Reach Plc · LSE:RCH
Reach — Trinity Mirror — FY2014 Earnings Presentation
54 slides from Reach's earnings presentation, Mar 2, 2015
Slide 1: 2014 Annual Results
Telling the Story Yesterday. Today. Tomorrow. . 2014 ANNUAL RESULTS 2 March 2015 Trinity Mirror plc
Slide 2: Today's agenda
Today’s agenda Highlights Simon Fox Financial update Vijay Vaghela Strategic and operational update Simon Fox Trinity Mirror plc 1
Slide 3: Highlights
Highlights Group performance – Profit before tax of £102.3 million, up 1.0% – Earnings per share of 32.8 pence, up 2.5% Strong growth in Publishing Digital revenues although Print revenues remain challenging – Group revenue down 4.1% compared to a decline of 6.0% for 2013 – Publishing digital revenu
Slide 4: Areas of strategic focus
Areas of strategic focus Strategic focus KPI Protecting and revitalising our core Outperform print trends brands in print Growing our existing brands onto Digital growth digital delivery channels Continuing our relentless focus on Targeted cost savings efficiency and cost management Launching, devel
Slide 5: Vijay Vaghela, Group Finance Director
Vijay Vaghela GROUP FINANCE DIRECTOR Trinity Mirror plc 4
Slide 6: Group performance
Group performance 2014 2013 Change Change £m £m £m % Revenue 636.3 663.8 (27.5) (4.1%) Costs (536.9) (562.6) 25.7 4.6% Associates 6.1 6.8 (0.7) (10.3%) Operating profit 105.5 108.0 (2.5) (2.3%) Net interest (3.2) (6.7) 3.5 52.2% Profit before tax 102.3 101.3 1.0 1.0% Profit after tax 81.3 79.1 2.2 2
Slide 7: Publishing
Publishing 2014 2013 Change Change £m £m £m % Print 521.6 556.4 (34.8) (6.3%) Digital 32.4 22.0 10.4 47.3% Revenue 554.0 578.4 (24.4) (4.2%) Costs (440.5) (459.9) 19.4 4.2% Operating profit 113.5 118.5 (5.0) (4.2%) Operating margin 20.5% 20.5% - - Print market remains challenging although we are see
Slide 8: Publishing print revenue
Publishing print revenue 2014 2013 Change Change £m £m £m % Circulation 279.8 285.8 (6.0) (2.1%) Advertising 209.2 236.3 (27.1) (11.5%) Display 119.6 133.4 (13.8) (10.3%) Classified 72.6 83.7 (11.1) (13.2%) Other 17.0 19.2 (2.2) (11.5%) Other 32.6 34.3 (1.7) (5.0%) Revenue 521.6 556.4 (34.8) (6.3%)
Slide 9: Publishing digital revenue
Publishing digital revenue 2014 2013 Change Change £m £m £m % Advertising 28.5 19.2 9.3 48.4% Display 18.6 9.2 9.4 101.4% Classified recruitment 5.5 5.0 0.5 13.2% Classified other 4.4 5.0 (0.6) (13.2%) Other 3.9 2.8 1.1 39.3% Revenue 32.4 22.0 10.4 47.3% Advertising revenue up 48.4% – Display revenu
Slide 10: Printing
Printing 2014 2013 Change Change £m £m £m % Contract printing 37.6 38.4 (0.8) (2.1%) Newsprint supply 24.3 24.6 (0.3) (1.2%) Other revenue 2.6 2.7 (0.1) (3.7%) Revenue 64.5 65.7 (1.2) (1.8%) External costs (188.9) (198.4) 9.5 4.8% Publishing division recharge 124.4 132.7 (8.3) (6.3%) Operating resul
Slide 11: Other segments
Other segments Specialist Digital Central 2014 2013 Change 2014 2013 Change £m £m % £m £m % Advertising 4.8 7.2 (33.3%) - - - Other 9.7 9.5 2.1% 3.3 3.0 10.0% Revenue 14.5 16.7 (13.2%) 3.3 3.0 10.0% Costs (12.5) (16.3) 23.3% (19.4) (20.7) 6.3% Associates - - - 6.1 6.8 (10.3%) Operating profit/(loss)
Slide 12: Cost savings
Cost savings 2014 2013 Change Change £m £m £m % Labour 196.1 210.0 13.9 6.6% Newsprint 97.5 102.3 4.8 4.7% Depreciation 24.5 26.4 1.9 7.2% Other 218.8 223.9 5.1 2.3% Costs 536.9 562.6 25.7 4.6% 2014 2013 Change Change £m £m £m % Publishing 440.5 459.9 19.4 4.2% Printing 64.5 65.7 1.2 1.8% Specialist
Slide 13: Non-recurring items and restructuring charges
Non-recurring items and restructuring charges Non-recurring items 2014 2013 £m £m Provision for historical legal issues (12.0) - Impairment of goodwill and other intangible assets - (225.0) Profit on disposal of subsidiary undertaking - 0.6 Non-recurring items excluding associates (12.0) (224.4) Non
Slide 14: Pensions
Pensions 2014 2013 Change £m £m £m Fair value of scheme assets 1,562.0 1,563.9 (1.9) Present value of scheme liabilities (1,863.2) (1,816.1) (47.1) Net scheme deficit (301.2) (252.2) (49.0) Net scheme deficit after deferred tax (241.0) (201.8) (39.2) Assets fell during the period – Positive asset re
Slide 15: Cash flow and financing
Cash flow and financing 2014 2013 Change £m £m £m Operating profit 105.5 108.0 (2.5) Depreciation 24.5 26.4 (1.9) Pension funding (18.2) (19.0) 0.8 Net capital expenditure (6.2) (7.3) 1.1 Net interest (3.6) (5.4) 1.8 Restructuring charges (14.0) (9.9) (4.1) Taxation (17.3) (22.0) 4.7 Dividends from
Slide 16: Current trading and outlook
Current trading and outlook Solid performance in 2014 with growth in EPS, strong cash flow and increased financial flexibility Proposed final dividend of 3 pence per share for 2014 2015 revenue trends will be adversely impacted by title closures in the South (£4.5 million) and changes to the newspri
Slide 17: Simon Fox, Chief Executive
Simon Fox CHIEF EXECUTIVE Trinity Mirror plc 16
Slide 18: Areas of strategic focus
Areas of strategic focus Strategic focus KPI Measurement Circulation volume and revenue Protecting and revitalising our Outperform print ahead of the market core brands in print trends Print advertising volume and revenue ahead of the market Digital audience (unique user and Growing our existing bra
Slide 19: Protecting and revitalising our core brands in print
Protecting and revitalising our core brands in print 18 Trinity Mirror plc
Slide 20: Our print reach
Protecting and revitalising our core brands in print Our print reach Continuing to Circulation of the Daily Mirror outperformed the red top market outperform the throughout 2014 market Growing group of Over 70,000 daily Mirror e-edition (Monday to Friday) readers in e-edition readers January 2015 Ov
Slide 21: Year of terrific journalism
Protecting and revitalising our core brands in print Year of terrific journalism Leading the news agenda Trinity Mirror plc 20
Slide 22: Keep our print product offerings relevant
Protecting and revitalising our core brands in print Continue to challenge and keep our print product offerings relevant Launch – Sunday Echo in Liverpool in January 2014 Rationalisation – South portfolio in November 2014 Digital-only publishing model in Reading – The Visiter in March 2015, covering
Slide 23: Gaining market share in national print advertising
Protecting and revitalising our core brands in print Gaining market share in national print advertising Trinity Mirror plc 22
Slide 24: Trinity Mirror Solutions – Invention
Protecting and revitalising our core brands in print Trinity Mirror Solutions – Invention Trinity Mirror plc 23
Slide 25: Aldi partnership
Protecting and revitalising our core brands in print Aldi partnership – Aldi targeting Modal Britain’s savvy shoppers Some of our other partners include: Trinity Mirror plc 24
Slide 26: Growing our existing brands onto digital delivery channels
Growing our existing brands onto digital delivery channels 25 Trinity Mirror plc
Slide 27: UK advertising market
Growing our existing brands onto digital delivery channels UK advertising market Latest industry forecast shows 2015 to be the year digital advertising will account for half of total advertising spend in the UK – Total UK advertising market forecast to reach £15.8 billion in 2015 – digital advertisi
Slide 28: Our digital revenues
Growing our existing brands onto digital delivery channels Our digital revenues Publishing digital revenues – 2013 and 2014 Publishing digital revenues – 2014 +39% +47% +101% 0% Source: TM information Trinity Mirror plc 27
Slide 29: Monetising digital
Growing our existing brands onto digital delivery channels Monetising digital Industry Trinity Mirror Upskilling of sales teams Direct sales between Enhanced our regional websites’ publishers and digital classified platforms and agencies/advertisers Direct / local rolled out new platforms for accoun
Slide 30: Digital audience growth continues
Growing our existing brands onto digital delivery channels Digital audience growth continues National newsbrands average monthly UUs – Trinity Mirror Group monthly page views 2014 vs 2013 (%) Average monthly PVs: +97% yoy in 2014 Source: Omniture (includes desktop, mobile and apps) Source: ABCe 81.7
Slide 31: Our scale in digital
Growing our existing brands onto digital delivery channels Our scale in digital Newsbrands digital audience in the UK (m) Mail Online Trinity Mirror Guardian Telegraph Source: Comscore multi-platform – UK only, December 2014 Trinity Mirror plc 30
Slide 32: All our newsrooms transformed
Growing our existing brands onto digital delivery channels All our newsrooms transformed… All our newsrooms transformed Improvements in underlying products Focused on mobile, social and video Trinity Mirror plc 31
Slide 33: Regional digital content strategy
Growingdigital Driving our existing brands onto digital delivery channels audience Regional digital content strategy Memorable content Coverage of big events in a way no one else can or will Going Live Instant coverage whenever we can to keep users longer Social content Make people smile and celebra
Slide 34: Regional digital content strategy
Growingdigital Driving our existing brands onto digital delivery channels audience Regional digital content strategy Empowering Set agenda and help people get involved Fan First sport “Tell us something we don’t know” approach to football Info Stuff people can use. Be familiar in search and a truste
Slide 35: Growing our existing brands onto digital delivery channels
Growing our existing brands onto digital delivery channels Trinity Mirror plc 34
Slide 36: Relentless focus on efficiency and cost management
Continuing our relentless focus on efficiency and cost management 35 Trinity Mirror plc
Slide 37: Efficiency and cost management
Continuing our relentless focus on efficiency and cost management Cost management remains a key area of focus We delivered £15 million of structural cost savings in 2014 – Cost savings after increased digital investment of £8 million – Expect to deliver structural cost savings of £10 million in 2015
Slide 38: Launching, developing, investing in or acquiring new businesses
Launching, developing, investing in or acquiring new businesses built around distinctive content or audience 37 Trinity Mirror plc
Slide 39: Pinpoint and Local World
Launching, developing, investing in or acquiring new businesses built around distinctive content or audience Pinpoint Local World Launched during 2014 Our investment continues to deliver 107 advertisers including strong returns for the second year Post Office, B&Q, Ikea, running Domino’s and Paddy P
Slide 40: In summary…
In summary… 39 Trinity Mirror plc
Slide 41: Summary
Summary Delivering our strategy Strong financial performance Increased financial flexibility Confident that performance for 2015 will be in line with expectations Trinity Mirror plc 40
Slide 42: Thank you
THANK YOU Questions Trinity Mirror plc
Slide 43: Appendices
Appendices 42 Trinity Mirror plc
Slide 44: Income statement
Income statement 2014 2013 2014 2013 Statutory Statutory Adjusted* Adjusted* £m £m £m £m Group revenue 636.3 663.8 636.3 663.8 Operating profit/(loss) 98.6 (134.8) 105.5 108.0 Adjusted operating profit 105.5 108.0 105.5 108.0 Non-recurring items 15.2 (224.9) - - Pension administrative expenses (3.2)
Slide 45: Balance sheet
Balance sheet Dec Dec 2014 2013 £m £m Intangible assets 680.9 683.1 Property, plant and equipment 317.7 337.6 Investment in associates 41.4 26.8 Retirement benefit assets 17.8 15.7 Deferred tax assets 62.1 57.0 Derivative financial instruments 3.2 1.9 Non-current assets 1,123.1 1,122.1 Cash and cash
Slide 46: Restatement of 2013 results and revenue trends
Restatement of 2013 results As reported fish4 As restated 2013 2013 2013 £m £m £m Publishing 576.4 2.0 578.4 Specialist Digital 18.7 (2.0) 16.7 Revenue 595.1 - 595.1 Publishing 118.5 - 118.5 Specialist Digital 0.4 - 0.4 Operating profit 118.9 - 118.9 Revenue trends Q1 Q2 H1 Q3 Q4 H2 FY Publishing (3
Slide 47: Reconciliation of statutory results to adjusted results
Reconciliation of statutory results to adjusted results Non- recurring Pension Restructuring Finance Tax Statutory items Amortisation charges charges costs items Adjusted results (a) (b) (c) (d) (e) (f) results £m £m £m £m £m £m £m £m 2014 Revenue 636.3 - - - - - - 636.3 Operating profit 98.6 (15.2)
Slide 48: Cash flow
Cash flow 2014 2013 £m £m Statutory operating profit 98.6 (134.8) Depreciation 24.5 26.4 Pension funding (15.0) (16.2) Share of associates results (30.6) (3.3) Impairment of goodwill and intangible assets - 225.0 Other (including movements in working capital) 12.6 (4.2) Cash flows from operating act
Slide 49: Reconciliation of net debt and financial covenants
Reconciliation of net debt Dec Dec 2014 2013 £m £m Statutory net debt (13.1) (88.2) Loan notes at period end exchange rate 65.3 102.4 Loan notes at swapped exchange rate (68.3) (112.5) Cross-currency interest rate swaps (3.2) 1.3 Contracted net debt (19.3) (97.0) Financial covenants Minimum Maximum
Slide 50: Pension scheme assets
Pension scheme assets 2014 % 2013 % £m of total £m of total UK equities 219.6 14.1% 223.7 14.3% US equities 189.3 12.1% 159.0 10.2% Other overseas equities 251.2 16.1% 230.3 14.7% Total equities 660.1 42.3% 613.0 39.2% Property 26.8 1.7% 28.2 1.8% Corporate bonds 248.7 15.9% 264.7 16.9% Fixed intere
Slide 51: Provisions and associates
Provisions Share-based Payments Property Restructuring Other Total £m £m £m £m £m At 29 December 2013 (3.7) (11.0) (3.4) (6.0) (24.1) Released/(charged) to income statement 1.5 (1.1) (14.0) (12.7) (26.3) Utilisation of provision 0.8 3.1 13.8 2.5 20.2 At 28 December 2014 (1.4) (9.0) (3.6) (16.2) (30.
Slide 52: Group revenue
Group revenue 2014 2013 Specialist Specialist Group Publishing Printing Digital Central Group Publishing Printing Digital Central £m £m £m £m £m £m £m £m £m £m Circulation 279.8 279.8 - - - 285.8 285.8 - - - Advertising 242.5 237.7 - 4.8 - 262.7 255.5 - 7.2 - Print 209.2 209.2 - - - 236.3 236.3 - -
Slide 53: National newspaper advertising market share (volumes)
National newspaper advertising market share (volumes) UK 2014 Dailies 2014 2013 1. Daily Mirror 18.5% 18.4% 2. Sun 19.9% 20.1% 3. Daily Star 16.3% 16.6% 4. Daily Mail 21.1% 20.9% 5. Daily Express 24.2% 24.0% 100.0% 100.0% Sundays 2014 2014 2013^ 1. Sunday Mirror 17.6% 17.1% 2. Sunday People 10.9% 10
Slide 54: Trinity Mirror plc
Trinity Mirror plc