Interim Results
SMG PLC
10 September 2002
SMG plc
Interim Results Six Months Ended 30 June 2002
* Interim results in line with expectations
* All SMG businesses remain profitable and cash generative
* Continued market share gains across the Group
* Sale of newspapers and magazines businesses initiated
KEY FINANCIALS
* Total turnover * - £130.7m (2001: £139.7m)
* EBITDA * - £31.3m (2001: £34.4m)**
* Total operating profit * - £26.4m (2001: £29.9m)**
* Profit before tax * - £11.5m (2001: £20.0m)
* Earnings per share * - 2.7 p (2001: 4.7 p)
* Dividend per share - Deferred (2001: 1.5 p)
* Excluding online activities and goodwill amortisation
** Re-stated to include FRS17 costs
These results reflect the strength of SMG's businesses in the continued
difficult trading environment. Profit before tax reduced by £8.5m to £11.5m,
with £4m of the fall as a result of the decline in ITV advertising and reduced
network programme commissions; £2.5m was the impact of the increased cost of the
Group's borrowings; and £2m reflected the additional pension charge from the
introduction of accounting standard FRS17. In light of the decision to initiate
the sale of the Group's Publishing Division, the Board has deferred a decision
on an interim dividend for 2002.
Andrew Flanagan, Chief Executive of SMG, said:
'In difficult trading conditions, the Group is performing robustly and all our
businesses are profitable. We are well-prepared for the advertising upturn when
it comes. The sale of our Publishing Division, will provide us with the
flexibility, both financial and regulatory, to pursue our cross media strategy,
building national positions in the faster growing media sectors.
'As we enter this period of great opportunity for UK media companies, we are
determined that SMG will be well-positioned to take full advantage of all the
possibilities for further development that the forthcoming months are set to
present.'
For further information contact:
SMG
Andrew Flanagan, Chief Executive Tel: 020 7882 1199
George Watt, Group Finance Director
Callum Spreng, Corporate Affairs Director
Brunswick
James Hogan Tel: 020 7404 5959
Ben Brewerton
There will be a presentation to analysts at 9.00am today at
the Lincoln Centre, 18 Lincoln's Inn Fields, London WC2A 3ED.
SMG plc
2002 Interim Results
Chairman's Statement
OVERVIEW
SMG has experienced a challenging, but productive first six months of 2002 as
the advertising downturn, that has affected the entire media industry,
continued. In the first quarter we experienced muted declines but since then we
have seen stable and improving performances across all our businesses. In the
context of these difficult trading conditions, our businesses continue to
perform well and in most instances have successfully increased market share. We
have further trimmed our cost base to protect margins and all our businesses
remain profitable and cash generative.
With the prolongation of the advertising downturn and the emergence of the
detail of the forthcoming Communications Act, we have actively considered the
long-term options open to the Group. We remain committed to a cross media
approach and this proposition has seen an increasing level of interest from
major advertisers. It is also clear that cross media works most effectively
where there is commonality, both of advertisers and geographic coverage. With
the exception of our newspapers, all of SMG's media assets - in television,
radio, cinema and outdoor - attract predominantly national advertising as the
geographic footprint of these businesses is also national, albeit in the case of
Television as part of the wider entity, ITV. However, our newspaper business is
less attractive to such major advertisers, offering principally regional
coverage in west central Scotland, and is substantially reliant on classified
advertising. We are also committed to concentrating the Group's development on
the faster growth areas of UK media.
The forthcoming Communications Act promises to open up opportunities to create
substantial cross media groups. Upon implementation of the Act, and in pursuit
of the strategy outlined above, it is important that we have sufficient
flexibility - fiscal and regulatory - to capitalise on the opportunities that
the new Act promises to deliver. In order to pursue such opportunities we
recognise that not only is it appropriate to focus the Group on its national
media businesses but that the Group's balance sheet also requires to be
strengthened. Furthermore, it is clear to us that the new legislation is likely
to tighten media ownership regulation at a local level with inevitable emphasis
on radio and newspapers.
We have concluded, therefore, to pursue the sale of the Group's newspapers - The
Herald, Sunday Herald and Evening Times - and our magazines business. Having
received a number of unsolicited approaches, we are confident that the level of
interest from potential purchasers is high, and in announcing this decision
today, we expect to have completed the sale, and, if necessary, regulatory
clearance, ahead of the implementation of the new Communications Act in 2003.
Group turnover (excluding online activities) across the first six months was
down 6% at £130.7m (2001: £139.7m) primarily due to reduced advertising and
lower programme commissions. These factors, combined with increased licence
fees, additional interest and other charges related to our debt restructuring
and the impact of FRS17, resulted in lower pre-tax profits (excluding online
activities and goodwill amortisation) at £11.5m (2001: £20.0m). Earnings per
share (excluding online activities and goodwill amortisation) were 2.7 pence
(2001: 4.7 pence).
In view of the decision to initiate the sale process for our Publishing
business, and its financial significance, the Board has decided to defer the
decision on an interim dividend (2001: 1.5 pence). This decision will be
reviewed once the outcome of the sale process is more clear. However, it
remains the policy of the Board to retain the Group's dividend cover to within a
range of 2.5 - 3.0 times.
TELEVISION
The advertising climate for commercial television in the UK, and ITV in
particular, has been well documented. The World Cup, although welcome and
confirming advertisers' confidence in ITV's ability to deliver mass audiences,
could not fully offset the continued year on year revenue falls in the early
part of 2002. Airtime revenues for our broadcasting business fell by 5%, with
a 10% fall in the first quarter and modest growth in the second. As a
consequence of this, together with increased licence fees, and reduced
commissions at our network production business, Television operating profits
reduced to £8.6m (2001: £12.9m).
Although airtime sales fell by 5% this contrasted with a 6% drop for ITV as a
whole resulting in further improvement in our NAR (Net Advertising Revenues)
share to 6.12% (2001: 6.07%). This performance was underpinned by our regional
airtime sales, which continued to be strong, with growth of 7%, emphasising the
resilience of the local advertising market in Scotland and the continued
popularity of the micro advertising regions available to Scottish advertisers.
A substantial majority of ITV's advertising revenues are generated in peak-time
and the channel remains the most popular in the UK in this part of the day by a
considerable margin. Despite the continued encroachment of multichannel
television and the increasingly populist programming policy of the BBC, Scottish
and Grampian, with a peak time audience share of 31.4%, once again displayed a
significant lead over their nearest rival, BBC1 Scotland. We anticipate that the
increased investment in the ITV network schedule, and a sharper focus at the
Network Centre on the principal ITV channel, will ensure that ITV retains its
market leading position for the foreseeable future.
Our Television management continues to focus closely on costs and is exploring a
number of initiatives in this area. The new ITV Charter for the Nations and
Regions, will improve the service for viewers and will also result in reduced
regional programming costs. A move of Grampian TV studios to a new site in
Aberdeen - currently the subject of a detailed feasibility study - would provide
further efficiency improvements.
Our network programming business, SMG TV Productions, continues to benefit from
a number of high profile commissions. However in 2002, with tight budgets across
all broadcasters, sales will be down on the prior year and will be weighted
towards the second half of the year. These will include dramas such as Taggart
and Goodbye Mr Chips and a six-part follow-up to the popular Club Reps
documentary series entitled The Workers. With a strengthened and streamlined
creative team, and increased investment in programme budgets by ITV and other
commercial channels, we anticipate an improved performance for this business
next year.
PUBLISHING
Operating profits in Publishing increased by 6% to £8.5m (2001: £8.0m) as
improved efficiencies and the headcount reduction introduced at the end of 2001,
coupled with lower newsprint prices, fed through. Although newspaper
advertising revenues saw slight decline over the period, the strength of the
second quarter, largely mitigated the effects of the first three months of the
year.
The national display sector experienced revenue growth and the entertainment
sector was particularly strong. However, in recruitment advertising the
proportion of public sector jobs increased during the period resulting in lower
yields but, while recording a drop in revenue, we outperformed our national
newspaper rivals by a considerable margin. Meanwhile the strength of the
housing market in west central Scotland served to hold back property advertising
volumes as advertisers required less exposure in order to secure sales.
The Herald and Evening Times' circulation performed in line with the market over
the period with small declines. However cover price increases on both The
Herald and the Sunday Herald increased circulation revenues by 2% overall. The
Sunday Herald, launched in 1999, further increased its circulation and grew its
advertising market share significantly. New initiatives, such as the launch at
Easter of a separate property section, have ensured that it maintains its
profile both with advertisers and a growing readership.
Our new printing facilities in Glasgow were completed on budget and on schedule
and all production had been transferred to the new facility by the end of June.
In addition to providing increased capacity and production improvements, this
has provided the opportunity to reduce headcount and cost in our printing
facility.
The eradication of Foot and Mouth Disease saw our largest magazine, Scottish
Farmer, return to robust health and this, combined with the benefits of our
Orpheus Magazines acquisition in 2001, resulted in strong increases in both
turnover and profits for the magazines business.
RADIO
Our Radio Division consists of the national commercial rock station, Virgin
Radio, and whilst its reliance on national advertising revenues saw turnover
fall by 7% to £13.6m (2001: £14.6m), it held operating profit at £6.0m (2001:
£6.0m) as earlier cost reductions came into effect. This increased its
operating margin to an industry-leading 44%, emphasising its position as the
UK's most profitable radio station.
Virgin Radio has returned variable RAJAR audience listening figures in recent
years and the first half of 2002 has been no exception. However, with a stable
schedule and popular propositions such as its 'no repeat 9-5 work day', Virgin
Radio has effectively maintained its strong position as the UK's only national
station based on a rock music format. The receipt of a coveted Gold Sony Award
by the station's popular drivetime presenters Pete Mitchell and Geoff Lloyd
underlined the station's commitment to high quality, popular radio broadcasting
specifically aimed at its valuable 20-45 year old core audience.
OUT OF HOME
SMG's Out of Home Division consists of our outdoor and cinema advertising
businesses which once again recorded excellent growth during the period.
Turnover for the division increased by 27% to £19.9m (2001: £15.7m), largely
reflecting the benefits of the UGC cinema advertising contract, which came on
stream at the beginning of the year. Operating profit of £3.0m was up 15%
(2001: £2.6m). Ongoing investment in the Primesight outdoor panel estate
limited profit growth.
Primesight increased its six-sheet panel estate to just under 10,000 during the
period, while Pearl & Dean's market share grew to 43% as a result of the UGC
contract.
CORPORATE DEVELOPMENT
SMG continues to occupy a strong position within the UK media landscape and the
Group's assets are profitable, attractive and valuable and have therefore been
the subject of considerable speculation in recent months, much of which has been
inaccurate. Considerable progress has now been made by legislators on the
development of the Communications Bill and, while we await its fine detail
following the latest period of consultation, we are confident that the
Government's deregulatory intent will be evident in its final draft. However,
we have become concerned that, while against the spirit of the Bill as a whole,
there is a desire to tighten media ownership regulations at a local level and
this, in part, has contributed to our decision to dispose of our Publishing
assets.
For some time, and as outlined earlier in this statement, we have set out the
Group's strategy of developing our cross media approach through building
national businesses and focusing the Group's expansion on the faster growing
media sectors. Our publishing business, which consists principally of regional
newspapers, is focused primarily on local advertising revenues and does not
offer advertisers national coverage. In addition, widespread consolidation
within the newspaper sector has resulted in scale becoming an increasingly
important feature of the most successful newspaper businesses. Having received
a number of approaches from potentially interested parties, we are satisfied
that we will attract significant interest from a range of high quality bidders,
particularly as local advertising revenues have proven to be most resilient
during the advertising downturn.
We have invested continuously in these businesses, as a result of which not only
are they amongst the best newspapers in Scotland, with reputations second to
none, but they enjoy state of the art facilities from which to publish and
print. Furthermore, while we have developed these publications significantly
during our ownership, we believe their future prosperity is best assured as part
of a larger newspaper group.
PROSPECTS
The current advertising market is stable, with pockets of growth in some of the
brighter spots, but insufficient evidence at this stage of a sustained
advertising upturn.
ITV is still growing, building on five consecutive months of year-on-year growth
with October revenues up 10% on last year. In newspapers, recruitment is
beginning to recover, but property remains difficult as sellers continue to
experience fast sales. Radio, after a poor July, bounced back in August and we
expect to see growth in September, while Out of Home continues to build on its
strong first half performance.
Overall, we expect to see a modest improvement in trading for the Group as a
whole in the third quarter of 2002, with further progress anticipated through
the fourth quarter. Meanwhile, we continue to focus on cost reduction where
this is feasible, and on a satisfactory conclusion to the sale of our Publishing
business announced today.
Don Cruickshank
Chairman
SMG plc
10 September 2002
Consolidated profit and loss account
for the six months ended 30 June 2002
Excluding online costs, Total including online costs,
exceptionals and FRS10 exceptionals and FRS10
Restated Restated Audited
6 months 6 months 6 months 6 months full year
2002 2001 2002 2001 2001
Note £m £m £m £m £m
Turnover 2 130.7 139.7 131.1 139.9 280.8
Net operating expenses (106.8) (112.3) (117.8) (123.8) (246.8)
Reorganisation costs 3 - - - - (9.0)
Writedown of investments 3 - - - - (5.0)
------- ------- ------- ------- -------
Total operating expenses (106.8) (112.3) (117.8) (123.8) (260.8)
------- ------- ------- ------- -------
Group operating profit 23.9 27.4 13.3 16.1 20.0
Share of associates 2.5 2.5 2.5 2.5 (0.8)
Writedown of investment in associates 3 - - - - (56.3)
Total operating profit/(loss) 2 26.4 29.9 15.8 18.6 (37.1)
Net interest payable and similar 3, 4 (14.9) (9.9) (14.9) (9.9) (27.1)
charges
------- ------- ------- ------- -------
Profit/(loss) on ordinary activities 11.5 20.0 0.9 8.7 (64.2)
before taxation
Tax on profit/(loss) on ordinary 5 (3.1) (5.4) (2.8) (5.4) (6.3)
activities
------- ------- ------- ------- -------
Profit/(loss) on ordinary activities after 8.4 14.6 (1.9) 3.3 (70.5)
taxation
Dividends 6 - (4.9) - (4.9) (9.6)
------- ------- ------- ------- -------
Profit/(loss) transferred to reserves 8.4 9.7 (1.9) (1.6) (80.1)
------- ------- ------- ------- -------
Earnings per ordinary share - basic 7 2.7p 4.7p (0.6p) 1.1p (22.5p)
------- ------- ------- ------- -------
- diluted 7 2.8p 4.6p (0.4p) 1.2p (21.3p)
------- ------- ------- ------- -------
Consolidated balance sheet
at 30 June 2002
Restated Audited
Note 30 June 30 June 31 December
2002 2001 2001
£m £m £m
Fixed assets
Intangible assets 8 328.5 342.6 336.4
Tangible assets 82.9 62.8 81.0
Investments 9 91.5 156.0 93.3
------- ------- -------
502.9 561.4 510.7
------- ------- -------
Current assets
Stock 24.2 25.9 23.5
Debtors and prepayments 68.4 64.8 62.2
------- ------- -------
92.6 90.7 85.7
------- ------- -------
Creditors: amounts falling due within one year
Creditors and accrued (49.7) (64.2) (54.5)
charges
Bank loans and overdrafts (237.5) (197.6) (226.9)
Other loans (140.0) - (140.0)
Corporation tax (10.5) (12.3) (8.7)
Proposed dividend (4.7) (4.9) (4.7)
------- ------- -------
(442.4) (279.0) (434.8)
------- ------- -------
Net current liabilities (349.8) (188.3) (349.1)
------- ------- -------
Total assets less current liabilities 153.1 373.1 161.6
------- ------- -------
Creditors: amounts falling due after more than one year
Creditors and accrued charges (2.2) (2.3) (2.5)
Other loans - (140.0) -
Convertible unsecured loan stock (22.8) (22.8) (22.8)
Secured loan stock (1.0) (4.5) (1.1)
------- ------- -------
(26.0) (169.6) (26.4)
------- ------- -------
Provisions for liabilities and charges 10 (9.7) (4.5) (15.6)
------- ------- -------
Net assets excluding pension (liability)/asset 117.4 199.0 119.6
Pension (liability)/asset (22.0) 7.1 (21.8)
------- ------- -------
Net assets including pension (liability)/asset 95.4 206.1 97.8
------- ------- -------
Capital and reserves
Called up share capital 7.8 7.8 7.8
Share premium account 59.2 57.7 58.5
Shares to be issued - 1.4 1.3
Revaluation reserve 3.1 3.1 3.1
Merger reserve 173.4 173.4 173.4
Profit and loss account (148.1) (37.3) (146.3)
------- ------- -------
Equity shareholders' funds 11 95.4 206.1 97.8
------- ------- -------
Consolidated cash flow statement
for the six months ended 30 June 2002
Audited
Note 6 months 6 months Full Year
2002 2001 2001
£m £m £m
Operating activities
Net cash inflow from continuing operating activities 12 12.0 23.4 43.4
------- ------- -------
Dividends received from associates and investments 1.7 1.3 1.3
------- ------- -------
Returns on investments and servicing of finance
Interest received 0.2 0.1 0.2
Interest paid (13.7) (9.7) (25.7)
Interest paid on finance leases - (0.1) -
------- ------- -------
(13.5) (9.7) (25.5)
------- ------- -------
Taxation
UK corporation tax paid (0.4) (7.9) (11.6)
------- ------- -------
Capital expenditure and financial investment
Purchase of tangible fixed assets (8.2) (11.2) (32.0)
Sale of tangible fixed assets 2.7 1.7 1.7
------- ------- -------
(5.5) (9.5) (30.3)
------- ------- -------
Acquisitions and disposals
Purchase of subsidiary undertakings - (1.9) (2.7)
Increased investment in associate undertaking - (46.2) (46.2)
------- ------- -------
- (48.1) (48.9)
------- ------- -------
Equity dividends paid - (14.1) (18.8)
------- ------- -------
Cash outflow before financing (5.7) (64.6) (90.4)
------- ------- -------
Financing
Share capital options exercised - 1.8 0.7
Net repayment of loan notes (2.3) (0.1) (1.2)
Repayment of principal under finance leases - (0.2) (0.3)
------- ------- -------
(2.3) 1.5 (0.8)
------- ------- -------
Cash outflow in the period (8.0) (63.1) (91.2)
------- ------- -------
Movement in net debt Audited
6 months 6 months Full Year
2002 2001 2001
£m £m £m
Opening net debt (393.8) (300.4) (300.4)
Cash outflow in the period (8.0) (63.1) (91.2)
Issue of loan notes - (2.3) (2.3)
Other movements - 0.1 0.1
------- ------- -------
Closing net debt (401.8) (365.7) (393.8)
------- ------- -------
Notes to the interim statement
for the six months ended 30 June 2002
1. Basis of preparation of the interim statement
The interim statement, which is unaudited, has been prepared on a basis that is
consistent with the accounting policies and practices adopted for the Group for
the year ended 31 December 2001. The balance sheet at 31 December 2001 and the
results for the year then ended have been extracted from the Group's annual
report and financial statements, which have been filed with the Registrar of
Companies. The auditors' opinion on the financial statements was unqualified and
did not include a statement under section 237(2) or (3) of the Companies Act
1985. Certain prior period amounts have been reclassified to conform to the
current year's presentation and the results for the period to 30 June 2001 have
been restated to include the impact of the implementation of FRS17 'Retirement
Benefits'.
2. Segmental analysis
The analysis of the Group's turnover and operating profit by operating division
is set out below:
Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
Turnover
Television 58.4 70.3 141.6
Publishing 38.8 39.1 77.4
Radio 13.6 14.6 27.9
Out of Home 19.9 15.7 33.4
------- ------- -------
130.7 139.7 280.3
Online 0.4 0.2 0.5
------- ------- -------
Total turnover 131.1 139.9 280.8
------- ------- -------
Turnover in the first six months of 2002 includes £2.2m (2001: £0.5m) of
revenues from sources outside the UK. The audited full year results for 2001
included £1.7m of revenues from outside the UK.
Restated Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
Operating profit
Television 8.6 12.9 25.4
Publishing 8.5 8.0 14.3
Radio 6.0 6.0 10.5
Out of Home 3.0 2.6 5.2
Associates 2.5 2.5 5.9
Pension costs (2.2) (2.1) (4.1)
------- ------- -------
Headline operating profit 26.4 29.9 57.2
Online (1.0) (0.1) (1.8)
Exceptional items (note 3) - - (70.3)
Goodwill amortisation (9.6) (11.2) (22.2)
------- ------- -------
Operating profit/(loss) (FRS3) 15.8 18.6 (37.1)
------- ------- -------
Operating profit in the first six months of 2002 includes £1.1m (2001: £0.2m)
arising outside the UK. The audited full year results for 2001 included £0.7m
of operating profits from outside the UK.
FRS17 pension costs are incurred in Television £1.1m (2001: £1.0m), Publishing
£0.9m (2001: £0.9m), Radio £0.1m (2001: £0.1m) and Out of Home £0.1m (2001:
£0.1m). The audited full year results for 2001 included FRS 17 costs of £2.2m
in Television, £1.6m in Publishing, £0.1m in Radio and £0.2m in Out of Home.
3. Exceptional items
i) Debt restructuring costs
In the second six months of 2001, a provision for exceptional costs amounting to
£5.9m was made to cover costs and charges relating to renegotiating debt
facility terms with the Group's lenders.
ii) Reorganisation costs
A provision for exceptional costs amounting to £9.0m was made in the second six
months of 2001, £6.0m to cover reorganisation initiatives across the Group and
£3.0m to cover reorganisation initiatives in relation to the Publishing
division's new printing plant.
iii) Writedown of investments
Provisions of £5.0m and £56.3m respectively were made in the second six months
of 2001 against the investments in Heart of Midlothian plc ('Hearts') and
Scottish Radio Holdings plc ('SRH') to reflect their market value at December
2001.
4. Net interest payable and similar charges
Restated Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
Interest payable:
Bank loans and overdrafts 11.9 11.7 23.9
CULS and loan note interest 0.7 0.8 1.6
------- ------- -------
Group interest payable before penalty interest 12.6 12.5 25.5
Penalty interest margin 2.5 - -
------- ------- -------
Group interest payable 15.1 12.5 25.5
Share of associates 0.1 0.3 0.4
------- ------- -------
Total interest payable 15.2 12.8 25.9
Interest receivable (0.2) (0.8) (0.5)
------- ------- -------
Net interest payable 15.0 12.0 25.4
Pension finance credit (0.1) (2.1) (4.2)
------- ------- -------
Net interest payable and similar charges excluding exceptional items 14.9 9.9 21.2
Debt restructuring costs (see note 3) - - 5.9
------- ------- -------
Net interest payable and similar charges 14.9 9.9 27.1
------- ------- -------
5. Tax on profit/(loss) on ordinary activities
Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
The charge for taxation is as follows:
Charge for the period at 27.0% (2001: 27.0%) 2.4 4.8 8.1
Share of taxation of associated undertakings 0.7 0.6 1.6
------- ------- -------
3.1 5.4 9.7
Tax credit on online costs/exceptional items (0.3) - (3.4)
------- ------- -------
2.8 5.4 6.3
------- ------- -------
6. Dividends
Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
2002 interim of nil per share (2001: 1.5p) - 4.9 4.9
2001 final paid of 1.5p per share - - 4.7
------- ------- -------
- 4.9 9.6
------- ------- -------
7. Earnings per share
Basic earnings per share (EPS), excluding online costs, exceptional items and
the impact of goodwill amortisation under FRS10, is calculated as follows:
Audited
6 months 6 months full year
2002 2001 2001
Attributable profit for the financial period (£m) 8.4 14.6 26.3
Weighted average number of shares in issue (m) 313.1 311.5 312.7
Earnings per ordinary share (pence) 2.7 4.7 8.4
------- ------- -------
Basic EPS, inclusive of online costs, exceptional items and after goodwill
amortisation under FRS10, in the six months to 30 June 2002 is (0.6p) (six
months to 30 June 2001: 1.1p and audited full year 2001: (22.5p)).
Diluted EPS, excluding online costs, exceptional items and the impact of
goodwill amortisation under FRS10, is calculated as follows:
Audited
6 months 6 months full year
2002 2001 2001
Attributable profit for the financial period (£m) 8.9 15.2 27.4
Weighted average number of shares in issue (m) 324.9 326.6 326.0
Diluted EPS (pence) 2.8 4.6 8.4
------- ------- -------
Diluted EPS, inclusive of online costs, exceptional items and after goodwill
amortisation under FRS10, in the six months to 30 June 2002 is (0.4p) (six
months to 30 June 2001: 1.2p and audited full year 2001: (21.3p)).
8. Intangible assets
Publishing
titles Goodwill Total
£m £m £m
Cost
At 1 January 2002 and 30 June 2002 56.0 312.9 368.9
Amortisation
At 1 January 2002 - 32.5 32.5
Charge for the period - 7.9 7.9
------- ------- -------
At 30 June 2002 - 40.4 40.4
------- ------- -------
Net book value at 30 June 2002 56.0 272.5 328.5
------- ------- -------
Net book value at 31 December 2001 56.0 280.4 336.4
------- ------- -------
Publishing titles comprise the masthead values ascribed to the Group's two
principal newspaper titles on acquisition, being The Herald (£50.0m) and the
Evening Times (£6.0m). Mastheads are not subject to annual amortisation, but are
reviewed annually for any impairment.
Goodwill comprises capitalised goodwill on acquisitions completed since 1
January 1998 and is being amortised on a straight-line basis over 20 years.
9. Investments
Associated Other
undertakings investments Total
£m £m £m
At 1 January 2002 89.8 3.5 93.3
Share of associated undertakings 1.8 - 1.8
Dividend received from associated undertaking (1.7) - (1.7)
Goodwill amortisation (1.7) - (1.7)
Loan stock repaid (0.2) - (0.2)
------- ------- -------
At 30 June 2002 88.0 3.5 91.5
------- ------- -------
The investment in GMTV included above in associated undertakings represents only
the loan stock element of £0.3m (2001: £0.5m); the equity accounted losses for
GMTV are shown at Note 10.
10. Provisions for liabilities and charges
Restated Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
Deferred taxation 1.4 0.9 1.4
Equity accounted losses 1.0 1.8 1.3
Other provisions 7.3 1.8 12.9
------- ------- -------
9.7 4.5 15.6
------- ------- -------
Equity accounted losses represents the equity accounted losses on GMTV.
11. Reconciliation of movements in equity shareholders' funds
Restated Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
(Loss)/profit for the period (1.9) 3.3 (70.5)
Dividends - (4.9) (9.6)
------- ------- -------
Retained loss for the period (1.9) (1.6) (80.1)
Increase in share premium 0.7 13.2 14.0
Shares issued - 0.1 0.1
Movement in shares to be issued (1.3) (26.4) (26.5)
Amount deducted in respect of shares issued to QUEST - - (0.2)
Actuarial gains/(losses) 0.1 (4.9) (48.2)
Deferred tax thereon - 1.5 14.5
------- ------- -------
Net movement in shareholders' funds (2.4) (18.1) (126.4)
------- ------- -------
Opening shareholders' funds as previously stated 97.8 225.8 225.8
Prior year adjustment - (1.6) (1.6)
------- ------- -------
Opening shareholders' funds restated 97.8 224.2 224.2
------- ------- -------
Closing equity shareholders' funds 95.4 206.1 97.8
------- ------- -------
12. Reconciliation of operating profit to operating cash flow
Restated Audited
6 months 6 months full year
2002 2001 2001
£m £m £m
Group operating profit (before online costs, exceptional items and 23.9 27.4 51.3
FRS10)
Depreciation and other non-cash items 2.9 3.7 6.4
(Increase)/decrease in stock (0.7) 5.4 7.8
Increase in debtors (6.2) (1.6) (2.3)
Decrease in creditors (2.8) (8.2) (12.7)
Reorganisation and debt restructuring costs (5.1) (1.1) (3.6)
Internet development costs - (2.2) (3.5)
------- ------- -------
Net cash inflow from continuing operations 12.0 23.4 43.4
------- ------- -------
13. Financing and post balance sheet events
The Group has now finalised legal documentation with its lenders on the
renegotiation of the Group's bank debt and 2010 loan note facilities with the
new arrangements becoming effective on 18 July 2002.
As discussed in the 2001 Annual Report, the restructured facilities provide
sufficient treasury headroom for the Group's needs through to 30 June 2003.
The Group has undertaken to refinance the bank debt and 2010 loan notes by 30
June 2003 or, if necessary, to make disposals to ensure repayment at that later
date.
Following the early termination of the Group's 10-year currency and interest
rate swap and hedging arrangements related to the Group's former debt and
borrowing facilities a £3.7m cash gain was realised due to favourable movements
in UK and US interest rates. Also in July 2002, an exchange translation gain
of £5.0m arising from favourable foreign exchange rate movements was realised.
Both of these items will be treated as exceptional gains in the second half of
2002.
An exceptional provision of £5.1m will also be made in the second half in
respect of the onerous nature of the back end fee included in the debt
restructuring agreement. In addition, a further provision for £3.5m will be
made to cover additional costs and charges relating to renegotiating debt
facility terms with the Group's lenders and in writing off unamortised costs
from the previous facilities. These items will also be recognised in the second
half of 2002.
14. Contingent liability
The Group has received a legal claim from one of the former shareholders in
Ginger Media Group Limited pursuing the final tranche of share-based
consideration which would have been payable had all of the related contractual
terms been met. The Group will vigorously defend this matter and has submitted
a substantial counter-claim. No provision has been made in the financial
statements since the directors are of the opinion that the claim can be
successfully resisted.
15. Mailing
A copy of this statement is being sent to all shareholders on 23 September 2002
and will be available for inspection by members of the public at the Company's
registered office at 200 Renfield Street, Glasgow.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 hours ago Centrica
- 3 hours ago Northern Bear
- 3 hours ago Weir Group
- 4 hours ago Legal & General Group
- 4 hours ago Legal & General Group