RNS No 2981t
HODDER HEADLINE PLC
1st March 1999
HODDER HEADLINE PLC
PRELIMINARY RESULTS
Hodder Headline announces record profits for the twelve months to 31st
December 1998.
The key points are:
* Pre-tax profits up by 15 per cent to #9.4 million (1997, #8.2 million)
* Earnings per share up by 13 per cent to 17.9 pence (1997, 15.8 pence)
* Sales growth of 10 per cent to #102.5 million (1997, #93.2 million)
* Positive net cash of #1.7 million (1997, net debt #2.5 million)
* Underlying operating cash flow increased by 65 per cent to #11.3 million
(1997, #6.8 million)
* Recommended final dividend of 5.55 pence net per share, making a total
dividend of 8.0 pence net per share (1997, 7.2 pence net per share)
* Sales in the first seven weeks of 1999 were up by 11 per cent and the
outlook for growth is encouraging.
Tim Hely Hutchinson, Group Chief Executive, commented on the results and
prospects:
"I am delighted that we are able to announce another set of record results
for Hodder Headline.
Our sales growth reflects a further increase in market share in both
consumer and educational markets as we back our rapidly developing lists
of both top established authors and outstanding new talent with powerful
marketing campaigns.
We are encouraged not only by the earnings growth that we generated in
1998, but also by the fact that our strong cash flow enabled us to
eliminate all the Group's net borrowings by the end of the year. This
places us in an excellent position to continue investing for the future in
all the key areas of our business.
Our investment to date in our largest activity, UK Consumer Publishing,
brought us an 18 per cent increase in sales in 1998 and a 40 per cent
increase in operating profit. The biggest bestsellers of the year
included Dickie Bird's autobiography, Tom Clancy's Net Force, Josephine
Cox's Miss You Forever, Charles Frazier's Cold Mountain, Elizabeth
George's Deception on His Mind, Stephen King's Bag of Bones, Dean Koontz's
Fear Nothing and James Patterson's Cat and Mouse.
The UK book market continues to be lively and it is excellent to see so
many high quality bookstore openings. Export markets have been tougher,
but recent results from Australia have shown considerable improvement.
1999 has started well, with sales in the first seven weeks of the year
approximately 11 per cent ahead of the same period last year and 18 of our
titles having so far made appearances on national bestseller lists, 10 of
them by authors new to our lists. We are very pleased with the success of
John le Carre's Single & Single and Josephine Cox's The Gilded Cage. We
are also delighted with the bestselling performance of several first
novels, particularly John Connolly's Every Dead Thing and Wendy Holden's
Simply Divine. We have extremely strong consumer, educational and
academic publishing programmes throughout the year. The fiction
highlights include new novels from Tom Clancy, Elizabeth George, Stephen
King, Dean Koontz and James Patterson. Non-fiction blockbusters will
include cricket umpire Dickie Bird's new book White Cap and Bails and
Manchester United manager Alex Ferguson's long-awaited autobiography.
I am confident that Hodder Headline's policies of investing for growth,
supporting new talent and striving for excellence in every department will
enable us to report even more good news at the end of 1999 and in future
years."
Attached is a copy of the Preliminary Statement. This comprises a
shortened version of the text that will be included in our Annual Report
and Accounts 1998, to be published in late March, together with the
Group's profit and loss account, balance sheet and cash flow statement as
at 31st December 1998.
For further information, please contact:
Tim Hely Hutchinson 0171 404 5959 on 1st March 1999
Group Chief Executive Otherwise 0171 873 6000 thereafter
Mark Opzoomer As above
Deputy Chief Executive
Richard Adam As above
Group Finance Director
Jane Hardman/Jessica Shepherd-Smith 0171 404 5959
Brunswick Group Limited
1st March 1999
KEY FINANCIAL FIGURES
1998 1997 per cent
#000 #000 change
Profit & loss account
Sales 102,486 93,162 10.0 per cent
Operating profit before
interests in Associated
undertakings and joint
ventures 9,876 8,698 13.5 per cent
Operating profit 10,048 8,898 12.9 per cent
Profit before taxation 9,365 8,174 14.6 per cent
Earnings per share 17.9p 15.8p 13.3 per cent
Dividends
Dividends per share (net) 8.0p 7.2p 11.1 per cent
Dividend cover (times) 2.2 2.2 -
Cash flow statement
Net cash inflow from continuing
operating activities before
property disposal proceeds 11,319 6,856 65.1 per cent
Operating profit conversion 115 per cent 79 per cent 45.6 per cent
Net cash inflow before financing 4,106 1,267 224.1 per cent
Balance sheet
Net cash / (debt) 1,701 (2,449) -
Gearing Nil 7 per cent -
Interest cover (times) 14.7 12.3 19.5 per cent
Net assets 38,657 35,450 9.0 per cent
Net assets per share 109.6p 100.5p 9.1 per cent
RESULTS SUMMARY & DIVIDEND
We are very pleased to report another year of record results for the
Group. Our strategy has been to strengthen our publishing lists, without
necessarily increasing our already prolific output of new titles, by
acquiring and commissioning books from the world's best authors. We have
backed our star-studded publishing programmes with increasingly powerful
sales and publicity campaigns. In 1998, the success of this strategy was
reflected in a 13 per cent increase in like-for-like publishing sales and
similar growth in earnings per share. At the same time we achieved even
stronger cash flow than in the previous year. This is enabling us to
continue investing in exciting new projects that are confidently expected
to generate further growth in 1999 and future years.
Results
Pre-tax profit increased by 15 per cent to #9.4 million (1997, #8.2
million). Earnings per share increased by 13 per cent to 17.9 pence
(1997, 15.8 pence), slightly less than the pre-tax profit growth rate
because of an increase in the effective tax rate to 32.5 per cent (1997,
32.0 per cent).
The Group's sales in the year grew by 10 per cent to #102.5 million (1997,
#93.2 million). Like-for-like publishing sales, excluding the effects of
currency translation differences and distribution services, grew by 13 per
cent. This was driven by significant growth in our UK publishing
divisions whose revenues grew by 16 per cent. Our consumer markets have
shown some renewed signs of growth in 1998, particularly in the UK and,
more importantly, we are gaining market share. Underlying overseas sales
grew by only 3 per cent, as we refined our publishing programme in New
Zealand and suffered from a very depressed schools market in South Africa.
However our very strong UK performance easily outweighed the effect of
relatively difficult overseas markets.
Net assets rose to #38.7 million (1997, #35.5 million). Net debt at the
1997 year end of #2.5 million was converted to a net positive cash balance
of #1.7 million at the end of 1998. The Group also has substantial
unutilised committed borrowing facilities.
Dividend
The Board is recommending payment of a final dividend of 5.55 pence net
per share (1997, 5.0 pence net per share), making a total dividend for the
year of 8.0 pence net per share (1997, 7.2 pence net per share), an
increase of 11 per cent. Dividend cover continues to be 2.2 times. The
final dividend would be payable on 19th May 1999 to shareholders on the
register at the close of business on 23rd April 1999.
STRATEGIC REVIEW - A TIME OF OPPORTUNITY
Plans and Opportunities for Editorially-led Growth
Thanks to a succession of years in which we have increased our sales and
profits while simultaneously reducing our stocks, we have eliminated all
of the Group's year end net borrowings. Taken together, our cash in hand
and our committed bank facilities give us the scope to develop our
publishing lists more vigorously than ever before. Much of this building
work consists of taking on and nurturing the careers of a growing list of
the world's most gifted and popular authors. The number and high calibre
of authors joining us for the first time is extraordinary, and this influx
of talent will prove a strong foundation for future growth stretching many
years ahead.
In our Educational and Academic publishing, we are continuing to develop
important new school and home learning series, such as our growing and
multi-faceted revision guide range. In addition, we aim to buy catalogues
of new and backlist titles from other publishers. At the end of 1998, we
acquired a small list of children's books in Australia and the medical
list of the long-established publisher Chapman & Hall. These lists will
generate around #2 million of additional sales for 1999, and we are
actively seeking further opportunities of a similar nature and probably
larger in some cases.
So, both by acquiring whole lists of titles from other publishers and by
ensuring that our editorial programme contains building blocks of growth
for each of the years ahead, our strategy is to ensure that our future
growth is securely based on increasingly powerful lists of new and
backlist titles.
New Developments in Exciting Markets
The markets in which we are working are broadly stable in value, with
gains in Britain being offset by currency and other problems in export
markets; but the quality, diversity and innovation in worldwide
bookselling today are exciting. We continue to see, notably in Britain,
Australia and Europe, important new bookstore openings in prime locations.
The trend of "superstore" openings continues apace. The new bookselling
space is usually attractive, well-lit, well-stocked and staffed by
knowledgeable booksellers. The public's appetite for books has been
stimulated by these new stores, by new initiatives such as the promotion
of World Book Day and by much more rapid access to the full catalogue of
available books both from terrestrial booksellers and from the new
internet "bookstores".
The Group's market share in all its main markets is increasing. For
example, in paperback fiction publishing, our largest single activity, our
ranking in Britain rose to No. 2 (after Bertelsmann) in the authoritative
Guardian list of 1998's bestsellers, with 18 of our titles included in the
top 100 (1997, 13 titles) and a value increase of 33 per cent.
Although we believe we are already very effective in British and
Commonwealth markets, we also feel that there are major new sales and
marketing opportunities for us in Europe. We are offering our European
customers new benefits that include the option of receiving invoices and
statements in Euro or local currencies, as alternatives to sterling, and
the introduction of faster delivery services. These initiatives are being
backed by increased telephone and field sales representation and a greater
allocation of promotional resources. Europe is currently our fastest
growing export market and we expect it to become substantially larger over
the next few years.
Although sales through internet bookselling remain small for predominantly
British publishers, we expect internet and other home shopping to grow
rapidly. There are several sophisticated UK-based sites and we expect
these to take the lion's share of the domestic on-line market. We are
actively marketing our books in co-operation with these new retailers.
Group Current Trading and Prospects
The Group's sales in the first seven weeks of the year were 11 per cent
ahead of the same period last year. The year has started with 18 titles
appearing on national bestseller lists, 10 from first-time authors.
We were delighted that our authors won the Whitbread Novel of the Year and
Children's Book of the Year awards announced in January. We are very
pleased with the success of John le Carre's Single & Single and Josephine
Cox's The Gilded Cage. We are equally delighted with the bestselling
performance of several first novels, particularly John Connolly's Every
Dead Thing and Wendy Holden's Simply Divine.
We have extremely strong consumer, educational and academic publishing
programmes throughout the year. The consumer programmes feature not only
virtually all our top established authors but also an unrivalled wealth of
authors new to our lists whom we shall be promoting with an unprecedented
programme of vigorous and innovative campaigns. Fiction highlights
include new novels from Tom Clancy, Elizabeth George, Stephen King, Dean
Koontz and James Patterson. Non-fiction blockbusters will include cricket
umpire Dickie Bird's new book White Cap and Bails and Manchester United
manager Alex Ferguson's long-awaited autobiography.
Our Educational and Academic business will benefit from the newly acquired
Chapman & Hall titles we referred to earlier and the continued rapid
development of our home learning publishing. We do expect growth in
schools publishing but this may be held back by poor funding of textbooks
in UK secondary schools and the fact that certain major new examinations
for which we are planning publications will not be in place until the year
2000.
Overseas, we expect to see an improvement in profitability. This will
stem partly from our recent reorganisation of our offices and distribution
arrangements in Australia. The reorganisation costs were all borne in
1997 and 1998 and we expect to see benefits this year. Also, trading
conditions in Australia appear to be improving and our locally-published
list is producing a prolific stream of bestsellers.
Overall, the Group is in an ideal position to continue making progress
from a strong base. This is primarily because of the investments we have
been making and continue to make to build the quality of our publishing
lists. But our success also stems from a striving for excellence in
marketing, author care, customer service, commercial management and every
other activity. Our aim is not only to grow but also to be the best. We
are confident that these policies, together with the dedicated efforts of
our high calibre staff, will enable us to report even more good news at
the end of 1999 and in future years.
GROUP OPERATING REVIEW
Operating Profit
Group operating profit increased by 13 per cent to #10.1 million (1997,
#8.9 million). Our operating margin increased to 9.8 per cent (1997, 9.6
per cent). The operating profit and margin increases were achieved
despite the #0.9 million lower level of "Other Income", largely due to the
previously forecast lower contribution from our Anne Geddes publishing
programme in New Zealand, caused by a natural gap in the creative cycle.
The underlying performance of the business was therefore even stronger
than the reported figures indicate.
Sales and Gross Margins
The Group's sales grew by 10 per cent to #102.5 million (1997, #93.2
million). Like-for-like publishing sales, excluding the impact of
exchange rate movements and revenue from third party distribution, grew by
13 per cent. Our UK publishing divisions produced sales growth of 16 per
cent.
The Group's gross margins were well maintained during the year, despite
competitive pressures and tight controls on print runs, ending the full
year marginally ahead at 47.2 per cent (1997, 47.1 per cent).
Overheads
Distribution costs remained stable at 10.9 per cent of sales (1997, 10.7
per cent) with the slight increase being attributable to the first full
year of the Group incurring the higher cost of our sales-generative next
day distribution service and also to higher levels of equally sales-
generative inspection copies sent to schools. Administrative expenses
were reduced to 29.2 per cent of sales (1997, 30.8 per cent). Although we
are likely to see some impact on administrative expenses in 1999 following
a rent review on our head office, we continue to keep tight control on all
overheads and we expect overhead reductions in Australia following our
recent reorganisation there.
Other Income
Other income in 1998 declined, as forecast, to #2.6 million (1997, #3.5
million) because of the absence of a wholly new work in our New Zealand-
based Anne Geddes publishing programme. This was partially offset by
improved sales of subsidiary rights in our UK Consumer Publishing segment.
SEGMENTAL OPERATING REVIEWS
UK Consumer Publishing
Hodder Headline had an excellent year in UK Consumer Publishing.
Operating profit grew by 40 per cent to #7.4 million (1997, #5.3 million).
Our operating margin improved to 11.8 per cent (1997, 9.9 per cent). We
now rank No. 3 amongst UK consumer book publishers and No. 2 amongst UK
mass-market paperback publishers. The biggest bestsellers of the year
included Dickie Bird's autobiography, Tom Clancy's Net Force, Josephine
Cox's Miss You Forever, Charles Frazier's Cold Mountain, Elizabeth
George's Deception on His Mind, Stephen King's Bag of Bones, Dean Koontz's
Fear Nothing and James Patterson's Cat and Mouse.
The operating profit growth was driven by a 15 per cent increase in sales
to #67.9 million (1997, #58.9 million). This was led by another
outstanding performance from Headline Book Publishing, with excellent
results also coming from Hodder & Stoughton General Publishing and Hodder
Children's Books.
UK Educational, Academic & Professional Publishing
Our UK Educational, Academic and Professional divisions' sales increased
by 11 per cent to #22.8 million (1997, #20.6 million).
Operating profit was up by 3 per cent to #2.7 million (1997, #2.6
million). The relatively low increase in operating profit growth compared
to sales growth was caused primarily by reduced gross margins within the
Arnold division where over 40 per cent of the sales are exports. These
were affected by the strength of sterling and difficulties in Asian
markets. Hodder & Stoughton Educational increased its operating profit in
keeping with its sales growth.
Overseas Operations
Overseas Operations recorded an operating loss in 1998 of #0.3 million
(1997, #0.9 million operating profit) in difficult market conditions. The
reduction in performance compared to last year was largely attributable to
a #1.1 million lower contribution to Other Income from the Anne Geddes
programme in New Zealand, #0.3 million of reorganisation costs to
consolidate warehouse, distribution and customer service functions with
another publisher in Australia and a #0.3 million reduced contribution
from South Africa, caused by a collapse in government spending on
educational books. Sales for 1998 were #15.0 million (1997, #17.6
million). Excluding the translation impact of differing exchange rates,
which amounted to #3.0 million, sales were up by 3 per cent.
GROUP FINANCIAL REVIEW
Interest
The net interest charge of #0.7 million in 1998 was slightly lower than
1997 as the benefits of lower average borrowings exceeded the cost of
higher average base rates. The underlying average rate of interest for the
year was approximately 8.3 per cent (1997,8.0 per cent). Interest cover
improved to 14.7 times, compared with 12.3 times in 1997.
Effective Tax Rate
The tax charge for the year was #3.0 million, producing an effective tax
rate of 32.5 per cent (1997, 32.0 per cent). This compares with a weighted
standard rate of taxation of 30.7 per cent (1997, 31.3 per cent) for the
main countries in which the Group operates. The slightly higher 1998
effective rate reflects the tax losses incurred in the Overseas Operations
which are not available for offset against UK taxable profits.
Liquidity and Funding
During the year, strong underlying free cash flow resulted in the Group
being in a #1.7 million net cash position at the year end. This compares
with #2.5 million of net debt and associated gearing of 6.9 per cent at
the end of 1997. Net debt peaked at #12.0 million during October when
stocks and debtors increased as the Group moved into the seasonally high
Autumn sales period. This was #2.4 million lower than the previous year's
peak level and was well within the Group's #30.0 million United Kingdom
bank facilities, which comprise a mixture of two- and three-year committed
facilities.
Cash Flow
In 1998, net cash flow from continuing operations increased to #11.3
million (1997, #6.8 million before property disposal proceeds of #0.2
million). This represented 114.6 per cent of operating profit (1997, 78.8
per cent) and was achieved after a further net investment of #3.0 million
(1997, #4.7 million) in new copyright assets, as the Group continued to
add to its future publishing programme.
Underlying free cash flow, before payments in respect of dividends and
property disposal proceeds, amounted to #6.7 million. This was almost
double the previous year's level of #3.4 million. Working capital
throughout the Group was carefully managed with stock, trade debtors and
trade creditors all contributing to the improvement in underlying free
cash flow. Stock was reduced from 1997 levels and the ratio of stock
compared to sales continued the previous three years' trend by falling
from 19.2 per cent to 16.7 per cent.
Year 2000
The Year 2000 issue is one that affects all companies. In 1997 we
initiated a Year 2000 programme and progress is regularly monitored by the
Board of Directors. We believe that we are now compliant in all material
respects, although total compliance is dependent upon organisations with
whom we trade meeting their targets. The Group has followed the
requirements of the Urgent Issues Task Force Abstract 20 by charging the
#0.2 million cost of rendering existing software Year 2000 compliant to
the profit and loss account as it has been incurred.
Pensions
An actuarial valuation of the Group's UK defined benefits pension scheme
as at 1st July 1998 was completed in January 1999. This showed a surplus
which is being spread over the estimated average remaining service lives
of current employees. The Group's contribution holiday is currently being
maintained at least until June 2000.
Financial Statements
The Group's profit & loss account, balance sheet and cash flow statement
as at 31st December 1998 are set out below.
CONSOLIDATED PROFIT & LOSS ACCOUNT
YEAR ENDED 31ST DECEMBER
1998 1997
Note #000 #000
Turnover - continuing operations 3 102,486 93,162
Cost of sales (54,103) (49,314)
__________ ____________
Gross profit 48,383 43,848
Distribution costs (11,176) (10,004)
Administrative expenses (29,963) (28,687)
Other operating income 2,632 3,541
__________ ____________
Operating profit - before interests
in associated undertakings and joint
ventures 9,876 8,698
Income from interests in associated
undertakings and joint ventures 172 200
__________ ____________
Operating profit 3 10,048 8,898
Net interest payable and similar
charges (683) (724)
__________ ____________
Profit on ordinary activities before
taxation 9,365 8,174
Tax on profit on ordinary activities 4 (3,044) (2,616)
__________ ____________
Profit on ordinary activities after
taxation 6,321 5,558
Equity minority interests 3 (1)
__________ ____________
Profit for the financial year 6,324 5,557
Dividends 5 (2,823) (2,540)
__________ ____________
Retained profit for the financial year
transferred to reserves 3,501 3,017
========== ============
Basic earnings per share 6 17.9p 15.8p
========== ============
Diluted earnings per share 6 17.9p 15.7p
========== ============
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
YEAR ENDED 31ST DECEMBER
1998 1997
#000 #000
Profit attributable to members of the
- Group 6,147 5,352
- associated
undertakings 32 38
- joint ventures 145 167
__________ ___________
6,324 5,557
Currency translation differences on foreign
currency net investments (307) (624)
__________ ____________
Total recognised gains and losses for the year 6,017 4,933
CONSOLIDATED BALANCE SHEET
31ST DECEMBER
1998 1997
Note #000 #000
Fixed assets
Intangible assets 1,392 495
Tangible assets 3,344 3,695
Investments 359 358
________ ________
5,095 4,548
________ ________
Current assets
Stocks 17,095 17,880
Debtors 44,628 45,123
Cash at bank and in hand 7,561 3,492
69,284 66,495
Creditors : amounts falling due within one year (29,648) (29,110)
________ ________
Net current assets 39,636 37,385
________ ________
Total assets less current liabilities 44,731 41,933
Creditors : amounts falling due after more than
one year (5,404) (5,582)
Provisions for liabilities and charges (670) (901)
________ ________
Net assets 3 38,657 35,450
________ ________
Capital and reserves
Called up share capital 3,528 3,527
Share premium account 17,273 17,256
Merger reserve 3,171 3,171
Profit and loss account 14,662 11,468
________ ________
Equity shareholders' funds 7 38,634 35,422
Equity minority interests 23 28
________ ________
Shareholders' funds 38,657 35,450
======== ========
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31ST DECEMBER
1998 1997
Note #000 #000
Net cash inflow from operating activities
Net cash inflow from continuing operating
Activities 11,319 7,038
Cash outflow in respect of prior year
acquisition and reorganisation provisions (200) (442)
_________ __________
8 11,119 6,596
_________ __________
Dividends from joint ventures and associated
undertakings 152 186
_________ __________
Returns on investment and servicing of finance
Interest paid (739) (781)
Interest received 43 111
_________ __________
Net cash outflow from returns on investment and
servicing of finance (696) (670)
_________ __________
Taxation
UK corporation tax paid (1,860) (981)
Overseas tax received/(paid) 3 (302)
_________ __________
Tax paid (1,857) (1,283)
_________ __________
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,079) (1,272)
Purchase of intangible fixed assets (954) -
Proceeds from sale of tangible fixed assets 49 73
_________ __________
Net cash outflow from capital expenditure and
financial investment (1,984) (1,199)
_________ __________
Equity dividends paid (2,628) (2,363)
_________ __________
Net cash inflow before financing 4,106 1,267
_________ __________
Financing
Issue of ordinary share capital 18 8
Proceeds from new borrowings - 5,000
Repayment of loans - (142)
Capital element of finance lease payments (377) (504)
Receipts from new finance leases 27 -
_________ __________
Net cash (outflow)/inflow from financing (332) 4,362
_________ __________
Increase in cash 3,774 5,629
========= ==========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH/(DEBT)
YEAR ENDED 31ST DECEMBER
1998 1997
Note #000 #000
Increase in cash in the year 3,774 5,629
Cash outflow/(inflow) from decrease/(increase) in
debt and leasing finance 350 (4,354)
________ _________
Change in cash resulting from cash flows 4,124 1,275
Other finance lease movements (64) (73)
Currency translation differences 90 186
________ _________
Movement in net cash/(debt) in the year 4,150 1,388
Net debt at 1st January (2,449) (3,837)
________ _________
Net cash/(debt) at 31st December 9 1,701 (2,449)
======== =========
NOTES TO THE PRELIMINARY RESULTS
1. BASIS OF PREPARATION
The figures in this Preliminary Statement (which does not comprise
statutory accounts within the meaning of Section 240 of the Companies Act
1985) represent an abridged version of the Group's full accounts for the
financial year ended 31st December 1998, which were approved by the Board
on 1st March 1999 and upon which the Group's auditors have given an
unqualified report.
The 1998 Annual Report and Accounts will be posted to all shareholders by
24th March 1999 and both this Statement and the Annual Report and Accounts
will be available on request from the Company Secretary, Hodder Headline
PLC, 338 Euston Road, London NW1 3BH.
2. ACCOUNTING POLICIES
The Preliminary Statement has been prepared on the basis of the accounting
policies set out in the Group's published annual report and accounts for
the year ended 31st December 1997.
3. SEGMENTAL ANALYSIS
Total Intra- External Total Intra- External
Sales Group Sales Sales Group Sales
Sales Sales
______ _______ _______ _______ _______ _______
1998 1998 1998 1997 1997 1997
#000 #000 #000 #000 #000 #000
Turnover -
continuing
operations
UK Consumer
Publishing 67,945 (4,770) 63,175 58,869 (5,181) 53,688
UK Educational,
Academic and
Professional
Publishing 22,789 (633) 22,156 20,593 (604) 19,989
Overseas
Operations 15,010 (153) 14,857 17,591 (214) 17,377
UK Distribution 11,521 (9,223) 2,298 9,790 (7,682) 2,108
______ _______ _______ _____ ______ ________
117,265 (14,779) 102,486 106,843 (13,843) 93,162
======= ======== ======= ======= ======== ========
1998 1998 1997 1997
#000 #000 #000 #000
Profits
UK Consumer Publishing
- Group 7,391 5,283
- associated undertakings 36 40
________ ________
7,427 5,323
UK Educational, Academic
& Professional Publishing 2,694 2,628
Overseas Operations - Group (478) 783
- joint ventures 136 160
________ ________
(342) 943
UK Distribution 269 4
_______ ________
Operating profit 10,048 8,898
Net interest payable and similar charges (683) (724)
_______ ________
Profit before taxation 9,365 8,174
======= ========
3. SEGMENTAL ANALYSIS continued
1998 1998 1997 1997
#000 #000 #000 #000
Net assets
UK Consumer Publishing
- Group 27,456 25,980
- associated undertakings 161 134
________ ______
27,617 26,114
UK Educational, Academic
& Professional Publishing 4,597 5,527
Overseas Operations
- Group 4,297 4,602
- joint ventures 198 229
________ ______
4,495 4,831
UK Distribution 247 1,427
_______ ________
Net operating assets 36,956 37,899
Net cash/(debt) 1,701 (2,449)
_______ ________
38,657 35,450
======= ========
4. TAX ON PROFIT ON ORDINARY ACTIVITIES
1998 1997
#000 #000
United Kingdom
Corporation tax at 31.0 per cent (1997, 31.5 per cent) 3,110 2,272
Deferred taxation (96) (19)
Adjustments in respect of prior years - (9)
_________ ________
3,014 2,244
Overseas tax 17 361
_________ ________
3,031 2,605
Associated undertakings 13 11
_________ ________
3,044 2,616
========= ========
5. DIVIDENDS ON EQUITY SHARES
1998 1998 1997 1997
Pence Pence
Per Per
Share Share
(net) #000 (net) #000
Ordinary Shares of 10p each:
Interim paid 2.45 864 2.20 776
Final proposed 5.55 1,959 5.00 1,764
________ _______ ______ ________
8.00 2,823 7.20 2,540
======== ======= ====== ========
6. EARNINGS PER SHARE
1998 1997
#000 #000
Basic earnings 6,324 5,557
Number Number
Weighted average number of shares 35,279,145 35,268,649
Dilution by share options 123,177 47,523
______________ ________________
Diluted weighted average
number of shares 35,402,322 35,316,172
_____________ ________________
Pence Pence
Per Per
Share Share
Basic earnings per share 17.9 15.8
============== ================
Diluted earnings per share 17.9 15.7
Dilution has been restricted to share options where the individual option
price is less than the average market value of shares during the year, which
in 1998 was 241.6p (1997, 206.6p).
7. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
1998 1997
#000 #000
Profit attributable to members
of the Company 6,324 5,557
Dividends (2,823) (2,540)
____________ ____________
3,501 3,017
Capital subscribed 18 8
Exchange rate differences (307) (624)
____________ ____________
Net movement in equity
shareholders' funds 3,212 2,401
Opening equity shareholders' funds 35,422 33,021
____________ ____________
Closing equity shareholders' funds 38,634 35,422
============ ============
8. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM
OPERATING ACTIVITIES
1998 1997
#000 #000
Operating profit - before interests in associated
undertakings and joint ventures 9,876 8,698
Adjustments to operating profit :
Depreciation and amortisation charges 1,433 1,391
Loss on sale of tangible fixed assets 16 39
(Increase)/decrease in working capital :
Proceeds from sale of property held for sale - 182
Stocks 490 (300)
Debtors (287) (4,168)
Creditors (269) 1,105
Increase in acquisition and reorganisation provisions 60 91
_________ _________
Net cash inflow from continuing operations 11,319 7,038
Cash outflow in respect of prior year acquisition and
reorganisation provisions (200) (442)
_________ _________
Net cash inflow from operating activities 11,119 6,596
========= =========
9. ANALYSIS OF CHANGES IN NET (DEBT)/CASH DURING THE YEAR
Effect of
At 1st Net foreign At 31st
January cash Other exchange December
1998 flow changes rates 1998
#000 #000 #000 #000 #000
Cash at bank and
in hand 3,492 4,002 - 67 7,561
Bank overdrafts - (228) - 4 (224)
_________ ________ ________ _________ _________
3,492 3,774 - 71 7,337
Borrowings due after - - - (5,000)
one year (5,000)
Finance leases (941) 350 (64) 19 (636)
_________ ________ ________ _________ _________
(5,941) 350 (64) 19 (5,636)
_________ ________ ________ _________ _________
Net (debt)/cash (2,449) 4,124 (64) 90 1,701
10. COMPANY INFORMATION
The Preliminary Statement was approved by the Board of Directors on 1st March
1999. The Annual General Meeting will be held at 338 Euston Road, London NW1
3BH, at 10 a.m. on Wednesday 5th May 1999.
END
FR CCACNDDKBABB
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