7th Mar 2005 07:00
ULSTER TELEVISION plc("UTV" or "the Company" or "the Group")Preliminary Resultsfor the year ended 31 December 2004UTV PROFIT SOARS BY 28% IN 2004Ulster Television plc, the multimedia group which broadcasts television andradio and provides internet and telephony services throughout Ireland,announces its preliminary results for the year to 31 December 2004.Financial highlights: * Group turnover up 18% at ‚£63.5m (2003: ‚£54.0m). * Group pre-tax profit before goodwill amortisation up 28% at ‚£17.5m (2003: ‚£ 13.6m). * Group pre-tax profit (post goodwill) up 46% at ‚£13.9m (2003: ‚£9.5m). * Television operating profit up 29% at ‚£15.2m (2003: ‚£11.7m). * Radio operating profit ‚£2.5m (2003: ‚£2.5m). * New Media operating profit ‚£0.9m (2003: ‚£0.9m). * Earnings per share increased by 24% to 23.30p (2003: 18.81p). * A 19% increase in final dividend to 7.00p (2003: 5.90p) making a total for the year of 11.50p (2003: 10.00p) an increase of 15%. Operational highlights: * Television advertising revenue increased by 16% compared to a 2.6% increase for ITV1, giving UTV its fifth successive year of outperformance with a record share of 2.69% (2003: 2.36%) of the ITV1 advertising market. * Radio advertising grew by 8%. * Internet revenue grew by 46%. * On 21 February 2005 we purchased the local independent radio station for counties Louth and Meath, LMFM, in the Republic of Ireland for ‚£6.7m. * TV advertising revenues expected to be 5% up in the first quarter of 2005. * Radio advertising revenues expected to be 20% up in the first quarter of 2005. * Successful relaunch of Dublin radio station as Q102 in March 2004 resulted in a 60% increase in its market share to 8%. Key dates: * 18 March 2005 : record date for payment of dividends * 7 June 2005 : payment of dividends Commenting on the results, Mr John B McGuckian, Chairman, UTV said:"I am pleased to report a year of outstanding achievement for UTV in all threeareas of our business. Our unique market offering ensures the continuation ofimpressive growth in TV, radio and new media. In particular our integratedsales strategy for radio is paying dividends across Ireland and is wellpositioned to grow further."Television operating profit increased by 29% to ‚£15.2m and we expect 2005advertising revenue to increase by 5% in the first quarter. We have alsoaccepted the Digital Replacement Licence offered by Ofcom which extends theterm of our television broadcasting licence to 2014."The successful relaunch of Q102 in Dublin combined with strong performancesfrom our radio stations in Cork and Limerick drove our total Irish radioadvertising up by 8% to ‚£10.9m in 2004. Q102 should move into profit this yearwhich would give a significant boost to the overall profits of our radiodivision. We expect radio advertising growth of 20% in the first quarter ofthis year and further improvement will be delivered by the integration of LMFMwhich broadcasts to 250,000 adults in Dundalk, Drogheda and surrounding areas."Through a combination of continued growth in our broadband customer base andfollowing the successful launch of our telephony product UTV Talk in August,turnover in our New Media division grew by 44% to ‚£5.4m."For further information contact:Stakeholder CommunicationsTom Kelly, Managing Director +44 207 9035145 / 07767393250Ulster Television plcJohn McCann, Group Chief Executive +44 28 9026 2202Jim Downey, Group Finance Director +44 28 9026 2176Orla McKibbin, Head of Press and PR +44 28 9026 2188Chairman's StatementINTRODUCTIONI am pleased to report a year of outstanding achievement for your company.Group turnover grew by 18% to ‚£63.5m, group pre-tax profit before goodwillamortisation was up by 28% to ‚£17.5m, earnings per share rose by 24% to 23.3p,and net debt reduced by ‚£10.6m to ‚£18.5m.RESULTS AND DIVIDENDOperating profit before goodwill amortisation increased by 29% to ‚£15.2m (2003: ‚£11.7m) for television and was maintained at ‚£2.5m (2003 : ‚£2.5m) and at ‚£0.9m (2003 : ‚£0.9m) for radio and new media respectively. Group operatingprofit before goodwill amortisation, therefore, was up by ‚£3.5m to ‚£18.6m (2003: ‚£15.1m). With net interest charges lower at ‚£0.9m (2003 : ‚£1.3m) and a lossof ‚£0.2m (2003 : ‚£0.2m) in joint ventures, the group profit before tax andgoodwill amortisation was ‚£17.5m (2003 : ‚£13.6m).Your Board recommends a final dividend of 7.00p (2003 : 5.90p) which representsa 19% increase over last year making a total for the year of 11.50p (2003 :10.00p) an increase of 15%. The final dividend will be paid on 7 June 2005 toshareholders on the Register at the close of business on 18 March 2005. TheAnnual General Meeting will be held on 27 May 2005.TELEVISIONA share of 2.69% of the ITV network's advertising revenue, another record,signalled our fifth successive year of outperformance, with our advertisingrevenue up by 16% to ‚£44.5m (2003 : ‚£38.3m) compared to a 2.6% increase forITV1 as a whole. While there were some performance-related cost increases, thesubstantial network programme cost increases of the past four years have beencontained by the implementation of the Granada/Carlton merger undertakings, andour television operating profit rose by ‚£3.5m to ‚£15.2m (2003 : ‚£11.7m). InDecember, we accepted the Digital Replacement Licence offered by Ofcom whichreplaced our analogue licence and which extended our television broadcastingterm to 31 December 2014. We also applied for a review of the financial termsof our licence and Ofcom's decision on this will be published in June 2005.RADIOThe relaunch and rebranding of our Dublin radio station in March 2004 wasrewarded with much improved listenership figures which drove a 5.5% improvementin advertising revenue to Q102 for the full year compared to an 11% reductionin the first half. With strong performances from our radio stations in Cork andLimerick, our total Irish radio advertising revenue was up by 8% to ‚£10.9m(2003 : ‚£10.1m). The costs associated with the relaunch of Q102 inhibitedgrowth in radio operating profit which, at ‚£2.5m, was maintained at the samelevel as 2003. On 21 February 2005, we purchased for ¢â€š¬9.5m (‚£6.7m) the localindependent radio station for counties Louth and Meath, LMFM, which broadcaststo 250,000 adults centered around the key urban areas of Dundalk and Drogheda.Our application for a new radio licence broadcasting to 720,000 adults inBelfast and the surrounding area is currently under consideration by Ofcom.NEW MEDIAContinuing growth in our broadband customer base helped to lift turnover by 44%to ‚£5.4m. As indicated in my Interim Statement, broadband customer acquisitioncosts do put pressure on margins but developing this income stream is a keypart of our long-term strategy. Similarly, our stand-alone telecoms product,UTV Talk, which was launched in August 2004, is making very good progress butis not yet contributing to profitability due to initial costs. Despite thesecosts and a one-off credit of ‚£0.15m in the comparative figure, new mediaoperating profits were maintained at ‚£0.9m (2003 : ‚£0.9m).CURRENT TRADING AND PROSPECTSAdvertising prospects generally for the current year appear to be good withforecasters predicting that UK and global advertising will increase by about5%, which would be only slightly behind the growth of 2004. Total televisionadvertising growth in the UK is expected to be around 4%, but the effect ofITV1's fall in its share of commercial impacts under the Contract RightsRenewal (CRR) undertaking may lead to an underperformance in advertisingrevenue for the ITV1 network in 2005.That portion of our television advertising revenue sourced in GB, which in 2004accounted for 49% of the total, will be similarly subject to the CRR mechanism,but the balance of our revenue deriving from Ireland will be traded normally.Our television advertising revenue for the first quarter is expected to be upby 5% but it is difficult at this stage to anticipate the level of growththroughout the rest of the year.A strong recovery by our Dublin radio station, Q102, and good performances byour stations in Cork and Limerick are expected to lift our radio advertisingrevenue in Ireland by 20% in the first quarter of 2005. The radio marketremains very short-term, but, with the Irish economy continuing to grow,further strong growth should be achievable. Q102 is expected to move intoprofit this year which should give a significant boost to the overall profitsof the radio division. Further improvement can be expected also from theintegration of our latest radio acquisition LMFM, which should be earningsenhancing for the year as a whole.Our broadband and telephony services continue to enjoy substantial growth withturnover in our new media division expected to be up by about 25% in the firstquarter of 2005. This level of growth should be sustainable throughout the restof the year and, even with tighter margins, should drive some improvement inthe profitability of that division.PEOPLEOn your behalf, I wish to thank the Board, management and staff of the Companyfor their commitment, professionalism and enthusiasm in delivering another setof results of which they can be proud.John B McGuckianChairman7 March 2005Operating and Financial ReviewFINANCIAL OVERVIEWTelevision, radio and new media accounted for 74%, 17% and 9% respectively ofgroup turnover of ‚£63.5m (2003 : ‚£54.0m) and 81%, 14% and 5% respectively ofgroup operating profit before goodwill of ‚£18.6m (2003 : ‚£15.1m). The strongoperational performance generated net positive cash flows of ‚£8.7m (2003 : ‚£0.7m outflow) in the year which, with the conversion of ‚£1.7m (2003 : ‚£1.7m) ofloan notes into ordinary shares at ‚£2.30 and the impact of foreign exchangemovements, reduced the net debt at 31 December 2004 to ‚£18.5m (2003 : ‚£29.1m).This reduction in our net debt resulted in a lower net interest charge for theyear of ‚£0.9m (2003 : ‚£1.3m).The net debt position at the year end represented 0.9 times (2003 : 1.7 times)Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) andcomprised euro denominated loans of ‚£26.1m (2003 : ‚£32.3m), sterling cashbalances of ‚£4.7m (2003 : ‚£2.7m) and euro denominated cash balances of ‚£3.0m(2003 : ‚£2.3m). Euro denominated balances were translated at a euro/sterlingexchange rate of 1.413 (2003: 1.415).Of the tax charge for the year of ‚£4.9m (2003 : ‚£3.6m), ‚£4.6m (2003 : ‚£3.3m)was on profits arising in the UK and ‚£0.3m (2003 : ‚£0.3m) was on profitsarising in the more favourable corporation tax regime in the Republic ofIreland. The effective pre-goodwill tax rate overall was 28.3% (2003 : 26.5%).The post tax pre-goodwill profit of ‚£12.6m (2003 : ‚£10.0m) produced earningsper share of 23.30p (2003 : 18.81p).TELEVISIONOur key strategic objectives were, and are, to maintain our brand strengththroughout Ireland, maximise our audience and provide our advertisers with theonly viable mass market television advertising proposition across the island.With further penetration of digital television in the UK, the ITV1 networkshare of the peaktime audience fell slightly from 31.4% in 2003 to 30.6% in2004. Despite this, and the additional competition in Northern Ireland from thefour channels broadcasting from the Republic of Ireland, UTV's peaktime shareincreased over the same period from 33.6% to 34.5%. This gave us a commandinglead over both BBC1 Northern Ireland with a 21.9% share, and our nearestcommercial competitor, C4, with an 8.6% share, and again compared favourably tothe combined peaktime share of all our commercial television competitors of37.3%. Within that combined share, the four channels originating in theRepublic of Ireland had a total share of 5.5%, which compared to the 11.3%share which UTV achieved in 78% of homes in the Republic which aremulti-channel.Supported by this viewership across Ireland, advertising revenue increased by ‚£6.2m to ‚£44.5m (2003 : ‚£38.3m), with strong growth being recorded in all threeof our marketplaces, Belfast, Dublin and Great Britain. Encouragingly, thisgrowth was across most advertising categories with 17 out of 22 categoriesachieving double digit growth. With other revenue of ‚£2.7m (2003 : ‚£1.8m),including sponsorship revenue of ‚£1.2m (2003 : ‚£1.0m), total television revenueincreased by ‚£7.1m to ‚£47.2m (2003 : ‚£40.1m).Under the Communications Act 2004, Ofcom offered a new Digital ReplacementLicence (DRL) which we accepted and which took effect from 28 December 2004.This new licence expires on 31 December 2014 and currently contains broadly thesame public service requirements set out in our old analogue licence. However,the DRL also creates the framework for digital switchover by introducingvarious obligations including a target switchover date for all mainbroadcasters of no later than 31 December 2012. Ofcom proposes that digitalswitchover will take place on a region-by-region basis and published a proposedsequence for this process on 9 February 2005 which envisages the first regionsswitching over in 2008 and UTV switching over in 2011. The sequence, andrelated matters such as digital coverage, will be included in our obligationsby way of variation to the DRL.Also under the legislation, we applied for a review of the financial terms ofour licence, which in 2004 comprised a flat payment of ‚£0.6m and a variablepayment of ‚£1.3m representing 5% of our total qualifying revenue. Indetermining any new financial terms, Ofcom is required to set a value for thecash bid for the licence as if the licence was being auctioned anew. Ourapplication was prepared in accordance with a methodology document published byOfcom which required ten year projections prepared on the basis of a range ofgiven assumptions.In June, Ofcom will issue new financial terms which, if acceptable to us, willapply from 1 January 2005. If we reject the terms offered, then our existingfinancial terms will remain in place and no further reviews can be soughtduring the licence period. If we withdraw our application prior to Ofcomoffering new terms, then we will be allowed to apply again for review up until31 December 2007.The Phase 3 report of Ofcom's statutory review of public service broadcastingwas published on 8 February 2005 and proposed that non-news local programmingrequirements for Northern Ireland would be reduced by one half hour to aminimum of four hours per week. This, and other proposals in the report, havenow been put to formal consultation until 19 April 2005.RADIOOur strategy in radio is to create the leading independent commercial radiogroup in Ireland comprising strong local broadcasters operating in key urbanareas.With the purchase of LMFM on 21 February 2005 for ‚£6.7m, UTV's radio stationsin the Republic of Ireland, now broadcast to five major urban areas, Dublin,Cork, Limerick, Drogheda and Dundalk. Through our wholly owned sales house,Broadcast Media Sales Ltd, we also sell airtime for Galway Bay FM, the leadingindependent radio station in Galway and for Beat FM, a regional stationbroadcasting in the south-east of Ireland. More than 66% of the totalpopulation of the Republic of Ireland reside in these areas and our radiostations, together with Galway Bay FM and Beat FM, reach 29% of 15+ adults inthe Republic every week. This provides an attractive proposition for nationaland international marketers, with further advertising support coming from localadvertisers in each area. Our previously underperforming station in Dublin ismaking good progress with the most recent research data in February 2005confirming the improving trend in its listenership.With the acquisition of LMFM, UTV now owns 17.9% of the total number ofindependent local radio licences in the Republic of Ireland. Ownership rulesintroduced by the Broadcasting Commission of Ireland (BCI) in October 2001deemed the ownership of up to 15% of the total number of licences to be"acceptable" with up to a further 10% ownership of the total number requiring"more careful consideration by the Commission". After approving our acquisitionof LMFM, the BCI announced that it would be reviewing its ownership policythrough public consultation and would issue a new policy which would beoperational by late 2005. While this review is under way, the BCI will apply anew maximum permissible ownership holding of 17.9% of the total number ofindependent local radio licences i.e. our current ownership level.NEW MEDIAThe key objective of our new media operations is the development of internetaccess, telephony and cross media content services to consumers across theisland of Ireland. This is achieved in the context of delivering innovativeproducts which extend choice to consumers while developing long termshareholder value through the creation of new profit streams.Broadband penetration continues to grow rapidly throughout Ireland. Keyinitiatives by the incumbent telecommunications operators will ensure that, byDecember 2005, all homes in Northern Ireland will have access to broadbandservices, with 90% of homes in the Republic of Ireland expected to havecoverage by March 2006. UTV Internet will continue to use the Group's media topromote our broadband services, with a view to increasing our market sharebeyond the 5.2% currently achieved since launch in July 2003. Costs associatedwith customer acquisition have impacted on overall margins within our new mediadivision but we will seek to use this wider customer base to leverage valueadded services such as internet based telephony as these technologies becomewidely available.Our broadband products are sold in conjunction with telephony services and wehave developed considerable experience in the administration and billingsystems required in this field. As a result, in August 2004 we launched UTVTalk, a residential telephony product available to consumers throughoutIreland. Initial demand for this service has proved positive and supports ourlow risk entry into the provision of stand alone voice services.Content plays a key role in promoting the UTV brand as well as those of ourindividual television and radio interests. Our flagship website u.tv makes useof the wider news gathering resources available within the group, while in turncross promoting programmes, personalities and activities relevant to ouraudiences across Ireland.In January 2005, UTV Internet was awarded Service Provider of the Year for thesecond time in the three years in which the Digital Media Awards have beenheld. Our submission highlighted the success of our broadband and telephonyoperations and their impact on the competitive digital media landscape inIreland.PENSIONSUTV operates a defined benefit pension scheme in Northern Ireland. This schemewas closed to new members from 21 August 2002.The most recent actuarial valuation was carried out at 30 June 2002 andrevealed a FRS17 surplus of ‚£0.2m. In the period from the date of the lastactuarial valuation the scheme's assets have increased by 9% but this has beenmore than offset by a 27% increase in the scheme's liabilities leaving anestimated FRS17 deficit at 31 December 2004 of ‚£7.13m (2003 : ‚£7.93m). The nextactuarial valuation will be carried out at 30 June 2005. The total pension costfor the year under SSAP24 was ‚£0.80m (2003 : ‚£0.95m).UTV also operates defined contribution schemes both in Northern Ireland and theRepublic of Ireland. Contributions in the year amounted to ‚£0.03m (2003 : ‚£0.02m).CORPORATE SOCIAL RESPONSIBILITYUTV has met the FTSE4Good criteria and is therefore a constituent member of theFTSE4Good Index Series. This demonstrates UTV's commitment to responsiblebusiness practice and management of its social, environmental and ethicalrisks. As a constituent member of a FTSE4Good Index, UTV is demonstrating thatit has the policies and management systems in place to help address theserisks.STAFFThe Group recognizes the importance of providing opportunity for employeeinvolvement as a means of achieving corporate objectives. Joint Committeesreview operational matters, while monthly Team Briefing provides an effectivemeans of communication, complementing the day to day line-management process.The Group provides equality of opportunity for all staff and job applicants andcomplies with relevant Equal Opportunities legislation and codes of practice.The Group's commitment to Equal Opportunities is further demonstrated by thetraining of Equality advisors, membership of Opportunity Now and ourparticipation in a Voluntary Agreement with the Equality Commission.The Group is also fully committed to training staff to develop the skills andknowledge necessary to meet its business objectives by both on and off-the-jobdevelopment activities. The Group works in partnership with the NorthernIreland Film and Television Commission to provide practical training andsupport to individuals working in the sector.ENVIRONMENTAL POLICYUTV recognises that its business activities inevitably have an impact on theenvironment. Consequently our environmental policy seeks to encourage employeesto be environmentally aware and to achieve the highest standards of goodenvironmental practice. In addition the Group endeavours to minimise the levelof waste and the risks of pollution in all areas of its operation. The Grouphas a well established recycling practice in place throughout all departments.UTV recognises the need to educate and inform all employees of policies andplans and developments with the Environmental Management System and these arecommunicated to the workforce through regular environmental newsletters.UTV attained British Standard 7750 in 1996 and was the first broadcastingcompany to hold this award. As a continuation, in July 1997 the Company wasaccredited with the ISO-14001 series of international standards certification.UTV participated in the 2004 Environmental Management Survey in NorthernIreland and achieved an overall percentage score of 78.1% compared to theNorthern Ireland average of 65%.Further details of UTV's environmental policies and associated data areavailable at our corporate website utvplc.com.IN THE COMMUNITYUTV contributes more than half a million pounds directly to the local communityon charitable and sponsorship activities each year. As a result we are one of asmall number of companies in Northern Ireland who have signed up to the PerCentClub which recognises the Company's commitment to investing a minimum of 1% ofit's pre-tax profits on community projects.A unique aspect of our community support is the free provision to localvoluntary, charitable, sporting and enterprise bodies of UTV's studiofacilities. Many of these groups could not otherwise afford such a high profileplatform or reception.In addition, UTV opens its doors weekly to groups of schoolchildren, ethnicorganisations, retired people associations and disabled groups for tours of ourstudios and also supports a number of other local charitable and communityinitiatives.Each day UTV broadcasts at least two Community Service Announcements (CSAs).Last year, 30 different CSAs were broadcast and the company held quarterlyworkshops for those community organisations to assist with training inelementary television skills.UTV supports Business in the Community (BITC) in Northern Ireland. BITC is aunique movement of companies across the UK and Ireland committed to continuallyimproving their positive impact on society. BITC has a core membership of 700companies (more than 210 of these in Northern Ireland) including 70% of theFTSE 100.In 2004 the computer system at UTV was updated, resulting in surplus computerequipment. Through co-ordination with local educational and medicalmissionaries, any equipment that was suitable for re-use was distributed toschools in Zambia.John McCannGroup Chief Executive7 March 2005Group Profit and Loss AccountFor the year ended 31 December 2004 2004 2003 Notes ‚£000 ‚£000 Turnover Continuing Operations Group and share of joint ventures' turnover 64,223 54,384 Less : share of joint ventures' turnover (720) (423) ----------- ----------- Group turnover 2(a) 63,503 53,961 ----------- ----------- Group operating profit before goodwill 2(b) 18,610 15,139amortisation Goodwill amortisation (3,491) (3,777) ----------- ----------- Group operating profit 2(b) 15,119 11,362 Share of operating loss in joint ventures before (213) (186)goodwill amortisation Share of joint venture goodwill amortisation (138) (42) Amortisation of goodwill arising from acquisition - (270)of joint ventures ----------- ----------- Profit on ordinary activities before interest and 14,768 10,864taxation Interest receivable 148 110 Interest payable (1,048) (1,438) ----------- ----------- Profit on ordinary activities before taxation 13,868 9,536 Taxation on profit on ordinary activities 3 (4,950) (3,615) ----------- ----------- Profit on ordinary activities after taxation 8,918 5,921 Minority interest 11 (48) ----------- ----------- Profit for the financial year attributable to the 8,929 5,873Group Ordinary dividends 4 (6,235) (5,349) ----------- ----------- Transfer to reserves 2,694 524 ----------- ----------- Earnings per share Diluted 5 16.33p 10.91p ----------- ----------- Basic (FRS14) 5 16.56p 11.09p ----------- ----------- Adjusted 5 23.30p 18.81p ----------- ----------- Diluted adjusted 5 22.95p 18.39p ----------- ----------- Dividend per share 4 11.50p 10.00p ----------- -----------Group Statement of Total Recognised Gains and LossesFor the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 Profit for the financial year excluding loss of joint 9,350 6,122ventures Share of joint ventures' loss for the year (421) (249) ----------- ----------- Profit for the financial year attributable to members of 8,929 5,873the parent company Exchange difference on retranslation of net assets of (109) 4,320subsidiary undertakings Exchange difference on loans 223 (2,690) ----------- ----------- Total recognised gains and losses for the year 9,043 7,503 ----------- -----------Group Balance SheetAt 31 December 2004 2004 2003 Notes ‚£000 ‚£000 Fixed assets Intangible assets 44,533 47,964 Tangible assets 8,572 8,894 Investment in joint ventures 788 1,151 Other investments 1 1 ----------- ----------- 53,894 58,010 ----------- ----------- Current assets Stocks 4,773 3,533 Debtors 12,672 11,718 Short term cash deposits 6 2,542 2,413 Cash at bank and in hand 6 5,110 2,569 ----------- ----------- 25,097 20,233 Creditors: amounts falling due within one year Creditors (26,292) (19,651) Convertible loan notes 6 - (1,684) ----------- ----------- Net current liabilities (1,195) (1,102) ----------- ----------- Total assets less current liabilities 52,699 56,908 Creditors: amounts falling due after more than one year Bank loans 6 (17,403) (26,668) Amounts due for film rights (822) (170) Provision for liabilities and charges (217) (294) ----------- ----------- 34,257 29,776 Minority interest 18 7 ----------- ----------- Net assets 34,275 29,783 ----------- ----------- Capital and reserves Called-up equity share capital 2,711 2,674 Share premium account 3,873 2,226 Profit and loss account 27,691 24,883 ----------- ----------- Equity shareholders' funds 7 34,275 29,783 ----------- -----------Group Statement of Cash FlowsFor the year ended 31 December 2004 2004 2003 Note ‚£000 ‚£000 Net cash inflow from operating activities 8 21,210 13,463 Returns on investments and servicing of finance (927) (1,307) Taxation (4,703) (3,429) Capital expenditure and financial investment (1,299) (2,482) Acquisitions and disposals - (1,866) Equity dividends paid (5,596) (5,171) ----------- ----------- Net cash inflow/(outflow) before use of liquid resources and financing 8,685 (792) (Increase)/decrease in cash on deposit (129) 2,307 ----------- ----------- 8,556 1,515 Financing (6,018) (2,915) ----------- ----------- Increase/(decrease) in cash 2,538 (1,400) ----------- -----------Reconciliation of Net Cash Flow to Movement in Net Debt 2004 2003 Note ‚£000 ‚£000 Increase/(decrease) in cash in the year 2,538 (1,400) Cash outflow/(inflow) from increase/(decrease) 129 (2,307)in cash on deposit Repayment of loans and debentures 6,018 2,997 ----------- ----------- Change in net debt resulting from cash flows 8,685 (710) Loan acquired on acquisition - (157) Financial liability waived from a third party - 144 Conversion of loan notes 1,684 1,678 Translation difference 226 (2,581) ----------- ----------- Movement in net debt in the year 10,595 (1,626) Net debt at 1 January (29,051) (27,425) ----------- ----------- Net debt at 31 December 6 (18,456) (29,051) ----------- -----------Notes to the Financial StatementsAt 31 December 20041. Basis of preparationThe results for the years ended 31 December 2004 and 31 December 2003 are anabridged extract of the Group's full accounts on which the auditors have issuedunqualified reports. The Group's full accounts for the year ended 31 December2003 have been filed with the Registrar of Companies.The financial information contained in this statement does not constitute fullaccounts within the meaning of Article 262 of the Companies (Northern Ireland)Order 1986.2. Turnover and segmental analysisTurnover is generated principally from the UK with all radio activity generatedin the Republic of Ireland. Turnover and group operating profit on ordinaryactivities before tax are analysed as follows: 2004 2003 Sales to Inter- Sales to Inter- third segmental Total third segmental Total parties sales sales parties sales sales ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 (a) TURNOVER Area of activity Television 47,222 421 47,643 40,134 335 40,469 Radio 10,853 61 10,914 10,062 58 10,120 New Media 5,428 62 5,490 3,765 60 3,825 ---------- ---------- ---------- ---------- ----------- ---------- Total 63,503 544 64,047 53,961 453 54,414 ---------- ---------- ---------- ---------- ----------- ---------- 2004 2003 Operating Operating Profit Group Profit Group before operating before operating goodwill Goodwill profit goodwill Goodwill profit ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 (b) GROUP OPERATING PROFIT Area of activity Television 15,193 - 15,193 11,750 - 11,750 Radio 2,560 (2,885) (325) 2,514 (2,883) (369) New Media 857 (606) 251 875 (894) (19) ---------- ---------- ----------- ----------- ----------- ----------- Total 18,610 (3,491) 15,119 15,139 (3,777) 11,362 ---------- ---------- ----------- ----------- ----------- -----------3. Tax on profit on ordinary activities 2004 2003 ‚£000 ‚£000 Current tax: UK corporation tax on profits for the period 4,686 3,563 Adjustments in respect to previous years (38) (179) ----------- ----------- 4,648 3,384 Foreign tax: ROI corporation tax on profits for the period 342 288 Adjustments in respect to previous years (1) (1) ----------- ----------- Total current tax 4,989 3,671 Deferred tax: Origination and reversal of timing differences (39) (187) Adjustments in respect of previous periods - 131 ----------- ----------- 4,950 3,615 ----------- -----------4. Dividends 2004 2003 Pence Pence per per share ‚£000 share ‚£000 Ordinary interim paid 18 October 4.50 2,440 4.10 2,1932004 Proposed ordinary final payable 7 7.00 3,795 5.90 3,156June 2005 ------ ------ ------ ------ 11.50 6,235 10.00 5,349 ------ ------ ------ ------5. Earnings per shareBasic earnings per share, in accordance with Financial Reporting Standard No14(FRS 14), is calculated on the weighted average number of shares in issueduring the period being 53,903,903 (2003: 52,959,243) and is based on profitfor the financial year after exceptional items and taxation of ‚£8,929,000(2003: ‚£5,873,000).Diluted earnings per share is calculated on 54,827,129 shares (2003:54,678,391) reflecting the dilutive potential of the Convertible Loan Notes(314,674 shares (2003: 1,309,746)) and Share Option Schemes (608,552 shares(2003: 409,402)). The calculation is based on profit for the financial year of‚£8,952,615 (2003: ‚£5,964,795) reflecting an adjustment for net interest payableon the Convertible Loan Notes of ‚£23,615 (2003: ‚£91,795).An adjusted earnings per share has been calculated to exclude the impact onprofit of goodwill amortisation. 2004 2003 p p Diluted earnings per share 16.33 10.91 Adjustments: To reflect the dilutive potential of the Convertible 0.18 0.09Loan Notes To reflect the dilutive potential of the Share Option 0.05 0.09Schemes ----------- ----------- Earnings per share (FRS 14) 16.56 11.09 Adjustments: Goodwill amortisation 6.74 7.72 ----------- ----------- Adjusted earnings per share 23.30 18.81 Adjustments: To reflect the dilutive potential of the Convertible (0.26) (0.28)Loan Notes To reflect the dilutive potential of the Share Option (0.09) (0.14)Schemes ----------- ----------- Diluted adjusted earnings per share 22.95 18.39 ----------- -----------6. Net Debt 2004 2003 ‚£000 ‚£000 Cash 5,110 2,569 Short term deposits 2,542 2,413 Loans (a) - falling due within one year (8,705) (5,681) - falling due after more than one year (17,403) (26,668) Convertible loan notes (b) - (1,684) ----------- ----------- (18,456) (29,051) ----------- -----------(a)LoansThe Company has two multi option loan facilities which each bear interest atEuribor plus 0.8%.(b)Convertible loan notesOn 17 May 2004 convertible loan notes amounting to ‚£208,000 were converted into90,434 Ordinary Shares and on 9 June 2004 the remaining convertible loan notesamounting to ‚£1,476,000 were converted into 641,739 Ordinary Shares.7. Reconciliation of shareholders' funds and movement on reserves 2004 2003 ‚£000 ‚£000 Balance at 1 January 29,783 25,862 Conversion of Loan Notes 1,684 1,678 Exercise of share options - 82 Profit for the year 8,929 5,873 Dividends (6,235) (5,349) Exchange difference on retranslation of net assets of subsidiary undertakings (109) 4,327 Exchange difference on loans 223 (2,690) ----------- ----------- Balance at 31 December 34,275 29,783 ----------- -----------8. Reconciliation of operating profit to net cash flow from operatingactivities 2004 2003 ‚£000 ‚£000 Operating profit 15,119 11,362 Depreciation charges 1,688 1,741 Amortisation of goodwill 3,491 3,777 Profit on sale of tangible fixed assets (8) (42) Increase in stocks (1,240) (547) Increase in debtors (1,037) (892) Increase/(decrease) in creditors 3,224 (1,909) Decrease in provisionsRelated Shares:
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