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Click on the thumbnail below to view the Reserves table.
Summary of the Effects of Acquisitions
The principal acquisitions completed during the year and the dates of acquisition were:
|
| Buy & Sell | October 2001 |
| Loot | October 2001 |
| Vista | March 2002 |
| Blanch | March 2002 |
| 4BH Radio | May 2002 |
| Hill Brothers Group | August 2002 |
|
The aggregate consideration for these and other businesses was £79.0 million, of which £72.8 million was paid during the year, £1.2 million issued
in the form of loan notes and an estimated amount of £5.0 million payable in the form of deferred consideration, dependent upon trading results.
This deferred consideration has been discounted back to current values in accordance with FRS 7. In each case, the Group has used acquisition
accounting to account for thepurchase. The impact of acquisitions on net assets was:
|
Note | Book value and
Fair value
£m |
|
| Net assets acquired: |
| Tangible fixed assets | 3.5 |
| Stocks | 0.2 |
| Debtors | 3.7 |
| Creditors and provisions | (7.0) |
|
| 0.4 |
|
| Satisfied by: |
| Cash | 71.8 |
| Acquisition expenses | 1.0
| | Deferred consideration | 5.0 |
| Loan notes | 1.2 |
|
| 79.0 |
|
| Less: goodwill acquired | 20 | (78.6) |
|
| 0.4 |
|
In September GWR sold its 25% holding in DMG Radio Investments Pty Limited to the Group. Under the terms of the transaction
GWR issued 5.8million new ordinary shares of 5p to the Group. The consideration for the sale and the issue of the new
ordinary shares was satisfied by the cancellation of £39.8 million convertible subordinated unsecured loan notes of GWR
held by the Group and a further £7.2 million of interest bearing debt owed to the Group by GWR.
Summary of the Effects of Disposals
The principal disposals completed during the year and their dates of disposal were:
|
| Welding and Cocoa divisions of DMG Business Media | October 2001 |
| DMG do Brazil | March 2002 |
| Unline | March 2002 |
| DMG Salones Especializados | March 2002 |
|
The aggregate consideration for these and other businesses, was £4.9 million, £1.9 million of which was received in the form of cash.
The impact of disposals on net assets was:
| Note | £m |
|
| Net assets disposed of: |
| Intangible assets | 2.6 |
| Creditors and provisions | (4.5) |
|
| (1.9) |
| Profit on disposal of businesses | 6 | 6.8 |
|
| 4.9 |
|
| Satisfied by: |
| Cash | 1.9 |
| Loan notes | 3.0 |
|
| 4.9 |
|
Commitments
| 2002
£m | 2001
£m |
|
Group
Tangible fixed assets: |
| Contracted but not provided in the financial statements | 45.7 | 64.5 |
|
At 29th September, 2002 the Group had annual commitments under non-cancellable operating leases as follows:
| 2002 | 2001 |
|
Properties
£m | Plant and
equipment
£m |
Properties
£m | Plant and
equipment
£m |
|
| Operating leases which expire: |
| Within one year | 3.5 | 1.7 | 3.6 | 1.6 |
| Between 2 – 5 years | 4.9 | 3.0 | 8.6 | 3.4 |
| Over 5 years | 17.4 | 0.7 | 14.8 | – |
|
| 25.8 | 5.4 | 27.0 | 5.0 |
|
The Group has entered into arrangements with its ink suppliers to obtain ink for the next three years to 2005 at competitive prices and to secure
supply. At the year end, the commitment to purchase ink over the period was £31.2 million (2001 £43.9 million).
Most property leases are subject torent reviews.
dmg world media USA acquired a 25% stake in George Little Management LLC in November 2000. The purchase agreement included ‘putandcall’ arrangements
to acquire the membership interests of the other members of GLM. The details are as follows :
(i) With effect from 1st October, 2005, the other members have the right to put their membership interests to the Group at a fair market value. The
initial put to the Group cannot be less than 50% of the total outstanding membership interest.
(ii) On 1st October, 2010, the Group will increase its membership interests in GLM to 51% subject to (i) above, by calling the appropriate number of
membership interests held by the other members, at fair market value.
(iii) At 1st October, 2014, the Group is required to acquire any remaining membership interests which it does not own in GLM, at fairmarketvalue.
(iv) In certain circumstances, the Group is required to purchase the membership interests of individual members of GLM. Thesecircumstancesinclude
disability, death, retirement and termination of employment.
Contingent Liabilities
Four writs claiming damages for libel have been issued in Malaysia against Euromoney Institutional Investor and three of its employees inrespect of an
article published in one of Euromoney’s magazines, International Commercial Litigation, in November 1995. The writs were served on Euromoney in October,
1996. The total amount claimed is 280 million Malaysian ringgits, £50.0 million (2001 £50.1 million). Noprovision has been made in these financial
statements since the Directors do not believe that Euromoney has any material liability in respect of these writs.
In August 2002, Euromoney successfully settled the £4 million claim related to the article published in International Commercial Litigation brought in
England against it and three of its employees seeking 100% contribution towards damages and legal costs incurred in Malaysia by sources quoted in the
article. The total cost to the Group including legal fees, was £85,000.
At 29th September, 2002 the Group had outstanding commitments under forward foreign exchange contracts amounting to £180.2 million (2001 £81.4 million).
At 29th September, 2002, the Company had guaranteed borrowing facilities and finance leases of subsidiaries under which £353.0 million (2001 £312.0 million)
were outstanding. The Company had also guaranteed a subsidiary’s interest rate derivatives with a principal value of £29.3 million (2001 £43.9 million) and
letters of credit of £8.8 million (2001 £1.6 million).
Pension Arrangements
The Group operates several pension schemes covering most major UK group companies under which contributions are paid by the employer and employees.
The schemes for most employees are funded defined benefit pension arrangements, providing service-related benefits, based on final pensionable salary.
The assets of the schemes are held independently from the Group’s finances and are administered by trustee companies. Pension costs are assessed on
the advice of an independent qualified actuary following triennial valuations using theprojected unit method.
A valuation of the principal schemes was carried out as at 31st March, 2001. The assumptions having the most significant effect on the results of the
valuations are shown in the following table:
|
| Price Inflation | 2.5% | p.a. |
| Salary Increases | 4.3% | p.a. |
| Pension Increases | 2.5% | p.a. |
| Investment Return | 6.75% | p.a. |
| Dividend Growth | 3.5% | p.a. |
|
The contribution rate paid by employees in the principal schemes is5% of pensionable salaries and the company cash contribution is12% of pensionable
salaries. These schemes are open to eligible new employees.
The pension charge for the year ended 29th September, 2002 was £21.5million (2001 £20.3 million). A prepayment of £0.4 million (2001£11.1million) is
included under debtors, representing the excess of accumulated contributions paid over the equivalent pension charge. Aprovision of £0.4 million (2001
£0.4 million) is included in provisions, representing the excess of the accumulated pension charge over pension contributions paid.
The surpluses identified from the valuation of the principal schemes are amortised over a period of 11 years using the straight line method. The
pension cost to the Group of its principal schemes over the estimated average service life of employees is currently between 8.1%and 10.4% of pensionable
salaries.
An interim valuation of the principal schemes as at 31st March, 2002
on the normal funding basis indicated only a marginal reduction in
solvency compared with a year earlier. Following this review, the
actuary confirmed that there was no particular need to adjust the
Company cash contribution rate of 12%. However, this position will
be closely monitored going forward.
The effect of UITF 6, ‘Accounting for post-retirement benefits other
than pensions’, is not material.
FRS 17
In accordance with the requirements of FRS 17, Retirement Benefits,
this note discloses the main financial assumptions made in valuing the
liabilities of the schemes and the fair value of assets held. Additionally,
this note discloses the amounts that would be charged or recognised
in the financial statements under the requirements of FRS 17, together
with an analysis of the movement in scheme surpluses or deficits
which would result. However, as permitted by FRS 17, the costs,
accruals and prepayments recorded in the financial statements
continue to be reported under the requirements of SSAP 24
‘Accounting for Pension Costs’.
Defined Benefit Schemes
The figures in this note are based on the calculations carried out in
connection with the formal actuarial valuation of the main schemes as
at 31st March, 2001 and an interim valuation as at 31st March, 2002,
updated to 29th September, 2002 by the actuary.
The main financial assumptions used for FRS 17 purposes are shown
in the following table:
|
| Price inflation | 2.3% |
| Salary increases | 4.1% |
| Pension increases | 2.3% |
| Discount rate for scheme liabilities | 5.5% |
|
The fair value of the assets held by the pension schemes, the long-term
expected rate of return on each class of assets and the value of the
schemes’ liabilities assessed on the assumptions described above are
shown in the following table:
| Long-term
rate of
return
expected
at 29th
September,
2002 |
Value at
29th September,
2002
£m | Long-term
rate of
return
expected
at 30th
September,
2001 |
Value at
30th September,
2001
£m |
|
| Equities | 8.0% | 675.9 | 7.5% | 783.6 |
| Bonds | 4.5% | 133.1 | 5.0% | 155.2 |
| Property | 7.0% | 93.2 | 7.0% | 89.2 |
| Other Assets | 4.5% | 83.0 | 5.0% | 102.8 |
|
| Total market value of assets | 985.2 | 1,130.8 |
|
| Present value of schemes’ liabilities | (1,201.4) | (1,101.3) |
|
| (Deficit)/surplus in the schemes | (216.2) | 29.5 |
|
| Related deferred tax asset/(liability) | 64.9 | (8.9) |
|
| Net pension (liability)/asset | (151.3) | 20.6 |
|
An analysis of the amount which would be chargeable to operating
profit is shown below:
2002
£m |
|
| Current service cost | 35.3 |
| Past service cost | – |
|
| Total operating charge | 35.3 |
|
An analysis of the amount which would be credited to other finance
income is shown below:
2002
£m |
|
| Expected return on pension scheme assets | 76.8 |
| Interest on pension scheme liabilities | (65.3) |
|
| Net return | 11.5 |
|
An analysis of the amount which would be recognised in the
statement of total recognised gains and losses (STRGL) is shown
inthefollowing table, together with the components shown as a
percentage of scheme assets or liabilities:
2002
£m |
|
| Actual return less expected return on pension scheme assets | (193.9) |
| Percentage of scheme assets | (19.7%) |
|
| Experience gains and losses arising on the scheme liabilities | 32.3 |
| Percentage of the present value of the scheme liabilities | 2.7% |
| Changes in assumptions underlying the present value of the scheme liabilities | (82.7) |
|
| Actuarial gain recognisable in STRGL | (244.3) |
|
| Percentage of the present value of the scheme liabilities | (20.3) |
|
The movement in surplus during the year is shown in the
following table:
2002
£m |
|
| Surplus in scheme at beginning of year | 29.5 |
| Movement in year: |
| Current service cost | (35.3) |
| Contributions | 22.4 |
| Other finance income | 11.5 |
| Actuarial gain | (244.3) |
|
| Deficit in schemes at end of the year | (216.2) |
|
UK Defined Contribution Plans
A number of defined contribution pension plans are operated by
certain divisions of the Group where a business case exists for this
type of pension provision. The pension cost attributable to these plans
during the year amounted to £3.0 million (2001 £1.2 million).
An amount of £0.5 million (2001 £3.1 million) is included in provisions
representing outstanding contributions due at the balance sheet date.
Overseas Pension Plans
Overseas subsidiaries of certain Group divisions operate defined
contribution retirement benefit plans, primarily in North America and
Australia. The pension cost attributable to these plans during the year
amounts to £2.0 million (2001 £1.4 million).
Pension Arrangements for Executives
The Group operates a two-tier, non-contributory defined benefit pension scheme for senior executives (including
Executive Directors), details of which are incorporated in the above disclosures. It is theCompany’s policy that
annual bonuses, payments under the ExecutiveBonus Scheme and benefits in kind are not pensionable.
Included in UK Defined Contribution Plans above are investments in a funded unapproved retirement benefit scheme for
certain executives of the Group including one Executive Director who are subject to the pensionable earnings cap
imposed by the Inland Revenue. The assets of this scheme are held under individual trusts independently from the
Group’s finances; investment during the year totalled £0.5 million (2001£0.4 million).
Stakeholder Pensions
DMGTprovides access to a stakeholder pension plan for relevant employees who are not eligible for the other pension
schemes operated by the Group.
Ultimate Holding Company
The Company’s ultimate holding company is Rothermere Continuation Limited, a company incorporated in Bermuda.
Related Party Transactions
The Company has taken advantage of the exemption under FRS 8 ‘Related Party Disclosures’, not to disclose related party
transactions between subsidiaries. The disclosures that are required under FRS 8 are set out below.
Ultimate Controlling Party
The Company’s ultimate controlling party is the Viscount Rothermere, the Company’s Chairman. Transactions relating to the
remuneration and shareholdings of the Viscount Rothermere are given in the Remuneration Report.
Transactions with Directors
On 21st June, 2002, Northcliffe Newspapers acquired Autorespond Limited, a small company providing an electronic trade to trade
marketing service to the motor trade. One of the vendors was MrDMM Dutton who owned 15% of the company. The initial
consideration for the acquisition was £161,870, of which Mr Dutton received £150,000, being full reimbursement of his
investment and ofan interest bearing loan. The other vendor, a third party, received thebalance of the consideration and
is the beneficiary of an earn-out arrangement, based on the revenues from Autorespond. No further consideration is due
to Mr Dutton.
There were no other material transactions with Directors of the
Company, except for those relating to remuneration and shareholdings, disclosed in the Remuneration Report.
Transactions with Joint Ventures and Associates
Associated Newspapers has a 50% joint venture interest in Zoom. During the year, it funded its share of the operations of
Zoom by way ofloans. The amount due from Zoom at 29th September, 2002 was £4.9million (2001 £4.9 million) which is included
in investments in joint ventures (Note 23).
Associated Newspapers has a 17% investment in Shopcreator plc which is an associate. During the year, the Group received
advertisingrevenue from Shopcreator of £0.2 million (2001 £0.2 million). Theamount due from Shopcreator at 29th September
2002 was £nil(2001£nil).
Associated Newspapers has a 17% investment in Indigo Holidays Limited which is an associate. During the year, the
Group receivedadvertising revenue from Indigo Holidays of £1.8 million (2001£0.1million). The amount due from
Indigo Holidays at 29thSeptember, 2002 was £0.2 million (2001 £nil).
During the year, Northcliffe Newspapers Group Limited provided equity funding of £2.0 million (2001 £3.9 million) to
Fish4 Limited, a 22.9% associate. Equity funding of £nil million (2001 £0.2 million) was also provided to This is
Britain Limited, a 25% associate. Full provision has been made against this funding in these financial statements
and these associates have not been disclosed in Note 23 since they are not material.
Details of the Group’s principal joint ventures and associates are setout in Note 23.
All transactions with joint ventures and associates arose in the normal course of business. Material transactions are
set out as follows:
The Group has contracts with Greenland Interactive Limited, a joint venture, whereby Greenland administers premium-rate
telephone linesand a customer care line. During the year, the Group received £1.4million (2001 £1.7 million) from Greenland
in respect of premium rate telephone revenue and paid £0.1 million (2001 £0.1 million) toGreenland for administration fees.
At 29th September, 2002, £0.1million was outstanding (2001 £0.1 million).
Other Related Party disclosures
At 29th September, 2002, there was an interest-free loan of £181,000 (2001 £301,000) made to Mr M MacLennan, Managing Director of
Associated Newspapers, to assist with relocation after joining the Group. The maximum amount outstanding during the year was£301,000.
At 29th September, 2002, there was a further loan of £105,344, made to Mr MacLennan on 17th July, 2002 to enable him to purchase shares
in the Company in order to commit them to the LTIP. The loan bears interest at 6% per annum. The maximum amount outstanding during the
year was £105,846.
At 29th September, 2002 there was a loan of £205,072 (2001 £213,268) made to Mr K J Beatty, managing director of Northcliffe
Newspapers, to assist with relocation after joining the Group. The loan bears interest at 2 1/2% per annum. The maximum amount
outstanding during the year was £213,268. At 29th September, 2002, there was a further loan of£56,574, made to Mr Beatty on 17th
July, 2002 to enable him to purchase ‘A’ Ordinary Non-Voting shares in the Company in order tocommit them to the LTIP. The loan
bears interest at 6% per annum. The maximum amount outstanding during the year was £56,574.
At 29th September, 2002 the Group owed £4.4 million (2001
£3.1million) to the pension schemes which it operates. This amount comprised employees’ and employer’s contributions in respect
of September 2002 payrolls, which were paid to the pension schemes inOctober 2002.
The Group recharges its principal pension schemes with costs of investment management fees. The total amount recharged during
the year was £0.5 million (2001 £0.5 million).
Post Balance Sheet Events
Details of material post balance sheet events are given in the Directors’ Report.
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