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DAILY MAIL & GENERAL TRUST PLC – Half-yearly Report
Daily Mail and General Trust plc Half Yearly Financial Report for the six months ended 4th April,2010 Financial Highlights Adjusted results* Statutory results~ 2010 2009 Change 2010 2009 (restated)+ (restated)+ Revenue £974m £1,085 m -10% £958m £1,059 m Operating £144m £114 m +26% £73m £(137) m profit/(loss) Profit/(loss) £110m £77 m +42% £36m £(222) m before tax Earnings/(loss) per 21.1p 14.2 p +48% 24.3p (46.0) p share Dividend per share 5.0p 4.8 p *(before amortisation and impairment of intangible assets and exceptional items; see Consolidated Income Statement and reconciliation in Note 9). These adjusted results are for total operations, including those treated as discontinued. + restated for the change of presentation of the IAS 19 finance item from operating profit to net finance costs; see Note 1. ~ These statutory highlights are for continuing operations only (excluding DMG Radio up to 16th December, 2009), other than for earnings / (loss) per share which is the total statutory figure. STRONG REBOUND IN FIRST HALF PROFITABILITY - Underlying operating profit* increase of approximately 20% on equivalent revenue decline of 3%. - Continued growth from our B2B operations excluding events, delivering overall underlying profit* growth of 15%. - Profitability* of our UK consumer businesses more than doubled, with recovering advertising trends. - Margin* improvements from all divisions. - Net debt reduced by £31 million, due to strong cash flow management and disposals. - Dividend increased by 4%. Martin Morgan, Chief Executive, said: "Trading in the first half of the year was ahead of our expectations. Our business-to-business companies have delivered excellent profit* growth, demonstrating strength and resilience across the portfolio. Our UK consumer businesses have achieved a sharp improvement in profitability* reflecting the actions taken to reduce costs and to eliminate loss-making activities, but also thanks to an improved advertising market. We remain focused on driving profitable organic growth across the Group. The strong half year results reflect our focus on execution as well as the benefits of DMGT's diversified international portfolio of market-leading businesses in both B2B and consumer markets. Whilst we remain cautious about the outlook, particularly in the UK, we are increasingly well positioned to weather current economic uncertainties and to take advantage of improved conditions as they materialise." A live webcast of the Half Year Results presentation to City analysts will be available on our website at 9.30 a.m. on 27th May, 2010 at http://www.dmgt.co.uk. Enquiries Peter Williams Tel: 020 7938 6631 Nicholas Jennings Tel: 020 7938 6625 Andrew Honnor, Tulchan Communications Tel: 020 7353 4200 Contents Interim Management Report Condensed Consolidated Income Statement Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Cash Flow Statement Condensed Consolidated Balance Sheet Notes to the Condensed Consolidated Financial Statements Independent review report by the external auditors Shareholder Information Interim Management Report This interim management report focuses principally on the adjusted results to give a more comparable indication of the Group's underlying business performance. A discussion of restructuring and impairment charges and other items included in the statutory results is set out after the divisional performance review and in the segmental note. In the statutory results, the Group's radio division is shown within discontinued operations for the period to 16 December 2009. The adjusted results are summarised below: Adjusted results* 2010 2009 Change† £m (restated)+ £m Revenue 974 1,085 -10% Operating profit 144 114 +26% Income from joint ventures and associates 2 (1) N/A Net finance costs (36) (36) 0% Profit before tax 110 77 +42% Tax charge (19) (15) -19% Minority interest (10) (8) -26% Group profit 81 54 +51% Adjusted earnings per share 21.1p 14.2p +48% *Adjusted results are stated before amortisation and impairment of intangible assets and exceptional items. For a reconciliation of Group profit to adjusted Group profit, see Note 9. These adjusted results are for total operations, including those treated as discontinued. #Underlying revenue or profit* is revenue or profit* on a like for like basis, adjusted for acquisitions, disposals and closures made in the current and prior year and at constant exchange rates. For A&N Media, the underlying percentage movements exclude the Evening Standard, London Lite, the discontinued television activities of Teletext, the digital dating and data businesses and the Slovakian print production companies. + Operating profit* and net finance costs for the prior period have been restated for the transfer of an IAS 19 pension finance credit of £2.3 million from corporate costs into net finance costs; see Note 1. † Percentages are calculated on actual numbers to one decimal place. Summary Group revenue for the six months to 4th April, 2010 was £974 million, compared with £1,085 million for the prior year, representing a fall of 10% but only an underlying# fall of 3%. Operating profit* was up 26% on the equivalent figure for the previous half year at £144 million, an underlying# increase of approximately 20%. This increase was due to margin improvements across our portfolio, but particularly in our consumer businesses. The Group's B2B companies increased their overall profit* by 11%, an underlying# increase of 15%. The profits* of A&N Media were significantly higher, up 132%, due to cost efficiencies and the elimination of loss-making activities. As a consequence, 71% of this half year's operating profit* was generated from B2B, compared to 81% for the prior half year. Adjusted profit* before tax rose by 42% to £110 million. The statutory profit before tax for the period was £36 million, after charging £37 million of amortisation charges and impairment losses and £37 million of net exceptional charges. Outlook We expect to achieve growth in the rest of the year from B2B, driven by solid subscription revenues and good cost control. Within our UK national consumer media business, the impact of cost reductions, portfolio changes and the current advertising trends will have a continuing positive effect on profitability*, though we remain cautious on the outlook for advertising. In our UK local media operations, the impact of cost reductions remains beneficial and advertising trends are gradually improving. They should move into year on year growth during the second half, unless a new downward trend emerges. As a result, the Board currently expects to achieve good growth in earnings* per share for the full year. Divisional Review Business to business (B2B) Revenues from the B2B group totalled £380 million, 13% lower than last year, with an underlying# fall of just 1%. Adjusted operating profits* increased by £10 million (11%) to £103 million with increases from all companies other than dmg: events. The underlying# increase was 15% reflecting prior year disposals within dmg: information and dmg: events outweighing the impact of a small increase in the average sterling: US dollar exchange rate. Margin* rose from 21% to 27% with increases by each company. Risk Management Solutions 2010 2009 Movement £m £m % Revenue 71 69 +4% Operating profit* 23 20 +18% Operating margin* 33% 29% RMS increased its revenues by 4% and its operating profit* by 18%. Its underlying# revenue increased by 9%, which, combined with continuing expense management efforts, resulted in underlying# operating profit* growth of 15%. Client retention, renewal increases and new licence sales were strong relative to a year ago, particularly in the Natural Catastrophe & Portfolio Solutions, Underwriting and Data Solutions businesses. There was also strong demand for catastrophe bond services, driven by the recovery in capital markets. The strength of RMS's business model has preserved margins whilst accommodating continued investment in key growth areas for the long-term including the next generation software platform, peril models and the data solutions initiative. RMS remains on track to deliver 10% underlying# revenue growth for the full year. dmg: information 2010 2009 Movement £m £m % Revenue 103 107 -3% Operating profit* 18 11 +56% Operating margin* 17% 10% dmgi increased its operating profit* by 56%, with revenues 3% lower. Underlying# revenues increased by 6% and underlying# operating profits* rose by £7.5 million or 75%. Property Information Operating profit* from the property information companies increased by 30% to £8.6 million, with revenues 6% lower at £39 million, due to the effect of disposing of PPR in 2009. Underlying# revenues and operating profits* increased by 12% and 70% respectively. Landmark Information Group benefited from an improvement in residential transaction volumes in the UK in the first quarter, whilst the last few months have been stable. They remain significantly below normal long term prior levels. EDR profits* improved significantly with the full benefit of last year's cost saving initiatives coming through and revenues increased modestly. Other markets Operating profit* from dmgi's non-property related companies in the Financial, Education, Energy and Geospatial markets increased by 61% to £11.0 million, though revenues were 2% lower at £64 million. Underlying# operating profits* increased by 56% on underlying# revenues that were 2% higher. Across the Financial, Education and Energy markets, underlying# revenues increased by 13%. Conditions remained tough, however, in the Geospatial market with Sanborn seeing an underlying# revenue decline of 32%. In the financial information market, both Trepp and the products offered by Lewtan to investors of asset backed securities continued to grow and margins* improved further. Hobsons, the education information company, grew its revenues strongly and broke even in the first half of the year, compared with a first half loss* in 2009 due to the timing of revenue recognition. Genscape, the leading provider of real-time information to the energy trading markets, generated double-digit revenue growth and continues aggressively to expand its product offerings. Over the full year, dmgi expects to achieve high single digit growth in its underlying# revenues and an improvement in margins*. The portfolio continues to strengthen its market positions through the enhancement and development of products across all its markets. dmg: events (formerly DMG World Media) 2010 2009 Movement £m £m % Revenue 58 102 -43% Operating profit* 17 25 -31% Operating margin* 30% 24% dmg: events revenue and operating profit* were down 43% and 31% respectively, due in large part to the divestment of businesses last year so as to focus our strategy on the B2B sector. The results also reflect the absence of one large biennial event in the half, ADIPEC. The divestment programme is now completed and we have a portfolio of strong, market-leading exhibitions and conferences. dmg: events' underlying# revenue was down 13% and underlying operating profit* fell by only 17%, despite the high operating leverage of exhibitions due to cost saving initiatives. Events are a late cycle media and hence in the first half of the year many were still reporting anticipated year-on-year reductions in revenue as the impact of the economic recession filters through. Attendances are now improving, however, and shows have been performing in line with our expectations. The outlook for the two major events in the second half, the Global Petroleum Show to be held in Calgary in June and the New York International Gift Fair in August, is moderately encouraging and together with launches, particularly in Evanta and Digital Marketing, will contribute to improving growth rates. Euromoney Institutional Investor 2010 2009 Movement £m £m % Revenue 148 161 -8% Operating profit* 45 36 +22% Operating margin* 30% 23% Euromoney announced its record first half results last week which highlight the success of its strategy to build a more robust and higher quality information business. It responded early to the financial crisis, cutting costs and acting to protect its margins*. This strategy has continued to drive strong bottom line performance in the period, in spite of an 8% fall in revenues. The underlying# fall was 6%. Euromoney's operating profit* increased by 22% due to the benefits from last year's cost cuts, helped by the delayed benefit from the strengthening of the US dollar against sterling in 2009. While tight margin management was maintained throughout the period, the focus of the strategy has shifted to positioning the business for growth, both from existing products as markets recover, and from investment in technology and new products as part of the migration to an online information business. Revenues from subscription-based products declined as the lag effect of cuts in headcount and information buying by customers during the first half of 2009 worked their way through into revenues. Subscription revenues fell by 7%, but at constant currency the rate of decline appears to have bottomed out in the first quarter, earlier than expected, and recent trends in renewal rates and new orders have both been positive. Advertising, which was the first revenue stream to be hit by the credit crisis, began to show signs of recovery in the first quarter and this was confirmed in the second as customers, particularly global financial institutions, began to increase their marketing spend. Revenues from events and training continued to suffer in the first quarter from the tight controls on discretionary spending first imposed by customers at the end of 2008, as well as Euromoney's deliberate strategy to eliminate low margin events. In contrast, there has been a gradual recovery in sponsor and delegate revenues since the start of the calendar year. Emerging markets, which account for more than a third of Euromoney's revenues, continue to hold up reasonably well, with growth in Latin America and Asia offsetting weakness in Eastern Europe and the Middle East. The gradual recovery in sales since the start of the calendar year accelerated in March and April to the point where there are prospects for a return to revenue growth in the third quarter. Whilst the sovereign debt crisis in Europe and the possible fallout may affect Euromoney's ability to grow as quickly as it would wish, the immediate outlook is encouraging. Consumer media Revenues from the Group's consumer operations for the period totalled £594 million, 8% lower than last year, with an underlying# fall of 3%. Adjusted operating profits* increased by £33 million (127%) to £58 million. A&N Media's margins* rose from 4% to 9%. The improving performance was accentuated by easier comparatives in the quarter to March, given the state of the markets a year ago. Whilst A&N Media has seen improving advertising revenue trends since the start of the calendar year, the Group remains focused on cost control. Headcount fell by 680 (8%) in the period, including the closure of London Lite in November 2009, most of the television activities of Teletext in December 2009 and a further regional printing plant at Plymouth in February 2010. As a consequence, an exceptional restructuring charge of £28 million was made. Associated Newspapers 2010 2009 Movement £m £m % Revenue 427 455 -6% Operating profit* 42 18 +135% Operating margin* 10% 4% Associated's results benefited from the impact of the significant cost reductions made in the prior year, together with further cost savings made in the current year and from the actions taken to eliminate loss-making activities. These actions offset the effect of a slight decline in circulation revenues. Advertising revenues were little changed, but with an improving trend that has continued into May: for the half year they were up 1% on an underlying# basis (quarter 1 - down 7%, quarter 2 - up 11%). Newspaper operations Underlying# circulation revenues fell by 3% to £175 million. Whilst circulation of the Daily Mail fell by 1.7% in the period and that of The Mail on Sunday by 3.2%, both titles increased their market share. Our sustained subscription/home delivery initiative contributed to this improved competitive position with the Daily Mail's share of the national market exceeding 20% throughout the period. The upfront cost of this investment is charged against circulation revenues. Promotional activity continued to be directed away from CD and DVD giveaways. Underlying# advertising revenues were up 1% at £181 million, driven by a strong performance by Metro. Underlying# display advertising was up 2% to £148 million. Retail, our largest category, performed particularly well, up 18%, driven by strong advertising by supermarkets. Underlying# classified advertising fell by 5% to £27 million. Underlying# digital revenue from the newspaper titles' companion sites increased by 20% to £5.4 million due to the growing success of MailOnline. The results include losses* made by London Lite and the discontinued television activities of Teletext prior to their closure. Associated Northcliffe Digital AND's revenues from its portfolio of core digital businesses in jobs, property, travel and motors rose by 5% to £41 million, compared to the first half of last year. All sectors increased their revenues, other than the Jobs businesses which continued to experience a decline due to the depressed recruitment market. Operating profit* improved by £3.8 million to £2.2 million. This was due mainly to lower marketing costs at Jobsite compared to the first half of last year, when a significant brand-building campaign took place. AND disposed of its dating and data businesses in the period. Northcliffe Media 2010 2009 Movement £m £m % Revenue 150 166 -9% Operating profit* 14 6 +121% Operating margin* 9% 4% UK Northcliffe increased its UK operating profits* by £8.9 million (262%) to £12.3 million. Revenues were down 7% to £132 million, with advertising revenues down by 9% to £93 million (quarter one - down 13%, quarter two - down 5%). By category, property revenues were up 1%, but all other major categories fell with retail down 4%, recruitment down 24%, notices down 8% and motors down by 6%. All other categories combined contracted by 9%. UK digital revenues for the period were £9 million, up 13%, despite recruitment revenues being down 14%. UK circulation revenues fell by 7% to £33 million. In the July to December 2009 ABC period, circulation of both daily and weekly titles, down 8% and 6% respectively, were in line with industry trends. Nine daily titles increased their cover prices during the period. In contrast with the loss of print circulation, the number of visitors across our entire digital network rose by 16% in March 2010, compared to March 2009. Operating costs were 15% lower than in the previous period, with lower newsprint and other production costs, staff and distribution costs in particular. Headcount was reduced by a further 143 (4%) in the period. Trading during April and the first three weeks of May has seen advertising revenues 4% below last year. Property (up 9%) and recruitment (up 2%: first growth for over two years) have performed well, retail continues to show single digit declines, whereas notices are finding market conditions challenging. Central Europe A&N International's operating profits* fell by £1.5 million (56%) to £1.2 million on revenues down 20% to £19 million. Underlying revenues# fell by 17% with market conditions difficult for motors and retail advertising. Two loss making print publishing companies in Slovakia, Perex a.s. and Avizo s.r.o. were disposed of. Underlying# headcount has been reduced by 35 (7%) during the period. Other income statement items - Net finance costs 2010 2009 Movement £m (restated) % £m Net interest payable (35) (38) -9% and similar charges Pension finance item (1) 2 N/A Total (36) (36) 0% Net interest payable and similar charges (including deemed finance charges and interest receivable) fell by £3 million to £35 million with the higher sterling value of interest on fixed US$ liabilities offset by lower average floating rate debt. The IAS 19 pension finance charge has been reported within net finance costs, rather than within Group operations as in previous reporting periods. The prior period comparative has been restated. The pension finance item increased by £3 million due to the movement in the pension fund deficit and the discount rate used. This has needed to be recalculated from that previously thought to be required and the full year increase is now expected to be £6 million, £9 million lower than previously indicated. - Other items The Group's share of the results* of its joint ventures and associates improved by £2.2 million to £2.0 million. It includes income, net of interest costs, from DMG Radio Australia (DMGRA) since it became a 50% joint venture on 16th December 2009. This was offset by our share of the losses of India Today. The results of DMGRA have been reported as discontinued operations up to 16th December, 2009, as required by IFRS 5. The Group has charged £33 million as exceptional operating costs. This charge comprised impairment of property, plant and equipment of £17 million and reorganisation costs of £16 million principally within A&N Media. The charge for amortisation of intangible assets fell by £6 million to £39 million due mainly to the disposal of 50% of DMGRA. The Group recorded other net gains of £2 million, compared to net losses of £6 million in the prior period. - Taxation The adjusted tax charge of £19 million (2009 £15 million) is stated after adjusting for the effect of exceptional items. The adjusted tax rate for the half year fell to 16.8% from 22.1% in the 2009 full year. The continued low rate reflects tax reductions from tax-efficient financing and tax deductible amortisation in the USA that are expected to recur. In addition, the Group recognised previously unrecognised tax losses and this largely accounts for the lower rate, compared with last year. There were net exceptional credits of £50 million, being the write back of provisions arising from the agreement of certain prior year open issues with tax authorities (£41 million), deferred tax credits on goodwill and intangible assets, (£3 million) and tax credits on exceptional items (£6 million). Pensions The deficit on the Group's defined benefit pension schemes fell from £430 million at the beginning of the year to £250 million at the half year (calculated in accordance with IAS 19). This improvement is due both to an increase in the market value of the schemes' assets coupled with an experience gain actuarial movement which has decreased the value attributed to its liabilities. The Company has begun funding discussions with the trustees as part of the process associated with the triennial actuarial valuation of the main schemes as at 31st March, 2010. The valuation and funding agreement are expected to be completed by June 2011, within the statutory period. Net debt and cash flow Net debt at the end of the period was £1,018 million, a reduction of £31 million since the year end, despite a £13 million increase arising from the depreciation of sterling against the US dollar. The Group generated operating cash flows of £132 million and disposals of £73 million. These funded total acquisition spend of £28 million, capital expenditure £23 million, taxation £5 million, interest £36 million and dividends totalling £42 million. Acquisitions were largely pre-contracted earn-out payments and other deferred consideration. Disposals were of properties and businesses, principally the sale of 50% of DMGRA in December. Net debt is usually at its peak around the half year due to the timing of dividend and other annual payments. A steady reduction in net debt is expected in the second half of the year. In December 2009, the Group extended the maturity of its bond debt by issuing further 5.75% Bonds due 2018 in exchange for £144 million of 7.5% Bonds due 2013, reducing its 2013 bond maturities to £156 million. As previously reported, we expect no difficulties in meeting our banking covenants and have adequate committed facilities for our present requirements. £180 million of our facilities of £420 million expire in September 2011, with the balance available until 2013. Other financing The Group acquired 1.9 million of its `A' Ordinary shares for £8 million, using them to settle exercised share options in a subsidiary. DMGT's weighted average number of shares in issue for the full year is currently estimated at 382.9 million (2009 382.9 million). DMGT took its share of the final dividend from Euromoney in the form of a scrip. This enabled it to offset the dilutive effect of the vesting of the final tranche of Euromoney's capital appreciation plan, thereby maintaining its equity interest at around 66%. It is the Board's current intention also to take Euromoney's forthcoming interim dividend in the form of a scrip. Dividend The Board has declared an interim dividend of 5.00 pence per Ordinary and `A' Ordinary Non-Voting share (2009 4.80 pence) which will be paid on 9th July, 2010 to shareholders on the register at the close of business on 11th June, 2010. Principal risks and uncertainties The principal risks and uncertainties that affect the Group on an ongoing basis are described in our 2009 Annual Report at www.dmgt.co.uk. These are still considered to be the most relevant risks and uncertainties at this time. The risks that could potentially have a specific impact on the Group's performance over the remaining six months of the financial year are "Exposure to changes in the global economy and customer spending patterns" and "Impact of a major disaster". The impact of these risks could cause actual results to differ from expected and historical results. Where a risk that was disclosed in the Annual Report is unchanged or is not expected to have a specific impact in the remaining period, a summary of the disclosure given in the Annual Report has been included. Risks specific to the remaining six month period of the year Exposure to changes in the global economy and customer spending patterns The speed and extent of the recovery in the global economy and especially the UK and US economies, remains uncertain. A slower than expected, or "double dip," recovery gives rise to a risk that the Group's forecast results will not be achieved. Management of costs over the last 18 months has reduced the Group's cost base and therefore put us in a strong position should the recovery falter. Trading in the period up to 4th April 2010 has continued to be ahead of our expectations, though we remain cautious about the rest of the year, particularly in the light of economic uncertainty in the UK. Impact of a major disaster The recent closure of European airspace as a result of the eruption of the Eyjafjallajökull volcano in Iceland has highlighted the potential impact that restrictions to air travel could have on our events and training businesses. This closure had minimal financial impact on the Group's activities, though it remains unclear whether further significant airspace closures may be required. Disruptions to international travel for any reason could lead to events and training courses being postponed or cancelled. Contingency plans are in place to minimise the disruption from travel restrictions, and abandonment insurance is in place for certain key events. Other risks disclosed in the Annual Report The following is a summary of the other risks and uncertainties that were disclosed in the 2009 Annual Report. The impact of technological and market changes on our competitive advantage Our businesses operate in highly competitive environments that can be subject to rapid change. Our products and services, and their means of delivery, are affected by technological innovations, changing legislation, competitor activity or changing customer behaviour. Our strategy of diversification and willingness to take a long-term view helps us react to these challenges and opportunities. Pension scheme shortfalls We operate defined benefit schemes for our newspaper divisions and certain senior executives. Reported earnings may be adversely affected by changes in our pension costs and funding requirements due to lower than expected investment returns, changes in bond yields and changes in demographics, particularly longer life expectancy. The schemes remain neutral in cash flow terms and so do not currently need to sell assets. The next triennial valuation of the schemes as at 31st March 2010 will be completed in early 2011. Impact of a major disaster Any disaster, such as a geopolitical event, terrorist attack, or a natural disaster, which significantly affects the wider environment or infrastructure in a sector where the Group has material operations, could adversely affect the Group. Plans and procedures are in place to manage the impact of such risks. Impact of a major outbreak of disease The first and second wave of the H1N1 influenza pandemic were not as severe as first predicted and had only a limited impact. The World Health Organisation has, however maintained the pandemic threat level at six. A more severe wave of pandemic influenza, arising from a mutation of the existing virus could still affect the Group's ability to produce and deliver its products, reduce the demand for them, or affect our cost base. Our planning in advance of the recent events and since has allowed our businesses to be well prepared and to respond quickly to this threat. Reliance on key management and staff In order to pursue our strategy, we are reliant on key management and staff across all our businesses. We cannot predict with certainty that we will enjoy continued success in our recruitment and retention of high quality management and creative talent. Our Group Human Resources Director continues to work with divisional and executive management on talent management and succession planning. Commercial Relationships including volatility of newsprint DMGT is reliant on a number of commercial relationships with key suppliers and third parties. A significant change to the commercial terms or a loss of any of these key relationships could have a material impact on the Group's financial results and ability to trade. An example of this is newsprint which represents a significant proportion of our costs within the newspaper divisions. Significant time and resources are committed to developing these relationships to ensure they continue to operate satisfactorily. The Group's newsprint requirements are also monitored by the board of Harmsworth Printing. Acquisition and disposal risk A number of risks are inherent within any strategy to acquire. However, the majority of acquisitions considered are smaller add-on businesses, which reduces the size of the risk of each acquisition to the Group. There are also risks to our ability to achieve optimal value from disposals. These are monitored and managed by each divisional board with oversight from the DMGT Board. Reliance on IT infrastructure All of our businesses are dependent on technology to some degree. Information systems are critical for the effective management and provision of services around the Group. Disruption to our information technology infrastructure, or failure to implement new systems effectively, could result in lost revenue and damage our reputation. Dedicated project management teams are used to manage the risk in any change project and business continuity plans are in place in each division to protect existing systems. Information security Information security continues to be an important issue, particularly in light of rapid technological change. A Group-wide policy has been set and the Risk Committee have overseen the implementation of this policy in all divisions. Climate change The risks associated with climate change include the introduction of, or increase in, legislation and regulation of the environmental impact of our operations. In the longer term, the physical impact of climate change could affect our business locations, distribution routes or third party suppliers. Treasury Risk The Group's financing and treasury operations manage a number of risks including currency exchange rate fluctuations, liquidity risk and interest rate risk. The recent problems in global financial markets and the global recession heighten the uncertainty in this area. The Group renegotiated its bank debt prior to the 2008 financial year end. Tax risk The Group operates within many jurisdictions; our earnings are therefore subject to taxation at differing rates across these jurisdictions and, due to an ever more complex international tax environment, there will always be a level of uncertainty when provisioning for our tax liabilities. Working with divisional management and external experts we have a team of in-house specialists who review all tax arrangements within the Group and keep abreast of changing legislation. Legal and regulatory DMGT businesses are subject to varying legislation and regulation across several jurisdictions. A breach of legislation or regulations could affect the results and future trading of the business. For further details of these risks and mitigating controls which are in place, please refer to the 2009 Annual Report. 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, this condensed set of financial statements which should be read in conjunction with the annual financial statements for the year ended 4th October, 2009: a) has been prepared in accordance with IAS 34 `Interim financial reporting' as adopted by the European Union; and b) includes a fair review of the information required by the Financial Services Authority's Disclosure and Transparency Rules 4.2.7R and 4.2.8R. By order of the Board of Directors The Viscount Rothermere Chairman 26th May, 2010 *References to operating profit or loss or share of the results of joint ventures and associates in the narrative above are to adjusted operating profit or loss or adjusted share of the results of joint ventures and associates before amortisation and impairment of intangible assets and exceptional items); see notes 2 and 3. These adjusted results are for total operations, including those treated as discontinued. #Underlying revenue or profit* is revenue or profit* on a like for like basis, adjusted for acquisitions, disposals and closures made in the current and prior year and at constant exchange rates. For A&N Media, the results are for 26 weeks, both in the current and prior half year and the underlying percentage movements exclude the Evening Standard, London Lite, the discontinued television activities of Teletext, the digital dating and data businesses and the Slovakian print companies. The average £: US$ exchange rate for the half year was £1: $1.59 (against £1:$1.51 for the first half of last year). The rate at the half year year end was $1.53 (against the 2009 year end rate of $1.59). For further information For analyst and institutional enquiries: Peter Williams 020 7938 6631 Nicholas Jennings 020 7938 6625 For media enquiries: Andrew Honnor, Tulchan Communications 020 7353 4200 Analysts' presentation and webcast A presentation of the Half Year results will be given to investors and analysts at 9.30 a.m. on 27th May, 2010 at the Brewery, Chiswell Street, London, EC1Y 4SD. There will also be a live webcast available on our website: http://www.dmgt.co.uk. Next trading update The Group's next scheduled announcement of financial information will be its third quarter interim management statement on 27th July, 2010. This Interim Management Report (IMR) is prepared for and addressed only to the Group's shareholders as a whole and to no other person. The Group, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom IMR is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. 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 the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Group in this IMR involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this IMR contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Group undertakes no obligation to update these forward-looking statements. DMGT plc Condensed Consolidated Income Statement For the 26 weeks ending ended 4th April, 2010 Unaudited 26 Unaudited 26 Audited 53 weeks ending weeks ending weeks 4th 29th March, ending 4th April, 2010 2009 October, Restated 2009 (note 1) Restated (note 1) Note £m £m £m CONTINUING OPERATIONS Revenue 2 957.7 1,059.0 2,062.4 Operating profit before exceptional operating 2 141.4 112.5 269.1 costs and amortisation and impairment of goodwill and intangible assets Exceptional operating costs and impairment of 2 (32.5) (49.1) (99.0) property, plant and equipment Amortisation and impairment of goodwill and 2 (35.5) (200.1) (331.3) intangible assets Operating profit/(loss) before share of 2 73.4 (136.7) (161.2) results of joint ventures and associates Share of results of joint ventures and 3 (1.5) (5.1) (9.2) associates Total operating profit/(loss) 71.9 (141.8) (170.4) Other gains and losses 4 1.4 (6.3) (23.5) Profit/(loss) before net finance costs and tax 73.3 (148.1) (193.9) Investment revenue 5 1.4 3.1 7.0 Finance costs 6 (38.7) (76.8) (113.8) Net finance costs (37.3) (73.7) (106.8) Profit/(loss) before tax 36.0 (221.8) (300.7) Tax 7 33.9 56.9 80.3 Profit/(loss) after tax from continuing 69.9 (164.9) (220.4) operations DISCONTINUED OPERATIONS Profit/(loss) from discontinued operations 19 32.2 (13.9) (85.0) PROFIT/(LOSS) FOR THE PERIOD 102.1 (178.8) (305.4) Attributable to : Owners of the company 92.7 (172.9) (303.4) Non-controlling interests * 9.4 (5.9) (2.0) Profit/(loss) for the period 102.1 (178.8) (305.4) Earnings/(loss) per share 10 From continuing operations Basic 15.9p (42.0)p (57.4)p Diluted 15.9p (42.0)p (57.4)p From discontinued operations Basic 8.4p (4.0)p (22.4)p Diluted 8.4p (3.9)p (22.4)p From continuing and discontinued operations Basic 24.3p (46.0)p (79.8)p Diluted 24.3p (45.9)p (79.8)p Adjusted earnings per share Basic 21.1p 14.2p 37.2p Diluted 21.1p 14.3p 37.2p * All attributable to continuing operations DMGT plc Condensed Consolidated Statement of Comprehensive Income For the 26 weeks ending ended 4th April, 2010 Unaudited 26 Unaudited 26 Audited 53 weeks ending 4th weeks ending weeks April, 2010 29th March, ending 4th 2009 October, 2009 Note £m £m £m Profit/(loss) for the period 102.1 (178.8) (305.4) Fair value movements on available 0.2 - 1.4 -for-sale investments Gains/(losses) on hedges of net investments 0.7 (119.9) (41.9) in foreign operations Cash flow hedges : - - Gains/(losses) arising during the period (9.5) (30.6) (4.5) Transfer of gains on cash flow hedges from 2.6 1.9 3.5 translation reserve to Income Statement Share of associates other comprehensive - - (2.4) income items Translation reserves recycled to 18 (42.9) - 0.9 Income Statement on disposals Foreign exchange differences on translation 34.4 111.0 39.8 of foreign operations Actuarial gain/(loss) on defined benefit 182.9 (186.7) (424.5) pension schemes Other comprehensive income/(loss) 168.4 (224.3) (427.7) Tax relating to components of other (50.8) 59.1 120.6 comprehensive income/(loss) Other comprehensive income/ 117.6 (165.2) (307.1) (loss) for the period Total comprehensive income/ 219.7 (344.0) (612.5) (loss) for the period Attributable to : Owners of the Company 207.4 (339.6) (613.9) Non-controlling interests 12.3 (4.4) 1.4 219.7 (344.0) (612.5) DMGT plc Condensed Consolidated Statement of Changes in Equity For the 26 weeks ending ended 4th April,2010 Called Share Capital Revaluation Shares Translation Retained Total Non- Total up premium redemption reserve held in reserve earnings controlling equity share account reserve treasury interests capital £m £m £m £m £m £m £m £m £m £m Balance as at 49.1 12.4 1.1 39.5 (93.5) 22.2 479.1 509.9 38.7 548.6 28th September, 2008 Loss for the - - - - - - (172.9) (172.9) (5.9) (178.8) period Other - - - - - (39.1) (127.6) (166.7) 1.5 (165.2) comprehensive income/(loss) for the period Total - - - - - (39.1) (300.5) (339.6) (4.4) (344.0) comprehensive loss for the period Dividends - - - - - - (37.1) (37.1) (7.1) (44.2) Own shares - - - - 33.1 - - 33.1 - 33.1 released on vesting of share options Transfer to - - - (35.9) - - 35.9 - - - retained earnings realised gain on GCap Media plc shares Exercise of - - - - - - 13.7 13.7 6.9 20.6 acquisition put option commitments Other - - - - - 2.4 (1.9) 0.5 3.1 3.6 transactions with non-controlling interests Adjustment to - - - - - - (4.2) (4.2) - (4.2) equity following increased stake in controlled entity Credit to - - - - - - 5.3 5.3 - 5.3 equity for equity settled share based payments Settlement of - - - - - - (36.0) (36.0) - (36.0) exercised share options of subsidiary Balance as at 49.1 12.4 1.1 3.6 (60.4) (14.5) 154.3 145.6 37.2 182.8 29th March, 2009 Balance as at 49.1 12.4 1.1 39.5 (93.5) 22.2 479.1 509.9 38.7 548.6 28th September, 2008 Loss for the - - - - - - (303.4) (303.4) (2.0) (305.4) period Other - - - 1.4 - (11.6) (300.3) (310.5) 3.4 (307.1) comprehensive income/(loss) for the period Total - - - 1.4 - (11.6) (603.7) (613.9) 1.4 (612.5) comprehensive income/(loss) for the period Issue of share - - - - - - - - 0.2 0.2 capital Dividends - - - - - - (55.3) (55.3) (9.3) (64.6) Own shares - - - - (5.6) - - (5.6) - (5.6) acquired in the period Own shares - - - - 52.3 - - 52.3 - 52.3 released on vesting of share options Transfer to - - - (36.8) - - 36.8 - - - retained earnings realised gain on GCap Media plc shares Exercise of - - - - - - 20.2 20.2 6.9 27.1 acquisition put option commitments Other - - - - - (0.8) (6.2) (7.0) 7.9 0.9 transactions with non-controlling interests Adjustment to - - - - - - (3.1) (3.1) - (3.1) equity following increased stake in controlled entity Credit to - - - - - - 11.4 11.4 1.0 12.4 equity for equity settled share based payments Settlement of - - - - - - (43.2) (43.2) - (43.2) exercised share options of subsidiary Balance as at 49.1 12.4 1.1 4.1 (46.8) 9.8 (164.0) (134.3) 46.8 (87.5) 4th October, 2009 Profit for the - - - - - - 92.7 92.7 9.4 102.1 period Other - - - 0.2 - - 17.4 131.9 114.7 2.9 117.6 comprehensive income for the period Total - - - 0.2 - (17.4) 224.6 207.4 12.3 219.7 comprehensive income for the period Issue of share - - - - - - - - 1.0 1.0 capital Dividends - - - - - - (37.9) (37.9) (3.9) (41.8) Own shares - - - - (7.9) - - (7.9) - (7.9) acquired in the period Own shares - - - - 9.8 - - 9.8 - 9.8 released on vesting of share options Exercise of - - - - - - 2.0 2.0 (1.1) 0.9 acquisition put option commitments Other - - - - - - 2.9 2.9 (2.1) 0.8 transactions with non-controlling interests Adjustment to - - - - - - 6.3 6.3 (6.3) - equity following increased stake in controlled entity Adjustment to - - - - - - (1.3) (1.3) 1.3 - equity following decreased stake in controlled entity Credit to - - - - - - 5.7 5.7 0.2 5.9 equity for equity settled share based payments Settlement of - - - - - - (9.6) (9.6) - (9.6) exercised share options of subsidiary Deferred tax on - - - - - - (0.6) (0.6) (0.2) (0.8) share based payment transactions Balance as at 49.1 12.4 1.1 4.3 (44.9) (7.6) 28.1 42.5 48.0 90.5 4th April, 2010 DMGT plc Condensed Consolidated Cash Flow Statement For the 26 weeks ending ended 4th April, 2010 Unaudited 26 Unaudited Audited 53 weeks 26 weeks weeks ending 4th ending 29th ending 4th April, 2010 March, October, 2009 2009 Note £m £m £m Operating profit/(loss) before share of results of joint 2 73.4 (136.7) (161.2) ventures and associates - continuing operations Operating profit/(loss) before share of results of joint 19 0.7 (18.0) (100.9) ventures and associates - discontinued operations Adjustments for : Share-based payments 5.9 5.3 12.5 Pension curtailments 20 (0.4) - (27.4) Depreciation 2 26.5 32.1 61.7 Impairment of property, plant and equipment 2 17.0 12.8 25.4 Impairment of goodwill and intangible assets 2 0.6 175.4 346.6 Amortisation of intangible assets 2 36.7 44.2 89.1 Operating cash flows before movements in working capital 160.4 115.1 245.8 (Increase)/decrease in inventories (3.4) (1.5) 5.8 (Increase)/decrease in trade and other receivables (27.8) 58.5 109.4 Decrease in trade and other payables (7.1) (91.6) (88.0) (Decrease)/increase in provisions (6.5) 4.7 24.2 Additional payment into pension schemes 20 - - (4.2) Cash generated by operations 115.6 85.2 293.0 Taxation paid (12.4) (20.2) (32.3) Taxation received 7.2 6.9 18.3 Net cash from operating activities 110.4 71.9 279.0 Investing activities Interest received 0.8 5.5 5.7 Dividends received from joint ventures and associates 2.3 2.1 2.1 Dividends received from available-for-sale investments 0.4 1.3 0.2 Purchase of property, plant and equipment 12 (15.8) (22.6) (39.6) Expenditure on internally generated intangible fixed assets (7.6) (8.0) (17.8) Purchase of available-for-sale investments (1.1) (1.2) (2.5) Proceeds on disposal of property, plant and equipment 12 1.7 3.3 20.5 Proceeds on disposal of available-for-sale investments - - 1.3 Purchase of subsidiaries 17 (10.0) (16.6) (22.0) Purchase of additional interests in controlled entities (12.8) (20.4) (24.1) Treasury derivative activities (3.5) (68.2) (58.7) Investment in joint ventures and associates (3.8) (1.5) (5.4) Loans to joint ventures and associates repaid 64.7 0.2 0.4 Proceeds on disposal of businesses 18 3.1 3.0 4.7 Net cash generated by/(used in) investing activities 18.4 (123.1) (135.2) DMGT plc Condensed Consolidated Cash Flow Statement (continued) For the 26 weeks ending ended 4th April, 2010 Unaudited 26 Unaudited Audited 53 weeks 26 weeks weeks ending 4th ending 29th ending 4th April, 2010 March, October, 2009 2009 Note £m £m £m Financing activities Equity dividends paid 8 (37.9) (37.1) (55.3) Dividends paid to minority interests (3.9) (7.1) (9.3) Issue of shares by Group companies to non-controlling interests 1.0 - 0.2 Purchase of own shares (7.9) - (5.6) Receipt/(payment) on exercise/settlement of subsidiary share 2.0 (2.9) 5.2 options Interest paid (33.9) (17.7) (77.0) Bond issue costs (0.4) - - Loan notes repaid (4.0) (8.3) (14.4) Sale and lease back finance receipts - - 25.0 Repayments of obligations under hire purchase agreements (2.4) - - (Decrease)/increase in bank borrowings (19.9) 117.6 (16.1) Net cash (used in)/generated by financing activities (107.3) 44.5 (147.3) Net increase/(decrease) in cash and cash equivalents 21.5 (6.7) (3.5) Cash and cash equivalents at beginning of period 46.9 44.3 44.3 Exchange gain on cash and cash equivalents 1.5 7.1 6.1 Net cash and cash equivalents at end of period 11 69.9 44.7 46.9 DMGT plc Condensed Consolidated Balance Sheet As at 4th April, 2010 Unaudited as at Unaudited as at Audited as at 4th 29th 4th April, 2010 March, 2009 October, 2009 Restated Restated (note (note 1) 1) Note £m £m £m ASSETS Non-current assets Goodwill 747.1 849.0 734.2 Other intangible assets 388.4 641.8 460.9 Property, plant and equipment 12 395.9 482.9 440.4 Investments Joint ventures 23.7 16.2 16.8 Associates 5.1 2.6 5.4 Available-for-sale investments 21.1 4.6 18.1 Trade and other receivables 30.9 23.6 17.6 Derivative financial assets 6.1 5.3 5.5 Retirement benefit assets 20 0.6 0.6 - Deferred tax assets 123.7 78.6 164.6 1,742.6 2,105.2 1,863.5 Current assets Inventories 27.5 31.6 23.6 Trade and other receivables 386.9 436.4 377.5 Current tax receivable - - 12.8 Derivative financial assets 9.2 3.3 17.9 Cash and cash equivalents 70.8 45.3 47.4 494.4 516.6 479.2 Total assets 2,237.0 2,621.8 2,342.7 LIABILITIES Current liabilities Trade and other payables (625.0) (655.1) (640.1) Current tax payable (57.2) (88.2) (97.0) Acquisition put option commitments 13 (1.1) (19.5) (11.2) Borrowings 14 (17.1) (19.0) (20.5) Derivative financial liabilities (6.8) (38.6) (9.5) Provisions (29.0) (27.5) (38.7) (736.2) (847.9) (817.0) Non-current liabilities Trade and other payables (0.4) (1.0) (0.6) Acquisition put option commitments 13 - (0.4) (0.7) Borrowings 14 (1,024.3) (1,168.9) (1,040.7) Derivative financial liabilities (79.1) (140.8) (82.2) Retirement benefit obligations 20 (251.0) (220.7) (430.4) Provisions (32.0) (30.3) (34.4) Deferred tax liabilities (23.5) (29.0) (24.2) (1,410.3) (1,591.1) (1,613.2) Total liabilities (2,146.5) (2,439.0) (2,430.2) Net assets/(liabilities) 90.5 182.8 (87.5) DMGT plc Condensed Consolidated Balance Sheet (continued) As at 4th April, 2010 Unaudited as at Unaudited as at Audited as at 4th 29th 4th April, 2010 March, 2009 October, 2009 Restated Restated (note (note 1) 1) Note £m £m £m SHAREHOLDERS' EQUITY As at 4th April, 2010 Called up share capital 49.1 49.1 49.1 Share premium account 12.4 12.4 12.4 Share capital 16 61.5 61.5 61.5 Capital redemption reserve 1.1 1.1 1.1 Revaluation reserve 4.3 3.6 4.1 Shares held in treasury (44.9) (60.4) (46.8) Translation reserve (7.6) (14.5) 9.8 Retained earnings/(deficit) 28.1 154.3 (164.0) Equity attributable to owners of the company 42.5 145.6 (134.3) Non-controlling interests 48.0 37.2 46.8 90.5 182.8 (87.5) Approved by the Board of Directors on 26th May, 2010 DMGT plc For the 26 weeks ending ended 4th April, 2010 NOTES 1 BASIS OF PREPARATION The information for the 26 weeks ended 4th April, 2010 and 29th March, 2009 and for the 53 weeks ended 4th October, 2009 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the 53 weeks ended 4th October, 2009 has been delivered to the Registrar of Companies. The auditors' 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, 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 the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half yearly report. This financial information has been prepared for the 26 weeks ending 4th April, 2010, 26 weeks ending 29th March, 2009 and 53 weeks ending 4th October, 2009. The Group, and its national and local media divisions, prepare financial information for a period ending on a Sunday near to the end of March or September; all other divisions prepare financial information for periods ending on 31st March and 30th September. As a result the information presented for the 53 week period ended 4th October, 2009 is not directly comparable with that presented for the half year periods in respect of the national and local media divisions. The Group considers whether there have been any significant transactions or events between the end of the financial period of the divisions other than the national and local media divisions and the end of the Group's financial period and makes any material adjustments as appropriate. 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 53 week period ending 4th October, 2009 have been included on a voluntary basis. The comparative information has been updated in line with the requirements of IFRS 5, Non-current assets held for sale and discontinued operations, to present the results of discontinued operations on a basis comparable with the current period. Further details of discontinued operations are shown in note 19. These condensed financial statements have been prepared in accordance with the accounting policies set out in the 2009 Annual Report and Accounts with the exception of the changes in accounting policy described below, and as amended by the application of certain new accounting standards in the period. These policies are expected to be followed in the preparation of the full financial statements for the financial year ending 3rd October, 2010. Change in accounting policy The Group's defined benefit pension scheme charge under IAS 19, Employee Benefits, contains financing components which comprise the expected return on scheme assets and an interest cost on scheme liabilities. In order to provide a more relevant presentation to assist the user of these accounts to understand the components of the Group's defined benefit pension scheme charge, the Group has presented these financing elements within net Finance costs. Previously these were included within operating profit along with the service charge element. Accordingly the comparatives presented in these consolidated condensed financial statements have been restated. This change in accounting policy has resulted in a reclassification of a return on scheme assets of £57.8 million and an interest cost of £55.5 million from operating profit to net Finance costs in the 26 weeks to 29th March, 2009 and a reclassification of a return on scheme assets of £116.2 million and an interest cost of £111.4 million from operating profit to net Finance costs in the 53 weeks to 4th October, 2009. Reclassification of loans to joint ventures and associates The Group has reclassified loans to joint ventures and associates from investment in joint ventures and associates to trade and other receivables. The amount reclassified in respect of joint ventures at 4th October, 2009 was £7.5 million (29th March, 2009 £7.2 million) the amount reclassified in respect of associates as at 4th October, 2009 was £5.9 million (29th March, 2009 £4.9 million). This reclassification aligns the Group's presentation more closely with the requirements of the relevant accounting standards. Impact of new accounting standards The following new and revised Standards and Interpretations have been adopted in the current year. The adoption of these standards and interpretations on the amounts reported in the condensed consolidated financial information as follows : - IAS 1 (2007) Presentation of Financial Statements IAS 1 (2007) requires the presentation of a Statement of Changes in Equity as a primary statement, separate from the Income Statement and Statement of Comprehensive Income. As a result, a Condensed Consolidated Statement of Changes in Equity has been included in the primary statements, showing changes in each component of equity for each period presented. - IFRS 3 (2008) Business Combinations and IAS 27 (2008) Consolidated and Separate Financial Statements. As a consequence of the adoption of the above standards, the Group has applied the following policies on a prospective basis with regard to business combinations and purchases and sales of shares in a controlled entity effected on or after October 5th, 2009. Such transactions which completed prior to October 5th, 2009 have not been restated and remain as previously reported. Business combinations The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are now recognised in the Income Statement as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted through the Income Statement. All other changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the date of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is a maximum of one year. Business combinations achieved in stages Where a business combination is achieved in stages, the Group's previously held interests in the acquired entity are remeasured to fair value at the date the Group attains control and the resulting gain or loss is recognised in the Income Statement. Amounts arising from interests in the acquiree prior to the acquisition date that were recognised in other comprehensive income are reclassified to the Income Statement where such treatment would be appropriate if the interest were disposed of. Purchases and sales of shares in a controlled entity Where the Group's interest in a controlled entity increases, the non controlling interests' share of net assets, excluding any allocation of goodwill, is transferred to retained earnings. Any difference between the cost of the additional interest and the existing carrying value of the non controlling interests' share of net assets is recorded in retained earnings. Where the Group's interest in a controlled entity decreases, but the Group retains control, the share of net assets disposed, excluding any allocation of goodwill, is transferred to the non controlling interest. Any difference between the proceeds of the disposal and the existing carrying value of the net assets or liabilities transferred to the non controlling interests is recorded in retained earnings. Disposal of controlling interests where stake retained Where the Group disposes of a controlling interest but retains a stake in the business, the Group accounts for the disposal of a subsidiary and the subsequent acquisition of a joint venture, associate or available-for-sale asset at fair value on initial recognition. On disposal of a subsidiary all amounts deferred in equity are recycled to the Income Statement. 2 BASIS OF PREPARATION (Continued) Critical accounting judgements and key sources of estimation uncertainty In addition to the judgement taken by management in selecting and applying the accounting policies set out above, management has made the following judgements concerning the amounts recognised in the consolidated financial statements : Impairment of goodwill and intangible assets Determining whether goodwill and intangible assets are impaired requires an estimation of the value in use of the relevant cash generating units. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash generating unit and compare the net present value of these cash flows using a suitable discount rate to determine if any impairment has occurred. Key judgements include the growth rate of the applicable businesses and the discount rate applied to those cash flows. The carrying amount of goodwill and intangible assets at the balance sheet date was £1,135.5 million (29 March, 2009 £1,490.8 million 4th October, 2009 £1,195.1 million) after an impairment loss on continuing operations of £0.3 million (26 weeks to 29 March, 2009 £160.8 million 53 weeks to 4th October, 2009 £253.4 million) was recognised during the year (note 2). 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. In determining the fair value of assets, liabilities and contingent liabilities acquired significant estimates and assumptions, including assumptions with respect to cash flows and unprovided liabilities and commitments, particularly in respect to tax, are often used. The Group recognises intangible assets acquired as part of a business combination at fair values 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. Acquisition option commitments Written put options to acquire further stakes in subsidiaries, associates and joint ventures written at the time of business combinations, unless so deeply in the money that they represent in-substance ownership interests, are considered financial instruments under IAS 32 and IAS 39. Put options over a minority stake in a subsidiary give rise to a financial liability under IAS 32. Put options over an associate are within the scope of IAS 39 and are accounted for as derivatives at fair value through profit and loss. Where put options over associates have a fair value of £nil, no accounting is required. Written put options are classified within current liabilities if exercisable within one year. The Group is party to a number of put and call options over the remaining minority interests in some of its subsidiaries. IAS 39 requires the fair value of these acquisition option commitments to be recognised as a liability on the Balance Sheet with a corresponding decrease in reserves. Subsequent changes in the fair value of the liability are reflected in the Income Statement. On exercise and settlement of the put option liability, cumulative amounts are removed from retained earnings along with the derecognition of the minority interest and recognition of additional goodwill. Key areas of judgement in calculating the fair value of the options are the expected future cash flows and earnings of the business and the discount rate. As at 4th April, 2010 the fair value of these acquisition option commitments is £1.1 million (29th March, 2009 £19.9 million 4th October, 2009 £11.9 million). Contingent consideration Estimates are required in respect of the amount of contingent consideration payable, which is determined according to formulae agreed at the time of the business combination, and normally related to the future earnings of the acquired business. The Directors review the amount of contingent consideration likely to become payable at each balance date, the major assumption being the level of future profits of the acquired business. As at 4th April, 2010 the Group has outstanding contingent consideration payable amounting to £21.3 million (29th March, 2009 £31.1 million, 4th October 2009 £23.5 million). Contingent consideration is discounted to its fair value in accordance with IFRS 3 and IAS 37. For acquisitions completed prior to October 4th, 2009, the difference between the fair value of these liabilities and the actual amounts payable is charged to the Income Statement as notional finance costs with remeasurement of the liability being recorded against goodwill. For acquisitions completed in the current period, movements in the fair value of these liabilities are charged to Financing. Adjusted profits and exceptional items The Group presents adjusted earnings by making adjustments for costs and profits which management believe to be exceptional in nature by virtue of their size or incidence or have a distortive effect on current year earnings. Such items include costs associated with business combinations, one off gains and losses on disposal of businesses, properties and similar items of a non-recurring nature together with reorganisation costs and similar charges, tax and by adding back impairment of goodwill and amortisation and impairment of intangible assets. See note 9 for a reconciliation of profit before tax to adjusted profit. Exceptional tax items, together with tax on these adjustments is also adjusted in arriving at adjusted earnings per share. Share-based payments The Group makes share-based payments to certain employees. These payments are measured at their estimated fair value at the date of grant, calculated using an appropriate option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of the number of shares that will eventually vest. The key assumptions used in calculating the fair value of the options are the discount rate, the Group's share price volatility, dividend yield, risk free rate of return, and expected option lives. Management regularly perform a true-up of the estimate of the number of shares that are expected to vest, this is dependent on the anticipated number of leavers. Taxation The Group forecasts its expected underlying full year tax charge or credit on a territorial basis in order to calculate forecast effective tax rates for each territory, before applying these rates to actual interim profits in accordance with IAS 34 to arrive at the underlying interim tax charge or credit. Tax charges and credits relating to discrete and non-recurring items are then overlaid in arriving at the Group's total interim tax charge or credit. Being a multinational Group with tax affairs in many geographic locations inherently leads to a highly complex tax structure which makes the degree of estimation and judgement more challenging. The resolution of issues is not always within the control of the Group and is often dependent on the efficiency of legal processes. Such issues can take several years to resolve. The Group takes a conservative view of unresolved issues, 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. 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, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. The assumptions and the resulting estimates are reviewed annually and, when appropriate, changes are made which affect the actuarial valuations and, hence, the amount of retirement benefit expense recognised in the Income Statement and the amounts of actuarial gains and losses recognised in the Statement of Changes in Equity. The carrying amount of the retirement benefit obligation as at 4th April, 2010 was a deficit of £250.4 million (29th March, 2009 £220.1 million 4th October, 2009 £430.4 million). Further details are given in note 20. 2 SEGMENT ANALYSIS Within these consolidated condensed financial statements the Group's Radio operating segment (up to December 16th, 2009) has been treated as discontinued operations. Further details are set out in note 19. The Group's business activities are split into seven operating divisions - RMS, business information, events (previously known as exhibitions), Euromoney, national media, local media and radio. These divisions are the basis on which information is reported to 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 and impairment charges, other gains and losses, net finance costs and taxation. Details of the types of products and services from which each segment derives its revenues are included within the interim management review on pages 5 to 10. The accounting policies applied in preparing the management information for each of the reportable segments are the same as the Group's accounting policies described in note 1. Inter-segment sales are charged at prevailing market prices other than the sale of newsprint from the national media to the local media division which is at cost to the Group. The amount of newsprint sold during the year amounted to £11.2 million (2009 £13.9 million). Unaudited 26 weeks External Inter-segment Total Segment Less Group profit ending 4th April, 2010 revenue revenue revenue result operating before profit of exceptional joint operating ventures and costs associates and (Note i) amortisation and impairment of goodwill and intangible assets Note £m £m £m £m £m £m RMS 71.3 0.7 72.0 23.3 - 23.3 Business information 103.1 0.1 103.2 17.5 - 17.5 Events 57.8 - 57.8 17.2 - 17.2 Euromoney 147.8 - 147.8 44.8 0.1 44.7 National media 427.3 34.3 461.6 42.3 - 42.3 Local media 150.4 0.5 150.9 13.7 0.2 13.5 Radio (ii) 15.9 - 15.9 4.2 1.7 2.5 973.6 35.6 1,009.2 163.0 2.0 161.0 Corporate costs (17.1) Discontinued operations 19, (ii) (15.9) (2.5) 957.7 Operating profit before 141.4 exceptional operating costs and amortisation and impairment of goodwill and intangible assets Exceptional operating (32.5) costs including impairment of property plant and equipment Impairment of goodwill (0.3) and intangible assets Amortisation of (35.2) intangible assets Operating profit before 73.4 share of results of joint ventures and associates Share of result of joint (1.5) ventures and associates Total operating profit 71.9 Other gains and losses 1.4 Profit before net 73.3 finance costs and tax Investment revenue 1.4 Finance costs (38.7) Profit before tax 36.0 Tax 33.9 Profit from discontinued 19 32.2 operations Profit for the period 102.1 (i) The operating profit of joint ventures and associates deducted in reconciling the Group profit before exceptional operating costs and amortisation and impairment of goodwill and intangible assets includes the results of the radio operating segment from December 17th, 2009 from which date the business is accounted for as a joint venture. (ii) Revenue and Group profit before exceptional operating costs and amortisation and impairment of goodwill and intangible assets relating to the discontinued operations of Radio has been deducted in order to reconcile to Group profit before tax from continuing operations. Included within unallocated central costs is a charge of £1.3 million which adjusts the pensions charge recorded in each operating segment from a cash rate to actuarial accrual rate in accordance with IAS 19, Employee benefits. An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows : Unaudited Amortisation Impairment Exceptional Impairment Depreciation Investment Finance 26 weeks of of operating of of income costs ending 4th intangible goodwill costs property, property, April, 2010 assets and plant plant intangible and and assets equipment equipment £m £m £m £m £m £m £m RMS (1.0) - - - (1.9) 0.1 - Business (6.0) - (0.3) - (3.8) - (0.4) information Events (5.4) - (0.7) - (0.7) 0.1 - Euromoney (8.1) - 1.8 (0.2) (1.2) 0.2 (1.4) National (12.3) (0.3) (8.6) (9.8) (12.5) 0.4 (1.5) media Local media (2.4) - (3.0) (7.0) (5.1) 0.1 - Radio (1.5) (0.3) - - (0.6) - - (36.7) (0.6) (10.8) (17.0) (25.8) 0.9 (3.3) Corporate - - (4.7) - (0.7) 0.5 (35.4) costs (36.7) (0.6) (15.5) (17.0) (26.5) 1.4 (38.7) Relating to 1.5 0.3 - - 0.6 - - discontinued operations Continuing (35.2) (0.3) (15.5) (17.0) (25.9) 1.4 (38.7) operations The Group's exceptional operating costs represent closure and reorganisation costs in business information, events, national media and local media. In Euromoney the exceptional operating income is represented by restructuring charges of £0.6 million following further reductions in headcount and an exceptional credit of £2.2 million following the successful resolution of a US legal dispute. The Group's tax charge includes a related credit of £6.0 million in relation to these items. Unaudited 26 weeks External Inter-segment Total Segment Less Group profit ending 29th March, 2009 revenue revenue revenue result operating before Restated (note 1) profit of exceptional joint operating ventures and costs and associates amortisation (Note i) and impairment of goodwill and intangible assets Note £m £m £m £m £m £m RMS 68.7 1.0 69.7 19.6 (0.2) 19.8 Business information 106.7 0.2 106.9 11.1 (0.1) 11.2 Events 101.8 - 101.8 24.8 (0.1) 24.9 Euromoney 160.7 - 160.7 36.4 0.1 36.3 National media 455.3 31.9 487.2 18.3 0.3 18.0 Local media 165.8 0.6 166.4 1.0 (5.1) 6.1 Radio (i) 26.3 - 26.3 2.0 0.4 1.6 1,085.3 33.7 1,119.0 113.2 (4.7) 117.9 Corporate costs (3.8) Discontinued operations 19, (i) (26.3) (1.6) 1,059.0 Operating profit before 112.5 exceptional operating costs and amortisation and impairment of goodwill and intangible assets Exceptional operating (49.1) costs including impairment of property, plant and equipment Impairment of goodwill (160.8) and intangible assets Amortisation of intangible (39.3) assets Operating loss before (136.7) share of results of joint ventures and associates Share of results of joint (5.1) ventures and associates Total operating loss (141.8) Other gains and losses (6.3) Loss before net finance (148.1) costs and tax Investment revenue 3.1 Finance costs (76.8) Loss before tax (221.8) Tax 56.9 Loss from discontinued 19 (13.9) operations Loss for the year (178.8) (i) Revenue and Group profit before exceptional operating costs and amortisation and impairment of goodwill and intangible assets relating to the discontinued operations of Radio has been deducted in order to reconcile to Group profit before tax from continuing operations. Included within unallocated central costs is a credit of £2.0 million which adjusts the pensions charge recorded in each operating segment from a cash rate to actuarial accrual rate in accordance with IAS 19, Employee Benefits. An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows : Unaudited 26 Amortisation Impairment Exceptional Impairment Depreciation Investment Finance weeks ending of of operating of of income costs 29th March, 2009 intangible goodwill and costs property, property, Restated (note 1) assets intangible plant plant assets and and equipment equipment £m £m £m £m £m £m £m RMS (0.9) - - - (1.6) 0.1 - Business (6.0) - (0.6) - (4.0) - (0.7) information Events (7.1) (61.2) (1.3) - (1.0) 0.3 - Euromoney (8.1) (21.9) (9.1) (1.4) (1.3) 0.2 (32.2) National media (13.1) (9.4) (19.6) (9.7) (4.5) 0.1 (0.4) Local media (4.1) (68.3) (6.7) (1.7) (17.9) - - Radio (4.9) (14.6) (0.1) - (1.0) - - (44.2) (175.4) (37.4) (12.8) (31.3) 0.7 (33.3) Corporate costs - - 1.0 - (0.8) 2.4 (43.5) (44.2) (175.4) (36.4) (12.8) (32.1) 3.1 (76.8) Relating to 4.9 14.6 0.1 - 1.0 - - discontinued operations Continuing (39.3) (160.8) (36.3) (12.8) (31.1) 3.1 (76.8) operations The Group's exceptional operating costs comprise reorganisation and restructuring costs together with charges relating to a rationalisation of the Group's property portfolio. Exceptional gains within Group operations represent curtailment gains of £1.3 million net of professional fees of £0.3 million. There is a related current tax credit of £6.4 million and a related deferred tax credit of £0.5 million associated with the total exceptional operating costs. Audited 53 weeks ending 4th External Inter-segment Total Segment Less Group profit October, 2009 Restated revenue revenue revenue result operating before (note 1) profit of exceptional joint operating ventures and costs associates and (Note i) amortisation and impairment of goodwill and intangible assets £m £m £m £m £m £m RMS 136.5 1.8 138.3 42.2 - 42.2 Business information 229.8 0.3 230.1 46.4 0.2 46.2 Events 174.6 - 174.6 37.1 - 37.1 Euromoney 317.6 - 317.6 77.3 0.3 77.0 National media 876.0 61.1 937.1 57.9 (3.8) 61.7 Local media 327.9 2.7 330.6 24.5 0.5 24.0 Radio (i) 55.1 - 55.1 5.6 1.9 3.7 2,117.5 65.9 2,183.4 291.0 (0.9) 291.9 Corporate costs (19.1) Discontinued operations 19, (i) (55.1) (3.7) 2,062.4 Operating profit before 269.1 exceptional operating costs and amortisation and impairment of goodwill and intangible assets Exceptional operating costs (99.0) including impairment of property, plant and equipment Impairment of goodwill and (253.4) intangible assets Amortisation of intangible (77.9) assets Operating loss before share of (161.2) results of joint ventures and associates Share of results of joint (9.2) ventures and associates Total operating loss (170.4) Other gains and losses (23.5) Loss before net finance costs (193.9) and tax Investment revenue 7.0 Finance costs (113.8) Loss before tax (300.7) Tax 80.3 Loss from discontinued 19 (85.0) operations Loss for the year (305.4) (i) Revenue and Group profit before exceptional operating costs and amortisation and impairment of goodwill and intangible assets relating to the discontinued operations of Radio has been deducted in order to reconcile to Group profit before tax from continuing operations. Included within unallocated central costs is a credit of £0.2 million which adjusts the pensions charge recorded in each operating segment from a cash rate to actuarial accrual rate in accordance with IAS 19, Employee Benefits. An analysis of the amortisation and impairment of goodwill and intangible assets, depreciation and impairment of property, plant and equipment, exceptional operating costs, investment income and finance costs by segment is as follows : Audited 53 weeks Amortisation Impairment Exceptional Impairment Depreciation Investment Finance ending 4th of of operating of of income costs October, 2009 intangible goodwill costs property, property, Restated (note 1) assets and plant plant intangible and and assets equipment equipment £m £m £m £m £m £m £m RMS (1.9) - - - (3.3) 0.2 (0.3) Business (12.1) (0.5) (1.2) - (8.1) - (1.1) information Events (13.2) (88.8) (10.0) - (1.8) 0.5 - Euromoney (17.1) (21.9) (9.8) (1.2) (2.5) 0.3 (30.7) National media (26.5) (48.1) (63.2) (21.9) (29.1) 1.0 (0.3) Local media (7.1) (94.1) (13.8) (1.7) (13.0) - - Radio (11.2) (93.1) (0.2) - (2.2) - - (89.1) (346.5) (98.2) (24.8) (60.0) 2.0 (32.4) Corporate costs - - 24.4 (0.6) (1.7) 5.0 (81.4) (89.1) (346.5) (73.8) (25.4) (61.7) 7.0 (113.8) Relating to 11.2 93.1 0.2 - 2.2 - 0.0 discontinued operations Continuing (77.9) (253.4) (73.6) (25.4) (59.5) 7.0 (113.8) operations The Group's exceptional operating costs represent reorganisation costs of £83.3 million, charges relating to a rationalisation of the Group's property portfolio of £3.7 million together with exceptional provisions of £10.5 million in the national media division and £1.0 million in the local media divisions for a bad debt offset by pension curtailments of £24.7 million in corporate costs. There is a related current tax credit of £5.1 million associated with the total exceptional operating costs. The Group's revenue comprises sales excluding value added tax, less discounts and commission, where applicable, and is analysed as follows : Unaudited 26 weeks ending 4th April, 2010 Total Discontinued Inter-segment Continuing operations operations (note 19) £m £m £m £m Sale of goods 349.9 - - 349.9 Rendering of services 659.3 (15.9) (35.6) 607.8 1,009.2 (15.9) (35.6) 957.7 Unaudited 26 weeks ending 29th March, 2009 Total Discontinued Inter-segment Continuing operations operations (note 19) £m £m £m £m Sale of goods 366.9 - - 366.9 Rendering of services 752.1 (26.3) (33.7) 692.1 1,119.0 (26.3) (33.7) 1,059.0 Audited 53 weeks ending 4th October, 2009 Total Discontinued Inter-segment Continuing operations operations (note 19) £m £m £m £m Sale of goods 727.4 - - 727.4 Rendering of services 1,456.0 (55.1) (65.9) 1,335.0 2,183.4 (55.1) (65.9) 2,062.4 The Group includes circulation and subscriptions revenue within sales of goods, the remainder of the Group's revenue, excluding investment revenue is included within rendering of services. Investment revenue is shown in note 5. By geographic area The majority of the Group's operations are located in the United Kingdom, the rest of Europe, North America and Australia. The geographic analysis below is based on the location of companies in these regions. Export sales and related profits are included in the areas from which those sales are made. Revenue in each geographic market in which customers are located is not disclosed as there is no material difference between the two. Revenue is analysed by geographic area as follows : Unaudited 26 weeks ending 4th April, 2010 Total Discontinued Continuing operations operations £m £m £m UK 647.2 - 647.2 Rest of Europe 26.9 - 26.9 North America 236.3 - 236.3 Australia 20.2 (15.9) 4.3 Rest of the World 43.0 - 43.0 973.6 (15.9) 957.7 Unaudited 26 weeks ending 29th March, 2009 Total Discontinued Continuing operations operations £m £m £m UK 695.4 - 695.4 Rest of Europe 29.3 - 29.3 North America 267.5 - 267.5 Australia 28.7 (26.3) 2.4 Rest of the World 64.4 - 64.4 1,085.3 (26.3) 1,059.0 Audited 53 weeks ending 4th October, 2009 Total Discontinued Continuing operations operations £m £m £m UK 1,369.2 - 1,369.2 Rest of Europe 56.9 - 56.9 North America 530.0 - 530.0 Australia 65.7 (55.1) 10.6 Rest of the World 95.7 - 95.7 2,117.5 (55.1) 2,062.4 The closing net book value of goodwill, intangible assets and property, plant and equipment is analysed by geographic area as follows : Unaudited as at 4th April, 2010 Closing net Closing net Closing net TOTAL book book book value of value of value of goodwill intangible property, assets plant and equipment £m £m £m £m UK 274.3 108.9 343.4 726.6 Rest of Europe 1.1 4.7 18.2 24.0 North America 450.0 263.3 28.6 741.9 Australia 1.6 0.8 0.3 2.7 Rest of the World 20.1 10.7 5.4 36.2 747.1 388.4 395.9 1,531.4 Unaudited as at 29th March, 2009 Closing net Closing net Closing net TOTAL book book book value of value of value of goodwill intangible property, assets plant and equipment £m £m £m £m UK 293.2 141.5 414.0 848.7 Rest of Europe 8.7 18.4 18.3 45.4 North America 507.9 331.4 30.4 869.7 Australia 1.8 137.4 14.7 153.9 Rest of the World 37.4 13.1 5.5 56.0 849.0 641.8 482.9 1,973.7 Audited as at 4th October, 2009 Closing net Closing net Closing net TOTAL book book book value of value of value of goodwill intangible property, assets plant and equipment £m £m £m £m UK 294.4 114.3 374.9 783.6 Rest of Europe 3.9 15.2 19.9 39.0 North America 413.4 263.3 25.2 701.9 Australia 1.9 57.2 15.6 74.7 Rest of the World 20.6 10.9 4.8 36.3 734.2 460.9 440.4 1,635.5 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. The total impairment charge recognised for the period was £0.3 million (2009 £160.8 million). The impairment charge for the period relates to the national media division in relation to their jobs sector businesses. There is no tax associated with this impairment charge. The total impairment charge recognised for the prior period was £160.8 million. Of the impairment charge for the period, £21.9 million relates to Euromoney, mostly in connection with its structured finance event businesses, £61.2 million relates to the events division in relation to their gift sector businesses following a further downturn in the gift sector markets they serve, £9.4 million relates to the national media division and £68.3 million relates to the local media division. There is a deferred tax credit amounting to £28.0 million in relation to these impairment charges. When testing for impairment, the recoverable amounts for all the Group's cash-generating units (CGUs) are measured at the higher of value in use and fair value less costs to sell. Value in use is calculated by discounting future expected cash flows. These calculations use cash flow projections based on management approved budgets and projections which reflect management's current experience and future expectations of the markets in which the CGU operates. Risk adjusted discount rates used by the Group in its impairment tests range from 10.0% to 11.0% (2009 9.6% to 11.1%), the choice of rates depending on the market and maturity of the CGU. The growth rates used in the projections range between 0% and 5.0% (2009 0% and 5.0%) and vary with management's view of the CGU's market position, maturity of the relevant market and do not exceed the long-term average growth rate for the market in which it operates. 3 SHARE OF RESULTS OF JOINT VENTURES AND ASSOCIATES Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending 4th ending 29th ending 4th April, 2010 March, October, 2009 2009 Note £m £m £m Share of profits/(losses) from operations of joint 0.6 (1.4) (1.5) ventures Share of profits/(losses) from operations of 0.8 (0.1) (1.3) associates Operating profits/(losses) from joint ventures and 1.4 (1.5) (2.8) associates Share of joint ventures' other gains and losses - - - Share of associates' other gains and losses - - - Share of profits/(losses) before amortisation, 1.4 (1.5) (2.8) impairment of goodwill, interest and tax Share of amortisation of intangibles of joint ventures (0.5) - - Share of amortisation of intangibles of associates (0.1) - - Share of joint ventures' interest payable (0.4) - - Share of associates' interest payable - (0.2) (0.2) Share of joint ventures' tax 0.2 0.1 - Share of associates' tax (0.1) (0.2) (0.2) Impairment of carrying value of joint venture (i) (0.1) - (2.4) Impairment of carrying value of associate (ii) (1.9) (3.3) (3.6) (1.5) (5.1) (9.2) Share of associates items recognised in equity - - (2.4) (1.5) (5.1) (11.6) Share of results from operations of joint ventures (0.1) (1.3) (1.5) Share of results from operations of associates 0.6 (0.5) (1.7) Impairment of carrying value of joint ventures (0.1) - (2.4) Impairment of carrying value of associates (1.9) (3.3) (3.6) (1.5) (5.1) (9.2) Share of associates' items recognised in equity - - (2.4) (1.5) (5.1) (11.6) (i) Represents a write down in the carrying value of the Group's investment in Mail Today Newspapers Pvt. Limited. (ii) Represents a write down in the carrying value of the Group's investment in InfoStud, Fortune Green Limited and Inview Interactive Limited. In the 26 week period ending 29th March, 2009 this represented a write down in the value of the Group's investment in ITN and Inview Interactive Limited. 4 OTHER GAINS AND LOSSES Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending 4th ending 29th ending 4th April, 2010 March, 2009 October, 2009 Note £m £m £m Profit on sale of available-for-sale investments - 0.1 - Impairment of available-for-sale assets (i) - (8.8) (8.7) Profit on sale of property, plant and equipment - - 1.5 Amounts provided against deferred consideration receivable on disposal - - (5.6) Profit/(loss) on sale of businesses (ii) 1.3 4.8 (8.3) Loss on deemed part disposal of Euromoney Institutional Investor plc - (2.4) (2.4) Profit on sale of joint ventures and associates 0.1 - - 1.4 (6.3) (23.5) (i) In the prior 26 week period to 29th March, 2009, the impairment of available-for-sale assets represented an impairment charge of the Group's investment in Spot Runner Inc., an advertising services company. (ii) The profit on sale of businesses mainly comprises the profit on sale of various exhibition businesses in the events division. In the prior 26 week period ended 29th March, 2009 the profit on sale of businesses mainly comprised a £2.7 million curtailment gain within the national media division associated with the Group's sale of a 75.1 % interest in the Evening Standard together with profits within the exhibitions division in relation to the sale of Metropress. There was a deferred tax charge of £0.8 million in relation to the curtailment gain. 5 INVESTMENT REVENUE Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending ending 4th ending 29th 4th October, April, 2010 March, 2009 2009 Restated (note Restated (note 1) 1) Note £m £m £m Expected return on pension scheme 1 - 2.3 4.8 assets less interest on pension scheme liabilities Dividend income 0.4 - 0.2 Profit on derivatives, or portions 0.2 - - thereof, not designated for hedge accounting Interest receivable from short-term 0.8 0.8 2.0 deposits 1.4 3.1 7.0 6 FINANCE COSTS Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending ending 4th ending 29th 4th October, April, 2010 March, 2009 2009 Restated (note Restated (note 1) 1) Note £m £m £m Interest on pension scheme liabilities less 1 (1.0) - - expected return on pension scheme assets Interest, arrangement and commitment fees (35.5) (39.4) (76.1) payable on bonds, bank loans and loan notes Loss on derivatives, or portions thereof, not (0.2) (26.1) (28.0) designated for hedge accounting Finance charge on discounting of deferred (i) (0.5) (0.8) (1.7) consideration Other (1.5) (10.5) (8.0) (38.7) (76.8) (113.8) Analysed as follows : Interest, arrangement and commitment fees (35.6) (39.4) (76.1) payable on bonds, bank loans and loan notes Pension scheme finance charge (1.0) - - Finance charge on discounting of deferred (0.5) (0.8) (1.7) consideration Change in fair value of non-designated - - (2.0) portion of derivatives designated as net investment hedges Change in fair value of interest rate caps not (0.2) (0.4) - designated for hedge accounting Change in fair value of derivative hedge of 0.1 6.8 9.0 bond Change in fair value of hedged portion of (0.1) (6.8) (9.0) bond (37.3) (40.6) (79.8) Tax equalisation swap income - 0.9 0.8 Non foreign exchange gain on tax - 0.5 1.1 equalisation options (ii) - 1.4 1.9 Foreign exchange loss on tax equalisation - (27.1) (27.9) arrangements Foreign exchange loss on intra-group - - (6.2) financing Foreign exchange loss on restructured (iii) - (7.3) - hedging arrangements Change in fair value of acquisition put option (1.4) (3.2) (1.8) commitments Premium on repurchase of bonds 14 - - - Fair value of short life options - - - (1.4) (37.6) (35.9) (38.7) (76.8) (113.8) (i) The finance charge on the discounting of contingent consideration arises from the requirement under IFRS 3, Business Combinations, to discount contingent consideration back to current values. (ii) Tax equalisation swap income and the gain from tax equalisation options totalling £nil (2009 £1.4 million), arises from the economic hedging of tax on foreign exchange movements. The foreign exchange loss on tax equalisation arrangements of £nil (2009 £27.1 million) is excluded from adjusted profit since it is equal to a reduced tax charge (see note 11). In addition, the foreign exchange loss on intra group financing, premium on repurchase of bonds, on restructured hedging arrangements and the change in fair value of acquisition put options are also excluded from adjusted profits. (iii) The foreign exchange losses on restructured hedging arrangements of £nil (2009 £7.3 million) arise from forward contracts classified as ineffective under IAS 39, Financial instruments, following the directors' review of the Group's US dollar revenue capacity in its UK based businesses. 7 TAX Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending ending 4th ending 29th 4th October, April, 2010 March, 2009 2009 Note £m £m £m The credit on the profit/(loss) for the period consists of : UK tax Corporation tax at 28% (2009 28%) (1.7) - - Adjustments in respect of prior years (i) 30.7 14.6 26.4 29.0 14.6 26.4 Overseas tax Corporation tax (7.6) 11.6 (1.0) Adjustments in respect of prior years (i) 1.2 (0.3) 1.6 Total current tax 22.6 25.9 27.0 Deferred tax Origination and reversals of timing differences 1.8 30.9 49.1 Adjustments in respect of prior years (i) 9.5 0.1 4.2 Total deferred tax 11.3 31.0 53.3 Total Group tax - continuing operations 33.9 56.9 80.3 (i) The net prior year credit of £41.4 million (2009 £14.4 million) arose largely from the agreement of certain prior year open issues with tax authorities and a reassessment of the level of tax provisions required. Adjusted tax on profits before amortisation and impairment of intangible assets, restructuring costs and non-recurring items (adjusted tax charge) amounted to a charge of £18.4 million (2009 £15.5 million) and the resulting rate is 16.8% (2009 20.0%). The differences between the tax credit and the adjusted tax charge are shown in the reconciliation below : Unaudited 26 Unaudited 26 Audited 53 weeks weeks weeks ending ending 4th ending 29th 4th October, April, 2010 March, 2009 2009 £m £m £m Total tax credit on the profit/(loss) for 33.9 56.9 80.3 the year Tax (charge)/credit on discontinued (1.4) 3.7 14.2 operations Deferred tax on intangible assets and (3.3) (30.4) (52.4) goodwill Current tax on foreign exchange tax - (27.1) (27.9) equalisation contracts Agreement of open issues with tax (41.5) (13.7) (34.4) authorities Tax on other exceptional items (6.1) (4.9) (24.1) Adjusted tax charge on the profit/(loss) (18.4) (15.5) (44.3) for the period In calculating the adjusted tax rate, the Group excludes the potential future deferred tax effects of intangible assets and goodwill as it prefers to give the readers of its accounts a view of the tax charge based on the current status of such items. A credit of £nil relating to tax on foreign exchange losses (2009 £27.1 million) has been treated as exceptional as it matches foreign exchange losses of £nil (2009 £27.1 million) on tax equalisation swaps included within finance costs (see note 6). 8 DIVIDENDS PAID Unaudited Unaudited 26 Unaudited 26 Unaudited 26 Audited 53 Audited 53 26 weeks weeks ending weeks ending weeks ending weeks ending weeks ending ending 4th 4th April, 29th March, 29th March, 4th October, 4th October, April, 2010 2010 2009 2009 2009 2009 Pence Pence Pence per share £m per share £m per share £m Amounts recognisable as distributions to equity holders in the period Ordinary shares - interim - - - - - - dividend for the year ending 3rd October, 2010 `A' Ordinary Non-Voting - - - - - - shares - interim dividend for the year ending 3rd October, 2010 Ordinary shares - final 9.90 2.0 - - - - dividend for the year ended 4th October, 2009 `A' Ordinary Non-Voting 9.90 35.9 - - - - shares - final dividend for the year ended 4th October, 2009 Ordinary shares - final - - 9.90 2.0 9.90 2.0 dividend for the year ended 28th September, 2008 `A' Ordinary Non-Voting - - 9.90 35.1 9.90 35.1 shares - final dividend for the year ended 28th September, 2008 37.9 37.1 37.1 Ordinary shares - interim - - - - 4.80 1.0 dividend for the year ended 4th October, 2009 `A' Ordinary Non-Voting - - - - 4.80 17.2 shares - interim dividend for the year ended 4th October, 2009 - - 18.2 9.90 37.9 9.90 37.1 14.70 55.3 9 ADJUSTED PROFIT (BEFORE EXCEPTIONAL OPERATING COSTS AND AMORTISATION AND IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS, OTHER GAINS AND LOSSES AND EXCEPTIONAL FINANCING COSTS, AFTER TAXATION AND NON-CONTROLLING INTERESTS) Unaudited Unaudited Audited 26 weeks 26 weeks 53 weeks ending ending ending 4th 29th 4th April, March, October, 2010 2009 2009 £m £m £m Profit/(loss) before tax - 36.0 (221.8) (300.7) continuing operations Profit/(loss) before tax - 33.6 (17.6) (99.2) discontinued operations Add back : Amortisation of intangible 37.3 44.6 89.9 assets in Group profit from operations and in joint ventures and associates Impairment of goodwill and intangible assets 0.6 175.4 346.6 Exceptional operating costs and 32.5 49.2 99.2 impairment of property, plant and equipment Share of associates' other gains - - - Impairment of carrying value of joint venture 0.1 - 2.4 Impairment of carrying value of associate 1.9 3.3 3.6 Other gains and losses : Profit on sale of available-for-sale investments - (0.1) - Profit on sale of property, - - (1.5) plant and equipment Amounts provided against deferred - - 5.6 consideration receivable on disposal (Profit)/loss on sale of businesses (1.3) (4.8) 8.3 Impairment of available-for-sale assets - 8.8 8.7 Loss on deemed part disposal of - 2.4 2.4 Euromoney Institutional Investor plc Profit on sale of joint ventures (0.1) - - and associates Profit on sale of discontinued operations - - (1.2) Finance costs : Foreign exchange loss on tax - 27.1 27.9 equalisation arrangements Foreign exchange loss on - - 6.2 intra-group financing Foreign exchange loss on restructured - 7.3 1.8 hedging arrangements Change in fair value of acquisition 1.4 3.2 - put option commitments Premium on repurchase of bonds - - - Fair value of short life options - - - Tax : Share of tax in joint ventures (0.1) 0.2 0.8 and associates Profit on sale of discontinued operations (32.3) - - Profit before exceptional operating costs 109.6 77.2 200.8 , amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and non-controlling interests Total tax credit on the profit for the period 32.5 60.6 94.5 Adjust for : Deferred tax on intangible assets (3.3) (30.4) (52.4) and goodwill Current tax on foreign exchange on tax - (27.1) (27.9) equalisation arrangements Agreed open issues with tax authorities (41.5) (13.7) (34.4) Tax on other exceptional items (6.1) (4.9) (24.1) Non-controlling interests (10.3) (8.2) (15.8) Adjusted profit before exceptional operating costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs after taxation and non-controlling interests 80.9 53.5 140.7 The adjusted minority share of profits for the period of £10.3 million (2009 £8.2 million) is stated after eliminating a credit of £0.9 million (2009 £14.1 million), being the minority share of exceptional items. 10 EARNINGS/(LOSS) PER SHARE Basic earnings per share of 24.3 p (2009 loss 46.0 p) and diluted earnings per share of 24.3 p (2009 loss 45.9 p) are calculated, in accordance with IAS 33, Earnings per share, on Group profit for the financial period of £92.7 million (2009 loss £172.9 million) and on the weighted average number of ordinary shares in issue during the year, as set out below. As in previous years, adjusted earnings per share have also been disclosed since the Directors consider that this alternative measure gives a more comparable indication of the Group's underlying trading performance. Adjusted earnings per share of 21.1 p (2009 14.2 p) are calculated on profit for continuing and discontinued operations before exceptional operating costs, amortisation and impairment of goodwill and intangible assets, after charging the taxation and non-controlling interests associated with those profits, of £80.9 million (2009 £53.5 million), as set out in note 9 above, and on the basic weighted average number of ordinary shares in issue during the year. Unaudited Unaudited Audited 26 weeks ending 26 weeks ending 53 weeks ending 4th April, 2010 29th 4th March, 2009 October, 2009 Basic Basic Basic pence pence pence per share per share per share Profit/(loss) per share from 15.9 (42.0) (57.4) continuing operations Adjustment to include 8.4 (4.0) (22.4) earnings of discontinued operations Basic earnings/(loss) per 24.3 (46.0) (79.8) share from continuing and discontinued operations Add back: Amortisation of intangible assets in 9.7 11.9 23.7 Group profit from operations and in joint ventures and associates Impairment of goodwill and intangible 0.2 46.7 91.5 assets Exceptional operating costs and 8.4 13.1 26.2 impairment of property, plant and equipment Impairment of carrying value of joint - - 0.6 venture Impairment of carrying value of 0.5 0.9 1.0 associate Other gains and losses : Profit on sale of property, plant and - - (0.4) equipment Amounts provided against deferred - - 1.5 consideration receivable on disposal (Profit)/loss on sale of businesses (0.4) (1.3) 2.2 Impairment of available-for-sale assets - 2.3 2.3 Loss on deemed part disposal of - 0.6 0.6 Euromoney Institutional Investor plc Profit on sale of discontinued operations - - (0.3) Finance costs : Foreign exchange loss on tax - 7.2 7.4 equalisation arrangements Foreign exchange loss on intra-group - - 1.6 financing Foreign exchange loss on restructured - 1.9 - hedging arrangements Change in fair value of acquisition put 0.4 0.9 0.5 option commitments Tax : Share of tax in joint ventures and - 0.1 0.2 associates Profit on sale of discontinued operations (8.5) - - Profit before exceptional operating 34.6 38.3 78.8 costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and non- controlling interests Adjust for: Deferred tax on intangible assets and (0.9) (8.1) (13.9) goodwill Current tax on foreign exchange on tax - (7.2) (7.4) equalisation arrangements Agreed open issues with tax (10.8) (3.6) (9.1) authorities Tax on other exceptional items (1.6) (1.3) (6.4) Non-controlling interests (0.2) (3.9) (4.8) Adjusted earnings per share (before exceptional operating costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs after taxation and non- controlling interests) 21.1 14.2 37.2 10 EARNINGS/(LOSS) PER SHARE - CONTINUED Unaudited Unaudited Audited 26 weeks 26 weeks 53 weeks ending ending ending 4th 29th 4th April, March, October, 2010 2009 2009 Diluted Diluted Diluted pence pence pence per share per share per share Profit/(loss) per share from continuing operations 15.9 (42.0) (57.4) Adjustment to include earnings of discontinued operations 8.4 (3.9) (22.4) Basic earnings/(loss) per share from continuing and discontinued operations 24.3 (45.9) (79.8) Add back: Amortisation of intangible assets in Group profit from operations and in joint 9.7 11.9 23.7 ventures and associates Impairment of goodwill and intangible assets 0.2 46.7 91.5 Exceptional operating costs and impairment of property, plant and equipment 8.4 13.1 26.2 Impairment of carrying value of joint venture - - 0.6 Impairment of carrying value of associate 0.5 0.9 1.0 Other gains and losses : Profit on sale of property, plant and equipment - - (0.4) Amounts provided against deferred consideration receivable on disposal - - 1.5 (Profit)/loss on sale of businesses (0.4) (1.3) 2.2 Impairment of available-for-sale assets - 2.3 2.3 Loss on deemed part disposal of Euromoney Institutional Investor plc - 0.6 0.6 Profit on sale of discontinued operations - - (0.3) Finance costs : Foreign exchange loss on tax equalisation arrangements - 7.2 7.4 Foreign exchange loss on intra-group financing - - 1.6 Foreign exchange loss on restructured hedging arrangements - 1.9 - Change in fair value of acquisition put option commitments 0.4 0.9 0.5 Tax : - Share of tax in joint ventures and associates - 0.1 0.2 Profit on sale of discontinued operations (8.5) Profit before exceptional operating 34.6 38.4 78.8 costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs, taxation and non-controlling interests Adjust for: Deferred tax on intangible assets and goodwill (0.9) (8.1) (13.9) Current tax on foreign exchange on tax equalisation arrangements - (7.2) (7.4) Agreed open issues with tax authorities (10.8) (3.6) (9.1) Tax on other exceptional items (1.6) (1.3) (6.4) Non-controlling interests (0.2) (3.9) (4.8) Adjusted earnings per share (before exceptional operating costs, amortisation and impairment of goodwill and intangible assets, other gains and losses and exceptional financing costs after taxation and non-controlling interests) 21.1 14.3 37.2 10 EARNINGS/(LOSS) PER SHARE - CONTINUED The weighted average number of ordinary shares in issue during the period for the purpose of these calculations is as follows : Unaudited Unaudited Audited 26 weeks 26 weeks 53 weeks ending ending ending 4th 29th 4th April, March, October, 2010 2009 2009 Number m Number m Number m Number of ordinary shares in issue 392.8 391.3 392.6 Shares held in Treasury (9.6) (15.6) (14.0) Basic earnings per share denominator 383.2 375.7 378.6 Effect of dilutive share options 0.3 - 0.1 Dilutive earnings per share denominator 383.5 375.7 378.7 11 ANALYSIS OF NET DEBT Unaudited Unaudited Audited 26 weeks 26 weeks 53 weeks ending ending ending 4th 29th 4th April, March, October, 2010 2009 2009 £m £m £m Net debt at start (1,013.8) (984.9) (984.9) Cashflow 48.2 (122.3) 2.0 Foreign exchange movements (2.7) (0.5) (17.4) Other non-cash movements (2.3) (34.9) (13.5) Net debt at year end (970.6) (1,142.6) (1,013.8) Analysed as : Cash and cash equivalents 70.8 45.3 47.4 Unsecured bank overdrafts (0.9) (0.6) (0.5) Cash and cash equivalents in the cash flow statement 69.9 44.7 46.9 Debt due within one year Bank loans (0.5) (0.6) (0.5) Loan notes (10.8) (17.8) (14.8) Hire purchase obligations (4.9) - (4.7) Debt due in more than one year Bonds (848.1) (845.2) (847.1) Hire purchase obligations (17.7) - (20.3) Loans (158.5) (323.7) (173.3) Net debt at year end (970.6) (1,142.6) (1,013.8) Effect of derivatives on bank loans (47.4) (84.2) (34.8) Net debt including derivatives (1,018.0) (1,226.8) (1,048.6) The net cash inflow of £48.2 million includes a cash outflow of £14.0 million in respect of operating exceptional items. 12 PROPERTY, PLANT AND EQUIPMENT During the period the Group spent £15.8 million (2009 £22.6 million) on property, plant and equipment. The Group also disposed of certain of its property, plant and equipment with a carrying value of £1.6 million (2009 £4.0 million) for proceeds of £1.7 million (2009 £3.3 million). 13 ACQUISITION PUT OPTION COMMITMENTS Unaudited Unaudited Audited as at 4th as at 29th as at April, March, 4th 2010 2009 October, 2009 £m £m £m Current 1.1 19.5 11.2 Non-current - 0.4 0.7 1.1 19.9 11.9 14 OTHER FINANCIAL LIABILITIES Unaudited Unaudited Audited as at 4th as at as at April, 29th 4th 2010 March, October, 2009 2009 £m £m £m Current liabilities Bank overdrafts 0.9 0.6 0.5 Bank loans 0.5 0.6 0.5 Hire purchase obligations 4.9 - 4.7 Loan notes 10.8 17.8 14.8 17.1 19.0 20.5 Non-current liabilities Bonds 848.1 845.2 847.1 Bank loans 158.5 323.7 173.3 Hire purchase obligations 17.7 - 20.3 1,024.3 1,168.9 1,040.7 During the period the Group extended the maturity of £143.5 million of its 2013 bonds by exchanging these for new 2018 bonds. The new 2018 bonds formed a single series with the existing 2018 bonds. 15 BANK LOANS The Group's bank loans bear interest charged at LIBOR plus a margin based on the Group's ratio of net debt to EBITDA. Additionally each facility contains a covenant based on a minimum interest cover ratio. EBITDA for these purposes is defined as the aggregate of the Group's consolidated operating profit before 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. These covenants were met at the relevant test dates during the period. The Group's facilities and their maturity dates are as follows : Unaudited Unaudited Audited as at 4th as at as at April, 29th 4th 2010 March, October, 2009 2009 £m £m £m Expiring in one year or less - 70.0 - Expiring in more than one year but not more than two years 180.0 - 180.0 Expiring in more than two years but not more than three years 30.0 180.0 30.0 Expiring in more than three years but not more than four years 210.0 - - Expiring in more than four years but not more than five years - 240.0 210.0 Total bank facilities 420.0 490.0 420.0 The following undrawn committed borrowing facilities were available to the Group in respect of which all conditions precedent had been met : Unaudited Unaudited Audited as at 4th as at as at April, 29th 4th 2010 March, October, 2009 2009 £m £m £m Expiring in one year or less - 3.1 - Expiring in more than one year 63.6 - 105.7 but not more than two years Expiring in more than two years 30.0 - 30.0 but not more than three years Expiring in more than three years 108.1 1.0 - but not more than four years Expiring in more than four years - 46.1 68.2 but not more than five years Expiring in more than five years - 43.6 - but not more than six years Total undrawn committed bank facilities 201.7 93.8 203.9 16 SHARE CAPITAL AND RESERVES Share capital as at 4th April, 2010 amounted to £49.1 million. During the period 10,000 'A' Ordinary Non-Voting shares were allotted for aggregate consideration of £24,975 under the terms of the Company's 2006 Executive Share Option Scheme. The Company disposed of 2,023,197 treasury shares, representing 0.54 % of the called up 'A' Ordinary Non-Voting share capital, in order to satisfy incentive schemes. It also acquired 1,943,783 'A' Ordinary shares within treasury, representing 0.52% of the called up 'A' Ordinary share capital as at 4th April, 2010. At 4th April, 2010 options were outstanding under the terms of the Company's 1997 and 2006 Executive Share Option Schemes over a total of 5,715,422 (2009 6,543,567) 'A' Ordinary Non-Voting shares. 17 SUMMARY OF THE EFFECTS OF ACQUISITIONS The Group has made several minor acquisitions during the period. Provisional fair value of net assets acquired with acquisitions : Accounting Provisional Provisional policy fair value fair value alignments adjustments £m £m £m Goodwill - 5.0 5.0 Intangible assets - 3.9 3.9 Property, plant and equipment - - 0.2 Current assets - - 0.4 Cash and cash equivalents - - 0.3 Trade creditors and other payables - - (1.4) Deferred tax - (0.9) (0.9) Net assets acquired - 8.0 7.5 Minority share of net assets acquired - - 0.1 Group share of net assets acquired - 8.0 7.6 Cost of acquisitions: Cash paid Cash paid Total in prior in current period period £m £m £m Contingent consideration - - 3.5 Cash - 4.1 4.1 Total consideration at fair value - 4.1 7.6 If all acquisitions had been completed on the first day of the financial year, Group revenues for the year would have been £957.9 million and Group profit attributable to equity holders of the parent would have been £71.7 million. This information takes into account the amortisation of acquired intangible assets for a full year, together with related income tax effects but excludes any pre-acquisition finance costs and should not be viewed as indicative of the results of operations that would have occurred if the acquisitions had actually been completed on the first day of the financial year. Total profit attributable to equity holders of the parent since the date of acquisition for companies acquired during the period amounted to £nil. The aggregate consideration for these and other businesses was £8.2 million, of which £4.7 million was paid in cash during the year, and an estimated amount of £3.5 million payable in the form of contingent consideration, depending upon trading results. This contingent consideration has been discounted back to current values in accordance with IFRS 3, Business Combinations. In each case, the Group has used acquisition accounting to account for the purchase. Goodwill arising on the 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. 17 SUMMARY OF THE EFFECTS OF ACQUISITIONS - CONTINUED Purchase of additional shares in controlled entities Unaudited Unaudited Audited as at 4th as at as at April, 29th 4th 2010 March, October, 2009 2009 £m £m £m Cash consideration (including acquisition 12.8 20.4 24.1 expenses of £nil (2009 £0.1 million)) During the period, the Group acquired additional shares in controlled entities amounting to £12.8 million (2009 £20.4 million). In addition, the Group opted to receive a scrip dividend from Euromoney amounting to £5.9 million (2009 £9.3 million) thereby acquiring a further 0.3 % (2009 1.2 % ) of the issued ordinary share capital of Euromoney. Under the Group's accounting policy for the acquisition of shares in controlled entities, no adjustment has been recorded to the fair value of assets and liabilities already held on the balance sheet. The difference between the cost of the additional shares and the carrying value of the minority share of net assets is adjusted in retained earnings. The adjustment to retained earnings in the period was a charge of £1.8 million (2009 £1.1 million). Reconciliation to purchase of subsidiaries as shown in the cash flow statement : Unaudited Unaudited Audited as at 4th as at 29th as at April, March, 2009 4th 2010 October, 2009 £m £m £m Cash consideration including acquisition 4.1 7.6 7.6 expenses of £nil (2009 £0.3 million) Cash paid to settle contingent consideration 6.2 9.9 15.1 in respect of acquisitions Cash and cash equivalents acquired with (0.3) (0.9) (0.7) subsidiaries 10.0 16.6 22.0 18 SUMMARY OF THE EFFECTS OF DISPOSALS As referred to in note 19, the Group disposed of a 50.0% interest in dmg radio Australia. As part of this disposal transaction the Group received A$112.5 million (£63.9 million) in repayment of amounts due to the Group arising from a pre sale restructuring of the radio division. The net assets disposed were as follows : £m Goodwill - Intangible assets 57.2 Property, plant and equipment 15.9 Interests in joint ventures 24.7 Other - Trade and other receivables 14.0 Cash at bank and in hand 2.3 Deferred tax 1.4 Trade creditors and other payables (87.6) Total net assets disposed 27.9 Profit on sale of businesses 32.3 60.2 Satisfied by : Cash received - Loan in joint venture repaid - Investment in DMG Radio 21.3 Recycled cumulative translation differences 41.3 Directly attributable costs (2.4) 60.2 During the period radio generated £0.7 million of the Group's net operating cash flows, paid £nil in respect of investing activities and paid £nil in respect of financing activities. The other principal disposals completed during the period included the sale of various exhibitions and events businesses in the events segment. The proceeds received amounted to £5.4 million. In addition, the Group's interest in Euromoney was diluted during the period by 1.0%. Under the Group's accounting policy for the disposal of shares in controlled entities, no adjustment has been recorded to the fair value of assets and liabilities already held on the balance sheet. The difference between the Group's share of net assets before and after this dilution is adjusted in retained earnings. The adjustment to retained earnings in the period was a charge of £1.3 million. The impact of all disposals of businesses on net assets was : £m Goodwill 3.7 Intangible assets 60.7 Property, plant and equipment 16.9 Interests in joint ventures 24.7 Other - Trade and other receivables 16.3 Cash at bank and in hand 3.1 Trade creditors and other payables (110.3) Deferred tax 0.4 Net assets disposed 15.5 Profit on disposal of businesses 33.6 49.1 Satisfied by: Cash received 9.6 Loan in joint venture repaid - Investment in DMG Radio - Liabilities assumed - Recycled cumulative translation differences 42.9 Directly attributable costs (3.4) 49.1 18 SUMMARY OF THE EFFECTS OF DISPOSALS - CONTINUED Reconciliation to disposal of businesses as shown in the cash flow statement : Unaudited Unaudited Audited as at 4th as at as at April, 29th 4th 2010 March, October, 2009 2009 £m £m £m Cash consideration net of disposal costs 6.2 11.3 12.6 Cash consideration net of disposal costs - - - 1.2 discontinued operations Proceeds reinvested - (8.3) (8.3) Cash and cash equivalents disposed with subsidiaries (3.1) - (0.8) 3.1 3.0 4.7 The businesses disposed of during the year contributed £0.5 million to the Group's net operating cash flows, £nil attributable to investing and £nil attributable to financing activities. 19 DISCONTINUED OPERATIONS Discontinued operations In November 2009, the Group announced the sale of a 50.0% interest in dmg radio Australia to Illyria Radio Investments Limited. Following the disposal of the 50.0% interest in the Radio business on 16th December, 2009, the Group has joint control over the day to day management of this business. The Group's remaining 50.0% interest has therefore been accounted for as a joint venture. In the year to 4th October, 2009, the Group received final payment of £1.2m after related costs from the sale of Atalink Limited, following agreement of their completion accounts. There is no related tax charge. The business and net assets of Atalink Limited were sold in March 2007 and were treated as a discontinued operation up to that date. The Group's Income Statement includes the following results from discontinued operations : Unaudited Unaudited Audited as at 4th as at 29th as at April, March, 4th 2010 2009 October, 2009 £m £m £m Revenue 15.9 26.3 55.1 Expenses (12.8) (23.7) (49.2) Depreciation (0.6) (1.0) (2.2) Operating profit before exceptional 2.5 1.6 3.7 operating costs and amortisation and impairment of goodwill and intangible assets Exceptional operating costs - (0.1) (0.2) Impairment of goodwill and (0.3) (14.6) (93.2) intangible assets Amortisation of intangible assets (1.5) (4.9) (11.2) Operating profit/(loss) before 0.7 (18.0) (100.9) share of results of joint ventures and associates Share of results of joint ventures 0.6 0.4 0.5 and associates Total operating profit/(loss) 1.3 (17.6) (100.4) Other gains and losses - - 1.2 Profit/(loss) before net finance 1.3 (17.6) (99.2) costs and tax Investment revenue - - - Finance costs - - - Net finance costs - - - Profit/(loss) before tax 1.3 (17.6) (99.2) Tax (1.4) 3.7 14.2 Loss after tax attributable to (0.1) (13.9) (85.0) discontinued operations Profit on disposal of 32.3 - - discontinued operations Profit/(loss) attributable to 32.2 (13.9) (85.0) discontinued operations There was no tax associated with the profit on disposal of discontinued operations. Cashflows associated with discontinued operations comprises operating cashflows of £0.7 million (2009 £0.9 million), investing cashflows of £0.9 million (2009 £1.2 million) and financing cashflows of £nil (2009 £nil). 20 RETIREMENT BENEFITS The Group operates a number of pension schemes covering most major Group companies under which contributions are paid by the employer and employees. The schemes include funded defined benefit pension arrangements, providing service-related benefits, based on final pensionable salary in addition to a number of defined contribution pension arrangements. The defined benefit schemes in the UK and some defined contribution plans are administered by trustees or trustee companies. The assets of all the pension schemes and plans are held independently from the Group's finances. The total net pension costs of the Group for the period ended 4th April, 2010 were £22.3 million (2009 £13.8 million). The defined benefit obligation is calculated on a year-to-date basis, using the latest actuarial valuation as at 29th March, 2009. The assumptions used in the valuation are summarised below: Unaudited Unaudited Audited as at 4th as at 29th as at April, March, 4th 2010 2009 October, 2009 % pa % pa % pa Price inflation 3.5 3.0 3.1 Salary increases 3.3 3.5 3.0 Pension increases 3.3 3.0 3.0 Discount rate for scheme liabilities 5.5 6.8 5.5 Expected overall rate of return on assets N/A N/A 7.0 21 CONTINGENT LIABILITIES There have been no material changes in contingent liabilities since 4th October, 2009. The Group has issued stand by letters of credit in favour of the Trustees of the Group's defined benefit pension fund amounting to £51.2 million (2009 £66.1 million). The Group is exposed to libel claims in the ordinary course of business and vigorously defends against claims received. The Group makes provision for the estimated costs to defend such claims when incurred and provides for any settlement costs when such an outcome is judged probable. Four writs claiming damages for libel have been issued in Malaysia against Euromoney Institutional Investor and three of its employees in respect of an article published in one of Euromoney's magazines, International Commercial Litigation, in November 1995. The writs were served on Euromoney on 22nd October, 1996. Two of these writs have been discontinued. The total outstanding amount claimed on the two remaining writs is 82.0 million Malaysian ringgits (£16.6 million). No provision has been made in these accounts since the Directors do not believe that Euromoney has any material liability in respect of these writs. 22 ULTIMATE HOLDING COMPANY The Company's ultimate holding company and immediate parent company is Rothermere Continuation Limited, a company incorporated in Bermuda. 23 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. The following transactions and arrangements are those which are considered to have had a material effect on the financial performance and position of the Group for the period. Ultimate Controlling Party The Company's ultimate controlling party is the Viscount Rothermere, the Company's Chairman. Transactions with Directors There were no material transactions with Directors of the Company during the year, except for those relating to remuneration. For the purposes of IAS 24, Related Party Disclosures, Executives below the level of the Company's Board are not regarded as related parties. Transactions with joint ventures and associates During the period, the Company received services from companies in which Directors have an interest totalling £1.3 million (2009 £3.3 million) and received revenue of £0.4 million (2009 £0.3 million). The net amount owed by these companies at 4th April, 2010 was £0.4 million (2009 £0.1 million). Daily Mail and General Holdings Limited has a 15.8% share holding in The Press Association. During the period the Group received services amounting to £1.8 million (2009 £0.8 million) and the net amount due to the Press Association as at 4th April, 2010 was £0.5 million (2009 due from £82,000). Daily Mail and General Holdings Limited has a 24.9% share in the Evening Standard Limited (ESL). During the period, the Group has been invoiced by ESL £2.6 million net (2009 invoiced ESL £1.8 million net) for on going services at a market rate. The net amount due from ESL at 4th April, 2010 was £0.4 million (2009 £1.3 million). During the period the Group received A$112.5 million (£63.9 million) in respect of an outstanding loan balance from DMG Radio Pty Limited. As at 4th April, 2010 A$15.0 million (£9.0 million) was due to the Group from DMG Radio Pty Limited in relation to preference shares held by the Group. Associated Newspapers Limited has a 45% shareholding in Fortune Green Limited. During the period the Group received revenue for newsprint, computer and office services of £0.3 million (2009 £0.4 million). Amounts due from Fortune Green Limited at 4th April, 2010 were £58,000 (2009 £16,000). Associated Newspapers Limited has a 20% share in the Newspapers Licensing Agency (NLA) from which royalty revenue of £0.9 million was received (2009 £1.8 million). Commissions paid on this revenue total £10,000 (2009 £0.2 million). The amount due to the NLA on 4th April, 2010 was £nil (2009 £0.2 million). During the period, Landmark charged management fees of £0.2 million (2009 £0.2 million) to Point X Ltd, and recharged costs of £0.1 million (2009 £0.1 million). During the period Point X received royalty income from Landmark of £34,000 (2009 £40,000) and as at 4th April, 2010 owed £0.1 million to Landmark (2009 £0.2 million). Other related party disclosures At 4th April, 2010, the Group owed £1.5 million (2009 £1.2 million) to the pension schemes which it operates. This amount comprised employees' and employer's contributions in respect of March 2010 payrolls which were paid to the pension schemes in April 2010. Post Balance Sheet Events There were no material post balance sheet events. Independent review report to Daily Mail and General Trust plc We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 4th April, 2010 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement, the condensed consolidated balance sheet, and related notes 1 to 23. 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 condensed set of financial statements.This report is made solely to the Company 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. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report 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 and Transparency Rules of the United Kingdom's Financial Services Authority.As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of Review 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 inquiries, 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 Ireland) 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. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 4th April, 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditors 26th May, 2010 London United Kingdom Shareholder Information Financial Calendar (provisional) 2010 27th May Half Yearly Financial Report published 9th June Interim ex-dividend date 11th June Interim record date 9th July Payment of interim dividend 27th July Interim management statement 28th September Pre-close trading update 30th September Payment of interest on loan notes 3rd October Year end 25th November Annual results and final dividend announced 1st December Ex-dividend date 3rd December Record date Contacts Daily Mail and General Trust plc Auditors Northcliffe House Deloitte LLP, 2 New Street Square 2 Derry Street, London London EC4A 3BZ W8 5TT Telephone: 020 7938 6000 Email:[email protected] Stockbrokers Registrars JPMorgan Cazenove Limited Equiniti 20 MoorgateLondon Aspect House EC2R 6DA Spencer Road Lancing Credit Suisse Securities (Europe) West Sussex Limited BN99 6DA One Cabot Square London E14 4QJ For further investor information and contacts, please visit the Company's website at:http://www.dmgt.co.uk Copies of this Half Yearly Financial Report are available electronically from the Company's web site at www.dmgt.co.uk or from the Secretary upon request. END
Reviews sparse over city’s cable franchise agreement [Niagara Gazette, Niagara Falls, N.Y.]
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