16th Mar 2005 07:02
Independent News & Media PLC16 March 2005 16th March 2005 INDEPENDENT NEWS & MEDIA PLC ANNOUNCES RECORD OPERATING PROFIT** OF €285.7 MILLION FOR 2004 The Board of Independent News & Media PLC ('INM') (ticker: INWS.I ; INWS.L)today presented the Group's preliminary results for the year ended 31st December2004. Robust growth across all INM's segments delivered an excellent 22.8%increase in Operating Profit** to a record €285.7 million and an improvedoperating margin of 17.7%. RESULTS 2004 2003 •m •m %Turnover* 1,557.4 1,363.4 14.2Operating Profit** 285.7 232.6 22.8Profit Before Tax 189.1 122.0 55.0Earnings Per Share (incl. exceptionals) 10.90c 6.81c 60.1Adjusted Earnings Per Share*** 14.15c 12.63c 12.0Dividend per Share 9.00c 7.90c 13.9 SUMMARY HIGHLIGHTS FOR FULL YEAR 2004 • Results demonstrate a delivery of sustainable growth and meet our stated objectives. • Operating profit** up 22.8%, driven by strong advertising and circulation growth together with efficient cost control. • Profit before tax increased by 55.0%, reflecting good growth across all regions. • Investment in enhanced product offering helps fuel readership, circulation and advertising growth. • Successful implementation of Restructuring Plan nears completion and ensures realisation of considerable savings. • Agreement (subject to government approval) to purchase 26% shareholding in JPPL, publisher of India's No. 1 newspaper - Dainik Jagran. • EPS up 60.1% to 10.90c, with Adjusted EPS*** up 12.0% to 14.15c. • Dividend per share up 13.9% to 9.00c on the back of a record operating performance and favourable outlook for 2005. * From continuing operations ** From continuing operations before exceptional items*** Fully diluted EPS, before exceptional items and amortisation - OVERVIEW - Independent News & Media PLC today announced preliminary results for the yearended 31st December 2004. Turnover from continuing operations, at €1,557.4 million, was up 14.2% on 2003.Advertising revenues from continuing operations grew by 18.0% from a combinationof enhanced yield and higher volumes. Circulation from continuing operationsalso performed well with revenues up 7.7%, reflecting solid circulation volumesand some cover price increases. This year again showed further growth in ourreadership levels underpinning our titles' market leading positions. Operating profit before exceptionals grew by 22.8% to a record €285.7 million.This excellent result reflects improved revenues across all regions togetherwith INM's continued focus on tight cost control. The majority of theRestructuring Plan announced in December 2003 has already been successfullyimplemented and the Group is on target to achieve the full budgeted savings.This performance saw operating margin strengthen further from 16.96% in 2003 to17.74% for 2004. Profit before tax increased by 55.0% to €189.1 million, driven by the impressiveoperating results and reduced exceptional costs. This record performance hasenabled INM to once again deliver its stated objective of double-digit earningsgrowth. The Board is proposing to increase the Group's final dividend by 16.5% over lastyear to 6.00 cent per share, making a total dividend for the year of 9.00 centper share - an increase of 13.9% on 2003. This reflects the record results andthe Board's confidence in the Group's prospects. The final dividend will be paidon 13th June 2005 to ordinary shareholders registered at the close of businesson 15th April 2005. A scrip dividend alternative will also be available. Commenting on these results, Sir Anthony O'Reilly, Chief Executive, made thefollowing Outlook Statement: "Following record results in 2004, trading in 2005 has continued the samepositive trend with all operations showing strong revenue and profit growth insome of the world's fastest growing economies. Active cost management remains acentral focus, and the Group believes that the expected cost savings from therestructuring program will be fully achieved during 2005 and into 2006. "This very buoyant revenue profile has carried on through the first quarter, andwith a continuation of these favourable conditions, your Board is confident of afurther meaningful improvement in underlying profit for 2005." - OPERATIONS REVIEW - AUSTRALASIA APN News & Media Limited ('APN') - in which INM has a 39.7% shareholding - islisted on the Australian Stock Exchange since 1992 and has a current marketcapitalisation of A$2.5 billion (€1.5 billion). APN reported double-digit growthfor 2004 with turnover increasing by 16.9% to €747.1 million and operatingprofit growing by 23.5% to €161.4 million. APN continues to benefit from operating in the strongest markets in Australasia.Queensland and the northern half of the North Island of New Zealand once againrecorded strong economic conditions, producing above national average growthrates and near record employment levels. The New Zealand National Publishing Division, which includes The New ZealandHerald, the Herald on Sunday, The Aucklander and New Zealand Magazines,increased overall revenue by 11% and EBIT by 16% on a comparable basis. The NewZealand Herald remains by far the largest circulating daily newspaper in NewZealand. Each week more than 1 million New Zealanders read the Herald. Theon-going focus on advertising yields continues to underpin revenue gains. In2004, advertising volume in the Herald increased by 1.7% while yield increasedby 7.2%. The committed relationship with Herald subscribers and the Herald'spositive reputation with advertisers aided the successful launch of the Heraldon Sunday in October, with a current average weekly circulation of more than100,000 copies, of which 50,000 are regular subscriptions. Regional newspapers in Australia and New Zealand continued to perform ahead ofexpectation in the second half, underpinned by buoyant real estate andemployment advertising markets. Advertising yields strengthened in 2004,increasing in Australia by 9.7% and in New Zealand by 5.1% over the previousyear. Overall, divisional revenues were up by 9% and underlying EBIT increasedby 24% to A$100.2 million. Circulation revenue increased by 4% to A$61.0 millionand ABC figures for the six months to December 2004 show that APN publishes thefive fastest growing newspapers in Australia. In New Zealand, APN publishes thefour fastest growing regional daily newspapers as shown in the latest auditperiod to March 2004. Both the Australian and New Zealand radio operations performed well, growingrevenue by 14% to A$243 million, and EBIT by 20% to A$67.5 million before theeffect of the new radio licences in New Zealand. Strong audience survey resultsin both markets led to an increased share of agency advertising, as well ascontinued gains in direct advertising. The benefits from the restructuring of APN Outdoor gained momentum during theyear, with revenue increasing by 22% to A$227.0 million and underlying EBIT wasup 14% to A$21.6 million. The Print and Specialist Publishing Division produced a strong result, liftingrevenue by 6% and EBIT by 31%. Gains from the restructuring undertaken over thepast 18 months are now showing progress, in particular in commercial printing,where operational and sales efficiencies are producing good results. IRELAND Turnover for the Irish operation increased by 8.2% in 2004 to €410.3 million.This increase was driven by good growth in both advertising and circulationrevenues in the publishing operations, together with continued growth inNewspread, the group's publishing wholesaling division. Double-digit advertising revenue growth for the year was driven by strongproperty, retail and government related advertising. The improvement inrecruitment revenues noted in the first half was again evident in the secondhalf with revenues in this important category continuing to strengthen. Allmajor categories of advertising have continued to show strong growth in theearly weeks of 2005. Circulation revenues grew by over 3% due to good underlying core circulationvolumes and cover price increases in a number of the group's titles. The fullnational, six day roll out of the compact edition of the Irish Independent drovecore circulation volume growth and a strong increase in readership. Recentlyreleased JNRS readership results showed that the Irish Independent readershipgrew by 80,000 (15%) to 612,000 readers. The launch in early 2004 of the weekly glossy Sunday Independent Life magazinehas been very successful, proving popular with both advertisers and readers.Steady circulation volumes and a 20 cent cover price increase have underpinnedstrong readership numbers (increasing by 11,000 to 1,075,000) and circulationrevenues. All of the other group titles also showed strong and growingreadership numbers. The cost base in the Irish operation was considerably reduced in mid 2004 with208 redundancies being made in the Abbey Street operation. Back office andtelesales activities were outsourced to Cork and Armagh respectively withon-going efficiencies being achieved. The full year impact of this restructuringwill be seen during 2005 and into 2006. As a result of this strong operating performance, EBIT for the Irish operationgrew by 9.8% to €82.7 million. SOUTH AFRICA The South African operation produced very strong results in a robust economicand trading environment. Operating profits, at €31.0 million, were 31.9% up onthe prior year and operating margins showed an improvement from 14.7% in 2003 to15.6%. This performance reflects a combination of a strong double-digitimprovement in total revenue and the benefits of extremely low cost increases,which flowed from on-going cost containment initiatives. These initiativesincluded major efficiency improvements arising from the re-organisation andrationalisation of the company's production and distribution activities. The Cape and Gauteng newspaper divisions performed strongly in their respectivemarkets, reflecting on-going improvements in trading profits and in operatingmargins. In addition, the KwaZulu Natal division continued to build on theturnaround program, which began in the region during 2003, recording substantialgrowth on its prior year performance and making a major contribution to thegroup's overall result. Press advertising in South Africa showed good growth during 2004 with the groupmaintaining its strong share of the display advertising market and retaining itsdominant share in the classified market, where it enjoys a market share of morethan 50%. Circulation also performed very well, with all of the group's 15 titles showingyear-on-year volume improvement in a market where many of the group's directcompetitors showed on-going declines. Circulation of Isolezwe, the group's Zululanguage newspaper, which was launched just over two years ago, has continuedits remarkable development with its average daily sale increasing to over 65,000copies per day in the second half of 2004 (last year 55,000 copies). Today in Cape Town, the group launched South Africa's newest "red-top" tabloid,Daily Voice, aimed at the emerging mass-market readership. The outdoor advertising business, which is now a 50:50 joint venture with ClearChannel of the US, delivered a 47% increase in its profit contribution throughnew product innovations and the on-going focus on improving the profitability ofits African operations. The magazine operation had a good year with the launch of Glamour, which sold92,500 copies per month in its second ABC period, bringing critical mass to thebusiness. This achievement was ahead of the group's launch expectations and hasquickly established Glamour as the number two women's glossy monthly magazine,with a market share of 15%. In addition, the established titles, House andGarden and GQ, helped by the launch of a new product GQ Cars, performed well invery competitive markets. UNITED KINGDOM The UK operation recorded revenue of €201.9 million, an 8.7% increase oncontinuing operations. This reflected a good performance from the Belfastoperations and a full year benefit of the additional circulation revenues fromThe Independent, arising from the sales uplift on conversion to compact format.EBIT from continuing operations of €14.3 million was 18.2% ahead of last year. The UK advertising market showed signs of recovery, particularly in the secondhalf with the Belfast Telegraph producing a strong performance in both thedisplay and recruitment categories. The complexities of the conversion frombroadsheet to compact format stalled the recovery in advertising at TheIndependent in the first half of the year but year-on-year growth in the lastquarter laid the foundation for a strong start to 2005. The market for Londonsecretarial and financial recruitment advertising continues to be depressed, butfurther cost efficiencies have left the specialist London-based magazinedivision in a good position to benefit from the eventual recovery in thismarket. The initial success of the launch of The Independent as a compact product in2003, continued through 2004 with the broadsheet offering finally withdrawncompletely in May 2004. This resulted in a further uplift in the UK paid sale,which showed year-on-year growth of over 23% in 2004, against the backdrop of adeclining market. The success has continued into 2005 with the February saleproducing the seventeenth consecutive month of year-on-year growth in both UKnewstrade and headline ABC sales. This circulation success was further bolstered by enviable readership figureswith the first figures following the conversion to compact showing a 31%increase in total readership for The Independent, including a 47% increase infemale readership. The high quality of journalism and innovative use of the front cover has beenpraised again this year with The Independent winning almost every industryaward, including Newspaper of the Year for the second year running. INDIA On 22nd December 2004, INM announced that it had entered into a sale andpurchase agreement to acquire 26% of Indian newspaper publisher, JagranPrakashan Private Limited ('JPPL'), for a consideration of Rupees 1,500 million(€25.5 million). This transaction is currently being reviewed by the IndianGovernment and approval is expected in the coming weeks. JPPL publishes theHindi-language newspaper, Dainik Jagran, selling over 2 million copies per day.It is India's largest read daily newspaper (16.4 million readers) - thisrepresents one of the largest daily readerships of any newspaper worldwide. Dainik Jagran, in its 63rd year, publishes 25 editions from 25 printing centresacross India. The consideration will be financed from INM's existing cashbalance and the acquisition is expected to be immediately earnings enhancing. - INTERNATIONAL FINANCIAL REPORTING STANDARDS - The results for the year ended 31st December 2004 have been prepared inaccordance with Irish/UK GAAP. However, as a listed company in the EU, INM isrequired to prepare group accounts under International Financial ReportingStandards ('IFRS') from 1st January 2005. A substantial amount of work has beendone on the IFRS conversion and restatement process and further guidance will beprovided on the impact of IFRS later in the year. - OUTLOOK - Following record results in 2004, trading in 2005 has continued the samepositive trend with all operations showing strong revenue and profit growth insome of the world's fastest growing economies. Active cost management remains acentral focus, and the Group believes that the expected cost savings from therestructuring program will be fully achieved during 2005 and into 2006. This very buoyant revenue profile has carried on through the first quarter, andwith a continuation of these favourable conditions, your Board is confident of afurther meaningful improvement in underlying profit for 2005. - ANNUAL GENERAL MEETING - The Annual General Meeting will be held at 12:00 noon on Wednesday, 8th June2005 at the O'Reilly Hall, UCD, Belfield, Dublin 4. ENDS 16th March 2005 For reference: Gavin K. O'Reilly Pat WalshChief Operating Officer Murray ConsultantsIndependent News & Media PLC DublinDublin Tel: +353 (0)1 498 0300/+353 (0)87 226 9345Tel: +353 (0)1 466 3200 Donal J. Buggy Richard Oldworth/Mark EdwardsChief Financial Officer Buchanan CommunicationsIndependent News & Media PLC LondonDublin Tel: +44 (0)207 466 5000Tel: +353 (0)1 466 3200 Mark Kenny K Capital Source Dublin Tel: +353 (0)1 631 5500 ABOUT INDEPENDENT NEWS & MEDIA PLC - CORPORATE PROFILE - Independent News & Media PLC ('INM') is a leading media and communicationsgroup, operating primarily in Australia, Ireland, New Zealand, South Africa andthe United Kingdom. Spanning four continents and eight individual countries, INM has market-leadingnewspaper positions in Australia (regional), New Zealand, Ireland and SouthAfrica. In the UK, it owns the largest newspaper group in Northern Ireland andthe flagship Independent titles. The Group publishes over 175 newspaper andmagazine titles with a weekly circulation of 14.3 million copies and operatesover 70 online websites. The Group is also the largest radio and outdoor advertising operator inAustralasia, and has leading outdoor advertising operations in South Africa,Hong Kong, Malaysia and Indonesia. The Group has grown consistently over the last fifteen years by building ageographically diverse portfolio of market-leading brands, and today managesgross assets of over €3.9 billion, turnover of €1.8 billion and employs over11,000 people worldwide. INDEPENDENT NEWS & MEDIA PLC PRELIMINARY ANNOUNCEMENT OF RESULTS GROUP PROFIT AND LOSS ACCOUNT 2004 2003 •m •m Turnover - continuing operations 1,557.4 1,363.4 - discontinued operations - 24.8 1,557.4 1,388.2Operating profit - Continuing operations 285.7 232.6 - Exceptional items (15.8) (82.3) Operating profit from continuing operations 269.9 150.3 - Discontinued operations - 6.1 269.9 156.4 Exceptional items 2.5 57.7 Profit on ordinary activities 272.4 214.1 Net interest charge (80.4) (84.1)Exceptional finance charge (2.9) (8.0) Profit on ordinary activities before taxation 189.1 122.0 Taxation on profit on ordinary activities (31.8) (14.6) Profit on ordinary activities after taxation 157.3 107.4 Minority interests (including non-equity minority interests) (76.7) (60.5) Profit on ordinary activities after taxation and minority interests 80.6 46.9 Dividends paid (22.2) (20.2)Dividends proposed (44.7) (38.0)Retained profit/(loss) for the Group and its share of joint ventures and associates 13.7 (11.3) Earnings per share 10.90c 6.81c Fully diluted earnings per share 10.84c 6.81c Fully diluted earnings per share before exceptional items and amortisation 14.15c 12.63c RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 2004 2003 2004 2003 (Inc. (Inc. Mastheads) Mastheads) •m •m •m •m Profit on ordinary activities aftertaxation and minority interests 80.6 46.9 80.6 46.9Dividends paid (22.2) (20.2) (22.2) (20.2)Dividends proposed (44.7) (38.0) (44.7) (38.0) 13.7 (11.3) 13.7 (11.3)New share capital subscribed (including share premium) 11.2 114.2 11.2 114.2Currency translation differences on foreign currency net investments 6.3 (28.0) 16.0 (27.9)Revaluation surplus - - 453.7 -Disposal of UK regional mastheads - - - (28.2)Movement in treasury shares - 19.5 - 19.5 Net movement in equity shareholders' funds 31.2 94.4 494.6 66.3 Opening equity shareholders' funds 240.2 145.8 933.1 866.8 Closing equity shareholders' funds 271.4 240.2 1,427.7 933.1 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2004 2003 2004 2003 (Inc. (Inc. Mastheads) Mastheads) •m •m •m •m Profit on ordinary activities after taxation and minority interests 80.6 46.9 80.6 46.9Currency translation differences on foreign currency net investments 6.3 (28.0) 16.0 (27.9)Revaluation surplus - - 453.7 -Profit on sale of treasury shares - 0.9 - 0.9 Total recognised gains relating to the year 86.9 19.8 550.3 19.9 GROUP BALANCE SHEET 2004 2003 2004 2003 (Inc. (Inc. Mastheads) Mastheads) •m •m •m •mFixed assetsIntangible assets 1,676.8 1,662.4 2,797.1 2,346.2Tangible assets 354.8 338.3 354.8 338.3Financial assetsInvestment in joint ventures - share of gross assets 43.2 30.5 79.2 39.6 - share of gross liabilities (8.1) (7.0) (8.1) (7.0) 35.1 23.5 71.1 32.6Investment in associates 60.9 57.8 60.9 57.8Other investments 15.0 18.2 15.0 18.2 111.0 99.5 147.0 108.6 2,142.6 2,100.2 3,298.9 2,793.1Current assetsStocks 22.0 24.3 22.0 24.3Debtors (short and medium term) 338.4 307.5 338.4 307.5Cash at bank and in hand 123.8 188.9 123.8 188.9 484.2 520.7 484.2 520.7 Creditors - amounts falling due within one year (369.5) (306.5) (369.5) (306.5) Net current assets 114.7 214.2 114.7 214.2 Total assets less current liabilities 2,257.3 2,314.4 3,413.6 3,007.3 Creditors - amounts falling due after more than one year 1,202.2 1,286.6 1,202.2 1,286.6Provisions for liabilities and charges 37.7 72.5 37.7 72.5 1,239.9 1,359.1 1,239.9 1,359.1Capital and reservesCalled up share capital 223.3 221.3 223.3 221.3Capital conversion reserve fund 4.5 4.5 4.5 4.5Share premium account 260.8 251.6 260.8 251.6Revaluation reserve (73.5) (73.7) 1,082.8 619.2Other reserves (240.6) (241.9) (240.6) (241.9)Profit and loss account 96.9 78.4 96.9 78.4 Equity shareholders' funds 271.4 240.2 1,427.7 933.1 Minority interestsEquity minority interests 632.2 542.3 632.2 542.3Non-equity minority interests 113.8 172.8 113.8 172.8 746.0 715.1 746.0 715.1 2,257.3 2,314.4 3,413.6 3,007.3 GROUP CASH FLOW STATEMENT 2004 2003 •m •m •m •m Net cash inflow from operating activities(before restructuring payments) 331.3 286.8 Restructuring payments (36.8) (19.1) Net cash inflow from operating activities 294.5 267.7 Dividends received from joint ventures 1.2 0.9 Returns on investments and servicing of financeInterest received - Group 16.9 14.4Interest paid - Group (97.5) (96.5)Dividends and other payments to equity minority shareholders (40.3) (23.4)Dividends and other payments to non-equity minority shareholders (7.3) (14.8)Debt issue costs (1.7) (13.9) Net cash outflow from returns on investments and servicing of finance (129.9) (134.2) Net cash outflow from taxation (50.2) (37.2) Capital expenditure and financial investmentPurchase of tangible fixed assets and titles (64.4) (22.1)Sale of tangible fixed assets, titles and investments 7.1 60.1Purchase of investments/advances to investees (0.6) (11.0)Increase in investment in joint ventures and associates (0.2) (2.3)Advances to/repaid by joint ventures and associates (9.3) (1.0)Other capital expenditure (10.4) (12.1) Net cash (outflow)/inflow from capital expenditure and financial investment (77.8) 11.6 Acquisitions and disposalsPurchase of equity minority interests - (3.2)Disposal of assets and business of subsidiary undertaking - 77.0 Net cash inflow from acquisitions and disposals - 73.8 Equity dividends paid (51.2) (40.8) Cash (outflow)/inflow before management ofliquid resources and financing (13.4) 141.8 Management of liquid resourcesMovement in short term deposits - - Net cash flow from management of liquid resources - - FinancingIssue of shares 2.1 108.3Share issue costs - (4.8)Issue of equity minority interests 5.0 59.9Sale of treasury shares - 19.5Issue of non-equity minority interests - 66.9Redemption of non-equity minority interests - (131.8)Receipt of long term loans 65.0 690.7Receipt of short term loans - 258.0Repayment of long term loans (2.4) (510.2)Repayment of short term loans (61.5) (537.7)Capital element of finance lease rental payments (60.5) (33.7) Net cash outflow from financing (52.3) (14.9) (Decrease)/increase in cash (65.7) 126.9 SEGMENTAL REPORT The Group operates mainly in Ireland, the United Kingdom, South Africa andAustralasia. The following is an analysis of the Group's results by geographicalmarket. (A) BY GEOGRAPHICAL SEGMENTS TURNOVER OPERATING PROFIT 2004 2003 2004 2003 •m •m •m •mTurnover (By origin):Group and share of joint ventures and associates 1,659.2 1,470.7Less: share of joint ventures' turnover (22.4) (17.3) share of associates' turnover (79.4) (65.2) Group turnover 1,557.4 1,388.2 Ireland 410.3 379.2 82.7 75.3United Kingdom -continuing operations 201.9 185.7 14.3 12.1 -discontinued operations - 24.8 - 6.1South Africa 198.1 159.5 31.0 23.5Australasia 747.1 639.0 161.4 130.7 ______ ______ ______ ______ 1,557.4 1,388.2 289.4 247.7 Exceptional items (14.0) (78.3) Group share of joint ventures 22.4 17.3 3.8 2.3Group share of associates 79.4 65.2 3.8 (3.0) Common costs (13.1) (12.3)Exceptional items 2.5 57.7Net interest charge (80.4) (84.1)Exceptional finance charge (2.9) (8.0)Group profit on ordinary activities before taxation and minority interests 189.1 122.0 Turnover by origin has been shown above and does not differ materially fromturnover by destination. Turnover significantly relates to external customers.The minority interest share of operating profit for the financial year is €101.2million (2003: €77.3 million). (B) BY CLASS OF BUSINESS The Group has three main classes of business: - Printing, publishing and distribution of newspapers and magazines and commercial printing- Radio- Outdoor advertising The following is an analysis of the Group's results by class of business. TURNOVER OPERATING PROFIT 2004 2003 2004 2003 •m •m •m •mTurnover:Group and share of joint ventures and associates 1,659.2 1,470.7Less: share of joint ventures' turnover (22.4) (17.3) share of associates' turnover (79.4) (65.2)Group turnover 1,557.4 1,388.2 Printing, publishing, distribution andcommercial printing -continuing operations 1,269.6 1,131.3 245.1 206.9 -discontinued operations - 24.8 - 6.1Radio 153.5 127.4 37.5 28.2Outdoor advertising 134.3 104.7 6.8 6.5 ______ ______ ______ ______ 1,557.4 1,388.2 289.4 247.7 Exceptional items (14.0) (78.3) Group share of joint ventures 22.4 17.3 3.8 2.3Group share of associates 79.4 65.2 3.8 (3.0) Common costs (13.1) (12.3)Exceptional items 2.5 57.7Net interest charge (80.4) (84.1)Exceptional finance charge (2.9) (8.0)Group profit on ordinary activities before taxation and minority interests 189.1 122.0 The minority interest share of operating profit for the financial year is €101.2million (2003: €77.3 million). NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Basis of Preparation This preliminary announcement has been prepared on a consistent basis with theaccounting policies set out in the audited financial statements for the yearended 31st December 2003. 2. Pension Fund Position At year-end, the Group's defined benefit pension funds had a net deficit of€86.7 million (2003: net deficit of €69.6 million) as measured under FRS 17 -Retirement Benefits. As permitted by FRS 17 this amount has not been providedfor in the Group's Balance Sheet. 3. Earnings Per Share 2004 2003 •m •m Profit attributable to Independent News & Media PLC 80.6 46.9Exceptional items net of taxation and minority interests 14.8 29.2Amortisation of mastheads/goodwill/development expenditure 9.8 11.0 ---------- ----------Fully diluted profits before exceptional items and amortisation 105.2 87.1 ---------- ---------- Weighted average number of shares in issue during the year 739,713,574 688,208,464Effect of:Conversion of options 3,972,264 1,320,360 ---------- ----------Fully diluted number of shares 743,685,838 689,528,824 ---------- ---------- Earnings per share* 10.90c 6.81c ---------- ---------- Fully diluted earnings per share* 10.84c 6.81c ---------- ---------- Fully diluted earnings per share before exceptional items and amortisation 14.15c 12.63c ---------- ---------- Earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year. For fully diluted earnings per share, the weighted average number of ordinaryshares in issue is adjusted to assume conversion of all potential dilutiveoptions over ordinary shares. The cumulative exchangeable preference shares werenot dilutive in either 2004 or 2003. Fully diluted earnings per share before exceptional items and amortisation ispresented in order to give a better indication of the underlying performance ofthe Group. *Earnings per share and fully diluted earnings per share in 2003 are identicalbecause the exercise of share options was not dilutive on the result fromcontinuing operations. 4. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2004 2003 •m •m Operating profit from operations 269.9 156.4Non-cash operating exceptional items - 43.6 -------- --------Operating profit (net of non-cash exceptional items) 269.9 200.0 Share of profit of joint ventures (3.8) (2.3)Share of (profit)/loss of associates (3.8) 3.0Depreciation and amortisation charges 53.4 56.5Decrease in stocks 2.1 4.1(Increase)/decrease in short term and medium term debtors (6.3) 3.7Increase in creditors 24.6 15.6Net movement in provisions (excl. restructuring payments) 2.0 9.5Effects of foreign exchange rate changes (6.8) (3.3) -------- -------- Net cash inflow from operating activities (before restructuring payments 331.3 286.8Restructuring payments (36.8) (19.1) -------- --------Net cash inflow from operating activities 294.5 267.7 -------- -------- 5. Exceptional Items 2004 2003 •m •mIncluded in profit on ordinary activities before taxation arethe following:Continuing operationsRestructuring charges - (56.0)Exceptional start-up and product development costs (13.2) (16.6)Other rationalisation charges and asset write-downs (2.6) (9.7) -------- -------- (15.8) (82.3) -------- -------- Gain on sale of assets of UK regional newspapers - 51.7Gain on sale of tangible fixed assets - 16.4Gain on sale of investment in Lusomundo Media - 3.7Write-down of investment in Chorus Communications - (9.9)Other exceptional gains/(charges) 2.5 (4.2) -------- -------- 2.5 57.7 -------- -------- Exceptional finance charge (2004: redemption of sterling bond) (2.9) (8.0) -------- -------- Total exceptional items (16.2) (32.6) Tax credit on exceptional items 0.9 3.6Minority interest share of exceptional items 0.5 (0.2) -------- --------Exceptional items net of taxation and minority interests (14.8) (29.2) -------- -------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Independent News & Media