22nd Mar 2006 07:01
Independent News & Media PLC22 March 2006 PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2005 Dublin/London 22nd March 2006: The Board of Independent News & Media PLC ('INM'or the 'Group') (ticker: INWS.I; INWS.L) today presented the Group's preliminaryresults for the year ended 31st December 2005. These results were preparedunder International Financial Reporting Standards ('IFRS'). RESULTS 2005 2004 Change •m •m %Revenue 1,611.5 1,499.2 +7.5%Operating Profit Before Exceptionals 311.6 279.7 +11.4%Operating Margin 19.34% 18.66% +68bpsProfit Before Tax 272.5 192.4 +41.6%Net Profit After Minority Interests 151.8 84.3 +80.1%Earnings Per Share 20.30c 11.40c +78.1%Adjusted Earnings Per Share * 15.62c 13.33c +17.2%Dividend Per Share 10.75c 9.00c +19.4% * Diluted EPS, before exceptional items SUMMARY HIGHLIGHTS • Record results with strong revenue growth of 7.5% (advertising +10.7%, circulation +6.4%). • All regions contributing to growth in both revenues and profits. • Operating margins increased to 19.34% reflecting the impressive trading performance and strong cost management. • Strong underlying trading performances across the Group delivered an 11.4% improvement in Operating Profit Before Exceptionals. • Continued investment in new product development, marketing innovations and classified online services enhance market reach. • Profit Before Tax increased by 41.6% reflecting the superior operating performance and good interest savings. • Net Profit After Minority Interests up 80.1% to €151.8 million. • EPS up 78.1% to 20.30c, with Adjusted EPS up 17.2% to 15.62c. • Significant return realised on disposal of non-core iTouch plc shareholding. • Strategic acquisition of 26% of Jagran Prakashan Limited ('JPL') in India - publisher of the Hindi-language title, Dainik Jagran - India's largest selling newspaper. • Proposed 2005 final dividend of 7.00c per share increases full-year dividend to 10.75c (up 19.4%) to reflect the strength of the 2005 performance and a confident outlook. - OUTLOOK - Commenting on these record results, Sir Anthony O'Reilly, Chief Executive, madethe following outlook statement: "We are very pleased to announce another year of strong growth for the Group. "INM's globally balanced portfolio of operations in strongly growing markets,diverse multimedia platforms and market-leading brands, continue to distinguishthe Group from its media peer group. When coupled with the Group's clear andcompelling strategy for growth and its commitment to be the industry's low costoperator, the Board is confident of INM's ability to deliver another year ofsuperior earnings growth for 2006, in line with current market expectations." - OVERVIEW - Independent News & Media PLC today announced record preliminary results for theyear ended 31st December 2005, delivering superior and sustainable growth. Revenue increased by 7.5% to €1,611.5 million, with all regions showing growthacross all media platforms. Both advertising (up 10.7%) and circulation (up6.4%) revenues benefited from a combination of enhanced yield/price and highervolumes on core products. The Group's ongoing investment in innovative newproduct offerings and its aggressive strides in effective and complementaryonline advertising platforms also contributed to the strong performance withineach of our markets. Operating Profit Before Exceptionals increased by 11.4% to €311.6 million, withoperating margins improving to 19.34%. This performance is unique amongst ourmedia peer group. It reflects INM's distinctive multi-market, multi-language andmultimedia strategy and confirms that INM operates in some of the world'sfastest growing markets. Allied to that, cost efficiency remained a key focusfor the Group during 2005 with the full-year benefits from the 2004restructuring programme flowing through and further efficiencies actioned. Net Exceptional Items accounted for a positive €30.5 million in 2005, comparedto an exceptional charge of €13.6 million in 2004. This net gain was primarilydue to the successful disposal of the Group's investment in iTouch plc, whichgenerated a net gain of €62.7 million. This gain was partly offset by once-offredundancy and other costs associated with the closure of the Sunday World printsite in Dublin, together with asset impairment costs and exceptional productlaunch, development and promotional expenditure across the Group. Interest Payable decreased by 9.4% to €89.4 million, reflecting both INM'simproved credit profile and financing mix. During the year, the Grouprefinanced its core syndicated bank facility and replaced it with a new 5-year,€440.0 million unsecured facility. This new facility extends the maturity ofthe Group's core bank debt to 2010 on improved terms and pricing. Due to the timing of the implementation of IAS 32 and 39 (under the transitionto IFRS), Net Finance Costs include dividends on the New Zealand CumulativeExchangeable Preference Shares ('NZ CEPS') in 2005, whereas they are included aspart of Minority Interests in 2004. Similarly, in the Balance Sheet, the NZCEPS have been reclassified from Minority Interests in 2004 to CompoundFinancial Instruments in 2005. Profit After Tax was up a very strong 40.4% with Net Profit After MinorityInterests up 80.1% to €151.8 million. Basic Earnings Per Share increased to20.30 cent (+78.1%). In June 2005, INM purchased a 26% strategic shareholding in JPL, publisher ofDainik Jagran, India's largest circulating and the world's largest readnewspaper. JPL has recently entered the capital markets with a successfulinitial public offer ('IPO') of shares on the Mumbai Stock Exchange. Based onthe IPO market issue price, INM's stake - which has diluted to between 20.2% and20.8% following the IPO (dependent on the full exercise of a green shoe option)- was valued at €62.5 million, more than double the Group's original investment.This strategic investment, in one of the world's fastest growing newspapermarkets, presents significant growth potential for INM. INM today also announced the launch of its new global brand trademark, whichwill be rolled out over the coming months. The INM Group has successfullyexpanded into a leading multimedia business, spanning four continents and 21countries across the globe. As a global brand, INM has become a symbol foreditorial independence, objectivity, excellence and continuous innovation. Thepower of the INM brand derives from its ethos and its ability to pioneer newmarket opportunities. INM is dedicated to excellence through expanding bothconsumer choice and advertiser opportunities. The new global brand trademarkrecognises INM's worldwide expansion and gives cogent expression to its corevalues. - OPERATIONS REVIEW - SOUTH AFRICA The South African operation delivered another excellent result in 2005. A verystrong business performance was significantly enhanced by continuing buoyancy inthe economy, which was the strongest it has been in the past forty years.Reduced and steady interest rates, lower inflation levels, higher retailactivity and the emergence of a rapidly growing "new middle class" has createdfavourable consumer driven economic conditions. Driven by these favourable market conditions, operating profits, at €41.8million, were 34.8% up on the prior year and operating margins grew by animpressive 320 bps to 18.8% in 2005. This performance reflects a combination ofa strong double-digit improvement in total revenues and the benefits of strongcost containment initiatives. Individually, all newspaper regions (the Cape, Gauteng and KwaZulu Natal)performed strongly, reflected in underlying improvements in both trading profitsand operating margins. Newspaper advertising in South Africa showed solidgrowth throughout 2005 with the group's market-leading titles benefiting fromthis and maintaining their strong market share in both the display andclassified advertising markets. Despite competitive market conditions, circulation copy sales and revenues ofeach of the group's main 15 titles improved. Circulation growth of Isolezwe -the group's Zulu language newspaper launched in 2003 - has continued, with itsaverage daily sale increasing to over 86,000 copies per day in the second halfof 2005 (compared to 65,000 copies for the same period in the prior year). Anew 'red-top' tabloid - Daily Voice - aimed at the emerging "mass-market" wassuccessfully launched in Cape Town in March 2005. This publication offers thegroup further growth opportunities in the other metropolitan areas in which thegroup operates. While the African online market is still in its infancy - with relatively lowinternet penetration - the South African operation continues to invest in itsonline activities to good effect. The iol.co.za portal is now South Africa'sdominant news, current affairs and classified site. The group's wholly-owned Magazine division (Conde Nast Independent Magazines)had another good year, with Glamour, which was launched in March 2004, beatingexpectations in both copy sales and profits. Glamour is now the leading fashionand beauty magazine in South Africa. GQ Cars, which was also launched in 2004,performed well during 2005. Further expansion opportunities are beinginvestigated. The outdoor advertising business, Clear Channel Independent - in which the grouphas a 50% stake - delivered a 23% increase in its profit contribution throughnew product innovations and an ongoing focus on improving the profitability ofits diverse African operations. AUSTRALASIA APN News & Media Ltd ('APN'), in which INM has a 40.5% shareholding, has beenlisted on the Australian Stock Exchange since 1992 and has a current marketcapitalisation of €1.4 billion. APN continued to show strong growth in 2005, with turnover increasing by 9.9% to€778.5 million and operating profit growing by 7.1% to €179.1 million. APNcontinued its expansion and development into a diverse multimedia company, withmarket-leading brands in a number of high growth geographic locations. The New Zealand National Publishing division includes The New Zealand Herald,the Herald on Sunday, The Aucklander and New Zealand Magazines. This divisionincreased revenue (pre New Product Initiatives ('NPI')) by 5% and operatingprofit (pre NPI) by 7% over the prior year. The New Zealand Herald remains byfar the country's largest and most important metropolitan daily, with over onemillion readers every week. Advertising revenues grew in all major revenuecategories, with market shares maintained. Firm cost control and enhancedproductivity, together with improved yields, resulted in an increased operatingmargin. The Weekend Herald continues to be the country's most read weekendpaper, with 656,000 readers every Saturday. The Herald on Sunday has exceededexpectations in both readership and circulation since its market launch 18months ago, and has already become Auckland's best-read Sunday newspaper and isexpected to move into profit in 2007. The Regional Newspaper division in Australia and New Zealand delivered excellentgrowth, with divisional revenues (pre NPI) increasing by 8% and operating profit(pre NPI) by 12%. In Australia, employment and real estate recorded exceptionalgrowth of 29% and 13% respectively. A growing element in APN's successfulnewspaper publishing strategy is the launch of new gloss "lifestyle" magazines,such as Revive which was launched in five of APN's largest regional markets.The New Zealand titles also experienced a strong year, with real estate andemployment pillars growing 27% and 23% respectively. National advertisingrevenues in the 44 local community titles doubled in 2005, following theformation of a dedicated national sales team. APN now publishes the two fastestgrowing regional daily newspapers in New Zealand, the Bay of Plenty Times andthe Wanganui Chronicle. Radio operations in both Australia and New Zealand had another strong year,growing divisional revenue by 7% and operating profit by 15%. APN is now thelargest Australasian radio operator, with 128 stations and an audience of over 5million people (10+ years). The Australian Radio Network (ARN) had anoutstanding year, growing audience share through its two key brands, MIX andClassic Hits, and finishing the year in its strongest position ever, achievingthe number one rated FM station in each of Sydney, Melbourne and Adelaide. InNew Zealand, The Radio Network (TRN) - the clear market leader - grew itsaudience share in the economically dominant Auckland market to 53%. APN Outdoor has continued to benefit from its integrated management modelestablished two years ago to extract valuable synergies from a diversifiedportfolio of all of its major outdoor formats in five countries. Growth hasoccurred in all markets through a combination of site development, enhancedinfrastructure, asset tender wins and acquisition. Outdoor revenues (pre NPI)increased by 6% and, including associates, operating profit (pre NPI) increasedby 17%. APN has developed a significant online presence in both editorial andclassifieds. In New Zealand, nzherald.co.nz is the most popular news websiteand the 3rd most popular overall website, whilst The Aucklander has introducedits new business-to-consumer online auction, under the brand, bidnsave.co.nz.Over the last few years, successful online classified verticals have beenestablished in both Australia and New Zealand and are growing rapidly. Theamalgamation of the search4.co.nz classified portal in New Zealand and theworksearch.com.au jobs portal in Australia have supplemented APN's existingeditorial and services sites (ubd.co.nz - business directories and wises.co.nz -mapping). Together, these online platforms are generating significant trafficand online usage and valuable incremental revenues. UNITED KINGDOM The UK operation recorded revenue of €209.1 million, an increase of 3.6% on2004. Operating profit of €15.1 million was 11.0% ahead of last year. In contrast to the broader market, the National division enjoyed strongadvertising growth - which was partly offset by a further decline in the stillpoor London recruitment advertising market within the Magazines division.Generally tougher trading conditions in the regional newspaper market inNorthern Ireland saw advertising revenues contract for the Belfast TelegraphNewspaper operations. However, INM's total overall UK advertising revenueincreased by 1.5% year-on-year, versus declines for the rest of the market. After a positive start to 2005, the UK advertising market has been in declinesince the second quarter. Despite this, The Independent and Independent onSunday dramatically outperformed the market and delivered very good growth inadvertising (+11.4%), further capitalising on The Independent's strongcirculation growth as a result of the pioneering conversion to compact format inlate 2003, which has further strengthened the publishing proposition. Following a re-design of The Independent in April 2005, the circulation growthcontinued, culminating in an October ABC of 267,037 which was the highest salesince September 1997, and the highest under INM's ownership. This circulationperformance drove significant readership gains - per the National ReadershipSurvey - with The Independent recording a 29.8% increase (Mon-Sat) for the sixmonths to December 2005. The Independent on Sunday also achieved a 21.6% increase in readership for thesix months to December 2005. Furthermore, the Independent on Sunday benefitedfrom a positive uplift in core circulation following the change to compactformat in October 2005, which - in its first month - delivered the highest salefor over three years. In the wake of the circulation success of The Independent, the Saturday editionof The Belfast Telegraph was launched in February 2005 in compact format,followed by a new weekday morning compact edition in March 2005. Bothinitiatives were well received. The Belfast Telegraph was the only top-twentyevening newspaper in the UK (ABC period July-December 2005) to show an increasedyear-on-year sale to 96,435 copies. The Belfast printing operation had aproductive year, expanding its capacity with the addition of a new full-colourdouble-width press, completing the successful transfer of contracts from theformer Sunday World print site in Dublin and securing a new 15-year printcontract with News International (commencing 2007), which is worth circa €100million in revenue over the term of the contract. Following several tough years, during which the market for London secretarialand financial recruitment advertising declined, the group's specialistLondon-based Magazine division has developed its new recruitment website,LondonCareers.net - providing a dedicated 'reverse published' magazine of thesame name, incorporating the four original recruitment magazine titles. Thishas been well received by the London recruitment agencies. In conjunction with the Irish operations, the newly launched 'island of Ireland'recruitment portal, LoadzaJobs.co.uk, has resulted in a significant increase inonline jobs advertising for The Belfast Telegraph, and - combined with the twiceweekly Jobfinder supplement - has created the most powerful recruitmentadvertising proposition in Northern Ireland. In addition to jobs, property hasbeen a key area of focus which has led to the successful launch of thebelfasttelegraphhomefinder.co.uk property portal - which is complementary to theweekly newspaper supplement. Following the year-end, the Group has also made a 20% investment in CashcadeLimited, a leading UK online gaming company which owns the getminted.com gamingportal which provides services ranging from casino to bingo to poker. Cashcade,with over 400,000 registered users, has grown strongly since its launch in 2001and is now profitable. IRELAND Operating profit for the Irish group grew by 10.2% to €90.6 million in 2005,reflecting good growth in advertising revenue, solid circulation gains and thefull year benefits of the restructuring of the cost base in 2004. The Irish group achieved a 9.4% growth in advertising revenue year-on-year,slightly ahead of the industry's like-for-like growth of 9%. A buoyant year fornew homes advertising was reflected in the Irish Independent, Evening Herald andSunday Independent. These market-leading titles, along with the Sunday Worldand the Irish Daily Star, continued to benefit from an excellent year for retailand general run of paper advertising. A good recovery in recruitment activitywas also evident across all titles. In-paper magazine revenues grew strongly asthe high quality Sunday Life magazine, launched in 2004, was a hit withadvertisers, combined with the continuing success of the Irish Independent'sWeekend Magazine. Circulation revenues grew year-on-year, driven by good sales volumes and thesuccessful implementation of price increases on the Sunday World. The IrishIndependent is consistently the largest selling daily in Ireland. During 2005,it consolidated the gains it made following the launch of a compact edition inearly 2004, and the dual broadsheet/ compact offering delivered a July-December2005 ABC of 163,598 copies per day - up 1.4% compared to the pre-compact ABC ofJuly-December 2003. The Irish Independent reaches over 575,000 daily readers -making it the undisputed market-leader. The Sunday World - Ireland's largest selling popular Sunday title - grew itscirculation volumes to 272,304 copies per week in the second half of 2005, up1.5% over the comparable period in 2004, despite two price increases during theyear. The ongoing success of Ireland's largest selling newspaper, the SundayIndependent, was illustrated by its further growth in readership to 1,095,000(up 1.8%), as per the recent JNRS. In October 2005, a new 'freely available' Dublin commuter title, HeraldAM, waslaunched and it quickly established itself as a key advertising vehicle for theunder-35 ABC1 target reader. HeraldAM continues to outperform Metro on all keyvariables, including reach and distribution. In line with trends in major USmetropolitan centres, the advent of daily free newspapers in the Dublin markethas had no discernible impact on paid-for circulations and has grown the overallreadership universe. Underpinning the favourable market conditions, the group's online activitiescontinued to develop at pace, with the most notable being the successful Autumnlaunch of LoadzaJobs.ie, Ireland's first dedicated 32 county recruitment portal.After only seven months, LoadzaJobs.ie has become Ireland's second largestrecruitment site, building on existing revenues and the group's strongrelationships within the recruitment industry. The ongoing development andconsolidation of existing online (and in paper) classifieds under the Loadzabrand will extend the group's leading positions across all classified pillars. Operating profits include the full year benefits of the major cost restructuringof the main Irish publishing operations undertaken in 2004. During 2005, thatprocess continued in the Sunday World operations, which outsourced back officeactivities and closed its print site in Dublin resulting in the transfer ofprinting and related print contracts to the Belfast print operations in July. As a result of the strong revenue performance and the impact of the variousrestructurings, operating margins increased by 160 bps to 22.6% for the year. INDIA INM's strategic investment in JPL (JAGP.BO) - the publisher of India's largestselling newspaper and the world's largest read newspaper, Dainik Jagran -underscores INM's global diversification and high growth strategy for thefuture. Following its heavily oversubscribed debut on the Mumbai Stock Exchangein February 2006, JPL has successfully raised over Rs 3.2 billion (approximately€60.0 million) to further expand and develop its publishing footprint andinvest in other nascent media opportunities. The vast potential of JPL is best reflected in the most recently released 12month results (to 31st March 2005), which showed circulation and advertisingrevenue growth of 25.7% and 16.8% respectively. Revenue increases in eachcategory were underpinned by both volume and yield growth. Literacy rates inIndia now exceed 65% - but are slightly less than the national average in theDainik Jagran footprint area, reflecting the potential for further organicgrowth. The dominance of Dainik Jagran is further evident in its most recentreadership results (21.2 million daily readers - IRS 2005), which confirmed thatin the five years since 2000, the readership of Dainik Jagran has increased by120% - which is more than the combined readership growth for its four closestcompetitor newspapers and significantly, was more than three times the combinedgrowth of the top six English language newspapers in India. - DIVIDEND - The Board is recommending a final dividend of 7.00 cent per share, up 16.7% on2004. This brings the total dividend for the year to 10.75 cent per share, anincrease of 19.4% on 2004, reflecting the strong operating performance, thesignificant return realised on the disposal of the stake in iTouch plc andcontinuing confidence in the Group's ability to deliver superior earningsgrowth. This dividend will be paid on 12th June 2006 to ordinary shareholdersregistered at the close of business on 21st April 2006. A scrip dividendalternative will also be available. ENDS 22nd March 2006 For reference: Gavin O'Reilly, Group Chief Operating OfficerDonal Buggy, Group Chief Financial OfficerIndependent News & Media PLC T +353.1.466.32002023 Bianconi Avenue F +353.1.466.3222Citywest Business Campus www.inmplc.comNaas Road, Dublin 24 Pat Walsh T +353.1.498.0300/Murray Consultants (Dublin) +353.87.226.9345 Rory Godson T +44.20.7236.5619Powerscourt Media (London) Declan Kelly/Paul Keary T +1.212.850.5600Financial Dynamics (New York) Mark Kenny/Jonathan Neilan T +353.1.631.5500K Capital Source (Dublin) ABOUT INDEPENDENT NEWS & MEDIA PLC ('INM') - CORPORATE PROFILE - INM is a leading international newspaper and communications group, with its maininterests in Australia, India, Ireland, New Zealand, South Africa and the UnitedKingdom. Spanning four continents and 21 individual countries, INM hasmarket-leading newspaper positions in Australia (regional), India (regional),Ireland, New Zealand and South Africa. In the United Kingdom, it publishes theflagship national title, The Independent, as well as being the largest newspapergroup in Northern Ireland. Across these regions, the Group publishes over 175 newspaper and magazine titles- including the world's largest read newspaper, Dainik Jagran, in India -delivering a combined weekly circulation of over 31 million copies with a weeklyaudience of over 100 million consumers. The Group's titles are also wellrepresented online with over 70 editorial and classified sites. INM is thelargest radio (with 128 stations and an audience exceeding 5 million people(10+years)) and outdoor advertising operator in Australasia and also has leadingoutdoor advertising positions in Hong Kong, Malaysia, Indonesia and acrossAfrica. The Group has grown consistently over the last 15 years by building ageographically unique and diverse portfolio of market-leading brands, and todaymanages gross assets of €4.0 billion, revenue of €1.8 billion and employsapproximately 10,400 people worldwide. Further information is available on ourGroup website www.inmplc.com. INDEPENDENT NEWS & MEDIA PLC PRELIMINARY ANNOUNCEMENT GROUP INCOME STATEMENT Year ended Year ended 31 December 31 December 2005 2004 Notes •m •m Revenue 1,611.5 1,499.2 Operating profit before exceptional items 311.6 279.7 Exceptional items 4 30.5 (13.6) Operating profit after exceptional items 342.1 266.1 Share of results of associates and joint ventures 13.8 8.3 Net finance costs: - Interest receivable and similar income 5 17.3 19.6 - Interest payable and similar charges 5 (89.4) (98.7) - Cumulative exchangeable preference shares dividend 5 (11.3) - - Exceptional finance costs 5 - (2.9) Profit before taxation 272.5 192.4 Taxation (43.3) (29.2) Profit for the year 229.2 163.2 Attributable to:Minority interests: - Cumulative exchangeable preference shares dividend 5 - 10.5 - Other minority interests 77.4 68.4Equity holders of the parent 151.8 84.3 229.2 163.2 Earnings per ordinary share (cent) - Basic 6 20.30c 11.40c - Diluted 6 20.14c 11.34c GROUP BALANCE SHEET 31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004 (IFRS Balance Sheet) (Note 2) Assets •m •m •m •mNon-Current AssetsIntangible assets 1,842.1 1,701.6 2,950.5 2,797.5Property, plant and equipment 363.1 341.7 363.1 341.7Investments in associates and joint 60.0 46.4 95.9 82.3venturesDeferred tax assets 89.8 89.3 89.8 89.3Investments - 15.0 - 15.0Available-for-sale financial assets 15.7 - 15.7 -Derivative financial instruments 9.4 - 9.4 -Trade and other receivables 54.4 64.5 54.4 64.5 2,434.5 2,258.5 3,578.8 3,390.3 Current AssetsInventories 21.9 16.9 21.9 16.9Trade and other receivables 264.2 252.5 264.2 252.5Current income tax assets 17.1 9.6 17.1 9.6Cash and cash equivalents 132.8 123.8 132.8 123.8 436.0 402.8 436.0 402.8 Total Assets 2,870.5 2,661.3 4,014.8 3,793.1 LiabilitiesCurrent LiabilitiesTrade and other payables 266.1 230.7 266.1 230.7Current income tax liabilities 16.1 12.0 16.1 12.0Borrowings 64.7 58.1 64.7 58.1Derivative financial instruments 6.6 - 6.6 -Provisions for other liabilities and 27.0 18.1 27.0 18.1charges 380.5 318.9 380.5 318.9 Non-Current LiabilitiesBorrowings 1,045.2 1,046.9 1,045.2 1,046.9Compound financial instruments 234.8 141.9 234.8 141.9Retirement benefit obligations 115.4 106.5 115.4 106.5Deferred taxation liabilities 292.3 279.9 25.7 28.2Other creditors 2.2 8.8 2.2 8.8Provisions for other liabilities and 3.7 16.1 3.7 16.1charges 1,693.6 1,600.1 1,427.0 1,348.4 Total Liabilities 2,074.1 1,919.0 1,807.5 1,667.3 Net Assets 796.4 742.3 2,207.3 2,125.8 EquityCapital and Reserves Attributable to Company's Equity HoldersShare capital 225.9 223.3 225.9 223.3Other reserves 325.5 275.4 1,378.4 1,322.6Retained earnings (333.4) (414.6) (140.5) (230.1) 218.0 84.1 1,463.8 1,315.8 Minority interests 578.4 658.2 743.5 810.0 Total Equity 796.4 742.3 2,207.3 2,125.8 GROUP CASH FLOW STATEMENT Year ended 31 December Notes 2005 2004 •m •m Net cash generated by operating activities 8 293.3 242.2 Cash flows from investing activitiesPurchases of property, plant and equipment (58.7) (57.0)Proceeds from sale of property, plant and equipment 21.4 7.1Purchases of intangible assets (18.1) (15.7)Purchases of available-for-sale financial assets (4.7) (0.6)Advances to joint ventures and associates (4.1) (9.3)Loans repaid by joint ventures and associates 10.8 -Purchases of associates and joint ventures (28.9) (0.2)Proceeds from sale of associate 96.9 -Interest received 14.8 16.9Dividends received 4.9 1.2 Net cash received from/(used in) investing activities 34.3 (57.6) Cash flows from financing activitiesProceeds from issuance of ordinary shares 8.8 2.1Debt issue costs (4.1) (1.7)Interest paid (88.7) (97.5)Proceeds from borrowings 611.9 65.0Repayment of borrowings (644.6) (63.9)Dividends paid to Company's shareholders (65.2) (51.2)Payment of finance lease liabilities (15.1) (60.5)Issue of equity minority interests 3.7 5.0Dividends paid to minority interests (54.8) (47.6)Purchases of equity minority interests (83.6) - Net cash used in financing activities (331.7) (250.3) Net decrease in cash and bank overdrafts (4.1) (65.7)Cash and bank overdrafts at beginning of the year 123.8 188.9Exchange gains on cash and bank overdrafts 7.9 0.6 Cash and bank overdrafts at end of year 127.6 123.8 Statement of Changes in Shareholders' Equity for the Year Ended 31 December 2005 Share Other Retained Minority Total Equity Capital Reserves Earnings Interests •m •m •m •m •m At 31 December 2004 223.3 275.4 (414.6) 658.2 742.3Adoption of IAS 32/39 on 1 January 2005 - (5.3) (0.9) (115.1) (121.3)At 1 January 2005 223.3 270.1 (415.5) 543.1 621.0Cash flow hedges - 0.7 - - 0.7Currency translation adjustments - 39.7 3.2 43.9 86.8Net income recognised directly inequity - 40.4 3.2 43.9 87.5Profit for the year - - 151.8 77.4 229.2Total recognised income andexpense for the year - 40.4 155.0 121.3 316.7 Dividends - - (72.9) (66.6) (139.5)Issue of share capital 2.6 13.9 - 46.9 63.4Share based payment - 1.1 - 0.5 1.6Buyback of shares held by minority - - - (66.8) (66.8) 2.6 15.0 (72.9) (86.0) (141.3) At 31 December 2005 225.9 325.5 (333.4) 578.4 796.4 Statement of Changes in Shareholders' Equity for the Year Ended 31 December 2004 Share Other Retained Minority Total Equity Capital Reserves Earnings Interests •m •m •m •m •m At 1 January 2004 221.3 256.2 (435.1) 629.5 671.9Currency translation adjustments - 9.3 (3.6) (7.9) (2.2)Net income recognised directly inequity - 9.3 (3.6) (7.9) (2.2)Profit for the year - - 84.3 78.9 163.2Total recognised income and expensefor the year - 9.3 80.7 71.0 161.0Dividends - - (60.2) (63.7) (123.9)Issue of share capital 2.0 9.2 - 21.1 32.3Share based payment - 0.7 - 0.3 1.0 2.0 9.9 (60.2) (42.3) (90.6) At 31 December 2004 223.3 275.4 (414.6) 658.2 742.3 NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Basis of Preparation of Financial Information under IFRS The European Union (EU) requires all EU listed companies to prepare consolidatedfinancial statements in accordance with IFRS for accounting periods commencingon or after 1st January 2005. Accordingly, INM has prepared these preliminaryresults for the year ended 31st December 2005 on this basis. The Group's transition date from Irish GAAP to IFRS is 1st January 2004 and thecomparative financial information for the year ended 31st December 2004 has beenrestated on a consistent basis, except where otherwise required or permitted byIFRS 1 "First time adoption of International Accounting Standards". The transition to IFRS is accounted for in accordance with IFRS 1. Thisstandard sets out how to adopt IFRS for the first time and mandates that mostIFRS are to be fully applied retrospectively. There are certain limitedexemptions from this requirement. The Group has availed of the exemption contained in IFRS 1 to only apply IAS 32"Financial Instruments: Disclosure and Presentation" and IAS 39 "FinancialInstruments: Recognition and Measurement" from 1st January 2005. Thecomparative financial information in relation to Financial Instruments for 2004is presented in accordance with Irish GAAP. This Preliminary Announcement has been prepared on the historical cost basis,except for certain fixed assets where the fair value was regarded as deemed coston transition to IFRS and the measurement at fair value of certain financialinstruments on adoption of IAS 32 and IAS 39 on 1st January 2005. A document was issued on 14th September 2005 detailing the impact of IFRS on theGroup's financial statements for the year ended 31st December 2004 and the sixmonths ended 30th June 2004. That document also contains a full list of theGroup's IFRS Accounting Policies and the exemptions availed of under IFRS. ThatIFRS Restatement Document is available on the Group's website at www.inmplc.comor from the Company Secretary at: 2023 Bianconi Avenue, Citywest BusinessCampus, Naas Road, Dublin 24, Ireland. Consistent with previous years, the full financial statements and the auditreport thereon will be finalised and circulated to shareholders in April 2006. 2. Value of Mastheads - Supplementary Information The "IFRS Balance Sheet" reports the carrying value of newspaper mastheads attheir acquired cost; where these assets have been acquired through a businesscombination, cost will be the fair value allocated in acquisition accounting.The value of internally generated newspaper mastheads or post-acquisitionrevaluations are not permitted to be recognised in the IFRS Balance Sheet and,as a result, no value for certain of the Group's internally generated newspapermastheads (e.g. the three main Irish titles, Irish Independent, Evening Heraldand the Sunday Independent) is reflected in the IFRS Balance Sheet. NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 2. Value of Mastheads - Supplementary Information (continued) In the opinion of the Directors, the presentation of the value of bothacquired and internally generated mastheads is useful information forShareholders, as it more accurately reflects the value of the Group's newspapermastheads. As a result, the Group has presented an "Alternative Balance Sheet"which includes all the Group's newspaper mastheads at their revalued amounts,including those mastheads that have been created internally with a correspondingadjustment to equity. At 31st December 2005, the Group's newspaper mastheads had a valuationof €2,479.3 million (31st December 2004: €2,388.4 million) compared to acarrying value under IFRS of €1,370.9 million (31st December 2004: €1,292.5million). All newspaper mastheads are regularly valued/revalued by expertindependent valuers, Grant Samuel & Associates Pty Limited. The most recentindependent valuation was undertaken as at 31st December 2004. No provision has been made for Deferred Tax in respect of the Group's intangibleassets (both internal and acquired) in the Alternative Balance Sheet as theGroup believes this deferred tax liability will not arise because it is theBoard's intention to retain these assets. In accordance with the requirementsof IFRS, deferred tax of €266.6 million (31st December 2004: €251.7 million) hasbeen provided in respect of the Group's intangible assets in the IFRS BalanceSheet. NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 3. Segmental Report By Geographical Segment Revenue Operating Profit 2005 2004 2005 2004 •m •m •m •m Ireland 401.7 390.7 90.6 82.2United Kingdom 209.1 201.9 15.1 13.6South Africa 222.2 198.1 41.8 31.0Australasia 778.5 708.5 179.1 167.2Common costs - - (15.0) (14.3) 1,611.5 1,499.2 311.6 279.7 Exceptional itemsIreland (5.1) (2.7)United Kingdom 40.6 (8.9)South Africa (0.6) (0.9)Australasia - (1.1)Common/Unallocated (4.4) - 30.5 (13.6) Operating profit after exceptional items 342.1 266.1 By Class of Business Revenue Operating Profit 2005 2004 2005 2004 •m •m •m •mPrinting, publishing, distribution and commercial printing 1,320.9 1,238.9 270.9 245.6Radio 152.8 138.7 50.3 43.0Outdoor advertising 137.8 121.6 5.4 5.4Common costs - - (15.0) (14.3) 1,611.5 1,499.2 311.6 279.7 NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 4. Exceptional Items Exceptional items are those items of income and expense that the Group considersare material and/or of such a nature that their separate disclosure is relevantto a better understanding of the Group's financial performance. 2005 2004 •m •mIncluded in profit before taxation are the following: Gain on sale of iTouch plc, net (i) 62.7 - Gain on sale of property (ii) 11.4 - Restructuring charges and impairment of property, plant,equipment and other assets (iii) (27.2) - Product launch costs, development and other promotionalexpenditure (iv) (16.4) (13.2) Other net exceptional charges - (0.4) 30.5 (13.6) Share of associates & joint ventures exceptional items 1.4 0.3Exceptional finance charge - (2.9) Total exceptional items 31.9 (16.2) (i) Net gain arising on the sale of the Group's shareholding in iTouchplc in June 2005. (ii) Gain arising on the sale of the Sunday World premises in Ireland. (iii) Restructuring charges relating to the closure of the Sunday Worldprint facility in Ireland and impairment charges relating to the write down ofproperty, plant, equipment and other assets to their recoverable amount acrossthe Group. (iv) Relates to product launch costs, development and other promotionalexpenditure incurred in Ireland, UK and South Africa during 2005. NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 5. Net Finance Costs 2005 2004 •m •m Interest receivable and similar income (17.3) (19.6) Interest payable and similar charges 89.4 98.7 Net interest costs before exceptional finance costs 72.1 79.1 Exceptional finance costs - 2.9 Net interest costs after exceptional finance costs 72.1 82.0 Cumulative exchangeable preference shares dividend 11.3 10.5 Total net finance costs (on a like-for-like basis) * 83.4 92.5 Total net finance costs (based on IFRS transitional provisions) 83.4 82.0 * The comparative numbers for the year ended 31st December 2004 have beenrestated on an IFRS basis, with the exception of IAS 32 and IAS 39, which wereimplemented from 1st January 2005. As a result, the cumulative exchangeablepreference shares dividend is shown within net finance costs in the year ended31st December 2005, but is shown within minority interests on the face of theIncome Statement in the 2004 comparative numbers. On a comparable basis, thetotal net finance costs for the year ended 31st December 2005 were €83.4million, compared to €92.5 million for the year ended 31st December 2004. NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 6. Earnings Per Share 2005 2004 •m •m Profit attributable to Independent News & Media PLC 151.8 84.3Exceptional items (note 4) (31.9) 16.2Tax credit on exceptional items (2.2) (0.9)Minority interest share of exceptional items - (0.5)Profit before exceptional items 117.7 99.1 Weighted average number of shares in issue during the year 747,883,265 739,713,574Effect of:Conversion of options 5,742,439 3,972,264Diluted number of shares 753,625,704 743,685,838 Basic earnings per share 20.30c 11.40c Basic earnings per share before exceptional items 15.74c 13.40c Diluted earnings per share 20.14c 11.34c Diluted earnings per share before exceptional items 15.62c 13.33c Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the period. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all potential dilutive options overordinary shares and dilutive cumulative exchangeable preference shares. Thecumulative exchangeable preference shares were not dilutive in either 2005 or2004. Basic and diluted earnings per share before exceptional items are presented inorder to give a better understanding of the Group's financial performance. 7. Dividends - Approved and Paid 2005 2004 •m •mFinal dividend for the year ended 31st December 2004 of €0.06 (2003: €0.0515) per share 44.7 38.0 Interim dividend for the year ended 31st December 2005 of €0.0375 (2004: €0.03) per share 28.2 22.2 72.9 60.2 The Directors are proposing a final dividend in respect of the year ended 31stDecember 2005 of €0.07 per share (€52.8 million). This proposed dividend issubject to approval by the shareholders at the AGM. NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued) 8. Reconciliation of Operating Profit to Net Cash Generated by OperatingActivities 2005 2004 •m •m Operating profit before exceptional items 311.6 279.7Depreciation/amortisation 43.0 43.8Non-cash share option charge 1.6 1.0Cash exceptional items (16.4) (13.6)Unrealised foreign exchange movements (4.9) (6.8) Cash generated from operations before changes in working capital and provisions 334.9 304.1(Increase)/decrease in stocks (3.8) 2.1Decrease/(increase) in short term and medium term debtors 3.9 (5.6)Increase in short term and long term creditors 14.3 26.6Increase in provisions (excluding restructuring payments) 1.0 2.0Restructuring payments (20.2) (36.8) Net cash generated from operations 330.1 292.4Income tax paid (36.8) (50.2)Net cash generated by operating activities 293.3 242.2 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Independent News & Media