independent newspapers, plc 1998 full year results 24th march 1999 all numbers in euro

Independent Newspapers, PLCIndependent Newspapers, PLC

1998 Full Year Results24th March 1999

All numbers in Euro

IntroductionIntroduction

Liam P. Healy

Group Chief Executive


Mexico

South Africa

Australia

New Zealand

Portugal

United Kingdom

Ireland


Mexico

South Africa

Australia

New Zealand

Portugal

UKIreland• A broadly based international media group

• Interests in newspapers, magazines, outdoor advertising

and electronic media

• No. 1 newspaper publisher in 3 of our 5 key country

markets

• Publish 160 titles a week selling over 15 million copies

• Owner of the flagship Independent title in the UK

Mexico

South Africa

Australia

New Zealand

Portugal

UKIreland


• Largest regional newspaper, radio and outdoor operator in Australasia

• Joint owner (with TCI) of Ireland’s 2nd largest cable operator

• Currently bidding for Ireland’s largest cable operator

(Cablelink)

• Strategic migration into new electronic media

platforms


5 Year C.A.G.R.• Turnover +29%• Operating Profit +31%• Pre-tax Profit +21%• Earnings Per Share +13%• Dividends Per Share +16%

Earnings Per Share €(Fully diluted before exceptionals &

goodwill amortisation)

15.1617.75

20.39

25.36 24.56

0

5

10

15

20

25

30

'94 '95 '96 '97 '98

HighlightsHighlights

James J. Parkinson

Group Finance Director

HighlightsHighlights

• Adverse currency movements

• Weakness in southern hemisphere (NZ and SA)

economies

• Buoyant Irish economy

• Acquired 100% of flagship UK Independent titles

• Successful disposal of Sirocco

• All embracing restructuring to fundamentally lower

Group cost base

Headline NumbersHeadline Numbers

% Change 1998 Constant % Change

€ Currencies Actual

Turnover 799m +10.9% +5.1%

Operating Profit* 142m +3.6% -4.6%

1998 1997 % Change

Operating Margin* 18.2% 20.9%EPS** 24.56c 25.36c -3.2% DPS 11.43c 9.90c +15.4%

* continuing operations, excluding exceptionals** fully diluted, excluding exceptionals and amortisation of goodwill

OverviewOverview

Australia8%

Other2%

South Africa20%

Ireland32%UK

14%

New Zealand

24%

Turnover by Business

• Outdoor Advertising 4%

• Electronic Media 4%

• Publishing 92%

Turnover by Market - 1998Total : € 936m*

* Including Group share of joint ventures and associates

OverviewOverview

Other2%

Australia9%

South Africa18%

Ireland40%

New Zealand

31%

Operating Profit by Business

• Outdoor Advertising 4%

• Electronic Media 5%

• Publishing 91%

Operating Profit by Market - 1998Total : € 145m *

* Excluding exceptional items but including Group share of joint ventures and associates

Summary Balance SheetSummary Balance Sheet

Fixed Assets

Intangible 1,121 1,167

Tangible 225 249

Financial 141 149

Working Capital 28 9

Provisions & Long-Term Creditors (82) (17)

Net Debt (568) (533)

Total Shareholders’ Funds 865 1,024

Interest cover (EBITDA/Interest) 3.5x 4.4x

1998€ m

1997€ m

Summary Cash FlowSummary Cash Flow

Operating profit 90 143

Restructuring costs 54 9

144 152

Share of Associates & JV’s Results (16) (9)

Depreciation & Amortisation 34 33

EBITDA 162 176

Operating cash flow 129 144

Operating cash flow conversion (%) 80% 82%

1998 € m

1997 € m

Operating and Financial Performance

Operating and Financial Performance

AustraliaAustralia

Turnover 251.6 +9% -2%EBITDA 57.5 +8% -2%Operating Profit 49.7 +8% -2%

1998* 1997*

Margin (%) 19.8% 19.8%Exceptionals - -

1998*€ m

% ChangeActual

* 100% of APN

% ChangeConstant

Currencies

AustraliaAustralia

Turnover Split *

PublishingPublishing50%50%

Electronic MediaElectronic Media 27% 27%

Newspaper Turnover

Advertising79%

Circulation21%

OutdoorOutdoor23%23%

*100% of APN

AustraliaAustralia

• Australia’s largest regional daily newspaper publisher

• Over 65% of Australia’s outdoor advertising market

• Over 25% of the Australian radio market

• Solid EBIT growth in regional newspapers (6%)

• Double-digit EBIT growth in Outdoor (10%) and Broadcasting

(15%)

• Broadcasting - significant market share gains

• Outdoor - 11 major contract wins in 1998

• Launch of APN Digital

• Compound annual growth in PBT (15%), Net Profits

(17%) and EPS (11%) since listing in 1992

• Strongest growth in normalised EPS over last 5 years

of any of the 8 largest media companies in Australia

AustraliaAustralia

New ZealandNew Zealand

*excluding discontinued operations


Turnover 208.4 -2% -15%EBITDA 58.6 -1% -14%Operating Profit 45.2 -3% -16%

1998* 1997*

Margin (%) 21.7% 22.0%Exceptionals (1.1) (0.2)

1998*€ m

% ChangeActual

% ChangeConstant

Currencies


Turnover Split*

PublishingPublishing93%93%CommercialCommercial

PrintingPrinting23%23%

Electronic MediaElectronic Media7%7%

Newspaper Turnover

Advertising78%Circulation

22%

*including Group share of joint ventures and associates


• New Zealand’s largest publisher

• The New Zealand Herald - Auckland’s only daily paper - with 57% of total national newspaper market

• No. 1 radio operator: 53 radio stations with over 50% market share

• No. 1 regional publisher: 9 paid-for regional daily titles with a market share 58%

• No. 1 commercial printing group and major magazine publisher

• 1998 economic recession galvanised new management team to totally restructure group cost base

• Group headcount reduced in 1998 by more than 200

• Launch of Herald’s real estate tabloid to drive market

share

• Herald’s circulation stabilised with new initiatives

• Launch of searchable classified website

• 1999 - NZ economy showing signs of growth


United KingdomUnited Kingdom

*based on 100% of UK operations

Turnover 142.9 +1% +8.1%EBITDA (1.8) +80% +79%

Operating Profit (3.1) +73% +71%

1998* 1997*

Margin (%) -2.2% -8.1%Exceptionals (1.3) (0.4)

1998*€ m

% ChangeActual

% ChangeConstant

Currencies


Turnover Split *

Newspaper Turnover


32%Electronic Media

1%

Publishing99%

MagazinesMagazines14%14%

* based on 100% of UK operations


• Significant UK player in national press, regional press and magazines

• Flagship title for Group

• Control of UK Independent titles from March 1998

• Major award winner in 1998 - the first time in 10

years

• Circulation turnaround

• Independent losses significantly reduced

• Operating margins for regional press and

magazines at top end of UK peer group

• Fast growing Internet site


IrelandIreland

Turnover 278.8 +12%EBITDA 62.2 +7%Operating Profit 56.7 +6%

1998 1997Margin (%) 20.3% 21.4%Exceptionals (2.6) (5.2)

%Change

1998€ m

IrelandIreland

Turnover Split*


Electronic MediaElectronic Media7%7%

Newspaper Turnover

Advertising56%

Circulation44%


IrelandIreland

• Largest publisher in Ireland, 51% market share (ABC)

• No 1 in all 5 newspaper categories:Quality Daily, Popular Daily, Quality Sunday, Popular Sunday and Evening

• 1998 circulations:Circulation

Change– Irish Independent 162,716 1.6%– The Star 90,263 1.5%– Sunday Independent 309,913 (5.2%)– Sunday World 308,754 0.52%– Evening Herald 106,989 (4.9%)

• Over 53% advertising market share

IrelandIreland

• No. 1 regional newspaper publisher, 11 titles with 39% market share

• Newspread - largest publishing distribution company

• IndoCom - directory/audiotext division, acquired Switchcom

• PHL subscribers over 150,000 and profitable

• Restructuring / new printing plant

South AfricaSouth Africa

*excluding discontinued operations

Turnover 175.2 +6% -6%EBITDA 31.4 +1% -10%

Operating Profit 27.7 +1% -10%

1998* 1997*

Margin (%) 15.8% 16.6%Exceptionals (0.6) (0.8)

1998*€ m

% ChangeActual

% ChangeConstant

Currencies


Turnover Split *

Newspaper Turnover


27%



CommercialCommercialPrintingPrinting

6%6%Electronic MediaElectronic Media

1%1%


• Largest newspaper publisher in South Africa

• Own 14 titles dominating the 3 major urban centres

• 54% of total newspaper readership

• Substantial and successful new products have stabilised and grown circulations

– Business Report

– Personal Finance

– I-Technology

• Operating margins increased from 8% in 1994to 15.8% by 1998

• Restructuring of editorial provides synergies

• Partnership with Conde Nast

• New media developments: In-Touch


New Media DevelopmentsNew Media Developments


Independent DigitalIndependent Digital

• Consolidate and enhance Group’s new media platforms

• Leverage newspaper USPs into the electronic arena

• Exploring internet-related opportunitiesenhanced e-commerceinternet-support call centresfulfilmenttelephony (GSM/ traditional/ TV)

• International co-ordination of R & D, network and brand alliances

In-Touch - South Africa

PHL / TCI / IndoCom- Ireland

ZD Net / Kompass - Australia

• Aim to be the No. 1 portal in our markets

• Media power to create internet brands


StrategyStrategy

StrategyStrategy

• Geographically diversified• Tight focus on...

1. 1. Core competenciesCore competencies

PublishingPublishing

OutdoorOutdoor

Electronic MediaElectronic Media

StrategyStrategy

2. 2. Market leadership positionsMarket leadership positions

3. 3. Cost reductionCost reduction

• Primary content provider across diverse media

platforms

• Deliver double-digit earnings growth

Opportunities and OutlookOpportunities and Outlook

Opportunities and Outlook Opportunities and Outlook

• Group performing to plan in Q1 1999

• Economic conditions in New Zealand improving

• Restructuring

– On schedule

– Substantial, detailed and aggressive multi-country rationalisations

– 10% headcount reduction

– Annual cost savings of € 28m by 2001

Opportunities - Market by Market OutlookOpportunities - Market by Market Outlook

• AustraliaAustralia– Continued sound economyContinued sound economy

• GDP growth forecasted at 2% - 3% for 1999GDP growth forecasted at 2% - 3% for 1999• Aus $ strengtheningAus $ strengthening

– Organic growth across all divisionsOrganic growth across all divisions– Sydney 2000 - outdoor / radioSydney 2000 - outdoor / radio– APN DigitalAPN Digital– Strong start to 1999Strong start to 1999– Forecasting 7th consecutive year of profit growthForecasting 7th consecutive year of profit growth


• New ZealandNew Zealand– Business confidence increasingBusiness confidence increasing

• Recession overRecession over• GDP growth forecasted at 2% for 1999 GDP growth forecasted at 2% for 1999

– Solid start to 1999 Solid start to 1999 – Substantial headcount reduction (already 200+) Substantial headcount reduction (already 200+)

to drive profit growth, particularly in 2nd half.to drive profit growth, particularly in 2nd half.

– America’s Cup / APEC ConferenceAmerica’s Cup / APEC Conference


• United KingdomUnited Kingdom– Economic contraction now appears unlikely Economic contraction now appears unlikely

• GDP growth forecasted to show a marginal 0.5% - 0.75% increase GDP growth forecasted to show a marginal 0.5% - 0.75% increase for 1999 for 1999

– Good start to 1999Good start to 1999

– New media:New media: “I-NEWS” “I-NEWS”

– IndependentIndependent titles titles• Award-winning: “Editor of the Year” Award-winning: “Editor of the Year”

• Latest ABCs confirm first yoy increase since 1996Latest ABCs confirm first yoy increase since 1996

• Turn-around: on trackTurn-around: on track


• IrelandIreland

– Continuing ‘Celtic Tiger’, with economic growth Continuing ‘Celtic Tiger’, with economic growth forecasted at 7% for 1999forecasted at 7% for 1999

– Forecasting organic growth across all divisionsForecasting organic growth across all divisions

– Restructuring - towards new plant (Q4 2000)Restructuring - towards new plant (Q4 2000)

– New media:New media:• -- PHL/CablelinkPHL/Cablelink• -- SwitchcomSwitchcom

– Buoyant readership / circulationsBuoyant readership / circulations


• South AfricaSouth Africa– Offer to acquire 100% (March 1999)Offer to acquire 100% (March 1999)– Economy stabilisedEconomy stabilised

• GDP growth forecasted to be flat for 1999 and increasing GDP growth forecasted to be flat for 1999 and increasing to 3% forecast for 2001 to 3% forecast for 2001

– Political stabilityPolitical stability• June electionsJune elections

– Significant restructuring initiatives across all 3 Significant restructuring initiatives across all 3 regions, on plan regions, on plan

– New media: Vodacom/ In-Touch developmentsNew media: Vodacom/ In-Touch developments

ConclusionConclusion

WE ARE COMMITTED TO DELIVERING DOUBLE-DIGIT EARNINGS GROWTH

• Core operational strengths• Restructuring• Expansion

• Developments– PHL / Cablelink– Prudent new media strategy– In-Touch/ Vodacom

independent newspapers, plc 1998 full year results 24th march 1999 all numbers in euro

Documents

apn slide

australia australia

amortisation of goodwill

financial performance

change operating margin

operating profit49

lower group cost base

australia turnover split