Interim Results
Trinity Mirror PLC
31 July 2003
31 July 2003
Interim Results
for the 26 weeks ended 29 June 2003
Trinity Mirror plc announces the Group's interim results for the 26 weeks ended
29 June 2003.
Chief Executive's review
• Committed to effectively driving Group assets to unlock value
• Performance based strategy to stabilise, revitalise and grow
• £25 million net of re-investment annualised cost savings in 2005. £4
million in 2003 and an incremental £16 million in 2004
• Disposal of titles in Northern Ireland
• Increase in interim dividend of 3.8%, the first increase since 2000
and a policy to progressively increase dividends
• Commitment to reduce net debt
Operational highlights
• Group operating profit(1) (2) up 5.8%.
• Operating margins(1) (2) increased from 17.3% to 18.4% with regional
newspaper titles (excluding Metros) improving operating margin(1) from 24.3%
to 25.2% and National titles improving operating margin from 15.0% to 15.6%
• Strong operating cash flow with net debt falling £16.9 million to
£649.2 million
• Incremental cost savings of £5.6m. This is in addition to savings of
£32.8 million achieved in 2002. On target to achieve £42.0 million of cost
savings by end of 2003
Financial highlights
Like-for-like(1) Actual
(pre exceptional items(2) (3)) (post exceptional items)
2003 2002 % 2003 2002 %
£m £m Change £m £m Change
Turnover 551.5 553.6 -0.4% 551.6 559.6 -1.4%
Group operating 101.4 95.8 +5.8% 100.3 89.9 +11.6%
profit
Profit before tax 80.4 78.4 +2.6% 79.4 72.1 +10.1%
Earnings per 19.0p 18.4p +3.3% 18.9p 16.9p +11.8%
share
Dividend per 5.5p 5.3p +3.8%
share
Net debt 649.2 666.1
(1) Adjusted to exclude the results of Post Publications Limited and Ethnic
Media Group Limited which were disposed of in June 2002, Channel One which
ceased trading in November 2002 and Wheatley Dyson & Son Limited which was
disposed of in February 2003. During the 26 weeks ended 29 June 2003 these
businesses achieved operating profit of £nil (2002: £0.5 million).
(2) Excludes operating exceptional items of £1.1 million pre tax (2002: £6.4
million).
(3) Excludes net exceptional items of £1.0 million pre tax (2002: £6.3 million).
Sir Victor Blank, Chairman of Trinity Mirror plc, commented:
'The Group has performed well against a difficult external environment. Our
priority in February was to improve the earnings growth in 2003 and we are on
track to achieve this.
Sly Bailey has made a very important contribution in the last six months and has
breathed new life into the business. Today, Sly has provided a clear plan
highlighting what this business needs to improve its performance and returns to
our shareholders.
The Board is enthusiastic about the plans and the progress being made.'
Sly Bailey, Chief Executive of Trinity Mirror plc, commented:
'My vision for Trinity Mirror is to unlock its hidden potential for growth. The
actions I am putting in place will transform our business so that its value as a
whole is undeniably more than the sum of the parts. I am confident that we will
achieve our objective of creating a fundamentally stronger and better performing
company.'
Enquiries:
Trinity Mirror plc 020 7293 3000
Sly Bailey, Chief Executive
Vijay Vaghela, Group Finance Director
Nick Fullagar, Director of Corporate Communications
Finsbury 020 7251 3801
Rupert Younger
James Leviton
31 July 2003
Interim Results for the 26 weeks ended 29 June 2003
Chairman's Statement
Financial highlights
2003 2002 change
£m £m %
Turnover
- actual 551.6 559.6 -1.4%
- like-for-like (1) 551.5 553.6 -0.4%
Group operating profit pre exceptional items (2)
- actual 101.4 96.3 +5.3%
- like-for-like (1) 101.4 95.8 +5.8%
Group operating profit post exceptional items
- actual 100.3 89.9 11.6%
- like-for-like (1) 100.3 89.4 +12.2%
Profit before tax pre exceptional items (3) 80.4 78.4 +2.6%
Profit before tax post exceptional items 79.4 72.1 +10.1%
Per share Pence Pence
Underlying earnings pre exceptional items 19.0p 18.4p +3.3%
Basic earnings post exceptional items 18.9p 16.9p +11.8%
Dividend per share 5.5p 5.3p +3.8%
(1) Adjusted to exclude the results of Post Publications Limited and Ethnic
Media Group Limited which were disposed of in June 2002, Channel One which
ceased trading in November 2002 and Wheatley Dyson & Son Limited which was
disposed of in February 2003. During the 26 weeks ended 29 June 2003 these
businesses achieved operating profit of £nil (2002: £0.5 million).
(2) Excludes operating exceptional items of £1.1 million pre tax (2002: £6.4
million).
(3) Excludes net exceptional items of £1.0 million pre tax (2002: £6.3
million).
(4) Accounting policies used in the preparation of the unaudited financial
information for the 26 weeks ended 29 June 2003 are consistent with those set
out in the Group's financial statements for the 52 weeks ended 29 December 2002.
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. For 2003, and for the 52 weeks ended 29 December
2002 central costs have been separately disclosed within the segmental analysis
of operating profit and therefore the comparatives for the 26 weeks ended 30
June 2002 have been restated to reflect this change. This change in presentation
has no impact on the Group or total operating profit in 2003 or 2002.
Chief Executive's review
Shortly after her appointment as Chief Executive, Sly Bailey undertook a review
of the performance, organisation and management of the Group. The objective of
the Chief Executive's review was to identify the actions required to deliver
significantly enhanced shareholder value. The review considered all options open
to the Group and was conducted under the direct control of the Chief Executive
and her executive team without external consultants.
Overview of Key Findings
The review highlighted the potential for improving performance and creating
shareholder value by running Trinity Mirror more effectively as a Group of
publishing businesses. As a first step, the Chief Executive identified the need
to lay a firm foundation in terms of this year's performance principally through
a combination of tighter cost management disciplines and a more focused
publishing approach. The impact of this first step can already be seen in the
interim results and the outlook for the full year.
Looking forward, the review clarified the direction the business needs to take
to drive stronger growth and margin performance. The Regional businesses will
remain true to the key planks of 'from Biggest to Best' but will increase the
rate of performance improvement, seeking to take full advantage of their
positions of local leadership and the scale of the portfolio as a whole. The
National titles will dramatically increase their focus on the basics of
publishing to deliver improved profitability and cash flows through better
portfolio management and sharper positioning of individual titles.
The review has confirmed that with changes to the organisation, management and
focus of corporate activities, the value of the Group as a whole is undeniably
greater than the sum of its constituent parts. To deliver the required
transformation, Sly Bailey has articulated a 3 phase programme - stabilise,
revitalise and grow - that will be implemented by management to secure the
transformation of the Group's performance. Active portfolio management rather
than passive administration will be a core part of management's agenda. As a
result of the review, Sly Bailey and the management team are already prepared to
make specific commitments to improve profitability, generate cash and increase
dividends.
The Recent History
Although the merger of Trinity and Mirror Group took place nearly four years
ago, the Chief Executive's review revealed that the degree of integration,
sharing of best practice and capture of obvious economies of scale between the
businesses remains limited. There was some effort to address these issues in
2000 but the barriers to change were not overcome. Once the merger process was
formally completed, the two main businesses moved in different directions. The
Regionals focused on disciplined delivery of improved performance through 'from
Biggest to Best', while the Nationals suffered from a lack of firm management
focus and market understanding.
The Regionals Division
The review confirmed that Trinity Mirror's regional businesses are strong and
have benefited from the 'from Biggest to Best' initiative and have robust,
market leading positions in many of the UK's most important metropolitan
markets.
However, the review also highlighted that the division has significant scope for
further improvement. Circulation, cover pricing, new product development and
further cost reduction through delayering management structures and
regionalisation are all potential drivers of top and bottom line growth. These
will be pursued with more vigour and focus than has been the case to date in
order that the Division will achieve its full potential. The Chief Executive has
already restructured the management team and will be accelerating the change
programme to deliver this vision.
The Nationals Division
The National titles remain very large consumer franchises. The review confirmed
the obvious fact that the National titles need to be far more robust than they
are. Having identified this early in the review, the Chief Executive has taken
direct personal control for their publishing, removed existing management,
introduced new talent, and set about the task of improving performance.
At the heart of this challenge lies the need for the organisation to get much
better at the core job of publishing. The titles need a much deeper
understanding of readers, the role that the newspaper plays in readers' lives
and what needs to be in place to trigger the decision to purchase. There is also
a need to strengthen the focus, skills and discipline of advertising sales
within the National titles. The change in advertising sales management announced
recently reflects this priority.
During the last quarter, the editorial tone of the Daily Mirror has evolved with
the clear pursuit of seriously good popular journalism rather than just 'serious
news'. The title must be about what matters to readers alone - and must see the
world through their eyes. Research conducted as part of the review confirmed
that readers want a blend of what they define as news which includes both
serious and fun elements. The decision to close 'M' magazine was taken as it was
not sufficiently valued by readers and advertisers.
The review also identified a pressing need to manage the interactions between
titles more effectively, for example the Group is committed to eliminating the
unproductive competition between the Group's titles in Scotland and on Sundays.
Editorial changes, new product propositions and closer links between the
management of the titles will shortly be in place to help this.
The strategic vision for the National titles is clear. Management's overriding
approach to publishing is customer focused, editorially driven and marketing
led. This will ensure that the titles are actively managed as a portfolio
delivering strong cashflows through a relentless focus on innovation to meet the
evolving needs of readers and advertisers and a sustained focus on reducing
costs.
Sale of Irish titles
As part of the renewed focus, it has been decided to sell our regional titles in
Belfast, Derry and Donegal.
Other business activities
The Group's other major business activities (the Sports Division, Magazines &
Exhibitions and Arrow Interactive (formerly Voice Media)) were not a major focus
of the review at this stage. However, it is clear that they all present
important although different opportunities for the Group. They will be the
subject of more formal reviews through this year's strategic planning and
budgeting activities.
The Corporate Centre
The Chief Executive's review revealed that there is a pressing need for the
corporate centre to increase its focus on adding value to the businesses. This
will be achieved firstly by adopting a much more interventionist stance in the
setting of strategies and budgets for business units. Secondly by becoming
proactive in the process of innovation to ensure that the best revenue growth
opportunities are receiving appropriate funding and management focus. Thirdly by
ensuring that the full value of Trinity Mirror's scale is captured in
manufacturing, supply chain, procurement, content creation/sharing, advertising
sales and the management of 'expert' functions such as Finance, HR and IT. And
finally by identifying and pursuing opportunities from corporate development.
The Transformation Programme and Benefits
The Chief Executive has implemented a three phase programme to transform the
Company's performance.
Phase 1: Stabilise
The first phase of the programme will stabilise current performance and ensure a
robust platform for the future. Costs will be reduced significantly in most
business areas and across most functions through actions such as the
centralisation of Finance, HR and IT. The Regionals Division has this month
delayered its management structure, accelerated its approach to regionalisation
and will pursue further immediate revenue enhancing and cost reducing
activities. Plans to stabilise the National titles and slow the pace of
circulation decline are also being implemented.
The programme will deliver £25 million annualised cost savings in 2005 of which
£4 million will be achieved in 2003 and an incremental £16 million in 2004. This
will involve reduction in staff numbers in the region of 550. Strong cashflows
will enable debt to be reduced (even allowing for the ongoing investment needs
of the businesses) and the Group will adopt a policy of progressive dividend
increases linked to earnings.
Phase 2: Revitalise
This critical phase is well underway in parallel with the continued development
and implementation of phase 1. Within the main businesses, better procedures for
innovation, regular consumer research to drive new insights and ongoing
strengthening of advertising sales capability are already in hand. Trinity
Mirror will redesign its internal processes and ways of working to become a more
agile and efficient Group. For example, a project aiming to improve
manufacturing, reduce newsprint costs and optimise capital expenditure is
already underway. All other group areas will be subject to a similar level of
scrutiny over the coming months.
Phase 3: Grow
Pursuing the opportunities identified in phases 1 and 2 will create the
momentum, financial headroom and the organisational capability to access and
drive value through longer term growth opportunities. We have already assembled
a small strategic development team that is beginning to explore the options and
routes that may lie open.
Benefits
This performance based strategy will deliver enhanced earnings and margins. It
will deliver both better performance from individual businesses and increase the
value of the Group as a whole by capturing the full benefits of scale, sharing
of best practice and ensuring that the right performance pressures and
incentives are in place.
Beyond these immediate commitments, the Chief Executive will indicate further
benefits as and when these become clear.
Review of operations
The initial actions arising from the Chief Executive's review have delivered a
good performance during the first 26 weeks of the year with Group operating
profit before exceptional items increasing 5.8% from £95.8 million to £101.4
million. These results are stated after severance of £1.9 million in relation to
management.
Group revenue fell by 0.4% to £551.5 million (2002: £553.6 million), reflecting
a 2.7% fall in circulation revenue from £191.1 million to £185.9 million
partially offset by a 0.2% increase in advertising revenue from £312.9 million
to £313.4 million and a 5.2% increase in other revenue from £49.6 million to
£52.2 million.
Profit before tax (including disposed businesses) and before exceptional items
increased by 2.6% to £80.4 million. The increase reflects the 5.3% increase in
operating profit which has been partially offset by an increase in financing
costs (net interest payable and other finance income). The increase in financing
costs is primarily a result of the FRS 17 (accounting for pension costs) finance
adjustment which was a credit of £2.7 million in 2002 and is a charge of £1.7
million in 2003 resulting in a net adverse movement of £4.4 million.
Operating exceptional items of £1.1 million have been incurred during the 26
week period, primarily in respect of the cost reduction plans stemming from the
'from Biggest to Best' initiatives offset by profits on the disposal of certain
fixed assets. It is anticipated that a further £15 million of exceptional items
will be incurred during the second half of the year for these initiatives and
the actions arising from the Chief Executive's review.
Earnings per share (including disposed businesses) before exceptional items
increased by 3.3% from 18.4p to 19.0p, reflecting the increased operating profit
which has been partially offset by increased FRS 17 finance costs.
The interim dividend has been increased by 3.8% to 5.5p (2002: 5.3p). It will be
paid on 31 October 2003 to shareholders on the register at 3 October 2003.
Strong operating cash flow of £116.7 million (2002: £101.0 million) contributed
to net debt falling by £16.9 million from £666.1 million at 29 December 2002 to
£649.2 million at 29 June 2003. Net debt is expected to rise marginally over the
remainder of the year due to the continued capital expenditure in relation to
the regional press investment.
Net assets at 29 June 2003 were £1,130.4 million (Dec 2002: £1,140.2 million),
supported by intangible fixed assets of £1,724.6 million (Dec 2002: 1,724.5
million). Included within net assets is a net pension fund deficit of £215.1
million, an increase of £52.0 million from 29 December 2002 when the deficit
stood at £163.1 million. The increase in the net pension fund deficit has been
offset against the accumulated profit and loss reserve. The increase in the
deficit has been driven by a reduction in the AA corporate bond rate used to
discount liabilities and is not related to an underlying reduction in asset
values which increased by £22.1million (net of tax) during the period.
Regionals division
The Regionals division now incorporates the Group's regional Digital Media
activities. The turnover and operating profit of the division were as follows:
2003 2002 Change Margin Margin
£m £m % 2003 2002
Turnover
Regionals Newspaper titles
excluding Metros 257.6 256.9 0.3%
Metros 5.0 4.4 13.6%
Digital Media activities 1.8 0.3 500.0%
Regionals division 264.4 261.6 1.1%
Operating profit
Regionals Newspaper titles
excluding Metros 64.8 62.4 3.8% 25.2% 24.3%
Metros (0.2) (1.1) 81.8%
Digital media activities (2.6) (4.4) 40.9%
Regionals division 62.0 56.9 9.0% 23.4% 21.8%
Overview
The Regionals division (incorporating our Metro titles and Digital Media)
continued to improve performance during the past 6 months with operating profit
increasing by 9.0% to £62.0 million and operating margin improving from 21.8% to
23.4%. The regional newspaper titles (excluding Metros and Digital Media)
increased operating profit by 3.8% from £62.4 million to £64.8 million. The
'from Biggest to Best' initiative continues to deliver revenue and cost benefits
enabling the division to improve profitability in the face of difficult trading
conditions. Incremental cost savings of £3.5 million were achieved during the
period.
A number of our businesses achieved positive year on year performance. In
particular, our businesses in the North East and Scotland achieved double digit
growth in operating profit. Midlands and London and the South East has
experienced more volatile trading. Difficult trading in the Midlands has been
driven by the local re-generation programme in Birmingham, resulting in
substantial short term disruption to the local retail trade, and disappointing
trading in Coventry. In London and the South East advertising conditions
continue to prove difficult, in particular in recruitment.
Advertising
Advertising revenues within the Regionals division increased 0.6% to £204.1
million (2002: £202.9 million). This reflects a fall in advertising revenues for
our regional newspapers titles (excluding Metros) of 0.3%, an increase in
advertising revenue for our Metro titles of 11.4% and our Digital Media
activities achieving advertising revenue of £1.2 million (2002: £nil).
The regional newspaper titles (excluding Metros) achieved growth in advertising
revenues of 0.4% in the second quarter compared to a decline of 0.8% in the
first quarter. Our titles outside London and the South East achieved second
quarter advertising revenues growth of 1.8% compared to 0.7% in the first
quarter.
During the period, outside London and the South East (where advertising revenue
fell by 4.4%) the regional newspaper titles (excluding Metros) achieved growth
of 1.3%. Strong growth in recruitment and property classified, which increased
by 3.0% and 6.3% respectively, has been partially offset by declines in display
and motors classified which fell by 1.6% and 4.7% respectively. Other classified
categories increased by 1.9%. In London and the South East with the exception of
property and other classified advertising which delivered growth of 9.8% and
1.4% respectively, all advertising categories showed declines with falls of
12.8% in recruitment, 7.3% in display and 6.8% in motors.
Our three Metro titles achieved growth in advertising revenue of 11.4% to £4.9
million (2002 : £4.4 million).
The Regional Digital Media activities are now fully embedded within our regional
titles and achieved advertising revenue of £1.2 million following the
introduction of charges for the upload of recruitment advertising to the
internet.
Circulation
Regional newspapers circulation revenue declined marginally by 1.0% to £40.8
million (2002: £41.2 million), with limited cover price increases partially
offsetting volume declines. With the exception of some weekly titles which
increased circulation volumes all titles showed declines in line with the
market.
Disposals
During the period the Group disposed of Wheatley Dyson & Son Limited (suppliers
of stationery) for a consideration of £0.1 million. During the 26 week period to
29 June 2003, Wheatley Dyson & Son Limited contributed £0.1 million revenue
(2002: £0.8 million) and a net profit of £nil million (2002: profit £0.1
million).
Nationals division
The turnover and operating profit of the Group's Nationals division is as
follows:-
2003 2002 Change Margin Margin
£m £m % 2003 2002
Turnover 244.3 249.7 -2.2%
Operating profit 38.2 37.5 1.9% 15.6% 15.0%
Overview
Despite a revenue decline of 2.2% from £249.7 million to £244.3 million the
Nationals division increased operating profit by 1.9% from £37.5 million to
£38.2 million and operating margin from 15.0% to 15.6%.
To stabilise the national titles in terms of market position and circulation
performance, the senior management team of the UK Nationals business has been
restructured. In addition to the new role of General Manager, MGN, changes have
been made in both marketing and advertising.
Circulation
Circulation revenue of the Group's five national titles (and related businesses)
declined by 4.3% from £134.6 million to £128.8 million. This reflects a fall in
volumes being only partially offset by the reinstatement of the Daily Mirror
Monday to Friday cover price to 32 pence in the southern regions of England, a 5
pence cover price increase on the Saturday edition of the Daily Record and a 5
pence cover price increase for all Sunday titles. The cost of price cutting
across the 5 titles was estimated to be £6.5 million (2002 : £8.0 million).
During the period the Daily Mirror circulation volume declined by 6.5%
year-on-year. Adjusted to exclude bulk sales (discontinued from 30 April 2002),
the decline was 5.7%. The disappointing circulation performance during the
period reflects the impact of reduced volumes following the reinstatement of the
Monday to Friday cover price to 32 pence in the southern regions of England.
The Sunday Mirror and The People circulation volume declined, year-on-year, by
7.5% and 16.2% respectively during the period. Adjusted to eliminate bulk sales
the declines were 6.5% and 15.0% respectively.
The Daily Record's and the Sunday Mail's circulation volume in Scotland declined
by 7.3% and 5.0% respectively. The Daily Record circulation continues to be
impacted by the discounting activity in the Scottish marketplace.
Advertising
The Group's national titles managed to limit declines in advertising revenues to
only 0.7% from £97.1 million to £96.4 million during the period despite
continued uncertainty and volatility in the advertising market. The war in Iraq
during the period and the strong advertising performance in June 2002 due to the
football World Cup contributed to a 2.9% decline in the second quarter compared
to a 1.3% increase in the first quarter.
The UK National titles achieved flat, year-on-year, advertising revenues of
£72.0 million for the period. A 3.0% increase in the first quarter has been
offset by a 2.9% decline in the second quarter. Retail advertising continues to
be extremely volatile with no underlying trend emerging due to distortions
created by the war in Iraq, the timing of Easter and the benefits of increased
advertising in June 2002 due to the football World Cup. Despite these factors,
the UK National titles achieved a year on year improvement of 0.7% in retail
advertising. Double digit growth in Motors, Finance and Holidays has been offset
by weaker performance in Mail Order and FMCG.
For our Scottish National titles, advertising revenue fell by 2.8% from £25.1
million to £24.4 million, with strong year-on-year performances in local retail
advertising up 9.5%, travel up 7.5% and entertainment up 20.0% offset by the
volatile recruitment sector which saw declines of 11.3%. National advertising
whilst still marginally below last year has shown greater stability in the
second quarter.
Sports Division
The Sports division achieved strong performance during the period with operating
profit increasing by 20.3% to £7.1 million (2002: £5.9 million). Advertising and
circulation revenue increased by 3.4% and 8.9% respectively. Circulation
revenues benefited from strong circulation performance of the Racing Post which
achieved a year-on-year circulation sale increase of 1.5% for the period and the
benefit of cover price increases.
The development of the division's websites, racingpost.co.uk and smartbet.co.uk,
has progressed encouragingly with revenue increasing by 12.0%.
Magazines and exhibitions
Operating profits in the Magazines and Exhibitions division declined by £0.4
million (down 11.1%) from £3.6 million to £3.2 million. However, part of this
decline was due to lost contribution from titles sold in 2002 and additional
licence costs that secured the long term future of two key businesses (Inside
Housing and the National Boat, Caravan and Outdoor Leisure Show). Whilst our
magazines are performing satisfactorily in difficult advertising conditions,
exhibitions show a one off decline due to a combination of tough markets and the
cancellation of two shows. However, bookings for major shows next year are
already well ahead of the equivalent time last year.
Arrow Interactive
During the period, Voice Media, which specialises in the provision of
interactive telephone services, changed its name to Arrow Interactive. This
followed the acquisition of the business and assets of Quartez, a company
specialising in the provision of mobile data services such as SMS, for £0.3
million. A delay in the transmission of anticipated TV programmes and investment
in expanding the services offered by Arrow Interactive contributed to an
operating loss of £0.2 million (2002 : profit £0.8 million).
Board changes
During the period Philip Graf, Chief Executive, Joe Sinyor, Chief Executive
Newspapers, Mark Haysom, Managing Director National Newspapers and Roger
Harrison, non-executive Director, left the company. Sly Bailey was appointed as
Chief Executive in February 2003 and Vijay Vaghela was appointed as Group
Finance Director in April 2003.
Outlook
The Group continues to deliver a good performance despite an uncertain economic
and advertising environment. The Board believes these uncertain conditions will
continue for the remainder of the year. Management's immediate actions on costs
and focus on the implementation of the Group's strategy underpin the Board's
expectation of a satisfactory outcome for the year.
Sir Victor Blank, Chairman
31 July 2003
Consolidated profit and loss account (unaudited)
for 26 week period to 29 June 2003
26 weeks to 29 June 2003
Before Exceptional After 26 weeks to 52 weeks to
exceptional items exceptional 30 June 29 December
items (note 4) items 2002 2002
notes £m £m £m £m £m
------------------------ ------ ------- -------- -------- ------- --------
Turnover 2 551.6 - 551.6 559.6 1,092.2
------------------------ ------ ------- -------- -------- ------- --------
Group operating profit 3 101.4 (1.1) 100.3 89.9 59.8
------------------------ ------ ------- -------- -------- ------- --------
Share of results of 0.6 - 0.6 0.8 1.5
associated undertakings
------------------------ ------ ------- -------- -------- ------- --------
Total operating profit 102.0 (1.1) 100.9 90.7 61.3
------------------------ ------ ------- -------- -------- ------- --------
Profit on disposals of 4 - 0.1 0.1 0.1 0.1
subsidiary undertakings
Profit on disposal of 4 - - - - 1.7
magazine titles
------------------------ ------ ------- -------- -------- ------- --------
Profit on ordinary 102.0 (1.0) 101.0 90.8 63.1
activities before
interest
------------------------ ------ ------- -------- -------- ------- --------
Net interest payable (19.9) - (19.9) (21.4) (43.0)
Other finance (charge)/ (1.7) - (1.7) 2.7 6.1
income
------------------------ ------ ------- -------- -------- ------- --------
Profit on ordinary 80.4 (1.0) 79.4 72.1 26.2
activities before
taxation
Tax on profit on ordinary 5 (24.9) 0.7 (24.2) (22.6) (45.2)
activities
------------------------ ------ ------- -------- -------- ------- --------
Profit/(loss) on ordinary 55.5 (0.3) 55.2 49.5 (19.0)
activities after
taxation
------------------------ ------ ------- -------- -------- ------- --------
Non-equity minority (0.1) - (0.1) (0.1) (0.3)
interest
------------------------ ------ ------- -------- -------- ------- --------
Profit/(loss) for the 55.4 (0.3) 55.1 49.4 (19.3)
financial period
------------------------ ------ ------- -------- -------- ------- --------
Ordinary dividends on 6 (16.1) (15.5) (51.4)
equity shares
------------------------ ------ ------- -------- -------- ------- --------
Retained profit/(loss) 39.0 33.9 (70.7)
for the financial
period
------------------------ ------ ------- -------- -------- ------- --------
Earnings per share 7
(pence)
------------------------ ------ ------- -------- -------- ------- --------
Underlying earnings per 19.0 18.4 37.1
share
Exceptional items (0.1) (1.5) (43.7)
------------------------ ------ ------- -------- -------- ------- --------
Earnings/(loss) per share 18.9 16.9 (6.6)
- basic
------------------------ ------ ------- -------- -------- ------- --------
Earnings/(loss) per share 18.8 16.9 (6.6)
- diluted
------------------------ ------ ------- -------- -------- ------- --------
All turnover and results arose from continuing operations.
Consolidated statement of total recognised gains and losses (unaudited)
for 26 week period to 29 June 2003
-------------------------------------- -------- -------- --------
26 weeks to 26 weeks to 30 52 weeks to 29
29 June June December
2003 2002 2002
£m £m £m
-------------------------------------- -------- -------- --------
Profit/(loss) for the financial 55.1 49.4 (19.3)
period
Difference between actual and expected 12.0 (81.0) (170.6)
return on pension schemes' assets
Experience losses arising on pension - - (11.1)
schemes' liabilities
Effects of changes in assumptions
underlying the present value of pension
schemes' liabilities (82.6) - (12.4)
Deferred tax asset associated with 21.2 24.3 58.3
movement on pension schemes' deficits
-------------------------------------- -------- -------- --------
Total recognised gains and losses in 5.7 (7.3) (155.1)
the period
-------------------------------------- -------- -------- --------
Consolidated balance sheet (unaudited)
at 29 June 2003
---------------------------------- ------ ------------ -------- --------
29 June 30 June 29 December
2003 2002 2002
notes £m £m £m
---------------------------------- ------ ------------ -------- --------
Fixed assets
Intangible assets 1,724.6 1,849.8 1,724.5
Tangible assets 391.0 383.9 389.9
Investments 10.6 14.2 10.1
---------------------------------- ------ ------------ -------- --------
2,126.2 2,247.9 2,124.5
---------------------------------- ------ ------------ -------- --------
Current assets
Stocks 7.0 7.2 7.3
Debtors 157.6 167.3 152.6
Cash at bank and in hand 39.2 49.4 40.0
---------------------------------- ------ ------------ -------- --------
203.8 223.9 199.9
---------------------------------- ------ ------------ -------- --------
Creditors: amounts falling due
within one year
Bank loans, loan notes and (58.2) (243.5) (66.7)
overdrafts
Obligations under finance leases (4.7) (4.2) (4.9)
Other creditors (227.2) (238.4) (243.8)
---------------------------------- ------ ------------ -------- --------
(290.1) (486.1) (315.4)
---------------------------------- ------ ------------ -------- --------
Net current liabilities (86.3) (262.2) (115.5)
---------------------------------- ------ ------------ -------- --------
Total assets less current 2,039.9 1,985.7 2,009.0
liabilities
Creditors: amounts falling due
after more than one year
Bank loans and loan notes (594.4) (470.1) (599.1)
Obligations under finance leases (31.1) (35.5) (35.4)
---------------------------------- ------ ------------ -------- --------
(625.5) (505.6) (634.5)
---------------------------------- ------ ------------ -------- --------
Provisions for liabilities and (65.2) (68.5) (67.5)
charges
Non-equity minority interest (3.7) (3.7) (3.7)
---------------------------------- ------ ------------ -------- --------
Net assets excluding pension 1,345.5 1,407.9 1,303.3
schemes' assets and liabilities
---------------------------------- ------ ------------ -------- --------
Pension schemes' assets 8 - 16.7 -
Pension schemes' liabilities 8 (215.1) (100.8) (163.1)
---------------------------------- ------ ------------ -------- --------
Net assets including pension 1,130.4 1,323.8 1,140.2
schemes' assets and liabilities
---------------------------------- ------ ------------ -------- --------
Equity capital and reserves
Called-up share capital 29.2 29.2 29.2
Share premium account 1,081.3 1,080.5 1,080.6
Revaluation reserve 4.9 5.0 5.0
Profit and loss account 15.0 209.1 25.4
------------------------------ ------ ------------ -------- --------
Equity shareholders' funds 11 1,130.4 1,323.8 1,140.2
------------------------------ ------ ------------ -------- --------
Consolidated cash flow statement (unaudited)
for 26 week period to 29 June 2003 26 weeks to 29 26 weeks to 30 52 weeks to 29
June June December 2002
2003 2002 (restated)
£m £m £m
notes
------------------------------------- ----- -------- ------- --------
Net cash inflow from operating 9 116.7 101.0 219.0
activities
------------------------------------ ----- -------- ------- --------
Dividends received from associated - 4.3 9.5
undertakings
------------------------------------ ----- -------- ------- --------
Cash inflow from associated - 4.3 9.5
undertakings
------------------------------------ ----- -------- ------- --------
Returns on investments and servicing
of finance
Interest received 0.3 0.5 0.9
Interest paid (20.0) (25.9) (43.7)
Interest element of finance lease (0.8) (1.0) (2.0)
rental payments
Dividends paid to minority (0.1) (0.1) (0.3)
shareholders
------------------------------------ ----- -------- ------- --------
Net cash outflow from returns on (20.6) (26.5) (45.1)
investments and servicing of
finance
------------------------------------ ----- -------- ------- --------
Taxation paid (21.2) (13.3) (39.2)
------------------------------------ ----- -------- ------- --------
Net cash inflow before investing 74.9 65.5 144.2
activities
------------------------------------ ----- -------- ------- --------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (26.9) (16.6) (46.0)
Sale of tangible fixed assets 4.3 0.8 2.8
------------------------------------ ----- -------- ------- --------
Net cash outflow from capital (22.6) (15.8) (43.2)
expenditure and financial
investment
------------------------------------ ----- -------- ------- --------
Net cash inflow before acquisitions 52.3 49.7 101.0
and disposals
------------------------------------ ----- -------- ------- --------
Acquisitions and disposals
Acquisition of business (0.3) - -
Disposals of subsidiary 0.1 15.7 15.7
undertakings
Disposal of magazine titles - - 1.8
------------------------------------ ----- -------- ------- --------
Net cash (outflow)/inflow from (0.2) 15.7 17.5
acquisitions and disposals
------------------------------------ ----- -------- ------- --------
Dividends paid (35.9) (35.9) (51.3)
------------------------------------ ----- -------- ------- --------
Net cash inflow before financing 16.2 29.5 67.2
------------------------------------ ----- -------- ------- --------
Financing
Issue of shares 0.7 1.6 1.7
New unsecured loans - 181.3 325.1
Repayment of unsecured loans (6.2) (211.3) (406.9)
Principal payments under finance (4.5) (5.8) (5.2)
leases
------------------------------------ ----- -------- ------- --------
Net cash outflow from financing (10.0) (34.2) (85.3)
------------------------------------ ----- -------- ------- --------
Increase/(decrease) in cash 6.2 (4.7) (18.1)
------------------------------------ ----- -------- ------- --------
Reconciliation of net cash flow to
movement in net debt
------------------------------------ ----- -------- ------- --------
Increase/(decrease) in cash in the 6.2 (4.7) (18.1)
period
Cash outflow from movement in debt 10.7 35.8 87.0
and lease financing
------------------------------------ ----- -------- ------- --------
Change in net debt resulting from 16.9 31.1 68.9
cash flows
------------------------------------ ----- -------- ------- --------
Movement in net debt in the period 16.9 31.1 68.9
Opening net debt (666.1) (735.0) (735.0)
------------------------------------ ----- -------- ------- --------
Closing net debt 10 (649.2) (703.9) (666.1)
------------------------------------ ----- -------- ------- --------
The comparative figures for the 26 weeks to 30 June 2002 have been restated to
reclassify the dividend paid to non-equity minority interest shareholders (£0.1
million) within returns on investments and servicing of finance. This was
previously reported within dividends paid.
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 29 June 2003 are as set out in the Group's
financial statements for the 52 weeks to 29 December 2002.
2. Turnover
The analysis of the Group's turnover is as follows:
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2002
2003 2002 (restated) (restated)
£m £m £m
------------------------------ -------------- -------- --------
By geographical destination:
------------------------------ -------------- -------- --------
United Kingdom and Republic of 549.1 556.9 1,085.5
Ireland
Continental Europe 2.4 2.4 6.2
Rest of the World 0.1 0.3 0.5
------------------------------ -------------- -------- --------
551.6 559.6 1,092.2
------------------------------ -------------- -------- --------
By type:
------------------------------ -------------- -------- --------
Circulation 185.9 192.0 373.3
Advertising 313.4 316.6 618.2
Other 52.3 51.0 100.7
------------------------------ -------------- -------- --------
551.6 559.6 1,092.2
------------------------------ -------------- -------- --------
By division:
------------------------------ -------------- -------- --------
Regionals division* 264.5 267.6 521.4
Nationals division 244.3 249.7 494.0
Sports division 21.2 19.7 39.4
Magazines and exhibitions 18.5 18.8 31.0
Arrow Interactive (formerly Voice 3.1 3.8 6.4
Media)
------------------------------ -------------- -------- --------
551.6 559.6 1,092.2
------------------------------ -------------- -------- --------
*Regionals division includes turnover relating to Post Publications Limited of
£nil (26 weeks to 30 June 2002 £2.6 million; 52 weeks to 29 December 2002 £2.6
million) and Ethnic Media Group Limited of £nil (26 weeks to 30 June 2002 £2.2
million; 52 weeks to 29 December 2002 £2.2 million), which were sold in June
2002, Channel One of £nil (26 weeks to 30 June 2002 £0.4 million; 52 weeks to 29
December 2002 £0.6 million) which ceased trading in November 2002 and Wheatley
Dyson & Son Limited of £0.1million (26 weeks to 30 June 2002 £0.8 million; 52
weeks to 29 December 2002 £1.6 million) which was disposed of in February 2003.
The comparatives for the 26 weeks to 30 June 2002 and for the 52 weeks to 29
December 2002 have been restated to reclassify Digital Media within Regionals
division. This was previously reported separately.
Notes to the financial statements (unaudited)
continued
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
29 June 30 June 29 December
2003 2002 2002
By division: (restated) (restated)
£m £m £m
---------------------------------- ------------- -------- --------
Regionals division* 62.0 57.4 112.9
Nationals division 38.2 37.5 77.6
Sports division 7.1 5.9 11.8
Magazines and exhibitions 3.2 3.6 5.3
Arrow Interactive (formerly Voice (0.2) 0.8 0.2
Media)
Central costs (8.9) (8.9) (16.8)
------------------------------ ------------- -------- --------
101.4 96.3 191.0
---------------------------------- ------------- -------- --------
* Regionals division includes the loss of Post Publications Limited of £nil (26
weeks to 30 June 2002 loss of £0.1 million; 52 weeks to 29 December 2002 loss of
£0.1 million) and profits relating to Ethnic Media Group Limited of £nil (26
weeks to 30 June 2002 £0.5 million; 52 weeks to 29 December 2002 £0.5 million),
which were sold in June 2002, Channel One of £nil (26 weeks to 30 June 2002 £nil
million; 52 weeks to 29 December 2002 £nil million) which ceased trading in
November 2002 and Wheatley Dyson & Son Limited of £nil million (26 weeks to 30
June 2002 £0.1 million; 52 weeks to 29 December 2002 £0.1 million) which was
disposed of in February 2003.
The comparatives for the 26 weeks to 30 June 2002 and for the 52 weeks to 29
December 2002 have been restated to reclassify Digital Media within Regionals
division. This was previously reported separately.
The comparatives for the 26 weeks to 30 June 2002 have been restated to reflect
the separate disclosure of central costs. This change in presentation has no
impact on Group operating profit in 2002 or 2003.
4. Exceptional items
----------------------------------- ---------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
----------------------------------- ---------- -------- --------
Operating exceptional items
Impairment of carrying value of - - 125.0
publishing rights and titles (a)
Restructuring costs (b) 2.2 6.4 13.2
Maxwell related recoveries (c) - - (5.6)
Birmingham circulation issue - - (1.4)
receipt (d)
Profit on disposal of land and (1.1) - -
buildings (e)
---------------------------------- ---------- -------- --------
Group exceptional items charged 1.1 6.4 131.2
against Group operating profit
---------------------------------- ---------- -------- --------
Share of exceptional items of - - (0.1)
associated undertakings (f)
---------------------------------- ---------- -------- --------
Total exceptional items charged 1.1 6.4 131.1
against operating profit
---------------------------------- ---------- -------- --------
Profit on disposals of subsidiary (0.1) (0.1) (0.1)
undertakings (g)
Profit on disposal of magazine - - (1.7)
titles (h)
---------------------------------- ---------- -------- --------
Net exceptional items before 1.0 6.3 129.3
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 of £125.0 million was required in 2002. The impairment charge
reduced the carrying value of the Regional titles in the Midlands, to the net
present value of future cashflows to be derived from these assets, discounted at
7.5%.
b) Restructuring costs relate to ongoing cost reduction plans.
c) In 2002, the Group recovered £5.6 million from the liquidators of
Maxwell related companies for claims outstanding since 1992.
d) In 2002, the Group received compensation of £1.4 million
(net of costs) in relation to outstanding issues following the identification of
errors in the circulation of the Birmingham titles in 1999.
e) During the period the Group disposed of surplus land and
buildings in the Midlands and Scotland, realising a profit on disposal of £1.1
million.
f) In 2002, Press Association, an associated undertaking, disposed of a
property, the Group share of profit being £0.1 million.
g) 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. In 2002, the Group disposed of Post Publications Limited for a cash
consideration of £6.5 million, realising a loss of £0.3 million, and Ethnic
Media Group Limited for a total consideration of £10.2 million, of which £9.2
million was paid in cash and £1.0 million was deferred for two years, realising
a profit of £0.4 million.
h) In 2002, the Group disposed of three biker magazines for a
cash consideration of £1.8 million realising a profit of £1.7 million.
Notes to the financial statements (unaudited)
continued
5. Tax on profit on ordinary activities
---------------------------------- ----------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
---------------------------------- ----------- -------- --------
Profit before tax on ordinary 80.4 78.4 155.5
activities before exceptional
items
--------------------------------- ----------- -------- --------
Corporation Tax
Corporation tax charge for the 26.9 25.7 45.5
period
Prior period adjustment - - 0.6
--------------------------------- ----------- -------- --------
Total current tax charge 26.9 25.7 46.1
--------------------------------- ----------- -------- --------
Deferred Tax
Deferred tax charge for the (2.0) (1.1) 2.9
period
Prior period adjustment - - (2.0)
--------------------------------- ----------- -------- --------
Total deferred tax (2.0) (1.1) 0.9
--------------------------------- ----------- -------- --------
Tax on profit on ordinary 24.9 24.6 47.0
activities before exceptional
items
--------------------------------- ----------- -------- --------
Exceptional:
UK corporation tax on exceptional (0.7) (2.0) (1.8)
items
--------------------------------- ----------- -------- --------
Tax on profit on ordinary 24.2 22.6 45.2
activities
--------------------------------- ----------- -------- --------
Included within the deferred tax credit for the period is a FRS 17 credit of
£1.1 million (2002: £0.6 million)
Reconciliation of current tax charge
The current tax rate for the period is more than the statutory rate of 30%
(2002: statutory rate 30%) for the reasons set out in the following
reconciliation:
---------------------------------- ----------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
% % %
---------------------------------- ----------- -------- --------
Standard rate of corporation tax 30.0 30.0 30.0
Permanent items 1.0 1.4 1.1
Depreciation in excess of capital 1.1 0.6 0.7
allowances for the period
Deferred tax on short-term and 1.4 0.8 (2.6)
other timing differences
Prior period adjustment corporation - - 0.4
tax
--------------------------------- ----------- -------- --------
Total current tax charge rate 33.5 32.8 29.6
--------------------------------- ----------- -------- --------
Deferred tax (credit)/charge rate (2.5) (1.4) 0.6
--------------------------------- ----------- -------- --------
Effective rate before exceptional 31.0 31.4 30.2
items
--------------------------------- ----------- -------- --------
6. Dividends
The Directors have declared the payment of an interim dividend of 5.5p (2002:
5.3p) per 10p ordinary share to be paid on 31 October 2003 to shareholders on
the register on 3 October 2003. The total dividend in 2002 was 17.6p 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
29 June 30 June 29 December
2003 2002 2002
No. of shares No. of shares No. of shares
-------------------------------- ------------ -------- --------
Basic (millions) 291.8 291.6 291.6
-------------------------------- ------------ -------- --------
Diluted (millions) 292.7 292.3 291.9
-------------------------------- ------------ -------- --------
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 currently operated, however, the cost of these is immaterial and is not
separately disclosed within the pension costs for the Group.
Two of the 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.
In addition to the above schemes, the Group operates a further eight final
salary schemes. Formal valuations of the schemes are carried out every three
years, 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 are being undertaken
in 2003 for the four significant schemes, the Trinity Retirement Benefit Scheme,
the MGN Pension Scheme, the Old Scheme and the Past Service Scheme. Early
indications are that, from 2004, additional funding of £3m per annum will be
required for the MGN Pension Scheme to reduce the historic deficit, and future
service contribution rates for the MGN Pension Scheme and Trinity Retirement
Benefit Scheme are likely to increase. These increases in funding are in
addition to contribution increases of £6.0m during 2003 (including £3.0m to the
Past Service Scheme).
During 2002, the decision was taken to close entry to the 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.
Valuations have been performed in accordance with the requirements of FRS 17 as
at 29 June 2003. Scheme liabilities have been calculated using a consistent
projected unit valuation method and compared to the schemes' assets at the 29
June 2003 market value.
Based on actuarial advice, the financial assumptions used in calculating the
schemes' liabilities are:
----------------------------------- --------- -------- --------
Assumptions Assumptions Assumptions
as at as at as at
29 June 30 June 29 December
2003 2002 2002
(%) (%) (%)
----------------------------------- --------- -------- --------
Discount rate 5.25 5.75 5.60
Inflation rate 2.50 2.50 2.30
Pension increases:
Pre 6 April 1997 pensions 2.50 to 5.00 2.50 to 5.00 2.30 to 5.00
Post 6 April 1997 pensions 2.50 to 3.00 2.50 to 3.00 2.30 to 3.00
Salary progression 4.25 4.25 4.05
---------------------------------- --------- -------- --------
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 29 June 2003, under FRS17, is as follows:
------------------- --------- -------- -------- --------
Defined benefit Total as at Total as at Total as at
net deficit 29 June 30 June 29 December
£m 2003 2002 2002
£m £m £m
------------------- --------- -------- -------- --------
Fair value of 904.4 904.4 945.4 872.8
schemes' assets
Actuarial value of (1,211.7) (1,211.7) (1,065.5) (1,105.8)
schemes'
liabilities
------------------ --------- -------- -------- --------
Schemes' deficits (307.3) (307.3) (120.1) (233.0)
Deferred tax 92.2 92.2 36.0 69.9
------------------ --------- -------- -------- --------
Net schemes' (215.1) (215.1) (84.1) (163.1)
liabilities
------------------ --------- -------- -------- --------
The contributions made during the period totalled £10.4 million (26 weeks to 30
June 2002 £8.0 million; 52 weeks to 29 December 2002 £17.4 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
29 June 30 June 29 December
2003 2002 2002
£m £m £m
----------------------------------- ----------- -------- --------
Current service cost 11.9 12.0 24.6
Past service cost 0.5 0.8 0.8
----------------------------------- ----------- -------- --------
Total included within 12.4 12.8 25.4
operating profit
----------------------------------- ----------- -------- --------
The amounts included as other finance charge/(income) for the period under FRS
17 are as follows:
----------------------------------- ----------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
----------------------------------- ----------- -------- --------
Expected return on pension schemes' (28.9) (32.3) (64.6)
assets
Interest cost on pension schemes' 30.6 29.6 58.5
liabilities
----------------------------------- ----------- -------- --------
Net finance charge/(income) 1.7 (2.7) (6.1)
----------------------------------- ----------- -------- --------
The movement in the deficit during the period is analysed below:
----------------------------------- ----------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
----------------------------------- ----------- -------- --------
Opening deficit in the schemes (233.0) (37.0) (37.0)
Current service cost (11.9) (12.0) (24.6)
Contributions 10.4 8.0 17.4
Past service cost (0.5) (0.8) (0.8)
Finance (charge)/income (1.7) 2.7 6.1
Actuarial losses (70.6) (81.0) (194.1)
------------------------------------ -------- -------- --------
Closing deficit in the schemes (307.3) (120.1) (233.0)
------------------------------------ -------- -------- --------
The profit and loss reserve is analysed below:
------------------------------------ ------------ -------- --------
As at As at As at
29 June 30 June 29 December
2003 2002 2002
£m £m £m
------------------------------------ ------------ -------- --------
Profit and loss reserve excluding 230.1 293.2 188.5
pension reserve
Pension reserve (215.1) (84.1) (163.1)
-------------------------------- ------------ -------- --------
Profit and loss reserve 15.0 209.1 25.4
-------------------------------- ------------ -------- --------
Notes to the financial statements (unaudited)
continued
9. Reconciliation of operating profit to net cash inflow from
operating activites
The following information is supplementary to the consolidated cash flow
statement:
---------------------------------- ------------ -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
---------------------------------- ------------ -------- --------
Operating profit 100.3 89.9 59.8
Depreciation 21.4 21.7 43.1
Amortisation/impairment of goodwill 0.3 3.0 128.3
and publishing rights and titles
Profit on disposal of fixed (1.2) (0.7) (1.1)
assets
Decrease in stocks 0.3 1.5 1.4
Increase in trade and other debtors (3.4) (14.6) (1.0)
and prepayments
Decrease in trade and other (3.0) (4.6) (19.5)
creditors and accruals
Adjustment for FRS 17 pension 2.0 4.8 8.0
funding
---------------------------------- ------------ -------- --------
Net cash inflow from operating 116.7 101.0 219.0
activities
---------------------------------- ------------ -------- --------
10. Analysis of net debt
---------------------------------- ------- ------- ------- --------
At 29 Cash Other At
December flow non-cash 29 June
2002 changes 2003
£m £m £m £m
---------------------------------- ------- ------- ------- --------
Cash at bank and in hand 40.0 (0.8) - 39.2
Bank overdrafts (23.8) 7.0 - (16.8)
---------------------------------- ------- ------- ------- --------
Net cash balances 16.2 6.2 - 22.4
---------------------------------- ------- ------- ------- --------
Debt due within one year (42.9) 1.2 0.3 (41.4)
Debt due after one year (599.1) 5.0 (0.3) (594.4)
Finance leases (40.3) 4.5 - (35.8)
---------------------------------- ------- ------- ------- --------
Bank loans, loan notes and (682.3) 10.7 - (671.6)
finance leases
---------------------------------- ------- ------- ------- --------
Net debt (666.1) 16.9 - (649.2)
---------------------------------- ------- ------- ------- --------
11. Reconciliation of movements in consolidated shareholders' funds
----------------------------------- ---------- -------- --------
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2003 2002 2002
£m £m £m
---------------------------------- ---------- -------- --------
Profit/(loss) for the financial 55.1 49.4 (19.3)
period attributable to
shareholders
Dividends (16.1) (15.5) (51.4)
---------------------------------- ---------- -------- --------
Retained profit/(loss) 39.0 33.9 (70.7)
Other net recognised gains and (49.4) (56.7) (135.8)
losses in the period in respect of
FRS 17
New share capital subscribed 0.7 1.9 2.0
Movement on revaluation reserve (0.1) - -
Effect of share options expensed by - (0.3) (0.3)
parent company
---------------------------------- ---------- -------- --------
Net decrease in shareholders' (9.8) (21.2) (204.8)
funds
---------------------------------- ---------- -------- --------
Opening shareholders' funds 1,140.2 1,345.0 1,345.0
---------------------------------- ---------- -------- --------
Closing shareholders' funds 1,130.4 1,323.8 1,140.2
---------------------------------- ---------- -------- --------
12. Statutory information
The financial statements for the 26 weeks to 29 June 2003 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 29 December 2002 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 on page 19.
The interim report was approved by the Directors on 31 July 2003. 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 29 June 2003, which comprises the consolidated profit and
loss account, the consolidated balance sheet, the consolidated cash flow
statement, the consolidated statement of total recognised gains and losses and
related notes 1 to 12, together with the reconciliation of net cash flow to
movement in net debt. 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 29 June 2003.
Deloitte & Touche
Chartered Accountants
London
31 July 2003
This information is provided by RNS
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