N&S Results
"This strong financial base enables the group to continually invest in new ventures and explore new opportunities in media both in the UK and internationally"
Northern & Shell Network's underlying financial results demonstrate management's capability and clear focus throughout the Group's media activities. Turnover has increased by £93.3million (28.7 per cent) since 2001, the first full year after acquiring Express Newspapers, with all growth being organic through brand development and consolidation within new and existing markets.
Underlying EBITDA (adjusted earnings before interest, tax, depreciation and amortisation) for 2006 was £83.9million, up £25.9million (44.6 per cent) on 2001, underlining the Group's continued growth and success. Underlying EBITDA (like for like) excludes items which are exceptional (non-recurring in nature), changes in such items as Chairman's emoluments that vary year on year, and certain other items which include changes in the pension scheme accounting, restructuring costs and start-up operating losses incurred in respect of the launch of the American and Australian editions of OK! Magazine. These items are considered one-off in nature by management but not regarded as exceptional for statutory accounting purposes.
The Network's balance sheet carries a very low figure for intangible assets (£8.0million as at December 31 2006) compared with many other media companies, with the true brand value of the Daily Express, Sunday Express, Daily Star and Daily Star Sunday not being reflected in the balance sheet. There is also no value attributed to the highly successful magazines, OK!, New! and Star, nor the television channels.
The Network has a small amount of debt relative to the earnings and net assets of the Group (net debt of £24.1million at December 31 2006). This strong financial base enables the Group to continually invest in new ventures and explore new opportunities in media in the UK and internationally, as demonstrated recently by the Group's successful launch of OK! America and OK! Australia.
2006 Group Report & Financial Statements
| Summary of underlying results | 1999 £'000 |
2000 £'000 |
2001 £'000 |
2002 £'000 |
2003 £'000 |
******2004 £'000 |
2005 £'000 |
2006 £'000 |
|---|---|---|---|---|---|---|---|---|
| Turnover including JVs | 51,959 | 96,511 | 373,277 | 387,442 | 421,381 | 471,447 | 460,124 | 460,527 |
| Turnover excluding JVs | 51,959 | 91,303 | 325,277 | 347,592 | 370,784 | 419,108 | 409,321 | 418,540 |
| Profit before interest & tax | 3,153 | 7,764 | 31,887 | 11,958 | (15) | 12,317 | 8,226 | 9,069 |
| Exceptional items | - | 2,250 | 7,134 | 934 | - | (12,072) | - | - |
| Amortisation, goodwill and trademarks | 8 | 153 | 1,466 | 3,273 | 3,869 | 3,960 | 3,940 | 3,940 |
| Chairman's remuneration | 5,877 | 3,434 | 8,848 | 20,983 | 46,234 | 51,735 | 27,280 | 40,662 |
| Pension adjustments - SSAP 24/FRS 17***/****** | - | - | (1,800) | 1,400 | 4,500 | 2,500 | (2,600) | (7,400) |
| Other accounting adjustments**** | 1,020 | 1,409 | 663 | 2,093 | 3,665 | 18,575 | 4,102 | 8,573 | Investment start up losses***** | - | - | - | - | - | - | 28,300 | 19,600 |
| Underlying EBITA* | 10,058 | 15,010 | 48,198 | 40,641 | 58,253 | 77,015 | 69,248 | 74,444 |
| Depreciation | 659 | 1,183 | 9,841 | 9,212 | 8,904 | 8,522 | 9,061 | 9,499 |
| Underlying EBITDA** | 10,717 | 16,193 | 58,039 | 49,853 | 67,157 | 85,537 | 78,309 | 83,943 |
* EBITA is adjusted earnings before interest, tax and amortisation
** EBITDA is adjusted earnings before interest, tax, depreciation and amortisation
*** Pension adjustments - SSAP 24 comprises the net effect on the profit and loss account for the year, arising from the difference between pension costs charged in the accounts and the amounts funded to date in accordance with SSAP 24. Pension adjustments - FRS 17 comprise the current service costs, past service costs and employer contributions in respect of funding the defined benefit pension schemes.
**** Other accounting adjustments include the alignment of joint venture accounting policies and items which the Company considers are non-recurring in nature but are not disclosed as exceptional for statutory accounting purposes, such as redundancy costs, costs in relation to the move to new corporate headquarters and Employer's NI on Chairman's remuneration (where appropriate)
***** Investment start up losses include start up operating losses incurred in respect of the American and Australian editions of OK! Magazine.
****** The adoption of FRS 17, 'Retirement Benefits', in 2005 represents a change in accounting policy and the 2004 figures have been restated accordingly.