IFRS 5 discontinued operations, IFRS 12 para 19 gain on remeasurement of retained associate interest

Daily Mail and General Trust plc – Annual report – 30 September 2017

Industry: media

18 Summary of the effects of disposals

On 8 December 2016, the Group announced its intention to reduce its holding in Euromoney Institutional Investor PLC (Euromoney) by the sale of approximately 32.3 million shares in Euromoney. The sale comprised two parts:

(i) a placing and

(ii) a buy-back by Euromoney and subsequent cancellation of the bought-back shares.

The effect of the sale was to reduce the Group’s holding from 67.9% of Euromoney’s issued share capital to 49.9% after which Euromoney ceased to be a subsidiary and is accounted for as an associate.

Following loss of control the Group has also considered factors which may indicate de facto control. The Group has determined that it does not have de facto control over Euromoney since it cannot block any ordinary resolutions, which comprise the majority of corporate actions, has no control over the remuneration of Euromoney’s directors and has no control over Euromoney’s day-to-day operations nor budgets. In addition, the Group has no material trading activities or relationships which are critical for Euromoney to carry out its business. The Group’s relationship with Euromoney is monitored on an ongoing basis to ensure no change in this assessment.

On 1 February 2017, the dmg information segment disposed of the assets in Beat the GMAT (BTG) for consideration of £0.4 million.

On 17 April 2017, the dmg media segment disposed of the assets and brand of Elite Daily for total consideration of £7.2 million.

On 29 September 2017, the dmg information segment disposed of the Admissions software business. The consideration received comprised a £15.7 million 9.0% loan note.

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

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(i) This was measured in accordance with IFRS 10, as the fair value of this listed investment is quoted in an active market.

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

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In addition, the Group’s interest in Euromoney, before Euromoney ceased to be a subsidiary undertaking, was diluted during the period by 0.1%. 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 Condensed Consolidated Statement of Financial Position. 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 £0.3 million (2016 £0.1 million).

The Group’s tax charge includes £4.4 million in relation to these disposals.

All of the businesses disposed of during the period generated £15.6 million of the Group’s net operating cash flows, paid £3.0 million in investing activities and paid £0.8 million in financing activities.

Proceeds from redemption of preference share capital

During the prior period the Group received £14.4 million relating to preference share capital following the prior year sale of Capital DATA Ltd in the Euromoney segment.

19 Discontinued operations

On 8 December 2016, the Group announced its intention to reduce its holding in Euromoney to 49.9% by a sale of approximately 32.3 million shares in Euromoney. The sale comprised two parts:

(i) a placing and

(ii) a buy-back by Euromoney and subsequent cancellation for the bought-back shares.

The effect of the sale was to reduce DMGT’s holding from 67.9% of Euromoney’s issued share capital to 49.9% after which Euromoney ceased to be a subsidiary and is accounted for as an Associate. The results of Euromoney up to the point of disposal are included in discontinued operations for the current period.

The Group’s Consolidated Income Statement includes the following results from discontinued operations:

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During the period as a subsidiary undertaking Euromoney generated £15.3 million (2016 £87.1 million) of the Group’s net operating cash flows, paid £3.0 million (2016 received £6.1 million) in respect of investing activities and paid £0.8 million (2016 £10.5 million) in respect of financing activities.

14 Earnings per share

Basic earnings per share of 97.8 pence (2016 57.8 pence) and diluted earnings per share of 96.3 pence (2016 56.4 pence) are calculated, in accordance with IAS 33, Earnings per share, on Group profit for the financial year of £345.3 million (2016 £204.2 million) as adjusted for the effect of dilutive Ordinary Shares of £0.1 million (2016 £0.9 million) and earnings from discontinued operations of £519.3 million (2016 £32.4 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 55.6 pence (2016 56.0 pence) are calculated on profit for continuing and discontinued operations before exceptional operating costs, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, other gains and losses and exceptional financing costs after taxation and non-controlling interests associated with those profits, of £196.3 million (2016 £197.8 million), as set out in Note 13 and on the basic weighted average number of Ordinary Shares in issue during the year.

Basic and diluted earnings per share:

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

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