GWR Group PLC
26 May 2004
GWR'S PROFITS* DOUBLE AS GROUP OUTPERFORMS RADIO INDUSTRY AND STRUCTURAL CHANGES
PAY OFF
GWR Group is the UK's most listened to commercial radio group with 33 analogue
local stations, Classic FM and the prime assets in the digital radio arena.
Underlying results*
2004 2003
£million £million % change
Turnover from continuing operations 125.6 115.5 +8.8
Operating profit from continuing operations* 20.7 16.7 +24.0
Pre-tax profit from continuing operations* 16.6 10.5 +57.4
Pre-tax profit* 17.1 8.6 +99.5
Headline earnings per share** 8.0p 4.8p +66.7
Proposed dividend for the year 6.3p 5.8p +8.6
Net debt reduced by £35 million, and by a further £10.6 million since year-end to £54 million.
Operational highlights
• Outperforming radio industry - UK advertising revenue up by 8.4%, industry
revenue up by 7.8%
• Structural changes & systems improvements drive analogue radio margin
growth - up to 24.6% from 23%
• Classic FM now third highest commercial audience in London
• LRG stations improve yields through new dynamic pricing system
• Digital revenues up 24.1%. Sales of digital radios forecast to reach 1
million by end of 2004
• GWR/BT Wholesale datacasting project launched
2004 2003
Statutory results £million £million
Turnover 128.7 127.1
Operating profit/(loss) 13.7 (2.6)
Pre-tax profit/(loss) 14.8 (14.8)
Basic earnings/(loss) per share 6.5p (11.8p)
Ralph Bernard CBE, GWR Executive Chairman, commented:
'This year GWR has produced excellent results. The disciplined concentration on
implementing structural changes and on introducing systems improvements during
the difficult times of the advertising recession is paying off as the market
recovers, and GWR has outperformed the industry.
'We look forward to the future with confidence, as the strength of our brands in
analogue radio is matched by our leading position in digital radio. We have
continued to focus attention on digital radio with some 20% of our operating
profits being invested in exploiting our prime assets in this critical area. We
have formed a powerful relationship with BT Wholesale to pioneer and develop the
'Livetime' datacasting operation. With sales of digital radios now well past
500,000 units, the value of the Group's first mover advantage is becoming
clear.'
26 May 2004
* Underlying results exclude goodwill amortisation and exceptional items - see
Consolidated profit and loss account. This presentation is used to provide a
normalised picture of the Group's earnings, making year-on-year comparisons more
valid.
** Headline earnings per share is calculated in accordance with the definition
by the UK Society of Investment Professionals in their Statement of Investment
Practice number 1 - see note 8 of this Statement.
Enquiries
GWR Group plc Tel: 0117 9005316
Ralph Bernard - Executive Chairman
Wendy Pallot - Finance Director
Simon Cooper - Public Affairs Director
College Hill Tel: 020 7457 2020
Matthew Smallwood
Adrian Duffield
GWR GROUP PLC
Preliminary results for the year ended 31 March 2004
Introduction
This year GWR has produced excellent results. Our hard work to implement
structural changes and systems improvements during the difficult times of the
advertising recession is paying off as the market recovers, and GWR has
outperformed the industry. UK Revenues are up by 8.8% to £125.6 million for
continuing operations and underlying* profit before tax has virtually doubled to
£17.1 million. Our balance sheet is markedly stronger too. Following the
disposal of our remaining overseas interests and the sale in May 2004 of our
stake in Radio Investments Limited, our debt is now at its lowest level for 5
years. This strong progress makes it possible for the Board to recommend an
increased dividend of 6.3p per share, an increase of 8.6%.
We can look forward to the future with confidence, because the strength of our
brands in analogue radio is matched by our leading position in digital radio.
Among other achievements during the year, we have formed a powerful relationship
with BT Wholesale, announcing in May 2004 that we would work together to develop
the 'Livetime' datacasting operation pioneered by GWR Group. With sales of
digital radios now well past 500,000 units, the value of the Group's first mover
advantage is becoming clear.
Financial Results
Turnover from continuing operations improved by 8.8% compared to last year, from
£115.5 million to £125.6 million. Following the sale of our remaining overseas
operations, 98% of our revenues this year came from the UK. The Group's total
revenues for the year were £128.7 million (2002/03: £127.1 million).
Underlying* operating profit from continuing operations is up by 24% to £20.7
million (2002/03: £16.7 million). The underlying* operating profit margin,
excluding digital investment, improved from 19.7% to 22.3%. Profits before tax,
goodwill amortisation and exceptional items were up 99.5% to £17.1 million (2002
/03: £8.6 million). Exceptional items resulted in a profit of £4.1 million,
mainly from the sale of Vibe Radio Services.
Headline** earnings per share for the year were up 66.7% to 8.0p (2002/03:
4.8p).
Operating profit was up £16.3 million to £13.7 million (2002/03: loss £2.6
million). Profit before tax was up £29.6 million to £14.8 million (2002/03: loss
£14.8 million). Basic earnings per share for the year was up 18.3p to 6.5p (2002
/03: loss per share of 11.8p).
During the advertising downturn the Board's policy was to maintain the level of
the Group's dividend, consistent with its confidence in GWR's future. This year,
as the advertising market has begun to recover and GWR's performance has
confirmed its resilience, the Directors have decided to recommend a final
dividend of 4p, giving an increased total dividend for the year of 6.3p (2002/
03: 5.8p) an increase of 8.6%.
During the year, our debt was reduced by £35 million to £64.6 million, mainly by
the sales of our investments in various overseas and non-core UK assets. This
contributed to a saving in the group's interest charge year-on-year of £1.9
million. Since the year end, the disposal of our stake in Radio Investments
Limited for a profit of £4.3 million has reduced debt further to £54 million.
Operations Review
In a generally improved advertising market, the Group's analogue radio business
has performed strongly, delivering an advertising revenue increase of 8.4%,
ahead of the 7.8% achieved by the radio industry as a whole. The UK analogue
profit margin has increased from 23% to 24.6%. National radio revenues, which
account for 51% of GWR's total revenues, rose by 8.7%, while local radio
revenues increased by 7.9% year-on-year. These results reflect the operation of
the new inventory control systems, which moved airtime into the more profitable
national revenue sector through the year, and the new dynamic pricing system,
which improved yields.
Local Radio Group (LRG). LRG contributed 69% of the Group's revenues during
2004, with revenue growth up 10.2% to £89.2 million (2002/03: £81.0 million).
Its revenue growth from national sales was 12.0% and local revenues, with less
inventory, were up 7.9%. LRG continues to be the commercial market leader in 29
of the 31 licence areas to which it broadcasts.
GWR's improved profitability owes much to the restructuring of LRG management
into functional streams, separating programming and content (Creation) from
sales (Opus). This change enhanced LRG's ability to react quickly to changing
market conditions.
Opus has introduced a dynamic airtime pricing system, which along with a
restructuring of the sales teams and the adoption of whole company targets, has
been key to this year's revenue success. The dynamic pricing system links the
price charged for advertising campaigns to the demand for airtime, and revises
prices upwards as demand increases. Thus the potential yield of each advertising
slot is maximised. This system, linked to the recovery in the advertising
market, has been a significant factor in the growth of profits.
The priority for Creation has been the six LRG sites most popular with national
advertisers, and a focus on improving the breakfast shows in LRG. This is also
where competition from other stations is greatest, and Creation has focused on
mounting promotional and programming campaigns, often highlighting local issues,
to maintain audience figures in the face of launches or re-launches by competing
stations. The most recent RAJAR results show that LRG's combined breakfast show
audience increased by 3.9% in the three months to 31 March 2004. Industry
awards have also confirmed the improved quality of LRG's programme content, with
a Gold and a Silver Award at the 2004 Sony Radio Academy Awards.
GWR has also looked at other new media to increase revenue. In April 2004, GWR
launched 'Hear it, Buy it, Burn it', a web-based service for downloading music,
which enables listeners to download songs while they are being played live.
Creation is also now starting to generate bespoke music streams for private
networks of users. Five branded music streams and a pop video channel are
already being produced for over 350 gyms in the health and fitness industry. A
successful trial for Woolworths has been completed and other private network
clients, mainly in the retail sector, are expected to sign contracts in the
current financial year.
Classic FM. Classic FM, which contributed £28.2 million, 21.9% of Group
revenues, has seen strong growth in advertising sales and sponsorship during the
second half of the year. This revenue was up by 16% year-on-year in the six
months to 31 March 2004, with a rise of 2.3% for the year overall. The principal
reason for this was the return to the market of strong brand names from the
retail, motor and finance sectors.
Encouragingly, Classic FM audience growth has also been strong, with its
national market share rising quarter-on-quarter from 4.3% to 4.5% in the RAJAR
Quarter 1 2004 figures. The station overtook Kiss FM and Magic to reach the
third largest commercial audience in London, and a London market share of 5.4%.
Classic FM's audience has now grown to 6.54 million.
Classic FM has also won a number of awards for the quality of its programming
during 2003/04, including a Silver Sony Award, and was named 'Media Brand of the
Year' by Marketing Week. It is increasingly successful across other media as
well as radio, with Classic FM TV now attracting a significant audience and the
CD and publishing operations well supported.
Digital Radio. The Group's digital businesses generated revenue of £8.1 million
(2002/03: £6.5 million), an increase of 24.1%; with the growth in multiplex
profits exceeding the increase in the Group's investment in broadcasting digital
services. Reflecting the strategic importance in maintaining its prime digital
radio assets, the Group's overall net investment in digital radio (including the
Livetime project) was £5.5 million (2002/03: £4.7 million). Excluding Livetime,
the investment in digital radio fell by £0.4 million to £3.0 million, as a
result of the growth in multiplex profits.
Listener numbers were sufficiently large to be included for the first time in
RAJAR results, with Planet Rock (the classic rock station) achieving a weekly
reach of 242,000. We are now generating advertising revenue from our new digital
stations for the first time.
The last year has seen an acceleration in the development of digital radio. The
number of digital receivers in use reached 500,000 and the Digital Radio
Development Bureau forecast that figure to reach 1 million by December 2004.
There are now more than 25 manufacturers selling over 75 models of Digital Audio
Broadcasting (DAB) receivers.
After the end of the reporting year, GWR and BT Wholesale announced that they
would work together to launch the digital datacasting system developed by GWR as
the Livetime project. GWR has licensed its datacasting activities to BT
Wholesale and is investing a further £2.75 million over 18 months in exchange
for a share of revenues over £30 million per annum. This caps GWR's datacasting
investment. The first revenue share is expected in the year ending March 2007,
with a projected pre-tax revenue share in excess of £5 million by the year
ending March 2008 if the business plan expectations are met.
The new venture will source and deliver multi-media content to mobile phones and
similar devices using the data carrying capacity provided by the Digital One
national digital radio spectrum. Datacasting should also speed up significantly
the growth in the number of devices capable of receiving digital radio
broadcasts. GWR, as the holder of the prime assets in digital radio, will derive
the most benefit from this development.
Regulation
In December we welcomed our new converged regulator, Ofcom. Ofcom has begun its
work by consulting extensively on many aspects of its principles and operations,
and GWR has responded constructively and in detail. We hope that Ofcom will
promote the economic efficiency of our industry by operating with a light touch
and encouraging self-regulation, as was promised when it was established.
The Communications Act relaxed the ownership restrictions for radio stations,
introduced the '2+BBC' local ownership rule, and allowed one company to own more
than one national commercial radio service. This simple and effective regime was
unfortunately complicated by the introduction late in the legislative process of
a Plurality Test. In addition, as we reported in the last Annual Report, in
April 2003 GWR was prevented from owning Galaxy 101 (now Vibe 101) by a ruling
from the Competition Commission. These developments have cast some uncertainty
over the prospects for consolidation in the industry, and we look forward to
clarification of the regulatory position.
The Board
Over the past year the Board has been considerably strengthened by the addition
of two experienced non-executives. In November, Alastair Ross Goobey CBE joined
as Senior Independent Director and Deputy Chairman Designate. As Chairman of the
International Corporate Governance Network and a past Chief Executive of Hermes
Pension Fund Management Limited, Alastair brings a considerable understanding of
corporate governance to the Board.
In January Patricia Hodgson DBE was appointed to the Board. With a career
spanning senior positions in the BBC, the Monopolies and Mergers Commission and
the Competition Commission, and most recently as Chief Executive of the
Independent Television Commission, she brings an in-depth knowledge of
broadcasting, government and regulation to GWR.
These additions to the Board, and a number of improvements we have made to the
manner in which the Board operates have brought us much closer to the standards
expected of companies by the new Combined Code***. We are committed to further
progress during the current year.
Outlook
GWR is now a streamlined and efficient business. Forward bookings are stronger
than last year, and in April UK advertising revenues were up 10.5%. May revenues
are forecast to be up 2.5%, in line with our expectations. The Board expects the
Group to show continued improvement in its revenue and profit performance over
the coming year.
26 May 2004
* Underlying results exclude goodwill amortisation and exceptional items - see
Consolidated profit and loss account. This presentation is used to provide a
normalised picture of the Group's earnings, making year on year comparisons more
valid.
** Headline earnings per share is calculated in accordance with the definition
by the UK Society of Investment Professionals in their Statement of Investment
Practice number 1 - see note 8 of this Statement.
*** A new combined code on Corporate Governance has come into effect for UK
listed companies for reporting years beginning on or after 1 November 2003.
Consolidated profit and loss account
for the year ended 31 March 2004
Year ended 31 March 2004 Year ended 31 March 2003
Before Before
goodwill and Goodwill and goodwill and Goodwill and
exceptional exceptional exceptional exceptional
items items Total items items Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 125,593 - 125,593 115,479 - 115,479
Discontinued operations 3,147 - 3,147 11,652 - 11,652
2 128,740 - 128,740 127,131 - 127,131
-
Operating profit/(loss)
Continuing operations 20,723 (7,378) 13,345 16,708 (8,131) 8,577
Discontinued operations 500 (144) 356 (1,973) (9,251) (11,224)
2,3 21,223 (7,522) 13,701 14,735 (17,382) (2,647)
Share of operating loss of 3 (489) (213) (702) (726) (633) (1,359)
associated undertakings and joint
ventures
Profit on disposal of investments 3 - 5,660 5,660 - 3,252 3,252
Loss on sale of operations 3 - (218) (218) - (8,620) (8,620)
Loss on disposal of fixed asset - - - - (3)
investment (3)
Profit/(loss) on ordinary 20,734 (2,293) 18,441 14,009 (23,386) (9,377)
activities before finance charges
Finance charges (net) 4 (3,671) - (3,671) (5,456) - (5,456)
Profit/(loss) on ordinary 5 17,063 (2,293) 14,770 8,553 (23,386) (14,833)
activities before taxation
Taxation 6 (5,073) (580) (5,653) (2,730) 649 (2,081)
Profit/(loss) on ordinary 11,990 (2,873) 9,117 5,823 (22,737) (16,914)
activities after taxation
Equity minority interests (603) - (603) 1,859 - 1,859
Profit/(loss) for the financial 11,387 (2,873) 8,514 7,682 (22,737) (15,055)
year
Equity dividends 7 (8,247) - (8,247) (7,475) - (7,475)
Profit/(loss) for the year 17 3,140 (2,873) 267 207 (22,737) (22,530)
Basic earnings/(loss) per share 8 6.5p (11.8p)
Diluted earnings/(loss) per share 8 6.5p (11.8p)
Headline earnings per share 8 8.0p 4.8p
Proposed dividend for the year 6.3p 5.8p
Share of operating loss of associated undertakings and joint ventures comprise
£595,000 (2003: £1,065,000) for associated undertakings and £107,000 loss (2003:
£294,000 loss) for joint ventures.
Balance sheet
at 31 March 2004
Group
2004 2003
Notes £'000 £'000
Fixed assets
Intangible assets 9 100,682 127,534
Tangible assets 10 19,787 22,322
Investments: 11
Joint venture share of gross assets - 1,236
Joint venture share of gross liabilities - (1,351)
Goodwill arising - 11,324
Net investment in joint venture - 11,209
Other investments 10,321 10,805
130,790 171,870
Current assets
Debtors 12 29,682 31,383
Cash at bank and in hand 620 1,332
30,302 32,715
Creditors: amounts falling due within one year 13 (33,295) (46,299)
Net current liabilities (2,993) (13,584)
Total assets less current liabilities 127,797 158,286
Creditors: amounts falling due after more than one year 14 (58,603) (91,162)
Provisions for liabilities and charges 15 (1,523) (702)
Net assets 2 67,671 66,422
Capital and reserves
Called-up share capital 16 6,545 6,526
Share premium account 17 52,605 51,800
Other reserves 17 29,895 34,031
Profit and loss account 17 (21,062) (25,020)
Equity shareholders' funds 67,983 67,337
Equity minority interests (312) (915)
67,671 66,422
Consolidated cash flow statement
for the year ended 31 March 2004
2004 2003
Notes £'000 £'000
Net cash inflow from operating activities 18 19,116 21,793
Returns on investments and servicing of finance
Investment income received 6 199
Net interest paid (3,771) (5,698)
Interest paid on finance leases (38) (20)
Dividend received 322 221
Net cash outflow from returns on investments and servicing of finance (3,481) (5,298)
Taxation
UK corporation tax paid (5,991) (440)
Overseas tax paid (82) (104)
(6,073) (544)
Capital expenditure and financial investment
Sale of tangible fixed assets 39 1,161
Sale of fixed asset investments - 22
Purchase of intangible fixed assets (113) (3,730)
Purchase of tangible fixed assets (2,867) (3,681)
Purchase of fixed asset investments (247) (259)
Net cash outflow from capital expenditure and financial investment (3,188) (6,487)
Acquisitions and disposals
Sale/(purchase) of subsidiaries 17,918 (1,723)
Purchase of investments in associates (239) (10,214)
Disposal of investments in associates and joint venture 17,278 26,584
Net cash inflow from acquisitions and disposals 34,957 14,647
Equity dividends paid (7,560) (7,336)
Net cash inflow before financing 33,771 16,775
Financing
Issue of shares 16 824 -
Decrease in short-term borrowings (1,900) (22,146)
(Decrease)/increase in other borrowings (29,200) 10,444
Repayment of loans - (9,500)
(Repayment)/redemption of loan notes (3,851) 892
Capital element of finance lease rentals (189) 198
Net cash outflow from financing (34,316) (20,112)
Decrease in cash for the year 19,20 (545) (3,337)
Included in the net cash inflow are goodwill and exceptional items of £1,304,000
(2003 £9,632,000).
Comprising £973,000 redundancies (2003 £1,712,000), £331,000 abortive licence
application costs (2003 nil) and in 2003 goodwill impairment of £7,920,000.
Consolidated statement of total recognised gains and losses
for the year ended 31 March 2004
2004 2003
£'000 £'000
Profit/(loss) for the financial year 8,514 (15,055)
Currency translation differences on foreign currency net investments (445) 505
Total recognised gains/(losses) for the financial year 8,069 (14,550)
Reconciliation of movements in consolidated equity shareholders' funds
for the year ended 31 March 2004
2004 2003
£'000 £'000
Profit/(loss) for the financial year 8,514 (15,055)
Dividends (8,247) (7,475)
Retained profit/(loss) for the financial year 267 (22,530)
Currency translation differences on foreign currency net investments (445) 505
New share capital issued 19 292
Premium on shares issued 805 11,692
Goodwill taken to profit and loss account on disposal - 1,399
Net increase/(decrease) in shareholders' funds 646 (8,642)
Opening equity shareholders' funds 67,337 75,979
Closing equity shareholders' funds 67,983 67,337
Notes to the financial statements
for the year ended 31 March 2004
1 Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 March 2004 or 2003, but is derived from
those accounts. Statutory accounts for the year ended 31 March 2003 have been
filed with the Registrar of companies. The statutory accounts for 2004 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985.
When published, the Company's Annual Report and Accounts will be sent to
shareholders and will be made available to the public at the Company's
registered office, 1 Passage Street, Bristol, BS2 0JF.
2 Segmental information
2004 2004 2004 2003 2003 2003
Total Continuing Discontinued Total
Continuing Discontinued £'000 £'000 £'000 £'000
£'000 £'000 Restated* Restated* Restated*
(a) Turnover
Geographical
analysis:
United Kingdom 125,593 - 125,593 115,479 - 115,479
Overseas - 3,147 3,147 - 11,652 11,652
125,593 3,147 128,740 115,479 11,652 127,131
Business type
analysis:
Analogue radio 117,546 3,147 120,693 108,997 11,652 120,649
Digital radio 8,047 - 8,047 6,482 - 6,482
125,593 3,147 128,740 115,479 11,652 127,131
The turnover analysis is both by origin and
destination.
(b) Operating profit/(loss) (before goodwill amortisation and exceptional items)**
Geographical
analysis:
United Kingdom 20,723 - 20,723 16,708 - 16,708
Overseas - 500 500 - (1,973) (1,973)
20,723 500 21,223 16,708 (1,973) 14,735
Business type
analysis:
Analogue radio 26,163 500 26,663 21,444 (1,973) 19,471
Digital radio (5,440) - (5,440) (4,736) - (4,736)
20,723 500 21,223 16,708 (1,973) 14,735
(c) Profit/(loss) before finance charges (net) and
taxation
Geographical
analysis:
United Kingdom 18,238 (107) 18,131 21,065 (633) 20,432
Overseas - 310 310 - (29,809) (29,809)
18,238 203 18,441 21,065 (30,442) (9,377)
Business type
analysis:
Analogue radio 24,323 203 24,526 26,604 (30,442) (3,838)
Digital radio (6,085) - (6,085) (5,539) - (5,539)
18,238 203 18,441 21,065 (30,442) (9,377)
(d) Net assets***
Geographical
analysis:
United Kingdom 67,671 - 67,671 37,072 11,209 48,281
Overseas - - - - 18,141 18,141
67,671 - 67,671 37,072 29,350 66,422
Business type
analysis:
Analogue radio 65,260 - 65,260 36,730 29,350 66,080
Digital radio 2,411 - 2,411 342 - 342
67,671 - 67,671 37,072 29,350 66,422
* The above restatement is due to the internet results now being included
within analogue radio.
** The group presents operating profit before goodwill and exceptional items
as the directors consider it to be an appropriate measure of underlying
profitability. See note 3 for an analysis of goodwill amortisation and
exceptional items.
*** Net assets are stated after allocating company debt.
3 Goodwill amortisation and exceptional items
2004 2004 2004 2004 2003 2003 2003 2003
Goodwill Exceptional Goodwill Exceptional Total
amortisation items Tax Total amortisation items Tax
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Goodwill amortisation
on continuing
operations (6,074) - - (6,074) (7,750) - - (7,750)
Goodwill amortisation
on discontinued
operations (144) - - (144) - - - -
Impairment of goodwill
on overseas investments - - - - (7,920) - - (7,920)
Restructuring costs - (973) 293 (680) - (1,712) 513 (1,199)
Abortive licence
application costs - (331) 99 (232) - - - -
(6,218) (1,304) 392 (7,130) (15,670) (1,712) 513 (16,869)
Share of operating loss
of associated
undertakings and joint
venture (213) - - (213) (294) (339) - (633)
Profit on disposal of
investments - 5,660 (972) 4,688 - 3,252 136 3,388
Loss on disposal of
overseas subsidiaries - (218) - (218) - (8,620) - (8,620)
Loss on disposal of
fixed asset investment - - - - - (3) - (3)
(6,431) 4,138 (580) (2,873) (15,964) (7,422) 649 (22,737)
The goodwill amortisation and impairment are included in other operating costs
and restructuring costs and abortive licence application costs are included
within exceptional operating costs. None of the above exceptional items has any
impact on the minority interests.
4 Finance charges (net)
2004 2003
£'000 £'000
Bank loans and overdrafts 3,771 5,768
Finance leases 38 21
Investment income (132) (221)
Interest receivable (6) (112)
3,671 5,456
5 Profit/(loss) on ordinary activities before taxation
2004 2003
£'000 £'000
Profit/(loss) on ordinary activities before taxation is stated after charging/
(crediting):
Loss/(profit) on disposal of tangible fixed assets in operating profit 12 (194)
Impairment of goodwill - 7,920
Depreciation/amortisation charge for the year:
Tangible owned fixed assets 4,329 4,481
Tangible fixed assets held under finance leases 362 329
Goodwill relating to subsidiary companies 6,218 7,750
Goodwill relating to associated companies and joint venture 213 294
Other intangible fixed assets 638 1,458
Auditor's remuneration
Audit fees 90 119
Interim review 10 17
Tax services 48 133
Other services - 32
148 301
Hire of plant and machinery 169 207
Other operating lease charges 1,058 1,270
The auditor's remuneration in 2003 was paid to KPMG. In addition they received
non-audit fees of £147,000 in the current year. Fees paid for the current audit
of the Company amounted to £6,000 to Deloittes (2003 £6,000 to KPMG).
6 Taxation
Analysis of the tax charge for the year
2004 2003
£'000 £'000
Current tax:
United Kingdom corporation tax at 30% (2003 30%):
Current 5,064 3,162
Foreign taxation on profits of the year 120 418
Under/(over) provision in respect of prior years 338 (592)
Group current tax 5,522 2,988
Share of taxation of associated undertakings (163) -
Total current tax 5,359 2,988
Deferred tax:
Origination and reversal of timing differences 350 77
Adjustments in respect of prior years (56) (917)
Share of tax on associate undertakings - (67)
Total deferred tax 294 (907)
Total 5,653 2,081
7 Dividends
2004 2003
£'000 £'000
Interim 2.3p per share (2003: 2.3p) paid 16 January 2004 3,010 3,001
Final proposed 4.0p per share (2003: 3.5p) to be paid on 3 August 2004 5,237 4,474
6.3p (2003: 5.8p) 8,247 7,475
The final dividend has an ex-dividend date of 7 July 2004 and a record date of 9
July 2004.
8 Earnings/(loss) per share
(a) Earnings per share
The calculation of loss per share is based on the weighted average number of
shares in issue for the year of 130,733,737 (2003: 127,145,369) and the profit
for the financial year of £8,514,000 (2003: loss of £15,055,000).
(b) Diluted earnings per share
The calculation of fully diluted earnings per share uses the weighted average
number of shares in issue as above adjusted to take account of the dilutive
effect of the number of the options granted of 1,176,359 (2003: nil)
(c) Headline earnings per share
The calculation of the Headline earnings per share is based on the definition by
the UK Society of Investment Professionals (formerly the Institute of Investment
Management and Research) in their Statement of Investment Practice No.1. The
calculation is based on the weighted average number of shares in issue for the
year of 130,733,737 (2003: 127,145,369) and the adjusted profit of £10,458,000
(2003: £6,148,000). The reconciliation from profit for the financial year to
adjusted profit is as follows:
2004 2003
£'000 p per share £'000 p per share
Profit/(loss) for the financial year 8,514 6.5 (15,055) (11.8)
Loss/(profit) on disposal of tangible 12 - (194) (0.1)
fixed assets
(Profit)/loss on disposal of investments (5,442) (4.1) 5,371 4.2
and subsidiaries
Impairment of goodwill - - 7,920 6.2
Goodwill amortisation 6,431 4.9 8,044 6.3
Tax effect of the above 943 0.7 62 -
10,458 8.0 6,148 4.8
Headline earnings per share is presented because the directors believe it is a
more appropriate measure of the underlying trend than basic or diluted earnings
per share.
9 Intangible fixed assets
Goodwill Other Total
Group Note £'000 £'000 £'000
Cost
At 1 April 2003 152,447 22,317 174,764
Exchange movements - (982) (982)
Additions 239 133 372
Disposals 21 (29,971) (15,808) (45,779)
At 31 March 2004 122,715 5,660 128,375
Amortisation
At 1 April 2003 36,451 10,779 47,230
Exchange movements - (549) (549)
Amortisation charge for the year 6,218 638 6,856
Transfer to investments (693) - (693)
Disposals (16,003) (9,148) (25,151)
At 31 March 2004 25,973 1,720 27,693
Net book value
At 31 March 2004 96,742 3,940 100,682
Net book value
At 31 March 2003 115,996 11,538 127,534
10 Tangible fixed assets
Transmitters,
fixtures and
Land and technical Motor
buildings equipment vehicles Total
Group £'000 £'000 £'000 £'000
Cost
At 1 April 2003 8,827 45,335 703 54,865
Exchange movements - (32) (6) (38)
Additions 189 2,678 - 2,867
Disposals - (19,693) (463) (20,156)
At 31 March 2004 9,016 28,288 234 37,538
Depreciation
At 1 April 2003 2,941 29,114 488 32,543
Exchange movements - (6) (2) (8)
Depreciation charge for the year 381 4,277 33 4,691
Disposals - (19,146) (329) (19,475)
At 31 March 2004 3,322 14,239 190 17,751
Net book value
At 31 March 2004 5,694 14,049 44 19,787
Net book value
At 31 March 2003 5,886 16,221 215 22,322
11 Investments
Joint Associated Other
ventures companies investments Total
Group £'000 £'000 £'000 £'000
At 1 April 2003 as previously 11,209 172 10,247 21,628
stated
Reclassification (see below) - 386 - 386
At 1 April 2003 restated 11,209 558 10,247 22,014
Additions - - 247 247
Transfer in from intangibles - - 693 693
Disposals (11,103) - (1,435) (12,538)
Share of results for the year 70 48 - 118
Goodwill amortisation (176) (37) - (213)
At 31 March 2004 - 569 9,752 10,321
Previously the Group included its share in net liabilities in associates in
investments. In accordance with FRS 9 these have been reclassified as
provisions. The comparatives for 2003 have been reclassified, by increasing
investments and provisions by £386,000.
12 Debtors
2004 2003
£'000 £'000
Amounts falling due within one year
Trade debtors 20,134 21,751
Amounts owed by associated undertakings 2,387 208
Amounts owed by joint venture - 16
Other debtors 2,262 3,403
Prepayments and accrued income 4,899 5,900
29,682 31,278
Amounts due after one year
Trade debtor - 105
29,682 31,383
13 Creditors: amounts falling due within one year
2004 2003
£'000 £'000
Loan notes 327 4,178
Bank loans and overdrafts 6,853 8,920
Obligations under finance leases 353 351
Trade creditors 2,041 6,515
Amounts owed to associated undertakings - 348
Corporation tax 3,513 3,435
Other taxation and social security 2,694 3,010
Other creditors 4,468 5,890
Accruals 7,809 9,102
Dividends payable 5,237 4,550
33,295 46,299
14 Creditors: amounts falling due after more than one year
2004 2003
£'000 £'000
Bank loans and overdrafts 57,500 86,700
Obligations under finance leases 167 358
Other creditors 936 4,104
58,603 91,162
Bank loans and overdrafts
2004 2003
£'000 £'000
Repayable as follows:
In one year or less, or on demand 6,853 8,920
Between one and two years 8,500 6,200
Between two and five years 49,000 80,500
64,353 95,620
All borrowings are unsecured. The debt incurs interest at a fixed rate averaging
5.5% on £20 million and the remaining £44.4 million of debt incurs interest at
variable LIBOR-related rates.
15 Provisions for liabilities and charges
Share in net
liabilities
of
Deferred tax associates Total
£'000 £'000 £'000
At 1 April 2003 316 - 316
Reclassification (note 11) - 386 386
At 1 April reclassified 316 386 702
Profit and loss account 294 527 821
At 31 March 2004 610 913 1,523
16 Called-up share capital
Authorised Allotted, called-up
and fully paid
Number £'000 Number £'000
Ordinary shares of 5p each
At 1 April 2003 174,000,000 8,700 130,512,482 6,526
Shares options exercised - - 391,372 19
At 31 March 2004 174,000,000 8,700 130,903,854 6,545
17 Reserves
Special capital Merger Total other Share premium
reserve reserve reserves account
Group £'000 £'000 £'000 £'000
At 1 April 2003 369 33,662 34,031 51,800
Shares issued - - - 805
Goodwill amortisation transferred to profit
and loss account - (4,136) (4,136) -
At 31 March 2004 369 29,526 29,895 52,605
Profit and loss
account
Group £'000
At 1 April 2003 (25,020)
Currency translation differences on foreign
currency net investment (445)
Retained profit for the year 267
Transfer from merger reserve 4,136
At 31 March 2004 (21,062)
18 Reconciliation of operating profit/(loss) to net cash inflow from operating
activities
2004 2003
£'000 £'000
Operating profit/(loss) 13,701 (2,647)
Depreciation of tangible fixed assets 4,691 4,810
Amortisation of intangible fixed assets 6,856 9,208
Goodwill impairment - 7,920
(Loss)/profit on disposal of tangible fixed assets (12) 194
Decrease in stocks - 155
(Increase)/decrease in debtors (4,044) 1,136
(Decrease)/increase in creditors (2,076) 1,017
Net cash inflow from operating activities 19,116 21,793
19 Reconciliation of net cash flow to movement in net debt
2004 2003
£'000 £'000
Decrease in cash in the year (545) (3,337)
Cash inflow from increase in debt and lease financing 35,140 20,858
Change in net debt from cash flows 34,595 17,521
Net loan notes repaid - 47,000
Movements in net debt in year 34,595 64,521
Net debt at 1 April 2003 (99,175) (163,696)
Net debt at 31 March 2004 (64,580) (99,175)
20 Analysis of net debt
1 April Cash Other 31 March
2003 flow non-cash 2004
£'000 £'000 £'000 £'000
In one year or less, or on demand
Cash in hand 1,332 (712) 620
Overdrafts (797) 167 (630)
(545)
Debt due within one year (12,301) 151 5,600 (6,550)
Debt due in more than one year but less than (6,200) - (2,300) (8,500)
two
Debt due in more than two years but less than (80,500) 34,800 (3,300) (49,000)
five
Finance leases (709) 189 - (520)
Total (99,175) 34,595 - (64,580)
21 Disposals
(a) Disposal of Hungarian Investments
On 18 June 2003 the Group sold its investment in Hungary for a total cash
consideration of £18.7 million. The book value of the investment was £16.2
million, including its indebtedness to the Group and goodwill. There was no
profit on disposal after expenses of £2.5 million incurred on the sale.
(b) Disposal of Interest in Joint Venture
On 31 July 2003, following approval from the Office of Fair Trading, the Group
sold its 49% holding in Vibe Radio Services Limited to its partner in the joint
venture, Scottish Radio Holdings plc, for a cash consideration of £17.6 million.
The book value of the 49% holding at disposal was £11.1 million; the profit on
disposal, net of £0.8 million expenses, was £5.7 million.
(c) Disposal of Austrian Investments
On 2 August 2003 the Group completed its disposal of its wholly owned Austrian
subsidiary, GWR Medien GmbH, together with its remaining investments held in
Austria, principally Antenne Salzburg. The investments were sold for a total
cash consideration of Euro 1.6 million (£1.1 million). The book value was £1.3
million, resulting in a loss of £0.2 million net of expenses.
(d) Disposal of Finnish Investment
On 5 November 2003 the Group sold its share in Oy Europer Ab, including its
subsidiary Classic Radio Oy, for a cash consideration of US$1(£1) to Oy
Metromedia Finland Ab. The book value of this investment was nil, therefore the
disposal results in no profit or loss.
22 Post balance sheet events
GWR and BT create mobile digital datacasting operation
On 4 May 2004 the Group announced its partnership with BT Wholesale in a new
venture using digital radio capacity to transmit instantaneously and at high
speed multi-media content. It is expected to provide a significant new revenue
stream for the Group.
Sale of Investment in Radio Investments Limited
On 11 May 2004 the Group conditionally agreed to sell its investment in Radio
Investments Limited for a cash consideration of £10.6 million. This will result
in an anticipated exceptional profit of £4.3 million. The sale completed on 24
May 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
