EMAP PLC
25 May 2004
25 May 2004
Emap plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2004
Business Performance - 'normalised'
• Turnover - up 9% to £1,050 million
• Operating profit - up 11% to £212 million
• Pre-tax profit - up 12% to £196 million
• EPS - up 14% to 55.8 pence
• Dividend per share - up 9% to 23.5 pence
Statutory Results
• Turnover - up 9% to £1,050 million
• Operating profit - up 42% to £160 million
• Pre-tax profit - up 3% to £144 million
• EPS - up 8% to 36.3 pence
• Dividend per share - up 9% to 23.5 pence
'Normalised' results are presented to provide a better indication of overall
financial performance and to reflect how the business is managed on a day-to-day
basis. The 'normalised' results exclude the amortisation and impairment of
goodwill and intangible fixed assets, any profit or loss on the disposal or
closure of businesses and fixed asset investments, other exceptional items
including exceptional reorganisation costs, financing costs and the tax impact
of all these items.
Operating Highlights
Consumer Media - More ABC share gains
- Closer, best ever launch
- Strong start for ZOO
- FHM now in 27 countries
Communications - Resilient core markets
- Display/recruitment bouncing back
- HSJ momentum maintained
- Expanding exhibitions
Performance - Kiss and Magic strengthen in London
- Big City, battling back
- Digital radio delivering revenues
- Increased music TV competition
France - TV listings under pressure
- Weeklies drive good advertising
- FHM/Top Sante on top
- Excelsior fully integrated
Current Trading
• UK consumer circ. - Good Television - Improving
• UK consumer adv. - Good France newsstand - Weak
• UK B2B display adv. - Good France subscriptions - Reasonable
• UK B2B rec'ment adv. - Reasonable France consumer adv - Soft
• UK B2B exhibitions - Strong US rate base - Maintained
• UK radio airtime - Slow US advertising - Reasonable
Commenting on the results Tom Moloney, Emap Group Chief Executive, said:
'This is another strong set of results, delivered against a backdrop where
trading conditions have been mixed. Our core business performed well, and this
was enhanced by exciting new product launches and solid bolt-on acquisitions.
'The business overall is in good shape. Whilst we will face some major
challenges in the year ahead, we're ready for them, and we expect to continue
delivering growth.'
Enquiries to:
Emap plc 020-7278-1452
Tom Moloney, Chief Executive
Gary Hughes, Finance Director
Miranda Acland, Communications Director
Brunswick Group 020-7404-5959
Patrick Handley
Ed Williams
Fiona Laffan
Emap plc
PRELIMINARY STATEMENT 2004
Strategic Overview
Emap has delivered a strong set of results and continues to deliver long term,
sustainable growth.
Driving the core business and developing our brands to extend product lifecycles
is the number one priority for Emap. Although trading conditions across the
group have been mixed this year, most parts of the business have achieved good
revenue growth, increased market share and improved margins.
New products are a very effective way of creating value. The launch of ZOO into
the UK men's weekly consumer magazine market in January was high profile, but
the group has also successfully launched new trade exhibitions in the UK and
Europe, doubled the number of B2B conferences it runs and generated its first
digital radio advertising revenues, as well as winning a new analogue radio
licence for the West Midlands. Approximately 2.0-2.5% of turnover is invested
across the group each year in new product development, with £22 million budgeted
for fiscal year 2004/05.
Emap also has a successful track record of growth from bolt-on acquisitions
which are quickly integrated into the core business and immediately add value
for shareholders. This year's results include Emap's first contribution from
Agor, a Paris-based exhibitions business, and the French consumer magazine
publisher, Excelsior, both of which have made good progress. The acquisition of
a 28% stake in Scottish Radio Holdings in January 2004 brings the prospect of
further opportunities to create value in radio. Since the end of the financial
year ABI, a provider of sales leads to the construction industry, and the
outstanding 50% of the trade show Interbuild have both been added to Emap
Communications' construction portfolio.
The forthcoming year will bring opportunities and some major challenges. Emap is
well prepared for both. The Board would like to thank everyone at Emap for their
achievements this year and for their ongoing commitment to the Company's
success.
Financial Review
Total turnover for the year increased by 9% to £1,050 million (2003: £967
million). At constant exchange rates total turnover increased by 6%
year-on-year.
Group operating profit, excluding amortisation and exceptional items, increased
by 11% to £212 million (2003: £191 million). Group operating margin was level at
20%.
Net interest in the period amounted to £18 million (2003: £17 million).
Associates, which include Scottish Radio Holdings, contributed £2 million (2003:
£1 million). Pre-tax profit, again excluding amortisation and exceptional items,
was up 12% to £196 million (2003: £175 million). At constant exchange rates
pre-tax profit increased by 9% year-on-year.
Inclusive of goodwill amortisation and impairment amounting to £49 million,
reorganisation costs of £4 million and profit on asset disposals of £1 million,
Emap generated a pre-tax profit of £144 million (2003: £140 million).
A total of £17 million (2003: £21 million) was invested in launches during the
year, principally on Closer, ZOO, digital radio distribution, The Hits on
Freeview and FHM in the US.
Minorities were £4 million (2003: £6 million). The normalised tax rate was 25%
(2003: 25%), and remains lower than the nominal rate due to the successful
resolution of prior year claims and the utilisation of carried-forward
relievable losses.
Earnings per share, before amortisation and exceptional items, were up 14% to
55.8 pence (2003: 49.0 pence). Total earnings per share, inclusive of
amortisation and exceptional items, were up 8% to 36.3 pence (2003: 33.6 pence).
Due to the significant strength of the Euro over the period, the Group has
benefited from a currency translation gain of £26 million in revenues and £5
million in normalised operating profit. The Group's exposure to the US dollar is
negligible.
As at 31 March 2004, the Group had net debt of £268 million (2003: £211
million), after the acquisitions of Excelsior and 28% of Scottish Radio Holdings
during the year. 97% (2003: 104%) of operating profit was converted into
operating cashflow.
In line with the Group's dividend policy, the Board is recommending a full year
dividend of 23.5 pence a share (2003: 21.6 pence), an increase of 9%. Subject to
shareholder approval this will be paid on 2 August 2004 to shareholders on the
Register as at 2 July 2004.
Operating Review
The following review is based on normalised results, which reflect how the
business is managed and measured on a day-to-day basis.
Emap Consumer Media
2004 2003 Absolute Underlying*
£m £m Change Change
Turnover 355 344 3% 6%
Operating Profit 59 55 7% 6%
Margin 17% 16%
* Like-for-like, excluding foreign exchange, acquisitions and disposals,
launches and closures.
Emap Consumer Media publishes the majority of Emap's consumer magazines in the
UK, as well as FHM worldwide (outside France) and consumer magazines in
Australia and South East Asia. Total turnover was up 3%, with revenue growth
from Closer and new launch ZOO offsetting the loss of revenue from certain
titles sold to Hachette in October 2002. Underlying turnover increased by 6%,
reflecting good growth across the core portfolio. Operating profit increased by
7%, 6% on an underlying basis, again reflecting the strength of the core
business. The operating profit margin increased to 17%.
Circulation: Emap's total UK consumer magazine portfolio increased retail sales
value market share again in the July to December 2003 period from 15.8% to 16.8%
, with value up 10% in an overall market which was level (ABC). Key to this
growth was the continued success of Closer, but other titles performing well
include Arena, Empire, More, MATCH, Today's Golfer and Car. Circulation revenues
for the year ending March 2004 were up 2% on an underlying basis, which
increases to 7% when Closer is included. Closer became part of the underlying
portfolio from April 2004 onwards.
Advertising: consumer magazine advertising revenues grew by 4% on an underlying
basis, increasing to 5% when Closer is included. During this period the total
consumer magazine advertising market is estimated to have grown by 2%,
indicating a significant outperformance by Emap (Advertising Association March
2004). Now in its fifth year, heat continues to grow advertising revenues
significantly, and good growth was also achieved by Motor Cycle News, Max Power,
Bliss, Today's Golfer, MATCH and Kerrang!. Toiletries and cosmetics, Emap
Advertising's largest magazine advertising category, has shown good growth,
along with fashion, films & DVD, food & snacks and finance.
Launches: launching is key to Emap Consumer Media's growth, as is clearly
demonstrated by the success of heat and the contribution to revenues now being
made by Closer, launched in September 2002. Circulation is nearing 450,000 per
week, raising the possibility that Closer may eventually overtake heat as Emap's
biggest-selling weekly magazine in the UK. A further £5 million (net) has been
invested in the title this year, and it is expected to move into profit from 04/
05 onwards - ahead of the original plan. A new men's weekly title ZOO was
launched in January 2004, and sales are building as the product evolves. The
title has already achieved a weekly sale in excess of 150,000 copies a week and
is ahead of plan on both circulation and advertising. Investment in ZOO was £4
million (net) this year, with break-even expected in 05/06.
International: FHM now has 27 international editions, of which 20 are licences,
with recent launches in Spain, Norway and Lithuania. The largest of these is the
US edition, which accounts for around half of all international revenues and
grew advertising revenues by 21% during 03/04. In the year, £1 million (net) was
invested in the title, which is expected to move into profit in 04/05. Emap's
publishing activities in Australia and South East Asia, led by FHM, New Woman
and Smash Hits!, are solidly profitable.
Emap Communications
2004 2003 Absolute Underlying*
£m £m Change Change
Turnover 213 195 9% 6%
Operating Profit 59 53 11% 3%
Margin 28% 27%
* Like-for-like, excluding foreign exchange, acquisitions and disposals,
launches and closures.
Emap Communications brings together business-to-business magazines, trade
exhibitions, conferences and information products in its key markets - retail,
construction, the public sector, healthcare and media. Turnover grew by 9%, with
recovery in B2B advertising and strong core exhibition revenues enhanced by the
recently acquired Distrirama and Stockorama shows in Paris, Print'Or in Lyons
and new shows launched in the UK and Europe this year. Underlying revenues grew
by 6%. Operating profit increased by 11%, boosted by good margin management,
together with the closure of a number of small, lower margin products. On an
underlying basis operating profit increased by 3%, and the operating margin
increased from 27% to 28%.
Circulation: Emap's trade magazines are distributed largely on the basis of
paid-for subscriptions, and therefore provide a reasonably steady revenue
stream. Circulation revenues for Emap's B2B business accounted for 19% of total
B2B revenue in the period and increased by 3%, with a 53rd issue in the year
helping to boost revenues for the weekly titles.
Display advertising: this year has seen a marked and progressive improvement in
B2B display advertising, up 10% on an underlying basis after two years of
declines. Titles delivering healthy double digit revenue growth include
Construction News, Broadcast, MEED, Retail Week and Drapers. This increase
compares well with the total business and professional magazine display market
which is estimated to be down 3% over the same period (Advertising Association
March 2004), and underlines Emap's strong position in attractive B2B markets.
Recruitment advertising: after a flat first half, recruitment advertising also
recovered well during the second half and finished up 2% for the year on an
underlying basis. Key titles for recruitment are Nursing Times, which saw a
small year-on-year decline in line with the overall nursing recruitment market,
and Health Service Journal, which grew recruitment revenues strongly once again.
Most of the other key titles across the B2B portfolio also performed well.
Exhibitions: Emap Communications' core UK exhibitions, The Spring Fair, The
Autumn Fair and Glee, all achieved good revenue growth this year. Stocklots in
Cologne, now rebranded TradeExpo, grew strongly with nearly 7,000 visitors and
over 10,000 m2 sold. The conference unit more than doubled the number of
conferences run across the year to 168 and grew overall revenues by around 50%.
All this contributed to underlying exhibitions and events revenue growth of 6%.
Not included in the underlying figure are Distrirama and Stockorama in Paris,
now also rebranded TradeExpo, which had a very successful first year under
Emap's ownership, and a number of other new shows including Glass Processing &
Technology at the NEC and Le Show in Amsterdam. Including these non-underlying
exhibitions and events increases growth to 18%.
Acquisitions: during the year Emap acquired the outstanding 50% of Pure
Womenswear, a leading fashion trade show, for £1 million. In April 2004 Emap
agreed to acquire the outstanding 50% of Interbuild, the UK's largest
construction exhibition, for £1 million. The deal will complete in July, and the
next show will be in April 2006. Both these shows were previously run in joint
ventures and treated as associates. In May 2004 Emap also acquired ABI, a sales
leads information business serving the construction market, from a subsidiary of
Candover and Cinven, for £14 million. This business has annual revenues of £5
million and profits of £1 million and will be managed by Emap's existing
construction leads business - Emap Glenigan.
Launches: new products and events planned for the coming year include jlee, the
French equivalent of Glee, in Paris; TradeExpo in London; Plastics Design &
Moulding at Telford; MEED Information, a new construction leads service for the
Middle East; and the continued growth of Emap's conference business.
Emap Performance
2004 2003 Absolute Underlying*
£m £m Change Change
Turnover 160 156 3% (2%)
Operating Profit 37 36 3% level
Operating Margin 23% 23%
* Like-for-like, excluding foreign exchange, acquisitions and disposals,
launches and closures.
Emap Performance's portfolio of strong music brands extend across radio, music
magazines and music television. Turnover increased by 3%, with good growth in
radio revenues offset by revenue declines in music magazines and, to a lesser
extent, television. On an underlying basis, which excludes revenues from digital
radio, The Hits TV channel on Freeview and Sneak, Emap Performance's revenues
declined by 2%. Operating profits increased by 3% in total, while underlying
profits and the operating margin were level.
Total radio revenues, including digital multiplex income, increased by 8%, while
profits fell by 4%, largely reflecting an investment of £2 million (net) in
digital radio. Radio margins at 25% continue to compare favourably with other
commercial radio groups.
Radio audiences: latest audience figures published on 6 May show Emap's share of
the London radio audience for Kiss 100 and Magic 105.4 to be 8.8%, a significant
increase from 7.7% last year. Emap's Big City network's share in key cities
across the north of England reduced from 14.6% to 13.1% year-on-year, reflecting
increased competition in the network's key markets. Recent steps have been taken
to protect and rebuild this audience share, including a broadening of the target
audience from 15-24 to 15-39, and a more localised music policy. Emap's eight
national radio stations, broadcast on Freeview, satellite and cable, digital
audio broadcasting and via the internet, now account for over 20% of the Group's
total hours. This has helped to take Emap's share of total commercial hours
across the industry from 14.1% to 14.6% year-on-year, a significant increase
(Rajar Q1:04).
Radio advertising: Emap Performance's airtime sales revenues grew by 6% during
the year, just behind industry revenue growth expected to be 8% (Advertising
Association March 2004). Share gains at Kiss 100 and Magic 105.4 in London more
than balanced out a weaker performance from Big City as a result of a managed
reduction in advertising minutes sold and lower overall audiences in the period.
A strong local revenue performance has boosted the improving national market,
which has seen good growth from a range of advertising categories including
telecoms, government, retail, entertainment, food and finance. In addition, Emap
brought in its first ever advertising revenues from digital radio - around £1
million, mostly in the second half of the year - a development which is likely
to become more significant as listening, and ultimately advertising revenues,
transfer from analogue to digital.
Radio acquisitions: the new Communications Act relaxed the ownership rules
governing commercial radio, and makes further consolidation within the industry
possible. On 16 January 2004 Emap announced the purchase of 28% of Scottish
Radio Holdings for £91 million, confirming Emap's commitment to its existing
radio business and demonstrating the importance of maintaining a position of
financial flexibility and overall financial strength.
Music magazines: the music magazine market has been tough for some time. Over
the last year average circulations across the market have fallen by 9%, and
combined average circulations for Emap's music magazines have fallen almost
exactly in line with this, although Mojo had a good year, up 4%. Within the teen
market Sneak's 20% growth year-on-year helped offset circulation falls at Smash
Hits!, (ABC Jul-Dec 2003 v Jul-Dec 2002). Circulation revenues across the Emap
Performance portfolio reduced by 2%, and advertising revenues by 13%. However,
diligent cost management, and a reduced investment in Sneak, have resulted in
profit growth of 6%.
Music television: as anticipated, this year the music TV market has become much
more competitive, with a strong performance from market leader MTV and the
arrival of a significant number of new music channels. Emap's share of music TV
audiences has reduced from 43% to 41% year-on-year (BARB March 04 v March 03
16-34 adults), but the resulting declines in advertising revenues have been
offset by growth from carriage fees and interactivity, with total TV revenues
down 3%. Underlying profits were maintained at the same level as the prior year
after a £2 million investment in The Hits on Freeview.
Emap France
2004 2003 Absolute Underlying*
£m £m Change Change
Turnover 322 272 18% 3%
Operating Profit 57 47 21% 11%
Margin 18% 17%
* Like-for-like, excluding foreign exchange, acquisitions and disposals,
launches and closures.
Emap France is the second largest consumer magazine publisher in France, and
operates with industry-leading margins in the French consumer magazine
marketplace. Turnover increased by 18%, reflecting the contribution from the
Excelsior titles acquired in June 2003 and the strength of the Euro, which
provided a £25 million currency translation gain year-on-year. Underlying
turnover, which excludes currency and acquisitions, and also Studio Magazine,
which Emap exited in March, grew by 3%. Operating profit increased in line with
turnover by 21%, 11% on an underlying basis, reflecting reduced investment in
key titles made last year. The year-on-year currency translation gain within
operating profit was £5 million. The operating margin increased from 17% to 18%,
with cost reductions more than offsetting the addition of the currently lower
margin Excelsior business.
Circulation: the newsstand environment in France remains tough, and Emap's
portfolio has not escaped the impact of this. Excluding the Excelsior titles,
total retail sales value for the French portfolio was down 1% year-on-year, in
line with a 1% decline across the market as a whole. On this basis Emap's market
share remained level at 11.4%, but when the Excelsior titles are included Emap's
share rises to 12.8%, marginally behind market leader Hachette with 15.0%.
Encouragingly, both of Emap France's recent launches increased circulation
year-on-year - FHM by 12% to 168,000, and ADDX by 27% to 80,000. Tele Star was
broadly level, but Tele Poche and Pleine Vie were both down year-on-year (OJD
2003).
Underlying newsstand revenues were level in the period, helped by good growth
from Auto Plus, FHM and the women's titles Nous Deux and Modes & Travaux.
Underlying subscription revenue increased by 2%, slightly lower than recent
trend rates, following a decision to reduce the subscriber base on Pleine Vie.
As predicted, now that consumer magazines in France have access to TV
advertising the market has moved into a more competitive and dynamic phase, and
similarities with the UK market are likely to increase. One area of the market
which has become particularly competitive is TV listings.
The beginning of 2004 saw the launch of France's first two-weekly TV listings
title, Tele 2 Semaines, from Prisma Presse, a subsidiary of Bertelsmann. The
title has a cover price of €1, broadly in line with weekly titles such as Emap's
own Tele Star and Tele Poche, and has been heavily supported with TV
advertising. Tele 2 Semaines is selling nearly 2 million copies every fortnight
and as a result circulations for Tele Star and Tele Poche have fallen by around
15-20% since the beginning of the year, broadly in line with the TV listings
weekly market as a whole. More recently there have been two other fortnightly TV
magazine launches. Emap's plans include protecting its existing titles, while
evaluating further launch opportunities. However, profitability for the
forthcoming year is likely to be significantly impacted by competitive pressures
in France, compounded by the weakening of the Euro since the start of the year.
Advertising: underlying advertising revenues increased by 8%, with a notably
strong performance from Tele Star, Tele Poche, Top Sante, Nous Deux and FHM.
This was a significant outperformance of the market. Excluding the Excelsior
titles, Emap France's share of advertising increased from 8.9% to 9.6%, and to
11.2% including the Excelsior titles, behind market leader Hachette with 18.5%
(Secodip). Much of the growth came from direct advertising, with retail,
telecoms, publishing, sporting goods and medicines also performing well. There
was minimal impact on advertising from new launch Tele 2 Semaines in the period.
Acquisitions: the integration of Excelsior into Emap France is now complete. The
women's titles Biba and 20 Ans have joined Top Sante, Nous Deux and Modes &
Travaux in Emap's women's portfolio. Men's titles Max and Mixte are now
published alongside FHM, and the Science & Vie titles remain as a stand-alone
unit. Advertising sales have transferred from Interdeco (Hachette's sales house)
to Emap, and cost savings have been achieved through a reduction in headcount
and shared infrastructure. The focus over the next 12 months will be to enhance
the performance of the new titles.
Current Trading (April-June)
In the UK, consumer magazine circulation revenues are encouraging with good
performances from many titles within the portfolio, and Closer in particular.
Consumer magazine advertising is also booking well, with forward bookings ahead
of a similar point last year.
In France, the newsstand remains weak, with TV listings titles Tele Star and
Tele Poche showing worsening circulation declines. The circulation declines are
also beginning to impact on advertising in a relatively soft market, and forward
bookings are currently behind the equivalent point last year.
B2B display advertising continues to show good momentum, with recruitment
advertising, on the whole, reasonable. Forward bookings on the Group's B2B
exhibitions remain robust.
The national radio market has softened in April and May, although local sales
remain strong. This is compounded by the Group's exceptionally strong
performance in the first quarter last year, meaning growth has been restricted.
The competitive nature of the music TV market remains unchanged with revenues
continuing to reflect this.
2004/05 Expectations
The increased competition in the French TV listings market, together with the
weakening of the Euro, is impacting the profitability of Emap France to a
greater extent than expected even two months ago when the group issued a regular
trading statement. However, we expect a continued strong performance from the
UK. Bearing all of these factors in mind, the Group expects to be able to
deliver another year of reasonable progress in 2004/05.
Emap plc
Consolidated profit
and loss account
For the year ended
31 March 2004
_____________________________________________________________________________________
'Normalised' 'Normalised' Total Total
2004 2003 2004 2003
Notes £m £m Growth £m £m Growth
_____________________________________________________________________________________
Turnover 2(a) 1,050 967 9% 1,050 967 9%
_____________________________________________________________________________________
Operating costs
Operating costs (838) (776) (838) (776)
Post acquisition 8 - - (4) -
reorganisation costs
Amortisation of 9 - - (47) (48)
intangible fixed
assets
Impairment of 9 - - (1) (30)
intangible fixed
assets
_____________________________________________________________________________________
Net operating (838) (776) (8%) (890) (854) (4%)
costs
_____________________________________________________________________________________
Group operating 2(b) 212 191 11% 160 113 42%
profit
Share of operating
profit of joint
ventures and
associated undertakings 2 1 1 1
_____________________________________________________________________________________
Total Group 214 192 11% 161 114 41%
operating profit
Profit on business 11 - - 1 43
disposals
Net interest payable 3 (18) (17) (18) (17)
and other financing
costs
_____________________________________________________________________________________
Profit on ordinary 2(c) 196 175 12% 144 140 3%
activities before tax
Tax on profit on 4 (49) (44) (47) (44)
ordinary activities
_____________________________________________________________________________________
Profit on ordinary 147 131 12% 97 96 1%
activities after tax
Minority interests 13 (4) (6) (4) (10)
(all equity)
_____________________________________________________________________________________
Profit attributable to 143 125 93 86
shareholders
Dividends 5 (60) (55) (60) (55)
_____________________________________________________________________________________
Retained profit 83 70 33 31
_____________________________________________________________________________________
'Normalised' 'Normalised' Total Total
2004 2003 2004 2003
Notes £m £m Growth £m £m Growth
_____________________________________________________________________________________
Earnings per share 6 55.8p 49.0p 14% 36.3p 33.6p 8%
Diluted earnings per 6 36.0p 33.4p 8%
share
Dividend per share 5 23.5p 21.6p 9% 23.5p 21.6p 9%
_____________________________________________________________________________________
'Normalised' results are presented to provide a better indication of overall
financial performance and to reflect how the business is managed on a day-to-day
basis. The 'normalised' results exclude the amortisation and impairment of
goodwill and intangible fixed assets, any profit or loss on the disposal or
closure of businesses and fixed asset investments, exceptional reorganisation
costs, other exceptional items and the tax impact of all these items. A
reconciliation of 'normalised' profit on ordinary activities before tax to total
profit on ordinary activities before tax is provided in Note 2(c).
There are no discontinued operations. All turnover and operating profit for 2004
and 2003 relates to continuing operations.
Emap plc
Consolidated cash flow statement
For the year ended 31 March 2004
_________________________________________________________________________________
2004 2003
Notes £m £m
_________________________________________________________________________________
Net cash inflow from operating activities 7(a) 219 212
_________________________________________________________________________________
Dividends from associated undertakings 1 -
_________________________________________________________________________________
Returns on investments and servicing of finance
Interest received 2 1
Interest paid (14) (15)
Issue costs on 6.25% Sterling Eurobond (2) -
Dividends received from fixed asset investments - 1
Dividends paid to minority shareholders (2) (6)
_________________________________________________________________________________
Net cash outflow from returns on investments and servicing (16) (19)
of finance
_________________________________________________________________________________
Taxation (44) (35)
_________________________________________________________________________________
Capital expenditure and financial investment
Purchase of tangible fixed assets (15) (16)
Sale of fixed asset investments 2 2
Increase in loans to joint ventures (3) -
_________________________________________________________________________________
Net cash outflow from capital expenditure and financial (16) (14)
investment
_________________________________________________________________________________
Acquisitions and disposals
Acquisition of businesses 8 (95) (40)
Net cash acquired with subsidiaries 8 33 3
Disposal of businesses 5 32
Costs of business disposals (1) (2)
Net cash disposed of on sale of businesses - (1)
Acquisition of joint ventures and associated 10 (92) -
undertakings
_________________________________________________________________________________
Net cash outflow from acquisitions and disposals (150) (8)
_________________________________________________________________________________
Equity dividends paid (57) (51)
_________________________________________________________________________________
Cash (outflow)/inflow before financing (63) 85
_________________________________________________________________________________
Financing
Issue of ordinary share capital - 1
Decrease in bank loans (167) (42)
Issue of 6.25% Sterling Eurobond 7(c) 250 -
Repayment of loan notes - (1)
Decrease in loans from associated undertakings (6) (2)
Loss on rollover of currency swaps (2) (6)
Decrease in other borrowings - (38)
_________________________________________________________________________________
Net cash inflow/(outflow) from financing 75 (88)
_________________________________________________________________________________
Increase/(decrease) in net cash 12 (3)
_________________________________________________________________________________
Emap plc
Consolidated balance sheet
At 31 March 2004
_________________________________________________________________________________
2004 2003
Notes £m £m
_________________________________________________________________________________
Fixed assets
Intangible fixed assets 9 576 569
Tangible fixed assets 31 32
Investments
- Joint ventures and associated undertakings 10 96 2
- Other investments 10 5 7
_________________________________________________________________________________
708 610
_________________________________________________________________________________
Current assets
Stocks 10 11
Debtors - amounts falling due within one year 238 235
Debtors - amounts falling due after more than one year 7 5
Cash at bank and in hand 38 26
_________________________________________________________________________________
293 277
Creditors - amounts falling due within one year (428) (411)
_________________________________________________________________________________
Net current liabilities (135) (134)
_________________________________________________________________________________
Total assets less current liabilities 573 476
Creditors - amounts falling due after more than one (272) (211)
year
Provisions for liabilities and charges 12 (16) (13)
_________________________________________________________________________________
Net assets 285 252
_________________________________________________________________________________
Capital and reserves
Called up share capital 64 64
Share premium account 589 586
Revaluation reserve 7 8
Profit and loss account 14 (378) (410)
_________________________________________________________________________________
Shareholders' funds (all equity) 282 248
Minority interests (all equity) 13 3 4
_________________________________________________________________________________
Capital employed 285 252
_________________________________________________________________________________
Approved by the Board of Directors on 25 May 2004.
T C Moloney
G W Hughes
Emap plc
Consolidated statement of total recognised gains and losses
For the year ended 31 March 2004
_________________________________________________________________________________
2004 2003
£m £m
_________________________________________________________________________________
Profit attributable to shareholders 93 86
Unrealised surplus on revaluation of intangible fixed assets - 8
Foreign exchange translation differences (3) 6
_________________________________________________________________________________
Total recognised gains and losses relating to the year 90 100
_________________________________________________________________________________
Profit on a historical cost basis is £1m (2003 - £nil) higher than as reported.
This is due to amortisation being charged on intangible assets revalued in
financial year 2002/03.
Reconciliation of movement in shareholders' funds
For the year ended 31 March 2004
_________________________________________________________________________________
2004 2003
Notes £m £m
_________________________________________________________________________________
Profit attributable to shareholders 93 86
Dividends 5 (60) (55)
_________________________________________________________________________________
Retained profit 33 31
Shares issued 3 3
Shares to be issued 1 1
Unrealised surplus on revaluation of intangible fixed - 8
assets
Foreign exchange translation differences (3) 6
_________________________________________________________________________________
Net addition to shareholders' funds 34 49
Opening shareholders' funds (all equity) 248 199
_________________________________________________________________________________
Closing shareholders' funds (all equity) 282 248
_________________________________________________________________________________
Reconciliation of movement in net debt
For the year ended 31 March 2004
_________________________________________________________________________________
Net cash Borrowings Net debt
£m £m £m
_________________________________________________________________________________
At 1 April 2003 26 (237) (211)
Exchange differences - 5 5
Non cash movement - (1) (1)
Net cash movement 12 (73) (61)
_________________________________________________________________________________
At 31 March 2004 38 (306) (268)
_________________________________________________________________________________
Emap plc
Notes
For the year ended 31 March 2004
_________________________________________________________________________________
1 Basis of preparation
The preceding financial information does not constitute statutory accounts as
defined in Section 240 of the United Kingdom Companies Act 1985. The information
contained in these financial statements is based on the statutory accounts for
the financial year ended 31 March 2004. These accounts, upon which the auditors
have issued an unqualified opinion, have not yet been delivered to the Registrar
of Companies.
2 Segmental analysis
Turnover and operating profit is reported for each of the Group's four operating
divisions. Proforma figures are also given for each media type to allow easier
market and peer group comparisons. The two analyses cross reference as follows:
Emap Consumer Media comprises UK, US and International consumer magazines
(excluding France) and automotive B2B activities. Emap Communications comprises
the majority of the Group's B2B activities plus healthcare related UK consumer
magazines. Emap Performance comprises all analogue and digital radio stations,
music TV and music related consumer magazines and events. Emap France comprises
the Group's French consumer magazines.
The management of the Group's digital activities, previously reported as Emap
Digital, has been the responsibility of the divisional management since January
2002. However, the Group undertook to disclose separately the performance of its
digital activities until 31 March 2003. The segmental analysis is now presented
with the digital activities within the four operating divisions and comparatives
have been restated accordingly. This reflects how the business and the digital
activities are managed on a day-to-day basis. The performance of the Group's
digital activities is included in the alternative presentation of turnover and
operating profit by media type in notes 2 (a) (iii) and 2 (b) (ii).
(a) Analysis of turnover by origin
(i) By division
_________________________________________________________________________________
2004 2003
£m £m
_________________________________________________________________________________
Emap Consumer Media 355 344
Emap Communications 213 195
Emap Performance 160 156
Emap France 322 272
_________________________________________________________________________________
Total turnover 1,050 967
_________________________________________________________________________________
(ii) By category
_________________________________________________________________________________
2004 2003
£m £m
_________________________________________________________________________________
Advertising 457 418
Circulation 467 425
Events 79 70
Other 47 54
_________________________________________________________________________________
Total turnover 1,050 967
(iii) By media type
_________________________________________________________________________________
2004 2003
£m £m
_________________________________________________________________________________
Consumer magazines - UK 347 340
Consumer magazines - France 322 272
Consumer magazines - International 48 45
Business-to-business 198 180
Radio 96 89
TV 21 22
Digital 18 19
_________________________________________________________________________________
Total turnover 1,050 967
_________________________________________________________________________________
(iv) By geographical origin
_________________________________________________________________________________
2004 2003
£m £m
_________________________________________________________________________________
United Kingdom 668 650
France 331 272
Rest of the World 51 45
_________________________________________________________________________________
Total turnover 1,050 967
_________________________________________________________________________________
The year-on-year impact of currency movements is to increase turnover by £26m.
The impact of the acquisition of Excelsior Publications SA completed on 27 June
2003 is to increase current year turnover by £29m within the Emap France
segment.
(b) Analysis of Group operating profit
(i) By division
____________________________________________________________________________________
'Normalised' Total
2004 2003 2004 2003
£m £m £m £m
____________________________________________________________________________________
Emap Consumer Media 59 55 53 38
Emap Communications 59 53 46 27
Emap Performance 37 36 27 17
Emap France 57 47 34 31
____________________________________________________________________________________
Group operating profit 212 191 160 113
____________________________________________________________________________________
(ii) By media type
____________________________________________________________________________________
'Normalised' Total
2004 2003 2004 2003
£m £m £m £m
____________________________________________________________________________________
Consumer magazines - UK 63 61 58 40
Consumer magazines - France 57 47 34 31
Consumer magazines - International 1 (1) - (3)
Business-to-business 54 50 41 24
Radio 24 25 15 12
TV 7 6 6 6
Digital 6 3 6 3
____________________________________________________________________________________
Group operating profit 212 191 160 113
____________________________________________________________________________________
(iii) By geographical origin
____________________________________________________________________________________
'Normalised' Total
2004 2003 2004 2003
£m £m £m £m
____________________________________________________________________________________
United Kingdom 150 146 122 86
France 61 47 38 31
Rest of the World 1 (2) - (4)
____________________________________________________________________________________
Group operating profit 212 191 160 113
____________________________________________________________________________________
The year-on-year impact of currency movements is to increase 'normalised' Group
operating profit by £5m and total operating profit by £4m.
The impact of the acquisition of Excelsior Publications SA on 27 June 2003 is to
increase current year 'normalised' Group operating profit by £1m. Total Group
operating profit includes additional charges of £4m for post acquisition
reorganisation costs and £2m for amortisation of intangible fixed assets. Hence,
the impact of the acquisition is to reduce total current year Group operating
profit by £5m.
(c) Reconciliation of 'normalised' profit before taxation to
profit before taxation
_________________________________________________________________________________________
2004 2003
Notes £m £m
_________________________________________________________________________________________
'Normalised' profit on ordinary activities before 196 175
tax
Post acquisition reorganisation costs 8 (4) -
Profit on business disposals 11 1 43
Amortisation of intangible fixed assets 9 (47) (48)
Impairment of intangible fixed assets 9 (1) (30)
Amortisation of goodwill on associated undertakings 10 (1) -
_________________________________________________________________________________________
Profit on ordinary activities before tax 144 140
_________________________________________________________________________________________
3 Net interest payable
_____________________________________________________________________________________
2004 2003
£m £m
_____________________________________________________________________________________
6.25% Sterling Eurobond (15) -
Bank loans and overdrafts, wholly repayable within five years (4) (11)
Hedging instruments - (4)
Amortisation of issue costs of bank loans and bond issues (2) (1)
Share of joint venture and associated undertaking interest - (1)
payable
_____________________________________________________________________________________
Total interest payable (21) (17)
_____________________________________________________________________________________
Hedging instruments 1 -
Interest received on tax repayments 2 -
_____________________________________________________________________________________
Total interest receivable 3 -
_____________________________________________________________________________________
Net interest payable (18) (17)
_____________________________________________________________________________________
4 Tax on profit on ordinary activities
_____________________________________________________________________________________
2004 2003
_____________________________________________________________________________________
'Normalised' tax rate 25% 25%
UK nominal tax rate 30% 30%
_____________________________________________________________________________________
The 'normalised' tax rate remains lower than the nominal rate due to the
successful resolution of prior year claims and the utilisation of
carried-forward relievable losses.
The table below shows the reconciliation of the tax in the profit and loss
account to tax at the nominal rate.
_____________________________________________________________________________________
2004 2003
£m £m
_____________________________________________________________________________________
Tax charge as shown in the Consolidated profit and loss account 47 44
Add/(less): Deferred tax 2 (1)
_____________________________________________________________________________________
Total current tax 49 43
Less: Corporation tax on pre-tax profit at nominal rate of 30% 43 42
_____________________________________________________________________________________
Difference 6 1
_____________________________________________________________________________________
The difference is principally due to:
Non-deductible impairment of intangible fixed assets - 9
Non-deductible amortisation of intangible fixed assets 14 14
Non-deductible profit on business disposals - (13)
Permanent disallowables, prior year and other items (8) (9)
_____________________________________________________________________________________
6 1
_____________________________________________________________________________________
5 Dividends
The final proposed dividend of 15.9p (2003 - 14.6p), making a total for the year
of 23.5p (2003 - 21.6p), will be paid, subject to shareholder approval, on 2
August 2004 to shareholders on the Register as at 2 July 2004.
6 Earnings per share
Earnings per share is calculated as profit attributable to shareholders divided
by the weighted average number of Ordinary Shares (WANS) in issue during the
year and ranking for dividend. Shares held in Trust in respect of Executive
Share Schemes and in the Qualifying Employee Share Ownership Trust (QUEST) are
excluded from the WANS but included in calculating the diluted WANS. The WANS
for the year ended 31 March 2004 was 256m (2003 - 255m).
________________________________________________________________________________
2004 2003
________________________________________________________________________________
Basic earnings per share - attributable to shareholders 36.3p 33.6p
Effect of dilutive shares and share options (0.3p) (0.2p)
________________________________________________________________________________
Diluted earnings per share 36.0p 33.4p
________________________________________________________________________________
'Normalised' earnings per Ordinary Share is based on 'normalised' profit
attributable to shareholders. Earnings per Ordinary Share can be reconciled to
'normalised' earnings per Ordinary Share as follows:
_____________________________________________________________________________________________________
2004 2003
_____________________________________________________________________________________________________
Basic earnings per share - attributable to shareholders 36.3p 33.6p
Amortisation of intangible fixed assets 18.5p 18.8p
Impairment of intangible fixed assets 0.3p 11.9p
Amortisation of goodwill on associated undertakings 0.5p -
Profit on business disposals (0.7p) (17.0p)
Post acquisition reorganisation costs 1.5p -
Tax relief on exceptional reorganisation costs (0.6p) -
Exceptional minority interest - 1.7p
_____________________________________________________________________________________________________
'Normalised' earnings per share 55.8p 49.0p
_____________________________________________________________________________________________________
7 Cash flow information
(a) Reconciliation of Group operating profit to net cash inflow
from operating activities
___________________________________________________________________________________________
2004 2003
Notes £m £m
___________________________________________________________________________________________
Group operating profit 160 113
Amortisation of intangible fixed assets 9 47 48
Impairment of intangible fixed assets 9 1 30
Post acquisition reorganisation costs 4 -
Depreciation of tangible fixed assets 15 12
Net loss on disposal of tangible fixed assets 1 1
Decrease in stocks - 2
Decrease in debtors 13 16
Decrease in creditors (16) (2)
Decrease in provisions (6) (8)
___________________________________________________________________________________________
Net cash inflow from operating activities 219 212
___________________________________________________________________________________________
(b) Operating profit into cash
The Group uses the conversion ratio of 'normalised' operating profit into cash
as its key measure of working capital management. In calculating 'profit into
cash', operating cash flow, net of capital expenditure, is adjusted to exclude
expenditure against exceptional reorganisation and acquisition restructuring
provisions and compared to 'normalised' Group operating profit.
________________________________________________________________________________________
2004 2003
Notes £m £m
________________________________________________________________________________________
Net cash inflow from operating activities 7(a) 219 212
Capital expenditure (15) (16)
Expenditure against exceptional reorganisation provisions 1 2
________________________________________________________________________________________
Adjusted operating cash flow 205 198
________________________________________________________________________________________
'Normalised' Group operating profit 212 191
________________________________________________________________________________________
Operating profit into cash 97% 104%
________________________________________________________________________________________
(c) Issue of 6.25% Sterling Eurobond
On 7 April 2003 Emap issued a £250m, 6.25% Sterling Eurobond maturing 9 December
2013. The proceeds have been used to repay existing debt. Subsequently the
Group's revolving credit facility has reduced from £650m to £525m.
8 Acquisitions
On 27 June 2003 the Group completed the acquisition of Excelsior Publications
SA, a French consumer magazine publisher. The purchase price was £91m, including
£33m of cash within the company acquired, giving a net purchase price, inclusive
of £1m deal costs, of £59m. The assets acquired include a portfolio of magazines
in the science and knowledge, women's fashion, and men's lifestyle markets.
Provisional fair value adjustments made on the acquisition of Excelsior
Publications SA are as follows: Intangible assets already included in the books
of Excelsior have been eliminated and replaced by current valuations of the
acquired magazine titles. These titles have been valued using discounted cash
flow techniques. A provision of £2m has been made relating to liabilities
arising from the rights of journalists to take redundancy on the change of
ownership. A further £2m provision has been made relating to a deficit on the
Company's funding of pension obligations. A £1m adjustment has been made as a
result of a review of the carrying value of the acquired business' current
assets. In addition, costs of £4m have been incurred since the acquisition on a
programme of restructuring the acquired business activities.
During the year AGOR SAS, within the Emap Communications division, purchased
Print 'Or for a cash consideration of £2m. The Emap Communications division also
acquired the remaining 50% stake in I&E Ltd, the organiser of the Pure
Womenswear exhibition, for a cash consideration of £1m.
The impact of all acquisitions on the consolidated balance sheet was:
________________________________________________________________________________
Net book Fair value Fair value
values adjustment to Group
Notes £m £m £m
________________________________________________________________________________
Intangible fixed assets 9 7 56 63
Tangible fixed assets 1 - 1
Current assets 24 (1) 23
Current liabilities (23) - (23)
Cash and overdrafts 33 - 33
Provisions 12 - (4) (4)
________________________________________________________________________________
Fair value of assets acquired 42 51 93
Goodwill 9 2
________________________________________________________________________________
Fair value of consideration 95
________________________________________________________________________________
Comprising:
Cash paid during the year 94
Related costs of acquisition 1
________________________________________________________________________________
9 Intangible fixed assets
________________________________________________________________________________
Publishing rights,
titles
& exhibitions Goodwill Total
Notes £m £m £m
________________________________________________________________________________
Cost
At 1 April 2003 585 358 943
Exchange movements (11) (3) (14)
Businesses acquired 8 63 2 65
Business disposals (1) - (1)
________________________________________________________________________________
At 31 March 2004 636 357 993
________________________________________________________________________________
Amortisation
At 1 April 2003 (212) (162) (374)
Exchange movements 4 1 5
Provided during the year (31) (16) (47)
Provision for impairment - (1) (1)
________________________________________________________________________________
At 31 March 2004 (239) (178) (417)
________________________________________________________________________________
Net book value at 31 March 2004 397 179 576
________________________________________________________________________________
Net book value at 31 March 2003 373 196 569
________________________________________________________________________________
10 Fixed asset investments
______________________________________________________________________________________________
Joint ventures & Other
associated fixed asset
undertakings investments Total
£m £m £m
______________________________________________________________________________________________
Net assets at acquisition/Cost
At 1 April 2003 1 7 8
Additions 10 - 10
Movement in loans 3 - 3
Movement in own shares - (2) (2)
______________________________________________________________________________________________
At 31 March 2004 14 5 19
______________________________________________________________________________________________
Goodwill
At 1 April 2003 - - -
Additions 82 - 82
Disposals (2) - (2)
Amortisation (1) - (1)
______________________________________________________________________________________________
At 31 March 2004 79 - 79
______________________________________________________________________________________________
Post acquisition reserves & provisions
At 1 April 2003 1 - 1
Increase in share of net assets 2 - 2
Share of retained profits 1 - 1
Foreign exchange movements (1) - (1)
______________________________________________________________________________________________
At 31 March 2004 3 - 3
______________________________________________________________________________________________
Net book value at 31 March 2004 96 5 101
______________________________________________________________________________________________
Net book value at 31 March 2003 2 7 9
______________________________________________________________________________________________
On 19 January 2004 the Group acquired SMG plc's stake in Scottish Radio Holdings
plc, of 9,729,361 shares representing 27.8% of the issued share capital. This
amounted to a total consideration of £92m, including £1m of acquisition costs,
which was paid in cash. On 15 March 2004 Scottish Radio Holdings plc completed
the acquisition of Capital Radio Productions Limited and issued shares to settle
a portion of the acquisition consideration. This resulted in a dilution of the
Group's shareholding in Scottish Radio Holdings plc from 27.8% to 27.1%, which
has been treated as a deemed disposal by the Group. As a result, a write off of
goodwill of £2m was recorded with a corresponding increase in post acquisition
reserves; there was no profit or loss on the disposal.
11 Business disposals
Profit on business disposals of £1m is a result of the sale of various UK
consumer magazine licences and Studio magazine in France.
12 Provisions for liabilities and charges
_____________________________________________________________________________________
Reorganisation Property Other Total
provisions provisions provisions provisions
£m £m £m £m
_____________________________________________________________________________________
At 1 April 2003 5 4 4 13
Operating losses of - - 1 1
associates and joint
ventures
Provided during the 1 1 3 5
year
Arising on - - 4 4
acquisition
Utilised in the (4) (1) (2) (7)
year
_____________________________________________________________________________________
At 31 March 2004 2 4 10 16
_____________________________________________________________________________________
Reorganisation provisions comprise ongoing redundancy and reorganisation costs.
These amounts are expected to be paid within one year.
The property provision relates to ongoing commitments on empty properties,
largely arising from the sale of Emap Newspapers in 1997. Some of these
commitments extend to 2015.
Other provisions comprise a provision for employer's National Insurance
contributions in respect of Executive share schemes and the Group's share of net
liabilities of joint ventures and associated undertakings. The provisions
arising on acquisition relate to the acquisition of Excelsior Publications SA.
These relate to acquired liabilities resulting from the rights of journalists to
take redundancy on the change of ownership and to a deficit on the Company's
funding of pension obligations (see Note 8).
13 Minority interests
Minority interests relate mainly to the Group's holdings in our distribution
companies, Frontline Ltd, Seymour International Ltd, EG Digital Ltd and EMAS
SNC, publisher of the Auto Plus title.
14 Profits available for distribution
Although the consolidated profit and loss reserve at 31 March is a deficit
balance of £378m (2003 - £410m deficit), the profit and loss reserve of the
parent company Emap plc amounts to £904m (2003 - £961m) including distributable
profits of £210m (2003 - £267m) enabling the Group to meet its obligations to
pay dividends for the foreseeable future.
15 Post balance sheet events
On 13 April 2004 Emap Communications Limited agreed to purchase the remaining
50% shareholding of the Interbuild exhibition from Montgomery Exhibitions
Limited. The transaction will be formally completed on 7 July 2004.
On 5 May 2004 Emap Communications Limited announced that it has acquired ABI
Building Data Limited, from ICW Publications Limited, part of the Springer
Science and Business Media group owned by Cinven and Candover, for £14m.
On 13 May 2004 the Office of Fair Trading decided, on the information currently
available, not to refer the Group's acquisition of shares in Scottish Radio
Holdings plc to the Competition Commission under the provisions of the
Enterprise Act 2002.
16 Annual report
Copies of the Annual Report will be sent to all shareholders on or before 11
June 2004, and will be available from the Company's registered office, Wentworth
House, Wentworth Street, Peterborough, PE1 1DS, or on the Internet at
www.emap.com.
This information is provided by RNS
The company news service from the London Stock Exchange
