RNS Number:8929R
EMAP PLC
11 November 2003
11 November 2003
Emap plc
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003
Financial Highlights
Business Performance - 'normalised'
* Turnover - up 7% to #509 million
* Operating profit - up 8% to #103 million
* Pre-tax profit - up 9% to #94 million
* EPS - up 10% to 26.7 pence
* Dividend per share - up 9% to 7.6 pence
Statutory Results
* Turnover - up 7% to #509 million
* Operating profit - up 13% to #79 million
* Pre-tax profit - up 16% to #71 million
* EPS - up 25% to 18.0 pence
* Dividend per share - up 9% to 7.6 pence
'Normalised' results are presented to provide a better indication of overall
financial performance and to reflect how the business is managed on a day-to-day
basis. The 'normalised' results exclude the amortisation and impairment of
goodwill and intangible fixed assets, any profit or loss on the disposal of
businesses and fixed asset investments, other exceptional items including
financing costs and the tax impact of all these items.
Operating Highlights
Emap Consumer Media - Strong copy sales
- Closer, well ahead of plan
- heat's momentum continues
- FHM US on track
Emap Communications - Display advertising recovers
- Recruitment still soft
- Big shows break records
- Flying start for Distrirama/Stockorama
Emap Performance - Kiss and Magic lead the way
- Digital radio takes off
- Kerrang! radio wins W Midlands
- Music TV remains flat
France - Outperforming a tough market
- Strong ad growth for Tele Star/ Tele Poche
- Strong Euro boosts performance
- Excelsior integration on plan
Current Trading
UK consumer circ. - Good * UK television - Weak
airtime
UK consumer adv. - Reasonable * France newsstand - Mixed
UK B2B display adv. - Good * France - Reasonable
subscriptions
UK B2B rec'ment - Soft * France - Reasonable
adv. advertising
UK B2B exhibitions - Strong * US rate base - Increasing
UK radio airtime - Reasonable * US Advertising - Reasonable
Commenting on the results Tom Moloney, Emap Chief Executive, said:
"Although the trading environment has not noticeably improved, Emap has again
made good progress in the first half of its financial year. The core business is
performing well, and has the potential to perform even better. Our new product
development initiatives and recent acquisitions are well on track and we remain
confident of meeting our targets for the full year."
Enquiries to:
Emap plc 020-7278-1452
Tom Moloney, Chief Executive
Gary Hughes, Finance Director
Miranda Acland, Communications Director
Brunswick 020-7404-5959
Patrick Handley
Ed Williams
Emap plc
INTERIM STATEMENT 2003
Strategic Overview
Emap's strategy over the last two years has been simple and clear: manage the
core business to grow key brands and stretch product lifecycles through focused
investment; exciting, innovative launches; and bolt-on acquisitions to
strengthen market positions and accelerate growth.
Today's results show encouraging signs of this strategy bearing fruit. In what
continues to be a very tough environment for the media sector as a whole, the
Group has grown revenue across its core businesses, invested in revitalising
great brands such as MEED, Magic 105.4 FM, Empire and Drapers Record, and
increased share across all its core markets.
This core revenue growth has been accelerated by new products such as Closer,
Sneak, FHM in the US, Stocklots, B2B conferences, The Hits on TV and digital
radio. Investment of #18 - #19 million in new product development is expected
for the full year, with a major men's weekly magazine launch already announced
and on track.
These results also include Emap's first revenues and profits from two recent
bolt-on acquisitions - Agor, a Paris-based exhibitions business, and the French
consumer magazine publisher, Excelsior Publications. The progress made by both
of these acquisitions to date, has been most encouraging.
Financial Review
Emap today announces results for the half year ended 30 September 2003.
Total turnover for the year increased by 7% to #509 million (2002: #477
million), a good performance in uncertain trading conditions.
Group operating profit, excluding goodwill amortisation, increased by 8% to #103
million (2002: #95 million). Operating margins were level at 20%. Pre-tax profit
, excluding amortisation and disposals, was up 9% at #94 million (2002: #86
million). Net interest in the period amounted to #9 million (2002: #9 million).
Inclusive of goodwill amortisation amounting to #24 million and profit on
disposals of #1 million, the group generated a pre-tax profit up 16% to #71
million (2002: #61 million).
A total of #8 million (2002: #10 million) was invested in launches during the
period, primarily on Closer in the UK, FHM in the US, digital radio and digital
television. Total launch spend across the full year is expected to be in the
region of #18 - #19 million, and all launch expenditure is expensed in the year
it is incurred.
Earnings per share, before amortisation and disposals, were up 10% to 26.7 pence
(2002: 24.2 pence). Total earnings per share, inclusive of amortisation, were up
25% to 18.0 pence (2002: 14.4 pence).
Due to the significant strength of the Euro, the Group has benefited from a
currency translation gain of #16 million in revenue and #3 million in operating
profit in the first half.
The Group continues to be highly cash generative with 60% (2002: 69%) of
operating profit converted into cash during the period. On a rolling 12 month
basis this increases to 97% (2002: 104%) reflecting the seasonality of the
Group's first and second half cash flows.
As at 30 September 2003, the Group had net debt of #268 million (2002: #280
million), after the acquisition of Excelsior Publications in France for #59
million during the period.
The Board has approved an interim dividend of 7.6 pence a share (2002: 7.0
pence), an increase of 9%. This increase is consistent with the Board's stated
dividend policy.
Operating Review
The operating review is based on normalised results as defined above. The
divisional comparatives for 2002 have been restated to include the Group's
digital activities. Underlying growth is based on activities owned and operated
by the Group since April 2002 at constant exchange rates.
Emap Consumer Media
2003 2002 Absolute Growth Underlying Growth
#m #m
Turnover 178 177 1% 7%
Operating Profit 29 28 4% 6%
Margin 16% 16%
Emap Consumer Media comprises Emap's women's, young women's, celebrity, men's,
automotive and special interest consumer titles in the UK, as well as FHM
internationally (except France) and the Group's wholly owned operations in
Australia, Singapore and Malaysia.
Total turnover was up 1%, with revenue from new launch Closer more than covering
the loss of revenue from certain titles sold to Lagardere in October 2002.
Underlying turnover was up 7%, driven by strong growth from heat and FHM US as
well as some good performances across the core UK portfolio. Revenue conversion
was good, with total operating profit up 4% to #29 million (2002: #28 million)
after a near #3 million investment in Closer during the period, keeping margins
steady at 16%. Underlying profit was up 6%.
Emap's UK magazine portfolio as a whole performed very strongly in terms of
circulation in the January-June 2003 ABCs. Total retail sales value (average
circulation x frequency x cover price) increased by 16% year-on-year compared to
total market growth of 6%, proving beyond doubt that this is a market which is
far from mature. Emap was the fastest growing publisher in the UK, increasing
its retail sales value market share year-on-year from 15.5% to 17.0% in the
January-June 2003 ABCs. Once again many titles across the portfolio contributed
to this growth, including heat, Closer, Empire, Max Power, MCN, Match and
Digital Photo. On an underlying basis circulation revenue increased by 4% in the
first half of the fiscal year.
Strong circulation figures and an increase in yields, for heat in particular,
underpinned a year-on-year underlying increase in consumer magazine advertising
revenue of 4% in a market estimated to be up approximately 3% (Advertising
Association September 2003). Telecoms, cinema, retail and high street fashion
have been particularly strong advertising categories with music and automotive
proving less robust.
Internationally FHM is now published in 20 territories, of which 13 are
licences. The largest edition outside the UK is FHM in the US, which has seen
strong advertising growth, up 33% in the period. The US rate base (circulation)
will be increased to 1.2 million from 1 January 2004 to drive advertising growth
further. In common with the men's market as a whole newsstand sales were
slightly down, resulting in circulation revenue down 8%, but sales improved
markedly towards the end of the period. FHM US will break even by the end of
this financial year and investment is expected to be #1 million for the 12 month
period.
Emap Communications
2003 2002 Absolute Growth Underlying Growth
#m #m
Turnover 98 91 8% 4%
Operating Profit 24 24 - (4%)
Margin 24% 26%
Emap Communications comprises the large majority of the Group's
business-to-business publishing, exhibitions and information activities.
Total turnover increased by 8%, enhanced by a strong performance from the
Distrirama and Stockorama shows purchased last year in the Agor acquisition.
Underlying growth was 4%. Investment has been made across a number of key
products including MEED, Broadcast, Screen, Drapers Record, The Autumn Fair and
GLEE, which led to total operating profit being level, with underlying profit
down 4% and margins reduced to a still strong 24%.
Emap's B2B display advertising has shown some recovery after two years of
declines. Underlying revenue was up 5% with an improving trend across the period
- a strong outperformance of the total business and professional display market
which is estimated to be down 6% (Advertising Association September 2003). In
particular Emap's retail titles have seen strong growth, with good performances
from Drapers Record and Retail Week. MEED, an economic journal widely respected
in the Middle East, has benefited from reconstruction across the region.
B2B recruitment advertising was down 1% on an underlying basis. Performance
across the portfolio was mixed, with HSJ's strong yield growth offsetting volume
shortfalls at Nursing Times, Local Government Chronicle and the construction
portfolio.
B2B circulation has again proved a reliable source of revenue for Emap
Communications, with improved newsstand sales for Nursing Times, successfully
relaunched in November 2002, resulting in overall growth of 1%.
Underlying growth of 9% for exhibitions has been boosted by strong performances
from Emap's key events, with The Autumn Fair and GLEE breaking previous records
and growing their revenue strongly. Stocklots in Germany reached a record 9,000
m2 from a standing start two years ago, with further shows now planned in London
and Parma. The non-underlying Distrirama and Stockorama came in ahead of the
acquisition business plan, with attendances up by 30%.
Emap Communications' conference team has also achieved good revenue and profit
growth and is on track to run over 150 conferences by the end of the year.
Working closely with publications in the Group's core B2B markets gives the team
a unique advantage in spotting and capitalising on short term opportunities in
the conference sector, such as the recent "Future of Retailing in London"
conference featuring Ken Livingstone as the keynote speaker.
Emap Performance
2003 2002 Absolute Growth Underlying Growth
#m #m
Turnover 80 74 8% 1%
Operating Profit 19 19 - 9%
Margin 24% 26%
Emap Performance's unique portfolio delivers well-recognised music brands and
relevant content through its extensive distribution network of analogue and
digital radio stations, market-leading music magazines and digital TV music
channels.
Underlying revenue grew by 1%, with good growth in radio being partially offset
by softer revenue across magazines, music events and television. Digital radio,
Sneak (which launched in April 2002) and The Hits music TV channel on Freeview
boosted total revenue growth to 8%. Good conversion of incremental radio revenue
led to underlying operating profit increasing by 9%. After investment in digital
radio, Sneak and The Hits music TV channel total operating profit was level.
Emap's analogue and digital radio distribution network has grown significantly.
As well as having 18 analogue stations in London and the North of England,
Emap's Kerrang! format beat 10 other applicants to win the new West Midlands
analogue licence, giving it a production base for the Kerrang! national digital
radio brand, as well as analogue coverage of two key cities - Birmingham and
Wolverhampton. Emap's eight digital music brands now have national distribution
on Freeview as well as via 66 digital audio broadcasting licences across the
country, comprising the biggest digital radio portfolio in the UK. Investment of
around #2 million will be made in digital radio in the current year, with Emap
breaking even to date on its digital radio activities.
The quarterly Rajar audience figures for the period ending September 2003 showed
a strong performance from Magic 105.4 FM in London, with hours up 28%
year-on-year and market share up from 4.0% to 5.0%. Emap's total share of the
London market, including Kiss 100, was up to 9.0% from 8.7% a year ago. Across
the North the Group's Big City stations increased their hours by 3%
period-on-period, improving advertising availability for these heavily demanded
stations. Total listening hours for the group increased by 5% period-on-period
to 69 million - a figure which does not include a further 8 million hours for
new national digital stations Q, The Hits and Magic. Total hours for Emap's
closest rival, Capital Radio, were 72 million.
Strong listening figures have helped the Group's radio advertising revenue to
increase by 8% in the period, strongly outperforming the total market which is
estimated to be up by 4% (Advertising Association September 2003). This
outperformance was most marked during Q1, helped, in part, by strong telecoms,
entertainment/leisure and government advertising. National advertising was the
key driver behind growth, with London stations Kiss and Magic performing
particularly well. A planned reduction in advertising minutage at Big City
stations adversely impacted Q2, but with a consequent increase in yields
expected to come through in the second half of the year. The overall radio
margin reduced from 32% to 26% in the period following an increased investment
in digital radio, enhanced marketing support for Magic 105.4 FM in particular,
and increased promotional and programming investment across the Big City Network
as well.
The market for music magazines continues to be tough, with total music market
circulation down 20% year-on-year (ABC January-June 2003). Mojo, Q and Smash
Hits held their own with year-on-year increases, but Kerrang!'s run of growth
has slowed. Sneak's second ABC was up 16% with an average circulation of 100,000
, and is on target for break-even next year. Advertising revenue has been
depressed across much of the music portfolio, but reduced year-on-year
investment in Sneak, together with diligent cost management, have resulted in
modest profit growth year-on-year.
As previously highlighted, the market for music television has become more
competitive during the period. This, together with a soft airtime sales market
over the summer, resulted in the Group's TV airtime revenue falling by 13% in
the first half. Total revenue, including carriage fees and interactivity, was
level year-on-year, while profit was impacted by investment in The Hits on
Freeview - expected to be around #2 million for the full year.
Emap France
2003 2002 Absolute Growth Underlying Growth
#m #m
Turnover 153 135 13% -
Operating Profit 31 24 29% 16%
Margin 20% 18%
Emap France publishes consumer magazines in the TV listings, women's, men's,
automotive, special interest and science & discovery markets.
Total turnover increased markedly by 13%, due in part to the impact of the
Excelsior titles acquired in June 2003 and also to the strength of the Euro,
providing a #15 million currency translation gain year-on-year. Underlying
revenue was flat overall in what has been a very tough economic environment in
France, affecting both consumer and advertiser confidence. Diligent cost
management has delivered an improved conversion of revenue to profit, with total
operating profit up 29%, including a #3 million currency translation gain and a
#1 million contribution from the Excelsior titles, and underlying operating
profit up 16%. This is reflected in a margin improvement from 18% to 20%.
Emap's magazine portfolio has not entirely escaped the economic downturn in
France, although it continues to outperform the market. The core portfolio was
down 2% year-on-year in terms of retail sales value, compared with a more
significant 6% decline across the market (OJD 12 months to June 2003). As a
result, Emap increased its retail sales value market share from 11.0% to 11.5%,
rising to 12.8% including the Excelsior titles. FHM continued to make good
progress with an average circulation up 13% to 164,000. Tele Star and Tele Poche
saw only marginal declines of 1% and 2% respectively, outperforming most other
TV listings titles. Auto Plus, Modes & Travaux, Pleine Vie and Top Sante all
declined year-on-year. On this basis, underlying newsstand revenue was down 1%
in the period. Subscription revenue increased by 1% overall, behind the most
recent trend rates, after a deliberate reduction in the subscription base of
Pleine Vie for efficiency reasons.
Underlying advertising revenue was up 2% in the period, with an improving trend
from Q1 to Q2, albeit against weaker comparatives. This was an outperformance of
the market as a whole which was up 1% (Secodip), increasing Emap's share from
8.8% to 11.0% (9.2% excluding the Excelsior titles). Strong advertising sales
for Tele Star and Tele Poche were key drivers behind this outperformance.
The integration of the Excelsior portfolio is progressing well. The potential to
develop the business has more than lived up to expectations, and a number of
important changes have already been made. The management team is making good
progress with the integration of the new titles into the Emap France structure,
with advertising sales transferring from Interdeco (Hachette's sales house) to
Emap over the coming months. The Group remains confident that this acquisition
will add significant value in the near future.
Current Trading (October - December)
In the UK, consumer magazine circulation remains good with continuing strong
performances from heat, Closer and Sneak in particular, as well as across the
core portfolio. Consumer magazine advertising remains reasonable, but forward
bookings continue to run marginally behind last year.
B2B recruitment advertising remains volatile with little sign of any improvement
as yet, while the improving trend in B2B display advertising in the first half
has continued into the third quarter. Advance bookings for the Group's key trade
exhibitions are on target.
Radio advertising continues to be reasonable, with local advertising in
particular strong across October and November. TV airtime revenue remains
depressed with no change to recent trends.
Although the overall environment in France remains tough, Emap's portfolio is
broadly level on the newsstand and subscriptions are stable. Advertising revenue
started the second half well but the outlook remains more mixed for November and
December.
Although the Board expects to see no material change in trading conditions for
the remainder of the second half, it remains confident of achieving its full
year goals.
Visit Emap's website on www.emap.com
Emap plc
Consolidated profit & loss account
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------------------
Year Half year Half year
Total 'Normalised' Total
02/03 03/04 02/03 03/04 02/03
#m Notes #m #m Growth #m #m Growth
---------------------------------------------------------------------------------------------------
967 Turnover 2(a) 509 477 7% 509 477 7%
---------------------------------------------------------------------------------------------------
Operating costs
(776) Operating costs (406) (382) (406) (382)
(48) Amortisation of 9 - - (24) (25)
intangible fixed
assets
(30) Impairment of - - - -
intangible fixed
assets
---------------------------------------------------------------------------------------------------
(854) Net operating costs (406) (382) (6%) (430) (407) (6%)
---------------------------------------------------------------------------------------------------
113 Group operating 2(b) 103 95 8% 79 70 13%
profit
1 Share of joint - - - -
ventures &
associates
---------------------------------------------------------------------------------------------------
114 Total Group operating 103 95 8% 79 70 13%
profit
43 Profit on business - - 1 -
disposals
(17) Net interest payable 3 (9) (9) (9) (9)
& other financing
costs
---------------------------------------------------------------------------------------------------
140 Profit on ordinary 2(c) 94 86 9% 71 61 16%
activities before
tax
(44) Tax on profit on 4 (23) (21) (23) (21)
ordinary activities
---------------------------------------------------------------------------------------------------
96 Profit on ordinary 71 65 9% 48 40 20%
activities after
tax
(10) Minority interests (2) (3) (2) (3)
(all equity)
---------------------------------------------------------------------------------------------------
86 Profit attributable 69 62 46 37
to shareholders
(55) Dividends 5 (20) (18) (20) (18)
---------------------------------------------------------------------------------------------------
31 Retained profit 49 44 26 19
---------------------------------------------------------------------------------------------------
Year Half year Half year
Total 'Normalised' Total
02/03 Notes 03/04 02/03 Growth 03/04 02/03 Growth
---------------------------------------------------------------------------------------------------
33.6p Earnings per share 6 26.7p 24.2p 10% 18.0p 14.4p 25%
33.4p Diluted earnings per 6 17.9p 14.3p 25%
share
21.6p Dividend per share 5 7.6p 7.0p 9% 7.6p 7.0p 9%
---------------------------------------------------------------------------------------------------
A definition of 'normalised' is provided in Note 1. 'Normalised' results are
presented to provide a better indication of overall financial performance and to
reflect how the business is managed on a day-to-day basis.
There are no discontinued operations. All turnover and operating profit for 2003
/04 and 2002/03 relates to continuing operations.
Emap plc
Consolidated cash flow statement
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m Notes #m #m
---------------------------------------------------------------------------------------
212 Net cash inflow from operating 7(a) 67 70
activities
---------------------------------------------------------------------------------------
Returns on investments & servicing
of finance
(14) Net interest paid (2) (8)
- Issue costs on 6.25% Sterling (3) -
Eurobond issue
1 Dividends received from fixed - -
asset investments
(6) Dividends paid to minority - (1)
shareholders
---------------------------------------------------------------------------------------
(19) Net cash outflow from returns on (5) (9)
investments & servicing of
finance
---------------------------------------------------------------------------------------
(35) Taxation (18) (19)
---------------------------------------------------------------------------------------
Capital expenditure & financial
investment
(16) Purchase of tangible fixed (5) (6)
assets
2 Sale of fixed asset investments - -
---------------------------------------------------------------------------------------
(14) Net cash outflow from capital (5) (6)
expenditure & financial
investment
---------------------------------------------------------------------------------------
Acquisitions & disposals
(40) Acquisition of businesses 8 (92) (1)
3 Net cash acquired with 8 33 -
subsidiaries
32 Disposal of businesses 2 -
(2) Costs of business disposals - (1)
(1) Net cash disposed of on sale of - -
businesses
---------------------------------------------------------------------------------------
(8) Net cash outflow from acquisitions (57) (2)
& disposals
---------------------------------------------------------------------------------------
(51) Equity dividends paid (37) (33)
---------------------------------------------------------------------------------------
85 Cash (outflow)/inflow before (55) 1
financing
---------------------------------------------------------------------------------------
Financing
1 Issue of ordinary share capital 1 1
(42) Decrease in bank loans (209) (17)
- Issue of 6.25% Sterling Eurobond 7(c) 250 -
(1) Repayment of loan notes - -
(2) Decrease in loans from associated (6) (3)
undertakings
(6) (Loss)/gain on rollover of (4) 4
currency swaps
(38) Increase/(decrease) in other 29 (6)
borrowings
---------------------------------------------------------------------------------------
(88) Net cash inflow/(outflow) from 61 (21)
financing
---------------------------------------------------------------------------------------
(3) Increase/(decrease) in net cash 6 (20)
---------------------------------------------------------------------------------------
Emap plc
Consolidated balance sheet
At 30 September 2003
-----------------------------------------------------------------------------------
31 Mar 30 Sept 30 Sept
2003 2003 2002
#m Notes #m #m
-----------------------------------------------------------------------------------
Fixed assets
569 Intangible fixed assets 9 614 564
32 Tangible fixed assets 31 29
Investments
2 - Joint ventures and associated 2 2
undertakings
7 - Other investments 7 6
-----------------------------------------------------------------------------------
610 654 601
-----------------------------------------------------------------------------------
Current assets
11 Stocks 11 13
235 Debtors - amounts falling due 276 272
within one year
5 Debtors - amounts falling due 7 4
after more than one year
26 Cash at bank and in hand 32 9
-----------------------------------------------------------------------------------
277 326 298
(411) Creditors - amounts falling due (432) (391)
within one year
-----------------------------------------------------------------------------------
(134) Net current liabilities (106) (93)
-----------------------------------------------------------------------------------
476 Total assets less current 548 508
liabilities
(211) Creditors - amounts falling due (249) (265)
after more than one year
(13) Provisions for liabilities and 10 (14) (15)
charges
-----------------------------------------------------------------------------------
252 Net assets 285 228
-----------------------------------------------------------------------------------
Capital and reserves
64 Called up share capital 64 64
586 Share premium account 589 586
8 Revaluation reserve 8 -
(410) Profit and loss account 11 (382) (428)
-----------------------------------------------------------------------------------
248 Shareholders' funds (all equity) 279 222
4 Minority interests (all equity) 6 6
-----------------------------------------------------------------------------------
252 Capital employed 285 228
-----------------------------------------------------------------------------------
Approved by the Board of Directors
on 11 November 2003.
T C Moloney G W Hughes
Emap plc
Consolidated statement of total recognised gains & losses
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
---------------------------------------------------------------------------------------
86 Profit attributable to 46 37
shareholders
8 Unrealised surplus on revaluation of intangible - -
fixed assets
6 Foreign exchange translation 1 1
differences
---------------------------------------------------------------------------------------
100 Total recognised gains & losses in 47 38
the period
---------------------------------------------------------------------------------------
There is no material difference between the reported profits and the historical
cost profits on ordinary activities before taxation for all periods being
reported.
Reconciliation of movement in shareholders'funds
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
---------------------------------------------------------------------------------------
86 Profit attributable to 46 37
shareholders
(55) Dividends (20) (18)
---------------------------------------------------------------------------------------
31 Retained profit 26 19
3 Shares issued 3 3
1 Shares to be issued 1 -
8 Unrealised surplus on revaluation - -
of intangible assets
6 Foreign exchange translation 1 1
differences
---------------------------------------------------------------------------------------
49 Net addition to shareholders' 31 23
funds
199 Opening shareholders' funds (all 248 199
equity)
---------------------------------------------------------------------------------------
248 Closing shareholders' funds (all 279 222
equity)
---------------------------------------------------------------------------------------
Reconciliation of movement in net debt
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------
Net cash Borrowings Net debt
#m #m #m
---------------------------------------------------------------------------------------
At 1 April 2003 26 (237) (211)
Exchange differences - (5) (5)
Net cash movement:
- Acquisitions 33 - 33
- Other (27) (58) (85)
---------------------------------------------------------------------------------------
At 30 September 2003 32 (300) (268)
---------------------------------------------------------------------------------------
Emap plc
Notes
For the half year ended 30 September 2003
---------------------------------------------------------------------------------------
1 Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the financial
year ended 31 March 2003. The preceding unaudited financial information does not
constitute statutory accounts as defined in Section 240 of the United Kingdom
Companies Act 1985. The full year comparative financial information is based on
the statutory accounts for the financial year ended 31 March 2003. These
accounts, upon which the auditors have issued an unqualified opinion, have been
delivered to the Registrar of Companies.
'Normalised' results are presented to provide a better indication of overall
financial performance and to reflect how the business is managed on a day-to-day
basis. The 'normalised' results exclude the amortisation and impairment of
goodwill and intangible fixed assets, any profit or loss on the disposal of
businesses and fixed asset investments, other exceptional items including
financing costs and the tax impact of all these items. A reconciliation of
'normalised' profit before taxation to profit before taxation is provided in
Note 2(c).
2 Segmental analysis
Turnover and operating profit is reported for each of the Group's four operating
divisions. Proforma figures are also given for each media type to allow easier
market and peer group comparisons. The two analyses cross reference as follows:
Emap Consumer Media comprises UK, US and International consumer magazines
(excluding France) and automotive B2B activities. Emap Communications comprises
the majority of the Group's B2B activities plus healthcare related UK consumer
magazines. Emap Performance comprises all analogue and digital radio stations,
music TV and music related consumer magazines and events. Emap France comprises
the Group's French consumer magazines.
The management of the Group's digital activities, previously reported as Emap
Digital, has been the responsibility of the divisional management since January
2002. However, the Group undertook to disclose separately the performance of its
digital activities until 31 March 2003. The segmental analysis is now presented
with the digital activities within the four operating divisions and comparatives
have been restated accordingly. This reflects how the business and the digital
activities are managed on a day-to-day basis.
(a) Analysis of turnover by origin
(i) By
division
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
344 Emap Consumer Media 178 177
195 Emap Communications 98 91
156 Emap Performance 80 74
272 Emap France 153 135
----------------------------------------------------------------------------------------------------
967 Total turnover 509 477
----------------------------------------------------------------------------------------------------
(ii) By category
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
418 Advertising 213 211
425 Circulation 216 204
70 Events 34 28
54 Other 46 34
----------------------------------------------------------------------------------------------------
967 Total turnover 509 477
----------------------------------------------------------------------------------------------------
(iii) By media type
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
340 Consumer magazines - 177 174
UK
272 Consumer magazines - 153 135
France
45 Consumer magazines - 23 22
International
180 Business to 90 83
business
89 Radio 47 44
22 TV 10 10
19 Digital 9 9
----------------------------------------------------------------------------------------------------
967 Total turnover 509 477
----------------------------------------------------------------------------------------------------
(iv) By geographical origin
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
650 United Kingdom 328 320
272 France 158 135
20 USA 11 11
25 Rest of the World 12 11
----------------------------------------------------------------------------------------------------
967 Total turnover 509 477
----------------------------------------------------------------------------------------------------
The year on year impact of currency movements is to increase turnover by #16m.
(b) Analysis of Group operating profit
(i) By division
----------------------------------------------------------------------------------------------------
Year Half year Half year
Total 'Normalised' Total
02/03 03/04 02/03 03/04 02/03
#m #m #m #m #m
----------------------------------------------------------------------------------------------------
38 Emap Consumer 29 28 26 23
Media
27 Emap 24 24 18 18
Communications
17 Emap Performance 19 19 14 13
31 Emap France 31 24 21 16
----------------------------------------------------------------------------------------------------
113 Group operating 103 95 79 70
profit
----------------------------------------------------------------------------------------------------
(ii) By media type
----------------------------------------------------------------------------------------------------
Year Half year Half year
Total 'Normalised' Total
02/03 03/04 02/03 03/04 02/03
#m #m #m #m #m
----------------------------------------------------------------------------------------------------
46 Consumer magazines - 32 32 29 30
UK
31 Consumer magazines - 31 24 21 16
France
(3) Consumer magazines - - (1) - (3)
International
24 Business to 23 22 17 16
business
6 Radio 12 14 7 7
6 TV 3 4 3 4
3 Digital 2 - 2 -
----------------------------------------------------------------------------------------------------
113 Group operating 103 95 79 70
profit
----------------------------------------------------------------------------------------------------
(iii) By geographical origin
----------------------------------------------------------------------------------------------------
Year Half year Half year
Total 'Normalised' Total
02/03 03/04 02/03 03/04 02/03
#m #m #m #m #m
----------------------------------------------------------------------------------------------------
86 United Kingdom 70 72 56 56
31 France 33 24 23 16
(3) USA (1) (1) (1) (1)
(1) Rest of the World 1 - 1 (1)
----------------------------------------------------------------------------------------------------
113 Group operating 103 95 79 70
profit
----------------------------------------------------------------------------------------------------
The year on year impact of currency movements is to increase 'normalised' Group
operating profit by #4m and total operating profit by #3m.
(c) Reconciliation of 'normalised' profit before taxation to profit before taxation
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
175 'Normalised' profit on ordinary 94 86
activities before tax
(48) Amortisation of intangible fixed (24) (25)
assets
(30) Impairment of intangible fixed - -
assets
43 Profit on business disposals 1 -
----------------------------------------------------------------------------------------------------
140 Profit on ordinary activities 71 61
before tax
----------------------------------------------------------------------------------------------------
3 Net interest payable
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
- 6.25% Sterling Eurobond (8) -
(11) Bank loans & overdrafts, wholly - (6)
repayable within five years
(6) Other interest payable (1) (3)
----------------------------------------------------------------------------------------------------
(17) Net interest payable (9) (9)
----------------------------------------------------------------------------------------------------
4 Tax on profit on ordinary activities
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
----------------------------------------------------------------------------------------------------
25% 'Normalised' tax rate 25% 25%
30% UK nominal tax rate 30% 30%
----------------------------------------------------------------------------------------------------
The table below shows the reconciliation of the tax in the profit &
loss account to tax at the nominal rate.
----------------------------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
----------------------------------------------------------------------------------------------------
44 Taxes as shown in the financial 23 21
statements
42 Less: Corporation tax on pre-tax 21 18
profit at nominal rate of 30%
----------------------------------------------------------------------------------------------------
2 Difference 2 3
----------------------------------------------------------------------------------------------------
The difference is principally due
to:
9 Non-deductible impairment of - -
intangible fixed assets
14 Non-deductible amortisation of 7 7
intangible fixed assets
(13) Non-deductible loss on sale of - -
businesses & investments
(8) Permanent disallowables, prior (5) (4)
year & other items
----------------------------------------------------------------------------------------------------
2 2 3
----------------------------------------------------------------------------------------------------
5 Dividends
The interim dividend of 7.6p (2002 - 7.0p), will be paid on 9 January 2004 to
shareholders on the Register at 12 December 2003.
6 Earnings per share
Earnings per share is calculated as profit attributable to shareholders divided
by the weighted average number of Ordinary Shares (WANS) in issue during the
period and ranking for dividend. Shares held in Trust in respect of Executive
Share Schemes and in the Qualifying Employee Share Ownership Trust (QUEST) are
excluded from the WANS. The WANS for the half year ended 30 September 2003 was
256m.
-------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
-------------------------------------------------------------------------------
33.6p Basic - attributable to shareholders 18.0p 14.4p
(0.2p) Effect of dilutive shares & share options (0.1p) (0.1p)
-------------------------------------------------------------------------------
33.4p Diluted 17.9p 14.3p
-------------------------------------------------------------------------------
'Normalised' earnings per ordinary share is based on 'normalised' profit
attributable to shareholders. Earnings per ordinary share can be reconciled to
'normalised' earnings per ordinary share as follows:
-------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
-------------------------------------------------------------------------------
33.6p Basic - attributable to shareholders 18.0p 14.4p
18.8p Amortisation of intangible fixed assets 9.1p 9.8p
11.9p Impairment of intangible fixed assets - -
(17.0p) Profit on business disposals & closures (0.4p) -
1.7p Exceptional minority interest - -
-------------------------------------------------------------------------------
49.0p 'Normalised' 26.7p 24.2p
-------------------------------------------------------------------------------
7 Cash flow information
(a) Reconciliation of Group operating profit to net cash inflow from operating activities
-----------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
-----------------------------------------------------------------------------------
113 Group operating profit 79 70
48 Amortisation of intangible fixed 24 25
assets
30 Impairment of intangible fixed - -
assets
12 Depreciation of tangible fixed 6 5
assets
1 Net loss on disposal of tangible 1 -
fixed assets
2 Decrease in stocks - -
16 (Increase)/decrease in debtors (28) (10)
(2) Decrease in creditors (11) (12)
(8) Decrease in provisions (4) (8)
-----------------------------------------------------------------------------------
212 Net cash inflow from operating 67 70
activities
-----------------------------------------------------------------------------------
(b) Operating profit into cash
The Group uses the conversion ratio of 'normalised' operating profit into cash
as its key measure of working capital management. In calculating 'profit into
cash', operating cash flow, net of capital expenditure, is adjusted to exclude
expenditure against exceptional reorganisation and acquisition restructuring
provisions and compared to 'normalised' Group operating profit.
--------------------------------------------------------------------------------
Year Half year Half year
02/03 03/04 02/03
#m #m #m
--------------------------------------------------------------------------------
212 Net cash inflow from operating activities 67 70
(16) Capital expenditure (5) (6)
2 Expenditure against exceptional reorganisation - 2
provisions
--------------------------------------------------------------------------------
198 Adjusted operating cash flow 62 66
--------------------------------------------------------------------------------
191 'Normalised' Group operating profit 103 95
--------------------------------------------------------------------------------
104% Operating profit into cash 60% 69%
--------------------------------------------------------------------------------
Operating profit into cash on a rolling twelve month basis was 97% for the year
ended 30 September 2003 (Year ended 30 September 2002 - 104%).
(c) Issue of 6.25% Sterling Eurobond
On 7 April 2003 Emap issued a #250m, 6.25% Sterling Eurobond maturing 9 December
2013. The proceeds have been used to cancel an element of the Group's existing
#650m syndicated multi-currency revolving credit facility.
8 Acquisitions
On 27 June 2003 the Group completed the acquisition of Excelsior Publications
SA, a French consumer magazine publisher. The purchase price was #91m, including
#33m of cash within the company acquired, giving a net purchase price, inclusive
of #1m deal costs, of #59m. The assets acquired include a portfolio of magazines
in the science and knowledge, women's fashion, and men's lifestyle markets. A
provisional fair value exercise has been performed on the acquired balance
sheet. Based on this, the impact of the acquisition on the consolidated balance
sheet is as follows:
Provisional Provisional
Net book fair value fair value
values adjustment to Group
#m #m #m
--------------------------------------------------------------------------------
Intangible fixed assets 7 (7) -
Tangible fixed assets 1 - 1
Current assets 22 (3) 19
Current liabilities (22) - (22)
Cash and overdrafts 33 - 33
Provisions - (3) (3)
--------------------------------------------------------------------------------
Fair value of assets acquired 41 (13) 28
Goodwill 64
--------------------------------------------------------------------------------
Fair value of consideration 92
--------------------------------------------------------------------------------
Comprising:
Cash paid during the year 91
Related costs of acquisition 1
--------------------------------------------------------------------------------
On acquisition, a fair value provision of #3m has been made. Of this provision
#1m relates to liabilities resulting from the rights of journalists to take
redundancy on the change of ownership and #2m relates to a deficit on the
company's funding of pension obligations.
Subsequent to the balance sheet date a programme of restructuring of the
acquired business' activities has been announced. It is anticipated that this
programme would cost approximately #4m and these costs would be recognised in
the second half of the current financial year.
9 Intangible fixed
assets
-----------------------------------------------------------------------------------------------------
#m
-----------------------------------------------------------------------------------------------------
Cost
At 1 April 2003 943
Exchange movements 7
Businesses acquired 64
-----------------------------------------------------------------------------------------------------
At 30 September 1,014
2003
-----------------------------------------------------------------------------------------------------
Amortisation
At 1 April 2003 (374)
Exchange movements (2)
Provided during the (24)
period
-----------------------------------------------------------------------------------------------------
At 30 September (400)
2003
-----------------------------------------------------------------------------------------------------
Net book value at 30 614
September 2003
-----------------------------------------------------------------------------------------------------
Net book value at 31 569
March 2003
-----------------------------------------------------------------------------------------------------
10 Provisions for liabilities & charges
-----------------------------------------------------------------------------------------------------
Reorganisation Property Other Total
provisions provisions provisions provisions
#m #m #m #m
-----------------------------------------------------------------------------------------------------
At 1 April 2003 5 4 4 13
Operating losses of associates - - 1 1
and joint ventures
Arising on - - 3 3
acquisition
Utilised in the (2) (1) - (3)
period
-----------------------------------------------------------------------------------------------------
3 3 8 14
-----------------------------------------------------------------------------------------------------
Reorganisation provisions comprise ongoing redundancy and reorganisation costs.
These amounts are expected to be paid within one year.
The property provision relates to ongoing commitments on empty properties,
largely arising from the sale of Emap Newspapers in 1997. Some of these
commitments extend to 2015.
Other provisions comprise a provision for Employer's National Insurance
Contributions in respect of Executive share schemes and the Group's share of net
liabilities of joint ventures and associated undertakings. The provisions
arising on acquisition relate to the acquisition of Excelsior Publications SA.
These relate to liabilities resulting from the rights of journalists to take
redundancy on the change of ownership and to a deficit on the company's funding
of pension obligations (see Note 8).
11 Profits available for distribution
Profits available for distribution at 30 September 2003 amount to #237m (31
March 2003 - #267m).
12 Interim Report
Copies of the Interim Report will be sent to all shareholders on or before 1
December 2003, and will be available from the Company's registered office at
Wentworth House, Wentworth St, Peterborough, PE1 1DS, or on the Internet at
www.emap.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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