5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
Mecom Group PLC
Interim Results RNS Number : 6670N Mecom Group PLC 30 July 2014
For immediate release 30th July 2014
MECOM GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30th JUNE 2014
Mecom Group plc ("Mecom" or the "Company" and, together with its subsidiaries, the "Group"), one of Europe's leading consumer publishing companies, announces its results for the half year to 30th June 2014.
SUMMARY
• Continuing operations financial highlights: • Circulation revenue down 1% to €190 million
• Advertising revenue down 22% to €116 million • Costs €39 million (11%) lower than in H1 2013 • Adjusted EBITDA up €8.0 million to €38.6 million
• Adjusted total earnings per share of 16.0 euro cents (2013: 7.1 euro cents)
• Net debt1 of €31.5 million (2013 year-end: €41.2 million; 30th June 2013: €99.7 million)
• Recommended cash offer from De Persgroep N.V. of 155p per Mecom share announced on 30th June 2014
FINANCIAL SUMMARY
€m unless otherwise indicated Six months to Six months to 2014 vs. 30th June 2014 30th June 20131 2013
Circulation revenue 189.6 192.4 (1)% Advertising revenue 116.1 148.8 (22)% Other revenue 41.4 36.5 13% Total revenue3 347.1 377.7 (8)% Costs3 (308.5) (347.1) 11% lower Adjusted EBITDA2,3 38.6 30.6 8.0 Adjusted operating profit2,3 27.8 15.8 12.0 Adjusted earnings per share (euro cents) - continuing operations2,3 16.0 cents 7.7 cents 8.3 cents Adjusted total earnings per share (euro cents)2,4 16.0 cents 7.1 cents 8.9 cents Loss for the period, after tax (3.1) (97.6) 97% lower Loss per share, after exceptional items and intangibles amortisation (2.4) cents (82.0) cents 79.6 cents Net debt1 (31.5) (99.7) 68.2 lower
Notes
1. 2013 results have been restated to reflect the adoption of IFRS 11 Joint Arrangements, as explained further in note 3 to the condensed consolidated financial statements. This restatement does not affect the loss for the period after tax, nor the loss per share after exceptional items and intangibles amortisation. The deconsolidation of joint ventures' cash balances on the adoption of IFRS 11 results in the restatement of the net debt balances as at 30th June 2013 and 31st December 2013, increasing net debt at these two dates by €4.2 million and €3.1 million, respectively, relative to previously reported net debt balances at these dates.
2. Adjusted EBITDA, adjusted operating profit and adjusted earnings per share figures are stated before exceptional items and the amortisation of acquired intangibles.
3. Revenue, costs, adjusted EBITDA, adjusted operating profit and adjusted earnings per share for continuing operations are amounts from continuing businesses (that is, excluding the results of Mecom Poland for the six month period to 30th June 2013). http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 1/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
4. Adjusted total earnings per share include the results of Mecom Poland for the six month period to 30th June 2013, treated as discontinued operations in the financial statements.
Rory Macnamara, Chairman, said:
"These first half results reflect the successful execution of the restructuring programme we began implementing in the Netherlands in the second half of 2013. Looking forward, market conditions and the structural pressures facing our business remain challenging, and the Board believes that further restructuring is required to maintain profitability in the face of continuing declines in revenues, particularly in print advertising.
On 30th June, we announced a recommended cash offer by De Persgroep N.V., and shareholders have today been sent the Scheme Document, which provides further details of this offer."
Enquiries:
Mecom Group plc +44 (0) 20 7925 7200 Rory Macnamara, Chairman Henry Davies, Group Finance Director
Pendomer Communications LLP +44 (0) 20 3603 5220 Ben Foster Rosie Oddy
A set of presentation slides covering the interim results will be available on the "Investor Relations" section of the Mecom website (http://www.mecom.com/investor-relations.aspx).
INTERIM MANAGEMENT REPORT
Offer from De Persgroep
It was announced on 30th June 2014 that the Boards of De Persgroep N.V. ("De Persgroep") and the Company had reached agreement on the terms of a recommended cash offer of 155 pence per share, pursuant to which De Persgroep (through a wholly-owned subsidiary) will acquire all of the issued and to-be-issued share capital of the Company (the "Transaction"). It is intended that the Transaction will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006, full details of which are contained in a document which will be sent to the Company's shareholders on 30th July 2014 (the "Scheme Document"). The Transaction will be subject to certain conditions and further terms set out in Part Three of the Scheme Document.
Limburg Media Group
The Group announced on 14th February 2014 that it had reached a preliminary, but non-binding, agreement with Concentra N.V. ("Concentra") regarding a possible sale of its subsidiary LMG Netherlands II B.V. ("LMG"). These discussions remain ongoing. The assets and liabilities associated with LMG have been classified as held for sale as at 30th June 2014, as explained further in note 8 to the condensed consolidated financial statements.
Financing
As disclosed in the 2013 Annual Report and Accounts, the Group entered into two financing arrangements in March 2014, one with a group of three Dutch banks and one with a Danish bank, replacing the Group's previous banking facilities, which were repaid on 27th March 2014.
Outlook
For the trading outlook for the remainder of 2014, please refer to the statement in paragraph 1(b) of Part Five of the Scheme Document, headed "Mecom Profit Forecast", which amounts to a profit forecast for the purposes of Rule 28 of the City Code on Takeovers and Mergers (the "Code"), and accordingly sets out the outlook for the remainder of 2014, the assumptions on which it is based, and the confirmations from the directors of Mecom as required by Rule 28.1(c)(i) of the Code.
Forward-looking statements
This Interim Results announcement contains certain statements that are forward-looking. These statements involve risk and uncertainty because they relate to events or circumstances which may or may not occur in the future. Accordingly actual results or developments may differ in material respects from those expressed in or implied by these forward-looking statements. Although the forward-looking statements reflect the knowledge and information available at the date of this report, no assurance is given as to their reasonableness or probability.
Financial results
€m unless otherwise indicated Six months to Six months to 2014 30th June 2014 30th June 20132 vs. 2013
Revenue by country The Netherlands 224.2 239.9 (6.5)% Denmark 122.9 137.8 (10.8)% Total 347.1 377.7 (8.1)%
Revenue by category http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 2/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Circulation 189.6 192.4 (1.5)% Advertising 116.1 148.8 (22.0)% Other 41.4 36.5 13.4% Total 347.1 377.7 (8.1)%
EBITDA by country The Netherlands 33.1 22.9 10.2 Denmark 7.0 10.0 (3.0) Corporate (1.5) (2.3) 0.8 Total 38.6 30.6 8.0
Operating profit by country The Netherlands 26.3 13.9 12.4 Denmark 3.0 4.2 (1.2) Corporate (1.5) (2.3) 0.8 Total 27.8 15.8 12.0
Notes
1. The results set out above and presented and described in the subsequent sections 'Revenue, cost and operating results - continuing operations' and 'EBITDA and operating profit' are presented for continuing businesses, before exceptional items and the amortisation of acquired intangibles. All references to EBITDA and operating profit in these sections should be understood to refer to adjusted EBITDA and adjusted operating profit as defined in note 2 to the condensed, consolidated financial statements.
2. All figures presented in respect of the 2013 have been restated to reflect the adoption of IFRS 11 Joint Arrangements.
Revenue, costs and operating results - continuing operations
(The financial results set out below are stated before exceptional items and amortisation of acquired intangibles).
The Netherlands
€m unless otherwise indicated Six months to Six months to 2014 30th June 2014 30th June 2013 vs. 2013
Circulation 126.5 128.7 (1.7)% Advertising 76.7 92.2 (16.8)% Other revenue 21.0 19.0 10.5% Total revenue 224.2 239.9 (6.5)% Total costs (191.2) (217.9) 12.3% lower Net income from associates 0.1 0.9 (88.8)% and joint ventures EBITDA 33.1 22.9 10.2 EBITDA margin 14.8% 9.5% +5.3 ppts
Operating profit 26.3 13.9 12.4 Operating profit margin 11.7% 5.8% +5.9 ppts
Circulation revenue in the Netherlands was 1.7 per cent lower than in the first half of 2013, with a decline in circulation volumes of 5.2 per cent offset in part by an increase in subscription rates. Advertising fell by 16.8 per cent, which included the effect of the disposal of the Autotrack business in March 2013 and certain smaller disposals/closures of out-of-area freesheets in 2014; without these effects the year-on-year decline would have been 13.2 per cent, a rate of decline which shows some modest improvement on the 15.7 per cent decline in the final quarter of 2013. Other revenues were up 10.5 per cent, largely driven by an increase in distribution revenues following the extension of third-party distribution activities to include those of De Persgroep Nederland. Total revenue was down 6.5 per cent.
Costs were 12.3 per cent lower, reflecting reductions across all categories except sales and marketing costs. The largest reduction was experienced within staff costs, which were 14.0 per cent lower, reflecting a reduction of full-time equivalent employees ("FTEs") from (on average) 2,707 in the first half of 2013 to (on average) 2,281 in the first half of 2014. The increase in sales and marketing costs reflects higher spend on subscriber acquisition and retention.
Net income from associates and joint ventures was significantly lower than the prior year comparative due to the disposal, in June 2013, of the Group's 30 per cent economic interest in Funda N.V..
EBITDA was €33.1 million, up €10.2 million from the first half of 2013, with an EBITDA margin of 14.8 per cent (2013: 9.5 per cent). The improvement in EBITDA performance compared with the first half of 2013 was driven by the reduction in costs associated with the "Phoenix" restructuring programme initiated in the second half of 2013.
Depreciation was lower by €2.2 million than in the equivalent period in 2013, including the effect of closing one of the Group's print plants in the Netherlands on 1st January 2014.
Denmark €m unless otherwise indicated Six months to Six months to 2014 30th June 2014 30th June 2013 vs. 2013
Circulation 63.1 63.7 (0.9)% Advertising 39.4 56.6 (30.4)% Other revenue 20.4 17.5 16.6% Total revenue 122.9 137.8 (10.8)% Total costs (115.7) (129.0) 10.3% lower 1.2 n/a http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 3/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Net income from associates (0.2) and joint ventures EBITDA 7.0 10.0 (3.0) EBITDA margin 5.7% 7.3% -1.6 ppts
Operating profit 3.0 4.2 (1.2) Operating profit margin 2.4% 3.0% -0.6 ppts
Circulation revenue was down 0.9 per cent, reflecting the combined influences of significantly lower declines in single-copy revenue than in the recent past (1.6 per cent, as compared to 10.2 per cent in the first half of 2013) and a decline in full price subscription volumes of 6.5 per cent which was outweighed by increases in subscription rates. The Danish division has also continued to reduce the number of trial and discounted subscriptions, which were down by 40 per cent in the first half of 2014 as compared to H1 2013.
Advertising revenue, which was down 30.4 per cent year-on-year, was affected significantly by the disposals made in 2013; without this effect, declines would have been 8.0 per cent, broadly consistent with the declines experienced in the final quarter of 2013. Other revenue was up 16.6 per cent, including the positive effects of printing and other services being provided to businesses sold during 2013.
Total costs were 10.3 per cent lower, including the effect of 2013 disposals and notwithstanding a c.€2 million increase in costs resulting from changes in the timing of the receipt of Danish government media subsidies, of which the Group is a beneficiary. The lower costs reflected reductions in all categories, apart from sales and marketing costs which were higher as a result of increased single copy sales commissions.
Net income from associates and joint ventures was lower in the first half of 2014 than the equivalent period in 2013 (as restated) due principally to lower volumes and third party revenues at the Danish division's distribution joint venture, Bladkompagniet.
EBITDA was €7.0 million, down €3.0 million from the first half of 2013, with an EBITDA margin of 5.7 per cent (2013: 7.3 per cent). On a like-for-like basis (that is, adjusting 2013 results to exclude the results attributable to businesses which have since been disposed), EBITDA was €1.2 million higher in the first half of 2014 than in the equivalent period in 2013, and EBITDA margin was 1.1 percentage points higher. Depreciation was €4.0m in the period, €1.8 million lower than in the first half of 2013 due principally to the write-off of certain software assets in late 2013. As such, operating profit was €3.0 million, €1.2 million lower than the first half of 2013 (but €3.0 million higher than the prior year on a like-for-like basis).
Group EBITDA and operating profit - continuing operations
EBITDA for continuing operations in the six month period was €38.6 million, €8.0 million higher than in 2013, with an EBITDA margin of 11.1 per cent (2013: 8.1 per cent). EBITDA rose in the Netherlands by €10.2 million, but was offset by a fall in Denmark of €3.0 million; central costs were €0.8 million lower.
Depreciation was €4.0 million lower in the first half of 2014 than the comparative period in 2013, including the effects of the closure of a print plant in the Netherlands and a write-down of the carrying value of certain software in Denmark in 2013.
The net effect of higher EBITDA and lower depreciation resulted in an increase in operating profit of €12.0 million, from €15.8 million in 2013 to €27.8 million in 2014, and an increase in operating profit margin from 4.2 per cent to 8.0 per cent.
Net profit, cash flow and financial position
The Group's adjusted net interest charge was €3.1 million, down €1.2 million from the first half 2013 net charge of €4.3 million, reflecting lower average net debt levels.
The Group's effective tax rate on adjusted profit before tax was 22.0 per cent, which was lower than the 2013 rate of 26.9 per cent due to the recognition of certain tax assets in the period which had previously not been recognised as recoverable.
Adjusted total earnings per share were 16.0 euro cents, 8.9 euro cents per share higher than in the same period in 2013 due to the higher adjusted operating profit and lower net interest charge, offset by a higher absolute tax charge on adjusted profit before tax. In the six months to 30th June 2013 adjusted total earnings per share of 7.1 euro cents comprised earnings of 7.7 euro cents per share from the continuing operations and a loss of 0.6 euro cents per share from Mecom Poland.
Total loss per share was 2.4 euro cents, down from 82.0 euro cents per share for the first half of 2013, which included the effect of impairment charges.
The Group's continuing operations recorded exceptional items, including impairment charges, losses on disposal and amortisation of intangibles, totalling €28.5 million (€22.4 million after tax) in the six month period to 30th June 2014 (2013: €122.6 million; €105.4 million after tax). Included in the net exceptional charge were €2.0 million of staff redundancy costs (2013: €6.9 million). The 2013 expense included impairment charges of €121.0 million.
Cash inflow before acquisitions, disposals and dividends paid to equity shareholders was €12.7 million (2013: outflow of €2.1 million), and is stated after exceptional operating cash charges of €18.3 million (2013: €18.2 million) and net capital expenditure of €0.8 million (2013: €2.7 million).
As a result of which, net debt as at 30th June 2014 was €31.5 million, down by €68.2 million from 30th June 2013 and by €9.7 million from 31st December 2013. Both of these comparisons are made against net debt values which reflect the adoption of IFRS 11 Joint Arrangements, the effect of which, through the deconsolidation of joint ventures' cash balances, is to increase reported net debt at 30th June 2013 and 31st December 2013 by, respectively, €4.2 million and €3.1 million, relative to their previously reported values. As described earlier, the Group refinanced its bank borrowings during the period.
Dividends
The Group neither declared nor paid any dividends in the six months to 30th June 2014 (2013: no dividend declared in respect of the http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 4/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate period to 30th June 2013; €6.5 million paid in respect of the year ending 31st December 2012).
Principal risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group have not changed from those detailed on pages 20 to 21 of the 2013 Annual Report and Accounts, a copy of which is available on the Company's website at www.mecom.com. These risks and uncertainties could have an impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ from expected or historical results. The principal risks are summarised below:
Key external risk factors
The following risks arise from factors outside the control of management
Factor Risk The market · A decline in print advertising revenues, caused by structural changes in media consumption and prolonged economic instability in the markets in which Mecom operates could significantly impact the Group's overall financial performance
Consumer · Consumer tastes / behaviours could change more quickly than anticipated to new media trends sources, negatively impacting traditional print circulation volumes and advertising revenues
Key strategic risks
The following risks are related to the delivery of the strategy the Group has put in place
Factor Risk Reach, brands · An editorial error or breach of editorial standards could lead to potential loss of readership, and market damaged reputation or legal proceedings positions · Mecom is not able to attract, to motivate and to retain its creative talent
Subscriptions, · Mecom fails to invest in and to develop new products and services quickly enough to offset commerce and decline in traditional revenues advertising · Current technologies and processes are insufficient to support the growth and development of new online products and pay models and fail to provide requisite data analytics to drive segmented and targeted advertising sales
Cost base · Mecom fails to achieve the planned cost savings and operational improvements from its restructuring reorganisations, such as the Phoenix restructuring programme in the Netherlands.
Financial · The Group fails to secure medium-term financing to support the business, including the position need for further restructuring
· The Group may not be able to comply with financial limits and covenants in its banking facilities
Other significant risks
Factor Risk People · Retention of key management becomes more difficult
· The business loses the support of the unions or works councils
Business · Mecom fails to ensure appropriate business continuity planning and resilience in its print, Continuity distribution and online operations
· The Group is subject to external disruption to IT services, for example from an information security breach or cyber attack
· Financial or performance failure of the key IT outsource provider, resulting in the loss of IT services across the Group
Audley House 13 Palace Street London SW1E 5HX
By order of the Board
Rory Macnamara Henry Davies Chairman Group Finance Director 29th July 2014 29th July 2014
DIRECTORS' RESPONSIBILITY STATEMENT
The directors confirm to the best of their knowledge that
http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 5/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate (a) the condensed set of consolidated financial statements for the six months to 30th June 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
(b) the Interim Results announcement includes a fair review of the information required by DTR 4.2.7R, being an indication of the important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the year; and
(c) the Interim Results announcement includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period and any changes in the related party transactions described in the last Annual Report and Accounts that could do so.
By order of the Board
Rory Macnamara Henry Davies Chairman Group Finance Director 29th July 2014 29th July 2014
Consolidated income statement for the six months ended 30 June 2014
Unaudited (restated) Six months ended 30 June 2014 Six months ended 30 June 2013
Before Exceptional After Before Exceptional items After exceptional items and exceptional exceptional and exceptional items and amortisation items and items and amortisation items and amortisation of acquired amortisation amortisation of acquired amortisation of acquired intangibles of acquired of acquired intangibles of acquired intangibles (Note 5) intangibles intangibles (Note 5) intangibles Note €m €m €m €m €m €m Continuing operations Revenue 4 347.1 - 347.1 377.7 - 377.7 Cost of sales (96.6) - (96.6) (107.2) - (107.2) Gross profit 250.5 - 250.5 270.5 - 270.5
Operating costs (222.8) (24.3) (247.1) (256.9) (147.8) (404.7) Share of results of associates 0.2 - 0.2 0.9 - 0.9 Share of results of joint ventures 3 (0.1) - (0.1) 1.3 - 1.3 Operating profit/(loss) 4 27.8 (24.3) 3.5 15.8 (147.8) (132.0) Finance income 6 - - - 0.2 - 0.2 Finance expense 6 (3.1) (2.0) (5.1) (4.5) (0.1) (4.6) (Loss)/profit on disposal of businesses and Investments - (2.2) (2.2) - 25.3 25.3
Profit/(loss) before tax 24.7 (28.5) (3.8) 11.5 (122.6) (111.1)
Income tax (expense)/credit 7 (5.4) 6.1 0.7 (2.5) 17.2 14.7 Profit/(loss) for the period from
continuing operations 19.3 (22.4) (3.1) 9.0 (105.4) (96.4)
Discontinued operations
Loss for the period from discontinued operations 8 - - - (0.7) (0.5) (1.2) Profit/(loss) for the period 19.3 (22.4) (3.1) 8.3 (105.9) (97.6)
Attributable to: (restated) (restated)
Mecom Group plc shareholders 19.5 (22.4) (2.9) 8.4 (105.9) (97.5)
Non-controlling interests (0.2) - (0.2) (0.1) - (0.1)
(restated) Non- Earnings/(loss) per share Non-IFRS IFRS IFRS IFRS (euro cents per share) Note measures measures measures measures From continuing operations
Basic 10 16.0 (2.4) 7.7 (81.0) Diluted 10 16.0 (2.4) 7.7 (81.0)
From discontinued operations Basic 10 - - (0.6) (1.0) Diluted 10 - - (0.6) (1.0)
From continuing and discontinued operations
operations http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 6/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Basic 10 16.0 (2.4) 7.1 (82.0) Diluted 10 16.0 (2.4) 7.1 (82.0)
Details of dividends paid are set out in Note 9.
As explained in further detail in Note 3, the restatement of the 2013 comparatives relates principally to the adoption of IFRS 11 Joint Arrangements.
Consolidated statement of comprehensive income for the six months ended 30 June 2014
Unaudited Six months Six months ended ended 30 June 30 June 2014 2013 €m €m
Loss for the period (3.1) (97.6)
Other comprehensive income for the period: Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on retranslation of foreign operations (0.1) 0.2 Net other comprehensive (loss)/income to be classified to profit or loss in subsequent
periods (0.1) 0.2
Other comprehensive (loss)/income for the period, net of tax (0.1) 0.2 Total comprehensive loss for the period, net of tax (3.2) (97.4)
Attributable to:
Mecom Group plc shareholders (3.0) (97.1) Non-controlling interests (0.2) (0.3)
Consolidated balance sheet at 30 June 2014 (restated) (restated) 30 June 31 December 30 June 2014 2013 2013 Unaudited Audited Unaudited Note €m €m €m ASSETS Non-current assets Intangible assets 278.4 316.1 310.2 Property, plant and equipment 88.4 103.2 115.7 Interests in associates 1.3 3.9 4.9 Interests in joint ventures 2.7 6.0 10.8 Deferred tax assets 15.8 19.1 21.8 Total non-current assets 386.6 448.3 463.4
Current assets
Inventories 3.3 3.5 4.0 Trade and other receivables 52.8 63.2 64.2 Cash and cash equivalents 12,13 29.5 43.6 33.9 Other investments - current 0.1 0.1 0.1 Total current assets 85.7 110.4 102.2 Assets classified as held for sale 8 44.4 - 16.8 Total assets 516.7 558.7 582.4 LIABILITIES Non-current liabilities Borrow ings 13 (44.4) (3.5) (132.6) Other payables (1.6) (0.4) (0.5) Provisions (7.3) (15.1) (7.0) Employee benefit obligations (19.1) (21.8) (33.9) Deferred tax liabilities (66.9) (76.2) (74.2) Total non-current liabilities (139.3) (117.0) (248.2) Current liabilities Borrow ings 13 (31.4) (81.3) (11.8) Trade and other payables (208.2) (236.0) (245.4) Provisions (17.8) (28.5) (15.1) Employee benefit obligations (4.2) (5.2) - Current tax liabilities (2.4) (0.5) - Obligations under finance leases 13 - - (0.2) Total current liabilities (264.0) (351.5) (272.5) Liabilities directly associated w ith assets classified as held for sale 8 (27.7) - (6.5) Total liabilities (431.0) (468.5) (527.2) Net assets 85.7 90.2 55.2 EQUITY Issued share capital 89.9 89.7 89.7 Share premium 9.1 8.9 8.9 Retained losses (23.9) (22.2) (65.1) Other reserves 9.3 12.3 16.0 http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 7/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Accumulated amounts recognised directly in equity relating to a disposal group held for sale - - 1.3 Equity attributable to Mecom Group plc shareholders 84.4 88.7 50.8 Non-controlling interests 1.3 1.5 4.4 Total equity 85.7 90.2 55.2
Consolidated statement of changes in equity Accumulated Other reserves amounts f or the six months ended 30 June 2014 recognised directly in Equity equity relating attributable Issued Share-based Currency to a disposal to Mecom Non- share Share Retained payment Own translation group held Group plc controlling Total capital premium earnings reserve shares reserve for sale shareholders interests equity €m €m €m €m €m €m €m €m €m €m Balance at 1 January 2014 (audited) 89.7 8.9 (22.2) 2.9 - 9.4 - 88.7 1.5 90.2 Loss for the year - - (2.9) - - - - (2.9) (0.2) (3.1) Other comprehensive (loss)/income: Exchange differences on retranslation of foreign operations - - - - - (0.1) - (0.1) - (0.1) Total comprehensive loss for the year - - (2.9) - - (0.1) - (3.0) (0.2) (3.2) Credit in respect of share-based payments - - - 0.2 - - - 0.2 - 0.2 Exercise, forfeiture and lapse of options - - 1.4 (1.4) ------
Re-designation of share-based payments as cash-settled - - 0.2 (1.7) - - - (1.5) - (1.5)
New shares issued 0.2 0.2 (0.4) ------Balance at 30 June 2014 (unaudited) 89.9 9.1 (23.9) - - 9.3 - 84.4 1.3 85.7
Balance at 1 January 2013 (audited) 89.7 8.9 39.4 9.9 (5.5) 9.4 1.7 153.5 6.8 160.3 Loss for the year - - (97.5) - - - - (97.5) (0.1) (97.6) Other comprehensive (loss)/income: Exchange differences on retranslation of foreign operations - - - - - 0.4 - 0.4 (0.2) 0.2 Total comprehensive (loss)/income for the year - - (97.5) - - 0.4 - (97.1) (0.3) (97.4) Credit in respect of share-based payments - - - 0.1 - - - 0.1 - 0.1 Shares held by EBT used to satisfy employee share aw ards - - (1.3) - 1.3 - - - - - Transfer of accumulated amounts recognised directly in equity relating to a disposal group held for sale - - - - - 0.4 (0.4) - - - Acquisition of non-controlling interest w ithout a change of control - - 1.0 - - - - 1.0 (1.9) (0.9) Dividends paid/payable - - (6.7) - - - - (6.7) (0.2) (6.9) Balance at 30 June 2013 (unaudited) 89.7 8.9 (65.1) 10.0 (4.2) 10.2 1.3 50.8 4.4 55.2
Consolidated cash flow statement for the six months ended 30 June 2014
Unaudited (restated) Six months Six months ended ended 30 June 30 June 2014 2013 Note €m €m Operating activities Cash generated from/(used in) operations 16 12.3 (0.4) Income tax paid - (0.1) Net cash from/(used in) operating activities 12.3 (0.5)
Investing activities Proceeds from sale of property, plant and equipment 0.3 0.1 Proceeds from sale of interests in associates and investments 17 - 15.0 Capital expenditure on:
property, plant and equipment (0.6) (1.3) other intangible assets (0.5) (1.5) Divestment of businesses, including cash and overdrafts sold and net of transaction advisory (0.5) 31.3 costs Interest received - 0.4 Dividends received 3.5 5.5 http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 8/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Net cash from investing activities 2.2 49.5
Financing activities Net (repayment)/proceeds from draw dow ns under revolving credit facilities (8.7) 39.0 Repayment of term loans and other borrow ings (53.6) (50.5) Draw dow n of term loans and other borrow ings 55.2 - Repayment of obligations under finance leases - (0.1) Interest and other finance expenses paid (2.3) (4.8) Costs related to the refinancing/extension of Group's bank facilities (2.9) (3.6) Acquisition of non-controlling interest - (0.9) Dividends paid - (6.7) Net cash used in financing activities (12.3) (27.6)
Net increase in cash and cash equivalents 2.2 21.4 Net foreign exchange differences 0.2 (0.3) Cash and cash equivalents at beginning of the period 12 30.1 23.2 Cash and cash equivalents at end of the period 12 32.5 44.3
The consolidated cash flow statement includes all cash flow s relating to disposal groups classified as held for sale and, in respect of 2013, those operations classed as discontinued.
Notes to the Consolidated Financial Statements for the six months ended 30 June 2014
1. Corporate information
Mecom Group plc (the "Company") is a public limited company incorporated and domiciled in England and Wales. The registered office of the Company is Audley House, 13 Palace Street, London, SW1E 5HX. Its ordinary shares are traded on the London Stock Exchange (LSE).
These condensed consolidated financial statements for the six months ended 30 June 2014 w ere approved by the Board of Directors on 29 July 2014.
2. Definitions of terms
The Group uses the follow ing terms, w ith the definitions given, in these condensed consolidated financial statements and in its internal monitoring of financial performance:
Adjusted EBITDA/Adjusted EBITDA margin The Group monitors the performance of its segments on an earnings before interest, tax, depreciation and amortisation ("EBITDA") basis. This measure includes any profit or loss from associates and joint ventures but excludes any exceptional items. Adjusted EBITDA margin (expressed as a percentage) is defined as adjusted EBITDA for a period divided by external revenue for the same period.
Adjusted operating profit/Adjusted operating profit margin Adjusted operating profit or loss is stated before exceptional items and amortisation of acquired intangibles. Adjusted operating profit margin (expressed as a percentage) is defined as adjusted operating profit for a period divided by external revenue for the same period.
Exceptional items The Group presents as exceptional items on the face of the consolidated income statement those material items of income and expense w hich, because of their nature and/or expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the period, so as to facilitate comparison w ith prior periods.
Net debt The Group presents as "net debt" the net of cash and cash equivalents, borrow ings and obligations under finance leases. The Group also includes in net debt any of the above items that have been classified as held for sale.
3. Basis of preparation
(i) Significant accounting policies These condensed consolidated financial statements have been prepared in accordance w ith the Disclosure and Transparency Rules ("DTR") of the Financial Services Authority and International Accounting Standard (IAS) 34 Interim Financial Reporting, as adopted by the European Union.
Except for the adoption of new , revised, amended and improved Standards and Interpretations as set out below (w hich had an impact on the Group), the accounting policies adopted in the preparation of these condensed consolidated financial statements are consistent w ith those follow ed in the preparation of the Group's Annual Report and Accounts for the year ended 31 December 2013.
(ii) Preparation of the consolidated financial statements on the going concern basis The Group's financial and liquidity risk factors, and the approach to managing them, are set out in Note 26 to the Group's 2013 Annual Report and Accounts.
As explained in Note 13 to these condensed consolidated financial statements, the Group refinanced its bank borrow ings on 27 March 2014 w ith tw o new facilities entered into by, respectively, its Dutch and Danish subsidiaries. The new facilities include customary financial covenants and restrictions. Both facilities have a minimum term of at least three years, subject, in the case of the Dutch facility, to standard change of control provisions.
The Group has processes in place designed to ensure that it remains w ithin the facility limits, financial covenants and other relevant restrictions. These processes include an annual budget cycle, periodic financial reforecasts and short-term (three month) cash flow forecasts, as w ell as approval of capital expenditure and significant items of operating expenditure under a scheme of delegated authority.
Based on these processes, and having made appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis of accounting in preparing these condensed consolidated financial statements.
(iii) Adoption of new, amended and improved Standards From 1 January 2014, the Group has adopted the follow ing amendments to standards and new standards:
New , amended and improved Standards Effective date
IFRS 10 Consolidated Financial Statements 1 January 2014
IFRS 11 Joint Arrangements 1 January 2014 http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 9/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
IFRS 12 Disclosure of Interests in Other Entities 1 January 2014
Amendments to IFRS 10, IFRS 11 Consolidated Financial Statements, Joint Arrangements 1 January 2014 and IFRS 12 and Disclosure of Interests in Other Entities: Transition Guidance IAS 27(as revised in 2011) Separate Financial Statements 1 January 2014
IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures 1 January 2014
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment entities 1 January 2014
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014
IFRS 11 governs the accounting for arrangements in w hich there is joint control; proportionate consolidation is not permitted for joint ventures (as new ly defined). The Directors of the Company review ed and assessed the classification of the Group's investments in joint arrangements in accordance w ith the requirements of IFRS 11. As a result of this, the Group's jointly controlled entities ("JCEs"), w hich had previously been accounted for by proportional consolidation, are now classified as joint ventures (as new ly defined) and are equity accounted for w ith the Group's attributable share of their results presented w ithin a single line in the income statement. Any items of income or expense incurred by the Group's joint ventures w hich w ould previously have been treated as exceptional w hen the joint ventures w ere proportionately consolidated are, follow ing the adoption of IFRS 11, no longer treated as exceptional, consistent w ith the Group's treatment of the results of its associates.
In accordance w ith IFRS 11, the comparative figures in these condensed consolidated financial statements have been restated to take account of this change. The principal effects of this restatement on the primary statements, excluding specific reference to any line item on w hich the effects of the restatement are in the opinion of the Directors immaterial, are show n below :
Before Exceptional After exceptional items and exceptional items and amortisation items and amortisation of acquired amortisation of acquired intangibles of acquired intangibles (Note 5) intangibles Consolidated income statement €m €m €m
Six months ended 30 June 2013: as reported 1 Revenue 415.3 - 415.3 Cost of sales (124.0) - (124.0) Operating costs (275.9) (148.3) (424.2) Share of results of associates 0.9 - 0.9 Share of results of joint ventures - - - Operating profit/(loss) 16.3 (148.3) (132.0) Other income statement items (continuing operations) (7.0) 42.6 35.6 Loss for the period from discontinued operations (0.7) (0.5) (1.2) Profit/(loss) for the period 8.6 (106.2) (97.6)
Effect of restatement 1 Revenue (37.6) - (37.6) Cost of sales 16.8 - 16.8 Operating costs 19.0 0.5 19.5 Share of results of associates - - - Share of results of joint ventures 1.3 - 1.3 Operating profit/(loss) (0.5) 0.5 - Other income statement items (continuing operations) 0.2 (0.2) - Loss for the period from discontinued operations - - - Profit/(loss) for the period (0.3) 0.3 -
Six months ended 30 June 2013: as restated 1 Revenue 377.7 - 377.7 Cost of sales (107.2) - (107.2) Operating costs (256.9) (147.8) (404.7) Share of results of associates 0.9 - 0.9 Share of results of joint ventures 1.3 - 1.3 Operating profit/(loss) 15.8 (147.8) (132.0) Other income statement items (continuing operations) (6.8) 42.4 35.6 Loss for the period from discontinued operations (0.7) (0.5) (1.2)
Profit/(loss) for the period 8.3 (105.9) (97.6)
1 Except as stated otherwise, all information in the above table relates to continuing operations.
From From From continuing and continuing discontinued discontinued Earnings per share (euro cents per share) operations operations operations Six months ended 30 June 2013: as reported
Earnings per share (non-IFRS basis): Basic 7.9 (0.6) 7.3 Earnings per share (non-IFRS basis): Diluted 7.8 (0.5) 7.3 Effect of restatement Earnings per share (non-IFRS basis): Basic (0.2) - (0.2)
Earnings per share (non-IFRS basis): Diluted 2 (0.1) (0.1) (0.2) http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 10/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Six months ended 30 June 2013: restated Earnings per share (non-IFRS basis): Basic 7.7 (0.6) 7.1 Earnings per share (non-IFRS basis): Diluted 7.7 (0.6) 7.1
2 The effect of restatements on diluted earnings per share (non-IFRS basis) from both continuing and discontinued operations are net of 0.1 euro cents per share relating to a separate restatement to earnings per share for the six months ended 30 June 2013, as described further in Note 10 to these condensed consolidated financial statements.
31 December 30 June 2013 2013 Consolidated balance sheet €m €m 2013: as reported
Goodw ill - 1.0 Other intangible assets 319.0 317.4 Property, plant and equipment 104.5 118.2 Interests in joint ventures - - Trade and other receivables 70.8 79.6 Cash and cash equivalents 46.7 38.1 Other assets 27.2 49.2 Total assets 568.2 603.5 Trade and other payables (244.2) (265.1) Other liabilities (233.8) (283.2) Total liabilities (478.0) (548.3) Net assets 90.2 55.2 Memo: Net debt (38.1) (95.5)
Effect of restatement Goodw ill - (1.0) Other intangible assets (2.9) (7.2) Property, plant and equipment (1.3) (2.5) Interests in joint ventures 6.0 10.8 Trade and other receivables (7.6) (15.4) Cash and cash equivalents (3.1) (4.2) Other assets (0.6) (1.6)
Total assets (9.5) (21.1) Trade and other payables 8.2 19.7 Other liabilities 1.3 1.4 Total liabilities 9.5 21.1
Net assets - - Memo: Net debt (3.1) (4.2)
2013: as restated
Goodw ill - - Other intangible assets 316.1 310.2 Property, plant and equipment 103.2 115.7 Interests in joint ventures 6.0 10.8 Trade and other receivables 63.2 64.2 Cash and cash equivalents 43.6 33.9 Other assets 26.6 47.6 Total assets 558.7 582.4 Trade and other payables (236.0) (245.4) Other liabilities (232.5) (281.8)
Total liabilities (468.5) (527.2) Net assets 90.2 55.2 Memo: Net debt (41.2) (99.7)
Consolidated cash flow statement €m Six months ended 30 June 2013: as reported Cash from operating activities 1.5 Income tax paid (0.3)
Net cash from/(used in) operating activities 1.2 Dividends received 2.3 Other cash from investing activities 44.9 Net cash from investing activities 47.2 Net cash used in financing activities (27.7)
Net increase in cash and cash equivalents 20.7 Net foreign exchange differences (0.8) http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 11/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
Cash and cash equivalents at the beginning of the period 28.6 Cash and cash equivalents at the end of the period 48.5
Effect of restatement Cash used in operating activities (1.9) Income tax paid 0.2
Net cash from/(used in) in operating activities (1.7) Dividends received 3.2 Other cash from investing activities (0.9) Net cash from investing activities 2.3 Net cash used in financing activities 0.1 Net increase in cash and cash equivalents 0.7 Net foreign exchange differences 0.5 Cash and cash equivalents at the beginning of the period (5.4) Cash and cash equivalents at the end of the period (4.2)
Six months ended 30 June 2013: as reported Cash used in operating activities (0.4) Income tax paid (0.1) Net cash from/(used in) operating activities (0.5) Dividends received 5.5 Other cash from investing activities 44.0 Net cash from investing activities 49.5 Net cash used in financing activities (27.6) Net increase in cash and cash equivalents 21.4 Net foreign exchange differences (0.3) Cash and cash equivalents at the beginning of the period 23.2 Cash and cash equivalents at the end of the period 44.3
(iv) Other These condensed consolidated financial statements are unaudited but have been review ed by the auditors. The financial information presented herein does not amount to full statutory accounts w ithin the meaning of Section 435 of the Companies Act 2006. The figures for the year ended 31 December 2013 have been extracted from (and, w here necessary, adjusted from: see iii) above) the 2013 Annual Report and Accounts w hich has been filed w ith the Registrar of Companies. The audit report on the 2013 Annual Report and Accounts w as unqualified and did not contain an adverse statement under Section 498 (2) or (3) of the Companies Act 2006.
These condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction w ith the Group's Annual Report and Accounts for the year ended 31 December 2013.
These condensed consolidated financial statements are presented in euros and all values are show n in millions, rounded to the nearest one hundred thousand euros, except w hen otherw ise stated. The significant exchange rates for the Group applied during the current and prior periods are as follow s:
Average rate for the six months ended 30 June Spot rate at 30 June (against EUR) (against EUR) 2014 2013 2014 2013 DKK 7.46 7.46 7.46 7.46 GBP 0.82 0.85 0.80 0.86 PLN n/a 4.20 n/a 4.33
Differences in spot rates betw een 31 December 2013 and 30 June 2014 have caused the Group's non-euro denominated assets and liabilities (primarily comprising amounts denominated in British Pounds Sterling) to increase in value w hen retranslated into euros, resulting in foreign exchange differences of €0.1m being debited to reserves in the six months ended 30 June 2014 (six months ended 30 June 2013: credit of €0.2m).
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and the amounts reported for revenues and expenses during the period. How ever, the nature of estimation means that actual outcomes could differ from those estimates. The estimates and underlying assumptions are review ed on an ongoing basis. At 30 June 2014, such estimates and underlying assumptions are the same as set out on pages 70-71 of the Group's 2013 Annual Report and Accounts. Revisions to accounting estimates are recognised in the period in w hich the estimate is revised if the revision affects that period only or in the period of the revision and future periods if the revision affects both current and future periods.
It w as announced on 30 June 2014 that the Boards of De Persgroep N.V. ("De Persgroep") and the Company had reached agreement on the terms of a recommended cash offer of 155 pence per share, pursuant to w hich De Persgroep (through a w holly ow ned subsidiary) w ill acquire all of the issued and to-be-issued share capital of the Company (the "Transaction"). It is intended that the Transaction w ill be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006, full details of w hich are contained in a document w hich is expected to be sent to the Company's shareholders on 30 July 2014 (the "Scheme Document"). The Transaction w ill be subject to certain conditions and further terms set out in Part Three to the Scheme Document. Pending satisfaction of the conditions contained in Part Three of the Scheme Document, the announcement of the Transaction does not, in and of itself, necessitate any material changes to the Group's financial reporting as presented in these condensed consolidated financial statements. How ever, in respect of the Group's share-based payment aw ards the Directors have concluded, after taking into consideration the Transaction along w ith other relevant factors, that it is now likely that these aw ards w ill be cash-settled. Accordingly, liabilities have been reflected in the Group's balance sheet as at 30 June 2014 in respect of these share-based payments. Previously, costs associated w ith these aw ards had been credited to reserves in accordance w ith IFRS 2.
4. Operating segments
For management and therefore internal reporting purposes, the Directors have organised the Group into divisions based on geographical location.
The Group's reportable operating segments included w ithin "Mecom continuing" are:
· the Netherlands; and · Denmark.
Such separation allow s the Board to focus on the financial performance of the continuing businesses, the total of w hich is show n in the Group's internal financial reports in 2014 and 2013 as "Mecom continuing".
"Corporate" is also part of "continuing" and comprises the Group's head-office activities, w hich are primarily located in the UK. Certain group-w ide costs such as internal audit, Group- http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 12/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate w ide I.T. systems and costs relating to share-based payment have been recharged to the Group's reportable operating segments, being charged to their respective adjusted EBITDA amounts.
As described in Note 8, the Group's Polish operations (Media Regionalne) w ere classified as held-for-sale in the six months ended 30 June 2013. Under IFRS the Group accounted for this operating segment as a discontinued operation in 2013, up until its disposal on 31 October 2013.
The Group's Directors (being the chief operating decision maker) monitor the operating results of its divisions separately for the purpose of making decisions about resource allocation and performance assessment. The Group's financial performance is based on an assessment of the results, w hich are measured consistently w ith operating profit or loss in the consolidated income statement, of the above segments. Such monitoring and assessment of an individual division's financial performance is done primarily at the adjusted EBITDA level.
All of the Group's reportable operating segments derive their revenue from the follow ing revenue streams: advertising, circulation and other (comprising principally third-party printing, distribution and enterprises). Revenue from external customers is attributed to individual operating segments on an origin basis. Transfer prices betw een operating segments are on an arm's length basis in a manner similar to transactions w ith third parties. Transactions betw een operating segments represented less than 1% of both total Group revenue and operating costs during the six months ended 30 June 2014.
Exceptional items (comprising amounts recorded in operating costs, finance exceptional items and gains/losses on disposal of businesses and investments) are also monitored and assessed, in aggregate, by the Directors at the operating segment level. Amortisation of acquired intangibles is also monitored and assessed by the Directors at the operating segment level. Follow ing the refinancing of the Group's banking facilities on 27 March 2014, regular, non-exceptional finance income and expense and income taxes are also monitored and assessed at the operating segment level. Previously (i.e. before the Group had local banking facilities in each of its territories) these items w ere managed on a Group basis and w ere therefore not previously allocated to operating segments.
Operating assets and liabilities comprise all classes of assets and liabilities, respectively. Non-current assets exclude employee benefit assets, deferred tax assets and derivative financial instruments and are located in the country of domicile of their respective reportable operating segment.
Digital revenue comprises revenue earned from either new spaper w ebsites, standalone w ebsites or the Group's mobile, tablet and e-paper offerings and is recorded against the relevant revenue category. Capital expenditure excludes any items purchased via a business combination or the separate purchase of publishing rights and, for the purposes of this Note, includes property, plant and equipment additions and softw are additions. Additions to non-current assets comprises additions to goodw ill, other intangibles assets, property, plant and equipment, interests in associates, interests in joint ventures, investments and other financial assets arising from capital expenditure, other purchases and business combinations but excludes additions to employee benefit assets, deferred tax assets and derivative financial instruments.
The follow ing tables present financial information as internally reported to the Directors for the six months ended 30 June 2014 and 2013 in respect of the Group's reportable operating segments, as reconciled to the Group's loss for the period as included in the Consolidated Income Statement. Financial information as internally reported to the Directors for six months ended 30 June 2014
Unaudited The Mecom Netherlands Denmark Corporate Group total €m €m €m €m Revenue: External sales: Advertising 76.7 39.4 - 116.1 Circulation 126.5 63.1 - 189.6 Other 21.0 20.4 - 41.4 Total revenue as internally reported 224.2 122.9 - 347.1 Total costs (including share of results of associates and joint ventures, excluding depreciation) (191.1) (115.9) (1.5) (308.5) Adjusted EBITDA as internally reported 33.1 7.0 (1.5) 38.6 Depreciation (including amortisation of softw are) (6.8) (4.0) - (10.8) Adjusted operating profit/(loss) as internally reported 26.3 3.0 (1.5) 27.8 Total exceptional items 1 (5.2) - (3.8) (9.0) Amortisation of acquired intangibles (17.5) (2.0) - (19.5) Net finance expense (2.6) (0.5) - (3.1) Income tax credit/(charge) 0.8 (0.1) - 0.7 Profit/(loss) for six months ended 30 June 2014 1.8 0.4 (5.3) (3.1)
Assets and liabilities Operating assets 374.0 134.7 8.0 516.7 Operating liabilities (284.1) (139.4) (7.5) (431.0)
Other information Digital revenue 2.7 7.0 - 9.7 Amortisation of acquired intangibles (17.5) (2.0) - (19.5) Impairment charges in respect of: goodw ill, acquired intangibles, softw are and property, plant and equipment - - - - Adjusted EBITDA margin 14.8% 5.7% n/a 11.1% Adjusted operating profit margin 11.7% 2.4% n/a 8.0% Non-current assets 2 295.8 75.0 0.1 370.8 Interests in associates 2 0.3 1.0 - 1.3 Interests in joint ventures 2 0.3 2.4 - 2.7 Capital expenditure on property, plant and equipment and softw are 3 0.6 0.5 - 1.1 Additions to non-current assets 0.6 0.5 - 1.1
1 For internal reporting purposes, total exceptional items include both operating and finance exceptional items together with all gains/losses on disposal of businesses. 2 Excluding assets held for sale. 3 Capital expenditure in this instance relates to book amounts.
Financial information as internally reported to the Directors for six months ended 30 June 2013 (restated)
Unaudited Mecom discontinued
The 1 Mecom Mecom Netherlands Denmark Corporate continuing Poland Group total €m €m €m €m €m €m Revenue: External sales: Advertising 92.2 56.6 - 148.8 7.9 156.7 Circulation 128.7 63.7 - 192.4 11.3 203.7 Other 19.0 17.5 - 36.5 3.2 39.7 Total revenue as internally reported 239.9 137.8 - 377.7 22.4 400.1 Total costs (including share of results of associates and joint ventures, excluding depreciation) (217.0) (127.8) (2.3) (347.1) (22.0) (369.1) http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 13/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate Adjusted EBITDA as internally reported 22.9 10.0 (2.3) 30.6 0.4 31.0 Depreciation (including amortisation of softw are) (9.0) (5.8) - (14.8) (1.0) (15.8) Adjusted operating profit/(loss) as internally reported 13.9 4.2 (2.3) 15.8 (0.6) 15.2 Total exceptional items 2 (98.6) (1.2) (1.8) (101.6) (0.5) (102.1) Amortisation of acquired intangibles (18.4) (2.6) - (21.0) - (21.0) Segment result as internally reported (103.1) 0.4 (4.1) (106.8) (1.1) (107.9) Reconciliation to loss for the year Net finance expense (4.3) - (4.3) Income tax credit/(charge) 14.7 (0.1) 14.6 Loss for six months ended 30 June 2013 (96.4) (1.2) (97.6)
Assets and liabilities Operating assets 385.7 177.9 2.0 565.6 16.8 582.4 Operating liabilities (254.8) (121.6) (144.3) (520.7) (6.5) (527.2)
Other information Digital revenue 5.1 5.6 - 10.7 1.7 12.4 Amortisation of acquired intangibles (18.4) (2.6) - (21.0) - (21.0) Impairment charges in respect of: - goodw ill, acquired intangibles, softw are and - property, plant and equipment (121.0) - - (121.0) - (121.0) Adjusted EBITDA margin 9.5% 7.3% n/a 8.1% 1.8% 7.7% Adjusted operating profit margin 5.8% 3.0% n/a 4.2% (2.7)% 3.8% Non-current assets 3 329.2 112.7 (0.3) 441.6 - 441.6 Interests in associates 3 2.6 2.3 - 4.9 - 4.9 Interests in joint ventures 3 0.2 10.6 - 10.8 - 10.8 Capital expenditure on property, plant and equipment - and softw are 4 2.0 0.7 - 2.7 0.1 2.8 Additions to non-current assets 2.0 0.7 - 2.7 0.1 2.8
1 Corporate operating liabilities of €144.3m at 30 June 2013 included €143.3m of gross borrowings. 2 For internal reporting purposes, total exceptional items include both operating and finance exceptional items together with all gains/losses on disposal of businesses. 3 Excluding assets held for sale. 4 Capital expenditure in this instance relates to book amounts.
5. Exceptional items and amortisation of acquired intangibles
The Group presents as exceptional items separately on the face of the consolidated income statement those items of income and expense w hich, because of their nature and/or the infrequency of the events giving rise to them, merit separate presentation. This allow s shareholders to understand better the elements of financial performance in the period, so as to facilitate comparison w ith prior periods. The Group also separates the amortisation of acquired intangibles on the face of the consolidated income statement since, w hilst accounting standards require the recognition of this amortisation as an expense, it is not an underlying operating expense of the Group's businesses.
The exceptional items and amortisation charges relating to continuing and discontinued operations are summarised as follow s:
Unaudited (restated) Six months ended 30 June 2014 Six months ended 30 June 2013
Amortisation Amortisation Exceptional of acquired Exceptional of acquired items intangibles Total items intangibles Total €m €m €m €m €m €m Continuing operations
Amounts recognised in operating profit/(loss):
Restructuring costs
Staff redundancy costs (2.0) - (2.0) (6.9) - (6.9)
Other - - - 0.4 - 0.4
Total restructuring costs (2.0) - (2.0) (6.5) - (6.5)
Other exceptional operating (costs)/credits
Charge in respect of provisions for onerous
contracts (2.1) - (2.1) - - -
Advisory costs relating to recommended offer (1.4) - (1.4) - - -
Credit due to reimbursement of advisory costs
under an insurance contract - - - 0.7 - 0.7
Other 0.7 - 0.7 - - -
Total other exceptional operating (costs)/credits (2.8) - (2.8) 0.7 - 0.7
Amortisation and impairment charges
Amortisation of acquired intangibles - (19.5) (19.5) - (21.0) (21.0)
Impairment charges in respect of:
goodw ill - - - (75.7) - (75.7)
acquired intangibles - - - (45.3) - (45.3)
Total amortisation and impairment charges - (19.5) (19.5) (121.0) (21.0) (142.0)
Total recognised in operating loss (4.8) (19.5) (24.3) (126.8) (21.0) (147.8)
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Amounts recognised in finance expense:
Write-off of prepaid finance fees (1.8) - (1.8) - - -
Notional interest on exceptional provisions (0.2) - (0.2) (0.1) - (0.1)
Total recognised in finance expense (2.0) - (2.0) (0.1) - (0.1)
(Loss)/gain on disposal of businesses and
investments (2.2) - (2.2) 25.3 - 25.3
Total recognised in loss before tax (9.0) (19.5) (28.5) (101.6) (21.0) (122.6)
Exceptional income tax credit 1.3 4.8 6.1 12.1 5.1 17.2
Total recognised in loss for period from
continuing operations (7.7) (14.7) (22.4) (89.5) (15.9) (105.4)
Unaudited Six months ended 30 June 2014 Six months ended 30 June 2013
Amortisation Amortisation Exceptional of acquired Exceptional of acquired items intangibles Total items intangibles Total €m €m €m €m €m €m Discontinued operations
Amounts recognised in operating loss before tax:
Restructuring costs
Staff redundancy costs - - - (0.2) - (0.2)
Total recognised in operating loss - - - (0.2) - (0.2)
Loss on disposal of businesses and
investments - - - (0.3) - (0.3)
Total recognised in loss for period
from discontinued operations - - - (0.5) - (0.5)
Continuing operations
Restructuring costs Restructuring costs of €2.0m w ere recorded in the six months ended 30 June 2014 (six months ended 30 June 2013: €6.5m), all of w hich related to the cost of redundancy associated w ith cost reduction programmes (six months ended 30 June 2013: €6.9m).
Other exceptional operating (costs)/credits The Group increased its provision for onerous contracts by €2.1m in the six months ended 30 June 2014, reflecting decisions taken by the Group to vacate various leased premises in the Netherlands as w ell as notice received from a tenant that it intends to terminate its sublease w ith effect from 1 January 2015.
During the period the Group incurred €1.4m of advisory costs relating to the recommended public offer for the Group by De Persgroep Publishing N.V. announced on 30 June 2014.
Other exceptional costs and credits w ere incurred during the period, resulting in a net income of €0.7m. The items comprising this net income included €0.2m of gains on the sale of various publishing rights, a settlement of €0.2m received upon the liquidation of GPD (the former industry-w ide new s agency in the Netherlands), and a €0.3m release of provisions for certain employee entitlements relating to staff affected by the restructuring programmes.
Amortisation and impairment charges In the six months ended 30 June 2014, the Group recorded an amortisation charge of €19.5m (six months ended 30 June 2013: €21.0m) in respect of its acquired intangibles. Note 4 analyses the amortisation of acquired intangibles by operating segment. Impairment charges in the six months ended 30 June 2013 w ere made in respect of the Netherlands operating segment, of w hich €75.7m related to goodw ill and €34.0m to acquired intangibles, being the €45.3m above and the related tax credit of €11.3m noted below .
Amounts recognised in finance expense Exceptional finance items in the six months ended 30 June 2014 of €2.0m included a €1.8m w rite-off of the remaining capitalised prepaid fees relating to the previous bank borrow ings on refinancing of this debt. The remaining exceptional costs included w ithin finance expense in the six months ended 30 June 2014 (€0.2m) related to the unw inding of notional interest on exceptional provisions (six months ending 30 June 2013: €0.1m)
(Loss)/gain on disposal of businesses and investments During the period the Group recognised €2.2m of costs relating to past and future disposals of businesses. These costs comprised principally of advisory fees relating to the potential disposal of Limburg Media Group and also a provision for potential claims under w arranties provided by the Group as part of certain transactions completed in previous financial periods. In the six months ended 30 June 2013 a number of disposals of non-core businesses w ere made. Further details of these disposals are set out in Note 17.
Income tax credit An income tax credit on exceptional items of €6.1m w as recorded in the six months ended 30 June 2014 (six months ended 30 June 2013: €17.2m). €4.8m (six months ended 30 June 2013: €5.1m) of this is due to deferred tax credits arising on the amortisation of the Group's acquired intangibles, and €1.3m (six months ended 30 June 2013: €0.8m) related to tax credits recorded on other exceptional operating and finance items. In the six months ended 30 June 2013 a tax credit of €11.3m w as also recorded in respect of the impairment of acquired intangible assets.
Discontinued operations
There are no discontinued operations in the six months ended 30 June 2014.
Restructuring costs Staff redundancy costs associated w ith cost reduction programmes of €0.2m w ere recorded in the six months ended 30 June 2013.
Loss on disposal of businesses and investments In the six months to 30 June 2013, Mecom Poland disposed of its interests in five small subsidiaries (w hich together operate radio stations under the Radio GRA brand) to Multimedia Sp. z o.o.. The loss on disposal w as €0.3m. http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 15/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
6. Finance income and expense
Below is an analysis of the Group's finance income and expense, split betw een continuing and discontinued operations and also split betw een regular and exceptional items.
Unaudited (restated) Six months ended 30 June 2014 Six months ended 30 June 2013
Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total €m €m €m €m €m €m
Bank interest receivable - - - 0.2 0.1 0.3 Total finance income before exceptional - - - 0.2 0.1 0.3 items
Interest payable on loans and overdrafts (1.7) - (1.7) (2.9) - (2.9) Amortisation of debt issue costs (0.9) - (0.9) (1.1) - (1.1) Commitment fees on bank loans and overdrafts (0.5) - (0.5) (0.4) - (0.4) Unw inding of discounts - - - (0.1) - (0.1)
Total finance expense before exceptional (3.1) - (3.1) (4.5) - (4.5) items
Net finance (expense)/income before exceptional items (3.1) - (3.1) (4.3) 0.1 (4.2)
Exceptional items:
Exceptional finance expense (2.0) - (2.0) (0.1) - (0.1)
Total finance income - - - 0.2 0.1 0.3
Total finance expense (5.1) - (5.1) (4.6) - (4.6)
7. Tax
The adjusted tax expense on continuing operations for the six months ended 30 June 2014 of €5.4m (six months ended 30 June 2013: €2.5m) represents an effective tax rate on adjusted profit before tax (excluding the share of results of associates and joint ventures) of 22.0% (six months ended 30 June 2013: 26.9%).
The total tax credit on continuing operations for the six months ended 30 June 2014 of €0.7m (six months ended 30 June 2013: credit €14.7m) included a tax credit of €6.1m (six months ended 30 June 2013: credit €17.2m) arising on exceptional items and the amortisation of acquired intangibles. Refer to Note 5 for further details.
8. Discontinued operations and assets classified as held for sale
Limburg Media Group At 30 June 2014 the Group's LMG operations w ere classified as a disposal group held for sale and are presented separately in the consolidated balance sheet as at 30 June 2014. The Group announced on 14 February 2014 that it w as in discussions w ith Concentra regarding a potential disposal of LMG. As at 30 June 2014 the Directors considered the potential disposal of LMG to meet the criteria for reclassification of the assets and liabilities of the disposal group as held for sale. The major classes of assets and liabilities comprising the operations classified as held for sale at 30 June 2014 are as follow s:
Unaudited 30 June 2014 €m
Other intangible assets 16.3
Property, plant and equipment 6.8 Interest in associates 2.6 Deferred tax assets 1.0 Inventories 0.4 Trade and other receivables 2.3 Cash and cash equivalents 15.0
Total assets classified as held for sale 44.4
Borrow ings (0.2) Provisions (7.0) Employee benefit obligations (1.2) Deferred tax liabilities (4.5) Trade and other payables (14.8)
Total liabilities directly associated w ith assets classified as held for sale (27.7)
Net assets of disposal group 16.7
Under the terms of the new banking facilities described in Note 13, the outstanding term debt in the Netherlands (w hich w as €22.5m as at 30 June 2014) is required to be repaid in full follow ing the completion of a disposal of LMG.
Mecom Poland On 20 March 2013, the Company reached agreement for the sale of its remaining Polish operations, w hich comprised at that time only of Media Regionalne Sp. z o.o ("Media Regionalne"). As such, at 30 June 2013 the Group's Polish operations w ere classified as a disposal group held for sale and w ere presented separately in the consolidated balance sheet as at 30 June 2013. The major classes of assets and liabilities comprising the operations classified as held for sale at 30 June 2013 w ere as follow s: http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 16/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
Unaudited 30 June 2013 €m Deferred tax assets
0.3 Inventories 1.1 Trade and other receivables 4.4 Cash and cash equivalents
11.0 Total assets classified as held for sale
16.8 Provisions
(0.2) Deferred tax liabilities (0.6) Trade and other payables
(5.7) Total liabilities directly associated w ith assets classified as held for sale
(6.5) Net assets of disposal group
10.3
Follow ing the agreement to sell Media Regionalne all operations in Poland w ere classed as discontinued. The Group reported the income and expenses of this discontinued operation separately from income and expenses of its continuing operations for the six months ended 30 June 2013. The sale of Media Regionalne w as completed on 31 October 2013.
The results of Mecom Poland for 2013 w hich w ere included in the consolidated income statement as discontinued operations are set out below .
Unaudited Six months ended 30 June 2013
Before Exceptional After exceptional items and exceptional items and amortisation items and amortisation of acquired amortisation of acquired intangibles of acquired intangibles (Note 5) intangibles Note €m €m €m Revenue 4 22.4 - 22.4 Cost of sales
(9.2) - (9.2) Gross profit 13.2 - 13.2 Operating costs
(13.8) (0.2) (14.0) Operating loss 4 (0.6) (0.2) (0.8) Finance income 6 0.1 - 0.1 Loss on disposal of businesses and investments 1
- (0.3) (0.3) Loss before tax (0.5) (0.5) (1.0) Income tax expense
(0.2) - (0.2) Loss for the period from discontinued operations
(0.7) (0.5) (1.2)
Attributable to:
Mecom Group plc shareholders
(0.7) (0.5) (1.2) Non-controlling interests
- - -
1. No tax liabilities arose on the disposal of businesses and investments
The net cash flow s associated w ith the Polish operations in 2013 w ere as follow s:
Unaudited Six months ended 30 June 2013 €m Net cash used in operating activities (0.1) Net cash from investing activities 1.8 Net cash flow s used in financing activities -
9. Dividends
Unaudited Six months Six months ended ended 30 June 30 June 2014 2013 €m €m Dividends on ordinary shares of the Company declared and paid during the period: Final 2012 dividend paid at 5.5 euro cents per share - 6.5
http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 17/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate 10. Earnings per share
Basic earnings per share is calculated by dividing net profit/(loss) for the period attributable to ordinary equity holders of the parent by the w eighted average number of ordinary shares outstanding during the period, excluding ow n shares held by the Mecom Employee Benefit Trust ("EBT") w hich are treated as cancelled. The shares held by the EBT w ere sold in the second half of 2013.
Adjusted basic earnings per share is calculated by dividing adjusted earnings for the period attributable to ordinary equity holders of the parent by the w eighted average number of ordinary shares outstanding during the period, excluding ow n shares held by the EBT w hich are treated as cancelled. Adjusted earnings are the profit/(loss) for the period attributed to ordinary equity holders of the parent adjusted to exclude exceptional items and amortisation of acquired intangibles (net of related tax and non-controlling interests).
Diluted earnings per share and adjusted diluted earnings per share are calculated after assessing the effect of potentially dilutive shares issued under (i) the Group's share-based payment aw ards and (ii) share w arrants, in both cases only w here the exercise price is less than the average market price of the Company's ordinary shares during the period.
There have been no transactions involving ordinary shares or potential ordinary shares betw een the reporting date and the date of authorisation of these condensed consolidated financial statements.
Unaudited Six months Six months ended ended 30 June 30 June 2014 2013 000s 000s Weighted average number of ordinary shares for basic earnings per share and basic adjusted basic
earnings per share 121,920 118,910
Effect of dilution: Share-based payment aw ards 1,264 966
Weighted average number of ordinary shares for diluted earnings per share and adjusted diluted
earnings per share 123,184 119,876
The potentially dilutive share-based payment aw ards w ould not, either in the six month period ended 30 June 2014, or the six month period ended 30 June 2013, have had a dilutive effect on basic earnings per share from continuing operations. As such, there is considered to be no effective dilution on any of the earnings per share measures presented below . The comparative figures have been restated accordingly in the table below .
Unaudited (restated) Six months Six months ended ended 30 June 30 June 2014 2013 Earnings per share (euro cents per share): IFRS measures Basic: continuing operations (2.4) (81.0)
discontinued operations - (1.0)
continuing and discontinued operations (2.4) (82.0)
Diluted: continuing operations (2.4) (81.0)
discontinued operations - (1.0)
continuing and discontinued operations (2.4) (82.0)
Non-IFRS measures
Adjusted basic: continuing operations 16.0 7.7
discontinued operations - (0.6) continuing and discontinued operations 16.0 7.1
Adjusted diluted: continuing operations 16.0 7.7
discontinued operations - (0.6)
continuing and discontinued operations 16.0 7.1
Earnings per share for the six months ended 30 June 2013 from continuing operations exclude the discontinued Polish operations, as described in Note 8.
Adjusted earnings per share The Directors believe that the presentation of adjusted earnings per share, being the basic earnings per share adjusted for exceptional items and amortisation of acquired intangibles (and any related tax effects) and the non-controlling interests' share of those items helps to explain the underlying performance of the Group. A reconciliation of basic to adjusted earnings per share is as follow s:
Unaudited (restated) Six months ended 30 June 2014 Six months ended 30 June 2013
Euro cents Euro cents €m per share €m per share
Basic earnings (2.9) (2.4) (97.5) (82.0) Add back exceptional items 9.0 7.4 (18.9) (15.9) Add back amortisation of acquired intangibles 19.5 16.0 21.0 17.7 Add back impairments - - 121.0 101.8 Deduct exceptional tax credits for year (6.1) (5.0) (17.2) (14.5) Deduct non-controlling interests' share of above - - - - http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 18/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
Adjusted earnings 19.5 16.0 8.4 7.1 Deduct adjusted earnings of discontinued operations - - 0.7 0.6
Adjusted earnings - continuing operations only 19.5 16.0 9.1 7.7
11. Impairment review of acquired intangible assets
Carrying amount of acquired intangible assets allocated to each CGU
Unaudited The Netherlands Denmark Total 1 Acquired intangible assets
At 30 June 2014 235.1 38.0 273.1
At 30 June 2013 (restated) 241.1 54.6 295.7
1 Excluding acquired intangible assets that were classified as held-for-sale at the period end
The Group had no goodw ill on its balance sheet at 30 June 2014 or 30 June 2013, w ith all balances w ritten off in prior periods. At each reporting date the Group assesses w hether there is any indication of any of its cash generating units' (CGUs') acquired intangible assets (comprising customer relationships, brands and publishing rights), being impaired. If there is such an indication, the individual assets' recoverable amount is measured and, if necessary, an impairment charge is recorded.
Indications of impairment during the six months ended 30 June 2014 Having taken into account both internal and external factors, the Directors have identified no indicators of impairment in respect of either CGU during the six months ended 30 June 2014.
12. Cash and cash equivalents
Unaudited (restated) (restated) 30 June 31 December 30 June 2014 2013 2013 Note €m €m €m
Cash and cash equivalents per the consolidated balance sheet 29.5 43.6 33.9
Cash and cash equivalents classified as assets held for sale 8 15.0 - 2.4
Short-term deposits classified as assets held for sale 8 - - 8.6
Bank overdrafts (12.0) (13.5) (0.6) 13 Cash and cash equivalents per the consolidated cash flow 32.5 30.1 44.3 statement
13. Borrow ings
30 June 31 December 30 June 2014 2013 2013 €m €m €m Note Unaudited Audited Unaudited
Bank overdrafts 12 (12.0) (13.5) (0.6)
Bank borrow ings (60.5) (67.5) (139.9) Other (3.3) (3.8) (3.9)
Total (75.8) (84.8) (144.4)
Show n in the consolidated balance sheet as:
Non-current (44.4) (3.5) (132.6)
Current (31.4) (81.3) (11.8)
The Group's net debt is as follow s:
Unaudited (restated) (restated) 30 June 31 December 30 June 2014 2013 2013 Note €m €m €m
Cash and cash equivalents 12 29.5 43.6 33.9 Cash and cash equivalents included w ithin assets classified as held for sale 8 15.0 - 11.0
Borrow ings (75.8) (84.8) (144.4) Borrow ings included w ithin assets classified as held for sale 8 (0.2) - -
Obligations under finance leases - - (0.2)
Total net debt (31.5) (41.2) (99.7)
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The Group refinanced its previous bank borrow ings on 27 March 2014 w ith tw o new standalone banking facilities, one in the Netherlands and one in Denmark (together totalling €140.0m). The term loans under both new facilities are due to amortise over a three year period.
Each facility contains financial covenants that are customary in each banking market and certain restrictions related to the operation of the businesses (such as requiring consent from lending banks for certain corporate activities) and to maintaining financial separation betw een the tw o banking facilities (such as restricting certain cash flow s from each financing). The term loans in each set of facilities are required to be prepaid upon the occurrence of certain events, such as the disposal of businesses, and each of the lenders in the Netherlands has the right to request full repayment of their respective commitments to the facility in the Netherlands upon a change of control of the borrow er.
The Group's average net debt for the six months ended 30 June 2014 w as €52.6m (six months ended 30 June 2013: €140.0m). Closing net debt, has decreased by €9.7m from 31 December 2013 to €31.5m. This decrease is primarily due to operating cash flow generation.
14. Capital commitments
Capital commitments contracted but not provided at 30 June 2014 w ere €0.3m (30 June 2013: €0.9m).
15. Related party transactions
Transactions betw een the Company and its subsidiaries, w hich are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of other related party transactions are disclosed below .
Transactions w ith joint ventures and associates The follow ing table summarises the sales, purchases and amounts ow ed to and by the Group's associated undertakings and joint ventures.
Unaudited Sales to Purchases Amount owed Amount owed to related from related by related related parties parties parties parties €m €m €m €m Associates Six months to 30 June 2014 0.1 0.1 - - Six months to 30 June 2013 - - - - Joint ventures Six months to 30 June 2014 0.3 7.1 - 0.3 Six months to 30 June 2013 1.0 8.9 0.2 -
Sales of goods and services to related parties w ere made at the usual list prices, less average volume discounts. Purchases w ere made at market prices. No provisions have been made for doubtful debts in respect of amounts ow ed by related parties.
16. Reconciliation of loss for the period to cash generated from operations
The table below relates to amounts w ithin both continuing and discontinued operations, unless otherw ise stated.
Unaudited (restated) Six months Six months ended ended Note 30 June 30 June 2014 2013 €m €m Loss for the period (3.1) (97.6) Adjusted for: Depreciation of property, plant and equipment 8.3 10.9 Amortisation of softw are 2.5 4.9 Amortisation of acquired intangibles 5 19.5 21.0 Impairment charges - 121.0 Share-based payment expense 0.2 0.1 Loss/(gain) on disposal of businesses and investments 2.2 (25.0) Gain on disposal of property, plant and equipment (0.2) (0.1) Net finance expense 6 5.1 4.3 Income tax credit 7,8 (0.7) (14.5) Share of results of associates and joint ventures (0.1) (2.2)
Operating cash flow before changes in w orking capital, provisions and 33.7 22.8 pensions
Increase in inventories (0.2) (0.1) Decrease in trade and other receivables 7.5 11.3 Decrease in trade and other payables (14.8) (18.1) Decrease in provisions (11.8) (11.7) Decrease in employee benefit obligations (2.1) (4.6)
Cash generated from/(used in) operations 12.3 (0.4)
17. Disposals of businesses
There w ere no material disposals of businesses during the six months ended 30 June 2014. Certain costs relating to historical transactions and potential future disposals have been recognised in the period as a net loss on disposal.
Disposals in 2013
Sale of subsidiaries On 31st March 2013 Mecom's Dutch subsidiary, Wegener Nederland B.V., completed the sale of its online automotive classifieds business AutoTrack to De Persgroep Nederland B.V. via the sale of the shares of Wegener Digital B.V. for proceeds of €26.4 million. Transaction costs of €0.8m w ere incurred. The carrying value of net assets disposed w as €13.7m resulting in a gain on disposal of €11.9m.
The net cash inflow in the half year condensed consolidated financial statements from the disposal w as €25.9m, comprising cash proceeds received on disposal of €26.4m less €0.5m of directly attributable costs paid. €0.3m of directly attributable costs remained unpaid at 30 June 2013.
In the half year to 30 June 2013 AutoTrack generated revenues of €2.3m and profit before tax of €0.8m being the results up to the date of sale.
Sales of interest in associates http://www.investegate.co.uk/ArticlePrint.aspx?id=201407300700146670N 20/21 5/8/2014 Mecom Group PLC | Interim Results | FE InvestEgate
On 20th June Mecom's Dutch subsidiary, Wegener Nederland B.V., completed the sale of its 30 per cent economic interest in Funda N.V. ("Funda"). The sale w as effected by means of a buy back by Funda of Mecom's shareholding for a price of €15.1m. Transaction costs of €0.3m w ere incurred. The carrying value of Mecom's interest in Funda at the date of disposal w as €3.4m resulting in a gain on disposal of €11.4m.
The net cash inflow in the half year from the disposal w as €15.0m, comprising cash proceeds received on disposal of €15.1m less €0.1m of directly attributable costs paid. €0.2m of directly attributable costs remained unpaid at 30 June 2013.
In the half year to 30 June 2013, Funda generated and profit before tax of €3.4m.
Sales of businesses On 1 June 2013 Mecom's Danish subsidiary, Berlingske Media A/S ("Berlingske Media"), completed the sale of the trade and assets of three local free w eekly titles (the "Freesheets") to Sjællandske Medier A/S on a debt- and cash-free basis for proceeds of DKK 37.5m (€5.0m). The carrying value of net assets disposed of w as €2.5m and transaction costs of €0.3m w ere incurred, resulting in a gain on disposal of €2.2m.
Mecom also incurred €0.9m of advisory costs in aggregate in relation to the sale of a radio business in Poland and certain other ongoing sales processes during the six months ended 30 June 2013.
18. Events after the balance sheet date
No material events have occurred betw een the balance sheet date and the date of approval of these condensed consolidated financial statements w hich, in the opinion of the Directors, w ould require disclosure or adjustment in the condensed consolidated financial statements.
INDEPENDENT REVIEW REPORT TO MECOM GROUP PLC
Introduction We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2014, w hich comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the related Notes 1 to 18. We have read the other information contained in the half yearly financial report and considered w hether it contains any apparent misstatements or material inconsistencies w ith the information in the condensed set of consolidated financial statements.
This report is made solely to the Company in accordance w ith guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. To the fullest extent permitted by law , w e do not accept or assume responsibility to anyone other than the Company, for our w ork, for this report, or for the conclusions w e have formed.
Directors' Responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance w ith the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 3, the annual financial statements of the Group are prepared in accordance w ith IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance w ith International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union.
Our Responsibility Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review .
Scope of Review We conducted our review in accordance w ith International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance w ith International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that w e w ould become aw are of all significant matters that might be identified in an audit. Accordingly, w e do not express an audit opinion.
Conclusion Based on our review , nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance w ith International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP London 29 July 2014
This information is provided by RNS The company news service from the London Stock Exchange
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IR RLMFTMBITBII
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