Reach Plc · LSE:RCH
Reach — Trinity Mirror — FY2013 Earnings Presentation
70 slides from Reach's earnings presentation, Mar 13, 2014
Slide 1: 2013 Annual Results and Strategic Update
Telling the Story Yesterday. Today. Tomorrow. 2013 ANNUAL RESULTS AND STRATEGIC UPDATE 13 March 2014 Trinity Mirror plc
Slide 2: Today's agenda
Today’s agenda Highlights of performance Simon Fox Financial update Vijay Vaghela Strategic and Operational update Simon Fox Trinity Mirror plc 1
Slide 3: Highlights of performance
Highlights of performance Good Operating profit up 0.8% profit growth Profit before tax up 2.6% Earnings per share up 7.0% Improving Net debt down by £45.8 million to £97.0 million financial position On track to repay £44.2 million of maturing debt in June 2014 from cash flow Strong Average monthly
Slide 4: Vijay Vaghela, Group Finance Director
Vijay Vaghela GROUP FINANCE DIRECTOR Trinity Mirror plc 3
Slide 5: Group performance
Group performance 2013 2012 Change Change £m £m £m % Revenue 663.8 706.5 (42.7) (6.0)% Costs (562.6) (601.1) 38.5 6.4% Associates 6.8 1.7 5.1 300.0% Operating profit 108.0 107.1 0.9 0.8% Net interest (6.7) (8.4) 1.7 20.2% Profit before tax 101.3 98.7 2.6 2.6% Profit after tax 79.1 73.7 5.4 7.3% Earn
Slide 6: Circulation revenue and volumes and digital audience
Circulation revenue and volumes and digital audience 2013 2012 Change Change £m £m £m % Circulation - revenue 285.8 297.2 (11.4) (3.8)% Circulation - paid for volumes: '000 '000 '000 % Daily Mirror< 1,028 1,078 (50) (4.6)% Sunday Mirror (March to December)< 1,017 1,077 (60) (5.6)% Sunday People (Mar
Slide 7: Advertising revenue
Advertising revenue 2013 2012 Change Change £m £m £m % Display 142.6 155.7 (13.1) (8.6)% Classified 100.9 115.4 (14.5) (12.6)% Recruitment 22.5 29.3 (6.8) (23.4)% Property 18.7 21.7 (3.0) (14.1)% Motors 11.7 13.0 (1.3) (9.6)% Other 48.0 51.4 (3.4) (6.5)% Other 19.2 21.7 (2.5) (11.4)% Advertising rev
Slide 8: Advertising revenue – Publishing
Advertising revenue – Publishing Publishing advertising Publishing advertising revenue revenue year onyear year on % year % Improvement in trends as the year progressed across print and digital in the Publishing division Significant improvement in Q4 when advertising revenues fell by a much reduced
Slide 9: Printing revenue
Printing revenue 2013 2012 Change Change £m £m £m % Contract printing 38.4 36.7 1.7 4.6% Newsprint supply 24.6 26.7 (2.1) (7.9)% Other revenue 2.7 2.9 (0.2) (6.9)% Printing revenue 65.7 66.3 (0.6) (0.9)% Continued growth in contract printing revenues – Secured new print contract for City AM in May 2
Slide 10: Other revenue
Other revenue 2013 2012 Change Change £m £m £m % Publishing 37.1 37.7 (0.6) (1.6)% Specialist Digital and Central 12.5 12.5 - - Other revenue 49.6 50.2 (0.6) (1.2)% Decline in other revenue driven by fall in leaflets, reader offers and returns paper sales Growth in contract publishing, syndication a
Slide 11: Digital revenue
Digital revenue 2013 2012 Change Change £m £m £m % Display 9.2 6.8 2.4 30.1% Classified 17.2 21.8 (4.6) (21.4)% Recruitment 10.3 13.1 (2.8) (22.3)% Property 2.2 3.3 (1.1) (31.7)% Other 4.7 5.4 (0.7) (13.1)% Advertising revenue 26.4 28.6 (2.2) (7.7)% Other revenue 12.3 12.2 0.1 0.8% Total revenue 38.
Slide 12: Publishing Digital revenue
Publishing Digital revenue 2013 2012 Change Change £m £m £m % Display 9.2 6.8 2.4 30.1% Classified 8.0 9.7 (1.7) (18.0)% Recruitment 3.0 3.9 (0.9) (24.8)% Other 5.0 5.8 (0.8) (13.5)% Advertising revenue 17.2 16.5 0.7 4.2% Other revenue 2.8 2.9 (0.1) (3.4)% Total revenue 20.0 19.4 0.6 3.1% Benefits o
Slide 13: Cost savings
Cost savings 2013 2012 Change Change £m £m £m % Labour 210.0 214.0 4.0 1.9% Newsprint 102.3 122.0 19.7 16.1% Depreciation 26.4 29.1 2.7 9.3% Other 223.9 236.0 12.1 5.1% Costs* 562.6 601.1 38.5 6.4% 2013 2012 Change Change £m £m £m % Publishing 457.9 490.5 32.6 6.6% Printing 65.7 66.3 0.6 0.9% Specia
Slide 14: Divisional performance
Divisional performance 2013 2012 Change Change Revenue £m £m £m % Publishing 576.4 615.6 (39.2) (6.4)% Printing 65.7 66.3 (0.6) (0.9)% Specialist Digital 18.7 21.4 (2.7) (12.6)% Central 3.0 3.2 (0.2) (6.3)% Group 663.8 706.5 (42.7) (6.0)% 2013 2012 Change Change Operating profit/(loss)* £m £m £m % P
Slide 15: Non-recurring items
Non-recurring items 2013 2012 £m £m Impairment of goodwill and other intangible assets (225.0) (60.0) Restructuring charges (9.9) (11.5) Profit on disposal of subsidiary undertaking 0.6 - Non-recurring items excluding associates (234.3) (71.5) Non-recurring items included in associates (0.5) 5.5 Tot
Slide 16: Cash flow
Cash flow 2013 2012 Change £m £m £m Operating profit* 108.0 107.1 0.9 Associates (6.8) (1.7) (5.1) Depreciation 26.4 29.1 (2.7) Pension funding (19.0) (10.9) (8.1) Net capital expenditure (7.3) (5.3) (2.0) Net Interest (5.4) (7.5) 2.1 Non recurring restructuring costs (9.9) (11.5) 1.6 Acquisition of
Slide 17: Financing
Financing Contracted basis* Statutory basis Dec Dec Dec Dec 2013 2012 Change 2013 2012 Change £m £m £m £m £m £m Loan notes 112.5 167.0 54.5 102.4 154.6 52.2 Derivatives - - - 1.3 (2.5) (3.8) Gross debt 112.5 167.0 54.5 103.7 152.1 48.4 Net cash balances< (15.5) (24.2) (8.7) (15.5) (24.2) (8.7) Net d
Slide 18: Pensions
Pensions Dec Dec 2013 2012 Change £m £m £m Fair value of scheme assets 1,563.9 1,505.9 58.0 Present value of scheme liabilities (1,816.1) (1,803.6) (12.5) Net scheme deficit (252.2) (297.7) 45.5 Net scheme deficit after deferred tax (201.8) (229.2) 27.4 Assets increased by £58.0 million – Growth in
Slide 19: Capital reduction
Capital reduction £700 million non-cash impairment of the carrying value of investments in the balance sheet of the Company – Contributed to negative balance on the Company’s profit and loss account of £514.8 million – Resulted in the Company having no distributable reserves We are progressing with
Slide 20: Summary
Summary Good trading performance – Continued growth in profits and strong cash flows Improving financial position – On track to repay £44.2 million of maturing debt in June 2014 from cash flow – Final debt repayment of £68.3 million in June 2017 January and February 2014 revenues declined year on ye
Slide 21: Simon Fox, Chief Executive
Simon Fox CHIEF EXECUTIVE Trinity Mirror plc 20
Slide 22: Our vision and values
Our vision and values Our vision To be a dynamic and growing media business that is an essential part of our customers’ daily lives Our values We are creative We are open We have integrity We are ambitious Trinity Mirror plc 21
Slide 23: Our strategy presented in 2013
Our strategy presented in 2013 “One Trinity Mirror”: Harnessing the combined strength of our journalists and our audience reach under a unified organisation structure Outperform circulation and print advertising market trends Protecting and revitalising our core brands in print Stabilise profits and
Slide 24: One Trinity Mirror
“One Trinity Mirror”: Harnessing the combined strength of our journalists and our audience reach under a unified organisation structure Trinity Mirror plc 23
Slide 25: Increased content sharing and collaborative working
Increased content sharing and collaborative working between our national and regional brands Increased collaboration / Trinity Mirror Wire Liverpool Echo South Wales Echo Western Mail Daily Record Daily Mirror Daily Mirror Trinity Mirror plc 24
Slide 26: Shared content unit
Shared content unit produces content of general appeal but which does not require specific local flavour Shared content unit Trinity Mirror plc 25
Slide 27: Combined portfolio reaches 16.1 million readers each week
Our combined portfolio of national and regional titles reaches 16.1 million readers each week Seven-day average weekly print readership (‘m) – 2013 Trinity Express / News UK DMGT Mirror Star Source: NRS and Jicreg Trinity Mirror plc 26
Slide 28: National Advertising Sales Agency
Our National Advertising Sales Agency shows how we are leveraging this combined strength of our portfolio National Advertising Sales Agency Trinity Mirror plc 27
Slide 29: Areas of strategic focus
Areas of strategic focus Strategic focus KPI Measurement Circulation volume and revenue Protecting and revitalising our ahead of the market Outperform print trends core brands in print Print advertising volume and revenue ahead of the market Digital audience (unique user and Growing our existing bra
Slide 30: Protecting and revitalising our core brands in print
Protecting and revitalising our core brands in print Trinity Mirror plc 29
Slide 31: Redesign and rebranding of Mirror
Redesign and rebranding of Mirror Trinity Mirror plc 30
Slide 32: Trinity Mirror plc
Trinity Mirror plc 31
Slide 33: Daily Mirror circulation
Daily Mirror circulation Daily Mirror average circulation – year on year % Note: (a) Rest of market comprised Daily Record, The Sun, Daily Mail, Daily Express and Daily Star Source: ABC Trinity Mirror plc 32
Slide 34: New products and new editions launches
New products and new editions launches Trinity Mirror plc 33
Slide 35: Growing our existing brands onto digital delivery channels
Growing our existing brands onto digital delivery channels Trinity Mirror plc 34
Slide 36: Launched e-editions across all key brands
Launched e-editions across all key brands Trinity Mirror plc 35
Slide 37: Key brand sites upgraded onto new technology platform
All our key brands sites have been upgraded onto new technology platform Trinity Mirror plc 36
Slide 38: Still about breaking the big exclusives
We are still about breaking the big exclusives… …but we do them differently these days Trinity Mirror plc 37
Slide 39: Lord Hanningfield's expense scandal
Lord Hanningfield’s expense scandal Trinity Mirror plc 38
Slide 40: Lord Hanningfield's expense scandal
Lord Hanningfield’s expense scandal Trinity Mirror plc 39
Slide 41: Stormy weather in December 2013
Stormy weather in December 2013 Trinity Mirror plc 40
Slide 42: Data Journalism Unit generating content across digital and print
Data Journalism Unit generating engaging content across digital and print Real Schools Guide Trinity Mirror plc 41
Slide 43: Community teams established in regional centres
Community teams established in our regional centres Trinity Mirror plc 42
Slide 44: Accelerated growth in audience and page views
Accelerated growth in audience and page views across our publishing sites TM group monthly unique users – year on year % Dec 13 UUs up 101% TM group monthly page views– year on year % Dec 13 PVs up 136% Source: ABCe, Omniture, TM estimate Trinity Mirror plc 43
Slide 45: Accelerated growth in Publishing Digital revenues
Accelerated growth in Publishing Digital revenues TM Publishing Digital revenue – year on year % Dec 13 Publishing Digital display revenue up 91% Source: TM information Trinity Mirror plc 44
Slide 46: Relentless focus on efficiency and cost management
Continuing our relentless focus on efficiency and cost management Trinity Mirror plc 45
Slide 47: We delivered some £12 million of structural cost savings in 2013
We delivered some £12 million of structural cost savings in 2013 Cost management remains a key area of focus Our structural cost savings delivered of £12 million in 2013 were £2 million ahead of our target Actions undertaken included: Ad Sales pro – continued efforts to consolidate our newspaper sal
Slide 48: Launching, developing, investing in or acquiring new businesses
Launching, developing, investing in or acquiring new businesses built around distinctive content or audience Trinity Mirror plc 47
Slide 49: New product development: Editorial and content
New product development: Editorial and content Trinity Mirror plc 48
Slide 50: New product development: Editorial and content
New product development: Editorial and content Trinity Mirror plc 49
Slide 51: New product development: Commercial
New product development: Commercial Trinity Mirror plc 50
Slide 52: Investing in new digital talent and celebrating success
Investing in new digital talent and celebrating success None of the above is possible without the commitment, innovation and drive of our people – Staff survey undertaken and action plans developed It is key to attract and retain high calibre digital talent into the organisation – We have made a num
Slide 53: Summary
Summary Strategic focus KPI Measurement Circulation volume and revenue Protecting and revitalising our ahead of the market Outperform print trends core brands in print Print advertising volume and revenue ahead of the market Digital audience (unique user and Growing our existing brands onto page vie
Slide 54: Thank you / Questions
THANK YOU Questions Trinity Mirror plc
Slide 55: Appendices
Appendices Trinity Mirror plc 54
Slide 56: Income statement
Income statement 2013 2012 2013 2012 Statutory Statutory Adjusted* Adjusted* (restated**) £m £m £m £m Group revenue 663.8 706.5 663.8 706.5 Operating (loss)/profit (134.8) 34.9 108.0 107.1 Adjusted operating profit 108.0 107.1 108.0 107.1 Non-recurring items (234.8) (66.0) - - Pension administrative
Slide 57: Balance sheet
Balance sheet 2013 2012 £m £m Intangible assets 683.1 912.7 Property, plant and equipment 337.6 357.5 Land and buildings 182.3 187.8 Other fixed assets 155.3 169.7 Investment in associates 26.8 12.6 Retirement benefit assets 15.7 36.7 Deferred tax assets 57.0 68.9 Derivative financial instruments 1.
Slide 58: Restatement of 2012 statutory results
Restatement of 2012 statutory results IAS19 As reported Change As restated 2012 2012 2012 £m £m £m Revenue 706.5 - 706.5 Costs (675.6) (3.2) (678.8) Associates 7.2 - 7.2 Operating profit 38.1 (3.2) 34.9 Investment revenues 0.4 - 0.4 Pension finance charge (5.2) (6.0) (11.2) Finance cost (14.4) - (14
Slide 59: Reconciliation of statutory results to adjusted results
Reconciliation of statutory results to adjusted results Non- Tax recurring Finance Pension legislation Statutory items Amortisation costs charges changes Adjusted results (a) (b) (c) (d) (e) results £m £m £m £m £m £m £m 2013 Revenue 663.8 - - - - - 663.8 Operating (loss)/profit (134.8) 234.8 5.2 - 2
Slide 60: Cash flow
Cash flow 2012 2013 (restated) £m £m Statutory operating (loss)/profit (134.8) 34.9 Depreciation 26.4 29.1 Pension funding (16.2) (7.7) Impairment of goodwill and intangible assets 225.0 60.0 Other 1.6 (1.5) Movements in working capital (9.1) (5.6) Cash flow from operating activities 92.9 109.2 Inco
Slide 61: Reconciliation of net debt
Reconciliation of net debt Dec Dec 2013 2012 £m £m Statutory net debt (88.2) (127.9) ^ Loan notes at period end exchange rate 102.4 154.6 Loan notes at swapped exchange rate (112.5) (167.0) Cross-currency interest rate swaps 1.3 (2.5) Contracted net debt (97.0) (142.8) ^ ^ The December 2012 figures
Slide 62: Pension scheme assets
Pension scheme assets 2013 % 2012 % £m of total £m of total UK equities 223.7 14.3% 227.6 15.1% US equities 159.0 10.2% 103.9 6.9% Other overseas equities 230.3 14.7% 252.7 16.8% Total equities 613.0 39.2% 584.2 38.8% Property 28.2 1.8% 22.1 1.5% Corporate bonds 264.7 16.9% 264.6 17.6% Fixed interes
Slide 63: Group revenue
Group revenue Group Publishing Printing Specialist Digital Central £m % of total £m % of total £m % of total £m % of total £m % of total Circulation 285.8 43.0% 285.8 49.6% - - - - - - Advertising 262.7 39.6% 253.5 44.0% - - 9.2 49.2% - - Publishing Print 236.3 35.6% 236.3 41.0% - - - - - - Publishi
Slide 64: Group digital revenue
Group digital revenue Publishing Digital Specialist Digital Total Digital 2013 2012 Change 2013 2012 Change 2013 2012 Change £m £m % £m £m % £m £m % Display 9.2 6.8 30.1% - - - 9.2 6.8 30.1% Classified 8.0 9.7 (18.0)% 9.2 12.1 (24.0)% 17.2 21.8 (21.4)% Recruitment 3.0 3.9 (24.8)% 7.3 9.2 (21.2)% 10.
Slide 65: Publishing division
Publishing division 2013 2012 Change £m £m % Circulation 285.8 297.2 (3.8)% Advertising 253.5 280.7 (9.7)% Print advertising 236.3 264.2 (10.6)% Digital advertising 17.2 16.5 4.2% Other 37.1 37.7 (1.6)% Print other 34.3 34.8 (1.4)% Digital other 2.8 2.9 (3.4)% Revenue 576.4 615.6 (6.4)% Print 556.4
Slide 66: Specialist Digital division
Specialist Digital division 2013 2012 Change £m £m % Advertising 9.2 12.1 (24.0)% Other 9.5 9.3 2.2% Revenue 18.7 21.4 (12.6)% Costs (18.3) (24.3) 24.7% Operating profit/(loss)* 0.4 (2.9) 113.8% Central division 2013 2012 Change £m £m % Revenue 3.0 3.2 (6.3)% Costs (20.7) (20.0) (3.5)% Associates 6.
Slide 67: Advertising revenue by division
Advertising revenue by division Publishing Specialist Digital Total Group 2013 2012 Change 2013 2012 Change 2013 2012 Change £m £m % £m £m % £m £m % Display 142.6 155.7 (8.6)% - - - 142.6 155.7 (8.6)% Classified 91.7 103.3 (11.2)% 9.2 12.1 (24.0)% 100.9 115.4 (12.6)% Recruitment 15.2 20.1 (24.4)% 7.
Slide 68: Revenue trends
Revenue trends Q1 Q2 H1 Q3 Q4 H2 FY Circulation (9.9)% (2.3)% (6.2)% (1.4)% (1.0)% (1.2)% (3.8)% Advertising (12.8)% (12.5)% (12.6)% (12.0)% (3.9)% (8.0)% (10.3)% Printing (3.9)% (0.4)% (2.1)% 1.0% (0.1)% 0.5% (0.9)% Other (9.0)% (2.4)% (6.1)% 0.1% 6.8% 3.7% (1.2)% Group revenue (10.5)% (6.4)% (8.5)
Slide 69: National newspaper advertising market share (volumes)
National newspaper advertising market share (volumes) UK 2013 Dailies 2013 2012 1. Mirror 18.4% 18.0% 2. Sun 20.1% 21.2% 3. Star 16.6% 17.5% 4. Mail 20.9% 20.6% 5. Express 24.0% 22.7% 100.0% 100.0% Sundays^ 1. Sunday Mirror 17.1% 15.5% 2013 2. Sunday People 10.9% 10.9% 3. Sun on Sunday 12.2% 11.1% 4
Slide 70: Trinity Mirror plc
Trinity Mirror plc