Final Results
Trinity Mirror PLC
27 February 2003
27 February 2003
Trinity Mirror plc
2002 Preliminary Results
Trinity Mirror plc, the UK's largest newspaper publisher, announces the Group's
preliminary results for the 52 weeks ended 29 December 2002.
Operational highlights
• Robust performance despite an extremely difficult and uncertain
advertising environment: Group operating profit and earnings per share, before
exceptional items, up 0.3% and 1.6% respectively
• Regional newspapers from Biggest to Best strategy progressing well:
the division has delivered incremental revenue enhancements of £9.4 million and
cost savings of £10.6 million during the year
• Repositioning of the Mirror brand: improved and refined brand
proposition, well received by readers
• Delivered £32.8 million savings in 2002 from cost reduction plans and
strategy implementation: on track to deliver at least £42.0 million in 2003
Financial highlights
Like-for-like(2) (pre Actual (post exceptional items
exceptional items) (3,4))
2002 2001(1) % 2002 2001(1) %
£m £m change £m £m change
Turnover 1,087.4 1,120.2 (2.9%) 1,092.2 1,131.1 (3.4%)
Group operating profit 190.6 189.9 0.3% 59.8 22.5 166.7%
Profit before tax 155.5 152.6 1.9% 26.2 (14.2) 285.1%
Earnings/(loss) per share 37.1p 36.5p 1.6% (6.6)p (19.1)p 65.4%
Dividend per share 17.6p 17.6p -
Net debt 666.1 735.0
1) the results are stated after the adoption in 2002 of FRS 17
Retirement Benefits and all comparatives have been restated accordingly
2) adjusted to exclude the results of Post Publications
Limited and Ethnic Media Group Limited which were disposed of in June 2002
3) Group operating exceptional items of £131.2 million (2001:
£168.0 million) include a £125.0 million (2001: £150.0 million) impairment
charge against the carrying value of the publishing rights and titles of the
Regional titles in the Midlands. In 2001 the impairment charge of £100.0 million
related to the National titles and £50.0 million to the Regional titles in the
Midlands
4) total exceptional items before tax of £129.3 million (2001:
£166.8 million), and after tax of £127.5 million (2001: £161.6 million), reflect
the operating items in note 3 above, together with the net profit on the
disposal of subsidiary undertakings and three magazine titles, and the Group's
share of associate's non operating exceptional items
Sir Victor Blank, Chairman of Trinity Mirror plc, commented:
'Our 2002 result has been good against a difficult external environment. We
continue to invest in our businesses to improve performance and to enhance value
for shareholders.
Sly Bailey joined us in early February and has already made an impact with her
vigour, drive and fresh thinking, which has been warmly welcomed within the
Group.'
Sly Bailey, Chief Executive, Trinity Mirror plc commented:
'The Trinity Mirror businesses have tremendous potential. My job is to unlock
this potential and position the business to deliver enhanced shareholder value.
I will be reporting back on my plans in due course.'
Enquiries:
Trinity Mirror plc 020 7293 3000
Sly Bailey, Chief Executive
Nick Fullagar, Director of Corporate Communications
Finsbury 020 7251 3801
Rupert Younger
James Leviton
Trinity Mirror plc
2002 Preliminary Results
Financial highlights
2002 2001 (1)
£m £m % change
Turnover
- actual 1,092.2 1,131.1 (3.4%)
- like-for-like (2) 1,087.4 1,120.2 (2.9%)
Group operating profit pre exceptional items
- actual 191.0 190.5 0.3%
- like-for-like(2) 190.6 189.9 0.3%
Group operating profit post exceptional items (3)
- actual 59.8 22.5 166.7%
- like-for-like(2) 59.4 21.9 171.7%
Profit before tax pre exceptional items 155.5 152.6 1.9%
Profit/(loss) before tax post exceptional items (4) 26.2 (14.2) 285.1%
Per share Pence Pence
Underlying earnings pre exceptional items 37.1p 36.5p 1.6%
Basic loss post exceptional items (4) (6.6)p (19.1)p 65.4%
Dividend 17.6p 17.6p -
1) the results are stated after the adoption in 2002 of FRS 17
Retirement Benefits and all comparatives have been restated accordingly
2) adjusted to exclude the results of Post Publications
Limited and Ethnic Media Group Limited which were disposed of in June 2002
3) Group operating exceptional items of £131.2 million (2001:
£168.0 million) include a £125.0 million (2001: £150.0 million) impairment
charge against the carrying value of the publishing rights and titles of the
Regional titles in the Midlands. In 2001 the impairment charge of £100.0 million
related to the National titles and £50.0 million related to the Regional titles
in the Midlands
4) total exceptional items before tax of £129.3 million (2001:
£166.8 million), and after tax of £127.5 million (2001: £161.6 million), reflect
the operating items in note 3 above, together with the net profit on the
disposal of subsidiary undertakings and three magazine titles and the Group's
share of associate's non operating exceptional items
Within the following review of operations, all figures are presented on a
like-for-like(1),(2) pre exceptional items basis unless otherwise specified.
For 2002, central costs are being separately disclosed within the segmental
analysis of operating profit and therefore the comparatives for 2001 have been
restated to reflect the change. This change in presentation has no impact on
the Group or total operating profit in 2001 and 2002.
Review of operations
The Group has delivered a robust performance in 2002 with Group operating profit
before exceptionals of £190.6 million, marginally ahead of 2001 (2001: £189.9
million), despite a £32.8 million (2.9%) decline in revenues. The results
demonstrate the significant benefits being derived from the strategies which
were outlined during 2001 and in February 2002.
The from Biggest to Best regional newspaper strategy continues to deliver
results above initial expectations. In 2002 we realised incremental revenue
enhancements of £9.4 million and achieved cost savings of £7.2 million. In
addition, the cost reduction plans initiated in 2001 delivered further savings
of £3.4 million.
An integrated marketing strategy for the Daily Mirror was implemented during the
year. The brand is now more clearly defined and research shows there has been
encouraging acceptance by the readership. An incremental £17.8 million has been
invested during the year in the Mirrors.
In 2002 total annualised cost savings of £32.8 million have been realised with
incremental savings in the year of £21.7 million. These savings are in addition
to savings arising from the merger (£13.7 million) and Southnews integration
(£6.1 million). In addition, newsprint price reductions delivered savings of
£18.8 million during the year.
Our strategies have enabled us to maintain profitability whilst investing for
the future. During the year we invested an incremental £22.7 million (above the
level of investment in 2001) in products, editorial and marketing and a further
£12.7 million exceptional costs in the implementation of the Group's strategies
and plans.
The Group continued to generate strong net cash flows during the year of £67.2
million (2001: £31.7 million) including disposal proceeds of £17.5 million and
dividends from associates of £9.5 million, with net debt falling to £666.1
million (2001: £735.0 million) after making dividend payments of £51.3 million,
interest payments and dividends due to minority shareholders of £45.1 million,
tax payments of £39.2 million and net capital expenditure of £43.2 million
(including a further £22.5 million of a total of £90.0 million in replacing four
regional press facilities).
The annual impairment review of the carrying value of the Group's publishing
rights and titles, undertaken in accordance with FRS 10, has indicated that an
impairment charge of £125.0 million (2001: £150.0 million) was required. The
impairment charge reduces the carrying value of the Regional titles in the
Midlands. In 2001 an impairment charge of £100.0 million related to the
National titles and £50.0 million related to the Regional titles in the
Midlands.
During the year, given the substantial fall in equity markets and reduced rates
of return, the FRS 17 pension deficit has increased from £25.9 million to £163.1
million (net of deferred tax). There are no immediate funding implications for
our defined benefit schemes, which are funded in accordance with MFR (Minimum
Funding Requirements). The FRS 17 operating profit charge, before past service
costs (£0.8 million) was £24.6 million in 2002 and is expected to be £24.7
million in 2003. The FRS 17 finance income was £6.1 million in 2002 and is
expected to be a finance charge of £2.9 million in 2003.
Regional newspapers and digital media
The from Biggest to Best strategy for the regional newspaper division has been
successfully progressed during the year. Instead of 13 autonomous business units
the division now operates with common aims, objectives, policies and controls.
The success of the strategy is demonstrated by a strong financial performance
despite a difficult advertising market which severely impacted the division's
largest business in London and the South East and to a lesser extent the
Midlands.
The turnover and operating profit of the Group's regional newspapers and Metros,
excluding Digital Media, is as follows:
2002 2001 Change Margin Margin
(restated) (restated)
£m £m % 2002 2001
Turnover
Regionals excluding Metros 506.8 511.5 (0.9%)
Metros 9.1 8.3 10.1%
Regionals including Metros 515.9 519.8 (0.7%)
Operating profit
Regionals excluding Metros 121.6 119.6 1.7% 24.0% 23.4%
Metros (1.5) (4.5) 66.3% (16.5%) (54.2%)
Regionals including Metros 120.1 115.1 4.4% 23.3% 22.1%
Operating profit The regional newspaper operations achieved operating growth of
4.4% to £120.1 million despite turnover falling by 0.7% to £515.9 million.
Excluding Metros, the division achieved an increase in operating profit of 1.7%
to £121.6 million despite a fall in revenue of 0.9% to £506.8 million. The
impact of a difficult and uncertain economic and advertising environment has
been partially mitigated by the strategies and cost reduction plans which
commenced in 2001. In addition, the division benefited from a 10.2% reduction in
newsprint prices. Within Metros, losses have been reduced by 66.3% to £1.5
million, due to improving advertising revenues and cost reductions.
Advertising revenue within the regional newspaper operations declined by 1.4% to
£394.5 million (2001: £400.2 million). Excluding Metros, advertising revenues
declined by 1.6% to £385.5 million (2001: £392.0 million). Differing
advertising trends have been experienced in local market places, and a clear
North/South divide has emerged throughout the year. Whilst advertising revenues
in London and the South East fell by 9.9%, the rest of the division (excluding
Metros) achieved growth of 1.7%. Although there is still limited visibility, an
improving trend emerged in the second half of the year, with the division
(excluding Metros) achieving growth of 1.1% in the fourth quarter compared to
declines of 2.5% in the first half and 2.4% in the third quarter.
Some regions achieved recruitment advertising revenue growth in excess of 10%
(Liverpool 14.1%, Chester 12.7% and Cardiff 11.3%). Recruitment advertising in
London and the South East fell by 19.4% and in the Midlands fell by 5.0%. This
resulted in recruitment advertising for the division (excluding Metros) falling
by 2.8%. Property advertising in some regions has been weak all year, declining
by 3.0% in total (excluding Metros) with significant declines in Teesside
(18.7%) and Scotland (14.5%). However, Coventry, Newcastle and Cardiff achieved
good growth in property advertising of 11.7%, 8.5% and 6.9% respectively.
Display advertising has deteriorated in the second half with a decline of 3.0%
(excluding Metros) compared to a decline of 1.5% in the first half.
Circulation revenue for the regional newspapers declined by 0.9% to £81.1
million (2001: £81.8 million). Modest declines in circulation were partially
offset by limited cover price increases.
Strategic direction
We have put into place initiatives arising from the from Biggest to Best
strategy which drive the pursuit of industry leading operational and financial
performance through:
- driving continuous performance improvement;
- capturing the benefits of scale;
- investing in quality and excellence; and
- sustaining long term growth.
The full integration of the Digital Media operations within the business units
has provided real focus to drive this business towards profitability. During
2002, cost control measures and initiatives to drive revenues have enabled a
substantial reduction in losses from our target of £10.0 million to £7.6
million. These losses include £2.2 million (2001: £3.2 million) investment in
Fish 4, a joint venture with other leading newspaper publishers to provide a
platform for classified advertising on the internet. Fish 4 made significant
progress during the year with expectations for further reductions in funding for
the future.
To deliver the Group's strategy for its regional newspaper division, exceptional
costs of £8.1 million (2001: £4.4 million) were incurred for implementation and
severance costs. We expect further exceptional costs of £4.6 million to support
the implementation team and costs of implementing new initiatives during 2003.
National newspapers
The turnover and operating profit of the Group's national newspapers is as
follows:
2002 2001 Change Margin Margin
(restated) (restated)
£m £m % 2002 2001
Turnover 494.0 519.7 (4.9%)
Operating profit 77.6 95.2 (18.6%) 15.7% 18.3%
Operating profit The decline in operating profit of £17.6 million to £77.6
million arose as a consequence of a decline in advertising revenue of £6.7
million and significant investment in the UK National titles. Margins fell from
18.3% to 15.7%.
Circulation revenue declined by 7.6% to £260.7 million (2001: £282.1 million).
The decline is primarily due to price cutting at a cost of £23.5 million (2001:
£4.0 million), including £21.8 million (2001: £3.6 million) for the Daily
Mirror.
The Daily Mirror circulation over the 12 month period fell by 3.4%. Excluding
sampling, which was discontinued from May, circulation fell by 2.0% (2.4% in
2001). The Daily Mirror brand was more clearly defined in April 2002 to improve
its appeal to younger readers. Research has indicated that the brand proposition
has been well received by the readership.
The Sunday Mirror and The People continued to operate in a competitive and
difficult market with additional pressure on circulation following the launch of
the Daily Star Sunday in September.
The Sunday Mirror limited the decline in circulation for the 12 month period to
4.8%, representing a decline of 3.2% (4.2% in 2001) when sampling, discontinued
from May 2002, is excluded. The Sunday Mirror was aligned to the Daily Mirror
from April 2002 with a new magazine, M Celebs, which extends the success of the
M brand, and a new supplement, The Prem (launched in September 2002). This
required additional investment of £3.1 million.
The People circulation fell by 7.8% during the 12 month period, representing a
fall of 6.5% (8.2% in 2001) excluding sampling. The title was relaunched in
August 2002 with major changes to the product, including a new Sports
supplement, supported by a marketing campaign. Whilst competitor activity
limited the impact of the changes, circulation has stabilised after an initial
loss of 100,000 copies following the launch of the Daily Star Sunday.
Circulation revenue for the UK Nationals fell by 7.6% from £222.9 million to
£205.9 million. £18.2 million of incremental price cutting on the Daily Mirror
was partially offset by cover price increases on Saturday and the Sunday titles
limiting the net fall in revenues to £17.0 million.
The Scottish market has proved extremely difficult during the year with 12 month
declines in circulation (Scottish sales only) for the Daily Record and Sunday
Mail of 5.8% and 3.8% respectively. The poor performance of the Daily Record has
been attributable to price competition in Scotland with very limited price
discounting by the Daily Record.
Circulation revenue for the Scottish titles fell by 7.5% to £54.8 million with
revenue lost through circulation declines and price cutting offset by an
increased cover price on the Sunday Mail.
Advertising revenue Despite a significant improvement in advertising revenues
in the second half (with growth of 2.3%) advertising revenues in the national
newspapers operations declined by 3.3% over the full year.
The three UK titles increased advertising revenues in the second half by 2.4%,
which partially offset a 10.3% decline in the first half, limiting the annual
decline to 4.4% from £150.6 million to £144.0 million. The uncertainty and
volatility of advertising noted in the first half has continued in the second
half although an improving trend, driven by Retail and to a lesser extent
Holidays and Classified, had emerged.
In Scotland, further improvements in performance in the second half, have
limited the annual decline in advertising revenues to 0.1%. Although National
advertising in the second half fell by 2.5%, a 4.6% increase in local
advertising enabled overall second half growth of 1.8% compared to a decline of
2.3% in the first half.
UK Nationals - improving long term profitability
During the year improvements have been made in refining the brand and editorial
proposition of the three UK national newspapers. The improvements were
supported by one-off and ongoing investment to drive frequency of purchase
amongst Mirror readers.
The efficient management of the Nationals' cost base achieved savings of £8.3
million. These savings include labour, newsprint, external printing, sampling
and other overheads.
For 2003, the UK national newspaper operations will strive to improve
profitability.
Scottish Nationals - asserting leadership
Initiatives to drive advertising revenues have delivered positive results.
During 2003 the Scottish nationals will capitalise on these achievements.
During 2002, the Scottish nationals achieved cost savings of £2.3 million across
all cost categories and further initiatives in 2003 are expected to deliver
incremental cost savings in 2003.
Other businesses and central costs
Sports newspapers and websites
The Sports division achieved a record performance in 2002 with operating profit
increasing by 44.9% to £11.8 million (2001: £8.2 million).
The Racing Post increased its cover price and its circulation (13.5% 12 monthly
increase), consequently circulation revenue grew by 11.2% from £23.5 million to
£26.1 million.
The advertising revenue increase in the Sports newspapers of 12.2% was driven by
a recovery from the foot and mouth epidemic in 2001 and additional one-off
revenues from the World Cup which contributed to first half advertising revenue
growth of 25.8% followed by steady growth of 0.5% and 2.0% in quarters three and
four respectively.
Racing Post Online, the division's web site, achieved breakeven operating profit
during the year following efficient cost control and a revenue increase of £0.6
million from online betting. This represents a significant improvement from
losses of £0.6 million in 2001. Racingpost.co.uk and Smartbet.co.uk had average
monthly page impressions of 19.8 million and 5.4 million respectively during the
year.
Magazines and Exhibitions
The Magazines and Exhibitions division has undergone a major restructuring
during the year by the management team appointed in December 2001. The changes
involved lower staffing levels, disposals, renegotiations of all supplier
contracts and investment in marketing and product quality.
In December, the division sold three specialist motorbike magazines for a
consideration of £1.8 million realising a profit of £1.7 million. These titles
contributed £0.9 million to revenues (2001: £0.9 million) and £0.2 million to
operating profits during the year (2001 : £0.1 million).
The division successfully renegotiated a new 11 year contract with the Chartered
Institute of Housing for the endorsement of Inside Housing and expanded The
National Boat, Caravan and Leisure Show following the successful 2002 show and
exhibitor demand for more space. Two new shows for motorcycles and weddings are
being launched in 2003.
The division achieved operating profit of £5.3 million representing a fall of
only 2.4% (£0.1 million) despite revenue falling by £1.5 million from £32.5
million to £31.0 million.
Voice Media
Voice Media is a provider of interactive telephone response services to both
internal newspaper operations and external media and advertisers. Following the
loss of a major contract in 2001, coupled with disappointing results in the
second half of the year, the division saw revenues fall by 48.3% to £6.4 million
(2001: £12.4 million) with a consequential reduction in operating profit of £3.7
million to £0.2 million (2001: £3.9 million).
Central Costs
Following a thorough review of the Group cost base, central costs which are not
directly identifiable to operating divisions, are being separately disclosed to
provide a clearer presentation of underlying divisional performance. During the
year central costs increased by £2.4 million, from £14.4 million to £16.8
million. The increase in costs is primarily due to consultancy costs and the
provision of payments in lieu of notice to senior management.
Investment
The £90.0 million investment plan in new regional press facilities for Cardiff,
the Midlands and the North East is progressing on plan with the new Cardiff
Press facility on line in March this year, with the North East site due for
completion later this year and Midlands to be completed in 2004.
Disposals
During the year the Group disposed of non-core investments in Post Publications
Limited (the Sunday Business Post), Ethnic Media Group Limited and three biker
magazine titles.
Post Publications Limited and Ethnic Media Group Limited were disposed of in
June 2002 for considerations of £6.5 million and £10.2 million (including £1.0
million deferred consideration, receivable in June 2004) respectively. During
the 52 weeks ended 29 December 2002, the Sunday Business Post contributed £2.6
million revenue (2001: £6.9 million) and a net loss of £0.1 million (2001: loss
£0.2 million) and Ethnic Media Group contributed £2.2 million revenue (2001:
£4.0 million) and an operating profit of £0.5 million (2001: £0.8 million) to
the results of the regional newspaper division.
The three biker magazines were disposed of in December 2002 for a cash
consideration of £1.8 million realising a profit of £1.7 million. During the 52
week period ended 29 December 2002 these magazines contributed £0.9 million
revenue (2001 : £0.9 million) and an operating profit of £0.2 million (2001 :
£0.1 million).
Outlook
The uncertain and volatile advertising conditions experienced throughout 2002
have continued into the first two months of this year. Whilst there is still
limited visibility, the Board is anticipating a satisfactory performance during
2003, due to the benefits of revenue enhancement and cost reduction measures
implemented by the Group.
Board Changes
The Board welcomes Sly Bailey, who joined as Chief Executive on 3 February 2003.
Sly was Chief Executive of IPC Media Limited from December 1999. She
successfully led discussions with AOL Time Warner that resulted in the sale of
IPC Media Limited to Time Inc, the publishing division of AOL Time Warner, in
July 2001.
Financial summary
Accounting policies used in the preparation of the financial information for the
52 weeks ending 29 December 2002 are consistent with those set out in the
Group's financial statements for 2001, as amended by the adoption, in 2002, of
FRS 17 Retirement Benefits. The adoption of FRS 17 has required the restatement
of the 2001 consolidated profit and loss account, consolidated statement of
total recognised gains and losses, balance sheets and reconciliation of
movements in shareholders' funds. Note 9 to the summarised financial
information attached to this preliminary results statement details the effects
of the restatement. The commentary below reflects the 2001 restated financial
information.
Revenue of the Group fell by 3.4% to £1,092.2 million (2001: £1,131.1 million).
Advertising revenue fell by 2.5% to £618.2 million and revenue from newspaper
and magazine sales fell by 5.2% to £373.3 million. Contract print and other
revenues declined by 2.6% (£2.6 million) to £100.7 million.
Group operating profit before exceptional items, increased by £0.5 million
(0.3%) to £191.0 million. In 2002, Group operating profit before exceptional
items was adversely impacted by incremental investment in the Group's core
businesses of £22.7 million and a £15.9 million fall in advertising revenue but
has benefited from reduced newsprint prices (£18.8 million), incremental cost
savings (£21.7 million) and reduced losses in digital media (£15.9 million).
The pre exceptional items operating margin (including the net cost of digital
media activities) increased from 16.8% to 17.5%.
Contribution from associates was £1.5 million (2001: £0.3 million), reflecting
the Group's share of profits from its associate, The Press Association.
Net interest payable fell by £6.2 million, to £43.0 million. Group operating
profit before exceptional items covers the net interest cost 4.4 times.
Other finance income, reflecting the FRS 17 interest credit, fell by £4.9
million, to £6.1 million and is expected to be a charge of £2.9 million in 2003.
Exceptional costs, before tax, of £129.3 million (2001: £166.8 million) were
incurred during the year. Note 4 to the summary financial information attached
to this preliminary results statement details the nature of the exceptional
items. These items include an impairment charge of £125.0 million (2001: £150.0
million) in relation to the carrying value of the publishing rights and titles;
£0.5 million finance function restructuring costs; £12.7 million of costs
associated with the implementation of the Group's strategic and cost reduction
plans, including £6.2 million of severance costs which have been partially
offset by Maxwell related receipts of £5.6 million and £1.4 million settlement
relating to circulation issues in Birmingham. The ongoing implementation of the
strategic and cost saving plans are anticipated to result in a further £10.0
million of related implementation costs during this current year.
The strategic and cost reduction plans gave rise to an estimated £32.8 million
of gross savings in 2002, estimated to rise to at least £42.0 million in 2003.
These savings are stated before the £22.7 million incremental reinvestment in
product, editorial and marketing activity to ensure the Group's newspapers
retain their competitive position and brand strength and the implementation of
the various strategies of the Group's businesses. These savings are in addition
to the increase in benefits arising from the merger of Trinity plc and Mirror
Group plc in September 1999 (£13.7 million), the synergy savings arising from
the acquisition of Southnews (£6.1 million) and the reduced level of gross
investment in digital media activities (£15.9 million).
Profit before tax and exceptional items, was £155.5 million (2001: £152.6
million).
Tax charge for 2002 of £45.2 million incorporates a charge of £47.0 million on
profit before tax and exceptional items of £155.5 million representing an
underlying rate of 30.2%.
Underlying earnings per share, before exceptional items, were 37.1p (2001:
36.5p) an increase of 1.6%.
Dividends - subject to the approval of the shareholders at the Annual General
Meeting, the directors propose a final dividend of 12.3p per share to be paid on
4 June 2003 to shareholders on the register at 9 May 2003. This will bring the
full year dividend to 17.6p per share, retaining the dividend at the 2001 level.
The dividend is covered 2.1 times by pre exceptional earnings and will be
fully funded from operating cash flow. The Group's dividend strategy takes into
account the Group's operating results, the investment required for delivering
its corporate strategy, its financing requirements and the policy to retain the
dividend at a level where it is covered more than twice by earnings.
Net assets of the Group at 29 December 2002 were £1,140.2 million. This
includes the total carrying value of the Group's acquired publishing and
newspaper titles of £1,716.2 million, goodwill of £8.3 million, tangible fixed
assets of £389.9 million, net debt of £666.1 million and the FRS 17 pension
deficit of £163.1 million. The FRS 17 pension deficit has increased from £25.9
million to £163.1 million during the year, reflecting general market conditions
and in particular the fall in equities during the year.
Cash flow from operating activities during 2002 (after exceptional items)
increased by £14.1 million to £219.0 million. This primarily reflects the
improved operating cash flows and improved working capital. Other principal
cash outflows in 2002 related to £45.1 million interest and dividends to
minority shareholders (2001: £50.2 million), lower than 2001 due to lower
interest rates and debt levels, tax paid of £39.2 million (2001: £40.1 million),
net capital expenditure of £43.2 million (2002: £28.0 million) and the £51.3
million payment of equity dividends (2001: £51.1 million). With the exception
of £17.5 million cash inflow from disposals and £9.5 million received from
associates, there were no material cash inflows other than from operating
activities.
Net debt at 29 December 2002 was £666.1 million (net of £40.0 million of cash
and £23.8 million of bank overdrafts) compared to £735.0 million at 30 December
2001.
Capital expenditure in 2002 was £43.2 million (net) (2001: £28.0 million)
against a depreciation charge of £43.1 million (2001: £43.4 million). The
capital expenditure included a further £22.5 million in respect of the regional
press replacement project (total expenditure between 2002 and 2004 is estimated
to be approximately £90.0 million). Planned capital expenditure for 2003 is
approximately £84.0 million, including £54.0 million in respect of the press
replacement project. All capital expenditure is to be financed from operating
cash flows.
Funding and liquidity - at 29 December 2002 committed facilities of £909.6
million were available to the Group, of which £204.4 million were undrawn. The
committed facilities include a £369.0 million syndicated bank facility, US$
647.7 million and £32.0 million unsecured loan notes (representing the total
obligations under a series of fixed rate, differing maturity private placement
US dollar and sterling loan notes respectively and £6 million floating rate
private placement loan notes), obligations under finance leases of £40.3 million
and £28.0 million of acquisition loan notes.
Consolidated profit and loss account
for the 52 weeks ended 29 December 2002 (52 weeks ended 30 December 2001)
Before Before
exceptional ExceptionaI Total exceptional Exceptional Total
items Items 2002 items items 2001
(restated) (restated)
£m £m £m £m £m £m
Turnover 1,092.2 - 1,092.2 1,131.1 - 1,131.1
Group operating profit 191.0 (131.2) 59.8 190.5 (168.0) 22.5
Share of results of 1.4 0.1 1.5 0.3 - 0.3
associated undertakings
Total operating profit 192.4 (131.1) 61.3 190.8 (168.0) 22.8
Profit on disposal of - 1.7 1.7 - - -
magazine titles
Profit on disposal of
subsidiary/associated
undertakings - 0.1 0.1 - 1.2 1.2
Profit on ordinary activities 192.4 (129.3) 63.1 190.8 (166.8) 24.0
before interest
Net interest payable (43.0) - (43.0) (49.2) - (49.2)
Other finance income 6.1 - 6.1 11.0 - 11.0
Profit/(loss) on ordinary
activities before taxation 155.5 (129.3) 26.2 152.6 (166.8) (14.2)
Tax on profit/(loss) on (47.0) 1.8 (45.2) (46.3) 5.2 (41.1)
ordinary activities
Profit/(loss) on ordinary
activities after taxation 108.5 (127.5) (19.0) 106.3 (161.6) (55.3)
Non equity minority interest (0.3) - (0.3) (0.3) - (0.3)
Profit/(loss) for the 108.2 (127.5) (19.3) 106.0 (161.6) (55.6)
financial year
Ordinary dividends on equity (51.4) (51.2)
shares
Retained loss for the (70.7) (106.8)
financial year
Earnings per share (pence)
Before digital media 38.9 42.1
activities
Digital media activities (1.8) (5.6)
Underlying earnings per share 37.1 36.5
Exceptional items (43.7) (55.6)
Loss per share - basic (6.6) (19.1)
Loss per share - diluted (6.6) (19.1)
All turnover and results arose from continuing operations.
The consolidated profit and loss account for the 52 weeks to 30 December 2001
has been restated for the adoption of FRS 17 (see note 9).
Consolidated statement of total recognised gains and losses
for the 52 weeks ended 29 December 2002 (52 weeks ended 30 December 2001)
2002 2001
(restated)
£m £m
Loss for the financial year (19.3) (55.6)
Difference between actual and expected return on pension schemes' (170.6) (145.1)
assets
Experience (losses)/gains arising on pension schemes' liabilities (11.1) 20.6
Effects of changes in assumptions underlying the present value of
pension schemes' liabilities (12.4) (22.8)
Deferred tax asset associated with movement on pension
schemes' deficits 58.3 44.2
Total recognised gains and losses in the year (155.1) (158.7)
Total recognised gains and losses related to the year (155.1)
above
Prior period adjustments (note 9) (17.1)
Total gains and losses recognised since the last annual (172.2)
report
The consolidated statement of total recognised gains and losses for the 52 weeks
to 30 December 2001 has been restated for the adoption of FRS 17 (see note 9).
Consolidated balance sheet
at 29 December 2002 (30 December 2001)
2002 2001
(restated)
£m £m
Fixed assets
Intangible assets 1,724.5 1,866.9
Tangible assets 389.9 389.7
Investments 10.1 17.9
2,124.5 2,274.5
Current assets
Stocks 7.3 8.7
Debtors 152.6 153.9
Cash at bank and in hand 40.0 43.5
199.9 206.1
Creditors: amounts falling due within one year
Bank loans, loan notes and overdrafts (66.7) (119.3)
Obligations under finance leases (4.9) (6.3)
Other creditors (243.8) (257.8)
(315.4) (383.4)
Net current liabilities (115.5) (177.3)
Total assets less current liabilities 2,009.0 2,097.2
Creditors: amounts falling due after more than one year
Bank loans and loan notes (599.1) (613.7)
Obligations under finance leases (35.4) (39.2)
(634.5) (652.9)
Provisions for liabilities and charges (67.5) (69.7)
Non equity minority interest (3.7) (3.7)
Net assets excluding pension schemes' (liabilities)/assets 1,303.3 1,370.9
Pension schemes' assets - 28.8
Pension schemes' liabilities (163.1) (54.7)
Net assets including pension schemes' (liabilities)/assets 1,140.2 1,345.0
Equity capital and reserves
Called up share capital 29.2 29.1
Share premium account 1,080.6 1,078.7
Revaluation reserve 5.0 5.0
Profit and loss account 25.4 232.2
Equity shareholders' funds 1,140.2 1,345.0
The consolidated balance sheet as at 30 December 2001 has been restated for the
adoption of FRS 17 (see note 9).
Consolidated cash flow statement
for the 52 weeks ended 29 December 2002 (52 weeks ended 30 December 2001)
2002 2001
(restated)
£m £m
Net cash inflow from operating activities 219.0 204.9
Dividends received from associated undertakings 9.5 2.6
Interest received from associated undertakings - 0.4
Net cash outflow from returns on investments and servicing of (45.1) (50.2)
finance
Taxation paid (39.2) (40.1)
Net cash outflow from capital expenditure and financial (43.2) (28.0)
investment
Net cash inflow/(outflow) from acquisitions and disposals 17.5 (6.8)
Dividends paid (51.3) (51.1)
Net cash inflow before financing 67.2 31.7
Net cash outflow from financing (85.3) (30.6)
(Decrease)/increase in cash (18.1) 1.1
The comparative figures for the 52 weeks to 30 December 2001 have been restated
to reclassify the dividend paid to non-equity minority interest shareholders
(£0.3 million) within returns on investments and servicing of finance. This was
previously reported within dividends paid.
Reconciliation of net cash flow to movement in net debt
for the 52 weeks ended 29 December 2002 (52 weeks ended 30 December 2001)
2002 2001
£m £m
(Decrease)/increase in cash in the year (18.1) 1.1
Cash outflow from movement in debt and leasing finance 87.0 34.5
Change in net debt resulting from cash flows 68.9 35.6
New finance leases - (2.4)
Movement in net debt in the year 68.9 33.2
Net debt at 31 December 2001 (735.0) (768.2)
Net debt at 29 December 2002 (666.1) (735.0)
Analysis of net debt
for the 52 weeks ended 29 December 2002 (52 weeks ended 30 December 2001)
At 31 Loans Loans and Other At 29
December Cash flow repaid loan notes non-cash December
2001 issued changes 2002
£m £m £m £m £m £m
Cash at bank and in hand 43.5 (3.5) - - - 40.0
Bank overdrafts (9.2) (14.6) - - - (23.8)
Net cash balances 34.3 (18.1) - - - 16.2
Debt due within one year (110.1) 82.1 - - (14.9) (42.9)
Debt due after one year (613.7) (0.3) 325.1 (325.1) 14.9 (599.1)
Finance leases (45.5) 5.2 - - - (40.3)
Bank loans, loan notes and finance (769.3) 87.0 325.1 (325.1) - (682.3)
leases
Net debt (735.0) 68.9 325.1 (325.1) - (666.1)
Non cash movements
During the year, the Group entered into finance lease arrangements with a total
capital value at the inception of the leases of £nil million (2001: £2.4
million).
Notes to the 2002 preliminary statement
1. Change in accounting policies
The only change to the Group's accounting policies during the 52 weeks to 29
December 2002 was in respect of the full adoption of financial reporting
standard FRS 17, Retirement Benefits.
The consolidated profit and loss account, consolidated statement of total
recognised gains and losses, balance sheets and reconciliation of movements in
consolidated shareholders' funds have been amended to reflect the adoption of
FRS 17. The prior period figures have been restated to reflect the removal of
the pension costs, prepayment and provisions under SSAP 24 and to include the
cost, liability and asset position under FRS 17. There is no impact on the cash
flow due to the adoption of FRS 17.
Under FRS 17, pension schemes are measured using fair values. Pension scheme
liabilities are measured using the projected unit method and discounted at the
current rate of return on a high quality corporate bond of equivalent term to
the liability. Each pension scheme surplus (to the extent that it is
recoverable) or deficit is recognised in full, net of deferred tax, and
presented on the face of the balance sheet. The movement in the scheme surplus/
deficit is split between operating and financing items in the consolidated
profit and loss account and the consolidated statement of total recognised gains
and losses.
2. Turnover
2002 2001
£m £m
Regional newspapers* 520.7 530.7
National newspapers 494.0 519.7
Sports newspapers 39.4 34.9
Magazines and exhibitions 31.0 32.5
Digital media 0.7 0.9
Other 6.4 12.4
Group turnover by division 1,092.2 1,131.1
* Regional newspapers includes turnover relating to Post Publications Limited of
£2.6 million (52 weeks to 30 December 2001 £6.9 million) and Ethnic Media Group
Limited of £2.2 million (52 weeks to 30 December 2001 £4.0 million), which were
sold in June 2002. Regional newspapers also includes turnover relating to the
three Metro titles of £9.1 million (52 weeks to 30 December 2001 £8.3 million).
3. Group operating profit
The analysis of the Group's operating profit (before exceptional items) is as
follows:
2002 2001
(restated)
£m £m
Regional newspapers* 120.5 115.7
National newspapers 77.6 95.2
Sports newspapers 11.8 8.2
Magazines and exhibitions 5.3 5.4
Digital media (7.6) (23.5)
Other 0.2 3.9
Central costs (16.8) (14.4)
Group operating profit by division 191.0 190.5
* Regional newspapers includes losses relating to Post Publications Limited of
£0.1 million (52 weeks to 30 December 2001 £0.2 million) and profits relating to
Ethnic Media Group Limited of £0.5 million (52 weeks to 30 December 2001 £0.8
million), which were sold in June 2002. Regional newspapers also includes
losses relating to the three Metro titles of £1.5 million (52 weeks to 30
December 2001 £4.5 million).
The comparatives for the 52 weeks to 30 December 2001 have been restated to
reflect the separate disclosure of Central costs. This change in presentation
has no impact on Group operating profit in 2001 or 2002.
The prior period figures have been restated to reflect the adoption of FRS 17
(see note 9).
4. Exceptional items
2002 2001
£m £m
Operating exceptional items
Impairment of carrying value of publishing rights and titles (a) 125.0 150.0
Restructuring costs (b) 13.2 20.0
Maxwell related recoveries (c) (5.6) -
Recovery from Maxwell Works Pensions Scheme (d) - (2.0)
Birmingham circulation issue receipt (e) (1.4) -
Group exceptional items charged against Group operating profit 131.2 168.0
Share of exceptional items of associated undertakings (f) (0.1) -
Total exceptional items charged against operating profit 131.1 168.0
Profit on sale of magazine titles (g) (1.7) -
Profit on sale of subsidiary undertakings (h) (0.1) -
Profit on sale of investment in associated undertakings (i) - (1.2)
Net exceptional items before taxation 129.3 166.8
a) The annual impairment review of the carrying value of the Group's
publishing rights and titles, undertaken in accordance with FRS 10, has
indicated that an impairment charge of £125.0 million (2001: £150.0 million) was
required. The impairment charge reduces the carrying value of the publishing
rights and titles of the Regional titles in the Midlands, to the net present
value of future cash flows to be derived from these assets, discounted at 7.5%
(2001: 7.3%). In 2001 the impairment charge of £100 million related to the
National titles and £50.0 million related to the Regional titles.
b) Restructuring costs of £13.2 million (2001: £20.0 million) relate primarily
to costs incurred in the formulation and implementation of strategic and profit
improvement plans, including cost reduction measures, amounting to £12.7 million
(2001: £12.3 million) and ongoing restructuring of the Group's finance systems
of £0.5 million (2001: £3.1 million).
c) In 2002, the Group recovered £5.6 million from the liquidators of Maxwell
related companies for claims outstanding since 1992.
d) In 1992, Mirror Group loaned the Trustees of the Maxwell Works Pension
Scheme sufficient money to pay the benefits due under that scheme. Mirror Group
was the principal company under the scheme's trust. The terms of the loan
specified that it would only be repaid when the scheme had settled all of its
debts, including monies owed to the government. Mirror Group wrote off the loan
in 1992. In December 2001, a repayment of £2.0 million was made by the scheme.
e) During the year, the Group received compensation of £1.4 million (net of
costs) in relation to outstanding issues following the identification of errors
in the circulation for the Birmingham titles in 1999.
f) During the year, Press Association, an associated undertaking, disposed
of a property, the Group share of the profit being £0.1 million.
g) In December 2002, the Group disposed of three biker magazines for a cash
consideration of £1.8 million realising a profit of £1.7 million. The results
of the magazines to the date of disposal have been included in continuing
operations. Tax has been charged in respect of this disposal of £0.2 million
based on a chargeable gain of £0.8 million.
h) In June 2002, the Group disposed of Post Publications Limited for cash
consideration of £6.5 million, realising a loss of £0.3 million and Ethnic Media
Group Limited for total consideration of £10.2 million, of which £9.2 million
was paid in cash and £1.0 million is deferred for two years, realising a profit
of £0.4 million. The results of the companies to the date of disposal have been
included in continuing operations. No tax liability arises on these disposals.
i) In August 2001, the Group sold its investment in Reed Aviation, realising
a profit on disposal of £0.5 million. In October 2001, the Group disposed of
its investment in PA Sporting Life, realising a profit for the Group of £0.7
million. No material tax liability arose on these disposals.
5. Tax on profit on ordinary activities
2002 2001
(restated)
£m £m
Profit before tax on ordinary activities before exceptional items 155.5 152.6
Corporation Tax
Corporation tax charge for the year 45.5 40.5
Prior year adjustment 0.6 (1.8)
Total current tax charge 46.1 38.7
Deferred Tax
Deferred tax charge for the year 2.9 3.3
Prior year adjustment (2.0) 4.3
Total deferred tax 0.9 7.6
Total tax on profit on ordinary activities before exceptional items 47.0 46.3
Exceptional:
UK corporation tax on exceptional items (1.8) (5.2)
Tax on profit/(loss) on ordinary activities 45.2 41.1
Included within the deferred tax charge for the year is an FRS 17 credit of £0.6
million. Within the prior year deferred tax adjustment in 2002 is a credit of
£0.5 million in relation to the Press Association's restatement of comparative
years due to the adoption of FRS 19.
The prior period figures have been restated for the adoption of FRS 17(see note
9).
6. Earnings per share
Earnings per share are based on the profit or loss on ordinary activities after
taxation. They are calculated using the weighted average number of shares in
issue (basic) increased by the number of share options in issue (diluted) as
shown below.
2002 2001
No. of No. of
shares shares
Basic (millions) 291.6 290.6
Diluted (millions) 291.9 291.0
7. Sale of operations and magazine titles
The Group disposed of its subsidiary undertakings, Post Publications Limited and
Ethnic Media Group Limited in June 2002 and three biker magazines in December
2002. The results of the companies and the biker magazines up to the date of
disposal have been included within continuing operations.
Post Publications Ethnic Media Group Sale of Total
Limited Limited Magazine titles 2002
Net assets disposed of: £m £m £m £m
Intangible fixed assets 5.0 9.1 - 14.1
Tangible fixed assets 0.4 0.2 - 0.6
Current assets 2.7 0.8 - 3.5
Creditors falling due within one year (1.4) (0.6) - (2.0)
6.7 9.5 - 16.2
Costs of disposal 0.1 0.3 0.1 0.5
(Loss)/profit on disposal (0.3) 0.4 1.7 1.8
6.5 10.2 1.8 18.5
Satisfied by:
Cash 6.5 9.2 1.8 17.5
Deferred consideration - 1.0 - 1.0
6.5 10.2 1.8 18.5
Analysis of the net cash inflow in
respect of the disposals of subsidiary
undertakings and magazine titles:
Cash consideration 6.5 9.2 1.8 17.5
8. Pensions
The Group operates a number of funded final salary pension schemes including two
executive arrangements, all of which have been set up under Trusts that hold
their financial assets separately from those of the Group.
Valuations have been performed in accordance with the requirements of FRS 17 as
at 29 December 2002.
Scheme liabilities have been calculated using a consistent projected unit
valuation method and compared to the schemes' assets at the 29 December 2002
market value as below:
Total as at Total as at Total as at
29 December 30 December 31 December
2002 2001 2000
£m £m £m
Fair value of schemes' assets 872.8 999.9 1,089.8
Actuarial value of schemes' (1,105.8) (1,036.9) (982.6)
liabilities
Schemes' (deficits)/surpluses (233.0) (37.0) 107.2
Deferred tax 69.9 11.1 (32.2)
Net schemes' (liabilities)/ (163.1) (25.9) 75.0
assets
9. Restatement of comparatives
The adoption of FRS 17, Retirement Benefits, has required full disclosure of the
fair value of assets and liabilities arising from retirement benefit obligations
and any related funding. Operating costs relating to salaries are recognised in
the accounting period in which they are incurred and, in addition, the gains,
losses, assets and liabilities arising from the provisions discussed above are
disclosed.
As a result of these changes in accounting policy, the comparatives have been
restated as follows:
a) Consolidated balance sheet
Debtors and Provisions Pension Pension Shareholders'
prepayments for scheme scheme funds
liabilities assets liabilities
and charges
£m £m £m £m £m
30 December 2001
As previously reported 172.9 (97.5) - - 1,362.1
Reversal of SSAP 24 (i) (19.0) 32.8 - - 13.8
Adoption of FRS17 (ii) - - 28.8 (54.7) (25.9)
Taxation - (5.0) - - (5.0)
As restated 153.9 (69.7) 28.8 (54.7) 1,345.0
i) Under SSAP 24 any surplus or liability in a pension scheme was amortised
over the remaining service lives of the employees.
ii) The net fall in opening shareholders' funds at 30 December 2001 of £17.1
million reflects the impact of changing to FRS 17 from SSAP 24 at that date.
b) Consolidated profit and loss account
Other finance income Net operating expenses Taxation
after
exceptional items
52 weeks ended 30 December 2001 £m £m £m
As previously reported - (1,094.7) (41.4)
Adoption of FRS 17 (i) 11.0 (13.9) 0.3
As restated 11.0 (1,108.6) (41.1)
i) The net decrease in profit attributable to shareholders for the 52 weeks
to 30 December 2001 of £2.6 million relates to the full service cost of the
pension provision to be charged to operating profit and the net impact of the
unwinding of the discount rate on scheme liabilities and the expected return of
the scheme assets to be charged/credited to other finance costs, in comparison
to the amortisation over the remaining service lives of the employees of any
SSAP 24 surpluses or deficits.
The impact of the adoption of FRS 17 on the 2002 results (profit after tax)
amounted to a charge of £5.4 million (2001: £2.6 million).
c) Earnings per share
Earnings per share
(pence)
Underlying earnings per share before
digital media activities - as previously reported 43.0
Effect of implementation of FRS17 (0.9)
Underlying earnings per share before
digital media activities - as restated 42.1
Digital media activities (5.6)
Underlying earnings per share - as restated 36.5
Exceptional items (55.6)
Basic loss per share - as restated (19.1)
Diluted loss per share - as previously reported (18.2)
Effect of implementation of FRS 17 (0.9)
Diluted loss per share - as restated (19.1)
10. Issue of Annual Report and Accounts
The 2002 Annual Report and Accounts will be posted to shareholders on 18 March
2003. Copies may be obtained after 18 March 2003 from the Company Secretary,
Trinity Mirror plc at One Canada Square, Canary Wharf, London, E14 5AP.
The financial information set out above does not constitute the Company's
statutory accounts for the periods ended 29 December 2002 or 30 December 2001,
but is derived from those accounts. Statutory accounts for 2001 have been
delivered to the Registrar of Companies and those for the period ended 29
December 2002 will be delivered following the Company's Annual General Meeting.
The auditors have reported on those accounts; their reports were unqualified and
did not contain statements under section 237(2) or (3) of the Companies Act
1985.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 31st May 2024
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