Interim Results
Trinity Mirror PLC
31 July 2002
31st July 2002
Trinity Mirror plc
2002 Interim Results
Trinity Mirror plc, the UK's largest newspaper publisher, announces the Group's
interim results for the 26 weeks ended 30th June 2002.
The results are stated after the adoption in 2002 of FRS 17 'Retirement benefits'
and all comparatives have been restated accordingly
Financial highlights
2002 2001 change
£m £m %
restated
Turnover
- Actual 559.6 581.4 -3.7%
- Like-for-like (1) 554.8 575.6 -3.6%
Group operating profit (2)
- Actual 96.3 101.1 -4.7%
- Like-for-like (1) 95.9 100.5 -4.6%
Profit before tax (3) 78.4 80.6 -2.7%
Earnings per share (3) 18.4p 19.4p -5.2%
Dividend per share 5.3p 5.3p -
(1) Adjusted to exclude the results of Post Publications Limited and Ethnic
Media Group Limited which were disposed of in June 2002 (the 'disposed
businesses')
(2) Excludes operating exceptional items of £6.4 million pre tax (2001: £7.6
million)
(3) Excludes net exceptional items of £6.3 million pre tax (2001: £7.6
million)
Operational highlights
• Implementation of 'from Biggest to Best' strategy and cost reduction plans
in regional newspaper operations delivering ahead of expectations
- realisation of £6.5 million structural cost benefits and £6.6 million
revenue enhancements in the period.
• Invested incremental £6.5 million in implementation of integrated marketing
strategy for Mirror titles, including the impact of cover price cuts.
• Delivered £14.6 million from cost saving initiatives across the Group - on
target to achieve £32 million in the full year.
• Sale of Sunday Business Post and Ethnic Media Group for £6.5 million and
£10.2 million respectively.
Sir Victor Blank, Chairman of Trinity Mirror plc, commented:
'In the first six months of the year, against a backdrop of difficult economic
conditions, we have further demonstrated the strength of our businesses.
The regional newspapers' 'from Biggest to Best' strategy continues to exceed
expectations and management has identified further benefits beyond those
originally planned. Our national strategy still in its early stages is
progressing as expected with the improvements in the quality of our main titles,
and strengthening of our brand and promotional activity to increase readership.
In Scotland, the advertising improvement strategy of the Daily Record is already
delivering positive results. Our business also remains highly cash generative in
these tough markets.
The immediate future of the marketplace remains uncertain. However, we continue
the successful implementation of the Group's strategy and this underpins the
Board's expectation of a satisfactory outcome for the year.'
An interview with Philip Graf, Chief Executive, on Trinity Mirror's results and
the financial results presentation will be available on Trinity Mirror's website
at http://www.trinity-mirror.co.uk/interview0702 and
http://www.trinity-mirror.co.uk/interimresults02 respectively .
Enquiries:
Trinity Mirror plc 020 7293 3000
Philip Graf, Chief Executive
Nick Fullagar, Director of Corporate Communications
Finsbury 020 7251 3801
Rupert Younger
James Leviton
31st July 2002
Trinity Mirror plc
Interim Results for the 26 weeks ended 30th June 2002
The results are stated after the adoption in 2002 of FRS 17 'Retirement
benefits' and all comparatives have been restated accordingly
Chairman's Statement
Financial highlights(4)
2002 2001 Change
£m £m %
restated
Turnover
- Actual 559.6 581.4 -3.7%
- Like-for-like (1) 554.8 575.6 -3.6%
Group operating profit (2)
- Actual 96.3 101.1 -4.7%
- Like-for-like (1) 95.9 100.5 -4.6%
Profit before tax (3) 78.4 80.6 -2.7%
Earnings per share (3) 18.4p 19.4p -5.2%
Dividend per share 5.3p 5.3p -
(1) Adjusted to exclude the results of Post Publications Limited and Ethnic
Media Group Limited which were disposed of in June 2002 (the 'disposed
businesses').
(2) Excludes operating exceptional items of £6.4 million pre tax (2001: £7.6
million)
(3) Excludes net exceptional items of £6.3 million pre tax (2001: £7.6
million)
(4) Accounting policies used in the preparation of the unaudited financial
information for the 26 weeks ended 30th June 2002 are consistent with those
set out in the Group's financial statements for the 52 weeks ended
30th December 2001, as amended by the adoption this year of financial
reporting standard, FRS 17: 'Retirement Benefits'. FRS 17 requires the full
service cost of pension provision to be charged to operating profit and
results in a charge to operating profit for the 26 week period to 30th June
2002 of £12.8 million (2001: £11.0 million), an increase of £7.0 million
(2001 : £5.7 million) over the previous SSAP 24 charge. The adoption of
FRS 17 has required the restatement of the profit and loss account, balance
sheet, statement of total recognised gains and losses, reconciliation of
movements in consolidated shareholders' funds and associated notes for the
26 weeks ended 1st July 2001 and the 52 weeks ended 30th December 2001.
Notes 8 and 11 to the unaudited interim financial statements summarise the
implications of the adoption of FRS 17. There is no impact on the Group's
underlying operations.
Within the following financial summary and the review of operations, all figures
are presented on a 'like-for-like' basis unless otherwise stated.
Financial Summary
Group revenue decreased by 3.6% to £554.8 million (2001: £575.6 million),
reflecting a fall of 4.0% in advertising revenue to £312.9 million, a 1.3%
decline in circulation revenue to £191.1 million, (including £7.5 million
reduction in respect of the Daily Mirror cover price discount compared to £3.6
million in 2001) and a 9.3% decline in other revenue to £50.8 million (2001:
£56.0 million).
Group operating profit before exceptional items decreased by 4.6% to £95.9
million (2001: restated £100.5 million). The £8.7 million incremental
investment in marketing, editorial and product support of the Group's titles and
the £20.8 million fall in revenue have been partially offset by cost savings of
£14.6 million and £10.3 million reduced net investment in digital media
activities. The Group remains on track to deliver targeted cost savings of £32
million in the full year.
Profit before tax (including disposed businesses) and before exceptional items
declined by 2.7% to £78.4 million. This decline reflects the reduction in
operating profit of 4.6% partially offset by a £1.9 million reduction in
financing costs (net interest payable and other finance income).
Operating exceptional items of £6.4 million have been incurred during the 26
week period, primarily in respect of the ongoing implementation of the Group's
strategies and cost reduction plans. It is anticipated that a further £9
million will be incurred during the second half of the year.
Earnings per share (including disposed businesses) before exceptional items
decreased by 5.2% from 19.4p (restated) to 18.4p, reflecting both the decline in
profit before tax and the increase in the estimated effective tax rate from
30.0% in 2001 to 31.3% in 2002.
The interim dividend is being held at the same level as the 2001 interim
dividend, 5.3p. It will be paid on 31 October 2002 to shareholders on the
register at 4 October 2002.
Strong operating cash flow of £101.0 million (2001: £88.9 million) contributed
to net debt falling by £31.1 million from £735.0 million at 30th December 2001
to £703.9 million at 30th June 2002.
Net assets at 30th June 2002 were £1,323.8 million (2001: restated £1,345.0
million), supported by intangible fixed assets of £1,849.8 million (2001:
£1,866.9 million). Included within net assets is a net pension fund deficit of
£84.1 million (2001: £25.9 million), as required to be recorded under FRS 17.
The increase in the net pension fund deficit of £58.2 million has been offset
against the accumulated profit and loss reserve.
Review of Operations
Regional newspapers and digital media
The turnover and operating profit of the Group's regional newspapers and Metros,
excluding digital media, is as follows:-
2002 2001 Change Margin Margin
£m £m % 2002 2001
restated
Turnover
Regionals excluding Metros 258.1 263.5 -2.0%
Metros 4.4 4.1 7.3%
Regionals including Metros 262.5 267.6 -1.9%
Operating profit
Regionals excluding Metros 63.5 64.2 -1.1% 24.6% 24.4%
Metros (1.1) (2.4) 54.2%
Regionals including Metros 62.4 61.8 1.0% 23.8% 23.1%
During the past six months, significant progress has been made in implementing
the 'from Biggest to Best' strategy for the regional newspaper division. The
pace and achievement of the strategy to date are extremely encouraging, with
significant change and innovative projects being undertaken in each of the
regional businesses, with a high level of commitment across the business. As
the change programme is implemented, it has become clear that the potential
performance improvement opportunities are greater than first identified and can
be achieved at a faster pace.
Key performance indicators have been established across a broad range of
measures and are being used to increase the efficiency and effectiveness of all
functions, including pre-press, advertising sales, editorial, administration,
etc. Processes are being scrutinised in detail, business by business, to ensure
that best practice performance is achieved in all operations.
Significant effort has been directed to the short to medium term performance
based activities. At the same time, we have been investing to secure the long
term health of revenues. The division continues to pursue the other three
elements of the from Biggest to Best strategy - scale, excellence and growth.
For example, we have invested in brand and readership research and have
developed the advertising best practice model. Several other key projects -
best practice in editorial and standardised advertising classification - have
already been completed. Although it is early days this work will drive our goal
of achieving industry leading performance by 2005.
The Group has continued to invest in the regional operations (in the form of
capital projects, particularly the press replacement programme and product and
promotional support, including the relaunch of the Birmingham Evening Mail).
Losses at the Metro titles have been halved mainly due to the increase in
advertising revenues.
Businesses in the North East, North West, Cardiff and Ireland have achieved
robust performances. Trading has been more difficult in the Midlands and a very
difficult trading environment experienced in London and the South East during
the latter part of 2001 has continued into 2002. Overall advertising revenues,
excluding those of the three Metro titles is down 2.5% on last year. However,
offsetting this, the continued implementation of the strategy will ensure that
exposure to profit downturn during this current economic cycle is minimised, and
the businesses are leaner and fitter to benefit from an economic recovery.
Advertising
Advertising revenues within the regional newspaper operations declined 2.2% to
£202.9 million (2001: £207.5 million). Excluding Metros, advertising revenue
declined by 2.5%. Outside London and the South East where advertising revenue
fell by 12.6%, the division (excluding Metros) achieved growth of 1.8%.
Excluding the Metros, recruitment advertising was the key driver of the decline
in advertising revenues, with a 5.4% (£3.6 million) fall to £63.3 million in the
period, again influenced by a 23.7% decline in the South East compared to 2.9%
growth throughout the rest of the division. In the first quarter, the division
saw a decline of 8.8% in recruitment advertising revenue (compared to 17.7%
growth in the same period in 2001), with a decline of 1.7% in the second quarter
(2001: increase of 14.5%). Property advertising revenue also declined by 3.4%,
motors 3.1% and display 1.5%. These declines were partially mitigated by a 2.7%
increase (£0.9 million) in 'other' classified advertising.
Circulation
Circulation revenue of the regional newspapers remained stable at £41.2 million
(2001: £41.3 million), as cover price increases applied to certain titles offset
volume declines. The Group's titles remain amongst the highest 'actively
purchased' within the regional newspaper industry. The division is in the midst
of prioritising improvement of its circulation performance, including
undertaking the UK regional press's largest readership research project
involving 34,000 one-to-one interviews during the period January to November.
Digital Media
Digital media operations achieved revenue of £0.3 million (2001: £0.6 million)
and a loss of £4.4 million (2001: £14.7 million, including the costs of the
central portals, closed from March 2001).
Disposals
As part of our strategy to divest non-core assets, the Group completed the
disposals of Post Publications Limited (the Sunday Business Post) and Ethnic
Media Group Limited for considerations of £6.5 million and £10.2 million
(including £1 million deferred consideration, receivable in June 2004)
respectively. During the 26 week period to 30 June 2002, the Sunday Business
Post contributed £2.6 million revenue (2001: £3.9 million) and a net loss of
£0.1 million (2001: profit £0.2 million) and Ethnic Media Group contributed £2.2
million revenue (2001: £1.9 million) and an operating profit of £0.5 million
(2001: £0.4 million) to the results of the regional newspaper division.
National newspapers
The turnover and operating profit of the Group's national newspapers is as
follows:-
2002 2001 Change Margin Margin
£m £m % 2002 2001
restated
Turnover 249.7 262.9 -5.0%
Operating profit 26.7 42.9 -37.8% 10.7% 16.3%
The fall in the national newspapers operating profit is a reflection of a
difficult advertising environment, which saw a 8.4% decline in advertising
revenues, and the impact of £7.6 million additional investment in editorial,
marketing and product support of the strategies for the UK and Scottish national
titles.
Research undertaken last year clearly indicated that there was an opportunity,
over the medium to long term, to increase frequency of purchase amongst existing
Daily Mirror readers and to improve the title's share of young people entering
the tabloid market.
An integrated marketing strategy, developed for the two Mirror titles, has been
designed to sharpen the Mirror brand image and, over time, achieve a change in
readers' habits. As announced in February, an incremental £20 million is to be
invested this year (plus a reallocation of annual marketing spend, including the
withdrawal from bulk sales) in the marketing, product and editorial support of
the Mirror titles' strategy.
The relaunch of the Daily Mirror brand commenced in April. This included
changing the masthead, a brand campaign, product changes and strengthening the
editorial team. Early research on the product changes and the branding campaign
are extremely positive.
The brand relaunch was followed in May by a national cover price cut - another
component of the strategy - and specific regional price cuts from June. During
the early stages of this strategy, price is being used as a stimulus to get
occasional and infrequent readers to sample the product more often and to build
a readership habit. The results are in line with our expectations. The editorial
repositioning of the Daily Mirror has been widely acclaimed and is reinforced by
the two Newspaper of the Year Awards.
In Scotland, the Daily Record and Sunday Mail's advertising improvement strategy
is delivering positive results. The content of the two newspapers has also been
strengthened with the introduction of new and revised sections aimed at
deepening the appeal to target segments of readership. This activity has been
backed by a strong branding campaign combined with targeted grass roots level
promotional activity designed to increase reader loyalty by re-establishing the
connections with local communities.
Circulation
Circulation revenue of the Group's five national titles (and related businesses)
declined by 3.0% to £134.6 million (2001: £138.8 million) partly due to cover
price discounts of £8.0 million (2001: £4.0 million) which offset the benefit
of cover price increases implemented in 2001.
The Daily Mirror saw a 3.0% year-on-year decline in circulation. Adjusted to
exclude bulk sales (discontinued from 30th April), the decline is 1.9%.
The Sunday Mirror's circulation declined, year-on-year, by 3.9%. Adjusted to
eliminate bulk sales the decline was 2.9%.
Following a restructuring of its editorial team at the beginning of the year,
the Sunday People's circulation decline has slowed to its best rate for four
years - 5.5% (adjusted to eliminate bulk sales the decline was 4.9%).
During the six months to 30th June, the Daily Record and Sunday Mail have
performed broadly in line with expectations. The Daily Record's and the Sunday
Mail's circulation in Scotland declined by 4.5% and 3.5% respectively. The
overall ABC figures for both titles show a higher rate of decline due to the
decision to reduce the level of bulk sales.
Advertising
Despite a significant improvement in advertising revenues during May and June
(with growth of 0.4%) advertising revenues of the national newspaper operations
declined by 8.4%. It has been a difficult six months, particularly for the UK
Nationals.
The three UK national titles experienced a decline of 10.2% for the six months,
reflecting a decline of 15.3% for the first four months (compared to growth of
5.4% in the same period in 2001) offset by a decline of only 1.1% in May and
growth of 1.5% in June. In recent months, an improving trend has been seen in
retail, travel and entertainment advertising, whilst finance, mail order,
telecoms and computing have remained weak.
Advertising revenue declines within the two Scottish national titles and their
related businesses have been limited to only 2.3%. Local advertising revenue has
performed above expectations, reflecting the stronger local advertising market
and the benefits of the implementation of the titles' strategy. National
advertising continues to be more volatile but is showing signs of recovery.
Sports newspapers
The sports division's operating profit increased by 80.0% to £6.3 million (2001:
£3.5 million). This improvement reflects in part the recovery from the foot and
mouth epidemic that negatively impacted the first half of 2001, resulting in a
loss of profit contribution in 2001 of £0.8 million. Advertising revenue has
grown by 35.0% over the same period whilst Racing Post circulation volumes have
improved by 10.1%.
The development of the division's websites, racingpost.co.uk and smartbet.co.uk,
has progressed encouragingly with revenue growth of £0.3m to £0.6 million.
Leading bookmakers have announced turnover growth of approximately 50%, which is
at the upper range of expectation following the abolition of betting duty. The
racing industry has recently secured a licensing contract to replace the betting
levy, expected to result in approximately 100% increase in funding to the
industry. The recent launch of the Attheraces channel will help provide greater
media exposure for the sport. Collectively these industry developments provide
a positive environment for the Group's betting related publications and sites.
Other businesses
The new management appointed at the end of 2001 has continued the progress made
in reshaping and refocusing the magazines and exhibitions business. A major
achievement during the period was the agreement of a new 11 year contract with
the Chartered Institute of Housing for the endorsement of Inside Housing. In
addition the division has expanded The National Boat, Caravan and Leisure Show
following the successful 2002 show and exhibitor demand for more space.
However, advertising revenues, particularly in recruitment, have been tough and
many of the exhibitions and events have come under significant revenue pressure.
During the 26 week period revenue has declined by 4.1% to £18.8 million (2001:
£19.6 million) and operating profit decreased by 13.0% to £4.0 million (2001:
£4.6 million).
Voice Media, the Group's interactive telephone services company, achieved
operating profit of £0.9 million (2001: £2.4 million) despite a fall in revenue
of £4.5 million which is largely attributable to the loss of the This Morning
contract in the second half of 2001. Among its recent successes are viewer
interaction services for Carlton Television's The Vault gameshow.
Communications Bill
The draft Communications Bill is generally neutral with regard to newspapers,
although it has a number of welcome features. We continue to press our case for
a fairer and deregulatory regime.
Board changes
The Board welcomes Mr Ric Piper who joins as Group Finance Director in mid
September.
Mr Piper is currently Group Finance Director at W S Atkins plc, a position he
has held since 1993. A Chartered Accountant, his previous companies have
included ICI, Citicorp and Logica. He is a non-executive director of Synstar plc
and a member of the Urgent Issue Task Force of the Accounting Standards Board.
Outlook
The performance over the last six months reveals the underlying strength of the
Group's operations.
The immediate future of the marketplace remains uncertain. However, we continue
the successful implementation of the Group's strategy and this underpins the
Board's expectation of a satisfactory outcome for the year.
Sir Victor Blank, Chairman
31st July 2002
Trinity Mirror plc
Consolidated profit and loss account (unaudited)
26 weeks to 30 June 2002 26 weeks to 52 weeks to
Before Exceptional After 1 July 30 December
exceptional items exceptional 2001 2001
items (note 4) items (restated) (restated)
notes £m £m £m £m £m
Turnover 2 559.6 - 559.6 581.4 1,131.1
Group operating profit 3 96.3 (6.4) 89.9 93.5 22.5
Share of results of associated undertakings 0.8 - 0.8 0.1 0.3
Total operating profit 97.1 (6.4) 90.7 93.6 22.8
Profit on disposal of subsidiary/associated
undertakings 4 - 0.1 0.1 - 1.2
Profit on ordinary activities before 97.1 (6.3) 90.8 93.6 24.0
interest
Net interest payable (21.4) - (21.4) (25.9) (49.2)
Other finance income 2.7 - 2.7 5.3 11.0
Profit/(loss) on ordinary activities before 78.4 (6.3) 72.1 73.0 (14.2)
taxation
Tax on profit/(loss) on ordinary activities 5 (24.6) 2.0 (22.6) (21.7) (41.1)
Profit/(loss) on ordinary activities after 53.8 (4.3) 49.5 51.3 (55.3)
taxation
Non-equity minority interest (0.1) - (0.1) (0.1) (0.3)
Profit/(loss) for the financial period 53.7 (4.3) 49.4 51.2 (55.6)
Ordinary dividends on equity shares 6 (15.5) (15.4) (51.2)
Retained profit/(loss) for the financial 33.9 35.8 (106.8)
period
Earnings per share (pence) 7
Before digital media activities 19.5 23.0 42.1
Digital media activities (1.1) (3.6) (5.6)
Underlying earnings per share 18.4 19.4 36.5
Exceptional items (1.5) (1.8) (55.6)
Earnings/(loss) per share - basic 16.9 17.6 (19.1)
Earnings/(loss) per share - diluted 16.9 17.6 (19.1)
All turnover and results arose from continuing operations.
Statement of total recognised gains and losses (unaudited)
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
£m £m £m
Profit/(loss) for the financial period 33.9 35.8 (106.8)
Difference between actual and expected return on pension scheme assets (81.0) (90.6) (145.1)
Experience gains arising on pension scheme liabilities - - 20.6
Effects of changes in assumptions underlying the present value of pension
scheme liabilities - 44.4 (22.8)
Deferred tax asset associated with loss on pension asset 24.3 13.9 44.2
Total recognised gains and losses in the period (22.8) 3.5 (209.9)
The statement of total recognised gains and losses for the 26 weeks to 1 July
2001 and 52 weeks to 30 December 2001 has been restated for the adoption of FRS
17 (see note 11).
Consolidated balance sheet (unaudited)
30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
notes £m £m £m
Fixed assets
Intangible assets 1,849.8 2,017.7 1,866.9
Tangible assets 383.9 393.0 389.7
Investments 14.2 15.4 17.9
2,247.9 2,426.1 2,274.5
Stocks 7.2 7.2 8.7
Debtors 167.3 173.7 153.9
Cash at bank and in hand 49.4 49.6 43.5
223.9 230.5 206.1
Creditors: amounts falling due within one year
Bank loans, loan notes and overdrafts (243.5) (134.0) (119.3)
Obligations under finance leases (4.2) (7.0) (6.3)
Other creditors (238.4) (255.5) (257.8)
(486.1) (396.5) (383.4)
Net current liabilities (262.2) (166.0) (177.3)
Total assets less current liabilities 1,985.7 2,260.1 2,097.2
Creditors: amounts falling due after more than one year
Bank loans and loan notes (470.1) (643.4) (613.7)
Obligations under finance leases (35.5) (37.0) (39.2)
(505.6) (680.4) (652.9)
Provisions for liabilities and charges (68.5) (64.2) (69.7)
Non-equity minority interest (3.7) (3.7) (3.7)
Net assets excluding pension (liabilities)/assets 1,407.9 1,511.8 1,370.9
Pension scheme assets 8 16.7 57.0 28.8
Pension scheme liabilities 8 (100.8) (13.0) (54.7)
Net assets including pension (liabilities)/assets 1,323.8 1,555.8 1,345.0
Equity capital and reserves
Called up share capital 29.2 29.0 29.1
Share premium account 1,080.5 1,075.7 1,078.7
Revaluation reserve 5.0 5.0 5.0
Profit and loss account 209.1 446.1 232.2
Equity shareholders' funds 11 1,323.8 1,555.8 1,345.0
Gearing 53.2% 49.6% 54.6%
Consolidated cash flow statement (unaudited)
26 weeks to 26 weeks 52 weeks to
30 June to 1 July 30 December
2002 2001 2001
notes £m £m £m
Net cash inflow from operating activities 9 101.0 88.9 204.9
Dividends received from associated undertakings 4.3 0.7 2.6
Interest received from associated undertakings - - 0.4
Cash inflow from associated undertakings 4.3 0.7 3.0
Returns on investments and servicing of finance
Interest received 0.5 0.5 2.0
Interest paid (25.9) (27.1) (49.8)
Interest element of finance lease rental payments (1.0) (1.2) (2.1)
Net cash outflow from returns on investments and servicing of finance (26.4) (27.8) (49.9)
Taxation paid (13.3) (13.4) (40.1)
Net cash inflow before investing activities 65.6 48.4 117.9
Capital expenditure and financial investment
Purchase of tangible fixed assets (16.6) (10.1) (28.9)
Sale of tangible fixed assets 0.8 - 0.9
Net cash outflow from capital expenditure and financial investment (15.8) (10.1) (28.0)
Net cash inflow before acquisitions and disposals 49.8 38.3 89.9
Acquisitions and disposals
Purchase of subsidiary and associated undertakings - (7.4) (7.4)
Sale of subsidiary/associated undertakings 15.7 - 0.6
Net cash inflow/(outflow) from acquisitions and disposals 15.7 (7.4) (6.8)
Dividends paid (36.0) (35.8) (51.4)
Net cash inflow/(outflow) before financing 29.5 (4.9) 31.7
Financing
Issue of shares 1.6 1.3 3.9
New unsecured loans 181.3 20.0 258.8
Repayment of unsecured loans (211.3) (19.5) (288.7)
Principal payments under finance leases (5.8) (3.7) (4.6)
Net cash (outflow) from financing (34.2) (1.9) (30.6)
(Decrease)/increase in cash 10 (4.7) (6.8) 1.1
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period (4.7) (6.8) 1.1
Cash outflow movement in debt and lease financing 35.8 3.2 34.5
Change in net debt resulting from cash flows 31.1 (3.6) 35.6
New finance leases - - (2.4)
Movement in net debt in the period 31.1 (3.6) 33.2
Opening net debt (735.0) (768.2) (768.2)
Closing net debt (703.9) (771.8) (735.0)
Notes to the financial statements
1. Basis of preparation
The accounting policies used in the preparation of the interim financial
statements for the 26 weeks to 30 June 2002 are as set out in the Group's
financial statements for the 52 weeks to 30 December 2001 as amended by the
adoption in this period of a new financial reporting standard, FRS 17, '
Retirement Benefits'.
The profit and loss account, statement of total recognised gains and losses,
balance sheet 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 market values. Pension scheme
liabilities are measured using a 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 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 profit and loss account and, the statement
of total recognised gains and losses.
2. Turnover
The analysis of the Group's turnover is as follows:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
(restated)
£m £m £m
By geographical destination:
United Kingdom and Republic of Ireland 556.9 578.4 1,126.0
Continental Europe 2.4 2.7 4.7
Rest of the World 0.3 0.3 0.4
559.6 581.4 1,131.1
By type:
Circulation 192.0 194.6 393.7
Advertising 316.6 330.6 634.1
Other 51.0 56.2 103.3
559.6 581.4 1,131.1
By division:
Regional newspapers* 267.3 273.4 530.7
National newspapers 249.7 262.9 519.7
Sports newspapers and websites** 19.7 16.6 34.9
Magazines and exhibitions 18.8 19.6 32.5
Other 3.8 8.3 12.4
Digital media** 0.3 0.6 0.9
559.6 581.4 1,131.1
* Regional newspapers includes turnover relating to Post Publications Limited of
£2.6 million (26 weeks to 1 July 2001 £3.9 million; 52 weeks to 30 December
2001 £6.9 million) and Ethnic Media Group Limited of £2.2 million (26 weeks to 1
July 2001 £1.9 million; 52 weeks to 30 December 2001 £4.0 million), which were
sold on 19 June 2002 and 28 June 2002 respectively. Regional newspapers also
includes turnover relating to the three Metro titles of £4.4 million (26 weeks
to 1 July 2001 £4.1 million; 52 weeks to 30 December 2001 £8.3 million).
**26 weeks to 1 July 2001 has been restated to incorporate revenue of Racing
Post Online (£0.3 million) within sports newspapers and websites. This was
previously reported within digital media and is now aligned to the disclosure
reported in the 2001 annual accounts.
3. Group operating profit
The analysis of the Group's operating profit (before exceptional items) is as
follows:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
By division: £m £m £m
Regional newspapers* 62.8 62.4 113.3
National newspapers 26.7 42.9 81.9
Sports newspapers** 6.3 3.5 8.4
Magazines and exhibitions 4.0 4.6 6.4
Other 0.9 2.4 4.0
Digital media** (4.4) (14.7) (23.5)
96.3 101.1 190.5
* Regional newspapers includes losses relating to Post Publications Limited of
£0.1million (26 weeks to 1 July 2001 profit of £0.2 million; 52 weeks to 30
December 2001 loss of £0.2 million) and profits relating to Ethnic Media Group
Limited of £0.5 million (26 weeks to 1 July 2001 £0.4 million; 52 weeks to 30
December 2001 £0.8 million) which were sold on 19 June 2002 and 28 June 2002
respectively. Regional newspapers also includes losses of £1.1 million (26
weeks to 1 July 2001 £2.4 million; 52 weeks to 30 December 2001 £4.5 million)
relating to the three Metro titles.
**26 weeks to 1 July 2001 has been restated to incorporate the net costs of
Racing Post Online (£0.3 million) within sports newspapers and websites. This
was previously reported within digital media and is now aligned to the
disclosure reported in the 2001 annual accounts.
4. Exceptional items
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 31 December
2002 2001 2001
£m £m £m
Operating exceptional items
Impairment of carrying value of publishing rights and titles (a) - - 150.0
Restructuring costs (b) 6.4 7.6 20.0
Recovery from Maxwell Works Pension Scheme (c) - - (2.0)
Total exceptional items charged against operating profit 6.4 7.6 168.0
Profit on disposal of subsidiary undertakings (d) (0.1) - -
Profit on sale of investment in associated undertakings (e) - - (1.2)
Net exceptional items before taxation 6.3 7.6 166.8
a) An annual impairment review of the carrying value of the Group's publishing
rights and titles, undertaken in accordance with FRS 10, at 30 December
2001, indicated that an impairment charge of £150.0 million was required.
The impairment reduced the carrying value of the former Mirror Group's
publishing rights and titles to the net present value of future cashflows
to be derived from these assets, discounted at 7.3%.
b) Restructuring costs in the 26 weeks to 30 June 2002 relate to the ongoing
restructuring arising from implementation of the Group's strategic plans.
In 2001 (the 26 weeks to 1 July 2001 and 52 weeks to 30 December 2001)
restructuring costs related to the closure of the central digital media
sites and integration of the regional sites with the regional newspaper
businesses, ongoing restructuring of the Group's finance systems and costs
incurred in the formulation and implementation of strategic and profit
improvement plans, including cost reduction measures.
c) In 1992 Mirror Group lent 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 other 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.
d) 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.
e) In August 2001, the Group disposed of 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 on disposal
for the Group of £0.7 million. No material tax liability arose on these
disposals.
5. Tax on profit/(loss) on ordinary activities
26 weeks to 26 weeks 52 weeks to
30 June to 30 December
1 July
2002 2001 2001
(restated) (restated)
£m £m £m
Profit before tax on ordinary activities before exceptional items 78.4 80.6 152.6
Corporation Tax
Corporation tax charge for the period 25.7 23.5 40.5
Prior year adjustment - - (1.8)
Total current tax charge 25.7 23.5 38.7
Deferred Tax
Deferred tax charge for the period (1.1) 0.5 3.3
Prior year adjustment - - 4.3
Total deferred tax (1.1) 0.5 7.6
Total tax on profit on ordinary activities before exceptional items 24.6 24.0 46.3
Exceptional
UK corporation tax on exceptional items (2.0) (2.3) (5.2)
Tax on profit/(loss) on ordinary activities 22.6 21.7 41.1
Reconciliation of current tax charge
The current tax rate for the period is more than the statutory rate of 30%
(2001: statutory rate 30%) for the reasons set out in the following
reconciliation:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
% % %
Standard rate of corporation tax 30.0 30.0 30.0
Permanent items 1.4 (2.5) (2.0)
Depreciation in excess of capital allowances for the period 0.6 2.4 1.0
Deferred tax on short term and other timing differences 0.8 (0.7) (2.5)
Prior year adjustment corporation tax - - (1.1)
Total current tax charge rate 32.8 29.2 25.4
Deferred tax (credit)/charge rate (1.4) 0.6 5.0
Effective rate before exceptional items 31.4 29.8 30.4
The prior period figures have been restated to reflect the adoption of FRS 17.
6. Dividends
The Directors have declared the payment of an interim dividend of 5.3p (2001:
5.3p) per 10p ordinary share to be paid on 31 October 2002 to shareholders on
the register on 4 October 2002. The total dividend in 2001 was 17.6p per 10p
ordinary share.
7. Earnings per ordinary share
The calculation of earnings per share is based on the profit for the financial
period, using the weighted average number of shares in issue (basic) increased
by the number of share options in issue (diluted) as shown below:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
No. of shares No. of No. of
shares shares
Basic (millions) 291.6 290.1 290.6
Diluted (millions) 292.3 291.0 291.0
The implementation of FRS 17 has affected the earnings per ordinary share as
follows:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
Underlying earnings per share before digital media activities
- as previously reported 20.5 23.1 43.0
Effect of implementation of FRS 17 (1.0) (0.1) (0.9)
Underlying earnings per share before digital media activities
- as restated 19.5 23.0 42.1
Digital media activities (1.1) (3.6) (5.6)
Underlying earnings per share - restated 18.4 19.4 36.5
Exceptional items (1.5) (1.8) (55.6)
Basic - as restated 16.9 17.6 (19.1)
Diluted - as previously reported 17.9 17.7 (18.2)
Effect of implementation of FRS 17 (1.0) (0.1) (0.9)
Diluted - as restated 16.9 17.6 (19.1)
8. Pensions
In November 2000 the Accounting Standards Board issued FRS 17, 'Retirement
Benefits', replacing SSAP 24, 'Accounting for Pension Costs'. FRS 17 is fully
effective for periods ending on or after 22 June 2003, however the Group has
adopted FRS 17 in full for the year ending 29 December 2002.
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. In addition, a
number of defined contribution arrangements are currently operated, however, the
cost of these is immaterial and is not separately disclosed within the pension
costs for the Group.
Two of the schemes, namely the Mirror Group Pension Scheme (the 'Old Scheme')
and the MGN Past Service Pension Scheme (the 'Past Service Scheme') cover the
liabilities in respect of service up to 13 February 1992, the date when the Old
Scheme was closed. The Past Service Scheme was established to meet the
liabilities for service up to 13 February 1992 for employees and former
employees, who worked regularly on the production and distribution of Mirror
Group's newspapers, which are not satisfied by payments from the Old Scheme or
by Guaranteed Minimum Pensions provided by the State.
In addition to the above schemes, the Group operates a further eight final
salary schemes.
Formal valuations of the schemes are carried out every three years, the
actuarial methods and assumptions used to calculate each scheme's assets and
liabilities varying according to the actuarial and funding policies adopted by
their respective trustees.
Valuations have been performed in accordance with the requirements of FRS 17 as
at 30 June 2002. Scheme liabilities have been calculated using a consistent
projected unit valuation method and compared to the schemes' assets at their 30
June 2002 market value.
Based on actuarial advice, the financial assumptions used in calculating the
schemes' liabilities, the total value of those liabilities under FRS 17, and the
total market value of assets are:
Assumptions Assumptions Assumptions
as at as at as at
30 June 1 July 30 December
2002 2001 2001
(%) (%) (%)
Discount rate 5.75 6.2 5.75
Inflation rate 2.50 2.50 2.50
Pension increases:
Pre 6 April 1997 pensions 2.50 to 5.00 2.50 to 5.00 2.50 to 5.00
Post 6 April 1997 pensions 2.50 to 3.00 2.50 to 3.00 2.50 to 3.00
Salary Progression 4.25 4.25 4.25
Total as at Total as at Total as at
30 June 1 July 30 December
2002 2001 2001
£m £m £m
Actuarial value of scheme liabilities 1,065.5 964.3 1,036.9
Total market value of assets 945.4 1,027.1 999.9
Net (deficit)/surplus (120.1) 62.8 (37.0)
The overall net deficit between the assets of the Group's defined benefit
pension schemes and the actuarial liabilities of those schemes included in the
accounts at 30 June 2002, under FRS17, is as follows:
Total as at Total as at Total as at
Defined benefit Defined benefit 30 June 1 July 30 December
assets liabilities 2002 2001 2001
£m £m £m £m £m
Fair value of schemes' assets 945.4 1,027.1 999.9
Actuarial value of schemes' (1,065.5) (964.3) (1,036.9)
liabilities
Scheme surpluses/(deficits) 23.8 (143.9) (120.1) 62.8 (37.0)
Deferred tax (7.1) 43.1 36.0 (18.8) 11.1
Net schemes' assets/(liabilities) 16.7 (100.8) (84.1) 44.0 (25.9)
The contributions made during the period totalled £8.0 million (26 weeks to 1
July 2001 £7.5 million; 52 weeks to 30 December 2001 £14.5 million).
The future contribution rates for the Group's most significant schemes range
from 9% to 12% of pensionable salaries. Under the above projected unit method
of valuing scheme liabilities, the cost of the Group's closed schemes will
increase as the schemes' membership matures.
The amounts included within operating profit for the period under FRS 17 are as
follows:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
£m £m £m
Current service cost 12.0 11.0 22.4
Past service costs 0.8 - -
Total included within operating profit 12.8 11.0 22.4
The amounts included as other finance income for the period under FRS 17 are as
follows:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
£m £m £m
Expected return on pension schemes assets (32.3) (34.0) (67.8)
Interest cost on pension schemes liabilities 29.6 28.7 56.8
Net finance income (2.7) (5.3) (11.0)
The movement in the (deficit)/surplus during the period is analysed below:
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
£m £m £m
Opening (deficit)/surplus in the pension schemes (37.0) 107.2 107.2
Current service cost (12.0) (11.0) (22.4)
Contributions 8.0 7.5 14.5
Past service costs (0.8) - -
Finance income 2.7 5.3 11.0
Actuarial losses (81.0) (46.2) (147.3)
Closing (deficit)/surplus in the pension schemes (120.1) 62.8 (37.0)
The profit and loss reserves are analysed below:
As at As at As at
30 June 1 July 30 December
2002 2001 2001
£m £m £m
Profit and loss reserve excluding pension reserve 293.2 402.1 258.1
Pension reserve (84.1) 44.0 (25.9)
Profit and loss reserve 209.1 446.1 232.2
9. Consolidated cash flow statement
The following information is supplementary to the consolidated cash flow
statement:
Reconciliation of operating profit to net cash flow from 26 weeks to 26 weeks to 52 weeks to
operating activities 30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
£m £m £m
Operating profit 89.9 93.5 22.5
Depreciation 21.7 21.4 43.4
Amortisation/impairment of goodwill and publishing rights and 3.0 0.7 151.5
titles
Profit on disposal of fixed assets (0.7) - (0.5)
Decrease in stocks 1.5 0.5 1.1
(Increase)/decrease in trade and other debtors and prepayments (14.6) (7.4) 8.3
(Decrease) in trade and other creditors and accruals (4.6) (23.3) (29.3)
Decrease in pension asset 4.8 3.5 7.9
Net cash inflow from operating activities 101.0 88.9 204.9
10. Analysis of net debt
At 30 Cash Loans Loan Other non- At 30
December Flow repaid notes cash June
2001 Issued changes 2002
£m £m £m £m £m £m
Cash at bank and in hand 43.5 5.9 - - - 49.4
Bank overdrafts (9.2) (10.6) - - - (19.8)
Net cash balances 34.3 (4.7) - - - 29.6
Debt due within one year (110.1) 30.0 181.3 - (324.9) (223.7)
Debt due after one year (613.7) - - (181.3) 324.9 (470.1)
Finance leases (45.5) 5.8 - - - (39.7)
Bank loans, loan notes and finance leases (769.3) 35.8 181.3 (181.3) - (733.5)
Net debt (735.0) 31.1 181.3 (181.3) - (703.9)
11. Reconciliation of movements in consolidated shareholders' funds
26 weeks to 26 weeks to 52 weeks to
30 June 1 July 30 December
2002 2001 2001
(restated) (restated)
£m £m £m
Profit for the financial period attributable to shareholders 52.4 51.4 (53.0)
-as previously reported
Effect of implementation of FRS 17 on the operating profit for the (7.0) (5.7) (13.9)
period (a)
Effect of implementation of FRS 17 on the interest charge for the 2.7 5.3 11.0
period (a)
Effect of implementation of FRS 17 on the tax charge for the period (a) 1.3 0.2 0.3
Profit for the financial period attributable to shareholders as 49.4 51.2 (55.6)
restated
Dividends (15.5) (15.4) (51.2)
Retained earnings - as restated 33.9 35.8 (106.8)
Other net recognised gains and losses in the period (b) (56.7) (32.3) (103.1)
New share capital subscribed 1.9 1.3 4.4
Effect of share option expenses incurred by parent company (0.3) - (0.5)
Net increase in shareholders' funds (21.2) 4.8 (206.0)
Opening shareholders' funds - as previously reported 1,362.1 1,462.4 1,462.4
Effect of implementation of FRS 17 (c) (17.1) 88.6 88.6
Opening shareholders' funds - as restated 1,345.0 1,551.0 1,551.0
Closing shareholders' funds - as restated 1,323.8 1,555.8 1,345.0
(a) The net decrease in profit attributable to shareholders for the 26 weeks
to 30 June 2002 of £3.0 million, for the 52 weeks to 30 December 2001 of
£2.6 million and for the 26 weeks to 1 July 2001 of £0.2 million arises as
a result of the implementation of FRS 17, which requires the full service
cost of the pension provision relating to the period 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. Under SSAP 24 any surplus or
liability in a pension scheme is amortised over the remaining service
lives of the employees. However, under FRS 17 the surplus or deficit on a
scheme (net of deferred tax) must be recognised on the balance sheet.
FRS 17 requires two new items to be recognised in the profit and loss
account under other financing costs. These are a charge equal to the
expected increase in the present value of the scheme liabilities netted
against a credit equal to the Group's expected return on scheme assets.
(b) Under FRS 17 any difference between the expected return on assets and that
actually achieved is charged through the statement of total recognised
gains and losses (STRGL). Similarly, any differences that arise from
experience or assumption changes are also charged through the STRGL.
(c) The decrease in opening shareholders' funds for the 26 weeks to 30 June
2002 of £17.1 million and the increase in opening shareholders' funds for
the 52 weeks to 30 December 2001 and the 26 weeks to 1 July 2001 of £88.6
million, arise as a result of the implementation of FRS 17. FRS 17
requires the full service cost of the pension provisions relating to the
period to be charged to operating profit, the net impact of the unwinding
of the discount rate on scheme liabilities and the expected return on the
scheme assets to be charged/credited to other financing costs,
and requires scheme assets and liabilities to be revalued at the balance
sheet date with any surplus/(deficit) net of deferred tax to be recognised
in the statement of total recognised gains and losses.
12. Sale of subsidiary undertakings
The Group disposed of its subsidiary undertakings, Post Publications Limited and
Ethnic Media Group Limited on 19 and 28 June 2002 respectively. The results of
the companies up to the date of disposal have been included in continuing
operations.
Post Publications Ethnic Media
Limited Group Limited Total
2002 2002 2002
Net assets disposed of: £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 0.4
(Loss)/Profit on disposal (0.3) 0.4 0.1
6.5 10.2 16.7
Satisfied by:
Cash 6.5 9.2 15.7
Deferred consideration - 1.0 1.0
6.5 10.2 16.7
Analysis of the net cash inflow in respect of the
disposals of subsidiary undertakings:
Cash consideration 6.5 9.2 15.7
13. Statutory information
The financial statements for the 26 weeks to 30 June 2002 do not constitute
statutory accounts for the purposes of Section 240 of the Companies Act 1985 and
have not been audited. No statutory accounts for the period have been delivered
to the Registrar of Companies.
The financial information in respect of the 52 weeks ended 30 December 2001 has
been extracted from the statutory accounts for this period which have been filed
with the Registrar of Companies. The auditors' report on these accounts was
unqualified and did not contain a statement under Section 237 (2) or (3) of the
Companies Act 1985.
The auditors have carried out a review of the interim report and their report is
set out on page 19. The interim report was approved by the Directors on 31 July
2002.
This announcement is being sent to shareholders and will be made available at
the Company's registered office at One Canada Square, Canary Wharf, London, E14
5AP.
Independent review report to Trinity Mirror plc
Introduction
We have been instructed by the Company to review the financial information for
the 26 weeks ended 30 June 2002, which comprises the profit and loss account,
the balance sheet, the cash flow statement, the statement of total recognised
gains and losses and related notes 1 to 13, together with the reconciliation of
net cash flow to movement in net debt. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority, which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and, therefore,
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 26 week period
ended 30 June 2002.
Deloitte & Touche
Chartered Accountants
Hill House
1 Little New Street
London
EC4A 3TR
31 July 2002
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
COMPANIES COVERED:
Latest directors dealings
- 1 hour ago Aquila Energy Efficiency Trust (EUR)
- 1 hour ago Boohoo Group
- 1 hour ago Tritax Big Box Reit
- 2 hours ago Standard Chartered
- 2 hours ago Coca-Cola HBC AG (CDI)