29th Nov 2005 07:03
Future PLC29 November 2005 29 November 2005 FUTURE PLC Preliminary results for the year ended 30 September 2005 Future plc (LSE: FUTR), the international special-interest media group, todayannounces its preliminary results for the year ended 30 September 2005. Thesepreliminary results are accompanied by unaudited pro forma results for thetwelve months ended 30 September 2004, as published last year. An analystpresentation will be held today at 10.00am at the offices of UBS, 1 FinsburyAvenue, London EC2M 2PP. Financial highlights Adjusted* results for year ended 30 September 2005 compared with pro Changeforma results for 12 months to 30 September 2004 Turnover £212.3m (2004: £190.4m) Up 12%EBITAE profit £20.7m (2004: £23.6m) Down 12%Adjusted pre-tax profit £19.7m (2004: £23.6m) Down 17%Exceptional costs of £7.2m (2004: Nil) -Adjusted earnings per share 5.1p (2004: 5.8p) Down 12%Final proposed dividend of 1.3p making a total dividend Up 20%of 1.8p per share (2004: 1.5p) * Adjusted results are presented to provide a better indication of overallfinancial performance and to reflect how the business is run on a day to daybasis. In running the business, Future management focuses on earnings beforeinterest, tax, goodwill amortisation and impairment, and exceptional items.Profit on disposal of subsidiaries is also excluded. For convenience we refer tothis as EBITAE.Similarly, adjusted earnings per share are stated before these items, and afterthe tax charge for the year. Other highlights: - Significant expansion of business through acquired titles, including 38 from Highbury - Integration progressing well, following exceptional costs and recent consolidation of London offices - Increased spend on new product development, including online properties and new titles - Profit margin reduced by weakness in Mainland European computing titles - Games profits held steady in 2005 - Entertainment titles growing in revenues and profits - Circulation revenue up 7% (excluding acquisitions, up 1%) - Advertising revenue up 21% (excluding acquisitions, up 5%) Statutory results: Year ended 30 September 2005 9 months to 30 September 2004Turnover £212.3m £133.0mOperating(loss)/profit £(10.0)m £0.4mPre-tax(loss)/profit £(8.9)m £0.6mBasic loss pershare (3.4)p (0.2)pTotal dividendper share 1.8p 1.5p Commenting on the results, Greg Ingham, Future's Chief Executive said: "The year to 30 September 2005 has been an important one for Future. Althoughthe economic backdrop has been unhelpful, the Group has significantly grown thescale of its operations during the year. This provides the platform for theGroup to develop its profits further over time. "In the meantime, Future's strong cash generation and modest level of bank debtenables the Group readily to withstand any adverse economic conditions; and mayalso enable the Group to take advantage of further attractive businessopportunities should they arise. "We are committed to building on our progress and to ensuring Future's continuedgrowth through acquisitions and increased new product development spend onlaunches and internet expansion. "Whilst we continue to take a cautious view on the near term outlook, trading inthe first month of the new financial year is on track." Enquiries: Future plcGreg Ingham, Chief Executive Tel: 01225 442244John Bowman, Finance Director Tel: 01225 732281 Hogarth PartnershipJames Longfield/Georgina Briscoe Tel: 020 7357 9477 Summary The past year has been one of intense activity for Future, during which we haveinvested significantly in launches and acquisitions of new magazines andwebsites. This has inevitably incurred significant exceptional costs in relationto our acquisition programme. Financial performance Whilst annual turnover has grown by 12% to £212.3m, operating profits at theEBITAE level were £20.7m, down 12% on last year. We also incurred exceptionalcosts totalling £7.2m, as we pursued our expansion strategy. Adjusted earningsper share were 5.1p (2004: 5.8p). Business expansion During the past year we have launched 11 magazines and made eight acquisitions,representing 57 magazines including the purchase of 38 magazines from HighburyHouse Communications plc. We were originally planning to acquire the whole ofHighbury House but our recommended Offer was unexpectedly referred in April bythe Office of Fair Trading to the Competition Commission and thus our Offerlapsed. Although we welcomed the subsequent purchase of certain Highbury assets, Futureincurred exceptional bid costs of £2.2m on the aborted transaction. We were alsoinvolved in investigating a major potential acquisition in the US and weincurred modest costs. During the year, we realised £2.1m of profit on disposal of certain non-tradingsubsidiaries. Strategy Future has built a focused business, now serving a significant number ofspecial-interest consumer audiences. By focusing on communities of interest, weare less exposed to the intense competition that is all too visible in more massmarket media areas. This targeted approach also presents a good businessopportunity as new communities of interest are always emerging and evolving. Inaddition, we are able to achieve a much better balance between circulation andadvertising income, as our customers are generally prepared to pay a premium forproducts relevant to their own special interests. There continue to be three key elements to Future's growth plan. These are: - development of existing titles- new product development- selected acquisitions Development of existing titles It is important to re-invigorate existing titles frequently. Most titles inFuture's portfolio are magazines which have been in existence for more than fiveyears, and 58% of them were originally launched, rather than acquired. Keycreative effort is applied to every title to ensure that it continues to addressthe special-interests of readers. There have been many development successes inrecent years, across a variety of sectors. The group's best selling title is a US games magazine, Official Xbox Magazine,launched in the US in 2001, and now selling more than 400,000 copies a month.Our Xbox magazine business is the Group's largest business area. Microsoft'sdecision last year to extend the Official Xbox Magazine contract until 2011 istestament to the magazine's success and to the good working relationship betweenFuture and Microsoft. New product development The second element of Future's strategy is the development of new products, anarea where Future has a strong track record. Future defines New ProductDevelopment spend as the losses from launched titles and websites until they areprofitable. Most product launches are profitable within one year (except in theUS) and once profitable, the products are excluded from the definition. Thedefinition also embraces any loss-making acquired products, again untilprofitable. The Internet is becoming increasingly important to Future, both as a means ofaugmenting print activity, and for creating profitable business units in theirown right. Future's understanding of areas of special-interest helps to enhanceInternet opportunities. Of the 17 magazines launched during the last two years, four had been closed bythe year end as the Group had decided they were not successful. Building on thissuccessful record, Future has been consciously increasing its spending on NewProduct Development. Notable launches this year include Micro Actuel, Simply Knitting, FutureSnowboarding Magazine, Total Su Doku and scrapbooking magazines in both the UKand US. Notable among our websites are www.gamesradar.com, www.oxm.co.uk,www.totalfilm.com, www.t3.co.ukand www.myfavouritemagazines.co.uk. Selected acquisitions The third element of Future's strategy is to grow by acquisition, provided thatthe price paid for the acquisition is not excessive; the acquisition has theclear potential to be earnings-enhancing; and that the post-tax return oninvestment should exceed Future's weighted average cost of capital within areasonable period. Last year, the Board reported that it was investigating a number of possible newmagazine acquisitions. During the year Future made eight acquisitions, acquiringmore than 50 titles. During the three years to September 2005 Future has invested £69.2m on 14acquisitions, acquiring 71 magazines and six websites. The Board is satisfiedthat, with the exception of two small acquisitions, the performance of acquiredtitles to date has been good. It is also clear that these acquisitions havehelped to increase the scale of Future's business in each country and increasethe diversity of the Company's magazine portfolio. Growth plan Last year Future stated its aim to double the size of the business by September2008. Good progress has been made during this last year in terms of increasingthe Group's turnover. This has led to a significantly larger business, which inturn provides a greater platform from which to generate increased profits in duecourse. Profits have been held back in the short term by increased New ProductDevelopment spend, weakness in computing titles, the acquisition of lower margintitles that require additional investment and also by the current challengingtrading environment. The games sector continued to perform well for Future and growth is expectedafter 2006 following the launch of the next generation games consoles. Moregenerally, Future is focused on exploiting growth opportunities provided thatthey meet the Group's strategic and financial criteria. Group financial overview The following review is based primarily on a comparison of results for thefinancial year ended 30 September 2005 with the unaudited pro forma results forthe 12 months to 30 September 2004 published in our Annual Report 2004. Theseaccompanied the audited results for the nine months to 30 September, which inturn resulted from the change in the Group's financial year to 30 September. Abrief commentary on the statutory results is set out overleaf. In running the business, Future management focuses on earnings before interest,tax, goodwill amortisation and impairment, and exceptional items. Profit ondisposal of subsidiaries is also excluded. For convenience we refer to this asEBITAE. Unless otherwise stated, growth percentages relate to a comparison of twelvemonths to September 2005 with twelve months to September 2004. Financial headlines Turnover for the year was £212.3m (2004: £190.4m) including £17.7m fromacquisitions. EBITAE for the year was £20.7m (2004: £23.6m) including £1.6m fromacquisitions. Exceptional items totalling £7.2 (2004: Nil) arose during the year, the majorityof which related to our acquisition programme. The largest elements relate toproperty (£2.4m costs, following our decision to relocate certain offices in theinterests of greater efficiency); £2.2m of aborted bid costs; £1.8m ofrestructuring and redundancy costs related to integrating acquisitions; and£0.8m relating to restructuring costs within the existing business. Among other financial items, the results were enhanced by £2.1m of profit on thedisposal of certain non-trading subsidiaries (2004: £0.2m). The charge foramortisation and impairment totalled £23.5m (2004: £16.6m) including £6.2mrelating to acquisitions during the year. Net interest payable for the year was£1.0m (2004: £Nil). Adjusted earnings per share, which exclude the impact of exceptional items,amortisation charge and profit on disposal, were 5.1p (2004: 5.8p). Followingthe introduction of the Board's dividend policy last year and the introductionof an interim dividend of 0.5p in 2005, the Board is recommending a finaldividend of 1.3p per share, bringing total dividends for the year up 20% to 1.8p(2004: 1.5p). If approved at the Annual General Meeting to be held on 25 January 2006, thefinal dividend of 1.3p per share will be paid on 27 January 2006 to shareholderson the register on 30 December 2005. The ex-dividend date will be 28 December2005. Statutory results for year ended 30 September 2005 These show that Future generated £212.3m of turnover, operating loss of £10.0mafter exceptional items of £7.2m, pre-tax loss of £8.9m, and a basic loss pershare of 3.4 pence. Statutory results for nine months ended 30 September 2004 (the Group changed itsfinancial year end to 30 September in 2004) These show that Future generated £133.0m of turnover, operating profit of £0.4m,pre-tax profit of £0.6m and a basic loss per share of 0.2 pence. Adjustedoperating profit (EBITAE) was £13.1m and adjusted earnings per share were 3.6pence. Reconciliation of statutory loss for year with EBITAE--------------------------- -------------- ------------Period ended 30 September Year ended 30 9 months to 30 Sept 2005 Sept 2004 £m £m--------------------------- -------------- ------------ Adjusted operating profit (EBITAE) 20.7 13.1--------------------------- -------------- ------------Exceptional items (7.2) -Profit on disposal of subsidiaries 2.1 0.2Net interest payable (1.0) -Amortisation and impairment of intangible fixed (23.5) (12.7)assets --------------------------- -------------- ------------Pre-tax loss for period (8.9) 0.6Tax (2.1) (1.3)--------------------------- -------------- ------------Loss for period (11.0) (0.7)--------------------------- -------------- ------------ The table below analyses the Group's operating profit.------------------------------ ----------- ------------Period ended 30 September Year ended 30 9 months to 30 Sept 2005 Sept 2004 £m £m------------------------------ ----------- ------------ Adjusted operating profit (EBITAE) 20.7 13.1------------------------------ ----------- ------------Exceptional items (7.2) -Goodwill amortisation and impairment (23.5) (12.7)------------------------------ ----------- ------------Operating (loss)/profit (10.0) 0.4------------------------------ ----------- ------------ Group revenues The tables below analyse Group revenues which grew 2% from continuing operationsand by 12% including the impact of acquisitions made during the year.---------------- ---------- ----------- ----------- --------Summary % of 2005 2004 Change Group £m £m %---------------- ---------- ----------- ----------- -------- Continuing operations 92% 194.6 190.4 Up 2%Acquisitions 8% 17.7 - ----------------- ---------- ----------- ----------- --------Group turnover 100% 212.3 190.4 Up 12%---------------- ---------- ----------- ----------- -------- ---------------- ---------- ----------- ----------- --------Turnover by type % of 2005 2004 Change Group £m £m %---------------- ---------- ----------- ----------- -------- Circulation 66% 139.0 129.8 Up 7%Advertising 32% 68.1 56.2 Up 21%Other 2% 5.2 4.4 Up 18%---------------- ---------- ----------- ----------- --------Group turnover 100% 212.3 190.4 Up 12%---------------- ---------- ----------- ----------- -------- ---------------- ---------- ----------- ----------- --------Turnover by country % of 2005 2004 Change Group £m £m %---------------- ---------- ----------- ----------- -------- UK 55% 118.4 100.4 Up 18%US 26% 55.5 52.0 Up 7%Mainland Europe 19% 39.7 39.9 Down 1%Intra-group - (1.3) (1.9)---------------- ---------- ----------- ----------- --------Group turnover 100% 212.3 190.4 Up 12%---------------- ---------- ----------- ----------- -------- Proportion of MainlandGroup revenue UK US Europe Group------------------- -------- ----------- --------- ---------- Games 16% 13% 10% 39%Computing 13% 6% 8% 27%Entertainment 26% 7% 1% 34%------------------- -------- ----------- --------- ----------Total 55% 26% 19% 100%------------------- -------- ----------- --------- ---------- Group profit The table below summarises the Group's EBITAE which was 12% below that for lastyear; and also shows the other key elements in the Group profit and loss accountin summary form.----------------------- ----------- ------------ -----------Year ended 30 September 2005 2004 Change £m £m £m----------------------- ----------- ------------ ----------- UK 17.6 17.3 0.3US 3.8 5.6 (1.8)Mainland Europe 2.1 3.1 (1.0)Central costs (2.8) (2.4) (0.4)----------------------- ----------- ------------ -----------Adjusted operating profit (EBITAE) 20.7 23.6 (2.9)----------------------- ----------- ------------ -----------Profit on disposal of subsidiaries 2.1 0.2 1.9Exceptional items (7.2) - (7.2)Net interest payable (1.0) - (1.0)----------------------- ----------- ------------ -----------Sub-total 14.6 23.8 (9.2)Goodwill amortisation (23.5) (16.6) (6.9)----------------------- ----------- ------------ -----------Pre-tax (loss/profit) (8.9) 7.2 (16.1)----------------------- ----------- ------------ ----------- Adjusted operating profit (EBITAE) Profits have been held back as a result of a £1.5m increase in New ProductDevelopment spend, and a reduction of £1.2m in profits from computing titles.Profits from games titles were £0.3m above those for last year. UK EBITAE profit improved to £17.6m, representing a margin of 15% (2004: 17%) onturnover which increased 18% to £118.4m. This reduction in margin reflects a lowinitial margin from certain acquisitions, together with lower margin businessfrom certain computing and games titles during the year. US EBITAE profits reduced to £3.8m, representing a margin of 7% (2004: 11%) onturnover which increased by 7% to £55.5m. This reduction in margin reflectsreducing margin from games titles during the year, partially offset by improvedperformance from guitar titles, and significant New Product Development spend. Mainland Europe profits reduced to £2.1m, representing a margin of 5% (2004: 8%)on turnover down 1% at £39.7m. This result reflects more challenging newsstandconditions in both France and Italy, particularly in computing, together withthe cost of launching Micro Actuel in France. Games titles performed well. Central costs increased to £2.8m (2004: £2.4m) reflecting increased activity inrelation to the Group's growth plans. With the changing magazine portfolio, and the phasing of New Product Developmentspend, the bias of profits towards the first half will not apply in 2006. New product development (NPD) During the year, a total of £4.6.m (2004: £3.1m) was spent on New ProductDevelopment. The overall purpose of continued spending in New ProductDevelopment is to create media properties which will deliver future profitgrowth. Indeed, many of the Group's titles were originally launches,not acquisitions. Acquisitions The result for the year includes turnover of £17.7m and EBITAE of £1.6m fromacquisitions made during the year. The largest of these was the acquisition of38 titles from Highbury on 21 June 2005. Excluding the cost of exceptional itemsand goodwill amortisation, in aggregate these acquisitions have enhancedearnings per share. Exceptional items These amounted to £7.2m (2004: £Nil) representing £2.2m of aborted bid costs,£1.8m of restructuring costs associated with acquisition activity, and £0.8m ofrestructuring costs within the existing business. Property costs of £2.4m havebeen incurred including additional property provisions of £1.6m following theBoard's decision to relocate certain acquired and existing offices. In the UK, following acquisition activity, we had four rented offices in Londonand we are currently moving all our London employees to one office inMarylebone.In the US, we are moving our San Francisco employees to new offices and there isa small property provision for the unoccupied portion of rent paid in the newfinancial year. Taxation The Group's tax strategy is to minimise its liabilities to taxation, havingregard to commercial circumstances, tax history, the risk of changinglegislation, and delays in agreeing matters in certain territories. The tax charge for the year amounted to £2.1m (2004: 4.7m), comprising a currenttax charge of £2.0m and a deferred tax charge of £0.1m. In computing taxable profits, a significant portion of purchased goodwill isallowed to be set against taxable profits in some territories. If this goodwillwere not deductible the effective tax rate, based on the current tax charge,would be 17%. The Group's effective current tax rate is therefore below standard rates ofcorporation tax of 30% (UK), 42% (US), 35% (France) and 35% (Italy). In Franceand Italy, the Group has accumulated tax losses, so that profits generated thereshould continue to be effectively tax-free for at least the next two years. The Group also benefits from the structuring of certain acquisitions and otherplanning steps. Earnings per share After adjusting so as to exclude the impact of goodwill amortisation andimpairment and exceptional items (including any related tax effects) profitafter tax amounted to £16.6m. With a weighted average of 325.5m shares in issue,adjusted earnings per share were down 12% on last year at 5.1p per share (2004:5.8p). Balance sheet The main change in the shape of the Group balance sheet this year end comparedwith 2004 is that the Group has moved into modest net debt, following a periodof acquisitions, and for the same reason there have been increases in the levelof tangible assets, debtors, stocks and creditors. Net assets at 30 September 2005 amounted to £91.7m (2004: £107.7m) of which£135.8m (2004: £108.4m) related to intangible fixed assets - acquired publishingrights and goodwill arising on acquisition. As is common in media companies,Future has a low capital base and its value is better measured from its strongcash flows rather than by returns on capital employed. Cash flow and net debt Future is strongly cash-generative. Over the three years to 30 September 2005more than 84% of EBITA profit was converted into cash. For the year ended 30September 2005, the cash conversion ratio (excluding the impact of exceptionalcosts) was 67%. Net cash inflow from operating activities (after the cost of exceptional items)for the year was £9.8m (2004: 17.7m). The Group paid out a net £46.1m in respect of acquisitions and disposals, £6.5min respect of dividends, £4.1m in tax, and £1.8m in capital expenditure. Net debt at the end of the year was £39.5m (2004: net cash of £9.8m). International financial reporting standards Future is required to publish its accounts in accordance with IFRS foraccounting periods from 1 October 2005. Accordingly, IFRS will apply to Future'sinterim results for the six months to 31 March 2006 and full year results to 30September 2006. As Future explained in its 2003 and 2004 Annual Reports, the areas of IFRS whichwill have the most significant impact on Future's reported financial resultsrelate to: (a) purchased goodwill, which will cease to be amortised over itsestimated useful life: instead Future will perform annual impairment reviews ofgoodwill; and (b) share-based payments. The transition to IFRS has no effect on the cash flows of the business, nor onthe Company's ability to pay dividends for the foreseeable future. The Group will update shareholders on the impact of the transition to IFRS earlyin 2006, and will provide restated results for the year ended 30 September 2005in advance of publishing its first IFRS results for the six months to 31 March2006. Post balance sheet event On 20 October 2005, the Group announced that Microsoft had awarded Futureinternational rights to publish a consumer title called Windows Vista TheOfficial Magazine. The publishing licence is initially for five years withworldwide licensing and distribution opportunities. Future will launch the firstissue of the magazine in autumn 2006, in the UK, US, France and Italy. Othereditions of the magazine will be produced under licence by Future'sinternational publishing partners. UK performance for year ended September 2005 ------------- -------- -------- ------- ------- ------- -------- ------ 2005 2005 2005 2005 2004 2004 2004 Turnover Contribution Margin % of Turnover Contribution Margin £m £m % turnover £m £m % ------------- -------- -------- ------- ------- ------- -------- ------ Games 34.1 11.9 35% 29% 33.8 11.1 33%Computing 28.0 8.3 30% 24% 27.3 7.9 29%Entertainment 56.3 13.4 24% 47% 39.3 10.5 27%------------- -------- -------- ------- ------- ------- -------- ------Overheads and other 118.4 33.6 28% 100% 100.4 29.5 29%costs (16.0) (12.2)------------- -------- -------- ------- ------- ------- -------- ------EBITAE 17.6 15% 17.3 17%Exceptional items (4.5) -Amortisation and (4.7) (0.6)impairment ------------- -------- -------- ------- ------- ------- -------- ------Operating profit 8.4 7% 16.7 17%------------- -------- -------- ------- ------- ------- -------- ------ UK EBITAE was £17.6m, representing an EBITAE margin of 15% (2004: 17%). UKturnover for the year rose by 18% reflecting organic growth of 3% and asignificantly increased level of acquisition activity. We have broadened our UK portfolio, including the acquisition in the first halfof the following: 11 motoring, two parenting, one wedding and one computingmagazine. In June we acquired for £30.5m 38 titles (of which 33 are in the UK)and associated assets from Highbury House Communications plc, strengthening ourpositions in some magazine sectors and also taking us into new areas.Integration of these acquired titles is progressing well. During the first half-year, we completed the relocation of most of our 750Bath-based employees to new offices. In London, we acquired three offices, through acquisitions, in addition to ourexisting office in Baker Street. We have now secured one larger office inMarylebone, which we have contracted to lease for 10 years. We are relocatingall our London employees in the early part of the new financial year. UK circulation revenue increased by 10% and advertising revenue by 45% for theyear. Excluding the effect of acquisitions, the growth rates were 0% and 15%respectively. Our UK online business generated turnover of £1.7m (up 89%) and an EBITAE lossof £0.1m. US performance for year ended 30 September 2005 ------------- -------- -------- ------- ------- ------- -------- ------ 2005 2005 2005 2005 2004 2004 2004 Turnover Contribution Margin % of Turnover Contribution Margin £m £m % turnover £m £m % ------------- -------- -------- ------- ------- ------- -------- ------ Games 50.1 12.8 26% 49% 52.1 15.3 29%Computing 22.5 4.0 18% 22% 22.8 2.2 10%Entertainment 29.8 3.6 12% 29% 18.0 3.7 21%------------- -------- -------- ------- ------- ------- -------- ------Overheads 102.4 20.4 20% 100% 92.9 21.2 23% (13.3) (11.3)------------- -------- -------- ------- ------- ------- -------- ------EBITAE 7.1 7% 9.9 11%Exceptional items (1.1) -Amortisation (6.6) (4.8)------------- -------- -------- ------- ------- ------- -------- ------Operating (loss)/ (0.6) - 5.1 5%profit ------------- -------- -------- ------- ------- ------- -------- ------ US EBITAE was $7.1m, representing an EBITAE profit margin of 7% (2004: 11%)after NPD of $4.6m. The Group's NPD spend was most marked in the US, with ahigher than usual amount spent. US turnover rose by 10% as Future continued to diversify its US portfolio, whichnow serves five special-interest areas: games, computing, music, action sportsand craft. During the first half, we established our action sports division inSan Diego and acquired Snowboard Journal; in the second half, we launched FutureSnowboarding, Scrapbook Answers and Future Music. The result for the year reflects the losses from investment in new launches,developing our internet activities, and losses of $0.9m from Mobile, which welaunched last year but which had not made enough progress and was closed inSeptember. We acquired the profitable Cheatplanet.com website for $8.7m in May and it hasperformed well ahead of our expectations. This acquisition was the first step inour plan to increase our Internet presence and develop our games websiteactivities in the US. Mainland Europe performance for year ended 30 September 2005 2005 2005 2005 2005 2004 2004 2004 Turnover Contribution Margin % % of Turnover Contribution Margin •m •m turnover •m •m %--------------- --------- ----------- -------- --------- --------- ----------- --------Games 32.9 8.5 26% 57% 32.6 7.0 21%Computing 24.3 3.6 15% 42% 25.1 7.5 30%Entertainment 0.6 0.2 33% 1% 0.8 (0.4) ---------------- --------- ----------- -------- --------- --------- ----------- -------- 57.8 12.3 21% 100% 58.5 14.1 24%Overheads (9.2) (9.5) --------------- --------- ----------- -------- --------- --------- ----------- --------EBITAE 3.1 5% 4.6 8%Amortisation (3.1) (3.4)--------------- --------- ----------- -------- --------- --------- ----------- --------Operating profit - - 1.2 2%--------------- --------- ----------- -------- --------- --------- ----------- -------- Although good progress was made in Mainland Europe during the first half, secondhalf trading was unexpectedly tough. For the year as a whole, the EBITAE profitwas €3.1m representing an EBITAE profit margin of 5% (2004: 8%). This result isalso stated after the cost of intra-group licence fees of €1.4m (2004: €1.8m). Both businesses are profitable. We increased revenues in Italy whilstexperiencing a decline in France, reflecting tougher newsstand tradingconditions during the second half-year. In both countries, games magazine performance exceeded our expectations whereasthe performance of the existing computing titles was below expectation. In France, we launched a new computing title, Micro Actuel, in March, whichincurred losses of €0.6m during the period and has achieved good levels of bothcirculation and advertising revenue. Our Italian business trialled two new titles during the summer, Wrestling Powerand 1,2,3...Su Doku, both of which were quickly profitable. In September Future Italy acquired Italy's longest-running games title The GamesMachine and associated titles and website, for €3.5m. In France, Future acquiredConsole Plus for €0.2m, including integration costs. These titles usefully buildon our existing position in the games sector in Italy and France. Group performance 2005 2005 2005 2004 2004 2004 Turnover Contribution Margin Turnover Contribution Margin £m £m % £m £m %----------- -------- --------- ------- -------- --------- -------Games 83.8 24.8 30% 85.3 24.5 29%Computing 56.9 13.0 23% 57.1 14.2 25%Entertainment 72.9 15.4 21% 49.9 12.3 25%----------- -------- --------- ------- -------- --------- ------- 213.6 53.2 25% 192.3 51.0 27%----------- -------- --------- ------- -------- --------- -------Less intra-group (1.3) - (1.9) ------------ -------- --------- ------- -------- --------- ------- 212.3 - 190.4 -Overheads andother costs (32.5) (27.4)----------- -------- --------- ------- -------- --------- -------EBITAE 20.7 10% 23.6 12%Exceptional items (7.2) -Amortisation and impairment (23.5) (16.6)----------- -------- --------- ------- -------- --------- -------Operating (loss) /profit (10.0) 7.0------------ -------- --------- ------- -------- --------- ------- Current trading outlook The year to 30 September 2005 has been an important one for Future. Although theeconomic backdrop has been unhelpful, the Group has significantly grown thescale of its operations during the year. This provides the platform for theGroup to develop its profits further over time. In the meantime, Future's strong cash generation and modest level of bank debtenables the Group readily to withstand any adverse economic conditions; and mayalso enable the Group to take advantage of further attractive businessopportunities should they arise. We are committed to building on our progress and to ensuring Future's continuedgrowth through acquisitions and increased new product development spend onlaunches and internet expansion. Whilst we continue to take a cautious view on the near term outlook, trading in the first month of the new financial year is on track. Section 1 - Financial information for the 12 months to 30 September 2005 and proforma 12 months to 30 September 2004 Group profit and loss accountfor the 12 months to 30 September 2005 ------------------ ------ ------------- --------- --------- --------- Pro forma 12 months 12 months to 30 to 30 September September Continuing Acqui- 2005 2004 Note operations sitions Total Total ------------------ ------ ------------- --------- --------- --------- £m £m £m £m------------------ ------ ------------- --------- --------- --------- Turnover 2,18 194.6 17.7 212.3 190.4------------------ ------ ------------- --------- --------- --------------------------- ------ ------------- --------- --------- ---------Operating profit/(loss) ------------- --------- --------- ---------Operating profit beforeexceptionalitems and amortisation and impairmentof intangible assets 19.1 1.6 20.7 23.6Exceptional items 3 (4.8) (2.4) (7.2) -Amortisation and impairmentof intangible assets 9 (17.3) (6.2) (23.5) (16.6) ------------- --------- --------- --------------------------- ------ ------------- --------- --------- ---------Operating (loss)/profit 3 (3.0) (7.0) (10.0) 7.0Profit on disposal of subsidiaries 3 2.1 0.2------------------ ------ ------------- --------- --------- ---------(Loss)/profit on ordinaryactivities before interest (7.9) 7.2Net interest payable andsimilar charges 5 (1.0) ------------------- ------ ------------- --------- --------- ---------(Loss)/profit on ordinaryactivities before tax 2 (8.9) 7.2Tax on (loss)/profit onordinary activities 6 (2.1) (4.7)------------------ ------ ------------- --------- --------- ---------(Loss)/profit for the year (11.0) 2.5------------------ ------ ------------- --------- --------- --------------------------- ------ ------------- --------- --------- ---------Dividends: - September 2005 proposed 7 (4.2) -- March 2005 paid 7 (1.6) - - September 2004 paid - (4.9) - December 2003 paid - (4.0)------------------ ------ ------------- --------- --------- ---------Retained loss for the year (16.8) (6.4)------------------ ------ ------------- --------- --------- --------- Earnings per 1p Ordinary share------------------------------- --------- --------- --------- Note 12 months to 30 Pro forma September 2005 12 months to 30 pence September 2004 pence------------------------------- --------- --------- ---------Basic (loss)/earnings pershare 8 (3.4) 0.8Adjusted basic earningsper share 8 5.1 5.8Diluted (loss)/earningsper share 8 (3.4) 0.8Adjusted diluted earningsper share 8 5.1 5.8------------------------------- --------- --------- --------- Group statement of total recognised gains and lossesfor the 12 months to 30 September 2005------------------------------ ------ ---------- ------------ Note 12 months to Pro forma 30 September 12 months to 2005 30 September 2004 £m £m------------------------------ ------ ---------- ------------ (Loss)/profit for the year 17 (11.0) 2.5Dividend - September 2005 proposed 7 (4.2) -Dividend - March 2005 paid 7 (1.6) -Dividend - September 2004 paid - (4.9)Dividend - December 2003 paid - (4.0)------------------------------ ------ ---------- ------------Retained loss for the year (16.8) (6.4)Release of pre-acquisition loan - 1.0Tax on release of pre-acquisition loan - (0.4)Unwinding of licensing obligation - 0.1------------------------------ ------ ---------- ------------Total recognised loss relating to the year (16.8) (5.7)------------------------------ ------ ---------- ------------ Group reconciliation of movements in shareholders' fundsfor the 12 months to 30 September 2005------------------------------ ------ ----------- ---------- Note 12 months to Pro forma 30 September 12 months to 2005 30 September 2004 £m £m------------------------------ ------ ----------- ---------- (Loss)/profit for the year 17 (11.0) 2.5Dividend - September 2005 proposed 7 (4.2) -Dividend - March 2005 paid 7 (1.6) -Dividend - September 2004 paid - (4.9)Dividend - December 2003 paid - (4.0)------------------------------ ------ ----------- ----------Retained loss for the year (16.8) (6.4)Issue of share capital during the year 17 0.1 -Premium on shares issued during the year 17 0.7 0.9Release of pre-acquisition loan - 1.0Tax on release of pre-acquisition loan - (0.4)Unwinding of licensing obligation - 0.1------------------------------ ------ ----------- ----------Net movement in shareholders' funds (16.0) (4.8)Opening equity shareholders' funds 107.7 112.5------------------------------ ------ ----------- ----------Equity shareholders' funds 91.7 107.7------------------------------ ------ ----------- ---------- Group balance sheetas at 30 September 2005-------------------------- ------------ --------- --------- Note 30 Sep- 30 Sep- tember tember 2005 2004 £m £m-------------------------- ------------ --------- --------- Fixed assetsIntangible assets 9 135.8 108.4Tangible assets 10 3.9 3.5-------------------------- ------------ --------- --------- 139.7 111.9 Current assetsStocks 11 6.2 5.0Debtors 12 50.2 39.5Investments 13 - 2.5Cash at bank and in hand 10.7 12.0-------------------------- ------------ --------- --------- 67.1 59.0Creditors: amounts falling due within one year 14 (80.9) (62.3)-------------------------- ------------ --------- ---------Net current liabilities (13.8) (3.3)-------------------------- ------------ --------- ----------------------------------- ------------ --------- ---------Total assets less current liabilities 125.9 108.6-------------------------- ------------ --------- ---------Creditors: amounts falling due after more than 15 (32.0) -one yearProvisions for liabilities and charges 16 (2.2) (0.9)-------------------------- ------------ --------- ---------Net assets 91.7 107.7-------------------------- ------------ --------- --------- Capital and reservesCalled-up share capital 17 3.3 3.2Share premium account 17 24.4 23.7Merger reserve 17 109.0 109.0Profit and loss account 17 (45.0) (28.2)-------------------------- ------------ --------- ---------Equity shareholders' funds 91.7 107.7-------------------------- ------------ --------- --------- Group cash flow statementfor the 12 months to 30 September 2005 ------------------------------ --------- --------- 12 months Pro forma to 30 12 months September to 30 2005 September 2004 £m £m------------------------------ --------- --------- Net cash inflow from operating activities 9.8 17.7------------------------------ --------- ---------Returns on investments and servicing of financeInterest received 0.5 0.6Issue costs of new bank loan (0.4) -Interest paid (0.8) (0.4)------------------------------ --------- ---------Net cash (outflow)/inflow from returns on investments andservicing of finance (0.7) 0.2------------------------------ --------- ---------TaxTax paid (5.5) (6.6)Tax received 1.4 0.8------------------------------ --------- ---------Net tax paid (4.1) (5.8)------------------------------ --------- ---------Capital expenditure and financial investmentPurchase of tangible fixed assets (1.8) (1.4)------------------------------ --------- ---------Net cash outflow from capital expenditure and financialinvestment (1.8) (1.4)------------------------------ --------- ---------Acquisitions and disposalsPurchase of subsidiary undertakings (33.6) (3.3)Net cash acquired with subsidiary undertakings 0.8 -Disposal of subsidiary undertakings 2.1 0.2Purchase of magazine titles (15.3) (5.6)Payment of deferred consideration (0.1) (0.7)------------------------------ --------- ---------Net cash outflow for acquisitions and disposals (46.1) (9.4)------------------------------ --------- ---------DividendsEquity dividends paid (6.5) (4.0)------------------------------ --------- ---------Net cash outflow from payment of dividends (6.5) (4.0)------------------------------ --------- ---------Management of liquid resourcesDecrease in short-term deposits with bank 2.5 6.5------------------------------ --------- ---------Net cash inflow in management of liquid resources 2.5 6.5------------------------------ --------- ---------Net cash (outflow)/inflow before financing (46.9) 3.8------------------------------ --------- ---------FinancingProceeds from issue of Ordinary share capital 0.8 0.9Draw down of bank loans 53.6 -Movement in other loan - (0.5)Repayment of bank loans (8.7) (0.3)------------------------------ --------- ---------Net cash inflow from financing 45.7 0.1------------------------------ --------- ---------(Decrease)/increase in cash in the year (1.2) 3.9------------------------------ --------- --------- Notes to the Group cash flow statementfor the 12 months to 30 September 2005 A. Cash flow from operating activities The reconciliation of operating (loss)/profit to net cash inflow from operatingactivities is as follows:---------------------------------- ----------- ---------- 12 months to Pro forma 30 September 12 months 2005 to 30 September 2004 £m £m---------------------------------- ----------- ---------- Operating (loss)/profit (10.0) 7.0Depreciation charge 1.5 1.5Amortisation and impairment of intangible assets 23.5 16.6Movement in provisions 1.0 (1.2)Increase in stocks (1.0) (1.4)Increase in debtors (7.9) (1.6)Increase/(decrease) in creditors 2.7 (3.2)---------------------------------- ----------- ----------Net cash inflow from operating activities 9.8 17.7---------------------------------- ----------- ---------- B. Analysis of net cash/(debt)------------- -------- ----------- --------- -------- ------------- At 1 October Cash flow Acquis- Exchange At 30 2004 itions movements September 2005 £m £m £m £m £m------------- -------- ----------- --------- -------- ------------- Cash at bank and in hand 12.0 (2.4) 1.2 (0.1) 10.7Debt due within one year (4.7) (15.1) (0.4) (0.2) (20.4)Debt due after more than - (29.8) - - (29.8)one yearLiquid resources 2.5 (2.5) - - -------------- -------- ----------- --------- -------- -------------Net cash/(debt) 9.8 (49.8) 0.8 (0.3) (39.5)------------- -------- ----------- --------- -------- ------------- C. Reconciliation of movement in net cash/(debt)------------------------------------ --------- --------- 12 months to 30 Pro forma September 2005 12 months £m to 30 September 2004 £m------------------------------------ --------- --------- Net cash at 1 October 9.8 10.4(Decrease)/increase in cash (1.2) 3.9Movement in deposits (2.5) (6.5)Movement in borrowings (44.9) 0.8Overdraft acquired with subsidiary (0.4) -Non-cash movements - 1.0Exchange movements (0.3) 0.2------------------------------------ --------- ---------Net (debt)/cash at 30 September (39.5) 9.8------------------------------------ --------- --------- Notes to the pro forma financial information 1. Basis of preparation of pro forma financial informationThis preliminary statement of annual results for the 12 months ended 30September 2005 is unaudited and does not comprise statutory accounts within themeaning of section 240 of the Companies 1985 In order to assist readers following the change of financial year end, pro formafinancial information was prepared for the 12 months to 30 September 2004. Theseresults are unaudited and do not constitute statutory accounts as defined insection 240 of the Companies Act 1985. 2. Segmental reporting The Group is involved in one class of business, the publication of magazines andrelated websites. The analysis of turnover by type, geographical analyses ofturnover and (loss)/profit before tax were as follows: a) Turnover by type --------------------- --------- ---- ----------- ------------ 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m--------------------- --------- ---- ----------- ------------ Circulation1 139.0 129.8Advertising1 68.1 56.2Other 5.2 4.4--------------------- ----------- ------------Total 212.3 190.4--------------------- --------- ---- ----------- ------------ 1Included in the total circulation revenue for the 12 months ended 30 September2005 is £7.8m relating to acquisitions. Acquisitions provided £9.1m ofadvertising revenue in the same period. b) Turnover by origin--------------------- --------- ---- ----------- ------------ 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m--------------------- --------- ---- ----------- ------------ United Kingdom2 118.4 100.4United States2 55.5 52.0Mainland Europe 39.7 39.9Turnover between segments (1.3) (1.9)--------------------- ----------- ------------Total 212.3 190.4--------------------- ----------- ------------ 2Included in the UK turnover by origin for the 12 months ended 30 September 2005is £14.9m relating to acquisitions. Acquisitions provided £2.4m of revenue inthe US. Further information on the acquisitions during the year can be found innote 18. c) Turnover by destination--------------------- --------- ---- ----------- ----------- 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m--------------------- --------- ---- ----------- ----------- United Kingdom 99.4 83.5United States 57.0 53.6Mainland Europe 47.1 46.0Rest of the world 10.1 9.2Turnover between segments (1.3) (1.9)--------------------- ----------- -----------Total 212.3 190.4--------------------- ----------- ----------- d) (Loss)/profit on ordinary activities before tax by origin------------------------------ ----------- ------------ 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m------------------------------ ----------- ------------ United Kingdom (1.1) 11.4United States (2.8) 0.4Mainland Europe (1.4) (1.7)Central costs (3.6) (2.9)------------------------------ ----------- ------------Total (8.9) 7.2------------------------------ ----------- ------------ 3. Operating (loss)/profit----------------- ------------- --------- ---------- --------- 12 months Pro forma to 30 12 months September to 30 2005 September 2004 Continuing Acquisi- Total Total operations tions £m £m £m £m----------------- ------------- --------- ---------- --------- Turnover 194.6 17.7 212.3 190.4Cost of sales (130.5) (14.2) (144.7) (126.3)----------------- ------------- --------- ---------- ---------Gross profit 64.1 3.5 67.6 64.1Distribution costs (14.0) (0.4) (14.4) (13.1) ------------- --------- ---------- ---------Administration expenses (31.0) (1.5) (32.5) (27.4)Exceptional items (4.8) (2.4) (7.2) -Amortisation and impairment ofintangible assets (17.3) (6.2) (23.5) (16.6) ------------- --------- ---------- ---------Total administration expenses (53.1) (10.1) (63.2) (44.0)----------------- ------------- --------- ---------- ---------Operating (loss)/profit (3.0) (7.0) (10.0) 7.0----------------- ------------- --------- ---------- --------- Included in administration expenses are the following exceptional items:----------------- ------------- --------- ---------- --------- 12 months Pro forma to 30 12 months September to 30 2005 September 2004 Continuing Acquisi Total Total operations tions £m £m £m £m----------------- ------------- --------- ---------- --------- Aborted bid costs 2.2 - 2.2 -Restructuring costs 0.8 1.8 2.6 -Property costs 1.8 0.6 2.4 ------------------ ------------- --------- ---------- ---------Total exceptional items 4.8 2.4 7.2 ------------------ ------------- --------- ---------- --------- The aborted bid costs relate to the external professional fees and other costsof the aborted bid for the entire issued share capital of Highbury HouseCommunications plc during the first half of 2005. The restructuring costs relate to the costs incurred whilst integrating theacquisitions of Beach Magazines and Publishing Limited, A&S Publishing CompanyLimited and the various Highbury assets into the main Future businesses in theUK and the US. In addition there are some costs relating to subsequentrestructuring within Future's ongoing businesses. The property costs relate to the integration of the acquisitions and inparticular the move of Future UK's business in London to a larger single officefollowing the substantial increase in London-based employees as a result of theHighbury acquisition which is set to be completed by the end of 2005. Profit on disposal of subsidiariesDuring the year the Group sold four wholly-owned subsidiary companies for atotal consideration of £2.1m. After accounting for associated costs of disposalthe profit on disposal of subsidiaries was £2.1m. The companies disposed ofcontained capital tax losses which were surplus to Future's requirements. 4. Employees and Directors-------------------------------- ----------- -----------Staff costs 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m-------------------------------- ----------- ----------- Wages and salaries 42.5 32.8Social security costs 6.9 5.6Other pension costs 0.8 0.7-------------------------------- ----------- -----------Total 50.2 39.1-------------------------------- ----------- ----------- 5. Net interest payable and similar charges------------------------------- ---------- ---------- 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m------------------------------- ---------- ---------- Interest receivable 0.5 0.6Exchange losses - (0.2)------------------------------- ---------- ----------Total interest receivable and similar items 0.5 0.4------------------------------- ---------- ----------Interest payable on bank loans and overdrafts (1.1) (0.3)Other interest payable - (0.1)Write-off of debt issue costs (0.4) -------------------------------- ---------- ----------Total interest payable and similar charges (1.5) (0.4)------------------------------- ---------- ----------Net interest payable and similar charges (1.0) -------------------------------- ---------- ---------- 6. Tax on (loss)/profit on ordinary activities The tax charge for 12 months to 30 September 2004 has been calculated using theweighted average effective rates for the 12 month period, derived from theGroup's financial statements for the year ended 31 December 2003, and the 9months to 30 September 2004. 7. Dividends Equity dividends September March September 2005 2005 2004------------------------ ------------ --------- ----------- Number of shares in issue at end of period 326.3 325.8 324.5(million)Dividend proposed/paid (pence per share) 1.3 0.5 1.5------------------------ ------------ --------- -----------Dividend proposed/paid (£million) 4.2 1.6 4.9------------------------ ------------ --------- ----------- 8. Earnings per share Basic earnings per share are calculated using the weighted average number ofOrdinary shares outstanding during the year. Diluted earnings per share havebeen calculated by taking into account the dilutive effect of Ordinary sharesthat would be issued on conversion into Ordinary shares of options held underemployee share schemes. The adjusted earnings per share removes the effect of the amortisation andimpairment of intangible assets, exceptional items (including profit on disposalof subsidiaries) and any tax effects of the exceptional items from thecalculation as follows: Adjustments to (loss)/profit on ordinary activities after tax------------------------------- ----------- ---------- 12 months to Pro forma 30 September 12 months to 2005 30 September £m 2004 £m------------------------------- ----------- ---------- (Loss)/profit on ordinary activities after tax (11.0) 2.5Add: exceptional items 7.2 -Add: amortisation and impairment of intangible assets 23.5 16.6Less: profit on disposal of subsidiaries (2.1) (0.2)Less: tax effect of exceptional items (1.0) -------------------------------- ----------- ----------Adjusted profit on ordinary activities after tax 16.6 18.9------------------------------- ----------- ---------- In some territories the Group gains a tax deduction for the amortisation ofintangible assets. The calculation of adjusted earnings as above does not takethis into account. If a further adjustment is made for this effect the adjustedprofit after tax is £14.9m. On this basis, basic and diluted adjusted earningsper share are 4.6 pence (2004: 5.7 pence). 2005 2004--------------------------------- --------- --------- Weighted average number of shares outstanding duringthe period:- basic 325,468,072 323,215,690- dilutive effect of share options 937,654 886,179- diluted 326,405,726 324,101,869Basic (loss)/earnings per share (in pence) (3.4) 0.8Adjusted basic earnings per share (in pence) 5.1 5.8Diluted (loss)/earnings per share (in pence) (3.4) 0.8Adjusted diluted earnings per share (in pence) 5.1 5.8--------------------------------- --------- --------- The adjustments to profit have the following effect:--------------------------------- --------- --------- 2005 2004 pence pence--------------------------------- --------- ---------Basic (loss)/earnings per share (3.4) 0.8Exceptional items 2.2 -Amortisation and impairment of intangible assets 7.2 5.0Profit on disposal of subsidiaries (0.6) -Tax effect of exceptional items (0.3) - --------- ---------Adjusted basic earnings per share 5.1 5.8 --------- --------- Diluted (loss)/earnings per share (3.4) 0.8Exceptional items 2.2 -Amortisation and impairment of intangible assets 7.2 5.0Profit on disposal of subsidiaries (0.6) -Tax effect of exceptional items (0.3) - --------- ---------Adjusted diluted earnings per share 5.1 5.8--------------------------------- --------- --------- 9. Intangible fixed assets--------------------------------------- ----------- Goodwill £m--------------------------------------- ----------- CostAt 1 October 2004 324.8Additions 50.3Adjustments to fair value on prior year acquisitions 0.2Exchange adjustments 0.7--------------------------------------- -----------At 30 September 2005 376.0--------------------------------------- ----------- --------------------------------------- -----------AmortisationAt 1 October 2004 (216.4)Charge for the year (23.5)Exchange adjustments (0.3)--------------------------------------- -----------At 30 September 2005 (240.2)--------------------------------------- ----------- Net book value at 30 September 2005 135.8--------------------------------------- -----------Net book value at 30 September 2004 108.4--------------------------------------- ----------- During the year the Directors performed impairment reviews on certain intangibleassets within the Group. These reviews resulted in a provision being madeagainst the remaining carrying value of the goodwill (£0.7m) relating to SpanishHomes Magazine acquired in 2004. This was due to the poor trading experienced bythis magazine since acquisition. 10. Tangible fixed assets-------------- ---------- ---------- ---------- ----------Group Land and Plant and Equipment, Total buildings machinery fixtures and fittings £m £m £m £m-------------- ---------- ---------- ---------- ---------- CostAt 1 October 2004 2.4 6.8 1.3 10.5Additions - 1.5 0.3 1.8Exchange adjustments - 0.1 - 0.1-------------- ---------- ---------- ---------- ----------At 30 September 2005 2.4 8.4 1.6 12.4-------------- ---------- ---------- ---------- ------------------------ ---------- ---------- ---------- ----------DepreciationAt 1 October 2004 (0.8) (5.2) (1.0) (7.0)Charge for the year (0.1) (1.2) (0.2) (1.5)Exchange adjustments - (0.1) 0.1 --------------- ---------- ---------- ---------- ----------At 30 September 2005 (0.9) (6.5) (1.1) (8.5)-------------- ---------- ---------- ---------- ------------------------ ---------- ---------- ---------- ----------Net book value at 30 September 2005 1.5 1.9 0.5 3.9-------------- ---------- ---------- ---------- ----------Net book value at 30 September 2004 1.6 1.6 0.3 3.5-------------- ---------- ---------- ---------- ---------- 11. Stocks 30 September 30 September 2005 2004 £m £m------------------------------ ----------- ----------- Raw materials 2.4 1.6Work in progress 2.6 2.8Finished goods 1.2 0.6------------------------------ ----------- -----------Total 6.2 5.0------------------------------ ----------- ----------- 12. Debtors 30 September 30 September 2005 2004 £m £m----------------------------- ----------- ----------- Amounts falling due within one year:Trade debtors 37.9 31.0Corporation tax recoverable 2.3 2.0Other debtors 3.0 2.9Prepayments and accrued income 6.1 2.7----------------------------- ----------- ----------- 49.3 38.6Amounts falling due after more than one year:Other debtors 0.9 0.9----------------------------- ----------- -----------Total 50.2 39.5----------------------------- ----------- ----------- Deferred tax At 30 September 2005 a deferred tax asset has been recognised within otherdebtors as follows:----------------------------- ----------- ----------- 30 September 30 September 2005 2004 £m £m----------------------------- ----------- ----------- Amounts falling due within one year 0.9 0.9Amounts falling due after more than one year 0.8 0.9----------------------------- ----------- ----------- 13. Current asset investments ----------------------------- ----------- ----------- 30 September 30 September 2005 2004 £m £m----------------------------- ----------- -----------Short-term bank deposits - 2.5----------------------------- ----------- -----------Total - 2.5----------------------------- ----------- ----------- 14. Creditors: amounts falling due within one year------------------------- ----------- ----------- 30 September 30 September 2005 2004 £m £m------------------------- ----------- -----------Bank and other borrowings 20.4 4.7Trade creditors 20.2 16.5Corporation tax 0.3 2.1Taxation and social security 3.3 3.0Other creditors 7.1 6.3Accruals and deferred income 25.4 24.7Proposed dividend 4.2 4.9Deferred consideration for acquisitions - 0.1------------------------- ----------- -----------Total 80.9 62.3------------------------- ----------- ----------- The deferred consideration of £0.1m in the prior year related to the acquisitionof Spanish Homes Magazine in 2004 and was paid during 2005. 15. Creditors: amounts falling due after more than one year--------------------- ----------- ----------- 30 September 30 September 2005 2004 £m £m--------------------- ----------- ----------- Bank and other borrowings 29.8 -Other creditors 2.2 ---------------------- ----------- -----------Total 32.0 ---------------------- ----------- ----------- Within creditors, the bank and other borrowings are repayable as follows: --------------------- ----------- ----------- 30 September 30 September 2005 2004 £m £m--------------------- ----------- -----------Within one year 20.4 -Between 1 and 2 years 4.0 -Between 2 and 5 years 25.8 ---------------------- ----------- -----------Total 50.2 ---------------------- ----------- ----------- 16. Provisions for liabilities and charges------------- ---------------- ------------- ------------- Property and Redundancy Total dilapidations provisions £m £m £m------------- ---------------- ------------- ------------- At 1 October 2004 0.9 - 0.9On acquisitions 0.1 0.2 0.3Charge in the year 1.6 - 1.6Utilised in year (0.4) (0.2) (0.6)------------- ---------------- ------------- -------------At 30 September 2005 2.2 - 2.2------------- ---------------- ------------- ------------- 17. Capital and reserves---------------- -------- --------- ------ --------- -------- Called up Share Merger Profit Total share premium reserve & loss capital account account £m £m £m £m £m---------------- -------- --------- ------ --------- -------- At 1 October 2004 3.2 23.7 109.0 (28.2) 107.7Issue of share capital during the 0.1 - - - 0.1yearPremium on exercise of share - 0.7 - - 0.7optionsLoss for the year - - - (11.0) (11.0)Dividends - - - (5.8) (5.8)---------------- -------- --------- ------ --------- --------At 30 September 2005 3.3 24.4 109.0 (45.0) 91.7---------------- -------- --------- ------ --------- -------- 18. Acquisitions The results for the 12 months to 30 September 2005 include the undernotedcontribution from acquisitions made in the year:-------------- ------- --------- -------- -------- -------- What Beach A&S Snowboard Cheat Laptop Magazines Publishing Journal Planet & Company Publishing Limited Limited £m £m £m £m £m-------------- ------- --------- -------- -------- -------- Date acquired 30.11.04 03.12.04 24.01.05 26.01.05 12.05.05 Turnover 0.7 2.9 4.8 0.1 0.3-------------- ------- --------- -------- -------- --------Operating profit/(loss)before exceptionalitems and amortisationof intangible assets 0.3 (0.6) 1.0 (0.3) 0.3Amortisation ofintangible assets (0.7) (0.6) (1.4) (0.3) (0.7)Exceptional items - (0.1) (0.8) - --------------- ------- --------- -------- -------- --------Operating loss (0.4) (1.3) (1.2) (0.6) (0.4)-------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total titles Plus Machine £m £m £m £m £m-------------- -------- -------- -------- -------- -------- Date acquired 21.06.05 16.08.05 13.09.05 Turnover 8.5 0.1 0.3 - 17.7-------------- -------- -------- -------- -------- --------Operating profit beforeexceptionalitems and amortisation of intangibleassets 0.8 - 0.1 - 1.6Amortisation of intangible assets (2.4) - - (0.1) (6.2)Exceptional items (1.5) - - - (2.4)-------------- -------- -------- -------- -------- --------Operating (loss)/profit (3.1) - 0.1 (0.1) (7.0)-------------- -------- -------- -------- -------- -------- i) Acquisition of Highbury titles On 21 June 2005 the Group's wholly owned UK subsidiary Future Publishing Limitedacquired certain assets and liabilities relating to 38 magazine titles andrelated businesses from Highbury House Communications plc, Highbury LifestyleLimited and Highbury Entertainment Limited for a cash consideration of £30.5m.The consideration was funded by a combination of cash resources and bank debt.The purchase is being accounted for as an acquisition. The provisional fair values of the net liabilities acquired are set out below:------------------ -------- --------- ----------- ---------Assets and liabilities Book value Revaluations Accounting Fair valueacquired policy alignment £m £m £m £m------------------ -------- --------- ----------- --------- Intangible fixed assets 0.7 - (0.7)1 -Tangible fixed assets 0.5 (0.4)2 (0.1)3 -Debtors 1.4 - (0.2)4 1.2Cash at bank and in hand 0.1 - - 0.1Other creditors (2.0) (0.2)5 - (2.2)------------------ -------- --------- ----------- ---------Net assets/(liabilities) acquired 0.7 (0.6) (1.0) (0.9)------------------ -------- --------- ----------- ---------Goodwill 33.2------------------ -------- --------- ----------- ---------Consideration------------------ -------- --------- ----------- ---------Consideration satisfied by:Cash 30.5Associated costs 1.8------------------ -------- --------- ----------- ---------Total consideration 32.3------------------ -------- --------- ----------- --------- Notes:The fair value adjustments comprise:1. The write off of the capitalised value of publishing rights in line with theGroup's accounting policies2. The revaluation of fixed assets to reflect the market value at the date ofacquisition3. The revaluation of fixed assets to reflect the Group's accounting policies ondepreciation4. An additional provision for advertising debtors in line with the Group'saccounting policies5. An accrual relating to unrecorded liabilities at the date of acquisition inrespect of software licences. Prior to the acquisition of these titles, they were owned by Highbury HouseCommunications plc, Highbury Lifestyle Limited and Highbury EntertainmentLimited. In the year ended 31 December 2004 turnover for these titles was £34.1mand estimated trading profit attributable to these titles was £5.3m. This profitis presented before corporate charges, interest and taxation and any financingitems which were dealt with on a group basis by Highbury House Communicationsplc as a whole. As only certain assets and liabilities of the group wereacquired, it is not practical to provide any details of post-tax profits orrecognised gains or losses for the financial periods pre-acquisition. ii) Other acquisitions During the year, the following business combinations, which were all accountedfor as acquisitions, also occurred:a) On 30 November 2004, the acquisition of the title What Laptop in the UKfor a consideration of £0.7m.b) On 3 December 2004, the acquisition of 100% of the shares of BeachMagazines & Publishing Limited for a consideration of £1.5m.c) On 24 January 2005, the acquisition of 100% of the shares of A&SPublishing Company Limited for a consideration of £6.0m, plus an additionalpayment of £0.7m in respect of net assets acquired.d) On 26 January 2005, the acquisition of the title Snowboard Journal inthe US for a consideration of £0.2m.e) On 12 May 2005, the acquisition of the computer games website CheatPlanet for a consideration of £4.6m.f) On 16 August 2005, the acquisition of the title Consoles Plus inFrance for a consideration of £0.0mg) On 13 September 2005, the acquisition of the titles The Games Machineand PC Action in Italy for a consideration of £2.3mh) In October 2004, the purchase in the UK of a trademark for aconsideration of £0.2m. In addition, in relation to the acquisition of Beach Magazines and PublishingLimited, there is a deferred element of consideration, up to a maximum of £1.5mpayable 12 months after the date of purchase, subject to the achievement ofcertain performance criteria. At 30 September 2005 it is considered unlikelythat these criteria will be met and therefore no provision has been made for anypayment of deferred consideration. The aggregate provisional fair values of the net assets acquired at the dates ofthese other acquisitions are shown below: ------------------ -------- --------- --------- ------ --------Assets and Book value Revalu- Accounting Other Fair liabilities ations policy valueacquired alignment £m £m £m £m £m------------------ -------- --------- --------- ------ -------- Intangible fixed assets 0.2 - (0.2)1 - -Tangible fixed assets 0.3 (0.2)2 - - 0.1Stocks 0.4 - (0.2)3 - 0.2Debtors 1.6 (0.2)5 (0.2)4 - 1.2Cash at bank and in hand 1.1 - - - 1.1Bank overdraft (0.3) - - - (0.3)Other creditors (2.6) - - - (2.6)Provisions - - - (0.2)6 (0.2)------------------ -------- --------- --------- ------ --------Net assets/(liabilities) acquired 0.7 (0.4) (0.6) (0.2) (0.5)------------------ -------- --------- --------- ------ --------Goodwill 17.1------------------ -------- --------- --------- ------ --------Consideration------------------ -------- --------- --------- ------ --------Consideration satisfied by:Cash 16.2Associated costs 0.4------------------ -------- --------- --------- ------ --------Total consideration 16.6------------------ -------- --------- --------- ------ -------- Notes: The fair value adjustments comprise:1. The write off of the capitalised value of publishing rights in line with theGroup's accounting policies2. The revaluation of fixed assets to reflect the market value at the date ofacquisition3. The revaluation of stock in line with the Group's accounting policies4. An additional provision for advertising debtors in line with the Group'saccounting policies5. The write off of irrecoverable other debtor balances at the date ofacquisition6. A provision of £0.2m to reflect onerous employee contracts on the acquisitionof Consoles Plus in France. Under French law certain classes of journalists havethe right on the change of control of a company to demand favourable redundancypackages for an unlimited period after the change of control. The provisionreflects the potential cost of those eligible to claim redundancy and as at 30September 2005 less than £0.1m of the provision remained, with the remainderhaving been fully utilised. During the last three years, the Group has spent £69.2m on acquisitions. In the12 months to 30 September 2003 the results for these acquired businesses were asfollows:------------- ------ ------- ------- -------- ------ ------- HDP Guitar Guitar Computec Spanish PC Zone World One Homes / CVG £m £m £m £m £m £m------------- ------ ------- ------- -------- ------ ------- Turnover 2.8 - - - - -------------- ------ ------- ------- -------- ------ -------Operating loss before exceptionalitems and (0.2) - - - - -amortisation of intangible assets ------ ------- ------- -------- ------ --------------------Amortisation of intangible assets (1.0) (0.1) - - - -------------- ------ ------- ------- -------- ------ -------Operating loss (1.2) (0.1) - - - -------------- ------ ------- ------- -------- ------ ------- -------------- ------- --------- -------- -------- -------- What Beach A&S Snowboard Cheat Laptop Magazines Publishing Journal Planet & Company Publishing Limited Limited £m £m £m £m £m-------------- ------- --------- -------- -------- -------- Turnover - - - - --------------- ------- --------- -------- -------- --------Operating profit before and - - - - -amortisation of intangible assets -------------- ------- --------- -------- -------- --------Amortisation of intangible assets - - - - --------------- ------- --------- -------- -------- --------Operating profit - - - - --------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total titles Plus Machine £m £m £m £m £m-------------- -------- -------- -------- -------- -------- Turnover - - - - 2.8-------------- -------- -------- -------- -------- --------Operating profit before andamortisation of intangible - - - - (0.2)assets -------- -------- -------- -------- ----------------------Amortisation of intangible assets - - - - (1.1)-------------- -------- -------- -------- -------- --------Operating loss - - - - (1.3)-------------- -------- -------- -------- -------- -------- In the 12 months to 30 September 2004 these acquisitions contributed as follows:------------- ------- ------ ------- -------- ------ ------- HDP Guitar Guitar Computec Spanish PC Zone World One Homes / CVG £m £m £m £m £m------------- ------- ------ ------- -------- ------ ------- Turnover 7.8 7.7 2.3 2.8 0.1 0.1------------- ------- ------ ------- -------- ------ -------Operating profit before andamortisation of intangibleassets 0.9 0.6 0.1 0.7 0.1 -------------- ------- ------ ------- -------- ------ -------Amortisation of intangibleassets (2.4) (2.0) (0.5) (1.0) (0.1) (0.1)------------- ------- ------ ------- -------- ------ -------Operating loss (1.5) (1.4) (0.4) (0.3) - (0.1)------------- ------- ------ ------- -------- ------ ------- -------------- ------- --------- -------- -------- -------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited £m £m £m £m £m-------------- ------- --------- -------- -------- -------- Turnover - - - - --------------- ------- --------- -------- -------- --------Operating profit before and - - - - -amortisation of intangible assets -------------- ------- --------- -------- -------- --------Amortisation of intangible assets - - - - --------------- ------- --------- -------- -------- --------Operating profit - - - - --------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total Plus Machine £m £m £m £m £m-------------- -------- -------- -------- -------- -------- Turnover - - - - 20.8-------------- -------- -------- -------- -------- --------Operating profit before andamortisation of - - - - 2.4intangible assets -------------- -------- -------- -------- -------- --------Amortisation of intangible assets - - - (0.2) (6.3)-------------- -------- -------- -------- -------- --------Operating loss - - - (0.2) (3.9)-------------- -------- -------- -------- -------- -------- In the 12 months to 30 September 2005 these acquisitions contributed as follows:------------- ------- ------ ------- -------- ------ ------- HDP Guitar Guitar Computec Spanish PC Zone World One Homes / CVG £m £m £m £m £m------------- ------- ------ ------- -------- ------ ------- Turnover 7.0 9.5 3.8 3.1 0.6 2.1------------- ------- ------ ------- -------- ------ -------Operating profit beforeexceptional items andamortisation of intangibleassets 1.3 1.5 0.2 0.6 - 0.7------------- ------- ------ ------- -------- ------ -------Amortisation and impairment ofintangible assets (1.4) (2.1) (0.4) (1.3) (1.5) (0.9)Exceptional items - - - - - -------------- ------- ------ ------- -------- ------ -------Operating loss (0.1) (0.6) (0.2) (0.7) (1.5) (0.2)------------- ------- ------ ------- -------- ------ ------- -------------- ------- --------- -------- -------- -------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited £m £m £m £m £m-------------- ------- --------- -------- -------- -------- Turnover 0.7 2.9 4.8 0.1 0.3-------------- ------- --------- -------- -------- --------Operating profit/(loss) beforeexceptional items and amortisationof intangible assets 0.3 (0.6) 1.0 (0.3) 0.3-------------- ------- --------- -------- -------- --------Amortisation and impairment ofintangible assets (0.7) (0.6) (1.4) (0.3) (0.7)Exceptional items - (0.1) (0.8) - --------------- ------- --------- -------- -------- --------Operating loss (0.4) (1.3) (1.2) (0.6) (0.4)-------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total titles Plus Machine £m £m £m £m £m-------------- -------- -------- -------- -------- -------- Turnover 8.5 0.1 0.3 - 43.8-------------- -------- -------- -------- -------- --------Operating profit before exceptionalitems and amortisation of intangible assets 0.8 - 0.1 - 5.9-------------- -------- -------- -------- -------- --------Amortisation and impairment ofintangible assets (2.4) - - (0.1) (13.8)Exceptional items (1.5) - - - (2.4)-------------- -------- -------- -------- -------- --------Operating (loss)/profit (3.1) - 0.1 (0.1) (10.3)-------------- -------- -------- -------- -------- -------- In total, over the three years, the results include the undernoted contributionfrom acquisitions:------------- ------- ------- ------- -------- ------- ------- HDP Guitar Guitar One Computec Spanish PC Zone World Homes / CVG £m £m £m £m £m------------- ------- ------- ------- -------- ------- -------Country France US US UK UK UK------------- ------- ------- ------- -------- ------- -------Date 28.04.03 10.09.03 31.10.03 21.11.03 02.08.04 23.08.04acquired ------------- ------- ------- ------- -------- ------- -------Turnover 17.6 17.2 6.1 5.9 0.7 2.2------------- ------- ------- ------- -------- ------- -------Operatingprofit beforeexceptionalitems andamortisationof intangibleassets 2.0 2.1 0.3 1.3 0.1 0.7------------- ------- ------- ------- -------- ------- -------Amortisationand impairmentof intangibleassets (4.8) (4.2) (0.9) (2.3) (1.6) (1.0)Exceptional items - - - - - -------------- ------- ------- ------- -------- ------- -------Operating loss (2.8) (2.1) (0.6) (1.0) (1.5) (0.3)------------- ------- ------- ------- -------- ------- ------- -------------- ------- --------- -------- -------- -------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited £m £m £m £m £m-------------- ------- --------- -------- -------- -------- Country UK UK UK US US-------------- ------- --------- -------- -------- --------Date acquired 31.11.04 03.12.04 24.01.05 26.01.05 12.05.05-------------- ------- --------- -------- -------- --------Turnover 0.7 2.9 4.8 0.1 0.3-------------- ------- --------- -------- -------- --------Operating profit/(loss)before exceptionalitems and amortisationof intangible assets 0.3 (0.6) 1.0 (0.3) 0.3-------------- ------- --------- -------- -------- --------Amortisation andimpairment ofintangible assets (0.7) (0.6) (1.4) (0.3) (0.7)Exceptional items - (0.1) (0.8) - --------------- ------- --------- -------- -------- --------Operating profit (0.4) (1.3) (1.2) (0.6) (0.4)-------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total Plus Machine £m £m £m £m £m-------------- -------- -------- -------- -------- -------- Country UK France Italy --------------- -------- -------- -------- -------- --------Date acquired 21.06.05 16.08.05 13.09.05 --------------- -------- -------- -------- -------- --------Turnover 8.5 0.1 0.3 - 67.4-------------- -------- -------- -------- -------- --------Operating profit beforeexceptionalitems and amortisation of intangible assets 0.8 - 0.1 - 8.1-------------- -------- -------- -------- -------- --------Amortisation and impairmentof intangible assets (2.4) - - (0.3) (21.2)Exceptional items (1.5) - - - (2.4)-------------- -------- -------- -------- -------- --------Operating (loss)/profit (3.1) - 0.1 (0.3) (15.5)-------------- -------- -------- -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOWRelated Shares:
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