Financial summary
27 July 2001
Financial Highlights
Group revenue increased by 3.8% to £581.4 million (2000: £559.9 million). On a like-for-like basis, adjusting to eliminate from 2000 the revenues of Belfast Telegraph Newspapers (sold on 30 July 2000) and include the revenues of Southnews (acquired 28 November 2000), revenue increased by 1.1%.
Operating profit, before the net investment in digital media activities and exceptional items, decreased by 6.5% to £121.8 million. On a like for like basis, the decrease was 4.9%, reflecting the difficult advertising market in the second quarter and a 12% increase in the price of newsprint from the beginning of the year. During the 26 week period, the Group invested £15.0 million (2000: £12.8 million) in digital media activities.
Interest costs of £26.0 million (2000: £27.8 million) reflect lower interest rates. Before exceptional costs, profit before tax has decreased 9.7% on the previous year to £80.9 million.
Exceptional costs of £5.3 million have been incurred during the 26 week period in respect of the closure of the central digital media sites and ongoing restructuring of the Group's finance systems. In addition, the formulation and implementation of strategic and profit improvement plans, including cost reduction measures, across the Group has incurred exceptional costs of £2.3 million in the first half of the year. It is anticipated that £8.0 million additional costs of implementation will be incurred during the latter half of the year, with a further £10.0 million in 2002.
The strategic and profit improvement plans will give rise to an estimated £9.0 million gross cost saving in the second half of the year, increasing to £25.0 to £28.0 million in 2002 and £30.0 to £35.0 million per annum in 2003. This is in addition to any potential reduction in the level of the Group's ongoing investment in its digital media activities. It is also before any reinvestment in product, editorial and marketing activity to ensure the Group's newspapers retain their competitive position and brand strength.
Earnings per share, before exceptional items, have decreased from 21.8p to 19.5p. The interim dividend is being held at the same level as the 2000 interim dividend, 5.3p. It will be paid on 31 October 2001 to shareholders on the register at 5 October 2001.
Net debt at 1 July 2001 was £771.8 million, an increase of £3.6 million since the year end. This increase reflects primarily the additional digital media investment of £15.0 million, the final payment of deferred consideration for Thomson Regional Newspapers of £5.0 million and £2.4 million of further costs in respect of the acquisition of Southnews.
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