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2002 Full Year Results

2002 Full Year Results. Johnston Press plc. Agenda. Introductions and Overview. 2002 Prelims. Operating Review. Outlook. Turnover. Up 43%. Like for like advertising revenue. Up 2%. Operating profit. Up 45%. - Like for like pre exceptionals. Up 7%. Profit before taxation .

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2002 Full Year Results

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  1. 2002 Full Year Results

  2. Johnston Press plc Agenda • Introductions and Overview • 2002 Prelims • Operating Review • Outlook

  3. Turnover Up 43% Like for like advertising revenue Up 2% Operating profit Up 45% - Like for like pre exceptionals Up 7% Profit before taxation Up 35% Headline earnings per share Up 13% Dividend per share Up 18% Free cash flow Up 127% Key Financial Highlights

  4. Operational Highlights • Modest advertising revenue growth • Excellent cost control and lower newsprint prices • Successful integration of RIM • Weekly circulations increased for sixth successive year • Completion of major press upgrades with substantially • increased colour capability • Growing contribution from electronic publishing

  5. Corporate Governance • Proposed new non executive appointments • 2 year CE contract removed • Introduction of LTIP • Appointment of new auditors • Consultation

  6. Financial Review

  7. Profit & Loss Account – EBITDA 52 weeks to 31 December 2002 2002 2001 % £’m £’m Change Turnover Continuing 306.4 300.6 1.9 Acquisitions 120.4 - - Discontinued 1.6 Total Turnover 428.4 300.6 EBITDA 148.2 102.7 44.3 Depreciation (16.7) (11.6) 131.5 91.1 44.3 Operating exceptionals (1.7) (1.2) Exceptional items (4.4) (5.0) EBIT 125.4 84.9 47.9 Net interest (32.7) (16.3) Profit before taxation 92.7 68.6 35.3 Taxation (26.8) (20.0) Profit after taxation 65.9 48.6 35.6 Earnings per share Headline 26.75 23.65 13.1 Basic 24.65 21.68 13.7

  8. Publishing and Printing 52 weeks to 31 December 2002 - Existing Business -like for like 2002 £’m 2001 £’m Variance % Advertising Volume 109.7 109.8 0 (cms) Advertising Yield 2.14 2.09 2 (£/ccm) Advertising Sales 234.3 229.5 2 Newspaper Sales 36.7 35.1 5 Contract Printing 14.0 15.7 (11) Other Sales 21.4 20.4 5 Total Revenue 306.4 300.7 2 Total Production Costs 73.4 77.1 ( 5 ) Editorial 30.7 30.1 2 Advertising & Marketing 32.4 32.6 ( 1 ) Distribution 22.5 22.1 2 Administration 37.6 36.5 3 Depreciation 12.7 11.6 9 Total Costs 209.3 210.0 0 7 Operating Profit –pre exceptionals 97.1 90.7 Operating Margin 31.7% 30.2%

  9. Former RIM Companies 52 weeks to 31 December 2002 15 Weeks Pre acq £m 37 Weeks Post acq. £m 2002 £m 2001 £m Advertising Sales 35.8 87.5 123.3 123.6 Newspaper Sales 8.9 21.7 30.6 31.4 Contract Printing 2.0 5.1 7.1 7.9 Other Sales 3.5 7.7 11.2 12.4 Total Revenue 50.2 122.0 172.2 175.3 Total Costs 37.6 87.9 125.5 135.1 46.7 40.2 Operating Profit (pre exceptionals) 12.6 34.1 Operating Margin 25.1% 28.0% 27.1% 22.9% 2001 includes Valpak losses of £0.9m

  10. Advertising Revenue Analysis 52 weeks to 31 December 2002 - Existing Business - like for like Revenue Increase % Proportion of business 2002 2001 % % 1.7 30.9 31.0 Display 2.3 14.0 13.9 Motors Employment 0.3 25.9 26.4 3.7 13.9 13.7 Property 4.5 15.3 15.0 Other Classified 2.1 100.0 100.0 TOTAL

  11. Advertising Revenue Analysis 52 weeks to 31 December 2002 - Newly Acquired Business - like for like Revenue Increase % Proportion of business 2002 2001 % % 1.0 31.5 31.6 Display (2.1) 10.5 10.8 Motors Employment 2.3 33.4 33.2 1.3 9.8 9.8 Property 3.0 14.8 14.6 Other Classified 1.4 100.0 100.0 TOTAL

  12. Advertising increase by division 52 weeks to 31 December 2002 - Existing Business - like for like Volume % Yield % Revenue % Scotland (0.5) 0.5 0.0 4.3 Northeast (6.4) 11.4 North of England (0.3) 5.3 4.9 North Midlands (1.7) 9.8 7.9 East Midlands 3.0 1.2 4.2 South Midlands 0.7 (1.1) (0.5) South of England 0.1 (0.4) (0.4) Total (0.1) 2.2 2.1

  13. Advertising Increases by Category Existing Business - 2002 Revenue Year % Half Year to June December % % 1.7 2.9 0.5 Display 2.3 (0.2) 5.0 Motors Employment 0.3 (1.9) 2.7 3.7 0.9 6.9 Property 4.5 5.3 3.8 Other Classified _____ _____ _____ 2.1 1.2 3.0 TOTAL _____ _____ _____

  14. Advertising Increases by Category Newly Acquired Business - 2002 Revenue Year % Half Year to June December % % 1.0 2.0 0.1 Display (2.1) (1.0) (3.2) Motors Employment 2.3 (0.2) 5.2 1.3 0.7 2.0 Property 3.0 4.3 1.8 Other Classified _____ _____ _____ 1.4 1.1 1.8 TOTAL _____ _____ _____

  15. Cash Flow 2001 £m % Increase 2002 £m Operating Profit 129.5 89.5 44.7 Exceptionals (5.0) (0.6) Depreciation – and other non cash movements 16.6 11.6 10.4 (2.9) Movement in working capital Net cash flow from operating activities 151.5 97.6 55.2 Interest paid - net (33.5) (16.0) Taxation (17.7) (19.3) Capital expenditure and financial investment (14.2) (24.3) Free Cash Flow 86.1 38.0 126.6 66% 42% Conversion of operating profit to free cash flow

  16. Cash Flow 2001 £m 2002 £m FREE CASH FLOW 86.1 38.0 Acquisitions (573.3) (6.0) Disposals 5.6 - (11.7) (9.3) Dividends Net cash flow before financing (493.3) 22.7 Financed by Issue of Shares 223.1 0.5 Increase / (Decrease) in Net Debt 270.2 (23.2) 493.3 (22.7)

  17. Net Debt / Interest Cover As at 31.12.02 30.06.02 31.12.01 31.12.00 31.12.99 Net assets (£’M) 561.5 535.7 288.0 249.0 212.8 Net Debt (£’M) 502.8 557.0 236.9 259.3 263.0 Gearing (%) 90 104 82 104 124 Interest Cover (times) 4.3 5.3 5.5 4.5 5.5 Net Debt / EBITDA 3.1 3.6 2.3 2.7 3.5

  18. Summary Balance Sheet 31 December 2002 31 December 2001 £’m £’m £’m £’m Fixed Assets Intangibles 927.6 425.5 Other 159.2 1086.8 123.7 549.2 Current Assets Stocks and Debtors 64.5 44.0 Cash 10.7 9.1 75.2 53.1 Creditors within one year (122.0) (89.8) (46.8) (36.7) Creditors over one year (478.5) (224.5) 561.5 288.0 Shareholders Funds 561.5 288.0

  19. Capital Expenditure / Depreciation Year to 31 December Forecast £’m 1999 2000 2001 2002 2003 Net Capital Expenditure (Cash) 9.0 19.9 24.3 13.6 21.0 9.7 11.5 11.6 16.7 18.5 Depreciation

  20. RIM Acquisition Fair Value Adjustments £m Fixed Assets Property (1.6) • Plant 12.6 11.0 ____ Investments 4.6 Stocks 0.2 Debtors – mainly doubtful debts 0.5 Additional creditors 0.9 Provision for pension deficit 8.8 Taxation (13.9) ____ 12.1 ____

  21. RIM Acquisition Non Operating Exceptional Items £m Termination and redundancies costs • RIM Board members and support staff 2.2 • Central Activities 1.2 Closure of London and Manchester national sales offices 0.4 Closure of Harrogate Press 0.5 Termination of superfluous contracts 0.1 ____ 4.4 ____

  22. Pensions / FRS 17 • 2 defined benefit schemes • Both closed since 1998/9 • Both schemes fully funded at 31/12/00 • FRS17 deficits at 31/12/02 Existing £50m Acquired £25m • Employer / employee contributions increased during 2002 • MFR – status, emergency contributions under review

  23. Operational Review

  24. Overview • Strategic theme …. “Life is Local” • Organic Revenue Growth • Focus on Circulations • Maximising RIM integration benefits • Continuing cost control / operating efficiencies • Controlling newsprint costs • Ongoing capex programme – presses / systems • Progressing electronic publishing strategy • Investment in training / management development • Pursuit of acquisitive growth / media ownership • Prospects for 2003

  25. Revenue Growth Initiatives • Driving proactive categories • Better tailored packaging • Dissemination of best practice • New revenue streams

  26. Circulation Performance Sixmonths to June 2002 Six months to December 2002 Existing % Newly Acquired % Existing % Newly Acquired % Weeklies 0.7 1.8 1.3 2.9 Dailies (total sale) (2.6) (4.1) (2.5) (4.2) Dailies (excluding Bulk sales) (2.1) (1.5) (1.8) (3.3)

  27. Circulation – Action Plans • Focus on content and design • Dissemination of best practice • Review of underlying trends • Added value supplements and daily platforms • Improved direct delivery and supply arrangements • Canvassing programmes • Conservative approach to cover prices

  28. Daily Circulation July to Dec 2002 ABC

  29. Acquisition Integration Lessons • Experience 15 Acquisitions in 10 years including Emap’s newspapers, Portsmouth & Sunderland, RIM • Detailed planning pre-completion • Act early / be decisive • Ensure immediate Johnston Press management control • Quick introduction of Johnston Press reporting and procedures • Drive cost savings / restructuring • Encourage revenue growth initiatives • Clear responsibility / monitor progress regularly • Consult and communicate

  30. RIM Integration Benefits Ongoing plans • Regionalisation of back room functions • Integration of overlapping publications • Extended title packaging where appropriate • Harmonisation of IT systems • Optimisation of printing facilities Already achieved • Implementation of new organisation structure • Closure of head office • Termination of advisory arrangements • Savings on newsprint and other major purchases • Closure / rationalisation of central functions • Disposal of non-core assets • Withdrawal from radio interests • Closure of Harrogate press and pre-press

  31. Containing Costs / Improving Efficiency • Common systems across regions • Group-wide interconnectivity • Contingency plans • Group Intranet • Printing optimisation • Regionalised administration • Letterbox Direct

  32. Newsprint • Price reductions 2002/03 • Standardising on reduced web-width • Reducing wastage

  33. Capital Expenditure Plans • Front end systems • Press upgrades …. Leeds/Sunderland • Computer-to-plate • Longer term - Sheffield site/press

  34. Electronic Publishing • Withdrawal from Fish4 • New property portal • Individual job uploads • Jobs and motors upgrades • Integration of RIM • Over 140 sites

  35. Page Impressions 2002

  36. Electronic Publishing Profit Contribution Existing business -like for like

  37. Investment in People • Enhanced skill-based training • Succession planning • Management development • SIP Scheme

  38. Acquisitive Growth / Regulatory Environment • Further consolidation anticipated • Strategic focus • SMG titles • Communications Bill • Regulators approach

  39. Outlook • Uncertain economic outlook • Positive start • Continued modest advertising revenue growth • Colour availability helping yields • Continued cost control • Reduced newsprint prices • Benefits of RIM • Cautious but progress continues

  40. Appendices

  41. Acquisitions since flotation • 1992 TR Beckett (Sussex) • 1994 Halifax Courier, (incl. Isle of Man) • 1995 W&J Linney (Nottinghamshire) • 1996 South Yorkshire Newspapers • 1996 Emap’s newspaper interests • 1997 Pocklington, Driffield, and Bridlington newspapers • 1997 North Derbyshire Newspapers • 1998 Amberstock Publishing; Archant’s Beds and Bucks newspapers • 1999 Portsmouth & Sunderland Newspapers; Tweeddale Press • 2000 Lincolnshire Standard Group and Four Counties Newspapers • 2001 Glasgow East News; Mortons Media’s Lincolnshire newspapers • 2002 Regional Independent Media

  42. Growth in market capitalisation since flotation Notes 1996: Rights Issue of £109m net 2002: Rights Issue of £220m net

  43. Growth in turnover and operating profit

  44. SHAREHOLDER PROFILE* * As at December 2002

  45. SHAREHOLDER PROFILE* – GEOGRAPHIC SPLIT * As at December 2002

  46. SHAREHOLDER PROFILE* – PRINCIPAL INSTITUTIONS * As at December 2002

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