Interim Results
Trinity Mirror PLC
29 July 2004
29 July 2004
Interim Results
for the 26 weeks ended 27 June 2004
Trinity Mirror plc announces the Group's interim results for the 26 weeks ended
27 June 2004.
Operational highlights
• 'Stabilise Revitalise Grow' on track, delivering improved performance
and enhanced shareholder value.
• Strong performance for the first half Group operating profit(1)(2) up 20.6% to
£120.2 million and earnings per share up 25.3% to 23.8(2) pence per share.
• Improving revenues(1) Total revenues up 5.6% with circulation revenues
up 6.3% and advertising revenues up 5.1%.
• Continued improvement in operating margins(1)(2) Increased from 18.4%
to 21.0%.
• Incremental net cost savings of £11.0 million This is in addition to
savings of £5.0 million achieved in 2003. Target for net annualised savings in
2005 increased by £5.0 million from £30.0 million to £35.0 million.
• Strong operating cash flow with net debt falling £81.6 million to
£523.5 million.
Financial
highlights
Like-for-like(1) Statutory
(pre exceptional items(2) (3)) (post exceptional items)
2004 2003(4) % 2004 2003(4) %
£m £m Change £m £m Change
Turnover 572.7 542.1 +5.6% 572.7 550.2 +4.1 %
Group operating
profit 120.2 99.7 +20.6% 116.7 100.3 +16.4 %
Profit before
tax 101.8 80.4 +26.6% 100.8 79.4 +27.0 %
Earnings per share 23.8p 19.0p +25.3% 23.8p 18.9p +25.9%
Dividend per share 5.9p 5.5p +7.3 %
Net debt 523.5 649.2
(1) Turnover and operating profit adjusted to exclude the results of Wheatley
Dyson & Son Limited which was disposed of in February 2003 and the Irish
regional newspaper titles in Belfast, Derry and Donegal which were disposed
of in January 2004. During the 26 weeks ended 27 June 2004 these businesses
achieved turnover of £nil (2003: £8.1 million) and operating profit of
£nil (2003: £1.7 million).
(2) Excludes operating exceptional items of £3.5 million pre tax (2003: £1.1
million).
(3) Excludes net exceptional items of £1.0 million pre tax (2003: £1.0 million).
(4) Accounting policies used in the preparation of the unaudited financial
information for the 26 weeks ended 27 June 2004 are consistent with those
set out in the Group's financial statements for the 52 weeks ended
28 December 2003. The 2003 interim results have been restated on this
basis.
Sir Victor Blank, Chairman of Trinity Mirror plc, commented:
'Today's figures demonstrate that the Group's drive to improve performance is
continuing to bear fruit. We are now a stronger Group both financially and
managerially, and we look positively to our future prospects.'
Sly Bailey, Chief Executive of Trinity Mirror plc, commented:
'Our performance-based strategy Stabilise Revitalise Grow is delivering. This
phase of the Group's development has been about improving our performance and
today's results demonstrate our ability to meet objectives and show we are
creating a fundamentally stronger and better-performing Group.'
Enquiries:
Trinity Mirror plc 020 7293 3000
Vijay Vaghela, Group Finance Director
Nick Fullagar, Director of Corporate Communications
Finsbury 020 7251 3801
Rupert Younger
James Leviton
Interim Results for the 26 weeks ended 27 June 2004
Financial highlights
2004 2003 Change
£m £m %
Turnover
- statutory 572.7 550.2 +4.1%
- like-for-like (1) 572.7 542.1 +5.6%
Group operating profit pre exceptional items (2)
- statutory 120.2 101.4 +18.5%
- like-for-like (1) 120.2 99.7 +20.6%
Group operating profit post exceptional items
- statutory 116.7 100.3 +16.4%
- like-for-like (1) 116.7 98.6 +18.4%
Profit before tax pre exceptional items (3) 101.8 80.4 +26.6%
Profit before tax post exceptional items 100.8 79.4 +27.0%
Per share Pence Pence
Underlying earnings pre exceptional items 23.8p 19.0p +25.3%
Basic earnings post exceptional items 23.8p 18.9p +25.9%
Dividend per share 5.9p 5.5p +7.3%
(1) Turnover and operating profit adjusted to exclude the results of Wheatley
Dyson & Son Limited which was disposed of in February 2003 and the Irish
regional newspaper titles in Belfast, Derry and Donegal which were disposed
of in January 2004. During the 26 weeks ended 27 June 2004 these businesses
achieved turnover of £nil (2003: £8.1 million) and operating profit of
£nil (2003: £1.7 million).
(2) Excludes operating exceptional items of £3.5 million pre tax (2003: £1.1
million).
(3) Excludes net exceptional items of £1.0 million pre tax (2003: £1.0 million).
(4) Accounting policies used in the preparation of the unaudited financial
information for the 26 weeks ended 27 June 2004 are consistent with those
set out in the Group's financial statements for the 52 weeks ended
28 December 2003. The 2003 interim results have been restated on this
basis. (See note 13(a) on page 20.)
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.
Chief Executive's review
The benefits of the 'Stabilise Revitalise Grow' strategy are already evident in
the Group's strong performance for the 26 weeks ended 27th July 2004, with
revenues(1) increasing by 5.6% from £542.1 million to £572.7 million, operating
profits(1)(2) increasing by 20.6% from £99.7 million to £120.2 million and
operating margin(1)(2) improving by 2.6% from 18.4% to 21.0%.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Delivery against announced objectives
The short-term objectives of the strategy, updated in February 2004, were as
follows:
• £30 million annualised net cost savings in 2005.
• A policy to increase dividends progressively.
• A commitment to reduce debt.
• Higher operating margins for Regionals division.
• Maintain market share for UK National titles.
Success in achieving these objectives is detailed below:
• Incremental net cost savings of £11.0 million have been achieved
and the Group is on track to deliver at least £20.0 million this year.
Accordingly, the target for savings in 2005 has been raised to £35.0 million
in 2005, an increase of £5.0 million.
• The interim dividend has been increased by 7.3%.
• Net debt has fallen by £81.6 million to £523.5 million.
• Operating margins* for the Group's Regionals division have risen by 4.2%
from 23.5% to 27.7%.
• Across the UK National titles good progress was made until May. The rolling
six-monthly market share for the Daily Mirror was maintained at 20.3% for the
first five months. Following the publication of the fake photographs of abuse
of Iraqi prisoners this slipped to 20.1% in June.
• In a highly competitive marketing-driven environment the Sunday Mirror
maintained its market share at 15.7% whilst The People lost share,
falling from 10.5% to 10.2%.
Regionals
The Regionals division has delivered strong performance for the period with
revenue* increasing by 5.5% and operating profits* growing by 24.4%. The strong
performance reflects the implementation of the 'Stabilise Revitalise Grow'
strategy with:
• Improved advertising performance from the national advertising
sales operation through AMRA.
• Better yield management through sharing of best practice and
improved packages for advertisers.
• Incremental revenues and reduced costs for digital media to
achieve at least break even in 2004 with profit forecast in 2005.
• Circulation revenue improvements from the 'little and often'
cover pricing policy initiated last year.
• Cost-saving initiatives coupled with tighter cost control in
general.
Whilst the benefits of the strategy are already apparent, in particular the
improvement in operating margins* to 27.7%, there is still scope to improve
performance in the division and numerous initiatives are under way to stabilise
and revitalise the Group's titles and products.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Nationals
The Nationals division delivered an improved performance for the period with
revenues increasing by 5.6% and operating profits* increasing by 7.6%. A strong
performance from the UK Nationals with operating profits* rising by 11.4% has
been partially offset by a 0.8% fall in operating profits* for the Scottish
Nationals.
The improved UK Nationals performance has been driven by a marginal improvement
in advertising revenues and significantly higher circulation revenues following
cover price increases on all three titles. There has been no discernible impact
on circulation volumes as a result of the cover price increases.
The returns on investment in new supplements such as 3am in the Daily Mirror on
Wednesdays, Homes and Holidays in the Sunday Mirror and the revamped People
magazine Take it Easy, have been encouraging. However, circulation volumes, for
the Daily Mirror, were disappointing in May and June following the publication
of the fake Iraq pictures.
Effective from 17th June 2004 the following management changes have been made:
• Ellis Watson appointed to the new role of Managing Director, National
Newspapers. Editors of the UK National titles now report to him, having
previously reported directly to the Chief Executive. The wider remit,
encompassing all aspects of the Nationals business, will enable Ellis to
better co-ordinate and manage the commercial and editorial functions of the
business to drive performance.
• Richard Wallace appointed as the new Editor of the Daily Mirror. He was
previously Deputy Editor of the Sunday Mirror. Prior to that he was Head of
News, US Editor and Showbusiness Editor of the Daily Mirror.
Circulation performance, whilst growing profits, remains the focus of attention
on the National titles. Management has set the key metric of maintaining volume
market share whilst recognising that absolute volumes in the market will
continue to decline.
The Daily Record continues to operate in a highly competitive marketplace. The
title is regaining ground against the competition and is improving its
circulation performance, with a year-on-year decline of 3.5% for the first half
compared to a decline of 5.7% in the second half of 2003. This follows the
appointment of a new Editor and the review of the publishing mix supported by
additional marketing.
Sports
The Sports division has delivered another strong set of results with revenues
increasing by 11.8% to £23.7 million and operating profits* increasing by 21.1%
to £8.6 million. The revenue performance of the titles has benefited from
publishing more or less every Sunday. Excluding the impact of these additional
Sundays, revenues would have increased by 8.9%. The division continues to
explore opportunities to improve performance through initiatives such as
provision of content to other Group titles, focus on increasing internet
revenues and revitalising our existing newspapers and book interests.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Magazines and Exhibitions
The Magazines and Exhibitions division has delivered a robust performance. The
Group is now reaping the full benefits of a comprehensive programme of
restructuring of the division's business activities. The division has achieved
operating profit* growth of 46.9% to £4.7 million.
Arrow Interactive
A review of the business highlighted that it did not have the scale to compete
effectively for third party revenues in what has become a highly competitive
marketplace experiencing significant pressure on margins. In the light of this
conclusion the business has been significantly restructured to focus on
generating revenues internally for the Group's own titles.
Key projects
Management has focused on three key Group-wide projects - Manufacturing, Supply
Chain and Procurement - to drive performance by capitalising on the benefits of
scale.
Manufacturing
Following closure of the Huddersfield site the majority of the Group's newspaper
titles are printed (in-house) on 40 printing presses in 11 print sites across
the country. The operating costs of these sites, excluding costs directly
related to external printing, is approximately £124 million per annum. These
costs are to some extent dependent on volumes. Apart from the three Nationals
printing sites (located in Watford, Oldham and Glasgow) which operate under a
single management structure, print sites historically have been managed by local
management and predominantly served the needs of the local titles. This
structure contributed to a wide range in operating efficiencies with some
utilisation levels as low as 25%.
The aim of the manufacturing project is to:
• Improve the quality of products to better serve the needs of readers
and advertisers.
• Improve operating efficiencies.
• Reduce printing costs.
• Significantly reduce, over time, the level of capital expenditure
required for the Group's printing assets.
As a first step the Group has consolidated all its printing operations into a
Manufacturing Network which is headed by Rupert Middleton, Director of
Manufacturing, who joined the company in April.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Specific progress to date has included:
• Single-press site in Huddersfield was closed in May 2004.
• The two-press site in Chester is to be downscaled in October 2004 and
closed in January 2005.
• The new full-colour four-press site in Birmingham is due to begin operating
in the fourth quarter of 2004, resulting in the closure of the old three-press
site in Birmingham and a two-press site in Coventry.
• The press sites in Scotland, located at Cardonald and Blantyre, consisting of
four presses and a single press respectively, now operate under a single
management structure.
• The new full-colour press site at Teesside will be on stream in Autumn of 2004
when the old Teesside site closes.
These changes will contribute to a reduction in the number of print sites from
11 to 9 and a reduction in the number of press lines from 40 to 37. The benefits
of these initiatives will be as follows:
• A reduction in the future capital expenditure requirements for
re-pressing the Huddersfield and Chester print sites.
• Improved products for Huddersfield, Chester and Teesside with better colour
availability and formats to improve reader appeal and drive advertising
revenues.
• More flexibility for the Scottish National titles and the Regional
titles in Scotland through a virtual print operation.
• Full-colour availability for the Group's Regional titles in the
Midlands
• A capital investment of £7.5 million in the Midlands for inserting equipment.
This will enable the printing of the National titles, thereby reducing future
capital costs for the Nationals print sites and improving time to market.
The plan to establish a Group-wide printing network is progressing well and
benefits in terms of enhanced products, reduced unit costs, greater efficiencies
and increased contract print and publishing revenues are beginning to be
realised.
The Group will be in a position to finalise the short to medium-term capital
requirements for the Network by the end of 2004 and will provide an update with
the 2004 preliminary results announcement.
Supply Chain
Good progress has been made in reviewing the newspaper supply chain - for the
first time across the entire Group - with the specific aim of:
• Capturing the benefits of scale.
• Reducing costs.
• Improving circulation volumes.
• Driving revenue benefits.
The project will help drive better overall performance throughout the business
through shared learning, improved copy management and market analysis. An
integral part of the project involves the re-negotiation of supply chain
contracts with wholesale partners.
An update on the benefits arising from the review will be provided with our 2004
preliminary results announcement.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Procurement
The review of procurement is also progressing well. A number of areas have been
reviewed including utilities, security and other property services. The benefits
of these are included in the revised cost saving targets.
Board Change
On 26 July 2004, Stephen Parker, Managing Director, Regional Newspapers,
resigned as Director of Trinity Mirror plc and will leave the company on 30 July
2004. We thank Stephen for his contribution and commitment to the company over
the past 20 years and wish him well for the future.
Next Steps
Within the framework of the 'Stabilise Revitalise Grow' strategy, management is
focused on building on the progress to date and extracting the benefits of
scale. The Group is committed to deliver net annualised cost savings of £35.0
million in 2005, an increase of £5 million on the previously reported target and
will maintain ongoing commitments to reduce debt, progressively increase
dividends, improve operating margins for the Regionals division and maintain
volume market share for the UK National titles.
The strategy has created a substantially more robust platform from which we can
look to future growth.
Sly Bailey, Chief Executive
29th July 2004
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Review of operations
Group revenue* increased by 5.6% from £542.1 million to £572.7 million and Group
operating profit* before exceptional items increased by 20.6% from £99.7 million
to £120.2 million. Group operating margins* have increased by 2.6% from 18.4% to
21.0%. On a statutory basis, Group revenues increased by 4.1% from £550.2
million to £572.7 million and Group operating profit before exceptional items
increased by 18.5% from £101.4 million to £120.2 million.
The results reflect the benefits of an improvement in advertising market
conditions, the benefits of initiatives driving revenue performance and
incremental net cost savings of £11.0 million. These improvements have been
partially offset by incremental FRS 17 pensions costs of £3.9 million.
Operating exceptional items of £3.5 million have been incurred during the 26
week period. These relate primarily to the costs associated with delivery of the
cost savings, including £0.8 million associated with closure of the Huddersfield
print plant and £0.7 million from the restructuring of Arrow Interactive offset
by profits of £0.8 million from the disposal of certain properties. It is
anticipated that a further £16.0 million of exceptional costs will be incurred
during the second half of the year. This will include £4.0 million of
accelerated depreciation for printing assets in Chester due to the closure of
the print site.
Earnings per share before exceptional items increased by 25.3% from 19.0 pence
per share to 23.8 pence per share, reflecting the increased operating profit and
reduced finance costs, partially reduced by a higher effective tax rate.
The interim dividend has been increased by 7.3% to 5.9 pence per share (2003:
5.5 pence per share). It will be paid on 1 November 2004 to shareholders on the
register at 3 October 2004.
The Group continued to deliver strong operating cash flows which increased by
8.7% to £126.9 million (2003: £116.7 million). The strong cash flows, coupled
with the £44.7 million net disposal proceeds for the sale of the Regional
newspaper titles in Ireland, contributed to net debt falling by £81.6 million
from £605.1 million at 28 December 2003 to £523.5 million at 27 June 2004. Net
debt is expected to fall marginally over the remainder of the year with
continued strong cash flows being partially offset by estimated capital
expenditure of £30.0 million.
During the period the FRS 17 operating profit pension charge for current service
increased by £3.9 million to £15.8 million with cash contributions (excluding
past service enhancements) increasing by £3.8 million to £13.7 million. Net
pension scheme liabilities, after the provision of deferred taxation, fell by
£13.7 million to £234.4 million. This reflects, before the provision of deferred
taxation, an increase in assets of £2.4 million and a fall in liabilities of
£17.2 million. The reduction in liabilities reflects an increase in the real
rate of return applied to discount liabilities. This increased from 2.65% at 28
December 2003 to 2.80% at 27 June 2004.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Regionals division
The Regionals division achieved growth in revenue* of 5.5% from £256.4 million
to £270.4 million and operating profit* of 24.4% from £60.3 million to £75.0
million. Operating margin* increased by 4.2% from 23.5% to 27.7%. The strong
operating profit* performance reflects the benefit of strong performance from
the Metros where profits* of £0.5 million have been achieved (2003: £0.2 million
loss) and a £2.4 million reduction in Digital Media losses* to £0.2 million
(2003: £2.6 million loss).
Advertising revenues* increased 6.0% to £211.0 million (2003: £199.1 million).
This reflects the benefits of an improvement in advertising conditions and a
partial recovery in the South, contributing to growth of 5.3% from £193.0
million to £203.3 million for our Regional newspapers titles (excluding Metros),
an increase in advertising revenue for the Metro titles of 16.3% from £4.9
million to £5.7 million and Digital Media advertising* achieving growth of 66.7%
from £1.2 million to £2.0 million.
The Regional newspaper titles (excluding Metros) achieved growth in advertising
revenues* of 5.4% in the second quarter, compared to growth of 5.2% in the first
quarter.
Growth* was achieved in all advertising categories with display growing by 5.1%,
recruitment growing by 6.9%, property growing by 6.3%, motors growing by 2.8%
and other classified categories growing by 2.7%. Titles in London and the South
East achieved growth of 3.9% with all categories, with the exception of
recruitment, achieving year-on-year growth. Recruitment revenues in the South
fell marginally by 1.5%.
Regional newspapers circulation revenue* increased by 3.9% from £38.1 million to
£39.6 million, with the benefits of the 'little and often' cover price policy
partially offset by volume declines. Circulation volumes* for the Regional
titles have continued to decline with volume declines of 3.7% for daily morning
titles, 5.6% for daily evening titles and 1.8% for the weekly titles.
Initiatives to improve circulation volume performance have commenced.
On the 15 January 2004, the Group disposed of its Irish regional newspapers for
a consideration of £46.1 million. No revenue or costs have been included in the
results for the period for these titles.
Nationals division
The Nationals division achieved growth in revenue of 5.6% from £244.3 million to
£257.9 million and operating profit* of 7.6% from £38.2 million to £41.1
million. Operating margin* improved from 15.6% to 15.9%. The operating profit*
performance for the division reflects a marginal improvement in the advertising
market, increased circulation revenues from cover price increases for four of
the five National titles and the benefit of incremental cost savings partially
offset by increases in the FRS17 operating pension charge and additional
investment in products and marketing.
Circulation revenue for the Group's five National titles (and related
businesses) increased by 6.7% from £128.8 million to £137.4 million. This
reflects the benefit of cover price increases partially offset by volume
declines.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
During the period the Daily Mirror circulation volume, excluding sampling,
declined by 5.3% year-on-year. The disappointing circulation performance during
the period reflects the impact of reduced volumes following the publication of
the fake Iraq prisoner abuse pictures in May.
The Sunday Mirror and The People circulation volume, excluding sampling,
declined year-on-year by 3.0% and 8.1% respectively during the period.
The rolling six-monthly market share performance (excluding sampling) to June
2004 and Dec 2003 for the 3 National titles is as follows:
June 2004 December 2003
Daily Mirror 20.1% 20.3%
Sunday Mirror 15.7% 15.6%
The People 10.2% 10.5%
The rolling six-monthly market share for the Daily Mirror was held flat at 20.3%
from January to May and the drop-off in sales experienced in May and continuing
into June has contributed to the fall in market share to 20.1%.
The market share for the Sunday Mirror has remained stable at 15.7% during
January to June, representing an improvement of 0.1% from December 2003.
Whilst the market share of The People has fallen from 10.5% to 10.2% the average
year-on-year volume decline for the period has improved from 12.7% for the six
months to December 2003 to 8.1%.
The Daily Record and the Sunday Mail have both improved their year-on-year
circulation performance during the period. For the Daily Record, the average
year-on-year decline during the period was 3.5% compared to 5.7% for the six
months to December 2003. For the Sunday Mail, the average year-on-year decline
during the period was 4.0% compared to 4.3% for the six months to December 2003.
The improvement in the Sunday Mail circulation performance was achieved despite
a cover price increase.
Advertising
The Group's National titles achieved advertising revenue growth of 2.7% from
£96.4 million to £99.0 million during the period in a marketplace which saw
marginal improvement. However, the market remains volatile. The results also
include the benefit of improved advertising performance in June which saw growth
of 7.8%, helped by the European football championship.
The UK National titles achieved advertising revenue growth of 2.6% from £72.0
million to £73.9 million for the period, reflecting a 0.6% increase in the first
quarter and 4.7% increase in the second quarter. Strong core display advertising
growth of 9.4% has been offset by weaker performance in classified and
magazines. The weaker magazines performance reflects the impact of closing the M
magazine in the second half of 2003, partially offset by additional advertising
revenues for the newly launched 3am magazine.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
For the Scottish National titles, advertising revenue increased by 2.9% from
£24.4 million to £25.1 million, with strong year-on-year performances in
recruitment (up 26.4%), travel (up 10.5%) and national display (up 5.9%) offset
by weaker performances from local retail (down 2.8%), motors (down 6.7%) and
property (down 9.2%).
Sports division
The Sports division achieved strong performance during the period with operating
profit* increasing by 21.1% to £8.6 million (2003: £7.1 million). Advertising
and circulation revenue increased by 19.6% and 9.2% respectively. Circulation
revenues benefited from cover price increases and additional Sunday publishing.
The development of the division's website, racingpost.co.uk, has progressed
encouragingly with revenue increasing by 19.9%.
Magazines and Exhibitions
The Magazines and Exhibitions division delivered a robust performance with
operating profit* increasing by 46.9% from £3.2 million to £4.7 million.
Revenues increased by 4.9% for the period with particularly strong exhibitions
revenues, which grew by 7.0% during the period.
Arrow Interactive
During the period Arrow Interactive reported deteriorating performance with
operating losses* of £0.6 million, an increase in losses* of £0.4 million
compared to the same period in 2003.
The division has now been refocused on driving revenues for the Group. The
results of the division will not be separately reported from 2005.
Restructuring costs totalling £0.7 million, including £0.4 million for
severance, have been separately disclosed as exceptional items.
Outlook
The 'Stabilise Revitalise Grow' strategy continues to deliver improved
performance. For the remainder of the year comparatives, both in terms of
revenue and profit, are more challenging. Despite this, the Board is confident
that the business will continue to perform in line with expectations.
* On a like-for-like, pre-exceptional items basis as defined in footnotes (1)
and (2) on page 1
Consolidated profit and loss account (unaudited)
for 26 week period to 27 June 2004
26 weeks to 27 June 2004
Before Exceptional After 26 weeks to 29 52 weeks to
exceptional items exceptional June 28 December
items (note 4) items 2003 2003
(restated)
notes £m £m £m £m £m
------------------------- ----- -------- -------- -------- -------- --------
Turnover 2 572.7 - 572.7 550.2 1,095.1
------------------------ ----- -------- -------- -------- -------- --------
Group operating profit 3 120.2 (3.5) 116.7 100.3 100.5
------------------------ ----- -------- -------- -------- -------- --------
Share of results of 0.7 - 0.7 0.6 1.2
associated undertakings
------------------------ ----- -------- -------- -------- -------- --------
Total operating profit 120.9 (3.5) 117.4 100.9 101.7
------------------------ ----- -------- -------- -------- -------- --------
Profit on disposals of 4 - 2.5 2.5 0.1 0.1
subsidiary undertakings
Profit on disposal of 4 - - - - -
motorcycle show
business
------------------------ ----- -------- -------- -------- -------- --------
Profit on ordinary 120.9 (1.0) 119.9 101.0 101.8
activities before
interest
------------------------ ----- -------- -------- -------- -------- --------
Net interest payable (17.5) - (17.5) (19.9) (38.3)
Other finance charge (1.6) - (1.6) (1.7) (2.9)
------------------------ ----- -------- -------- -------- -------- --------
Profit on ordinary 101.8 (1.0) 100.8 79.4 60.6
activities before
taxation
Tax on profit on ordinary 5 (31.6) 1.0 (30.6) (24.2) (46.9)
activities
------------------------ ----- -------- -------- -------- -------- --------
Profit on ordinary 70.2 - 70.2 55.2 13.7
activities after
taxation
------------------------ ----- -------- -------- -------- -------- --------
Non-equity minority (0.1) - (0.1) (0.1) (0.3)
interest
------------------------ ----- -------- -------- -------- -------- --------
Profit for the financial 70.1 - 70.1 55.1 13.4
period
------------------------ ----- -------- -------- -------- -------- --------
Ordinary dividends on 6 (17.4) (16.1) (53.7)
equity shares
------------------------ ----- -------- -------- -------- -------- --------
Retained profit/(loss) 52.7 39.0 (40.3)
for the financial
period
------------------------ ----- -------- -------- -------- -------- --------
Earnings per share 7
(pence)
------------------------ ----- -------- -------- -------- -------- --------
Underlying earnings per 23.8 19.0 41.1
share
Exceptional items - (0.1) (36.5)
------------------------ ----- -------- -------- -------- -------- --------
Earnings per share - 23.8 18.9 4.6
basic
------------------------ ----- -------- -------- -------- -------- --------
Earnings per share - 23.6 18.8 4.6
diluted
------------------------ ----- -------- -------- -------- -------- --------
Turnover and net operating expenses comparative figures for the 26 weeks to 29
June 2003 have been restated to reflect Arrow Interactive revenues net of
commissions payable (previously disclosed as operating expenses) to third
parties. This change in accounting policy has no impact on the Group operating
profit for 2003 and is consistent with the accounting policies set out in the
Group financial statements for the 52 weeks ended 28 December 2003. The effect
of this change in accounting policy was a reduction in turnover of £1.4 million
and a reduction in net operating expenses of £1.4 million in the 26 weeks to 29
June 2003.
All turnover and results arose from continuing operations.
Consolidated statement of total recognised gains and losses (unaudited)
for 26 week period to 27 June 2004
---------------------------------------- ------- -------- -------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------------- ------- -------- -------
Profit for the financial period 70.1 55.1 13.4
Difference between actual and expected (24.2) 12.0 55.1
return on pension schemes' assets
Experience losses arising on pension - - (18.0)
schemes' liabilities
Effects of changes in assumptions
underlying the present value of pension
schemes' liabilities
47.5 (82.6) (154.7)
Deferred tax asset associated with (7.0) 21.2 35.3
movement on pension schemes' deficits
---------------------------------------- ------- -------- -------
Total recognised gains and losses in the 86.4 5.7 (68.9)
period
---------------------------------------- ------- -------- -------
Consolidated balance sheet (unaudited)
at 27 June 2004
-------------------------------- ----- --------- --------- ---------
27 June 29 June 28 December
2004 2003 2003
notes (restated)
£m £m £m
-------------------------------- ----- --------- --------- ---------
Fixed assets
Intangible assets 1,585.6 1,724.6 1,622.4
Tangible assets 392.1 391.0 401.0
Investments 7.3 10.2 9.9
-------------------------------- ----- --------- --------- ---------
1,985.0 2,125.8 2,033.3
-------------------------------- ----- --------- --------- ---------
Current assets
Stocks 6.6 7.0 7.0
Debtors 172.5 157.6 160.8
Cash at bank and in hand 33.7 39.2 34.3
-------------------------------- ----- --------- --------- ---------
212.8 203.8 202.1
-------------------------------- ----- --------- --------- ---------
Creditors: amounts falling due
within one year
Bank loans, loan notes and (63.5) (58.2) (57.3)
overdrafts
Obligations under finance leases (2.0) (4.7) (4.4)
Other creditors (236.6) (227.2) (249.5)
-------------------------------- ----- --------- --------- ---------
(302.1) (290.1) (311.2)
-------------------------------- ----- --------- --------- ---------
Net current liabilities (89.3) (86.3) (109.1)
-------------------------------- ----- --------- --------- ---------
Total assets less current 1,895.7 2,039.5 1,924.2
liabilities
Creditors: amounts falling due
after more than one year
Bank loans and loan notes (470.7) (594.4) (554.9)
Obligations under finance leases (21.0) (31.1) (22.8)
-------------------------------- ----- --------- --------- ---------
(491.7) (625.5) (577.7)
-------------------------------- ----- --------- --------- ---------
Provisions for liabilities and (68.9) (65.2) (68.8)
charges
Non-equity minority interest (3.7) (3.7) (3.7)
-------------------------------- ----- --------- --------- ---------
Net assets excluding pension 1,331.4 1,345.1 1,274.0
schemes' assets and liabilities
-------------------------------- ----- --------- --------- ---------
Pension schemes' assets 8 - - -
Pension schemes' liabilities 8 (234.4) (215.1) (248.1)
-------------------------------- ----- --------- --------- ---------
Net assets including pension 1,097.0 1,130.0 1,025.9
schemes' assets and liabilities
-------------------------------- ----- --------- --------- ---------
Equity capital and reserves
Called-up share capital 29.5 29.2 29.4
Share premium account 1,096.7 1,081.3 1,089.5
Revaluation reserve 5.0 4.9 5.0
Profit and loss account (34.2) 14.6 (98.0)
-------------------------------- ----- --------- --------- ---------
Equity shareholders' funds 11 1,097.0 1,130.0 1,025.9
-------------------------------- ----- --------- --------- ---------
The Consolidated balance sheet at 29th June 2003 has been restated in accordance
with UITF 38 Accounting for ESOP Trusts. Shares held within Employee Share
Option Schemes are dealt with in the balance sheet as a deduction from
shareholders' funds. The effect of this change in accounting policy was a
reduction in fixed asset investments of £0.4 million and a reduction in
shareholders' funds of £0.4 million.
Consolidated cash flow statement (unaudited)
for 26 week period to 27 June 26 weeks to 26 weeks to 52 weeks to
2004 27 June 29 June 28 December
2004 2003 2003
notes £m £m £m
-------------------------------- ----- --------- --------- ---------
Net cash inflow from operating 9 126.9 116.7 246.2
activities
-------------------------------- ----- --------- --------- ---------
Dividends received from 3.2 - 0.9
associated undertakings
-------------------------------- ----- --------- --------- ---------
Cash inflow from associated 3.2 - 0.9
undertakings
-------------------------------- ----- --------- --------- ---------
Returns on investments and
servicing of finance
Interest received 0.3 0.3 0.5
Interest paid (17.8) (20.0) (41.2)
Interest element of finance lease (0.5) (0.8) (1.4)
rental payments
Dividends paid to minority (0.1) (0.1) (0.3)
shareholders
-------------------------------- ----- --------- --------- ---------
Net cash outflow from returns on (18.1) (20.6) (42.4)
investments and servicing of
finance
-------------------------------- ----- --------- --------- ---------
Taxation paid (22.9) (21.2) (44.9)
-------------------------------- ----- --------- --------- ---------
Net cash inflow before investing 89.1 74.9 159.8
activities
-------------------------------- ----- --------- --------- ---------
Capital expenditure and financial
investment
Purchase of tangible fixed (14.8) (26.9) (59.4)
assets
Sale of tangible fixed assets 1.0 4.3 4.2
-------------------------------- ----- --------- --------- ---------
Net cash outflow from capital (13.8) (22.6) (55.2)
expenditure and financial
investment
-------------------------------- ----- --------- --------- ---------
Net cash inflow before 75.3 52.3 104.6
acquisitions and disposals
-------------------------------- ----- --------- --------- ---------
Acquisitions and disposals
Acquisition of business - (0.3) (0.4)
Net cash balances disposed of (2.1) - -
with subsidiary undertaking
Sale of subsidiary undertakings 44.7 0.1 0.1
Sale of motorcycle show 0.2 - -
business
-------------------------------- ----- --------- --------- ---------
Net cash inflow/(outflow) from 42.8 (0.2) (0.3)
acquisitions and disposals
-------------------------------- ----- --------- --------- ---------
Dividends paid (37.6) (35.9) (52.0)
-------------------------------- ----- --------- --------- ---------
Net cash inflow before 80.5 16.2 52.3
financing
-------------------------------- ----- --------- --------- ---------
Financing
Issue of shares 7.3 0.7 8.7
Purchase of own shares under (6.2) - -
LTIP
Repayment of unsecured loans (84.8) (6.2) (49.1)
Principal payments under finance (4.2) (4.5) (13.1)
leases
-------------------------------- ----- --------- --------- ---------
Net cash outflow from financing (87.9) (10.0) (53.5)
-------------------------------- ----- --------- --------- ---------
(Decrease)/increase in cash (7.4) 6.2 (1.2)
-------------------------------- ----- --------- --------- ---------
Reconciliation of net cash flow
to movement in net debt
-------------------------------- ----- --------- --------- ---------
(Decrease)/increase in cash in (7.4) 6.2 (1.2)
the period
Cash outflow from movement in 89.0 10.7 62.2
debt and lease financing
-------------------------------- ----- --------- --------- ---------
Change in net debt resulting from 81.6 16.9 61.0
cash flows
-------------------------------- ----- --------- --------- ---------
Movement in net debt in the 81.6 16.9 61.0
period
Opening net debt (605.1) (666.1) (666.1)
-------------------------------- ----- --------- --------- ---------
Closing net debt 10 (523.5) (649.2) (605.1)
-------------------------------- ----- --------- --------- ---------
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 27 June 2004 are as set out in the Group's
financial statements for the 52 weeks to 28 December 2003.
2. Turnover
The analysis of the Group's turnover is as follows:
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
(restated)
£m £m £m
By geographical destination:
---------------------------------- --------- --------- ---------
United Kingdom and Republic of 568.9 547.7 1,088.9
Ireland
Continental Europe 3.8 2.4 6.1
Rest of the World 0.0 0.1 0.1
---------------------------------- --------- --------- ---------
572.7 550.2 1,095.1
---------------------------------- --------- --------- ---------
By type:
---------------------------------- --------- --------- ---------
Circulation 194.8 185.9 376.0
Advertising 324.2 313.4 620.6
Other 53.7 50.9 98.5
---------------------------------- --------- --------- ---------
572.7 550.2 1,095.1
---------------------------------- --------- --------- ---------
By division:
---------------------------------- --------- --------- ---------
Regionals division* 270.4 264.5 525.3
Nationals division 257.9 244.3 492.2
Sports division 23.7 21.2 43.4
Magazines and exhibitions 19.4 18.5 30.5
Arrow Interactive 1.3 1.7 3.7
---------------------------------- --------- --------- ---------
572.7 550.2 1,095.1
---------------------------------- --------- --------- ---------
*Regionals division includes turnover relating to Wheatley Dyson & Son Limited
of £nil (26 weeks to 29 June 2003 £0.1 million; 52 weeks to 28 December 2003
£0.1 million) which was disposed of in February 2003 and the Irish regional
newspaper titles in Belfast, Derry and Donegal of £nil (26 weeks to 29 June 2003
£8.0 million; 52 weeks to 28 December 2003 £16.1 million) which were disposed of
in January 2004.
Turnover and net operating expenses for the 26 weeks to 29 June 2003 have been
restated to reflect Arrow Interactive revenues net of commissions payable
(previously disclosed as operating expenses) to third parties. This change in
accounting policy has no impact on the Group operating profit for 2003 and is
consistent with the accounting policies set out in the Group financial
statements for the 52 weeks ended 28 December 2003.
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
27 June 29 June 28 December
2004 2003 2003
By division:
£m £m £m
---------------------------------- --------- --------- ---------
Regionals division* 75.0 62.0 123.9
Nationals division 41.1 38.2 85.8
Sports division 8.6 7.1 14.2
Magazines and exhibitions 4.7 3.2 4.8
Arrow Interactive (0.6) (0.2) (0.3)
Central costs (8.6) (8.9) (15.9)
---------------------------------- --------- --------- ---------
120.2 101.4 212.5
---------------------------------- --------- --------- ---------
* Regionals division includes profit relating to Wheatley Dyson & Son Limited of
£nil (26 weeks to 29 June 2003 £nil ; 52 weeks to 28 December 2003 £nil) which
was disposed of in February 2003 and profits relating to the Irish regional
newspaper titles in Belfast, Derry and Donegal of £nil (26 weeks to 29 June 2003
£1.7 million; 52 weeks to 28 December 2003 £3.1 million), which were disposed of
in January 2004
Notes to the financial statements (unaudited)
continued
4. Exceptional items
---------------------------------- --------- -------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- -------- ---------
Operating exceptional items
Impairment of carrying value of - - 100.0
publishing rights and titles (a)
Write-off carrying value of - - 1.6
goodwill (b)
Restructuring costs (c) 4.3 2.2 14.6
Maxwell related recoveries (d) - - (3.1)
Profit on disposal of land and (0.8) (1.1) (1.1)
buildings (e)
---------------------------------- --------- -------- ---------
Group exceptional items charged 3.5 1.1 112.0
against Group operating profit
---------------------------------- --------- -------- ---------
Profit on sale of subsidiary (2.5) (0.1) (0.1)
undertakings (f)
---------------------------------- --------- -------- ---------
Profit on sale of motorcycle show - - -
business (f)
---------------------------------- --------- -------- ---------
Net exceptional items before 1.0 1.0 111.9
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 was required in 2003. The impairment charge reduced the
carrying value of the Regional titles in the South by £100.0 million, to the
net present value of future cashflows to be derived from these assets,
discounted at 8.0%.
b) In 2003, following a review of a number of motorcycle shows during the year,
in advance of their subsequent disposal in January 2004, goodwill of £1.6
million was written off.
c) Restructuring costs relate to ongoing cost reduction plans and include
costs of £0.7 million incurred in restructuring Arrow Interactive.
d) In 2003, the Group recovered £3.1 million from the liquidators of
Maxwell related companies for claims outstanding since 1992.
e) In 2003 the Group disposed of surplus land and buildings realising a profit
on disposal of £1.1 million. In the 26 week period to 27 June 2004 the group
disposed of surplus land and buildings realising a profit of £0.8 million.
f) In January 2004, the Group disposed of its Irish subsidiaries for a
consideration of £46.1 million, realising a profit of £2.5 million and its
Motorcycle Show business for a consideration of £0.2 million, realising a
profit of £nil. 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.
5. Tax on profit on ordinary activities
----------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
----------------------------------- --------- --------- ---------
Profit before tax on ordinary 101.8 80.4 172.5
activities before exceptional
items
---------------------------------- --------- --------- ---------
Corporation Tax
Corporation tax charge for the 31.6 26.9 52.1
period
Prior period adjustment - - (1.2)
---------------------------------- --------- --------- ---------
Total current tax charge 31.6 26.9 50.9
---------------------------------- --------- --------- ---------
Deferred Tax
Deferred tax (credit)/charge for - (2.0) 3.8
the period
Prior period adjustment - - (2.6)
---------------------------------- --------- --------- ---------
Total deferred tax - (2.0) 1.2
---------------------------------- --------- --------- ---------
Tax on profit on ordinary 31.6 24.9 52.1
activities before exceptional
items
---------------------------------- --------- --------- ---------
Exceptional:
UK corporation tax on exceptional (1.0) (0.7) (5.2)
items
---------------------------------- --------- --------- ---------
Tax on profit on ordinary 30.6 24.2 46.9
activities
---------------------------------- --------- --------- ---------
The deferred tax (credit)/charge for the period is after a FRS 17 credit of £1.1
million (2003: £1.1 million).
Notes to the financial statements (unaudited)
continued
5. Tax on profit on ordinary activities
continued
Reconciliation of current tax charge
The current tax rate for the period is more than the statutory rate of 30%
(2003: statutory rate 30%) for the reasons set out in the following
reconciliation:
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
% % %
---------------------------------- --------- --------- ---------
Standard rate of corporation tax 30.0 30.0 30.0
Permanent items 1.0 1.0 2.3
Depreciation in excess of/(below) 0.8 1.1 (2.5)
capital allowances for the period
Deferred tax on short-term and (0.8) 1.4 0.4
other timing differences
Prior period adjustment corporation - - (0.7)
tax --------- --------- ---------
----------------------------------
Total current tax charge rate 31.0 33.5 29.5
---------------------------------- --------- --------- ---------
Deferred tax (credit)/charge rate - (2.5) 0.7
---------------------------------- --------- --------- ---------
Effective rate before exceptional 31.0 31.0 30.2
items
---------------------------------- --------- --------- ---------
6. Dividends
The Directors have declared the payment of an interim dividend of 5.9p (2003:
5.5p) per 10p ordinary share to be paid on 1 November 2004 to shareholders on
the register on 3 October 2004. The total dividend in 2003 was 18.3p 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
27 June 29 June 28 December
2004 2003 2003
No. of shares No. of shares No. of shares
---------------------------------- --------- --------- ---------
Basic (millions) 294.5 291.8 292.4
---------------------------------- --------- --------- ---------
Diluted (millions) 297.8 292.7 293.8
---------------------------------- --------- --------- ---------
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
pence pence pence
---------------------------------- --------- --------- ---------
Underlying earnings per share 23.8 19.0 41.1
---------------------------------- --------- --------- ---------
Exceptional items - (0.1) (36.5)
---------------------------------- --------- --------- ---------
Earnings per share - basic 23.8 18.9 4.6
---------------------------------- --------- --------- ---------
Earnings per share - diluted 23.6 18.8 4.6
---------------------------------- --------- --------- ---------
The earnings per share for each category of exceptional items disclosed in Note
4 is as follows:
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
pence pence pence
---------------------------------- --------- --------- ---------
Impairment of carrying values of - - (34.2)
publishing rights and titles
---------------------------------- --------- --------- ---------
Write-off carrying value of - - (0.5)
goodwill --------- --------- ---------
----------------------------------
Restructuring costs (1.1) (0.1) (3.2)
---------------------------------- --------- --------- ---------
Maxwell related recoveries - - 1.0
---------------------------------- --------- --------- ---------
Profit on disposal of land and 0.3 - 0.4
buildings --------- --------- ---------
----------------------------------
Profit on sale of subsidiary 0.8 - -
undertakings
---------------------------------- --------- --------- ---------
Earnings per share - exceptional - (0.1) (36.5)
items
---------------------------------- --------- --------- ---------
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 also operated. However the cost of these is immaterial and is not separately
disclosed within the pension costs for the Group.
Two of the defined benefit 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.
An actuarial valuation of these pension schemes as at 31 December 2002, showed
that they have insufficient assets to meet their liabilities for members'
benefits, therefore contributions of £3.5 million were paid to the Past Service
Scheme in 2003 with £3.5 million due to be paid in 2004.
In addition to the above schemes, the Group operates a further eight final
salary schemes. Actuarial valuations of schemes are carried out regularly, 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 were undertaken during 2003 for a further five of the final
salary schemes, the most significant being the Trinity Retirement Benefit Scheme
and the MGN Pension Scheme. All the valuations showed that, on the basis of the
assumptions used by their respective scheme actuary, there were insufficient
assets to meet the liabilities, resulting in increased contributions of £5.0
million during 2004. Further actuarial valuations will be undertaken in 2004,
including the Old Scheme, the Past Service Scheme, the MGN Pension Scheme and
the Midland Independent Newspapers Pension Scheme.
During 2002, the decision was taken to close entry to the three 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 known as the Trinity Mirror Pension Plan
which was introduced on 1 July 2003.
Valuations have been performed in accordance with the requirements of FRS 17
with scheme liabilities calculated using a consistent projected unit valuation
method and compared to the market value of the schemes' assets at 25 June 2004,
the last day prior to the period end for which such values were available.
Based on actuarial advice, the financial assumptions used in calculating the
schemes' liabilities are:
---------------------------------- --------- --------- ---------
Assumptions Assumptions Assumptions
as at as at as at
27 June 29 June 28 December
2004 2003 2003
(%) (%) (%)
---------------------------------- --------- --------- ---------
Discount rate 5.80 5.25 5.40
Inflation rate 3.00 2.50 2.75
Pension increases:
Pre 6 April 1997 pensions 3.00 to 5.00 2.50 to 5.00 2.75 to 5.00
Post 6 April 1997 pensions 3.00 to 3.25 2.50 to 3.00 2.75 to 3.25
Salary progression 4.50 4.25 4.30
---------------------------------- --------- --------- ---------
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 27 June 2004, under FRS17, is as follows:
---------------------- --------- --------- --------- --------- ---------
Total as at Total as at Total as at
Defined benefit Defined benefit 27 June 29 June 28 December
assets liabilities
£m £m 2004 2003 2003
£m £m £m
---------------------- --------- --------- --------- --------- ---------
Fair value of schemes' 973.1 973.1 904.4 970.7
assets
Actuarial value of (1,308.0) (1,308.0) (1,211.7) (1,325.2)
schemes' liabilities --------- --------- --------- --------- ---------
----------------------
Schemes' deficits (334.9) (307.3) (354.5)
Deferred tax asset 100.5 92.2 106.4
---------------------- --------- --------- --------- --------- ---------
Net schemes' (234.4) (215.1) (248.1)
liabilities --------- --------- --------- --------- ---------
----------------------
The contributions made during the period were £14.1 million (26 weeks to 29 June
2003 £10.4 million; 52 weeks to 28 December 2003 £25.2 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
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- --------- ---------
Current service cost 15.8 11.9 24.5
Past service cost 0.4 0.5 1.7
---------------------------------- --------- --------- ---------
Total included within operating 16.2 12.4 26.2
profit --------- --------- ---------
----------------------------------
The amounts included as other finance charge for the period under FRS 17 are as
follows:
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- --------- ---------
Expected return on pension schemes' (33.6) (28.9) (57.7)
assets
Interest cost on pension schemes' 35.2 30.6 60.6
liabilities --------- --------- ---------
----------------------------------
Net finance charge 1.6 1.7 2.9
---------------------------------- --------- --------- ---------
The movement in the deficit during the period is analysed below:
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- --------- ---------
Opening deficit in the schemes (354.5) (233.0) (233.0)
Current service cost (15.8) (11.9) (24.5)
Contributions 14.1 10.4 25.2
Past service cost (0.4) (0.5) (1.7)
Finance charge (1.6) (1.7) (2.9)
Actuarial gains/(losses) 23.3 (70.6) (117.6)
---------------------------------- --------- --------- ---------
Closing deficit in the schemes (334.9) (307.3) (354.5)
---------------------------------- --------- --------- ---------
The profit and loss reserve is analysed below:
---------------------------------- --------- --------- ---------
As at As at As at
27 June 29 June 28 December
2004 2003 2003
(restated)
£m £m £m
---------------------------------- --------- --------- ---------
Profit and loss reserve excluding 200.2 229.7 150.1
pension reserve
Pension reserve (234.4) (215.1) (248.1)
---------------------------------- --------- --------- ---------
Profit and loss reserve (34.2) 14.6 (98.0)
---------------------------------- --------- --------- ---------
Notes to the financial statements (unaudited)
continued
9. Reconciliation of operating profit to net cash inflow from operating
activities
The following information is supplementary to the consolidated cash flow
statement:
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- --------- ---------
Operating profit 116.7 100.3 100.5
Depreciation 20.3 21.4 43.3
Amortisation/impairment of goodwill 0.2 0.3 102.5
and publishing rights and titles
Profit on disposal of fixed (0.8) (1.2) (0.7)
assets
Decrease in stocks 0.2 0.3 0.3
Increase in trade and other debtors (13.6) (3.4) (6.3)
and prepayments
Increase/(decrease) in trade and 0.8 (3.0) 5.6
other creditors and accruals
Cost of Long Term Incentive Plan 1.0 - -
benefits (LTIP)
Adjustment for FRS 17 pension 2.1 2.0 1.0
funding --------- --------- ---------
----------------------------------
Net cash inflow from operating 126.9 116.7 246.2
activities --------- --------- ---------
----------------------------------
10. Analysis of net debt
---------------------- -------- -------- --------- --------- ---------
At 28 Cash Loans Other non-cash At 27 June
December flow repaid changes 2004
2003 £m £m £m £m
£m
---------------------- -------- -------- --------- --------- ---------
Cash at bank and in 34.3 (0.6) - - 33.7
hand
Bank overdrafts (19.3) (6.8) - - (26.1)
---------------------- -------- -------- --------- --------- ---------
Net cash balances 15.0 (7.4) - - 7.6
---------------------- -------- -------- --------- --------- ---------
Debt due within one (38.0) - 0.6 - (37.4)
year
Debt due after one (554.9) - 84.2 - (470.7)
year
Finance leases (27.2) 4.2 - - (23.0)
---------------------- -------- -------- --------- --------- ---------
Bank loans, loan notes (620.1) 4.2 84.8 - (531.1)
and finance leases -------- -------- --------- --------- ---------
----------------------
Net debt (605.1) (3.2) 84.8 - (523.5)
---------------------- -------- -------- --------- --------- ---------
11. Reconciliation of movements in consolidated shareholders' funds
---------------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
27 June 29 June 28 December
2004 2003 2003
£m £m £m
---------------------------------- --------- --------- ---------
Profit for the financial period 70.1 55.1 13.4
attributable to shareholders
Dividends (17.4) (16.1) (53.7)
---------------------------------- --------- --------- ---------
Retained profit/(loss) 52.7 39.0 (40.3)
Other net recognised gains and 16.3 (49.4) (82.3)
losses in the period in respect of
FRS 17
New share capital subscribed 7.3 0.7 9.1
Movement on revaluation reserve - (0.1) -
Effect of share options expensed by - - (0.4)
parent company
Effect of investment in LTIP (6.2) - -
shares
Expense of the cost of the 1.0 - -
investment in LTIP shares --------- --------- ---------
----------------------------------
Net decrease in shareholders' 71.1 (9.8) (113.9)
funds --------- --------- ---------
----------------------------------
Opening shareholders' funds 1,025.9 1,139.8 1,139.8
---------------------------------- --------- --------- ---------
Closing shareholders' funds 1,097.0 1,130.0 1,025.9
---------------------------------- --------- --------- ---------
977,124 shares were acquired during the year for management remuneration
purposes and held in an ESOP Trust. These will not vest in the employees until
2007 and accordingly are included as a reduction from shareholders' funds.
Notes to the financial statements (unaudited)
continued
12. Sale of subsidiary undertakings
The Group disposed of its Motorcycle Show business and Irish subsidiaries on 8
and 15 of January 2004 respectively. The results of the companies up to the date
of disposal have been included in continuing operations.
---------------------------------- ------- -------- --------
Sale of Irish Sale of
newspaper Motorcycle Show
titles business Total
£m £m £m
---------------------------------- -------- -------- --------
Net assets disposed of:
---------------------------------- -------- -------- --------
Intangible fixed assets 36.3 0.2 36.5
Tangible fixed assets 3.0 - 3.0
Current assets 4.2 - 4.2
Creditors falling due within one year (1.3) - (1.3)
---------------------------------- -------- -------- --------
42.2 0.2 42.4
Costs of disposal 1.4 - 1.4
Profit on disposal 2.5 - 2.5
---------------------------------- -------- -------- --------
46.1 0.2 46.3
---------------------------------- -------- -------- --------
Satisfied by:
Cash consideration 46.1 0.2 46.3
---------------------------------- -------- -------- --------
Analysis of the net cash inflow in
respect of the disposals of subsidiary
undertakings and motorcycle show
business
---------------------------------- -------- -------- --------
Cash consideration 46.1 0.2 46.3
Costs of disposal (1.4) - (1.4)
Net cash balance transferred on (2.1) - (2.1)
disposal
---------------------------------- -------- -------- --------
42.6 0.2 42.8
---------------------------------- -------- -------- --------
13. Restatement of comparatives
a) Arrow Interactive
Turnover and net operating expenses have been restated to reflect Arrow
Interactive revenues net of commissions payable (previously disclosed as
operating expenses) to third parties. This change in accounting policy has no
impact on the Group operating profit for 2003.
As a result of this change in accounting policy, the comparatives have been
restated as follows:
------------------------------------------ -------- --------
Turnover Net operating
expenses
£m £m
Consolidated Profit and Loss Account
------------------------------------------ -------- --------
26 weeks to 29 June 2003 reported 551.6 451.3
Change in revenue recognition policy (1.4) (1.4)
------------------------------------------ -------- --------
26 weeks to 29 June 2003 restated 550.2 449.9
------------------------------------------ -------- --------
b) UITF 38 Accounting for ESOP Trusts
Shares held within Employee Share Option Schemes are dealt with in the balance
sheet as a deduction from shareholders' funds.
As a result of this change in accounting policy, the comparatives have been
restated as follows:
----------------------------------------- -------- ---------
Investments Shareholders'
funds
Consolidated Balance Sheet £m £m
----------------------------------------- -------- ---------
26 weeks to 29 June 2003 reported 10.6 1,130.4
Reclassification of ESOP shares to shareholders' (0.4) (0.4)
funds -------- ---------
-----------------------------------------
26 weeks to 29 June 2003 restated 10.2 1,130.0
----------------------------------------- -------- ---------
Notes to the financial statements (unaudited)
continued
14. Statutory information
The financial statements for the 26 weeks to 27 June 2004 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 28 December 2003 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 overleaf.
The interim report was approved by the Directors on 29 July 2004. 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 27 June 2004, which comprises the consolidated profit and
loss account, consolidated statement of total recognised gains and losses, the
consolidated balance sheet, the consolidated cash flow statement, the
reconciliation of net cash flow to movement in net debt and related notes 1 to
14. 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 27 June 2004.
Deloitte & Touche LLP
Chartered Accountants
London
29 July 2004
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