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Daily Mail & General Trust PLC   -  DMGT   

Half year 2019 Results

Released 07:00 30-May-2019

RNS Number : 5405A
Daily Mail & General Trust PLC
30 May 2019
 

30 May 2019

 

Daily Mail and General Trust plc ('DMGT')

 

Half Yearly Financial Report for the six months ended 31 March 2019

 

Good performance and major capital return to shareholders

 

·      Group underlying¹ growth achieved:

Revenue +1%

Cash operating income² +11%

Adjusted³ operating profit +11%

·      Adjusted profit before tax +19% underlying including reduction in net finance costs

·      Adjusted EPS down 8% reflecting ZPG Plc disposal and tax normalisation

·      Interim dividend increased +3% to 7.3p

·      Statutory4 operating profit £39m (H1 2018 £133m); statutory profit before tax £50m (H1 2018 £113m); statutory EPS 12.9p (H1 2018 32.2p)

·      £862m of capital returned to shareholders in April 2019, including £200m special dividend

·      Significantly increased portfolio focus, in line with strategy:

Distribution of DMGT's entire Euromoney stake to DMGT shareholders

RCA disposal for US $89m in May 2019, On-geo sale expected to complete in June 2019

·      Strong financial position: net debt £146m5 and net debt:EBITDA ratio of 0.65 adjusted for April 2019 distribution outflows

·      Group outlook for the Full Year in line with market expectations6

 

 

Adjusted Results3

Statutory Results4

Half Year 2019

Half Year 2018

Change~

Half Year 2019

Half Year 2018

Reported

Underlying¹

Revenue

£724m

£746m

-3%

+1%

£724m

£746m

Operating profit

£90m

£84m

+8%

+11%

£39m

£133m

Profit before tax

£100m

£103m

-3%

+19%

£50m

£113m

Earnings per share

22.5p

24.4p

-8%

 

12.9p

32.2p

Dividend per share

 

7.3p

7.1p

 

Paul Zwillenberg, CEO, commented:

"DMGT delivered a good performance in the first half of the year, achieving underlying growth in revenue, cash generation and profit. Consumer Media delivered a particularly strong performance and we saw continued growth in our B2B portfolio.

 

The strategy we are pursuing is transforming DMGT and delivering results. The distribution of our stake in Euromoney and the £200m special dividend was a defining moment for DMGT.  We returned nearly £900m, or 38% of our market capitalisation, to our shareholders. Our balance sheet remains strong despite this considerable capital return and an additional £117m made available to our pension schemes. We are confident we can invest for growth and maximise the portfolio's true potential, continuing the transformation we started three years ago.

 

Consumer Media delivered a strong performance in the first half.  Given the inherent lack of visibility of our advertising revenue streams, exacerbated by the uncertain macro environment, we remain cautious about the remainder of the year.  Guidance for B2B remains unchanged with higher planned investment in the second half, notably in RMS.  The Board remains confident that the Group's strategy and strong balance sheet will, over the medium term, deliver consistent earnings growth to underpin DMGT's long-standing commitment to sustainable annual real dividend growth."

 

 

Half Year 2019 Financial Results:

 

 

·     

Revenue £724m; underlying growth +1%: reflects growth from EdTech, Events and Exhibitions and Consumer Media and stable revenues from Insurance Risk, Property Information and Energy Information.

·     

Cash operating income (Cash OI)2 £97m; underlying growth +11%: driven by improving operational execution across the portfolio of businesses.

·     

Adjusted operating profit £90m; underlying growth +11%: reflects increase in Consumer Media profit and reduced Corporate Costs.

·     

Statutory operating profit £39m: decreased from £133m in the prior year primarily due to a £72m reduction in the share of profits from joint ventures and associates.

·     

Income from JVs and associates: the share of adjusted operating profit reduced to £18m from £41m due to the disposal of DMGT's stake in ZPG Plc in July 2018 and lower profits from Euromoney.

·     

Adjusted profit before tax (PBT) £100m: growth of +19% on an underlying basis, including underlying reduction in finance costs of -32% to £8m. Statutory PBT £50m (H1 2018 £113m).

·     

Tax: adjusted tax charge £19m (£16m H1 2018); with the adjusted effective tax rate increasing to 19.4%.  The statutory tax charge was £4m.

·     

Earnings per share: adjusted EPS down -8% to 22.5p (H1 2018 24.4p). Statutory EPS was 12.9p (H1 2018 32.2p) reflecting impairments in respect of Euromoney and On-geo.

·     

Net debt5 was £146m as at 31 March 2019, adjusted for the distribution of £200m to shareholders in April 2019 and a related £117m expected to be made available to the pension schemes in the current financial year.  The net debt:EBITDA ratio was 0.6 on this basis.  Excluding the £317m of adjustments described above, the net cash and net cash:EBITDA ratio as at 31 March 2019 were £172m and 0.7 respectively.

·     

Portfolio management: the focus within the portfolio has been increased significantly by the £662m distribution of DMGT's c.49% stake in Euromoney to DMGT's shareholders in April 2019.  The Events and Exhibitions business made a small acquisition during the period and DailyMailTV became a wholly-owned subsidiary in October 2018.  In Property Information, DMGT sold its c.40% stake in US-based Real Capital Analytics (RCA) for US $89m in May 2019 and agreed the disposal of its German-based business, On-geo, which is expected to complete in June 2019.

·     

Outlook: is in line with market expectations6 and guidance for the Full Year remains broadly unchanged. Lower Consumer Media revenue growth and operating margins are expected in the second half. As a result of the good first half performance, however, the underlying rate of revenue decline for the Full Year is now expected to be in the low-single digits rather than the mid-single digits previously guided to. The Consumer Media Full Year operating margin is still expected to be in the high-single digits. The B2B businesses are collectively still expected to deliver a Full Year underlying revenue growth rate in the low-single digits and an operating margin in the mid-teens, due to higher planned investment in the second half.

 

 

Half Year 2019 - segmental performance:

 

Revenue

Adjusted operating profit3

Statutory operating profit

H1 '19

£m

H1 '18

£m

Change~

H1 '19

£m

H1 '18

£m

Change~

H1 '19

£m

H1 '18

£m

Rep

UL

Rep

UL

Insurance Risk

119

113

+6%

0%

26

20

+33%

+19%

26

20

Property Information

114

151

-25%

0%

21

28

-26%

-23%

(5)

22

EdTech

38

33

+17%

+14%

3

3

-3%

+32%

2

2

Energy Information

37

43

-14%

0%

4

-

N/A

N/A

2

2

Events & Exhibitions

73

72

+1%

+2%

18

20

-11%

-16%

18

20

B2B Total

381

411

-7%

+2%

71

71

 +1%

-1%

43

65

Consumer Media

343

335

+3%

+1%

39

38

+2%

+13%

36

36

Corporate costs

 

(19)

(24)

-21%

-22%

(23)

(24)

DMGT Group

724

746

-3%

+1%

90

84

+8%

+11%

56*

77

* The DMGT Group statutory operating profit shown above excludes the share of operating profits from joint ventures and associates.

† Underlying operating profit performance improved by £3m for Energy Information.

Rep: Reported change

UL: Underlying change

 

 

Enquiries

Investors:

Tim Collier, Group CFO

 

 

+44 20 3615 2902

Adam Webster, Head of Investor Relations

+44 20 3615 2903

 

Media:

Doug Campbell / Paul Durman, Teneo

 

+44 20 7260 2700

 

Half Year Results presentation

A presentation of the Half Year Results will be given to investors and analysts at 9.30am on 30 May 2019, at J.P. Morgan, 60 Victoria Embankment, London, EC4Y 0JP. There will also be a live webcast available on our website at www.dmgt.com/webcasthy19.

 

Investor Briefing and next trading update

DMGT will be hosting an Investor Briefing on 2 July 2019, with a focus on the Insurance Risk business, RMS.

 

The Group's next scheduled announcement of financial information will be its nine month trading update on 25 July 2019.

 

About DMGT

DMGT manages a portfolio of companies that provide businesses and consumers with compelling information, analysis, insight, events, news and entertainment.  The Group takes a long-term approach to investment and has market-leading positions in consumer media, insurance risk, property information, education technology, energy information and events & exhibitions. In total, DMGT generates revenues of around £1.4bn.

 

Notes

 

1 Underlying growth rates are on a like-for-like basis, see pages 20 to 22.  Underlying revenues, cash operating income2 and operating profits are adjusted for constant exchange rates, the exclusion of disposals and closures, the inclusion of the year-on-year organic growth from acquisitions and for the consistent timing of revenue recognition.  For events, the comparisons are between events held in the year and the same events held the previous time.  For Consumer Media, underlying revenues exclude low margin newsprint resale activities.  The underlying change in the share of operating profits from joint ventures and associates excludes ZPG Plc, Euromoney Institutional Investor PLC and DailyMailTV but includes the year-on-year organic growth from Yopa. The underlying net finance costs exclude the share of finance costs from ZPG Plc and Euromoney Institutional Investor PLC and the underlying H1 2018 costs have also been adjusted to include an assumed £6m benefit from £642m proceeds on the disposal of ZPG Plc.

 

2 Cash operating income (Cash OI) is calculated by adding back depreciation and amortisation expenses, which are non-cash items, to adjusted operating profit and then deducting capital expenditure. 

 

3 Unless otherwise stated, all profit and profit margin figures in this Interim Management Report refer to adjusted results and not statutory results.  The Board and management team use adjusted results, rather than statutory results, to give greater insight to the financial performance of the Group and the way that it is managed.  Similarly, adjusted results are used in setting management remuneration.  Adjusted results are stated before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, pension finance credits and fair value adjustments.  For reconciliations of statutory profit before tax to adjusted profit before tax and supporting explanations, see pages 16 to 18.

 

4 The statutory results are IFRS figures before any adjustments.

 

5 The actual net cash position as at 31 March 2019 was £172m and the net cash:EBITDA ratio was 0.7.  In March 2019, however, shareholder approval was given for a £200m special dividend and making £117m available to the Group's pension schemes.  The £200m special dividend was paid in April 2019 and the £117m cash is expected to be made available to the pension schemes in the current financial year.  Adjusting for a £317m reduction in cash, the net debt position as at 31 March 2019 would have been £146m and the net debt:EBITDA ratio would have been 0.6.

 

6 Current City analyst expectations for DMGT for FY 2019, as published on the Group's website (www.dmgt.com), are based on seven analysts that have updated their projections since the distribution of Euromoney shares and £200m cash that was announced on 3 March 2019.  Expectations range from £1,361m to £1,410m for revenue, from £130m to £137m for adjusted profit before tax and from 35.6p to 37.7p for adjusted basic earnings per share with a consensus of £1,388m, £134m and 37.1p.

 

~ Percentages are calculated on actual numbers to one decimal place.

 

The average £: US$ exchange rate for the first half of the year was £1:$1.29 (against £1:$1.36 last year).  The rate at the Half Year end was $1.30 (2018: $1.40), compared to $1.30 at the September 2018 year end.

 

 

Daily Mail and General Trust plc

Northcliffe House, 2 Derry Street,

London, W8 5TT

 

www.dmgt.co.uk

Registered in England and Wales No. 184594

 

Interim Management Report

This interim management report focuses on the adjusted results to give a more comparable indication of the Group's business performance. The adjusted results are summarised below:

 

Adjusted results²

 

Half Year

2019

£m

Half Year 2018

£m

Change~

Full Year

2018

£m

Revenue

724

746

-3%

1,426

 

 

 

 

 

Cash operating income²

97

87

+12%

155

Operating profit

90

84

+8%

145

Income from JVs and associates

18

41

-57%

74

Net finance costs

(8)

(21)

-63%

(37)

Profit before tax

100

103

-3%

182

 

 

 

 

 

Tax charge

(19)

(16)

+19%

(33)

Minority interests

(1)

-

 

-

Group profit

80

86

-8%

149

 

 

 

 

 

Adjusted earnings per share

22.5p

24.4p

-8%

42.2p

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

Group revenue for the six months to 31 March 2019 was £724m, a decrease of 3% on both a statutory and absolute basis, reflecting the effect of disposals. On an underlying¹ basis, revenue grew 1%. Underlying growth was delivered in subscriptions, digital advertising and events, but was partly offset by the expected decline in print advertising, circulation and transactions.

 

Cash operating income ('Cash OI') of £97m grew 12% in absolute terms and 11% on an underlying basis. The Board considers Cash OI to be a good indicator of the underlying cash generation of the businesses and it is included as a core element of the incentive plans for all senior management teams. Good progress was made by EdTech and Energy Information in particular, reflecting the strong focus on improving operational execution across those businesses.

 

Adjusted operating profit of £90m grew 8% and by 11% on an underlying basis. The underlying performance reflected profit growth from Consumer Media and, within B2B, from Insurance Risk, EdTech and Energy Information.  There was also a 22% underlying decrease in Corporate costs, reflecting the Group's more focused portfolio.  The adjusted operating margin was 12%, an improvement on the 11% in the first half of the prior year.

 

Adjusted profit before tax was £100m, a decrease of 3% in absolute terms but 19% growth on an underlying basis.  The share of operating profits from joint ventures and associates decreased £23m, following the disposal of ZPG Plc, and decreased £1m on an underlying basis.  This was partly offset by a £13m reduction in net finance costs.  The adjusted tax charge was £19m, an increase of 19% on last year, due to an expected increase in the effective tax rate to 19.4%. Adjusted basic earnings per share of 22.5p decreased by 8%.

 

The statutory profit before tax for the period was £50m, a decrease of £63m on the prior year, due to the prior year benefiting from gains on disposals, including those made by associates, and the current year including impairments in respect of Euromoney and On-geo. Statutory basic earnings per share were 12.9p, a 60% reduction on the prior year.

 

The table below sets out the reconciliation from statutory profit before tax to adjusted profit before tax. More detail and explanations are provided on pages 16 to 18.

 

 

Half Year

2019

£m

Half Year

2018

£m

Explanation

(as per page 16)

Statutory profit before tax

50

113

 

Exceptional operating (credit) / costs

(1)

2

1

Intangible impairment and amortisation

63

21

2

Profit on sale of assets

(16)

(41)

3

Pension finance credit

(4)

(1)

4

Other adjustments

8

9

5

Adjusted profit before tax

100

103

 

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers. 

 

Progress on Strategic Priorities

DMGT's three key strategic priorities remain consistent: 1) improving operational execution, 2) increasing portfolio focus and 3) maintaining financial flexibility.

 

Good progress continues to be made with improving operational execution as the businesses pursue initiatives to optimise their performance.  The 11% underlying growth in cash operating income, a key metric used to measure operational performance, reflects this progress.

 

In April 2019, DMGT distributed £862m to shareholders, comprising its entire holding of Euromoney shares and a £200m special dividend.  The distribution of the listed Euromoney shares increased the Group's focus towards a balanced portfolio of cash generative and growing businesses.  Today we announced two further disposals: On-geo, the German based Property Information business, and DMGT's c.40% stake in RCA, the US-based Property Information business.  On a pro forma basis, adjusted for the £200m cash distributed to shareholders in April 2019 and £117m cash expected to be made available to the pension schemes in the coming months, the net debt:EBITDA ratio was 0.6 at the period end. The balance sheet flexibility will be further enhanced with the proceeds of US $89m from the RCA disposal announced today.

 

Our approach to capital allocation remains unchanged. We seek to maximise the potential of the portfolio and create long-term value. The commitments to organic investment and consistent, real growth in dividend per share continue to be our highest priorities. We take a balanced view on the relative merits of acquisitions, reducing net debt and returning capital to shareholders.

 

Group outlook

The outlook for the Full Year is in line with market expectations6 and guidance remains broadly unchanged:

·      B2B: low-single digit underlying revenue growth and an adjusted operating margin in the mid-teens

·      Consumer Media: low-single digit underlying revenue decline, revised from mid-single digit decline, and an adjusted operating margin in the high-single digits

·      Corporate costs: less than £45m

·      Joint ventures and associates: share of adjusted operating profits around £15m, as guided to when the distribution of Euromoney shares was announced in March 2019

·      Net finance costs: around £15m

·      Effective tax rate: around 20%

 

Group revenues for FY 2019 are expected to be stable on an underlying basis, with a broadly stable adjusted operating margin. 

 

Business Review

 

Business to Business (B2B)

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

381

411

-7%

+2%

773

Cash operating income2

75

69

+9%

+2%

131

Adjusted3 operating profit

71

71

+1%

-1%

128

Cash operating income2 margin

20%

17%

 

 

17%

Adjusted3 operating margin

19%

17%

 

 

17%

 

B2B revenues totalled £381m, up 2% on an underlying basis. EdTech and Events and Exhibitions grew and there were stable performances from Insurance Risk, Property Information and Energy Information.  Revenues decreased by 7% in absolute terms due to disposals within the Property Information and Energy Information sectors in 2018.  B2B cash operating income increased an underlying 2% to £75m, with notable improvements from EdTech and Energy Information. There was an increase in the overall B2B cash operating income margin to 20%. B2B operating profits were down 1% underlying. The performance was adversely affected by a larger proportion of development costs being expensed, not capitalised. By business, the underlying profit growth from Insurance Risk, EdTech and Energy Information was more than offset by decreases from Property Information and Events and Exhibitions.  The overall B2B operating margin increased to 19%, driven by increases in the Insurance Risk and Energy Information margins.

 

Outlook: the guidance for B2B remains unchanged. The financial performance during the remainder of the year will be impacted by planned increased investment, notably in Insurance Risk.  Market conditions are expected to remain largely unchanged. The underlying revenue growth rate for the Full Year is expected to be in the low-single digits and the adjusted operating margin is expected to be in the mid-teens.

 

 

Insurance Risk: RMS

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

119

113

+6%

0%

229

Cash operating income2

26

27

-4%

-12%

50

Adjusted3 operating profit

26

20

+33%

+19%

35

Cash operating income2 margin

22%

24%

 

 

22%

Adjusted3 operating margin

22%

17%

 

 

15%

The Insurance Risk business, RMS, provides models and solutions that help insurers, reinsurers, brokers, financial markets and public agencies evaluate and manage catastrophe risks globally.  Revenues were stable on an underlying basis.  The benefit of favourable contract renewals during the first half was offset by the impact of industry consolidation as well as historic RMS(one) delivery issues.  Reported revenues grew 6% to £119m, benefiting from the stronger US dollar. 

 

The cash operating income margin decreased to 22% as the business increased its investment in software, data, data analytics and applications to drive future growth.  Adjusted operating profit benefited from the absence of RMS(one) amortisation, which was £7m in H1 2018, following the impairment of the asset in September 2018.  Consequently, the adjusted operating margin improved from 17% to 22%. Investment will increase further during the second half of the year, with development costs continuing to be expensed as incurred, resulting in lower cash operating income and adjusted operating profit margins for the Full Year.

 

In May 2019, RMS held its annual client conference and announced the launch of Risk Intelligence, an open and flexible platform built to enable better risk management and support profitable risk selection. Risk Intelligence enables clients to access the Risk Data Lake, a repository that can securely unify RMS's data, clients' data and third-party data to provide risk insights and enable data-driven decisions. RMS also introduced two new analytics applications: SiteIQ, which synthesises risk data for a single location, is being made available on Risk Intelligence in June 2019 and will allow underwriters to immediately gain a better understanding of property risk; and ExposureIQ, aimed at exposure management, is expected to be released in September 2019.  Risk Intelligence brings additional functionality and reduced running costs for clients, superseding the RMS(one) platform which has now been retired.

 

The model pipeline remains strong and will help to strengthen the leading market position held by RMS.  The US Inland Flood high-definition (HD) model, which is available on Risk Intelligence, was successfully released in April 2019 and the US Wildfire HD model is expected to be released on Risk Intelligence in September 2019.

 

 

Property Information

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

114

151

-25%

0%

272

Cash operating income2

21

20

+5%

-4%

48

Adjusted3 operating profit

21

28

-26%

-23%

58

Cash operating income2 margin

19%

13%

 

 

18%

Adjusted3 operating margin

18%

18%

 

 

21%

 

The Property Information portfolio of businesses operates in Europe and the US, providing commercial and residential property related products and services. Revenues were stable on an underlying basis, with growth from the US businesses, Trepp and BuildFax, offsetting a decrease from the European business, which continues to face challenging market conditions in the UK.  The 25% reported decrease in revenues reflected the disposal of EDR and SiteCompli in April 2018 and Xceligent's cessation of trading in December 2017.

 

There was significant product development in the period across all businesses, notably at Trepp including initiatives for the collateralised loan obligation (CLO) market. The underlying decrease in cash operating income and adjusted operating profit was a result of the increased cost base, reflecting the increased investment, although margins benefited from the prior year changes to the Property Information portfolio.  The sale of the German business, On-geo, was agreed in April 2019 and is expected to complete in June 2019, after which the European business will comprise of Landmark and SearchFlow. The greater focus, both geographically and in the services offered, will enable its new management team to prioritise growth opportunities. On-geo generated £3m of operating profit from £29m of revenues in FY 2018.

 

 

EdTech: Hobsons

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

38

33

+17%

+14%

68

Cash operating income2

4

-

N/A

N/A*

2

Adjusted3 operating profit

3

3

-3%

+32%

7

Cash operating income2 margin

12%

1%

 

 

3%

Adjusted3 operating margin

8%

10%

 

 

11%

* Cash operating income improved by £5m on an underlying basis from negative to positive.

 

The EdTech business, Hobsons, is a leading provider of college and career readiness and student success solutions to the North American market and continues to perform strongly.  Revenues grew by an underlying 14% with continued growth from each of the three product lines: Naviance, the K-12 college and career readiness solution; Intersect, the higher education matching business, and Starfish, the higher education student retention and success platform.

 

At the same time, the focus on improving operational execution delivered a high flow-through from revenue growth to cash generation, driving a transformation in cash operating income and the margin improvement from 1% to 12%.

 

Good progress has been made modernising the core EdTech product platforms and adding new client-facing features and functionality, which have helped to drive revenue growth.  A larger proportion of expenditure on technology was expensed directly rather than capitalised in the period, contributing to a decrease in the adjusted operating margin from 10% to 8%.

 

 

Energy Information: Genscape

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

37

43

-14%

0%

86

Cash operating income2

5

1

+724%

N/A*

4

Adjusted3 operating profit

4

-

N/A

N/A*

-

Cash operating income2 margin

15%

2%

 

 

4%

Adjusted3 operating margin

9%

0%

 

 

0%

* On an underlying basis, cash operating income improved by £4m and adjusted operating profit by £3m.

 

The Energy Information business, Genscape, delivers innovative solutions to improve market transparency and efficiency across several asset classes and geographies.  Revenues were stable on an underlying basis.  There was continued growth from the core oil and gas sectors which was offset by the power sector, where market conditions have become more challenging.  The solar business, Locus Energy, was merged into AlsoEnergy in September 2018 and its absence resulted in revenues decreasing 14% on a reported basis to £37m.

 

Improvements in operational execution, including the elimination of peripheral products and streamlining of support functions, drove an increase in the cash operating income margin from 2% to 15%. A larger proportion of expenditure on technology was expensed directly and not capitalised.  This resulted in a smaller increase in the adjusted operating margin from 0% to 9%.

 

 

Events and Exhibitions: dmg events

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue

73

72

+1%

+2%

118

Cash operating income2

18

20

-12%

-17%

28

Adjusted3 operating profit

18

20

-11%

-16%

28

Cash operating income2 margin

25%

28%

 

 

24%

Adjusted3 operating margin

25%

28%

 

 

24%

 

The Events and Exhibitions business, dmg events, is an organiser of B2B exhibitions and associated conferences with industry-leading events in the energy, construction, interiors, hotel, hospitality and leisure sectors. Revenues grew 2% on an underlying basis. Big 5 Dubai and ADIPEC, two of the business's three largest events, were held in November 2018 and collectively delivered underlying revenue growth despite challenging conditions in the Middle East, notably in the construction sector.  Revenues grew 1% on an absolute basis, with the benefit of the stronger US dollar being more than offset by timing differences, notably the Index interior design show being held in September 2019, having previously occurred in March 2018.  During the period, new events were successfully launched in Saudi Arabia, South Africa and Thailand.  Following a successful EGYPS event in February 2019, DMGT acquired the local partner's stake in the Egyptian energy show. The wholly owned event further strengthens dmg events' presence in Africa.

 

The cash operating income and operating margins decreased to 25%, reflecting investment in driving attendance to support the future growth of the major events as well as in new launches.  As previously indicated, Gastech, one of the three largest events in the portfolio, is moving to an annual format having previously been held every eighteen months.  The greater frequency is expected to deliver an increase in cumulative revenues and profits over time.  The reduced interval between shows is, however, expected to have an adverse effect on the absolute revenues and operating margin of the September 2019 event, exacerbating the usual seasonality of lower margins during the second half of the year.

 

 

Consumer Media: dmg media

 

 

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Revenue:

 

 

 

 

 

Daily Mail / The Mail on Sunday

208

219

-5%

-5%

424

MailOnline

76

61

+25%

+16%

122

Mail Businesses

284

280

+1%

0%

546

Metro

41

37

+12%

+12%

71

Newsprint and other

19

18

+5%

0%

37

Total Revenue

343

335

+3%

+1%

654

 

 

 

 

 

 

Cash operating income2

44

42

+4%

+14%

77

Adjusted3 operating profit

39

38

+2%

+13%

64

Cash operating income2 margin

13%

13%

 

 

12%

Adjusted3 operating margin

11%

11%

 

 

10%

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

The Consumer Media portfolio includes two of the UK's most read paid-for newspapers, the UK's highest circulation weekday newspaper and MailOnline, one of the world's leading English language newspaper websites. Revenue grew by an underlying 1% to £343m, benefitting from favourable conditions in the advertising market.  The underlying growth from MailOnline of 16% more than offset a 3% decrease in print advertising revenues and a 2% decrease in circulation revenues.  Revenues grew 3% in absolute terms, benefiting from the inclusion of DailyMailTV, which became a wholly owned MailOnline business in October 2018.

 

Revenues for the combined Mail newspaper and website businesses (Daily Mail, The Mail on Sunday and MailOnline) were £284m, stable on an underlying basis.  Circulation revenue decreased 2% to £144m with the continued decline in volumes being partly offset by the benefit of the 5p cover price increase in September 2018 of the weekday editions to 70p.  The Mail brand remains strong, reflected in the large and growing market shares held by the Daily Mail and The Mail on Sunday of 25.3% and 22.6% respectively7. A 12% underlying decline in print advertising revenue to £57m was more than offset by MailOnline, which grew revenues by an underlying 16% to £76m, reflecting strong organic growth for both the website and DailyMailTV.

 

MailOnline continues to focus on attracting traffic directly to its homepages on desktop and mobile or its apps.  Indirect traffic, primarily via social media and search platforms, decreased year-on-year, notably in the first quarter, due to changes made by the platforms in the prior year.  This resulted in total average daily global unique browsers during the period decreasing by 7% to 12.7m.  Total minutes spent on the site decreased by 1% to a daily average of 145m, although growth was achieved in the second quarter.  The direct audience accounted for 78% of minutes spent, compared to 76% in H1 2018, reflecting continued growing engagement with the direct audience.

 

Following the integration of the advertising operations of the Metro and Mail in April 2018, Metro delivered a robust performance.  Revenues grew by 12% to £41m, a good achievement in the context of a declining print advertising market.  Revenues also benefited from the addition of two regional franchises in January 2018, one in July 2018 and a further one in January 2019.

 

Cash operating income and adjusted operating profit grew by an underlying 14% and 13% respectively, reflecting the continued focus on improving operational execution and the flow through of revenue growth to profits. The cash operating margin of 13% was in line with the prior year, as was the operating margin of 11%.

 

Outlook: Advertising in the first half was stronger than expected but we remain cautious about the remainder of the year.  Circulation volumes are expected to continue to decline. Margins in the second half will be adversely affected by the anticipated reduction in revenues. Given the stronger than expected first half performance, the underlying rate of decline in Consumer Media revenues for the Full Year is expected to be in the low-single digits, rather than the mid-single digits previously guided to. The operating margin is still expected to be in the high-single digits.

 

 

Corporate costs

 

 

Half Year 2019

£m

Half Year 2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Cash operating costs²

(22)

(24)

-9%

-10%

(53)

Adjusted operating costs3

(19)

(24)

-21%

-22%

(47)

 

As expected, Corporate costs reduced by an underlying 22% to £19m, reflecting the Group's more focused portfolio.

 

Outlook: Corporate costs are expected to be less than £45m in FY 2019 and decrease further in FY 2020.

 

 

Joint Ventures & Associates

 

Share of pre-tax operating profits3

Half Year

2019

£m

Half Year

2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Euromoney Institutional Investor PLC

23

27

-16%

N/A

56

ZPG Plc

-

17

-100%

N/A

23

Other joint ventures and associates

(6)

(4)

+45%

+15%

(5)

Total joint ventures and associates

18

41

-57%

+15%

73

             

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

The Group's share of adjusted operating profits from joint ventures and associates was £18m, a 57% decrease on the prior year. DMGT's stake in ZPG was disposed of in July 2018 and consequently no profits were generated from the business in the period, compared to £17m in the prior year.

 

The share of profits from DMGT's c.49% stake in Euromoney was £23m, down 16% on last year, reflecting disposals made by Euromoney in 2018.  On 2 April 2019, all of the Euromoney shares held by DMGT were distributed to DMGT's shareholders and Euromoney is no longer an associate.

 

The net share of operating losses from other joint ventures and associates was £6m, notably from Yopa, the early-stage UK hybrid estate agent which became an associate in August 2018.  The performance benefited from the absence of DailyMailTV, another early-stage business which is now a wholly owned part of MailOnline. On an underlying basis, excluding ZPG, Euromoney and DailyMailTV and including Yopa's organic year-on-year performance, the share of net losses increased by 15%.

 

In May 2019, the focus of the portfolio was further increased by the disposal of DMGT's c.40% stake in Real Capital Analytics (RCA), the US-based Property Information business, for US $89m.

 

The most significant businesses within the remaining portfolio of joint ventures and associates are Yopa and Excalibur, which operates the online discount businesses Wowcher and LivingSocial UK, in the Consumer Media sector; Praedicat in the Insurance Risk sector; and AlsoEnergy in the Energy Information sector.  dmg ventures, the DMGT's venture capital unit, manages the majority of the portfolio, as well as smaller stakes in other early-stage investments.

 

Outlook: the results during the second half of the year will reflect the disposals made, notably the absence of Euromoney and ZPG.  The remaining businesses are expected to deliver net losses during the second half of the year reflecting continued investment.  The Full Year share of operating profits from joint ventures and associates is expected to be around £15m, as guided to in March 2019 on the announcement of the distribution of Euromoney shares.

 

 

Net finance costs

 

 

Half Year 2019

£m

Half Year 2018

£m

Change~

 

Underlying¹

Change~

Full Year

2018

£m

Net interest payable and similar charges3

(8)

(21)

-63%

-32%

(37)

 

Net interest payable and similar charges, including DMGT's share of associates' interest costs, were £8m. The 63% decrease on the prior year was due to several factors, primarily the net cash held in the period, the maturing of £219m of bond debt in December 2018 and a reduced share of associates' interest payable.  The decrease in finance costs was 32% on an underlying basis, after adjusting for the disposal of the Euromoney and ZPG associates and for the proceeds from the ZPG disposal.

 

The pension finance credit, which is excluded from adjusted results, was £4m for the period, reflecting the pension surplus on an accounting basis.  This compared to a £1m credit for the same period last year and £2m for the prior Full Year.

 

Outlook: net finance costs for the Full Year are expected to be around £15m.

 

 

Other income statement items

 

·      Exceptional items and amortisation

Following a significant reduction in exceptional operating costs in FY 2018, costs remain at low levels compared to previous years.  Exceptional operating costs, including those of joint ventures and associates, totalled a £1m credit in the period.  This included £3m of charges in respect of exceptional cash items.

 

There were impairment charges of £49m in the period (H1 2018 £2m), including £28m in respect of the Euromoney associate and £21m in respect of On-geo. The carrying value of Euromoney included DMGT's share of the cumulative statutory profits since it became an associate and exceeded the market value at the period end.  The carrying value of On-geo included an accounting gain on change in control in 2016 and the total cash returns from the investment are expected to be positive.

 

The charge for amortisation of intangible assets arising on business combinations, including the share from joint ventures and associates, was £14m (H1 2018 £19m).  The Group recorded other net gains on disposal of businesses and investments of £16m, primarily in respect of the disposal of the Group's remaining stake in SiteCompli (H1 2018 gain £41m).

 

·      Taxation

The adjusted tax charge of £19m (H1 2018 £16m) is stated after adjusting for the effect of exceptional items.  As expected, the adjusted tax rate for the half year was 19.4%, an increase on 15.8% in H1 2018, reflecting the geographical mix of profits.

 

The statutory tax charge for the period was £4m and the share of associates' tax charge amounted to £7m.  There were £8m of exceptional tax credits including a £10m non-cash item arising on the recognition of additional UK tax losses.

 

Outlook: the effective tax rate is expected to be around 20% in FY 2019 and gradually increase further over the next few years.

 

 

Pensions

The net surplus on the Group's defined benefit pension schemes reduced marginally from £244m at the start of the year to £236m at the half year (calculated in accordance with IAS 19 (Revised)), with an increase in the value of the defined benefit obligation exceeding the increase in the value of the assets.  Funding payments into the main schemes during the period were £13m.

 

In conjunction with the distribution of £862m of assets to shareholders in April 2019, a further £117m will be made available to the pension schemes in the current financial year and DMGT and the pension Trustees are working on finalising arrangements.  The triennial actuarial valuation of the defined benefit schemes as at 31 March 2019 is also currently in progress.  The defined benefit schemes are closed to new entrants.

 

 

Net debt and cash flow 

Prior to adjustment, net cash at the end of the period was £172m, a decrease of £61m since the start of the financial year, reflecting the usual seasonal cash outflows.

 

In March 2019, shareholder approval was given to pay a £200m special dividend in April 2019 and for a further £117m to be made available to the Group's defined benefit pension schemes.  The nature and timing of payments to the schemes are yet to be agreed and it is likely that a significant portion of the £117m will remain as cash on DMGT's balance sheet.  Given the anticipated restrictions associated with the use of funds, however, the Board considers it appropriate to exclude the £117m when reporting pro forma net debt and pro forma gearing.  Adjusting to exclude the £200m special dividend and £117m being made available to the pension schemes, net debt at the period end was £146m and the net debt:EBITDA ratio was 0.6.

 

Cash operating income of £97m is stated after £17m of capital expenditure, a significant reduction on £26m in H1 2018, reflecting a larger proportion of technology costs being expensed directly.  Other operating cash net outflows totalled £61m including the expected increase in trade debtors for dmg media, following the cessation of a trade finance arrangement, and the usual seasonal outflows. Group operating cash flow was £36m in the period, a 40% conversion rate of operating profits to operating cash flow, an improvement on 28% in H1 2018.

 

Payments in the period included dividends of £58m, pension funding payments of £13m, interest payments of £11m and taxation of £5m.  Net expenditure on acquisitions and investments, including proceeds from disposals, was £9m.

 

Net debt is typically at its peak at around the half year, due to the timing of the payment of the prior year's final dividend and other annual payments as well as the seasonality of operating cash flows.  In  May 2019, DMGT disposed of its c.40% stake in RCA for US$ 89m, further enhancing the Group's financial flexibility.

In December 2018, £219m of bond debt matured and consequently the remaining bond debt as at 31 March 2019 was £202m.  The Group also has £372m of bank facilities available.

 

In April 2019, Standard & Poor's revised its corporate credit rating for DMGT from BB+ to BB, following the distribution of Euromoney shares and £200m cash to shareholders.  In February 2019, Fitch reaffirmed DMGT's BBB- investment grade rating.

 

The Directors consider that the Group has adequate resources to continue in operational existence for at least the next twelve months. Accordingly, they continue to adopt the going concern basis in preparing the half yearly report.

 

Financing and shares

During the first half of the year, the Group acquired 0.4m 'A' Ordinary Shares for £3m in order to meet obligations to provide shares under its incentive plans.  In addition, 1.2m shares were used from the Employee Benefit Trust, with a carrying value of £9m, to provide shares under various incentive plans.

 

In April 2019, as part of the distribution of Euromoney shares and £200m cash to shareholders, 127.3m 'A' Ordinary Shares were returned to DMGT and cancelled.  Following the cancellation of these shares, DMGT had 227.8m shares in issue as at 30 April 2019, including 19.9m Ordinary Shares, and a further 7.0m 'A' Ordinary Shares were held in Treasury and the Employee Benefit Trust8.  The reduced share count will support earnings per share growth over the coming year.

 

Dividend

The dividend policy is to grow the dividend in real terms and, in the medium term, to distribute about one-third of the Group's adjusted earnings.  The Board has declared an interim dividend of 7.3 pence per Ordinary and 'A' Ordinary Non-Voting share (H1 2018 7.1 pence) which will be paid on 28 June 2019 to shareholders on the register at the close of business on 7 June 2019.

 

 

 

Adjusted results: statutory profit before tax (PBT) reconciliation to adjusted PBT

The Board and management team use adjusted results, rather than statutory results, to give greater insight to the financial performance of the Group and the way it is managed.  Similarly, adjusted results are used in setting management remuneration.  Adjusted results exclude certain items which, if included, could distort the understanding of performance during the period and the comparability between periods.

 

The tables on pages 17 and 18 show the adjustments between statutory profit before tax and adjusted profit before tax, by business, for both the first half of FY 2019 (H1 2019) and H1 2018.

 

The explanation for each type of adjustment is as follows:

1)    Exceptional operating costs: businesses occasionally incur exceptional costs, including severance and consultancy fees, in respect of a reorganisation that is incremental to normal operations.  Similarly, for the Group's B2B businesses, there may be legal costs in respect of litigation that are outside the ordinary course of business and sufficiently material to be treated as an exceptional cost.  These are excluded from adjusted results.

2)    Intangible amortisation: when acquiring businesses, the premium paid relative to the net assets on the balance sheet of the acquired business is classified as either goodwill or as an intangible asset arising on a business combination and is recognised on DMGT's balance sheet.  This differs to organically developed businesses where assets such as employee talent and customer relationships are not recognised on the balance sheet.  Amortisation of intangible assets and goodwill arising on acquisitions are excluded from adjusted results as they relate to historical M&A activity rather than the trading performance of the business during the period.

3)    Profit on sale of assets: the Group makes gains or losses when disposing of businesses, for example on the disposal of EDR, the US Property Information business, in April 2018. These items are excluded from adjusted results as they reflect the value created since the business was formed or acquired rather than the operating performance of the business during the period. Similarly, the gains or losses made by joint ventures or associates when disposing of businesses are excluded from adjusted results.

4)    Pension finance credit: the finance credit on defined benefit schemes is a formulaic calculation that does not necessarily reflect the underlying economics associated with the relevant pension assets and liabilities. It is effectively a notional credit and is excluded from adjusted results.

5)    Other adjustments: other items that are excluded from adjusted results include changes in the fair value of certain financial instruments and changes to future acquisition payments.  They are considered to be unrelated to the ongoing cost of doing business. The share of joint ventures' and associates' tax charges is included in statutory profit before tax but, since it is a tax charge, is excluded from adjusted profit before tax.  The share of joint ventures' and associates' interest charges is reclassified to financing costs in the adjusted results

 

 

Reconciliation: Statutory profit to adjusted profit - Half Year 2019

 

 

£ millions

Note

IRA

PIB

ETC

EID

E&EE

CMF

CCG

JV&AH

DMGT Group

 

Statutory operating profit

 

26

(5)

2

2

18

36

(23)

(17)

39

 

Exceptional operating costs

1

-

-

-

-

-

2

3

(7)

(1)

Intangible impairment and amortisation

2

-

26

1

2

1

-

-

34

63

Exclude JV's & Associates

 

 

 

 

 

 

 

 

10

(10)

 

Adjusted operating profit

 

26

21

3

4

18

39

(19)

 

90

 

 

 

£ millions

Note

IRA

PIB

ETC

EID

E&EE

CMF

CCG

JV&AH

FCI

DMGT Group

 

Statutory PBT

 

26

22

2

1

18

36

(32)

(17)

(5)

50

 

Profit on sale of assets

3

-

(27)

-

1

-

-

9

-

-

(16)

 

Operating profit adjustments (∞ above)

1, 2

-

26

1

2

1

2

3

27

-

61

Total ∞

Pension finance credit

4

-

-

-

-

-

-

-

-

(4)

(4)

 

Other adjustments

5

-

-

-

-

-

-

-

7

1

8

 

Adjusted PBT

 

26

21

3

4

18

39

(19)

18

(8)

100

 

 

Notes:

The figures in the Note column above correspond with explanations of the adjustments given on page 16.

A IR = Insurance Risk, B PI = Property Information, C ET = EdTech, D EI = Energy Information, E E&E = Events and Exhibitions, F CM = Consumer Media, G CC = Corporate costs, H JV&A = Joint ventures and Associates, I FC = Financing costs

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

Reconciliation: Statutory profit to adjusted profit - Half Year 2018

 

£ millions

Note

IRA

PIB

ETC

EID

E&EE

CMF

CCG

JV&AH

DMGT Group

 

Statutory operating profit

 

20

22

2

2

20

36

(24)

56

133

 

Exceptional operating costs

1

-

2

-

(4)

-

1

-

2

2

Intangible impairment and amortisation

2

-

4

1

2

-

-

-

13

21

Associates' profit on sale of assets

3

 

 

 

 

 

 

 

(43)

(43)

 

Exclude JV's & Associates

 

 

 

 

 

 

 

 

28

(28)

 

Adjusted operating profit

 

20

28

3

-

20

38

(24)

 

84

 

 

 

£ millions

Note

IRA

PIB

ETC

EID

E&EE

CMF

CCG

JV&AH

FCI

DMGT Group

 

Statutory PBT

 

20

25

(6)

2

20

37

(24)

56

(16)

113

 

Profit on sale of assets

3

-

(3)

8

-

-

(1)

(1)

(43)

-

(41)

 

Operating profit adjustments (∞ above)

1, 2

-

6

2

(2)

-

2

-

15

-

22

Total ∞

Pension finance credit

4

-

-

-

-

-

-

-

-

(1)

(1)

 

Other adjustments

5

-

-

-

1

-

-

-

13

(4)

9

 

Adjusted PBT

 

20

28

2

-

20

38

(24)

41

(21)

103

 

 

 

Notes:

The figures in the Note column above correspond with explanations of the adjustments given on page 16.

A IR = Insurance Risk, B PI = Property Information, C ET = EdTech, D EI = Energy Information, E E&E = Events and Exhibitions, G CM = Consumer Media, H CC = Corporate costs, I JV&A = Joint ventures and Associates, J FC = Financing costs

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

 

Cash operating income2

 

Half Year 2019

 

£ millions

IRA

PIB

ETC

EID

E&EE

CMF

CCG

DMGT Group

Adjusted operating profit

26

21

3

4

18

39

(19)

90

Depreciation of tangible fixed assets

2

1

-

1

-

7

-

13

Amortisation of intangible assets*

-

3

4

2

-

1

-

11

Purchase of tangible fixed assets

(2)

(1)

-

(1)

-

(3)

-

(8)

Expenditure on intangible fixed assets*

-

(3)

(2)

(1)

-

-

(3)

(9)

Cash operating income

26

21

4

5

18

44

(22)

97

 

 

Half Year 2018

 

£ millions

IRA

PIB

ETC

EID

E&EE

CMF

CCG

DMGT Group

Adjusted operating profit

20

28

3

-

20

38

(24)

84

Depreciation of tangible fixed assets

2

1

-

2

-

7

-

13

Amortisation of intangible assets*

7

2

2

2

-

2

-

16

Purchase of tangible fixed assets

(2)

(7)

-

(1)

-

(5)

-

(16)

Expenditure on intangible fixed assets*

-

(3)

(6)

(1)

-

-

-

(10)

Cash operating income

27

20

-

1

20

42

(24)

87

 

Notes:

* Amortisation of intangible assets and expenditure on intangible assets refers to products and software, not assets acquired as part of business combinations.

 

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

 

 

Underlying1 analysis - Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Half Year 2019

 

Half Year 2018

£ millions

%

 

Underlying

M&A

Other

Reported

 

Underlying

M&A

Exchange

Other

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Risk

0%

 

119

-

-

119

 

119

-

6

-

113

Property Information

0%

 

114

-

-

114

 

114

(39)

3

(1)

151

EdTech

+14%

 

38

-

-

38

 

33

-

2

(1)

33

Energy Information

0%

 

37

-

-

37

 

37

(8)

2

-

43

Events and Exhibitions

+2%

 

72

-

-

73

 

71

-

4

(4)

72

B2B

+2%

 

381

-

-

381

 

374

(47)

17

(6)

411

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Media

+1%

 

325

-

(18)

343

 

322

4

1

  (17)

335

 

 

 

 

 

 

 

 

 

 

 

 

 

DMGT Group

+1%

 

706

-

(18)

724

 

697

(44)

17

(23)

746

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 

 

Notes:

M&A adjustments are for disposals and acquisitions.  The underlying results include the post-acquisition organic growth from acquired entities. 'Other' includes adjustments for the timing of shows at Events and Exhibitions, for the consistent timing of revenue recognition and for the gross-up, equivalent to the cost of sales, on the low margin resale of newsprint activities.

 

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

 

 

 

 

 

Underlying1 analysis - Adjusted3 operating profit and profit before tax

 

 

 

 

Half Year 2019

 

Half Year 2018

£ millions

%

 

Underlying

M&A

Other

Reported

 

Underlying

M&A

Exchange

Other

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Risk

+19%

 

26

-

-

26

 

22

-

2

-

20

 

Property Information

(23)%

 

21

-

-

21

 

27

(2)

1

-

28

 

EdTech

+32%

 

3

-

-

3

 

2

-

-

(1)

3

 

Energy Information

N/A*

 

4

-

-

4

 

-

1

-

-

-

 

Events and Exhibitions

(16)%

 

18

-

-

18

 

21

-

1

(1)

20

 

B2B

(1)%

 

71

-

-

71

 

72

(1)

4

(2)

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Media

+13%

 

39

-

-

39

 

34

(4)

-

-

38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate costs

(22)%

 

(19)

-

-

(19)

 

(25)

-

-

-

(24)

 

Adjusted operating profit

+11%

 

90

-

-

90

 

81

(5)

4

(2)

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from JVs and associates

+15%

 

(6)

(23)

-

18

 

(5)

(45)

-

-

41

 

Net finance costs

(32)%

 

(8)

-

-

(8)

 

(12)

10

-

-

(21)

 

Adjusted profit before tax

+19%

 

77

(23)

-

100

 

64

(40)

4

(2)

103

 

                                     

 

Notes:

M&A adjustments are for disposals and acquisitions.  The underlying results include the post-acquisition organic growth from acquired entities. 'Other' includes adjustments for the timing of shows at Events and Exhibitions and for the consistent timing of revenue recognition.  The underlying growth in the share of operating profits from joint ventures and associates excludes ZPG Plc, Euromoney and DailyMailTV but includes the year-on-year organic growth from Yopa.  The underlying H1 2018 finance costs have also been adjusted to include an assumed £6m benefit from £642m proceeds on the disposal of ZPG Plc.

 

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

* The underlying performance improved by £3m for Energy Information.

 

 

Underlying1 analysis - Cash operating income²

 

 

 

 

 

Half Year 2019

 

Half Year 2018

£ millions

%

 

Underlying

M&A

Other

Reported

 

Underlying

M&A

Exchange

Other

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Risk

(12)%

 

26

-

-

26

 

30

-

2

-

27

 

Property Information

(4)%

 

21

-

-

21

 

22

2

-

-

20

 

EdTech

N/A*

 

4

-

-

4

 

(1)

-

-

(1)

-

 

Energy Information

N/A*

 

5

-

-

5

 

1

-

-

-

1

 

Events and Exhibitions

(17)%

 

17

-

-

18

 

21

-

1

(1)

20

 

B2B

+2%

 

75

-

-

75

 

73

2

4

(2)

69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Media

+14%

 

44

-

-

44

 

39

(4)

-

-

42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate cash operating costs

(10)%

 

(22)

-

-

(22)

 

(25)

-

-

-

(24)

 

Group cash operating income

+11%

 

96

-

-

97

 

87

(1)

3

(2)

87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                 

 

Notes:

M&A adjustments are for disposals and acquisitions.  The underlying results include the post-acquisition organic growth from acquired entities. 'Other' includes adjustments for the timing of shows at Events and Exhibitions and for the consistent timing of revenue recognition.

 

Amounts are stated rounded to the nearest million pounds, consequently totals may not equal the sum of the component integers.

 

* The underlying performance improved by £5m for EdTech and £4m for Energy Information.

 

 

Principal risks and uncertainties

The principal risks and uncertainties that affect the Group on an ongoing basis are described in our most recent Annual Report (FY 2018).  These are still considered to be the most relevant risks and uncertainties for the Group at this time.  They are summarised below.

 

Strategic Risks

·      Market disruption creates opportunities as well as risks.  Disruption enables us to move into new markets and geographies to grow the business.  Failure to anticipate and respond to market disruption may affect the demand for our products and services and our ability to drive long-term growth.

 

·      Internal investments in new products and services, and developments of existing products and services, may fail to achieve customer acceptance and yield expected benefits.

 

·      Acquisitions and investments not delivering as expected, portfolio changes not delivering expected benefits, or not divesting from non-core businesses at the right time.

 

·      Economic and geopolitical uncertainty.

 

·      Failure to secure and retain the right people for senior and business-critical roles.

 

Operational Risks

·      Information security breach or cyberattack.

 

·      Reliance on key third parties; a failure of one of our critical third parties may cause disruption to business operations.

 

·      Compliance with laws and regulations across multiple jurisdictions and sectors.

 

·      Pension scheme deficit with the risk that funding of the deficit could be greater than expected owing to adverse changes in investment performance.

 

 

Statement of Directors' responsibilities

The Directors are responsible for preparing the Half Yearly Financial Report, in accordance with applicable law and regulations.

 

The Directors confirm that to the best of their knowledge:

 

a) this Condensed set of Financial Statements which should be read in conjunction with the annual financial statements for the year ended 30 September 2018 and has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union; and

 

b) the Interim Management Report includes a fair review of the information required by the Financial Conduct Authority's Disclosure and Transparency Rules 4.2.7R and 4.2.8R.

 

By order of the Board of Directors

 

The Viscount Rothermere

Chairman

29 May 2019

 

 

 

Notes

1 Underlying growth rates are on a like-for-like basis, see pages 20 to 22.  Underlying revenues, cash operating income2 and operating profits are adjusted for constant exchange rates, the exclusion of disposals and closures, the inclusion of the year-on-year organic growth from acquisitions and for the consistent timing of revenue recognition.  For events, the comparisons are between events held in the year and the same events held the previous time.  For Consumer Media, underlying revenues exclude low margin newsprint resale activities.  The underlying change in the share of operating profits from joint ventures and associates excludes ZPG Plc, Euromoney Institutional Investor PLC and DailyMailTV but includes the year-on-year organic growth from Yopa.  The underlying net finance costs exclude the share of finance costs from ZPG Plc and Euromoney Institutional Investor PLC and the underlying H1 2018 costs have also been adjusted to include an assumed £6m benefit from £642m proceeds on the disposal of ZPG Plc.

 

2 Cash operating income (Cash OI) is calculated by adding back depreciation and amortisation expenses, which are non-cash items, to adjusted operating profit and then deducting capital expenditure.

 

3 Unless otherwise stated, all profit and profit margin figures in this Interim Management Report refer to adjusted results and not statutory results.  The Board and management team use adjusted results, rather than statutory results, to give greater insight to the financial performance of the Group and the way that it is managed.  Similarly, adjusted results are used in setting management remuneration.  Adjusted results are stated before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, pension finance credits and fair value adjustments.  For reconciliations of statutory profit before tax to adjusted profit before tax and supporting explanations, see pages 16 to 18.

 

4 The statutory results are IFRS figures before any adjustments.

 

5 The actual net cash position as at 31 March 2019 was £172m and the net cash:EBITDA ratio was 0.7.  In March 2019, however, shareholder approval was given for a £200m special dividend and making £117m available to the Group's pension schemes.  The £200m special dividend was paid in April 2019 and the £117m cash is expected to be made available to the pension schemes in the current financial year.  Adjusting for a £317m reduction in cash, the net debt position as at 31 March 2019 would have been £146m and the net debt:EBITDA ratio would have been 0.6.

 

6 Current City analyst expectations for DMGT for FY 2019, as published on the Group's website (www.dmgt.com),  are based on seven analysts that have updated their projections since the distribution of Euromoney shares and £200m cash that was announced on 3 March 2019.  Expectations range from £1,361m to £1,410m for revenue, from £130m to £137m for adjusted profit before tax and from 35.6p to 37.7p for adjusted basic earnings per share with a consensus of £1,388m, £134m and 37.1p.

 

7 The Daily Mail's market share of UK retail sales averaged 25.3% during the six months to 31 March 2019 (H1 2019), an increase from 24.6% in H1 2018, and The Mail on Sunday's UK retail market share averaged 22.6%, an increase from 21.8% in H1 2018. Circulation market share figures are calculated using ABC's National Newspapers Reports, excluding digital subscribers

 

8 As at the end of 30 April 2019, there were 4,701,905 'A' Ordinary Shares held in Treasury and 2,299,458 'A' Ordinary Shares held by the DMGT Employee Benefit Trust.

 

~ Percentages are calculated on actual numbers to one decimal place.

 

The average £: US$ exchange rate for the first half of the year was £1:$1.29 (against £1:$1.36 last year).  The rate at the Half Year end was $1.30 (2018: $1.40), compared to $1.30 at the September 2018 year end.

 

All references to profit or margin in this interim management report are to adjusted profit or margin, except where reference is made to statutory profit.

 

For further information

 

For analyst and institutional enquiries:

 

 

Tim Collier, Group CFO

+44 20 3615 2902

 

Adam Webster, Head of Investor Relations

+ 44 20 3615 2903

For media enquiries

Doug Campbell / Paul Durman, Teneo

 

+44 20 7260 2700

 

Half Year Results presentation

A presentation of the Half Year Results will be given to investors and analysts at 9.30am on 30 May 2019, at J.P. Morgan, 60 Victoria Embankment, London, EC4Y 0JP. There will also be a live webcast available on our website at www.dmgt.com/webcasthy19.

 

Investor Briefing and next trading update

DMGT will be hosting an Investor Briefing on 2 July 2019, with a focus on the Insurance Risk business, RMS.

 

The Group's next scheduled announcement of financial information will be its nine month trading update on 25 July 2019.

 

 

This Interim Management Report ('IMR') is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this IMR save as would arise under English law.  Statements contained in this IMR are based on the knowledge and information available to the Group's Directors at the date it was prepared and therefore facts stated and views expressed may change after that date.

 

This document and any materials distributed in connection with it may include forward-looking statements, beliefs, opinions or statements concerning risks and uncertainties, including statements with respect to the Group's business, financial condition and results of operations. Those statements and statements which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Group's Directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and which may cause results and developments to differ materially from those expressed or implied by those statements and forecasts. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this IMR. The Group undertakes no obligation to release any update of, or revisions to, any forward-looking statements, opinions (which are subject to change without notice) or any other information or statement contained in this IMR. Furthermore, past performance of the Group cannot be relied on as a guide to future performance.

 

No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per DMGT share for the current or future financial years would necessarily match or exceed the historical published earnings per DMGT share.

 

Nothing in this document is intended to constitute an invitation or inducement to engage in investment activity. This document does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This document does not constitute a recommendation regarding any securities.

 

 

Independent review report to Daily Mail and General Trust plc

 

Report on the Condensed Consolidated Financial Statements

 

·      Our conclusion

We have reviewed Daily Mail and General Trust plc's Condensed Consolidated Financial Statements (the "interim financial statements") in the Half Yearly Financial Report of Daily Mail and General Trust plc for the six month period ended 31 March 2019. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

·      What we have reviewed

The interim financial statements comprise:

·     the Condensed Consolidated Statement of Financial Position as at 31 March 2019;

·     the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Comprehensive Income for the period then ended;

·     the Condensed Consolidated Cash Flow Statement for the period then ended;

·     the Condensed Consolidated Statement of Changes in Equity for the period then ended; and

·     the explanatory notes to the interim financial statements.

The interim financial statements included in the Half Yearly Financial Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

 

Responsibilities for the interim financial statements and the review

 

·      Our responsibilities and those of the directors

The Half Yearly Financial Report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half Yearly Financial Report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

Our responsibility is to express a conclusion on the interim financial statements in the Half Yearly Financial Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

·      What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the Half Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

29 May 2019

 

Shareholder Information

 

Financial Calendar (provisional)

 

2019

 

30 May

Half yearly financial report released

6 June

Interim ex-dividend date

7 June

Interim record date

21 June

Payment of interest on bonds

28 June

Payment of interim dividend

2 July

Investor Briefing

25 July

Nine month trading update

30 September

Year end

5 December

Announcement of Full Year 2019 results

12 December

Ex-dividend date

13 December

Record date

 

Contacts

 

Daily Mail and General Trust plc

Northcliffe House

2 Derry Street

London

W8  5TT

Email: adam.webster@dmgt.com

 

Auditor

PricewaterhouseCoopers LLP

1 Embankment Place

London

WC2N 6RH

Stockbrokers

Credit Suisse International

One Cabot Square

London

E14 4QJ

Registrars

Equiniti

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

J.P. Morgan Cazenove

25 Bank Street

Canary Wharf

London

E14 5JP

 

 

     

 

For further investor information and contacts, please visit the Company's website at

www.dmgt.com.

Condensed Consolidated Financial Statements

Condensed Consolidated Income Statement

 

For the 6 months ended 31 March 2019

 

 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

CONTINUING OPERATIONS

 

 

 

 

Revenue

3

723.9

745.8

1,426.4

 

 

 

 

 

Adjusted operating profit

3, (i)

90.4

83.8

144.9

Exceptional operating (expense)/income, impairment of internally generated and acquired computer software, property, plant and equipment

3

(5.6)

0.8

(78.9)

Amortisation and impairment of acquired intangible assets arising on business combinations and impairment of goodwill

3, 17

(28.8)

(7.8)

(15.8)

 

 

 

 

 

Operating profit before share of results of joint ventures and associates

 

56.0

76.8

50.2

Share of results of joint ventures and associates

4

(16.6)

55.8

118.4

Total operating profit

 

39.4

132.6

168.6

Other gains and losses

5

16.2

(2.8)

553.0

Profit before investment revenue, net finance costs and tax

 

55.6

129.8

721.6

Investment revenue

6

6.6

1.9

4.8

 

 

 

 

 

Finance expense

7

(15.5)

(20.9)

(40.0)

Finance income

7

3.7

2.6

5.5

Net finance costs

 

(11.8)

(18.3)

(34.5)

 

 

 

 

 

Profit before tax

 

50.4

113.4

691.9

Tax

8

(4.3)

3.9

(3.7)

Profit after tax

 

46.1

117.3

688.2

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the Company

 

45.6

114.1

689.4

Non-controlling interests

 

0.5

3.2

(1.2)

Profit for the period

 

46.1

117.3

688.2

 

 

 

 

 

Earnings per share

11

 

 

 

From continuing operations

 

 

 

 

Basic

 

12.9p

32.2p

194.7p

Diluted

 

12.7p

31.8p

192.4p

Adjusted earnings per share

 

 

 

 

Basic

 

22.5p

24.4p

42.2p

Diluted

 

22.2p

24.1p

41.7p

 

 

 

 

 

 

(i)      Adjusted operating profit is defined as total operating profit from continuing operations before share of results of joint ventures and associates, exceptional operating (expense)/income, impairment of goodwill and intangible assets, amortisation of acquired intangible assets arising on business combinations and impairment of property, plant and equipment.

 

Condensed Consolidated Statement of Comprehensive Income

 

For the 6 months ended 31 March 2019

 

 

Unaudited 6 months ended 31 March  2019

Unaudited 6 months ended 31 March  2018

Audited year ended 30 September 2018

 

£m

£m

£m

Profit for the period

46.1

117.3

688.2

 

 

 

 

Items that will not be reclassified to Consolidated Income Statement

 

 

 

Actuarial (loss)/gain on defined benefit pension schemes

(21.1)

4.4

183.6

Foreign exchange differences on translation of foreign operations of non-controlling interests

(0.3)

(0.2)

0.2

Tax relating to items that will not be reclassified to Consolidated Income Statement

3.6

(0.7)

(31.2)

 

 

 

 

Total items that will not be reclassified to Consolidated Income Statement

(17.8)

3.5

152.6

 

 

 

 

Items that may be reclassified subsequently to Consolidated Income Statement

 

 

 

(Losses)/gains on hedges of net investments in foreign operations

(3.6)

12.0

(2.1)

Costs of hedging

(0.5)

-

-

Cash flow hedges:

 

 

 

     Gains arising during the period

-

4.3

4.9

     Transfer of gains on cash flow hedges from translation reserve to Consolidated Income Statement

-

-

(4.9)

Share of joint ventures' and associates' items of other comprehensive (expense)/income

(0.7)

(7.1)

14.7

Translation reserves recycled to Consolidated Income Statement on disposals

(1.0)

(4.1)

(10.4)

Foreign exchange differences on translation of foreign operations

(0.5)

(11.9)

(8.9)

 

 

 

 

Total items that may be reclassified subsequently to Consolidated Income Statement

(6.3)

(6.8)

(6.7)

 

 

 

 

Other comprehensive (expense)/income for the period

(24.1)

(3.3)

145.9

 

 

 

 

Total comprehensive income for the period

22.0

114.0

834.1

 

 

 

 

Attributable to:

 

 

 

Owners of the Company

21.8

111.0

835.1

Non-controlling interests

0.2

3.0

(1.0)

 

22.0

114.0

834.1

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Changes in Equity

 

For the 6 months ended 31 March 2019

 

 

 

Called-up

share

capital

Share

premium

account

Capital

redemption

reserve

Own

shares

Translation

reserve

Retained

earnings

Equity

attributable

to owners of

the Company

Non-controlling

interests

Total

equity

 

Note

£m

£m

£m

£m

£m

£m

£m

£m

£m

At 30 September 2017

 

45.3

17.8

5.0

(64.3)

74.9

829.5

908.2

11.0

919.2

Profit for the period

 

-

-

-

-

-

114.1

114.1

3.2

117.3

Other comprehensive (expense)/income for the period

 

-

-

-

-

0.3

(3.4)

(3.1)

(0.2)

(3.3)

Total comprehensive income for the period

 

-

-

-

-

0.3

110.7

111.0

3.0

114.0

Dividends

9

-

-

-

-

-

(55.9)

(55.9)

-

(55.9)

Own shares acquired in the period

22

-

-

-

(4.6)

-

-

(4.6)

-

(4.6)

Own shares transferred on exercise of share options

 

-

-

-

11.0

-

-

11.0

-

11.0

Changes in non-controlling interests following disposal and closure of businesses

 

-

-

-

-

-

-

-

0.6

0.6

Credit to equity for share-based payments

 

-

-

-

-

-

4.9

4.9

-

4.9

Settlement of exercised share options of subsidiaries

 

-

-

-

-

-

(12.1)

(12.1)

-

(12.1)

At 31 March 2018

 

45.3

17.8

5.0

(57.9)

75.2

877.1

962.5

14.6

977.1

At 30 September 2017

 

45.3

17.8

5.0

(64.3)

74.9

829.5

908.2

11.0

919.2

Profit/(loss) for the year

 

-

-

-

-

-

689.4

689.4

(1.2)

688.2

Other comprehensive income/(expense) for the year

 

-

-

-

-

(21.4)

167.1

145.7

0.2

145.9

Total comprehensive income/(expense) for the year

 

-

-

-

-

(21.4)

856.5

835.1

(1.0)

834.1

Dividends

9

-

-

-

-

-

(81.0)

(81.0)

(0.2)

(81.2)

Own shares acquired in the year

22

-

-

-

(14.3)

-

-

(14.3)

-

(14.3)

Own shares transferred on exercise of share options

 

-

-

-

21.4

-

-

21.4

-

21.4

Changes in non-controlling interests following disposal and closure of businesses

 

-

-

-

-

-

-

-

3.7

3.7

Credit to equity for share-based payments

 

-

-

-

-

-

10.8

10.8

-

10.8

Settlement of exercised share options of subsidiaries

 

-

-

-

-

-

(13.8)

(13.8)

-

(13.8)

Corporation tax on share-based payments

 

-

-

-

-

-

2.3

2.3

-

2.3

Deferred tax on other items recognised in equity

 

-

-

-

-

-

(6.8)

(6.8)

-

(6.8)

At 30 September 2018

 

45.3

17.8

5.0

(57.2)

53.5

1,597.5

1,661.9

13.5

1,675.4

Adjustment for transition to IFRS 15

2

-

-

-

-

-

(2.4)

(2.4)

-

(2.4)

Adjustment for transition to IFRS 9

2

-

-

-

-

-

(2.9)

(2.9)

-

(2.9)

Restated at 1 October 2018

 

45.3

17.8

5.0

(57.2)

53.5

1,592.2

1,656.6

13.5

1,670.1

Profit for the period

 

-

-

-

-

-

45.6

45.6

0.5

46.1

Other comprehensive expense for the period

 

-

-

-

-

(5.6)

(18.2)

(23.8)

(0.3)

(24.1)

Total comprehensive income/(expense) for the period

 

-

-

-

-

(5.6)

27.4

21.8

0.2

22.0

Dividends

9

-

-

-

-

-

(57.4)

(57.4)

(1.0)

(58.4)

Euromoney dividend in specie

9, 27

-

-

-

-

-

(673.6)

(673.6)

-

(673.6)

Euromoney cash distribution

9, 27

-

-

-

-

-

(200.0)

(200.0)

-

(200.0)

Own shares acquired in the period

22

-

-

-

(2.5)

-

-

(2.5)

-

(2.5)

Own shares transferred on exercise of share options

 

-

-

-

8.6

-

-

8.6

-

8.6

Changes in non-controlling interests following disposal and closure of businesses

 

-

-

-

-

-

-

-

(3.3)

(3.3)

Fair value movement in available-for-sale assets

 

-

-

-

-

-

(4.9)

(4.9)

-

(4.9)

Credit to equity for share-based payments

 

-

-

-

-

-

7.8

7.8

-

7.8

Settlement of exercised share options of subsidiaries

 

-

-

-

-

-

(9.2)

(9.2)

-

(9.2)

Deferred tax on other items recognised in equity

 

-

-

-

-

-

(0.5)

(0.5)

-

(0.5)

At 31 March 2019

 

45.3

17.8

5.0

(51.1)

47.9

681.8

746.7

9.4

756.1

 

Condensed Consolidated Statement of Financial Position

 

At 31 March 2019

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

Note

£m

£m

£m

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

17

308.5

356.8

333.2

Other intangible assets

17

108.5

196.1

131.2

Property, plant and equipment

 

85.2

99.4

99.7

Investments in joint ventures

 

7.4

1.5

1.0

Investments in associates

 

74.3

771.0

769.5

Financial assets at fair value through other comprehensive income

 

30.3

-

-

Available-for-sale investments

 

-

33.5

20.4

Trade and other receivables

 

30.4

22.5

27.3

Other financial assets

20

5.6

18.1

18.4

Derivative financial assets

 

3.6

5.0

9.0

Retirement benefit assets

23

243.4

88.8

249.1

Deferred tax assets

 

58.3

71.2

49.5

 

 

955.5

1,663.9

1,708.3

Current assets

 

 

 

 

Inventories

 

20.6

23.0

31.5

Trade and other receivables

 

308.3

248.9

264.3

Current tax receivable

 

3.6

7.4

5.4

Other financial assets

20

6.9

7.2

245.3

Derivative financial assets

 

-

0.9

0.7

Cash and cash equivalents

 

382.6

15.6

437.8

Total assets of businesses held for sale

16

709.6

120.5

-

 

 

1,431.6

423.5

985.0

Total assets

 

2,387.1

2,087.4

2,693.3

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(460.4)

(433.9)

(492.9)

Dividends payable

9, 27

(873.6)

-

-

Current tax payable

 

(7.5)

(1.9)

(6.1)

Acquisition put option commitments

 

(0.5)

(0.6)

(0.6)

Borrowings

19

(4.7)

(226.0)

(222.3)

Derivative financial liabilities

 

-

(4.5)

(6.6)

Provisions

 

(38.9)

(41.4)

(38.8)

Total liabilities of businesses held for sale

16

(9.3)

(37.7)

-

 

 

(1,394.9)

(746.0)

(767.3)

Non-current liabilities

 

 

 

 

Trade and other payables

 

(2.5)

(2.2)

(2.0)

Acquisition put option commitments

 

-

(7.1)

(7.6)

Borrowings

19

(202.0)

(317.3)

(205.7)

Derivative financial liabilities

 

(14.8)

(6.0)

(13.5)

Retirement benefit obligations

23

(7.5)

(9.4)

(5.6)

Provisions

 

(6.7)

(15.0)

(10.0)

Deferred tax liabilities

 

(2.6)

(7.3)

(6.2)

 

 

(236.1)

(364.3)

(250.6)

Total liabilities

 

(1,631.0)

(1,110.3)

(1,017.9)

Net assets

 

756.1

977.1

1,675.4

 

 

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Financial Position

 

At 31 March 2019

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

Note

£m

£m

£m

SHAREHOLDERS' EQUITY

 

 

 

 

Called-up share capital

22

45.3

45.3

45.3

Share premium account

 

17.8

17.8

17.8

Share capital

 

63.1

63.1

63.1

Capital redemption reserve

 

5.0

5.0

5.0

Own shares

 

(51.1)

(57.9)

(57.2)

Translation reserve

 

47.9

75.2

53.5

Retained earnings

 

681.8

877.1

1,597.5

Equity attributable to owners of the Company

 

746.7

962.5

1,661.9

Non-controlling interests

 

9.4

14.6

13.5

 

 

756.1

977.1

1,675.4

 

Approved by the Board on 29 May 2019.

 

Condensed Consolidated Cash Flow Statement

 

For the 6 months ended 31 March 2019

 

 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Cash generated by operations

12

28.7

26.4

137.3

Taxation paid

 

(7.1)

(12.3)

(27.1)

Taxation received

 

1.8

10.8

4.8

Net cash generated by operating activities

 

23.4

24.9

115.0

 

 

 

 

 

Investing activities

 

 

 

 

Interest received

 

4.4

0.3

0.9

Dividends received from joint ventures and associates

26

12.2

17.1

23.1

Dividends received from available-for-sale investments

6

-

0.1

0.1

Purchase of property, plant and equipment

18

(7.6)

(15.7)

(30.4)

Expenditure on internally generated intangible fixed assets

17

(9.2)

(10.4)

(19.5)

Expenditure on other intangible assets

17

-

(0.2)

(0.2)

Purchase of financial assets held at fair value through other comprehensive income

 

(4.3)

-

-

Purchase of available-for-sale investments

 

-

(3.4)

(19.3)

Proceeds on disposal of property and plant and equipment

18

9.3

-

0.1

Proceeds on disposal of available-for-sale investments

 

-

1.0

1.0

Purchase of subsidiaries

14

(7.0)

(7.2)

(19.1)

Settlements and collateral payments on treasury derivatives

 

(3.9)

16.1

7.7

Investment in joint ventures and associates

 

(9.6)

(1.5)

(1.8)

Loans advanced to joint ventures and associates

 

-

(7.3)

(8.4)

Loans to joint ventures and associates repaid

 

0.1

-

0.2

(Costs)/proceeds on disposal of subsidiaries

15

(5.4)

(5.2)

146.3

Proceeds on disposal of joint ventures and associates

5

10.3

5.4

637.9

Sale/(purchase) of other financial assets

20

237.3

-

(237.3)

 

 

 

 

 

Net cash generated/(used) by investing activities

 

226.6

(10.9)

481.3

 

 

 

 

 

Financing activities

 

 

 

 

Equity dividends paid

9

(57.4)

(55.9)

(81.0)

Dividends paid to non-controlling interests

 

(1.0)

-

(0.2)

Purchase of own shares

22

(2.5)

(4.6)

(14.3)

Net (payment)/receipt on settlement of subsidiary share options

 

(0.5)

(1.5)

7.6

Interest paid

 

(14.6)

(17.2)

(37.7)

Bonds repaid

19

(218.5)

-

-

Bonds redeemed

19

(6.1)

-

-

Premium on redemption of bonds

 

(0.9)

-

-

Loan notes repaid

13

-

-

(0.1)

Increase/(decrease) in bank borrowings

13

-

66.6

(43.7)

 

 

 

 

 

Net cash used in financing activities

 

(301.5)

(12.6)

(169.4)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

13

(51.5)

1.4

426.9

Cash and cash equivalents at beginning of year

 

435.9

7.4

7.4

Exchange (loss)/gain on cash and cash equivalents

13

(1.8)

(0.3)

1.6

Net cash and cash equivalents at end of year

 

382.6

8.5

435.9

 

Condensed Consolidated Financial Statements               

Notes to the accounts

 

1 Basis of preparation      

The information for the 6 months ended 31 March 2019 and 31 March 2018 and for the year ended 30 September 2018 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the year ended 30 September 2018 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

The Group's business activities are split into six operating divisions: Insurance Risk, Property Information, EdTech, Energy 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.

 

Other than the Daily Mail, The Mail on Sunday and Metro businesses, the Group prepares accounts for a 6 month period ending on 31 March. The Daily Mail, The Mail on Sunday and Metro businesses prepare financial statements for a 26 or 27 week financial period ending on a Sunday near to the end of March and do not prepare additional financial statements corresponding to the Group's financial period 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 period of these businesses and the end of the Group's financial period and makes any material adjustments as appropriate.

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the interim management report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the condensed financial statements and notes. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least one year from the date of the interim financial report date. Accordingly, they continue to adopt the going concern basis in preparing the half yearly report.

 

The Annual Report and Accounts of DMGT plc are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as adopted by the European Union. These Condensed Financial Statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union.

 

Although not required by IAS 34, comparative figures for the Condensed Consolidated Income Statement for the year ended 30 September 2018  and the Condensed Consolidated Statement of Financial Position at 31 March 2018 have been included on a voluntary basis.

 

These Condensed Consolidated Financial Statements have been prepared in accordance with the accounting policies set out in the 2018 Annual Report and Accounts, as amended, where appropriate by the application of certain new or amended accounting standards in the period, described below, with the exception of changes in estimates that are required in determining the interim provision for income taxes. These policies are expected to be followed in the preparation of the full financial statements for the financial year ending 30 September 2019.

 

2 Significant accounting policies

 

The following new and amended IFRSs have been adopted during the period:               

·     IFRS 9, Financial Instruments (effective 1 January 2018)

·     IFRS 15, Revenue from Contracts with Customers (effective 1 January 2018)     

 

IFRS 9, Financial Instruments replaced IAS 39, Financial Instruments: Recognition and Measurement. The key areas of IFRS 9 which affect the Group are those which relate to the recognition of impairment provisions against receivables, the treatment of available-for-sale investments and new hedging requirements.

 

In accordance with the transitional provisions of IFRS 9 the Group has adopted IFRS 9 on a modified retrospective basis such that comparative figures have not been restated and remain in line with the requirements of IAS 39.

 

IFRS 9 contains three principal classification categories for financial assets - Measured at Amortised Cost, Fair Value through Other Comprehensive Income (FVTOCI) and Fair Value through Profit and Loss (FVTPL) and eliminates the IAS 39 categories of held to maturity, loans and receivables and held for sale. The main effect resulting from this reclassification relates to the Group's equity investments which under IAS 39 were classified as available-for-sale whilst under IFRS 9 are now classified as Fair Value through Other Comprehensive Income. As a result, all fair value movements are now recorded in Other Comprehensive Income and gains and losses will not be recycled to the Income Statement on disposal although dividend income will continue to be recorded in the Income Statement. A fair value gain of £9.4 million on transition has been recorded on transition to IFRS 9.

 

With regard to impairment provisions, IFRS 9 introduces the expected credit loss (ECL) model which requires an impairment provision to be made on initial recognition of the receivable which under IAS 39 was required only when a loss event occurred. IFRS 9 requires ECLs to be recognised by reference to historical recovery rates and forward-looking indicators. The Group has applied the simplified approach to trade receivables and contract assets. The IFRS 9 ECL model has resulted in an ECL loss of £0.3 million on transition to IFRS 9 in relation to trade and other receivables.

 

The IFRS 9 ECL model also applies to long-term receivables from associates and joint ventures. The Group has recorded an ECL loss of £12.0 million on transition to IFRS 9 in relation to amounts due from its associates.

 

The Group has adopted the new general hedge accounting model in IFRS 9 which aligns hedge accounting with the Group's risk management strategy. All hedge relationships designated under IAS 39 are treated as continuing hedges under IFRS 9. Under the new standard, the Group has excluded the currency basis from its hedge designation retrospectively.

 

A summary of the transition impact of IFRS 9 is shown below:

 

 

Previously reported

As at 1 October 2018

IFRS 9 transition adjustment

Restated

 

£m

£m

£m

Financial assets at FVTOCI

 20.4

 9.4

 29.8

Trade and other receivables

 27.3

 (0.3)

 27.0

Other financial assets

 18.4

 (12.0)

 6.4

 

 66.1

 (2.9)

 63.2

 

IFRS 15 Revenue from Contracts with Customers replaced IAS 18 Revenue. In accordance with the transitional provisions of IFRS 15 the Group has adopted IFRS 15 on a modified retrospective basis such that comparative figures have not been restated and remain in line with the requirements of IAS 18.

 

The new revenue recognition standard introduced additional guidance surrounding performance obligations within sales contracts and the timing of revenue recognition. The standard introduces a five step model which will require judgement in their application, which are as follows:

 

·     Identify the contract(s) with the customer

·     Identify the separate performance obligations in the contract

·     Determine the contract price

·     Allocate the transaction price to the performance obligations in the contract

·     Recognise revenue when each performance obligation has been satisfied

 

In addition to changes to the timing of revenue recognition IFRS 15 also introduces changes to the recognition of incremental costs incurred when obtaining a contract with a customer known as contract acquisition costs. These include commissions paid to employees. The standard requires such costs to be recognised as an asset, when the Group expects to recover them, and charge them to the Income Statement on a systematic basis rather than being expensed immediately. Judgement is required to determine this period and whether this is the contract term or a longer period such as the estimated customer life for contracts which are expected to renew. Such deferred costs are de-recognised and charged immediately to the Consolidated Income Statement when no future economic benefits are expected.

 

The adoption of IFRS 15 resulted in a reduction in net assets of £2.4 million which is summarised as follows:

 

Segment

Increased contract acquisition costs

(Increased) / decreased deferred revenue and accruals

Increased / (decreased) deferred tax assets

IFRS 15 transition adjustment

 

£m

£m

£m

£m

Insurance Risk

 1.1

 1.2

 (0.6)

 1.7

Property Information

 1.0

 (1.1)

 -

 (0.1)

EdTech

 -

 (7.3)

 1.9

 (5.4)

Energy Information

 1.6

 -

 (0.2)

 1.4

 

 3.7

 (7.2)

 1.1

 (2.4)

 

The IFRS 15 transition adjustment represents the reversal of certain revenues which met the criteria for recognition under IAS 18 but do not so under IFRS 15 together with contract acquisition costs which were expensed immediately under IAS 18 and which are now deferred and recognised on a systemic basis under IFRS 15.

 

The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are only effective for the Group's accounting periods beginning on or after 1 October 2018. These new pronouncements are listed below:

 

·     Amendments to IAS 28, Investments in Associates and Joint Ventures (effective 1 January 2018)

·     Amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards (effective 1 January 2018)

·     IFRS 16, Leases (effective 1 January 2019)

·     Amendment to IFRS 2, Share Based Payments - benefits (effective 1 January 2019 but not yet endorsed by the EU)

·     IFRIC 22, Foreign Currency Transactions and advance consideration (effective 1 January 2019 but not yet endorsed by the EU)

·     IFRIC 23, Uncertainty over Income Tax Treatments (effective 1 January 2019 but not yet endorsed by the EU)

 

Other than IFRS 16, the adoption of standards, amendments and interpretations which have been issued but are not yet effective are not expected to have a material impact on the Group's Consolidated Financial Statements.

 

IFRS 16, effective for the 2020 fiscal year, eliminates the distinction between operating and finance leases for lessees. The standard requires lessees to recognise right of use assets and corresponding liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. The new standard replaces the operating lease expense with a depreciation charge on the underlying asset and an interest expense on the liability.

 

Lessors will continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting largely unchanged from its predecessor, IAS 17. The Group expects to adopt IFRS 16 on a modified retrospective basis such that the Group will recognise the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings i.e. as at 1 October 2019 with no restatement of prior periods.

 

The Group is in the process of quantifying the impact of this standard although based on the undiscounted operating lease commitments, there will be a large increase in total assets - largely in the land and buildings category, together with an increase in financial liabilities as liabilities relating to current operating leases are recognised.

 

Since existing operating lease charges will be replaced with a depreciation and finance charge, EBITDA will increase. These changes will also have an impact on the Group's tax charge. The standard will also require the Group to make key accounting judgements in particular around lease renewal assumptions and discount rates.

 

For transition, as permitted by IFRS 16, the Group intends to apply the modified retrospective approach to existing operating leases which will be capitalised under the new standard (i.e. retrospectively, with the cumulative effect recognised at the date of initial application as an adjustment to the opening balance of  retained earnings with no restatement of comparative information in the financial statements). For existing finance leases, the carrying amounts before transition will represent the 30 September 2019 values assigned to the right of use asset and lease liability.

 

In addition as permitted by IFRS 16 the Group does not intend to bring onto the balance sheet short-term leases (those with 12 months or less to run as at 1 October 2019 including reasonably certain options to extend) or low value leases. Costs for these items will therefore continue to be expensed directly to the Income Statement. The Group also expects to separate non-lease components from lease components as part of the transition adjustment and in some cases to apply a single discount rate to a portfolio of leases with reasonably similar characteristics.

 

The financial impact of adopting IFRS 16 is dependent on circumstances at the date of transition, it is not yet practicable to determine a reliable estimate of the financial impact on the Group.

 

Critical accounting judgements and key sources of estimation uncertainty

In addition to the judgement taken by management in selecting and applying the accounting policies set out above, management has made the following judgements concerning the amounts recognised in these Condensed Consolidated Financial Statements:

 

Adjusted measures

The Group presents adjusted operating profit and adjusted profit before tax by making adjustments for costs and profits which management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect on current year earnings.

 

Such items would include, but are not limited to, costs associated with business combinations, gains and losses on the disposal of businesses, finance costs relating to premia on bond buy backs, fair value movements, exceptional operating costs, impairment of goodwill and amortisation and impairment of intangible assets arising on business combinations.

 

Exceptional operating costs include reorganisation costs and similar items of a significant and a non-recurring nature. In addition, the Group presents an adjusted profit after tax measure by making adjustments for certain tax charges and credits which management believe to be significant by virtue of their size, nature or incidence or which have a distortive effect. The Group uses these adjusted measures to evaluate performance and as a method to provide shareholders with clear and consistent reporting.

 

See Note 10 for a reconciliation of profit before tax to adjusted profit before and after tax.

The Group also presents a measure of net debt, see Note 13 for further detail.

 

Investment in Euromoney                                                                                                                               

The Group has considered factors which may indicate de facto control following the reduction in its shareholding to below 50.0% in a prior period.

 

The Group has determined that it does not have de facto control over Euromoney since it cannot block any ordinary resolutions, which comprise the majority of corporate actions, has no control over the remuneration of Euromoney's directors and has no control over Euromoney's day-to-day operations nor budgets. In addition, the Group has no material trading activities or relationships which are critical for Euromoney to carry out its business. Accordingly, the Group has equity accounted for Euromoney during the period.

 

The Group's investment was distributed to shareholders by way of a dividend in specie on 2 April 2019, see Note 27 for further detail.

                                                               

Retirement benefits

After considering the principles set out in IFRIC 14, the Group has recognised a net surplus on its pension schemes amounting to £235.9 million (31 March 2018 £79.4 million, 30 September 2018 £243.5 million).

 

The following represent key sources of estimation uncertainty that have the most significant effect on the amounts recognised in these Condensed Consolidated Financial Statements:

 

Forecasting

The Group prepares medium-term forecasts based on Board-approved budgets and three-year outlooks. These are used to support judgements made in the preparation of the Group's financial statements including the recognition of deferred tax assets in different jurisdictions, the Group's going concern assessment and for the purposes of impairment reviews. Longer-term forecasts use long-term growth rates applicable to the relevant businesses.

 

Impairment of goodwill and intangible assets

Determining whether goodwill and intangible or other assets are impaired or whether a reversal of an impairment should be recorded requires a comparison of the balance sheet carrying value with the recoverable amount of the asset or cash generating unit (CGU). The recoverable amount is the higher of the value in use and fair value less costs to sell.

 

The value in use calculation requires management to estimate the future cash flows expected to arise from the asset or CGU and calculate the net present value of these cash flows using a suitable discount rate. A key area of estimation is deciding the long-term growth rate and the operating cash flows of the applicable businesses and the discount rate applied to those cash flows. The carrying amount of goodwill and intangible assets at 31 March 2019 was £417.0 million (31 March 2018 £552.9 million, 30 September 2018 £464.4 million).

 

Acquisitions and intangible assets

The Group's accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of identifiable assets, liabilities and contingent liabilities acquired with any excess consideration representing goodwill. Determining the fair value of assets, liabilities and contingent liabilities acquired requires significant estimates and assumptions, including assumptions with respect to cash flows and unprovided liabilities and commitments, including in respect to tax, to be used. The Group recognises intangible assets acquired as part of a business combination at fair value at the date of the acquisition. The determination of these fair values is based upon management's judgement and includes assumptions on the timing and amount of future cash flows generated by the assets and the selection of an appropriate discount rate. Additionally, management must estimate the expected useful economic lives of intangible assets and charge amortisation on these assets accordingly. 

 

Taxation

Being a multinational group with tax liabilities arising in many geographic locations inherently leads to complexity in the Group's tax structure. Accordingly, the Group occasionally seeks advice from external tax and legal advisors. The resolution of issues is not always within the control of the Group and actual tax liabilities or refunds may differ from those anticipated due to changes in tax legislation, differing interpretations of tax legislation and uncertainties surrounding the application of tax legislation. Such issues can take several years to resolve.            

                                                                                                                                                                       

The Group accounts for unresolved issues based on its best estimate of the final outcome, however the inherent uncertainty regarding these items means that the eventual resolution could differ significantly from the accounting estimates and, therefore, impact the Group's results and future cash flows. In situations where uncertainties exist, provision is made for contingent tax liabilities and assets when it is more likely than not that there will be a cash impact. These provisions are made for each uncertainty individually on the basis of management estimates following consideration of the available relevant information. The measurement basis adopted represents the best predictor of the resolution of the uncertainty which is usually based on the most likely cash outflow. The company reviews the adequacy of these provisions at the end of each reporting period and adjusts them based on changing facts and circumstances. In the current period, the Group's uncertain tax positions relate mainly to Euromoney, further detail is provided in Note 8.

                                                                       

In addition, the Group makes estimates regarding the recoverability of deferred tax assets relating to losses based on forecasts of future taxable profits which are, by their nature, uncertain.           

 

Retirement benefit obligations

The cost of defined benefit pension plans is determined using actuarial valuations prepared by the Group's actuaries. This involves making certain assumptions concerning discount rates, future salary increases and mortality rates. Due to the long-term nature of these plans, such estimates are

subject to significant uncertainty. The assumptions and the resulting estimates are reviewed annually and, when appropriate, changes are made which affect the actuarial valuations and, hence, the amount of retirement benefit expense recognised in the Condensed Consolidated Income

Statement and the amounts of actuarial gains and losses recognised in the Condensed Consolidated Statement of Changes in Equity.

 

The fair value of the Group's pension scheme assets include quoted and unquoted investments. The value of unquoted investments require more judgement as their values are not directly observable. Accordingly the assumptions used in valuing unquoted investments are affected by current market conditions and trends which could result in changes in their fair value after the measurement date. A 1.0% movement in the value of unquoted pension scheme assets is estimated to change the value of the Group's pension scheme assets by £21.2 million (31 March 2018 £15.6 million, 30 September 2018 £21.0 million).

 

The carrying amount of the retirement benefit obligation at 31 March 2019 was a net surplus of £235.9 million (31 March 2018 £79.4 million, 30 September 2018 £243.5 million). The assumptions used can be found in Note 23.

 

 

3 Segment analysis
The Group's business activities are split into six operating divisions: Insurance Risk, Property Information, EdTech, Energy 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 results from the Group's Events and Exhibitions segment are impacted by the seasonality of exhibitions and conferences held in each accounting period. The impact of this seasonality and details of the types of products and services from which each segment derives its revenues are included within the business review.

 

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 Notes 1 and 2.

 

Unaudited 6 months ended 31 March 2019

 

Total and external revenue

Segment operating profit/(loss)

Less operating profit/(loss) of joint ventures and associates         

Adjusted operating profit/(loss)

 

Note

£m

£m

£m

£m

Insurance Risk

 

 119.2

 25.8

 (0.2)

 26.0

Property Information

 

 114.0

 21.0

 0.4

 20.6

EdTech

 

 38.0

 3.1

-

 3.1

Energy Information

 

 36.9

 2.0

 (1.5)

 3.5

Events and Exhibitions

 

 72.5

 18.0

-

 18.0

Consumer Media

 

 343.3

 39.3

 0.8

 38.5

 

 

 723.9

 109.2

 (0.5)

 109.7

Corporate costs

 

-

 (2.0)

 17.3

 (19.3)

 

 

 723.9

 

 

 

Adjusted operating profit

 

 

 

 

 90.4

Exceptional operating expense, impairment of internally generated and acquired computer software, property, plant and equipment

 

 

 

 

 (5.6)

Impairment of goodwill and acquired intangible assets arising on business combinations

 17

 

 

 

 (20.9)

Amortisation of acquired intangible assets arising on business combinations

 

 

 

 

 (7.9)

Operating profit before share of results of joint ventures and associates

 

 

 

 

 56.0

Share of results of joint ventures and associates

 4

 

 

 

 (16.6)

Total operating profit

 

 

 

 

 39.4

Other gains and losses

 5

 

 

 

 16.2

Profit before investment revenue, net finance costs and tax

 

 

 

 

 55.6

Investment revenue

 6

 

 

 

 6.6

Finance expense

 7

 

 

 

 (15.5)

Finance income

 7

 

 

 

 3.7

Profit before tax

 

 

 

 

 50.4

Tax

 8

 

 

 

 (4.3)

Profit for the period

 

 

 

 

 46.1

 

 

An analysis of the amortisation and impairment of goodwill and intangible assets, exceptional operating costs by segment is as follows:

 

Unaudited 6 months ended 31 March 2019

 

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

Exceptional operating costs

 

 

(Note 17)

(Note 17)

(Note 17)

 

 

 

£m

£m

£m

£m

Insurance Risk

 

 (0.1)

-

-

-

Property Information

 

 (3.4)

 (4.6)

 (20.9)

-

EdTech

 

 (3.7)

 (1.1)

-

 0.1

Energy Information

 

 (2.0)

 (1.6)

-

-

Events and Exhibitions

 

-

 (0.5)

-

-

Consumer Media

 

 (1.4)

 (0.1)

-

 (2.3)

 

 

 (10.6)

 (7.9)

 (20.9)

 (2.2)

Corporate costs

 

-

-

-

 (3.4)

Total and continuing operations

 

 (10.6)

 (7.9)

 (20.9)

 (5.6)

 

The Group's exceptional operating (expense)/income is analysed as follows:

 

Unaudited 6 months ended 31 March 2019

 

LTIP

 

Pension past service cost

Property

Total

 

 

(i)

(ii)

 

 

 

 

£m

£m

£m

£m

EdTech

 

-

-

 0.1

 0.1

Consumer Media

 

 (0.4)

 (1.9)

-

 (2.3)

 

 

 (0.4)

 (1.9)

 0.1

 (2.2)

Corporate costs

 

 (2.2)

 (1.2)

-

 (3.4)

Total and continuing operations

 

 (2.6)

 (3.1)

 0.1

 (5.6)

 

(i)     

During the year ended 30 September 2018, the Group sold its investment in ZPG resulting in a profit on sale of £508.4 million. As a direct consequence of this disposal, the value of the DMGT 2017 Long Term Incentive Plan (the LTIP) is estimated to have increased by £16.5 million. As the LTIP includes a service period condition, IFRS 2, Share Options requires the LTIP charge to be spread over the service period until the award vests. The LTIP charge recognised in the period amounts to £2.6 million. Since the profit on sale of ZPG is excluded from our adjusted profit measure we have treated the incremental increase in the LTIP charge as an adjusting item and will continue to do so until the award vests.

(ii)   

The pension past service cost represents a non-cash charge. This follows a High Court ruling in the Lloyds Banking Group case to equalise benefits for the effect of unequal Guaranteed Minimum Pensions (GMP) between men and women for UK pension schemes which had contracted out of the State Earnings Related Pension Scheme.

 

The Group's tax charge includes a related credit of £1.0 million in relation to these exceptional operating costs.

 

An analysis of the depreciation of property, plant and equipment, research costs, investment revenue, and finance income and expense by segment is as follows:

 

Unaudited 6 months ended 31 March 2019

 

Depreciation of property, plant and equipment

Research costs

Investment revenue

Finance Income

Finance expense

 

 

(Note 18)

 

(Note 6)

(Note 7)

(Note 7)

 

 

£m

£m

£m

£m

£m

Insurance Risk

 

 (2.4)

 (18.2)

 0.2

-

-

Property Information

 

 (1.3)

 (0.1)

-

-

 (0.1)

EdTech

 

 (0.2)

-

 0.7

-

 (0.1)

Energy Information

 

 (1.3)

-

 0.1

-

 (0.1)

Events and Exhibitions

 

 (0.2)

-

-

-

 

Consumer Media

 

 (7.0)

-

-

 2.6

 (0.3)

 

 

 (12.4)

 (18.3)

 1.0

 2.6

 (0.6)

Corporate costs

 

 (0.3)

-

 5.6

 1.1

 (14.9)

Total and continuing operations

 

 (12.7)

 (18.3)

 6.6

 3.7

 (15.5)

 

Unaudited 6 months ended 31 March 2018

 

Total and external revenue

Segment operating profit

Less operating profit/(loss) of joint ventures and associates

Adjusted operating profit/(loss)

 

 

 

 

 

 

 

Note

£m

£m

£m

£m

Insurance Risk

 

 112.6

 18.9

 (0.7)

 19.6

Property Information

 

 151.3

 27.9

 0.1

 27.8

EdTech

 

 32.5

 3.2

-

 3.2

Energy Information

 

 43.1

 (0.5)

 (0.3)

 (0.2)

Events and Exhibitions

 

 71.7

 20.2

-

 20.2

Consumer Media

 

 334.6

 52.4

 14.8

 37.6

 

 

 745.8

 122.1

 13.9

 108.2

Corporate costs

 

-

 2.3

 26.7

 (24.4)

 

 

 745.8

 

 

 

Adjusted operating profit

 

 

 

 

 83.8

Exceptional operating income, impairment of internally generated and acquired computer software, property, plant and equipment

 

 

 

 

 0.8

Amortisation of acquired intangible assets arising on business combinations

 

 

 

 

 (7.8)

Operating profit before share of results of joint ventures and associates

 

 

 

 

 76.8

Share of results of joint ventures and associates

 4

 

 

 

 55.8

Total operating profit

 

 

 

 

 132.6

Other gains and losses

 5

 

 

 

 (2.8)

Profit before investment revenue, net finance costs and tax

 

 

 

 

 129.8

Investment revenue

 6

 

 

 

 1.9

Finance expense

 7

 

 

 

 (20.9)

Finance income

 7

 

 

 

 2.6

Profit before tax

 

 

 

 

 113.4

Tax

 8

 

 

 

 3.9

Profit for the Period

 

 

 

 

 117.3

 

 

An analysis of the amortisation and impairment of intangible assets and exceptional operating costs by segment is as follows:

 

Unaudited 6 months ended 31 March 2018

Amortisation of intangible assets not arising on business combinations

Amortisation of intangible assets arising on business combinations

Exceptional operating income/(expense)

 

(Note 17)

(Note 17)

 

 

£m

£m

£m

Insurance Risk

 (7.5)

-

-

Property Information

 (1.8)

 (4.3)

 (1.5)

EdTech

 (2.4)

 (1.4)

 (0.1)

Energy Information

 (1.6)

 (1.7)

 3.8

Events and Exhibitions

-

 (0.3)

-

Consumer Media

 (2.3)

 (0.1)

 (1.4)

Total and continuing operations

 (15.6)

 (7.8)

 0.8

 

 

The Group's exceptional operating income/(expense) is analysed as follows:

 

Unaudited 6 months ended 31 March 2018

Severance costs

Other

Legal fees

Total

 

 

 

(i)

 

 

£m

£m

£m

£m

Property Information

 0.1

-

 (1.6)

 (1.5)

EdTech

 0.2

 (0.3)

-

 (0.1)

Energy Information

-

-

 3.8

 3.8

Consumer Media

 (0.1)

 (1.3)

-

 (1.4)

Total and continuing operations

 0.2

 (1.6)

 2.2

 0.8

 

 

The Group's tax charge includes a related credit of £0.7 million in relation to these exceptional operating costs.

 

(i)

Exceptional charges in the Property Information segment relate to fees paid to the Group's lawyers in defence of various claims brought against businesses in this segment. The exceptional credit in the Energy Information segment relates to a release of provisions no longer required.

 

An analysis of the depreciation of property, plant and equipment, research costs, investment revenue, and net finance costs by segment is as follows:

 

Unaudited 6 months ended 31 March 2018

Depreciation of property, plant and equipment

Research costs

Investment revenue

Finance Income

Finance expense

 

 

 

 

 

 

 

(Note 18)

 

(Note 6)

(Note 7)

(Note 7)

 

£m

£m

£m

£m

£m

Insurance Risk

 (2.2)

 (27.8)

 0.2

-

-

Property Information

 (1.4)

 (0.1)

-

-

-

EdTech

 (0.3)

-

 0.7

-

-

Energy Information

 (1.8)

 (0.6)

 0.1

-

 (0.8)

Events and Exhibitions

 (0.3)

-

-

-

-

Consumer Media

 (7.3)

-

-

-

 (0.5)

 

 (13.3)

 (28.5)

 1.0

-

 (1.3)

Corporate costs

 (0.1)

-

 0.9

 2.6

 (19.6)

Total and continuing operations

 (13.4)

 (28.5)

 1.9

 2.6

 (20.9)

 

 

Audited Year ended 30 September 2018

 

Total and external revenue

Segment operating profit/(loss)

Less operating profit/(loss) of joint ventures and associates

Adjusted operating profit/(loss)

 

 

 

 

 

 

 

Note

£m

£m

£m

£m

Insurance Risk

 

 229.4

 33.8

 (0.8)

 34.6

Property Information

 

 271.6

 58.0

-

 58.0

EdTech

 

 68.3

 7.4

-

 7.4

Energy Information

 

 85.5

 (0.5)

 (0.8)

 0.3

Events and Exhibitions

 

 117.8

 27.7

-

 27.7

Consumer Media

 

 653.8

 83.6

 19.3

 64.3

 

 

 1,426.4

 210.0

 17.7

 192.3

Corporate costs

 

-

 12.8

 60.2

 (47.4)

 

 

 1,426.4

 

 

 

Adjusted operating profit

 

 

 

 

 144.9

Exceptional operating expense, impairment of internally generated and acquired computer software, property, plant and equipment

 

 

 

 

 (78.9)

Impairment of goodwill and acquired intangible assets arising on business combinations

 17

 

 

 

 (0.3)

Amortisation of acquired intangible assets arising on business combinations

 

 

 

 

 (15.5)

Operating profit before share of results of joint ventures and associates

 

 

 

 

 50.2

Share of results of joint ventures and associates

 4

 

 

 

 118.4

Total operating profit

 

 

 

 

 168.6

Other gains and losses

 5

 

 

 

 553.0

Profit before investment revenue, net finance costs and tax

 

 

 

 

 721.6

Investment revenue

 6

 

 

 

 4.8

Finance expense

 7

 

 

 

 (40.0)

Finance income

 7

 

 

 

 5.5

Profit before tax

 

 

 

 

 691.9

Tax

 8

 

 

 

 (3.7)

Profit for the year

 

 

 

 

 688.2

 

 

 

Audited Year ended 30 September 2018

 

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

Impairment of internally generated and acquired computer software

Exceptional operating costs

 

 

(Note 17)

(Note 17)

(Note 17)

(Note 17)

 

 

 

£m

£m

£m

£m

£m

Insurance Risk

 

 (15.0)

-

-

 (58.3)

-

Property Information

 

 (3.9)

 (8.7)

-

-

 (1.5)

EdTech

 

 (5.2)

 (2.8)

-

-

-

Energy Information

 

 (3.4)

 (3.3)

 (0.3)

 (0.1)

 3.8

Events and Exhibitions

 

 (0.1)

 (0.6)

-

-

-

Consumer Media

 

 (5.2)

 (0.1)

-

-

 (18.2)

 

 

 (32.8)

 (15.5)

 (0.3)

 (58.4)

 (15.9)

Corporate costs

 

-

-

-

-

 (4.6)

Total and continuing operations

 

 (32.8)

 (15.5)

 (0.3)

 (58.4)

 (20.5)

 

 

The Group's exceptional operating (expense)/income is analysed as follows:

 

Audited Year ended 30 September 2018

Severance costs

LTIP

Pension past service cost

Property

Legal fees

Total

 

 

(i)

(ii)

 

(iii)

 

 

£m

£m

£m

£m

£m

£m

Property Information

 0.1

-

-

-

 (1.6)

 (1.5)

EdTech

 0.2

-

-

 (0.2)

-

-

Energy Information

-

-

-

-

 3.8

 3.8

Consumer Media

 (0.1)

 (0.8)

 (17.3)

-

-

 (18.2)

 

 0.2

 (0.8)

 (17.3)

 (0.2)

 2.2

 (15.9)

Corporate costs

-

 (4.7)

-

-

 0.1

 (4.6)

Total and continuing operations

 0.2

 (5.5)

 (17.3)

 (0.2)

 2.3

 (20.5)

 

The Group's tax charge includes a related credit of £4.3 million in relation to these exceptional operating costs.

 

(i)             During the year ended 30 September 2018, the Group sold its investment in ZPG resulting in a profit on sale of £508.4 million. As a direct consequence of this disposal, the value of the DMGT 2017 Long Term Incentive Plan (the LTIP) is estimated to have increased by £16.5 million. As the LTIP includes a service period condition, IFRS 2, Share Options requires the LTIP charge to be spread over the service period until the award vests. The LTIP charge recognised in the period amounts to £5.5 million which is anticipated to be repeated for the following two years. Since the profit on sale of ZPG is excluded from our adjusted profit measure we have treated the incremental increase in the LTIP charge as an adjusting item and will continue to do so until the award vests.

 

(ii)           The pension past service cost represents a non-cash charge. This follows a change to the scheme rules in one of the Group's defined benefit (DB) pension plans capping future pension increases at 5%. This aligns the pension increases of this scheme with all other Group DB pension plans. 

 

(iii)          Exceptional charges in the Property Information segment relate to fees paid to the Group's lawyers in defence of various claims brought against businesses in this segment. The exceptional credit in the Energy Information segment relates to a release of provisions no longer required. 

 

An analysis of the depreciation of property, plant and equipment, research costs, investment revenue and finance income and expense by segment is as follows:

 

 

Audited Year ended 30 September 2018

Depreciation of property, plant and equipment

Research costs

Investment revenue

Finance Income

Finance expense

 

 

 

 

 

 

 

(Note 18)

 

(Note 6)

(Note 7)

(Note 7)

 

£m

£m

£m

£m

£m

Insurance Risk

 (4.9)

 (37.2)

 0.3

-

-

Property Information

 (2.8)

 (0.1)

-

-

-

EdTech

 (0.6)

-

 1.4

-

-

Energy Information

 (3.3)

 (4.0)

-

-

 (2.5)

Events and Exhibitions

 (0.5)

-

-

-

-

Consumer Media

 (14.9)

 (0.5)

-

 2.0

 (1.1)

 

 (27.0)

 (41.8)

 1.7

 2.0

 (3.6)

Corporate costs

 (0.2)

-

 3.1

 3.5

 (36.4)

Total and continuing operations

 (27.2)

 (41.8)

 4.8

 5.5

 (40.0)

 

 

The Group's revenue comprises sales excluding value added tax, less discounts and commission where applicable and is analysed as follows:

 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited Year ended 30 September 2018

 

Point in time

Over time

Total and continuing operations

Total and continuing operations

Total and continuing operations

 

Under IFRS 15

Under IFRS 15

Under IFRS 15

Under IAS 18

Under IAS 18

 

£m

£m

£m

£m

£m

Print advertising

 97.7

-

 97.7

 100.2

 187.0

Digital advertising

 0.1

 71.2

 71.3

 68.3

 135.9

Circulation

 143.7

-

 143.7

 146.8

 291.4

Subscriptions

 3.7

 208.9

 212.6

 205.6

 399.1

Events, conferences and training

 72.5

-

 72.5

 70.7

 116.2

Transactions and other

 113.4

 12.7

 126.1

 154.2

 296.8

 

 431.1

 292.8

 723.9

 745.8

 1,426.4

 

 

By geographic area

The majority of the Group's operations are located in the United Kingdom, North America, rest of Europe and Australia. The analysis below is based on the location of companies in these regions.

 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited Year ended 30 September 2018

 

Point in time

Over time

Total and continuing operations

Total and continuing operations

Total and continuing operations

 

Under IFRS 15

Under IFRS 15

Under IFRS 15

Under IAS 18

Under IAS 18

 

£m

£m

£m

£m

£m

UK

 334.1

 69.1

 403.2

 403.4

 812.0

North America

 13.9

 212.2

 226.1

 247.1

 475.4

Rest of Europe

 13.0

 6.3

 19.3

 20.3

 40.1

Australia

-

 4.7

 4.7

 4.7

 8.7

Rest of the World

 70.1

 0.5

 70.6

 70.3

 90.2

 

 431.1

 292.8

 723.9

 745.8

 1,426.4

 

 

The analysis below is based on the geographic location of customers in these regions.
 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited Year ended 30 September 2018

 

Point in time

Over time

Total and continuing operations

Total and continuing operations

Total and continuing operations

 

Under IFRS 15

Under IFRS 15

Under IFRS 15

Under IAS 18

Under IAS 18

 

£m

£m

£m

£m

£m

UK

 327.3

 53.5

 380.8

 394.3

 772.4

North America

 15.9

 185.1

 201.0

 216.3

 410.8

Rest of Europe

 36.8

 35.3

 72.1

 74.1

 143.2

Australia

 0.1

 5.7

 5.8

 3.1

 10.2

Rest of the World

 51.0

 13.2

 64.2

 58.0

 89.8

 

 431.1

 292.8

 723.9

 745.8

 1,426.4

 

 

4 Share of results of joint ventures and associates

 

 

 

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Share of adjusted operating profits/(losses) from operations of joint ventures

 

 1.4

 (1.9)

 (3.2)

Share of adjusted operating profits from operations of associates

(i)

 16.1

 42.5

 77.2

Share of profits before exceptional operating costs, amortisation, impairment of goodwill, interest and tax

 12

 17.5

 40.6

 74.0

Share of associates' other gains and losses

 10

-

 43.3

 102.9

Share of exceptional operating income/(costs) of associates

 10

 7.0

 (2.3)

 (4.9)

Share of amortisation of intangibles arising on business combinations of associates

 10

 (6.1)

 (10.7)

 (16.7)

Share of associates' interest payable

 

 (0.1)

 (3.3)

 (4.0)

Share of joint ventures' tax

8, 10

 (0.1)

-

 (0.1)

Share of associates' tax

8, 10

 (7.1)

 (9.8)

 (31.2)

Share of impairment of goodwill in associates

 10

-

 (1.5)

 (1.5)

Share of associates' change in present value of acquisition put options

 

-

 0.3

-

Share of fair value movement of contingent consideration payable of associates

 

-

-

 0.7

Impairment of carrying value of held for sale associates

10, 27, (ii)

 (27.7)

 (0.8)

 (0.8)

 

 

 (16.6)

 55.8

 118.4

Share of associates' items of other comprehensive (expense)/income

 

 (0.7)

 (7.1)

 14.7

Share of results of joint ventures and associates

 

 (17.3)

 48.7

 133.1

 

 

 

 

 

Share of results from operations of joint ventures

 

 1.3

 (1.9)

 (3.3)

Share of results from operations of associates

 

 9.8

 58.5

 122.5

Impairment of carrying value of held for sale associates

 

 (27.7)

 (0.8)

 (0.8)

 

 

 (16.6)

 55.8

 118.4

Share of associates' items of other comprehensive (expense)/income

 

 (0.7)

 (7.1)

 14.7

Share of results of joint ventures and associates

 

 (17.3)

 48.7

 133.1

 

(i)             Share of adjusted operating profits from associates includes £23.0 million (period ended 31 March 2018 £27.4 million, year ended 30 September 2018 £55.9 million) from the Group's interest in Euromoney Institutional Investor PLC (Euromoney) held centrally and £nil (period ended 31 March 2018 £17.0 million, year ended 30 September 2018 £23.4 million) from the Group's interest in ZPG Plc (ZPG) in the Consumer Media segment.

 

(ii)           Represents a £27.7 million write-down in the carrying value of Euromoney held centrally.

 

In the prior periods, represents a £0.3 million write-down in the carrying value of RLTO Ltd in the Property Information segment and £0.5 million write-down in the carrying value of Eatfirst UK Ltd held centrally.

 

 

5 Other gains and losses

 

 

Note

Unaudited 6 months ended 31 March 2019

Unaudited 6 months ended 31 March 2018

Year ended 30 September 2018

 

 

£m

£m

£m

Profit on disposal of available-for-sale investments

 

-

 0.9

 1.0

Impairment of available-for-sale investments

 

-

 (0.3)

 (1.8)

Profit on disposal of property, plant and equipment

 

 1.1

-

-

(Loss)/profit on disposal and closure of businesses

(i)

 (0.9)

 (8.8)

 37.1

Recycled cumulative translation differences

(ii)

 1.0

 4.1

 10.4

Gain on dilution of stake in associate

(iii)

-

 0.8

 0.7

Loss on change in control

(iv)

 (3.0)

-

 (3.5)

Profit on disposal of joint ventures and associates

(v)

 18.0

 0.5

 509.1

 

 10

 16.2

 (2.8)

 553.0

 

There is a tax charge of £nil in relation to these other gains and losses (period ended 31 March 2018 £nil, year ended 30 September 2018 £17.6 million) in relation to these other gains and losses.

 

(i)   In the current period this principally relates to a £1.3 million working capital adjustment increasing the loss on disposal of Locus Energy which was sold in the prior period.

 

In the prior period ended 31 March 2018 this principally relates to a £4.1 million loss on the sale of Hobsons Solutions, together with an additional £4.0 million costs on the sale of Admissions in the EdTech segment and an accounting loss of £0.7 million on the closure of Xceligent.

 

In the prior year ended 30 September 2018 this principally relates to a £51.7 million profit on the sale of EDR in the Property Information segment, £6.3 million loss on the sale of Locus Energy, a £0.9 million profit on disposal of assets in acquiring an interest in Linevision and a £7.2 million loss on the disposal Digital H2O in the Energy segment, a £4.8 million loss on Hobsons Solutions and additional costs of £3.5 million on the sale of Hobsons Admissions and Edumate on in the EdTech segment. Additionally, a loss of £4.8 million was recognised on the closure of Xceligent, gains on various disposals amounting to £0.4 million recognised in the Consumer Media segment and £0.1 million in the Events segment.

 

(ii)      Represents cumulative translation differences required to be recycled through the Consolidated Income Statement on disposals.
 

(iii)    In the prior period ended 31 March 2018 and year ended 30 September 2018 this represents a gain on dilution of the Group's stakes in Praedicat and Skymet. In accordance with IAS 28, Investments in Associates and Joint Ventures, this dilution has been treated as a deemed disposal. The carrying value of these investments has increased resulting in a gain on dilution of £0.8 million for the period ended 31 March 2018 and a gain in dilution of £0.7 million for the year ended 30 September 2018.

 

(iv)    In the current period the Group reduced its interest in Trepp Port, LLC (TreppPort) in the Property Information segment. The remaining shareholding in TreppPort has been treated as a joint venture. In accordance with IFRS 3, Business Combinations, the difference between the fair value of the investment retained and the carrying value of £1.5 million is treated as a loss on change in control.

 

Additionally, in the current period the Group purchased the remaining 50.0% of Daily Mail On-Air LLC (DailyMailTV), a joint venture in the prior period, increasing its existing shareholding from 50.0% to 100.0% and became a wholly-owned subsidiary. The difference between the fair value of the joint venture and the net assets acquired of £1.5 million is treated as a loss on change in control.

 

In the prior year ended 30 September 2018 the Group reduced its interest in SiteCompli in the Property Information Segment and SiteCompli became an associate. In accordance with IFRS3, Business Combinations, the difference between the fair value of the investment retained less a capital contribution and the carrying value is treated as a loss on change in control.

 

(v)      In the current period this principally represents a profit of £26.9 million on the sale of SiteCompli in the Property Information segment offset by costs of £9.5 million incurred in relation to the Group's distribution of Euromoney to shareholders. See Note 27 for further detail.

 

In the prior period ended 31 March 2018 this principally relates to the disposal of Artirix in the Consumer Media segment and Skymet in the Energy Information segment.

 

In the prior year ended 30 September 2018 this principally relates to the disposal of ZPG for gross proceeds of £641.7 million, resulting in a profit on disposal of £508.4 million.

 

 

6 Investment revenue

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

£m

£m

£m

Dividend income

-

 0.1

 0.1

Interest receivable from short-term deposits

 4.5

 0.3

 1.7

Interest receivable on loan notes

 2.1

 1.5

 3.0

 

 6.6

 1.9

 4.8

 

7 Net finance costs

 

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Interest, arrangement and commitment fees payable on bonds, bank loans and loan notes

 

 (11.1)

 (19.2)

 (35.9)

Premium on bond redemption

(i)

 (0.9)

-

-

Loss on derivatives, or portions thereof, not designated for hedge accounting

 

 (2.4)

 (1.0)

 (1.7)

Change in fair value of derivative hedge of bond

 13

 1.6

 (1.1)

 (2.3)

Change in fair value of hedged portion of bond

 13

 (1.6)

 1.1

 2.3

Finance charge on discounting of contingent consideration payable

(ii)

-

 (0.1)

 (0.2)

Change in fair value of undesignated financial instruments

 10

 (0.9)

-

-

Change in fair value of contingent consideration payable

10, (iii)

 (0.2)

 (0.6)

 (2.2)

Finance expense

 

 (15.5)

 (20.9)

 (40.0)

 

 

 

 

 

Profit on derivatives, or portions thereof, not designated for hedge accounting

 

-

 0.3

 0.4

Finance income on defined benefit pension schemes

 10

 3.7

 1.0

 2.0

Change in fair value of undesignated financial instruments

 10

-

 1.3

 3.1

Finance income

 

 3.7

 2.6

 5.5

 

 

 

 

 

Net finance expense

 

 (11.8)

 (18.3)

 (34.5)

 

(i)             During the period the Company bought back £5.9 million nominal of its outstanding 2021 bonds incurring a premium of £0.9 million.

 

(ii)           The finance charge on the discounting of contingent consideration arises from the unwinding of the discount following the requirement under IFRS 3, Business Combinations, to record contingent consideration at fair value using a discounted cash flow approach.

 

(iii)          The fair value movement of contingent consideration arises from the requirement of IFRS 3, Business Combinations, to measure such consideration at fair value with changes in fair value taken to the Income Statement.

 

 

8 Tax

 

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

 

£m

£m

£m

The charge on the profit for the period consists of:

 

 

 

 

UK tax

 

 

 

 

Corporation tax at 19.0% (2018 19.0%)

 

-

-

 (0.7)

Adjustments in respect of prior years

 

-

-

 (0.2)

 

 

-

-

 (0.9)

Overseas tax

 

 

 

 

Corporation tax

 

 (8.0)

 (2.6)

 (24.3)

Adjustments in respect of prior years

 

-

 (0.5)

 (0.6)

 

 

 (8.0)

 (3.1)

 (24.9)

Total current tax

 

 (8.0)

 (3.1)

 (25.8)

Deferred tax

 

 

 

 

Origination and reversals of temporary differences

 

 3.7

 7.0

 22.1

Total deferred tax

 

 3.7

 7.0

 22.1

Total tax charge

 

 (4.3)

 3.9

 (3.7)

 

The current and deferred tax implications of Brexit on the Group have been considered by management and are not expected to have any material impact.

 

Adjusted tax on profit before amortisation and impairment of intangible assets, restructuring costs and non-recurring items (adjusted tax charge) amounted to a charge of £19.4 million (31 March 2018 £16.3 million, 30 September 2018 £33.2 million) and the resulting effective rate is 19.4% (31 March 2018 15.8%, 30 September 2018 18.2%).The differences between the tax charge and the adjusted tax charge are shown in the reconciliation below:

 

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Total tax charge on the profit for the year

 

 (4.3)

 3.9

 (3.7)

Share of tax in joint ventures and associates

4, 10

 (7.2)

 (9.8)

 (31.3)

Deferred tax on intangible assets

 10

 (1.1)

 (2.4)

 (22.6)

Reassessment of temporary differences

 10

 (9.5)

-

-

Tax on other adjusting items

 10

 0.3

 (11.2)

 24.4

Share of tax on associates other adjusting items

 10

 2.4

 3.2

-

Adjusted tax charge on the profit for the year

 10

 (19.4)

 (16.3)

 (33.2)

 

In calculating the adjusted tax rate, the Group excludes the potential future impact of the deferred tax effects of intangible assets (other than internally generated and acquired computer software), as the Group prefers to give users of its accounts a view of the tax charge based on the current status of such items. Deferred tax would only crystallise on a sale of the relevant businesses, which is not anticipated at the current time, and such a sale, being an exceptional item, would result in an exceptional tax impact.

 

Reassessment of temporary differences includes a net credit of £9.5 million (31 March 2018 £nil, 30 September 2018 £nil) relating to the recognition of UK tax losses which is treated as exceptional due to its distortive impact on the Group's adjusted tax charge.

 

Included in tax on other adjusting items are items arising from tax reform in the US comprising a deferred tax credit of £nil (31 March 2018 £16.0 million, 30 September 2018 £12.5 million) relating to the re-measurement of US deferred tax balances following the reduction in the US corporate tax rate, a current tax charge of £nil (31 March 2018 £4.0 million, 30 September 2018 £6.1 million) in respect of the transitional toll charge and a deferred tax charge of £nil (31 March 2018 £nil, 30 September 2018 £4.0 million) relating to the impact of the internal refinancing of the US group.

 

In April 2019 the EU Commission released its final decision on the State Aid investigation into the Group Financing Exemption (GFE) included within the UK's controlled foreign company (CFC) rules. The Commission ruled that the GFE constituted State Aid to the extent that non-trade finance profits of a CFC arose as a result of Significant People Functions (SPFs) in the UK. Up until 2018 the Group financed its US operations through a Luxembourg resident finance company which had received clearance from HM Revenue & Customs (HMRC) that it benefitted from the GFE. If the State Aid investigation ultimately leads to a reversal of the benefits that the Group has accrued through the GFE, the tax cost to the Group would be in the range from £nil to £7.4 million. It is not currently possible to quantify the exposure of the Group as HMRC have not yet released guidance on how UK SPFs should be calculated. The Directors consider that an appeal against the Commission's decision would be more than likely to be successful, and accordingly have made no provision in these financial statements.

 

At 31 March 2019 the Group's 49.8% associate, Euromoney held provisions for uncertain tax of £12.9 million (31 March 2018 £5.3 million, 30 September 2018 £12.9 million) relating to permanent establishment risk and challenges by tax authorities. The maximum potential additional exposure to Euromoney in relation to challenges by tax authorities not provided for is approximately £20.0 million which is for a challenge by the Canadian Revenue Agency (CRA) and Quebec Tax Authorities (Revenu Quebec) on a foreign currency trade in 2009.  Since October 2018, there have been no unexpected developments in this enquiry.

 

 

9 Dividends paid

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

Audited year ended 30 September 2018

 

Pence per share

£m

Pence per share

£m

Pence per share

£m

Amounts recognisable as distributions to equity holders in the year

 

 

 

 

 

 

Ordinary Shares - final dividend for the year ended 30 September 2018

 16.2

 3.2

 -

 -

 -

 -

A Ordinary Non-Voting Shares - final dividend for the year ended 30 September 2018

 16.2

 54.2

 -

 -

 -

 -

Ordinary Shares - final dividend for the year ended 30 September 2017

 -

 -

 15.8

 3.1

 15.8

 3.1

A Ordinary Non-Voting Shares - final dividend for the year ended 30 September 2017

 -

 -

 15.8

 52.8

 15.8

 52.8

 

 -

 57.4

 -

 55.9

 -

 55.9

Ordinary Shares - interim dividend for the year ended 30 September 2018

 -

 -

 -

 -

 7.1

 1.4

A Ordinary Non-Voting Shares - interim dividend for the year ended 30 September 2018

 -

 -

 -

 -

 7.1

 23.7

 

 -

 -

 -

 -

 -

 25.1

 

 -

 57.4

 -

 55.9

 -

 81.0

 

The Board has declared an interim dividend of 7.3 pence per Ordinary/A Ordinary Non-Voting Share (31 March 2018 interim dividend of 7.1 pence, 30 September 2018 final dividend of 16.2 pence) which will absorb an estimated £16.6 million (31 March 2018 £25.2 million, 30 September 2018 £57.4 million) of shareholders' equity for which no liability has been recognised in these financial statements. It will be paid on 28 June 2019 to shareholders on the register at the close of business on 7 June 2019.

 

In addition, on 2 April 2019 the Group made a distribution to certain shareholders of its investment in Euromoney. Using the Euromoney share price at the end of March the dividend in specie amounted to £673.6 million. On 15 April 2019 the Group also made a cash distribution of £200.0 million as part of the distribution to shareholders. Since both distributions were approved by the Board and shareholders before 31 March 2019, the Group has recognised a liability for both the cash distribution and the dividend in specie as at 31 March 2019.

 

Further detail can be found in Note 27.

 

 

10 Adjusted profit

 

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Profit before tax

 3

 50.4

 113.4

 691.9

Adjust for:

 

 

 

 

Amortisation of intangible assets in Group profit, including joint ventures and associates, arising on business combinations

3, 4

 14.0

 18.5

 32.2

Impairment of goodwill and intangible assets arising on business combinations

 3

 20.9

-

 0.3

Impairment of goodwill and intangible assets arising on business combinations of joint ventures and associates

 4

-

 1.5

 1.5

Exceptional operating costs, impairment of internally generated and acquired computer software, property, plant and equipment

 3

 5.6

 (0.8)

 78.9

Share of exceptional operating costs of joint ventures and associates

 4

 (7.0)

 2.3

 4.9

Share of joint ventures' and associates' other gains and losses

 4

-

 (43.3)

 (102.9)

Impairment of carrying value of joint ventures and associates

 4

 27.7

 0.8

 0.8

Other gains and losses

 5

 (16.2)

 2.8

 (553.0)

Finance costs:

 

 

 

 

Finance income on defined benefit pension schemes

 7

 (3.7)

 (1.0)

 (2.0)

Fair value movements including share of joint ventures and associates

7, (i)

 1.1

 (1.0)

 (1.6)

Tax:

 

 

 

 

Share of tax in joint ventures and associates

 4

 7.2

 9.8

 31.3

Adjusted profit before tax and non-controlling interests

 

 100.0

 103.0

 182.3

Total tax charge on the profit for the year

 8

 (4.3)

 3.9

 (3.7)

Adjust for:

 

 

 

 

Share of tax in joint ventures and associates

 4

 (7.2)

 (9.8)

 (31.3)

Deferred tax on intangible assets

 8

 (1.1)

 (2.4)

 (22.6)

Reassessment of temporary differences

 8

 (9.5)

-

-

Tax on other adjusting items

 8

 0.3

 (11.2)

 24.4

Share of tax on associates other adjusting items

 8

 2.4

 3.2

-

Non-controlling interests

(ii)

 (0.8)

 (0.4)

 0.2

Adjusted profit after taxation and non-controlling interests

 

 79.8

 86.3

 149.3

 

(i)             Fair value movements include movements on undesignated financial instruments, contingent consideration payable and receivable and change in value of acquisition put options.

 

(ii)           The adjusted non-controlling interests' share of profits for the period of £0.8 million (31 March 2018 £0.4 million, 30 September 2018 losses of £0.2 million) is stated after eliminating a credit £0.3 million (31 March 2018 charge of £2.8 million, 30 September 2018 £1.0 million), being the non-controlling interests' share of adjusting items.

 

 

11 Earnings per share

Basic earnings per share of 12.9 pence (31 March 2018 32.2 pence, 30 September 2018 194.7 pence) and diluted earnings per share of 12.7 pence (31 March 2018 31.8 pence, 30 September 2018 192.4 pence) are calculated, in accordance with IAS 33, Earnings per share, on Group profit for the financial period of £45.6 million (31 March 2018 £114.1 million, 30 September 2018 £689.4 million) as adjusted for the effect of dilutive Ordinary Shares of £nil (31 March 2018 £0.1 million, 30 September 2018 £nil) and on the weighted average number of Ordinary Shares in issue during the period, as set out below.

 

As in previous years, adjusted earnings per share have also been disclosed since the Directors consider that this alternative measure gives a more comparable indication of the Group's underlying trading performance. Adjusted earnings per share of 22.5 pence (31 March 2018 24.4 pence, 30 September 2018 42.2 pence) are calculated on profit for continuing and discontinued operations before exceptional operating costs, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, other gains and losses and exceptional financing costs after taxation and non-controlling interests associated with those profits, of £79.8 million (31 March 2018 £86.3 million, 30 September 2018 £149.3 million), as set out in Note 10 and on the basic weighted average number of Ordinary Shares in issue during the period.

 

 

 

 

Basic and diluted earnings per share:

 

 

 

Unaudited 6 months ended

31 March 2019 Diluted earnings

Unaudited 6 months ended

31 March 2018 Diluted earnings

Audited year ended 30 September 2018 Diluted earnings

 

Unaudited 6 months ended

31 March 2019 Basic earnings

Unaudited 6 months ended

31 March 2018 Basic earnings

Audited year ended 30 September 2018 Basic earnings

 

 

Note

£m

£m

£m

£m

£m

£m

Earnings from continuing operations

 

 45.6

 114.1

 689.4

 45.6

 114.1

 689.4

Effect of dilutive Ordinary Shares

 

-

 (0.1)

-

-

-

-

 

 

 45.6

 114.0

 689.4

 45.6

 114.1

 689.4

 

 

 

 

 

 

 

 

Adjusted earnings from continuing operations

 10

 79.8

 86.3

 149.3

 79.8

 86.3

 149.3

Effect of dilutive Ordinary Shares

 

-

 (0.1)

-

-

-

-

 

 

 79.8

 86.2

 149.3

 79.8

 86.3

 149.3

 

 

 

Unaudited 6 months ended

31 March 2019 Diluted pence per share

Unaudited 6 months ended

31 March 2018 Diluted pence per share

Audited year ended 30 September 2018 Diluted pence per share

Unaudited 6 months ended

31 March 2019 Basic pence per share

Unaudited 6 months ended

31 March 2018 Basic pence per share

Audited year ended 30 September 2018 Basic pence per share

Earnings per share from continuing operations

 

 12.7

 31.8

 192.4

 12.9

 32.2

 194.7

 

 

 

 

 

 

 

 

Adjusted earnings per share from continuing operations

 

 22.2

 24.1

 41.7

 22.5

 24.4

 42.2

Effect of dilutive Ordinary Shares

 

-

-

-

-

-

-

Adjusted earnings per share from continuing operations

 

 22.2

 24.1

 41.7

 22.5

 24.4

 42.2

 

The weighted average number of Ordinary Shares in issue during the year for the purpose of these calculations is as follows:

 

 

Unaudited at 31 March 2019 Number

Unaudited at 31 March 2018 Number

Audited at 30 September 2018 Number

 

m

m

m

Number of Ordinary Shares in issue

 362.1

 362.1

 362.1

Own shares held

 (7.3)

 (8.2)

 (8.0)

Basic earnings per share denominator

 354.8

 353.9

 354.1

Effect of dilutive share options

 4.9

 4.8

 4.3

Dilutive earnings per share denominator

 359.7

 358.7

 358.4

 

 

12 EBITDA and cash generated by operations

 

 

 

Unaudited 6 months ended

31 March 2019

Unaudited 6 months ended

31 March 2018

Audited year ended 30 September 2018

 

Note

£m

£m

£m

Continuing operations

 

 

 

 

Adjusted operating profit

 3

 90.4

 83.8

 144.9

Non-exceptional depreciation charge

 3

 12.7

 13.4

 27.2

Amortisation of internally generated and acquired computer software

 3

 10.6

 15.6

 32.8

Operating profits from joint ventures and associates

 4

 17.5

 40.6

 74.0

Share of charge of depreciation and amortisation of internally generated and acquired computer software of joint ventures and associates

 

 1.4

 5.7

 8.7

Dividend income

 6

-

 0.1

 0.1

EBITDA

 

 132.6

 159.2

 287.7

Adjustments for:

 

 

 

 

   Share-based payments

 

 7.8

 4.9

 10.8

   Loss on disposal of property, plant and equipment

 

 0.1

-

 1.4

   Share of profits from joint ventures and associates

 4

 (17.5)

 (40.6)

 (74.0)

   Exceptional operating (costs)/income

 3

 (5.6)

 0.8

 (20.5)

   Non-cash pension past service cost

 

 3.1

 1.3

 17.3

   Dividend income

 6

-

 (0.1)

 (0.1)

   Share of charge of depreciation and amortisation of internally generated and acquired computer

      software of joint ventures and associates

 

 (1.4)

 (5.7)

 (8.7)

Decrease/(increase) in inventories

 

 11.0

 2.9

 (5.7)

Increase in trade and other receivables

 

 (50.8)

 (39.2)

 (46.5)

Decrease in trade and other payables

 

 (37.9)

 (41.1)

 (10.5)

Increase/(decrease) in provisions

 

 0.1

 (3.1)

 (1.1)

Additional payments into pension schemes

 

 (12.8)

 (12.9)

 (12.8)

Cash generated by operations

 

 28.7

 26.4

 137.3

 

13 Analysis of net debt

 

 

Note

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

 

£m

£m

£m

Net debt at start of period before derivatives and collateral

 

 9.8

 (465.1)

 (465.1)

Cash flow

 

 173.2

 (65.2)

 470.7

Sold on disposals

 

-

 0.9

 0.9

Fair value hedging arrangements

 

 (1.6)

 1.1

 2.3

Foreign exchange movements

 

 (1.8)

 2.1

 4.2

Other non-cash movements

 

 (0.7)

 (1.5)

 (3.2)

Net debt at period end before derivatives and collateral

 

 178.9

 (527.7)

 9.8

 

 

 

 

 

Analysed as:

 

 

 

 

Cash and cash equivalents

 

 382.6

 15.6

 437.8

Classified as held for sale

 

 3.0

-

-

 

 

 385.6

 15.6

 437.8

Bank overdrafts

 19

 (3.0)

 (7.1)

 (1.9)

Cash and cash equivalents in the Condensed Consolidated Cash Flow Statement

 

 382.6

 8.5

 435.9

Debt due within one year:

 

 

 

 

Bonds

 19

-

 (217.1)

 (218.7)

Loan notes

 19

 (1.7)

 (1.8)

 (1.7)

Debt due in more than one year:

 

 

 

 

Bonds

 19

 (202.0)

 (206.8)

 (205.7)

Bank loans

 19

-

 (110.5)

-

Net debt at period end before derivatives and collateral

 

 178.9

 (527.7)

 9.8

Effect of derivatives on bank loans

 

 (14.3)

 (13.2)

 (22.4)

Collateral deposits

 20

 6.9

 7.2

 8.0

Other financial assets

 20

-

-

 237.3

Net debt including derivatives and collateral at closing exchange rate

 

 171.5

 (533.7)

 232.7

 

 

 

 

 

Net debt including derivatives and collateral at average exchange rate

 

 173.1

 (542.2)

 234.3

 

The net decrease in cash and cash equivalents in the period of £51.5 million (31 March 2018 increase of £1.4 million, 30 September 2018 increase of £426.9 million) includes a cash outflow of £0.1 million (31 March 2018 £7.6 million, 30 September  2018 £9.7 million) in respect of operating exceptional items.

 

14 Summary of the effects of acquisitions

On 1 October 2018, the Consumer Media segment acquired 50.0% of Daily Mail-On-Air LLC (DailyMailTV), increasing its existing shareholding from 50.0% to 100.0%, for total consideration of £4.8 million. DailyMailTV produces a US TV entertainment news programme which airs for one hour every weekday across the US on various channels.

 

DailyMailTV contributed £6.6 million to the Group's revenue, reduced the Group's operating profit by £1.0 million and reduced the Group's profit after tax by £1.0 million for the period between the date of acquisition and 31 March 2019.

 

On 20 February 2019, the Events and Exhibitions segment acquired EGYPS for total consideration of £3.4 million. EGYPS is the largest oil and gas show in North Africa.

 

EGYPS contributed £nil to the Group's revenue, £nil to the Group's operating profit and £nil to the Group's profit after tax for the period between the date of acquisition and 31 March 2019.

 

If the acquisition had been completed on the first day of the financial period, EGYPS would have contributed £nil to the Group's revenue, £nil to the Group's operating profit and £nil to the Group's adjusted profit after tax.

 

Provisional fair value of net assets acquired with all acquisitions:

 

 

 

DailyMailTV

EGYPS

Total

 

Note

£m

£m

Goodwill                                                                                                                   

17, (i)

 2.9

 1.1

 4.0

Intangible assets                                                                                                       

 17

-

 2.3

 2.3

Trade and other receivables

 

 2.6

-

 2.6

Cash and cash equivalents

 

 2.2

-

 2.2

Trade and other payables  

 

 (2.9)

-

 (2.9)

Group share of net assets acquired

 

 4.8

 3.4

 8.2

 

Cost of acquisitions:

 

 

DailyMailTV

EGYPS

Total

 

 

£m

£m

£m

Cash paid in current year

 

 4.8

 0.8

 5.6

Cash consideration payable

 

-

 2.6

 2.6

Total consideration at fair value

 

 4.8

 3.4

 8.2

 

(i)             The amount of goodwill which is deductible for the purposes of calculating the Group's tax charge is £nil.

 

Goodwill arising on these acquisitions is principally attributable to the anticipated profitability relating to the distribution of the Group's products in new and existing markets and anticipated operating synergies from the business combinations.

 

Reconciliation to purchase of subsidiaries as shown in the Condensed Consolidated Cash Flow Statement:           

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

Note

£m

£m

£m

Cash consideration

 

 5.6

 4.5

 5.0

Cash paid to settle contingent consideration in respect of acquisitions

(i)

 3.6

 3.0

 14.4

Cash and cash equivalents acquired with subsidiaries

 

 (2.2)

 (0.3)

 (0.3)

Purchase of subsidiaries

 

 7.0

 7.2

 19.1

 

(i)             Cash paid to settle contingent consideration in respect of acquisitions includes £0.1 million (31 March 2018 £1.5 million, 30 September 2018 £1.5 million) within the Property Information segment, £0.4 million (31 March 2018 £0.2 million, 30 September 2018  £0.2 million) within the EdTech segment, £3.1 million (31 March 2018 £1.2 million, 30 September 2018 £12.5 million) within the Energy Information segment and £nil (31 March 2018 £0.1 million, 30 September 2018 £0.2 million) within the Events and Exhibitions segment.

 

 

 

15 Summary of the effects of disposals

On 1 October 2018 the Property Information segment reduced its shareholding in Trepp Port, LLC (TreppPort) from 51.0% to 50.0% for consideration of £0.2 million. The remaining shareholding has been treated as a joint venture.

 

The impact of the disposal of businesses completed during the period on net assets is as follows:

 

 

 

TreppPort

Other

Total

 

Note

£m

£m

£m

Goodwill

 17

 5.2

-

 5.2

Intangible assets

 17

 3.6

-

 3.6

Trade and other receivables

 

 2.0

-

 2.0

Cash and cash equivalents

 

 4.4

-

 4.4

Trade and other payables  

 

 (2.8)

-

 (2.8)

Deferred tax liabilities

 

 (1.0)

-

 (1.0)

Net assets disposed

 

 11.4

-

 11.4

Non-controlling interest share of net assets disposed

 

 (3.3)

-

 (3.3)

Loss on sale of businesses including recycled cumulative exchange differences

 

 (0.5)

 (0.9)

 (1.4)

 

 

 7.6

 (0.9)

 6.7

 

 

 

 

 

Satisfied by:

 

 

 

 

Cash received

 

 0.2

 0.9

 1.1

Directly attributable costs paid

 

 (0.3)

 (0.8)

 (1.1)

Fair value of investment in joint venture

(i)

 6.7

-

 6.7

Working capital adjustment cash paid

 

-

 (1.0)

 (1.0)

Recycled cumulative translation differences

 

 1.0

-

 1.0

 

 

 7.6

 (0.9)

 6.7

 

(i)             The investment in the TreppPort joint venture involves an estimation of the fair value of the Group's equity holding in TreppPort. A 10.0% increase/(decrease) in the fair value of the Group's stake would decrease/(increase) the loss on change in control of TreppPort by £0.7 million.

 

Reconciliation to disposal of businesses as shown in the Consolidated Cash Flow Statement:

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

£m

£m

£m

Cash consideration net of disposal costs

-

 (2.6)

 143.8

Impact of cash flow hedges

-

-

 4.9

Working capital adjustment cash paid

 (1.0)

 (3.1)

 (3.7)

Cash consideration received in the current year relating to businesses sold in the prior year

-

 0.7

 0.7

Cash and cash equivalents disposed with subsidiaries

 (4.4)

 (0.2)

 0.6

Proceeds on disposal of businesses

 (5.4)

 (5.2)

 146.3

 

All of the businesses disposed of during the period absorbed £nil of the Group's net operating cash flows, paid £nil in investing activities and paid £nil in financing activities.

 

The Group's tax charge includes £nil in relation to these disposals.

  

 

16 Total assets and liabilities of businesses held for sale

At 31 March 2019, the assets and liabilities held for sale relate to investments in associates in Euromoney and Real Capital Analytics (RCA) held centrally and On-geo in the Property Information segment.

 

In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of Euromoney, RCA and On-geo are recorded at the lower of carrying value and fair value less costs to sell. In doing so, the Group has recognised an impairment charge of £27.7 million in relation to Euromoney and £20.9 million in relation to On-geo. No impairment was recognised in relation to RCA which was sold for US$88.6 million (£68.2 million) in May 2019.

 

At 31 March 2018, the assets and liabilities held for sale related to EDR and SiteCompli, which are included in the Property Information segment.

 

At 30 September 2018, there were no assets and liabilities of businesses held for sale.

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

Note

£m

£m

£m

Goodwill

 17

 0.9

 70.1

 -

Intangible assets

 17

 11.3

 8.1

 -

Property, plant and equipment

 

 1.0

 11.8

 -

Investments in joint ventures

 

 0.4

 -

 -

Investments in associates: Euromoney

 27

 673.6

 -

 -

Investments in associates: Other

 

 9.4

 -

 -

Trade and other receivables

 

 9.5

 30.5

 -

Cash and cash equivalents

 

 3.0

 -

 -

Current tax receivable

 

 0.5

 -

 -

Total assets associated with businesses held for sale

 

 709.6

 120.5

 -

 

 

 

 

 

Trade and other payables  

 

 (6.0)

 (28.7)

 -

Current tax payable

 

 -

 (4.6)

 -

Deferred tax

 

 (3.3)

 (4.4)

 -

Total liabilities associated with businesses held for sale

 

 (9.3)

 (37.7)

 -

 

 

 

 

 

Net assets of the disposal group

 

 700.3

 82.8

 -

 

17 Goodwill and other intangible assets

 

 

 

Goodwill

Other Intangibles

 

Note

£m

£m

Cost

 

 

 

Audited at 30 September 2017

 

 506.2

 629.0

Additions from business combinations

 

 2.7

 2.2

Other additions

 

-

 0.2

Internally generated

 

-

 10.4

Adjustment to previous year estimate of contingent consideration

 

 0.2

-

Disposals

 

 (10.2)

 (36.5)

Classified as held for sale

 

 (17.5)

 (8.7)

Exchange adjustment

 

 (9.7)

 (17.0)

Unaudited at 31 March 2018

 

 471.7

 579.6

Audited at 30 September 2017

 

 506.2

 629.0

Additions

 

 3.2

 2.6

Other additions

 

-

 0.2

Internally generated

 

-

 19.5

Disposals

 

 (90.6)

 (63.3)

Exchange adjustment

 

 3.6

 10.3

Audited at 30 September 2018

 

 422.4

 598.3

Additions from business combinations

 14

 4.0

 2.3

Internally generated

 

-

 9.2

Disposals

 15

 (5.2)

 (5.5)

Classified as held for sale

 16

 (21.8)

 (19.0)

Exchange adjustment

 

 (1.7)

 (1.4)

Unaudited at 31 March 2019

 

 397.7

 583.9

 

 

 

 

Accumulated amortisation and impairment

 

 

 

Audited at 30 September 2017

 

 143.1

 416.0

Amortisation

 

-

 23.4

Disposals                                                                                          

 

 (9.9)

 (36.4)

Classified as held for sale

 

 (17.5)

 (8.7)

Exchange adjustment

 

 (0.8)

 (10.8)

Unaudited at 31 March 2018

 

 114.9

 383.5

Audited at 30 September 2017

 

 143.1

 416.0

Amortisation

 

-

 48.3

Impairment

 

 0.3

 58.4

Disposals

 

 (54.8)

 (62.7)

Exchange adjustment

 

 0.6

 7.1

Audited at 30 September 2018

 

 89.2

 467.1

Amortisation

 3

-

 18.5

Impairment

 3

 20.9

-

Disposals                                                                                          

 15

-

 (1.9)

Classified as held for sale

 16

 (20.9)

 (7.7)

Exchange adjustment

 

-

 (0.6)

Unaudited at 31 March 2019

 

 89.2

 475.4

Net book value - Unaudited at 31 March 2018

 

 356.8

 196.1

Net book value - Audited at 30 September 2018

 

 333.2

 131.2

Net book value - Unaudited at 31 March 2019

 

 308.5

 108.5

 

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.

 

Goodwill impairment losses recognised in the period amounted to £20.9 million relating to On-geo in the Property Information segment. The tax credit in respect of the impairment of goodwill amounted to £nil.

 

In the prior year ended 30 September 2018, the Group recorded a goodwill impairment charge of £0.3 million relating to Genscape in the Energy Information segment. There was a tax credit of £nil associated with this impairment charge.

 

During the period to 31 March 2019 the Group determined that no indicators of intangible asset impairment had arisen and accordingly the total impairment charge recognised in the period was £nil (31 March 2018 £nil).

 

In the prior year ended 30 September 2018, the Group recorded an impairment charge of £58.4 million largely made up of RMS(one) in the Insurance Risk segment.

 

18 Property, plant and equipment

During the period the Group spent £7.6 million (period ended 31 March 2018 £15.7 million, year ended 30 September  2018 £30.4 million) on property, plant and equipment and disposed certain of its property, plant and equipment with a carrying value of £8.3 million (31 March 2018 £nil, 30 September  2018 £1.5 million) for net proceeds of £9.3 million (31 March 2018 £nil, 30 September 2018 £0.1 million). In addition property, plant and equipment with a carrying value of £nil was owned by subsidiaries disposed during the year (31 March 2018 £nil, 30 September 2018 £5.5 million).

 

19 Borrowings

The Group's borrowings are unsecured and are analysed as follows:

 

 

Note

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

 

£m

£m

£m

Current liabilities

 

 

 

 

Bonds

13, 21

-

217.1

218.7

Bank overdrafts

13

3.0

7.1

1.9

Loan notes

13

1.7

1.8

1.7

 

 

4.7

226.0

222.3

 

 

 

 

 

Non-current liabilities

 

 

 

 

Bonds

13, 21

202.0

206.8

205.7

Bank loans

13

-

110.5

-

 

 

202.0

317.3

205.7

 

Bonds

The Company's 2018 5.75% bond matured during the period and was repaid in full.  In addition, the Company bought back £5.9 million nominal of its outstanding 2021 bonds incurring a premium of £0.9 million.

 

Committed borrowing facilities

During the prior period, the Group renewed its committed bank facilities for a further five-year term. The terms of the new facilities are substantially the same as those of the previous facilities.

 

During the current period the Group cancelled committed bank facilities amounting to US$77.0 million (£59.2 million), after which the Group's total committed bank facilities amount to £371.9 million. Of these facilities £205.0 million are denominated in sterling and £166.9 million (US$217.0 million) are denominated in US dollars. Drawings are permitted in all major currencies.

 

The Group's bank loans bear interest charged at LIBOR plus a margin. The margin varies by bank and is based on the Group's ratio of net debt to EBITDA or the Group's credit rating. EBITDA for these purposes is defined as the aggregate of the Group's consolidated operating profit including share of results of joint ventures and associates before deducting depreciation, amortisation and impairment of goodwill, intangible and tangible assets, before exceptional items and before interest and finance charges, and is shown in Note 12.

 

Whilst the Group's internal target of a 12-month rolling net debt to EBITDA ratio is no greater than 2.0 times at any point, the limit imposed by its bank covenants is no greater than 3.50 times together with a minimum interest cover ratio of 3.0 times measured in March and September. These covenants were met at the relevant testing dates during the period. The bank covenant ratio uses the average exchange rate in the calculation of net debt. Excluding cash deposits with an original maturity of more than three months amounting to £nil (31 March 2018 £nil, 30 September 2018 £237.3 million) the resultant net cash to EBITDA ratio for the 12 month period ended 31 March 2019 is 0.67 times (31 March 2018 1.60 times net debt to EBITDA, 30 September 2018 0.01 times net debt to EBITDA). Using a closing rate basis for the valuation of net cash, the ratio of net cash to EBITDA was 0.66 times (31 March 2018 1.57 times net debt to EBITDA, 30 September 2018 0.02 times net debt to EBITDA). The interest cover ratio for the 12 month period ended 31 March 2019 was 13.5 times (31 March 2018 10.0 times, 30 September 2018 9.2 times).

 

The Group's committed bank facilities analysed by maturity are as follows:

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

£m

£m

£m

Expiring in more than three years but not more than four years

 371.9

-

-

Expiring in more than four years but not more than five years

-

 415.0

 431.2

Total bank facilities

 371.9

 415.0

 431.2

 

The following undrawn committed borrowing facilities were available to the Group in respect of which all conditions precedent had been met:

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

£m

£m

£m

Expiring in more than three years but not more than four years

 371.9

-

-

Expiring in more than four years but not more than five years

-

 304.5

 431.2

Total undrawn committed bank facilities

 371.9

 304.5

 431.2

 

20 Other financial assets

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

At 30 September 2018

 

Note

£m

£m

£m

Current assets

 

 

 

 

Collateral

13, (i)

 6.9

 7.2

 8.0

Cash deposits with original maturities of three months or more

13, (ii)

-

-

 237.3

 

 

 6.9

 7.2

 245.3

Non-current assets

 

 

 

 

Loans to associates and joint ventures

 

 5.6

 18.1

 18.4

 

 

 5.6

 18.1

 18.4

 

(i)             The Group deposits collateral with its bank counterparties with whom it has entered into a credit support annex to an ISDA (International Swaps and Derivatives Association) Master Agreement. This represents cash that cannot be readily used in operations.

 

(ii)           Represents cash deposits held with the Group's bank counterparties with an original maturity date of three months or more. As required by IAS 7, Statement of Cash Flows, these have been classified within Other financial assets.

 

21 Financial instruments and risk management

The Group's financial instruments are classified into the following categories:

 

 

 

IAS 39 measurement category

IFRS 9 measurement category

Derivative instruments

(i)

FVTPL

FVTPL

Trade and other receivables

 

Amortised cost

Amortised cost

Trade payables

 

Amortised cost

Amortised cost

Overdrafts, loan notes, finance leases and bank loans

 

Amortised cost

Amortised cost

Bonds

(ii)

Amortised cost

Amortised cost

Equity investments

 

Amortised cost

FVTOCI

Acquisition put option commitments

 

FVTPL

FVTPL

Provision for contingent consideration payable

 

FVTPL

FVTPL

Loans to joint ventures and associates

 

Amortised cost

Amortised cost

Collateral

 

Amortised cost

Amortised cost

Cash and cash equivalents

 

Amortised cost

Amortised cost

Cash deposits with original maturities of three months or more

 

Amortised cost

Amortised cost

Provision for contingent consideration receivable

 

FVTPL

FVTPL

 

(i)             The Group has derivatives designated in the following hedging relationships:

-          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.

 

(ii)           The Group's bonds are measured at amortised cost as adjusted for fair value hedging.

 

The Group's financial assets and liabilities are as follows:

 

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

 

Carrying value

Carrying value

Carrying value

 

Note

£m

£m

£m

Financial assets

 

 

 

 

Fair value through profit and loss

 

 

 

 

     Derivative instruments in designated hedge accounting relationships

 

 2.1

 3.1

 2.6

     Derivative instruments not designated in hedge accounting relationships

 

 1.5

 2.8

 7.1

     Provision for contingent consideration receivable

 

 0.3

 0.1

 0.1

Fair value through other comprehensive income

 

 

 

 

     Financial assets

 

 30.3

-

-

Amortised cost

 

 

 

 

     Available-for-sale investments

 

-

 33.5

 20.4

     Trade and other receivables

(i)

 255.2

 192.7

 213.8

     Collateral

(ii)

6.9

7.2

8.0

     Cash deposits with original maturities of three months or more

(iii)

-

-

237.3

     Loans to joint ventures and associates

(iv)

5.6

18.1

18.4

     Cash and cash equivalents

 

382.6

15.6

437.8

 

 

684.5

273.1

945.5

 

 

 

 

 

Financial liabilities

 

 

 

 

Fair value through profit and loss

 

 

 

 

     Derivative instruments in designated hedge accounting relationships

 

(14.8)

 (10.5)

 (20.1)

     Provision for contingent consideration payable

 

(1.4)

 (14.3)

 (4.8)

     Acquisition put option commitments

 

(0.5)

(7.7)

(8.2)

Amortised cost

 

 

 

 

     Trade payables

 

(37.9)

 (25.5)

 (39.9)

     Bank overdrafts

 

(3.0)

(7.1)

(1.9)

     Bonds

(v)

(202.0)

(423.9)

(424.4)

     Bank loans

 

-

(110.5)

-

     Loan notes

 

(1.7)

(1.8)

(1.7)

 

 

(261.3)

(601.3)

(501.0)

 

The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost (other than the bonds) approximate to their fair values.

 

(i)             Other receivables include a 9.0% fixed rate unsecured loan note, repayable on 27 September 2022 with a carrying value of £15.1 million (31 March 2018 £14.9 million, 30 September 2018 £15.4 million).

 

(ii)           The Group deposits collateral with counterparties with whom it has entered into a credit support annex to an ISDA (International Swaps and Derivatives Association) Master Agreement. At 31 March 2019, other financial assets comprise £6.9 million of collateral deposits (31 March 2018 £7.2 million, 30 September 2018 £8.0 million) which represents cash that cannot be readily used in the Group's operations.

 

(iii)          At 30 September 2018, other financial assets include £237.3 million cash deposits held with the Group's bank counterparties with an original maturity date of three months or more. As required by IAS 7, Statement of Cash Flows, these have been classified within Other financial assets.

 

(iv)          Loans to joint ventures and associates (included within other financial assets) include a 10.0% fixed rate unsecured loan note, repayable on 31 December 2025 with a carrying value of £5.3 million (31 March 2018 £17.5 million, 30 September 2018 £17.3 million).

 

 

(v)           The carrying value and fair values of the Group's bonds and the coupons payable are as follows

 

 

 

 

Unaudited at 31 March 2019 Fair value

Unaudited at 31 March 2019 Carrying value

Unaudited at 31 March 2018 Fair value

Unaudited at 31 March 2018 Carrying value

Audited at 30 September 2018 Fair value

Audited at 30 September 2018 Carrying value

Maturity                                      

Note

Annual coupon %

£m

£m

£m

£m

£m

£m

7 December 2018

(i)

 5.75

-

-

 224.6

 217.1

 220.2

 218.7

9 April 2021

(ii)

 10.00

 1.4

 1.2

 8.7

 9.5

 8.4

 9.1

21 June 2027

 

 6.375

 230.6

 200.8

 231.1

 197.3

 228.8

 196.6

 

 

 

 232.0

 202.0

 464.4

 423.9

 457.4

 424.4

 

(i)             The Company's 2018 bond matured during the period and was repaid in full.

 

(ii)           During the period the Company bought back £5.9 million nominal of its outstanding 2021 bonds incurring a premium of £0.9 million.

 

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 unadjusted quoted prices 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).

 

 

 

Level 1

Level 2 (i)

Level 3

Total

Unaudited at 31 March 2019 by valuation method under IFRS 9

 

£m

£m

£m

£m

Financial assets

 

 

 

 

 

Financial assets at fair value through other comprehensive income

 

-

-

30.3

30.3

Fair value through profit and loss

 

 

 

 

 

     Derivative instruments not designated in hedge accounting relationships

 

-

1.5

-

1.5

     Provision for contingent consideration receivable

 

-

-

0.3

0.3

Derivative instruments in designated hedge accounting relationships

 

-

2.1

-

2.1

 

 

-

3.6

30.6

34.2

Financial liabilities

 

 

 

 

 

Fair value through profit and loss

 

 

 

 

 

     Provision for contingent consideration payable

 

-

-

(1.4)

(1.4)

Derivative instruments in designated hedge accounting relationships

 

-

(14.8)

-

(14.8)

 

 

-

(14.8)

(1.4)

(16.2)

 

 

 

 

Level 1

Level 2

Level 3

Total

Unaudited at 31 March 2018 by valuation method under IAS 39

 

£m

£m

£m

£m

Financial assets

 

 

 

 

 

Available-for-sale investments

 

-

-

33.5

33.5

Fair value through profit and loss

 

 

 

 

 

     Derivative instruments not designated in hedge accounting relationships

 

-

2.8

-

2.8

     Provision for contingent consideration receivable

 

-

-

0.1

0.1

Derivative instruments in designated hedge accounting relationships

 

-

3.1

-

3.1

 

 

-

5.9

33.6

39.5

Financial liabilities

 

 

 

 

 

Fair value through profit and loss

 

 

 

 

 

     Provision for contingent consideration payable

 

-

-

(14.3)

(14.3)

Derivative instruments in designated hedge accounting relationships

 

-

(10.5)

-

(10.5)

 

 

-

(10.5)

(14.3)

(24.8)

 

 

 

 

 

Level 1

Level 2

Level 3

Total

Audited at 30 September 2018 by valuation method under IAS 39

 

£m

£m

£m

£m

Financial assets

 

 

 

 

 

Available-for-sale investments

 

-

-

20.4

20.4

Fair value through profit and loss

 

 

 

 

 

     Derivative instruments not designated in hedge accounting relationships

 

-

7.1

-

7.1

     Provision for contingent consideration receivable

 

-

-

0.1

0.1

Derivative instruments in designated hedge accounting relationships

 

-

2.6

-

2.6

 

 

-

9.7

20.5

30.2

Financial liabilities

 

 

 

 

 

Fair value through profit and loss

 

 

 

 

 

     Provision for contingent consideration payable

 

-

-

(4.8)

(4.8)

Derivative instruments in designated hedge accounting relationships

 

-

(20.1)

-

(20.1)

 

 

-

(20.1)

(4.8)

(24.9)

There were no transfers between categories in the period.

 

(i)             The fair value of derivative instruments is determined using market rates of interest and exchange, and established estimation techniques such as discounted cash flow and option valuation models.

 

Contingent consideration is valued based on the future profitability of the businesses to which the contingent consideration relates, discounted at market rates of interest.

 

A reconciliation of the movement in level 3 financial liabilities is as follows:

 

 

Note

£m

Audited at 30 September 2017

 

(17.0)

Cash paid to settle contingent consideration in respect of acquisitions

 

3.0

Change in fair value of contingent consideration payable

7

(0.6)

Finance charge on discounting of contingent consideration

 

(0.1)

Adjustment to goodwill

 

(0.2)

Exchange adjustment

 

0.6

Unaudited at 31 March 2018

 

(14.3)

Audited at 30 September 2017

 

(17.0)

Cash paid to settle contingent consideration in respect of acquisitions

 

14.4

Change in fair value of contingent consideration payable

7

(2.2)

Finance charge on discounting of contingent consideration

 

(0.2)

Additions to contingent consideration

 

(0.2)

Contingent consideration owned by subsidiaries disposed

 

0.4

Audited at 30 September 2018

 

(4.8)

Cash paid to settle contingent consideration in respect of acquisitions

 

3.6

Change in fair value of contingent consideration payable

7

(0.2)

Unaudited at 31 March 2019

 

 (1.4)

 

The key inputs into the significant level 3 financial liabilities are the future profitability of the businesses to which the contingent consideration relate and the discount rate. The estimated range of possible outcomes for the fair value of these liabilities is £nil to £2.3 million (31 March 2018 £nil to £214.1 million, 30 September 2018 £nil to £19.4 million).

 

A one percentage point increase or decrease in the growth rate used in estimating the expected profits, results in the contingent consideration liability at 31 March 2019 increasing or decreasing by £nil and £nil respectively (31 March 2018 £0.1 million and £0.2 million, 30 September 2018 £0.4 million and £0.4 million), with the corresponding change to the value at 31 March 2019 charged or credited to the Condensed Consolidated Income Statement in future periods.

 

The rates used to discount contingent consideration range from 0.0% to 1.9% (31 March 2018 0.0% to 1.0%, 30 September 2018 0.8% to 1.1%). A one percentage point increase or decrease in the discount rate used to discount the expected gross value of payments, results in the liability at 31 March 2019 decreasing or increasing by £nil and £nil respectively (31 March 2018 £0.2 million and £0.2 million, 30 September  2018 £0.1 million and £0.1 million), with the corresponding change to the value at 31 March 2019 charged or credited to the Condensed Consolidated Income Statement in future periods.

 

22 Share capital and reserves

Share capital at 31 March 2019 amounted to £45.3 million (31 March 2018 £45.3 million, 30 September 2018 £45.3 million).

 

During the period the Company utilised 1.2 million (31 March 2018 1.4 million, 30 September 2018 2.9 million) A Ordinary Non-Voting Shares out of Treasury and the Employee Benefit Trust with a carrying value of £8.7 million (31 March 2018 £10.4 million, 30 September 2018 £20.8 million) in order to satisfy incentive schemes. This represented 0.4% (31 March 2018 0.4%, 30 September 2018 0.9%) of the called-up A Ordinary Non-Voting Share capital at 31 March 2019.

 

The Company also purchased 0.4 million (31 March 2018 0.7 million, 30 September 2018 2.2 million) A Ordinary Non-Voting Shares having a nominal value of £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.3 million) to match obligations under incentive plans. The consideration paid for these shares was £2.5 million (31 March 2018 £4.6 million, 30 September 2018 £14.3 million).

 

At 31 March 2019 options were outstanding under the terms of the Company's Executive Share Option Schemes, Long-Term Incentive Plans and nil-cost options, over a total of 3,014,422 A Ordinary Non-Voting Shares (31 March 2018 3,610,659 shares, 30 September 2018 3,075,745 shares).

 

23 Retirement benefit obligations

The Group operates a number of pension schemes under which contributions are paid by the employer and employees.

 

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.

 

The total net pension charge of the Group for the period ended 31 March 2019 was £5.2 million (31 March 2018 £6.1 million, 30 September 2018 £10.6 million).

 

In October 2018 the High Court ruled in the Lloyds Banking Group (LBG) case that UK pension schemes which had contracted out of the State Earnings Related Pension Scheme would need to equalise benefits for the effect of unequal Guaranteed Minimum Pensions (GMP) between men and women. Whilst it is possible that one or more of the interested parties may lodge an appeal against this ruling the Group has booked a non-cash past service charge of £3.1 million, which represents an estimate of the impact of this equalisation. This non-cash charge is included in the net pension charge of £5.2 million.

 

The defined benefit obligation is calculated on a year-to-date basis, using the latest actuarial valuation as at 31 March 2019. The assumptions used in the valuation are summarised below:

 

 

Unaudited at 31 March 2019

Unaudited at 31 March 2018

Audited at 30 September 2018

 

%

%

%

Price inflation

 3.25

 3.15

 3.25

Pension increases

 3.10

 3.00

 3.10

Discount rate

 2.35

 2.50

 2.80

 

The net surplus as at the end of the period amounted to £235.9 million (at 31 March 2018 £79.4 million, at 30 September 2018 £243.5 million).

 

24 Contingent liabilities

The Group has issued standby letters of credit amounting to £1.5 million (31 March 2018 £3.2 million, 30 September 2018 £3.3 million).

 

The Group is exposed to libel claims in the ordinary course of business and vigorously defends against claims received. The Group makes provision for the estimated costs to defend such claims and provides for any settlement costs when such an outcome is judged probable.

 

Four writs claiming damages for libel were issued in Malaysia against Euromoney and three of its employees in respect of an article published in one of the Euromoney's magazines, International Commercial Litigation, in November 1995. The writs were served on Euromoney on 22 October 1996. Two of these writs were discontinued. The total outstanding amount claimed on the two remaining writs was Malaysian ringgit 83.4 million (£15.5 million) at 30 September 2018. As the limitation period for enforcing these claims has passed, the case has closed during the period.

 

In January 2018, the European Commission conducted an unannounced inspection at Euromoney's Brussels office of RISI Sprl (RISI), a wholly-owned subsidiary of Euromoney, as part of an investigation into the sector of kraft paper and industrial paper sacks in the European Union/European Economic Area. On 10 May 2019, Euromoney received confirmation that this case has been closed.

 

The Group's Energy Information business (Genscape) provided a real-time third-party auditor service verifying Renewable Identification Numbers (RINs) for renewable fuel production activities in the US, as part of the Renewable Fuel Standard Quality Assurance Program (Program), a regulatory program administered by the US Environmental Protection Agency (EPA).

 

Following discovery and self-reporting to the EPA by Genscape of potential fraudulent RINs generated by third parties but verified by Genscape under the Program, the EPA issued a notice of intent to revoke the ability of Genscape to verify RINs as a third-party auditor.

 

EPA regulations for the Program set a liability cap on replacement of invalid RINs of 2.0% of the RINs. Genscape voluntarily paid 2.0% liability cap associated with the invalid RINs at a cost of $1.3 million, based on the then-prevailing market rates, subject to a reservation of rights. The EPA regulations allow for situations where the cap does not apply - including auditor fraud and negligence. 

 

The EPA has not formally alleged any wrongdoing by Genscape but the EPA continues to consider a proposed action to seek Genscape to retire, at the current market price, a maximum of 68 million of RINs verified by Genscape. RINs trade in a volatile range currently averaging approximately 45 cents which equates to a theoretical maximum claim of approximately $31.0 million. Genscape has made no provision for any future claim which may be payable.

 

Genscape continues to co-operate with EPA and discussions are ongoing.

 

25 Ultimate holding company

The Company's immediate parent Company is Rothermere Continuation Limited (RCL), a company incorporated in Bermuda.

 

Daily Mail and General Trust plc is the only company in the Group to prepare consolidated financial statements.

 

26 Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The transactions between the Group and its joint ventures and associates are disclosed below.

 

For the purposes of IAS 24, Related Party Disclosures, executives below the level of the Company's Board are not regarded as related parties.

 

Ultimate controlling party

RCL is a holding company incorporated in Bermuda. The main asset of RCL is its 100.0% holding of DMGT Ordinary Shares. RCL has controlled the Company for many years and as such is its immediate parent Company. RCL is owned by a trust (the Trust) which is held for the benefit of Viscount Rothermere and his immediate family. The Trust represents the ultimate controlling party of the Company. Both RCL and the Trust are administered in Jersey, in the Channel Islands. RCL and its directors, the Trust and its beneficiaries are related parties of the Company.

 

Transactions with Directors

During the period, Forsters LLP in which Mr A Lane, a Non-Executive Director of the Company, is a partner, provided legal services to the Company amounting to £nil (31 March 2018 £8,145, 30 September 2018 £14,820).

 

Transactions with joint ventures and associates

Associated Newspapers Ltd (ANL) has a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in Northprint Manchester Ltd, a joint venture. The net amount due to ANL of £5.8 million (31 March 2018 £5.8 million, 30 September 2018 £5.8 million) has been fully provided.

 

Mail Media, Inc. had a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in Daily Mail On-Air LLC (DailyMailTV), a joint venture in the prior period. In the prior period, Mail Media, Inc. provided funding amounting to £4.9 million. At 31 March 2019, £nil (31 March 2018 £0.2 million, 30 September 2018 £5.9 million) was owed by DailyMailTV.  During the period, Mail Media, Inc. acquired the remaining 50.0% shareholding in DailyMailTV and DailyMailTV became a wholly-owned subsidiary.

 

DMG US Investments, Inc. had a 45.0% (31 March 2018 45.0%, 30 September 2018 45.0%) shareholding in Truffle Pig LLC, an associate, which was disposed of during the period. Funding of £nil (31 March 2018 £nil, 30 September 2018 £0.2 million) remained outstanding at 31 March 2019

 

DMGV Ltd (DMGV) has a 23.9% (31 March 2018 23.9%, 30 September 2018 23.9%) shareholding in Excalibur Holdco Ltd (Excalibur), an associate. During the period, services provided to Excalibur amounted to £0.2 million (31 March 2018 £0.3 million, 30 September 2018 £0.6 million). At 31 March 2019, amounts due from Excalibur amounted to £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.1 million), together with loan notes of £17.3 million prior to any expected credit losses as required by IFRS 9 (31 March 2018 £17.5 million, 30 September 2018 £17.3 million). The loan notes carry an annual coupon of 10.0% and £5.4 million (31 March 2018 £3.3 million, 30 September 2018 £4.0 million) was outstanding in relation to this coupon at 31 March 2019.

 

DMGV has a 18.5% shareholding in Bricklane Technologies Ltd (Bricklane), an associate acquired during the period. DMGV provided funding amounting to £1.2 million cash and £0.8 million of media credits. During the period, the Consumer Media segment provided services to Bricklane amounting to £0.2 million.  At 31 March 2019,  £0.1 million was owed by Bricklane. 

 

DMGV has a 25.8% (31 March 2018 nil, 30 September 2018 25.8%) shareholding in Yopa Property Ltd (Yopa), an associate. During the period, the Consumer Media segment provided services to Yopa amounting to £0.3 million (31 March 2018 £nil, 30 September 2018 £0.5 million). At 31 March 2019, £0.1 million (31 March 2018 £nil, 30 September 2018 £0.1 million) was owed by Yopa.

 

DMGV has a 14.1%  shareholding in Cazoo Ltd (Cazoo), an associate acquired during the period. DMGV provided cash funding amounting to £10.0 million and £5.0 million of media credits during the period.   

 

Daily Mail and General Trust plc (DMGT) has a 49.8% (31 March 2018 49.9% owned by DMG Charles Ltd, 30 September 2018 49.8% owned by DMGZ Ltd (DMGZ)) shareholding in Euromoney Institutional Investor PLC (Euromoney), an associate. During the period, services were recharged to Euromoney amounting to £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.1 million) and consortium relief losses were surrendered under an agreement between Euromoney and the Group amounting to a rebate of £nil (31 March 2018 £nil, 30 September 2018 £0.1 million).

 

During the period, DMGZ received dividends of £11.9 million (31 March 2018 £11.7 million, 30 September 2018 £17.1 million received by DMGZ and DMG Charles Ltd) from Euromoney prior to the shareholding in Euromoney being transferred from DMGZ to DMGT.

 

During the period, DMG World Media (2006) Ltd recharged costs amounting to £nil (31 March 2018 £0.2 million, 30 September 2018 £0.3 million) to BCA Research, Inc., a Euromoney subsidiary.

 

During the period, ANL recharged costs amounting to £0.8 million (31 March 2018 £0.2 million, 30 September 2018 £1.4 million) to Euromoney. At 31 March 2019, £0.5 million (31 March 2018 £0.3 million, 30 September 2018 £0.3 million) was owed by Euromoney.

 

During the period, Euromoney provided services to Risk Management Solutions Ltd amounting to £0.1 million (31 March 2018 £nil, 30 September 2018 £0.1 million).

 

DMGI Land & Property Europe Ltd (DMGILP), of which Landmark Information Group Ltd (Landmark) is a subsidiary undertaking, has a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in Point X Ltd (Point X), a joint venture.  During the period, Landmark charged management fees of £0.2 million (31 March 2018 £0.2 million, 30 September 2018 £0.3 million) and recharged costs of £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.1 million) to Point X. Point X received royalty income from Landmark of £nil (31 March 2018 £nil, 30 September 2018 £0.1 million).   DMGILP received dividends of £0.2 million (31 March 2018 £nil, 30 September 2018 £nil) from Point X.

 

Decision Insight Information Group (UK) Ltd (DIIG UK) has a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in Decision First Ltd (DF), a joint venture. During the period, DIIG UK recharged costs to DF amounting to £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.2 million) and charged management fees amounting to £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.1 million) and received dividends from DF of £nil (31 March 2018 £nil, 30 September 2018 £0.4 million). At 31 March 2019, £nil (31 March 2018 £0.1 million, 30 September 2018 £nil) was owed by DF.

 

On-Geo GmbH (On-geo) has a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in HypoPort On-Geo (HypoPort), a joint venture. During the period, HypoPort made purchases from On-geo amounting to £3.4 million (31 March 2018 £3.9 million, 30 September 2018 £9.1 million). During the period, On-geo received dividends of £nil (31 March 2018 £nil, 30 September 2018 £0.1 million) from HypoPort. At 31 March 2019, £0.7 million (31 March 2018 £1.3 million, 30 September 2018 £1.5 million) was owed by HypoPort.

 

Hobsons, Inc. has a 50.0% (31 March 2018 50.0%, 30 September 2018 50.0%) shareholding in Knowlura, a joint venture. At 31 March 2019, £0.2 million (31 March 2018 £0.4 million, 30 September 2018 £0.3 million) was owed by Knowlura.

 

Risk Management Solutions, Inc. (RMS, Inc.) has a 20.0% (31 March 2018 20.0%, 30 September 2018 20.0%) shareholding in OYO RMS Corporation (OYO), an associate. During the period, RMS, Inc. received a dividend of £nil (31 March 2018 £0.5 million, 30 September 2018 £0.4 million) from OYO. 

 

RMS, Inc. has a 25.9% (31 March 2018 25.9%, 30 September 2018 25.9%) shareholding in Praedicat, Inc. (Praedicat), an associate. During the period, RMS, Inc. provided funding of £nil (31 March 2018 £1.5 million, 30 September 2018 £1.5 million) to Praedicat. At 31 March 2019, £nil (31 March 2018 £0.8 million, 30 September 2018 £nil) was owed by Praedicat.

 

Genscape, Inc. (Genscape) has a 55.9% shareholding in LineVision, Inc. (LineVision). Since the Group's share of voting rights in LineVision is 49.0%, the Group does not have control but has significant influence, therefore the investment is treated as an associate. In the period ended 30 September 2018, Genscape sold assets with a net book value of US$0.1 million to LineVision for their fair value of US$2.1 million for US$nil cash proceeds.

 

The Group reduced its shareholding in Trepp Port, LLC. (TreppPort) on 1 October 2018 from 51.0% to 50.0% and TreppPort became a joint venture.  During the period, Trepp, LLC. received dividends of £0.1 million (31 March 2018 £nil, 30 September 2018 £nil) from TreppPort.

 

Other related party disclosures

Under an agreement to guarantee the income generated from certain property assets held by the Harmsworth Pension Scheme which were purchased from the Group during a prior period, the Group was charged for rent and service charges in relation to the current period amounting to £0.1 million (31 March 2018 £0.2 million, 30 September 2018 £0.3 million). At 31 March 2019, £nil (31 March 2018 £nil, 30 September 2018 £0.1 million) was owed to the Harmsworth Pension Scheme by the Group.

 

At 31 March 2019 the Group owed £0.9 million (31 March 2018 £0.7 million, 30 September 2018 £0.8 million) to the pension schemes which it operates. This amount comprised employees' and employer's contributions in respect of March 2019 payrolls.

 

The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged during the period was £0.1 million (31 March 2018 £0.1 million, 30 September 2018 £0.3 million).

 

In July 2012, the Group entered into a contingent asset partnership whereby a £150.0 million loan note, guaranteed by the Group, was used to commit £10.8 million funding p.a. to the Harmsworth Pension Scheme. Interest payable to DMG Pension Partnership LP in the period totalled £5.5 million (31 March 2018 £5.5 million, 30 September 2018 £11.0 million).

 

ANL, which shares common control by Rothermere Continuation Limited, with DMGT Healthcare Trustees, paid contributions to the scheme totalling £0.4 million (31 March 2018 £0.4 million, 30 September 2018 £0.7 million). At 31 March 2019, a total of £0.9 million (31 March 2018 £1.0 million, 30 September 2018 £1.0 million) was owed to the scheme by ANL.

 

27 Post balance sheet events

On 3 March 2019, the Group announced its intention to distribute all of the Euromoney Institutional Investor PLC (Euromoney) shares owned by the Group to certain holders of DMGT's A Ordinary Non-Voting Shares (A Shares), by way of a dividend in specie (the Euromoney Distribution), as well as a £200.0 million cash distribution (the Cash Distribution). The terms were such that Fully Participating Shareholders would participate in the Euromoney Distribution and Cash Distribution whilst Rothermere Affiliated Shareholders would only participate in the Cash Distribution and on a limited basis.

 

The proposal was approved at a Class Meeting of the Fully Participating Shareholders on 26 March 2019. The Euromoney Distribution occurred at 8am on 2 April 2019 and the Cash Distribution on 15 April 2019.

 

Before these distributions were made c.46.4% of the A Shares held by Fully Participating Shareholders were converted into a new class of B Shares and c.4.0% of the A Shares held by Rothermere Affiliated Shareholders converted into a new class of C Shares. The Euromoney Distribution and a special dividend of £183.0 million in aggregate in cash was then paid to the Fully Participating Shareholders in respect of the B Shares and a restricted special dividend of £17.0 million in aggregate in cash was paid to the Rothermere Affiliated Shareholders in respect of the C Shares. Once these distributions were made the B Shares and the C Shares were converted into Deferred B Shares and Deferred C Shares respectively before being transferred to the Company for no valuable consideration and cancelled shortly thereafter. Consequently, these distributions resulted in a reduction in the share capital of DMGT. The voting Ordinary Shares did not participate in the distributions.

 

For each A Share held at 6.00pm on 29 March 2019, the conversion record time, the Fully Participating Sha