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DailyMail and General Trust plc Daily Mail and General Trust plc Annual Report, 4th October, 2009 Annual Report, 4th October, 2009 Short-term actions 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Daily Mail and General Trust plc Northcliffe House, 2 Derry Street, London W8 5TT T +44 (0)20 7938 6000 F +44 (0)20 7938 4626 W www.dmgt.co.uk Long-term perspective DMGT Corporate Profile and Financial Highlights DMGT Corporate Profile and Financial Highlights DMGT.co.uk The Group’s businesses, other Operating Profit* 1996 Operating Profit* 2009 You have access to more information on our website: than its newspaper publishing, £88m £278m DMGT’s corporate website has achieved an ‘AA’ accessibility rating now make up 73% of the Group’s in independent tests. It is independently regarded as one of the operating profit*, compared best programmed sites in the FTSE 350 index. to 14% in 1996. Visit our web 2.0 interactive online Annual Report at www.dmgtreports.com/2009. Newspaper publishing 86%, £75m Newspaper publishing 27%, £75m Other businesses 14%, £13m Other businesses 73%, £203m DMGTREPORTS.COM/2009 Financial highlights Revenue Adjusted operating profit* Adjusted profit before tax* 09 £2,118m 09 £278m 09 £201m 08 £2,312m 08 £317m 08 £262m About dmgt Investor relations Corporate Responsibility Adjusted earnings per share* Dividend per share dmgt.co.uk/aboutdmgt dmgt.co.uk/investorrelations dmgt.co.uk/corporateresponsibility Group Overview Financial Announcements The Community 09 37.2p 09 14.7p Board of Directors Financial Calendar The Environment 08 47.9p 08 14.7p DMGT History Share Information Our Employees DMGT Fact File Analyst Consensus Our Readers * Before amortisation and impairment of intangible assets and exceptional items; Reports and Presentations Financial Markets see Consolidated Income Statement on page 66 and reconciliation in Note 13 to the Accounts. Corporate structure Board of Directors For Schools Shareholder Services dmgt.co.uk/corporatestructure Financial Analysis Media Centre Management Structure Fixed Income Investors Risk Management Solutions Contacts for Investors dmgt.co.uk/mediacentre dmg information News Releases dmg world media Corporate Governance Image Library Euromoney DMGT Factfile Contents Associated Newspapers dmgt.co.uk/corporategovernance Northcliffe Media Board Remit 01 Introduction 02 Chairman’s Statement 04-32 Business Review 04 Chief Executive’s Review 12 DMGT at a Glance 14 Management Feedback dmg radio australia Committee Remits Structure 15-21 Business to Business 15 Risk Management Solutions 17 dmg information 19 dmg world media 20 Euromoney DMGT Memorandum and Articles dmgt.co.uk/contact Institutional Investor 22-27 Consumer 22 A&N Media: Associated Newspapers 25 A&N Media: Northcliffe Media 27 dmg radio australia 28 Financial and Treasury Review 33 DMGT and Corporate Responsibility 37 Board of Directors and Secretary 38 Directors’ Report 42 Corporate Governance 47 Remuneration Report 65 Independent Auditors’ Statement 66 Consolidated Income Statement 67 Consolidated Statement of Recognised Income and Expense 68 Recognition of Movements in Equity 69 Consolidated Balance Sheet 71 Consolidated Cash Flow Statement 73 Significant Accounting Policies 83 Notes to the Consolidated Income Statement 99 Notes to the Consolidated Cash Flow Statement 103 Notes to the Consolidated Balance Sheet 147 Principal Subsidiaries 149 Five Year Financial Summary 151 Independent Auditors’ Report to the Members of the Daily Mail and General Trust plc 152 Company Balance Sheet 153 Designed and produced by salterbaxter Printed by CTD Notes to the Company Balance Sheet – U.K. GAAP 161 Shareholder Information 1 Introduction Introduction We are an innovative, adaptable and far-sighted company that has evolved over nearly 90 years to become a diversified worldwide media and information business. While we continue to adapt and do well in tough economic conditions, we are still very much a long-term business with strong underlying values. We are continuing to innovate and invest in preparation for the upturn. www.dmgtreports.com/2009 Chairman’s Statement 2 Chairman’s Statement I would like to thank our employees for their magnificent response to the torrid market conditions. The Viscount Rothermere Even more challenging Martin has also started to put in Chairman year than last year place initiatives around talent and This has been a most challenging year, communications that will bear fruit and I would like to start by thanking all the over many years. We have been able Group’s employees for their magnificent to take advantage of the market response to torrid market conditions for downturn to bring in a number of all of our businesses. When the world’s very able senior executives. financial system faced melt-down in October 2008, it was clear that we The Group’s financial structure had to act fast to reduce our cost base, With the benefit of hindsight, we went particularly in our newspaper divisions. into this downturn with too much debt on As a result of this, we sadly had to our balance sheet, given the speed with release over 2,500 employees across which, we now know, the profitability of our businesses. some consumer businesses can decline. However, the structure of our debt But I’ve been very impressed at the speed financing was sound, significantly due with which all our businesses reacted to some very timely facility extensions in their own way to rapidly changing in 2008, and proved equal to all the circumstances. A number have had to uncertainty that was thrown at it this cut their cost base sharply; others, more year. While we are now well placed fortunate, have only had to scale back in terms of availability and length of their growth ambitions; a lucky few financing, I do want us to bring our have actually continued to grow well. debt back to our desired level as fast as possible. That way, we will better be In the circumstances, I am very pleased able to take advantage of the opportunities that we are reporting operating profit* that are surely going to arise. down only 12% on last year’s result, and that it actually increased in the Diversification second half of the year. My father made a decision some 15 years ago to diversify the Group away from An interesting time for a new the U.K. newspaper market into other Chief Executive to take over! media less dependent on newspapers, Martin Morgan took over as Chief advertising and the U.K. Given what has Executive on 1st October, 2008. He cannot happened in the last year, that decision have expected, or wanted, such a baptism has proved to have been inspired. From of fire, and much of the credit for the next to nothing then, our B2B businesses resilience shown in our results for the have this year contributed nearly three year belongs to him. quarters of the Group’s profit, with over 60% of our profits* coming from outside Under his leadership, we have sold, the U.K. While some of the diversification restructured or closed a number has been more successful than others, of businesses around the Group in total it has been a well executed that were loss making. But we have expansion, largely into the United States, continued to invest in organic growth graveyard of so many U.K. company and continued to make a small number expansion plans. of bolt-on type acquisitions. * Adjusted operating profit (before exceptional items and amortisation and impairment of intangible assets). Daily Mail and General Trust plc Annual Report 2009 3 Chairman’s Statement Are newspapers dying? Board changes To paraphrase Mark Twain, I think The year has seen further change on that rumours of their death are much the Board, to which I referred in last exaggerated! The Daily Mail maintained year’s report. In February, we said its profitability this year, the second goodbye to Ian Park, who had served highest in its history. The combination the Group since 1984, first as Managing of a formidable brand strength, a loyal Director of Northcliffe until 1995, and audience very desirable to retail latterly as an excellent non-executive advertisers particularly, and less Director. Then, in July, Marius Gray stood dependence on classified advertising, down from the Board after a remarkable make it a wonderful business which, 24 years, including many years as I believe, will be around for many years Chairman of the Audit Committee. His to come. contribution to the Board’s deliberations and to the Group’s success over the period Our regional titles have not fared so of his tenure has been great, and he gives well this year, with their key classified the lie to those who say that non-executive advertising categories badly hit this year directors should serve for no longer than by the recession, rather than by structural nine years. In Marius’ place, we welcomed challenges. While I do believe they will to the Board David Nelson, senior partner recover, I still expect regional media to of Dixon Wilson, Chartered Accountants. look radically different in a decade, and I am also grateful to David Verey, who we need to identify the winning business has taken on the onerous role of model to garner local revenues. Chairman of the Audit Committee. Changes in the online world The year ahead I am delighted to see so many online The world appears to be a lot more innovations and product developments stable than it was earlier this year, around the Group, both in our B2B which is encouraging, and should and our B2C companies. Ours is an enable our businesses outside the U.K. increasingly digital world and, as a to return towards their historic growth leading media company, we have no rates.