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THE GLEANER COMPANY LIMITED FINANCIAL REPORT (Audited)
DECEMBER 31, 2004

Group Profit & Loss Account           Notes 2004 $'000 2003 $'000     Revenue 7 2,936,137 2,546,707 Cost of sales (1,605,910) (1,423,432) Gross profit 1,330,227 1,123,275 Other operating income 168,027 219,009 Employee Benefit Asset 3(a) 224,146 62,800   1,722,400 1,405,084   Distribution costs ( 388,192) ( 355,863) Administration expenses ( 513,535) ( 454,282) Other operating expenses ( 384,405) (276,306) Pension costs ( 2,313) ( 3,637)     (1,288,445) (1,090,088)   Profit from operations 433,955 314,996   Finance costs ( 25,899) ( 40,846) Exceptional items 130,116 40,140   Profit before taxation 1 538,172 314,290 Taxation ( 164,173) ( 80,736) 373,999 233,554 Minority interest ( 8,236) ( 2,535)   Net profit attributable to stockholders of parent company 2 365,763 231,019   Dealt with in the financial statements of: Parent company 388,536 247,256 Subsidiary companies ( 22,773) ( 16,237)     365,763 231,019   Earnings per stock unit on profit after taxation attributable to stockholders of parent company 8 30.20¢ 19.07¢ Balance Sheets December 31, 2004   GROUP COMPANY   2004 2003 2004 2003   $'000 $'000 $'000 $'000 Non-current assets           Property, plant and equipment 588,478 524,197 471,222 423,363 Intangible assets 463,794 10,728 - - Employees benefit asset 385,432 159,000 376,500 159,000 Long-term receivables 94 3,964 - 322 Investment in subsidiaries - - 14,959 14,959 Investment in associates - 150 - - Investments 191,980 141,559 183,762 139,911 Deferred tax assets 29,762 - 1,255 18,008                - 1,659,540 840,853 1,064,451 737,555             Current assets           Cash 67,829 36,501 13,834 1,982 Trade and other receivables 608,651 518,822 862,875 557,266 Prepayments 32,417 25,092 20,487 17,949 Taxation recoverable 10,657 9,048 - 8,681 Inventories and goods-in-transit 241,219 241,932 89,610 97,605 Securities purchased under agreements for resale 538,940 559,103 459,160 497,852   1,499,713 1,390,498 1,445,966 1,181,335             Current liabilities           Bank overdraft 5,815 4,376 - - Trade and other payables 485,802 311,336 295,515 258,406 Taxation 136,875 - 2,201 - Current portion of long-term liabilities 25,595 9,297 23,566 7,721 Deferred income 10,166 4,972                -                -   664,253 329,981 321,282 266,127 Working capital 835,460 1,060,517 1,124,684 915,208 Net assets 2,495,000 1,901,370 2,189,135 1,652,763             Financed by:           Stockholders' equity Share capital 605,622 605,622 605,622 605,622 Capital reserves 387,328 338,560 241,592 217,362 Fair value reserves 95,264 46,393 94,271 45,676 Retained profits 945,181 665,015 876,143 560,281 2,033,395 1,655,590 1,817,628 1,428,941 Minority interest 33,456 19,015                -                -             Non-current liabilities           Long-term liabilities 116,125 14,871 63,819 14,549 Employees benefit obligation 41,300 30,100 41,300 30,100 Deferred tax liabilities 270,724 181,794 266,388 179,173   428,149 226,765 371,507 223,822   2,495,000 1,901,370 2,189,135 1,652,763 Group Statement of Changes in Stockholders' Equity - Year ended December 31, 2004                      Share capital    Capital  reserves Fair value reserves  Retained profits       Total             $’000    $’000      $’000      $’000       $’000     Balances at December 31, 2002:   512,449 212,207 61,535 627,249 1,413,440      Net profit for the year   - - - 231,019   231,019*     Issue of bonus shares   93,173 - - ( 93,173) -     Appropriation in respect of bonus    shares issued in Subsidiary   - 17,743 - (17,743) -     Dividends paid (gross)   - - - ( 70,062) (  70,062)     Adjustment arising from consolidation     of subsidiary   - (     2,681) - - (    2,681)*     Gain on disposal of property, plant,    and equipment transferred   - 3,233 - (    3,233) -     Appropriation in respect of Bonus shares in associated companies   - 1,100 - (    1,100)      -     Prior year adjustment by subsidiary companies   - 877 - 3,363 4,240*     Currency translation difference on foreign subsidiaries   - 2,243 - - 2,243*     Change in fair value of investments   - - (15,142) - (  15,142)*     Gain on sale of loan   - 11,305 - (  11,305) -     Deferred tax   -  (    52,643) - - (  52,643)*     Gain on revaluation of buildings              - 145,176          -            - 145,176*     Balances at December 31, 2003   605,622 338,560 46,393 665,015 1,655,590     Balances at December 31, 2003   605,622 338,560 46,393 665,015  1,655,590     Net profit for the year             -          -          - 365,763     365,763*     Appropriation in respect of acquisition of    shares in subsidiary             -   12,460                   - (  12,460)                     -        Dividends paid            -           -          - (  72,675) (     72,675)     Deferred tax on property, plant, and equipment            - (       607)          -           - (         607)     Gain on disposal of property, plant,    and equipment transferred            -        462          - (      462)          -     Transfer of reserve in subsidiary            -        244 (      244)          -        -     Adjustment to revaluation reserve            -   27,240         -          -       27,240*     Change in fair value of investments            -          - 49,115          -       49,115*     Currency translation differences on foreign subsidiaries                            -             8,969               -                   -             8,969*     Balances at December 31, 2004   605,622 387,328 95,264 945,181 2,033,395         Retained in the financial statements of:       Parent company   605,622 241,592 94,271 876,143 1,817,628     Subsidiaries                  - 145,736      993   69,038    215,767     Balances at December 31, 2004   605,622 387,328 95,264 945,181 2,033,395         Parent company   605,622 217,362 45,676 560,281 1,428,941     Subsidiaries             - 118,680     717 103,261    222,658     Associates              -    2,518          -     1,473       3,991     Balances at December 31, 2003   605,622 338,560 46,393 665,015 1,655,590       *Total gains recognised for the year amounted to $451,087,000 (2003: $312,212,000) for the group and $461,363,000 (2003: 323,491,000) for the company.   Group Statement of Cash Flows Year ended December 31, 2004   2004 $'000 2003 $'000 Cash flows from operating activities Profit attributable to stockholders 365,763 231,019 Adjustments to reconcile profit to net cash provided/(used) by operating activities: Depreciation and amortisation 127,535 64,088 Deferred taxation, net 59,816 24,541 Employee benefit asset, net (215,232) ( 60,100) Gain on disposal of property, plant and equipment ( 6,867) ( 14,538) Net unrealised exchange gains ( 43,563) ( 10,713) Gain on disposal of investments (119,740) ( 25,603) Minority interests share of (profit)/loss ( 8,236) ( 2,535)   159,476 206,159 (Increase)/decrease in current assets: Trade and other receivables ( 89,829) ( 73,046) Prepayments ( 7,325) 952 Taxation recoverable ( 1,609) ( 9,048) Inventories and goods-in-transit 713 ( 55,041) Securities purchased under agreements for resale 20,193 (145,498)   (Increase)/decrease in current liabilities: Trade and other payables 174,466 30,200 Taxation 136,875 ( 33,876) Deferred income 5,194 483 Net cash provided/(used) by operating activities 398,154 ( 78,715) Cash flows from investing activities Exchange gain on investments, goodwill and property, plant and equipment ( 958) ( 10,228) Additions to property, plant and equipment (145,755) ( 57,623) Property, plant and equipment acquired on purchase of subsidiary ( 16,854) - Purchase of intangible assets (453,258) ( 10,728) Proceeds from disposal of investments and property, plant and equipment 149,705 39,889 Investments 35,667 5,512 Minority interest 14,441 251 Net cash used by investing activities (417,012) ( 32,927)   Cash flows from financing activities Bank overdraft 1,439 ( 304) Long-term receivable 3,870 414 Long-term liabilities 117,552 ( 3,388) Dividends paid ( 72,675) ( 70,062) Net cash provided/(used) by financing activities 50,186 ( 73,340) Net increase/(decrease) in cash 31,328 (184,982) Cash at beginning of the year 36,501 221,483 Cash at end of the year 67,829 36,501   Business segments The main business segments of the Group comprise:          2004   Notes Media Service Books and Stationery   Other      Total     $’000 $’000 $’000 $’000    2,361,409 542,880   31,848 2,936,137 Revenue   Profit from operations 2, 3(a & e)    249,437   10,926    5,565    265,928 Other income    111,991     7,126    5,347    124,464 Foreign exchange gains     33,242   10,321 -     43,563 Interest expense (    24,951) (       932) (        16) (    25,899) Exceptional items   125,704       462    3,950  130,116   Profit before taxation   495,423  27,903  14,846  538,172 Taxation (  149,520) ( 10,380) (  4,273) ( 164,173)   Segment Results  345,903 17,523 10,573  373,999   Minority interest (    8,236)   Net profit attributable to stockholders of the company   365,763   Segment assets 2,705,508 364,986 88,759 3,159,253 Segment liabilities    956,231 119,782 16,389 1,092,402 Capital expenditure      80,799   11,069 53,887   145,755 Depreciation      66,948     9,893 50,694   127,535 Business segments The main business segments of the Group comprise:         2003           Revenue             1,985,802  541,969 18,936  2,546,707   Profit from operations 2       79,735   19,681   (      3,429)      95,987 Other income     154,173     5,561          3,869     163,603 Foreign exchange gains       55,406            -                 -       55,406 Interest expense (      35,498) (   5,107) (          241) (      40,846) Exceptional items       26,249    1,966       11,925      40,140   Profit before taxation     280,065  22,101       12,124     314,290 Taxation (      74,170) (   5,043) (       1,523) (      80,736)   Segment Results    205,895       17,058       10,601     233,554   Minority interest (        2,535)   Net profit attributable to stockholders of the company    231,019   Segment net assets 1,813,220 348,325  69,806 2,231,351* Segment liabilities    422,520 125,002   9,224    556,746* Capital expenditure      52,622     5,001           -     57,623 Depreciation     55,979    8,098        11     64,088 *Reclassified to conform with 2004 presentation. Notes to Financial Report We hereby present the Report of the Group as of and for the year ended December 31, 2004. The Group Financial Statements for the year ended December 31, 2004, show, before taxation a profit of approximately $538M (2003: $314M). The Group Profit, after taxation and minority interest, for the year of 2004 was approximately $366M (2003: $231M), an increase of 58%. This increase was largely attributable to a 15% increase in sales and actuarial surplus in the pension scheme (note 3a). In comparing the profits for the year ended December 31, 2004, with those of the previous year, the following should be considered: Employee benefit asset of $224M (2003: $63M), in respect of a portion of the surplus in the pension scheme in accordance with IAS 19, was credited to the profit and loss account. However, this surplus is not available to the Group as it represents future economic benefits to be derived from the reduction in the company's contribution to the pension scheme. Independent Radio's profit increased by over 150% in 2004. Sangster's Book Stores financial results for 2004 showed improvement over the previous year due mainly to improved inventory control. The Group profit was adversely affected by the overseas companies, including the newly acquired Voice Group, which incurred losses. These companies are being restructured during 2005. We have discontinued the production of the Extra in the United States of America and the United Kingdom The net profit from (core newspaper) operations amounted to $25M. This was adversely affected by the performance of the overseas subsidiaries. During the year the Group through The Gleaner Company (UK) Limited, acquired The Voice Group Limited which publishes Britain's best-known and largest ethnic newspaper. It is expected that this acquisition will boost the profit earning potential of the overseas companies. In August 2004, the Group through Associated Enterprise Limited acquired full ownership of Beckford's Auto Supplies Limited. There were no significant changes to the Group's operations for the period under review. The Group Financial Statements for the year ended December 31, 2004, include the Company's twelve (2003: ten) subsidiaries - Associated Enterprise Limited, Popular Printers Limited, Sangster's Book Stores Limited, The Book Shop Limited, The Gleaner Online Limited, Selectco Publications Limited, Independent Radio Company Limited, Beckford's Auto Supplies Limited and overseas subsidiaries, The Gleaner Company U.S.A. Limited, The Gleaner Company (Canada) Incorporated, The Gleaner Company (UK) Limited, The Voice Group. The revenue represents sales by the Group before commission payable but excluding returns. The calculation of earnings per stock unit for 2004 and 2003 is arrived at by dividing profit after taxation attributable to stockholders of the company of $366M (2003: $231M) by 1,211M stock units, the number of stock units in issue at December 31, 2004. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations adopted by the International Accounting Standards Board (IASB), and comply with the provisions of the Companies Act. Dividends Two (2) interim Ordinary Dividends of 3 cents each per stock unit were paid on March 12, 2004 and August 31, 2004, to shareholders on record respectively at the close of business on February 27, 2004 and August 31, 2004. No final dividend is recommended. Libel Cases The Company's lawyers advised that they are of the opinion that the provision made in the Company's accounts is a reasonable provision for the purpose of covering all reasonable and probable judgements and costs for existing libel actions against the Company. On behalf of the Board Hon. O. F. Clarke, O.J. Chairman and Managing Director R. A. Speid Group Financial Controller March 31, 2005

 

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