value through profit and loss Derivative instruments in designated hedge accounting relationships Derivative instruments not in designated hedge accounting relationships Provision for contingent consideration receivable Loans to joint ventures and associates Financial liabilities Fair value through profit and loss Derivative instruments in designated hedge accounting relationships Provision for contingent consideration payable - (19.5) - (19.5) Note Level 1 £m Level 2 £m Level 3 £m Total £m 25 768.3 - - - - 768.3 31.7 0.4 0.4 - - 32.5 35 - - - (17.2) - (17.2) 6.0 806.0 - - 0.2 4.2 10.4 - (1.1) (1.1) 0.4 0.4 0.2 4.2 811.2 (17.2) (1.1) (18.3) 109 Daily Mail and General Trust plc Annual Report 2022 Reconciliation of level 3 fair value measurement of financial assets is as follows: At 1 October 2020 Transfer from Level 2 Contingent consideration received Loans advanced to joint ventures and associates Exchange adjustment At 30 September 2021 Settlement of contingent consideration receivable Loans advanced to associates Interest on loans to associates Transfer to investment in associates Impairment of loan to associate Exchange adjustment At 30 September 2022 Note (i) 7, 28 £m 1.3 4.8 0.2 4.2 (0.1) 10.4 (0.2) 5.8 0.4 (2.2) (8.2) 0.1 6.1 (i) Equity investments classified within level 2 in prior years have been transferred to level 3, as the observable market data used in the valuation was not available. Reconciliation of level 3 fair value measurement of financial liabilities is as follows: At 1 October 2020 Cash paid to settle contingent consideration in respect of acquisitions Change in fair value of contingent consideration Adjustment to goodwill At 30 September 2021 Cash paid to settle contingent consideration in respect of acquisitions Change in fair value of contingent consideration At 30 September 2022 Note 35 10, 35 20, 35 35 10, 35 £m (2.5) 1.4 (0.1) 0.1 (1.1) 1.2 (0.1) - The key inputs into the significant level 3 financial liabilities are the future profitability of the businesses to which the contingent consideration relates and the discount rate. At 30 September 2021 the estimated range of possible outcomes for the fair value of these liabilities was £0.2 million to £1.1 million. In the current year the increase in fair value of contingent consideration of £0.1 million (2021 £0.1 million) was 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 no change to the contingent consideration liability at 30 September 2021. No discounting was applied to the contingent consideration balance as at 30 September 2021, as the entire balance was payable within less than one year. 110 Financial Statements Financial Statements Notes to the accounts 34 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 credit of the Group for the year ended 30 September 2022 was £18.0 million (2021 costs of £10.1 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 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 Schemes are carried out triennially by the scheme actuary and determine the level of contributions payable by the Company to the Schemes. The Technical Provisions position for the most recent funding valuations of the Schemes are summarised in the table below: Latest Funding Position Date of latest triennial valuation Total Liabilities Total Assets (Deficit)/Surplus HPS 31 March 2019 £m (2,821.0) 2,583.0 (238.0) SEPF 31 March 2019 £m (330.5) 346.1 15.6 AVC 31 March 2017 £m (52.8) 49.0 (3.8) Following the results of the latest triennial valuations as at 31 March 2019, the Company and the Trustees of the Schemes (Trustees) agreed to eliminate the above HPS deficit through a combination of additional contributions and investment returns by 5 October 2024. The agreed Recovery Plan contributions were as follows: HPS £16.2 million paid on 5 October 2019 under the Recovery Plan agreed at the 31 March 2016 valuation; £11.0 million each year for 5 years from 5 October 2020 paid annually in advance; and £50.0 million at October 2024 or such lower amount required to meet the deficit at 31 March 2024 based on the Scheme Actuarys estimate of the technical provisions at this date. The Company also agreed to pay the Pension Protection Fund levy and all other expenses excluding investment management expenses for HPS. In addition, the Recovery Plan contributions were supplemented by arrangements offering contingent security to HPS, including: An Escrow arrangement, to which the Company agreed to contribute an initial sum of £113.6 million and five annual payments of £7.0 million each, with a termination date of 30 September 2026; A long-term insolvency guarantee (to replace the Limited Partnership Investment vehicle), capped at £150.0 million with a termination date of 2035 (or the date on which the Scheme reaches full funding on a self-sufficiency basis); and Further Funding Agreement in relation to contributions provided in certain circumstances. The Company considered that these contributions were sufficient to eliminate any deficit over the agreed period. This recovery plan was to be reviewed at the next triennial funding valuation of the Schemes which is due to be completed with an effective date of 31 March 2022. SEPF For the actuarial valuation as at 31 March 2019, there was no shortfall and therefore no deficit contributions were required. The Company will pay the Pension Protection Fund levy and all other expenses excluding investment management expenses for SEPF. AVC Plan The Recovery Plan agreed as part of the 31 March 2017 valuation of the AVC Plan estimated that the deficit would be eliminated by 30 September 2026. No deficit contributions were payable as it was assumed that this would be met through returns on the AVC Plans assets. 111 Daily Mail and General Trust plc Annual Report 2022 On 24 October 2022, the AVC plan was merged into HPS. Therefore, the assets and liabilities have been transferred to HPS and the 31 March 2020 valuation of the AVC plan will not be completed. Following acceptance of Rothermere Continuation Limiteds (RCL) offer for all of the issued DMGT A Ordinary Non Voting shares not already owned by RCL on 16 December 2021, the Company made a cash funding payment into the Pension Schemes amounting to £402.0 million in addition to a £11.0 million Recovery Plan cash funding payment made on 5 October 2021. These payments replaced all previously agreed Recovery Plan contributions. In addition, the Company has agreed with the Trustees that, should it make any permanent reductions in the Companys capital, including share buy- backs, it will make additional contributions to the Schemes amounting to 20.0% of the capital reduction capped at the aggregate HPS and SEPF funding deficits shown in the most recent actuarial report. Contributions of £nil (2021 £nil) relating to this agreement were made in the year to 30 September 2022. Following payment of the £402.0 million cash funding referenced above, this agreement was dissolved. Strategic Plan The Trustees have 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 Trustees have 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 the Schemes to be self-sufficient by 2026. The figures in this note are based on calculations using membership data as at 30 September 2022 along with asset valuations and cash flow information from the schemes for the year to 30 September 2022. 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 Impact of asset ceiling Surplus/(deficit) reported in the Consolidated Statement of Financial Position At 30 September 2022 Schemes in surplus £m (1,869.0) 2,879.9 (1.7) 1,009.2 At 30 September 2022 Schemes in deficit £m - - - - At 30 September 2022 Total £m (1,869.0) 2,879.9 (1.7) At 30 September 2021 Schemes in surplus At 30 September 2021 Schemes in deficit £m (2,893.4) 3,196.5 - £m (50.0) 42.0 - At 30 September 2021 Total £m (2,943.4) 3,238.5 - 1,009.2 303.1 (8.0) 295.1 The IAS 19, Employee Benefits, 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 Technical Provisions basis is agreed by the Trustees and Company as part of the triennial actuarial funding valuation which is used to determine the level of any contributions payable by the Company into the Schemes. The guidance issued to Trustees from the Pensions Regulator is that the Technical Provisions basis should reflect the covenant strength and investment strategy at the time of the valuation. In addition, the Technical Provisions discount rate represents the expected risk adjusted return on the Schemes assets and is normally set with reference to the yield on government bonds. For accounting purposes, IAS 19 states that the actuarial assumptions used must represent the best estimate of the variables determining the ultimate post-employment benefit cost. The discount rate used is determined by reference to market yields at the end of the reporting period on high quality (AA rated) corporate bonds, and therefore doesnt directly relate to the expected return on the Schemes assets. The key differences between the make-up of the bases are the reference yields used for the discount rate, which is higher on the IAS 19 basis, and that the Technical Provisions incorporate different risk adjustment factors, compared to the accounting basis which is set to represent best estimate assumptions. Due to the different methodologies used it is not uncommon for a scheme to be in IAS 19 accounting surplus but still be in a deficit on a Technical Provisions basis. 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. At 30 September 2022 the AVC Plan showed a surplus and an asset ceiling has been applied to restrict the surplus on the Consolidated Statement of Financial Position as required under IFRIC 14. 112 Financial Statements Financial Statements Notes to the accounts The surplus/(deficit) for the year, set out above, excludes a related deferred tax liability of £299.8 million (2021 £75.0 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 credit/(cost) Net benefit payments Actuarial gain/(loss) as a result of: - Changes in financial assumptions - Changes in demographic assumptions - Membership experience Defined benefit obligation at end of year A reconciliation of the fair value of assets is shown in the following table: Fair value of assets at start of year Interest income on scheme assets Company contributions 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: Year ended 30 September 2022 £m (2,943.4) Year ended 30 September 2021 £m (3,005.8) (56.2) 17.8 117.7 1,014.5 38.2 (57.6) (1,869.0) (45.7) (0.2) 116.2 (29.3) (3.3) 24.7 (2,943.4) Year ended 30 September 2022 £m 3,238.5 68.1 412.9 (117.7) (721.9) 2,879.9 Year ended 30 September 2021 £m 3,129.0 47.8 14.2 (116.2) 163.7 3,238.5 Note 10 3 38 38 38 Note 10 14 38 Equities - Investment funds - Private equity Liability Driven Investments Bonds and loans Property Infrastructure Cash / Other Total Assets Year ended 30 September 2022 At 30 September 2022 At 30 September 2021 At 30 September 2021 Note (i) (ii) (iii) (iv) £m - 194.8 591.6 1,287.3 373.0 187.6 245.6 2,879.9 % - 6 21 44 13 7 9 100 £m % 586.3 205.7 665.8 1,088.6 434.0 201.1 57.0 3,238.5 18 6 21 34 13 6 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) (iii) (iv) Liability Driven Investment funds (LDI) are a collateralised portfolio of gilt repo and swap contracts designed to hedge approximately 100.0% (by value of assets) of the schemes inflation and interest rate sensitivity. These are independently valued using quoted prices and for OTC instruments by the investment manager using recognised discounting techniques. 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. 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 Morgan Stanley Capital International (MSCI) property index. 113 Daily Mail and General Trust plc Annual Report 2022 The value of employer-related assets held on behalf of the schemes at 30 September 2022 was £nil (0.0% of assets), (2021 £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 2022 % 3.70 3.55 5.30 Year ended 30 September 2021 % 3.50 3.35 1.95 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 & Poors, Moodys, 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 average duration with an appropriate allowance for inflation risk premium (0.20% p.a.), rounded to the nearest 0.05% p.a. Mortality assumptions take account of scheme experience, and also allow for further improvements in life expectancy based on the Continuous Mortality Investigation (CMI) projections but with a long-term rate of improvement in future mortality rates of 1.25% p.a. Allowance is made for the extent to which employees have chosen to commute part of their pension for cash at retirement. The average duration of the defined benefit obligation at the end of the year is approximately 13 years (2021 17 years). The table below illustrates examples of the assumed average life expectancies from age 60 for the principal schemes: For a current 60-year-old male member of the scheme For a current 60-year-old female member of the scheme For a current 50-year-old male member of the scheme For a current 50-year-old female member of the scheme Year ended 30 September 2022 Future life expectancy from age 60 (years) 25.8 28.4 26.5 Year ended 30 September 2021 Future life expectancy from age 60 (years) 26.9 28.6 27.2 29.2 29.3 The amounts charged to the Consolidated Income Statement relating to the Groups defined benefit schemes, based on the above assumptions are shown in the following table: Past service credit/(cost) Credit/(charge) to operating profit Finance income Total credit to the Consolidated Income Statement Note 3 10 Year ended 30 September 2022 £m 17.8 17.8 Year ended 30 September 2021 £m (0.2) (0.2) 11.9 29.7 2.1 1.9 The fair value of some of our pension assets are made up of quoted and unquoted investments. The latter require more judgement as their values are not directly observable. The assumptions used in valuing unquoted investments are affected by current market conditions and trends which could result in changes in fair value after the measurement date. 114 Financial Statements Financial Statements Notes to the accounts 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 from a one-year increase in life expectancy Decrease in projected pension credit for the year to 30 September 2023 from a one year increase in life expectancy Inflation rate Increase in pension obligation at 30 September from a 0.1% p.a. increase (excluding hedging) Decrease in projected pension credit for the year to 30 September 2023 from a 0.1% p.a. increase in inflation Discount rate Decrease in pension obligation at 30 September from a 0.1% p.a. increase (excluding hedging) Increase in projected pension credit for the year to 30 September 2023 from a 0.1% increase in discount rate Year ended 30 September 2022 £m Year ended 30 September 2021 £m 54.0 2.8 17.9 0.8 22.1 2.1 118.8 2.3 45.9 0.9 51.8 1.3 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 100.0% of the schemes risk (by value of assets). Life expectancy risk The present value of the defined benefit obligation is calculated with reference to the best estimate of the mortality of scheme members. An increase in assumed life expectancy will result in an increase in the defined benefit obligation. Regular reviews of mortality experience are performed to ensure life expectancy assumptions remain appropriate. Investment risk This is a measure of the uncertainty that the return on the schemes assets meet the return necessary to fund pension obligations. The schemes hold a significant proportion of equities, but during the year 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 100.0% of the schemes risk (by value of assets). Amounts recognised in the Consolidated Statement of Comprehensive Income (SOCI) are shown in the following table: Actuarial gain Impact of asset ceiling on AVC Plan Total gain recognised in SOCI Cumulative actuarial gain recognised in SOCI at beginning of year Cumulative actuarial gain recognised in SOCI at end of year Note 38 Year ended 30 September 2022 £m 273.0 (1.7) 271.3 329.7 601.0 Year ended 30 September 2021 £m 155.8 - 155.8 173.9 329.7 115 Daily Mail and General Trust plc Annual Report 2022 A history of experience gains and losses is shown in the following table: Present value of defined benefit obligation Fair value of scheme assets Impact of asset ceiling on AVC Plan Combined surplus in schemes Experience adjustments on defined benefit obligation Experience adjustments on fair value of scheme assets At 30 September 2022 £m (1,869.0) 2,879.9 (1.7) 1,009.2 995.1 (721.9) At 30 September 2021 £m (2,943.4) 3,238.5 - 295.1 (7.9) 163.7 At 30 September 2020 £m (3,005.8) 3,129.0 - 123.2 (91.9) (20.2) 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 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 members 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 £204.0 million (2021 £214.0 million) at the year end. The pension cost attributable to these plans during the year amounted to £17.7 million (2021 £17.8 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 £0.9 million (2021 £1.8 million). 116 Financial Statements Financial Statements Notes to the accounts 35 Provisions Contract discounts and rebates (iv) £m Note Coupon discount £m Onerous contracts £m Contingent consideration (ii) £m Claims and legal (iii) £m Other (i) £m Total £m Current liabilities At 1 October 2020 Charged/(released) during year Utilised during year Owned by subsidiaries disposed Transfer from non-current liabilities Contingent consideration paid Adjustment to goodwill Fair value adjustment to contingent consideration Exchange adjustment At 30 September 2021 Charged/(released) during year Utilised during year Transfer from non-current liabilities Recognised during year Contingent consideration paid Fair value adjustment to contingent consideration Exchange adjustment At 30 September 2022 16, 33 10 16, 33 10 Non-current liabilities At 1 October 2020 Released during year Utilised during year Owned by subsidiaries disposed Transfer to current liabilities Contingent consideration paid At 30 September 2021 Released during year Utilised during year Transfer to current liabilities Exchange adjustment At 30 September 2022 30.0 1.4 (6.8) - - - - - - 24.6 (1.1) (1.0) - - - - - 22.5 0.1 - 0.7 - - - - - - 0.8 0.3 - - - - - - 1.1 1.3 (0.1) (0.7) - - - - - - 0.5 2.6 - - - - - - 3.1 1.9 - - - 0.4 (1.2) (0.1) 0.1 - 1.1 - - - - (1.2) 0.1 - - 23.2 12.3 (7.2) - - - - - (1.2) 27.1 7.2 (1.3) - - - - 4.7 37.7 Onerous contracts £m Contingent consideration (ii) £m Note 16, 33 2.4 (1.5) - - - - 0.9 (0.6) - - - 0.3 0.6 - - - (0.4) (0.2) - - - - - - 9.8 0.1 (2.5) (0.2) 0.2 - - 66.3 13.7 (16.5) (0.2) 0.6 (1.2) (0.1) - 0.1 (0.1) 7.3 0.7 (1.1) (0.7) 2.9 - - 1.2 10.3 Other (i) £m 2.9 (0.7) (0.1) (0.5) (0.2) - 1.4 0.1 (0.2) 0.7 (0.1) 1.9 (1.3) 61.4 9.7 (3.4) (0.7) 2.9 (1.2) 0.1 5.9 74.7 Total £m 5.9 (2.2) (0.1) (0.5) (0.6) (0.2) 2.3 (0.5) (0.2) 0.7 (0.1) 2.2 (i) Other current provisions principally comprise end of service provisions of £6.0 million (2021 £4.3 million), dilapidation provisions of £0.5 million (2021 £1.2 million) and cancellation provisions of £2.9 million. Other non-current provisions principally comprise dilapidation provisions of £1.6 million (2021 £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 £0.3 million (2021 £0.4 million). (ii) The maturity profile of the Groups contingent consideration provision is as follows: Expiring in one year or less 117 At 30 September 2022 £m - At 30 September 2021 £m 1.1 Daily Mail and General Trust plc Annual Report 2022 Contingent consideration was based on future business valuations and profit multiples and has been estimated using available data forecasts. There was no contingent consideration relating to acquisitions in the year (2021 £0.4 million). Certain contingent consideration arrangements are not capped since they are based on future business performance. (iii) Claims and provisions largely relate to the EPAs claim against Genscape, see Note 18 for further details. (iv) Contract discounts and rebates relate to provisions held for rebates agreed with advertising agencies and advertisers, on advertising spend across the Groups Consumer Media titles. 36 Deferred taxation Accelerated capital allowances £m 32.4 Goodwill and intangible assets £m (15.2) Share- based payments £m 11.9 Deferred interest £m 33.7 Trading losses and tax credits £m 9.7 Note Pension scheme surplus and pension payment spreading £m (21.0) Other £m 22.6 Total £m 74.1 11, (i) 11, (i) 38 38 11, (i) 11, (i) 38 - (0.3) - - - - - (0.3) 32.4 (14.9) 11.9 33.7 9.7 (21.0) 22.6 74.4 0.9 8.0 - - 0.6 (5.4) (0.3) 36.2 2.6 (2.0) - - (3.9) 1.9 0.2 (16.4) 36.0 (17.1) 0.1 1.6 2.5 1.1 - (4.9) (0.3) 12.0 12.0 (14.3) 19.0 (6.0) (8.0) (5.7) 0.3 2.8 1.3 0.5 12.5 - - - (16.2) (2.0) 1.5 - - - - (0.6) 30.9 (29.5) (19.9) - - - (75.1) - - - (4.5) (0.9) 9.7 (27.0) (18.8) (3.3) (29.1) (3.9) (1.2) 1.2 29.9 (75.1) 7.2 (5.9) 0.2 2.4 0.7 - 1.7 41.0 0.7 - 23.2 (7.7) - 0.1 - (0.2) 6.6 (4.4) - - 41.0 (17.1) - 23.7 41.0 6.6 - - - 0.3 2.8 - - - 4.3 4.0 0.3 4.3 1.0 - 2.5 4.7 (23.1) (56.4) (0.1) (58.9) 0.5 - 1.5 9.8 1.2 (95.0) - (225.3) 0.1 - 1.0 10.7 2.6 (99.4) 4.0 (152.9) 3.9 (225.3) 9.2 (184.3) 5.9 - 1.5 31.4 9.8 (225.3) 10.7 (152.9) At 30 September 2020 Disclosed within non-current liabilities Disclosed within non-current assets (Charge)/credit to income Credit/(charge) to income due to change in tax rate (Charge)/credit to equity Charge to equity due to change in tax rate Owned by subsidiaries acquired Owned by subsidiaries sold Exchange adjustment At 30 September 2021 Disclosed within non-current liabilities Disclosed within non-current assets (Charge)/credit to income Credit/(charge) to income due to change in tax rate Charge to equity Exchange adjustment At 30 September 2022 Disclosed within non-current liabilities Disclosed within non-current assets At 30 September 2022 (i) Includes a £22.2 million credit attributable to discontinued operations (2021 £57.0 million charge). The 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 118 At 30 September 2022 £m 7.9 4.6 1.6 14.1 At 30 September 2021 £m 31.0 0.3 1.1 32.4 Financial Statements Financial Statements Notes to the accounts During the year the Groups IAS 19 pension scheme surplus (the IAS 19 Surplus) increased by £714.1 million to £1,009.2 million. The deferred tax liability in respect of the IAS 19 Surplus increased by £224.8 million to £299.8 million during the year. This deferred tax liability is calculated as the sum of the income tax that would be withheld on the part of the IAS 19 Surplus that is expected (when measuring deferred tax) to be returned to the Group in the future (the Income Tax Temporary Difference) plus the corporation tax impact of the reversal of the remainder of the IAS 19 Surplus through the Groups income statement. The excess of the IAS 19 Surplus over the Income Tax Temporary Difference is assumed to reverse through the Groups income statement in a straight line over the current weighted average life expectancy of the members of each scheme, being 23 years for the Harmsworth Pension Scheme and 18 years for the DMGT Senior Executive Pension Fund. The amount of the IAS 19 Surplus that might be returned to the Group in the future is highly uncertain and depends on a range of factors including (i) performance of scheme assets, (ii) macroeconomic conditions, (iii) future costs of insuring liabilities, (iv) the manner in which the pension schemes are operated and concluded. For the purpose of considering the manner of recovery of the IAS 19 Surplus under IAS 12 (i.e. for the measurement of deferred tax), judgement is therefore required. In accordance with IAS 12, the Group has used its best estimate to calculate the Income Tax Temporary Difference. The assumptions used in calculating the Income Tax Temporary Difference include (i) using discount rates based on long term gilt rates, which are lower than the discount rates used in calculating the IAS 19 Surplus, (ii) making estimates as to current insurer pricing, (iii) making no allowance for costs of any transaction or discount on sales of illiquid assets. If £100.0 million more or less of the IAS 19 Surplus were recovered as an Income Tax Temporary Difference, deferred tax liabilities would increase or decrease by £10.0 million respectively. A deferred tax asset of £74.5 million has been recognised in relation to the spreading of UK tax relief for the £412.9 million payments made into the pension schemes during the year and is shown above netted against the £299.8 million deferred tax liability in relation to the pension scheme surplus. Deferred tax assets are first recognised against the reversal of deferred tax liabilities and then against future forecast taxable profits where there is sufficient evidence to consider these probable. Deferred tax assets totalling £110.1 million in respect of deferred interest (£4.0 million), tax losses (£nil), the temporary timing difference in respect of pensions payments (£74.5 million), accelerated capital allowances (£28.3 million), and other timing differences (£3.3 million) have been recognised in the UK against the deferred tax liability arising in respect of the excess of the IAS 19 Surplus over the Income Tax Temporary Difference. Deferred tax assets totalling £16.1 million in respect of deferred interest (£nil), tax losses (£3.9 million), the temporary timing difference in respect of pensions payments (£nil), accelerated capital allowances (£12.2 million), and other timing differences (£nil) have been recognised in the UK on the basis that the Directors are of the opinion, based on recent and forecast trading, that there is convincing evidence that sufficient taxable profits will be generated in the UK in future accounting periods, such that it is considered probable that these assets will be recovered. Evidence includes the Groups recent and forecast trading, taking into account: non-recurring exceptional costs, the long-term nature of the business and risks associated with the future performance of the Group. The future performance of the Group could result in revisions of risk-weighted profit forecasts such that there is a material change in deferred tax assets recognised in respect of future forecast taxable profits. If the forecast risk-weighted operating profits were to increase or decrease by 5.0%, deferred tax assets would increase or decrease by £2.0 million respectively. Deferred tax assets totalling £24.9 million in respect of deferred interest (£0.3 million), tax losses (£4.3 million), accelerated capital allowances (£0.6 million), intangible assets (£13.5 million), and other timing differences (£6.2 million) have been recognised in North America and deferred tax assets totalling £1.7 million have been recognised in the Rest of the World on the basis that the Directors are of the opinion, based on recent and forecast trading, that there is convincing evidence that sufficient 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. The Income Tax Temporary Difference does not give rise to a deferred tax liability of the type against which the Groups deferred tax assets can be utilised. The quantum of deferred tax assets recognised in the UK in respect of tax losses and other timing differences is therefore dependent on the quantum of the deferred tax liability arising in respect of the excess of the IAS 19 Surplus over the Income Tax Temporary Difference. Accordingly, any volatility in the IAS 19 Surplus, or any change in the Directors assessment of its manner of recovery, creates volatility in the quantum of deferred tax assets recognised. There is an unrecognised deferred tax asset of £114.7 million (2021 £62.8 million) which relates to revenue losses and £34.2 million (2021 £33.5 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 unrecognised deferred tax asset of £403.8 million (2021 £147.8 million which relates to capital losses carried forward). £436.4 million of the revenue losses in respect of which the Group recognises no deferred tax asset have no expiry date, and £1.5 million of the unrecognised revenue losses are expected to expire during the period 2024 to 2029. All of the deferred interest of £136.6 million and capital losses of £1,615.1 million in respect of which the Group recognises no deferred tax asset have no expiry date. No deferred tax liability is recognised on temporary differences of £372.5 million (2021 £0.5 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 2022 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. 119 Daily Mail and General Trust plc Annual Report 2022 37 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 2022 £m 2.5 26.3 Allotted, issued and fully paid At 30 September 2021 £m 2.5 26.8 28.8 29.3 Allotted, issued and fully paid At 30 September 2022 Number of shares 19,890,364 210,798,306 230,688,670 Allotted, issued and fully paid At 30 September 2021 Number of shares 19,890,364 214,913,327 234,803,691 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. On 2 December 2021, Rothermere Continuation Limited (RCL) and the Non-conflicted DMGT Directors announced the terms of a recommended increased and final cash offer of £2.70 per share for all of the issued DMGT A Ordinary Non-Voting Shares not already owned by RCL (the Final Offer). On 16 December 2021, RCL announced that all of the Conditions to the Final Offer had been satisfied or, where applicable, waived and the Final Offer was therefore unconditional in all respects. Following the Final Offer becoming unconditional the Board of DMGT resolved to make applications to (i) the FCA to cancel the listing of all DMGT A Ordinary Non-Voting Shares on the FCA's Official List and (ii) to cancel trading in all DMGT A Ordinary Non-Voting Shares on the London Stock Exchange's main market for listed securities which took effect as of 8.00 am on 10 January 2022. On 24 February 2022, RCL acquired all remaining DMGT shares that it had not already acquired by that date. At 30 September 2022 options were outstanding under the terms of the Companys Executive Share Option Schemes, Long-Term Incentive Plans and nil-cost options, over a total of nil A Ordinary Non-Voting shares (2021 9,935,671 shares). 38 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 On cancellation of A Ordinary Non-Voting Shares At end of year Year ended 30 September 2022 £m Year ended 30 September 2021 £m Note 17.8 17.8 (iii) (i) (ii) (iii) 21.0 0.5 21.5 (35.5) - 6.6 28.9 - 21.0 - 21.0 (59.3) (1.0) 24.8 - (35.5) The Groups investment in its own shares represented shares held in treasury and shares held by an employee benefit trust (EBT) to satisfy incentive schemes. 120 Financial Statements Financial Statements Notes to the accounts At 30 September 2022, this investment comprised nil A Ordinary Non-Voting Shares (2021 4,115,021 shares) held in treasury and nil A Ordinary Non- Voting Shares (2021 875,450 shares) held in the EBT. The market value of the Treasury Shares at 30 September 2022 was £nil (2021 £44.1 million) and the market value of the shares held in the EBT at 30 September 2022 was £nil (2021 £9.4 million). The EBT is independently managed and purchases shares in order to satisfy outstanding share options and potential awards under long-term incentive plans. (i) (ii) (iii) The Company purchased nil (2021 0.1 million) A Ordinary Non-Voting Shares having a nominal value of £nil (2021 £nil) into treasury to match obligations under incentive plans. The consideration paid for these shares was £nil (2021 £1.0 million). During the year, the Company utilised 0.9 million (2021 3.3 million) A Ordinary Non-Voting Shares in order to satisfy incentive schemes. This represented 0.4% (2021 1.6%) of the called-up A Ordinary Non-Voting Share capital at 30 September 2022. The carrying value of these shares was £6.6 million (2021 £24.8 million). On 7 February 2022 4,115,021 DMGT A Ordinary Non-Voting Treasury shares were cancelled resulting in the transfer of £0.5 million nominal value of these shares from Share capital to the Companys Capital Redemption Reserve together with a transfer of £28.9 million from Treasury shares to Retained earnings. At 30 September 2022 options were outstanding under the terms of the Companys Executive Share Option Schemes, Long-Term Incentive Plans and nil-cost options, over a total of nil A Ordinary Non-Voting Shares (2021 9,935,671 shares). Year ended 30 September 2022 £m Year ended 30 September 2021 £m Note Translation reserve At start of year Foreign exchange differences on translation of foreign operations Translation reserves recycled to Consolidated Income Statement on disposals (Loss)/gain on hedges of net investments in foreign operations Costs of hedging Costs of hedging recycled to Consolidated Income Statement on currency swap termination 8, 17, 18 10 At end of year 6.9 5.8 (6.4) (5.9) 0.4 (0.3) 0.5 66.5 (13.3) (52.2) 6.1 (0.2) - 6.9 The translation reserve arises on the translation into sterling of the net assets of the Groups foreign operations, offset by changes in fair value of financial instruments used to hedge this exposure. Included in the translation reserve is a cumulative loss of £7.1 million (2021 £0.1 million) in relation to continuing hedge relationships and a cumulative loss of £6.1 million (2021 £7.2 million) in relation to hedging relationships for which hedge accounting is no longer applied. Retained earnings At start of year (Loss)/profit for the year Dividends paid Cazoo dividend in specie Actuarial gain on defined benefit pension schemes Credit to equity for share-based payments Settlement of exercised share options Transfers Fair value movement of financial assets at fair value through Other Comprehensive Income Deferred tax on actuarial movement Deferred tax on other items recognised directly in equity Cancellation of shares At end of year At end of year - total reserves 121 Year ended 30 September 2022 £m Year ended 30 September 2021 £m Note 12 12 34 6, 14, 41 25 36 36 3,044.1 (133.8) (1,356.4) (109.8) 271.3 58.8 (62.7) (3.3) (646.0) (95.0) (4.4) (28.9) 933.9 1,069.9 1,542.3 (55.0) - 155.8 40.1 (34.0) - 370.8 (49.4) 3.6 - 3,044.1 973.7 3,054.3 Daily Mail and General Trust plc Annual Report 2022 39 Non-controlling interests At start of year Share of loss for the year Foreign exchange differences on translation of foreign operations At end of year 40 Commitments and contingent liabilities Commitments At 30 September 2022, the Group had outstanding capital expenditure commitments as follows: Right of use assets - Property, plant and equipment Contracted but not provided in the financial statements Year ended 30 September 2022 £m (1.5) Year ended 30 September 2021 £m 1.0 (0.3) (0.2) (2.0) (2.4) (0.1) (1.5) At 30 September 2022 £m At 30 September 2021 £m 7.5 - The lease at Northcliffe House (NCH) expires in December 2022. Prior to this date, employees currently working at NCH will move into nearly alternative office space whilst redevelopment works are being carried out. The target end date for these works is June 2024, at which point the Group will commence its own fit out works prior to employees moving back into NCH. A new lease for NCH has been signed covering 109,000 square feet for 15 years. The new NCH lease includes a 42-month rent free period and includes five-year market reviews. The total amount payable over the lease term is estimated to be £98.4 million. At 30 September 2022 the Group had contracted for but not provided for capital expenditure amounting to £7.5 million (2021 £nil) in relation to this move. At 30 September 2022, 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 At 30 September 2022 £m 13.8 At 30 September 2021 £m 7.0 The Group has entered into arrangements with ink suppliers to obtain ink for the year to December 2023 at competitive prices and to secure supply. At 30 September 2022, the commitment to purchase ink over this period was £0.3 million (2021 £3.8 million for the period to December 2022). The Group has entered into agreements with various printers for years up to December 2024 at competitive prices and to secure supply. At 30 September 2022, the commitment to purchase printing capacity over this period was £4.1 million (2021 £7.8 million for the period to December 2024). Contingent liabilities The Group has issued standby letters of credit amounting to £2.0 million (2021 £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. 122 Financial Statements Financial Statements Notes to the accounts 41 Share-based payments Prior to going private the Group offered a number of share-based remuneration schemes to Directors and certain employees. The principal schemes comprised share options under the DMGT, Insurance Risk, Property Information and Consumer Media segments. Share options were exercisable after the vesting period, 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. 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 was estimated, based upon relevant historic data in respect of the DMGT A Ordinary Non-Voting Share price. The expected life used in the model being adjusted, based on managements best estimate, for the effects of non-transferability. During the period Rothermere Continuation Limited (RCL) acquired all of the issued DMGT A Shares not already owned by RCL. Following this transaction, certain of the Groups equity settled long term incentive plan (LTIP) arrangements early vested subject to pro-rata vesting and were replaced with cash settled incentive awards. The cash settled incentive awards are fixed amounts payable on the vesting dates of the original equity settled awards and vest subject to a service period as follows: Vesting date December 2022 December 2023 December 2024 December 2025 LTIP payable £m 1.4 1.9 2.5 2.1 7.9 Where an equity settled LTIP is cancelled, IFRS 2, Share-based Payment requires this is treated as an acceleration of the original vesting period. The impact of this acceleration results in non-cash LTIP charges being charged against profits of the current period which normally would have been charged against profits of future periods. These accelerated charges have been treated as exceptional operating costs. The total charge to the Consolidated Income Statement in respect of LTIP arrangements is as follows: Segment Scheme DMGT Board and Corporate Costs Insurance Risk Property Information Consumer Media Equity settled LTIP arrangements Cash settled LTIP arrangements Social security costs Equity-Settled Executive Bonuses Long-Term Incentive Plan Option Plan Option Plan Option Plan Long-Term Incentive Plan Option Plan The Group did not reprice any of its outstanding options during the year. Further details of the Group's significant schemes are set out below: Year ended 30 September 2022 £m - 44.7 - - Year ended 30 September 2021 £m 0.7 19.7 0.2 11.0 - 14.0 0.1 58.8 3.7 0.2 62.7 1.2 5.8 1.5 40.1 - 7.4 47.5 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 was 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. During the period all the outstanding ESOS awards were exercised following the Groups go private transaction for consideration of £1.9 million. 123 Daily Mail and General Trust plc Annual Report 2022 Outstanding at 1 October Granted during the period Exercised during the period Expired during the period Outstanding at 30 September Exercisable at 30 September Exercisable at 1 October Year ended 30 September 2022 Number of share options Year ended 30 September 2022 Weighted average exercise price £ Year ended 30 September 2021 Number of share options Year ended 30 September 2021 Weighted average exercise price £ 369,414 - (369,414) - - - - 6.07 - 5.54 - - - - 531,576 100,000 (251,800) (10,362) 369,414 - 168,903 5.62 7.09 5.54 5.69 6.07 - 5.23 The aggregate of the estimated fair values of the options granted during the prior year is £0.1 million. The options outstanding at 30 September 2021 had a weighted average remaining contractual life of 6.0 years. The inputs into the Black-Scholes model at 30 September 2021 were 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 (£) 25 January 2019 5.69 5.69 - 10 7 5.69 0.81 3.59 27.95 24 November 2020 7.09 7.09 - 3 - 7.09 1.28 2.61 24.00 0.84 0.99 Nil-cost options under the DMGT Executive Bonus Scheme Since December 2009, a portion of a cash bonus earned by Executive Directors under the Executive Bonus Scheme has been deferred into shares in the form of nil-cost options. These options are to the value of the equity portion of the bonus and are fully expensed in the year in which they are earned. Outstanding at 1 October Granted during the period Exercised during the period Outstanding at 30 September Exercisable at 30 September Exercisable at 1 October Year ended 30 September 2022 Number of share options Year ended 30 September 2022 Weighted average exercise price £ Year ended 30 September 2021 Number of share options Year ended 30 September 2021 Weighted average exercise price £ 191,243 95,338 (286,581) - - 105,344 - - - - - - 191,243 - - 191,243 105,344 - - - - - - - The aggregate of the estimated fair values of the awards granted during the year is £1.0 million (2021 £nil). The awards outstanding at 30 September 2021 had a weighted average remaining contractual life of 4.6 years. During the period all the outstanding nil-cost option awards were exercised following the Groups go private transaction for consideration of £3.2 million. 124 Financial Statements Financial Statements Notes to the accounts DMGT Long-Term Incentive Plan DMGT Long-Term Executive Incentive Plan Awards 2019 and 2020 These awards entitle participants (who are not Executive Directors) to a set number of shares further to a three-year restricted period. Awards are based on financial and individual performance for the previous financial year. The awards are settled in A Ordinary Non-Voting Shares based on the average share price for the first three days following release of the annual financial results or the date of employment. During the period all the outstanding nil-cost option awards were exercised following the Groups go private transaction for consideration of £9.2 million. DMGT Long-Term Executive Director Incentive Plan Awards 2019, 2020 and 2021 The Executive Directors LTIPs spanned 12 years three awards pursuant to which shares will accrue and be delivered at the end of a different ten- year period. The Executive Directors will therefore be strongly incentivised to deliver value creation through share price appreciation and dividend payments over that period. The first two Awards to the Executive Directors under the Executive Director LTIP were made on 31 March 2021 covering the following periods: 1 October 2019 to 30 September 2029 and 1 October 2020 to 30 September 2030. The third Executive Director LTIP Award covering the period: 1 October 2021 to 30 September 2031 was made on 23 November 2021. This award was calculated by reference to the Volume Weighted Average of DMGTs share price (VWAP) in the twelve months period up to and including 22 November 2021, three days after DMGTs financial results for 2021 were announced. Each award was to vest on a graded vesting rather than straight line basis as a result of service conditions associated with each award. This results in a higher charge in the earlier years of the award. The charge for the period was £55.5 million (2021 £3.0 million). The Executive Directors LTIPs were cancelled during the period and the participants award shares were pro-rated vested. The dividend equivalent payment mechanism in the LTIP was calculated as if all dividends declared during the performance period were reinvested into DMGT shares on the date they would have been paid. This cash settlement of dividends was based on the full number of shares in the award i.e., not pro-rata. Accordingly, the Executive Directors received cash consideration of £18.7 million including a dividend equivalent payment of £15.8 million. It is the Boards intention that this award will be replaced with a three-year cash settled incentive plan. Outstanding at 1 October Granted during the period Forfeited during the period Exercised during the period Expired during the period Modified during the period Outstanding at 30 September Exercisable at 30 September Exercisable at 1 October Year ended 30 September 2022 Number of share options 6,604,794 2,877,516 (74,114) (1,803,773) (6,232,361) (1,372,062) - - - Year ended 30 September 2022 Weighted average exercise price £ - - - - - - - - - Year ended 30 September 2021 Number of share options 2,603,313 5,117,940 - (1,116,459) - - 6,604,794 - - Year ended 30 September 2021 Weighted average exercise price £ - - - - - - - - - The aggregate of the estimated fair values of the awards granted during the year is £30.0 million (2021 £26.8 million). The awards outstanding at 30 September 2021 had a weighted average remaining contractual life of 7.4 years. Options under the DMGT Long-Term Incentive Scheme The inputs into the Black-Scholes model at 30 September 2021 for the Executive Directors Long Term Incentive Plan awards with accrual schedules from 2019 to 2029 and 2020 to 2030 respectively were as follows: Date of grant Market value of shares at date of grant (£) Number of share options outstanding Term of option (years) Risk-free rate (%) Expected dividend yield (%) Volatility (%) Fair value per option (£) 3 February 2021 6.82 - 3 February 2021 7.39 - 23 November 2021 10.92 - 10 0.9 3.0 24.0 5.96 10 0.9 3.0 24.0 5.78 10 1.0 2.3 2.8 8.70 125 Daily Mail and General Trust plc Annual Report 2022 Insurance Risk (RMS) Option Plans RMS maintained a 2014 Equity Award Plan (2014 Plan) and a 2015 Equity Incentive Plan (2015 Plan). The 2014 Plan allowed grants of options and Restricted Stock Units (RSUs), both time and performance based, to employees, officers, directors and consultants of RMS. The 2015 Plan allowed grants of options to employees, officers, directors and consultants of RMS. Options granted under this plan had two vesting 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. On 20 July 2020, the 2015 Plan was modified such that vesting occurred only on the satisfaction of the service period. In addition, the modified plan allows for the granting of RSUs. RMS options under the 2014 and 2015 Plans were granted at market value and are settled in equity upon exercise. Following the Groups disposal of RMS to Moodys Corporation (Moodys) during the prior period, all vested RMS options were cancelled in exchange for cash payment equal to the market value of these options less the option cost; all unvested RMS options were cancelled in exchange for RSU awards in Moodys; and all RMS RSUs were converted into RSUs in Moodys. 42 Ultimate holding company The Companys immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Jersey, in the Channel Islands. Daily Mail and General Trust plc is the only company in the Group to prepare Consolidated Financial Statements. 43 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 Companys 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 Note 6. Ultimate controlling party Rothermere Continuation Limited (RCL) is a holding company incorporated in Jersey, in the Channel Islands. The main asset of RCL is its controlling shareholding in DMGT, being its 100% holding of DMGTs issued Ordinary Shares and DMGT issued A Ordinary Shares. 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. RCL and its directors, and the Trust are related parties of the Company. Transactions with Directors During the year, 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 £170,899 (2021 £90,752). During the year, Dixon Wilson Chartered Accountants and H.W. Wood Ltd., in which Mr D Nelson, a Non- Executive Director of the Company, is a partner and director respectively, provided professional services to the Company amounting to £76,350 (2021 £30,500). The charge to the Income Statement in relation to Directors' remuneration is as follows: Salary and fees paid to Executive Directors Fees paid to third parties and Non-Executive Directors Annual bonuses Long term incentives Pension benefits Other Year ended 30 September 2022 £m 3.2 0.5 9.1 56.9 0.8 0.2 70.7 Year ended 30 September 2021 £m 3.8 0.2 3.3 17.1 1.0 0.3 25.7 126 Financial Statements Financial Statements Notes to the accounts Transactions with joint ventures and associates Details of the Groups principal joint ventures and associates are set out in Note 24. Associated Newspapers Ltd (ANL) has a 50.0% (2021 50.0%) shareholding in Northprint Manchester Ltd, a joint venture. The net amount due to ANL of £5.8 million (2021 £5.8 million) has been fully provided. DMGV Ltd (DMGV) has a 23.9% (2021 23.9%) shareholding in Excalibur Holdco Ltd (Excalibur), an associate. During the year, services provided to Excalibur amounted to £0.3 million (2021 £0.3 million). At 30 September 2022, amounts due from Excalibur amounted to £nil (2021 £nil), together with loan notes of £17.3 million (2021 £17.3 million). The loan notes carry an annual coupon of 10.0% and £10.3 million (2021 £10.3 million) was outstanding in relation to this coupon at 30 September 2022. An expected lifetime impairment allowance of £12.0 million (2021 £12.0 million) has been made against the loan note and unpaid coupon balance. DMGV has a 45.3% (2021 45.3%) shareholding in Yopa Property Ltd (Yopa), an associate. During the year, DMGV provided cash funding of £3.8 million (2021 £nil). At 30 September 2022, amounts due from Yopa amounted to £3.8 million (2021 £nil) convertible loan notes. The loan notes carry an annual coupon of 10.0% and £0.2 million (2021 £nil) was outstanding in relation to this coupon at 30 September 2022. The total loan amount due of £3.8 million has been fully provided. During the year, the Consumer Media segment provided services to Yopa amounting to £nil (2021 £0.1 million). Also, during the year, the Property Information segment paid referral fees of £2.8 million (2021 £2.9 million) and made sales of £nil (2021 £0.1 million) to Yopa. DMGV has a 33.9% (2021 21.4%) shareholding in Quick Move Ltd, an associate. DMGV provided cash funding amounting to £0.4 million and £0.2 million of media credits (2021 £nil cash and £nil of media credits) during the year. In addition, DMGV also provided cash funding of £2.0 million convertible loan notes (2021 £nil). The loan notes carry an annual coupon of 10.0% and £0.2 million (2021 £nil) was accrued in relation to this coupon. On 6 September 2022, the loan notes and outstanding coupon were converted to Ordinary shares amounting to £2.2 million. DMGV has a 20.1% (2021 20.1%) shareholding in Factory 14 S.a.r.l, an associate. DMGV provided cash funding amounting to £nil (2021 £8.6 million) during the year. At 30 September 2022, amounts due from Factory 14 amounted to £4.2 million loan notes. The loan notes carry an annual coupon of 8.0% and £0.2 million (2021 £nil) was outstanding in relation to this coupon at 30 September 2022. The total amount due of £4.4 million has been fully provided. DMGV has a 21.5% (2021 20.0%) shareholding in Bloobloom Ltd, an associate. DMGV provided funding amounting to £1.0 million cash (2021 £0.8 million) and £nil of media credits (2021 £0.2 million) during the year. DMGV has a 22.0% (2021 22.0%) shareholding in Kortext Ltd, an associate. DMGV provided cash funding amounting to £nil (2021 £16.6 million) during the year. DMG Events (USA), Inc. has a 19.5% (2021 19.5%) shareholding in Whereoware, LLC, an associate. During the year, DMG Events (USA), Inc. received dividends of £0.1 million (2021 £0.1 million) from Whereoware, LLC. DMGI Land & Property Europe Ltd (DMGILP), of which Landmark Information Group Ltd (Landmark) is a subsidiary undertaking, has a 50.0% (2021 50.0%) shareholding in PointX Ltd (PointX), a joint venture. During the year, Landmark charged management fees of £0.3 million (2021 £0.3 million) and recharged costs of £0.1 million (2021 £0.1 million) to PointX. DMGILP received dividends of £0.1 million (2021 £0.1 million) from PointX. Decision Insight Information Group (UK) Ltd (DIIG UK), of which SearchFlow Ltd (SF) is a subsidiary undertaking, has a 50.0% (2021 50.0%) shareholding in Decision First Ltd (DF), a joint venture. During the year, DIIG UK recharged costs to DF amounting to £0.2 million (2021 £0.2 million) and charged management fees of £0.1 million (2021 £0.1 million). During the year, SF received dividends of £1.0 million (2021 £nil) from DF. 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 year, the Group was charged for rent and service charges in relation to the current year amounting to £0.2 million (2021 £0.2 million). At 30 September 2022, the Group owed £1.1 million (2021 £1.0 million) to the pension schemes which it operates. This amount comprised employees and employers contributions in respect of September 2022 payrolls. The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged during the year was £0.3 million (2021 £0.3 million). Contributions made during the year to the Groups retirement benefit plans are set out in Note 34, along with details of the Groups future funding commitments. ANL paid contributions to DMGT Healthcare Trustees totaling £1.1 million (2021 £0.9 million). At 30 September 2022, a total of £1.0 million (2021 £1.2 million) was owed to the scheme by ANL. 127 Daily Mail and General Trust plc Annual Report 2022 44 Post balance sheet events Acquisitions Following the year end the Group made the following acquisitions: (i) A £0.5 million investment in Napo Ltd, a pet insurance company, representing a 1.24% equity stake. The Groups investment comprised cash funding of £0.2 million and media credits of £0.3 million. (ii) An additional £0.9 million cash investment in convertible loan notes in Yopa Property Ltd, an associate, the online property portal. Disposals Following the year end the Group disposed of 4.2% of its stake in LineVision, Inc. an associate, for cash consideration of £0.9 million. Other Following the year end the Company bought back and cancelled £50.0 million nominal of its outstanding £200.0 million 2027 bonds for cash consideration of £46.6 million. 128 Financial Statements Financial Statements Notes to the accounts 45 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 2022: Subsidiary name Daily Mail and General Holdings Ltd Daily Mail and General Investments Ltd DMGB Ltd DMGV Ltd Daily Mail International Ltd DMG Asset Finance Ltd DMG Atlantic Ltd DMG Events International Ltd DMG Information Ltd DMGZ Ltd Northcliffe Media Ltd Ralph US Holdings Young Street Holdings Ltd Trepp UK Ltd Company registration number 01693108 02251116 04521116 05830195 01966438 05528329 04521108 04118004 03708142 00272225 03403993 06341444 04485808 03209327 Subsidiary name Searchflow Ltd DMG Events (Conferences) Ltd Landmark Valuation Services Ltd Decision Insight Hub Ltd Decision Insight Information Group (UK) Ltd Millar & Bryce Ltd dmgi Land and Property Europe Ltd OneSearch Direct Ltd dmg media Limited Mail Finance Services Ltd Associated Print Holdings Limited Associated Printing (Dinnington) Limited Associated Printing (Portsmouth) Limited Associated Printing (Carn) Limited Company registration number 04084804 03410466 01670075 04084803 02099085 SC134475 01163844 SC230285 05765286 04282263 11573312 11575473 11575513 11575502 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 2022: Subsidiary name A&N Media Finance Services Ltd Abbey Newco Ltd Central Independent News and Media Ltd Daily Mail Ltd JPIMedia Publications Ltd Lincolnshire Media Ltd Company registration number Subsidiary name Company registration number 03709742 13550497 03015855 01160542 11575526 00037928 Mail Finance Services Ltd MailLife Financial Services Ltd Northcliffe Trustees Ltd OneSearch Direct Group Ltd The Mail on Sunday Ltd 04282263 01063950 03394992 SC202596 01160545 129 Daily Mail and General Trust plc Annual Report 2022 46 Full list of Group undertakings Subsidiary name Registered office A&N Media Finance Services Ltd Abbey Newco Ltd AN Mauritius Ltd Argyll Environmental Ltd Associated Newspapers (Ireland) Ltd Northcliffe House, 2 Derry Street, London W8 5TT Ground Floor, 7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY 10th Floor, Standard Chartered Tower, 19 Cybercity, Ebène, Mauritius 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY Top Floor, Two Haddington Buildings, 20-38 Haddington Road, Dublin 4, D04 HE94 Associated Newspapers Ltd Associated Newspapers North America, Inc. Associated Print Holdings Ltd 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 Associated Printing (Carn) Ltd Northcliffe House, 2 Derry Street, London W8 5TT Associated Printing (Dinnington) Ltd Northcliffe House, 2 Derry Street, London W8 5TT Associated Printing (Portsmouth) Ltd Northcliffe House, 2 Derry Street, London W8 5TT Central Independent News and Media Ltd Northcliffe House, 2 Derry Street, London W8 5TT Coral Mint Ltd Daily Mail and General Holdings Ltd* Top Floor, Two Haddington Buildings, 20-38 Haddington Road, Dublin 4, D04 HE94 Northcliffe House, 2 Derry Street, London W8 5TT Daily Mail and General Investments Ltd Northcliffe House, 2 Derry Street, London W8 5TT Daily Mail and General Trust plc Northcliffe House, 2 Derry Street, London W8 5TT Daily Mail International Ltd Northcliffe House, 2 Derry Street, London W8 5TT Daily Mail Ltd Daily Mail On-Air, LLC Dailymail.com Australia Pty Ltd Decision Insight Hub Ltd Decision Insight Information Group (UK) Ltd DMG Angex Ltd (in Liq'n) DMG Asset Finance Ltd DMG Atlantic Ltd DMG Conference & Exhibition Services (Shanghai) Ltd DMG Connect, Inc DMG Events (Canada), Inc. Northcliffe House, 2 Derry Street, London W8 5TT CSC Lawyers Incorporating Service, 2710 Gateway Oaks Drive, Suite 150N, Sacramento, CA 95833, United States Level 12, 207 Kent Street, Sydney, NSW 2000 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY 31st Floor, 40 Bank Street, London E14 5NR 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 Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States 1510 140 10 Avenue SE, Calgary, Alberta T2G 0R1, Canada Country of incorporation or registration Classes of shares held UK UK Ordinary Ordinary % shareholding (% held directly by parent) 100% 100% Mauritius Ordinary 100% UK Ordinary A 100% Ireland Ordinary UK USA UK UK UK UK UK Ordinary Common Ordinary Ordinary Ordinary Ordinary Ordinary Ireland Ordinary UK UK UK UK UK Ordinary Ordinary Ordinary and A ordinary non voting Ordinary Ordinary 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% N/A 100% 100% USA Ordinary 100% Australia Ordinary UK UK UK UK UK Ordinary Ordinary Ordinary Ordinary Ordinary China Ordinary 100% 100% 100% 100% 100% 100% 100% USA Common 100% Canada Ordinary DMG Events (Conferences) Ltd Northcliffe House, 2 Derry Street, London W8 5TT UK Ordinary DMG Events (Doha), LLC Office 706, Palm Tower B, PO Box 3601, West Bay, Doha, Qatar Qatar Ordinary DMG Events (MEA) Ltd (in liq'n) 31st Floor, 40 Bank Street, London E14 5NR UK Ordinary 130 100% 100% 100% 100% Financial Statements Financial Statements Notes to the accounts DMG Events (PNG) Ltd DMG Events (UK) Ltd DMG Events (USA), Inc. DMG Events Asia Pacific Pte Ltd DMG Events Egypt Ltd DMG Events India Private Ltd DMG Events International Ltd DMG Events, LLC Level 3, Pacific Mmi Building, Port Moresby, National Capital District, Papua New Guinea 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 Level 4, Dynasty A Wing, Andheri Kurla Road, Mumbai- 400 059, Maharashtra, 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 Exhibition Management Services (PTY) Ltd 76 Eleventh Street, Parkmore, Johannesburg, 2196, South Africa DMG Information Hong Kong Company Ltd 14/F One Taikoo Place, 979 King's Rd, Quarry Bay, Hong Kong DMG Information Ltd DMG Media Ltd DMG Nigeria Events Limited DMG World Media Abu Dhabi Ltd (i) DMG World Media Dubai (2006) Ltd (i) DMGB Ltd* dmgi Land & Property Europe Ltd DMGK Ltd DMGT Air Holdings Ltd DMGT US Employee Services, Inc. DMGV Ltd DMGZ Ltd Entale Media Ltd ES London Ltd Estate Technical Solutions Ltd JPIMedia Publications Ltd (in liq'n) Kingston Midco 1 Ltd Kingston Midco 2 Ltd Landmark Analytics Ltd Northcliffe House, 2 Derry Street, London W8 5TT Northcliffe House, 2 Derry Street, London W8 5TT Plot E, Ikosi Road, Oregun Industrial Estate, Ikeja, Lagos, Nigeria 15 Esplanade, St Helier, JE1 1RB, Jersey, Channel Islands 15 Esplanade, St Helier, JE1 1RB, Jersey, 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 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 Northcliffe House, 2 Derry Street, London W8 5TT Northcliffe House, 2 Derry Street, London W8 5TT Northcliffe House, 2 Derry Street, London W8 5TT 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY C/O Begbies Traynor (London) LLP, 31st Floor, 40 Bank Street, London E14 5NR 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 Landmark Information Group Ltd 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY Papua New Guinea Ordinary UK USA Ordinary Common 100% 100% 100% Singapore Ordinary 100% Egypt Ordinary 100% India UK Ordinary Ordinary 100% 100% Saudi Arabia Ordinary 100% South Africa Ordinary 100% Hong Kong Ordinary UK UK Ordinary Ordinary 100% 100% 100% Nigeria Ordinary 49.0% Jersey Ordinary 100% Jersey Ordinary UK UK UK UK Ordinary Ordinary Preference Ordinary USA Common UK UK UK UK UK UK UK UK UK UK Ordinary Ordinary Ordinary, Preference Ordinary Ordinary A Ordinary Ordinary Ordinary Ordinary Ordinary, Ordinary A, Redeemable Preference 100% 100% 100% 75.0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 131 Daily Mail and General Trust plc Annual Report 2022 Landmark Optimus Ltd Landmark Valuation Services Ltd Lincolnshire Media Ltd (in liq'n) Mail Finance Services Ltd Mail Force Charity CIO Mail Media, Inc. MailLife Financial Services Ltd Millar & Bryce Ltd Nalac Ltd 5-7 Abbey Court Eagle Way, Sowton Industrial Estate, Exeter, Devon EX2 7HY 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY C/O Begbies Traynor (London) LLP, 31st Floor, 40 Bank Street, London E14 5NR 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 30 Morehampton Road, Dublin 4 D04 YN81, Ireland New Scientist Group Ltd Northcliffe House, 2 Derry Street, London W8 5TT New Scientist Ltd New Scientist, Inc. Northcliffe House, 2 Derry Street, London W8 5TT Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Northcliffe Media Ltd Northcliffe House, 2 Derry Street, London W8 5TT Northcliffe Trustees Ltd Northcliffe House, 2 Derry Street, London W8 5TT Ochresoft Technologies Ltd OneSearch Direct Group Ltd OneSearch Direct Holdings Ltd OneSearch Direct Ltd Ralph US Holdings SearchFlow Ltd Springthorpe Drake, Inc. The Mail on Sunday Ltd Trepp UK Ltd Trepp, Inc. Xceligent Inc (in liq'n) 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY 6th Floor, Skypark Sp1, 8 Elliot Place, Glasgow G3 8EP 6th Floor, Skypark Sp1, 8 Elliot Place, Glasgow G3 8EP 6th Floor, Skypark Sp1, 8 Elliot Place, Glasgow G3 8EP 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 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 Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Young Street Holdings Ltd Northcliffe House, 2 Derry Street, London W8 5TT All subsidiaries are included in the consolidated financial statements of the Group. UK Ordinary A 100% Ordinary 100% UK UK UK UK Ordinary Ordinary - USA Ordinary UK UK Ordinary Ordinary 100% 100% 100% 100% 100% 100% Ireland Ordinary 100% Ordinary, A1 Ordinary, A2 Ordinary, B1 Ordinary, B2 Ordinary Ordinary Ordinary Ordinary Ordinary A, Ordinary B 100% 100% 100% 100% 100% Ordinary 100% Ordinary 100% UK UK USA UK UK UK UK UK Ordinary A 100% UK UK UK Ordinary Ordinary Ordinary USA Ordinary UK UK Ordinary Ordinary USA Ordinary USA UK Common, Series A preferred Ordinary 100% 100% 100% 100% 100% 100% 100% 86.8% 100% * Direct investment held by the parent Company Daily Mail and General Trust plc (DMGT). All other subsidiaries are held indirectly through subsidiaries of DMGT. (i) Principal place of business in the UAE. 132 Financial Statements Financial Statements Notes to the accounts Joint Venture name Address of principal place of business Decision First Ltd Northprint Manchester Ltd PointX Ltd Cardinal House, 9 Manor Road, Leeds, West Yorkshire, LS11 9AH PO Box 68164, Kings Place, 90 York Way, London N1P 2 AP 5-7 Abbey Court, Eagle Way, Sowton, Exeter, Devon EX2 7HY Classes of shares held Financial year end % capital included in consolidation Ordinary B 31 December 50.0% Ordinary 30 September 50.0% Ordinary B 31 March 50.0% The Group has joint control over all of the joint ventures listed above, because key operating decisions require the unanimous consent of the Group and the other investor(s). Associate name Address of principal place of business Bloobloom Ltd Conveyancing Information Executive Ltd Excalibur Holdco Ltd 242 Acklam Road, Westbourne Studios Unit 209, London W10 5JJ Alpha House, 4 Greek Street, Stockport, Cheshire SK3 8AB Wowcher Limited, Dalston Works, 69 Dalston Lane, London E8 2NG Country of incorporation or registration Classes of shares held % shareholding Preference 21.5% UK UK UK Limited by Guarantee B Ordinary 23.0% 23.9% 20.1% Factory 14 S.a.r.l 53 boulevard Royale, L-2449, Luxembourg Luxembourg Preference Funcent DMG Information Technology Hong Kong Company Ltd Independent Television News Ltd Kortext Ltd Liases Foras Real Estate Rating and Research Private Ltd LineVision, Inc. Propstack Services Private Ltd 27/F 248 Queen's Road East, Wanchai, Hong Kong 200 Grays Inn Road, London WC1X 8XZ 26-32 Oxford Road, Suite B, 6th Floor, Avalon House, Bournemouth, Dorset, BH8 8EZ S6, 2nd Floor, Pinnacle Business Park, Mahakali Cave Road, Andheri East, Mumbai, 400093 India India 444 Somerville Ave, Somerville, 02413, MA, United States 1st & 2nd Floor, Nyay Sagar Bdlg, Kalanagar, Bandra (East), Mumbai 400 051, India Quick Move Ltd 86-90 Paul Street, London EC2A 4NE RLTO Ltd Office 7 35-37 Ludgate Hill, London EC4M 7JN Skymet Weather Services Private Ltd 109, Kushal Bazar, Nehru Place, New Delhi, 110019, India Whereoware, LLC Yopa Property Ltd Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Suite 4, Building 4, Hatters Lane, Watford WD18 8YF Investment name Address of principal place of business Air Mail, LLC BDG Media, Inc. Registered Agent Solutions, 9.E Loockerman Street, Suite 311, Dover, Kent, Delaware 19901, United States 315 Park Avenue South, 11th Floor, New York, NY 10010 133 Hong Kong Ordinary 22.6% UK UK Ordinary Ordinary, Preference India Equity, Series A CCCPS 20.0% 22.0% 30.5% USA Series A1 24.1% India UK UK India USA Equity, Series A CCCPS Ordinary, Preference Ordinary Ordinary Membership Interests 22.7% 33.9% 20.0% 15.9% 19.5% UK Preference 45.3% Country of incorporation or registration Classes of shares held % shareholding USA Preference 3.1% USA Ordinary, Preference 3.4% Daily Mail and General Trust plc Annual Report 2022 Believe in Science Ltd Bricklane Technologies Ltd Compstak, Inc. Cue Ball Capital, LP Finsgate, 5-7 Cranwood Street, London EC1V 9EE 20 Baltic Street, London EC1Y 0UL Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, United States Evening Standard Ltd Northcliffe House, 2 Derry Street, London W8 5TT Farewill Ltd Financial Network Analytics Ltd Global Event Partners Ltd GPNutrition Ltd Hambro Perks Ltd 1st Floor, 27 Downham Road, London N1 5AA Albert House, 256-260 Old Street, London EC1V 9DD Suite 1, 3rd Floor, 11-12 St. James's Square, London SW1Y 4LB 24 Hills Road, Cambridge CB2 1JP 111 Buckingham Palace Road, London SW1W 0SR IPSX Group Ltd Birchin Court, 20 Birchin Lane, London EC3V 9DU L Lambert Holdings Ltd 411-413 Oxford Street, London W1C 2PE Laundrapp Ltd (in liq'n) Lindentor 226. V V GmbH Live Better With Ltd Media Investors 17, LLC 2nd Floor 110 Cannon Street, London EC4N 6EU Charlottenstraße 4, Berlin, 10969, Germany 70 White Lion Street, Islington, London N1 9PP The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, United States OceanSaver Ltd 3 Park Square East, Leeds LS1 2NE PA Media Group Ltd The Point, 37 North Wharf Road, Paddington, London W2 1AF Papier Ltd Third Floor, 20 Old Bailey, London EC4M 7AN Pascal Metrics, Inc. Pembroke Holdings, LLC Plandek Ltd Plum Fintech Ltd Stem, Inc. Taboola.com Ltd Upstream Group, Inc. WellAware Holdings, Inc. Workana, LLC Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States 485 West Putham Avenue, Greenwich, CT, 06830, United States United States C/O Praxis, 1 Poultry, London EC2R 8EJ 2-7 Clerkenwell Green, 2nd Floor, London EC1R 0DE 100 California St, 14th Floor, San Francisco, CA 94111, Unites States 7 Totseret Haaretz St., Tel-Aviv Israel The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, United States 3424 Paesanos Parkway, Suite 200, San Antonio, Texas 78231, United States SAN ANTONIO TX 78231 120 East 56th Street, Suite 420, New York, NY 10022, United States Zapkey Technologies Private Limited B1 1401, Godrej Platinum Pirojshanagar, Vikhroli East, Mumbai, Maharashtra, 400079, India Zilch Technology Ltd 123 Buckingham Palace Road, London SW1W 9SH 134 UK UK Preference Preference USA Common USA Partnership Units UK UK UK UK UK UK UK UK UK Germany UK USA UK UK UK Ordinary Preference Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Preference Preference Ordinary B Ordinary Ordinary A Ordinary Ordinary, Series C Preference USA Ordinary USA UK UK USA Israel USA Membership Interests Ordinary B Series A Preference Common Ordinary Ordinary 2.5% 13.2% 2.0% 2.5% 5.0% 5.4% 4.5% 15.0% 13.9% 3.1% 1.6% 1.5% 1.7% 0.1% 4.6% 12.8% 5.0% 18.4% 4.2% 4.4% 10.0% 2.5% 2.3% 0.2% 0.3% 3.6% USA Preference 3.4% USA Membership interests India Equity, CCPS UK Ordinary 3.8% 5.0% 1.1% Daily Mail and General Trust plc Annual Report 2022 Unaudited Five Year Financial Summary Consolidated Income Statement For the year ended 30 September 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 (loss)/profit before share of results and impairment of joint ventures and associates Share of results and impairment of joint ventures and associates and loans to associates Total operating (loss)/profit Other gains and losses (Loss)/profit before investment revenue, net finance costs and tax Investment revenue Net finance costs (Loss)/profit before tax Tax (Loss)/profit for the year after tax Discontinued operations Non-controlling interests (Loss)/profit for the year Year ended 30 September 2018 £m 1,340.9 144.6 Year ended 30 September 2019 £m 1,337.0 135.8 Year ended 30 September 2020 £m 870.2 48.7 Year ended 30 September 2021 £m 885.3 65.5 Year ended 30 September 2022 £m 974.0 58.8 (94.8) (41.2) (40.9) (61.6) (100.5) 49.8 94.6 7.8 3.9 (41.7) 118.4 168.2 565.5 733.7 4.8 (32.0) 706.5 (7.6) 698.9 (10.7) 1.2 689.4 (28.1) (10.7) 66.5 73.7 140.2 11.5 (17.4) 134.3 (20.4) 113.9 (22.6) (0.4) 90.9 (2.9) 42.1 39.2 7.0 (12.5) 33.7 2.0 35.7 153.3 0.3 189.3 (9.8) (5.9) 14.3 8.4 2.3 (13.1) (2.4) 62.2 59.8 1,480.1 2.4 1,542.3 (45.3) (87.0) 30.8 (56.2) 2.8 (6.7) (60.1) (85.6) (145.7) 11.6 0.3 (133.8) Adjusted profit before tax and non-controlling interests 182.3 144.7 72.1 88.1 39.3 Earnings before interest, taxation, depreciation and amortisation (EBITDA) 287.7 205.6 142.5 154.0 89.5 Adjusted profit after taxation and non-controlling interests 149.3 114.5 59.4 71.3 29.8 135 Financial Statements Financial Statements Unaudited Five Year Financial Summary Consolidated Cash Flow Statement For the year ended 30 September Net cash (outflow)/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 2018 £m 115.0 481.3 (169.4) 426.9 7.4 1.6 2019 £m 154.8 221.1 (533.3) (157.4) 435.9 10.7 2020 £m 142.5 173.2 (114.1) 201.6 289.2 (10.9) 2021 £m 106.2 1,274.0 (102.1) 1,278.1 479.9 (12.8) 2022 £m (376.5) 118.7 (1,464.1) (1,721.9) 1,745.2 29.0 Cash and cash equivalents at end of year 435.9 289.2 479.9 1,745.2 52.3 Net (decrease)/increase in cash and cash equivalents Cash inflow from change in debt and finance leases Change in net debt from cash flows Other non-cash items (Increase)/decrease in net debt in the year Net cash/(debt) at start of year Net (debt)/cash at end of year Consolidated Statement of Financial Position At 30 September Goodwill and intangible assets Property, plant and equipment Right of use assets 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 Non-controlling interests Retained earnings Total equity Shareholder information At 30 September Dividend per share * 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 (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 24.4 702.8 774.3 201.6 32.3 233.9 (130.9) 103.0 81.9 184.9 2020 £m 350.3 63.0 89.8 467.7 239.0 1,209.8 260.5 (324.1) 1,146.2 29.3 17.8 28.2 1.0 1,069.9 1,146.2 1,278.1 14.0 1,292.1 28.1 1,320.2 184.9 1,505.1 2021 £m 301.1 55.4 34.7 876.9 452.0 1,720.1 1,615.4 (253.4) 3,082.1 29.3 17.8 (7.6) (1.5) 3,044.1 3,082.1 (1,721.9) 27.0 (1,694.9) 7.8 (1,687.1) 1,505.1 (182.0) 2022 £m 280.9 50.2 31.3 98.8 1,069.7 1,530.9 (108.3) (422.1) 1,000.5 28.8 17.8 22.0 (2.0) 933.9 1,000.5 2018 23.30p 2019 23.90p 2020 24.10p 2021 24.90p 2022 653.53p *Represents the dividends declared by the Directors in respect of the above years excluding the Euromoney cash distributions and Euromoney dividend in specie. 136 Daily Mail and General Trust plc Annual Report 2022 Company Statement of Financial Position At 30 September 2022 ASSETS Non-current assets Fixtures, fittings and artwork Shares in Group undertakings Financial assets at fair value through Other Comprehensive Income Other financial assets Trade and other receivables Current assets Trade and other receivables Cash at bank and in hand Deferred tax Total assets LIABILITIES Creditors: amounts falling due within one year Trade and other payables Borrowings Provisions 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 2022 £m At 30 September 2021 £m Note 7 8 9 11 10 10 12 13 14 14 16 15 15 17 17 18 19 1.2 1,350.2 3.6 - 11.9 1,366.9 114.5 25.1 1.6 141.2 1,508.1 (23.2) (0.4) (34.5) (58.1) (194.6) (19.5) (214.1) (272.2) - 2,914.4 - 120.7 0.4 3,035.5 42.8 1,246.4 12.2 1,301.4 4,336.9 (296.2) (1.0) (23.1) (320.3) (199.5) (17.2) (216.7) (537.0) 1,235.9 3,799.9 28.8 17.8 46.6 - 21.7 1,167.6 29.3 17.8 47.1 (35.5) 21.2 3,767.1 1,235.9 3,799.9 The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company income statement. The loss for the Company for the year was £400.6 million (2021 profit of £1,134.7 million). The financial statements on pages 137 to 147 were approved by the Directors and authorised for issue on 29 November 2022. They were signed on their behalf by: The Viscount Rothermere Director 137 Financial Statements Financial Statements Company Statement of Changes in Equity Called-up share capital Share premium account Capital redemption reserve Reserve for own shares Profit and loss account For the year ended 30 September 2022 At 1 October 2020 Profit for the year Total comprehensive income for the year Dividends paid Fair value movement of financial assets at fair value through Other Comprehensive Income 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 2021 Loss for the year Fair value movement of financial assets at fair value through Other Comprehensive Income Total comprehensive loss for the year Cancellation of A Ordinary Non-voting shares Dividends paid Cazoo dividend in specie Credit to equity for share based payments Deferred tax on share based payments Settlement of exercised share options Own shares released on vesting of share options At 30 September 2022 £m 2,668.6 1,134.7 1,134.7 Total £m 2,677.6 1,134.7 1,134.7 (55.0) (55.0) 0.4 0.4 25.5 3.6 - (16.0) 5.3 3,767.1 25.5 3.6 (1.0) (16.0) 30.1 3,799.9 (400.6) (400.6) (713.8) (713.8) (1,114.4) (1,114.4) (28.9) (1,356.4) (109.8) 51.5 (4.4) (40.0) 2.9 1,167.6 - (1,356.4) (109.8) 51.5 (4.4) (40.0) 9.5 1,235.9 £m 17.8 - - - - - - - - - 17.8 - - - - - - - - - - 17.8 £m 21.2 - - - - - - - - - 21.2 - - - 0.5 - - - - - - 21.7 £m (59.3) - - - - - - (1.0) - 24.8 (35.5) - - - 28.9 - - - - - 6.6 - £m 29.3 - - - - - - - - - 29.3 - - - (0.5) - - - - - - 28.8 138 Financial Statements Financial Statements Notes to the Company Statement of Financial Performance 1 Basis of preparation Daily Mail and General Trust plc (DMGT) is an unlisted public limited company incorporated and domiciled in the United Kingdom. The address of the registered office is Northcliffe House, 2 Derry Street, London, W8 5TT, England. The financial statements of DMGT have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework (FRS 101). The financial statements have been prepared under the historical cost convention or historic cost modified by revaluation of financial assets and financial liabilities held at fair value through profit and loss, and in accordance with the Companies Act 2006 and on a going concern basis. 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 Companys accounting policies. See Note 2 for further detail. All amounts presented have been rounded to the nearest £0.1 million. Profit for the financial year As permitted by Section 408 of the Companies Act 2006, a separate profit and loss account for the Company has not been included in these accounts. The Companys loss after tax for the year was £400.6 million (2021 profit of £1,134.7 million). This includes dividends receivable from subsidiary undertakings amounting to £1,275.4 million (2021 £1,565.9 million). Impact of amendments to accounting standards The Company has applied the exemption available under FRS 101 in relation to paragraphs 30 and 31 of IAS 8, Accounting policies, changes in accounting estimates and errors (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued and is not yet effective). 2 Significant accounting policies The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 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. 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. 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. 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. 139 Daily Mail and General Trust plc Annual Report 2022 Financial instruments disclosures Financial assets Trade and other receivables Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. The majority of other receivables relate to amounts owed by subsidiary undertakings. Further information concerning interest charged on these receivables is set out in Note 10. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, short-term deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Financial liabilities and equity instruments Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Trade and other payables Trade payables are non-interest bearing and are stated at their nominal value. Capital market and bank borrowings Interest bearing loans and overdrafts are initially measured at fair value (which is equal to net proceeds at inception), and are subsequently measured at amortised cost, using the effective interest rate method. A portion of the Company's bonds are subject to fair value hedge accounting and this portion of the carrying value is adjusted for the movement in the hedged risk to the extent hedge effectiveness is achieved. Any difference between the proceeds, net of transaction costs and the settlement or redemption of borrowings is recognised over the term of the borrowing. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to settle on a net basis, or realise the asset and liability simultaneously. Derivative financial instruments and hedge accounting The Company's activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses various derivative financial instruments to manage its exposure to these risks. The use of financial derivatives is set out in Note 33 of the Group's Annual Report. The Company does not use derivative financial instruments for speculative purposes. The Company does not apply hedge accounting except for fair value hedges. Gains and losses arising on derivatives that form part of net investment hedge or cash flow hedge relationships in the consolidated financial statements are recorded in the profit and loss account in the Company. Financial instruments disclosures The Company has taken advantage of the exemption provided in IFRS 7, Financial Instruments: Disclosures and included disclosures relating to financial instruments in Note 33 of the Group's Annual Report. Cash flow statement The Company has utilised the exemptions provided under IAS 7, Statement of Cash Flows and has not presented a cash flow statement. A consolidated cash flow statement has been presented in the Group's Annual Report. Related party transactions The Company has taken advantage of the exemptions of IAS 24, Related Party Disclosures and included disclosures relating to related parties in Note 43 of the Group's Annual Report. Share-based payments The Company operates the Groups LTIP and other Group share-based payment schemes, details of which can be found in Note 41 of the Groups Annual Report. 140 Financial Statements Financial Statements Notes to the Company Statement of Financial Performance 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 2022. 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 34 of the Groups Annual Report. Provisions Provisions are recognised when the Company has a present obligation, legal or constructive, as a result of a past event, and it is probable that the Company 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. 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 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 forecasts 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 12.1% to 25.9% (2021 10.9% to 30.0%), the choice of rates depending on the risks specific to that cash generating unit (CGU). The cash flow projections consist of a Board-approved budget for the following year, outlooks for the proceeding four years with nominal long-term growth rates beyond these periods. The nominal long-term (decline)/growth rates range from -3.0% to 6.9% (2021 -3.0% to 4.0%) 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 industry in which the CGU operates. The carrying value of the investment in Group undertakings is £1,350.2 million (2021 £2,914.4 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 increase the impairment by £108.2 million. If the growth rate assumptions above were increased by 1.0% this would reduce the impairment by £137.7 million. If the discount rate assumptions above were reduced by 1.0% this would reduce the impairment by £133.3 million. If the discount rate assumptions above were increased by 1.0% this would increase the impairment by £110.9 million. 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 judgements about future events and uncertainties that rely heavily on estimates and assumptions. As disclosed in Note 18 Discontinued operations, 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 additional RINs it had verified. During the period a settlement agreement was reached with the EPA whereby the Company without admitting any wrongdoing, will replace 24 million RINs over a four-year period. At each period end IAS 37 requires DMGT to review this provision and make appropriate adjustments to reflect the current status of the claim. The Groups closing provision includes the cost of replacement RINs, estimated purchase costs, associated legal fees and currency fluctuations. The final settlement amount may be different than the provision made, however, it is not possible for the Group to predict with any certainty the potential impact of this litigation or to quantify the ultimate cost of a verdict or resolution. Accordingly, the provision could change substantially over time as the dispute progresses and new facts emerge. 141 Daily Mail and General Trust plc Annual Report 2022 RINs trade in a volatile range, using the period end price of US$1.74 compared to the estimated future forecast price of US$1.51 would increase the provision by approximately US$3.1 million (£2.7 million). 3 Auditor's remuneration Statutory audit fees relating to the Company amounted to £0.8 million (2021 £1.1 million). 4 Employees Average number of persons employed by the Company: Administration Directors Total staff costs comprised: Wages and salaries Share-based payments Social security costs Pension costs Year ended 30 September 2022 Number Year ended 30 September 2021 Number 7 3 10 7 3 10 Year ended 30 September 2022 £m Year ended 30 September 2021 £m 16.3 43.2 3.1 - 62.6 10.7 15.7 4.5 0.1 31.0 The remuneration of the Directors of the Company during the year are disclosed in Note 6 of the Group's Annual Report. 5 Tax There was a current tax credit for the year of £2.1 million (2021 £12.6 million). 6 Dividends On 14 December 2021, a special dividend was declared to all DMGT shareholders with a record date of 16 December 2021. It was comprised of a cash element of £5.68 per share and a share element of approximately 0.5749 shares in Cazoo Group Ltd (Cazoo) per DMGT share. Settlement of the cash element of £1,310.3 million occurred on 30 December 2021 and settlement of the Cazoo share element of £109.8 million occurred on 24 June 2022. Following the year end, the Board declared and paid an interim dividend of £5.4 million at its 1 November 2022 meeting (2.0 pence per Ordinary/A Ordinary Non-Voting Share). The Board declared a final dividend of 3.78 pence per Ordinary/A Ordinary Non-Voting Share at its 29 November 2022 meeting (2021 17.3 pence). It will absorb an estimated £8.7 million (2021 £39.8 million) of shareholders equity for which no liability has been recognised in these Consolidated Financial Statements. 142 Financial Statements Financial Statements Notes to the Company Statement of Financial Performance 7 Fixtures, fittings and artwork Cost At 1 October 2020 and 30 September 2021 Additions At 30 September 2022 Accumulated depreciation At 1 October 2020 Charge for the year At 30 September 2021 Charge for the year At 30 September 2022 Net book value - 2020 Net book value - 2021 Net book value - 2022 8 Shares in Group undertakings (listed on pages 130 to 132) At 1 October 2020 Additions Impairment charge At 30 September 2021 Additions Impairment charge At 30 September 2022 Analysis of movements in the year: Daily Mail and General Holdings Ltd DMGB Ltd Note (i) Cost £m 3,581.0 110.4 - 3,691.4 8.4 - 3,699.8 Cost £m 8.4 - 8.4 Provision £m (412.6) - (364.4) (777.0) - (1,572.6) (2,349.6) Provision £m (1,149.2) (423.4) (1,572.6) (i) The impairment charge arose as a result of dividends paid by subsidiaries together with value in use reductions during the year. 9 Financial assets at fair value through Other Comprehensive Income At 1 October 2020 Disposal Fair value movement At 30 September 2021 Additions Cazoo dividend in specie Fair value movement At 30 September 2022 Note (i) (ii) (ii) £m 0.9 1.2 2.1 (0.6) (0.3) (0.9) - (0.9) 0.3 - 1.2 Net book value £m 3,168.4 110.4 (364.4) 2,914.4 8.4 (1,572.6) 1,350.2 Total £m (1,140.8) (423.4) (1,564.2) £m 1.0 (1.4) 0.4 - 827.2 (109.8) (713.8) 3.6 (i) The disposal in the prior year relates to the Companys investment in Financial Network Analytics Ltd which was transferred to DMGV Ltd, a subsidiary undertaking, during the year. 143 Daily Mail and General Trust plc Annual Report 2022 (ii) The additions during the year relate to the Companys investments in Stem, Inc. and Cazoo Group Ltd (Cazoo). Cazoo was distributed as dividend in specie from Daily Mail and General Holdings Ltd, a subsidiary undertaking. The investment in Cazoo was later distributed as dividend in specie to the Companys shareholders. Details of the Company's financial assets at fair value through Other Comprehensive Income are included in Note 25 and the financial instruments disclosures are set out in Note 33 of the Group's Annual Report. 10 Trade and other receivables Amounts falling due after more than one year Derivative financial assets Amounts falling due within one year Amounts owed by Group undertakings Other financial assets Prepayments and accrued income Other receivables Corporation tax Derivative financial assets Note (i) Note (ii) (i) At 30 September 2022 £m At 30 September 2021 £m 11.9 0.4 At 30 September 2022 £m At 30 September 2021 £m 108.2 5.1 0.6 0.6 - - 114.5 11.2 9.2 0.5 9.0 12.5 0.4 42.8 (i) Details of the Company's derivative financial assets are set out in Note 33 of the Group's Annual Report. (ii) 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. 11 Other financial assets Escrow (i) See Note 28 of the Groups Annual Report for further details. 12 Cash at bank and in hand Cash at bank and in hand 13 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 144 At 30 September 2022 £m - At 30 September 2021 £m 120.7 Note (i) At 30 September 2022 £m 25.1 At 30 September 2021 £m 1,246.4 At 30 September 2022 £m 12.2 (4.4) (6.2) 1.6 At 30 September 2021 £m 6.7 3.6 1.9 12.2 Financial Statements Financial Statements Notes to the Company Statement of Financial Performance 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. 14 Creditors: amounts falling due within one year Bank overdrafts Interest payable Amounts owing to Group undertakings Accruals and deferred income Other payables Note (i) At 30 September 2022 £m 0.4 3.6 6.3 13.2 0.1 23.6 At 30 September 2021 £m 1.0 3.6 254.1 38.3 0.2 297.2 (i) Amounts owing to Group undertakings are repayable on demand and bear interest of UK bank base rate plus 0.5%. 15 Creditors: amounts falling due after more than one year 6.375 % Bonds 2027 Derivative financial liabilities The nominal values of the bonds are as follows: 6.375 % Bonds 2027 Note (i) At 30 September 2022 £m 194.6 19.5 214.1 At 30 September 2021 £m 199.5 17.2 216.7 At 30 September 2022 £m 200.0 At 30 September 2021 £m 200.0 (i) Details of the Company's derivative financial liabilities are set out in Note 33 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 discounts are being amortised over the expected lives of the bonds using the effective interest method. The unamortised issue costs amount to £0.3 million (2021 £0.3 million) and the unamortised discount amounts to £0.5 million (2021 £0.6 million). The Company used interest rate swaps designated as hedges of a proportion of the change in fair value of the Companys bonds. Following termination of the last remaining interest rate swap on 21 June 2022, the residual bond fair value adjustment of £4.9 million is required to be amortised over the period to 21 June 2027 being the maturity of the bond. Amortisation charged in the year amounts to £0.3 million leaving an unamortised residual fair value adjustment of £4.6 million. Following the year end the Company bought back and cancelled £50.0 million nominal of its outstanding £200.0 million 2027 bonds for cash consideration of £46.6 million. Details of the fair value of the Company's bonds are set out in Note 32 of the Group's Annual Report. The bonds are subject to fair value hedging using derivatives as set out in Note 33 of the Group's Annual Report. Consequently, their carrying value is also adjusted to take into account the effects of this hedging activity. The book value of the Company's other borrowings equates to fair value. 145 Daily Mail and General Trust plc Annual Report 2022 The maturity profile of the Company's borrowings is as follows: Year ended 30 September 2022 Within one year Between two and five years Year ended 30 September 2021 Within one year Over five years 16 Provisions Other provisions Movements on other provisions were as follows: At start of year Additions At end of year Overdrafts £m 0.4 - 0.4 1.0 - 1.0 Bonds £m - 194.6 194.6 Owed to group undertakings £m 6.3 - 6.3 Total £m 6.7 194.6 201.3 - 254.1 255.1 199.5 199.5 - 254.1 199.5 454.6 At 30 September 2022 £m 34.5 At 30 September 2021 £m 23.1 Note (i) 23.1 11.4 34.5 - 23.1 23.1 (i) The provision above relates to the EPA claim against the Groups Energy Information segment (Genscape). Notwithstanding the sale of Genscape to Verisk during 2019, DMGT plc is responsible for any costs, claims or awards and all settlement negotiations with the EPA. See Note 18 of the Groups Annual report for further details. 17 Capital and Reserves Share premium account: At start and end of year Reserve for own shares: At start of year Additions Own shares released on vesting of share options Own shares cancelled At end of year At 30 September 2022 £m 17.8 At 30 September 2021 £m 17.8 At 30 September 2022 £m (35.5) - 6.6 28.9 - At 30 September 2021 £m (59.3) (1.0) 24.8 - (35.5) The Company's investment in its own shares represented shares held in treasury and shares held by an employee benefit trust to satisfy incentive schemes. At 30 September 2022, this investment comprised the cost of nil A Ordinary Non-Voting Shares (2021 4,115,021 shares) held in treasury and nil A Ordinary Non-Voting Shares (2021 875,450 shares) held in the employee benefit trust. The market value of the Treasury Shares at 30 September 2022 was £nil (2021 £44.1 million) and the market value of the shares held in the employee benefit trust at 30 September 2022 was £nil (2021 £9.4 million). 146 Financial Statements Financial Statements Notes to the Company Statement of Financial Performance The employee benefit trust is independently managed and purchased shares in order to satisfy outstanding share options and potential awards under equity-settled long-term incentive plans. The Reserve for own shares is considered to be a realised loss for the purposes of calculating distributable reserves. 18 Capital redemption reserve At start of year On cancellation of A Ordinary Non-Voting Shares At end of year 19 Profit and loss account At start of year Net (loss)/profit for the year Dividends paid Cazoo dividend in specie Fair value movement of financial assets at fair value through Other Comprehensive Income On cancellation of A Ordinary Non-Voting Shares Other movements on share option schemes At end of year At 30 September 2022 £m 21.2 0.5 21.7 At 30 September 2022 £m 3,767.1 (400.6) (1,356.4) (109.8) (713.8) (28.9) 10.0 1,167.6 At 30 September 2021 £m 21.2 - 21.2 At 30 September 2021 £m 2,668.6 1,134.7 (55.0) - 0.4 - 18.4 3,767.1 Total reserves 1,207.1 3,770.6 The Directors estimate that £113.4 million of the Company's profit and loss account reserve is not distributable (2021 £1,807.3 million). 20 Contingent liabilities and guarantees At 30 September 2022 the Company had guaranteed subsidiaries' outstanding derivatives which had a mark to market liability valuation of £nil (2021 £nil) and letters of credit with a principal value of £2.0 million (2021 £3.3 million). 21 Ultimate holding company The Companys immediate parent company is Rothermere Continuation Limited (RCL), a company incorporated in Jersey, in the Channel Islands. Ultimate controlling party Rothermere Continuation Limited (RCL) is a holding company incorporated in Jersey, in the Channel Islands. The main asset of RCL is its controlling shareholding in DMGT, being its 100% holding of DMGTs issued Ordinary Shares and DMGT issued A Ordinary Shares. RCL is controlled by a discretionary trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust is the ultimate controlling party of the Company. Both RCL and the Trust are administered in Jersey. RCL and its directors, and the Trust are related parties of the Company. 22 Post balance sheet events Details of the Company's post balance sheet events can be found within Note 44 of the Group's Annual Report. 147
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