Transcript INDEPENDENT NEWS & MEDIA PLC

INDEPENDENT
NEWS & MEDIA PLC.
1999 Full Year Results
29th March, 2000
INTRODUCTION
Liam P Healy
Group Chief Executive
HIGHLIGHTS FOR THE YEAR
• Strong performances in Ireland, Australia and New Zealand
• iTouch expands internationally
• Unison launches “internet on TV” initiative in Ireland
• UK Independent makes circulation gains - losses reduced
• South African economy set for recovery
• E 200 million 10 year bond issued at coupon of 5.75%
• Group restructuring plan substantially completed
• Successful bid for Belfast Telegraph since year end
GROUP PROFILE
James J Parkinson
Group Finance Director
GROUP PROFILE
• Listing Information:
PLC listed on the Irish, London and New Zealand Stock Exchanges
• Current Shareholder Profile:
Dr AJF O’Reilly
Irish Institutions
UK Institutions
US Institutions
European Institutions
Private
Board
• Market Capitalisation:
E 2.7bn
IR£2.1bn
28%
27%
18%
12%
6%
5%
4%
STG£1.6bn
LEADING MEDIA BRANDS
Ireland
United Kingdom
•No. 1 National Publisher
•The Independent, Independent on Sunday
•No. 1 Regional Publisher
•No. 1 Recruitment Magazine Publisher
•No. 1 Newspaper/ Magazine Distributor
•No. 2 Rugby/ No. 1 U.S. Football Publisher
•No. 2 Cable/ MDS Operator
•No. 1 Paid-For Regional Publisher in London
Portugal
•No. 1 National Publisher
Hong Kong
•No. 2 Transport Adv.
South Africa
Australia
•No. 1 Regional Publisher
New Zealand
•No. 1 National Publisher
•No. 2 Radio Operator
•No. 1 National Publisher
•No. 1 Regional Publisher
•No. 1 Outdoor/ Transport Adv
•No. 1 Regional Publisher
•No. 1 Commercial Printer
• No. 1 Pay-TV Movies
•No. 1 Radio Operator
•No. 1 Commercial/ Magazine Printer
•No. 1 Security Printer
LEADING MEDIA BRANDS
Ireland
United Kingdom
•No. 1 National Publisher
•The Independent, Independent on Sunday
•No. 1 Regional Publisher
•No. 1 Recruitment Magazine Publisher
•No. 1 Newspaper/ Magazine Distributor
•No. 2 Rugby/ No. 1 U.S. Football Publisher
•No. 2 Cable/ MDS Operator
•No. 1 Paid-For Regional Publisher in London
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•
•
•
•
DominantPortugal
media company in 4 of 5 markets
Market share > 50%
160 newspaper titles/ 45m readers per week
Largest radio/outdoor operator in Australasia
Fast-growing new media operator
•No. 1 National Publisher
South Africa
Australia
Hong Kong
•No. 2 Transport Adv.
•No. 1 Regional Publisher
New Zealand
•No. 1 National Publisher
•No. 1 Radio Operator
•No. 1 National Publisher
•No. 1 Regional Publisher
•No. 1 Outdoor/ Transport Adv
•No. 1 Regional Publisher
•No. 1 Commercial Printer
• No. 1 Pay-TV Movies
•No. 1 Radio Operator
•No. 1 Commercial/ Magazine Printer
•No. 1 Security Printer
GROUP STRATEGY
• Geographically diversified
• Tight focus on CORE competencies
Publishing
Outdoor
New Media / Electronic
• Brand market-leadership positions
• Operating margin enhancements
– Target + 20%
GROUP STRATEGY
• Primary content provider across diverse media platforms
– Migrate into revenue enhancing new media platforms
• Growth orientated through organic growth & earnings enhancing
investments
• Deliver double-digit earnings growth & enhanced shareholder value
1999 RESULTS
HEADLINE NUMBERS
1999
Em
Turnover
1998
Em
Change
%
1,168.2
798.8
+ 46.2
Operating Profit *
192.4
138.7
+ 38.7
Profit Before Tax
142.7
85.4
+ 67.1
70.1
58.7
+ 19.4
EPS **
30.72c
24.56c
+ 25.1
DPS
13.33c
11.43c
+ 16.7
Net Profit
* Continuing activities before exceptionals
** Before exceptional items and amortisation
SUMMARY BALANCE SHEET
1999
Em
1998
Em
2,100
1,466
(15)
(54)
Net Debt
(868)
(568)
Total Shareholders’ Funds *
1,217
844
Interest Cover (EBITDA/Interest)
4.8x
3.3x
Net Debt to EBITDA
3.8x
3.6x
Fixed Assets *
Other Net Liabilities
* Including the revalued elements of mastheads
SUMMARY CASH FLOW
1999
Em
190.6
190.6
1998
Em
86.9
54.1
141.0
Share of Associates & JV’s Results
Depreciation & Amortisation
(5.8)
43.2
(15.3)
32.5
EBITDA
Working Capital Movements
Operating cash flow
Operating cash flow conversion (%)
228.0
(41.5)
186.5
81.8%
158.2
(28.8)
129.4
81.8%
Operating Profit
Restructuring Costs
TEN YEAR PERFORMANCE
Earnings per Share (E)
(Fully diluted before exceptionals & goodwill amortisation)
35
30.72
30
25.36 24.56
25
20.39
20
17.75
14.04 15.16
15
10
9.24
10.72
8.3
5
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
19
90
0
10 Year C.A.G.R.
• Turnover
+22%
• Operating Profit
+27%
• Pre-Tax Profit
+31%
• Earnings Per Share
+14%
• Dividends Per Share
+15%
KEY OPERATIONAL DRIVERS: 1999
• Recovery in key currencies
• Strong performance from Australian operations
• Strong second half performance from New Zealand operations
• Return to double-digit growth in Irish operations
• UK turnaround of Independent titles
• Efficient treasury and tax management
• Successful implementation of E 50m Group-wide restructuring
– > 80% of total planned headcount reductions achieved
CORPORATE ACTIVITY: 1999
• Acquired 100% of South African business
• Increased stake in Australia (APN) to 41%
• Issued 10 year E 200m Eurobond at 5.75%
• New media activities
– i-Touch stake >70%
– Internet Ireland acquired
• Post year end
– Successful bid for Belfast Telegraph
– Significant expansion of i-Touch activity
GROUP TURNOVER BY MARKET
Turnover by Market -- 1999
Total: E 1,168.2m
South Africa
15%
Ireland
27%
UK 13%
New Zealand
22%
Australia 23%
GROUP PROFITS BY MARKET
Operating Profit by Market -- 1999
Total: E 190.6m
Ireland
32%
South Africa
12%
New Zealand
25%
Australia 31%
DIVISIONAL PERFORMANCE
Brendan M. A. Hopkins
Chief Executive - Independent News
& Media (UK)
NEW ZEALAND
1999
Em
1998
Em
Turnover
EBITDA
Operating Profit
253.2
66.7
50.0
208.4
58.2
42.9
Margin (%)
19.7%
20.5%
Change
%
+ 21.5
+ 14.6
+ 16.6
NEW ZEALAND
• Largest publisher - The New Zealand Herald with 71% national
market share and 83% recruitment market share
• Largest regional publisher with 58% market share
• Largest commercial/ magazine printer
• Largest radio operator with 50% + market share
PROSPECTS
• GDP growth of + 3% forecast in 2000
• Significant benefits from restructuring
• Growth in New Zealand Herald circulations
• Strong start to 2000
AUSTRALIA
1999
Em
1998 *
Em
Change
%
Turnover
EBITDA
Operating Profit
275.7
72.1
60.8
243.5
56.7
49.6
+ 13.2
+ 27.1
+ 22.5
Margin (%)
22.1%
20.3%
* including 100% of ARN
AUSTRALIA
• APN News & Media consolidated from 1999
• Strongest performing media stock (EPS)
• Largest regional publisher with 60% + paid penetration
• 2nd largest radio operator with 25% + market share
• Largest outdoor operator with 70% + market share
PROSPECTS
• GDP growth of + 3% forecast in 2000
• Organic growth across all divisions
• Exciting developments in APN Digital
• Syndey Olympics
• Strong start to 2000
SOUTH AFRICA
1999
Em
1998
Em
Turnover
EBITDA
Operating Profit
177.3
28.2
23.3
175.3
31.1
27.0
Margin (%)
13.1%
15.4%
Change
%
+ 1.2
- 9.3
- 13.7
SOUTH AFRICA
• Largest publisher with 14 metropolitan titles achieving 54%
readership market share and 58% of total classified market
• Ongoing circulation gains in Gauteng and Cape
• New media R&D centre in CapeTown
• www.iol.co.za busiest newspaper site
• Successful magazine launches with Condé Nast
PROSPECTS
• GDP growth of + 3% forecast in 2000
• Interest rates down to 14% - Rand stable
• Significant benefits from restructuring
• Positive readership/ circulations
• Positive start to 2000
UNITED KINGDOM
1999
Em
1998 *
Em
Change
%
Turnover
EBITDA
Operating Profit
151.5
(3.3)
(4.8)
142.9
(3.5)
(4.9)
+ 6.0
Margin (%)
(3.1%)
(3.4%)
* based on 100% of UK operation
UNITED KINGDOM
• Significant publisher in national, regional press and magazines
• Regionals: operating margins at top end of UK peer group
• Independent turnaround:
– YOY volumes +4% and Circulation share up to 9.5%
– Second-time Winner of “Editor of the Year”
– Losses significantly reduced
– Group synergies achieved
– Breakeven on track for 2001
PROSPECTS
• Strong advertising/ circulations
• Rapid growth in new media www.independent.co.uk in top 20 content
web sites
• Belfast Telegraph integration
• Overall strong start to 2000
BELFAST TELEGRAPH ACQUISITION
• The Belfast Telegraph
– Northern Ireland’s leading daily newspaper
– Circulates 117,000 Monday-Saturday
– More than 50% home delivered
• The Sunday Life
– Northern Ireland's leading Sunday newspaper
– Circulates 95,000 every Sunday
• Other Titles
– Community Titles, Farm Trader
• Thriving new media business
• Significant printing facilities and freehold
BELFAST TELEGRAPH ACQUISITION
• Earnings enhancing in first year
• Unique metropolitan franchise with strong growth prospects
• Excellent track record with proven management/ editorial team
• Dynamic new media resource
• Automatic referral to UK Competition’s Commission
– Likely timing 4-6 months
– Legal advice positive
– Trinity Mirror joint approach
• Acquisition price: £300m (less £5m debt)
IRELAND
1999
Em
1998 *
Em
Change
%
Turnover
EBITDA
Operating Profit
310.5
69.4
63.3
278.8
59.4
53.9
+ 11.4
+ 16.8
+ 17.4
Margin (%)
20.4%
19.3%
IRELAND
• Largest publisher with 50% market share and 72% readership penetration
• No. 1 title in all 5 newspaper categories
– Readership/ circulations up and Advertising market share up
• Largest regional publisher with 39% market share
• 2nd largest cable/ MDS business (co-owned with TCI Liberty)
– Managing >250,000 subscribers
PROSPECTS
• Continued strong economic growth forecast
• Significant benefits from restructuring
• New “Citywest” production plant (Q42000)
• PHL - broadband network build
• Strong start to 2000
INDEPENDENT DIGITAL
Gavin K. O’Reilly
Chief Executive - Independent News
& Media (Ireland)
GROUP STRATEGY
TO OWN THE
ONLINE
MEDIASPACE
CONTENT CHANNEL
ENHANCE
EXISTING
REVENUE
STREAMS
MARKETING
BUILD
NEW
REVENUE
STREAMS
INDEPENDENT DIGITAL
WAP/ SMS
CELLULAR
• Content
Aggregation
/ Packaging
• Software
Developmen
t
EDUCATION
INTERNET
TELEPHONY
• PrePaid Cards
B2B
• Premium Database
• Residential
Ireland
Ireland
• SME
Worldwide
• Distance Learning
• Network
Provision
Australia
Israel
Ireland
New Zealand
South Africa
United Kingdom
Australasia
• Web “Back Office” Solutions
• Software
Development
Ireland
U.S.A.
Ireland
• E-Commerce Engines, Web
Enabling, Web Design
Australia
• Proprietorial
Software
SOPRANO
• ISP - Commercial/ Consumer
Ireland
Worldwide
Worldwide
Ireland
New Zealand
• B2B Content Solutions
• Software Development
South Africa
SOPRANO
Worldwide
United Kingdom
• Proprietorial Software
DIGITAL BRANDING
• Ireland’s largest consumer ISP
• Set Top Box = market USP and market
first.
• ISP offering broadband multi-media
• PHL’s exclusive “home page” portal for
their 250,000 existing subscribers
• Building substantial phone/ data traffic
for PHL fixed and wireless broadband
(2MB) network
DIGITAL BRANDING
… CONTENT
Independent content
Yellow page directory
Ireland’s largest classified
Shopping mall
27 non-group regional newspaper titles
Horoscopes/ weather/ lifestyle/ entertainment/ chat...
… CHANNEL / MARKETING
Initial 10,000 STB give-away
Annualised +£35m equivalent media spend in participating titles
Channel promotion to 250,000 subscribers
… powered by Independent Digital

Leading Brands

Core Expertise

Content

Channel

Marketing

Enhanced Revenues

New Revenue Streams

New Markets
Delivering
• Earnings Growth
• Capital Values
SUMMARY: INVESTMENT CASE
• Geographically diversified - with tight focus on core competencies
• Brand leadership positions - dominant in 4 out of 5 markets
• Turnaround of UK Independent
• Belfast Telegraph - EPS enhancing
• Increasing value of Irish cable/ telephony business
SUMMARY: INVESTMENT CASE
• Economic recovery in New Zealand and South Africa
• Continuing strong growth in Australia, Ireland and United Kingdom
• Returns enhanced through aggressive restructuring
• Revenue and profit enhancing new media strategy
Strong Double-Digit Earnings Growth
WE ARE COMMITTED TO...
TO DELIVERING DOUBLE-DIGIT EARNINGS GROWTH...
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CORE operational strengths
Unrivalled BRAND dominance
COST Restructuring
Expansionist
CREATING REAL SHAREHOLDER VALUE...
• PHL cable/ telephony network
• Prudent new media strategy
• iTouch
Independent News & Media PLC
1999 Preliminary Results
29th March, 2000