RNS Number:1616N
Capital Radio PLC
15 November 2001
PART 3
Notes Forming Part of the Accounts
1 Accounting Policies
A summary of the principal Group accounting policies, all of which
have been applied consistently throughout the year, is set out below
a. Basis of accounting
The accounts have been prepared under the historical cost accounting
rules, modified to include the revaluation of certain fixed assets,
and in accordance with applicable accounting standards, including for
the first time Financial Reporting Standard 17 (transitional
arrangements) and Financial Reporting Standard 18.
b. Basis of consolidation
(i) The consolidated accounts include the accounts of the Company and its
subsidiary undertakings made up to 30th September 2001
Unless otherwise stated, the acquisition method of accounting has been
adopted. Under this method, the results of subsidiary undertakings
acquired or disposed of in the year are included in the consolidated
profit and loss account from the date of acquisition or up to the date
of disposal.
An associate is an undertaking in which the Group has a long term
interest, usually from 20% to 50% of the equity voting rights, and
over which it exercises significant influence. The Group's share of
the profits less losses of associates is included in the consolidated
profit and loss account and its interest in their net assets is
included in the consolidated balance sheet.
Other fixed asset investments in the Group accounts, and all fixed
assets in the accounts of the Company, are stated at cost less amounts
written off in respect of any impairment in value.
(ii) Purchased goodwill (both positive and negative) arising on
consolidation in respect of acquisitions before 1st October 1997, when
Financial Reporting Standard 10, Goodwill and intangible assets, was
adopted, was written off to reserves in the year of acquisition. When
a subsequent disposal occurs any related goodwill previously written
off to reserves is written back through the profit and loss account as
part of the profit or loss on disposal.
Purchased goodwill (representing the excess of the fair value of the
consideration given over the fair value of the separable net assets
acquired) arising on consolidation in respect of acquisitions since
1st October 1997 is capitalised. Positive goodwill is amortised to nil
by equal annual instalments over its estimated useful life, being
deemed to be 20 years.
On the subsequent disposal or termination of a business acquired since
1st October 1997, the profit or loss on disposal or termination is
calculated after charging/(crediting) the unamortised amount of any
related goodwill/(negative goodwill).
(iii) Under section 230(4) of the Companies Act 1985 the Company is exempt
from the requirement to present its own profit and loss account. The
profit for the financial year dealt with in the financial statements
of the holding company was #16,530,000 (2000: #9,506,000).
c. Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided to write off the cost (less
estimated residual value) of each asset on a straight line basis over
its expected useful life, as follows:
Freehold buildings 2%-4% per annum
Long leasehold premises 4% per annum
Short leasehold premises over the term of the lease, or where the
lease is renewable, 5%
Office and studio equipment 10%-20% per annum
Computer equipment 33% per annum
Motor vehicles 25% per annum
Television plant and
technical equipment 15%-25% per annum
Freehold land is not
depreciated.
d. Investments
In the Company's accounts investments in subsidiary companies are stated
at cost less provisions where, in the opinion of the Directors, there has
been an impairment in the value of the investment. Dividends receivable
from subsidiary companies are credited to the Company's profit and loss
account. Fixed asset investments are stated at cost less provisions where,
in the opinion of the Directors, there has been an impairment in the value
of the investment.
e. Taxation
Corporation tax payable is provided on taxable profits at the current
rate. Deferred taxation is provided using the liability method to take
account of the timing differences between the recognition of income and
expenditure for taxation and accounting purposes to the extent that it is
probable that an actual liability or asset will crystallise.
f. Operating leases
Rentals payable under operating leases are charged to the profit and loss
account on a straight line basis.
g. Finance leases
Assets held under finance lease agreements are included in tangible fixed
assets and are depreciated in accordance with the depreciation policy.
Obligations under such agreements are included in creditors net of finance
charges allocated to future periods. Finance charges are taken to the
profit and loss account so that the annual rate of charge on the
outstanding obligation at the end of each accounting period is
approximately constant.
h. Turnover
Turnover comprises income from the sale of advertising airtime,
sponsorship and promotions (net of agencies' commissions) and income from
advertising on the Internet. Turnover is stated excluding VAT, trade
discounts, and intra group transactions and derives from goods and
services provided in the normal course of business.
i. Pensions
The Group provides for and funds pension liabilities on a going concern
basis, on the advice of external actuaries. The amount charged to the
profit and loss account is calculated to produce a level percentage of the
current and future pensionable payroll. The group has adopted the
transitional arrangements under Financial Reporting Standard 17,
Retirement Benefits, and these disclosures can be found in note 25.
j. Capital Radio Restricted Share Plan ("the Plan")
Shares acquired by the Trustee of the Plan funded by the Company and held
for the continuing benefit of the Company are classified as fixed asset
investments until such time as the shares vest unconditionally in
employees. The cost of the shares is amortised to the profit and loss
account as an operating expense over three years. Any permanent diminution
in value is recognised immediately and is charged as an operating expense.
k. Restatement of Prior Year
The prior year has been restated to reflect the full year effect of the
discontinued television business.
2. Segmental Information Turnover Profit before Interest Net
and Taxation Assets
2001 2000 2001 2000 2001 2000
Restated Restated Restated
#000 #000 #000 #000 #000 #000
Commercial Radio, all from
UK:
Analogue 122,170 123,935 36,526 45,396
Digital 169 - (2,959) (1,264)
Total Commercial Radio, 122,339 123,935 33,567 44,132 191,060 204,841
all from UK:
Interactive, all from UK: 862 984 (3,587) (4,211) - -
Continuing operations
before goodwill
and exceptional operating 123,201 124,919 29,980 39,921 191,060 204,841
costs
Exceptional operating - - (2,712) (1,685) - -
costs
Amortisation of goodwill - - (9,622) (4,246) - -
(continuing)
Television (discontinued) 11,386 5,144 2,689 1,452 - 51,849
Restaurants (discontinued) - 4,862 - (4,982) - -
134,587 134,925 20,335 30,460 191,060 256,690
Share of operating profit - - 2,612 2,309 2,013 3,115
of associated companies
Exceptional gain on - - 10,215 - - -
disposal of investments
Cash, overdrafts, loans - - - -(32,901)(100,723)
and other investments
Liabilities for taxation - - - - (3,684) (7,814)
Proposed dividend - - - -(10,220) (10,211)
134,587 134,925 33,162 32,769 146,268 141,057
Amortisation of goodwill relates to analogue commercial radio activities. #
1,778,000 of exceptional costs related to analogue commercial radio
activities and #934,000 to interactive business.
3 Operating Continuing Discontinued 2001 Continuing Discontinued 2000
Profit operations operations operations operations
Restated Restated Restated
#000 #000 #000 #000 #000 #000
Turnover 123,201 11,386 134,587 124,919 10,006 134,925
Direct costs (14,930) (3,292) (18,222) (15,377) (2,163) (17,540)
Gross profit 108,271 8,094 116,365 109,542 7,843 117,385
Staff costs (27,302) (2,648) (29,950) (30,603) (3,342) (33,945)
Other (46,766) (1,959) (48,725) (35,346) (7,335) (42,681)
operating
charges
Exceptional (2,712) - (2,712) (1,685) - (1,685)
operating
costs
Depreciation (13,845) (798) (14,643) (7,918) (696) (8,614)
and
amortisation
Operating 17,646 2,689 20,335 33,990 (3,530) 30,460
profit/
(loss)
3 Operating Profit (continued)
Operating profit is stated after charging the following items: 2001 2000
#000 #000
Hire of plant or machinery 997 849
Other operating lease charges 1,653 1,951
Auditor's remuneration - audit fees 108 105
Other fees paid to the auditor and their associates 392 286
Loss on disposal of fixed assets 26 58
Fees paid to the auditor for the audit of the Company amounted to #25,000
(2000: #25,000). In 2000 fees paid to the auditor and their associates in
respect of assistance for acquisitions amounted to #50,000 in addition to the
above. Auditor's fees have been reviewed by the Audit Committee.
4 Exceptional gain on disposal of investments
During the year the Group recorded the following exceptional income:
Consideration Net Assets Costs of Attributable Gain on
In cash Disposed Disposal Goodwill Disposal
of
#000 #000 #000 #000 #000
Sale of investment in:
Wolverhampton Area 772 (131) - - 641
Radio Limited
The New 102 Limited/ 3,607 (1,661) - - 1,946
Centre Broadcasting
Limited
Bucks Broadcasting 2,477 1,189 (16) (1,128) 2,522
Limited
Sun FM Limited 4,600 (350) (19) - 4,231
Carlisle FM Limited 1,050 (100) - - 950
Border Television 50,500 (9,248) (75) (41,252) (75)
Limited
63,006 (10,301) (110) (42,380) 10,215
5. Underlying Profit before Taxation from Continuing
Operations
Underlying profit before taxation from continuing 2001 2000
operations has been calculated as follows:
#000 Restated
#000
Profit on ordinary activities before taxation 27,852 30,351
Continuing operations:
Post acquisition restructuring costs - (1,685)
Abortive development costs (1,458) -
Restructuring costs (1,254) -
Total exceptional operating costs (2,712) (1,685)
Amounts written off goodwill - continuing operations (9,622) (4,246)
Exceptional gain on disposal of investments 10,215 -
Discontinued operations:
Operating loss of restaurants - (1,373)
Impairment of fixed assets - (3,609)
Operating profit of television 2,689 1,452
Related interest on discontinued operations (2,775) (1,434)
Net excluded items 2,205 10,895
Underlying profit before taxation from continuing 30,057 41,246
operations
Aborted development costs represents a provision against the Group's
investment in India together with those costs related to acquisition
opportunities that did not subsequently proceed. Restructuring costs
principally reflect the integration of the interactive department into the
brand lines it supports and develops.
6. Staff 2001 2000
#000 #000
The aggregate payroll costs of the persons employed by
the Group during the year were as follows:
Wages and salaries 25,391 30,065
Social security costs 2,941 3,015
Other pension costs 1,618 865
29,950 33,945
Redundancy costs included within exceptional operating 530 664
costs
30,480 34,609
The above analysis includes the costs relating to Directors. The figures
exclude radio presenters engaged under short-term and part-time contracts.
The total cost of these persons amounts to #8,575,000 (2000: #6,886,000).
2001 2000
No. No.
The average number of persons employed by the Group
(including Directors) during the year was as
follows:
Radio: Management and administration 174 154
Sales 318 293
Programming 162 118
Engineering 19 19
673 584
Television 91 49
Interactive 58 41
Restaurants - 135
822 809
Details of individual directors' emoluments, pension entitlements, long term
incentive schemes and share options (including gains on exercise) are shown
in the Directors' Remuneration report.
7. Net Interest Payable and Similar Items 2001 2000
#000 #000
Interest receivable and similar income:
Bank interest 78 208
Bank interest attributable to associated undertakings 402 69
480 277
Interest payable and similar charges:
Bank loan and overdrafts, wholly repayable within 5 years (1,553) (780)
Bank loan and overdrafts on acquisitions - (177)
Interest on Capital Radio plc loan notes (1,450) (297)
Hire purchase, finance leases and other interest (12) (7)
(3,015) (1,261)
Interest payable by continuing operations (2,535) (984)
Interest payable by discontinued operations on bank loan and (2,775) (1,434)
overdrafts wholly repayable within 5 years
(5,310) (2,418)
8. Taxation 2001 2000
#000 #000
Corporation tax at 30% (2000: 30%) 8,227 11,392
Tax saving re Qualifying Employee Share Ownership Trust - (1,267)
Share of associated companies' taxation 904 693
Adjustment relating to prior years (750) (990)
8,381 9,828
The effective rate of tax on underlying profit before taxation from
continuing operations is 28.5% (2000: 26.3%).The amount of unprovided
deferred tax asset, relating to short term timing differences and capital
allowances is #414,000 (2000: #266,000 ). There is no unprovided deferred tax
liability in the Company (2000: #nil).
9. Profit for the Financial Year
The profit for the financial year dealt with in the accounts of the Company
was #16,530,000
(2000: profit #9,506,000).
10. Dividends 2001 2000
#000 #000
Interim dividend of 6.0p (2000: 6.0p) per share, paid on 29th 4,894 4,596
June 2001
Proposed final dividend of 12.5p (2000: 12.5p) per share, to 10,220 10,211
be paid on 28th January 2002
Total dividend of 18.5p per share (2000: 18.5p) 15,114 14,807
11. Earnings Per Share
The calculation of earnings per share is based on the profit after taxation
and minority interest of #19,471,000 (2000: #20,155,000) and on the
weighted average of 81,729,926 (2000: 76,501,703) Ordinary Shares in issue
during the year. The underlying earnings per share from continuing
operations is included to show the effect of adjusting for the impact of
exceptional items, goodwill and discontinued operations which result in
increased earnings of #2,205,000 (2000: #10,895,000). After the effect of
related tax credit of #189,000 (2000: #1,067,000), this results in earnings
of #21,487,000 (2000: #29,983,000). There is no dilution to the weighted
average number of shares (2000: 77,241,648).
12. Intangible Assets - Goodwill
#000
GROUP
Cost
Beginning of year 234,184
Additions -
Disposals (42,380)
End of year 191,804
Amortisation and impairment
Beginning of year 11,694
Provided during the year 9,622
Disposals -
End of year 21,316
Net book value
Beginning of year 222,490
End of year 170,488
13. Tangible Fixed Land and Long Short Fixtures,
Assets Freehold Leasehold Leasehold Fittings Motor
GROUP and
Property Premises Premises Equipment Vehicles Total
#000 #000 #000 #000 #000 #000
Cost
Beginning of year 1,847 2,972 10,781 26,876 792 43,268
Additions - 309 - 3,552 61 3,922
On disposal of a - (86) (2,638) (7,817) - (10,541)
subsidiary
Disposals - - - (192) (296) (488)
End of year 1,847 3,195 8,143 22,419 557 36,161
Depreciation
Beginning of year 308 366 698 15,391 428 17,191
Charged in year 39 218 353 4,272 139 5,021
On disposal of a - (18) (8) (4,133) - (4,159)
subsidiary
Disposals - - - (144) (211) (355)
End of year 347 566 1,043 15,386 356 17,698
Net book value
Beginning of year 1,539 2,606 10,083 11,485 364 26,077
End of year 1,500 2,629 7,100 7,033 201 18,463
The net book value of assets held under finance leases by the Group
amounted to #385,000 (2000: #880,000). The depreciation charge in respect
of these assets amounted to #148,000 (2000: #428,000). The gross book value
of freehold property includes #1,488,000 (2000: #1,488,000) of depreciable
assets.
Short Fixtures,
COMPANY Leasehold Fittings and Motor
Premises Equipment Vehicles Total
#000 #000 #000 #000
Cost
Beginning of year 8,087 16,718 367 25,172
Additions - 1,623 - 1,623
Disposals - - (48) (48)
End of year 8,087 18,341 319 26,747
Depreciation
Beginning of year 680 12,288 275 13,243
Charged in year 310 2,273 46 2,629
Disposals - - (42) (42)
End of year 990 14,561 279 15,830
Net book value
Beginning of year 7,407 4,430 92 11,929
End of year 7,097 3,780 40 10,917
14. Fixed Asset
Investments
Associated Other Own
GROUP Companies Investments Shares Total
#000 #000 #000 #000
Book value
Beginning of year 3,115 675 2,282 6,072
Additions 215 884 - 1,099
Disposal of investment (2,139) (916) (1,391) (4,446)
Reclassification 21 (21) - -
Share of retained 801 - - 801
profits
End of year 2,013 622 891 3,526
Provisions
Beginning of year - - 2,282 2,282
Provided/(released) - 575 (1,391) (816)
during the year
End of year - 575 891 1,466
Net book value
Beginning of year 3,115 675 - 3,790
End of year 2,013 47 - 2,060
Fixed asset investments comprise:
At the beginning of the year
Unlisted investments 3,115 675 - 3,790
Listed investments - - - -
Total 3,115 675 - 3,790
At the end of the year
Unlisted investments 2,013 47 - 2,060
Listed investments - - - -
Total 2,013 47 - 2,060
Market value of listed investments
At beginning of year - - 3,041 3,041
At end of year - - 317 317
14. Fixed Asset Investments (continued)
Subsidiary Associated Other Own
Companies Companies Investments Shares Total
#000 #000 #000 #000 #000
COMPANY
Book value
Beginning of year 343,738 2,797 605 2,282 349,422
Additions - 215 30 - 245
Disposals (50,500) (1,930) - (1,391) (53,821)
Reclassification - 21 (21) - -
End of year 293,238 1,103 614 891 295,846
Provisions
Beginning of year 52,437 965 - 2,282 55,684
Provided/(released) - (550) 572 (1,391) (1,369)
during the year
End of year 52,437 415 572 891 54,315
Net book value
Beginning of year 291,301 1,832 605 - 293,738
End of year 240,801 688 42 - 241,531
Fixed asset investments
comprise:
At beginning of year
Unlisted investments 291,301 1,832 605 - 293,738
Listed investments - - - - -
Total 291,301 1,832 605 - 293,738
At the end of the year
Unlisted investments 240,801 688 42 - 241,531
Listed investments - - - - -
Total 240,801 688 42 - 241,531
Own Shares in both the Group and Company represents shares in Capital Radio
plc acquired by the Trustee of the Capital Radio Restricted Share Plan to
satisfy potential future obligations to award shares under the Plan. In
accordance with guidance given by the Urgent Issues Task Force the cost of
these shares is amortised over three years, being the period of service in
respect of which conditional awards have been made.
15. Disposal of Border Television Plc
On 31st July 2001 Border Television Plc was sold to Granada Media Plc
#000 #000
Investments 137
Tangible fixed assets 6,227
Stock 377
Debtors 3,740
Creditors (1,233)
Book value on disposal 9,248
Goodwill disposed of 41,252
50,500
Consideration:
Cash (50,500)
Costs of disposal (75) (50,575)
Loss on disposal (75)
Border Television Plc contributed #2,681,000 to the group's net operating
cash flows, paid #26,000 in respect of interest, #807,000 in respect of
taxation and utilised #563,000 for capital expenditure.
16. Debtors Group Company
2001 2000 2001 2000
#000 #000 #000 #000
Amounts falling due within one year:
Trade debtors 11,893 17,482 11,726 14,411
Amounts due from subsidiary companies - - 34,321 41,210
Other debtors 391 1,592 93 51
Assets awaiting disposal - 729 - -
Prepayments and accrued income 4,264 3,919 3,174 2,697
16,548 23,722 49,314 58,369
Included within prepayments and accrued income for both the Group and the
Company is #869,000 (2000: # nil) receivable after more than one year.
17. Creditors: Amounts falling due within one year
Group Company
2001 2000 2001 2000
#000 #000 #000 #000
Bank loans and overdrafts 16,500 14,104 14,770 17,026
Loan notes (see note below) 9,751 25,004 9,751 25,004
Finance leases 221 552 - -
Trade creditors 3,981 4,876 3,961 3,925
Royalty creditors 591 1,899 221 968
Other creditors 4,840 1,941 5,379 6,969
Amounts due to subsidiary undertakings - - 66,644 59,693
Corporation tax payable 3,684 7,814 3,591 2,989
Proposed dividend 10,220 10,211 10,220 10,211
Other taxation and social security 2,372 2,811 2,302 2,344
Accruals and deferred income 2,702 5,130 892 686
54,862 74,342 117,731 129,815
Capital Radio plc loan notes
Capital Radio plc loan notes amounting to #450,000 (2000: #650,000) were
issued in July 1998 and have a five year term. Interest is paid six monthly in
arrears at 1% below London Inter-Bank Offered Rates. The loan notes may be
redeemed at the holder's option on interest dates until 2003, or at the
Company's option on 31 July 2003.
Capital Radio plc loan notes amounting to #6,001,000 (2000: #21,054,000) were
issued in June 2000 and have a five year term. Interest is paid six monthly in
arrears at 1% below London Inter-Bank Offered Rates. The loan notes may be
redeemed at the holder's option on interest dates until 2005, or at the
Company's option on 31 March 2005.
Capital Radio plc loan notes amounting to #3,300,000 (2000: #3,300,000) were
issued in August 2000 and have a five year term. Interest is paid six monthly
in arrears at 1% below London Inter-Bank Offered Rates. The loan notes may be
redeemed at the holder's option on interest dates until 2005, or at the
Company's option on 31 March 2005.
18. Creditors: Amounts falling due after more than Group Company
one year
2001 2000 2001 2000
#000 #000 #000 #000
Bank loans falling due after more than one year 8,000 8,700 8,000 8,700
and less than two years
Bank loans falling due after more than two years - 52,100 - 52,100
and less than five years
Finance leases falling due after more than one 37 227 - -
year and less than two years
Finance leases falling due after more than two - 36 - -
years and less than five years
8,037 61,063 8,000 60,800
19 Share Capital 2001 2000
#000 #000
Authorised 100,000,000 (2000: 100,000,000) Ordinary Shares 2,500 2,500
of 2.5p each
Allotted, called-up and fully paid 81,759,799 (2000: 2,044 2,040
81,596,785) Ordinary shares of 2.5p each
The increase in the issued share capital was due to: Number Number
Ordinary Shares of 2.5p each issued fully paid during the
year:
- on acquisitions 68,844 2,103,020
- on placing - 3,850,000
- on issue to Quest (not exercised) - 179,539
- on exercise of option rights 94,170 990,954
163,014 7,123,513
At 30th September 2001, the Company had options outstanding to subscribe for
2,201,735 (2000: 1,646,797) ordinary shares. Details of the outstanding
options are as follows:
Option Number of Exercise Exercisable
Shares Price Not
Grant Date Under Option (pence) Earlier Than
Capital Radio 1986 Senior Executive Share Option Scheme
July 1993 10,348 172 July 1996
December 1994 24,100 332 December 1997
December 1996 29,300 540 December 1999
Capital Radio Savings Related Share Option Scheme
December 1996 27,004 438 February 2002
December 1997 58,601 389 February 2003
December 1998 33,812 448 February 2004
December 1999 47,323 897 February 2005
December 2000 100,988 1054 February 2006
Capital Radio 1998 Share Option Scheme
March 1998 240,971 633 March 2001
November 1998 380,542 541 November 2001
June 1999 91,219 865 May 2002
November 1999 275,656 1224 November 2002
May 2000 95,607 1262 May 2003
November 2000 360,281 1172 November 2003
December 2000 16,204 1172 December 2003
February 2001 102,357 1080 February 2004
May 2001 156,718 795 May 2004
Capital Radio Presenters Share Option Scheme
March 2000 54,794 1825 March 2003
May 2000 6,336 1262 May 2003
December 2000 40,358 1115 December 2003
May 2001 10,457 765 May 2004
July 2001 38,759 645 July 2004
During the year, options over 155,637 Ordinary Shares of 2.5p each were
exercised, of which 61,467 were issued through the "Quest" for a total
consideration of #793,000, resulting in an increase in the share premium
account of #216,000. Options over 116,087 shares lapsed during the year.
Share options under the Capital Radio 1986 Senior Executive Share Option
Scheme and the Capital Radio 1998 Share Option Scheme expire ten years after
the date of grant. Options under the Capital Radio Savings Related Share
Option Scheme expire six months after the date on which they can first be
exercised.
20. Reserves Profit
Share Revaluation Merger and Loss
Premium Reserve Reserve Account
#000 #000 #000 #000
The movement on reserves during the year was as follows:
Group
Beginning of year 72,084 - 31,856 34,737
Retained profit for the year - - - 4,357
Premium arising on issue of shares 505 - - -
Merger reserve arising on acquisition - - 685 -
Transfer on sale of subsidiaries - - (8,774) 8,774
End of year 72,589 - 23,767 47,868
Company
Beginning of year 72,084 429 45,331 53,537
Retained profit for the year - - - 1,416
Premium arising on issue of shares 505 - - -
Merger reserve arising on acquisition - - 685 -
Transfer on sale of subsidiaries - - (8,774) 8,774
End of year 72,589 429 37,242 63,727
The cumulative amount of goodwill written off direct to profit and loss
account reserve (net of disposals) at 30th September 2001 was #45,941,000
(2000: #45,941,000).
21. Reconciliation of Operating Profit to Net Cash
Inflow from Operating Activities 2001 2000
#000 #000
Operating profit 20,335 30,460
Depreciation 5,021 4,368
Amortisation and impairment of goodwill 9,622 4,246
Loss on disposal of tangible fixed assets 26 58
Impairment of fixed assets - 3,609
Decrease in debtors 2,745 999
Decrease in stock - 209
Decrease in creditors (2,933) (1,557)
Change in provisions against investments in own shares - 2,027
34,816 44,419
22. Cash Flows from Acquisitions and Disposals 2001 2000
#000 #000
Acquisition of Border Television Plc - (112,941)
Acquisition of Beat 106 Ltd - (23,916)
Acquisition of First Oxfordshire Ltd - (7,629)
Net cash disposed of with subsidiary (233) -
Net cash acquired with subsidiary 456 (8,368)
Net Proceeds from sale of Border Television Plc 50,500 -
Net Proceeds from sale of other investments 12,471 326
Proceeds from sale of restaurants - 8,064
Repayment of loan to investment 1,930 -
65,124 (144,464)
23. Cash Flows from Financing 2001 2000
#000 #000
Proceeds from issue of shares 507 61,229
Bank loans 14,000 68,500
Repayment of bank loans (58,000) -
Repayment of loan notes (15,253) (200)
Capital element of finance leases (557) (305)
(59,303) 129,224
24. Analysis of Net Debt Net Debt Cash Net Debt at
at
1st Flow 30th
October September
2000 2001
#000 #000 #000
Cash at bank - 1,608 1,608
Bank loans and overdrafts (6,404) 6,404 -
(6,404) 8,012 1,608
Bank loans falling due in less than one (7,700) (8,800) (16,500)
year
Bank loans falling due in more than one (60,800) 52,800 (8,000)
year
Loan notes (25,004) 15,253 (9,751)
Finance leases (815) 557 (258)
(94,319) 59,810 (34,509)
(100,723) 67,822 (32,901)
25. Pension Funds
The Group operates three pension schemes and participates in a fourth
scheme on behalf of its employees. The Capital Radio Plc Pension and
Assurance Scheme and the Midlands Radio Group Pension Scheme are
contributory defined benefit schemes. Both schemes were closed to new
employees from 31st March 1995. At 30th September 2001, 24 employees of
Capital Radio plc and 10 employees of Birmingham Broadcasting Limited
respectively were active members of these schemes. All other employees in
the Radio Group, and in particular new employees, are eligible to join the
Capital Radio Group Personal Pension Plan, which was established on 1st
April 1995. This scheme is a contributory defined contribution arrangement
and as at 30th September 2001, 274 employees were active members of this
scheme. The Group makes age related contributions to the scheme
For both defined benefits schemes, the assets are held separately from
those of the Group. The Capital Radio Plc Pension and Assurance Scheme
assets are invested with an insurance company. The Midlands Radio Group
Pension Scheme assets are invested with an investment manager. Independent
actuarial valuations are obtained every third year. Contributions to the
pension schemes are made in accordance with advice given by independent
qualified actuaries.
Details of the most recent Actuarial valuations of the defined benefit
pension schemes, insofar as they relate to the Group, are as follows:
Capital Radio Plc Pension and Midlands Radio Group
Assurance Scheme Pension Scheme
Date of last valuation 1st April 1999 30th September 2000
Method used Attained Age Minimum Funding
Requirement (MFR)
Assumptions:
Annual salary increase 6% 6%
Annual investment return 7.5% 9%
before retirement
Annual investment return 6.5% 9%
after retirement
Market value of scheme #7,277,000 #3,638,000
assets
Percentage of liabilities 92% 84%
Under the MFR method of valuation, the current service cost of members will
increase as members approach retirement.
The contribution to the Capital Radio Plc Pension and Assurance Scheme made
by the Company in the year was #272,000. The Company has agreed to redress
the deficit over five years at the funding rate of 22% (plus the cost of
insured death in service benefits) as recommended by the actuary.
The contribution to the Midlands Radio Group Pension Scheme made by the
Company in the year was #105,000. The Company has agreed to redress the
deficit over five years at the funding rate of 14% of pensionable salaries
plus #22,800 per month for eighteen months, and #7,600 per month for a
further three years as recommended by the actuary.
Additional disclosures in accordance with FRS17
The actuarial valuations were updated to 30th September 2001 by independent
qualified actuaries. Details of the Group's share of the fair values of both
schemes, in accordance with Financial Reporting Standard 17 ("FRS 17") are
given in the tables below.
Capital Radio Plc Pension and Midlands Radio Group
Assurance Scheme Pension Scheme
Assumption
Inflation 2.5% 2.5%
Salary increase 4.25% 4.25%
Pensions increase 3% 2.25% (on post 1988 GMP*)
3% (on excess over GMP)
Discount rate of 6% 6%
liabilities
* Guaranteed minimum pension
Capital Radio Plc Pension and Midlands Radio Group Pension
Assurance Scheme Scheme
Fair value Fair value Expected return Fair value Expected return
and expected
return
Equities #3,393,000 6.5% #2,210,000 7%
Bonds #3,393,000 6.5% #157,000 6%
Other #1,563,000 6% #512,000 5%
Fair value
of scheme
assets #8,349,000 #2,879,000
Present
value
of scheme
liabilities #10,025,000 #4,474,000
Scheme
deficit #1,676,000 #1,595,000
In accordance with the transitional arrangements of FRS 17, the deficits on the
above schemes have not been recognised in the accounts.
The total pension cost for the period was #1,618,000 (2000: #865,000). Pension
costs for the two defined benefit schemes are charged to the Profit and Loss
Account so as to spread the cost of pensions over employees' working lives with
the Group. The pension charge for the other schemes represents the
contributions paid. The outstanding creditor to pension schemes at 30th
September 2001 was #87,000 (2000: #102,000).
26. Financial Commitments
Annual operating lease commitments for the year to 30th September
2001 analysed by expiry date are as follows:
Land and Land and
Buildings Other Buildings Other
2001 2001 2000 2000
GROUP #000 #000 #000 #000
Less than one year - 160 - 186
Within one to two years - 194 - 238
Within three to five years - 365 - 166
In more than five years 2,086 - 1,714 -
2,086 719 1,714 590
COMPANY
Less than one year - 30 - 66
Within one to two years - 55 - 72
Within three to five years - 36 - 49
In more than five years 1,532 - 1,137 -
1,532 121 1,137 187
Contracted capital expenditure at 30th September not 2001 2000
provided for in the accounts amounts to: #000 #000
Group - 2,109
Company - -
27. Contingent Liabilities
Neither the Group nor the Company had any material contingent liabilities
at 30th September 2001 or 2000. The Company has given its bankers a cross
guarantee to secure the bank borrowings of the other Group undertakings.
This guarantee is unsecured. The Directors do not anticipate that any
liability will fall on the Company in respect of this guarantee.
28. Related Parties
The Group has trading relationships with Independent Radio News Limited
("IRN"), the Radio Advertising Bureau Limited ("RAB"), Wildstar, and C E
Digital. The Group holds significant shareholdings in these companies and
has representatives on their boards of directors, and is therefore in a
position to exercise significant influence over these companies. All
transactions were conducted at normal commercial rates.
IRN supplies the UK radio industry with a news service in return for
airtime adjacent to news bulletins. This airtime is sold as the "Newslink"
national advertising product by Capital Advertising, as agent for IRN. An
element of the profits of IRN are repaid to participating stations as a
payment for airtime given. The Group also supplies accounting services to
IRN. During the year the Group received #2,251,000 (2000: #3,159,000) of
income from IRN, representing Capital Advertising commission income,
airtime rebate and payment for accounting services. The value of airtime
transferred to IRN during the year was #2,475,000 (2000: #3,163,000). At
30th September 2001 there was an outstanding debtor from IRN of #604,000
(2000: #919,000).
The RAB is a trade body promoting commercial radio with advertisers. The
RAB is funded by levies paid by the commercial radio industry in the UK
based on volumes of advertising. During the year the Group paid #897,000
(2000: #1,024,000) in levies to the RAB and at 30 September 2001 had an
outstanding creditor of #72,000 (2000: debtor of #33,000).
Wildstar is a record label. During the year a loan of #1.9 million, which
had previously been capitalised, was repaid to the Group (2000: # nil). At
30 September 2001 there were no outstanding debtors or creditors to the
Group.
C E Digital operates three local digital radio multiplexes. During the year
the Group paid #804,000 (2000: #nil) to C E Digital in respect of radio
broadcasts and received #170,000 (2000: #nil) from C E Digital in respect
of legal expertise and engineering time. At 30 September 2001 there was an
outstanding debtor of #201,000 (2000: #nil).
29. Derivatives and other financial instruments
An explanation of the Group's objectives, policies and strategies for the
role of derivatives and other financial instruments can be found in the
Report of the Directors. Short term debtors and creditors that meet the
definition of a financial asset or liability under Financial Reporting
Standard 13 have been excluded from the disclosures as permitted by the
Standard.
Interest rate profile of financial assets and financial liabilities:
Financial assets
The interest rate risk profile of the financial assets of the Group as at
30th September 2001 was as follows:
2001 2000
#000 #000
Cash at floating interest rate 1,608 -
Debtors due after more than one year 869 -
Unlisted investments 47 -
2,524 -
The weighted average interest rate for cash at 30th September 2001 was 4%.
Financial liabilities
The Group's floating rate financial liabilities which had a weighted average
interest rate at the year end of 5%, consist of:
2001 2000
#000 #000
Bank overdraft - 6,404
Bank loans 24,500 68,500
Loan notes 9,751 25,004
Finance leases 258 815
34,509 100,723
The floating rate bank loans carry interest at 0.6% over LIBOR and are
repayable in instalments over three years ending on 31st December 2002. Bank
overdrafts carry interest at 1% over bank base rate and are repayable on
demand.
The loan notes carry interest at 1% below bank base rate and are redeemable
by the holders on interest dates or by the Company on dates ranging from 31st
July 2003 to 31st March 2005.
The maturity profile of the Group's financial liabilities at 30th September
2001 was as follows:
2001 2000
#000 #000
In one year or less, or on demand 26,472 39,660
In more than one year but not more than two years 8,037 8,927
In more than two years but not more than five years - 52,136
34,509 100,723
Borrowing facilities
The Group has various undrawn committed borrowing facilities. The undrawn
facilities available at 30th September 2001 in respect of which all
conditions precedent have been met were as follows:
2001 2000
#000 #000
Expiring in one year or less 40,500 55,096
Fair value financial assets and financial liabilities
There are no material differences between the carrying values and the fair
values of the financial assets and financial liabilities disclosed above.
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