Final Results - Year Ended 2 Jan 2000, Part 2
Trinity Mirror PLC
17 March 2000
Part 2
Consolidated profit and loss account - statutory basis
53 weeks ended 2 January 2000 (1998: 52 weeks)
Before Before
excep- Excep- Excep- Excep-
tional tional Total tional tional Total
items items 1999 items items 1998
Note £m £m £m £m £m £m
_________________________ _________________________
Turnover
Continuing 340 - 340 321 - 321
operations
Acquisitions 254 - 254 - - -
_________________________ _________________________
594 594 321 321
Discontinued 2 - 2 21 - 21
operations
_________________________ _________________________
2 596 - 596 342 - 342
_________________________ _________________________
Net operating
expenses
Continuing (256) (3) (259) (243) (4) (247)
operations
Acquisitions (202) (5) (207) - - -
_________________________ _________________________
(458) (8) (466) (243) (4) (247)
Discontinued (3) - (3) (18) - (18)
operations
_________________________ _________________________
(461) (8) (469) (261) (4) (265)
_________________________ _________________________
Group 2
operating
profit
Continuing 84 (3) 81 78 (4) 74
operations
Acquisitions 52 (5) 47 - - -
_________________________ _________________________
136 (8) 128 78 (4) 74
Discontinued (1) - (1) 3 - 3
operations
_________________________ _________________________
Total 135 (8) 127 81 (4) 77
operating profit
Share of
exceptional 3 - 1 1 - - -
item of
associated
undertaking
(continuing)
(Loss)/profit on 3 - (5) (5) - 17 17
termination/sale
of operations
(discontinued)
Profit on ordinary
activities _________________________ _________________________
before finance costs 135 (12) 123 81 13 94
Net interest (19) - (19) (8) (2) (10)
payable _________________________ _________________________
Profit on
ordinary 116 (12) 104 73 11 84
activities
before
taxation
Taxation 4 (31) 3 (28) (23) 2 (21)
_________________________ _________________________
Profit on
ordinary 85 (9) 76 50 13 63
activities _________________ _________________
after taxation
Dividends 5 (46) (20)
__________ _________
Retained
profit for the 30 43
financial year __________ _________
Earnings per 6
share (pence)
Underlying 45.5 35.9
earnings per
share
Exceptional (4.9) 9.5
items __________ _________
Earnings per 40.6 45.4
share - basic __________ _________
Earnings per 40.2 45.0
share - __________ _________
diluted
Consolidated profit and loss account - unaudited pro forma basis
52 weeks ended 2 January 2000 (1998: 52 weeks)
Before Before
excep- Excep- Excep- Excep-
tional tional Total tional tional Total
items items 1999 items items 1998
Note £m £m £m £m £m £m
___________________________ ________________________
Turnover
Continuing 1,053 - 1,053 1,008 - 1,008
operations
Discontinued 10 - 10 31 - 31
operations ___________________________ ________________________
2 1,063 - 1,063 1,039 - 1,039
Net operating ___________________________ ________________________
expenses
Continuing (828) (10) (838) (782) (4) (786)
operations
Discontinued (14) - (14) (36) - (36)
operations ___________________________ ________________________
(842) (10) (852) (818) (4) (822)
___________________________ ________________________
Group operating profit
Continuing 225 (10) 215 226 (4) 222
operations
Discontinued (4) - (4) (5) - (5)
operations ___________________________ ________________________
Group 2 221 (10) 211 221 (4) 217
operating
profit
Share of
results of 3 - 3 8 - 8
associated ___________________________ ________________________
undertakings
Total 224 (10) 214 229 (4) 225
operating
profit
Share of
exceptional
item of 3 - 2 2 - - -
associated
undertakings
(continuing)
Profit on
termination/ 3 - 25 25 - 4 4
sale of ___________________________ ________________________
operations
(discontinued)
Profit on
ordinary 224 17 241 229 - 229
activities
before finance costs
Net interest (56) (4) (60) (81) (2) (83)
payable ___________________________ ________________________
Profit on
ordinary 168 13 181 148 (2) 146
activities
before
taxation
Taxation 4 (45) 5 (40) (44) 2 (42)
___________________________ ________________________
Profit on
ordinary 123 18 141 104 - 104
activities __________________ ________________
after
taxation
Dividends 5 (46) (42)
__________ __________
Retained
profit for 95 62
the financial __________ __________
year
Earnings per 6
share (pence)
underlying 42.6 36.1
earnings per
share
Exceptional items 6.2 -
__________ __________
Earnings per 48.8 36.1
share - basic __________ __________
-
Earnings per 48.6 36.0
share - diluted
__________ __________
The pro forma financial has been extracted from a statement which will be
subject to a separate review report by the auditors.
Consolidated balance sheet
as at 2 January 2000
1999 1998
£m £m
Fixed assets
Intangible assets 1,768 349
Tangible assets 433 123
Investments 11 5
____________________________________________________________
2,212 477
____________________________________________________________
Current assets
Stocks 14 3
Debtors 161 56
Cash at bank and in hand 50 29
____________________________________________________________
225 88
____________________________________________________________
Creditors: amounts
falling due within one year
Bank loans, loan
notes and overdrafts (123) (10)
Obligations under (7) (4)
finance leases
Other creditors (267) (69)
____________________________________________________________
(397) (83)
____________________________________________________________
Net current (172) 5
(liabilities)/assets
____________________________________________________________
Total assets less 2,040 482
current liabilities
Creditors: amounts falling
due after more than one year
Bank loans, loan notes (649) (32)
Obligations under (50) (49)
finance leases
Other creditors (3) (9)
____________________________________________________________
(702) (90)
____________________________________________________________
Provisions for liabilities and
charges (55) (12)
____________________________________________________________
Net assets 1,283 380
____________________________________________________________
Equity capital and
reserves
Called up share 29 14
capital
Share premium account 1,072 212
Revaluation reserve 5 5
Profit and loss 177 149
account
____________________________________________________________
Equity shareholders' 1,283 380
funds
____________________________________________________________
Gearing 60.7% 17.4%
Consolidated cash flow statement - statutory basis
53 weeks ended 2 January 2000 (1998: 52 weeks)
1999 1998
£m £m
Net cash flow from 192 91
operating activities
____________________________________________________________
Net cash flow from
returns on (26) (12)
investments and
servicing of finance
____________________________________________________________
Taxation paid (53) (18)
____________________________________________________________
Net cash flow before 113 61
investing activities
____________________________________________________________
Capital expenditure
and financial (35) (22)
investment
Purchase of tangible
fixed assets
Sale of tangible - 1
fixed assets
____________________________________________________________
Net cash flow from
capital expenditure (35) (21)
and financial
investment
____________________________________________________________
Net cash flow before
acquisitions and 78 40
disposals
____________________________________________________________
Acquisitions and disposals
Sale of investment/subsidiary 4 33
undertaking
Purchase of subsidiary (421) (3)
undertakings
Bank overdraft (1) -
acquired
____________________________________________________________
Net cash flow from (418) 30
acquisitions and
disposals
Equity dividends paid (28) (19)
____________________________________________________________
Net cash before (368) 51
financing
____________________________________________________________
Financing
Issue of shares 6 1
New unsecured loans 645 -
Repayment of (291) (72)
unsecured loans (4) (1)
Principal payments
under finance leases
____________________________________________________________
Net cash flow from 356 (72)
financing
____________________________________________________________
Decrease in cash (12) (21)
____________________________________________________________
Opening net debt (66) (117)
Borrowings (drawn (350) 73
down)/repaid
Loan notes on (2) (1)
acquisition
Net debt acquired (350) -
with subsidiary
Other movements 1 -
Decrease in cash (12) (21)
____________________________________________________________
Closing net debt (779) (66)
____________________________________________________________
Notes to the preliminary announcement
1 Basis of preparation
(i) The merger
On 6 September 1999 the merger of Trinity and Mirror Group became effective
and Trinity changed its name to Trinity Mirror plc. Trinity Mirror accounted
for the merger as an acquisition in accordance with Financial Reporting
Standard ('FRS') 6 'Acquisitions and Mergers'. On this basis the statutory
consolidated profit and loss account comprises the results of Trinity for the
full 53 week period and the results of Mirror Group for the period from the 6
September to 2 January 2000.
(ii) Basis of pro forma financial information
The pro forma consolidated profit and loss accounts for 1998 and 1999 are
derived from the consolidated financial statements of both Trinity and Mirror
Group. The pro forma financial information in respect of 1999 includes 53
weeks of Trinity (1998:52 weeks) and 52 weeks of Mirror Group (1998:53 weeks).
The pro forma consolidated profit and loss accounts have been presented as if
the merger took place on the first day of each of the financial accounting
periods presented and include adjustments made by Trinity Mirror management
that it believes to be reasonable. The adjustments primarily reflect the
impact of fair value adjustments arising from the acquisition and the interest
charge implications of the debt incurred from the assumed date of completion
of the merger.
(iii) Accounting policies
The statutory basis financial information set out in the preliminary
announcement has been prepared in accordance with applicable accounting
standards.
The financial information (including the pro forma financial information) for
the 53 weeks ended 2 January 2000, and as that date, has been prepared on the
basis of accounting policies which have been consistently applied by Trinity
Mirror (formerly Trinity) in both 1999 and 1998, except for the adoption in
1999 of FRS 12 'Provisions, Contingent Liabilities and Contingent Assets' and
FRS 13 'Derivatives and Other Financial Instruments - Disclosures'. Adoption
of these new accounting standards has had no effect on the current or prior
year results.
2 Turnover
(i) the analysis of the Group's turnover is as follows:
Statutory basis Pro forma basis
1999 1998 1999 1998
£m £m £m £m
By geographical
destination:
United Kingdom 592 321 1,048 1,003
Continental Europe 4 - 14 13
Rest of the World - 21 1 23
_____________ ______________
596 342 1,063 1,039
_____________ ______________
Statutory Pro forma
basis basis
1999 1998 1999 1998
£m £m £m £m
By type:
Advertising 333 240 558 540
Circulation 173 68 393 390
Other (including 90 34 112 109
discontinued activities)
_____________ _______________
596 342 1,063 1,039
_____________ _______________
Statutory Pro forma
basis basis
1999 1998 1999 1998
By division: £m £m £m £m
National and sports 155 - 425 418
newspapers
Regional and Scottish 418 311 581 554
national newspapers
Magazines and 18 10 34 30
exhibitions
New media and 1 - 3 2
interactive services
Other (including 4 21 20 35
discontinued activities)
_____________ _______________
596 342 1,063 1,039
_____________ _______________
(ii) the analysis of the Group's operating profit (before
exceptionals ) is as follows:
Statutory Pro forma
basis basis
By division: 1999 1998 1999 1998
£m £m £m £m
National and sports 33 - 84 81
newspapers
Regional and Scottish 103 76 138 139
national newspapers
Magazines and 4 2 8 7
exhibitions
New media and (4) - (6) -
interactive services
Other (including (1) 3 (3) (6)
discontinued activities)
_____________ _______________
135 81 221 221
_____________ _______________
3 Exceptional items Statutory Pro forma basis
basis
Exceptional items in £m £m
1999 were:
Note
Restructuring and (a) (8) (10)
redundancy costs
________ _________
Included in operating (8) (10)
profit
Gain on sale of (b) - 32
investment
Loss of termination of (c) (5) (7)
operations _________ __________
(13) 15
Share of exceptional (d) 1 2
items of associated _________ __________
undertaking
(12) 17
Net interest payable (e) - (4)
_________ __________
(12) 13
_________ __________
(a) Restructuring costs relate primarily to management severance and
redundancies incurred after the merger with Mirror Group
(b) In March 1999 Mirror Group disposed of its investment in Scottish Media
Group for consideration of £110m. After writing-off the investment and
goodwill,a net profit of £32m was realised. This gain is recognised in
the pro forma profit and loss account only.
(c) The loss on termination of operations related primarily to the closure of
Live TV on 5 November 1999 which resulted in a net loss of £5m and the
costs of the cancelled launch, prior to the merger, of the new
Sporting Life title amounting to £2m.
(d) The share of associate's exceptional item relates to the profit on
disposal of businesses during 1999 by The Press Association, the
Group's associated undertaking (previously held by Mirror Group).
(e) Subsequent to the disposals of the Holborn property and the investment
in Scottish Media Group by Mirror Group, prior to the merger, interest
rate swaps with a principal amount of £200m were cancelled at a cost of
£4m.
4 Taxation
The charge for taxation Statutory Pro forma
is as follows: basis basis
1999 1998 1999 1998
£m £m £m £m
Underlying
United Kingdom 33 22 45 33
corporation tax
ACT written back - (1) - -
Overseas taxation - 1 - 1
Deferred taxation (2) 1 (2) 7
Share of tax of - - 2 3
associated undertakings _______________ _____________
31 23 45 44
Exceptional
United Kingdom (3) (2) (5) (1)
corporation tax
Deferred taxation - - - (1)
_______________ _____________
Total 28 21 40 42
_______________ _____________
The taxation charge has been calculated by applying the directors' best
estimate of the annual effective tax rate to the taxable profit for the
period. The statutory tax rate for the period is 30.25% (1998: 31%). The
underlying tax charge is less than the UK corporation tax rate because of
different treatments for certain expenditure for accounts and tax purposes.
5 Dividends
Subject to approval at the Annual General Meeting, a final dividend of 11.2p
per ordinary share will be paid on 31 May 2000 to shareholders on the register
on 2 May 2000, making a total dividend of 16p for the year (1998: 14.5p).
6 Earnings per share
Earnings per share are based on the profit on ordinary activities after
taxation. They are calculated using the weighted average number of shares in
issue (basic) increased by the number of share options in issue (diluted) as
shown below:
Statutory Pro forma basis
basis
1999 1998 1999 1998
m m m m
Basic 187 139 289 288
_____________ _______________
Diluted 189 140 290 289
_____________ _______________
7 EBITDA
Earnings before interest, tax, depreciation, amortisation and exceptional
items is calculated as follows:
Statutory Pro forma basis
basis
1999 1998 1999 1998
£m £m £m £m
Profit on ordinary 116 73 168 148
activities before
taxation
Net interest 19 8 56 81
payable
Depreciation and 24 13 48 46
amortisation ____________ ___________
159 94 272 275
____________ ___________
8 Consolidated cash flow statement
Net cash flow from operating activities comprises:
1999 1998
£m £m
Operating profit 127 77
Depreciation and 24 13
amortisation
Movements in
working capital:
Stocks (2) 1
Trade and other 29 (4)
debtors and
prepayments
Trade and other 14 4
creditors and
accruals
_______ ________
Net cash flow from 192 91
trading activities _______ ________
9 Analysis of net debt
Other
Loan non
1998 Cash Acquis- notes cash
flow itions issued changes 1999
£m £m £m £m £m £m
Cash at bank and in 29 21 - - - 50
hand
Overdrafts - (33) - - - (33)
Debt due within (10) - - - (80) (90)
one year
Debt due after one (32) (354) (341) (2) 80 (649)
year
Finance leases (53) 4 (9) - 1 (57)
________________________________________________
(66) (362) (350) (2) 1 (779)
________________________________________________
10 Reconciliation of movements in shareholders' funds
1999 1998
£m £m
Opening shareholders' funds 380 330
Profit for the financial year 76 63
Dividends (46) (20)
Goodwill - 6
Effect of share options expensed by (2) (1)
parent
New share capital 875 2
issued (net of expenses) _____ _____
Closing shareholders'funds 1,283 380
_____ _____
11 Acquisitions
On 6 September 1999 Trinity acquired the entire issued share capital of Mirror
Group Limited (formerly Mirror Group PLC).
The provisional fair values attributed to the net assets acquired on
acquisition were:
Book value Provisional Provisional
fair value fair value
adjustments to the
Group
£m £m £m
Intangible fixed 213 1,194 (i) 1,407
assets
Tangible fixed 351 (50) (ii) 301
assets
Fixed assets 11 - 11
investments
Current assets 156 (7)(iii) 149
Creditors falling (184) (13) (iv) (197)
due within one year
Creditors falling (333) - (333)
due after one year
Provisions (33) (15) (v) (48)
_______ ______ ______
Net assets acquired 181 1,109 1,290
_______ ______ ______
(i) The adjustment to intangible fixed assets represents the increase in
carrying value of publishing rights and titles to reflect the directors'
valuations of these assets at acquisition.
(ii) The adjustment to tangible fixed assets represents professional
independent valuations of land, buildings, plant and machinery on a value
to the business basis at the date of acquisition.
(iii)Adjustments to current assets represent independent market valuations of
assets for resale and accounting policy alignment in respect of debtors.
(iv) Adjustments to current liabilities relate to goodwill payments to be made
to advertisers in respect of circulation irregularities that occurred
prior to 6 September 1999 and corporation tax.
(v) Adjustments to provisions are in respect of future costs related to
occupied, let and vacant properties, pension scheme valuation deficits
and deferred tax.
The provisional nature of the fair value adjustments primarily relates to
estimates used in arriving at the pension schemes' valuations.
Fair value of the consideration
£m
Cash 375
Shares issued 870
Cost of acquisition 45
______
Total consideration 1,290
Fair value of net 1,290
assets acquired
______
Goodwill -
______
12 Post balance sheet events
As a condition of the merger of Trinity and Mirror Group, the Secretary of
State for Trade and Industry required the Group to dispose of Belfast
Telegraph Newspapers Limited. The Group announced today that it had reached
agreement with Independent News & Media plc to sell Belfast Telegraph
Newspapers Limited for £300m. The transaction is subject to regulatory
approval.
13 Issue of Annual Report and Accounts
The 1999 Annual Report and Accounts will be posted to shareholders on 3 April
2000. Copies may be obtained after 10 April 2000 from the Secretary, Trinity
Mirror plc at One Canada Square, Canary Wharf, London E14 5AP.
The financial information set out above does not constitute the company's
statutory accounts for the periods ended 27 December 1998 or 2 January 2000.
The financial information for the year ended 27 December 1998 is derived from
the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under S.237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the period ended 2 January
2000 will be finalised on the basis of the financial information presented by
the directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the company's Annual General Meeting.
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