REG - Trinity Mirror PLC - Annual Results for 53 weeks ended 1 January 2017 <Origin Href="QuoteRef">TNI.L</Origin> - Part 2
27/02/2017 07:07
- Part 2: For the preceding part double click ID:nRSa8869Xa
Results Announcement in
accordance with applicable laws and regulations. The responsibility statement
below has been prepared in connection with the Company's full Annual Report
for the 53 weeks ended 1 January 2017. Certain points thereof are not included
within this Annual Results Announcement.
The directors confirm to the best of their knowledge:
a) the consolidated financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and
profit and loss of the Company and the undertakings included in the
consolidation taken as a whole; and
b) the Management Report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face.
By order of the Board of directors
Simon Fox
Vijay Vaghela
Chief Executive
Group Finance Director
Consolidated income statement
for the 53 weeks ended 1 January 2017 (52 weeks ended 27 December 2015)
notes 2016 £m 2015£m
Revenue 3,4 713.0 592.7
Cost of sales (342.1) (300.3)
Gross profit 370.9 292.4
Distribution costs (76.0) (67.2)
Administrative expenses:
Non-recurring items 5 (26.0) (4.4)
Restructuring charges in respect of cost reduction measures (15.1) (15.3)
Amortisation of intangible assets (0.3) (1.8)
Pension administrative expenses 13 (2.2) (2.1)
Other administrative expenses (158.5) (121.6)
Share of results of associates:
Results before non-recurring items and amortisation 1.1 6.0
Non-recurring items 5 (0.1) (1.3)
Amortisation of intangible assets (0.3) (2.5)
Operating profit 3 93.5 82.2
Investment revenues 6 0.6 0.6
Pension finance charge 13 (10.4) (10.9)
Finance costs 7 (7.2) (4.7)
Profit before tax 76.5 67.2
Tax (charge)/credit 8 (7.0) 9.8
Profit for the period attributable to equity holders of the parent 69.5 77.0
Statutory earnings per share 2016Pence 2015Pence
Earnings per share - basic 10 24.9 30.2
Earnings per share - diluted 10 24.8 29.6
Adjusted* earnings per share 2016Pence 2015Pence
Earnings per share - basic 10 38.1 33.9
Earnings per share - diluted 10 37.8 33.2
* 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 18 is the reconciliation between the statutory
results and the adjusted results.
Consolidated statement of comprehensive income
for the 53 weeks ended 1 January 2017 (52 weeks ended 27 December 2015)
notes 2016£m 2015£m
Profit for the period 69.5 77.0
Items that will not be reclassified to profit and loss:
Actuarial losses on defined benefit pension schemes 13 (188.9) (11.0)
Tax on actuarial losses on defined benefit pension schemes 8 32.1 2.2
Deferred tax charge including the future change in tax rate 8 (0.6) (6.0)
Share of items recognised by associates 1.1 (3.2)
Other comprehensive costs for the period (156.3) (18.0)
Total comprehensive (costs)/income for the period (86.8) 59.0
Consolidated cash flow statement
for the 53 weeks ended 1 January 2017 (52 weeks ended 27 December 2015)
notes 2016£m 2015£m
Cash flows from operating activities
Cash generated from operations 11 91.5 62.6
Income tax paid (12.2) (9.7)
Net cash inflow from operating activities 79.3 52.9
Investing activities
Interest received 0.6 0.6
Dividends received from associates - 16.3
Proceeds on disposal of subsidiary undertaking 17 1.8 -
Proceeds on disposal of land and buildings 10.6 -
Purchases of property, plant and equipment (4.3) (3.6)
Acquisition of associate undertaking 16 (0.8) -
Acquisition of subsidiary undertaking - (148.2)
Net debt acquired on acquisition of subsidiary undertaking - (11.9)
Net cash received from/(used in) investing activities 7.9 (146.8)
Financing activities
Dividends paid (14.6) (12.5)
Interest paid on borrowings (5.9) (1.7)
(Repayment of)/ Increase in borrowings (80.0) 80.0
Issue of ordinary share capital - 34.5
Purchase of own shares (2.3) -
Purchase of shares for LTIP (2.0) -
Net cash (used in)/received from financing activities (104.8) 100.3
Net (decrease)/increase in cash and cash equivalents (17.6) 6.4
Cash and cash equivalents at the beginning of the period 12 55.4 49.0
Cash and cash equivalents at the end of the period 12 37.8 55.4
Consolidated statement of changes in equity
for the 53 weeks ended 1 January 2017 (52 weeks ended 27 December 2015)
Sharecapital£m Share premiumaccount£m Mergerreserve£m Capitalredemptionreserve£m Retained earnings and other reserves£m Total£m
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-settled share-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)
Profit for the period - - - - (69.5) (69.5)
Other comprehensive costs for the period - - - - 156.3 156.3
Total comprehensive costs for the period - - - - 86.8 86.8
Credit to equity for equity-settled share-based payments - - - - (1.5) (1.5)
Purchase of shares for LTIP - - - - 2.0 2.0
Purchase of own shares - - - - 2.3 2.3
Dividends paid - - - - 14.6 14.6
At 1 January 2017 (28.3) (606.7) (37.9) (4.4) 97.9 (579.4)
Consolidated balance sheet
at 1 January 2017 (at 27 December 2015)
notes 2016£m 2015£m
Non-current assets
Goodwill 102.0 104.5
Other intangible assets 799.5 799.8
Property, plant and equipment 262.1 300.1
Investment in associates 21.8 19.2
Retirement benefit assets 13 - 29.4
Deferred tax assets 81.5 55.2
Derivative financial instruments 12 - 3.5
1,266.9 1,311.7
Current assets
Inventories 5.8 6.2
Trade and other receivables 89.8 121.8
Derivative financial instruments 12 14.8 -
Cash and cash equivalents 12 37.8 55.4
148.2 183.4
Total assets 1,415.1 1,495.1
Non-current liabilities
Borrowings 12 - (132.6)
Retirement benefit obligations 13 (466.0) (334.6)
Deferred tax liabilities (164.1) (175.9)
Provisions 14 (3.6) (7.2)
(633.7) (650.3)
Current liabilities
Trade and other payables (83.1) (94.3)
Borrowings 12 (81.2) (15.0)
Current tax liabilities (9.8) (8.4)
Provisions 14 (27.9) (43.5)
(202.0) (161.2)
Total liabilities (835.7) (811.5)
Net assets 579.4 683.6
Equity
Share capital 15 (28.3) (28.3)
Share premium account 15 (606.7) (606.7)
Merger reserve 15 (37.9) (37.9)
Capital redemption reserve 15 (4.4) (4.4)
Retained earnings and other reserves 15 97.9 (6.3)
Total equity attributable to equity holders of the parent (579.4) (683.6)
Notes to the consolidated financial statements
for the 53 weeks ended 1 January 2017 (52 weeks ended 27 December 2015)
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 27 December 2015 have been filed
with the Registrar of Companies and those for the 53 weeks ended 1 January
2017 will be filed following the Annual General Meeting on 4 May 2017. The
auditors' reports on the statutory accounts for the 52 weeks ended 27 December
2015 and for the 53 weeks ended 1 January 2017 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 53 weeks ended 1 January 2017 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 2017.
The financial information has been prepared for the 53 weeks ended 1 January
2017 and the comparative period has been prepared for the 52 weeks ended 27
December 2016. Throughout this report, the financial information for the 53
weeks ended 1 January 2017 is referred to and headed 2016 and for the 52 weeks
ended 27 December 2015 is referred to and headed 2015.
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 53 weeks ended 1 January 2017 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 2016 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.
Annual Improvements 2010-2012 cycle and 2011-2013 cycle have been implemented
and had no material impact on the Group.
The following standards, which have not been applied and when adopted are not
expected to have a material impact on the Group, were in issue and will be
effective for periods beginning on are after 1 January 2016 unless stated
below:
· IFRS 10 (Amended)'Consolidated Financial Statements'
· IFRS 11 (Amended) 'Joint Arrangements'
· IFRS 12 (Amended) 'Disclosure of Interests in Other Entities'
· IAS 1 (Amended) 'Presentation of Financial Statements'
· IAS 16 (Amended) 'Property, Plant and Equipment'
· IAS 27 (Amended) 'Separate Financial Statements'
· IAS 28 (Amended) 'Investments in Associated and Joint Ventures'
· IAS 38 (Amended) 'Intangible Assets'
· Annual improvements 2012 - 2014 cycle
· IAS 7 (Amended) 'Statement of Cash Flows' - effective for periods
beginning on or after 1 January 2017*
· IAS 12 (Amended) 'Income taxes' - effective for periods beginning on
or after 1 January 2017*
· IFRS 2 (Amended) 'Share-based Payment' - effective for periods
beginning on or after 1 January 2018*
· IFRS 9 (Amended) 'Financial Instruments' - effective for periods
beginning on or after 1 January 2018
· IAS 40 (Amended) 'Investment Property' - effective for periods
beginning on or after 1 January 2018*
· Annual improvements 2014 - 2016 cycle - effective for periods
beginning on or after 1 January 2018*
* Not yet endorsed for use in the EU
The following new standards which have not been applied and for which the
impact on the Group is being assessed:
· 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
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.
Impairment of goodwill and other intangible assets
In addition to the areas of judgement outlined below, there are also sources
of estimation uncertainty in the value in use calculation. The most
significant area of uncertainty relates to expected future cash flows for each
cash-generating unit.
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.
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 classified recruitment and our digital marketing
services business; 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
53 weeks ended 1 January 2017 Publishing2016£m Printing 2016£m Specialist Digital 2016£m Central2016£m Total2016£m
Revenue
Segment sales 660.0 147.9 13.3 3.9 825.1
Inter-segment sales - (111.7) (0.4) - (112.1)
Total revenue 660.0 36.2 12.9 3.9 713.0
Segment result 148.4 - 2.4 (13.3) 137.5
Non-recurring items (26.1)
Restructuring charges in respect of cost reduction measures (15.1)
Amortisation of intangible assets (0.6)
Pension administrative expenses (2.2)
Operating profit 93.5
Investment revenues 0.6
Pension finance charge (10.4)
Finance costs (7.2)
Profit before tax 76.5
Tax charge (7.0)
Profit for the period 69.5
69.5
3. Operating segments (continued)
Segment revenue and results (continued)
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
4. Revenue
2016£m 2015£m
Publishing Print 581.0 485.9
Circulation 310.6 271.7
Advertising 236.6 182.0
Other 33.8 32.2
Publishing Digital 79.0 42.9
Display and transactional 58.4 30.4
Classified 20.6 12.5
Printing 36.2 44.9
Specialist Digital 12.9 15.4
Central 3.9 3.6
Total revenue 713.0 592.7
The Group's operations are located primarily in the UK. The Group's revenue by
location of customers is set out below:
2016£m 2015£m
UK and Republic of Ireland 709.9 589.9
Continental Europe 2.8 2.7
Rest of World 0.3 0.1
Total revenue 713.0 592.7
5. Non-recurring items
2016£m 2015£m
Contract termination fee (a) (2.0) -
Impairment of goodwill (b) (2.0) -
Provision for historical legal issues (c) (11.5) (29.0)
Closure of print sites and press line (d) (10.7) (3.4)
Profit on disposal of land and buildings (e) 0.2 -
Local World acquisition transaction costs (f) - (5.6)
Gain on deemed disposal of Local World associate interest (g) - 33.6
Non-recurring items included in administrative expenses (26.0) (4.4)
Non-recurring items included in share of results of associates (h) (0.1) (1.3)
Total non-recurring items (26.1) (5.7)
5. Non-recurring items (continued)
(a) In the first quarter of 2016, following extensive work on the separation
of certain titles the Group had agreed to dispose to the Iliffe family as part
of the acquisition of Local World, the Board concluded that it was in the best
interests of the Company not to proceed with the disposal and therefore pay a
break fee of £2.0 million to Iliffe Print Cambridge Limited.
(b) In the first half, an impairment review comparing the carrying value of
the Group's assets with the value in use was undertaken in accordance with IAS
36. The review indicated that a £2.0 million charge against the carrying value
of goodwill in our Specialist Digital division was required.
(c) Provision of £11.5 million (2015: £29.0 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 19.
(d) Costs associated with closure of the printing site in Cardiff and a
press line in Scotland (Cardonald) including the write off of fixed assets of
£9.1 million (2015: costs associated with the closure of the printing sites in
Scotland (Blantyre) in June 2015 and Newcastle in December 2015 including the
write off of fixed assets of £2.5 million).
(e) Profit on disposal of Cardiff and Coventry properties with net proceeds
of £10.6 million less carrying value of £10.4 million.
(f) In 2015, transaction costs incurred by the Group relating to the
acquisition of Local World on 13 November 2015.
(g) In 2015, gain on the accounting deemed disposal of the 19.98% interest
in Local World on 13 November 2015.
(h) Group's share of restructuring costs incurred by PA Group (2015: Group's
share of transaction related costs incurred by Local World and restructuring
costs incurred by PA Group and Local World).
6. Investment revenues
2016£m 2015£m
Interest income on bank deposits and other interest receipts 0.6 0.6
7. Finance costs
2016£m 2015£m
Interest on bank overdrafts and borrowings (4.9) (2.7)
Total interest expense (4.9) (2.7)
Fair value gain on derivative financial instruments 11.3 0.3
Foreign exchange loss on retranslation of borrowings (13.6) (2.3)
Finance costs (7.2) (4.7)
8. Tax
2016£m 2015£m
Corporation tax charge for the period (20.4) (9.8)
Prior period adjustment 1.2 0.9
Current tax charge (19.2) (8.9)
Deferred tax credit for the period 1.8 2.1
Prior period adjustment 0.6 (0.6)
Deferred tax rate change 9.8 17.2
Deferred tax credit 12.2 18.7
Tax (charge)/credit (7.0) 9.8
Reconciliation of tax (charge)/credit % %
Standard rate of corporation tax (20.0) (20.3)
Tax effect of items that are not deductible in determining taxable profit (5.4) (2.6)
Tax effect of items that are not taxable in determining taxable profit 1.1 10.9
Prior period adjustment 2.3 0.4
Deferred tax rate change 12.6 25.6
Tax effect of share of results of associates 0.2 0.6
Tax (charge)/credit rate (9.2) 14.6
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
£1.7 million (gross) and losses on asset disposals (2015: 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 for the year is 20% (2015: blended rate
of 20.25% being a mix of 21% up to 31 March 2015 and 20% from 1 April 2015).
The current tax liabilities amounted to £9.8 million (27 December 2015: £8.4
million) at the reporting date.
8. Tax (continued)
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 18% to 17% in
2020 has been accounted for in the current year resulting in a £9.8 million
credit in the consolidated income statement and a £4.4 million charge in the
consolidated statement of comprehensive income (2015: change in rate from 20%
to 19% in 2017 and from 19% to 18% in 2020 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 losses on defined benefit pension schemes taken to the
consolidated statement of comprehensive income is a credit of £32.1 million
comprising a deferred tax credit of £26.5 million and a current tax credit of
£5.6 million (2015: credit of £2.2 million comprising a deferred tax credit of
£0.8 million and a current tax credit of £1.4 million). The deferred tax
charge including the future change in tax rate of £0.6 million (2015: £6.0
million) comprises a charge of £4.4 million (2015: £6.0 million) from the
change in future tax rates and a credit of £3.8 million (2015: nil) from a
change in the expected reversal of timing differences. The tax on share-based
payments taken to equity is nil (2015: credit of £0.5 million comprising a
deferred tax charge of £1.1 million and a current tax credit of £1.6
million).
9. Dividends
Dividends paid per share and recognised as distributions to equity holders in the period 5.25 5.00
Dividend proposed per share but not paid nor included in the accounting records 3.35 3.15
Dividend proposed per share but not paid nor included in the accounting
records
3.35
3.15
The Board proposes a final dividend for 2016 of 3.35 pence per share. An
interim dividend for 2016 of 2.10 pence per share was paid on 25 November 2016
bringing the total dividend in respect of 2016 to 5.45 pence per share. The
2016 final dividend payment is expected to amount to £9.2 million. The 2016
interim dividend payment amounted to £5.8 million.
On 5 May 2016 the final dividend proposed for 2015 of 3.15 pence per share was
approved by shareholders at the Annual General Meeting and was paid on 10 June
2016. 2015 final dividend payment amounted to £8.8 million.
10. Earnings per share
Profit after tax before adjusted* items 106.2 86.4
Adjusted items:
Non-recurring items (after tax) (22.0) 1.5
Amortisation of intangibles (after tax) (0.5) (3.9)
Pension charges (after tax) (10.1) (10.4)
Restructuring charges (after tax) (12.1) (12.2)
Finance costs (after tax) (1.8) (1.6)
Tax legislation changes 9.8 17.2
Profit for the period 69.5 77.0
Profit for the period
69.5
77.0
* 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 18 is the reconciliation between the statutory
results and the adjusted results
Weighted average number of ordinary shares for basic earnings per share 278,895 254,936
Effect of potential dilutive ordinary shares in respect of share awards 1,864 5,024
Weighted average number of ordinary shares for diluted earnings per share 280,759 259,960
Weighted average number of ordinary shares for diluted earnings per share
280,759
259,960
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 2,805,385 (2015: 2,681,295).
Statutory earnings per share 2016Pence 2015Pence
Earnings per share - basic 24.9 30.2
Earnings per share - diluted 24.8 29.6
Adjusted* earnings per share 2016Pence 2015Pence
Earnings per share - basic 38.1 33.9
Earnings per share - diluted 37.8 33.2
10. Earnings per share (continued)
The basic earnings per share impact for each non-recurring item disclosed in
note 5 are as follows:
2016Pence 2015Pence
Contract termination fee (0.7) -
Impairment of goodwill (0.7) -
Provision for historical legal issues (3.3) (9.1)
Closure of print sites and press line (3.5) (1.1)
Profit on disposal of land and buildings 0.2 -
Local World acquisition transaction costs - (1.9)
Gain on deemed disposal of Local World associate interest - 13.2
(Loss)/profit per share - non-recurring items included in administrative expenses (8.0) 1.1
Loss per share - non-recurring items included in share of results of associates - (0.5)
(Loss)/profit per share - total non-recurring items (8.0) 0.6
* 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 18 is the reconciliation between the statutory
results and the adjusted results.
11. Notes to the consolidated cash flow statement
2016£m 2015£m
Operating profit 93.5 82.2
Depreciation of property, plant and equipment 22.2 22.4
Amortisation of intangible assets 0.3 1.8
Impairment of goodwill 2.0 -
Share of results of associates (0.7) (2.2)
Charge for share-based payments 1.5 1.5
Gain on deemed disposal of Local World associate interest - (33.6)
Profit on disposal of land and buildings (0.2) -
Write-off of fixed assets 9.6 4.0
Pension administrative expenses 2.2 2.1
Pension deficit funding payments (40.7) (20.0)
Operating cash flows before movements in working capital 89.7 58.2
Decrease in inventories 0.4 1.1
Decrease in receivables 29.7 13.7
Decrease in payables (28.3) (10.4)
Cash flows from operating activities 91.5 62.6
12. Net debt
The statutory net debt for the Group is as follows:
27 December 2015£m Cashflow£m Derivative financial instruments*£m Foreign exchange*£m Term loan repaid£m Transfer to current£m 1 January 2017£m
Non-current liabilities
Loan notes (67.6) - - (13.6) - 81.2 -
Term loan (65.0) - - - 65.0 - -
(132.6) - - (13.6) 65.0 81.2 -
Current liabilities
Loan notes - - - - - (81.2) (81.2)
Term loan (15.0) - - - 15.0 - -
(15.0) - - - 15.0 (81.2) (81.2)
Non-current assets
Derivative financial instruments 3.5 - 11.3 - - (14.8) -
3.5 - 11.3 - - (14.8) -
Current assets
Derivative financial instruments - - - - - 14.8 14.8
Cash and cash equivalents 55.4 62.4 - - (80.0) - 37.8
55.4 62.4 - - (80.0) 14.8 52.6
Net debt (88.7) 62.4 11.3 (13.6) - - (28.6)
* 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.
12. Net debt (continued)
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:
27 December 2015£m Cashflow£m Term loan repaid£m Transfer to current£m 1 January 2017£m
Non-current liabilities
Loan notes (68.3) - - 68.3 -
Term loan (65.0) - 65.0 - -
(133.3) - 65.0 68.3 -
Current liabilities
Loan notes - - - (68.3) (68.3)
Term loan (15.0) - 15.0 - -
(15.0) - 15.0 (68.3) (68.3)
Current assets
Cash and cash equivalents 55.4 62.4 (80.0) - 37.8
55.4 62.4 (80.0) - 37.8
Net debt (92.9) 62.4 - - (30.5)
The statutory net debt reconciles to the contracted net debt as follows:
2016£m 2015£m
Statutory net debt (28.6) (88.7)
Loan notes at period end exchange rate 81.2 67.6
Loan notes at swapped exchange rate (68.3) (68.3)
Cross-currency interest rate swap (14.8) (3.5)
Contracted net debt (30.5) (92.9)
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. 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 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. Local
World will implement the Auto Enrolment legislation from 1 July 2017.
The current service cost charged to the consolidated income statement of £13.6
million (2015: £13.3 million) represents contributions of £12.3 million
(2015:£13.1 million) paid to the TMPP Scheme by the Group at rates specified
in the scheme rules and contributions of £1.3 million (2015:£0.2 million) paid
into the LW Plan by the Group at rates specified in the scheme rules. 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 three (2015: five) defined benefit
pension schemes following the merger of the Mirror Group Pension Scheme and
the MGN Past Service Pension Scheme into the MGN Pension Scheme (together the
'Mirror Schemes').
The remaining schemes are 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').
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 generally half of the remaining Trustees nominated by the members and
half by the Group.
13. Retirement benefit schemes (continued)
Defined benefit pension schemes (continued)
Maturity profile and cash flow
Across the schemes, the invested assets are expected to be sufficient to pay
the uninsured benefits due up to 2045, based on the reporting date
assumptions. The remaining uninsured benefit payments, payable from 2046, are
due to be funded by a combination of asset outperformance and the deficit
contributions currently scheduled to be paid by 2025. The liabilities related
50% to current pensioners and their spouses or dependants and 50% related to
deferred pensioners. The average term from the year end to payment of the
remaining uninsured benefits is expected to be around 20 years. Uninsured
pension payments in 2016, excluding lump sums and transfer value payments,
were £41 million, and these are projected to rise to an annual peak in 2039 of
£75 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 £336.7 million for the Mirror
Schemes, £31.9 million for the Trinity Scheme and £26.7 million for the MIN
Scheme.
As part of the agreement of the valuations, deficit funding contributions were
agreed at £36.2 million for 2015, 2016 and 2017. Contributions were agreed at
around £36 million from 2018 to 2023 and then reduce to around £21 million for
2024 and 2025 after which contributions were due to cease. The combined
deficit was expected to be eradicated by 2027 by a combination of the
contributions and asset returns. In December 2014, the Group prepaid
contributions for 2015 and 2016 of £16.5 million and £0.5 million
respectively.
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.
Payments in 2016 were £40.7 million (2015: £20.0 million) comprising £35.7
million of deficit funding and £5.0 million in connection with the share
buyback. Payments due in 2016 were £36.2 million less the prepayment in
December 2014 of
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