DMGT.L Regulatory News (DMGT)

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£1,542m pro forma net cash¹ post disposals; varied dynamics across diversified portfolio

· Group underlying² performance reflects strong growth in Property Information, stable Consumer Media performance and continued impact of the pandemic on Events:

o Revenue down 1% underlying

o Cash operating income³ down 1% underlying

o Adjusted⁴ operating profit up 5% underlying

o Adjusted profit before tax up 7% underlying, 22% in absolute terms

o Adjusted EPS up 20%

· Statutory5 revenue £885m, statutory loss before tax £2m and statutory EPS 676.2p

· Pro forma net cash £1,542m¹ and £763m value of holding in Cazoo, now listed on NYSE

· Final dividend 17.3p; full year dividend increased +3% to 24.9p

· Substantial portfolio activity with £1,535m net disposals and £139m acquisitions and investments in FY 2021:

o Disposal of Insurance Risk (RMS) and EdTech (Hobsons)

o Acquisition of New Scientist and investments by dmg ventures, including in Cazoo

· Recommended offer for DMGT made by RCL at £2.55 per share and conditional special dividend of £5.68 cash and c.0.5749 Cazoo shares per DMGT share

Paul Zwillenberg, CEO, commented:

"2021 has been a truly historic year for DMGT. I am immensely proud of the hard work, creativity and commitment that all our people have demonstrated and the significant value we have created for our shareholders through the execution of our strategy.

We achieved premium valuations for RMS, our Insurance Risk business, and Hobsons, our EdTech business, with net proceeds totalling over £1.5bn. The transactions clearly demonstrate the value created in recent years, through sustained organic investment combined with our focus on improving operational performance, making both businesses particularly attractive to trade buyers. We are also delighted that Cazoo successfully completed its listing on the New York Stock Exchange following DMGT's previous participation in multiple funding rounds. Our stake was valued at £763m at year end, equivalent to six and a half times our investment.

The financial strength of the Group today is a reward for the consistent and disciplined strategy we have followed, with our clear goals of increasing portfolio focus, improving operational execution and maintaining financial flexibility. DMGT is now more tightly focused in three sectors with a notably higher weighting to Consumer Media.

From a financial and operational perspective, DMGT delivered a creditable performance in the year. Our Property Information businesses delivered strong growth, supported by particularly high residential property transaction volumes in the UK. In Consumer Media, we saw good revenue and profit contribution growth from MailOnline and a solid performance from the Mail print titles driving profit contribution growth for the Mail businesses as a whole. Unsurprisingly, the commuter newspaper Metro and our Events business continue to be significantly impacted by the pandemic.

Looking ahead, DMGT will continue to invest, prioritising organic opportunities and taking advantage of technological change, whilst maintaining a long-term perspective."

Full Year 2021 Financial Results Summary

The adjusted results include Hobsons and RMS up to the date of their disposal in March and September 2021 respectively. Both businesses are excluded from underlying growth rates and from statutory results.

Segmental performance:

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

* Events & Exhibitions' Cash OI and adjusted operating profit both reduced by an underlying £15m.

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

· Adjusted revenue of £1,142m, (including £885m from continuing operations ('pro forma'6)), underlying decrease -1%: B2B Information Services' strong underlying growth only includes Property Information and was more than offset by decreases in Events and Exhibitions and Consumer Media.

· Cash operating income (Cash OI)³ £121m (including pro forma £76m), underlying decrease -1%: underlying growth from Property Information and the Mail titles was more than offset by the impact of Covid-19 on Events & Exhibitions and Consumer Media's Metro newspaper. Group Cash OI +10% in absolute terms includes the comparative benefit of written-off costs of £7m recognised in the prior year relating to events scheduled in FY 2021.

· Adjusted operating profit £106m (including pro forma £66m), underlying growth +5%: reflecting the same operating dynamics as Cash OI. Absolute growth +18%.

· Statutory operating loss £6m: compared to £3m in the prior year, reflecting an increase in exceptional operating costs.

· Losses from JVs and associates £3m: compared to a loss of £8m in the prior year.

· Adjusted profit before tax (PBT) £88m (including pro forma £50m), underlying growth +7%: including £5m increase in net finance costs to £15m, due to lower interest rates reducing interest income; absolute growth +22%. Statutory PBT £2m loss (FY 2020 £34m profit).

· Tax: adjusted tax charge £17m (FY 2020 £13m); with the adjusted tax rate increasing to 20% (FY 2020 18%). The statutory tax credit was £62m and there was also a statutory tax charge of £104m on discontinued operations, giving a total net tax charge of £42m.

· Earnings per share: total adjusted EPS up +20% to 31.3p (FY 2020 26.1p). The adjusted pro forma EPS, excluding Insurance Risk and EdTech, was 17.8p.  Statutory EPS was 676.2p (FY 2020 83.1p) including the profit on disposal of the Insurance Risk and EdTech businesses.

· Pro forma net cash¹ was £1,542m as at 30 September 2021, adjusted to exclude £37m of lease liabilities recognised following the adoption of IFRS 16. The net cash:EBITDA ratio was 11.7 on this basis.

· Portfolio activity: there were several significant transactions in the year. The disposals of Hobsons, the EdTech business, in March 2021 and RMS, the Insurance Risk business, in September 2021, realised c.US$410m and c.£1,425m of gross proceeds respectively, crystallising substantial value for shareholders. New Scientist, one of the world's leading science publishing titles, was acquired for £67m in March 2021, adding a growing subscription-based business to the Consumer Media portfolio. In October 2020, three printing plants were acquired for £10m, to strategically strengthen dmg media's position in the market. Also in October 2020, DMGT invested a further £34m in Cazoo, bringing the total investment to £117m. In August 2021, Cazoo combined with AJAX I, the US-listed SPAC, which resulted in DMGT receiving US$5m net cash proceeds and retaining a c.17% stake, on a fully diluted basis. The Cazoo stake had a market value of £763m as at 30 September 2021.

· Outlook: the Group's financial performance in FY 2022 will be adversely affected by the impact of disposals, primarily RMS in September 2021. Some recovery in revenues is expected from the Events & Exhibitions and Consumer Media businesses, although the extent remains uncertain. The US Property Information business is also expected to deliver revenue growth. The UK Property Information business is likely to experience weaker property transaction volumes in FY 2022, following a particularly strong prior year. We expect there to be continued significant organic investment in the year, to support future revenues and create value over time. Due to the requirements of the Takeover Code, we are not providing profit forecasts or guidance. The dividend policy was withdrawn in November 2021 and the Board intends to review the policy applicable to FY 2022.

Enquiries

A virtual presentation of the Full Year Results will be given at 9.00am on 18 November 2021 and will be followed by a question and answer session for City analysts and investors. The presentation will be available on our website at www.dmgt.com/webcastfy21 and the dial-in number for questions is +44 (0)330 336 9126, confirmation code 6551367.

DMGT's 2021 Annual Report and Accounts is expected to be made available on our website at www.dmgt.com/investors on 18 November 2021.

Financial reporting calendar

The Group's next scheduled announcement of financial information is the first quarter trading update on 25 January 2022.

About DMGT

DMGT manages a portfolio of companies that provide businesses and consumers with compelling information, analysis, insight, events, news and entertainment. The Group takes a long-term approach to investment and has market-leading positions in consumer media, property information and events & exhibitions. In total, DMGT generates revenues of around £1bn.

Notes

1 The actual net cash position as at 30 September 2021 was £1,505m including £37m of lease liabilities in respect of the adoption of IFRS 16, the lease accounting standard, and the net cash:EBITDA ratio was 9.8. The lease liabilities largely reflect the future operating costs of renting office space and are not considered a component of net debt when the Board reviews the Group's available capital. Consequently, they are excluded from pro forma net cash. The pro forma net cash and pro forma net cash:EBITDA ratio as at 30 September 2021 were £1,542m and 11.7 respectively.

The pro forma net cash of £1,542m includes gross cash of £1,745m, £200m of bond debt and £4m net debt in respect of derivatives and collateral. Gross cash includes cash, cash equivalents and short-term deposits, net of overdrafts. As at 30 September 2021, £121m of cash was held in escrow for the benefit of DMGT's pension schemes. The £121m is classified as an 'other financial asset' on DMGT's balance sheet and is excluded from DMGT's cash balance.

2 Underlying growth rates are on a like-for-like basis, see pages 34 to 36. Underlying revenues, cash operating income³ (cash OI) and operating profits are adjusted for constant exchange rates, the exclusion of disposals and business closures, the inclusion of the year-on-year organic growth from acquisitions and for the consistent timing of revenue recognition. For Consumer Media, underlying revenues exclude low-margin newsprint resale activities. For events, the comparisons are between events scheduled to be held in the year and the same events held, or that were scheduled to be held, the previous time. Consequently, underlying growth rates include all costs for events that were originally scheduled in FY 2021 and that were cancelled or postponed. Similarly, the prior year comparatives include all revenues and costs for the previously scheduled occurrence of the same event, whether it occurred or not. Underlying growth rates include the negative impact of events held in FY 2020 that are usually annual but which were not held in FY 2021. Due to cancellations or postponements, the operating profit and cash OI in both years include costs recognised in advance of the scheduled occurrence of an event; but for the calculation of underlying growth rates, the costs are recognised when the event was scheduled to be held.

3 Cash operating income (Cash OI) is calculated by adding back depreciation and amortisation expenses, which are non-cash items, to adjusted operating profit and then deducting capital expenditure. The depreciation charge on the additional right-of-use assets, which has resulted since 1 October 2019 from the adoption of IFRS 16, the lease accounting standard, is not added back when calculating Cash OI.

4 Unless otherwise stated, all profit and profit margin figures in this Full Year Results Report refer to adjusted results and not statutory results. The Board and management team use adjusted results, rather than statutory results, to give greater insight to the financial performance of the Group and the way that it is managed. Similarly, adjusted results are used in setting management remuneration. Adjusted results are stated before exceptional items, other gains and losses, impairment of goodwill and intangible assets, amortisation of intangible assets arising on business combinations, pension finance credits and fair value adjustments. For reconciliations of statutory profit before tax to adjusted profit before tax and supporting explanations, see pages 28 to 31.

5 The statutory results are IFRS figures before any adjustments. Statutory revenue, operating profit and profit before tax figures are for continuing operations only and exclude discontinued operations, namely the Energy Information business, Genscape, the EdTech business, Hobsons, which was disposed of in March 2021, and the Insurance Risk business, RMS, which was disposed of in September 2021. The FY 2020 statutory results have been reclassified accordingly.

6 The adjusted pro forma results have been prepared to illustrate the effect on DMGT's adjusted⁴ income statement of the disposal of the EdTech and Insurance Risk businesses, which were disposed of in March 2021 and September 2021 respectively. The adjusted pro forma results are on page 37 and show DMGT's adjusted FY 2021 results after deconsolidating the EdTech and Insurance Risk businesses as if the disposals had occurred on 1 October 2020.

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

The average £:US$ exchange rate for the year was £1:$1.37 (2020 £1:$1.28). The rate at the year end was $1.35 (2020 $1.29).

Daily Mail and General Trust plc

Northcliffe House, 2 Derry Street,

London W8 5TT

www.dmgt.co.uk

Registered in England and Wales No. 184594

Recommended offer for DMGT by RCL

On 3 November 2021, it was announced (the Offer Announcement) that Rothermere Continuation Limited (RCL) and the Non-conflicted DMGT Directors had reached agreement on the terms of a special distribution and on a recommended cash offer (the Offer) by RCL of £2.55 per share to acquire all the issued and to be issued DMGT A Shares not already owned by RCL (the Offer Shares). The Non-conflicted DMGT Directors are those that are considered independent in respect of the Offer. The Offer Announcement followed DMGT's announcement on 12 July 2021 of a possible major reorganisation of the Group and, subject to pre-conditions, a possible offer by RCL for the Offer Shares.

Conditional upon the Offer becoming or being declared unconditional (Offer Acceptance), DMGT intends to declare a special dividend payable to all DMGT shareholders, including RCL. The special dividend would comprise cash of £5.68 per share and shares in Cazoo Group Ltd (Cazoo). The Cazoo share component would be approximately 0.5749 Cazoo shares per DMGT share, subject to rounding for each DMGT shareholder and a reduction in the event of the sterling equivalent market value of each Cazoo share exceeding c.£7.38, which is DMGT's sterling equivalent base cost for tax purposes in those shares, on the date that the settlement is calculated.

The Non-conflicted DMGT Directors have recommended the Offer to DMGT's shareholders. Shareholders have until 1.00 pm GMT on 16 December 2021 to decide whether or not they will accept the Offer. The Offer is conditional upon RCL having received valid acceptances in respect of not less than 90% of the Offer Shares, or a lower percentage as RCL may decide provided that this condition shall not be satisfied unless RCL has acquired or agreed to acquire more than 50% of all DMGT shares, including those already owned by RCL.

Following Offer Acceptance, it is expected that DMGT would cease to be listed in due course and be re-registered as a private company.

For further information, please see the 'Recommended offer for DMGT' section on DMGT's website, www.dmgt.com/investors.

Full Year 2021: Strategy Review

Over the past five years, the shape of the DMGT portfolio has been transformed through a series of value-creating disposals. The Group was streamlined to focus on assets with the potential to drive compelling returns through strong cash flow generation and/or growth in capital value. The balance sheet was strengthened significantly over this time, moving into a net cash position. These actions enabled the Group to successfully manage through the Covid-19 pandemic whilst also continuing to invest to enhance the value of the portfolio.

Delivery against DMGT's three strategic priorities has created substantial strategic and financial value.

· Increasing portfolio focus: through the disposals of RMS and Hobsons in FY 2021, we reduced our operating sectors from five to three. Today, DMGT is a deliberately smaller portfolio and, as a result, is now more weighted towards Consumer Media and the UK.

· Improving operational execution: excellent operational execution is embedded in our culture and is a continuous process. The attractive valuations achieved for both RMS and Hobsons are testament to the operational progress made as well as to the benefits of focussing on the key growth opportunities in both businesses. We remain committed to ensuring that a high-performance culture pervades everything that we do, through a clear ROI mindset and a focus on cash operating income.

· Maintaining financial flexibility: the balance sheet, which was already strong at the start of the year, now has a substantial cash position following the sale of Hobsons and RMS for a total of over £1.5bn in net proceeds. As at 30 September 2021, pro forma net cash was £1,542m and DMGT's listed investment in Cazoo was worth £763m. DMGT will continue to take advantage of attractive opportunities as they arise, investing for the long term. Organic investment remains the Group's priority for capital allocation and DMGT will continue to adopt a patient and disciplined approach to acquisitions, prioritising bolt-on opportunities that can deliver synergies.

Group Financial Review Full Year 2021

This review of the audited results for the year ended 30 September 2021 focuses principally on the adjusted4 results, to give a more comparable indication of the Group's business performance. The adjusted results are summarised below. The pro forma results exclude RMS and Hobsons, which were disposed of during FY 2021:

* The tax charge increased by 35% to £17m. The 32% increase shown in the table includes non-controlling interests.

Revenue

Group adjusted revenue for the year, including discontinued operations, was £1,142m, a decrease of 6%. The performance reflected the varied market conditions resulting from the Covid-19 pandemic, as well as the effect of disposals and the weaker US dollar. On an underlying² basis, revenue was down 1%. Underlying growth rates exclude RMS and Hobsons, which were disposed of during FY 2021. By revenue stream, underlying growth was achieved in subscriptions, digital advertising and transactions but this was more than offset by the decrease in events, print advertising and circulation. The revenue performance for our B2B Information Services, B2B Events & Exhibitions and Consumer Media businesses, on an absolute and underlying basis, is summarised below.

* The Insurance Risk business, RMS, was disposed of in September 2021; the EdTech business, Hobsons, was disposed of in March 2021; and the Energy Information business, Genscape, was disposed of in November 2019. Absolute growth rates include their performance prior to disposal whereas the underlying growth rates exclude them completely, other than RMS being included in the H1 growth rates.

** There were minimal Events and Exhibitions revenues during H2 FY 2020 due to no physical events being held.

Cash operating income

Cash operating income ('Cash OI') of £121m grew 10% in absolute terms, including strong growth from Property Information. There was, however, a £15m underlying reduction in Cash OI from Events and Exhibitions which resulted in the Group Cash OI being down 1% on an underlying basis. The absolute performance in Events and Exhibitions includes the comparative benefit of written-off costs for events scheduled for FY 2021 which were required to be recognised in FY 2020. Underlying growth, on the other hand, includes the reclassification of these £7m of event cancellation costs from FY 2020 to FY 2021. Consumer Media delivered modest underlying Cash OI growth, with growth in the Mail businesses largely offset by losses from the Metro newspaper. The Group Cash OI margin from continuing and discontinued operations was 11%, an improvement on 9% in the prior year. Excluding RMS and Hobsons, the pro forma Group Cash OI was £76m and the margin was 9%. Cash OI is considered by the Board to be a good indicator of the underlying cash generation of the businesses and it is included as a core element of the incentive plans for all senior management teams.

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

* The Insurance Risk business, RMS, was disposed of in September 2021; the EdTech business, Hobsons, was disposed of in March 2021; and the Energy Information business, Genscape, was disposed of in November 2019. The figures above, including absolute growth rates, show their performance prior to disposal, whereas the underlying growth rates exclude them completely.

** Events & Exhibitions' Cash OI reduced by an underlying £15m.

Operating profit

Adjusted operating profit of £106m grew 18% in absolute terms and by 5% on an underlying basis, primarily due to the operational dynamics described above. The year-on-year adjusted operating profit performance was stronger than the Cash OI performance. This was largely due to increased capital expenditure at Landmark, which adversely affected Cash OI. The Group adjusted operating margin from continuing and discontinued operations was 9%, compared to 7% in the prior year. DMGT continues to prioritise organic investment, consistent with the Group's capital allocation framework and long-term approach. Total organic investment was equivalent to 10% of revenues in the year. The majority of organic investment is expensed directly to the income statement. Capital expenditure remains significantly less than the Group's depreciation and amortisation charge, resulting in DMGT's Cash OI continuing to exceed adjusted operating profit. Excluding RMS and Hobsons, the pro forma adjusted operating profit was £66m, the margin was 7% and total organic investment was equivalent to 4% of revenues in the year.

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

* The Insurance Risk business, RMS, was disposed of in September 2021; the EdTech business, Hobsons, was disposed of in March 2021; and the Energy Information business, Genscape, was disposed of in November 2019. The figures above, including absolute growth rates, show their performance prior to disposal, whereas the underlying growth rates exclude them completely.

** Events & Exhibitions' adjusted operating profit reduced by an underlying £15m.

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

UL: Underlying² change

Profit before tax and EPS

Adjusted profit before tax was £88m, an increase of 22% in absolute terms and 7% underlying. There was a £5m reduction in the share of operating losses from joint ventures and associates which was offset by a £5m increase in net finance costs due to the adverse impact of lower interest rates on interest income. On a pro forma6 basis, excluding RMS and Hobsons, adjusted profit before tax was £50m.

The adjusted tax charge was £17m, an increase of 35% on last year, due to the increase in profit before tax and an increase in the adjusted tax rate to 20% from 18% in the prior year. Adjusted basic earnings per share (EPS) increased 20% to 31.3p. On a pro forma basis, excluding RMS and Hobsons, adjusted basic EPS would have been 17.8p.

The statutory profit before tax for the year was a loss of £2m, compared to a £34m profit in FY 2020 due to gains on Property Information disposals that year. Statutory basic earnings per share were 676.2p, an increase of 714% including the benefit of the profit on disposal of discontinued operations, namely RMS, the Insurance Risk business, and Hobsons, the EdTech business.

The table below sets out the reconciliation from statutory profit before tax to adjusted profit before tax. More detail and explanations are provided on pages 28 to 31.

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

Dividend

The Board is recommending the payment of a final dividend of 17.3p that would make a total for the year of 24.9p, a 3% increase.

In the event of the Offer becoming or being declared unconditional, DMGT intends to declare a special distribution payable to all DMGT shareholders, comprising cash and Cazoo shares as set out in the 'Recommended offer for DMGT by RCL' section above.

The Board intends to review the dividend policy applicable to FY 2022. In formulating its policy, the Board will take account of several factors that are currently uncertain and has consequently withdrawn its existing policy that increased dividends by more than inflation. Nevertheless, if the Offer is declared unconditional and the special dividend paid, the Board anticipates that any future dividends per share paid on the DMGT A Shares will be materially lower than they have been historically.

Outlook for FY 2022

The duration and severity of the Covid-19 pandemic and its repercussions remain unclear, particularly for our Events and Exhibitions business and Metro publication. DMGT continues not to provide formal quantitative guidance and instead provides a qualitative indication of direction for each business in FY 2022. In addition, the requirements of the Takeover Code apply, notably in respect of restrictions on profit forecasts or guidance.

Group: the underlying financial performance in FY 2022, for the Group as a whole, will reflect the disposals made during 2021 and will be driven by the dynamics of the individual businesses, as described below.

B2B Information Services: following the disposal of RMS and Hobsons, B2B Information Services now contains only Property Information. In the US, Trepp is well positioned to deliver growing subscription revenues, but at a lower percentage growth rate than the 11% achieved in FY 2021. In the UK, property transaction volumes are likely to continue at a more normal level, following the end of the stamp duty reductions. Organic investment is expected to increase in both businesses.

B2B Events and Exhibitions: other than Big 5 Dubai, which is scheduled to be held in December 2022, all our significant shows are currently scheduled to be held in FY 2022. Almost all events, including the two major shows being held in the year, are expected to be significantly smaller than in 2019, prior to the onset of the Covid-19 pandemic, but dmg events is currently expected to deliver revenue growth compared to FY 2021. Events are likely to remain subject to late cancellations and uncertainty due to changing restrictions for venues and travel. The business is likely to continue to derive some benefit from its insurance cover in FY 2022 in respect of reductions in profit attributable to Covid-19, with the total amount dependent on the specific circumstances and financial performance of each event.

Consumer Media: the advertising market, which inherently lacks visibility and is volatile, will reflect the status of post-Covid-19 economy. Circulation volumes of the Mail and 'i' are expected to decline from current levels, whilst Metro's will depend on commuter traffic. There have been recent substantial increases in input costs for the newspaper businesses, notably newsprint. Reported results will benefit in FY 2022 from the acquisition of New Scientist and the inclusion of 53 weeks of trading, compared to 52 weeks in FY 2021.

Net finance costs: the £13m charge on the Group's bond debt is expected to remain unchanged in FY 2022, whilst additional interest costs and interest income will depend on any use of the Group's bank facilities and the amount of any gross cash deposits.

Taxation: the adjusted tax rate will continue to depend on the geographical mix of profits. The FY 2022 rate is currently expected to increase slightly from the FY 2021 rate of 20%.

Business Review

Business to Business (B2B) Information Services

The Insurance Risk business, RMS, was disposed of in September 2021; the EdTech business, Hobsons, was disposed of in March 2021; and the Energy Information business, Genscape, was disposed of in November 2019. The figures above include their performance prior to disposal, other than the underlying growth rates which exclude them completely.

The B2B division has been separated into B2B Information Services and B2B Events and Exhibitions to help investors understand the drivers of revenue, profitability and valuation.

DMGT now operates in one B2B Information Services sector, Property Information, compared to four at the start of the prior year. This follows the disposal of the Insurance Risk business, RMS, in September 2021, the EdTech business, Hobsons, in March 2021 and the Energy Information business, Genscape, in November 2019. The disposals have created substantial value for shareholders and were consistent with DMGT's strategy of increasing portfolio focus.

B2B Information Services revenue totalled £484m, down 8% in absolute terms including the adverse impact of disposals and the weaker US dollar. The B2B Information Services underlying growth rates exclude sold businesses and are entirely attributable to Property Information, which delivered strong underlying revenue growth of 25%.

B2B Information Services cash operating income grew 18% to £89m, including 57% underlying growth from Property Information, and the margin increased to 18%. Adjusted operating profit grew 29%, including 89% underlying growth from Property Information, and the operating margin increased to 17%. The margin improvement was largely driven by Property Information revenue growth.

Outlook: the US Property Information business, Trepp, generates over 90% of its revenues from subscriptions and benefits from high renewal rates. It is well positioned to deliver continued revenue growth in FY 2022. The year-on-year performance for the UK Property Information business, Landmark, will reflect the dynamics in residential property transaction volumes.

Property Information

The Property Information portfolio is comprised of two businesses: Landmark Information Group (Landmark), which operates in the UK, and Trepp in the US. Landmark derives revenues from providing services across the value chain, using technology, data and workflow to streamline and help reduce the risk associated with residential and commercial property transactions. The majority of Landmark's revenues are generated from volume-related transactions, underpinned by a predictable minimum base level. Trepp provides risk, valuation and data solutions for the commercial mortgage-backed securities (CMBS) market as well as tools, analytics and models for commercial real estate (CRE) investors and lenders. The majority of Trepp's revenues are from subscriptions.

Property Information revenues for the year grew by 25% on an underlying basis, with particularly strong growth from Landmark, which accounted for three-quarters of Property Information revenues in the year. Cash operating income was £44m with margin increasing from 16% to 19%, whilst the adjusted operating margin increased from 13% to 19%. The margins benefitted from strong revenue growth. There was also a £6m increase in organic investment, including a £4m increase in capital expenditure at Landmark which adversely affected the Cash OI growth rate.

Landmark

Landmark benefitted from high transaction volumes in the UK residential property market during the year and delivered underlying revenue growth of 30% to £170m. Adjusted operating profit grew to £26m, an adjusted operating margin of 15%. There was strong revenue growth during the first nine months of the year, particularly in the third quarter compared to significant declines in the prior year during the first UK lockdown. Higher volumes were supported by reductions in stamp duty, introduced in July 2020, and in the early months of the year by pent-up demand following the first UK lockdown. Stamp duty was increased at the end of June and September 2021, which has adversely impacted new listings of residential properties in recent months.

Landmark made encouraging strategic and operational progress in the year, continuing to strengthen its product lines and market position including the development of its Valuation Hub for lenders and surveyors. At DMGT's Investor Briefing event in February 2021, investors had the opportunity to learn about the vision for an end-to-end ecosystem that Landmark has started to build through acquisitions and organic investment. The progress made integrating Landmark's businesses during the year will help enable future development of an open platform to increase the speed and transparency of the transaction process in the UK residential property market, which presents exciting opportunities for Landmark to expand its scale and profitability. In April 2021, Landmark disposed of its operations in the Republic of Ireland to increase its focus on the opportunities described above.

Trepp

Trepp's revenues grew an underlying 11% to £57m, driven by increased demand as customers sought to further understand their portfolio risk exposure using Trepp's tools, analytics, data and models. There was particularly strong growth from the Commercial Real Estate and Banking businesses which have benefitted from previous organic investment in product and technology initiatives. Investment in technology and product development continues, notably the data lake, application programming interfaces (APIs) and business intelligence tools. These are expected to form the foundation, over the coming years, of both Trepp's unified technology infrastructure and its delivery platform for customers, enabling Trepp's growth to continue. Trepp's adjusted operating profit was £18m in the year, an adjusted operating margin of 32%. Trepp's long-term growth potential, supported by its strong core business and strategy to enter adjacent market segments, was presented at DMGT's February Investor Briefing event.

Outlook and priorities in the year ahead

In the US, Trepp is well positioned to deliver growing subscription revenues in FY 2022, but at a lower percentage growth rate than the 11% achieved in FY 2021. Over 90% of the business's revenues are from subscriptions and, as expected, revenue growth has slowed a little in recent months. In October 2021, Trepp's revenues grew an underlying 5%.

In the UK, property transaction volumes are likely to continue at a more normal level, following the increases in stamp duty at the end of June and September 2021. In October 2021, Landmark's revenues decreased by an underlying 10%.

Landmark and Trepp are investing organically in their businesses to enhance their market-leading positions and support future revenue growth, and investment is expected to increase in FY 2022. Initiatives include continued integration and modernisation of technology across Landmark's businesses and the development and enhancement of Trepp's products.

Insurance Risk: RMS

DMGT no longer operates in the Insurance Risk sector, following the disposal of RMS to Moody's Corporation (Moody's) for approximately £1,425m gross proceeds on 15 September 2021.

Over the past few years, RMS made substantial organic investments in software, data, data analytics, models and applications. The business successfully delivered its accelerated product development programme and the deployment of Risk Intelligence, the world's first software-as-a-service (SaaS) unified catastrophe model and analytics platform, which was a major achievement. The premium valuation achieved is testament to the strategic progress RMS made in this period. Moody's is well positioned to drive the next stage of RMS's growth and deliver revenue synergies.

Revenue decreased 10% in absolute terms, reflecting the weaker US dollar and that the business was only owned for 50 weeks of FY 2021. Following peak investment in FY 2020, the Cash OI and adjusted operating income margin increased to 19% and 18% respectively. Cash OI and adjusted operating profit increased 21% and 17% respectively in absolute terms, despite the adverse impact of exchange rates and the timing of the disposal.

EdTech: Hobsons

DMGT no longer operates in the EdTech sector, following the disposal of Hobsons for approximately US$410m in total from two separate transactions that completed in March 2021. Naviance, the K-12 college and career readiness solution, and Intersect, the higher education student match and fit business, were sold to US-based PowerSchool, a leading provider of K-12 education technology solutions, for approximately US$320m. Starfish, the higher education student retention and success platform, was sold to EAB, a US-based education company, for approximately US$90m.

The highly attractive valuations achieved in these two transactions reflected the significant progress made since Hobsons was restructured in 2017 to increase its focus on the businesses with the most potential for value creation. Over the subsequent four years, Hobsons invested organically in technology and improved its operational execution, creating a firm foundation for long-term profitable growth.

Revenues, Cash OI and adjusted operating profit decreased in absolute terms due to the disposal in March. As expected, investment in modernising the core product platforms resulted in a reduction in margins.

Energy Information: Genscape

DMGT no longer operates in the Energy Information sector, following the disposal of Genscape for US$364m in November 2019.

Business to Business (B2B) Events and Exhibitions: dmg events

* Cash operating income and adjusted operating profit both reduced by an underlying £15m.

The Events and Exhibitions business, dmg events, is an organiser of B2B exhibitions and conferences with industry-leading events in the energy, construction, interiors, hotel, hospitality and leisure sectors. The business has been severely affected by the impact of Covid-19 and no significant physical events were held in the first seven months of the financial year.

Throughout the year, dmg events worked closely with major customers, sponsors and venues to ensure the safety of all stakeholders and to support the long-term value of its brands. The implications of the Covid-19 pandemic remained unpredictable. As recently as September 2021, the Global Energy Show in Calgary, Canada was cancelled less than one week before it was scheduled to be held, due to the implementation of emergency restrictions.

The business's largest exhibition, ADIPEC, is usually held each November but did not occur in FY 2021 because of the Covid-19 pandemic. Big 5 Dubai and Gastech, the business's second and third largest events, were both held in Dubai in September 2021, following the relocation of Gastech from Singapore, to reduce the risk of cancellation, and the postponement of Big 5 Dubai from November 2020. A few smaller physical events were held in the year, including the Hotel Show and INDEX interior design events in Dubai in May and Big 5 Egypt, a construction event, in June 2021.

As expected, physical events held in the year were significantly smaller than pre Covid, with revenues and profits affected accordingly. This reflected the reduced ability and willingness of exhibitors and delegates to travel, particularly between continents, and consequently events were regional rather than truly international. Virtual versions of several events were held, notably ADIPEC in November 2020, to help maintain the brand profiles, expand audiences and sustain customer relationships. Customer feedback was positive but the virtual events were not financially significant.

Revenues decreased by 56% on an underlying basis and by 57% in absolute terms to £34m. The Covid-19 pandemic continues to have a substantial impact, with second-half revenues from events that are usually held annually down approximately 51% compared to the last time they were held.

The business recognised £4m of costs in the year relating to cancelled or postponed events. This compared to £18m recognised in the prior year, of which £7m related to events that had been scheduled in FY 2021. The business does, however, have insurance cover for communicable diseases, of up to US$20m per financial year until September 2022 and the full cover was recognised in both FY 2021 and FY 2020. Including the benefit from insurance, Cash OI and adjusted operating profit were £1m and a break-even performance respectively. For the purposes of the underlying growth calculations, the costs for cancelled events are in the period that the event was scheduled to occur and consequently the £7m of costs referred to above are reclassified from FY 2020 to FY 2021.

Both the rate and extent of the recovery of physical exhibitions remain uncertain as do the longer-term implications of climate change. DMGT believes that face-to-face events will remain important in a digitising world and consequently the business will continue to launch new events where opportunities arise.

Outlook and priorities in the year ahead

Other than Big 5 Dubai, which is scheduled to be held in December 2022, all of dmg events' significant shows are currently scheduled to be held in FY 2022. This includes the other two of the three major shows: ADIPEC in Abu Dhabi in November 2021 and Gastech in Milan in September 2022. Almost all events, including these two major shows, are expected to be significantly smaller than when they were held in 2019, prior to the onset of the Covid-19 pandemic. In October 2021, dmg events' revenues were less than £1m, reflecting the limited schedule of events in the month.

The portfolio of events continues to evolve to adjust to circumstances. There are 22 shows that were held pre-Covid that are either not in the current schedule at all or have been merged into other larger events. Nine new physical events are currently scheduled in FY 2022, including the World Utilities Congress in Abu Dhabi in May 2022.

Events are likely to remain subject to late cancellations and uncertainty due to changing restrictions for venues and travel. Based on the current schedule, dmg events is expected to deliver revenue growth in FY 2022. The business is likely to continue to derive some benefit from its insurance cover in FY 2022 in respect of reductions in profit attributable to Covid-19, with the total amount dependent on the specific circumstances and financial performance of each event.

Consumer Media: dmg media

The Consumer Media portfolio, dmg media, includes two of the UK's most-read paid-for newspapers, Daily Mail and The Mail on Sunday; Metro, its free newspaper, which is the UK's highest circulation weekday newspaper; as well as MailOnline, one of the world's leading English-language newspaper websites.

The New Scientist, one of the world's leading science publishing titles, was acquired in March 2021, following the acquisition of the 'i', the UK national newspaper and website in November 2019, with both businesses now benefitting from synergies as part of a larger media portfolio. dmg media provides its businesses with shared functions and expertise, including advertising sales, some editorial content, centralised support teams and the production and distribution of print products.

The trading conditions for Consumer Media improved during the year with the easing of lockdown restrictions in the UK and a partial recovery in the advertising market. Total revenues decreased by an underlying 2%, including a 13% underlying reduction in the first half of the year and 13% underlying growth in the second half. The year-on-year growth rates reflect a particularly challenging final seven months of FY 2020, following the onset of Covid-19.

Total advertising revenues grew an underlying 1% to £284m. Underlying growth of 16% from MailOnline was largely offset by a 15% underlying decrease in print advertising due to Metro, which is facing particularly challenging market conditions. Circulation revenues, including subscriptions, decreased by an underlying 3% for the full year, including 2% growth in the second half, to £288m. There was strong growth in subscriptions, notably for 'The Digital Edition', a paid-for enhanced digital version of the Mail newspaper. Excluding subscriptions, circulation revenues decreased by an underlying 6%. The decline in newspaper volumes was partly offset by Daily Mail cover price increases of 10p to £1.10 for the Saturday edition in January 2020 and 10p to 80p for the Monday to Friday editions in March 2021.

Digital revenues continued to grow, up an underlying 15%, and accounted for 32% of the combined revenues from our news brands in the year, compared to 28% in the prior year.

Total Consumer Media revenues were £624m, 3% growth in absolute terms, including the benefit of the acquisition of three printing plants in October 2020 and New Scientist in March 2021, as well as the full 12-month benefit of the acquisition of the 'i' in November 2019.

The Consumer Media cash operating income margin remained unchanged at 11%, whilst the adjusted operating margin increased from 9% to 10%. Cash operating income was £69m and adjusted operating profit was £60m, both up 2% on an underlying basis despite a particularly challenging year for Metro, which made a loss. There was a continued focus on managing the cost base of the newspaper businesses and driving synergies across the portfolio, as well as good profit contribution growth from MailOnline. dmg media continued to invest organically to support revenues and growth opportunities, notably in technology and developing its digital subscription products as well as its capabilities in content-led performance marketing where growth opportunities have been identified.

Mail businesses

Revenues for the combined Mail newspaper, website and TV businesses (Daily Mail, The Mail on Sunday, MailOnline and DailyMailTV) grew by an underlying 3% to £518m, of which £164m was generated by MailOnline. Total advertising across the Mail businesses grew by an underlying 9% to £249m, including 16% growth from MailOnline and 1% growth in print advertising revenues. Digital advertising accounted for 67% of total advertising across the combined Mail businesses. The full-year growth in print advertising included 33% in the second half of the year, despite continued structural and competitive challenges facing the UK national newspaper advertising market, reflecting the particularly pronounced impact Covid-19 had on the prior year.

The Mail newspapers' competitive positions remain strong, with large and growing UK retail market shares held by the Daily Mail and The Mail on Sunday, estimated to be 27.3% and 24.5% for the year respectively7. Demand for the digital version of the Mail newspapers' content increased, with subscribers to 'The Digital Edition' averaging over 90,000 during the year, a 51% increase on the prior year. The 'Mail+' briefings service, which offers readers additional insight, news and entertainment via video, podcast and articles, attracted an average of over 370,000 unique visitors a month during the year. Mail circulation revenues, including subscriptions, decreased 4% to £255m, despite the benefit of cover price increases.

MailOnline continues to focus on attracting traffic directly to its homepages, on desktop and mobile, or its apps. Following particularly high traffic levels in 2020, driven in part by the Covid-19 pandemic, total minutes spent on the site, excluding time viewing videos, decreased by 7% to a daily average of 135m in the year. The direct audience accounted for 81% of minutes spent, an increase from 79% in the prior year, demonstrating high levels of engagement with these valuable and loyal customers. The total average daily global unique browsers, excluding other platforms such as Snapchat and Facebook video, decreased by 15% to 14.7m, due to lower levels of indirect traffic. DailyMailTV is currently in its fifth season and is aired daily across the US, continuing to raise awareness of MailOnline. Revenues at DailyMailTV of £6m were down 26% on an underlying basis. MailOnline's revenue growth resulted in margin progression and the business's profit contribution remains accretive to the dmg media margin.

Metro and the 'i'

Metro revenues decreased by £21m or 46% year-on-year to £26m, a substantial reduction compared to the £79m achieved in FY 2019. The performance reflects the combination of fewer copies being distributed, as the business has been severely affected by lower commuter volumes, and the weak print advertising market. This resulted in Metro making a substantial loss in the year, as the majority of the revenue reduction flowed through to Cash OI and operating losses. Metro circulation volumes increased to a daily weekday average of 1.1m by September 2021, compared to 0.8m during the year and 0.3m in May 2020, but remain below the pre-Covid level of over 1.4m.

Revenues from the 'i' were £32m, an underlying decrease of 1%, reflecting lower circulation revenues largely offset by advertising growth following the successful integration of the sales team.

New Scientist

In early March 2021, dmg media acquired New Scientist for £67m. New Scientist's high-quality editorial content attracts a large and growing international readership and we believe there are significant digital growth opportunities to be achieved. The acquisition improves the quality of dmg media's revenue streams, as approximately 75% of revenues are derived from subscriptions. The business is well positioned for growth. Revenues in the seven months to September 2021 were £13m, with underlying growth of 9%.

Other revenues

In October 2020, dmg media acquired three printing plants for £10m to strategically strengthen its position in the newspaper production market. Printing publications for third-parties generated £10m of low-margin revenues in the year.

Other revenues also include £22m of low-margin sales of newsprint to other publishers, which is excluded from underlying revenue growth calculations.

Outlook and priorities in the year ahead

dmg media will continue to harness the value of its brands for both readers and advertisers and invest in the quality of their popular journalism. The strength of the advertising market, which inherently lacks visibility and is volatile, will reflect the status of the post-Covid-19 economy. Circulation volumes of the Mail and 'i' are expected to decline from current levels, whilst Metro's will depend on commuter traffic. In October 2021, total revenues grew an underlying 2%, including a 3% decrease for Mail Newspapers and growth of 1% for MailOnline and 42% for Metro, which remained loss-making.

There have been recent substantial increases in distribution and energy costs, as well as increases in the cost of newsprint at levels not seen since 1996, and these have started to impact the profitability of the newspaper businesses. Newsprint is the second largest cost item for the Consumer Media business and DMGT is currently exploring a number of options to mitigate the impact of these cost increases, including a review of employee numbers.

Due to the publishing cycle, dmg media's results include a whole number of weeks' performance in each year and the FY 2022 results will include a 53rd week up to Sunday 2 October 2022. The additional week will be excluded from underlying growth rates but will benefit reported results. Reported results will also benefit from the inclusion of 12 months of New Scientist following its acquisition.

Corporate costs

Joint ventures, associates and dmg ventures

DMGT holds minority stakes in early-stage businesses, primarily through its dmg ventures arm. The Group's net share of adjusted operating losses from its joint ventures and associates was £3m in the year, compared to £8m in FY 2020.

Yopa, a UK hybrid estate agent in which DMGT owns a c.45% stake, continues to disrupt the estate agency sector and made good operational progress during the year. It is influenced by the same UK residential property market dynamics as Landmark and delivered strong revenue growth as well as a significantly reduced adjusted operating loss.

In June 2021, dmg ventures invested a further £17m in Kortext, the leading supplier of digital textbook solutions to UK universities, increasing its stake to c.22%. The investment is expected to fund additional product development, helping the seamless delivery of digital textbooks and other course materials to students.

DMGT also invests in and develops early-stage businesses in which the Group holds smaller stakes. As the percentage holdings are too small, or DMGT's level of influence insufficient, for the companies to be associates, the Group does not recognise a share of profits or losses from these investments. The most notable is Cazoo, which aims to transform the car buying and selling experience for consumers across the UK and Europe.

In October 2020, dmg ventures participated in a further Cazoo funding round and invested £34m, increasing DMGT's total investment in Cazoo to £117m. In March 2021, Cazoo announced its intention to become publicly listed on the New York Stock Exchange (NYSE) through a business combination with AJAX I, a publicly-traded special purpose acquisition company (SPAC) which was already listed on the NYSE. The transaction completed in August 2021 with DMGT receiving US$5m net cash proceeds and retaining c.132.6m shares in Cazoo Group, equivalent to c.17% of the common stock on a fully diluted basis. This was valued at US$1,031m as at 30 September 2021. Lock-up restrictions apply to DMGT's holding in Cazoo Group for up to six months to 26 February 2022 and DMGT is subject to US securities law restrictions, including customary blackout periods relating to releases of Cazoo Group's results and other non-public information. Consequently, it may be more than six months before some or all of DMGT's stake in Cazoo Group can be realised.

In June 2021, Taboola, the content discovery platform, listed on Nasdaq's US exchange through a merger with a SPAC. dmg ventures' stake was valued at £5m as at 30 September 2021, compared to a cost of £2m in 2015.

Outlook: DMGT's joint ventures and associates are primarily investment-stage businesses and DMGT does not control them, unlike subsidiaries.

Net finance costs

Adjusted net finance costs were £15m. The 48% increase in total net costs was due to a £6m reduction in interest income on DMGT's gross cash deposits due to lower interest rates compared to FY 2020. Net finance costs included £13m of charges on bond debt.

The pension finance credit, which is excluded from adjusted results, was £2m, reflecting the pension surplus on an accounting basis. This compared to £4m in the prior year.

Outlook: the £13m charge on the Group's bond debt is expected to remain unchanged in FY 2022, whilst additional interest costs and interest income will depend on any use of the Group's bank facilities and the amount of any gross cash deposits.

Other income statement items

· Exceptional items and amortisation

The exceptional cash costs in the year were £33m, compared to £15m in the prior year. Total exceptional operating costs, including £5m from discontinued operations, were £39m, compared to £24m in the prior year. There were £18m of exceptional professional fees including for restructuring advice relating to the possible offer for DMGT by RCL.

The charge for amortisation of intangible assets arising on business combinations was £16m (FY 2020 £11m). Total impairment charges in the year, including £7m in respect of associates, were £20m, compared to £19m in the prior year. The charge includes £13m in respect of CWC, the Events and Exhibitions business, due to uncertainty caused by the Covid-19 pandemic. The Group recorded other net gains on disposal of businesses and investments of £1,566m (FY 2020 £177m), including £1,551m on discontinued operations, notably £1,320m on the disposal of RMS, the Insurance Risk business.

· Taxation

The adjusted tax charge for the year of £17m (FY 2020 £13m) is stated after adjusting for the effect of exceptional items. The adjusted tax rate was 20%, a slight increase on 18% in the prior year and in line with expectations, reflecting the geographical mix of profits.

The statutory tax credit for the year was £62m, including exceptional credits of £40m in respect of the recognition of previously unrecognised US deferred tax assets following the disposal of Hobsons and

£17m in respect of the recognition of previously unrecognised UK deferred tax assets. There was also a statutory tax charge of £104m on discontinued operations, notably an exceptional charge of £97m on the disposal of RMS and Hobsons, giving a total net statutory tax charge of £42m. There were £25m of net exceptional tax charges in total.

Outlook: the adjusted tax rate will continue to depend on the geographical mix of profits. The FY 2022 rate is currently expected to increase slightly from the FY 2021 rate of 20%.

Pensions

The pro forma net surplus on the Group's three defined benefit pension schemes, on an accounting basis, increased from £240m at the start of the year to £416m at 30 September 2021, calculated in accordance with IAS 19 (Revised). The pro forma surplus includes £121m in escrow, held for the benefit of the pension schemes but classified as an 'other financial asset' on DMGT's balance sheet, as well as the statutory net surplus of £295m. At the start of the year, the pro forma surplus included £117m that had been made available to the pension schemes and that was paid into escrow in October 2020. During the year, funding payments directly into the main schemes were £14m and payments into escrow totalled £121m, including the £117m referenced above. In aggregate, the schemes remain in deficit on an actuarial, technical provisions basis.

The proposed special dividend would constitute a significant portion of the current value of DMGT and a number of significant payments and protections would take effect in the event of Offer Acceptance and the special dividend being declared. They include the payment of £402m cash, including the release of current escrow arrangements. For more information, please see page 24 of the 'Major reorganisation and recommended cash offer for DMGT' announcement in the 'Recommended offer for DMGT' section on DMGT's website, www.dmgt.com/investors.

In the event of the special dividend not being declared, the existing funding plan is that from FY 2022 to FY 2025 inclusive, payments of £11m p.a. will be made directly into the schemes and, in addition, payments of £7m p.a. will be paid into escrow. The FY 2022 payments were made in October 2021. The existing arrangement also includes funding of £58 million that is payable following the disposal of RMS and its retirement as a guarantor in respect of one of the schemes.

There is also an agreement for a further £10m of funding if two of the schemes are merged as currently planned and which is not conditional on Offer Acceptance or the special dividend being declared.

The defined benefit schemes are closed to new entrants and the next actuarial valuation is scheduled for 31 March 2022.

Net cash and cash flow

Pro forma net cash¹ at the end of the year was £1,542m, an increase of £1,374m compared to the start of the year, reflecting £1,535m of net disposal proceeds partly offset by £139m spent on acquisitions and investments. Pro forma net cash as at 30 September 2021 is stated after adjusting to exclude £37m of lease liabilities that are included in net cash in the financial statements following the adoption of IFRS 16, the lease accounting standard. The lease liabilities largely reflect the future operating cost of renting office space and are not considered a component of net debt when the Board reviews the Group's available capital. Consequently, they are excluded from pro forma net cash.

The Group's cash operating income of £121m is stated after £16m of capital expenditure, a reduction on £18m in the prior year. DMGT remains committed to investing for the long term and the Group's organic investment was equivalent to 10% of revenues in the year, with the majority expensed directly to the income statement and relating to RMS, the Insurance Risk business. For continuing operations, organic investment was equivalent to 4% of revenues.

Other operating cash net outflows totalled £25m including exceptional costs. Group operating cash flow was £96m, a 90% conversion rate of operating profits to operating cash flow, compared to 110% in the prior year, reflecting the increase in exceptional cash costs in the year.

Disposal proceeds included net proceeds of £1,228m from the disposal of RMS and £288m from the disposal of Hobsons. Expenditure on acquisitions and investments included £67m to acquire New Scientist, £34m of investment in Cazoo, £17m of investment in Kortext and £10m to acquire printing plants.

Total pension funding payments in the year were £135m including £117m previously made available to the schemes and which was excluded from pro forma net cash as at 30 September 2020. Consequently, on a pro forma basis, the adverse impact of pension funding on net cash during the year was £18m. Other cash payments in the year included dividends of £55m, taxation of £22m and net interest payments of £13m. The weaker US dollar at year end, relative to the prior year end, resulted in an adverse cash revaluation of £9m.

The Group's cash, cash equivalents and short-term deposits, net of overdrafts, totalled £1,745m at year end. Bond debt was £200m of 6.375% bonds, due 2027 and there was also £4m of net debt in respect of derivatives and collateral. The Group's committed bank facilities, which mature in March 2023, were £316m and were completely unutilised.

In September 2021, Fitch downgraded DMGT's corporate credit rating from BBB- to BB+ following the disposal of RMS. Standard & Poor's rating of DMGT's corporate credit remains unchanged at BB, although it was placed on 'CreditWatch Negative' in July 2021, following the announcement of the possible major reorganisation of the Group. The revised assessments would be expected to impact the cost of borrowing, if DMGT is required to do so in the future, and are likely to be a consideration for the Trustees of DMGT's defined benefit pension schemes.

The Group's preferred upper limit for gearing remains a net debt to adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of 2.0, below the requirements of the Group's bank covenants.

The Directors have a reasonable expectation that the Group will continue to operate and meet its liabilities as they fall due for at least one year. Accordingly, they are satisfied that it is appropriate to continue to adopt the going concern basis in preparing DMGT's accounts.

Financing and shares

During the year, the Group acquired 0.1m A Ordinary Shares for £1m in order to meet obligations to provide shares under its incentive plans. It utilised 0.5m shares, valued at £3m, and a further 2.8m shares from the Employee Benefit Trust, valued at £21m, to provide shares under various incentive plans. As at 30 September 2021, DMGT had 229.8m shares in issue, including 19.9 million Ordinary Shares, and a further 5.0m A Ordinary Shares held in Treasury and the Employee Benefit Trust8.

Dividend

DMGT's existing dividend policy has been to grow the dividend per share in real terms and, in the medium term, to distribute around one third of the Group's adjusted earnings.

The Board is recommending the payment on DMGT's issued Ordinary Shares and A Ordinary Non-Voting Shares of a final dividend of 17.3 pence per share for the year ended 30 September 2021 (2020 16.6 pence). This will give a total for the year of 24.9 pence (2020 24.1 pence), increasing the dividend by more than inflation. The recommended FY 2021 full year dividend is equivalent to 80% of the adjusted earnings per share (EPS) for the year, since earnings have been adversely affected by the impact of Covid-19 and disposals, and 140% of the adjusted pro forma EPS, excluding RMS and Hobsons. The final dividend will be paid on 4 February 2022 to shareholders on the register at the close of business on 26 November 2021.

Also, in the event of the Offer becoming or being declared unconditional, DMGT intends to declare a special distribution payable to all DMGT shareholders, comprising cash and Cazoo shares as set out in the 'Recommended offer for DMGT by RCL' section above.

The Board intends to review the dividend policy applicable to FY 2022 with a view to communicating a revised policy with the half year results for the six months ending 31 March 2022.

In formulating its policy, the Board will take account of several factors including: shareholdings in DMGT; the near-term trading and cash generation or absorption of the Group following the business disposals in FY 2021; any capital returned in connection with the special dividend and the related Offer; the desire for reinvestment of DMGT's capital for future organic and inorganic investment; and the outlook for the remaining businesses in the Group. As these matters are currently uncertain, the Board notes that it is not in a position to determine its policy at this time and has consequently withdrawn its existing policy that increased dividends by more than inflation. Nevertheless, if the Offer is declared unconditional and the special dividend is paid, the DMGT Board anticipates that any future dividends per share paid to holders of the DMGT A Shares will be materially lower than they have been historically.

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

The Board and management team use adjusted results, rather than statutory results, as the primary basis for providing insight into the financial performance of the Group and the way it is managed. Similarly, adjusted results are used in setting management remuneration. Adjusted results exclude certain items which, if included, could distort the understanding of the comparative performance of the business during the year.

The tables on pages 30 and 31 show the adjustments between statutory profit before tax and adjusted profit before tax, by business, for both FY 2021 and FY 2020.

The explanation for each type of adjustment is as follows:

1) Discontinued operations: the adjusted results include the pre-disposal results of discontinued operations, namely Genscape, the Energy Information business, Hobsons, the EdTech business, and RMS, the Insurance Risk business. Statutory revenue, operating profit and profit before tax, however, only include continuing operations. The gains on the disposal of Genscape in FY 2020 and on the disposal of both Hobsons and RMS in FY 2021 are excluded from both statutory and adjusted profit before tax.

2) Exceptional operating costs: businesses occasionally incur exceptional costs, including severance and consultancy fees, in respect of a reorganisation that is incremental to normal operations. These are excluded from adjusted results.

3) Intangible impairment and amortisation: when acquiring businesses, the premium paid relative to the net assets on the balance sheet of the acquired business is classified as either goodwill or as an intangible asset arising on a business combination and is recognised on DMGT's balance sheet. This differs to organically developed businesses where assets such as employee talent and customer relationships are not recognised on the balance sheet. Impairment and amortisation of intangible assets and goodwill arising on acquisitions are excluded from adjusted results as they relate to historical M&A activity and future expectations rather than the trading performance of the business during the year. Software, including products, is also recognised as an intangible asset on the balance sheet but the ongoing amortisation of software is similar to the depreciation of tangible assets and is an everyday cost of doing business, so is included in both statutory and adjusted results.

4) Gain on sale or purchase of assets: the Group makes gains or losses when disposing of businesses, for example on the disposal of BuildFax, the US Property Information business, in FY 2020. These items are excluded from adjusted results as they reflect the value created since the business was formed or acquired rather than the operating performance of the business during the year. Similarly, the gains or losses made by joint ventures or associates when disposing of businesses are excluded from adjusted results. Rarely, the Group may make a gain when acquiring a business where the value of identifiable net assets is more than the consideration paid, as with the purchase of three printing plants in October 2020. The gain is excluded from adjusted results as it is unrelated to the operating performance during the year.

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

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

Reconciliation: Statutory profit to adjusted profit - FY 2021

Reconciliation: Statutory profit to adjusted profit - FY 2020

Reconciliation: Adjusted results including and excluding discontinued operations

Cash operating income³

Full Year 2021

Full Year 2020

Underlying² analysis - Revenues

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

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

Underlying² analysis - Cash operating income³

Underlying² analysis - Adjusted⁴ operating profit and profit before tax

Adjusted⁴ pro forma6 income statement

The adjusted pro forma results show the adjusted results⁴, rather than statutory results, for FY 2021 after adjusting to deconsolidate the EdTech and Insurance Risk businesses. The Ed Tech business, which was disposed of in March 2021, and the Insurance Risk business, which was disposed of in September 2021, are discontinued operations and the adjusted pro forma results show DMGT's adjusted results as if the disposals had occurred on 1 October 2020.

Principal risks and uncertainties

The Directors confirm that they have completed a robust assessment of the Group's principal risks and a thorough review of risk management processes. The Group's risks are categorised as either strategic or operational. Strategic risks are linked to the Group's strategic priorities and impact the whole Group. Operational risks are those arising from the execution of the business functions and typically impact one or more of the principal businesses.

Strategic Risks