12th Sep 2005 06:00
Ulster Television plc("UTV" or "the Company" or "the Group")Interim ResultsFor the six months ended 30 June 2005RECORD SALES AND OPERATING PROFIT AT UTV IN FIRST HALF 2005Ulster Television plc, the media group which owns radio, television andmultimedia assets in Britain and Ireland, announces record results for the sixmonths to 30 June 2005.The Group's assets in Ireland include UTV, the channel 3 licensee; six localradio stations, and UTV internet, which provides telephone and broadbandservices.On 6 June 2005, it acquired The Wireless Group, owner of Talksport, Britain'snational radio sports station and 16 independent local radio stations (ILRs).These results include The Wireless Group for the period from 6 June to 30 June.Financial highlights: * Group turnover up 17% to ‚£35.8m (2004: ‚£30.5m) * Operating profit before exceptional items up 11% to ‚£9.6m (2004: ‚£8.6m) * Group pre-tax profit before exceptionals up 11% to ‚£9.0m (2004: ‚£8.1m) * Television operating profit maintained at ‚£7.3m (2004: ‚£7.3m) * Radio operating profit up 150% to ‚£1.9m (2004: ‚£0.8m) * New Media operating profit of ‚£0.4m (2004: ‚£0.5m) * Diluted adjusted earnings per share up 12% to 12.05p (2004: 10.77p) * The Board has declared an interim dividend of 4.75p which represents a 5.6% increase over last year Operational highlights: * Acquisition of The Wireless Group on 6 June 2005 for ‚£97.0m * Acquisition of LMFM on 21 February 2005 for ‚£7.5m * Television advertising revenue down 3% against a strong comparative period which included Euro 2004 * Flat fee element of television licence payments reduced to ‚£0.12m from ‚£ 0.61m in 2004 * Radio advertising in Ireland up 36% to ‚£6.5m (2004: ‚£4.8m) * New Media revenue grew by 56% to ‚£3.9m (2004: ‚£2.5m) John B McGuckian, Chairman, UTV, said:"I am pleased to announce another strong set of financial results for UTV. UTVis now a significant player in the UK radio market through the acquisition ofThe Wireless Group. Good progress has been made in integrating Talksport andthe 16 local radio stations which we are re-branding as UTV Radio. Thisdivision will also include Juice FM in Liverpool which UTV now owns outright."The outlook is promising in radio and in television tight cost control shouldhelp us to overcome a soft advertising market. New Media has had a strong firsthalf with turnover up by 56% representing significant growth in its customerbase in internet and telephony services."John McCann, Group Chief Executive, UTV, said:"Radio has performed well with operating profit up by 150% and stronglistenership growth in our Republic of Ireland stations. Radio advertisingrevenue in Ireland continues to experience good growth and is expected to beup, on a like-for-like basis, by 13% in the third quarter. Q102, almost doubledits market share in the competitive Dublin market and is on target to breakeven this year. U105, our new station for Belfast and the surrounding area willlaunch ahead of schedule in November 2005."Cost synergies of ‚£1.5m will be fully delivered on UTV Radio in Great Britainin 2006. Talksport is performing very well and should achieve revenue growth ofabout 7% in the third quarter. Overall revenue in that quarter at UTV Radio GBshould be up by approximately 3%. We expect to see further significantimprovement in revenue performance in our local radio sales with theintegration of our national advertising for those stations into a new jointventure sales house (FRS) with The Local Radio Company. FRS will now represent113 stations throughout the UK making it a compelling proposition for nationaladvertisers. Our new radio station in Edinburgh `allTALK 107' will go on air inFebruary 2006."Operating profit for television remained flat largely as a result of a weakeradvertising market compared to 2004. This was due to a significant reduction inGovernment expenditure during the general election campaign and the absence oftwo revenue drives Euro 2004 and Easter, which had been in the comparativequarter. We expect advertising revenue in the third quarter to be down by 2%.With regard to the remainder of the year, television advertising is expected tobe down on last year, but we will continue to closely control costs and thereduction in licence fee will help to offset any revenue reduction."Broadband and telephony continue to drive strong revenue growth in new mediawhich is expected to be up 60% in the third quarter."Key dates:¢â€" 23 September 2005: record date for payment of dividends¢â€" 17 October 2005: payment of dividendsFor further information contact:Powerscourt +44 20 7236 5615 Rory Godson +44 7909 926 020 Anthony Silverman +44 7818 036 579 Ulster Television plc John McCann, Group Chief Executive +44 28 9026 2202 Jim Downey, Group Finance Director +44 28 9026 2176 Orla McKibbin, Head of Press and PR +44 28 9026 2188 Chairman's Statement1 IntroductionLaying the foundations for future growth remains at the heart of our strategyand, in the first six months of 2005, your company consolidated further itsleading position in independent local radio in Ireland through the acquisitionof LMFM, achieved a reduction in its television licence payments, expanded itscustomer base in internet and telephony services and established itself as asignificant player in the UK radio market through the acquisition of theWireless Group and the winning of the new radio licence for Belfast and thesurrounding area. The strong growth in Irish radio advertising revenue in thefirst three months continued into the second quarter and helped to offset thedifficult trading conditions in the television advertising marketplace in thelatter quarter.2 Results and DividendOperating profit before exceptional items was up by 11% to ‚£9.6m (2004 : ‚£8.6m)with radio operating profit more than doubling to ‚£1.9m (2004 : ‚£0.8m).Television operating profit was maintained at ‚£7.3m (2004 : ‚£7.3m) while newmedia operating profit was lower at ‚£0.4m (2004 : ‚£0.5m). With a net interestcharge of ‚£0.5m (2004 : ‚£0.5m), group profit before exceptional items andtaxation was up by 11% to ‚£9.0m (2004 : ‚£8.1m). After exceptional items of ‚£0.9m (2004: ‚£Nil) and taxation of ‚£2.1m (2004 : ‚£2.2m), profits attributable toshareholders were ‚£6.0m (2004 : ‚£5.9m). Fully diluted earnings per share beforeexceptional items were 12% up at 12.05p (2004: 10.77p).Your Board has declared an interim dividend of 4.75p which represents a 5.6%increase over last year. The dividend will be paid on 17 October 2005 to allshareholders on the Register at the close of business on 23 September 2005.3 TelevisionTelevision advertising revenue was down 3% in the first half compared to thesame period in 2004, which was in line with the ITV network.As forecast, we had a 5% improvement in the first 3 months but this was morethan offset by an 11% decrease in the second quarter. The UK advertising marketwas generally weak in that quarter because of a significant reduction inGovernment expenditure during the General Election campaign and the absence oftwo revenue drivers, Euro 2004 and Easter, which had been in the comparativequarter. During the period, we applied for a review of the financial terms ofour television licence and on 29 June 2005 Ofcom offered, and we accepted, newlicence terms effective from 1 January 2005. Those new licence terms encompassan unchanged variable payment of 5% of our qualifying revenue and a reductionin the flat fee element from ‚£0.61m in 2004 to ‚£0.12m in 2005. This reductionin our licence fee, coupled with stringent cost control helped to maintainfirst-half television operating profit at the same level as in last year.4 RadioThis division developed rapidly during the first six months of 2005.Advertising revenue on a like-for-like basis in our Irish radio stationsincreased by 20%, with our Dublin radio station Q102 recording a 48% increasein revenue. The purchase of LMFM on 21 February 2005 for ‚£7.5m (includingcosts) further enhanced our marketing proposition for advertisers, adding thekey urban areas of Dundalk and Drogheda. Overall, radio advertising revenue inIreland was up by 36%, boosting radio operating profits there to ‚£1.9m (2004 :‚£ 0.9m). The Wireless Group which we acquired on 6 June 2005 for ‚£97.0m(including costs) contributed ‚£0.1m of operating profit. In the 6 months to 30June 2005, the Wireless Group turnover was down by 1% to ‚£19.7m. Losses inAR-UK, our radio joint venture, were ‚£0.1m (2004: ‚£0.1m).5 New MediaAs expected, our growth strategy for this division brought significant revenueimprovement with turnover up by 56% to ‚£3.9m (2004 : ‚£2.5m). Approximately twothirds of total revenue derived from the Republic of Ireland. Broadband andtelephony continued to be the key drivers of revenue growth but with tightermargins and acquisition costs on these products, operating profits were down by‚£0.1m to ‚£0.4m (2004: ‚£0.5m).6 ProspectsOur television advertising revenue for the year to date has been characterisedby variability. Good growth in the first quarter was followed by a sharpreduction in the second quarter. July and August saw a return to growth butSeptember is likely to experience a decrease which would leave the thirdquarter down by 2% over the same period last year. This underperformance maywell continue into the fourth quarter.Television advertising revenue for the year, therefore, is expected to be downon last year, but continuing cost control and the reduction in the licence feewill help to mitigate any revenue reduction.Radio advertising revenue in Ireland continues to experience good growth and isexpected to be up, on a like-for-like basis, by 13% in the third quarter. TheJoint National Listenership Research data, JNLR, published on 25 August 2005showed strong performances from our Irish radio stations and confirmed thecontinuing recovery of our Dublin station, Q102, which almost doubled itsmarket share and is on target to break even in the current year. Excellentprogress has been made in our preparations for our new radio stations U105 inthe greater Belfast area and Talk 107 in Edinburgh. The latter will go on airon 14 February 2006 and we have brought forward the launch date of U105 to 14November 2005.Good progress has also been made in integrating the Wireless Group. We hadidentified cost synergies of ‚£1.5m p.a. and these will be fully delivered in2006. Talksport continues to achieve good revenue growth and in the quarter to30 September 2005 should be up by approximately 7%. Revenue at the local radiostations is expected to be slightly down in that quarter but we already aretaking steps to improve future performance through the creation of a jointventure sales house with The Local Radio Company. The integration of nationaladvertising for our local radio stations with that of The Local Radio Company'sstations should significantly improve revenue performance in the months ahead.Overall, revenue at the Wireless Group is expected to be up by about 3% in thethird quarter compared to the same period last year. On 8 September 2005, wewholly acquired Juice FM in Liverpool through payment of ‚£2.1m for the 67%balance of shares.Broadband and telephony continue to drive strong revenue growth in new mediawhich is expected to be up by 60% in the third quarter. Although furtheracquisition costs will be incurred, stronger profit growth should be achievablein the second half.Group Income Statementfor the six months ended 30 June 2005 Notes Unaudited Revised 30 June 31 December 1 2005 2004 2004 ‚£000 ‚£000 ‚£000 Revenue 2 35,768 30,481 63,632 ----------- ----------- -----------Operating profit on ordinary 2 9,551 8,596 18,427activities beforetax and finance costs ----------- ----------- -----------Exceptional costs 3 (939) - - ----------- ----------- ----------- Profit from continuing operations 8,612 8,596 18,427beforetax and finance costs Finance income 69 67 147 Finance costs (607) (529) (1,047) Income from associates 10 - - ----------- ----------- -----------Profit before tax 8,084 8,134 17,527 Taxation (2,125) (2,250) (4,937) ----------- ----------- -----------Profit for period 5,959 5,884 12,590 ----------- ----------- ----------- Attributable to: Equity holders of the parent 5,959 5,884 12,590 Minority interests - - - ----------- ----------- ----------- 5,959 5,884 12,590 ----------- ----------- -----------Earnings per share Diluted 5 10.85p 10.77p 23.01p Basic 5 10.97p 10.98p 23.36p Adjusted 5 12.18p 10.98p 23.36p Diluted adjusted 5 12.05p 10.77p 23.01p ----------- ----------- ----------- ‚£000 ‚£000 ‚£000 Dividends Declared and paid during the period 4 3,803 3,156 5,596 ----------- ----------- ----------- EBITDA (before exceptional costs) 10,297 9,336 19,911 ----------- ----------- -----------Group Statement of Recognised Income and Expensefor the six months ended 30 June 2005 Notes Unaudited Revised 30 June 31 December 1 2005 2004 2004 ‚£000 ‚£000 ‚£000 Exchange difference on (3,041) (2,583) 16subsidiaries Exchange difference on loans 1,662 1,605 223hedging net investment in subsidiaries Actuarial gains/(losses) on (1,210) 121 909defined benefit pension schemes Tax on items taken directly to 363 (36) (272)equity ----------- ----------- ----------- Net income recognised directly to (2,226) (893) 876equity Profit for the period 5,959 5,884 12,590 ----------- ----------- ----------- Total recognised income and 3,733 4,991 13,446expense ----------- ----------- ----------- Attributable to: Equity holders of the parent 3,733 4,991 13,446 Minority interests - - - ----------- ----------- ----------- 3,733 4,991 13,446 ----------- ----------- -----------Group Balance Sheetat 30 June 2005 Notes Unaudited Revised 30 June 31 December 1 2005 2004 2004 ‚£000 ‚£000 ‚£000 ASSETS Non-current assets Property, plant and equipment 10,552 8,978 8,908 Intangible assets 195,320 46,545 48,827 Investments in associates accounted for under the equity method 225 - - Deferred tax assets 4,050 2,375 2,139 ----------- ----------- ----------- 210,147 57,898 59,874 ----------- ----------- ----------- Current assets Inventories 5,107 3,637 4,773 Trade and other receivables 21,709 12,138 13,080 Cash and cash equivalents 6 8,820 5,223 7,707 ----------- ----------- ----------- 35,636 20,998 25,560 ----------- ----------- ----------- TOTAL ASSETS 245,783 78,896 85,434 ----------- ----------- ----------- EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Issued capital 2,727 2,711 2,711 Share premium 4,103 3,873 3,873 Merger reserve 993 - - Foreign currency reserve (1,140) (978) 239 Profit and loss account 31,118 24,991 29,809 ----------- ----------- ----------- 37,801 30,597 36,632 Minority Interest (7) (7) (7) ----------- ----------- ----------- Total equity 7 37,794 30,590 36,625 ----------- ----------- ----------- Non-current liabilities Interest bearing loans and 6 121,003 19,382 17,403borrowings Pension liability 8,376 7,892 7,166 Provisions - 20 13 Deferred tax liabilities 33,647 227 177 ----------- ----------- ----------- 163,026 27,521 24,759 ----------- ----------- ----------- Current liabilities Trade and other payables 35,394 9,688 12,490 Current portion of interest bearing 6 7,373 8,643 9,074loans and borrowings Tax payable 2,169 2,430 2,459 Provisions 27 24 27 ----------- ----------- ----------- Net current liabilities 44,963 20,785 24,050 ----------- ----------- ----------- TOTAL LIABILITIES 207,989 48,306 48,809 ----------- ----------- ----------- TOTAL EQUITY AND LIABILITIES 245,783 78,896 85,434 ----------- ----------- -----------Group Cash Flow Statementfor the six months ended 30 June 2005 Unaudited Revised 30 June 31 December 2005 2004 2004 Notes ‚£000 ‚£000 ‚£000 Net cash inflow from operating activities Receipts from customers 36,982 30,309 62,595 Payments to suppliers and employees (25,720) (20,383) (41,388) Borrowing costs (588) (501) (1,072) Tax paid (2,437) (2,097) (4,703) ----------- ----------- ----------- Net cash inflow from operating 8,237 7,328 15,432activities ----------- ----------- ----------- Cash flows from investing activities Proceeds from sale of property, 23 79 60plant and equipment Interest received 69 6 145 Purchase of property, plant and (533) (811) (1,301)equipment Acquisition of subsidiaries, net of (98,994) - -cash acquired Income from associates 10 - - ----------- ----------- ----------- Net cash flows from investing (99,425) (726) (1,096)activities ----------- ----------- ----------- Cash flows from financing activities Proceeds from exercise of share 236 - -options Repayment of borrowings (35,546) (3,096) (6,018) Proceeds from borrowings 131,581 - - Dividends paid to equity holders of (3,803) (3,156) (5,596)the parent ----------- ----------- ----------- Net cash flows used in financing 92,468 (6,252) (11,614)activities ----------- ----------- ----------- Net increase in cash and cash 1,280 350 2,722equivalents Net foreign exchange differences (167) (109) 3 Cash and cash equivalents at 1 7,707 4,982 4,982January ----------- ----------- ----------- Cash and cash equivalents 6 8,820 5,223 7,707 ----------- ----------- -----------Notes to the Interim Reportat 30 June 20051. Basis of preparationFor all periods up to and including the year ended 31 December 2004, theCompany prepared its financial statements in accordance with UK generallyaccepted accounting practice (UK GAAP). From 1 January 2005 UTV is required toprepare consolidated financial statements in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the European Commission('EC'). Consequently, financial information for the interim period to 30 June2005 must be prepared on the basis of IFRS.The general principle that should be applied on first-time adoption of IFRS isthat standards in force at the first reporting date (that is, for UTV, 31December 2005) should be applied retrospectively. However, IFRS 1 'First-timeAdoption of International Financial Reporting Standards' contains a number ofexemptions which companies are permitted to apply. UTV has elected: * not to restate its financial information for acquisitions occurring before 1 January 2004. * to deem cumulative translation differences to be zero at 1 January 2004. * not to apply IFRS 2 to equity instruments which were granted on or before 7 November 2002. * to recognise all actuarial gains and losses on pensions and other post-retirement benefits directly in shareholders' equity at 1 January 2004. * to apply IAS32 and IAS39 prospectively from 1 January 2005 without restating the comparative period. As a result of the above exemptions certain changes apply from 1 January 2004(UTV's Date of Transition) followed by further changes (due to IAS32 and IAS39)to apply from 1 January 2005. The six month information for 2005, and therestatement of financial information for the year ended 31 December 2004 andthe six months to 30 June 2004, have been prepared on the basis of theaccounting policies expected to be adopted for the year ended 31 December 2005.These are based on all International Financial Reporting Standards (IFRSs)(with the exception of IFRS4, IAS32 and IAS39 (as amended) for the 2004information) and Standing Interpretations Committee (SIC) and InternationalFinancial Reporting Interpretations Committee (IFRIC) interpretations issued bythe International Accounting Standards Board (IASB) expected to be in effectfor the year ending 31 December 2005. In addition, UTV has decided to earlyadopt the amendment to IAS 19 'Amendment to International Accounting StandardIAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans andDisclosures' whereby all actuarial differences are recognised in the GroupStatement of Recognised Income and Expenditure. It is possible that there willbe changes to these standards and interpretations before the end of 2005, whichmight require further adjustments to this information before it is included inthe 2005 Annual Report and Accounts.The principal differences for the Group between reporting on the basis of UKGAAP and IFRS are: * ceasing to amortize goodwill but performing an annual impairment test. * changes to recognise the pension scheme liability on the group balance sheet. * no longer recognising dividends proposed but not declared as a liability at the balance sheet date. * retranslating the results of foreign subsidiaries at average rate rather than closing rate. * using proportionate consolidation for joint ventures rather than gross equity accounting. UTV has produced its accounting policies under IFRS. This information can befound on the Company's corporate website, www.utvplc.com.A reconciliation of the group operating profit and overall profit for the 6months to 30 June 2004 and for the year to 31 December 2004 and shareholdersfunds at 31 December 2004 can be found in note 8. A reconciliation ofshareholders funds at 31 December 2003, which creates the opening position forreporting under IFRS, is shown within the Group Statement of Changes in Equity.The Company has prepared draft fair value tables for the net assets attainedwith its acquisitions during the period. These will be reviewed and, ifnecessary, revised prior to the year end.The interim results are unaudited and do constitute full accounts within themeaning of Article 262 of the Companies (Northern Ireland) Order 1986. Theauditors have issued an unqualified report on the Company's full accounts forthe year ended 31 December 2004, which are prepared under UK GAAP and have beenfiled with the registrar of Companies. 2. Segmental analysis The Group's primary reporting format is business segments. The operatingbusinesses are organised and managed separately according to the nature of theservices provided, with each segment representing a strategic business unitthat offers different services and serves different markets.Turnover represents the amounts derived from the provision of goods andservices which fall within the Group's ordinary activities, stated net of valueadded tax. Transfer prices between business segments are set on an arm's lengthbasis in a manner similar to transactions to third parties.(a) Business segmentsThe Group operates in three principal areas of activity - television, radio andnew media - all of which are continuing operations. The following tablespresent revenue and profit information and certain asset and liabilityinformation regarding the Group's business segments. The impact on revenue andprofit of the acquisitions in 2005 has been separately disclosed. There were noacquisitions in 2004.RevenueSix months ended 30 June 2005 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Continuing operations 22,307 6,201 3,890 32,398 Acquisitions - 3,370 - 3,370 ----------- ----------- ----------- ----------- Sales to third parties 22,307 9,571 3,890 35,768 Intersegmental sales 182 10 30 222 ----------- ----------- ----------- ----------- Total sales 22,489 9,581 3,920 35,990 ----------- ----------- ----------- ----------- Six months ended 30 June 2004 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Sales to third parties 22,975 5,018 2,488 30,481 Intersegmental sales 147 9 32 188 ----------- ----------- ----------- ----------- Total sales 23,122 5,027 2,520 30,669 ----------- ----------- ----------- ----------- Year ended 31 December 2004 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Sales to third parties 47,464 10,882 5,286 63,632 Intersegmental sales 421 61 62 544 ----------- ----------- ----------- ----------- Total sales 47,885 10,943 5,348 64,176 ----------- ----------- ----------- -----------Operating profit Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Six months ended 30 June 2005 Continuing operations 7,295 1,604 372 9,271 Acquisitions - 280 - 280 ----------- ----------- ----------- ----------- Total operating profit 7,295 1,884 372 9,551 ----------- ----------- ----------- ----------- Six months ended 30 June 2004 7,312 752 532 8,596 ----------- ----------- ----------- ----------- Year ended 31 December 2004 15,357 2,247 823 18,427 ----------- ----------- ----------- ----------- Assets and liabilities 30 June 2005 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Segment assets 20,778 209,779 3,904 234,461 Unallocated assets 11,322 ----------- Total assets 245,783 ----------- Segment liabilities (18,246) (49,237) (1,585) (69,068) Unallocated liabilities (138,921) ----------- Total liabilities (207,989) -----------Assets and liabilities30 June 2004 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Segment assets 18,791 48,982 3,525 71,298 Unallocated assets 7,598 ----------- Total assets 78,896 ----------- Segment liabilities (7,568) (1,571) (820) (9,959) Unallocated liabilities (38,347) ----------- Total liabilities (48,306) ----------- 31 December 2004 Television Radio New Media Total ‚£000 ‚£000 ‚£000 ‚£000 Segment assets 19,666 52,244 3,678 75,588 Unallocated assets 9,846 ----------- Total assets 85,434 ----------- Segment liabilities (9,788) (1,956) (964) (12,708) Unallocated liabilities (36,101) ----------- Total liabilities (48,809) -----------3. Exceptional Costs Unaudited Revised 30 June 31 December 2005 2004 2004 ‚£000 ‚£000 ‚£000 Fundamental restructuring (i) 266 - - costs - Television - The Wireless Group (ii) 564 - - Bank facility (iii) 109 - - ----------- ----------- ----------- 939 - - ----------- ----------- ----------- i. During the period, all Channel 3 programme scheduling was centralised in London. This fundamental restructuring resulted in the closure of the Company's programme scheduling department giving rise to redundancy costs amounting to ‚£266,000. ii. Following the acquisition of The Wireless Group plc on 6 June 2005, the staff structure with the Group was reviewed and the fundamental rationalisation resulted in redundancy costs amounting to ‚£564,000. iii. During the half year the Group performed a fundamental restructuring of its bank facility to secure sufficient borrowings in advance of acquisitions. As a result of this ‚£109,000 of costs were incurred. 4. DividendsEquity dividends on ordinary shares 2004 Pence per share ‚£000 Declared and paid during the year Final for 2003 paid 8 June 2004 5.90 3,156 Interim for 2004 paid 18 October 2004 4.50 2,440 ------ ------ 10.40 5,596 ------ ------ 2005 Pence per share ‚£000 Declared and paid during the year Final for 2004 paid 7 June 2005 7.00 3,803 ------ ------ 5. Earnings per share Basic earnings per share is calculated based on the profit for the financialyear after exceptional items and on the weighted average number of shares inissue during the period. Adjusted earnings per share is calculated based on theprofit for the financial year before exceptional items and on the weightedaverage number of shares in issue during the period.Diluted earnings per share is calculated based on profit for the financialperiod after adjusting for net interest payable on Convertible Loan Notes. Theweighted average number of shares is adjusted to reflect the dilutive potentialof the Convertible Loan Notes and Share Option Schemes. The impact of these aresummarised below.Net Profit Unaudited Revised 30 June 31 December 2005 2004 2004 ‚£000 ‚£000 ‚£000 Net profit attributable to equity 5,959 5,884 12,590holders Interest on convertible loan notes - 24 24 ----------- ----------- ----------- Net profit attributable to ordinary 5,959 5,908 12,614shareholders for diluted earnings per share ----------- ----------- ----------- Unaudited Revised 30 June 31 December 2005 2004 2004 ‚£000 ‚£000 ‚£000 Net profit attributable to equity 5,959 5,884 12,590holders Exceptional costs 939 - - Taxation relating to exceptional items (282) - - ----------- ----------- ----------- Net profit attributable to ordinary 6,616 5,884 12,590shareholders for adjusted earnings per share Interest on convertible loan notes - 24 24 ----------- ----------- ----------- Net profit attributable to ordinary 6,616 5,908 12,614shareholders for diluted adjusted earnings per share ----------- ----------- ----------- Weighted average number of shares 30 June 31 December 2005 2004 2004 Thousands Thousands Thousands Weighted average number of shares for 54,300 53,589 53,904basic earnings per share Effect of dilution: Convertible loan notes - 629 315 Share options 621 613 608 ----------- ----------- ----------- Adjusted weighted average number of 54,921 54,831 54,827ordinary shares for diluted earnings per share ----------- ----------- -----------6. Net debt Unaudited Revised 30 June 31 December 2005 2004 2004 ‚£000 ‚£000 ‚£000 Cash and cash equivalents 8,820 5,223 7,707 Interest bearing loans and borrowings - Current (7,373) (8,643) (9,074) - Non-current (121,003) (19,382) (17,403) ----------- ----------- ----------- (119,556) (22,802) (18,770) ----------- ----------- -----------To facilitate the acquisition of The Wireless Group, in May 2005 the Grouprefinanced its existing loan facilities with new Senior Facilities totalling ‚£140m. The facilities comprise a ‚£110m term loan and a ‚£30m revolving creditfacility which are syndicated by five banks. Each facility matures in June2010. Interest is payable at LIBOR plus 1.35% reducing to LIBOR plus 0.75%depending on ratio of net debt to EBITDA. At 30 June 2005, ‚£130m of thesefacilities were drawn down.The borrowings at the 30 June 2005 are stated net of ‚£1,872,000 of deferredfinancing costs.7. Group Statement of Changes in Equity Attributable to equity holders Min Total of the parent Int _____________________________ Eq Share Iss'd prem Merger FX P&L cap acc reserve reserve acc ‚£000 ‚£000 ‚£'000 ‚£000 ‚£000 ‚£000 ‚£000 Balance at 31 2,674 2,226 - - 24,883 (7) 29,776December 2003 per UK GAAP Opening Adjustments Reverse final - - - - 3,156 - 3,1562003 dividend charge Pension - Creation of - - - - (8,037) - (8,037)pension reserve - Release of - - - - (61) - (61)pension prepayment - Creation of - - - - 2,411 - 2,411related deferred tax asset Impairment of - - - - (173) - (173)Bocom's goodwill Impairment of - - - - (1) - (1)other investments ------ ----- ------ ----- ------ ----- ------ Balance at 31 2,674 2,226 - - 22,178 (7) 27,071December 2003 per International GAAP Conversion of 37 1,647 - - - - 1,684Loan Notes Profit for - - - - 5,884 - 5,884the period Dividends - - - (3,156) - (3,156) Exchange - - - (2,583) - - (2,583)difference on subsidiaries Exchange - - - 1,605 - - 1,605difference on loans hedging net investment in subsidiaries Actuarial - - - - 121 - 121gains on defined benefit pension schemes Tax on items - - - - (36) - (36)taken directly to equity ----- ------ ------ ------ ----- ----- ------ Balance at 30 2,711 3,873 - (978) 24,991 (7) 30,590June 2004 Profit for - - - - 6,706 - 6,706the period Dividends - - - - (2,440) - (2,440) Exchange - - - 2,599 - 2,599difference on subsidiaries Exchange - - - (1,382) - - (1,382)difference on loans hedging net investment in subsidiaries Actuarial - - - - 788 - 788gains on defined benefit pension schemes Tax on items - - - - (236) - (236)taken directly to equity ----- ----- ------ ------ ------ ------ ------ Balance at 31 2,711 3,873 - 239 29,809 (7) 36,625December 2004 Share capital 10 - 993 - - 1,003issued Share options 6 230 - - - - 236exercised Profit for - - - - 5,959 - 5,959the period Dividends - - - - (3,803) - (3,803) Exchange - - - (3,041) - (3,041)difference on subsidiaries Exchange - - - 1,662 - - 1,662difference on loans hedging net investment in subsidiaries Actuarial - - - - (1,210) - (1,210)losses on defined benefit pension schemes Tax on items - - - - 363 - 363taken directly to equity ------ ------ ------ ------ ------ ------ ------ Balance at 30 2,727 4,103 993 (1,140) 31,118 (7) 37,794June 2005 ------ ------ ----- ------ ----- ------- ------ 8. Impact of implementing International Financial Reporting Standards (a) TURNOVER 30 June 2004 Sales to third parties UK Relating to FX GAAP joint Impact IFRS ventures ‚£000 ‚£000 ‚£000 ‚£000 Area of activity Television 22,860 115 - 22,975 Radio 4,779 237 2 5,018 New Media 2,488 - - 2,488 ----------- ----------- ----------- ----------- Total 30,127 352 2 30,481 ----------- ----------- ----------- ----------- 31 December 2004 Sales to third parties UK Relating to FX GAAP joint Impact IFRS ventures ‚£000 ‚£000 ‚£000 ‚£000 Area of activity Television 47,222 242 - 47,464 Radio 10,853 478 (449) 10,882 New Media 5,428 - (142) 5,286 ----------- ----------- ----------- ----------- Total 63,503 720 (591) 63,632 ----------- ----------- ----------- -----------(b) GROUP OPERATING PROFIT30 June 2004 Reverse IFRS UK depn pension FX GAAP JVs on bldgs charge Impact IFRS ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Area of activity Television 7,190 (5) 102 25 - 7,312 Radio 842 (91) - - 1 752 New Media 532 - - - - 532 -------- -------- --------- --------- -------- -------- Total 8,564 (96) 102 25 1 8,596 -------- -------- --------- --------- -------- -------- 31 December 2004 Reverse IFRS UK depn pension FX GAAP JVs on bldgs charge Impact IFRS ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Area of activity Television 15,193 (3) 204 (37) - 15,357 Radio 2,560 (210) - - (103) 2,247 New Media 857 - - - (34) 823 -------- ------- ---------- --------- -------- -------- Total 18,610 (213) 204 (37) (137) 18,427 -------- -------- --------- --------- -------- --------(c) PROFIT FOR THE PERIOD 30 June 2004 Reverse UK goodwill FX GAAP amort JV's Impact IFRS Note ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Group operating (8b) 8,564 8,596profit before goodwill amortisation Goodwill (1,760) 1,760 - - -amortisation Share of (96) - 96 - -operating loss in JV's Share of JV (69) 69 - - -goodwill amortisation Finance income 67 - - - 67 Finance costs (529) - - - (529) --------- --------- Profit on 6,177 8,134ordinary activities before taxation Taxation (2,250) - - - (2,250) --------- --------- Profit for period 3,927 5,884 --------- -------- 31 December 2004 Reverse UK goodwill FX GAAP amor JV's Impact IFRS Note ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Group operating (8b) 18,610 18,427profit before goodwill amortisation Goodwill (3,491) 3,491 - - -amortisation Share of (213) - 213 - -operating loss in JV's Share of JV (138) 138 - - -goodwill amortisation Finance income 148 - - (1) 147 Finance costs (1,048) - - 1 (1,047) --------- --------- Profit on 13,868 17,527ordinary activities before taxation Taxation (4,950) - - 13 (4,937) --------- --------- Profit for period 8,918 12,590 --------- ---------(d) RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENT ON RESERVESAt 31 December 2004 Equity Share Foreign Profit issued premium currency and loss capital account reserve account Total ‚£000 ‚£000 ‚£'000 ‚£000 ‚£000 Balance per UK GAAP 2,711 3,873 - 27,691 34,275 Opening Adjustments Reverse final 2003 - - - 3,156 3,156dividend charge Pension - Creation of pension - - - (8,037) (8,037)reserve - Release of pension - - - (61) (61)prepayment - Creation of related - - - 2,411 2,411deferred tax asset Impairment of Bocom's - - - (173) (173)goodwill Impairment of other - - - (1) (1)investments Current Year Adjustments Recognise final 2003 - - - (3,156) (3,156)dividend Reverse final 2004 - - - 3,795 3,795dividend charge Reverse of 2004 goodwill - - - 3,491 3,491amortisation Reverse of 2004 JV - - - 138 138goodwill amortisation Write off deferred costs - - - (10) (10)in JV Reversal of depreciation - - - 204 204on buildings Re-translate Radio's - - 89 (89) -results Re-translate Internet's - - 36 (36) -results Exchange difference on - - (109) 109 -subsidiaries Exchange difference on - - 223 (223) -loans hedging net investment in subsidiaries Additional pension charge - - - (37) (37)required Actuarial gains on - - - 909 909defined benefit pension schemes Tax on items taken (272) (272)directly to equity --------- --------- --------- --------- --------- Balance per IFRS 2,711 3,873 239 29,809 36,632 --------- --------- --------- --------- ---------ENDULSTER TELEVISION PLCRelated Shares:
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