ULSTER TELEVISION plc
('UTV' or 'the Company' or 'the Group')
Preliminary Results
for the year ended 31 December 2004
UTV PROFIT SOARS BY 28% IN 2004
Ulster Television plc, the multimedia group which broadcasts television and
radio and provides internet and telephony services throughout Ireland,
announces its preliminary results for the year to 31 December 2004.
Financial highlights:
* Group turnover up 18% at £63.5m (2003: £54.0m).
* Group pre-tax profit before goodwill amortisation up 28% at £17.5m (2003: £
13.6m).
* Group pre-tax profit (post goodwill) up 46% at £13.9m (2003: £9.5m).
* Television operating profit up 29% at £15.2m (2003: £11.7m).
* Radio operating profit £2.5m (2003: £2.5m).
* New Media operating profit £0.9m (2003: £0.9m).
* Earnings per share increased by 24% to 23.30p (2003: 18.81p).
* A 19% increase in final dividend to 7.00p (2003: 5.90p) making a total for
the year of 11.50p (2003: 10.00p) an increase of 15%.
Operational highlights:
* Television advertising revenue increased by 16% compared to a 2.6% increase
for ITV1, giving UTV its fifth successive year of outperformance with a
record share of 2.69% (2003: 2.36%) of the ITV1 advertising market.
* Radio advertising grew by 8%.
* Internet revenue grew by 46%.
* On 21 February 2005 we purchased the local independent radio station for
counties Louth and Meath, LMFM, in the Republic of Ireland for £6.7m.
* TV advertising revenues expected to be 5% up in the first quarter of 2005.
* Radio advertising revenues expected to be 20% up in the first quarter of
2005.
* Successful relaunch of Dublin radio station as Q102 in March 2004 resulted
in a 60% increase in its market share to 8%.
Key dates:
* 18 March 2005 : record date for payment of dividends
* 7 June 2005 : payment of dividends
Commenting on the results, Mr John B McGuckian, Chairman, UTV said:
'I am pleased to report a year of outstanding achievement for UTV in all three
areas of our business. Our unique market offering ensures the continuation of
impressive growth in TV, radio and new media. In particular our integrated
sales strategy for radio is paying dividends across Ireland and is well
positioned to grow further.
'Television operating profit increased by 29% to £15.2m and we expect 2005
advertising revenue to increase by 5% in the first quarter. We have also
accepted the Digital Replacement Licence offered by Ofcom which extends the
term of our television broadcasting licence to 2014.
'The successful relaunch of Q102 in Dublin combined with strong performances
from our radio stations in Cork and Limerick drove our total Irish radio
advertising up by 8% to £10.9m in 2004. Q102 should move into profit this year
which would give a significant boost to the overall profits of our radio
division. We expect radio advertising growth of 20% in the first quarter of
this year and further improvement will be delivered by the integration of LMFM
which broadcasts to 250,000 adults in Dundalk, Drogheda and surrounding areas.
'Through a combination of continued growth in our broadband customer base and
following the successful launch of our telephony product UTV Talk in August,
turnover in our New Media division grew by 44% to £5.4m.'
For further information contact:
Stakeholder Communications
Tom Kelly, Managing Director +44 207 9035145 / 07767393250
Ulster Television plc
John McCann, Group Chief Executive +44 28 9026 2202
Jim Downey, Group Finance Director +44 28 9026 2176
Orla McKibbin, Head of Press and PR +44 28 9026 2188
Chairman's Statement
INTRODUCTION
I am pleased to report a year of outstanding achievement for your company.
Group turnover grew by 18% to £63.5m, group pre-tax profit before goodwill
amortisation was up by 28% to £17.5m, earnings per share rose by 24% to 23.3p,
and net debt reduced by £10.6m to £18.5m.
RESULTS AND DIVIDEND
Operating profit before goodwill amortisation increased by 29% to £15.2m (2003
: £11.7m) for television and was maintained at £2.5m (2003 : £2.5m) and at £
0.9m (2003 : £0.9m) for radio and new media respectively. Group operating
profit before goodwill amortisation, therefore, was up by £3.5m to £18.6m (2003
: £15.1m). With net interest charges lower at £0.9m (2003 : £1.3m) and a loss
of £0.2m (2003 : £0.2m) in joint ventures, the group profit before tax and
goodwill amortisation was £17.5m (2003 : £13.6m).
Your Board recommends a final dividend of 7.00p (2003 : 5.90p) which represents
a 19% increase over last year making a total for the year of 11.50p (2003 :
10.00p) an increase of 15%. The final dividend will be paid on 7 June 2005 to
shareholders on the Register at the close of business on 18 March 2005. The
Annual General Meeting will be held on 27 May 2005.
TELEVISION
A share of 2.69% of the ITV network's advertising revenue, another record,
signalled our fifth successive year of outperformance, with our advertising
revenue up by 16% to £44.5m (2003 : £38.3m) compared to a 2.6% increase for
ITV1 as a whole. While there were some performance-related cost increases, the
substantial network programme cost increases of the past four years have been
contained by the implementation of the Granada/Carlton merger undertakings, and
our television operating profit rose by £3.5m to £15.2m (2003 : £11.7m). In
December, we accepted the Digital Replacement Licence offered by Ofcom which
replaced our analogue licence and which extended our television broadcasting
term to 31 December 2014. We also applied for a review of the financial terms
of our licence and Ofcom's decision on this will be published in June 2005.
RADIO
The relaunch and rebranding of our Dublin radio station in March 2004 was
rewarded with much improved listenership figures which drove a 5.5% improvement
in advertising revenue to Q102 for the full year compared to an 11% reduction
in the first half. With strong performances from our radio stations in Cork and
Limerick, our total Irish radio advertising revenue was up by 8% to £10.9m
(2003 : £10.1m). The costs associated with the relaunch of Q102 inhibited
growth in radio operating profit which, at £2.5m, was maintained at the same
level as 2003. On 21 February 2005, we purchased for €9.5m (£6.7m) the local
independent radio station for counties Louth and Meath, LMFM, which broadcasts
to 250,000 adults centered around the key urban areas of Dundalk and Drogheda.
Our application for a new radio licence broadcasting to 720,000 adults in
Belfast and the surrounding area is currently under consideration by Ofcom.
NEW MEDIA
Continuing growth in our broadband customer base helped to lift turnover by 44%
to £5.4m. As indicated in my Interim Statement, broadband customer acquisition
costs do put pressure on margins but developing this income stream is a key
part of our long-term strategy. Similarly, our stand-alone telecoms product,
UTV Talk, which was launched in August 2004, is making very good progress but
is not yet contributing to profitability due to initial costs. Despite these
costs and a one-off credit of £0.15m in the comparative figure, new media
operating profits were maintained at £0.9m (2003 : £0.9m).
CURRENT TRADING AND PROSPECTS
Advertising prospects generally for the current year appear to be good with
forecasters predicting that UK and global advertising will increase by about
5%, which would be only slightly behind the growth of 2004. Total television
advertising growth in the UK is expected to be around 4%, but the effect of
ITV1's fall in its share of commercial impacts under the Contract Rights
Renewal (CRR) undertaking may lead to an underperformance in advertising
revenue for the ITV1 network in 2005.
That portion of our television advertising revenue sourced in GB, which in 2004
accounted for 49% of the total, will be similarly subject to the CRR mechanism,
but the balance of our revenue deriving from Ireland will be traded normally.
Our television advertising revenue for the first quarter is expected to be up
by 5% but it is difficult at this stage to anticipate the level of growth
throughout the rest of the year.
A strong recovery by our Dublin radio station, Q102, and good performances by
our stations in Cork and Limerick are expected to lift our radio advertising
revenue in Ireland by 20% in the first quarter of 2005. The radio market
remains very short-term, but, with the Irish economy continuing to grow,
further strong growth should be achievable. Q102 is expected to move into
profit this year which should give a significant boost to the overall profits
of the radio division. Further improvement can be expected also from the
integration of our latest radio acquisition LMFM, which should be earnings
enhancing for the year as a whole.
Our broadband and telephony services continue to enjoy substantial growth with
turnover in our new media division expected to be up by about 25% in the first
quarter of 2005. This level of growth should be sustainable throughout the rest
of the year and, even with tighter margins, should drive some improvement in
the profitability of that division.
PEOPLE
On your behalf, I wish to thank the Board, management and staff of the Company
for their commitment, professionalism and enthusiasm in delivering another set
of results of which they can be proud.
John B McGuckian
Chairman
7 March 2005
Operating and Financial Review
FINANCIAL OVERVIEW
Television, radio and new media accounted for 74%, 17% and 9% respectively of
group turnover of £63.5m (2003 : £54.0m) and 81%, 14% and 5% respectively of
group operating profit before goodwill of £18.6m (2003 : £15.1m). The strong
operational performance generated net positive cash flows of £8.7m (2003 : £
0.7m outflow) in the year which, with the conversion of £1.7m (2003 : £1.7m) of
loan notes into ordinary shares at £2.30 and the impact of foreign exchange
movements, reduced the net debt at 31 December 2004 to £18.5m (2003 : £29.1m).
This reduction in our net debt resulted in a lower net interest charge for the
year of £0.9m (2003 : £1.3m).
The net debt position at the year end represented 0.9 times (2003 : 1.7 times)
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) and
comprised euro denominated loans of £26.1m (2003 : £32.3m), sterling cash
balances of £4.7m (2003 : £2.7m) and euro denominated cash balances of £3.0m
(2003 : £2.3m). Euro denominated balances were translated at a euro/sterling
exchange rate of 1.413 (2003: 1.415).
Of the tax charge for the year of £4.9m (2003 : £3.6m), £4.6m (2003 : £3.3m)
was on profits arising in the UK and £0.3m (2003 : £0.3m) was on profits
arising in the more favourable corporation tax regime in the Republic of
Ireland. The effective pre-goodwill tax rate overall was 28.3% (2003 : 26.5%).
The post tax pre-goodwill profit of £12.6m (2003 : £10.0m) produced earnings
per share of 23.30p (2003 : 18.81p).
TELEVISION
Our key strategic objectives were, and are, to maintain our brand strength
throughout Ireland, maximise our audience and provide our advertisers with the
only viable mass market television advertising proposition across the island.
With further penetration of digital television in the UK, the ITV1 network
share of the peaktime audience fell slightly from 31.4% in 2003 to 30.6% in
2004. Despite this, and the additional competition in Northern Ireland from the
four channels broadcasting from the Republic of Ireland, UTV's peaktime share
increased over the same period from 33.6% to 34.5%. This gave us a commanding
lead over both BBC1 Northern Ireland with a 21.9% share, and our nearest
commercial competitor, C4, with an 8.6% share, and again compared favourably to
the combined peaktime share of all our commercial television competitors of
37.3%. Within that combined share, the four channels originating in the
Republic of Ireland had a total share of 5.5%, which compared to the 11.3%
share which UTV achieved in 78% of homes in the Republic which are
multi-channel.
Supported by this viewership across Ireland, advertising revenue increased by £
6.2m to £44.5m (2003 : £38.3m), with strong growth being recorded in all three
of our marketplaces, Belfast, Dublin and Great Britain. Encouragingly, this
growth was across most advertising categories with 17 out of 22 categories
achieving double digit growth. With other revenue of £2.7m (2003 : £1.8m),
including sponsorship revenue of £1.2m (2003 : £1.0m), total television revenue
increased by £7.1m to £47.2m (2003 : £40.1m).
Under the Communications Act 2004, Ofcom offered a new Digital Replacement
Licence (DRL) which we accepted and which took effect from 28 December 2004.
This new licence expires on 31 December 2014 and currently contains broadly the
same public service requirements set out in our old analogue licence. However,
the DRL also creates the framework for digital switchover by introducing
various obligations including a target switchover date for all main
broadcasters of no later than 31 December 2012. Ofcom proposes that digital
switchover will take place on a region-by-region basis and published a proposed
sequence for this process on 9 February 2005 which envisages the first regions
switching over in 2008 and UTV switching over in 2011. The sequence, and
related matters such as digital coverage, will be included in our obligations
by way of variation to the DRL.
Also under the legislation, we applied for a review of the financial terms of
our licence, which in 2004 comprised a flat payment of £0.6m and a variable
payment of £1.3m representing 5% of our total qualifying revenue. In
determining any new financial terms, Ofcom is required to set a value for the
cash bid for the licence as if the licence was being auctioned anew. Our
application was prepared in accordance with a methodology document published by
Ofcom which required ten year projections prepared on the basis of a range of
given assumptions.
In June, Ofcom will issue new financial terms which, if acceptable to us, will
apply from 1 January 2005. If we reject the terms offered, then our existing
financial terms will remain in place and no further reviews can be sought
during the licence period. If we withdraw our application prior to Ofcom
offering new terms, then we will be allowed to apply again for review up until
31 December 2007.
The Phase 3 report of Ofcom's statutory review of public service broadcasting
was published on 8 February 2005 and proposed that non-news local programming
requirements for Northern Ireland would be reduced by one half hour to a
minimum of four hours per week. This, and other proposals in the report, have
now been put to formal consultation until 19 April 2005.
RADIO
Our strategy in radio is to create the leading independent commercial radio
group in Ireland comprising strong local broadcasters operating in key urban
areas.
With the purchase of LMFM on 21 February 2005 for £6.7m, UTV's radio stations
in the Republic of Ireland, now broadcast to five major urban areas, Dublin,
Cork, Limerick, Drogheda and Dundalk. Through our wholly owned sales house,
Broadcast Media Sales Ltd, we also sell airtime for Galway Bay FM, the leading
independent radio station in Galway and for Beat FM, a regional station
broadcasting in the south-east of Ireland. More than 66% of the total
population of the Republic of Ireland reside in these areas and our radio
stations, together with Galway Bay FM and Beat FM, reach 29% of 15+ adults in
the Republic every week. This provides an attractive proposition for national
and international marketers, with further advertising support coming from local
advertisers in each area. Our previously underperforming station in Dublin is
making good progress with the most recent research data in February 2005
confirming the improving trend in its listenership.
With the acquisition of LMFM, UTV now owns 17.9% of the total number of
independent local radio licences in the Republic of Ireland. Ownership rules
introduced by the Broadcasting Commission of Ireland (BCI) in October 2001
deemed the ownership of up to 15% of the total number of licences to be
'acceptable' with up to a further 10% ownership of the total number requiring
'more careful consideration by the Commission'. After approving our acquisition
of LMFM, the BCI announced that it would be reviewing its ownership policy
through public consultation and would issue a new policy which would be
operational by late 2005. While this review is under way, the BCI will apply a
new maximum permissible ownership holding of 17.9% of the total number of
independent local radio licences i.e. our current ownership level.
NEW MEDIA
The key objective of our new media operations is the development of internet
access, telephony and cross media content services to consumers across the
island of Ireland. This is achieved in the context of delivering innovative
products which extend choice to consumers while developing long term
shareholder value through the creation of new profit streams.
Broadband penetration continues to grow rapidly throughout Ireland. Key
initiatives by the incumbent telecommunications operators will ensure that, by
December 2005, all homes in Northern Ireland will have access to broadband
services, with 90% of homes in the Republic of Ireland expected to have
coverage by March 2006. UTV Internet will continue to use the Group's media to
promote our broadband services, with a view to increasing our market share
beyond the 5.2% currently achieved since launch in July 2003. Costs associated
with customer acquisition have impacted on overall margins within our new media
division but we will seek to use this wider customer base to leverage value
added services such as internet based telephony as these technologies become
widely available.
Our broadband products are sold in conjunction with telephony services and we
have developed considerable experience in the administration and billing
systems required in this field. As a result, in August 2004 we launched UTV
Talk, a residential telephony product available to consumers throughout
Ireland. Initial demand for this service has proved positive and supports our
low risk entry into the provision of stand alone voice services.
Content plays a key role in promoting the UTV brand as well as those of our
individual television and radio interests. Our flagship website u.tv makes use
of the wider news gathering resources available within the group, while in turn
cross promoting programmes, personalities and activities relevant to our
audiences across Ireland.
In January 2005, UTV Internet was awarded Service Provider of the Year for the
second time in the three years in which the Digital Media Awards have been
held. Our submission highlighted the success of our broadband and telephony
operations and their impact on the competitive digital media landscape in
Ireland.
PENSIONS
UTV operates a defined benefit pension scheme in Northern Ireland. This scheme
was closed to new members from 21 August 2002.
The most recent actuarial valuation was carried out at 30 June 2002 and
revealed a FRS17 surplus of £0.2m. In the period from the date of the last
actuarial valuation the scheme's assets have increased by 9% but this has been
more than offset by a 27% increase in the scheme's liabilities leaving an
estimated FRS17 deficit at 31 December 2004 of £7.13m (2003 : £7.93m). The next
actuarial valuation will be carried out at 30 June 2005. The total pension cost
for the year under SSAP24 was £0.80m (2003 : £0.95m).
UTV also operates defined contribution schemes both in Northern Ireland and the
Republic of Ireland. Contributions in the year amounted to £0.03m (2003 : £
0.02m).
CORPORATE SOCIAL RESPONSIBILITY
UTV has met the FTSE4Good criteria and is therefore a constituent member of the
FTSE4Good Index Series. This demonstrates UTV's commitment to responsible
business practice and management of its social, environmental and ethical
risks. As a constituent member of a FTSE4Good Index, UTV is demonstrating that
it has the policies and management systems in place to help address these
risks.
STAFF
The Group recognizes the importance of providing opportunity for employee
involvement as a means of achieving corporate objectives. Joint Committees
review operational matters, while monthly Team Briefing provides an effective
means of communication, complementing the day to day line-management process.
The Group provides equality of opportunity for all staff and job applicants and
complies with relevant Equal Opportunities legislation and codes of practice.
The Group's commitment to Equal Opportunities is further demonstrated by the
training of Equality advisors, membership of Opportunity Now and our
participation in a Voluntary Agreement with the Equality Commission.
The Group is also fully committed to training staff to develop the skills and
knowledge necessary to meet its business objectives by both on and off-the-job
development activities. The Group works in partnership with the Northern
Ireland Film and Television Commission to provide practical training and
support to individuals working in the sector.
ENVIRONMENTAL POLICY
UTV recognises that its business activities inevitably have an impact on the
environment. Consequently our environmental policy seeks to encourage employees
to be environmentally aware and to achieve the highest standards of good
environmental practice. In addition the Group endeavours to minimise the level
of waste and the risks of pollution in all areas of its operation. The Group
has a well established recycling practice in place throughout all departments.
UTV recognises the need to educate and inform all employees of policies and
plans and developments with the Environmental Management System and these are
communicated to the workforce through regular environmental newsletters.
UTV attained British Standard 7750 in 1996 and was the first broadcasting
company to hold this award. As a continuation, in July 1997 the Company was
accredited with the ISO-14001 series of international standards certification.
UTV participated in the 2004 Environmental Management Survey in Northern
Ireland and achieved an overall percentage score of 78.1% compared to the
Northern Ireland average of 65%.
Further details of UTV's environmental policies and associated data are
available at our corporate website utvplc.com.
IN THE COMMUNITY
UTV contributes more than half a million pounds directly to the local community
on charitable and sponsorship activities each year. As a result we are one of a
small number of companies in Northern Ireland who have signed up to the PerCent
Club which recognises the Company's commitment to investing a minimum of 1% of
it's pre-tax profits on community projects.
A unique aspect of our community support is the free provision to local
voluntary, charitable, sporting and enterprise bodies of UTV's studio
facilities. Many of these groups could not otherwise afford such a high profile
platform or reception.
In addition, UTV opens its doors weekly to groups of schoolchildren, ethnic
organisations, retired people associations and disabled groups for tours of our
studios and also supports a number of other local charitable and community
initiatives.
Each day UTV broadcasts at least two Community Service Announcements (CSAs).
Last year, 30 different CSAs were broadcast and the company held quarterly
workshops for those community organisations to assist with training in
elementary television skills.
UTV supports Business in the Community (BITC) in Northern Ireland. BITC is a
unique movement of companies across the UK and Ireland committed to continually
improving their positive impact on society. BITC has a core membership of 700
companies (more than 210 of these in Northern Ireland) including 70% of the
FTSE 100.
In 2004 the computer system at UTV was updated, resulting in surplus computer
equipment. Through co-ordination with local educational and medical
missionaries, any equipment that was suitable for re-use was distributed to
schools in Zambia.
John McCann
Group Chief Executive
7 March 2005
Group Profit and Loss Account
For the year ended 31 December 2004
2004 2003
Notes £000 £000
Turnover
Continuing Operations
Group and share of joint ventures' turnover 64,223 54,384
Less : share of joint ventures' turnover (720) (423)
----------- -----------
Group turnover 2(a) 63,503 53,961
----------- -----------
Group operating profit before goodwill 2(b) 18,610 15,139
amortisation
Goodwill amortisation (3,491) (3,777)
----------- -----------
Group operating profit 2(b) 15,119 11,362
Share of operating loss in joint ventures before (213) (186)
goodwill amortisation
Share of joint venture goodwill amortisation (138) (42)
Amortisation of goodwill arising from acquisition - (270)
of joint ventures
----------- -----------
Profit on ordinary activities before interest and 14,768 10,864
taxation
Interest receivable 148 110
Interest payable (1,048) (1,438)
----------- -----------
Profit on ordinary activities before taxation 13,868 9,536
Taxation on profit on ordinary activities 3 (4,950) (3,615)
----------- -----------
Profit on ordinary activities after taxation 8,918 5,921
Minority interest 11 (48)
----------- -----------
Profit for the financial year attributable to the 8,929 5,873
Group
Ordinary dividends 4 (6,235) (5,349)
----------- -----------
Transfer to reserves 2,694 524
----------- -----------
Earnings per share
Diluted 5 16.33p 10.91p
----------- -----------
Basic (FRS14) 5 16.56p 11.09p
----------- -----------
Adjusted 5 23.30p 18.81p
----------- -----------
Diluted adjusted 5 22.95p 18.39p
----------- -----------
Dividend per share 4 11.50p 10.00p
----------- -----------
Group Statement of Total Recognised Gains and Losses
For the year ended 31 December 2004
2004 2003
£000 £000
Profit for the financial year excluding loss of joint 9,350 6,122
ventures
Share of joint ventures' loss for the year (421) (249)
----------- -----------
Profit for the financial year attributable to members of 8,929 5,873
the parent company
Exchange difference on retranslation of net assets of (109) 4,320
subsidiary undertakings
Exchange difference on loans 223 (2,690)
----------- -----------
Total recognised gains and losses for the year 9,043 7,503
----------- -----------
Group Balance Sheet
At 31 December 2004
2004 2003
Notes £000 £000
Fixed assets
Intangible assets 44,533 47,964
Tangible assets 8,572 8,894
Investment in joint ventures 788 1,151
Other investments 1 1
----------- -----------
53,894 58,010
----------- -----------
Current assets
Stocks 4,773 3,533
Debtors 12,672 11,718
Short term cash deposits 6 2,542 2,413
Cash at bank and in hand 6 5,110 2,569
----------- -----------
25,097 20,233
Creditors: amounts falling due within one year
Creditors (26,292) (19,651)
Convertible loan notes 6 - (1,684)
----------- -----------
Net current liabilities (1,195) (1,102)
----------- -----------
Total assets less current liabilities 52,699 56,908
Creditors: amounts falling due after more than
one year
Bank loans 6 (17,403) (26,668)
Amounts due for film rights (822) (170)
Provision for liabilities and charges (217) (294)
----------- -----------
34,257 29,776
Minority interest 18 7
----------- -----------
Net assets 34,275 29,783
----------- -----------
Capital and reserves
Called-up equity share capital 2,711 2,674
Share premium account 3,873 2,226
Profit and loss account 27,691 24,883
----------- -----------
Equity shareholders' funds 7 34,275 29,783
----------- -----------
Group Statement of Cash Flows
For the year ended 31 December 2004
2004 2003
Note £000 £000
Net cash inflow from operating activities 8 21,210 13,463
Returns on investments and servicing of finance (927) (1,307)
Taxation (4,703) (3,429)
Capital expenditure and financial investment (1,299) (2,482)
Acquisitions and disposals - (1,866)
Equity dividends paid (5,596) (5,171)
----------- -----------
Net cash inflow/(outflow) before use
of liquid resources and financing 8,685 (792)
(Increase)/decrease in cash on deposit (129) 2,307
----------- -----------
8,556 1,515
Financing (6,018) (2,915)
----------- -----------
Increase/(decrease) in cash 2,538 (1,400)
----------- -----------
Reconciliation of Net Cash Flow to Movement in Net Debt
2004 2003
Note £000 £000
Increase/(decrease) in cash in the year 2,538 (1,400)
Cash outflow/(inflow) from increase/(decrease) 129 (2,307)
in cash on deposit
Repayment of loans and debentures 6,018 2,997
----------- -----------
Change in net debt resulting from cash flows 8,685 (710)
Loan acquired on acquisition - (157)
Financial liability waived from a third party - 144
Conversion of loan notes 1,684 1,678
Translation difference 226 (2,581)
----------- -----------
Movement in net debt in the year 10,595 (1,626)
Net debt at 1 January (29,051) (27,425)
----------- -----------
Net debt at 31 December 6 (18,456) (29,051)
----------- -----------
Notes to the Financial Statements
At 31 December 2004
1. Basis of preparation
The results for the years ended 31 December 2004 and 31 December 2003 are an
abridged extract of the Group's full accounts on which the auditors have issued
unqualified reports. The Group's full accounts for the year ended 31 December
2003 have been filed with the Registrar of Companies.
The financial information contained in this statement does not constitute full
accounts within the meaning of Article 262 of the Companies (Northern Ireland)
Order 1986.
2. Turnover and segmental analysis
Turnover is generated principally from the UK with all radio activity generated
in the Republic of Ireland. Turnover and group operating profit on ordinary
activities before tax are analysed as follows:
2004 2003
Sales to Inter- Sales to Inter-
third segmental Total third segmental Total
parties sales sales parties sales sales
£000 £000 £000 £000 £000 £000
(a) TURNOVER
Area of activity
Television 47,222 421 47,643 40,134 335 40,469
Radio 10,853 61 10,914 10,062 58 10,120
New Media 5,428 62 5,490 3,765 60 3,825
---------- ---------- ---------- ---------- ----------- ----------
Total 63,503 544 64,047 53,961 453 54,414
---------- ---------- ---------- ---------- ----------- ----------
2004 2003
Operating Operating
Profit Group Profit Group
before operating before operating
goodwill Goodwill profit goodwill Goodwill profit
£000 £000 £000 £000 £000 £000
(b) GROUP
OPERATING
PROFIT
Area of activity
Television 15,193 - 15,193 11,750 - 11,750
Radio 2,560 (2,885) (325) 2,514 (2,883) (369)
New Media 857 (606) 251 875 (894) (19)
---------- ---------- ----------- ----------- ----------- -----------
Total 18,610 (3,491) 15,119 15,139 (3,777) 11,362
---------- ---------- ----------- ----------- ----------- -----------
3. Tax on profit on ordinary activities
2004 2003
£000 £000
Current tax:
UK corporation tax on profits for the period 4,686 3,563
Adjustments in respect to previous years (38) (179)
----------- -----------
4,648 3,384
Foreign tax:
ROI corporation tax on profits for the period 342 288
Adjustments in respect to previous years (1) (1)
----------- -----------
Total current tax 4,989 3,671
Deferred tax:
Origination and reversal of timing differences (39) (187)
Adjustments in respect of previous periods - 131
----------- -----------
4,950 3,615
----------- -----------
4. Dividends
2004 2003
Pence Pence
per per
share £000 share £000
Ordinary interim paid 18 October 4.50 2,440 4.10 2,193
2004
Proposed ordinary final payable 7 7.00 3,795 5.90 3,156
June 2005
------ ------ ------ ------
11.50 6,235 10.00 5,349
------ ------ ------ ------
5. Earnings per share
Basic earnings per share, in accordance with Financial Reporting Standard No14
(FRS 14), is calculated on the weighted average number of shares in issue
during the period being 53,903,903 (2003: 52,959,243) and is based on profit
for the financial year after exceptional items and taxation of £8,929,000
(2003: £5,873,000).
Diluted earnings per share is calculated on 54,827,129 shares (2003:
54,678,391) reflecting the dilutive potential of the Convertible Loan Notes
(314,674 shares (2003: 1,309,746)) and Share Option Schemes (608,552 shares
(2003: 409,402)). The calculation is based on profit for the financial year of
£8,952,615 (2003: £5,964,795) reflecting an adjustment for net interest payable
on the Convertible Loan Notes of £23,615 (2003: £91,795).
An adjusted earnings per share has been calculated to exclude the impact on
profit of goodwill amortisation.
2004 2003
p p
Diluted earnings per share 16.33 10.91
Adjustments:
To reflect the dilutive potential of the Convertible 0.18 0.09
Loan Notes
To reflect the dilutive potential of the Share Option 0.05 0.09
Schemes
----------- -----------
Earnings per share (FRS 14) 16.56 11.09
Adjustments:
Goodwill amortisation 6.74 7.72
----------- -----------
Adjusted earnings per share 23.30 18.81
Adjustments:
To reflect the dilutive potential of the Convertible (0.26) (0.28)
Loan Notes
To reflect the dilutive potential of the Share Option (0.09) (0.14)
Schemes
----------- -----------
Diluted adjusted earnings per share 22.95 18.39
----------- -----------
6. Net Debt
2004 2003
£000 £000
Cash 5,110 2,569
Short term deposits 2,542 2,413
Loans (a)
- falling due within one year (8,705) (5,681)
- falling due after more than one year (17,403) (26,668)
Convertible loan notes (b) - (1,684)
----------- -----------
(18,456) (29,051)
----------- -----------
(a)Loans
The Company has two multi option loan facilities which each bear interest at
Euribor plus 0.8%.
(b)Convertible loan notes
On 17 May 2004 convertible loan notes amounting to £208,000 were converted into
90,434 Ordinary Shares and on 9 June 2004 the remaining convertible loan notes
amounting to £1,476,000 were converted into 641,739 Ordinary Shares.
7. Reconciliation of shareholders' funds and movement on reserves
2004 2003
£000 £000
Balance at 1 January 29,783 25,862
Conversion of Loan Notes 1,684 1,678
Exercise of share options - 82
Profit for the year 8,929 5,873
Dividends (6,235) (5,349)
Exchange difference on retranslation of net assets
of subsidiary undertakings (109) 4,327
Exchange difference on loans 223 (2,690)
----------- -----------
Balance at 31 December 34,275 29,783
----------- -----------
8. Reconciliation of operating profit to net cash flow from operating
activities
2004 2003
£000 £000
Operating profit 15,119 11,362
Depreciation charges 1,688 1,741
Amortisation of goodwill 3,491 3,777
Profit on sale of tangible fixed assets (8) (42)
Increase in stocks (1,240) (547)
Increase in debtors (1,037) (892)
Increase/(decrease) in creditors 3,224 (1,909)
Decrease in provisions (27) (27)
----------- -----------
21,210 13,463
----------- -----------
This summary has been approved by our Directors for release to the Press today
7 March 2005 and the full printed Annual Report and Accounts will be posted to
Shareholders and Stock Exchanges on 27 April 2005. Copies will be available to
the public at the Company's registered office Ormeau Road, Belfast BT7 1EB from
that date.
