TIDMTNI
RNS Number : 8869X
Trinity Mirror PLC
27 February 2017
27 February 2017
Trinity Mirror plc
Annual Results Announcement
For the 53 weeks ended 1 January 2017
Results Adjusted results Statutory results
(1)
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
Revenue - actual 713.0 592.7 713.0 592.7
Operating profit 137.5 109.6 93.5 82.2
Profit before tax 133.2 107.5 76.5 67.2
Earnings per share
(2) 38.1p 33.9p 24.9p 30.2p
Dividends per share - - 5.45p 5.15p
Key Highlights
-- Strong growth in adjusted operating profit and adjusted earnings per share
Strong growth in adjusted operating profit of 25.5% and adjusted
earnings per share of 12.4% driven by the benefits of the
acquisition of Local World and continued tight management of the
cost base with structural (including synergy) cost savings of GBP25
million, GBP10 million ahead of target. Group revenue increased by
20.3% to GBP713.0 million with like for like (3) revenue falling by
8.0%.
-- Continued growth in digital audience and revenue
Continued growth in digital audience with average monthly page
views on a like for like basis (4) growing by 15.4% to 636.1
million. Like for like publishing digital revenue grew by 12.8% to
GBP78.5 million with digital display and transactional revenue
growing by 24.7% partially offset by digital classified revenue
falling by 11.3%.
-- Local World integration ahead of expectations
Excellent progress on integrating Local World delivering GBP10
million of synergy savings in 2016. Forecast annualised savings of
GBP15 million in 2017 which is GBP3 million ahead of the target
announced at the time of the acquisition in 2015.
-- Pension deficit increase
The IAS19 pension deficit increased by GBP160.8 million to
GBP466.0 million (GBP385.1 million net of deferred tax) driven by a
fall in long term interest rates and higher inflation expectations.
The Group paid GBP40.7 million into the defined benefit pension
schemes during 2016.
-- Historical legal issues
As previously announced, we increased the provision for dealing
with historical legal issues by GBP11.5 million.
-- Strong cash generation and committed long term financing improves financial flexibility
Adjusted EBITDA (5) of GBP159.7 million and strong net cash
inflows resulted in net debt (6) reducing by GBP62.4 million to
GBP30.5 million. We have financial flexibility with a new
amortising GBP110 million bank facility which is committed until
December 2021.
-- Share buyback progressing and 6.3% increase in final dividend to 3.35 pence per share
The Group acquired 2.5 million shares for GBP2.3 million under
the GBP10 million share repurchase programme announced in August
2016. A final dividend of 3.35 pence per share, an increase of 6.3%
per share, is proposed bringing the total dividend for 2016 to 5.45
pence per share, an increase of 5.8% per share. We remain committed
to our progressive dividend policy, and the Board expects dividends
to increase by at least 5% per annum.
-- Refreshed strategy and outlook
We have refreshed our strategy and have adopted new financial
KPIs to ensure an even closer alignment between our strategic
initiatives and their financial outcomes. Our four key areas of
strategic focus are to grow digital audience and revenue, to build
new diversified revenue streams, to protect our strong print brands
and to seek out strategic opportunities that drive value. The Board
remains confident that our strategy will meet our objective to
deliver sustainable growth in revenue, profit and cash flow over
the medium term.
Commenting on the annual results for 2016, Simon Fox, Chief
Executive, Trinity Mirror plc, said:
"We have delivered a strong financial performance in the year
despite the challenging environment we face. I am particularly
pleased with the progress we have made in growing our digital
audience and revenue, and with the work we have done this year to
develop and refine our strategic priorities for the year
ahead."
Notes
(1) Adjusted items relate to the exclusion of non-recurring
items, restructuring charges in respect of cost reduction measures,
the amortisation of intangible assets, the pension administrative
expenses, the retranslation of foreign currency borrowings, the
impact of fair value changes on derivative financial instruments,
the pension finance charge and the impact of tax legislation
changes. Set out in note 18 is the reconciliation between the
statutory results and the adjusted results.
(2) Whilst statutory profit before tax increased, statutory
earnings per share has fallen due to a tax charge of GBP7.0 million
compared to a tax credit of GBP9.8 million in 2015 and an increase
in shares in issue as a result of the acquisition of Local
World.
(3) Like for like assumes Local World was owned from the
beginning of 2015 (GBP181.5 million net impact in 2015) and
excludes revenue from the Independent print and distribution
contract which ceased in April 2016, revenues from Rippleffect
which was sold in August 2016, revenue from the contract to publish
the Rugby World Cup match day programmes in 2015 (together GBP4.8
million in 2016 and GBP14.6 million in 2015) and compares the 52
weeks to 25 December 2016 with the 52 weeks to 27 December 2015
(additional GBP9.1 million in 2016).
(4) Like for like average monthly page views excluding apps and
galleries for the Publishing division across web and mobile
assuming Local World was owned from the beginning of 2015 and
compares the period for January to December 2016 with January to
December 2015.
(5) Adjusted operating profit (GBP137.5 million) plus depreciation (GBP22.2 million).
(6) On a contracted basis assuming that the private placement
loan notes and related cross-currency interest rate swaps are not
terminated prior to maturity.
Enquiries
Trinity Mirror Brunswick
020 7293 3553 020 7404 5959
Simon Fox, Chief Executive Mike Smith, Partner
Vijay Vaghela, Group Finance Director Will Medvei, Director
Investor presentation
A presentation for analysts will be held at 10.30am on Monday 27
February 2017. The presentation will be live on our website:
www.trinitymirror.com at 10.30am and a playback will be available
from 3.00pm.
Annual Report
The Annual Report for the 53 weeks ended 1 January 2017 is
available on the Company's website at www.trinitymirror.com and at
the Company's registered office at One Canada Square, Canary Wharf,
London E14 5AP and will be sent to shareholders who have elected to
receive a hard copy by the end of March 2017.
Statutory and adjusted basis
In the Management Report, performance is stated on an adjusted
basis to provide a more meaningful comparison of the Group's
trading performance. The adjusted results aim to demonstrate the
performance of the Group without the volatility created by
non-recurring items, restructuring charges in respect of cost
reduction measures and accounting items such as the amortisation of
intangible assets, the pension administrative expenses, the
retranslation of foreign currency borrowings, the impact of fair
value changes on derivative financial instruments, the pension
finance charge and the impact of tax legislation changes. Set out
in note 18 is the reconciliation between the statutory results and
the adjusted results.
Like for like revenue trend
Revenue trends are distorted by a number of items in 2016 and
2015. To provide a more meaningful comparison of the Group's
underlying revenue trends, the year on year changes are also
presented on a like for like basis. Like for like for 2016 compared
to 2015 assumes Local World was owned from the beginning of 2015
(GBP181.5 million net impact in 2015) and excludes revenue from the
Independent print and distribution contract which ceased in April
2016, revenues from Rippleffect which was sold in August 2016,
revenue from the contract to publish the Rugby World Cup match day
programmes in 2015 (together GBP4.8 million in 2016 and GBP14.6
million in 2015) and compares the 52 weeks to 25 December 2016 with
the 52 weeks to 27 December 2015 (additional GBP9.1 million in
2016).
Forward looking statements
Statements contained in this Annual Results Announcement are
based on the knowledge and information available to the Company's
directors at the date it was prepared and therefore the facts
stated and views expressed may change after that date. By their
nature, the statements concerning the risks and uncertainties
facing the Company in this Annual Results Announcement involve
uncertainty since future events and circumstances can cause results
and developments to differ materially from those anticipated. To
the extent that this Annual Results Announcement contains any
statement dealing with any time after the date of its preparation
such statement is merely predictive and speculative as it relates
to events and circumstances which are yet to occur. The Company
undertakes no obligation to update these forward-looking
statements.
Management Report
Operational Performance
The Group delivered a strong set of results for 2016 despite the
print markets remaining challenging throughout the year. Cash
generation was also strong providing resilience and financial
flexibility to invest, to grow dividends and over time meet pension
obligations.
Group revenue increased by 20.3% to GBP713.0 million. The
increase in revenue includes the benefit of the acquisition of
Local World in November 2015 and an additional week of trading in
2016, partly offset by the cessation of the Independent print and
distribution contract in April 2016 and the sale of Rippleffect in
August 2016.
On a like for like basis, revenue fell by 8.0% with publishing
digital revenue growing by 12.8% and publishing print revenue
falling by 10.7%. The challenges in print advertising markets
resulted in a decline in display advertising across a number of
sectors, in particular retail. Most classified advertising
categories also came under pressure, in particular recruitment.
Circulation revenues declined 5.2% with volume declines partially
mitigated by cover price increases. Strong growth in digital
display and transactional revenue of 24.7% was partly offset by
digital classified revenue declines of 11.3%, primarily due to
falls in recruitment advertising. The growth in digital display and
transactional revenue was driven by the growth in digital audience
with average monthly page views on a like for like basis growing by
15.4% to 636.1 million.
Good cost control together with the acquisition of Local World
and an additional week of trading contributed to adjusted operating
profit growing by 25.5% with adjusted EBITDA of GBP159.7 million.
The Group delivered structural (including synergy) cost savings of
GBP25 million, GBP10 million ahead of the GBP15 million target for
the full year. We have delivered GBP10 million of synergy savings
in 2016 from the integration of Local World and expect annualised
synergy savings of GBP15 million in 2017, GBP3 million ahead of our
original GBP12 million target at the time of the acquisition.
Restructuring charges in respect of cost reduction measures were
GBP15.1 million in 2016 and are expected to be GBP10 million in
2017.
Adjusted profit before tax grew by 23.9% and adjusted earnings
per share grew by 12.4% reflecting the increased revenues and tight
management of the business.
Statutory operating profit increased by GBP11.3 million to
GBP93.5 million reflecting the benefit of the increased adjusted
operating profit partially offset by higher non-recurring operating
charges of GBP26.0 million in 2016 compared to GBP4.4 million in
2015. The non-recurring items comprise an increase of GBP11.5
million in the provision for historical legal issues, a GBP10.7
million charge for the closure of a print plant and a press line
(GBP9.1 million fixed asset write off and GBP1.6 million of closure
costs), a GBP2.0 million charge for terminating a contract to sell
certain assets to the Iliffe family following the acquisition of
Local World, a GBP2.0 million non-cash impairment charge against
the carrying value of goodwill in our Specialist Digital division
partially offset by a GBP0.2 million profit on the disposal of
properties in Cardiff and Coventry.
Statutory profit before tax increased by GBP9.3 million to
GBP76.5 million with the higher statutory operating profit
partially offset by higher interest cost following the acquisition
of Local World. Statutory profit after tax fell by GBP7.5 million
to GBP69.5 million due to a tax charge of GBP7.0 million in 2016
compared to a tax credit of GBP9.8 million in 2015. The 2015 tax
credit included the benefit of no tax on the gain on the accounting
deemed disposal of the 19.98% interest in Local World and from a
higher credit from the change in the future rate of corporation
tax. As a result of the lower statutory profit after tax and the
increased shares in issue related to the acquisition of Local
World, statutory earnings per share fell by 5.3 pence to 24.9
pence.
Financial Flexibility
The strong cash flows generated by the Group have resulted in a
significant decline in leverage since the acquisition of Local
World and provide resilience and financial flexibility to invest,
to grow dividends and over time meet pension obligations despite
the uncertain economic environment.
In 2016, the Group repaid from cash the GBP80 million
Acquisition Term Loan procured for the acquisition of Local World
and replaced the undrawn GBP60 million bank facility with a new
amortising GBP110 million bank facility which is committed until
December 2021. No drawings have been made on the new bank
facility.
Net debt on a contracted basis fell by GBP62.4 million from
GBP92.9 million to GBP30.5 million. Net debt comprises the
outstanding private placement loan notes of GBP68.3 million and
cash balances of GBP37.8 million. The private placement loan notes
are due for repayment in June 2017.
Statutory net debt (which includes the US$ denominated private
placement loan notes at the reporting date exchange rate and the
related cross-currency interest rate swap at fair value) fell by
GBP60.1 million from GBP88.7 million to GBP28.6 million. The fair
value of the Group's cross-currency interest rate swap was an asset
of GBP14.8 million and the sterling equivalent of the US$
denominated private placement loan notes was GBP81.2 million.
Historical Legal Issues
In March 2016, the Supreme Court refused the Group's application
to appeal the decision of the Court of Appeal which upheld the
findings of Mr Justice Mann in May 2015.
Following the Supreme Court hearing, the Group started to
accelerate the resolution of these historical matters. Good
progress has been made on settling civil claims with damages for
over 80% of claims settled by the year end. To maintain momentum in
bringing the process to a conclusion it was clear that costs, in
particular the claimants' legal costs, would be higher resulting in
an increase in the provision for dealing with these historical
matters by GBP11.5 million in December 2016 bringing the total
amount provided to GBP52.5 million. During the year, GBP29.7
million has been charged against the provision and the provision
remaining at the end of 2016 was GBP18.1 million.
Although there still remains uncertainty as to how these matters
will progress, the Board remains confident that the exposures
arising from these historical events are manageable and do not
undermine the delivery of the Group's strategy.
Pension Schemes
The Group operates defined contribution pension schemes with
contributions and associated costs charged to operating profit.
The defined benefit pension schemes operated by the Group were
closed to future accrual in 2010.
The last actuarial funding valuations of the defined benefit
pension schemes were as at 31 December 2013. The valuations were
completed in December 2014 with deficit funding contributions
agreed of circa GBP36 million per annum from 2015 to 2023 reducing
to circa GBP21 million for 2024 and 2025. In addition, the Group
agreed additional contributions would be paid at 50% of the excess
if dividends paid in 2015 were above 5 pence per share and if a
greater than 10% annual increase thereafter.
Payments in 2016 were GBP40.7 million (2015: GBP20.0 million)
comprising GBP35.7 million (GBP36.2 million scheduled payment
reduced by GBP0.5 million prepaid in 2014) of deficit funding and
alongside the share buyback programme, the Group paid to the
defined benefit pension schemes an additional GBP5.0 million in
August 2016 with up to a further GBP2.5 million payable in
2017.
The accounting pension deficit increased by GBP160.8 million to
GBP466.0 million (GBP385.1 million net of deferred tax) driven by a
fall in long term interest rates and higher inflation expectations.
The increase in the accounting pension deficit does not have an
immediate impact on the agreed funding commitments. The next
valuation date of the schemes is 31 December 2016 and valuations
are expected to be finalised by March 2018.
Dividends and Share Buyback
The Board proposes a final dividend of 3.35 pence per share for
2016, an increase of 6.3%, bringing the total dividend for 2016 to
5.45 pence per share, an increase of 5.8%. The final dividend which
is subject to approval by shareholders at the Annual General
Meeting on 4 May 2017 will be paid on 9 June 2017 to shareholders
on the register on 12 May 2017.
The final dividend for 2015 of 3.15 pence per share was paid in
June 2016 and the interim dividend for 2016 of 2.10 pence per share
was paid in November 2016. Total dividend payments in 2016 amounted
to GBP14.6 million.
The Board approved a share buyback programme of up to GBP10
million, which commenced in August 2016. The share buyback
programme makes efficient use of the surplus cash in the Group and
will enhance earnings per share. It confirms the Board's confidence
in the cash flow generated by the Group and its commitment to
generating returns to shareholders. Alongside the share buyback,
the Board agreed to contribute a minimum of GBP5 million or up to a
maximum of 75% of the share buyback as additional funding to the
defined benefit pension schemes. At the year end the Group had
acquired 2.5 million shares for GBP2.3 million.
The Board continues to adopt a progressive dividend policy which
is aligned to the free cash generation of the business. The free
cash generation for the purposes of assessing the dividend is the
net cash flow generated by the Group before the repayment of debt,
dividend payments, other capital returns to shareholders and
additional contributions made to the defined benefit pension
schemes as a result of any substantial increase in dividends and/or
capital returns to shareholders. When setting the level of
dividends the Board will ensure that the Group maintains adequate
headroom for investment and any unexpected cash flow requirements
for historical events or to fund further restructuring. Based on
the Board's expectation of future cash flows, the Board expects
dividends to increase by at least 5% per annum.
The Company will also consider the return of capital to
shareholders through a share buyback if it has generated surplus
cash and sees an opportunity to enhance earnings per share and
therefore shareholder value. Prior to initiating a share buyback
programme the Company will carefully consider the cash generation
of the business, investment requirements and the Group's
obligations to the Group's defined benefit pension schemes.
Current Trading and Outlook
We have refreshed our strategy and have adopted new financial
KPIs to ensure an even closer alignment between our strategic
initiatives and their financial outcomes. Our four key areas of
strategic focus are to grow digital audience and revenue, to build
new diversified revenue streams, to protect our strong print brands
and to seek out strategic opportunities that drive value. The Board
remains confident that our strategy will meet our objective to
deliver sustainable growth in revenue, profit and cash flow over
the medium term.
Revenue in the first two months of 2017 is expected to fall by
9% on a like for like basis. The like for like trends for 2017
exclude from the 2016 comparative: the extra week of trading in
2016, the Independent print and distribution contract which ceased
in April 2016, Rippleffect which was sold in August 2016 and the
four Metros handed back to DMGT and other portfolio changes. Print
markets, in particular advertising revenue trends, are expected to
remain challenging and volatile during 2017 while digital audience
and revenue is expected to continue to grow.
Strategic Update
During 2016, we undertook a detailed review of our vision and
strategy to ensure that it continued to support our overriding goal
of driving shareholder value whilst over time funding our
historical pension obligations. The review concluded that the
strategy remained appropriate although the vision and strategic
objectives needed to be refreshed to reflect the progress made over
the past few years and the fast changing media environment. This
section summarises our vision and strategic objective arising from
the review.
Our vision is "to be an essential part of people's daily lives
by delivering quality content and services that inform, enlighten
and enrich". To deliver this vision it is clear that quality
content is and will remain at the heart of our business.
Our strategic objective remains to deliver sustainable growth in
revenue, profit and cash flow over the medium term.
This will be delivered through four key areas of strategic
focus:
-- Grow: Grow digital audience and revenue through deepening
relationships with readers and optimising response for
advertisers;
-- Build: Build a diversified product portfolio and sustainable mix of new revenue;
-- Protect: Protect our print brands by efficiently delivering quality products; and
-- Consolidate: Seek out strategic opportunities that drive value.
Growth from digital and new revenue streams will begin to
outstrip print declines on an aggregate basis, leading to a
stabilisation of Group revenue and then a return to top line
growth. This, combined with our inbuilt and relentless focus on
efficiencies, makes the Board confident that the delivery of
sustainable growth in revenue, profit and cash flow is achievable
in the future, for the benefit of all stakeholders.
Key highlights of progress on each area of strategic focus
during 2016 are set out below:
Grow
We have continued to build on the significant digital audience
and revenue we developed over the past three years with average
monthly page views growing by 15.4% to 636.1 million and digital
display and transactional revenue growth of 24.7%, both on a like
for like basis.
Our newsrooms across the business are organised and staffed to
drive audience growth and engagement to maximise commercial
opportunities to grow revenues.
Our digital ambition is supported by continued investment in
product development. In 2016 we developed a fully responsive site
with increased focus on mobile and video. The new site improves the
user experience across all platforms and also presents new and
improved ad formats to improve response for our advertisers. We
commenced the roll out of the new site in the second half of 2016
and expect a full roll out during 2017.
Build
Alongside ensuring we have great digital sites which build on
our core print portfolios, we continue to launch new sites. After
the successful launch of Belfast Live last year, we launched
Glasgow Live and Dublin Live. The three "Live" sites delivered 3.0
million monthly browsers and 8.7 million page views in December
2016.
To leverage our print brands and content generation capabilities
we have also launched new sites such as football.london and an MUFC
app. These sites target niche audiences which are more valuable to
advertisers.
During 2017, we will continue to explore new product ideas to
leverage our portfolio of print and digital brands whilst seeking
to diversify the revenue streams beyond advertising.
Strategic Update continued
Protect
Protecting our print brands through understanding our print
readers and delivering a quality product, whilst leveraging our
brands, communities and advertisers to maximise our financial
performance remains a key area of strategic focus.
Our national newspapers continue to deliver strong financial
performance with their core revenue stream being circulation
revenue. The success of our titles has been recognised by multiple
industry awards during the year. In 2016 we also secured a 5 year
sponsorship deal from TSB plc for the Pride of Britain awards
alongside all of our 'Pride of' events across our portfolio. This
re-enforces the strength of our brands and relevance of our
audience to advertisers.
During 2016, we continued to enhance our regional print brands
through the roll out of a new design with less focus on crime, more
reporting on things to do in the city and improved coverage in
areas such as football and entertainment. Alongside enhancing our
newspapers we continue to rationalise the portfolio and during 2016
we closed a small number of regional newspapers and at the end of
2016 we handed back to DMGT four of the eight Metros franchises we
operated.
We are committed to building a loyal reader subscription base
for our regional dailies and the regional 'Plus' loyalty programme
has been rolled out to 14 of our regional dailies with plans to
complete the full roll out in 2017. Results so far show high levels
of reader engagement and improved order retention.
We launched a new national newspaper, The New Day, on 29
February 2016. Although the title received many supportive reviews,
its circulation was below our expectations. As a result, we decided
to close the title on 6 May 2016.
Tight management of the cost base remains essential and we have
delivered GBP25 million of structural (including synergy) cost
savings. The synergy savings from the acquisition of Local World
were GBP10 million in 2016 and we are now forecasting to deliver
annualised synergy savings of GBP15 million in 2017, GBP3 million
ahead of the original target of GBP12 million announced at the time
of the acquisition in 2015.
Excellent progress has been made during 2016 following the
acquisition of Local World through sharing best practices across
the Group with a number of non system dependent changes implemented
during the year. In addition to relocating all central operations
previously located at Local World's head office to the Group's
operations at Canary Wharf, we have:
-- Rationalised regional management structures including the
creation of a number of super regions in the South East, East
Midlands and South Wales;
-- Rolled out best practice operational structures across the
functions of advertising, editorial and newspaper sales;
-- Began the process of centralising recruitment advertising
into Bristol and private advertising into Hull; and
-- Combined the national advertising sales across print and
digital throughout the entire Group under the umbrella of Trinity
Mirror Solutions.
In addition to the Local World synergy savings, initiatives have
included the closure of the Newcastle print plant at the end of
2015 and of the Cardiff plant at the end of 2016 and numerous
initiatives to drive efficiencies across editorial, advertising,
pre press, property and all back office functions.
For 2017 we have targeted a further GBP15 million of structural
cost savings, including the incremental GBP5 million of synergy
savings from the acquisition of Local World.
Consolidate
To complement the strategic initiatives listed above we will
seek out strategic opportunities that drive value. We will continue
to exercise rigorous discipline in considering any acquisition
opportunities that enhance our local strategy or brings new
diversified revenue streams. We see ourselves as a consolidator in
the newspaper industry and will continue to do so subject to tight
financial returns.
In October 2016, the Group acquired a 50% stake in Brand Events
1 Limited (renamed to Brand Events TM Limited), one of UK's leading
creators and operators of consumer event formats for GBP750,000 and
has committed to provide further financing of up to GBP750,000. We
will partner with the business in growing and developing events
within the Food, Sports and Crafts division, areas that resonate
well with our core audience across our regional footprint.
Strategic Update continued
Key Performance Indicators
To track delivery of our strategy, the following KPIs will be
reported on at each reporting date:
FINANCIAL MEASURE GROUP KPIs
Publishing digital revenue growth At least 15% pa
Circulation revenue Single digit declines
Print advertising revenue At least in line with national market trends
Operating margin Grow operating margin to support profits
Dividend growth At least 5% pa
---------------------------------- ---------------------------------------------
Had these KPIs been set for 2016, we would have met the
circulation revenue, operating margin and dividend growth KPIs.
Like for like publishing digital revenue growth in 2016 was 12.8%
with digital display and transactional revenue growing by 24.7%
offset by an 11.3% decline in classified revenue, primarily due to
recruitment. Print advertising revenue was worse than the national
market trends.
People
Olivia Streatfeild joined the Board as a non executive director
in January 2016. Olivia had held an executive role at TalkTalk and
was previously an Associate Principle at McKinsey & Co and the
combination of her consultancy and executive experience provides
valuable insight and support to the Board.
In July 2016, Eirik Svendsen joined the Group in the newly
created role of Group Chief Technology Officer reporting to the
Chief Executive. Eirik had previously been an executive at
Schibsted Media Group, an international media group, since 2011.
His career history to date has included internet-centric companies
across Europe, with roles at world-leading broadcasting software
company Vizrt and publishing software company Escenic, amongst
others. In his new role, Eirik leads the Product, Engineering and
Systems and Infrastructure teams and has overall responsibility for
all technology and product management strategy and implementation
across the Group including innovation of the customer experience
and architectures
In October 2016, Julia Warren joined as Group HR Director. Julia
was previously the HR Director for Serco in UK and Europe and was a
member of their Executive Management team for Central Government.
Prior to that Julia was HR Director at Thomson Reuters and has also
worked at Hay Management Consultants and John Lewis. Julia brings a
wealth of experience which will be of enormous value to Trinity
Mirror as the Group continues its transformation. Julia is also a
Non-Executive Director of the British Chamber of Commerce and a
Trustee of the Army Family Federation.
In January 2017, the Group appointed Andy Atkinson as the Chief
Revenue Officer for Trinity Mirror. Andy joined the Group in 2014
as Sales Director of Trinity Mirror Solutions, with responsibility
for leading the sales teams in London and Manchester. Prior to
joining Trinity Mirror, Andy was Head of Trading at Google, and has
also held senior roles at IDS and Channel 5.
We would like to thank all our colleagues for their contribution
to the full year performance.
Group Review
Income statement Statutory results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
-------------------- --------------- -------------- -------------- --------------
Revenue
Publishing 660.0 528.8 660.0 528.8
Print 581.0 485.9 581.0 485.9
Digital 79.0 42.9 79.0 42.9
-------------------- --------------- -------------- -------------- --------------
Printing 36.2 44.9 36.2 44.9
Specialist Digital 12.9 15.4 12.9 15.4
Central 3.9 3.6 3.9 3.6
-------------------- --------------- -------------- -------------- --------------
Revenue 713.0 592.7 713.0 592.7
Costs (620.2) (512.7) (576.6) (489.1)
Associates 0.7 2.2 1.1 6.0
-------------------- --------------- -------------- -------------- --------------
Operating profit 93.5 82.2 137.5 109.6
Financing (17.0) (15.0) (4.3) (2.1)
-------------------- --------------- -------------- -------------- --------------
Profit before tax 76.5 67.2 133.2 107.5
Tax (7.0) 9.8 (27.0) (21.1)
-------------------- --------------- -------------- -------------- --------------
Profit after tax 69.5 77.0 106.2 86.4
-------------------- --------------- -------------- -------------- --------------
Earnings per share 24.9p 30.2p 38.1p 33.9p
-------------------- --------------- -------------- -------------- --------------
The results have been prepared for the 53 weeks ended 1 January
2017 (2016) and the comparative period has been prepared for the 52
weeks ended 27 December 2015 (2015). The additional week
contributed revenue of GBP9.1 million and operating profit of
GBP2.8 million. The results are presented on a statutory and
adjusted basis to provide a more meaningful comparison of the
Group's trading performance. Set out in note 18 is the
reconciliation between the statutory results and the adjusted
results.
Group revenue, increased by GBP120.3 million or 20.3% to
GBP713.0 million. Like for like revenue fell 8.0%. Further details
on the revenue trends for each division are shown in the Divisional
Review.
Costs comprised:
Statutory
results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
---------------------------------- ----------- ----------- -------------- --------------
Labour (239.4) (195.8) (239.4) (195.8)
Newsprint (67.4) (63.8) (67.4) (63.8)
Depreciation (22.2) (22.4) (22.2) (22.4)
Other (291.2) (230.7) (247.6) (207.1)
----------- ----------- -------------- --------------
Non-recurring items (26.0) (4.4) - -
Restructuring charges in respect
of cost reduction measures (15.1) (15.3) - -
Amortisation of intangible
assets (0.3) (1.8) - -
Pension administrative expenses (2.2) (2.1) - -
Other (247.6) (207.1) (247.6) (207.1)
---------------------------------- ----------- ----------- -------------- --------------
Costs (620.2) (512.7) (576.6) (489.1)
---------------------------------- ----------- ----------- -------------- --------------
Statutory costs increased by GBP107.5 million or 21.0% to
GBP620.2 million. Adjusted operating costs increased by GBP87.5
million or 17.9% to GBP576.6 million.
Statutory
results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
--------------------------------- ------------ ----------- --------------- --------------
Operating profit pre associates 92.8 80.0 136.4 103.6
Associates 0.7 2.2 1.1 6.0
--------------------------------- ------------ ----------- --------------- --------------
Operating profit 93.5 82.2 137.5 109.6
--------------------------------- ------------ ----------- --------------- --------------
Statutory operating profit pre associates increased by GBP12.8
million or 16.0% to GBP92.8 million while adjusted operating profit
pre associates increased by GBP32.8 million or 31.7% to GBP136.4
million. Adjusted operating margin pre associates increased by 1.6
percentage points from 17.5% to 19.1%.
Statutory operating profit increased by GBP11.3 million or 13.7%
to GBP93.5 million. Adjusted operating profit increased by GBP27.9
million or 25.5% to GBP137.5 million. Adjusted operating margin
increased by 0.8 percentage points from 18.5% to 19.3%.
Group Review continued
The Group has a 21.53% investment in PA Group and a 50% interest
in Brand Events TM Limited (which was acquired on 6 October 2016
and changed its name from Brand Events 1 Limited). Up to 13
November 2015, prior to acquiring the entire business, the Group
held a 19.98% investment in Local World, accounted for as an
associated undertaking.
Statutory
results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
-------------------------------- ------------ ----------- --------------- --------------
Result before amortisation
and non-recurring items 1.1 6.0 1.1 6.0
Amortisation of intangible
assets (0.3) (2.5) - -
Non-recurring items (0.1) (1.3) - -
--------------------------------
Share of results of associates 0.7 2.2 1.1 6.0
-------------------------------- ------------ ----------- --------------- --------------
The statutory and adjusted result for associates fell by GBP1.5
million and GBP4.9 million respectively. The decline is wholly
attributable to Local World which was an associated undertaking
until November 2015 prior to it becoming a wholly owned
subsidiary.
Statutory
results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
---------------------------------------- ----------- ----------- --------------- ---------------
Investment revenues 0.6 0.6 0.6 0.6
Pension finance charge (10.4) (10.9) - -
Finance costs (7.2) (4.7) (4.9) (2.7)
Interest on bank overdrafts
and borrowings (4.9) (2.7) (4.9) (2.7)
Fair value gain on derivative
financial instruments 11.3 0.3 - -
Foreign exchange loss on retranslation
of borrowings (13.6) (2.3) - -
---------------------------------------- ----------- ----------- --------------- ---------------
Financing costs (17.0) (15.0) (4.3) (2.1)
---------------------------------------- ----------- ----------- --------------- ---------------
Statutory financing costs which include the pension finance
charge, the change in derivative financial instruments and the
foreign exchange changes on retranslation of foreign currency
borrowings increased by GBP2.0 million to GBP17.0 million. Adjusted
financing costs increased by GBP2.2 million to GBP4.3 million
reflecting the interest on the GBP80 million term loan procured to
partially fund the acquisition of Local World in November 2015.
This loan was repaid in December 2016.
The statutory tax charge of GBP7.0 million (2015: credit GBP9.8
million) comprises a current tax charge of GBP19.2 million (2015:
GBP8.9 million) and a deferred tax credit of GBP12.2 million (2015:
credit GBP18.7 million). The statutory effective tax rate is lower
than the standard rate of corporation tax for the reasons set out
in the reconciliation below:
Reconciliation of tax charge 2016 2015
% %
----------------------------------------------- --- ------- -------
Standard rate of corporation tax (20.0) (20.3)
Items not deductible in determining taxable
profit (non qualifying depreciation/assets
disposals) (5.4) (2.6)
Items not taxable in determining taxable
profit (utilised tax losses/asset disposals) 1.1 10.9
Prior period adjustment (current and deferred
tax) 2.3 0.4
Deferred tax rate change (from future
reduction in corporation tax rate) 12.6 25.6
Tax effect of share of results of associates
(brought in post tax) 0.2 0.6
Tax (charge)/credit rate (9.2) 14.6
---------------------------------------------------- ------- -------
The adjusted tax charge of GBP27.0 million (2015: GBP21.1
million) represents 20.3% (2015: 19.6%) of adjusted profit before
tax. The rate is higher than the statutory effective tax rate as it
excludes the impact of the rate change and non taxable items.
Statutory
results Adjusted results
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
---------------------------- ------------ ----------- -------------- --------------
Profit after tax 69.5 77.0 106.2 86.4
------------ ----------- -------------- --------------
Weighted average number of
shares (000's) 278,895 254,936 278,895 254,936
---------------------------- ------------ ----------- -------------- --------------
Earnings per share 24.9p 30.2p 38.1p 33.9p
---------------------------- ------------ ----------- -------------- --------------
Statutory earnings per share fell by 5.3 pence or 17.5% to 24.9
pence. Adjusted earnings per share increased by 4.2 pence or 12.4%
to 38.1 pence.
The increase in the weighted average number of shares year on
year primarily reflects the impact of the 8.7% equity placing on 28
October 2015 and the issue of shares representing 1.3% of equity on
13 November 2015, both relating to the acquisition of Local World
partially offset by the shares bought back as part of the share
buyback programme.
Divisional Review
The Group has four operating segments, each of which is a
division, that are regularly reviewed for the purposes of
allocating resources and assessing performance. The divisional
review that follows is presented on an adjusted basis and there is
no difference between the operating profit by division and the
segment result of each operating segment that is shown in note
3.
The operating segments are: Publishing which includes all of our
newspapers and associated digital publishing; Printing which
provides printing services to the Publishing segment and to third
parties; Specialist Digital which includes our acquired digital
classified recruitment business and our digital marketing services
business; and Central which includes revenue and costs not
allocated to the operational divisions and our share of results of
associates. After completing the acquisition of the 80.02% of Local
World not previously owned on 13 November 2015, Local World is
included in the Publishing division. Prior to 13 November 2015 the
Group's 19.98% interest was equity accounted for as an associated
undertaking and included in the Central division.
The revenue and adjusted operating profit by operating segment
is presented below:
2016 2015 Variance Variance
GBPm GBPm GBPm %
--------------------------- ------- ------ --------- ---------
Publishing 660.0 528.8 131.2 24.8%
Printing 36.2 44.9 (8.7) (19.4%)
Specialist Digital 12.9 15.4 (2.5) (16.2%)
Central 3.9 3.6 0.3 8.3%
Revenue 713.0 592.7 120.3 20.3%
--------------------------- ------- ------ --------- ---------
Publishing 148.4 113.7 34.7 30.5%
Printing - - - -
Specialist Digital 2.4 2.6 (0.2) (7.7%)
Central (13.3) (6.7) (6.6) (98.5%)
Adjusted operating profit 137.5 109.6 27.9 25.5%
--------------------------- ------- ------ --------- ---------
The year on year revenue trends are distorted by the acquisition
of Local World in 2015, revenue from the Independent print and
distribution contract which ceased in April 2016, revenues from
Rippleffect which was sold in August 2016, revenue from the
contract to publish the Rugby World Cup match day programmes in
2015 and 2016 is a 53 week period to 1 January 2017 (2015: a 52
week period to 27 December 2015). Revenue trends in this report are
presented on an actual and a like for like basis after adjusting
for these items.
Publishing
The revenue and adjusted operating profit for the Publishing
division is as follows:
2016 2015 Variance Variance
GBPm GBPm GBPm %
----------------------------- -------- -------- --------- ---------
Print 581.0 485.9 95.1 19.6%
Circulation 310.6 271.7 38.9 14.3%
Advertising 236.6 182.0 54.6 30.0%
Other 33.8 32.2 1.6 5.0%
----------------------------- -------- -------- --------- ---------
Digital 79.0 42.9 36.1 84.1%
Display and transactional 58.4 30.4 28.0 92.1%
Classified 20.6 12.5 8.1 64.8%
----------------------------- -------- -------- --------- ---------
Revenue 660.0 528.8 131.2 24.8%
----------------------------- -------- -------- --------- ---------
Costs (511.6) (415.1) (96.5) (23.2%)
----------------------------- -------- -------- --------- ---------
Adjusted operating profit 148.4 113.7 34.7 30.5%
----------------------------- -------- -------- --------- ---------
Adjusted operating margin 22.5% 21.5% 1.0% 4.7%
----------------------------- -------- -------- --------- ---------
Revenue increased by GBP131.2 million to GBP660.0 million with
print revenue increasing by GBP95.1 million and digital revenue
increasing by GBP36.1 million. On a like for like basis revenue
fell by 8.4% with print revenue declining by 10.7% and digital
revenue growing by 12.8%.
Costs increased by GBP96.5 million to GBP511.6 million driven by
the acquisition of Local World partially offset by ongoing cost
mitigation and structural cost savings.
Operating profit increased by GBP34.7 million or 30.5% to
GBP148.4 million with operating margin increasing by 1.0 percentage
point from 21.5% to 22.5%.
Divisional Review continued
Publishing continued
Print revenue
Print revenue grew by 19.6%. On a like for like basis print
revenue fell by 10.7%.
Circulation revenue improved by 14.3%. Like for like circulation
revenues fell by 5.2% with volume declines partially mitigated by
cover price increases.
The Daily Mirror volume fell by 10.8% compared to a 5.1% fall
for the UK national daily tabloid market. The market trends have
been distorted by cover price cuts and increased sampling in the
market. This is against cover price increases for our titles.
The Sunday Mirror and Sunday People volumes declined by 14.7%
and 14.1% respectively in a UK national Sunday tabloid market that
fell by 6.6%. The Daily Record was down 11.5% against an overall
Scottish daily tabloid market decline of 7.9% and the Sunday Mail
was down 13.9% against an overall Scottish Sunday tabloid market
decline of 10.0%. The market trends in the national Sunday market
and Scotland have been distorted by cover price discounting and
changes in sampling.
The market for our regional titles remains difficult with
declines of 15.1% for paid for dailies, 17.1% for paid for weeklies
and 17.9% for paid for Sundays. All titles are experiencing
difficulty and our overall trends remain challenged in the
market.
Print advertising revenue increased by 30.0% with display and
other up by 3.3% and classified up by 75.4%. Like for like print
advertising revenues fell by 17.9% with display and other lower by
15.1% and classified lower by 20.5%. Increased challenges in print
advertising markets saw declines in display advertising across a
number of sectors, in particular retail. Most classified
advertising categories also came under pressure, in particular
recruitment.
The Daily Mirror print advertising volume market share in the UK
national daily tabloid market fell from 18.3% to 17.4%. The Sunday
Mirror and Sunday People share fell with the Sunday Mirror share
falling from 17.5% to 16.2% and the Sunday People share falling
from 11.3% to 10.9%. The Daily Record share improved from 15.9% to
16.8% and the Sunday Mail share improved from 26.6% to 30.5%.
Our regional titles continue to experience difficult advertising
markets, particularly national advertising in our metropolitan
titles.
Other print revenue increased by 5.0%. Like for like other print
revenues decreased by 1.5% with declines in leaflets and business
enterprise revenue partially offset by improvements in Sports Media
and syndication.
Digital revenue
Digital revenue grew by 84.1% with display and transactional
revenue growing by 92.1% and classified revenue growing by 64.8%.
Like for like digital revenue grew by 12.8% with strong digital
growth from display and transactional revenue of 24.7% driven by an
increase in audience partly offset by classified revenue declines
of 11.3%, primarily due to recruitment. Strong growth in digital
audience, with average monthly page views on a like for like basis
growing by 15.4% to 636.1 million, drove the growth in display and
transactional revenue.
Printing
The revenue and adjusted costs of the Printing division is as
follows:
2016 2015 Variance Variance
GBPm GBPm GBPm %
------------------------------ -------- -------- --------- ---------
Contract printing 25.4 32.8 (7.4) (22.6%)
Newsprint supply 8.5 9.9 (1.4) (14.1%)
Other revenue 2.3 2.2 0.1 4.5%
Revenue 36.2 44.9 (8.7) (19.4%)
------------------------------ -------- -------- --------- ---------
External costs (147.9) (148.9) 1.0 0.7%
Publishing division recharge 111.7 104.0 7.7 7.4%
------------------------------ -------- -------- --------- ---------
Adjusted operating result - - - -
------------------------------ -------- -------- --------- ---------
Revenue fell by GBP8.7 million or 19.4% to GBP36.2 million. The
fall in revenue reflects the impact of the cessation of the
contract to print the Independent in April 2016 and the acquisition
of Local World on 13 November 2015 which resulted in contract print
revenue from Local World post acquisition being accounted for as
internal revenue. On a like for like basis revenue fell by GBP1.2
million or 3.4% reflecting the impact of lower volumes partially
offset by higher newsprint prices.
Divisional Review continued
Printing continued
External costs fell by GBP1.0 million or 0.7% to GBP147.9
million with the increased costs from Local World and higher
newsprint costs more than offset by lower external volumes and cost
reduction initiatives. The net cost recharged to the Publishing
division was GBP111.7 million compared to GBP104.0 million in the
prior year. Although the Publishing division recharge increased
year on year, this now includes costs of printing certain Local
World titles which were previously included in external revenue.
Excluding recharges in relation to Local World titles, recharges to
the Publishing division fell by GBP9.7 million due to cost
reduction initiatives.
Specialist Digital
The revenue and adjusted operating profit of the Specialist
Digital division is as follows:
2016 2015 Variance Variance
GBPm GBPm GBPm %
--------------------------- ------- ------- --------- ---------
Advertising 4.8 5.0 (0.2) (4.0%)
Other 8.1 10.4 (2.3) (22.1%)
Revenue 12.9 15.4 (2.5) (16.2%)
--------------------------- ------- ------- --------- ---------
Costs (10.5) (12.8) 2.3 18.0%
--------------------------- ------- ------- --------- ---------
Adjusted operating profit 2.4 2.6 (0.2) (7.7%)
--------------------------- ------- ------- --------- ---------
The Specialist Digital division includes Trinity Mirror Digital
Recruitment, our digital classified recruitment business and
Communicator Corp, our digital communications agency. Rippleffect
was sold in August 2016. Recruitment advertising revenues reduced
by GBP0.2 million compared to 2015 and our marketing services
businesses showed revenue declines of GBP2.3 million. Communicator
Corp revenues were in line with 2015 and the Rippleffect disposal
impact was GBP2.3 million. Operating profit fell marginally by
GBP0.2 million.
Central
The revenue and adjusted operating loss of the Central division
is as follows:
2016 2015 Variance Variance
GBPm GBPm GBPm %
------------------------- ------- ------- --------- ---------
Revenue 3.9 3.6 0.3 8.3%
------------------------- ------- ------- --------- ---------
Costs (18.3) (16.3) (2.0) (12.3%)
Associates 1.1 6.0 (4.9) (81.7%)
Adjusted operating loss (13.3) (6.7) (6.6) (98.5%)
------------------------- ------- ------- --------- ---------
The Central division includes revenue and costs not allocated to
the operational divisions and the share of results of associates.
Revenue primarily relates to rental income from surplus office
space at the Group's main office at Canary Wharf which increased as
more vacant space was leased to third parties. Costs increased by
GBP2.0 million from GBP16.3 million to GBP18.3 million reflecting
increased central costs predominantly from higher legal costs.
The result for 2016 was a loss of GBP13.3 million compared to a
loss of GBP6.7 million in 2015. The reduction in associates is from
Local World which was an associated undertaking until November 2015
prior to it becoming a wholly owned subsidiary. Excluding
associates the adjusted operating loss increased by GBP1.7
million.
Other Items
Related party transactions
There were no material non trading transactions during the
period.
Principal risks and uncertainties
There is an ongoing robust process for the identification,
evaluation and management of the principal risks and uncertainties
faced by the Group. Appropriate management actions are in place to
minimise the impact of the risks and uncertainties which are
identified as part of the risk process.
The principal risks and uncertainties are the same as last
year:
-- Strategy - the overall strategy or elements of the strategy
are inappropriate and the delivery of the strategy is badly
executed;
-- Revenue loss - faster than anticipated loss of revenue from
print and failure to deliver new revenue streams to offset print
decline and drive revenue growth;
-- Pensions - pension deficits grow at such a rate so as to
affect the viability of the Group itself or so that the annual
funding costs consume a disproportionate level of cash flow;
and
-- Historical legal issues - damage to reputation arising from
historical events, direct financial impact from legal claims and
distraction of senior management time from delivering the
strategy.
The outcome of the June 2016 UK referendum on EU membership has
created increased macroeconomic uncertainty. The impact on the
Group has been the reduction in gilt and bond yields and the impact
of this on the deficit in the defined benefit schemes. The
weakening of sterling has also contributed to increased newsprint
costs in the second half of 2016 and in the first half of 2017.
Considerations in relation to the uncertainty and these immediate
impacts are included in the principal risks above. Whilst the
impact is uncertain and hard to assess there is a risk that our
revenues could be lower than expectations.
These principal risks and uncertainties, the risk appetite in
relation to these and the progress made during the year are set out
in the Trinity Mirror plc 2016 Annual Report.
Assessment of the Group's prospects
The directors have assessed the Group's prospects, both as a
going concern and its longer term viability.
Going concern statement
The directors consider it appropriate to adopt the going concern
basis of accounting in the preparation of the Group's annual
consolidated financial statements.
In accordance with LR 9.8.6(3) of the Listing Rules, and in
determining whether the Group's annual consolidated financial
statements can be prepared on a going concern basis, the directors
considered all factors likely to affect its future development,
performance and its financial position, including cash flows,
liquidity position and borrowing facilities and the principal risks
and uncertainties relating to its business activities.
Having considered all the factors impacting the Group's
businesses, including downside sensitivities, the directors are
satisfied that the Group will be able to operate within the terms
and conditions of the Group's financing facilities for the
foreseeable future.
The directors have reasonable expectations that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to
adopt the going concern basis in preparing the Group's annual
consolidated financial statements.
Other Items continued
Assessment of the Group's prospects continued
Viability statement
The directors have a reasonable expectation that the Company and
the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their
assessment.
The directors assessed the prospects of the Group over a three
year period which reflects the budget and planning cycle adopted by
the Group. A three year period is adopted as it enables the
directors to consider the impact of declining print revenues, the
investment required to drive growth in digital and to identify the
extent to which costs need to be minimised to support profits and
cash flow. The assessment takes into account the Group's current
position and the principal risks and uncertainties facing the Group
including those that would threaten the business model, future
performance, solvency or liquidity.
Sensitivity analysis is applied to the projections to model the
potential effects should principal risks and uncertainties actually
occur, individually or in combination. The Board also assessed the
likely effectiveness of any proposed mitigating actions.
It is understood that such future assessments are subject to a
level of uncertainty that increases with time and, therefore,
future outcomes cannot be guaranteed or predicted with certainty.
Also, this assessment was made recognising the principal risks and
uncertainties that could have an impact on the future performance
of the Group and also the financial risks described in the notes to
the consolidated financial statements.
Further information concerning the review of going concern and
viability are set out in the Trinity Mirror plc 2016 Annual
Report.
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Results
Announcement in accordance with applicable laws and regulations.
The responsibility statement below has been prepared in connection
with the Company's full Annual Report for the 53 weeks ended 1
January 2017. Certain points thereof are not included within this
Annual Results Announcement.
The directors confirm to the best of their knowledge:
a) the consolidated financial statements, prepared in accordance
with International Financial Reporting Standards as adopted by the
European Union, give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Company
and the undertakings included in the consolidation taken as a
whole; and
b) the Management Report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties they face.
By order of the Board of directors
Simon Fox Vijay Vaghela
Chief Executive Group Finance Director
Consolidated income statement
for the 53 weeks ended 1 January 2017 (52 weeks ended 27
December 2015)
2016 2015
notes GBPm GBPm
------------------------------------ -------- -------- --------
Revenue 3,4 713.0 592.7
Cost of sales (342.1) (300.3)
------------------------------------- -------- -------- --------
Gross profit 370.9 292.4
Distribution costs (76.0) (67.2)
Administrative expenses:
Non-recurring items 5 (26.0) (4.4)
Restructuring charges in respect
of cost reduction measures (15.1) (15.3)
Amortisation of intangible
assets (0.3) (1.8)
Pension administrative expenses 13 (2.2) (2.1)
Other administrative expenses (158.5) (121.6)
Share of results of associates:
Results before non-recurring
items and amortisation 1.1 6.0
Non-recurring items 5 (0.1) (1.3)
Amortisation of intangible
assets (0.3) (2.5)
Operating profit 3 93.5 82.2
Investment revenues 6 0.6 0.6
Pension finance charge 13 (10.4) (10.9)
Finance costs 7 (7.2) (4.7)
------------------------------------- -------- -------- --------
Profit before tax 76.5 67.2
Tax (charge)/credit 8 (7.0) 9.8
------------------------------------- -------- -------- --------
Profit for the period attributable
to equity holders of the parent 69.5 77.0
2016 2015
Statutory earnings per share Pence Pence
------------------------------------ -------- -------- --------
Earnings per share - basic 10 24.9 30.2
Earnings per share - diluted 10 24.8 29.6
------------------------------------- -------- -------- --------
2016 2015
Adjusted* earnings per share Pence Pence
------------------------------------ -------- -------- --------
Earnings per share - basic 10 38.1 33.9
Earnings per share - diluted 10 37.8 33.2
------------------------------------- -------- -------- --------
* Adjusted items relate to the exclusion of non-recurring items,
restructuring charges in respect of cost reduction measures, the
amortisation of intangible assets, the pension administrative
expenses, the retranslation of foreign currency borrowings, the
impact of fair value changes on derivative financial instruments,
the pension finance charge and the impact of tax legislation
changes. Set out in note 18 is the reconciliation between the
statutory results and the adjusted results.
Consolidated statement of comprehensive income
for the 53 weeks ended 1 January 2017 (52 weeks ended 27
December 2015)
2016 2015
notes GBPm GBPm
------------------------------------- -------- -------- -------
Profit for the period 69.5 77.0
-------------------------------------- -------- -------- -------
Items that will not be reclassified
to profit and loss:
Actuarial losses on defined
benefit pension schemes 13 (188.9) (11.0)
Tax on actuarial losses on defined
benefit pension schemes 8 32.1 2.2
Deferred tax charge including
the future change in tax rate 8 (0.6) (6.0)
Share of items recognised by
associates 1.1 (3.2)
-------------------------------------- -------- -------- -------
Other comprehensive costs for
the period (156.3) (18.0)
Total comprehensive (costs)/income
for the period (86.8) 59.0
-------------------------------------- -------- -------- -------
Consolidated cash flow statement
for the 53 weeks ended 1 January 2017 (52 weeks ended 27
December 2015)
2016 2015
notes GBPm GBPm
---------------------------------------- -------- -------- --------
Cash flows from operating activities
Cash generated from operations 11 91.5 62.6
Income tax paid (12.2) (9.7)
---------------------------------------- -------- -------- --------
Net cash inflow from operating
activities 79.3 52.9
---------------------------------------- -------- -------- --------
Investing activities
Interest received 0.6 0.6
Dividends received from associates - 16.3
Proceeds on disposal of subsidiary
undertaking 17 1.8 -
Proceeds on disposal of land and
buildings 10.6 -
Purchases of property, plant and
equipment (4.3) (3.6)
Acquisition of associate undertaking 16 (0.8) -
Acquisition of subsidiary undertaking - (148.2)
Net debt acquired on acquisition
of subsidiary undertaking - (11.9)
---------------------------------------- -------- -------- --------
Net cash received from/(used in)
investing activities 7.9 (146.8)
---------------------------------------- -------- -------- --------
Financing activities
Dividends paid (14.6) (12.5)
Interest paid on borrowings (5.9) (1.7)
(Repayment of)/ Increase in borrowings (80.0) 80.0
Issue of ordinary share capital - 34.5
Purchase of own shares (2.3) -
Purchase of shares for LTIP (2.0) -
Net cash (used in)/received from
financing activities (104.8) 100.3
---------------------------------------- -------- -------- --------
Net (decrease)/increase in cash
and cash equivalents (17.6) 6.4
---------------------------------------- -------- -------- --------
Cash and cash equivalents at the
beginning of the period 12 55.4 49.0
---------------------------------------- -------- -------- --------
Cash and cash equivalents at the
end of the period 12 37.8 55.4
---------------------------------------- -------- -------- --------
Consolidated statement of changes in equity
for the 53 weeks ended 1 January 2017 (52 weeks ended 27
December 2015)
Retained
Share Capital earnings
Share premium Merger redemption and
capital account reserve reserve other Total
GBPm GBPm GBPm GBPm reserves GBPm
GBPm
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
At 28 December 2014 (25.8) (606.7) - (4.4) 42.0 (594.9)
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Profit for the period - - - - (77.0) (77.0)
Other comprehensive
costs for the period - - - - 18.0 18.0
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Total comprehensive
income for the period - - - - (59.0) (59.0)
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Issue of shares (2.5) - (37.9) - - (40.4)
Credit to equity for
equity-settled share-based
payments - - - - (1.8) (1.8)
Dividends paid - - - - 12.5 12.5
At 27 December 2015 (28.3) (606.7) (37.9) (4.4) (6.3) (683.6)
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Profit for the period - - - - (69.5) (69.5)
Other comprehensive
costs for the period - - - - 156.3 156.3
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Total comprehensive
costs for the period - - - - 86.8 86.8
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Credit to equity for
equity-settled share-based
payments - - - - (1.5) (1.5)
Purchase of shares for
LTIP - - - - 2.0 2.0
Purchase of own shares - - - - 2.3 2.3
Dividends paid - - - - 14.6 14.6
--------
At 1 January 2017 (28.3) (606.7) (37.9) (4.4) 97.9 (579.4)
----------------------------- ---------- ---------- ---------- ------------- ---------- --------
Consolidated balance sheet
at 1 January 2017 (at 27 December 2015)
2016 2015
notes GBPm GBPm
-------------------------------------- -------- -------- --------
Non-current assets
Goodwill 102.0 104.5
Other intangible assets 799.5 799.8
Property, plant and equipment 262.1 300.1
Investment in associates 21.8 19.2
Retirement benefit assets 13 - 29.4
Deferred tax assets 81.5 55.2
Derivative financial instruments 12 - 3.5
--------------------------------------- -------- -------- --------
1,266.9 1,311.7
-------------------------------------- -------- -------- --------
Current assets
Inventories 5.8 6.2
Trade and other receivables 89.8 121.8
Derivative financial instruments 12 14.8 -
Cash and cash equivalents 12 37.8 55.4
--------------------------------------- -------- -------- --------
148.2 183.4
-------------------------------------- -------- -------- --------
Total assets 1,415.1 1,495.1
--------------------------------------- -------- -------- --------
Non-current liabilities
Borrowings 12 - (132.6)
Retirement benefit obligations 13 (466.0) (334.6)
Deferred tax liabilities (164.1) (175.9)
Provisions 14 (3.6) (7.2)
(633.7) (650.3)
-------------------------------------- -------- -------- --------
Current liabilities
Trade and other payables (83.1) (94.3)
Borrowings 12 (81.2) (15.0)
Current tax liabilities (9.8) (8.4)
Provisions 14 (27.9) (43.5)
(202.0) (161.2)
-------------------------------------- -------- -------- --------
Total liabilities (835.7) (811.5)
--------------------------------------- -------- -------- --------
Net assets 579.4 683.6
--------------------------------------- -------- -------- --------
Equity
Share capital 15 (28.3) (28.3)
Share premium account 15 (606.7) (606.7)
Merger reserve 15 (37.9) (37.9)
Capital redemption reserve 15 (4.4) (4.4)
Retained earnings and other reserves 15 97.9 (6.3)
--------------------------------------- -------- -------- --------
Total equity attributable to
equity holders of the parent (579.4) (683.6)
--------------------------------------- -------- -------- --------
Notes to the consolidated financial statements
for the 53 weeks ended 1 January 2017 (52 weeks ended 27
December 2015)
1. General information
The financial information in the Annual Results Announcement is
derived from but does not represent the full statutory accounts of
Trinity Mirror plc. The statutory accounts for the 52 weeks ended
27 December 2015 have been filed with the Registrar of Companies
and those for the 53 weeks ended 1 January 2017 will be filed
following the Annual General Meeting on 4 May 2017. The auditors'
reports on the statutory accounts for the 52 weeks ended 27
December 2015 and for the 53 weeks ended 1 January 2017 were
unqualified, do not include reference to any matters to which the
auditors drew attention by way of emphasis of matter without
qualifying the reports and do not contain a statement under Section
498 (2) or (3) of the Companies Act 2006.
Whilst the financial information included in this Annual Results
Announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRS), this announcement does not itself contain
sufficient information to comply with IFRS. This Annual Results
Announcement constitutes a dissemination announcement in accordance
with Section 6.3 of the Disclosure and Transparency Rules (DTR).
The Annual Report for the 53 weeks ended 1 January 2017 is
available on the Company's website at www.trinitymirror.com and at
the Company's registered office at One Canada Square, Canary Wharf,
London E14 5AP and will be sent to shareholders who have elected to
receive a hard copy by the end of March 2017.
The financial information has been prepared for the 53 weeks
ended 1 January 2017 and the comparative period has been prepared
for the 52 weeks ended 27 December 2016. Throughout this report,
the financial information for the 53 weeks ended 1 January 2017 is
referred to and headed 2016 and for the 52 weeks ended 27 December
2015 is referred to and headed 2015.
2. Accounting polices
The financial information has been prepared in accordance with
IFRS as adopted by the European Union. These are subject to ongoing
amendment by the International Accounting Standards Board and by
the European Union and are therefore subject to change. As a
result, the financial information contained herein will need to be
updated for any subsequent amendment to IFRS or any new standards
that are issued. The financial information has been prepared under
the historical cost convention as modified by the revaluation of
freehold properties which on transition to IFRS were deemed to be
the cost of the asset and for derivative financial instruments and
shared-based payments that have been measured at fair value.
The accounting policies used in the preparation of the
consolidated financial statements for the 53 weeks ended 1 January
2017 have been consistently applied to all the periods presented
except for the changes in accounting policy noted below and are set
out in the Trinity Mirror plc 2016 Annual Report. These
consolidated financial statements have been prepared on a going
concern basis as set out in the Management Report in this Annual
Results Announcement.
Changes in accounting policy
The same accounting policies, presentation and methods of
computation are followed in the consolidated financial statements
as applied in the Group's latest annual consolidated financial
statements.
Annual Improvements 2010-2012 cycle and 2011-2013 cycle have
been implemented and had no material impact on the Group.
The following standards, which have not been applied and when
adopted are not expected to have a material impact on the Group,
were in issue and will be effective for periods beginning on are
after 1 January 2016 unless stated below:
-- IFRS 10 (Amended)'Consolidated Financial Statements'
-- IFRS 11 (Amended) 'Joint Arrangements'
-- IFRS 12 (Amended) 'Disclosure of Interests in Other Entities'
-- IAS 1 (Amended) 'Presentation of Financial Statements'
-- IAS 16 (Amended) 'Property, Plant and Equipment'
-- IAS 27 (Amended) 'Separate Financial Statements'
-- IAS 28 (Amended) 'Investments in Associated and Joint Ventures'
-- IAS 38 (Amended) 'Intangible Assets'
-- Annual improvements 2012 - 2014 cycle
-- IAS 7 (Amended) 'Statement of Cash Flows' - effective for
periods beginning on or after 1 January 2017*
-- IAS 12 (Amended) 'Income taxes' - effective for periods
beginning on or after 1 January 2017*
-- IFRS 2 (Amended) 'Share-based Payment' - effective for
periods beginning on or after 1 January 2018*
-- IFRS 9 (Amended) 'Financial Instruments' - effective for
periods beginning on or after 1 January 2018
-- IAS 40 (Amended) 'Investment Property' - effective for
periods beginning on or after 1 January 2018*
-- Annual improvements 2014 - 2016 cycle - effective for periods
beginning on or after 1 January 2018*
* Not yet endorsed for use in the EU
The following new standards which have not been applied and for
which the impact on the Group is being assessed:
-- IFRS 15 (Issued)'Revenue from Contracts with Customers' -
effective for periods beginning on or after 1 January 2018
-- IFRS 16 (Issued) 'Leases' - effective for periods beginning on or after 1 January 2019
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed
below:
Provisions
There is uncertainty as to liabilities arising from the outcome
or resolution of the ongoing historical legal issues. Provisions
are measured at the best estimate of the expenditure required to
settle the obligation based on the assessment of the related facts
and circumstances at each reporting date.
2. Accounting polices (continued)
Key sources of estimation uncertainty (continued)
Retirement benefits
Actuarial assumptions adopted and external factors can
significantly impact the surplus or deficit of defined benefit
pension schemes. Valuations for funding and accounting purposes are
based on assumptions about future economic and demographic
variables. This results in risk of a volatile valuation deficit and
the risk that the ultimate cost of paying benefits is higher than
the current assessed liability value. Advice is sourced from
independent and qualified actuaries in selecting suitable
assumptions at each reporting date.
Impairment of goodwill and other intangible assets
In addition to the areas of judgement outlined below, there are
also sources of estimation uncertainty in the value in use
calculation. The most significant area of uncertainty relates to
expected future cash flows for each cash-generating unit.
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's accounting policies,
described above, management has made the following judgements that
have the most significant effect on the amounts recognised in the
financial statements:
Impairment of goodwill and other intangible assets
Determining whether goodwill and other intangible assets are
impaired requires an estimation of the value in use of the
cash-generating unit to which these have been allocated. It also
requires assessment of the appropriateness of the cash-generating
unit at each reporting date. The value in use calculation requires
the Group to estimate the future cash flows expected to arise from
the cash-generating unit and a suitable discount rate in order to
calculate present value. Projections are based on both internal and
external market information and reflect past experience. The
discount rate reflects a long-term equity and debt mix based on the
period end enterprise value assuming a long-term debt to EBITDA
ratio of 2.5 times.
3. Operating segments
Operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Board and chief operating decision maker (Executive
directors) to allocate resources to the segments and to assess
their performance. The Group has four operating segments that are
regularly reviewed by the Board and chief operating decision
maker.
The operating segments are: Publishing which includes all of our
newspapers and associated digital publishing; Printing which
provides printing services to the Publishing segment and to third
parties; Specialist Digital which includes our acquired digital
classified recruitment and our digital marketing services business;
and Central which includes revenue and costs not allocated to the
operational divisions and our share of results of associates. After
completing the acquisition of the 80.02% of Local World not
previously owned on 13 November 2015, Local World is included in
the Publishing division. Prior to 13 November 2015, the Group's
19.98% interest was equity accounted for as an associated
undertaking and included in the Central division.
The accounting policies used in the preparation of each
segment's revenue and results are the same as the Group's
accounting policies. The Board and chief operating decision maker
are not provided with an amount for total assets by segment. The
Group's operations are primarily located in the UK and the Group is
not subject to significant seasonality during the year.
Segment revenue and results
53 weeks ended 1 January Publishing
2017 2016 Specialist
GBPm Printing Digital Central Total
2016 2016 2016 2016
GBPm GBPm GBPm GBPm
------------------------------- ------------ ----------- ------------- ---------- --------
Revenue
Segment sales 660.0 147.9 13.3 3.9 825.1
Inter-segment sales - (111.7) (0.4) - (112.1)
------------------------------- ------------ ----------- ------------- ---------- --------
Total revenue 660.0 36.2 12.9 3.9 713.0
------------------------------- ------------ ----------- ------------- ---------- --------
Segment result 148.4 - 2.4 (13.3) 137.5
------------ ----------- ------------- ----------
Non-recurring items (26.1)
Restructuring charges
in respect of cost reduction
measures (15.1)
Amortisation of intangible
assets (0.6)
Pension administrative
expenses (2.2)
------------------------------- ------------ ----------- ------------- ---------- --------
Operating profit 93.5
Investment revenues 0.6
Pension finance charge (10.4)
Finance costs (7.2)
------------------------------- ------------ ----------- ------------- ---------- --------
Profit before tax 76.5
Tax charge (7.0)
------------------------------- ------------ ----------- ------------- ---------- --------
Profit for the period 69.5
------------------------------- ------------ ----------- ------------- ---------- --------
3. Operating segments (continued)
Segment revenue and results (continued)
52 weeks ended 27 December Publishing Specialist
2015 2015 Printing Digital Central Total
GBPm 2015 2015 2015 2015
GBPm GBPm GBPm GBPm
------------------------------- ------------ ----------- ----------- ---------- --------
Revenue
Segment sales 528.8 148.9 16.2 3.6 697.5
Inter-segment sales - (104.0) (0.8) - (104.8)
------------------------------- ------------ ----------- ----------- ---------- --------
Total revenue 528.8 44.9 15.4 3.6 592.7
------------------------------- ------------ ----------- ----------- ---------- --------
Segment result 113.7 - 2.6 (6.7) 109.6
------------ ----------- ----------- ----------
Non-recurring items (5.7)
Restructuring charges
in respect of cost reduction
measures (15.3)
Amortisation of intangible
assets (4.3)
Pension administrative
expenses (2.1)
------------------------------- ------------ ----------- ----------- ---------- --------
Operating profit 82.2
Investment revenues 0.6
Pension finance charge (10.9)
Finance costs (4.7)
------------------------------- ------------ ----------- ----------- ---------- --------
Profit before tax 67.2
Tax credit 9.8
------------------------------- ------------ ----------- ----------- ---------- --------
Profit for the period 77.0
------------------------------- ------------ ----------- ----------- ---------- --------
4. Revenue
2016 2015
GBPm GBPm
----------------------------- ------ ------
Publishing Print 581.0 485.9
----------------------------- ------ ------
Circulation 310.6 271.7
Advertising 236.6 182.0
Other 33.8 32.2
----------------------------- ------ ------
Publishing Digital 79.0 42.9
----------------------------- ------ ------
Display and transactional 58.4 30.4
Classified 20.6 12.5
----------------------------- ------ ------
Printing 36.2 44.9
Specialist Digital 12.9 15.4
Central 3.9 3.6
Total revenue 713.0 592.7
----------------------------- ------ ------
The Group's operations are located primarily in the UK. The
Group's revenue by location of customers is set out below:
2016 2015
GBPm GBPm
---------------------------- ------ ------
UK and Republic of Ireland 709.9 589.9
Continental Europe 2.8 2.7
Rest of World 0.3 0.1
----------------------------- ------ ------
Total revenue 713.0 592.7
----------------------------- ------ ------
5. Non-recurring items
2016 2015
GBPm GBPm
------------------------------------------ ------- -------
Contract termination fee (a) (2.0) -
Impairment of goodwill (b) (2.0) -
Provision for historical legal issues
(c) (11.5) (29.0)
Closure of print sites and press
line (d) (10.7) (3.4)
Profit on disposal of land and buildings
(e) 0.2 -
Local World acquisition transaction
costs (f) - (5.6)
Gain on deemed disposal of Local
World associate interest (g) - 33.6
Non-recurring items included in
administrative expenses (26.0) (4.4)
Non-recurring items included in
share of results of associates (h) (0.1) (1.3)
Total non-recurring items (26.1) (5.7)
------------------------------------------- ------- -------
5. Non-recurring items (continued)
(a) In the first quarter of 2016, following extensive work on
the separation of certain titles the Group had agreed to dispose to
the Iliffe family as part of the acquisition of Local World, the
Board concluded that it was in the best interests of the Company
not to proceed with the disposal and therefore pay a break fee of
GBP2.0 million to Iliffe Print Cambridge Limited.
(b) In the first half, an impairment review comparing the
carrying value of the Group's assets with the value in use was
undertaken in accordance with IAS 36. The review indicated that a
GBP2.0 million charge against the carrying value of goodwill in our
Specialist Digital division was required.
(c) Provision of GBP11.5 million (2015: GBP29.0 million) to
cover the costs of dealing with historical legal issues in relation
to phone hacking. It remains uncertain as to how these matters will
progress, whether further allegations or claims will be made, and
their financial impact. Due to this uncertainty a contingent
liability has been highlighted in note 19.
(d) Costs associated with closure of the printing site in
Cardiff and a press line in Scotland (Cardonald) including the
write off of fixed assets of GBP9.1 million (2015: costs associated
with the closure of the printing sites in Scotland (Blantyre) in
June 2015 and Newcastle in December 2015 including the write off of
fixed assets of GBP2.5 million).
(e) Profit on disposal of Cardiff and Coventry properties with
net proceeds of GBP10.6 million less carrying value of GBP10.4
million.
(f) In 2015, transaction costs incurred by the Group relating to
the acquisition of Local World on 13 November 2015.
(g) In 2015, gain on the accounting deemed disposal of the
19.98% interest in Local World on 13 November 2015.
(h) Group's share of restructuring costs incurred by PA Group
(2015: Group's share of transaction related costs incurred by Local
World and restructuring costs incurred by PA Group and Local
World).
6. Investment revenues
2016 2015
GBPm GBPm
---------------------------------- ------ ------
Interest income on bank deposits
and other interest receipts 0.6 0.6
----------------------------------- ------ ------
7. Finance costs
2016 2015
GBPm GBPm
----------------------------------------- ------- ------
Interest on bank overdrafts and
borrowings (4.9) (2.7)
------------------------------------------ ------- ------
Total interest expense (4.9) (2.7)
Fair value gain on derivative financial
instruments 11.3 0.3
Foreign exchange loss on retranslation
of borrowings (13.6) (2.3)
------------------------------------------ ------- ------
Finance costs (7.2) (4.7)
------------------------------------------ ------- ------
8. Tax
2016 2015
GBPm GBPm
---------------------------------------- ------- -------
Corporation tax charge for the period (20.4) (9.8)
Prior period adjustment 1.2 0.9
----------------------------------------- ------- -------
Current tax charge (19.2) (8.9)
----------------------------------------- ------- -------
Deferred tax credit for the period 1.8 2.1
Prior period adjustment 0.6 (0.6)
Deferred tax rate change 9.8 17.2
----------------------------------------- ------- -------
Deferred tax credit 12.2 18.7
----------------------------------------- ------- -------
Tax (charge)/credit (7.0) 9.8
----------------------------------------- ------- -------
Reconciliation of tax (charge)/credit % %
Standard rate of corporation tax (20.0) (20.3)
Tax effect of items that are not
deductible in determining taxable
profit (5.4) (2.6)
Tax effect of items that are not
taxable in determining taxable profit 1.1 10.9
Prior period adjustment 2.3 0.4
Deferred tax rate change 12.6 25.6
Tax effect of share of results of
associates 0.2 0.6
Tax (charge)/credit rate (9.2) 14.6
----------------------------------------- ------- -------
Included in the 'tax effect of items that are not taxable in
determining taxable profit' is the impact of the utilisation of
unrecognised losses of GBP1.7 million (gross) and losses on asset
disposals (2015: utilisation of unrecognised losses of GBP2.1
million (gross) and the impact of the non-taxable gain on the
accounting deemed disposal of the 19.98% interest in Local World of
GBP33.6 million).
The standard rate of corporation tax for the year is 20% (2015:
blended rate of 20.25% being a mix of 21% up to 31 March 2015 and
20% from 1 April 2015). The current tax liabilities amounted to
GBP9.8 million (27 December 2015: GBP8.4 million) at the reporting
date.
8. Tax (continued)
The opening deferred tax position is recalculated in the period
in which a change in the standard rate of corporation tax has been
enacted or substantively enacted by parliament. The change in rate
from 18% to 17% in 2020 has been accounted for in the current year
resulting in a GBP9.8 million credit in the consolidated income
statement and a GBP4.4 million charge in the consolidated statement
of comprehensive income (2015: change in rate from 20% to 19% in
2017 and from 19% to 18% in 2020 resulting in a GBP17.2 million
credit in the consolidated income statement and a GBP6.0 million
charge in the consolidated statement of comprehensive income).
The tax on actuarial losses on defined benefit pension schemes
taken to the consolidated statement of comprehensive income is a
credit of GBP32.1 million comprising a deferred tax credit of
GBP26.5 million and a current tax credit of GBP5.6 million (2015:
credit of GBP2.2 million comprising a deferred tax credit of GBP0.8
million and a current tax credit of GBP1.4 million). The deferred
tax charge including the future change in tax rate of GBP0.6
million (2015: GBP6.0 million) comprises a charge of GBP4.4 million
(2015: GBP6.0 million) from the change in future tax rates and a
credit of GBP3.8 million (2015: nil) from a change in the expected
reversal of timing differences. The tax on share-based payments
taken to equity is nil (2015: credit of GBP0.5 million comprising a
deferred tax charge of GBP1.1 million and a current tax credit of
GBP1.6 million).
9. Dividends
2016 2015
Pence Pence
per share per share
------------------------------------------ ----------- -----------
Dividends paid per share and recognised
as distributions to equity holders
in the period 5.25 5.00
------------------------------------------- ----------- -----------
Dividend proposed per share but
not paid nor included in the accounting
records 3.35 3.15
------------------------------------------- ----------- -----------
The Board proposes a final dividend for 2016 of 3.35 pence per
share. An interim dividend for 2016 of 2.10 pence per share was
paid on 25 November 2016 bringing the total dividend in respect of
2016 to 5.45 pence per share. The 2016 final dividend payment is
expected to amount to GBP9.2 million. The 2016 interim dividend
payment amounted to GBP5.8 million.
On 5 May 2016 the final dividend proposed for 2015 of 3.15 pence
per share was approved by shareholders at the Annual General
Meeting and was paid on 10 June 2016. 2015 final dividend payment
amounted to GBP8.8 million.
10. Earnings per share
2016 2015
GBPm GBPm
-------------------------------------- ------- -------
Profit after tax before adjusted*
items 106.2 86.4
Adjusted items:
Non-recurring items (after tax) (22.0) 1.5
Amortisation of intangibles (after
tax) (0.5) (3.9)
Pension charges (after tax) (10.1) (10.4)
Restructuring charges (after tax) (12.1) (12.2)
Finance costs (after tax) (1.8) (1.6)
Tax legislation changes 9.8 17.2
Profit for the period 69.5 77.0
--------------------------------------- ------- -------
* Adjusted items relate to the exclusion of non-recurring items,
restructuring charges in respect of cost reduction measures, the
amortisation of intangible assets, the pension administrative
expenses, the retranslation of foreign currency borrowings, the
impact of fair value changes on derivative financial instruments,
the pension finance charge and the impact of tax legislation
changes. Set out in note 18 is the reconciliation between the
statutory results and the adjusted results
2016 2015
Thousand Thousand
--------------------------------------- ---------- ----------
Weighted average number of ordinary
shares for basic earnings per share 278,895 254,936
Effect of potential dilutive ordinary
shares in respect of share awards 1,864 5,024
Weighted average number of ordinary
shares for diluted earnings per
share 280,759 259,960
---------------------------------------- ---------- ----------
Basic earnings per share is calculated by dividing profit for
the period attributable to equity holders of the parent by the
weighted average number of ordinary shares during the period.
Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares in issue on the assumption of
conversion of all potentially dilutive ordinary shares. The
weighted average number of potentially dilutive ordinary shares not
currently dilutive was 2,805,385 (2015: 2,681,295).
2016 2015
Statutory earnings per share Pence Pence
Earnings per share - basic 24.9 30.2
Earnings per share - diluted 24.8 29.6
--------------------------------- ------- -------
2016 2015
Adjusted* earnings per share Pence Pence
-------------------------------- ------- -------
Earnings per share - basic 38.1 33.9
Earnings per share - diluted 37.8 33.2
--------------------------------- ------- -------
10. Earnings per share (continued)
The basic earnings per share impact for each non-recurring item
disclosed in note 5 are as follows:
2016 2015
Pence Pence
------------------------------------------ ------- -------
Contract termination fee (0.7) -
Impairment of goodwill (0.7) -
Provision for historical legal issues (3.3) (9.1)
Closure of print sites and press
line (3.5) (1.1)
Profit on disposal of land and buildings 0.2 -
Local World acquisition transaction
costs - (1.9)
Gain on deemed disposal of Local
World associate interest - 13.2
(Loss)/profit per share - non-recurring
items included in administrative
expenses (8.0) 1.1
Loss per share - non-recurring items
included in share of results of
associates - (0.5)
(Loss)/profit per share - total
non-recurring items (8.0) 0.6
------------------------------------------- ------- -------
* Adjusted items relate to the exclusion of non-recurring items,
restructuring charges in respect of cost reduction measures, the
amortisation of intangible assets, the pension administrative
expenses, the retranslation of foreign currency borrowings, the
impact of fair value changes on derivative financial instruments,
the pension finance charge and the impact of tax legislation
changes. Set out in note 18 is the reconciliation between the
statutory results and the adjusted results.
11. Notes to the consolidated cash flow statement
2016 2015
GBPm GBPm
------------------------------------------- ------ ------
Operating profit 93.5 82.2
Depreciation of property, plant and
equipment 22.2 22.4
Amortisation of intangible assets 0.3 1.8
Impairment of goodwill 2.0 -
Share of results of associates (0.7) (2.2)
Charge for share-based payments 1.5 1.5
Gain on deemed disposal of Local
World associate interest - (33.6)
Profit on disposal of land and buildings (0.2) -
Write-off of fixed assets 9.6 4.0
Pension administrative expenses 2.2 2.1
Pension deficit funding payments (40.7) (20.0)
-------------------------------------------- ------ ------
Operating cash flows before movements
in working capital 89.7 58.2
Decrease in inventories 0.4 1.1
Decrease in receivables 29.7 13.7
Decrease in payables (28.3) (10.4)
-------------------------------------------- ------ ------
Cash flows from operating activities 91.5 62.6
-------------------------------------------- ------ ------
12. Net debt
The statutory net debt for the Group is as follows:
Derivative
27 December Cash financial Foreign Term Transfer 1 January
2015 flow instruments* exchange* loan to current 2017
GBPm GBPm GBPm GBPm repaid GBPm GBPm
GBPm
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
Non-current
liabilities
Loan notes (67.6) - - (13.6) - 81.2 -
Term loan (65.0) - - - 65.0 - -
(132.6) - - (13.6) 65.0 81.2 -
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
Current liabilities
Loan notes - - - - - (81.2) (81.2)
Term loan (15.0) - - - 15.0 - -
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
(15.0) - - - 15.0 (81.2) (81.2)
Non-current
assets
Derivative
financial
instruments 3.5 - 11.3 - - (14.8) -
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
3.5 - 11.3 - - (14.8) -
Current assets
Derivative
financial
instruments - - - - - 14.8 14.8
Cash and cash
equivalents 55.4 62.4 - - (80.0) - 37.8
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
55.4 62.4 - - (80.0) 14.8 52.6
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
Net debt (88.7) 62.4 11.3 (13.6) - - (28.6)
---------------------- -------------- ------- --------------- ------------ --------- ------------- ------------
* The impact on the loan notes of translation into sterling at
the settlement date or at the reporting date exchange rate and the
impact on the derivative financial instruments of being stated at
fair value at the settlement date or at the reporting date are
included in the consolidated income statement within finance costs
as set out in note 7.
The Group has a cross-currency interest rate swap to manage its
exposure to foreign exchange movements and interest rate movements
on the private placement loan notes. Fair value is calculated using
discounted cash flows based upon forward rates available to the
Group. The cross-currency interest rate swap is classed in level
two of the financial instruments hierarchy. Level two fair value
measurements are those derived from inputs other than quoted prices
that are observable for the asset or liability, either directly or
indirectly.
12. Net debt (continued)
The contracted net debt for the Group, assuming that the private
placement loan notes and the cross-currency interest rate swap is
not terminated prior to maturity, is as follows:
27 December Cash Term loan Transfer 1 January
2015 flow repaid to current 2017
GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------ ------ ---------- ------------ ----------
Non-current liabilities
Loan notes (68.3) - - 68.3 -
Term loan (65.0) - 65.0 - -
(133.3) - 65.0 68.3 -
--------------------------- ------------ ------ ---------- ------------ ----------
Current liabilities
Loan notes - - - (68.3) (68.3)
Term loan (15.0) - 15.0 - -
--------------------------- ------------ ------ ---------- ------------ ----------
(15.0) - 15.0 (68.3) (68.3)
--------------------------- ------------ ------ ---------- ------------ ----------
Current assets
Cash and cash equivalents 55.4 62.4 (80.0) - 37.8
--------------------------- ------------ ------ ---------- ------------ ----------
55.4 62.4 (80.0) - 37.8
--------------------------- ------------ ------ ---------- ------------ ----------
Net debt (92.9) 62.4 - - (30.5)
--------------------------- ------------ ------ ---------- ------------ ----------
The statutory net debt reconciles to the contracted net debt as
follows:
2016 2015
GBPm GBPm
---------------------------------------- ------- -------
Statutory net debt (28.6) (88.7)
Loan notes at period end exchange rate 81.2 67.6
Loan notes at swapped exchange rate (68.3) (68.3)
Cross-currency interest rate swap (14.8) (3.5)
Contracted net debt (30.5) (92.9)
---------------------------------------- ------- -------
13. Retirement benefit schemes
Defined contribution pension schemes
The Group operates the Trinity Mirror Pension Plan (the 'TMPP
Scheme'), which is a defined contribution pension scheme for
qualifying employees. The assets of the TMPP Scheme are held
separately from those of the Group in funds under the control of
Trustees. The TMPP Scheme has three sections, one for members who
elected to join prior to 1 May 2013 which is now closed to new
members, one for members who elect to join from 1 May 2013 and one
for members from 1 July 2013 who are auto enrolled. Local World
operates a Group Personal Pension Plan (the 'LW Plan'), which is a
defined contribution pension scheme for qualifying employees where
employees hold a personal pension policy directly with Scottish
Widows.
The Group implemented the Auto Enrolment legislation from 1 July
2013. Local World will implement the Auto Enrolment legislation
from 1 July 2017.
The current service cost charged to the consolidated income
statement of GBP13.6 million (2015: GBP13.3 million) represents
contributions of GBP12.3 million (2015: GBP13.1 million) paid to
the TMPP Scheme by the Group at rates specified in the scheme rules
and contributions of GBP1.3 million (2015: GBP0.2 million) paid
into the LW Plan by the Group at rates specified in the scheme
rules. All amounts that were due have been paid over to the schemes
at all reporting dates.
Defined benefit pension schemes
Background
The defined benefit pension schemes operated by the Group were
closed to future accrual in 2010. The Group now has three (2015:
five) defined benefit pension schemes following the merger of the
Mirror Group Pension Scheme and the MGN Past Service Pension Scheme
into the MGN Pension Scheme (together the 'Mirror Schemes').
The remaining schemes are the MGN Pension Scheme (the 'MGN
Scheme'), the Trinity Retirement Benefit Scheme (the 'Trinity
Scheme') and the Midland Independent Newspapers Pension Scheme (the
'MIN Scheme').
Characteristics
The defined benefit pension schemes provide pensions to members
which are based on the final salary pension payable normally from
age 65 plus surviving spouses or dependents benefits following a
member's death. Benefits increase both before and after retirement
either in line with statutory requirements or in accordance with
the scheme rules. Such increases are either at fixed rates or in
line with retail or consumer prices but subject to upper and lower
limits. All of the schemes are independent of the Group with assets
held independently of the Group. They are governed by Trustees who
administer benefits in accordance with the scheme rules and
appropriate UK legislation. The schemes each have a professional
independent trustee as their chairman with generally half of the
remaining Trustees nominated by the members and half by the
Group.
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
Maturity profile and cash flow
Across the schemes, the invested assets are expected to be
sufficient to pay the uninsured benefits due up to 2045, based on
the reporting date assumptions. The remaining uninsured benefit
payments, payable from 2046, are due to be funded by a combination
of asset outperformance and the deficit contributions currently
scheduled to be paid by 2025. The liabilities related 50% to
current pensioners and their spouses or dependants and 50% related
to deferred pensioners. The average term from the year end to
payment of the remaining uninsured benefits is expected to be
around 20 years. Uninsured pension payments in 2016, excluding lump
sums and transfer value payments, were GBP41 million, and these are
projected to rise to an annual peak in 2039 of GBP75 million and
reducing thereafter.
Funding arrangements
The funding of the Group's schemes is subject to UK pension
legislation as well as the guidance and codes of practice issued by
the Pensions Regulator. Funding targets are agreed between the
Trustees and the Group and are reviewed and revised usually every
three years. The funding targets must include a margin for prudence
above the expected cost of paying the benefits and so are different
to the liability value for IAS 19 purposes. The funding deficits
revealed by these triennial valuations are removed over time in
accordance with an agreed recovery plan and schedule of
contributions for each scheme.
The valuations of the schemes as at 31 December 2013 were
completed on 9 December 2014. The valuations showed deficits of
GBP336.7 million for the Mirror Schemes, GBP31.9 million for the
Trinity Scheme and GBP26.7 million for the MIN Scheme.
As part of the agreement of the valuations, deficit funding
contributions were agreed at GBP36.2 million for 2015, 2016 and
2017. Contributions were agreed at around GBP36 million from 2018
to 2023 and then reduce to around GBP21 million for 2024 and 2025
after which contributions were due to cease. The combined deficit
was expected to be eradicated by 2027 by a combination of the
contributions and asset returns. In December 2014, the Group
prepaid contributions for 2015 and 2016 of GBP16.5 million and
GBP0.5 million respectively.
In addition, the Group agreed that in respect of dividend
payments in 2015, 2016 and 2017 that additional contributions would
be paid at 50% of the excess if dividends in 2015 were above 5
pence per share. For 2016 and 2017 the threshold increases in line
with the increase in dividends capped at 10% per annum.
Payments in 2016 were GBP40.7 million (2015: GBP20.0 million)
comprising GBP35.7 million of deficit funding and GBP5.0 million in
connection with the share buyback. Payments due in 2016 were
GBP36.2 million less the prepayment in December 2014 of GBP0.5
million. Alongside the share buyback programme, the Group paid to
the defined benefit pension schemes an additional GBP5.0 million in
August 2016 with up to a further GBP2.5 million payable in 2017.
Payments were GBP29.6 million (2015: GBP14.3 million) to the Mirror
Schemes, GBP7.0 million (2015: GBP3.7 million) to the Trinity
Scheme and GBP4.1 million (2015: GBP2.0 million) to the MIN
Scheme.
The future deficit funding commitments are linked to the
three-yearly actuarial valuations. There is no link to the IAS 19
valuations which use different actuarial assumptions and are
updated at each reporting date. The next funding valuation of the
schemes has an effective date of 31 December 2016 and these
valuations, which are currently in progress, are required to be
completed by 31 March 2018.
Although the funding commitments do not generally impact the IAS
19 position, IFRIC 14 guides companies to consider for IAS19
disclosures whether any surplus can be recognised as a balance
sheet asset and whether any future funding commitments in excess of
the IAS 19 liability should be provisioned for. Based on the
interpretation of the rules for each of the defined benefit pension
schemes, the Group considers that it has an unconditional right to
any potential surplus on the ultimate wind-up of each scheme after
all benefits to members have been paid. Under IFRIC 14 it is
therefore appropriate to recognise any IAS 19 surpluses which may
emerge in future, and not to recognise any potential additional
liabilities in respect of future funding commitments. This
conclusion was reconsidered and reconfirmed during the year
following the issuance of an Exposure Draft of changes to IFRIC14
which provides more detailed guidance on this area.
Risks
Valuations for funding and accounting purposes are based on
assumptions about future economic and demographic variables. This
results in risk of a volatile valuation deficit and the risk that
the ultimate cost of paying benefits is higher than the current
assessed liability value.
The main sources of risk are:
-- Investment risk: a reduction in asset returns (or assumed future asset returns);
-- Inflation risk: an increase in benefit increases (or assumed future increases); and
-- Longevity risk: an increase in average life spans (or assumed life expectancy).
These risks are managed by:
-- Investing in insured annuity policies: the income from these
policies exactly matches the benefit payments for the members
covered, removing all of the above risks. At the reporting date the
insured annuity policies covered 17% of total liabilities;
-- Investing a proportion of assets in government and corporate
bonds: changes in the values of the bonds broadly match changes in
the values of the uninsured liabilities, reducing the investment
risk, however some risk remains as the durations of the bonds are
typically shorter than that of the liabilities and so the values
may still move differently. At the reporting date this amounted to
47% of assets excluding the insured annuity policies;
-- Investing a proportion in equities: with the aim of achieving
outperformance and so reducing the deficits over the long term. At
the reporting date this amounted to 51% of assets excluding the
insured annuity policies; and
-- The gradual sale of equities over time to purchase additional
annuity policies or bonds: to further reduce risk as the schemes,
which are closed to future accrual, mature.
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
Pension scheme accounting deficits are snapshots at moments in
time and are not used by either the Company or Trustees to frame
funding policy. The Company and Trustees are aligned in focusing on
the long-term sustainability of the funding policy which aims to
balance the interests of the Company's shareholders and members of
the schemes. The Company and Trustees are also aligned in reducing
pensions risk over the long term and at a pace which is affordable
to the Company.
The Group is not exposed to any unusual, entity specific or
scheme specific risks. There were no plan amendments, settlements
or curtailments in 2016 or during 2015 which resulted in a pension
cost.
Actuarial projections at the 2016 year end showed removal of the
accounting deficit by 2024 due to scheduled contributions and asset
returns at the current target rate.
Results
For the purposes of the Group's consolidated financial
statements, valuations have been performed in accordance with the
requirements of IAS 19 with scheme liabilities calculated using a
consistent projected unit valuation method and compared to the
estimated value of the scheme assets at 1 January 2017.
The assets and liabilities of the schemes as at the reporting
date are:
MGN Scheme Trinity MIN Scheme Total
GBPm Scheme GBPm GBPm
GBPm
----------------------------- ------------ --------- ------------ ---------
Present value of uninsured
scheme liabilities (1,249.5) (383.6) (131.2) (1,764.3)
Present value of insured
scheme liabilities (174.8) (80.0) (108.5) (363.3)
------------------------------ ------------ --------- ------------ ---------
Total present value
of scheme liabilities (1,424.3) (463.6) (239.7) (2,127.6)
------------------------------ ------------ --------- ------------ ---------
Invested and cash
assets at fair value 855.4 365.3 77.6 1,298.3
Value of insurance
contracts 174.8 80.0 108.5 363.3
------------------------------ ------------ --------- ------------ ---------
Total value of scheme
assets 1,030.2 445.3 186.1 1,661.6
------------------------------ ------------ --------- ------------ ---------
Net scheme deficit (394.1) (18.3) (53.6) (466.0)
------------------------------ ------------ --------- ------------ ---------
Based on actuarial advice, the assumptions used in calculating
the scheme liabilities and the actuarial value of those liabilities
are:
2016 2015
-------------------------------- ----- -----
Financial assumptions (nominal
% pa)
Discount rate 2.65 3.65
Retail price inflation rate 3.20 3.05
Consumer price inflation rate 2.00 1.85
Rate of pension increase in
deferment 2.00 1.85
Rate of pension increases in
payment 3.85 3.85
--------------------------------- ----- -----
Mortality assumptions - future
life expectancies from age
65 (years)
Male currently aged 65 21.8 22.0
Female currently aged 65 23.9 24.0
Male currently aged 55 22.7 22.9
Female currently aged 55 24.8 24.9
--------------------------------- ----- -----
The fair values of the insurance policies have been taken as
equal to the present values of the liabilities that they insure
against and by using the same assumptions as those used to value
the liabilities.
The estimated impact on the IAS 19 liabilities and on the IAS 19
deficit at the reporting date, due to a reasonably possible change
in key assumptions over the next year, are set out in the table
below:
Effect on Effect
liabilities on
GBPm deficit
GBPm
------------------------------------------ ------------ --------
-164 /
Discount rate +/- 0.5% pa -188 / +219 +191
Retail price inflation rate +/- 0.5% +24 /
pa +30 / -28 -22
Consumer price inflation rate +/- 0.5% +49 /
pa +49 / -47 -47
+76 /
Life expectancy at age 65 +/- 1 year +82 / -80 -74
------------------------------------------ ------------ --------
The effect on the deficit is usually lower than the effect on
the liabilities due to the matching impact on the value of the
insurance contracts held in respect of some of the liabilities.
Each assumption variation represents a reasonably possible change
in the assumption over the next year but might not represent the
actual effect because assumption changes are unlikely to happen in
isolation.
The estimated impact of the assumption variations make no
allowance for changes in the values of invested assets that would
arise if market conditions were to change in order to give rise to
the assumption variation. If allowance were made, the estimated
impact would likely be lower as the values of invested assets would
normally change in the same directions as the liability values.
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
The amount included in the consolidated income statement,
consolidated statement of comprehensive income and consolidated
balance sheet arising from the Group's obligations in respect of
its defined benefit pension schemes is as follows:
2016 2015
Consolidated income statement GBPm GBPm
--------------------------------- ------- -------
Pension scheme administrative
expenses (2.2) (2.1)
Pension scheme finance charge (10.4) (10.9)
---------------------------------- ------- -------
Defined benefit cost recognised
in income statement (12.6) (13.0)
---------------------------------- ------- -------
Consolidated statement of comprehensive 2016 2015
income GBPm GBPm
Actuarial gain due to liability
experience 14.0 23.9
Actuarial loss due to liability
assumption changes (340.7) (16.0)
------------------------------------------- ------- ------
Total liability actuarial (loss)/gain (326.7) 7.9
Returns on scheme assets greater/(less)
than discount rate 137.8 (18.9)
------------------------------------------- ------- ------
Total loss recognised in statement
of comprehensive income (188.9) (11.0)
------------------------------------------- ------- ------
Consolidated balance sheet 2016 2015
GBPm GBPm
----------------------------------------- ---------- ----------
Present value of uninsured scheme
liabilities (1,764.3) (1,481.4)
Present value of insured scheme
liabilities (363.3) (352.2)
------------------------------------------ ---------- ----------
Total present value of scheme
liabilities (2,127.6) (1,833.6)
------------------------------------------ ---------- ----------
Invested and cash assets at fair
value 1,298.3 1,176.2
Value of insurance contracts 363.3 352.2
------------------------------------------ ---------- ----------
Total value of scheme assets 1,661.6 1,528.4
------------------------------------------ ---------- ----------
Net scheme deficit (466.0) (305.2)
------------------------------------------ ---------- ----------
Non-current assets - retirement
benefit assets - 29.4
Non-current liabilities - retirement
benefit obligations (466.0) (334.6)
------------------------------------------ ---------- ----------
Net scheme deficit (466.0) (305.2)
------------------------------------------ ---------- ----------
Net scheme deficit included in
consolidated balance sheet (466.0) (305.2)
Deferred tax included in consolidated
balance sheet 80.9 55.0
------------------------------------------ ---------- ----------
Net scheme deficit after deferred
tax (385.1) (250.2)
------------------------------------------ ---------- ----------
Movement in net scheme deficit 2016 2015
GBPm GBPm
----------------------------------------- ---------- ----------
Opening net scheme deficit (305.2) (301.2)
Contributions 40.7 20.0
Consolidated income statement (12.6) (13.0)
Consolidated statement of comprehensive
income (188.9) (11.0)
------------------------------------------ ---------- ----------
Closing net scheme deficit (466.0) (305.2)
------------------------------------------ ---------- ----------
Changes in the present value of 2016 2015
scheme liabilities GBPm GBPm
--------------------------------------- --------- ---------
Opening present value of scheme
liabilities (1,833.6) (1,863.2)
Interest cost (65.3) (67.5)
Actuarial gain - experience 14.0 23.9
Actuarial gain/(loss) - change
to demographic assumptions 30.0 (4.5)
Actuarial loss - change to financial
assumptions (370.7) (11.5)
Benefits paid 98.0 89.2
Closing present value of scheme
liabilities (2,127.6) (1,833.6)
---------------------------------------- --------- ---------
Changes in the fair value of scheme 2016 2015
assets GBPm GBPm
----------------------------------------- ------- -------
Opening fair value of scheme assets 1,528.4 1,562.0
Interest income 54.9 56.6
Actual return on assets greater/(less)
than discount rate 137.8 (18.9)
Contributions by employer 40.7 20.0
Benefits paid (98.0) (89.2)
Administrative expenses (2.2) (2.1)
Closing fair value of scheme assets 1,661.6 1,528.4
------------------------------------------ ------- -------
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
Fair value of scheme assets 2016 2015
GBPm GBPm
----------------------------------- ------- -------
UK equities 208.2 181.7
US equities 217.2 192.8
Other overseas equities 235.7 210.7
Property 26.9 20.4
Corporate bonds 220.0 308.7
Fixed interest gilts 196.8 70.9
Index linked gilts 192.1 81.2
Cash and other 1.4 109.8
------------------------------------ ------- -------
Invested and cash assets at fair
value 1,298.3 1,176.2
Value of insurance contracts 363.3 352.2
------------------------------------ ------- -------
Fair value of scheme assets 1,661.6 1,528.4
------------------------------------ ------- -------
All of the scheme assets have quoted prices in active markets.
Scheme assets include neither direct investments in the Company's
ordinary shares nor any property assets occupied nor other assets
used by the Group.
14. Provisions
Share-based
payments Property Restructuring Other Total
GBPm GBPm GBPm GBPm GBPm
------------------- ------------ ----------- ---------------- -------- --------
At 27 December
2015 (0.3) (9.6) (3.7) (37.1) (50.7)
Charged to income
statement - (2.5) (15.1) (13.4) (31.0)
Utilisation of
provision - 4.0 15.4 30.8 50.2
At 1 January 2017 (0.3) (8.1) (3.4) (19.7) (31.5)
------------------- ------------ ----------- ---------------- -------- --------
The provisions have been analysed between current and
non-current as follows:
2016 2015
GBPm GBPm
------------- ------- -------
Current (27.9) (43.5)
Non-current (3.6) (7.2)
-------------- ------- -------
(31.5) (50.7)
------------- ------- -------
The share-based payments provision relates to National Insurance
obligations attached to the future crystallisation of awards.
The property provision relates to onerous property leases and
future committed costs related to occupied, let and vacant
properties. This provision will be utilised over the remaining term
of the leases.
The restructuring provision relates to restructuring charges
incurred in the delivery of cost reduction measures. This provision
is expected to be utilised within the next year.
The other provision relates to legal and other costs relating to
historical litigation expected to be utilised within the next
year.
15. Share capital and reserves
The share capital comprises 283,459,571 allotted, called-up and
fully paid ordinary shares of 10p each. The share premium account
reflects the premium on issued ordinary shares. The merger reserve
comprises the premium on the shares allotted in relation to the
acquisition of Local World net of GBP0.8 million of issue costs.
The capital redemption reserve represents the nominal value of the
shares purchased and subsequently cancelled under share buy-back
programmes.
Cumulative goodwill written off to retained earnings and other
reserves in respect of continuing businesses acquired prior to 1998
is GBP25.9 million (2015: GBP25.9 million). On transition to IFRS,
the revalued amounts of freehold properties were deemed to be the
cost of the asset and the revaluation reserve has been transferred
to retained earnings and other reserves.
Shares purchased by the Trinity Mirror Employee Benefit Trust
(the 'Trust') are included in retained earnings and other reserves
at GBP5.5 million (2015: GBP3.7 million). During the year the Trust
purchased 1,600,000 shares (2015: nil) for a cash consideration of
GBP2.0 million (2015: GBPnil). The Trust received a payment of
GBP2.0 million from the Company to purchase these shares. During
the year, 138,634 shares were released relating to grants made in
prior years (2015: 5,929,939). During the year 859,794 awards were
granted to Executive Directors on a discretionary basis under the
Long Term Incentive Plan (2015: 665,287). The exercise price of the
granted awards is GBP1 for each block of awards granted. The awards
vest after three years, subject to the continued employment of the
participant and satisfaction of certain performance conditions and
are required to be held for a further two years. During the year
1,494,019 awards were granted to senior managers on a discretionary
basis under the Senior Management Incentive Plan (2015: 893,873).
The exercise price of the granted awards is GBP1 for each block of
awards granted. The awards vest after three years, subject to the
continued employment of the participant and satisfaction of certain
performance conditions. During the year 82,699 awards were granted
to Executive Directors under the Restricted Share Plan (2015:
120,543). The awards vest after three years.
The Board approved a share buyback programme of up to GBP10
million which commenced in August 2016. At the year end the Group
had acquired 2,505,366 shares for GBP2.3 million. The shares are
held as Treasury shares.
16. Acquisition of associate undertaking
In October 2016, the Group acquired a 50% equity interest in
Brand Events 1 Limited (renamed Brand Events TM Limited) for a cash
consideration of GBP0.8 million.
17. Disposal of subsidiary undertaking
In August 2016, the Group disposed of Rippleffect Limited. The
net assets at the date of disposal were as follows:
GBPm
------------------------------ -----
Goodwill 0.5
Trade and other receivables 2.3
Trade and other payables (1.0)
Net assets 1.8
Profit on disposal -
------------------------------ -----
Total consideration 1.8
------------------------------- -----
Satisfied by:
Cash consideration received 2.0
Transactions costs (0.2)
------------------------------- -----
Total consideration 1.8
------------------------------- -----
Net cash flow arising on disposal:
Cash consideration less transaction
costs 1.8
Net cash inflow 1.8
--------------------------------------- ---
18. Reconciliation of statutory results to adjusted results
53 weeks ended 1 January 2017
Non-recurring
items Pension Restructuring Finance Tax
Statutory (a) Amortisation charges charges costs items Adjusted
results GBPm (b) (c) (d) (e) (f) results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------- ------------- ---------------- ---------------- ----------- ----------------- --------- -------- ------------
Revenue 713.0 - - - - - - 713.0
Operating
profit 93.5 26.1 0.6 2.2 15.1 - - 137.5
Profit
before
tax 76.5 26.1 0.6 12.6 15.1 2.3 - 133.2
Profit
after tax 69.5 22.0 0.5 10.1 12.1 1.8 (9.8) 106.2
Basic EPS
(p) 24.9 8.0 0.2 3.6 4.3 0.6 (3.5) 38.1
----------- ------------- ---------------- ---------------- ----------- ----------------- --------- -------- ------------
52 weeks ended 27 December 2015
Non-recurring
items Pension Restructuring Finance Tax
Statutory (a) Amortisation charges charges costs items Adjusted
results GBPm (b) (c) (d) (e) (f) results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------- ------------- ---------------- ---------------- ----------- ----------------- --------- --------- ------------
Revenue 592.7 - - - - - - 592.7
Operating
profit 82.2 5.7 4.3 2.1 15.3 - - 109.6
Profit
before
tax 67.2 5.7 4.3 13.0 15.3 2.0 - 107.5
Profit
after tax 77.0 (1.5) 3.9 10.4 12.2 1.6 (17.2) 86.4
Basic EPS
(p) 30.2 (0.6) 1.5 4.1 4.8 0.6 (6.7) 33.9
----------- ------------- ---------------- ---------------- ----------- ----------------- --------- --------- ------------
(a) Non-recurring items relate to the items charged or credited
to operating profit as set out in note 5.
(b) Amortisation of the Group's intangible assets and
amortisation included in share of results of associates.
(c) Pension finance charge and pension administrative expenses
relating to the defined benefit pension schemes as set out in note
13.
(d) Restructuring charges in respect of cost reduction measures as set out in note 14.
(e) Impact of the translation of foreign currency borrowings and
fair value changes on derivative financial instruments as set out
in note 7.
(f) Tax items relate to the impact of tax legislation changes
due to the change in the future corporation tax rate on the opening
deferred tax position and prior year tax adjustments included in
the taxation credit or charge as set out in note 8.
19. Contingent liabilities
There is potential for further liabilities to arise from the
outcome or resolution of the ongoing historical legal issues. Due
to the present uncertainty in respect of the nature, timing or
measurement of any such liabilities it is too soon to be able to
reliably estimate how these matters will proceed and their
financial impact.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GLGDDGSDBGRR
(END) Dow Jones Newswires
February 27, 2017 02:01 ET (07:01 GMT)
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