REG - Trinity Mirror PLC - Annual Results for 52 weeks ended 27 December 2015 <Origin Href="QuoteRef">TNI.L</Origin> - Part 2
29/02/2016 07:11
- Part 2: For the preceding part double click ID:nRSc4146Qa
(67.2) (67.5)
Administrative expenses:
Non-recurring items 5 (4.4) (12.0)
Restructuring charges in respect of cost reduction measures (15.3) (14.0)
Amortisation of intangible assets (1.8) (2.2)
Pension administrative expenses 13 (2.1) (3.2)
Other administrative expenses (121.6) (139.5)
Share of results of associates:
Results before non-recurring items and amortisation 6.0 6.1
Non-recurring items 5 (1.3) 27.2
Amortisation of intangible assets (2.5) (2.7)
Operating profit 3 82.2 98.6
Investment revenues 6 0.6 0.3
Pension finance charge 13 (10.9) (11.2)
Finance costs 7 (4.7) (6.1)
Profit before tax 67.2 81.6
Tax credit/(charge) 8 9.8 (11.8)
Profit for the period attributable to equity holders of the parent 77.0 69.8
Statutory earnings per share 2015Pence 2014Pence
Earnings per share - basic 10 30.2 28.1
Earnings per share - diluted 10 29.6 27.4
Adjusted* earnings per share 2015Pence 2014Pence
Earnings per share - basic 10 33.9 32.8
Earnings per share - diluted 10 33.2 32.0
* Adjusted items relate to the exclusion of non-recurring items, restructuring
charges in respect of cost reduction measures, the amortisation of intangible
assets, the pension administrative expenses, the retranslation of foreign
currency borrowings, the impact of fair value changes on derivative financial
instruments, the pension finance charge and the impact of tax legislation
changes. Set out in note 17 is the reconciliation between the statutory
results and the adjusted results.
Consolidated statement of comprehensive income
for the 52 weeks ended 27 December 2015 (52 weeks ended 28 December 2014)
notes 2015£m 2014£m
Profit for the period 77.0 69.8
Items that will not be reclassified to profit and loss:
Actuarial losses on defined benefit pension schemes 13 (11.0) (52.8)
Tax on actuarial losses on defined benefit pension schemes 8 2.2 10.6
Deferred tax charge resulting from the future change in tax rate 8 (6.0) -
Share of items recognised by associates (3.2) -
Other comprehensive costs for the period (18.0) (42.2)
Total comprehensive income for the period 59.0 27.6
Consolidated cash flow statement
for the 52 weeks ended 27 December 2015 (52 weeks ended 28 December 2014)
notes 2015£m 2014£m
Cash flows from operating activities
Cash generated from operations 11 62.6 90.1
Income tax paid (9.7) (17.3)
Net cash inflow from operating activities 52.9 72.8
Investing activities
Interest received 0.6 0.3
Dividends received from associates 16.3 16.0
Proceeds on disposal of subsidiary undertaking - 0.9
Proceeds on disposal of property, plant and equipment - 0.2
Purchases of property, plant and equipment (3.6) (6.4)
Acquisition of subsidiary undertaking 16 (148.2) -
Net debt acquired on acquisition of subsidiary undertaking 16 (11.9) -
Net cash (used in)/received from investing activities (146.8) 11.0
Financing activities
Dividends paid (12.5) -
Interest paid on borrowings (1.7) (3.9)
Increase in/(repayment of) borrowings 80.0 (44.2)
Issue of ordinary share capital 34.5 -
Purchase of shares for LTIP - (2.2)
Net cash received from/(used in) financing activities 100.3 (50.3)
Net increase in cash and cash equivalents 6.4 33.5
Cash and cash equivalents at the beginning of the period 12 49.0 15.5
Cash and cash equivalents at the end of the period 12 55.4 49.0
Consolidated statement of changes in equity
for the 52 weeks ended 27 December 2015 (52 weeks ended 28 December 2014)
Sharecapital£m Share premiumaccount£m Mergerreserve£m Capitalredemptionreserve£m Retained earnings and other reserves£m Total£m
At 29 December 2013 (25.8) (1,121.6) - (4.3) 580.0 (571.7)
Profit for the period - - - - (69.8) (69.8)
Other comprehensive costs for the period - - - - 42.2 42.2
Total comprehensive income for the period - - - - (27.6) (27.6)
Capital reduction - 514.8 - - (514.8) -
Charge to equity for equity-settledshare-based payments - - - - 2.2 2.2
Purchase of shares for LTIP - - - - 2.2 2.2
Reclassification - 0.1 - (0.1) - -
At 28 December 2014 (25.8) (606.7) - (4.4) 42.0 (594.9)
Profit for the period - - - - (77.0) (77.0)
Other comprehensive costs for the period - - - - 18.0 18.0
Total comprehensive income for the period - - - - (59.0) (59.0)
Issue of shares (2.5) - (37.9) - - (40.4)
Credit to equity for equity-settledshare-based payments - - - - (1.8) (1.8)
Dividends paid - - - - 12.5 12.5
At 27 December 2015 (28.3) (606.7) (37.9) (4.4) (6.3) (683.6)
Consolidated balance sheet
at 27 December 2015 (at 28 December 2014)
notes 2015£m 2014£m
Non-current assets
Goodwill 104.5 12.0
Other intangible assets 799.8 668.9
Property, plant and equipment 300.1 317.7
Investment in associates 19.2 41.4
Retirement benefit assets 13 29.4 17.8
Deferred tax assets 55.2 62.1
Derivative financial instruments 12 3.5 3.2
1,311.7 1,123.1
Current assets
Inventories 6.2 7.0
Trade and other receivables 121.8 103.3
Cash and cash equivalents 12 55.4 49.0
183.4 159.3
Total assets 1,495.1 1,282.4
Non-current liabilities
Borrowings 12 (132.6) (65.3)
Retirement benefit obligations 13 (334.6) (319.0)
Deferred tax liabilities (175.9) (178.0)
Provisions 14 (7.2) (6.9)
(650.3) (569.2)
Current liabilities
Trade and other payables (94.3) (83.0)
Borrowings 12 (15.0) -
Current tax liabilities (8.4) (12.0)
Provisions 14 (43.5) (23.3)
(161.2) (118.3)
Total liabilities (811.5) (687.5)
Net assets 683.6 594.9
Equity
Share capital 15 (28.3) (25.8)
Share premium account 15 (606.7) (606.7)
Merger reserve 15 (37.9) -
Capital redemption reserve 15 (4.4) (4.4)
Retained earnings and other reserves 15 (6.3) 42.0
Total equity attributable to equity holders of the parent (683.6) (594.9)
Notes to the consolidated financial statements
for the 52 weeks ended 27 December 2015 (52 weeks ended 28 December 2014)
1. General information
The financial information in the Annual Results Announcement is derived from
but does not represent the full statutory accounts of Trinity Mirror plc. The
statutory accounts for the 52 weeks ended 28 December 2014 have been filed
with the Registrar of Companies and those for the 52 weeks ended 27 December
2015 will be filed following the Annual General Meeting on 5 May 2016. The
auditors' reports on the statutory accounts for the 52 weeks ended 28 December
2014 and for the 52 weeks ended 27 December 2015 were unqualified, do not
include reference to any matters to which the auditors drew attention by way
of emphasis of matter without qualifying the reports and do not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006.
Whilst the financial information included in this Annual Results Announcement
has been prepared in accordance with the recognition and measurement criteria
of International Financial Reporting Standards (IFRS), this announcement does
not itself contain sufficient information to comply with IFRS. This Annual
Results Announcement constitutes a dissemination announcement in accordance
with Section 6.3 of the Disclosure and Transparency Rules (DTR). The Annual
Report for the 52 weeks ended 27 December 2015 is available on the Company's
website at www.trinitymirror.com and at the Company's registered office at One
Canada Square, Canary Wharf, London E14 5AP and will be sent to shareholders
who have elected to receive a hard copy by the end of March 2016.
The financial information has been prepared for the 52 weeks ended 27 December
2015 and the comparative period has been prepared for the 52 weeks ended 28
December 2014. Throughout this report, the financial information for the 52
weeks ended 27 December 2015 is referred to and headed 2015 and for the 52
weeks ended 28 December 2014 is referred to and headed 2014.
2. Accounting polices
The financial information has been prepared in accordance with IFRS as adopted
by the European Union. These are subject to ongoing amendment by the
International Accounting Standards Board and by the European Union and are
therefore subject to change. As a result, the financial information contained
herein will need to be updated for any subsequent amendment to IFRS or any new
standards that are issued. The financial information has been prepared under
the historical cost convention as modified by the revaluation of freehold
properties which on transition to IFRS were deemed to be the cost of the asset
and for derivative financial instruments and shared-based payments that have
been measured at fair value.
The accounting policies used in the preparation of the consolidated financial
statements for the 52 weeks ended 27 December 2015 have been consistently
applied to all the periods presented except for the changes in accounting
policy noted below and are set out in the Trinity Mirror plc 2015 Annual
Report. These consolidated financial statements have been prepared on a going
concern basis as set out in the Management Report in this Annual Results
Announcement.
Changes in accounting policy
The same accounting policies, presentation and methods of computation are
followed in the consolidated financial statements as applied in the Group's
latest annual consolidated financial statements.
The Group has adopted IAS 19 (Amended) 'Employee Benefits' and IFRIC 21
(Issued) 'Levies' during the current financial period which had no impact on
the Group.
The following amended standards, which have not been applied and when adopted
will have no material impact on the Group, were in issue and will be effective
for periods beginning on are after 1 January 2016:
· IFRS 10 (Amended) 'Consolidated Financial Statements'
· IFRS 11 (Amended) 'Joint Arrangements'
· IFRS 12 (Amended) 'Disclosure of Interests in Other Entities'
· IAS 16 (Amended) 'Property, Plant and Equipment'
· IAS 1 (Amended) 'Presentation of Financial Statements'
· IAS 27 (Amended) 'Separate Financial Statements'
· IAS 28 (Amended) 'Investments in Associates and Joint Ventures'
· IAS 38 (Amended) 'Intangible Assets'
Annual Improvements 2010-2012 cycle and 2011-2013 cycle have been implemented
and had no material impact on the Group.
The following new and amended standards, which have not been applied and for
which the impact on the Group is being assessed, were not yet endorsed by the
EU and/or have no effective date:
· IFRS 9 (Issued) 'Financial Instruments' - effective for periods
beginning on or after 1 January 2018
· IFRS 10 (Amended) 'Consolidated Financial Statements'
· IFRS 15 (Issued) 'Revenue from Contracts with Customers' - effective
for periods beginning on or after 1 January 2018
· IFRS 16 (Issued) 'Leases' - effective for periods beginning on or after
1 January 2019
· IAS 28 (Amended) 'Investments in Associates and Joint Ventures'
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year,
are discussed below:
Provisions
There is uncertainty as to liabilities arising from the outcome or resolution
of the ongoing historical legal issues. Provisions are measured at the best
estimate of the expenditure required to settle the obligation based on the
assessment of the related facts and circumstances at each reporting date.
2. Accounting polices (continued)
Key sources of estimation uncertainty (continued)
Retirement benefits
Actuarial assumptions adopted and external factors can significantly impact
the surplus or deficit of defined benefit pension schemes. Valuations for
funding and accounting purposes are based on assumptions about future economic
and demographic variables. This results in risk of a volatile valuation
deficit and the risk that the ultimate cost of paying benefits is higher than
the current assessed liability value. Advice is sourced from independent and
qualified actuaries in selecting suitable assumptions at each reporting date.
Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, described above,
management has made the following judgements that have the most significant
effect on the amounts recognised in the financial statements:
Impairment of goodwill and other intangible assets
Determining whether goodwill and other intangible assets are impaired requires
an estimation of the value in use of the cash-generating unit to which these
have been allocated. It also requires assessment of the appropriateness of the
cash-generating unit at each reporting date. The value in use calculation
requires the Group to estimate the future cash flows expected to arise from
the cash-generating unit and a suitable discount rate in order to calculate
present value. Projections are based on both internal and external market
information and reflect past experience. The discount rate reflects a
long-term equity and debt mix based on the period end enterprise value
assuming a long-term debt to EBITDA ratio of 2.5 times.
Identification of intangible assets acquired in business combinations
Significant judgement is involved in respect of the identification of
intangible assets acquired in business combinations, such as publishing rights
and titles, and in calculating their fair values. These judgements impact the
amount of goodwill recognised on acquisitions. This involves consideration of
the intangible assets acquired and the selection and application of a suitable
valuation method and associated assumptions such as the discount rate and the
useful economic life attributed to the assets. The Group has sufficient
experience of valuations techniques and therefore performs the valuations
internally.
3. Operating segments
Operating segments are identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Board and chief
operating decision maker (Executive directors) to allocate resources to the
segments and to assess their performance. The Group has four operating
segments that are regularly reviewed by the Board and chief operating decision
maker.
The operating segments are: Publishing which includes all of our newspapers
and associated digital publishing; Printing which provides printing services
to the Publishing segment and to third parties; Specialist Digital which
includes our acquired digital specialist classified and our digital marketing
services businesses; and Central which includes revenue and costs not
allocated to the operational divisions and our share of results of associates.
After completing the acquisition of the 80.02% of Local World not previously
owned on 13 November 2015, Local World is included in the Publishing division.
Prior to 13 November 2015, the Group's 19.98% interest was equity accounted
for as an associated undertaking and included in the Central division.
The accounting policies used in the preparation of each segment's revenue and
results are the same as the Group's accounting policies. The Board and chief
operating decision maker are not provided with an amount for total assets by
segment. The Group's operations are primarily located in the UK and the Group
is not subject to significant seasonality during the year.
Segment revenue and results
52 weeks ended 27 December 2015 Publishing2015£m Printing 2015£m Specialist Digital 2015£m Central2015£m Total2015£m
Revenue
Segment sales 528.8 148.9 16.2 3.6 697.5
Inter-segment sales - (104.0) (0.8) - (104.8)
Total revenue 528.8 44.9 15.4 3.6 592.7
Segment result 113.7 - 2.6 (6.7) 109.6
Non-recurring items (5.7)
Restructuring charges in respect of cost reduction measures (15.3)
Amortisation of intangible assets (4.3)
Pension administrative expenses (2.1)
Operating profit 82.2
Investment revenues 0.6
Pension finance charge (10.9)
Finance costs (4.7)
Profit before tax 67.2
Tax credit 9.8
Profit for the period 77.0
77.0
3. Operating segments (continued)
Segment revenue and results (continued)
52 weeks ended 28 December 2014 Publishing2014£m Printing 2014 £m Specialist Digital 2014 £m Central2014£m Total2014£m
Revenue
Segment sales 554.0 188.9 15.8 3.3 762.0
Inter-segment sales - (124.4) (1.3) - (125.7)
Total revenue 554.0 64.5 14.5 3.3 636.3
Segment result 113.5 - 2.0 (10.0) 105.5
Non-recurring items 15.2
Restructuring charges in respect of cost reduction measures (14.0)
Amortisation of intangible assets (4.9)
Pension administrative expenses (3.2)
Operating profit 98.6
Investment revenues 0.3
Pension finance charge (11.2)
Finance costs (6.1)
Profit before tax 81.6
Tax charge (11.8)
Profit for the period 69.8
69.8
4. Revenue
2015£m 2014£m
Circulation 271.7 279.8
Advertising 224.3 242.5
Printing 44.9 64.5
Other 51.8 49.5
Total revenue 592.7 636.3
The Group's operations are located primarily in the UK. The Group's revenue by
location of customers is set out below:
2015£m 2014£m
UK and Republic of Ireland 589.6 632.7
Continental Europe 2.8 3.5
Rest of World 0.3 0.1
Total revenue 592.7 636.3
5. Non-recurring items
2015£m 2014£m
Provision for historical legal issues (a) (29.0) (12.0)
Closure of print sites (b) (3.4) -
Local World acquisition transaction costs (c) (5.6) -
Gain on deemed disposal of Local World associate interest (d) 33.6 -
Non-recurring items included in administrative expenses (4.4) (12.0)
Non-recurring items included in share of results of associates (e) (1.3) 27.2
Total non-recurring items (5.7) 15.2
(a) Provision of £29.0 million (2014: £12.0 million) to cover the costs of
dealing with historical legal issues in relation to phone hacking. It remains
uncertain as to how these matters will progress, whether further allegations
or claims will be made, and their financial impact. Due to this uncertainty a
contingent liability has been highlighted in note 18.
(b) Costs associated with the closure of the printing sites in Scotland
(Blantyre) and Newcastle including the non-cash write off of fixed assets of
£2.5 million.
(c) Transaction costs incurred by the Group relating to the acquisition of
Local World.
(d) Gain on the accounting deemed disposal of the 19.98% interest in Local
World on 13 November 2015.
(e) Group's share of transaction related costs incurred by Local World and
restructuring costs incurred by PA Group and Local World. In 2014, the Group's
share included a £27.5 million share of the gain on disposal by PA Group of
its weather forecasting business, MeteoGroup.
6. Investment revenues
2015£m 2014£m
Interest income on bank deposits and other interest receipts 0.6 0.3
7. Finance costs
2015£m 2014£m
Interest on bank overdrafts and borrowings (2.7) (3.5)
Total interest expense (2.7) (3.5)
Fair value gain/(loss) on derivative financial instruments 0.3 (0.3)
Foreign exchange loss on retranslation of borrowings (2.3) (2.3)
Finance costs (4.7) (6.1)
8. Tax
2015£m 2014£m
Current tax
Corporation tax charge for the period (9.8) (14.0)
Prior period adjustment 0.9 0.2
Current tax charge (8.9) (13.8)
Deferred tax
Deferred tax credit for the period 2.1 2.1
Prior period adjustment (0.6) (0.1)
Deferred tax rate change 17.2 -
Deferred tax credit 18.7 2.0
Tax credit/(charge) 9.8 (11.8)
Reconciliation of tax charge % %
Standard rate of corporation tax (20.3) (21.5)
Tax effect of items that are not deductible in determining taxable profit (2.6) (1.1)
Tax effect of items that are not taxable in determining taxable profit 10.9 -
Prior period adjustment 0.4 0.1
Deferred tax rate change 25.6 -
Tax effect of share of results of associates 0.6 8.0
Tax credit/(charge) rate 14.6 (14.5)
Included in the 'tax effect of items that are not taxable in determining
taxable profit' is the impact of the utilisation of unrecognised losses of
£2.1 million (gross) and the impact of the non-taxable gain on the accounting
deemed disposal of the 19.98% interest in Local World of £33.6 million.
The standard rate of corporation tax reduced from 21% to 20% on 1 April 2015.
The blended rate for the accounting year is 20.25% being a mix of 21% up to 31
March 2015 and 20% from 1 April 2015 (2014: 21.5% being a mix of 23% up to 31
March 2014 and 21% from 1 April 2014). The current tax liabilities amounted to
£8.4 million (2014: £12.0 million) at the reporting date. The opening deferred
tax position is recalculated in the period in which a change in the standard
rate of corporation tax has been enacted or substantively enacted by
parliament. The change in rate from 20% to 18% has been accounted for in the
current year resulting in a £17.2 million credit in the consolidated income
statement and a £6.0 million charge in the consolidated statement of
comprehensive income.
The tax on actuarial gains/(losses) on defined benefit pension schemes taken
to the consolidated statement of comprehensive income is a credit of £2.2
million comprising a deferred tax credit of £0.8 million and a current tax
credit of £1.4 million (2014: a credit of £10.6 million comprising a deferred
tax credit of £9.8 million and a current tax credit of £0.8 million). The tax
on share-based payments taken to equity is a credit of £0.5 million comprising
a deferred tax charge of £1.1 million and a current tax credit of £1.6 million
(2014: a charge of £3.3 million comprising a deferred tax charge of £3.7
million and a current tax credit of £0.4 million).
9. Dividends
Dividends paid per share and recognised as distributions to equity holders in the period 5.00 -
Dividend proposed per share but not paid nor included in the accounting records 3.15 3.00
Dividend proposed per share but not paid nor included in the accounting
records
3.15
3.00
The Board proposes a final dividend for 2015 of 3.15 pence per share. An
interim dividend for 2015 of 2.00 pence per share was paid on 30 November 2015
bringing the total dividend in respect of 2015 to 5.15 pence per share. The
2015 final dividend payment is expected to amount to £8.8 million. The 2015
interim dividend payment amounted to £5.0 million.
On 7 May 2015 the final dividend proposed for 2014 of 3.00 pence per share was
approved by shareholders at the Annual General Meeting and was paid on 4 June
2015. The 2014 final dividend payment amounted to £7.5 million.
10. Earnings per share
Profit after tax before adjusted* items 86.4 81.3
Adjusted items:
Non-recurring items (after tax) 1.5 17.6
Amortisation of intangibles (after tax) (3.9) (4.5)
Finance costs (after tax) (1.6) (2.1)
Restructuring charges (after tax) (12.2) (11.0)
Pension charges (after tax) (10.4) (11.5)
Tax legislation changes 17.2 -
Profit for the period 77.0 69.8
Weighted average number of ordinary shares 2015Thousand 2014Thousand
Weighted average number of ordinary shares for basic earnings per share 254,936 248,108
Effect of potential dilutive ordinary shares in respect of share awards 5,024 6,574
Weighted average number of ordinary shares for diluted earnings per share 259,960 254,682
Weighted average number of ordinary shares for diluted earnings per share
259,960
254,682
Basic earnings per share is calculated by dividing profit for the period
attributable to equity holders of the parent by the weighted average number of
ordinary shares during the period. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares in issue on the
assumption of conversion of all potentially dilutive ordinary shares. The
weighted average number of potentially dilutive ordinary shares not currently
dilutive was 2,681,295 (2014: 4,679,307).
Statutory earnings per share 2015Pence 2014Pence
Earnings per share - basic 30.2 28.1
Earnings per share - diluted 29.6 27.4
Adjusted* earnings per share 2015Pence 2014Pence
Earnings per share - basic 33.9 32.8
Earnings per share - diluted 33.2 32.0
The basic earnings per share impact for each non-recurring item disclosed in
note 5 are as follows:
2015Pence 2014Pence
Provision for historical legal issues in relation to phone hacking (9.1) (4.1)
Closure of print sites (1.1) -
Local World acquisition transaction costs (1.9) -
Gain on deemed disposal of Local World associate interest 13.2 -
Profit/(loss) per share - non-recurring items included in administrative expenses 1.1 (4.1)
(Loss)/profit per share - non-recurring items included in share of results of associates (0.5) 11.0
Profit per share - total non-recurring items 0.6 6.9
* Adjusted items relate to the exclusion of non-recurring items, restructuring
charges in respect of cost reduction measures, the amortisation of intangible
assets, the pension administrative expenses, the retranslation of foreign
currency borrowings, the impact of fair value changes on derivative financial
instruments, the pension finance charge and the impact of tax legislation
changes. Set out in note 17 is the reconciliation between the statutory
results and the adjusted results.
11. Notes to the consolidated cash flow statement
2015£m 2014£m
Operating profit 82.2 98.6
Depreciation of property, plant and equipment 22.4 24.5
Amortisation of intangible assets 1.8 2.2
Share of results of associates (2.2) (30.6)
Charge/(credit) for share-based payments 1.5 (0.4)
Gain on deemed disposal of Local World associate interest (33.6) -
Write-off of fixed assets 4.0 0.9
Pension administrative expenses 2.1 3.2
Pension deficit funding payments (20.0) (18.2)
Operating cash flows before movements in working capital 58.2 80.2
Decrease in inventories 1.1 1.9
Decrease in receivables 13.7 6.4
(Decrease)/increase in payables (10.4) 1.6
Cash flows from operating activities 62.6 90.1
12. Net debt
The statutory net debt for the Group is as follows:
28 December 2014£m Cashflow£m Derivative financial instruments*£m Foreign exchange*£m Loan drawn£m 27 December 2015£m
Non-current liabilities
Loan notes (65.3) - - (2.3) - (67.6)
Term loan - - - - (65.0) (65.0)
(65.3) - - (2.3) (65.0) (132.6)
Current liabilities
Term loan - - - - (15.0) (15.0)
- - - - (15.0) (15.0)
Non-current assets
Derivative financial instruments 3.2 - 0.3 - - 3.5
3.2 - 0.3 - - 3.5
Current assets
Cash and cash equivalents 49.0 (73.6) - - 80.0 55.4
49.0 (73.6) - - 80.0 55.4
Net debt (13.1) (73.6) 0.3 (2.3) - (88.7)
* The impact on the loan notes of translation into Sterling at the settlement
date or at the reporting date exchange rate and the impact on the derivative
financial instruments of being stated at fair value at the settlement date or
at the reporting date are included in the consolidated income statement within
finance costs as set out in note 7.
The Group has a cross-currency interest rate swap to manage its exposure to
foreign exchange movements and interest rate movements on the private
placement loan notes. Fair value is calculated using discounted cash flows
based upon forward rates available to the Group. The cross-currency interest
rate swap is classed in level two of the financial instruments hierarchy.
Level two fair value measurements are those derived from inputs other than
quoted prices that are observable for the asset or liability, either directly
or indirectly.
The contracted net debt for the Group, assuming that the private placement
loan notes and the cross-currency interest rate swap is not terminated prior
to maturity, is as follows:
28 December 2014£m Cashflow£m Loandrawn£m 27 December2015£m
Non-current liabilities
Loan notes (68.3) - - (68.3)
Term loan - - (65.0) (65.0)
(68.3) - (65.0) (133.3)
Current liabilities
Term loan - - (15.0) (15.0)
- - (15.0) (15.0)
Current assets
Cash and cash equivalents 49.0 (73.6) 80.0 55.4
49.0 (73.6) 80.0 55.4
Net debt (19.3) (73.6) - (92.9)
The statutory net debt reconciles to the contracted net debt as follows:
2015£m 2014£m
Statutory net debt (88.7) (13.1)
Loan notes at period end exchange rate 67.6 65.3
Loan notes at swapped exchange rate (68.3) (68.3)
Cross-currency interest rate swap (3.5) (3.2)
Contracted net debt (92.9) (19.3)
13. Retirement benefit schemes
Defined contribution pension schemes
The Group operates the Trinity Mirror Pension Plan (the 'TMPP Scheme'), which
is a defined contribution pension scheme for qualifying employees. The assets
of the TMPP Scheme are held separately from those of the Group in funds under
the control of Trustees. Local World operates a Group Personal Pension Plan
(the 'LW Plan'), which is a defined contribution pension scheme for qualifying
employees where employees hold a personal pension policy directly with
Scottish Widows.
The Group implemented the Auto Enrolment legislation from 1 July 2013. The
TMPP Scheme has three sections, one for members who elected to join prior to 1
May 2013 which is now closed to new members, one for members who elect to join
from 1 May 2013 and one for members from 1 July 2013 who are auto enrolled.
Local World will implement the Auto Enrolment legislation in 2017.
The current service cost charged to the consolidated income statement of £13.3
million (2014: £13.9 million) represents contributions of £13.1 million paid
to the TMPP Scheme by the Group at rates specified in the scheme rules and
contributions post acquisition of £0.2 million paid into the LW Plan. All
amounts that were due have been paid over to the schemes at all reporting
dates.
Defined benefit pension schemes
Background
The defined benefit pension schemes operated by the Group were closed to
future accrual in 2010. The Group now has five defined benefit pension schemes
following the securing of members' benefits of the five smaller schemes by way
of a buy-out with insurance companies without further contributions from the
Group. As part of the winding up of these schemes, surplus assets have been
transferred to one of the remaining schemes.
The remaining schemes are the Mirror Group Pension Scheme (the 'Old Scheme'),
the MGN Past Service Pension Scheme (the 'Past Service Scheme'), the MGN
Pension Scheme (the 'MGN Scheme'), the Trinity Retirement Benefit Scheme (the
'Trinity Scheme') and the Midland Independent Newspapers Pension Scheme (the
'MIN Scheme').
The Old Scheme and the Past Service Scheme cover the liabilities for service
up to 13 February 1992 for employees and former employees who worked regularly
on the production and distribution of Mirror Group's newspapers. The Old
Scheme was closed on 13 February 1992 and the Past Service Scheme was
established to meet any liabilities which are not satisfied by payments from
the Old Scheme and the Maxwell Communications Pension Plan. No contributions
have been paid to the Old Scheme since 1992. The disclosures contained in this
note in respect of these two schemes are combined (the 'Old Scheme/Past
Service Scheme').
Characteristics
The defined benefit pension schemes provide pensions to members which are
based on the final salary pension payable normally from age 65 plus surviving
spouses or dependents benefits following a member's death. Benefits increase
both before and after retirement either in line with statutory requirements or
in accordance with the scheme rules. Such increases are either at fixed rates
or in line with retail or consumer prices but subject to upper and lower
limits. All of the schemes are independent of the Group with assets held
independently of the Group. They are governed by Trustees who administer
benefits in accordance with the scheme rules and appropriate UK legislation.
The schemes each have a professional independent trustee as their Chairman
with half of the remaining Trustees nominated by the members and half by the
Group.
Maturity profile and cash flow
Across the schemes, the invested assets at the reporting date are expected to
be sufficient to pay the uninsured benefits due up to 2043, based on the
reporting date assumptions. The remaining uninsured benefit payments, payable
from 2044, are due to be funded by a combination of asset outperformance and
the deficit contributions currently scheduled to be paid by 2025. The
liabilities relate 50% to current pensioners and their spouses or dependants
and 50% relate to deferred pensioners. The average term from the reporting
date to payment of the remaining benefits was around 16 years. Uninsured
benefit payments in 2015, excluding transfer value payments, were £44 million,
projected to rise to an annual peak in 2039 of £82 million and reducing
thereafter.
Funding arrangements
The funding of the Group's schemes is subject to UK pension legislation as
well as the guidance and codes of practice issued by the Pensions Regulator.
Funding targets are agreed between the Trustees and the Group and are reviewed
and revised usually every three years. The funding targets must include a
margin for prudence above the expected cost of paying the benefits and so are
different to the liability value for IAS 19 purposes. The funding deficits
revealed by these triennial valuations are removed over time in accordance
with an agreed recovery plan and schedule of contributions for each scheme.
The valuations of the schemes as at 31 December 2013 were completed on 9
December 2014. The valuations showed deficits of £216.0 million for the Old
Scheme/Past Service Scheme, £120.7 million for the MGN Scheme, £31.9 million
for the Trinity Scheme and £26.7 million for the MIN Scheme. The next
valuation date of the schemes is due as at 31 December 2016 with the
valuations required to be completed by 31 March 2018.
As part of the agreement of the valuations, deficit funding contributions were
agreed at £36.2 million for 2015, 2016 and 2017. Contributions remain at
around £36 million from 2018 to 2023 and then reduce to around £21 million for
2024 and 2025 after which contributions are due to cease. The combined deficit
is expected to be eradicated by 2027 by a combination of the contributions and
asset returns.
In addition, the Group agreed that in respect of dividend payments in 2015,
2016 and 2017 that additional contributions would be paid at 50% of the excess
if dividends in 2015 were above 5 pence per share. For 2016 and 2017 the
threshold increases in line with the increase in dividends capped at 10% per
annum.
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
Funding arrangements (continued)
In December 2014, the Group prepaid contributions for 2015 and 2016 of £16.5
million and £0.5 million respectively. During 2015, contributions paid to the
defined benefit pension schemes were £20.0 million (2014: £18.2 million).
Payments were £11.0 million (2014: £9.2 million) to the Past Service Scheme,
£3.3 million (2014: £3.7 million) to the MGN Scheme, £3.7 million (2014: £2.7
million) to the Trinity Scheme and £2.0 million (2014: £2.6 million) to the
MIN Scheme.
Risks
Valuations for funding and accounting purposes are based on assumptions about
future economic and demographic variables. This results in risk of a volatile
valuation deficit and the risk that the ultimate cost of paying benefits is
higher than the current assessed liability value.
The main sources of risk are:
· Investment risk: a reduction in asset returns (or assumed future
asset returns);
· Inflation risk: an increase in benefit increases (or assumed future
increases); and
· Longevity risk: an increase in average life spans (or assumed life
expectancy).
These risks are managed by:
· Investing in insured annuity policies: the income from these
policies exactly matches the benefit payments for the members covered,
removing all of the above risks. At the reporting date the insured annuity
policies covered 19% of total liabilities;
· Investing a proportion of assets in government and corporate bonds:
changes in the values of the bonds broadly match changes in the values of the
uninsured liabilities, reducing the investment risk. At the reporting date
this amounted to 39% of assets excluding the insured annuity policies;
· Investing a proportion in equities: with the aim of achieving
outperformance and so reducing the deficits over the long term. At the
reporting date this amounted to 50% of assets excluding the insured annuity
policies; and
· The gradual sale of equities over time to purchase additional
annuity policies or bonds: to further reduce risk as the schemes, which are
closed to future accrual, mature.
The Group is not exposed to any unusual, entity specific or scheme specific
risks. There were no plan amendments, settlements or curtailments in 2015 or
during 2014 which resulted in a pension cost.
Actuarial projections at the 2015 year end showed removal of the accounting
deficit by 2024 due to scheduled contributions and asset returns.
Results
For the purposes of the Group's consolidated financial statements, valuations
have been performed in accordance with the requirements of IAS 19 with scheme
liabilities calculated using a consistent projected unit valuation method and
compared to the estimated value of the scheme assets at 27 December 2015.
The assets and liabilities of the schemes as at the reporting date are:
Old Scheme/PastService Scheme£m MGN Scheme£m Trinity Scheme£m MIN Scheme £m
Present value of uninsured scheme liabilities (598.6) (484.3) (300.5) (98.0)
Present value of insured scheme liabilities (175.3) - (75.5) (101.4)
Total present value of scheme liabilities (773.9) (484.3) (376.0) (199.4)
Invested and cash assets at fair value 390.0 388.6 329.9 67.7
Value of insurance contracts 175.3 - 75.5 101.4
Total value of scheme assets 565.3 388.6 405.4 169.1
Net scheme (deficit)/surplus (208.6) (95.7) 29.4 (30.3)
Based on actuarial advice, the assumptions used in calculating the scheme
liabilities and the actuarial value of those liabilities are:
27 December 2015 28 December 2014
Financial assumptions (nominal % pa)
Discount rate 3.65 3.70
Retail price inflation rate 3.05 3.05
Consumer price inflation rate 1.85 1.85
Rate of pension increase in deferment 1.85 1.85
Rate of pension increases in payment 3.85 3.85
Mortality
- More to follow, for following part double click ID:nRSc4146QcRecent news on Reach
See all newsREG - Reach PLC - Reach plc - Half-year Report
AnnouncementREG - Reach PLC - Notice of Results
AnnouncementREG - Reach PLC - Reach plc - Result of AGM
AnnouncementREG - Reach PLC - Total Voting Rights
AnnouncementREG - Reach PLC - Reach plc - Trading Update
Announcement