18th Sep 2007 07:02
Independent News & Media PLC18 September 2007 STRONG OPERATING PERFORMANCE DRIVES 9.7% INCREASE IN NET PROFIT* Dublin/ London 18th September 2007: The Board of Independent News & Media PLC('INM' or the 'Group') (ticker: INWS.I; INWS.L) today announced the Group'sinterim results for the six months ended 30th June 2007. +---------------------------------------+----------+---------+----------+|RESULTS | 2007| 2006| Change|| | •m| •m| %|| | --| --| -||Revenue | 815.5| 796.7| +2.4%||Operating Profit ** | 154.6| 147.9| +4.5%||Operating Margin ** | 19.0%| 18.6%| +40bps||Profit After Tax ** | 99.8| 91.7| +8.8%||Profit After Tax | 76.2| 87.3| -12.7%||Net Profit * | 62.0| 56.5| +9.7%||Adjusted Earnings Per Share *** | 8.03c| 7.43c| +8.1%||Basic Earnings Per Share | 4.96c| 6.89c| -28.0%||Interim Dividend Per Share | 4.57c| 4.15c| +10.1%|+---------------------------------------+----------+---------+----------+ * Profit attributable to INM (before exceptionals, note 6) ** Before exceptional items *** Diluted EPS, before exceptional items SUMMARY HIGHLIGHTS • Net profit* up 9.7% reflecting INM's diversified growth and rigorous cost management strategy • Good revenue growth of 4.2% in constant currency (2.4% in Euro terms) • Performance significantly better than peers and driven by strong underlying advertising (+6.3%) and circulation (+2.5%) revenue growth in the Publishing division • Operating profit** up 4.5% (6.1% in constant currency), with all divisions showing growth • Industry-leading operating margin strengthens by 40 bps to 19.0% • Adjusted Earnings Per Share*** up 8.1% • Further business restructuring initiatives being implemented across the Group in 2007 to deliver sustainable payroll and other savings and enhanced work flows • Continued rapid expansion of online in tandem with print, with market share gains in publishing across all markets • Continued expansion of business base in India, where JPL associate is thriving • Investment in Independent College - a new education initiative that will be launched in H2 2007 • As part of the Group's efficient capital management policy, 32.4 million Treasury Shares have been repurchased to date in 2007 • Interim dividend increased by 10.1% to 4.57 cent per share - OVERVIEW - Each of INM's main geographic regions performed strongly with first half GroupOperating Profit (before exceptionals) increasing by 4.5% (6.1% in constantcurrency terms) to €154.6 million. This produced a strong half year margin of19.0% (up 40 bps), placing us at the top of our peer group. Group revenues increased by 2.4% to €815.5 million (up 4.2% in constantcurrency), despite adverse currency movements and the loss of some low-margindistribution contracts in Ireland. This growth was largely driven by the Publishing division whose revenues grew by5.1% in constant currency, on the back of good increases in advertising revenues(up 6.3%) and circulation revenues (up 2.5%). Significantly, all markets showedgrowth in advertising, with increases in both aggregate volumes and rate. A net exceptional charge of €27.6 million relates mainly to payroll restructuring charges in the Group's Irish, Australasian and United Kingdomoperations, and reflects the Group's continuing business re-engineering in itspublishing operations, which is detailed further below. The exceptional chargealso includes costs associated with the APN Scheme of Arrangement, which did notproceed. The tax charge, at €17.9 million, was €3.4 million less than 2006 due mainly totax credits associated with the exceptional restructuring charges. Adjusted Earnings Per Share increased to 8.03 cent (+8.1%) due to the Group'sstrong operating and financial performance. - OUTLOOK - Commenting on these results, Sir Anthony O'Reilly, Chief Executive, made thefollowing outlook statement: "INM is pleased to report another set of record results. This strong performancereflects the clear benefits of our low cost ethos and our multi-market andmulti-media strategy. "We believe that our new work practices are right at the forefront in theproduction of newspapers, and we will continue our unrelenting attention ondriving revenue growth while achieving cost and margin improvements in all ofour businesses. "The positive trends we have experienced in the first half across all ourmarkets have continued into the second half and, based on the continuation ofthese trends, we believe that your Group's wide-ranging activities will delivercontinued earnings growth and sustain industry-leading operating margins". - RESTRUCTURING - INM is acknowledged as an industry leader in effective cost management,demonstrated by its consistently superior operating margins relative to its peergroup. Over the past few years, INM has fundamentally re-defined and re-shapedhow its publishing divisions operate. This singular focus has allowed the Groupto identify: • how best to compile its market-leading editorial products; • how best to enhance its interaction with its customers; • how best to manage its sales resources; and • how best to prioritise its investment in marketing and product innovation. All divisions within the Group are already working to, or are currentlyadopting, these new operating principles and work flows within their publishingdivisions. This has resulted in new (and in some instances, outsourced)centralised customer contact centres (telesales), advertising production centresand financial shared service centres in Australia (Brisbane), Ireland(Clonakilty), New Zealand (Tauranga and Whangerei) and the United Kingdom(Armagh). To facilitate this business re-engineering and to ensure that journalists arebetter focused on content creation and origination (rather than production), allpublishing systems have now been upgraded to a common Atex editorial system thatstreamlines page production, enhances quality control and enables real-timeeditorial page sharing across the Group. By leveraging the Group's global scale, adopting new and more efficient workflows and through the better use of technology, the Group has achieved asignificant reduction in its permanent headcount, generating significant costsavings, and sponsoring new revenue growth across print and online. This restructuring programme continues through 2007, where the full year cost ofrestructuring is expected to be approximately €45.0 million, delivering anexpected payback period of between 2.0 - 2.5 years. To date, over 450 of the579 forecasted headcount reductions in 2007 (in Australasia, Ireland and theUnited Kingdom) have been achieved and the remainder are expected to becompleted before year-end. - EDUCATION - As part of the Group's successful diversification strategy - both in terms ofsector platforms and markets - INM has identified the area of education as anattractive and fast-growing sector in which to strategically invest. The Group's initial investment is the launch of Independent College in Dublin,Ireland. Independent College builds on INM's existing educational platforms -editorial and online - creating a learning experience that is complementary toour existing portfolio of assets. Independent College has already assembled a team of exceptional lecturers tostaff each of the core faculties of Law, Accountancy, Journalism, Arts andContinuous Professional Development, with enrolments commencing now for coursesstarting in November. Further information on this will be available in thecoming weeks. This concept is scaleable across each of the Group's markets andwill greatly benefit from cross-promotion across the Group's leading titles,radio stations and outdoor sites. - CAPITAL MANAGEMENT - As part of INM's efficient capital management policy, the Company hasrepurchased 32.4 million Treasury Shares to date in 2007. The objective of thisis to minimise the dilutive impact for all shareholders which will arise on thematurity of the New Zealand Cumulative Exchangeable Preference Shares, if asexpected, they convert into INM shares (c. 56 million) in late November 2007. - DIVIDEND - The Board is recommending an interim dividend of 4.57 cent per share, anincrease of 10.1% on 2006, reflecting the strong half year operating performanceand confidence in the Group's ability to deliver continued earnings growth. This dividend will be paid on 19th November 2007 to ordinary shareholdersregistered at the close of business on 28th September 2007. A scrip dividendalternative will also be available. - OPERATIONS REVIEW - AUSTRALASIA APN News & Media Limited ('APN'), in which INM has a 38.5% shareholding, has acurrent market capitalisation of €1.6 billion on the Australian Stock Exchange. APN's operating profits grew by 2.3% to a record €85.1 million for the first sixmonths of 2007, led by strong performances from Australian Regional newspapersand the Outdoor division. Operating margins expanded by 55 bps to 23.3%. Overall revenues at €365.6 million were flat on 2006, as a result of thedisposal of the Security Printing business in 2006. Australasian advertising (publishing) grew at an aggregate 4.1%, withdouble-digit growth in the Australian Regional Publishing division and marketshare growth in ROP retail, national and classifieds. In Australia, thecontinuing strong resource and infrastructure sectors and superior growth intourism provided robust trading conditions in local markets. During the firsthalf, the group also completed the strategic acquisition of the minorityinterest in Toowoomba Newspapers, bringing full ownership of The Chronicle inToowoomba and a number of important non-daily and community titles into thegroup's portfolio of assets. In the New Zealand National Publishing division, trading conditions wereimpacted by low growth in the Auckland market. However, growth in revenues andoperating profit continues to be positive. The New Zealand Herald has thehighest circulation and readership of any daily newspaper in the country, whilethe Herald on Sunday, launched 3 years ago, has now moved into profitability andenjoys the highest circulation of any Sunday newspaper in the Auckland market. The Radio division comprises the Australian Radio Network (ARN) and The RadioNetwork (TRN) in New Zealand, which together reach almost 6 million listenerseach week - the largest radio audience in Australasia. Overall, operating profitgrew by 2% on flat revenues. The Outdoor division (including associates), despite inventory rationalisationand adverse foreign currency movements, produced a very strong 33% increase inprofits, building on the acquisition of a number of major new contracts. Thesuccess achieved in the first half of 2007 across the Outdoor division isexpected to continue in the second half. APN continues to invest in its Online division, developing products that extendexisting APN brands, as well as identifying joint venture partners forstandalone internet opportunities. The nzherald.co.nz website grew advertisingrevenue year-on-year by 75%. The investment phase also continues for the 'Search4' classifieds brand, which is being further extended for cars, jobs, propertyand general classifieds across New Zealand and Australia. IRELAND Operating profits grew by 4.7% to a record €48.9 million for the first sixmonths of 2007. Operating margins improved significantly by 144 bps to 24.7%.The full cost of herald am (c. €1.0m) is included in operating profit in 2007,whereas it was reported as an exceptional charge while in its launch phase in2006. Adjusting for this, on a like-for-like basis, operating profit was up 7.0%in 2007. Overall revenues contracted by 1.4%, entirely as a result of the loss of anumber of low margin wholesale distribution contracts and the decision to ceasecontract printing in Kerry during the second half of 2006. However, this waslargely offset by a strong 10.1% growth in advertising revenues (more thandouble the market growth in H1) driven by ROP retail, property, financial andgovernment spending in both national and regional markets. Despite intense competition, the group continues to grow its publishingrevenues, profits and operating margins whilst maintaining its number oneposition in each market segment. This is achieved through constant productdevelopment, maintaining and growing market share in both copy sales andadvertising, allied to a strong vigilance over costs. Selective cover price increases, solid circulation volumes and strong readershipfigures underpinned this good underlying revenue performance, with circulationrevenues up 0.7%. Ireland's largest selling daily, the Irish Independent, now eclipses thecombined readership of its two main competitors. The Sunday Independent (at overa million readers) has over 40% more readers than all of the other qualitySunday titles combined. The Evening Herald continues to enjoy the highestreadership of any title in Dublin and has 308,000 readers nationally. The SundayWorld continued to grow its share of the tabloid market with a very strong firsthalf, with over 350,000 more readers than its nearest rival. The group's dailyfree title, herald am, continues to enhance its market penetration andadvertising revenues are comfortably ahead of its Metro rival. The group's jointventure, the Irish Daily Star continues to grow its circulation and is nowIreland's largest selling daily tabloid. Online revenues added to total advertising growth, with LoadzaJobs.ie now firmlyestablished as the number two recruitment site nationally and the roll-out ofPropertyNews.com continuing apace. SOUTH AFRICA Operating profits grew by 9.3% to a record €20.0 million for the first sixmonths of 2007, despite adverse currency translation. Operating margins improvedsignificantly by 207 bps to 17.1%. Overall double-digit revenue growth, in constant currency, was driven by solidadvertising and good circulation gains. Following a series of interest rate hikes (300 bps since June last year), theSouth African economy - driven by consumer spending growth and infrastructureinvestment - is now expected to show GDP growth in the 4% - 5% range for 2007.This underlying growth - down from the exceptionally strong trends of recentyears - produced advertising growth of 7.8% for our titles, and good marketshare gains in display and classified, despite significant discounting bycompetitors. The group's titles performed strongly, growing circulation revenues by 10.8%,with 13 of the group's 16 leading titles recording year-on-year volume growth.The group's Zulu-language newspaper, Isolezwe, and the Cape Town based popularred-top, Daily Voice, continued to enjoy volume increases, attracting newreaders and copy sales in markets not previously served by our more traditionaltitles. The wholly-owned Magazine division (Conde Nast Independent Magazines), in anever-competitive trading environment, performed well, underpinned by furthergrowth from Glamour. The 50% owned Outdoor Advertising division, Clear Channel Independent, reporteda very good local currency increase in operating profit, benefiting from thebuoyant local outdoor trading environment and a healthy double-digitcontribution from its 13 African operations. Consistent with all of the group's markets, online revenues in South Africacontinued to grow in both display and classifieds. UNITED KINGDOM Operating profits grew by 19.7% to €7.3 million for the first six months of2007. Operating margins fell slightly to 5.4% due to the acquisition of the lowmargin WNS, Northern Ireland wholesale distribution business, in the second halfof 2006. Overall revenues grew by 22.6% in constant currency, inclusive of theacquisition of WNS in 2006. Excluding the WNS acquisition, revenues on alike-for-like basis rose by a healthy 2.3%. The firmer advertising trend seen in the second half of 2006 continued throughinto 2007, with group advertising revenues (including Online) ahead by 7.1%year-on-year, driven by good display revenue growth for The Independent, goodclassified growth - particularly in recruitment, property and motors in theNorthern Ireland titles - and the strong performance of PropertyNews.com (thelargest website in Northern Ireland), which was acquired during 2006. In a challenging circulation market, both Independent titles performed wellrelative to their competition. The Independent contracted marginallyyear-on-year (1.3%), which was better than the overall quality market, leadingto an improvement in market share over the first six months. The Independent onSunday, aided by a fresh re-design in June, bucked the trend of the overallmarket and increased its sale by 0.6% year-on-year, making it the bestperforming national newspaper in the entire UK market. Northern Ireland's contract print division, the largest on the island ofIreland, performed well, following the opening of its new Goss FPS printingfacility in Newry. This coldset operation, using new print technology, iscurrently being further expanded with heatset capacity to be operational in Q42007, allowing the production of high-quality gloss, full colour publicationsfor both internal and external customers. Online revenues for the group have continued to grow significantly year-on-year,with particularly good growth for its flagship www.independent.co.uk site, andfurther development of the Londoncareers.net and LoadzaJobs.co.uk recruitmentsites. INDIA Jagran Prakashan Limited ('JPL'), INM's 20.8% owned Indian associate - which islisted on the Mumbai Stock Exchange - reported a 27.9% revenue increase and a140.5% net profit increase in its financial year ended 31st March 2007. Thisexceptionally strong performance continued into Q1 of the 2007/08 financialyear, with revenue in the three months to the end of June increasing by 34.7%year-on-year, advertising growing by 42.1% and net profits increasing by 51.6%. INM's expansion in the Indian market continued during the first six months, withthe further roll-out of Radio Mantra (in which INM has a 20% stake). All but oneof the eight planned station launches have now taken place, with the finallaunch expected during the next month. In a market where radio is in itsinfancy, these launches were greeted with much enthusiasm and significantpositive feedback. Performances to date have been in line with expectations. - BOARD DEVELOPMENTS - As part of its commitment to good corporate governance, during the first half of2007, the Board announced the appointment of the Right Hon. Kenneth Clarke tothe Board and Audit Committee of INM. In addition, Baroness Margaret Jay wasappointed as the Senior Independent Director. Note Regarding Forward-Looking Statements Some statements in this announcement are forward-looking. They represent ourexpectations for our business, and involve risks and uncertainties. We havebased these forward-looking statements on our current expectations andprojections about future events. We believe that our expectations andassumptions with respect to these forward-looking statements are reasonable.However, because they involve known and unknown risks, uncertainties and otherfactors, which are in some cases beyond our control, our actual results orperformance, may differ materially from those expressed or implied by suchforward-looking statements. These forward-looking statements speak only as ofthe date of this document and no obligation is undertaken, save as required bylaw or by the Listing Rules of the Irish Stock Exchange and/or the UK ListingAuthority, to reflect new information, future events or otherwise. ENDS 18th September 2007 For further information, please contact: Gavin O'Reilly Chief Operating Officer +353 1 466 3200 Donal Buggy Chief Financial Officer +353 1 466 3200 Media Pat Walsh Rory Godson Paul Keary Murray Consultants Powerscourt (London) Financial Dynamics (Dublin) (London) (New York) Tel: +353 1 498 0300 Tel: +44 20 7250 1446 Tel: +1 212 850 5600 Investors and Analysts Mark Kenny/ Jonathan Neilan K Capital Source (Dublin) Tel: +353 1 631 5500 Email: [email protected] ABOUT INDEPENDENT NEWS & MEDIA PLC - 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, 10 major markets and 21 individual countries,INM has market-leading newspaper positions in Australia (regional), India,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 180 newspaper and magazinetitles, delivering a combined weekly circulation of over 31 million copies witha weekly audience of over 100 million consumers and includes the world's largestread newspaper, Dainik Jagran, in India. The Group has established a strong andgrowing online presence, with over 100 editorial and classified sites. INM is the largest radio operator - over 130 stations and an audience of almostsix million people - and outdoor advertising operator in Australasia and alsohas leading outdoor advertising positions in Hong Kong, Malaysia, India,Indonesia and across Africa. 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 €4.1 billion, revenue of €1.8 billion and employsapproximately 9,600 people worldwide. Further information is available on theGroup's website www.inmplc.com. INDEPENDENT NEWS & MEDIA PLC INTERIM STATEMENT GROUP INCOME STATEMENT (unaudited) Six months Six months ended 30 ended 30 June 2007 June 2006 Notes •m •m -- -- Revenue 815.5 796.7 ========================== Operating profit before exceptional items 154.6 147.9 Exceptional items 4 (27.6) (5.5) -------------------------- Operating profit after exceptional items 127.0 142.4 Share of results of associates and joint 6.9 6.3ventures Net finance costs: - Interest receivable and similar income 3.6 4.4- Interest payable and similar charges (43.4) (44.5) -------------------------- Profit before taxation 94.1 108.6 Taxation (17.9) (21.3) -------------------------- Profit for the period 76.2 87.3 ========================== Attributable to: Minority interests 38.2 35.2Equity holders of the parent 38.0 52.1 -------------------------- 76.2 87.3 ========================== Earnings per ordinary share (cent) - Basic 6 4.96c 6.89c ==========================- Diluted 6 4.92c 6.85c ========================== GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited) 6 months ended 30 June 2007 2006 •m •m -- --Items of income/(expense) recognised directly in equity Currency translation adjustments 42.6 (153.2)Retirement benefit obligations: - Actuarial gains 35.6 27.6 - Movement on deferred tax asset (4.9) (2.8)Gains relating to cash flow hedges 2.1 21.1 ------- -------Net income/(expense) recognised directly in equity 75.4 (107.3)Profit for the period 76.2 87.3 ------- -------Total recognised income and expense for the period 151.6 (20.0) ======= ======= Attributable to:Minority interests 62.6 (31.0)Equity holders of the parent 89.0 11.0 ------- ------- 151.6 (20.0) ======= ======= GROUP BALANCE SHEET (unaudited) +----------+ 30 June 2007 31 Dec 2006 30 June 2006 | 30 June| | 2007 | (IFRS Balance Sheets) | (Note 2)| -----------------------------------+ | | |Assets •m •m •m | •m |Non-Current Assets -- -- -- | -- | Intangible assets 1,927.9 1,800.5 1,682.8 | 2,986.7 |Property, plant and equipment 393.0 371.4 332.8 | 393.0 |Investments in associates and 86.2 83.0 70.0 | 122.1 |joint ventures | |Deferred tax assets 83.3 90.8 93.8 | 83.3 |Available-for-sale financial 34.2 26.2 11.4 | 34.2 |assets | |Derivative financial 0.3 - - | 0.3 |instruments | |Trade and other receivables 46.7 42.8 49.6 | 46.7 | -----------------------------------+----------+ 2,571.6 2,414.7 2,240.4 | 3,666.3 | -----------------------------------+----------+ | |Current Assets | |Inventories 17.4 15.9 17.6 | 17.4 |Trade and other receivables 279.2 266.3 264.5 | 279.2 |Current income tax assets 22.5 15.5 14.4 | 22.5 |Derivative financial 10.9 1.8 16.0 | 10.9 |instruments | |Cash and cash equivalents 123.2 104.5 148.0 | 123.2 | -----------------------------------+----------+ 453.2 404.0 460.5 | 453.2 | -----------------------------------+----------+ | |Total Assets 3,024.8 2,818.7 2,700.9 | 4,119.5 | -----------------------------------+----------+ | |Liabilities | |Current Liabilities | |Trade and other payables 257.8 287.6 240.1 | 257.8 |Current income tax 8.4 6.1 12.0 | 8.4 |liabilities | |Compound financial 128.4 120.0 - | 128.4 |instruments | |Borrowings 98.8 59.3 68.3 | 98.8 |Derivative financial 1.9 2.0 0.7 | 1.9 |instruments | |Provisions for other 40.7 31.2 23.7 | 40.7 |liabilities and charges | | -----------------------------------+----------+ 536.0 506.2 344.8 | 536.0 | -----------------------------------+----------+Non-Current Liabilities | |Borrowings 1,263.2 1,086.4 1,104.2 | 1,263.2 |Compound financial - 88.7 206.8 | - |instruments | |Retirement benefit 87.9 126.9 130.9 | 87.9 |obligations | |Deferred taxation liabilities 286.6 282.6 264.4 | 24.6 |Derivative financial - - 11.8 | - |instruments | |Other payables 7.3 7.7 3.8 | 7.3 |Provisions for other 1.4 2.0 2.8 | 1.4 |liabilities and charges | | -----------------------------------+----------+ 1,646.4 1,594.3 1,724.7 | 1,384.4 | -----------------------------------+----------+ | |Total Liabilities 2,182.4 2,100.5 2,069.5 | 1,920.4 | -----------------------------------+----------+ | |Net Assets 842.4 718.2 631.4 | 2,199.1 | ===================================+==========+ | |Equity | |Capital and Reserves | |Attributable to | | | |Company's Equity Holders | |Share capital 233.0 229.3 227.9 | 233.0 |Other reserves 377.8 329.9 292.3 | 1,385.2 |Retained earnings (402.0) (360.2) (375.6) | (209.6) | -----------------------------------+----------+ 208.8 199.0 144.6 | 1,408.6 | | |Minority Interests 633.6 519.2 486.8 | 790.5 | | | -----------------------------------+----------+ | |Total Equity 842.4 718.2 631.4 | 2,199.1 | ===================================+==========+ GROUP CASH FLOW STATEMENT (unaudited) 6 months ended 30 June Notes 2007 2006 •m •m -- --Net cash generated from operations (before restructuring payments) 7 141.2 154.7Restructuring payments (20.5) (10.0)Income tax paid (26.0) (26.6) -------- --------Net cash generated from operating activities 94.7 118.1 -------- --------Cash flows from investing activitiesPurchases of property, plant and equipment (41.2) (22.4)Construction in progress pending resale - (12.7)Proceeds from sale of property, plant and equipment 12.1 9.3Purchases of intangible assets (63.4) (4.9)(Purchases)/sales of available-for-sale financial assets (4.8) 3.6(Advances)/receipts from/to joint ventures and associates (1.2) 1.2Purchases of associates and joint ventures (1.1) (5.7)Purchase of subsidiary - (10.1)Interest received 4.0 5.1Dividends received 5.1 0.5 -------- --------Net cash used in investing activities (90.5) (36.1) -------- --------Cash flows from financing activitiesInterest paid (52.5) (49.0)Proceeds from borrowings 246.6 167.7Repayment of borrowings (48.3) (46.0)Proceeds from short-term construction financing - 12.7Dividends paid to company's shareholders (39.2) (46.2)Payments of finance lease liabilities (23.6) (21.3)Purchases of treasury shares (51.6) -Repayment of compound financial instrument (1.9) -Purchases of minority interests - (50.2)Dividends paid to minority interests (44.4) (29.0)Issue of ordinary shares 8.3 6.9Issue of minority interests 5.4 5.1 -------- --------Net cash used in financing activities (1.2) (49.3) -------- --------Net increase in cash and bank overdrafts 3.0 32.7Cash and bank overdrafts at beginning of the year 100.7 127.6Exchange gains/(losses) on cash and bank overdrafts 0.9 (20.2) -------- --------Cash and bank overdrafts at end of period 104.6 140.1 ======== ======== NOTES TO THE INTERIM STATEMENT (unaudited) 1. Basis of Preparation The interim results for the period to 30 June 2007 have been prepared inaccordance with the Listing Rules of the Irish Stock Exchange. The Group'sinterim statement has been prepared in accordance with the accounting policiesthat the Group expects to adopt for the 2007 year-end, which are consistent withthe principal accounting policies which were set out in the Group's 2006consolidated financial statements. The principal accounting policies adopted bythe Group for the 2006 year-end, as set out in the Group's 2006 consolidatedfinancial statements, were consistent with IFRSs issued by the IASB as adoptedby the European Commission for use in the European Union. The accounts in this interim statement are not the statutory accounts of theCompany, a copy of which is required to be annexed to the Company's annualreturn to the Companies Registration Office in Ireland. A copy of the statutoryaccounts required to be annexed to the Company's annual return in respect of theyear ended 31 December 2006 has in fact been so annexed. 2. Value of Mastheads - Supplementary Information The "IFRS Balance Sheets" report 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 Sheets and,as a result, no value for certain of the Group's internally generated newspapermastheads (e.g. the three main Irish titles, the Irish Independent, the EveningHerald and the Sunday Independent) is reflected in the IFRS Balance Sheets. In the opinion of the Directors, the presentation of the value of both acquiredand internally generated mastheads is useful information for Shareholders, as itmore accurately reflects the value of the Group's newspaper mastheads. As aresult, the Group has presented an "Alternative Balance Sheet" which includesall of the Group's newspaper mastheads at their revalued amounts, includingthose mastheads that have been created internally with a correspondingadjustment to equity. At 30 June 2007, the Group's newspaper mastheads had a valuation of €2,428.0m(included within intangible assets of €2,986.7m) compared to a carrying valueunder IFRS of €1,369.2m. All newspaper mastheads are regularly valued/revaluedby expert independent valuers, Grant Samuel & Associates Pty Limited. The mostrecent independent valuation was undertaken as at 31 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 requirements ofIFRS, deferred tax of €262.0m has been provided in respect of the Group'sintangible assets in the IFRS Balance Sheet at 30 June 2007. NOTES TO THE INTERIM STATEMENT (unaudited) (Continued) 3. Segmental Reporting By Geographical Segment Revenue Operating Profit 30 June 30 June 30 June 30 June 2007 2006 2007 2006 •m •m •m •m -- -- -- -- Ireland 198.3 201.1 48.9 46.7United Kingdom 134.6 107.8 7.3 6.1South Africa 117.0 121.8 20.0 18.3Australasia 365.6 366.0 85.1 83.2Common costs - - (6.7) (6.4) ----- ----- ----- ----- 815.5 796.7 154.6 147.9 ===== ===== Exceptional items (27.6) (5.5) ----- ----- Operating profit after exceptional items 127.0 142.4 ===== ===== By Class of Business Revenue Operating Profit 30 June 30 June 30 June 30 June 2007 2006 2007 2006 •m •m •m •m -- -- -- --Printing, publishing, online, distribution and commercial printing 678.1 659.5 135.3 130.0Radio 71.8 70.5 22.2 21.7Outdoor advertising 65.6 66.7 3.8 2.6Common costs - - (6.7) (6.4) ----- ----- ----- ----- 815.5 796.7 154.6 147.9 ===== =====Exceptional items (27.6) (5.5) ----- ----- Operating profit after exceptional items 127.0 142.4 ===== ===== The taxation charge for the period comprises €1.4m (2006: €2.4m) in respect ofIrish taxation and €16.5m (2006: €18.9m) in respect of overseas taxation. NOTES TO THE INTERIM STATEMENT (unaudited) (Continued) 4. Exceptional Items 30 June 30 June 2007 2006 •m •m -- -- Gain on sale of assets (i) 5.4 4.0 Restructuring charges (ii) (29.0) (7.5) Product launch costs, development and other promotional expenditure (iii) (1.9) (2.0) Other (iv) (2.1) - ----------------- (27.6) (5.5) ----------------- (i) Gain on sale of non-current assets. (ii) Restructuring charges relating to the Group's Irish, Australasian andUnited Kingdom operations (2006: Restructuring charges relating to the Group'sNorthern Ireland operations). (iii) Relates mainly to online development costs in Australasia (2006:Product launch costs, development and other promotional expenditure incurred across the Group). (iv) Relates mainly to the costs associated with the unsuccessful APN Schemeof Arrangement. 5. Dividends 30 June 30 June 2007 2006 •m •mDividends on equity shares -- -- Final (2006) ordinary dividend of €0.083 per share on 767,618,005 shares (2005: €0.07 per share on 758,300,511 shares) 63.7 53.1 ---------------- An Interim ordinary dividend of €0.0457 (Interim 2006: €0.0415) per share -total dividend payable of €34.1m (2006: €31.5m) - has been declared subsequentto 30 June 2007. NOTES TO THE INTERIM STATEMENT (unaudited) (Continued) 6. Earnings Per Share 30 June 30 June 2007 2006 •m •m -- -- Profit attributable to Independent News & Media PLC 38.0 52.1Exceptional items net of taxation and minority interests 24.0 4.4 ------------------------- Profit before exceptional items 62.0 56.5 ------------------------- Weighted average number of shares in issue during the period (excluding treasury shares) 765,553,168 756,305,659Effect of: Conversion of options 6,729,095 4,742,920 -------------------------Diluted number of shares 772,282,263 761,048,579 ------------------------- Basic earnings per share 4.96c 6.89c ------------------------- Basic earnings per share before exceptional items 8.10c 7.47c ------------------------- Diluted earnings per share 4.92c 6.85c ------------------------- Diluted earnings per share before exceptional items 8.03c 7.43c ------------------------- 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 2007 or2006. Basic and diluted earnings per share before exceptional items are also presentedin order to give a better understanding of the Group's financial performance. NOTES TO THE INTERIM STATEMENT (unaudited) (Continued) 7. Reconciliation of Operating Profit to Net Cash Generated fromOperations 30 June 30 June 2007 2006 •m •m -- -- Operating profit before exceptional items 154.6 147.9Depreciation/amortisation 17.6 18.5Non-cash share based payment 1.3 1.8Cash exceptional items (4.0) (2.0)Unrealised foreign exchange movements (7.0) (7.1) ------------------- Cash generated from operations before changes in working capital and provisions 162.5 159.1 (Increase)/decrease in inventories (1.8) 3.1Increase in short term and medium term receivables (6.8) (3.4)(Decrease)/increase in short term and long term (9.8) 0.1payables Retirement benefit obligations (2.6) (2.5)Decrease in provisions (excluding restructuring payments) (0.3) (1.7) ------------------- Net cash generated from operations (before restructuring payments) 141.2 154.7 ------------------- 8. Analysis of Changes in Equity 30 June 30 June 2007 2006 •m •m -- -- At 1 January 718.2 796.4Effect of change in accounting policy - (45.0) -------------------At 1 January as restated 718.2 751.4Issue of share capital 34.9 12.7Share based payment 1.3 1.8Dividends (including minority interests) (108.0) (82.1)Issue of minority interests 97.2 5.1Buyback of shares held by minority - (37.5)Purchase of treasury shares (51.6) -Acquisitions (1.2) - Total recognised income and expense for the period 151.6 (20.0) -------------------At 30 June 842.4 631.4 =================== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Independent News & Media