14th Jun 2005 07:01
Future PLC14 June 2005 Financial highlights for half-year to 31 March 2005 Adjusted results * Constant Reported currency Change Change Turnover £104.3m (2004: £98.9m) Up 5% Up 7%Circulation revenue Up 6% Up 7%Advertising revenue Up 5% Up 7%Adjusted pre-tax profit £12.8m (2004: £12.7m) Up 1% Up 3%Adjusted earnings per share 3.2p (2004: 3.0p) Up 7% Up 10%Interim dividend of 0.5 pence per share New New Statutory results Turnover £104.3m (2004: £98.9m)Goodwill amortisation £10.0m (2004: £8.0m)Pre-tax profit £1.3m (2004: £4.7m)(Loss)/earnings per share (0.3p) (2004: 0.6p)Interim dividend of 0.5 pence per share Other highlights > Two largest businesses, in UK and US, achieved 9% and 8% revenue growth respectively in constant currency > Like-for-like Group revenue (excluding acquisitions made during the six months to 31 March 2005) increased by 5% in constant currency. > New product development spend to be increased by over £1m to circa £3m for year to September 2005 > 16 titles acquired and four launched in first half. Nine launches due in second half. > Games revenues and profits both slightly up in constant currency at half-year stage > Significant expansion and diversification of Group planned through £30.5m acquisition of 38 titles from Highbury, expected to complete in June Definitions: * 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. The only adjustments made are to remove goodwill amortisation andexceptional items, including profit on disposal of subsidiaries. Greg Ingham, Chief Executive of Future commented: "This is an important year for the Group in our stated plan to double the sizeof the business in terms of both revenues and profits in the next four years. Wehave achieved much in the financial year to date. We have been very busydeveloping, launching and acquiring. During the current financial year we haveacquired 16 titles, will have launched 13 new magazines and have agreed to buy38 more. Whilst we have continued to build scale and diversify our magazineportfolio, first half adjusted earnings per share have increased 7% and, asindicated last year, we are introducing an interim dividend of 0.5 pence pershare. The actions that we have taken this year will expand Future UK by over a third.In the US, we have also expanded our magazine portfolio further by bothacquisition and launches. We are developing our Internet presence following lastmonth's acquisition of cheatplanet.com. Trading in the second half has begun a little below our expectations and ourshort-term outlook is therefore cautious. Second half performance is likely tobe affected to some degree by reported weakness in consumer demand. However onadvertising, Future is less exposed to any downturn in general advertising thansome in the media sector. We are commited to ensuring the continued growth of the business throughacquisitions and increased new product development spend on launches andInternet expansion. The games sector continues to perform well for us and facessignificant growth from 2006. More generally, we are enthused by the multiplegrowth opportunities facing Future. More immediately, and assuming approval by Highbury shareholders, we lookforward to welcoming the people who work on the Highbury titles. These areclassic special-interest magazines which will be great additions to the Future portfolio." An analyst presentation will be held at 10.00am today at the offices of UBSInvestment Bank, 1 Finsbury Avenue, London, EC2M 2PP. Enquiries: Future plcGreg Ingham, Chief Executive Tel: 01225 442244John Bowman, Group Finance Director Tel: 01225 732281 Hogarth PartnershipJames Longfield/Georgina Briscoe Tel: 020 7357 9477 Interim Report Summary This is an important year for the Group in our stated plan to double the size ofthe business in terms of both revenues and profits in the next four years. Wehave achieved much in the financial year to date. We have been very busydeveloping, launching and acquiring. During the current financial year we haveacquired 16 titles, will have launched 13 new magazines and have agreed to buy38 more. Whilst we have continued to build scale and diversify our magazineportfolio, first half adjusted earnings per share have increased 7% and, asindicated last year, we are introducing an interim dividend of 0.5 pence pershare. Financial results for half-year to 31 March 2005 Group turnover was £104.3m, 5% up on 2004 and 7% up in constant currency.Adjusted profit before tax was marginally ahead at £12.8m (2004: £12.7m). Ourresults for the first half, which were enhanced by £1.6m of profit on thedisposal of certain non-trading subsidiaries, but held back by exceptional costsincluding £2.2m for our aborted bid for Highbury House, also show a goodwillamortisation charge of £10.0m (2004: £8.0m): the increase arises fromacquisitions made during the second half of 2004 and the first half of 2005.After all of these items, the Group's pre-tax profit in the first half was £1.3m(2004: £4.7m). Adjusted earnings per share were 3.2p (2004: 3.0p), an increaseof 7%. Interim dividend As indicated in our Annual Report last year, we are introducing an interimdividend for the first time. After taking into account the results for the firsthalf, we have decided that the interim dividend will be one third of last year'stotal dividend of 1.5p. The interim dividend of 0.5p per share will be paid on11 July to all shareholders on the register on 24 June. The ex-dividend date is22 June. Magazine portfolio and new product development During the half-year to 31 March 2005, we spent £9.5m on four acquisitions whichcontributed for only a small part of the period: the contribution to the Group'sresults was turnover of £2.5m and adjusted operating profit of £0.1m. Thesetitles are being integrated within the Group and this gave rise to exceptionalcosts of £0.8m. After allowing for integration issues, overall performance ofour recent acquisitions is in line with our expectation. As at 31 March 2005 the Group published more than 110 regular special-interestmagazines and following the expected acquisition of the titles from Highbury inJune the total number will rise to over 150. Prior to this, the top 10 titles inthe half-year accounted for 34% of Group turnover (2004: 39%). Net spend on new product development (launches of titles and websites during theperiod) in the first half-year was £0.7m (2004: £1.3m) and total spend in thecurrent year is expected to increase by over £1.0m to circa £3.0m. At this levelnew product development spend represents 1.5% of turnover. Analysis of results by segment The table below analyses the Group's turnover for the six months to 31 March2005 by segment. Proportion of Group UK US Mainland Europe Group------------------- -------- ----------- --------- ----------Games 18% 14% 12% 44%Computing 13% 6% 9% 28%Entertainment 22% 6% - 28%------------------- -------- ----------- --------- ----------Total 53% 26% 21% 100%------------------- -------- ----------- --------- ---------- Performance of recent acquisitions During the two years to 30 September 2004 we spent £22.4m on six acquisitions.In the half-year to 31 March 2005 these acquired titles generated turnover of£13.7m and adjusted operating profit of £2.1m. Analysis of Group pre-tax profit for half-year ----------------------- ----------- ------------ ----------- 2005 2004 Change £m £m £m----------------------- ----------- ------------ -----------UK 9.6 9.2 0.4US 2.7 3.4 (0.7)Mainland Europe 1.8 1.6 0.2Central costs (1.4) (1.3) (0.1)----------------------- ----------- ------------ -----------Adjusted operating profit 12.7 12.9 (0.2)----------------------- ----------- ------------ -----------Profit on disposal of subsidiaries 1.6 - 1.6Exceptional charges (3.1) - (3.1)Net interest receivable/(payable) and 0.1 (0.2) 0.3similar itemsGoodwill amortisation (10.0) (8.0) (2.0)----------------------- ----------- ------------ -----------Pre-tax profit 1.3 4.7 (3.4)----------------------- ----------- ------------ ----------- Currency effect on half-year profits The average value of the Dollar against Sterling declined by 6% compared withthe first half last year, so that our revenue growth in Dollar terms wasstronger than that reported in Sterling. The average value of the Euro againstSterling in the half-year strengthened by less than 1%. The Group impact ofadverse currency movements held back adjusted operating profits by £0.3m. UK performance in half-year ------------------------------ --------- -------- -------- 2005 2004 Change £m £m %------------------------------ --------- -------- --------Circulation revenue 39.0 37.0 5%Advertising revenue 14.7 12.1 21%Other revenue 2.1 2.5 (16%)------------------------------ --------- -------- --------Turnover 55.8 51.6 8%Adjusted operating profit 9.6 9.2 4%------------------------------ --------- -------- --------Adjusted operating profit margin 17% 18%------------------------------ --------- -------- -------- UK turnover for the half-year rose by 8%, reflecting organic growth of 3% andincreased levels of acquisition and launch activity. The titles acquiredcontributed for only the latter months, accounting for turnover of £2.5m andadjusted operating profit of £0.2m. Integration costs arising from theseacquisitions gave rise to exceptional costs of £0.8m. We continued to diversify our UK portfolio, including the acquisition of 11motoring titles, two parenting titles, a wedding title and one computing titlein the period. This portfolio expansion is also reflected in our launchprogramme, which includes Simply Knitting, Computer Upgrade and ScrapbookInspirations. As announced in February, ABC newsstand sales for 2004 highlighted thecontinuing diversification of the overall portfolio as well as growth in themusic-making, music-listening, motoring, stitching and home entertainmentsectors. Additionally there was a steady performance for games magazines anddevelopment and adaptation of the computing portfolio. The UK games portfolioshowed a 5.7% rise, entertainment magazines were up 3.4%, and the computingportfolio showed a 0.4% rise, all including acquisitions and first time ABCs.More recent circulation trends indicate slight weakening in newsstand. Our UK online business generated turnover of £0.8m and adjusted operating profitof £0.3m. During the first half-year, we completed the relocation of most of our 650employees in Bath to Quay House which we have contracted to lease for 23 years. Later this month, we expect to take ownership of the titles to be acquired fromHighbury (as explained later) and following this transaction, we will employ anadditional 200 staff, bringing our total number of employees in London to morethan 350. We are currently seeking appropriate office space in London in orderto relocate both existing and new staff to one location. As previouslyexplained, this may lead to a property provision. Export and licensing activity UK exports totalled £6.1m (2004: £5.9m). The weakening of the US dollar heldback export revenues by £0.2m, primarily in games and computing. Third partylicensing revenue receivable by the Group in the half-year was £1.5m, up 7% on2004. US performance in half-year---------------------------- --------- -------- ---------- 2005 2004 Change $m $m %---------------------------- --------- -------- ----------Circulation revenue 27.6 24.1 15%Advertising revenue 22.3 21.9 2%Other revenue 0.9 1.2 (25%)---------------------------- --------- -------- ----------Turnover 50.8 47.2 8%Adjusted operating profit 5.1 6.1 (16%)---------------------------- --------- -------- ----------Adjusted operating profit margin 10% 13%---------------------------- --------- -------- ---------- US turnover rose by 8% as we continued to diversify our US portfolio, which nowserves four special-interest areas: games, computing, music and action sports.We established our action sports division, based in San Diego, in the firsthalf, acquired Snowboard Journal and will launch Future Snowboarding in the latesummer. Future Music was launched in March and during the second half we willlaunch Scrapbook Answers. As previously indicated, US games advertising revenue in the quarter to Decemberwas below its level for the previous year. By contrast, in the quarter to March,games advertising revenue exceeded our expectation. First-half results are stated after reduced losses of $0.4m from Mobile, whichwas launched in January 2004, and its operating performance is satisfactory atthis stage. Future has grown to become the 12th largest magazine publisher at newsstand in2004 (source: Circulation Management magazine). New product development, together with our new San Diego office, accounted for$0.9m of expenditure in the first half. New product development expenditure inthe second half will be greater. On 12 May we acquired CheatPlanet (www.cheatplanet.com), the US computer gameswebsite, for a cash consideration of $8.7m. Launched in 1997, www.cheatplanet.com is the number one cheat site (by site visitors and pageviews) and is the fourth largest computer games website in the US. For 2004,CheatPlanet generated revenues of $0.9m and pre-tax profits of $0.8m. This acquisition was the first step in our plans to increase our Internetpresence and develop our games website activities in the US. We will makefurther investment in this area in the second half and also in the nextfinancial year. Mainland Europe performance in half-year---------------------------------- ------- ------ ---------- 2005 2004 Change •m •m %---------------------------------- ------- ------ ----------Circulation revenue 24.8 23.8 4%Advertising revenue 6.8 7.6 (11%)Other revenue 0.1 0.2 (50%)---------------------------------- ------- ------ ----------Turnover 31.7 31.6 -Adjusted operating profit 2.6 2.2 18%---------------------------------- ------- ------ ----------Adjusted operating profit margin 8% 7%---------------------------------- ------- ------ ---------- The excellent progress made last year in France has been maintained. Adjustedoperating profit for Mainland Europe is stated after intra-group licence fees of€0.6m (2004: €1.0m). Games magazine performance exceeded our expectations in both France and Italywhereas the performance of computing titles has been below expectation. In March we launched a new computing title, Micro Actuel, in France, and earlysigns for both circulation and advertising are encouraging. This is Future'slargest magazine launch this year. Exceptional items These amounted to £3.1m (2004: £Nil) representing £2.2m of aborted bid costs(see below), £0.8m of restructuring costs associated with UK acquisitionactivity in the first half-year, and £0.1m of restructuring costs within theexisting UK business. Aborted bid for Highbury House Communications plc ("Highbury") On 14 February 2005 Future announced a recommended share offer (with a partialcash alternative) to acquire the whole of Highbury. This was a Class Onetransaction for Future and shareholders in Future voted in favour of it at anEGM held on 31 March 2005 when more than 80% of all shares in Future were votedand of these, more than 99% were in favour. On 14 April 2005 the Office of Fair Trading announced that it had referred therecommended share offer to the Competition Commission. On 15 April 2005 Futureannounced that it no longer intended to pursue this transaction. On 28 April2005 the Competition Commission announced that it had formally cancelled thereference. The external professional fees and other costs of the aborted bid totalled£2.2m. Agreement to buy 38 titles from Highbury for £30.5m On 29 April Future announced that it had entered into an agreement with theBoard of Highbury to acquire 38 magazine titles, and associated assets, for acash consideration of £30.5 million, to be funded from Future's committed bankfacilities. This acquisition is conditional upon shareholder approval from Highburyshareholders at an Extraordinary General Meeting convened for 16 June. Ifapproved, it is expected that Future will gain ownership of these titles on 21June 2005. The titles being acquired include Fast Car, Fast Bikes, DJ, DVD Review, the WhatVideo group of magazines and Highbury's puzzle magazines. Additionally, the dealincludes Highbury's US business which publishes five magazines. Highburymanagement accounts for the year ended 31 December 2004 show that: (a) theassets being acquired generated unaudited aggregated turnover of approximately£34.1 million; (b) the unaudited aggregated profit (before interest, taxationand amortisation) attributable to these assets was approximately £5.3 million;and (c) the unaudited aggregated net assets relating to the transaction wereestimated at £20.1 million of which approximately £18.4 million related tointangible publishing rights. This transaction has several of the attractions of the larger one with Highburyfrom which we withdrew in April. We built up considerable knowledge ofHighbury's portfolio over the past few months and were thus able to moveswiftly. We anticipate that a number of the benefits identified in relation toits previous offer for the whole of Highbury, in particular furtherdiversification of Future's portfolio and the benefits from increased financialand operational scale, are applicable to the acquisition of these Highburyassets. There has been thorough integration planning including on projected costsavings which are expected to be circa £0.5m in a full year. In time we seefurther growth prospects for launching from this new portfolio. None of the titles being acquired is a games title. As a result of this deal,the estimated split of the Group's revenues is likely to become Games 38%;Entertainment 34%; and Computing 28%. For the financial year to 30 September 2006, Future anticipates that thisacquisition will enhance adjusted earnings per share (this statement does notconstitute a profit forecast nor should it be interpreted to mean that futureearnings per share of Future following this transaction will necessarily matchor exceed historical earnings per share of Future) and Future expects to achievea post-tax return on this investment in excess of its weighted average cost ofcapital. New bank facility Future is a strongly cash-generative business and has had no net debt during thelast three years. In February 2005 we signed a £120m Credit Agreement withBarclays in connection with Future's recommended Offer for Highbury. After thisOffer lapsed, we signed a Credit Agreement with Barclays in April for £90m,enabling us to complete the Highbury transaction and providing a £60m revolvingcredit facility at the same time. Profit on disposal of subsidiaries During the period, the Group sold three wholly-owned subsidiary companies for atotal cash consideration of £1.7m. After accounting for associated costs ofdisposal, the profit on disposal of subsidiaries was £1.6m. The companiesdisposed of contained capital tax losses which were surplus to Future'srequirements. Net cash and capital expenditure The Group started the half-year with net cash of £9.8m and, during the period,the Group paid out a net £7.4m in respect of acquisitions and disposals, £4.9min respect of its second dividend, £2.2m in tax, and £0.6m for capitalexpenditure. The Group's operations for the half-year resulted generated a netcash inflow from operating activities of £11.4m and the Group ended thehalf-year with net cash of £6.7m. Leasehold property The Group balance sheet contains property provisions totalling £0.6m (September2004: £0.9m). Tax The tax charge for the period amounted to £2.2m which represents an effectivetax rate for the half-year of 19% (2004: 23%), ignoring goodwill amortisation.During the period, Mainland Europe profits were again effectively tax-free,reflecting the benefit of accumulated tax losses: this benefit should continuefor some years. This 19% rate is similar to the Group's estimate of theeffective tax rate likely to apply to taxable profits for the financial periodending on 30 September 2005. Quarterly performance The table below provides a quarterly analysis of the pro forma results for the12 months to September 2004, together with the corresponding quarterly figuresto March 2005. ------------------- --------- ---------- --------- --------- ------ Quarter to Quarter to Quarter to Quarter to Total December March June September £m £m £m £m £m------------------- --------- ---------- --------- --------- ------ Turnover Year ended 30September 2004 57.4 41.5 45.6 45.9 190.4 Six months to31 March 2005 58.0 46.3 - - - Adjusted operatingprofit Year ended 30September 2004 10.5 2.4 4.7 6.0 23.6 Six months to31 March 2005 11.1 1.6 - - ------------------- --------- ---------- --------- --------- ------ Impact of International Financial Reporting Standards (IFRS) In our Annual Reports for 2003 and 2004 we updated shareholders on the impact ofIFRS which will apply to Future's interim results for the six months to 31 March2006 and the full year results to 30 September 2006. As previously explained,the areas of IFRS which are expected to have the most significant impact onFuture's financial results relate to (a) purchased goodwill, which will cease tobe amortised over its estimated useful life: instead we will perform annualimpairment reviews of goodwill; and (b) share based payments. We do not expectIFRS to have any significant impact on Future's dividend policy or ability tomake dividend payments. Trading outlook This is an important year for the Group in our stated plan to double the size ofthe business in terms of both revenues and profits in the next four years. Wehave achieved much in the financial year to date. We have been very busydeveloping, launching and acquiring. During the current financial year we haveacquired 16 titles, will have launched 13 new magazines and have agreed to buy38 more. Whilst we have continued to build scale and diversify our magazineportfolio, first half adjusted earnings per share have increased 7% and, asindicated last year, we are introducing an interim dividend of 0.5 pence pershare. The actions that we have taken this year will expand Future UK by over a third.In the US, we have also expanded our magazine portfolio further by bothacquisition and launches. We are developing our Internet presence following lastmonth's acquisition of cheatplanet.com. Trading in the second half has begun a little below our expectations and ourshort-term outlook is therefore cautious. Second half performance is likely tobe affected to some degree by reported weakness in consumer demand. However onadvertising, Future is less exposed to any downturn in general advertising thansome in the media sector. We are commited to ensuring the continued growth of the business throughacquisitions and increased new product development spend on launches andInternet expansion. The games sector continues to perform well for us and facessignificant growth from 2006. More generally, we are enthused by the multiplegrowth opportunities facing Future. More immediately, and assuming approval by Highbury shareholders, we lookforward to welcoming the people who work on the Highbury titles. These areclassic special-interest magazines which will be great additions to the Futureportfolio. Roger Parry, non-executive ChairmanGreg Ingham, Chief ExecutiveJohn Bowman, Group Finance DirectorMichael Penington, senior independent non-executive DirectorPatrick Taylor, independent non-executive DirectorLisa Gordon, independent non-executive DirectorJohn Mellon, independent non-executive Director 14 June 2005 Analysis of turnover for half-year to 31 March------------- ------- ----------- ------------- ----------- % of 2005 2004 Change Group £m £m %------------- ------- ----------- ------------- -----------UK 53% 55.8 51.6 Up 8%US 26% 27.1 26.6 Up 2%Mainland Europe 21% 22.0 21.8 Up 1%Intra-group - (0.6) (1.1) -------------- ------- ----------- ------------- -----------Group turnover 100% 104.3 98.9 Up 5%------------- ------- ----------- ------------- ----------- In constant currencies the half year turnover is shown below:------------- ------- ----------- ------------- ----------- % of 2005 2004 Change Group £m £m %------------- ------- ----------- ------------- -----------UK 53% 56.0 51.6 Up 9%US 27% 28.7 26.6 Up 8%Mainland Europe 20% 21.8 21.8 -Intra-group - (0.6) (1.1) -------------- ------- ----------- ------------- -----------Group turnover 100% 105.9 98.9 Up 7%------------- ------- ----------- ------------- ----------- Enquiries: Future plcGreg Ingham, Chief Executive Tel: 01225 442244John Bowman, Group Finance Director Tel: 01225 732281 Hogarth PartnershipJames Longfield/Georgina Briscoe Tel: 020 7357 9477 About Future Future plc was founded in the UK in 1985. Today, it publishes over 100special-interest consumer magazines worldwide with strong portfolios in thecomputing, games, music, sports, motoring, crafts and leisure sectors. Futureemploys 1,200 people in offices in the UK, US, France and Italy. Over 100international editions of Future's magazines are also published under licence in30 other countries across the world. The company is listed on the London StockExchange (symbol FUTR). Group profit and loss accountfor the six months ended 31 March 2005----------------- ------ --------------------- -------- --------- 6 months to 31 March 2005 6 months to 31 12 months to 30 March 2004 September 2004 Note Continuing Acquisitions Total Total Total operations £m £m £m £m £m----------------- ------ ---------- --------- ------ -------- ---------Turnover 1 101.8 2.5 104.3 98.9 190.4----------------- ------ ---------- --------- ------ -------- ---------Operatingprofit Operatingprofit beforeexceptionalitems andamortisationof intangibleassets 12.6 0.1 12.7 12.9 23.6 Exceptionalitems 2 (2.3) (0.8) (3.1) - - Amortisationof intangibleassets 2,8 (9.1) (0.9) (10.0) (8.0) (16.6) ----------------- ------ ---------- --------- ------ -------- ---------Operatingprofit/(loss) 2 1.2 (1.6) (0.4) 4.9 7.0 Profit ondisposal ofsubsidiaries 2 1.6 - 0.2----------------- ------ ---------- --------- ------ -------- ---------Profit onordinaryactivitiesbeforeinterest 1.2 4.9 7.2 Net interestreceivable/(payable) andsimilar items 4 0.1 (0.2) ------------------ ------ ---------- --------- ------ -------- ---------Profit onordinaryactivitiesbefore tax 1 1.3 4.7 7.2 Tax on profiton ordinaryactivities 5 (2.2) (2.9) (4.7)----------------- ------ ---------- --------- ------ -------- ---------(Loss)/profitfor thefinancialperiod 16 (0.9) 1.8 2.5----------------- ------ ---------- --------- ------ -------- ---------Dividends -December 2003paid - (4.0) (4.0) - September2004 paid - - (4.9) - March 2005proposed 6 (1.6) - ------------------ ------ ---------- --------- ------ -------- ---------Retained lossfor thefinancialperiod (2.5) (2.2) (6.4)----------------- ------ ---------- --------- ------ -------- --------- Earnings per 1 pence Ordinary share ------------------------ -------- -------- -------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2004 September 2004 pence pence pence ------------------------ -------- -------- -------- ---------Basic(loss)/earnings per share 7 (0.3) 0.6 0.8 Adjusted basic earnings per share 7 3.2 3.0 5.8 Diluted (loss)/earnings per share 7 (0.3) 0.6 0.8 Adjusted dilutedearnings per share 7 3.2 3.0 5.8------------------------ -------- -------- -------- --------- Group statement of total recognised gains and lossesfor the six months ended 31 March 2005---------------------------- ------ -------- -------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2004 September 2004 Note £m £m £m---------------------------- ------ -------- -------- ---------(Loss)/profitfor the period 16 (0.9) 1.8 2.5 Dividend - December 2003paid - (4.0) (4.0) Dividend - September 2004paid - - (4.9) Dividend - March 2005proposed 16 (1.6) - ----------------------------- ------ -------- -------- ---------Retained lossfor the period (2.5) (2.2) (6.4) Net exchange adjustmentsoffset in reserves - (0.1) - Tax on exchange adjustments - - -offset in reserves Release ofpre-acquisition loan - - 1.0 Tax on release ofpre-acquisition loan - - (0.4) Unwinding oflicensing obligation - - 0.1---------------------------- ------ -------- -------- ---------Total recognised loss relating to the period (2.5) (2.3) (5.7)---------------------------- ------ -------- -------- --------- Group reconciliation of movements in shareholders' fundsfor the six months ended 31 March 2005---------------------------- ------ -------- -------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2004 September 2004 Note £m £m £m---------------------------- ------ -------- -------- ---------(Loss)/profit for the period 16 (0.9) 1.8 2.5 Dividend - December 2003paid - (4.0) (4.0) Dividend - September 2004paid - - (4.9) Dividend - March 2005proposed 16 (1.6) - ----------------------------- ------ -------- -------- ---------Retained loss for the period (2.5) (2.2) (6.4) Share options exercised 16 0.1 - - Premium on shares issuedduring the period 16 0.5 0.6 0.9 Net exchange adjustmentsoffset in reserves - (0.1) - Tax on exchange adjustments - - -offset in reserves Release ofpre-acquisition loan - - 1.0 Tax on release ofpre-acquisition loan - - (0.4) Unwinding of licensingobligation - - 0.1---------------------------- ------ -------- -------- ---------Net movement inshareholders' funds (1.9) (1.7) (4.8) Opening equityshareholders' funds 107.7 112.5 112.5---------------------------- ------ -------- -------- ---------Equity shareholders'funds as atend of period 105.8 110.8 107.7---------------------------- ------ -------- -------- --------- Group balance sheetas at 31 March 2005 ------------------------ --------- --------- --------- --------- 31 March 2005 31 March 2004 30 September 2004 Note £m £m £m ------------------------ --------- --------- --------- ---------Fixed assetsIntangible assets 8 108.5 112.4 108.4Tangible assets 9 3.6 3.4 3.5------------------------ --------- --------- --------- --------- 112.1 115.8 111.9 Current assetsStocks 10 5.6 4.7 5.0Debtors 11 40.6 31.8 39.5Investments 12 - 3.4 2.5Cash at bank and inhand 10.4 21.1 12.0------------------------ --------- --------- --------- --------- 56.6 61.0 59.0Creditors: amountsfalling due within oneyear 13 (61.8) (64.5) (62.3)------------------------ --------- --------- --------- ---------Net current liabilities (5.2) (3.5) (3.3)------------------------ --------- --------- --------- --------- ------------------------ --------- --------- --------- ---------Total assets lesscurrent liabilities 106.9 112.3 108.6------------------------ --------- --------- --------- ---------Provisions forliabilities and charges 14 (1.1) (1.5) (0.9)------------------------ --------- --------- --------- ---------Net assets 105.8 110.8 107.7------------------------ --------- --------- --------- --------- Capital and reservesCalled up share capital 15 3.3 3.2 3.2Share premium account 16 24.2 0.6 23.7Merger reserve 16 109.0 109.0 109.0Other reserves 16 - 21.9 -Profit and loss account 16 (30.7) (23.9) (28.2)------------------------ --------- --------- --------- ---------Equity shareholders'funds 105.8 110.8 107.7------------------------ --------- --------- --------- --------- Group cash flow statementfor the six months ended 31 March 2005 --------------------------- ------ --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2004 September 2004 Note £m £m £m--------------------------- ------ --------- --------- ---------Net cash inflow fromoperating activities A 11.4 16.8 17.7--------------------------- ------ --------- --------- ---------Returns on investments andservicing of financeInterest received 0.3 0.4 0.6Interest paid (0.2) (0.3) (0.4)--------------------------- ------ --------- --------- ---------Net cash inflow fromreturns on investmentsand servicing of finance 0.1 0.1 0.2--------------------------- ------ --------- --------- ---------TaxTax paid (3.6) (5.2) (6.6)Tax received 1.4 0.5 0.8--------------------------- ------ --------- --------- ---------Net tax paid (2.2) (4.7) (5.8)--------------------------- ------ --------- --------- ---------Capital expenditure andfinancial investmentPurchase oftangible fixed assets (0.6) (0.7) (1.4)--------------------------- ------ --------- --------- ---------Net cash outflow fromcapital expenditureand financial investment (0.6) (0.7) (1.4)--------------------------- ------ --------- --------- ---------Acquisitions anddisposals Purchase of subsidiaryundertakings (8.6) (3.3) (3.3) Net cash acquired withsubsidiary undertakings 0.8 - - Purchase of magazinetitles (0.9) (1.6) (5.6) Purchase of trademarks (0.2) - - Payment of deferredconsideration (0.1) - (0.7) Disposal of subsidiaryundertakings 1.6 - 0.2--------------------------- ------ --------- --------- ---------Net cash outflow foracquisitions and disposals (7.4) (4.9) (9.4)--------------------------- ------ --------- --------- ---------DividendsEquity dividends paid (4.9) - (4.0)--------------------------- ------ --------- --------- ---------Net cash outflow frompayment of dividends (4.9) - (4.0)--------------------------- ------ --------- --------- ---------Management of liquidresourcesDecrease in short termdeposits with bank 2.5 5.6 6.5--------------------------- ------ --------- --------- ---------Net cash inflow frommanagement of liquidresources 2.5 5.6 6.5--------------------------- ------ --------- --------- ---------Net cash (outflow)/inflow before financing (1.1) 12.2 3.8--------------------------- ------ --------- --------- ---------Financing Proceeds from issue ofOrdinary share capital 0.6 0.6 0.9 Draw down of bank loans 4.0 0.6 - Movement in other loan - (0.1) (0.5) Repayment of bank loans (4.8) (0.6) (0.3)--------------------------- ------ --------- --------- ---------Net cash (outflow)/inflow from financing (0.2) 0.5 0.1--------------------------- ------ --------- --------- ---------(Decrease)/Increase in cashin the period (1.3) 12.7 3.9--------------------------- ------ --------- --------- --------- Notes to the Group cash flow statementfor the six months ended 31 March 2005 A. Cash flow from operating activities The reconciliation of operating (loss)/profit to net cash inflow from operatingactivities is as follows: ------------------------------ --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2005 September 2004 £m £m £m ------------------------------ --------- --------- ---------Operating(loss)/ profit (0.4) 4.9 7.0Depreciationcharge 0.7 0.8 1.5Amortisationof intangibleassets 10.0 8.0 16.6Movement inprovisions (0.4) (0.5) (1.2)Increase instocks (0.5) (0.1) (1.4)(Increase)/decrease indebtors (1.3) 4.6 (1.6)Increase/(decrease) increditors 3.3 (0.9) (3.2)------------------------------ --------- --------- ---------Net cashinflow fromoperatingactivities 11.4 16.8 17.7------------------------------ --------- --------- --------- B. Analysis of net cash------------ --------- ---------- ---------- --------- ---------- At 1 October Cash flow Acquisitions Exchange At 31 March movements 2005 2004 £m £m £m £m £m------------ --------- ---------- ---------- --------- ----------Cash at bankand in hand 12.0 (2.4) 1.1 (0.3) 10.4Overdrafts - 0.3 (0.3) - -Debt duewithin oneyear (4.7) 0.8 - 0.2 (3.7)Liquidresources 2.5 (2.5) - - ------------- --------- ---------- ---------- --------- ----------Net cash 9.8 (3.8) 0.8 (0.1) 6.7------------ --------- ---------- ---------- --------- ---------- C. Reconciliation of movement in net cash --------------------------------- -------- -------- -------- 6 months to 31 6 months to 31 12 months to 30 March 2005 March 2004 September 2004 £m £m £m --------------------------------- -------- -------- --------Net cash atstart ofperiod 9.8 10.4 10.4(Decrease)/increase in cash (2.4) 12.7 3.9Cash acquiredwithsubsidiaries 1.1 - -Overdraftacquired withsubsidiaries (0.3) - -Movement inoverdraft 0.3 - -Movement indeposits (2.5) (5.6) (6.5)Movement inborrowings 0.8 0.1 0.8Non-cashmovements - - 1.0Exchangemovements (0.1) 0.5 0.2--------------------------------- -------- -------- --------Net cash atend of period 6.7 18.1 9.8--------------------------------- -------- -------- -------- Accounting policies Basis of preparation of accountsThe results for the six months ended 31 March 2005 and 2004 and the 12 months to30 September 2004 are unaudited. In 2004 the Group changed its financial yearend to 30 September from 31 December and the audited results for the nine monthperiod ended 30 September 2004, upon which an unqualified audit report wasgiven, have been delivered to the Registrar of Companies. The Interim reportdoes not constitute statutory accounts as defined in section 240 of theCompanies Act 1985. The accounting policies are as stated on pages 68 and 69 ofthe 2004 Annual Report. International Financial Reporting Standards (IFRS) will apply for the first timeto the Group's financial statements for the year ending 30 September 2006. Asdiscussed in the 2004 Annual Report on page 23 and 24, the Group is planningcarefully for the introduction of IFRS and will continue to monitor applicabledevelopments in this area. Notes to the financial statements 1. Segmental reporting The Group is involved in one class of business, the publication of magazines andrelated websites. The analysis of turnover by category, geographical analyses ofturnover and profit before tax by origin were as follows: a) Turnover by type ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------Circulation 70.9 67.0 129.8Advertising 31.3 29.7 56.2Other 2.1 2.2 4.4---------------------- --------- --------- ----------- Total 104.3 98.9 190.4 ---------------------- --------- --------- ----------- b) Turnover by origin ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------United Kingdom 55.8 51.6 100.4United States 27.1 26.6 52.0Mainland Europe 22.0 21.8 39.9Turnover between segments (0.6) (1.1) (1.9) ---------------------- --------- --------- ----------- Total 104.3 98.9 190.4 ---------------------- --------- --------- ----------- 1. Segmental reporting (continued) c) Turnover by destination ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------United Kingdom 47.5 42.9 83.5United States 27.3 27.5 53.6Mainland Europe 24.8 25.6 46.0Rest of the world 5.3 4.0 9.2Turnover between segments (0.6) (1.1) (1.9) ---------------------- --------- --------- ----------- Total 104.3 98.9 190.4 ---------------------- --------- --------- ----------- d) Profit before tax by origin ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------United Kingdom 3.9 7.4 11.4United States 0.3 0.8 0.4Mainland Europe (0.5) (0.9) (1.7)Central costs (2.4) (2.6) (2.9) ---------------------- --------- --------- ----------- Total 1.3 4.7 7.2 ---------------------- --------- --------- ----------- 2. Operating (loss)/profit ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m---------------------- --------- --------- -----------Turnover 104.3 98.9 190.4Cost of sales (69.3) (64.3) (126.3)---------------------- --------- --------- -----------Gross profit 35.0 34.6 64.1Distribution expenses (6.9) (6.5) (13.1) --------- --------- -----------Administration expenses (18.5) (15.2) (27.4)Amortisation of intangibleassets (10.0) (8.0) (16.6) --------- --------- -----------Total administrationexpenses (28.5) (23.2) (44.0)---------------------- --------- --------- -----------Operating (loss)/profit (0.4) 4.9 7.0---------------------- --------- --------- ----------- Included in administration expenses above are the following exceptional items: ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------Aborted bid costs 2.2 - -Restructuring costs 0.9 - - ---------------------- --------- --------- ----------- Total 3.1 - - ---------------------- --------- --------- ----------- 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 period. The restructuring costs relate to the costs incurred whilst integrating theacquisitions of Beach Magazines and Publishing Limited and A&S PublishingLimited into the main Future UK business, and restructuring within the ongoingUK business. During the period, the Group sold three wholly-owned subsidiary companies for atotal consideration of £1.7m. After accounting for associated costs of disposal,the profit on disposal of subsidiaries was £1.6m. The companies disposed ofcontained certain capital tax losses which were surplus to Future'srequirements. 3. Employees ---------------------- --------- --------- ----------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m ---------------------- --------- --------- -----------Wages and salaries 19.6 16.2 32.8Social security costs 3.3 2.9 5.6Other pension costs 0.3 0.4 0.7 ---------------------- --------- --------- ----------- Total 23.2 19.5 39.1 ---------------------- --------- --------- ----------- 4. Net interest receivable/(payable) and similar items ------------------------ -------- -------- ---------- 6 months to 6 months to 12 months to 31 March 2005 31 March 2004 30 September 2004 £m £m £m------------------------ -------- -------- ----------Interest payable on bankloans and overdrafts (0.1) (0.2) (0.3)Other interest payable - - (0.1)------------------------ -------- -------- ----------Interest payable andsimilar items (0.1) (0.2) (0.4)------------------------ -------- -------- ----------Interest receivable 0.3 0.4 0.6Exchange losses (0.1) (0.4) (0.2)Related Shares:
Future