CARLTON COMMUNICATIONS Plc Interim Results for the six months ended 31 March 2003
Unaudited consolidated profit and loss account
Six months ended 31 March
2003
-------------------------- ------- ---------- ---------- -------
Continuing Discontinued Total
operations operations
Note £m £m £m
-------------------------- ------- ---------- ---------- -------
Turnover 508.5 - 508.5
Less: share of joint (34.6) - (34.6)
ventures' ------- ---------- ---------- -------
--------------------------
Group turnover 473.9 - 473.9
-------------------------- ------- ---------- ---------- -------
Operating costs before (444.5) - (444.5)
exceptionals
Exceptional operating items (0.8) - (0.8)
-------------------------- ------- ---------- ---------- -------
Total operating costs (445.3) - (445.3)
-------------------------- ------- ---------- ---------- -------
Group operating profit 28.6 - 28.6
Share of operating results of 2.1 - 2.1
joint ventures
Joint ventures' goodwill (1.6) - (1.6)
amortisation
Share of operating results of 0.6 - 0.6
associated companies
Investment income 2.3 - 2.3
-------------------------- ------- ---------- ---------- -------
32.0 - 32.0
Profit on sale of businesses - 10.6 10.6
Loss on termination of - - -
businesses ------- ---------- ---------- -------
--------------------------
Profit on ordinary activities 32.0 10.6 42.6
before interest
Net interest payable (5.6) - (5.6)
-------------------------- ------- ---------- ---------- -------
Profit on ordinary activities 26.4 10.6 37.0
before taxation
Taxation 1 (11.2) (0.2) (11.4)
-------------------------- ------- ---------- ---------- -------
Profit on ordinary activities
after taxation 15.2 10.4 25.6
Dividends equity and
non-equity 2 (18.7) - (18.7)
-------------------------- ------- ---------- ---------- -------
Retained profit/(loss) (3.5) 10.4 6.9
-------------------------- ------- ---------- ---------- -------
Unaudited prior period consolidated profit and loss acc ount
Six months ended 31 March
2002
------------------------ ------- ---------- ----------- --------
Continuing Discontinued Total
operations operations
Note £m £m £m
----------------------- ------- ----------- ----------- --------
Turnover 524.8 61.0 585.8
Less: share of joint (21.7) (61.0) (82.7)
ventures' ------- ----------- ----------- --------
-----------------------
Group turnover 503.1 - 503.1
----------------------- ------- ----------- ----------- --------
Operating costs before (482.1) - (482.1)
exceptionals
Exceptional operating items (4.2) (4.2)
----------------------- ------- ----------- ----------- --------
Total operating costs (486.3) - (486.3)
---------------------- ------- ----------- ----------- --------
Group operating profit 16.8 - 16.8
Share of operating results of - (99.1) (99.1)
joint ventures
Joint ventures' goodwill (0.9) - (0.9)
amortisation
Share of operating results of (4.6) (2.6) (7.2)
associated companies ------- ----------- ----------- --------
----------------------
11.3 (101.7) (90.4)
Profit on sale of businesses - 18.5 18.5
Loss on termination of - (99.0) (99.0)
businesses ------- ----------- ----------- --------
----------------------
Profit/(loss) on ordinary 11.3 (182.2) (170.9)
activities before interest
Net interest payable (8.5) - (8.5)
---------------------- ------- ----------- ----------- --------
Profit/(loss) on ordinary 2.8 (182.2) (179.4)
activities before taxation
Taxation 1 (4.7) 6.1 1.4
---------------------- ------- ----------- ----------- --------
Loss on ordinary activities (1.9) (176.1) (178.0)
after taxation
Dividends equity and 2 (27.3) - (27.3)
non-equity ------- ----------- ----------- --------
----------------------
Retained loss (29.2) (176.1) (205.3)
---------------------- ------- ----------- ----------- --------
Unaudited consolidated balance sheet
31 March 31 March 30 September
2003 2002 2002
£m £m £m
------------------------------- -------- -------- --------
Fixed Assets
Intangible assets 313.3 329.4 319.5
Tangible assets 106.5 114.3 110.3
Investments in joint ventures:
-------- -------- --------
Share of gross assets 50.1 18.0 46.3
Share of gross liabilities (53.4) (14.6) (43.9)
Loans to joint ventures 28.6 0.5 18.9
Goodwill 62.8 35.7 58.2
-------- -------- --------
88.1 39.6 79.5
Investments in associated undertakings 8.9 1.9 6.1
Other investments 449.2 422.3 409.9
-------- -------- --------
Total fixed asset investments (note 4) 546.2 463.8 495.5
------------------------------- -------- -------- --------
966.0 907.5 925.3
Current Assets
Stocks 6.2 5.0 6.3
Programme and film rights 169.8 184.0 178.5
Debtors: amounts falling due within one 165.6 201.9 170.3
year
Debtors: amounts falling after more than 22.1 12.9 17.6
one year
Investments 51.5 40.5 40.6
Cash and other liquid funds 476.4 695.0 552.9
------------------------------- -------- -------- --------
891.6 1,139.3 966.2
Creditors: amounts falling due within one (342.9) (470.8) (401.6)
year (note 5)
------------------------------ -------- --------- --------
Net current assets 548.7 668.5 564.6
Total assets less current liabilities 1,514.7 1,576.0 1,489.9
Creditors: amounts falling due after more
than one year
Loans 895.2 913.3 854.8
Convertible debt 90.9 100.9 91.3
Finance lease creditors 32.4 33.1 31.7
Other creditors 27.5 9.9 30.5
--------------------------- --------- --------- ---------
1,046.0 1,057.2 1,008.3
Provisions for liabilities and charges 27.0 66.2 48.1
--------------------------- --------- --------- ---------
Net assets 441.7 452.6 433.5
--------------------------- --------- --------- ---------
Capital and reserves
Called up share capital 41.8 41.8 41.8
Share premium 151.4 151.4 151.4
Other reserves 16.9 17.1 17.1
Profit and loss account 231.6 242.3 223.2
--------------------------- --------- --------- ---------
Shareholders' funds 441.7 452.6 433.5
--------------------------- --------- --------- ---------
Unaudited statement of cash flows
Six months to Six months to Year to 30
31 March 31 March September
2003 2002 2002
£m £m £m
------------------------------ ---------- ---------- ---------
Operational cash flows
Operating profit 28.6 16.8 58.0
Depreciation and amortisation 17.8 22.7 42.4
Movement in working capital (33.0) (39.1) (11.6)
Sale of current asset investments 32.6 173.4 179.0
Non-cash fixed asset impairment - 1.0 1.8
Profit on sale of fixed assets - - (0.2)
------------------------------ ---------- ---------- ---------
Cash flow from operating 46.0 174.8 269.4
activities ---------- ---------- ---------
------------------------------
Dividends received from joint
ventures and associated
undertakings 1.1 - 0.8
------------------------------ ---------- ---------- ---------
Returns on investments and servicing
of finance
Interest received 33.2 20.2 43.4
Interest paid (22.1) (31.5) (61.4)
Preference dividends paid (5.3) (5.3) (10.5)
------------------------------ ---------- ---------- ---------
5.8 (16.6) (28.5)
Taxation (7.4) - 4.2
------------------------------ ---------- ---------- ---------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (6.6) (4.6) (11.7)
Purchase of intangible assets (2.0) (0.7) (0.2)
ITV Digital/ITV Sport Channel (21.0) - -
closure costs
Disposal of intangible and tangible 0.2 0.2 0.9
fixed assets
Payments to ITV Digital/ITV Sport - (73.0) (96.8)
Channel
Other net investments (13.0) (6.5) (18.4)
------------------------------ ---------- ---------- ---------
(42.4) (84.6) (126.2)
Cash inflow before acquisitions,
management of liquid resources and
financing 3.1 73.6 119.7
------------------------------ ---------- ---------- ---------
Acquisitions and disposals (0.3) 28.5 (7.8)
------------------------------ ---------- ---------- ---------
Equity dividends paid - - (55.5)
------------------------------ ---------- ---------- ---------
Management of liquid resources (45.0) - -
------------------------------ ---------- ---------- ---------
Financing
Share issues - - -
Net change in long-term funding (34.3) 361.6 266.3
------------------------------ ---------- ---------- ---------
(34.3) 361.6 266.3
------------------------------ ---------- ---------- ---------
(Decrease)/increase in cash in the
period (76.5) 463.7 322.7
------------------------------ ---------- ---------- ---------
Unaudited reconciliation of net cash flow to movements in net debt
Six months to Six months to Year to 30
31 March 31 March September
2003 2002 2002
£m £m £m
--------------------------- ---------- ---------- ----------
(Decrease)/increase in cash in the (76.5) 463.7 322.7
period
Cash outflow/(inflow) from decrease 34.3 (361.6) (269.6)
/(increase) in debt
Cash outflow from increase in
liquid financial instruments 45.0 - -
--------------------------- ---------- ---------- ----------
Change in net debt resulting from 2.8 102.1 53.1
cash flows
Exchange differences and non-cash
movements (40.0) (3.9) (6.4)
--------------------------- ---------- ---------- ----------
Movement in net debt in the (37.2) 98.2 46.7
period
Opening net debt (459.9) (506.6) (506.6)
--------------------------- ---------- ---------- ----------
Closing net debt (497.1) (408.4) (459.9)
--------------------------- ---------- ---------- ----------
Exchange
At 1 October Cash and non-cash At 31 March
2002 flows movements 2003
Analysis of net debt £m £m £m £m
---------------------- ----------- -------- ----------- --------
Cash at bank and in 552.9 (76.5) - 476.4
hand
Liquid financial - 45.0 - 45.0
instruments
Loans due within one (35.0) 35.0 - -
year
Loans due after more (854.8) - (40.4) (895.2)
than one year
Convertible debt (91.3) - 0.4 (90.9)
Finance lease (31.7) (0.7) - (32.4)
creditors ----------- -------- ----------- --------
----------------------
Statutory net debt (459.9) 2.8 (40.0) (497.1)
---------------------- ----------- -------- ----------- --------
Hedged exchange - - 26.2 26.2
differences ----------- -------- ----------- --------
----------------------
Adjusted net debt (459.9) 2.8 (13.8) (470.9)
---------------------- ----------- -------- ----------- --------
Carlton has purchased credit linked notes totalling £45.0m from an 'AA' rated
bank. The notes earn a return of libor plus 1.5% and mature prior to the year
end. Carlton will receive the full nominal value of the notes at maturity
provided that there has been no credit event (effectively default) on its
borrowings.
Unaudited reconciliation of movements in shareholders' funds
Six months to Six months to Year to 30
31 March 2003 31 March 2002 September
2002
£m £m £m
---------------------------- ---------- ---------- ---------
Profit/(loss) for the period 25.6 (178.0) (156.0)
Ordinary and preference (18.7) (27.3) (66.0)
dividends
Exchange differences on foreign 1.5 (5.0) (7.3)
currency net investments
New share capital issued - 0.7 0.7
Other reserve movements (0.2) (1.5) (1.6)
---------------------------- ---------- ---------- ---------
Net increase/(decrease) in
shareholders' funds 8.2 (211.1) (230.2)
Shareholders' funds at
beginning of the period 433.5 663.7 663.7
---------------------------- ---------- ---------- ---------
Shareholders' funds at the end
of the period 441.7 452.6 433.5
---------------------------- ---------- ---------- ---------
Unaudited attributable shareholders' funds
Six months to Six months to Year to 30
31 March 2003 31 March 2002 September 2002
£m £m £m
---------------------------- ---------- ---------- ---------
Equity shareholders' funds 1,212.8 1,223.7 1,207.5
(before goodwill)
Cumulative goodwill written
off directly to reserves (934.7) (934.7) (937.6)
---------------------------- ---------- ---------- ---------
Equity shareholders' funds 278.1 289.0 269.9
Non-equity shareholders' 163.6 163.6 163.6
funds ---------- ---------- ---------
----------------------------
Total shareholders' funds 441.7 452.6 433.5
---------------------------- ---------- ---------- ---------
Unaudited statement of total recognised gains and losses
Six months to Six months to Year to 30
31 March 2003 31 March 2002 September
2002
£m £m £m
---------------------------- ---------- ---------- ---------
Profit/(loss) for the period 25.6 (178.0) (156.0)
Exchange differences on
foreign currency net
investments 1.5 (5.0) (7.3)
---------------------------- ---------- ---------- ---------
Total recognised gains and
losses 27.1 (183.0) (163.3)
---------------------------- ---------- ---------- ---------
(1) Tax
Based on the estimated tax rate for the full year, before any adjustments in
respect of taxation for prior years, taxation on profits from continuing
operations before exceptional operating items and amortisation is calculated at
approximately 31%. Tax relief of £0.2m is attributed to the exceptional
operating items in continuing operations. This results in a tax charge on
continuing operations of £11.2m. Tax of £0.2m is attributed to the exceptional
credits included in discontinued operations which largely relate to the release
of litigation provisions in respect of the sale of Technicolor in 2001. Included
in taxation is overseas taxation of £0.5m.
(2) Dividends
The interim dividend of 2.0p per share will be paid on 15 August 2003 to holders
of Ordinary shares on the register at the close of business on 4 July 2003.
(3) Earnings per share
The reconciliation of earnings used in the calculation of earnings per share is
set out below:
Six months ended 31 Six months ended 31
March 2003 March 2002
--------------- ---------------
Earnings Pence Earnings Pence
£m per £m per
share share
------------------------- ---------- -------- ---------- --------
Reconciliation of earnings
Continuing pre-tax profits 26.4 2.8
Tax (11.2) (4.7)
Exceptional operating items 0.8 4.2
Tax on exceptional operating (0.2) (1.2)
items
Preference dividend (5.3) (5.3)
------------------------- ---------- -------- ---------- --------
Continuing operations -
pre-exceptionals 10.5 1.6 (4.2) (0.6)
Exceptional operating items after
tax (0.6) (0.1) (3.0) (0.5)
------------------------- ---------- -------- ---------- --------
Continuing operations - 9.9 1.5 (7.2) (1.1)
post-exceptionals
Discontinued operations 10.4 1.5 (176.1) (26.2)
------------------------- ---------- -------- ---------- --------
Basic earnings 20.3 3.0 (183.3) (27.3)
------------------------- ---------- -------- ---------- --------
Continuing operations - 10.5 1.6 (4.2) (0.6)
pre-exceptionals
Exceptional operating items after
tax (0.6) (0.1) (3.0) (0.5)
------------------------- ---------- -------- ---------- --------
Continuing operations - 9.9 1.5 (7.2) (1.1)
post-exceptionals
Discontinued operations 10.4 1.5 (176.1) (26.2)
------------------------- ---------- -------- ---------- --------
Diluted earnings 20.3 3.0 (183.3) (27.3)
------------------------- ---------- -------- ---------- --------
Reconciliation of earnings
Continuing operations - 10.5 1.6 (4.2) (0.6)
pre-exceptionals (as above)
Amortisation 9.3 1.4 12.6 1.9
------------------------- ---------- -------- ---------- --------
Continuing operations -
pre-exceptionals and
amortisation 19.8 3.0 8.4 1.3
------------------------- ---------- -------- ---------- --------
(4) Fixed asset investments
£m
-------------------------------- --------
At 30 September 2002 495.5
Loans advanced to joint ventures and associates 10.9
Revaluation of Thomson shares 39.3
Other 0.5
-------------------------------- --------
At 31 March 2003 546.2
-------------------------------- --------
(5) Creditors: amounts falling due within one year
31 March 2003 31 March 2002 30 September 2002
£m £m £m
-------------------- ----------- ----------- -----------
Creditors 203.4 273.8 244.6
Short term borrowings - 56.1 35.0
Dividends payable 47.0 55.6 33.5
Taxation 92.5 85.3 88.5
-------------------- ----------- ----------- -----------
342.9 470.8 401.6
-------------------- ----------- ----------- -----------
The financial information set out in this announcement does not constitute the
Company's statutory accounts. Statutory accounts for 2002, which received an
auditors' report that was unqualified and did not contain any statement
concerning accounting records or failure to obtain necessary information and
explanations, have been filed with the Registrar of Companies.
The interim report is expected to be posted to all shareholders by 16 June 2003.
The full text of the interim statement is available on
INDEPENDENT REVIEW REPORT TO CARLTON COMMUNICATIONS PLC
INTRODUCTION
We have been instructed by the company to review the financial information which
comprises the profit and loss account, the balance sheet, the cash flow
statement, the statement of total recognised gains and losses, the
reconciliation of movements in shareholders funds and the related notes. We have
read the other information contained in the interim report for any apparent
misstatements or material inconsistencies with the financial information.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information. This report, including the conclusion, has been prepared
for and only for the company for the purpose of the Listing Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
London
21 May 2003