2018 Year-End Results - Independent News & Media PLC
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2018 Year-End Results
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements in this announcement are forward-looking. They represent our
expectations for our business and involve risks and uncertainties. We have based these
forward-looking statements on our current expectations and projections about future
events. We believe that our expectations and assumptions with respect to these
forward-looking statements are reasonable. However, because they involve known and
unknown risks, uncertainties and other factors, which are in some cases beyond our
control, our actual results or performance may differ materially from those expressed or
implied by such forward-looking statements. These forward-looking statements speak
only as of the date of this document and no obligation is undertaken, save as required by
law or by the Listing Rules of Euronext Dublin and/or the UK Listing Authority, to reflect
new information, future events or otherwise.
INM | YEAR END RESULTS 2018 2CONTENTS
1 INM at a glance
2 Strategy
3 Year End Results 2018
4 Subsequent Events
Murdoch MacLennan, Chairman, Independent News & Media PLC, said: “In 2018 we continued to
make progress in implementing our new strategy with the full support of our new Board and our
new Senior Executive Team. We have recorded a financial performance for 2018 ahead of market
expectations and I can assure you that despite the challenges facing the industry the Board and
Senior Executive Team of your Group are both determined and confident that we are heading in the
right direction to build a sustainable business for the future and to create shareholder value.”
INM | YEAR END RESULTS 2018 3INM AT A GLANCE
“WE BELIEVE IN ENRICHING LIVES.
INFORMING, ENTERTAINING AND INSPIRING.
IN ALL WAYS, THE TRUSTED SOURCE”.
Market leading media Group on the Island of Ireland – strong newspaper
and digital presence.
Largest wholesale newspaper distributor on the Island of Ireland which
continues to show profitable growth.
Managing gross assets of €192.3m – employing approx. 800 people.
Headquartered in Dublin, Ireland; listed on Euronext Dublin and London
Stock Exchange.
INM | YEAR END RESULTS 2018 4ICONIC BRANDS
INM | YEAR END RESULTS 2018 5STRATEGY
The INM three year strategy, ‘INM@21’ was approved by the Board of INM in November
2018.
‘INM@21’ builds on a reinforced core, expands into customer-centric offerings, and aims
to future proof the business.
‘INM@21’ is based on three pillars underpinned by 11 workstreams involving; the
optimisation of revenues, reduction of costs, and building the capability to respond to the
changing needs of INM’s audience.
INM | YEAR END RESULTS 2018 6STRATEGY – ‘INM@21’
01 02 03
PROTECT & REINFORCE EXPAND & DEVELOP CUSTOMER-
ENABLE THE FUTURE
THE CORE CENTRIC OFFERINGS
Maximise the revenue through Leverage INMs existing reach and Invest in customer-centric
continuous innovation to deliver brand, and monetise through a systems enabling us to put the
best in class products across all range of digital offerings. customer at the core of the
platforms. business.
Develop paid for membership
Achieve and maintain the most content models. Implement future proof
efficient operating model, not organisational structure.
conflicting with longer terms Consolidate existing position and
strategy. further expand into targeted Irish Build processes and invest in IT
and international verticals. and data analytics to enable data
Consolidate print distribution and driven decision making.
protect the network. Invest to build Reach Group while
maintaining critical route to Invest in our culture and people
market for publishing titles. to transform our business.
INM | YEAR END RESULTS 2018 7STRATEGY - IMPLEMENTATION
• The Board and the Senior Executive Team have been refreshed to provide
the foundation for implementation.
• Implementation underway across the 3 pillars of our Strategy as follows:
Protect & Reinforce the Core: executing operational efficiencies.
Enable the Future: investing in technology, data, analytics,
customer and digital resources.
Expand & Develop Customer-Centric Offerings: utilising
aforementioned investment to develop and monetise a range of
digital offerings.
INM | YEAR END RESULTS 2018 8YEAR-END RESULTS 2018
The Group generated a profit before tax of €24.1m1, ahead of expectations
Key Highlights:
• Total revenue of €191.0m2 was down 2.1% on the prior year (restated under IFRS 15).
• Profit before tax, whilst ahead of expectations, decreased by 15.4% to €24.1m1.
• Total operating costs1 decreased by a net €0.1m in the year. This reflects a reduction in the
Group’s cost base largely offset by costs associated with two acquisitions and investment in
the INM strategy, as well as meeting our risk, legal and regulatory requirements (e.g. cyber-
security and GDPR).
• Total net exceptional charge of €13.3m.
• Balance sheet strengthened, net assets of €89.7m.
• Cash of €81.7m. Continued cash generation offset by once-off cash outflow related to
€13.9m funding of BT pension deficit.
1 Before exceptionals
2 The adoption of IFRS 15 has changed the presentation of the revenue from distribution of third party news and magazine titles from a gross presentation to a net presentation
INM | YEAR END RESULTS 2018 9SUMMARY OF RESULTS
REVENUE PROFIT BEFORE TAX (before exceptional items)
300 40
293.0 41.8
323.4 284.1 18.5
€’m
€’m
200 28.5
161.6 24.1
195.0 191.0
0 0
FY16 FY17 FY18 FY16 FY17 FY18
Turnover (pre IFRS 15 restatement)
Turnover (post IFRS 15 restatement)
NET ASSETS RETIREMENT BENEFIT OBLIGATIONS LIABILITY
100 100 97.3
77.5
89.7 55.6 50.6
€’m
76.1 €’m 39.8
62.3 DC
33.3
41.7 DB
37.7
0 0
17.3
FY16 FY17 FY18 FY16 FY17 FY18
INM | YEAR END RESULTS 2018 10FINANCIAL HIGHLIGHTS – FY 2018
TOTAL REVENUE 1 PROFIT BEFORE TAX2 NET ASSETS
€191M €24.1M €89.7M
2.1% 15.4% €13.6m
Total Advertising Revenue
Reported Op Costs 2 Retirement Benefit
Obligations Liability
8.8% by €0.1M
€26.9M
Circulation Revenue Net Exceptional Charge
€13.3M Cash Balance
6.3% (See slide 13)
€81.7M
Distribution Revenue 1
26.5%
1 The adoption of IFRS 15 has changed the presentation of the revenue from distribution of third party news and magazine titles from a gross presentation to a net presentation
2 Before exceptionals
INM | YEAR END RESULTS 2018 11• Revenues are restated under IFRS
15 - no impact on net profit or net
INCOME STATEMENT assets of the Group. Total revenues
of €191.0m down 2.1% year on
year.
Year Ended 31 December 2018 Year Ended 31 December 2017
• Total operating costs decreased by
a net €0.1m in the year. This
Before reflects a reduction in the Group’s
Before Exceptional Exceptional
Exceptional Exceptional
cost base largely offset by costs
Items Items Total
Items Items associated with two acquisitions
Euro Millions Total (restated) (restated) (restated)
and investment in strategy, GDPR
Revenue 191.0 - 191.0 195.0 - 195.0 and cyber-security costs.
Operating costs (167.4) (14.6) (182.0) (167.5) (12.0) (179.5) • Profit before tax of €24.1m, whilst
ahead of expectations, decreased
Operating profit/(loss) 23.6 (14.6) 9.0 27.5 (12.0) 15.5 by 15.4% on the prior year.
Share of results of • Net tax charge of €1.3m relates to
associates & joint a deferred tax charge of €1.8m
ventures 0.4 - 0.4 0.9 (0.1) 0.8 arising from planned pension
payments during the year and a
Finance income 0.1 0.8 0.9 0.1 - 0.1
release of UK deferred tax assets
Profit/(loss) before based on a reassessment of
taxation 24.1 (13.8) 10.3 28.5 (12.1) 16.4 forecast profits in Northern Ireland
and an exceptional tax credit of
Taxation (charge)/credit (1.8) 0.5 (1.3) (3.9) - (3.9) €0.5m on redundancy and other
Profit/(loss) for the restructuring costs.
year 22.3 (13.3) 9.0 24.6 (12.1) 12.5
• Net exceptional charge of €13.3m
primarily including a non-cash
€7.0m impairment (Northern
Ireland assets), a restructuring
charge of €4.1m and legal expenses
of €3.5m.
INM | YEAR END RESULTS 2018 12EXCEPTIONALS
The Group recorded a total net exceptional charge of €13.3m, which included:
Euro Millions Description
Impairments (7.0) Tangible and intangible assets in Northern Ireland.
Restructuring charge (4.1) Primarily redundancy costs in the Island of Ireland.
Legal expenses (3.5) ODCE/DPC/Inspectors and related matters.
Exceptional finance income 0.8 Re-measurement to fair value of the Group’s pre-existing
50% interest in Reachmount DAC upon obtaining control.
Exceptional tax credit 0.5 Related to redundancy and other restructuring costs.
Total (13.3)
€13.3m
Non cash charge of €8.1m,
cash charge of €5.2m
INM | YEAR END RESULTS 2018 13• Intangible Assets increase driven by
STATEMENT OF FINANCIAL POSITION additions of €9.7m mainly relating to two
acquisitions and computer software,
offset by amortisation charge and FX of
€3.4m and impairments of €2.2m.
• Decrease in tangible assets of €6.5m
31 Dec 31 Dec primarily due to an impairment of
Euro Millions 2018 2017 Δ property, plant and equipment in the
Newry print facility.
• Taxation movement due to reduction of
Intangible Assets 37.7 33.6 4.1
€1.8m in net deferred tax asset and
Tangible Assets 33.6 40.1 (6.5) €0.3m in corporation tax recoverable.
Taxation 6.6 8.7 (2.1)
• Cash balance decrease largely driven by
Cash and Cash Equivalents 81.7 91.5 (9.8) retirement benefit obligations payments
and costs associated with the two new
Retirement Benefit Obligations (50.6) (77.5) 26.9 acquisitions.
Other Net Liabilities (19.3) (20.3) 1.0
• Movement in retirement benefit
Net Assets 89.7 76.1 13.6 obligations primarily driven by deficit
repair/special contribution pension
payments of €21.9m (annual payments of
€8.0m and once-off payment re BT of
€13.9m) and remeasurement gains of
€5.1m.
INM | YEAR END RESULTS 2018 14CASH FLOW
Euro Millions 31 Dec 2018 31 Dec 2017 • EBITDA down €3.5m to €30.3m.
EBITDA 30.3 33.8 • €4.0m movement in
provisions/working capital as a
Movement in provisions/working capital (4.0) (5.0) result of inventory increase due
to acquisitions and timing of
Retirement benefit obligations deficit repair/special contribution payments (21.9) (14.1) supplier payments.
Exceptional expenditure (5.2) (3.9) • Deficit repair/special
contribution pension payments
Cash flows from other operating activities 0.5 (0.9) of €21.9m (annual payments of
€8.0m and once-off payment re BT
Cash (used in)/generated by operating activities (0.3) 9.9 of €13.9m).
Cash flows from investing activities • Exceptional expenditure relates
to legal costs (ODCE, DPC,
Acquisition of subsidiary, net of cash required (5.3) - inspectors and related matters)
along with restructuring costs.
Cash flows from other investing activities (4.1) (2.4)
• Acquisition of subsidiary relates
(Decrease)/increase in cash and cash equivalents (9.7) 7.5 to the acquisitions of the trading
business and certain assets of
Foreign exchange losses (0.1) (0.8) Hegadon Ltd and Reachmount
DAC.
Net (decrease)/increase in cash and cash equivalents (9.8) 6.7
• Cashflows from other investing
Balance at the beginning of the year 91.5 84.8 activities primarily relates to
capital expenditure on tangible
Cash and cash equivalents at end of the year 81.7 91.5 and intangible assets.
INM | YEAR END RESULTS 2018 15SUBSEQUENT EVENTS
• In January 2019, Ms. Kate Marsh was appointed to the Board as an
independent non-executive director.
• The former Chief Financial Officer, Mr. Ryan Preston, departed the Group
by mutual consent at the end of January 2019. INM is currently engaged
in a process to appoint a successor to Mr. Ryan Preston and this
appointment will be announced in due course.
• There were no other events since the year end that would require
disclosure or adjustment in the financial statements.
INM | YEAR END RESULTS 2018 16SUMMARY
Revenue reported under IFRS 15, no impact on net
01
profit or net assets.
02 Profit before Tax €24.1m1 ahead of expectations.
Net assets increase to €89.7m with a cash balance
03
of €81.7m.
Retirement benefit obligations managed down from
04 €97.3m at the end of 2016 to €50.6m at the end of
2018.
05 New refreshed Board and appointments to the
Senior Executive Team (“SET”).
New Corporate Strategy being implemented with
06 investment in technology, data, analytics,
customer and digital resources.
1 Before exceptionals
INM | YEAR END RESULTS 2018 17Q&A
Thank You
Q&A
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