Interim Management Statement

RNS Number : 9842S

Trinity Mirror PLC

14 November 2013

 



Trinity Mirror plc

14 November 2013

INTERIM MANAGEMENT STATEMENT

17 weeks ended 27 October 2013

Trinity Mirror plc is today issuing an Interim Management Statement covering the 17 weeks of trading to 27 October 2013 ('the period') and describing the Group's financial position and performance, updated to the latest practicable date.

Key Highlights

·      Board anticipates that the Group's performance for the year will be at the higher end of market expectations

·      Revenue trends, both print and digital, have continued to improve as we progressed through the second half, with third quarter revenues down 5% and October down 3%, compared to declines of 6% in the second quarter and 11% in the first quarter

·      Accelerating growth in digital audience with average monthly unique users¹ up 68% year on year in the period to 45 million and page views² up 65% year on year in the period to 240 million across our publishing operations with digital display advertising revenue growing by 27% year on year in the period

·      Continued strong cash generation enabling the repayment of £54.5 million of maturing debt in October from cash flow with net debt falling by £18 million to £102 million in the period

Commenting on the interim management statement for the period, Simon Fox, Chief Executive, Trinity Mirror plc, said:

"Our transformation programme continues to make good progress and we are beginning to see tangible signs that our strategy is delivering with improving revenue trends, strong growth in digital audience and continued tight management of the cost base, contributing to robust cash flows with falling leverage.

Although I expect continued volatility in revenues, the progress we are making provides the Board and I with confidence that our performance for the year will be at the higher end of market expectations."

Revenues

	H1	17 weeks	YTD
	%	%	%
Circulation	(6)	(1)	(4)
Advertising	(13)	(11)	(12)
Print	(13)	(11)	(12)
Digital	(11)	(9)	(10)
Printing	(2)	-	(1)
Other	(6)	2	(3)
Revenue	(9)	(5)	(7)

¹ Average monthly unique users for July to October 2013 versus July to October 2012 (ABCe and Omniture)

² Average monthly page views July to October 2013 versus July to October 2012 (Omniture)

Revenue trends have improved during the period compared to the first half. In particular, we are pleased with the improving circulation revenue trends with the rate of decline falling to 1.2% reflecting the benefit of cover price increases and a strong circulation volume performance. The Daily Mirror in particular continues to achieve volume trends ahead of the market, reflecting in part its recent redesign and innovative brand campaign (#Madeuthink).

Print advertising revenues declined by 11% during the period with display down 13% and classified categories down 8%. During October, print advertising revenues declined by 6%.

Digital advertising revenues declined by 9% during the period with display advertising up 27% and digital classified advertising down 23%. On an underlying basis, excluding Trinity Mirror Digital Property which was disposed of during the period, digital advertising revenues declined by 5% and digital classified advertising revenues declined by 18% in the period. Although classified advertising revenues were down year on year, we have experienced a continued improvement in recruitment advertising trends.

We have delivered accelerating growth in digital audience with average monthly unique users increasing 68% year on year in the period to 45 million compared to the year on year growth of 37% in the first half with page views up 65% year on year in the period to 240 million compared to growth of 49% in the first half. Growth is being driven by our investment in accelerating the Group's digital capabilities with our core websites now operating on a new digital content management system which has enhanced features and is fully mobile enabled.

Printing revenues for the period were flat with revenues from new contracts being offset by reduced volumes from our customers which also impacted revenues from newsprint and waste.

Other revenues grew in the period driven by the new contracts secured by our sports contract publishing business including the match day programmes contract for Manchester United and growth in digital revenues from both publishing and our specialist digital marketing services businesses.

Total digital revenues, on an underlying basis, fell in the period by 2% with growth of 4% during October, compared to the 9% decline in the first half. The improved performance reflects strong growth in digital display advertising and growth in digital other revenues from both publishing and our specialist digital marketing services businesses which has substantially offset the decline in digital classified advertising revenues.

Financing

Cash flows remained robust with net debt on a contracted basis* reducing by £18 million to £102 million during the period. Net debt on a contracted basis has reduced by £55 million since December 2012 and we anticipate a further decline for the remainder of the year.

Net debt on a contracted basis has fallen during the period as follows:

	£m
Net debt as at 30 June 2013	(120)
Operating cash flows, capital expenditure and working capital	29
Pensions deficit funding payments	(3)
Interest payments	(1)
Corporation tax payments	(10)
Disposal of Trinity Mirror Digital Property**	3
Net debt as at 27 October 2013	(102)

*       assuming that the private placement loan notes and related cross-currency interest rate swaps are not terminated prior to their maturity

**     Trinity Mirror Digital Property was disposed of during the period

The Group repaid £54.5 million of maturing debt during the period and had cash balances of £10 million at the period end. The next repayment of the private placement loan notes is £44.2 million in June 2014 with the remaining £68.3 million due in June 2017.

Net debt on a statutory basis, including the fair value asset of the cross-currency interest rate swaps and converting the US$ denominated private placement loan notes at the period end exchange rate, fell by £17 million to £91 million.

The Group has in place a £110 million bank facility which is committed to August 2015. There have been no drawings on the facility.

Disposal

On 4 September 2013, the Group announced the disposal of Trinity Mirror Digital Property Limited to Zoopla Property Group Limited for £3.3 million. The disposed business had revenues of £2.9 million and made an operating profit of £0.5 million in the prior year.

Non-recurring items

Restructuring costs for the year are expected to be broadly in line with our previous guidance of £10 million and the Group remains on track to deliver at least £10 million of structural cost saving for the year.

Capital expenditure

The Group continued its investment programme in new publishing systems and expects total capital expenditure for the year to be below the guidance of £15 million due to phasing.

Other matters

The Company previously announced that:

·      A current and a former journalist were arrested as part of the Metropolitan Police Operation Elveden (the investigation relating to alleged inappropriate payments to public officials). The current employee has been informed that no charges will be brought against him and the former employee has been charged.

·     Two current and two former journalists employed by the Group were arrested in connection with Operation Weeting (the investigation into alleged phone hacking). The Company continues to co-operate with the police in their investigations and none of the journalists have been charged.

·      Its subsidiary, MGN Limited ('MGN') the publisher of the Group's national newspapers, has been notified by the Metropolitan police that they are at a very early stage in investigating whether MGN is criminally liable for the alleged unlawful conduct by previous employees in relation to phone hacking on the Sunday Mirror.

·      MGN, had received Particulars of Claim in four civil claims alleging phone hacking and was challenging the basis of those claims. The application to strike out two of the claims has not been successful. A linked application to challenge the basis on which the two other claims were made was also unsuccessful. MGN continues to contest the four claims vigorously.

We will not accept wrong doing within our businesses and take these allegations seriously. In addition to co-operating with the police we have asked external lawyers to investigate all the allegations that have been made against our employees.

It is too soon to know how these matters will progress and their financial impact. Further updates will be made if there are any significant developments.

Conference call

Trinity Mirror will be holding a conference call this morning for analysts and investors at 8.00am. The dial-in number is 020 3426 2876 and the pin code is 91405299#.

Enquiries:

Trinity Mirror plc

Simon Fox, Chief Executive                                                   020 7293 3553

Vijay Vaghela, Group Finance Director                                   020 7293 3553

Brunswick

Mike Smith, Partner                                                                020 7404 5959

Nick Cosgrove, Director                                                         020 7404 5959

Forward looking statements

Statements contained in this Interim Management Statement are based on the knowledge and information available to the Company's directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Interim Management Statement involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Interim Management Statement contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward looking statements.

 

END

 

 

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