Interim Results

Trinity Mirror PLC 29 July 2004 29 July 2004 Interim Results for the 26 weeks ended 27 June 2004 Trinity Mirror plc announces the Group's interim results for the 26 weeks ended 27 June 2004. Operational highlights • 'Stabilise Revitalise Grow' on track, delivering improved performance and enhanced shareholder value. • Strong performance for the first half Group operating profit(1)(2) up 20.6% to £120.2 million and earnings per share up 25.3% to 23.8(2) pence per share. • Improving revenues(1) Total revenues up 5.6% with circulation revenues up 6.3% and advertising revenues up 5.1%. • Continued improvement in operating margins(1)(2) Increased from 18.4% to 21.0%. • Incremental net cost savings of £11.0 million This is in addition to savings of £5.0 million achieved in 2003. Target for net annualised savings in 2005 increased by £5.0 million from £30.0 million to £35.0 million. • Strong operating cash flow with net debt falling £81.6 million to £523.5 million. Financial highlights Like-for-like(1) Statutory (pre exceptional items(2) (3)) (post exceptional items) 2004 2003(4) % 2004 2003(4) % £m £m Change £m £m Change Turnover 572.7 542.1 +5.6% 572.7 550.2 +4.1 % Group operating profit 120.2 99.7 +20.6% 116.7 100.3 +16.4 % Profit before tax 101.8 80.4 +26.6% 100.8 79.4 +27.0 % Earnings per share 23.8p 19.0p +25.3% 23.8p 18.9p +25.9% Dividend per share 5.9p 5.5p +7.3 % Net debt 523.5 649.2 (1) Turnover and operating profit adjusted to exclude the results of Wheatley Dyson & Son Limited which was disposed of in February 2003 and the Irish regional newspaper titles in Belfast, Derry and Donegal which were disposed of in January 2004. During the 26 weeks ended 27 June 2004 these businesses achieved turnover of £nil (2003: £8.1 million) and operating profit of £nil (2003: £1.7 million). (2) Excludes operating exceptional items of £3.5 million pre tax (2003: £1.1 million). (3) Excludes net exceptional items of £1.0 million pre tax (2003: £1.0 million). (4) Accounting policies used in the preparation of the unaudited financial information for the 26 weeks ended 27 June 2004 are consistent with those set out in the Group's financial statements for the 52 weeks ended 28 December 2003. The 2003 interim results have been restated on this basis. Sir Victor Blank, Chairman of Trinity Mirror plc, commented: 'Today's figures demonstrate that the Group's drive to improve performance is continuing to bear fruit. We are now a stronger Group both financially and managerially, and we look positively to our future prospects.' Sly Bailey, Chief Executive of Trinity Mirror plc, commented: 'Our performance-based strategy Stabilise Revitalise Grow is delivering. This phase of the Group's development has been about improving our performance and today's results demonstrate our ability to meet objectives and show we are creating a fundamentally stronger and better-performing Group.' Enquiries: Trinity Mirror plc 020 7293 3000 Vijay Vaghela, Group Finance Director Nick Fullagar, Director of Corporate Communications Finsbury 020 7251 3801 Rupert Younger James Leviton Interim Results for the 26 weeks ended 27 June 2004 Financial highlights 2004 2003 Change £m £m % Turnover - statutory 572.7 550.2 +4.1% - like-for-like (1) 572.7 542.1 +5.6% Group operating profit pre exceptional items (2) - statutory 120.2 101.4 +18.5% - like-for-like (1) 120.2 99.7 +20.6% Group operating profit post exceptional items - statutory 116.7 100.3 +16.4% - like-for-like (1) 116.7 98.6 +18.4% Profit before tax pre exceptional items (3) 101.8 80.4 +26.6% Profit before tax post exceptional items 100.8 79.4 +27.0% Per share Pence Pence Underlying earnings pre exceptional items 23.8p 19.0p +25.3% Basic earnings post exceptional items 23.8p 18.9p +25.9% Dividend per share 5.9p 5.5p +7.3% (1) Turnover and operating profit adjusted to exclude the results of Wheatley Dyson & Son Limited which was disposed of in February 2003 and the Irish regional newspaper titles in Belfast, Derry and Donegal which were disposed of in January 2004. During the 26 weeks ended 27 June 2004 these businesses achieved turnover of £nil (2003: £8.1 million) and operating profit of £nil (2003: £1.7 million). (2) Excludes operating exceptional items of £3.5 million pre tax (2003: £1.1 million). (3) Excludes net exceptional items of £1.0 million pre tax (2003: £1.0 million). (4) Accounting policies used in the preparation of the unaudited financial information for the 26 weeks ended 27 June 2004 are consistent with those set out in the Group's financial statements for the 52 weeks ended 28 December 2003. The 2003 interim results have been restated on this basis. (See note 13(a) on page 20.) Within the following Chief Executive's review and review of operations, all figures are presented on a like-for-like(1) pre exceptional items(2)(3) basis unless otherwise specified. Chief Executive's review The benefits of the 'Stabilise Revitalise Grow' strategy are already evident in the Group's strong performance for the 26 weeks ended 27th July 2004, with revenues(1) increasing by 5.6% from £542.1 million to £572.7 million, operating profits(1)(2) increasing by 20.6% from £99.7 million to £120.2 million and operating margin(1)(2) improving by 2.6% from 18.4% to 21.0%. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Delivery against announced objectives The short-term objectives of the strategy, updated in February 2004, were as follows: • £30 million annualised net cost savings in 2005. • A policy to increase dividends progressively. • A commitment to reduce debt. • Higher operating margins for Regionals division. • Maintain market share for UK National titles. Success in achieving these objectives is detailed below: • Incremental net cost savings of £11.0 million have been achieved and the Group is on track to deliver at least £20.0 million this year. Accordingly, the target for savings in 2005 has been raised to £35.0 million in 2005, an increase of £5.0 million. • The interim dividend has been increased by 7.3%. • Net debt has fallen by £81.6 million to £523.5 million. • Operating margins* for the Group's Regionals division have risen by 4.2% from 23.5% to 27.7%. • Across the UK National titles good progress was made until May. The rolling six-monthly market share for the Daily Mirror was maintained at 20.3% for the first five months. Following the publication of the fake photographs of abuse of Iraqi prisoners this slipped to 20.1% in June. • In a highly competitive marketing-driven environment the Sunday Mirror maintained its market share at 15.7% whilst The People lost share, falling from 10.5% to 10.2%. Regionals The Regionals division has delivered strong performance for the period with revenue* increasing by 5.5% and operating profits* growing by 24.4%. The strong performance reflects the implementation of the 'Stabilise Revitalise Grow' strategy with: • Improved advertising performance from the national advertising sales operation through AMRA. • Better yield management through sharing of best practice and improved packages for advertisers. • Incremental revenues and reduced costs for digital media to achieve at least break even in 2004 with profit forecast in 2005. • Circulation revenue improvements from the 'little and often' cover pricing policy initiated last year. • Cost-saving initiatives coupled with tighter cost control in general. Whilst the benefits of the strategy are already apparent, in particular the improvement in operating margins* to 27.7%, there is still scope to improve performance in the division and numerous initiatives are under way to stabilise and revitalise the Group's titles and products. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Nationals The Nationals division delivered an improved performance for the period with revenues increasing by 5.6% and operating profits* increasing by 7.6%. A strong performance from the UK Nationals with operating profits* rising by 11.4% has been partially offset by a 0.8% fall in operating profits* for the Scottish Nationals. The improved UK Nationals performance has been driven by a marginal improvement in advertising revenues and significantly higher circulation revenues following cover price increases on all three titles. There has been no discernible impact on circulation volumes as a result of the cover price increases. The returns on investment in new supplements such as 3am in the Daily Mirror on Wednesdays, Homes and Holidays in the Sunday Mirror and the revamped People magazine Take it Easy, have been encouraging. However, circulation volumes, for the Daily Mirror, were disappointing in May and June following the publication of the fake Iraq pictures. Effective from 17th June 2004 the following management changes have been made: • Ellis Watson appointed to the new role of Managing Director, National Newspapers. Editors of the UK National titles now report to him, having previously reported directly to the Chief Executive. The wider remit, encompassing all aspects of the Nationals business, will enable Ellis to better co-ordinate and manage the commercial and editorial functions of the business to drive performance. • Richard Wallace appointed as the new Editor of the Daily Mirror. He was previously Deputy Editor of the Sunday Mirror. Prior to that he was Head of News, US Editor and Showbusiness Editor of the Daily Mirror. Circulation performance, whilst growing profits, remains the focus of attention on the National titles. Management has set the key metric of maintaining volume market share whilst recognising that absolute volumes in the market will continue to decline. The Daily Record continues to operate in a highly competitive marketplace. The title is regaining ground against the competition and is improving its circulation performance, with a year-on-year decline of 3.5% for the first half compared to a decline of 5.7% in the second half of 2003. This follows the appointment of a new Editor and the review of the publishing mix supported by additional marketing. Sports The Sports division has delivered another strong set of results with revenues increasing by 11.8% to £23.7 million and operating profits* increasing by 21.1% to £8.6 million. The revenue performance of the titles has benefited from publishing more or less every Sunday. Excluding the impact of these additional Sundays, revenues would have increased by 8.9%. The division continues to explore opportunities to improve performance through initiatives such as provision of content to other Group titles, focus on increasing internet revenues and revitalising our existing newspapers and book interests. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Magazines and Exhibitions The Magazines and Exhibitions division has delivered a robust performance. The Group is now reaping the full benefits of a comprehensive programme of restructuring of the division's business activities. The division has achieved operating profit* growth of 46.9% to £4.7 million. Arrow Interactive A review of the business highlighted that it did not have the scale to compete effectively for third party revenues in what has become a highly competitive marketplace experiencing significant pressure on margins. In the light of this conclusion the business has been significantly restructured to focus on generating revenues internally for the Group's own titles. Key projects Management has focused on three key Group-wide projects - Manufacturing, Supply Chain and Procurement - to drive performance by capitalising on the benefits of scale. Manufacturing Following closure of the Huddersfield site the majority of the Group's newspaper titles are printed (in-house) on 40 printing presses in 11 print sites across the country. The operating costs of these sites, excluding costs directly related to external printing, is approximately £124 million per annum. These costs are to some extent dependent on volumes. Apart from the three Nationals printing sites (located in Watford, Oldham and Glasgow) which operate under a single management structure, print sites historically have been managed by local management and predominantly served the needs of the local titles. This structure contributed to a wide range in operating efficiencies with some utilisation levels as low as 25%. The aim of the manufacturing project is to: • Improve the quality of products to better serve the needs of readers and advertisers. • Improve operating efficiencies. • Reduce printing costs. • Significantly reduce, over time, the level of capital expenditure required for the Group's printing assets. As a first step the Group has consolidated all its printing operations into a Manufacturing Network which is headed by Rupert Middleton, Director of Manufacturing, who joined the company in April. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Specific progress to date has included: • Single-press site in Huddersfield was closed in May 2004. • The two-press site in Chester is to be downscaled in October 2004 and closed in January 2005. • The new full-colour four-press site in Birmingham is due to begin operating in the fourth quarter of 2004, resulting in the closure of the old three-press site in Birmingham and a two-press site in Coventry. • The press sites in Scotland, located at Cardonald and Blantyre, consisting of four presses and a single press respectively, now operate under a single management structure. • The new full-colour press site at Teesside will be on stream in Autumn of 2004 when the old Teesside site closes. These changes will contribute to a reduction in the number of print sites from 11 to 9 and a reduction in the number of press lines from 40 to 37. The benefits of these initiatives will be as follows: • A reduction in the future capital expenditure requirements for re-pressing the Huddersfield and Chester print sites. • Improved products for Huddersfield, Chester and Teesside with better colour availability and formats to improve reader appeal and drive advertising revenues. • More flexibility for the Scottish National titles and the Regional titles in Scotland through a virtual print operation. • Full-colour availability for the Group's Regional titles in the Midlands • A capital investment of £7.5 million in the Midlands for inserting equipment. This will enable the printing of the National titles, thereby reducing future capital costs for the Nationals print sites and improving time to market. The plan to establish a Group-wide printing network is progressing well and benefits in terms of enhanced products, reduced unit costs, greater efficiencies and increased contract print and publishing revenues are beginning to be realised. The Group will be in a position to finalise the short to medium-term capital requirements for the Network by the end of 2004 and will provide an update with the 2004 preliminary results announcement. Supply Chain Good progress has been made in reviewing the newspaper supply chain - for the first time across the entire Group - with the specific aim of: • Capturing the benefits of scale. • Reducing costs. • Improving circulation volumes. • Driving revenue benefits. The project will help drive better overall performance throughout the business through shared learning, improved copy management and market analysis. An integral part of the project involves the re-negotiation of supply chain contracts with wholesale partners. An update on the benefits arising from the review will be provided with our 2004 preliminary results announcement. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Procurement The review of procurement is also progressing well. A number of areas have been reviewed including utilities, security and other property services. The benefits of these are included in the revised cost saving targets. Board Change On 26 July 2004, Stephen Parker, Managing Director, Regional Newspapers, resigned as Director of Trinity Mirror plc and will leave the company on 30 July 2004. We thank Stephen for his contribution and commitment to the company over the past 20 years and wish him well for the future. Next Steps Within the framework of the 'Stabilise Revitalise Grow' strategy, management is focused on building on the progress to date and extracting the benefits of scale. The Group is committed to deliver net annualised cost savings of £35.0 million in 2005, an increase of £5 million on the previously reported target and will maintain ongoing commitments to reduce debt, progressively increase dividends, improve operating margins for the Regionals division and maintain volume market share for the UK National titles. The strategy has created a substantially more robust platform from which we can look to future growth. Sly Bailey, Chief Executive 29th July 2004 * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Review of operations Group revenue* increased by 5.6% from £542.1 million to £572.7 million and Group operating profit* before exceptional items increased by 20.6% from £99.7 million to £120.2 million. Group operating margins* have increased by 2.6% from 18.4% to 21.0%. On a statutory basis, Group revenues increased by 4.1% from £550.2 million to £572.7 million and Group operating profit before exceptional items increased by 18.5% from £101.4 million to £120.2 million. The results reflect the benefits of an improvement in advertising market conditions, the benefits of initiatives driving revenue performance and incremental net cost savings of £11.0 million. These improvements have been partially offset by incremental FRS 17 pensions costs of £3.9 million. Operating exceptional items of £3.5 million have been incurred during the 26 week period. These relate primarily to the costs associated with delivery of the cost savings, including £0.8 million associated with closure of the Huddersfield print plant and £0.7 million from the restructuring of Arrow Interactive offset by profits of £0.8 million from the disposal of certain properties. It is anticipated that a further £16.0 million of exceptional costs will be incurred during the second half of the year. This will include £4.0 million of accelerated depreciation for printing assets in Chester due to the closure of the print site. Earnings per share before exceptional items increased by 25.3% from 19.0 pence per share to 23.8 pence per share, reflecting the increased operating profit and reduced finance costs, partially reduced by a higher effective tax rate. The interim dividend has been increased by 7.3% to 5.9 pence per share (2003: 5.5 pence per share). It will be paid on 1 November 2004 to shareholders on the register at 3 October 2004. The Group continued to deliver strong operating cash flows which increased by 8.7% to £126.9 million (2003: £116.7 million). The strong cash flows, coupled with the £44.7 million net disposal proceeds for the sale of the Regional newspaper titles in Ireland, contributed to net debt falling by £81.6 million from £605.1 million at 28 December 2003 to £523.5 million at 27 June 2004. Net debt is expected to fall marginally over the remainder of the year with continued strong cash flows being partially offset by estimated capital expenditure of £30.0 million. During the period the FRS 17 operating profit pension charge for current service increased by £3.9 million to £15.8 million with cash contributions (excluding past service enhancements) increasing by £3.8 million to £13.7 million. Net pension scheme liabilities, after the provision of deferred taxation, fell by £13.7 million to £234.4 million. This reflects, before the provision of deferred taxation, an increase in assets of £2.4 million and a fall in liabilities of £17.2 million. The reduction in liabilities reflects an increase in the real rate of return applied to discount liabilities. This increased from 2.65% at 28 December 2003 to 2.80% at 27 June 2004. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Regionals division The Regionals division achieved growth in revenue* of 5.5% from £256.4 million to £270.4 million and operating profit* of 24.4% from £60.3 million to £75.0 million. Operating margin* increased by 4.2% from 23.5% to 27.7%. The strong operating profit* performance reflects the benefit of strong performance from the Metros where profits* of £0.5 million have been achieved (2003: £0.2 million loss) and a £2.4 million reduction in Digital Media losses* to £0.2 million (2003: £2.6 million loss). Advertising revenues* increased 6.0% to £211.0 million (2003: £199.1 million). This reflects the benefits of an improvement in advertising conditions and a partial recovery in the South, contributing to growth of 5.3% from £193.0 million to £203.3 million for our Regional newspapers titles (excluding Metros), an increase in advertising revenue for the Metro titles of 16.3% from £4.9 million to £5.7 million and Digital Media advertising* achieving growth of 66.7% from £1.2 million to £2.0 million. The Regional newspaper titles (excluding Metros) achieved growth in advertising revenues* of 5.4% in the second quarter, compared to growth of 5.2% in the first quarter. Growth* was achieved in all advertising categories with display growing by 5.1%, recruitment growing by 6.9%, property growing by 6.3%, motors growing by 2.8% and other classified categories growing by 2.7%. Titles in London and the South East achieved growth of 3.9% with all categories, with the exception of recruitment, achieving year-on-year growth. Recruitment revenues in the South fell marginally by 1.5%. Regional newspapers circulation revenue* increased by 3.9% from £38.1 million to £39.6 million, with the benefits of the 'little and often' cover price policy partially offset by volume declines. Circulation volumes* for the Regional titles have continued to decline with volume declines of 3.7% for daily morning titles, 5.6% for daily evening titles and 1.8% for the weekly titles. Initiatives to improve circulation volume performance have commenced. On the 15 January 2004, the Group disposed of its Irish regional newspapers for a consideration of £46.1 million. No revenue or costs have been included in the results for the period for these titles. Nationals division The Nationals division achieved growth in revenue of 5.6% from £244.3 million to £257.9 million and operating profit* of 7.6% from £38.2 million to £41.1 million. Operating margin* improved from 15.6% to 15.9%. The operating profit* performance for the division reflects a marginal improvement in the advertising market, increased circulation revenues from cover price increases for four of the five National titles and the benefit of incremental cost savings partially offset by increases in the FRS17 operating pension charge and additional investment in products and marketing. Circulation revenue for the Group's five National titles (and related businesses) increased by 6.7% from £128.8 million to £137.4 million. This reflects the benefit of cover price increases partially offset by volume declines. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 During the period the Daily Mirror circulation volume, excluding sampling, declined by 5.3% year-on-year. The disappointing circulation performance during the period reflects the impact of reduced volumes following the publication of the fake Iraq prisoner abuse pictures in May. The Sunday Mirror and The People circulation volume, excluding sampling, declined year-on-year by 3.0% and 8.1% respectively during the period. The rolling six-monthly market share performance (excluding sampling) to June 2004 and Dec 2003 for the 3 National titles is as follows: June 2004 December 2003 Daily Mirror 20.1% 20.3% Sunday Mirror 15.7% 15.6% The People 10.2% 10.5% The rolling six-monthly market share for the Daily Mirror was held flat at 20.3% from January to May and the drop-off in sales experienced in May and continuing into June has contributed to the fall in market share to 20.1%. The market share for the Sunday Mirror has remained stable at 15.7% during January to June, representing an improvement of 0.1% from December 2003. Whilst the market share of The People has fallen from 10.5% to 10.2% the average year-on-year volume decline for the period has improved from 12.7% for the six months to December 2003 to 8.1%. The Daily Record and the Sunday Mail have both improved their year-on-year circulation performance during the period. For the Daily Record, the average year-on-year decline during the period was 3.5% compared to 5.7% for the six months to December 2003. For the Sunday Mail, the average year-on-year decline during the period was 4.0% compared to 4.3% for the six months to December 2003. The improvement in the Sunday Mail circulation performance was achieved despite a cover price increase. Advertising The Group's National titles achieved advertising revenue growth of 2.7% from £96.4 million to £99.0 million during the period in a marketplace which saw marginal improvement. However, the market remains volatile. The results also include the benefit of improved advertising performance in June which saw growth of 7.8%, helped by the European football championship. The UK National titles achieved advertising revenue growth of 2.6% from £72.0 million to £73.9 million for the period, reflecting a 0.6% increase in the first quarter and 4.7% increase in the second quarter. Strong core display advertising growth of 9.4% has been offset by weaker performance in classified and magazines. The weaker magazines performance reflects the impact of closing the M magazine in the second half of 2003, partially offset by additional advertising revenues for the newly launched 3am magazine. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 For the Scottish National titles, advertising revenue increased by 2.9% from £24.4 million to £25.1 million, with strong year-on-year performances in recruitment (up 26.4%), travel (up 10.5%) and national display (up 5.9%) offset by weaker performances from local retail (down 2.8%), motors (down 6.7%) and property (down 9.2%). Sports division The Sports division achieved strong performance during the period with operating profit* increasing by 21.1% to £8.6 million (2003: £7.1 million). Advertising and circulation revenue increased by 19.6% and 9.2% respectively. Circulation revenues benefited from cover price increases and additional Sunday publishing. The development of the division's website, racingpost.co.uk, has progressed encouragingly with revenue increasing by 19.9%. Magazines and Exhibitions The Magazines and Exhibitions division delivered a robust performance with operating profit* increasing by 46.9% from £3.2 million to £4.7 million. Revenues increased by 4.9% for the period with particularly strong exhibitions revenues, which grew by 7.0% during the period. Arrow Interactive During the period Arrow Interactive reported deteriorating performance with operating losses* of £0.6 million, an increase in losses* of £0.4 million compared to the same period in 2003. The division has now been refocused on driving revenues for the Group. The results of the division will not be separately reported from 2005. Restructuring costs totalling £0.7 million, including £0.4 million for severance, have been separately disclosed as exceptional items. Outlook The 'Stabilise Revitalise Grow' strategy continues to deliver improved performance. For the remainder of the year comparatives, both in terms of revenue and profit, are more challenging. Despite this, the Board is confident that the business will continue to perform in line with expectations. * On a like-for-like, pre-exceptional items basis as defined in footnotes (1) and (2) on page 1 Consolidated profit and loss account (unaudited) for 26 week period to 27 June 2004 26 weeks to 27 June 2004 Before Exceptional After 26 weeks to 29 52 weeks to exceptional items exceptional June 28 December items (note 4) items 2003 2003 (restated) notes £m £m £m £m £m ------------------------- ----- -------- -------- -------- -------- -------- Turnover 2 572.7 - 572.7 550.2 1,095.1 ------------------------ ----- -------- -------- -------- -------- -------- Group operating profit 3 120.2 (3.5) 116.7 100.3 100.5 ------------------------ ----- -------- -------- -------- -------- -------- Share of results of 0.7 - 0.7 0.6 1.2 associated undertakings ------------------------ ----- -------- -------- -------- -------- -------- Total operating profit 120.9 (3.5) 117.4 100.9 101.7 ------------------------ ----- -------- -------- -------- -------- -------- Profit on disposals of 4 - 2.5 2.5 0.1 0.1 subsidiary undertakings Profit on disposal of 4 - - - - - motorcycle show business ------------------------ ----- -------- -------- -------- -------- -------- Profit on ordinary 120.9 (1.0) 119.9 101.0 101.8 activities before interest ------------------------ ----- -------- -------- -------- -------- -------- Net interest payable (17.5) - (17.5) (19.9) (38.3) Other finance charge (1.6) - (1.6) (1.7) (2.9) ------------------------ ----- -------- -------- -------- -------- -------- Profit on ordinary 101.8 (1.0) 100.8 79.4 60.6 activities before taxation Tax on profit on ordinary 5 (31.6) 1.0 (30.6) (24.2) (46.9) activities ------------------------ ----- -------- -------- -------- -------- -------- Profit on ordinary 70.2 - 70.2 55.2 13.7 activities after taxation ------------------------ ----- -------- -------- -------- -------- -------- Non-equity minority (0.1) - (0.1) (0.1) (0.3) interest ------------------------ ----- -------- -------- -------- -------- -------- Profit for the financial 70.1 - 70.1 55.1 13.4 period ------------------------ ----- -------- -------- -------- -------- -------- Ordinary dividends on 6 (17.4) (16.1) (53.7) equity shares ------------------------ ----- -------- -------- -------- -------- -------- Retained profit/(loss) 52.7 39.0 (40.3) for the financial period ------------------------ ----- -------- -------- -------- -------- -------- Earnings per share 7 (pence) ------------------------ ----- -------- -------- -------- -------- -------- Underlying earnings per 23.8 19.0 41.1 share Exceptional items - (0.1) (36.5) ------------------------ ----- -------- -------- -------- -------- -------- Earnings per share - 23.8 18.9 4.6 basic ------------------------ ----- -------- -------- -------- -------- -------- Earnings per share - 23.6 18.8 4.6 diluted ------------------------ ----- -------- -------- -------- -------- -------- Turnover and net operating expenses comparative figures for the 26 weeks to 29 June 2003 have been restated to reflect Arrow Interactive revenues net of commissions payable (previously disclosed as operating expenses) to third parties. This change in accounting policy has no impact on the Group operating profit for 2003 and is consistent with the accounting policies set out in the Group financial statements for the 52 weeks ended 28 December 2003. The effect of this change in accounting policy was a reduction in turnover of £1.4 million and a reduction in net operating expenses of £1.4 million in the 26 weeks to 29 June 2003. All turnover and results arose from continuing operations. Consolidated statement of total recognised gains and losses (unaudited) for 26 week period to 27 June 2004 ---------------------------------------- ------- -------- ------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------------- ------- -------- ------- Profit for the financial period 70.1 55.1 13.4 Difference between actual and expected (24.2) 12.0 55.1 return on pension schemes' assets Experience losses arising on pension - - (18.0) schemes' liabilities Effects of changes in assumptions underlying the present value of pension schemes' liabilities 47.5 (82.6) (154.7) Deferred tax asset associated with (7.0) 21.2 35.3 movement on pension schemes' deficits ---------------------------------------- ------- -------- ------- Total recognised gains and losses in the 86.4 5.7 (68.9) period ---------------------------------------- ------- -------- ------- Consolidated balance sheet (unaudited) at 27 June 2004 -------------------------------- ----- --------- --------- --------- 27 June 29 June 28 December 2004 2003 2003 notes (restated) £m £m £m -------------------------------- ----- --------- --------- --------- Fixed assets Intangible assets 1,585.6 1,724.6 1,622.4 Tangible assets 392.1 391.0 401.0 Investments 7.3 10.2 9.9 -------------------------------- ----- --------- --------- --------- 1,985.0 2,125.8 2,033.3 -------------------------------- ----- --------- --------- --------- Current assets Stocks 6.6 7.0 7.0 Debtors 172.5 157.6 160.8 Cash at bank and in hand 33.7 39.2 34.3 -------------------------------- ----- --------- --------- --------- 212.8 203.8 202.1 -------------------------------- ----- --------- --------- --------- Creditors: amounts falling due within one year Bank loans, loan notes and (63.5) (58.2) (57.3) overdrafts Obligations under finance leases (2.0) (4.7) (4.4) Other creditors (236.6) (227.2) (249.5) -------------------------------- ----- --------- --------- --------- (302.1) (290.1) (311.2) -------------------------------- ----- --------- --------- --------- Net current liabilities (89.3) (86.3) (109.1) -------------------------------- ----- --------- --------- --------- Total assets less current 1,895.7 2,039.5 1,924.2 liabilities Creditors: amounts falling due after more than one year Bank loans and loan notes (470.7) (594.4) (554.9) Obligations under finance leases (21.0) (31.1) (22.8) -------------------------------- ----- --------- --------- --------- (491.7) (625.5) (577.7) -------------------------------- ----- --------- --------- --------- Provisions for liabilities and (68.9) (65.2) (68.8) charges Non-equity minority interest (3.7) (3.7) (3.7) -------------------------------- ----- --------- --------- --------- Net assets excluding pension 1,331.4 1,345.1 1,274.0 schemes' assets and liabilities -------------------------------- ----- --------- --------- --------- Pension schemes' assets 8 - - - Pension schemes' liabilities 8 (234.4) (215.1) (248.1) -------------------------------- ----- --------- --------- --------- Net assets including pension 1,097.0 1,130.0 1,025.9 schemes' assets and liabilities -------------------------------- ----- --------- --------- --------- Equity capital and reserves Called-up share capital 29.5 29.2 29.4 Share premium account 1,096.7 1,081.3 1,089.5 Revaluation reserve 5.0 4.9 5.0 Profit and loss account (34.2) 14.6 (98.0) -------------------------------- ----- --------- --------- --------- Equity shareholders' funds 11 1,097.0 1,130.0 1,025.9 -------------------------------- ----- --------- --------- --------- The Consolidated balance sheet at 29th June 2003 has been restated in accordance with UITF 38 Accounting for ESOP Trusts. Shares held within Employee Share Option Schemes are dealt with in the balance sheet as a deduction from shareholders' funds. The effect of this change in accounting policy was a reduction in fixed asset investments of £0.4 million and a reduction in shareholders' funds of £0.4 million. Consolidated cash flow statement (unaudited) for 26 week period to 27 June 26 weeks to 26 weeks to 52 weeks to 2004 27 June 29 June 28 December 2004 2003 2003 notes £m £m £m -------------------------------- ----- --------- --------- --------- Net cash inflow from operating 9 126.9 116.7 246.2 activities -------------------------------- ----- --------- --------- --------- Dividends received from 3.2 - 0.9 associated undertakings -------------------------------- ----- --------- --------- --------- Cash inflow from associated 3.2 - 0.9 undertakings -------------------------------- ----- --------- --------- --------- Returns on investments and servicing of finance Interest received 0.3 0.3 0.5 Interest paid (17.8) (20.0) (41.2) Interest element of finance lease (0.5) (0.8) (1.4) rental payments Dividends paid to minority (0.1) (0.1) (0.3) shareholders -------------------------------- ----- --------- --------- --------- Net cash outflow from returns on (18.1) (20.6) (42.4) investments and servicing of finance -------------------------------- ----- --------- --------- --------- Taxation paid (22.9) (21.2) (44.9) -------------------------------- ----- --------- --------- --------- Net cash inflow before investing 89.1 74.9 159.8 activities -------------------------------- ----- --------- --------- --------- Capital expenditure and financial investment Purchase of tangible fixed (14.8) (26.9) (59.4) assets Sale of tangible fixed assets 1.0 4.3 4.2 -------------------------------- ----- --------- --------- --------- Net cash outflow from capital (13.8) (22.6) (55.2) expenditure and financial investment -------------------------------- ----- --------- --------- --------- Net cash inflow before 75.3 52.3 104.6 acquisitions and disposals -------------------------------- ----- --------- --------- --------- Acquisitions and disposals Acquisition of business - (0.3) (0.4) Net cash balances disposed of (2.1) - - with subsidiary undertaking Sale of subsidiary undertakings 44.7 0.1 0.1 Sale of motorcycle show 0.2 - - business -------------------------------- ----- --------- --------- --------- Net cash inflow/(outflow) from 42.8 (0.2) (0.3) acquisitions and disposals -------------------------------- ----- --------- --------- --------- Dividends paid (37.6) (35.9) (52.0) -------------------------------- ----- --------- --------- --------- Net cash inflow before 80.5 16.2 52.3 financing -------------------------------- ----- --------- --------- --------- Financing Issue of shares 7.3 0.7 8.7 Purchase of own shares under (6.2) - - LTIP Repayment of unsecured loans (84.8) (6.2) (49.1) Principal payments under finance (4.2) (4.5) (13.1) leases -------------------------------- ----- --------- --------- --------- Net cash outflow from financing (87.9) (10.0) (53.5) -------------------------------- ----- --------- --------- --------- (Decrease)/increase in cash (7.4) 6.2 (1.2) -------------------------------- ----- --------- --------- --------- Reconciliation of net cash flow to movement in net debt -------------------------------- ----- --------- --------- --------- (Decrease)/increase in cash in (7.4) 6.2 (1.2) the period Cash outflow from movement in 89.0 10.7 62.2 debt and lease financing -------------------------------- ----- --------- --------- --------- Change in net debt resulting from 81.6 16.9 61.0 cash flows -------------------------------- ----- --------- --------- --------- Movement in net debt in the 81.6 16.9 61.0 period Opening net debt (605.1) (666.1) (666.1) -------------------------------- ----- --------- --------- --------- Closing net debt 10 (523.5) (649.2) (605.1) -------------------------------- ----- --------- --------- --------- Notes to the financial statements (unaudited) 1. Basis of preparation The accounting policies used in the preparation of the interim financial statements for the 26 weeks to 27 June 2004 are as set out in the Group's financial statements for the 52 weeks to 28 December 2003. 2. Turnover The analysis of the Group's turnover is as follows: 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 (restated) £m £m £m By geographical destination: ---------------------------------- --------- --------- --------- United Kingdom and Republic of 568.9 547.7 1,088.9 Ireland Continental Europe 3.8 2.4 6.1 Rest of the World 0.0 0.1 0.1 ---------------------------------- --------- --------- --------- 572.7 550.2 1,095.1 ---------------------------------- --------- --------- --------- By type: ---------------------------------- --------- --------- --------- Circulation 194.8 185.9 376.0 Advertising 324.2 313.4 620.6 Other 53.7 50.9 98.5 ---------------------------------- --------- --------- --------- 572.7 550.2 1,095.1 ---------------------------------- --------- --------- --------- By division: ---------------------------------- --------- --------- --------- Regionals division* 270.4 264.5 525.3 Nationals division 257.9 244.3 492.2 Sports division 23.7 21.2 43.4 Magazines and exhibitions 19.4 18.5 30.5 Arrow Interactive 1.3 1.7 3.7 ---------------------------------- --------- --------- --------- 572.7 550.2 1,095.1 ---------------------------------- --------- --------- --------- *Regionals division includes turnover relating to Wheatley Dyson & Son Limited of £nil (26 weeks to 29 June 2003 £0.1 million; 52 weeks to 28 December 2003 £0.1 million) which was disposed of in February 2003 and the Irish regional newspaper titles in Belfast, Derry and Donegal of £nil (26 weeks to 29 June 2003 £8.0 million; 52 weeks to 28 December 2003 £16.1 million) which were disposed of in January 2004. Turnover and net operating expenses for the 26 weeks to 29 June 2003 have been restated to reflect Arrow Interactive revenues net of commissions payable (previously disclosed as operating expenses) to third parties. This change in accounting policy has no impact on the Group operating profit for 2003 and is consistent with the accounting policies set out in the Group financial statements for the 52 weeks ended 28 December 2003. 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 27 June 29 June 28 December 2004 2003 2003 By division: £m £m £m ---------------------------------- --------- --------- --------- Regionals division* 75.0 62.0 123.9 Nationals division 41.1 38.2 85.8 Sports division 8.6 7.1 14.2 Magazines and exhibitions 4.7 3.2 4.8 Arrow Interactive (0.6) (0.2) (0.3) Central costs (8.6) (8.9) (15.9) ---------------------------------- --------- --------- --------- 120.2 101.4 212.5 ---------------------------------- --------- --------- --------- * Regionals division includes profit relating to Wheatley Dyson & Son Limited of £nil (26 weeks to 29 June 2003 £nil ; 52 weeks to 28 December 2003 £nil) which was disposed of in February 2003 and profits relating to the Irish regional newspaper titles in Belfast, Derry and Donegal of £nil (26 weeks to 29 June 2003 £1.7 million; 52 weeks to 28 December 2003 £3.1 million), which were disposed of in January 2004 Notes to the financial statements (unaudited) continued 4. Exceptional items ---------------------------------- --------- -------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- -------- --------- Operating exceptional items Impairment of carrying value of - - 100.0 publishing rights and titles (a) Write-off carrying value of - - 1.6 goodwill (b) Restructuring costs (c) 4.3 2.2 14.6 Maxwell related recoveries (d) - - (3.1) Profit on disposal of land and (0.8) (1.1) (1.1) buildings (e) ---------------------------------- --------- -------- --------- Group exceptional items charged 3.5 1.1 112.0 against Group operating profit ---------------------------------- --------- -------- --------- Profit on sale of subsidiary (2.5) (0.1) (0.1) undertakings (f) ---------------------------------- --------- -------- --------- Profit on sale of motorcycle show - - - business (f) ---------------------------------- --------- -------- --------- Net exceptional items before 1.0 1.0 111.9 taxation ---------------------------------- --------- -------- --------- a) The annual impairment review of the carrying value of the Group's publishing rights and titles, undertaken in accordance with FRS 10, indicated that an impairment charge was required in 2003. The impairment charge reduced the carrying value of the Regional titles in the South by £100.0 million, to the net present value of future cashflows to be derived from these assets, discounted at 8.0%. b) In 2003, following a review of a number of motorcycle shows during the year, in advance of their subsequent disposal in January 2004, goodwill of £1.6 million was written off. c) Restructuring costs relate to ongoing cost reduction plans and include costs of £0.7 million incurred in restructuring Arrow Interactive. d) In 2003, the Group recovered £3.1 million from the liquidators of Maxwell related companies for claims outstanding since 1992. e) In 2003 the Group disposed of surplus land and buildings realising a profit on disposal of £1.1 million. In the 26 week period to 27 June 2004 the group disposed of surplus land and buildings realising a profit of £0.8 million. f) In January 2004, the Group disposed of its Irish subsidiaries for a consideration of £46.1 million, realising a profit of £2.5 million and its Motorcycle Show business for a consideration of £0.2 million, realising a profit of £nil. In February 2003, the Group disposed of Wheatley Dyson & Son Limited for a consideration of £0.1 million, realising a profit of £0.1 million. 5. Tax on profit on ordinary activities ----------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ----------------------------------- --------- --------- --------- Profit before tax on ordinary 101.8 80.4 172.5 activities before exceptional items ---------------------------------- --------- --------- --------- Corporation Tax Corporation tax charge for the 31.6 26.9 52.1 period Prior period adjustment - - (1.2) ---------------------------------- --------- --------- --------- Total current tax charge 31.6 26.9 50.9 ---------------------------------- --------- --------- --------- Deferred Tax Deferred tax (credit)/charge for - (2.0) 3.8 the period Prior period adjustment - - (2.6) ---------------------------------- --------- --------- --------- Total deferred tax - (2.0) 1.2 ---------------------------------- --------- --------- --------- Tax on profit on ordinary 31.6 24.9 52.1 activities before exceptional items ---------------------------------- --------- --------- --------- Exceptional: UK corporation tax on exceptional (1.0) (0.7) (5.2) items ---------------------------------- --------- --------- --------- Tax on profit on ordinary 30.6 24.2 46.9 activities ---------------------------------- --------- --------- --------- The deferred tax (credit)/charge for the period is after a FRS 17 credit of £1.1 million (2003: £1.1 million). Notes to the financial statements (unaudited) continued 5. Tax on profit on ordinary activities continued Reconciliation of current tax charge The current tax rate for the period is more than the statutory rate of 30% (2003: statutory rate 30%) for the reasons set out in the following reconciliation: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 % % % ---------------------------------- --------- --------- --------- Standard rate of corporation tax 30.0 30.0 30.0 Permanent items 1.0 1.0 2.3 Depreciation in excess of/(below) 0.8 1.1 (2.5) capital allowances for the period Deferred tax on short-term and (0.8) 1.4 0.4 other timing differences Prior period adjustment corporation - - (0.7) tax --------- --------- --------- ---------------------------------- Total current tax charge rate 31.0 33.5 29.5 ---------------------------------- --------- --------- --------- Deferred tax (credit)/charge rate - (2.5) 0.7 ---------------------------------- --------- --------- --------- Effective rate before exceptional 31.0 31.0 30.2 items ---------------------------------- --------- --------- --------- 6. Dividends The Directors have declared the payment of an interim dividend of 5.9p (2003: 5.5p) per 10p ordinary share to be paid on 1 November 2004 to shareholders on the register on 3 October 2004. The total dividend in 2003 was 18.3p 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) adjusted for the effect of all dilutive potential ordinary shares (diluted) as shown below: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 No. of shares No. of shares No. of shares ---------------------------------- --------- --------- --------- Basic (millions) 294.5 291.8 292.4 ---------------------------------- --------- --------- --------- Diluted (millions) 297.8 292.7 293.8 ---------------------------------- --------- --------- --------- ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 pence pence pence ---------------------------------- --------- --------- --------- Underlying earnings per share 23.8 19.0 41.1 ---------------------------------- --------- --------- --------- Exceptional items - (0.1) (36.5) ---------------------------------- --------- --------- --------- Earnings per share - basic 23.8 18.9 4.6 ---------------------------------- --------- --------- --------- Earnings per share - diluted 23.6 18.8 4.6 ---------------------------------- --------- --------- --------- The earnings per share for each category of exceptional items disclosed in Note 4 is as follows: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 pence pence pence ---------------------------------- --------- --------- --------- Impairment of carrying values of - - (34.2) publishing rights and titles ---------------------------------- --------- --------- --------- Write-off carrying value of - - (0.5) goodwill --------- --------- --------- ---------------------------------- Restructuring costs (1.1) (0.1) (3.2) ---------------------------------- --------- --------- --------- Maxwell related recoveries - - 1.0 ---------------------------------- --------- --------- --------- Profit on disposal of land and 0.3 - 0.4 buildings --------- --------- --------- ---------------------------------- Profit on sale of subsidiary 0.8 - - undertakings ---------------------------------- --------- --------- --------- Earnings per share - exceptional - (0.1) (36.5) items ---------------------------------- --------- --------- --------- Notes to the financial statements (unaudited) continued 8. Pensions The Group operates a number of funded final salary pension schemes, 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 also operated. However the cost of these is immaterial and is not separately disclosed within the pension costs for the Group. Two of the defined benefit 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. An actuarial valuation of these pension schemes as at 31 December 2002, showed that they have insufficient assets to meet their liabilities for members' benefits, therefore contributions of £3.5 million were paid to the Past Service Scheme in 2003 with £3.5 million due to be paid in 2004. In addition to the above schemes, the Group operates a further eight final salary schemes. Actuarial valuations of schemes are carried out regularly, 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. Actuarial valuations were undertaken during 2003 for a further five of the final salary schemes, the most significant being the Trinity Retirement Benefit Scheme and the MGN Pension Scheme. All the valuations showed that, on the basis of the assumptions used by their respective scheme actuary, there were insufficient assets to meet the liabilities, resulting in increased contributions of £5.0 million during 2004. Further actuarial valuations will be undertaken in 2004, including the Old Scheme, the Past Service Scheme, the MGN Pension Scheme and the Midland Independent Newspapers Pension Scheme. During 2002, the decision was taken to close entry to the three final salary pension schemes to new employees with effect from 1 January 2003. Existing staff who were eligible to join a final salary scheme had until 28 February 2003 to apply. All new employees, after 1 January 2003, are entitled to participate in a new Group defined contribution plan known as the Trinity Mirror Pension Plan which was introduced on 1 July 2003. Valuations have been performed in accordance with the requirements of FRS 17 with scheme liabilities calculated using a consistent projected unit valuation method and compared to the market value of the schemes' assets at 25 June 2004, the last day prior to the period end for which such values were available. Based on actuarial advice, the financial assumptions used in calculating the schemes' liabilities are: ---------------------------------- --------- --------- --------- Assumptions Assumptions Assumptions as at as at as at 27 June 29 June 28 December 2004 2003 2003 (%) (%) (%) ---------------------------------- --------- --------- --------- Discount rate 5.80 5.25 5.40 Inflation rate 3.00 2.50 2.75 Pension increases: Pre 6 April 1997 pensions 3.00 to 5.00 2.50 to 5.00 2.75 to 5.00 Post 6 April 1997 pensions 3.00 to 3.25 2.50 to 3.00 2.75 to 3.25 Salary progression 4.50 4.25 4.30 ---------------------------------- --------- --------- --------- Notes to the financial statements (unaudited) continued 8. Pensions continued 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 27 June 2004, under FRS17, is as follows: ---------------------- --------- --------- --------- --------- --------- Total as at Total as at Total as at Defined benefit Defined benefit 27 June 29 June 28 December assets liabilities £m £m 2004 2003 2003 £m £m £m ---------------------- --------- --------- --------- --------- --------- Fair value of schemes' 973.1 973.1 904.4 970.7 assets Actuarial value of (1,308.0) (1,308.0) (1,211.7) (1,325.2) schemes' liabilities --------- --------- --------- --------- --------- ---------------------- Schemes' deficits (334.9) (307.3) (354.5) Deferred tax asset 100.5 92.2 106.4 ---------------------- --------- --------- --------- --------- --------- Net schemes' (234.4) (215.1) (248.1) liabilities --------- --------- --------- --------- --------- ---------------------- The contributions made during the period were £14.1 million (26 weeks to 29 June 2003 £10.4 million; 52 weeks to 28 December 2003 £25.2 million). The amounts included within operating profit for the period under FRS 17 are as follows: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- --------- --------- Current service cost 15.8 11.9 24.5 Past service cost 0.4 0.5 1.7 ---------------------------------- --------- --------- --------- Total included within operating 16.2 12.4 26.2 profit --------- --------- --------- ---------------------------------- The amounts included as other finance charge for the period under FRS 17 are as follows: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- --------- --------- Expected return on pension schemes' (33.6) (28.9) (57.7) assets Interest cost on pension schemes' 35.2 30.6 60.6 liabilities --------- --------- --------- ---------------------------------- Net finance charge 1.6 1.7 2.9 ---------------------------------- --------- --------- --------- The movement in the deficit during the period is analysed below: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- --------- --------- Opening deficit in the schemes (354.5) (233.0) (233.0) Current service cost (15.8) (11.9) (24.5) Contributions 14.1 10.4 25.2 Past service cost (0.4) (0.5) (1.7) Finance charge (1.6) (1.7) (2.9) Actuarial gains/(losses) 23.3 (70.6) (117.6) ---------------------------------- --------- --------- --------- Closing deficit in the schemes (334.9) (307.3) (354.5) ---------------------------------- --------- --------- --------- The profit and loss reserve is analysed below: ---------------------------------- --------- --------- --------- As at As at As at 27 June 29 June 28 December 2004 2003 2003 (restated) £m £m £m ---------------------------------- --------- --------- --------- Profit and loss reserve excluding 200.2 229.7 150.1 pension reserve Pension reserve (234.4) (215.1) (248.1) ---------------------------------- --------- --------- --------- Profit and loss reserve (34.2) 14.6 (98.0) ---------------------------------- --------- --------- --------- Notes to the financial statements (unaudited) continued 9. Reconciliation of operating profit to net cash inflow from operating activities The following information is supplementary to the consolidated cash flow statement: ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- --------- --------- Operating profit 116.7 100.3 100.5 Depreciation 20.3 21.4 43.3 Amortisation/impairment of goodwill 0.2 0.3 102.5 and publishing rights and titles Profit on disposal of fixed (0.8) (1.2) (0.7) assets Decrease in stocks 0.2 0.3 0.3 Increase in trade and other debtors (13.6) (3.4) (6.3) and prepayments Increase/(decrease) in trade and 0.8 (3.0) 5.6 other creditors and accruals Cost of Long Term Incentive Plan 1.0 - - benefits (LTIP) Adjustment for FRS 17 pension 2.1 2.0 1.0 funding --------- --------- --------- ---------------------------------- Net cash inflow from operating 126.9 116.7 246.2 activities --------- --------- --------- ---------------------------------- 10. Analysis of net debt ---------------------- -------- -------- --------- --------- --------- At 28 Cash Loans Other non-cash At 27 June December flow repaid changes 2004 2003 £m £m £m £m £m ---------------------- -------- -------- --------- --------- --------- Cash at bank and in 34.3 (0.6) - - 33.7 hand Bank overdrafts (19.3) (6.8) - - (26.1) ---------------------- -------- -------- --------- --------- --------- Net cash balances 15.0 (7.4) - - 7.6 ---------------------- -------- -------- --------- --------- --------- Debt due within one (38.0) - 0.6 - (37.4) year Debt due after one (554.9) - 84.2 - (470.7) year Finance leases (27.2) 4.2 - - (23.0) ---------------------- -------- -------- --------- --------- --------- Bank loans, loan notes (620.1) 4.2 84.8 - (531.1) and finance leases -------- -------- --------- --------- --------- ---------------------- Net debt (605.1) (3.2) 84.8 - (523.5) ---------------------- -------- -------- --------- --------- --------- 11. Reconciliation of movements in consolidated shareholders' funds ---------------------------------- --------- --------- --------- 26 weeks to 26 weeks to 52 weeks to 27 June 29 June 28 December 2004 2003 2003 £m £m £m ---------------------------------- --------- --------- --------- Profit for the financial period 70.1 55.1 13.4 attributable to shareholders Dividends (17.4) (16.1) (53.7) ---------------------------------- --------- --------- --------- Retained profit/(loss) 52.7 39.0 (40.3) Other net recognised gains and 16.3 (49.4) (82.3) losses in the period in respect of FRS 17 New share capital subscribed 7.3 0.7 9.1 Movement on revaluation reserve - (0.1) - Effect of share options expensed by - - (0.4) parent company Effect of investment in LTIP (6.2) - - shares Expense of the cost of the 1.0 - - investment in LTIP shares --------- --------- --------- ---------------------------------- Net decrease in shareholders' 71.1 (9.8) (113.9) funds --------- --------- --------- ---------------------------------- Opening shareholders' funds 1,025.9 1,139.8 1,139.8 ---------------------------------- --------- --------- --------- Closing shareholders' funds 1,097.0 1,130.0 1,025.9 ---------------------------------- --------- --------- --------- 977,124 shares were acquired during the year for management remuneration purposes and held in an ESOP Trust. These will not vest in the employees until 2007 and accordingly are included as a reduction from shareholders' funds. Notes to the financial statements (unaudited) continued 12. Sale of subsidiary undertakings The Group disposed of its Motorcycle Show business and Irish subsidiaries on 8 and 15 of January 2004 respectively. The results of the companies up to the date of disposal have been included in continuing operations. ---------------------------------- ------- -------- -------- Sale of Irish Sale of newspaper Motorcycle Show titles business Total £m £m £m ---------------------------------- -------- -------- -------- Net assets disposed of: ---------------------------------- -------- -------- -------- Intangible fixed assets 36.3 0.2 36.5 Tangible fixed assets 3.0 - 3.0 Current assets 4.2 - 4.2 Creditors falling due within one year (1.3) - (1.3) ---------------------------------- -------- -------- -------- 42.2 0.2 42.4 Costs of disposal 1.4 - 1.4 Profit on disposal 2.5 - 2.5 ---------------------------------- -------- -------- -------- 46.1 0.2 46.3 ---------------------------------- -------- -------- -------- Satisfied by: Cash consideration 46.1 0.2 46.3 ---------------------------------- -------- -------- -------- Analysis of the net cash inflow in respect of the disposals of subsidiary undertakings and motorcycle show business ---------------------------------- -------- -------- -------- Cash consideration 46.1 0.2 46.3 Costs of disposal (1.4) - (1.4) Net cash balance transferred on (2.1) - (2.1) disposal ---------------------------------- -------- -------- -------- 42.6 0.2 42.8 ---------------------------------- -------- -------- -------- 13. Restatement of comparatives a) Arrow Interactive Turnover and net operating expenses have been restated to reflect Arrow Interactive revenues net of commissions payable (previously disclosed as operating expenses) to third parties. This change in accounting policy has no impact on the Group operating profit for 2003. As a result of this change in accounting policy, the comparatives have been restated as follows: ------------------------------------------ -------- -------- Turnover Net operating expenses £m £m Consolidated Profit and Loss Account ------------------------------------------ -------- -------- 26 weeks to 29 June 2003 reported 551.6 451.3 Change in revenue recognition policy (1.4) (1.4) ------------------------------------------ -------- -------- 26 weeks to 29 June 2003 restated 550.2 449.9 ------------------------------------------ -------- -------- b) UITF 38 Accounting for ESOP Trusts Shares held within Employee Share Option Schemes are dealt with in the balance sheet as a deduction from shareholders' funds. As a result of this change in accounting policy, the comparatives have been restated as follows: ----------------------------------------- -------- --------- Investments Shareholders' funds Consolidated Balance Sheet £m £m ----------------------------------------- -------- --------- 26 weeks to 29 June 2003 reported 10.6 1,130.4 Reclassification of ESOP shares to shareholders' (0.4) (0.4) funds -------- --------- ----------------------------------------- 26 weeks to 29 June 2003 restated 10.2 1,130.0 ----------------------------------------- -------- --------- Notes to the financial statements (unaudited) continued 14. Statutory information The financial statements for the 26 weeks to 27 June 2004 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 28 December 2003 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 overleaf. The interim report was approved by the Directors on 29 July 2004. 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 27 June 2004, which comprises the consolidated profit and loss account, consolidated statement of total recognised gains and losses, the consolidated balance sheet, the consolidated cash flow statement, the reconciliation of net cash flow to movement in net debt and related notes 1 to 14. 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. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed. 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 are 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 27 June 2004. Deloitte & Touche LLP Chartered Accountants London 29 July 2004 This information is provided by RNS The company news service from the London Stock Exchange

Companies

Reach (RCH)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today