17 weeks ending 27 April 2008
Trinity Mirror plc is today issuing its first Interim Management Statement, made in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the first 17 weeks of trading to 27 April 2008 and describes the Group's financial position and performance during the period, updated to the latest practicable date.
We continued to make steady progress throughout the period with the development of our strategy to build a growing multi-platform media business, via the launch and acquisition of new products and services complementing our print offering, the implementation of new technology platforms and new full colour presses along with improved processes.
The outlook for the UK economy remains uncertain with the ongoing adverse implications of inflationary cost pressures, in particular energy and essential food items, and the wider implications of the credit crunch. These market conditions are adversely impacting consumer confidence and spending with the effect that businesses are curtailing marketing budgets to offset the prospect of slowing revenues. This has resulted in the advertising environment remaining difficult and volatile in the period since our last update at the end of February. Given this uncertain economic outlook for the UK we remain cautious about trading prospects.
Against this background, management will continue to implement the Group's new operating model which provides continued improvements and efficiencies to create a more robust business. In addition we continue to build digital revenues. The Group remains on track to deliver the incremental £7 million of cost savings (£20 million annualised) by the end of 2008 and cost control and operating efficiency remain at the core of our strategic focus. At this stage the Board anticipates performance for the year to be in line with expectations.
Revenue performance in the first 17 weeks of the year on an actual and underlying basis was as follows:
|Year on Year Change||17 weeks to||27 April 2008|
|Group digital revenue included in above||44.1||26.5|
* Actual includes acquisitions completed in 2007 and 2008 and service contracts in respect of the disposed businesses but excludes the disposals completed in 2007. Underlying includes the impact of acquisitions completed in 2007 and 2008 as if they had been owned by the Group in the current and corresponding period and excludes revenue from the service contracts in respect of the disposed businesses.
Actual Group revenues have increased by 0.3% while underlying revenues have decreased by 2.7%.
Actual Group advertising revenues in the period have fallen by 3.1% reflecting a decline of 3.2% for January and February and a decline of 3.0% for March and April. On an underlying basis, advertising revenues have fallen by 4.3% with a fall of 4.3% for January and February and 4.3% for March and April. Month on month volatility remains and we expect this to continue for the remainder of the year.
For our Regionals division actual advertising revenues in the period have fallen by 3.1% reflecting a decline of 3.0% for January and February and a decline of 3.3% for March and April. On an underlying basis, advertising revenues have fallen by 4.9% with a fall of 4.6% for January and February and 5.2% for March and April. By category the actual performance for the period was display up 0.2%, recruitment down 1.7%, property down 6.8%, motors down 16.3% and other classified categories were down 2.0%. On an underlying basis the decline in recruitment and property advertising was 4.9% and 11.5% respectively. Within advertising revenues, actual digital revenues have grown by 37.1% with an underlying increase of 20.6%.
For our Nationals division actual advertising revenues for the period fell by 2.9%. This reflects a decline of 3.5% for January and February and a decline of 2.4% for March and April. Advertising revenues for the UK Nationals fell by 2.0% and for the Scottish Nationals they fell by 5.2%. Within advertising revenues, actual digital revenues have grown by 10.9%.
Actual Group circulation revenues for the period have fallen by 1.2% with a decline of 1.1% for the Regionals and 1.3% for the Nationals. The Group continues to increase cover prices on a little and often basis. In January 2008 we increased the cover price of our Sunday national titles. With the exception of the Saturday editions, no change in cover price of our Daily national titles has taken place.
Actual Group other revenues for the period have grown by 29.8%, reflecting the benefit of acquisitions and service contracts, in particular printing, to the disposed businesses. On an underlying basis other revenues increased by 0.7% during the period.
Actual Group digital revenues for the period have grown by 44.1% with an increase of 38.6% for the Regionals and 95.3% for the Nationals. On an underlying basis Group digital revenues have grown by 26.5% with Regionals growing by 20.5%.
We have completed the investment in our Nationals presses giving our national and certain regional titles full colour. The investment required for the 12 year printing contract for the Independent and Independent on Sunday which was secured during 2007 will be completed in September 2008. In addition we have continued with our programme of developing and modernising our publishing operations across multi-media platforms through investment in our key IT systems.
As expected net debt increased by £162 million from £248 to £410 million during the period as follows:
|Net debt as at 31 December 2007||248|
|Share buy back||92|
|Other cash flows**||(3)|
|Net debt as at 27 April 2008||410|
* includes special pension contribution of Â£54 million and ongoing deficit funding payments
** operating cash flows, capex, tax, interest, working capital
Undrawn committed facilities of £260 million are available to the Group. No new financing facilities were procured during the period and no debt facilities were repaid other than in accordance with their normal maturity date.
During the period the Group completed the acquisitions of The Career Engineer Limited and Rippleffect Studio Limited for a combined initial consideration of £5.1 million with a potential deferred payment of up to £3.0 million subject to the management of these business achieving stretching growth targets for revenue and operating profits. Both acquisitions are included in the Regionals division and strengthen our digital portfolio.
Share buy back
The £175 million share buy back programme announced on 19 December 2007 is ongoing. At the Extraordinary General Meeting held on 29 February 2008 authority was given by shareholders to enable the Company to purchase sufficient shares to complete the buy back. As at 7 May 2008 the Group had acquired 31.4 million shares for a total consideration of 98.6 million.