Half year results to June 2003
Agenda Introductions / Overview 2003 Interim Results Operating Review Outlook 2
Key Financial Highlights Turnover Up 28% Like for like advertising revenues Includes RIM for the comparative period Up 3% Operating Profit pre- exceptionals Up 35% - like for like Up 7% Profit before taxation Up 51% Headline earnings per share Up 18% Operating margin pre-exceptionals Up to 33.8% JP businesses excluding RIM Up to 34.5% Former RIM companies Up to 32.6% Dividend per share Up 11% Free cash flow Up 49% 3
Operational Highlights Continued modest advertising revenue growth Yield increases in all advertising categories Ongoing tight cost control / continued efficiencies Record operating margins with all divisions ahead Weekly circulation growth in seventh successive year RIM integration ahead of expectations Improved Print Division performance and capability Major investment in new Sheffield print centre for 2006 4
Financial Review
Profit & Loss Account - EBITDA 26 weeks to 30 th June 2003 Turnover 2003 2002 m m 248.4 193.6 % Change 28 EBITDA Depreciation 92.7 (8.4) 70.1 (7.7) 32 Operating profit before exceptionals 84.3 62.4 35 Operational exceptionals (0.9) (1.1) Exceptional items - (3.8) EBIT Net interest 83.4 57.5 45 (16.7) (13.2) Profit before taxation Taxation Profit after taxation 66.7 (19.8) 46.9 44.3 (13.0) 31.3 51 50 Earnings per share Headline 16.82p 14.26p 18 Basic 16.51p 12.49p 32 6
Publishing and Printing 26 weeks to 30 th June 2003 enlarged group - Proforma Advertising Volume Advertising Yield Advertising Sales Newspaper Sales Contract Printing Other Sales Total Revenue Total Production Costs Editorial Advertising & Marketing Distribution Administration Depreciation Total Costs Operating Profit Operating Profit/Revenue (cms) ( /ccm) 2003 m 2002 m Variance % 75.7 74.5 2 2.48 2.44 2 187.6 182.2 3 33.9 33.4 1 10.0 10.3 (3) 17.0 15.6 9 248.5 241.5 3 53.7 54.6 2 25.0 23.7 (5) 26.9 27.2 1 18.9 18.9 0 31.2 34.6 10 8.7 9.0 3 164.4 168.0 2 84.1 73.5 14 33.8% 30.4% 7
Publishing and Printing 26 weeks to 30 th June 2003 excluding RIM 2003 m 2002 m Variance % Advertising Volume (cms) 57.6 56.7 2 Advertising Yield ( /ccm) 2.13 2.11 1 Advertising Sales 122.6 119.6 3 Newspaper Sales 18.8 18.4 2 Contract Printing 6.6 6.8 (3) Other Sales 12.4 10.4 19 Total Revenue 160.4 155.2 3 Total Production Costs 36.3 36.2 0 Editorial 15.7 15.1 (4) Advertising & Marketing 16.1 16.3 1 Distribution 11.5 11.0 (5) Administration 19.1 18.8 (2) Depreciation 6.3 6.0 (5) Total Costs 105.0 103.4 (2) Operating Profit 55.4 51.8 7 Operating Profit/Revenue 34.5% 33.4% 8
RIM Acquisition Trading results 26 weeks to 30/06/03 26 weeks to 31/12/02 11 weeks to 30/06/02 Revenue Advertising Sales m 65.1 m 59.9 m 26.8 Newspaper Sales 15.1 15.0 6.7 Contract Printing 3.4 3.5 1.6 Other sales 4.5 5.2 2.5 Total Revenue 88.1 83.6 38.4 Total costs 59.4 59.8 28.1 Trading Profit 28.7 23.8 10.3 Operating Margin 32.6% 28.5% 26.8% 9
Advertising Revenue Analysis - Like for like 26 weeks to 30 th June 2003 enlarged group Revenue Increase % Proportion of business 2003 2002 % % Employment 2.0 29.0 29.3 Property 15.8 14.3 12.7 Motors 1.8 12.6 12.7 Other Classified 4.6 15.3 15.1 Display (1.7) 28.8 30.2 TOTAL 3.0 100.0 100.0 10
Advertising Revenue Analysis - Like for like 26 weeks to 30 th June 2003 Revenue Increase % RIM Proportion of business % Existing Group Revenue Increase % Proportion of business % Employment 6.3 35.1 (0.9) 25.8 Property 14.2 11.1 16.4 16.0 Motors 1.0 10.3 2.2 13.8 Other Classified 6.8 14.9 3.5 15.4 Display (2.3) 28.6 (1.4) 29.0 TOTAL 4.0 100.0 2.5 100.0 11
Advertising increase by division Like for like 26 weeks to 30 th June 2003 Volume Yield Revenue % % % Scotland / Isle of Man (3.6) 3.7 0.0 Northeast 4.7 (2.4) 2.1 North of England 0.5 6.8 7.3 North Midlands (4.4) 10.1 5.3 East Midlands 4.9 (2.6) 2.2 South Midlands 3.1 (3.6) (0.6) South of England 2.1 1.6 3.7 Sub Total 1.7 0.8 2.5 Former RIM companies 1.5 2.5 4.0 Total 1.6 1.4 3.0 12
Cash Flow 2003 m Operating Profit 83.2 61.0 Exceptionals inc ESOT write off ( 0.4) (3.4) Depreciation - net 8.3 7.8 Movement in working capital (9.3) 0.9 Net cash flow from operating activities 81.8 66.3 Returns on investment and servicing of finance (15.2) (17.8) Taxation (7.7) (8.1) Capital expenditure and financial investment (9.4) (7.2) FREE CASH FLOW 49.5 33.2 Acquisitions and disposals 0.6 ( 573.3) Dividends (10.2) 2002 m (6.6) Net cash flow before financing 39.9 (546.7) % Inc 23.4% 49.1% 13
Capital Expenditure / Depreciation Year to 31 December m 26 weeks to June 1999 2000 2001 2002 2003 Forecast Year 2003 Capital Expenditure (Cash) 9.0 19.9 24.3 13.6 9.2 21.0 Depreciation 9.7 11.5 11.6 16.7 8.4 18.5 14
Net Debt/Interest Cover As at 30.06.03 31.12.02 30.06.02 31.12.01 31.12.00 Net assets ( m) 603.1 561.5 535.7 288.0 249.0 Net Debt ( m) 463.1 502.8 557.0 236.9 259.3 Interest Cover (times) 5.2 4.3 5.3 5.6 4.5 Net Debt / EBITDA 2.7 3.1 3.6 2.3 2.7 15
Finance other issues Private placement completed 7 th January 2003-133 million 10 year notes Pensions - 12.8 million one-off payment - approved by Board - both funds MFR over 90% 16
Operating Review
Operating Review Organic revenue growth Focus on circulations Continuing cost control/operating efficiencies Ongoing capex programme in presses / systems Progressing electronic publishing strategy Investment in training/management development 18
Organic Revenue Growth Targeting New Markets Nationally & locally, Industry Initiatives - Health -Travel -Tourism - Lifestyle Magazines - Niche publications 19
Organic Revenue Growth Sharing best practice - ADS4U (Group Intranet) Ideas exchange - Share visuals and ideas - Connects to all centres - Demonstrates best practice - Provides group commercial Information 20
Other Revenue Proforma 26 weeks to 30 June 2003 m 2003 2002 % change Leaflets 5.46 5.23 5% Exhibitions 0.83 0.80 3% Outbound/Days Out UK 0.70 0.62 13% Off road magazines * 0.65 0.54 21% *included in advertising revenue 21
Focus on Circulations 6 months to 20 June 2003 - % increases/(decreases) Weeklies Daily - total Daily ex bulk Existing 1.0 (2.0) (1.5) RIM 1.7 (4.3) (3.9) 22
Circulation Action Plans Added Value Supplements - new launches, a reason to buy Improved Canvassing - better use of databases Continued focus on direct delivery and supply arrangements - closer to our readers 23
Containing costs / Improving Efficiency IOM Falkirk Sunderland Scarborough Leeds Preston Doncaster Sheffield Chesterfield Peterborough Northampton Portsmouth Regionalised administration 7 / 8 Divisions going through change Common systems across regions - Advertising - Finance - Newspaper sales 24
Containing costs / Improving Efficiency Printing Division developments - Additional external contracts - More colour in Sunderland and Leeds - New management team bedding in - Sheffield Printing project 25
Electronic Media Jobs & Motors search engine upgrades Real progress on content Property/Motors Propertynet - structured data from estate agents Trader desk - structured data from motor dealers Page Impressions - well ahead Local & regional sites - Yorkshiretoday.co.uk 26
Electronic Media Jan June 2003 (like for like) Page Impressions Increase 66.6m 43% Revenue 2.4m 88% Jobs Uploads 147k 11% Property Uploads 1m 101% Motor Uploads 2.2m 59% 27
Investment in People Launch of commercial development programme Succession management planning Staff turnover focus 28
Outlook
Future Growth Organic development of existing business Ongoing capital investment to drive growth opportunities Further acquisitive growth within sector Industry consolidation, despite regulation Local market leadership in print and on-line 30
Outlook Positive start to second half Continued modest Advertising Revenue Growth Improving yields from increased colour availability Costs well controlled throughout business Continued improvements in operating efficiency Continuing benefits from RIM integration Stable newsprint prices, no evidence of upward pressure Continued strong cash flows reducing debt levels On course to report further progress in the full year 31
Half year results to June 2003