NOTES TO THE PROFIT AND LOSS ACCOUNT

1 Segmental Information
By activity

The Group’s main businesses are segmented below. Each segment includes its respective associated electronic products.

Turnover comprises Group sales excluding value added tax, less discounts and commission where applicable. The share of the turnover of joint ventures has not been disclosed separately on the face of the Profit and Loss Account since it is immaterial.

Turnover of regional newspapers and related activities excludes intra-group turnover of £17.1 million (2003 £12.8 million).
Turnover from broadcasting comprises television of £74.9 million (2003 £77.2 million) and radio of £47.5 million (2003 £38.8 million).
Turnover of business to business information and careers comprises £143.3 million (2003 £119.9 million) from business to business information and £113.8 million (2003 104.1 million) from careers.

Associates and joint ventures together comprise more than 20% of Group net assets and hence have been segmented in accordance with SSAP 25, as follows:

The Group’s results have not been segmented below total operating profit since such analysis would not be meaningful.

* See Note 34

By geographical area

The figures for each geographical area show the net operating assets owned by, and the turnover and profits made by, companies located in that area; export sales and related profits are included in the areas from which those sales are made. Turnover in each geographical market in which customers are located is not disclosed as there is no material difference between the two.

Comparative figures have been reanalysed to achieve a more consistent presentation.

2 Operating profit

There were no material discontinued activities in the year.

The Group audit fee includes £32,745 (2003 £27,000) in respect of the Company’s audit

Other fees earned by the Group’s auditors arise principally from acquisition advice of £1.6 million (2003 £Nil), tax advice of £1.3 million (2003 £0.6 million) and other audit related services of £0.4 million (2003 £0.2 million).

Turnover and operating profit for 2004 are analysed further by segment as follows:

* See Note 34

Operating profit before amortisation and impairment of intangible assets and exceptional items within broadcasting comprised £15.6 million from television and £3.8 million from radio.

Operating profit before amortisation and impairment of intangible assets and exceptional items within the business to business information and careers division comprised £34.8 million from business to business information and £4.9 million at careers, offset by unallocated central costs of £3.0 million.

The Directors do not consider these results to be sufficiently material to require the presentation of a separate segment, but have provided this additional information to assist the understanding of the performance of these divisions.

The Group’s review of its portfolio of investments has led to an impairment charge of £12.9 million (2003 £9.4 million). The impairment charge has been assessed by reference to the value in use of the intangible fixed assets as required by FRS11, Impairment of Fixed Assets. The discount rates applied to the cash flows varied, depending on the type of business, but were in the range of 7.5% and 10%.

Exceptional items comprise the write off of press equipment.

Operating profit for 2003 is analysed further by segment as follows:

Operating profit before amortisation and impairment of intangible assets and exceptional items within broadcasting comprised £18.4 million from television and £2.0 million from radio.

Operating profit before amortisation and impairment of intangible assets and exceptional items within the business to business information and careers division comprised £23.3 million from business to business information, £3.5 million at careers, offset by unallocated central costs of £3.0 million.

3 Employees

 

4 Share of Operating Profits and Losses of Joint Ventures and Associates

5 Profit on Sale of Fixed Assets

The profit on sale of investments arose on the disposal of shares in Reuters Group plc.

6 Profit on Disposal and Closure of Businesses including Associates

The profit on sale of businesses mainly comprises profit on the sale of the Group’s Australian regional radio business.

7 Income from Other Fixed Asset Investments

8 Net Interest Payable

9 Other Finance Charges

The finance charge on the discounting of deferred consideration arose from the requirement under FRS 7 to discount deferred consideration back to current values.

10 Taxation on Profit on Ordinary Activities

(i) The tax charge for the year is higher than the standard rate of corporation tax in the UK of 30% (2003 30%). The differences are explained below:

(ii) The underlying tax on profits before amortisation and impairment of intangible assets, exceptional and non recurring items amounted to £62.2 million (2003 £47.0 million) (Note 14) and the resulting rate is 26.6% (2003 25.3%). There was a tax credit of £5.0 million (2003 £1.5 million) relating to exceptional and non recurring items in the current and prior years. This included a credit of £3.4 million (2003 £4.1 million) which arose on the sale of fixed assets, a charge of £Nil (2003 £0.7 million) on the disposal and closure of businesses, a credit of £6.0 million (2003 £4.9 million) following the agreement of certain prior year open issues with the UK Inland Revenue in relation to the Group’s international structure, a charge of £4.4 million (2003 £Nil) in respect of the write off of irrecoverable overseas tax losses and a charge of £Nil (2003 £6.8 million) in respect of increased provisions for certain prior year open issues.

(iii) The net current tax prior year credit of £4.1 million (2003 charge £1.0 million) arose largely from a reassessment of the level of tax provisions required.

(iv) In subsequent years the Group’s tax charge may be affected by the movement in currently unrecognised deferred tax assets, the largest of which relates to the Group’s accumulated tax losses in the US.

11 Profit for the Financial Year

As permitted by section 230 of the Companies Act 1985, a separate profit and loss account for the Company has not been included in these accounts. The Company’s profit after tax for the year was £27.1 million (2003 £28.3 million).

12 Dividends

All shares in issue are equity shares.

* See note 34

13 Earnings per Share

Basic earnings per share of 15.5 p (2003 15.3 p) are calculated, in accordance with FRS 14, on Group profit for the financial year of £61.7 million (2003 £60.8 million) and on the weighted average number of ordinary shares in issue during the year, as set out below.

As in previous years, adjusted earnings per share have also been disclosed since the Directors consider that this alternative measure gives a more comparable indication of the Group’s underlying trading performance. Adjusted earnings per share of 41.6 p (2003 33.3 p) are calculated on profit before amortisation and impairment of intangible assets and exceptional items, after charging the taxation and minority interests associated with those profits, of £165.3 million (2003 £132.3 million), as set out in Note 14 below, and on the basic weighted average number of ordinary shares in issue during the year.

The weighted average number of ordinary shares in issue during the year for the purpose of these calculations is as follows:

14 Adjusted profit
(before amortisation and impairment of intangible assets and exceptional items, after taxation and minority interests)

(i) The adjusted minority charge for the year of £8.2 million (2003 £6.6 million) is stated after eliminating a credit of £2.5 million (2003 £4.5 million), being the minority share of amortisation.

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