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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