13th Jun 2007 07:02
Future PLC13 June 2007 13 June 2007 FUTURE PLC Interim results for the half-year ended 31 March 2007 Future plc (LSE: FUTR), the international special-interest media group, todayannounces its interim results for the half-year ended 31 March 2007. An analystpresentation will be held today at 10.00am at the offices of UBS, 1 FinsburyAvenue, London EC2M 2PP. Good progress on strategic turnaround • Improvement in normalised EBITAE margin (8.2% vs 7.0%) • Further annualised cost savings identified of over £1.0m being reinvested • Normalised EBITAE up 12% to £7.7m (H1 2006: £6.9m) • Statutory EBITAE up 39% to £7.9m (H1 2006: £5.7m) • Statutory profit before tax of £8.6m (H1 2006: loss of £1.6m) • Net debt down 24% to £29.1m (31 March 2006: £38.3m) EBITAE represents operating profit before exceptional items, impairment andamortisation of intangible assets. The normalised results exclude revenues andcosts of activities closed or divested between 1 October 2005 and 31 March 2007. • Online investment targeted to accelerate in H2 • Significant growth in online advertising revenue - up 66% year on year • Further successes in customer publishing with revenues up 59% year on year • All new senior hires now in post Other news today • Appointment of Seb Bishop as non-executive Director Commenting on the results and outlook, Stevie Spring, Chief Executive said: "I am pleased with what we have achieved in the first half and the steps we havetaken to strengthen the business. "We have focus back in the Group. "We have stabilised revenues and improved margins to fund investment for ourfuture revenue streams. Today's results demonstrate that the turnaround isworking and I would like to thank everyone at Future for their contribution tothis progress. There is clearly more to do, but I am confident that we aremoving in the right direction. "With our key online hires now in place, the second half will see the bulk ofour planned online investment, some of which had originally been expected in thefirst half. We also anticipate continuing declines at Future France as we havenot been investing in this part of the business. "Despite this and although the backdrop remains challenging for media generally,we are encouraged by the progress we have made to date and remain on track todeliver full-year results in line with existing expectations." Financial summary Statutory results H1 07 H1 06 Change £m (restated) % £mRevenue 95.3 107.0 -11%EBITAE 7.9 5.7 +39%EBITAE margin 8.3% 5.3% +57%Operating profit/(loss) 10.0 (0.3) -Pre-tax profit/(loss) 8.6 (1.6) -Earnings/(loss) per share - Continuing (p) 2.2 (0.4) -Earnings/(loss) per share - Total (p) 2.3 (3.6) - Dividend per share (p) 0.5 0.5 - Normalised results H1 07 H1 06 Change £m (restated) % £mRevenue 94.1 98.7 -5%EBITAE 7.7 6.9 +12%EBITAE margin 8.2% 7.0% +17%Adjusted earnings per share (p) 1.5 1.1 +36% EBITAE represents operating profit before exceptional items, impairment andamortisation of intangible assets.Normalised results are presented to reflect better the current size andstructure of the business, which is consistent with how the business is managedand measured on a day-to-day basis. The normalised results exclude revenues andcosts of activities closed or divested between 1 October 2005 and 31 March 2007.Adjusted earnings per share are based on normalised results, but excludeexceptional items, impairment and amortisation of intangibles and related taxeffects. Enquiries: Future plcStevie Spring, Chief Executive Tel: 020 7042 4007John Bowman, Group Finance Director Tel: 020 7042 4031 Hogarth PartnershipJames Longfield / Ian Payne Tel: 020 7357 9477 Chief Executive's Statement Twelve months ago, Future announced an interim loss, a revision of strategy anda change of CEO. Six months ago, we set out the steps we were taking to strengthen the business,including a series of actions to create significant cost savings forre-investing in the business. We also provided an outline of the six key areasof focus for 2007 and beyond. Today, one year after my appointment and following a busy first half-year, I canreport that we have made good progress on all fronts: better visibility in thebusiness; a significant improvement in operating margin; additional cost savingssecured; investment in product development; further successes in partnershippublishing, growth in online advertising and a further significant reduction indebt. We are also announcing the appointment of Seb Bishop as a non-executive Director(see separate announcement). We continue to operate in a fast-changing media landscape and in seeking tostrengthen our business we have been increasingly focused on leveraging our corecompetence of "English-language content, produced by and for enthusiasts,cross-platform". During the first half-year, we have significantly re-shaped the business. Infocusing on basics, we have continued to emphasise editorial and designexcellence. During the last twelve months, we have redesigned 20 magazinesacross the portfolio, most recently Total Film. We have also continued ourprogramme of cover-price experimentation and in the last six months haveincreased volumes and revenues on titles such as Digital Camera, PC Plus and PCFormat through tactical price decreases. Further price testing continues acrossthe portfolio. In managing our cost base, in addition to the savings from titles we sold orclosed last year, we have negotiated new contracts covering a substantial partof our external cost base, with significant annual cost savings in paper, printand covermounts, amounting to a further £1.0m+ - in addition to the £4.5mpreviously announced. In line with our strategy, these additional savings willbe re-invested in the business. Total Group headcount at 31 March 2007 was1,429. In March 2006, excluding Italy and divestments, the comparable headcountwas 1,417. The consistent level belies the fact that many roles have changed andmigrated to growth areas. In support of our requirement for greater flexibilityfrom our employees, we have also increased our training budget by 40%. We have also made good progress in reducing our property overhead. In April, wenegotiated a surrender of the lease in respect of our previous London office andthis, together with sub-lets of other surplus property, has allowed us to make asubstantial reduction in property provisions. This is the largest factor inexceptional credits totalling £4.1m. We have delivered further successes in partnership publishing, including ourlicensed magazines. During the last six months we launched Official PlayStationMagazine in the UK and France, ahead of the successful launch of thePlayStation3 console in Europe in March. We also launched the Official WindowsVista magazine across 12 territories in early 2007: the largest internationalmagazine launch ever. We secured a further three year licence to publish the UKOfficial Tour de France Guide and won a new licence to publish the Tour ofBritain magazine. Within partnership publishing, customer publishing (non-newsstand) revenues wereup 59% year on year, following the commencement of new contracts for Sky Movies,BT Vision, The Musicians Union, DSG and PC World. New wins secured in the firsthalf included HMV, Nvidia, Microsoft, Cingular and Comcast. In the US, thissource of revenue doubled in the half-year. Partnership publishing overallcontributed £5.0m on revenues of £19.5m in the first half, representingapproximately 20% of our business revenues. To drive our online development, we have made four new online senior managementhires and have also appointed a new Chief Technology Officer for the Group. Inthe half-year, online advertising revenues were up 66% in the UK/US,representing 13% of advertising revenues compared with 6% a year ago. Gamesradar.com, which is the world's third-largest computer games website,achieved revenue growth of 102% year on year. Our US games online advertisingrevenue now represents 26% of total Future US games advertising. Our other areas of online focus are technology, cycling, music-making and actionsports and our new websites in these areas are also being launched this year.With our new online management team now in place, we will increase our onlineinvestment in the second half, including some investment that had originallybeen expected to be incurred in the first half. Our US business has more than doubled its EBITAE margin compared with theprevious half-year, reflecting lower operating costs, shut-down of our Atlantaoffice and closure of a number of marginal or loss-making titles last year. Morerecently, we have also reorganised the music group behind a single brand focus:Guitar World, the world's largest and leading guitar magazine. Music-listeningin the US is based around last year's acquisition of Revolver - a noteworthyintegration success. Against a purchase price of $4m the title generated acontribution of more than $1.1m in its first 12 months. Future France faced even tougher trading conditions throughout the period withrevenues down by 14% and EBITAE down 25%. This reflects the fact that we do nothave any significant online presence in France and thus our ability to mitigatepressure on print revenue is very restricted. As previously announced, we havenot been investing in this part of the business. Future has some strong market positions and these will continue to be our mainareas of focus going forward. We will exploit our English-language contentstrength in print, online and face-to-face: wherever we can monetise our contentor consumers' interest. I am pleased with what we have achieved in the first half and the steps we havetaken to strengthen the business. We have a strong and enthusiastic team, fullof creative ideas and passionate about their subject. There is clearly more todo and I look forward to updating shareholders on our continuing progress at theyear end. For now, I would like to thank everyone at Future for theircontribution through a particularly demanding transition. Stevie SpringChief Executive13 June 2007 Financial Review Statutory results for half-year to 31 March 2007 The statutory results for the Group are set out on pages 13 to 23. First half-year revenue was £95.3m (2006: £107.0m) and the business generatedEBITAE of £7.9m (2006: £5.7m) representing a strengthened EBITAE margin of 8.3%(2006: 5.3%). The half-year income statement includes net exceptional credits of £4.1m (2006:exceptional costs £3.5m), a charge for amortisation of intangible assets of£2.0m (2006: £2.5m) and net financing costs of £1.4m (2006: £1.3m), leading topre-tax profits of £8.6m (2006: loss of £1.6m) for the period. --------------------------------- ----------- -----------Statutory results 2007 2006 £m (restated) £m--------------------------------- ----------- -----------Revenue 95.3 107.0EBITAE 7.9 5.7EBITAE margin 8.3% 5.3%Operating profit/(loss) 10.0 (0.3)Pre-tax profit/(loss) 8.6 (1.6) Earnings/(loss) per share - Continuing (p) 2.2 (0.4)Earnings/(loss) per share - Total (p) 2.3 (3.6) Dividend per share (p) 0.5 0.5--------------------------------- ----------- ----------- Normalised results for half-year to 31 March 2007 Normalised results are presented to reflect better the current size andstructure of the business, which is consistent with how the business is managedand measured on a day-to-day basis. The normalised results exclude revenues andcosts of activities closed or divested between 1 October 2005 and 31 March 2007. Normalised first half revenue was £94.1m (2006: £98.7m) generating EBITAE of£7.7m (2006: £6.9m). This result gives rise to an increase in the EBITAE marginfrom 7.0% to 8.2% for the normalised business, enhanced by online revenues aheadof expectation and online investment weighted towards the second half, followingour senior management appointments. --------------------------------- ----------- -----------Normalised results 2007 2006 £m £m--------------------------------- ----------- -----------Revenue 94.1 98.7EBITAE 7.7 6.9EBITAE margin 8.2% 7.0% Adjusted earnings per share (p) 1.5 1.1--------------------------------- ----------- ----------- Review of operations The review of operations is based on normalised results. Group revenue fell by 5% (2% in constant currencies) to £94.1m. Revenues in theUK and US were broadly flat compared with the previous year (in constantcurrencies) with expected softness in some games, computing and performance carrevenues compensated for by growth in online and customer publishing. Revenuesin France, where the group had no online revenue during the period, fell by 15%.The Group's top 10 titles in the half-year accounted for 26% of revenue (2006:32%). Margin improvement has arisen from tight control of direct costs acrossthe Group and strong margins in growth areas. Central costs remained below their2006 level. Analysis of revenue for half-year to 31 March ----------------------- --------- --------- --------- --------- % of 2007 2006 Change Group £m £m £m ----------------------- --------- --------- --------- ---------UK 62% 58.5 58.8 (0.3)US 26% 24.4 27.0 (2.6)France 12% 11.5 13.6 (2.1)Intra-group - (0.3) (0.7) 0.4----------------------- --------- --------- --------- ---------Total revenue 100% 94.1 98.7 (4.6)----------------------- --------- --------- --------- --------- Analysis of EBITAE for half-year to 31 March -------------- --------- --------- --------- 2007 2006 Change £m £m £m-------------- --------- --------- ---------UK 7.3 7.0 0.3US 1.1 0.4 0.7France 0.8 1.1 (0.3)Central costs (1.5) (1.6) 0.1-------------- --------- --------- ---------Total EBITAE 7.7 6.9 0.8-------------- --------- --------- --------- UK performance in half-year ------------------------------ --------- --------- --------- 2007 2006 Change £m £m %------------------------------ --------- --------- ---------Circulation revenue 38.1 38.5 - 1%Advertising revenue 18.0 18.1 - 1%Other revenue 2.4 2.2 + 9%------------------------------ --------- --------- ---------Revenue 58.5 58.8 - 1%EBITAE 7.3 7.0 + 4%------------------------------ --------- --------- ---------EBITAE margin 12.5% 11.9%------------------------------ --------- --------- --------- UK revenue for the half-year fell by £0.3m or 1% reflecting a reduction inrevenues from some games, computing and performance car titles, offset by growthin customer publishing and an increase in online advertising revenue. UK ABC circulation statistics published in February for our titles confirmedthat, with the exception of certain games titles (prior to the launch of our newPlayStation titles) and the particular area of performance cars (where we havetwo titles in a segment that has experienced a sector-wide reduction in sales)the circulation volume of the rest of our audited portfolio actually increasedby 1% in 2006 compared with 2005. While newsstand remains the dominant sales channel for our business in the UK,subscription revenues were up 10% year on year and represented 19% of total UKcirculation revenues (16% in H1 2006). We now have over 346,000 payingsubscribers for our magazines, with 60% of new subscription orders sourced andprocessed online, an increase of eight percentage points on last year. Operating costs remained under tight control during the period with newcontracts being negotiated for print and DVD covermounts. In addition overheadcosts were reduced resulting in an improved margin. As a result of thedivestment process last year and other distribution initiatives, overall UKnewsstand efficiency increased by 6% in the half-year. With effect from 1 May2007, distribution of all our UK magazines has been moved to Seymour, one of theUK's largest magazine distributors. This is expected to benefit the businessfrom 2008. In our continuing UK business, approximately 35% of revenues and approximately53% of contribution was generated by the top 15 titles. US performance in half-year ------------------------------ --------- --------- --------- 2007 2006 Change $m $m %------------------------------ --------- --------- ---------Circulation revenue 20.9 22.3 - 6%Advertising revenue 25.4 24.2 + 5%Other revenue 1.0 0.7 + 43%------------------------------ --------- --------- ---------Total revenue 47.3 47.2 -EBITAE 2.1 0.6 + 250%------------------------------ --------- --------- ---------EBITAE margin 4.4% 1.3%------------------------------ --------- --------- --------- US revenue for the half-year in US dollars was broadly flat reflectingadvertising weakness in games and certain music titles. The impact of this wasoffset by the growth of online games advertising, customer publishing and theinclusion of Revolver this half-year. We have taken a number of actions to improve operating performance in the US.The normalised results presented above exclude the impact of the six titles andAtlanta office closed last year. However, the results still show marginsimproving from 1.3% to 4.4% as a result of higher revenues in action sports andstronger margins achieved on increased customer publishing and online business.There is more to be done and we have recently renegotiated printing and DVDpurchasing agreements which will be beneficial to the business going forward. We have also recently re-organised our US music business around our lead brand,Guitar World. Guitar One, Acoustic and Bass are being merged into Guitar World,which has reduced our underlying costs and should enhance revenues of GuitarWorld over time. France performance in half-year ------------------------------ --------- --------- --------- 2007 2006 Change •m •m %------------------------------ --------- --------- ---------Circulation revenue 12.5 14.1 - 11%Advertising revenue 4.6 5.8 - 21%------------------------------ --------- --------- ---------Total revenue 17.1 19.9 - 14%EBITAE 1.2 1.6 - 25%------------------------------ --------- --------- ---------EBITAE margin 7.0% 8.0%------------------------------ --------- --------- --------- French revenue for the half-year in euros was down 14% reflecting toughnewsstand and advertising conditions throughout the period. Tight control ofoperational costs and overheads have been a key focus during the half-year,however EBITAE fell by 25% and the EBITAE margin reduced. Exceptional items Exceptional credits totalling £4.1m relate to property and other provisions anddisposals. The largest single element of £1.4m reflects the release of theprovision held in respect of the Group's previous offices in London. In April2007 the Group negotiated a surrender of the entire lease, which was due toexpire in 2012. During the period, the Group realised profits on disposal of businesses of £1.0mcomprising £0.1m in relation to the sale of Future Media Italy, shown indiscontinued operations, and £0.9m in relation to other disposals. Leasehold property and related balance sheet provisions All previously unoccupied property has now been either assigned, sub-let or thelease surrendered. Property provisions carried at 31 March 2007 totalled £1.5m(2006: £3.7m), of which £1.1m has since been paid. Taxation The tax charge for the half-year was £1.4m (2006: tax credit of £0.3m) whichrepresents an estimated effective tax rate of 30% applied to profit before taxand exceptional items. This is the effective rate estimated to apply to taxableprofits of the Group for the full financial year. Cash flow and net debt Net debt at 30 September 2006 was £32.8m. Future continues to be cash-generativeand the major inflows during the period were cash generated from operations of£6.9m (2006: £12.7m), proceeds from disposals of £1.0m (2006: £nil) and net taxreceived of £0.7m (2006: paid £0.6m). During the period the Group paid out £1.6m (2006: £4.2m) in dividends and £0.8m(2006: £3.3m) in respect of capital expenditure. Net debt at 31 March 2007 was£29.1m, a reduction of 24% compared with the position at 31 March 2006. Interim dividend An interim dividend of 0.5p per share (2006: 0.5p) will be paid on 12 July 2007to all shareholders on the register on 22 June 2007. The ex-dividend date is 20June 2007. Board On 13 June 2007, Future announced that Seb Bishop (32) has been appointed to theBoard as an independent non-executive Director with effect from 14 June 2007.Seb's creative background, extensive internet business experience andAnglo-American focus, fits perfectly with our strategy and we look forward toworking with him in the years ahead. Current trading and prospects With our key online hires now in place, the second half will see the bulk of ourplanned online investment, some of which had originally been expected in thefirst half. We also anticipate continuing declines at Future France as we havenot been investing in this part of the business. Despite this and although the backdrop remains challenging for media generally,we are encouraged by the progress we have made to date and remain on track todeliver full-year results in line with existing expectations. Roger Parry, ChairmanStevie Spring, Chief ExecutiveJohn Bowman, Group Finance DirectorMichael Penington, senior independent non-executive DirectorPatrick Taylor, independent non-executive DirectorJohn Mellon, independent non-executive Director 13 June 2007 Statutory resultsConsolidated income statementfor the six months ended 31 March 2007 -------------------------- ------ -------- -------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 (restated) (restated) Note £m £m £m-------------------------- ------ -------- -------- ---------Continuing operationsRevenue 1 95.3 107.0 211.7-------------------------- ------ -------- -------- ----------------------------------- ------ -------- -------- ---------Operatingprofit beforeexceptionalitems,impairment andamortisationof intangibleassets 7.9 5.7 13.4Exceptionalitems 3 4.1 (3.5) (9.0)Impairment ofintangibleassets 2,10 - - (33.0)Amortisationof intangibleassets 2,10 (2.0) (2.5) (5.8)-------------------------- ------ -------- -------- --------- Operatingprofit/(loss) 1,2 10.0 (0.3) (34.4) Finance income 5 0.4 0.2 0.5Finance costs 5 (1.8) (1.5) (3.1)-------------------------- ------ -------- -------- ---------Net financecosts 5 (1.4) (1.3) (2.6)-------------------------- ------ -------- -------- ---------Profit/(loss)on ordinaryactivitiesbefore tax 8.6 (1.6) (37.0)Tax onprofit/(loss)on ordinaryactivities 6 (1.4) 0.3 1.8-------------------------- ------ -------- -------- ---------Profit/(loss)for the periodfromcontinuingoperations 7.2 (1.3) (35.2)Discontinued operationsProfit/(loss)for the periodfromdiscontinuedoperations 9 0.2 (10.5) (12.0)-------------------------- ------ -------- -------- ---------Profit/(loss)for the period 7.4 (11.8) (47.2)-------------------------- ------ -------- -------- --------- Earnings per 1p Ordinary share -------------------------- ------ -------- -------- --------- Note 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 pence pence pence-------------------------- ------ -------- -------- ---------Basicearnings/(loss)per share -Total Group 8 2.3 (3.6) (14.5)Dilutedearnings/(loss)per share -Total Group 8 2.3 (3.6) (14.5)-------------------------- ------ -------- -------- ---------Basicearnings/(loss)per share -Continuingoperations 8 2.2 (0.4) (10.8)Dilutedearnings/(loss)per share -Continuingoperations 8 2.2 (0.4) (10.8)-------------------------- ------ -------- -------- --------- Consolidated statement of changes in equityfor the six months ended 31 March 2007 ------------------------- ---- ------- ------ ------ -------- -------- ----- Share Share Merger Treasury Retained Total capital premium reserve reserve earnings equity Note £m £m £m £m £m £m------------------------- ---- ------- ------ ------ -------- -------- -----Balance at 1 October 2006 3.3 24.5 109.0 (1.1) (72.1) 63.6------------------------- ---- ------- ------ ------ -------- -------- -----Profit for the period - - - - 7.4 7.4Currency translation differences - - - - (0.4) (0.4)------------------------- ---- ------- ------ ------ -------- -------- ----- Total recognised income for the period - - - - 7.0 7.0Final dividend relating to 2006 7 - - - - (1.6) (1.6)Share option schemes - Value of employees' services 4 - - - - 0.6 0.6 Transfer between reserves - - - 0.4 (0.4) -------------------------- ---- ------- ------ ------ -------- -------- -----Balance at 31 March 2007 3.3 24.5 109.0 (0.7) (66.5) 69.6------------------------- ---- ------- ------ ------ -------- -------- ----- ------------------------- ---- ------- ------ ------ -------- -------- ----- Balance at 1 October 2005 3.3 24.4 109.0 - (19.2) 117.5------------------------- ---- ------- ------ ------ -------- -------- -----Loss for the period - - - - (11.8) (11.8)Currency translation differences - - - - 0.2 0.2------------------------- ---- ------- ------ ------ -------- -------- ----- Total recognised loss for the period - - - - (11.6) (11.6)Final dividend relating to 2005 7 - - - - (4.2) (4.2)Share option schemes - Value of employees' services 4 - - - - 0.3 0.3New share capital subscribed - 0.1 - - - 0.1 ------------------------- ---- ------- ------ ------ -------- -------- ----- Balance at 31 March 2006 3.3 24.5 109.0 - (34.7) 102.1------------------------- ---- ------- ------ ------ -------- -------- ----- ------------------------- ---- ------- ------ ------ -------- -------- ----- Balance at 1 October 2005 3.3 24.4 109.0 - (19.2) 117.5------------------------- ---- ------- ------ ------ -------- -------- ----- Loss for the year - - - - (47.2) (47.2)Currency translation differences - - - - (0.4) (0.4) ------------------------- ---- ------- ------ ------ -------- -------- ----- Total recognised loss for the year - - - - (47.6) (47.6)Final dividend relating to 7 2005 - - - - (4.2) (4.2)Interim dividend relating to 2006 7 - - - - (1.7) (1.7)Share option schemes - Value of employees' services 4 - - - - 0.7 0.7- Deferred tax on options - - - - (0.1) (0.1)Treasury shares acquired - - - (1.1) - (1.1)New share capital subscribed - 0.1 - - - 0.1------------------------- ---- ------- ------ ------ -------- -------- ----- Balance at 30 September 3.3 24.5 109.0 (1.1) (72.1) 63.62006 ------------------------- ---- ------- ------ ------ -------- -------- ----- Consolidated balance sheetas at 31 March 2007 ------------------------ ------- --------- --------- --------- 31 March 2007 31 March 2006 30 September 2006 Note £m £m £m------------------------ ------- --------- --------- ---------AssetsNon-current assetsProperty, plant andequipment 5.7 6.4 6.2Intangible assets -goodwill 10 104.1 138.5 104.7Intangible assets -other 10 5.2 10.8 6.9Deferred tax 3.4 2.2 3.5------------------------ ------- --------- --------- ---------Total non-currentassets 118.4 157.9 121.3------------------------ ------- --------- --------- --------- Current assetsInventories 5.0 7.1 4.9Corporation taxrecoverable 1.4 2.9 2.6Trade and otherreceivables 34.8 42.2 36.8Cash and cashequivalents 9.7 19.4 20.0------------------------ ------- --------- --------- ---------Total current assets 50.9 71.6 64.3------------------------ ------- --------- --------- ---------Total assets 169.3 229.5 185.6------------------------ ------- --------- --------- --------- Equity and liabilitiesEquityIssued share capital 3.3 3.3 3.3Share premium account 24.5 24.5 24.5Merger reserve 109.0 109.0 109.0Treasury reserve (0.7) - (1.1)Retained earnings (66.5) (34.7) (72.1)------------------------ ------- --------- --------- ---------Total equity 69.6 102.1 63.6------------------------ ------- --------- --------- --------- Non-current liabilitiesFinancial liabilities -interest-bearing loansand borrowings 23.8 27.8 25.8Deferred tax 2.0 2.3 1.9Provisions 2.1 3.7 5.6Other non-currentliabilities 2.5 2.2 2.6------------------------ ------- --------- --------- ---------Total non-currentliabilities 30.4 36.0 35.9------------------------ ------- --------- --------- --------- Current liabilitiesFinancial liabilities -interest-bearing loansand borrowings 15.0 29.9 27.0Trade and otherpayables 53.1 61.3 58.9Corporation tax payable 1.2 0.2 0.2------------------------ ------- --------- --------- ---------Total currentliabilities 69.3 91.4 86.1------------------------ ------- --------- --------- ---------Total liabilities 99.7 127.4 122.0------------------------ ------- --------- --------- ---------Total equity andliabilities 169.3 229.5 185.6------------------------ ------- --------- --------- --------- Consolidated cash flow statementfor the six months ended 31 March 2007 --------------------------- --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 £m £m £m--------------------------- --------- --------- ---------Cash flows from operating activitiesCash generatedfromoperations 6.9 12.7 24.0Interestreceived 0.4 0.2 0.5Tax received 1.5 0.2 0.2Interest paid (1.7) (1.1) (3.2)Tax paid (0.8) (0.8) (0.9)--------------------------- --------- --------- ---------Net cashgenerated fromoperatingactivities 6.3 11.2 20.6--------------------------- --------- --------- --------- Cash flows from investing activitiesPurchase ofproperty,plant andequipment (0.8) (3.3) (4.2)Purchase ofmagazinetitles andtrademarks (0.1) (2.4) (2.4)Purchase ofcomputersoftware andwebsitedevelopment (0.4) - (0.9)Disposal ofmagazinetitles andtrademarks 0.3 - -Disposal ofsubsidiaryundertaking 0.7 - -Costs ofbusinessdisposals (0.3) - -Net cashdisposed withsubsidiaryundertaking (0.6) - ---------------------------- --------- --------- ---------Net cash usedin investingactivities (1.2) (5.7) (7.5)--------------------------- --------- --------- --------- Cash flows from financing activitiesProceeds fromissue ofOrdinary sharecapital - 0.1 0.1Purchase ofown shares byEmployeeBenefit Trust - - (1.1)Draw down ofbank loans 4.0 7.4 7.3Repayment ofbank loans (17.5) - (4.0)Rearrangementfees for bankloans (0.2) - -Equitydividends paid (1.6) (4.2) (5.9)--------------------------- --------- --------- ---------Net cash (usedin)/generatedfrom financingactivities (15.3) 3.3 (3.6)--------------------------- --------- --------- --------- Net (decrease)/increase in cash and cashequivalents (10.2) 8.8 9.5Cash and cashequivalents atbeginning ofperiod 20.0 10.7 10.7Exchangeadjustments (0.1) (0.1) (0.2)--------------------------- --------- --------- ---------Cash and cashequivalents atend of period 9.7 19.4 20.0--------------------------- --------- --------- ---------Amountattributableto -Continuingoperations 9.7 19.4 20.0- Discontinued operations - - ---------------------------- --------- --------- --------- Notes to the consolidated cash flow statementfor the six months ended 31 March 2007 A. Cash flows from operating activities The reconciliation of operating profit/(loss) to cash flows generated fromoperations is set out below:------------------------------ --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March September 2006 £m 2006 £m £------------------------------ --------- --------- ---------Operatingprofit/(loss)for the period - Continuing operations 10.0 (0.3) (34.4) - Discontinued operations 0.2 (10.5) (12.0)------------------------------ --------- --------- ---------Operatingprofit/(loss)for the period- Total Group 10.2 (10.8) (46.4)Adjustments for:Depreciationcharge 1.1 0.9 2.0Profit ondisposal ofsubsidiary (0.1) - -Profit ondisposal ofmagazinetitles andtrademarks (0.9) - -Amortisationof intangibleassets 2.0 2.6 5.9Impairment ofintangibleassets - 11.0 45.0------------------------------ --------- --------- ---------Share optionschemes - Value of employees' services 0.6 0.3 0.7------------------------------ --------- --------- ---------Operatingprofit beforechanges inworkingcapital andprovisions 12.9 4.0 7.2Movement inprovisions (3.5) 1.5 3.4(Increase)/decrease ininventories (0.8) (0.9) 1.2(Increase)/decrease in trade and otherreceivables (1.6) 4.0 8.2(Decrease)/increase in trade and otherpayables (0.1) 4.1 4.0------------------------------ --------- --------- ---------Cash generatedfrom operations 6.9 12.7 24.0------------------------------ --------- --------- --------- B. Analysis of net debt ----------------- ------- -------- -------- -------- -------- -------- At 1 October Cash flows Disposals Non-cash Exchange At 31 March changes movements 2007 2006 £m £m £m £m £m £m ----------------- ------- -------- -------- -------- -------- --------Cash and cashequivalents 20.0 (9.6) (0.6) - (0.1) 9.7Debt duewithin oneyear (27.0) 13.5 - (2.0) 0.5 (15.0)Debt due aftermore than oneyear (25.8) - - 2.0 - (23.8)----------------- ------- -------- -------- -------- -------- --------Net debt (32.8) 3.9 (0.6) - 0.4 (29.1)----------------- ------- -------- -------- -------- -------- -------- C. Reconciliation of movement in net debt ------------------------------ --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 £m £m £m ------------------------------ --------- --------- ---------Net debt atstart ofperiod (32.8) (39.5) (39.5)(Decrease)/increase in cashand cashequivalents (9.6) 8.8 9.5Cash disposedwithsubsidiary (0.6) - -Movement inborrowings 13.5 (7.4) (3.3)Exchangemovements 0.4 (0.2) 0.5------------------------------ --------- --------- ---------Net debt atend of period (29.1) (38.3) (32.8)------------------------------ --------- --------- --------- Basis of preparation This condensed interim financial information for the 6 months ended 31 March2007 has been prepared in accordance with the listing rules of the FinancialServices Authority and IAS 34 'Interim Financial Reporting' and should be readin conjunction with the Annual Report and Accounts for the year ended 30September 2006. The Interim report does not constitute statutory accounts as defined in section240 of the Companies Act 1985 and has not been audited. A copy of the statutoryfinancial statements for the year ended 30 September 2006 has been filed withthe Registrar of Companies. The auditors' report on those accounts wasunqualified. The auditors have carried out a review of the Interim results andtheir report will be set out in the printed Interim Report. The accounting policies adopted are consistent with those set out in the Group'sstatutory accounts for the financial year ended 30 September 2006. The Group has restated its income statement for the 6 months ended 31 March 2006and the year ended 30 September 2006 for the presentation of Future Media Italyas a discontinued operation, in accordance with IFRS 5 'Non-current assets heldfor sale and discontinued operations'. Notes to the financial information 1. Segmental reporting The Group is organised and managed primarily by geographical segment which isbased on the economic environment in which an entity operates. a) Revenue by segment ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September £m (restated) 2006 £m (restated) £m------------------------------ --------- --------- ---------United Kingdom 59.5 64.2 128.3United States 24.6 29.9 60.1France 11.5 13.6 24.4Revenue between segments (0.3) (0.7) (1.1)------------------------------ --------- --------- ---------Total 95.3 107.0 211.7------------------------------ --------- --------- --------- b) Operating profit/(loss) by segment ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September 2006 £m (restated) (restated) £m £m------------------------------ --------- --------- ---------United Kingdom 8.2 0.9 (19.7)United States 1.1 (0.7) (10.2)France 2.2 1.1 (0.5)Central costs (1.5) (1.6) (4.0)------------------------------ --------- --------- ---------Total 10.0 (0.3) (34.4)------------------------------ --------- --------- --------- Additional analysis of the Group's revenue by type and destination is set outbelow: i) Revenue by type ------------------------------ --------- --------- --------- 6 months to 31 6 months to 12 months to March 2007 £m 31 March 2006 30 September 2006 (restated) (restated) £m £m------------------------------ --------- --------- ---------Circulation 58.1 64.5 129.5Advertising 34.7 40.4 77.1Other 2.5 2.1 5.1------------------------------ --------- --------- ---------Total 95.3 107.0 211.7------------------------------ --------- --------- --------- ii) Revenue by destination ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September 2006 £m (restated) (restated) £m £m------------------------------ --------- --------- ---------United Kingdom 49.3 53.5 104.4United States 26.3 31.5 63.5Mainland Europe 15.6 18.4 35.1Rest of the world 4.4 4.3 9.8Revenue between segments (0.3) (0.7) (1.1)------------------------------ --------- --------- ---------Total 95.3 107.0 211.7------------------------------ --------- --------- --------- 2. Operating profit/(loss) on continuing operations ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September 2006 £m (restated) (restated) £m £m ------------------------------ --------- --------- ---------Revenue 95.3 107.0 211.7Cost of sales (65.4) (77.3) (148.7)------------------------------ --------- --------- ---------Gross profit 29.9 29.7 63.0Distribution expenses (6.1) (7.4) (14.9)Administration expenses(including exceptionalitems) (11.8) (20.1) (43.7)Impairment of intangibleassets - - (33.0)Amortisation of intangibleassets (2.0) (2.5) (5.8)------------------------------ --------- --------- ---------Operating profit/(loss) 10.0 (0.3) (34.4)------------------------------ --------- --------- --------- 3. Exceptional items ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30September 2006 £m (restated) (restated) £m £m ------------------------------ --------- --------- ---------Property costs 1.8 (2.8) (4.0)Restructuring andredundancy costs - (0.7) (3.6)Other items 1.4 - (1.4)Profit on disposal ofmagazine titles andtrademarks 0.9 - ------------------------------- --------- --------- ---------Total 4.1 (3.5) (9.0)------------------------------ --------- --------- --------- The property costs credit consists mainly of the release of vacant propertyprovisions previously made in respect of office space in London and Bath. The restructuring and redundancy costs in 2006 related to the costs incurred asa result of the continued integration and subsequent restructuring of businessesand titles acquired during the year ended 30 September 2005. The other items relate to historic provisions released in respect of othercontractual matters where the level of exposure is considered to have reduced. 4. Employees ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30September 2006 £m £m £m------------------------------ --------- --------- ---------Wages and salaries 22.9 24.8 50.4Social security costs 3.6 4.0 7.9Other pension costs 0.4 0.6 1.2------------------------------ --------- --------- ---------Share option schemes 0.6 0.3 0.7- Value of employees' services------------------------------ --------- --------- ---------Total 27.5 29.7 60.2------------------------------ --------- --------- --------- IFRS 2 (Share-based payments) requires an expense for equity instruments grantedto be recognised over the appropriate vesting period, measured at their fairvalue at the date of grant. The Group has used the Black Scholes model to value instruments with nonmarket-based performance criteria such as earnings per share. For instrumentswith market-based performance criteria, notably total shareholder return, theGroup has used a Monte Carlo model to determine the fair value. The expense for the 6 months ended 31 March 2007 of £0.6m (2006: £0.3m) has beencredited to reserves. 5. Finance income and costs ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September 2006 £m £m £m ------------------------------ --------- --------- ---------Interest receivable 0.4 0.2 0.5------------------------------ --------- --------- ---------Total finance income 0.4 0.2 0.5------------------------------ --------- --------- --------------------------------------- --------- --------- ---------Interest payable oninterest-bearing loans andborrowings (1.6) (1.4) (3.1)Net foreign exchangelosses - (0.1) -Rearrangement fees forbank loans (0.2) - ------------------------------- --------- --------- ---------Total finance costs (1.8) (1.5) (3.1)------------------------------ --------- --------- ---------Net finance costs (1.4) (1.3) (2.6)------------------------------ --------- --------- --------- 6. Tax on profit/(loss) on ordinary activities The tax charge for the six months ended 31 March 2007 is based on the estimatedtax charge for the full year to 30 September 2007 including the impact ofexceptional items. The half-year tax charge of £1.4m (2006: tax credit of £0.3m) represents aneffective rate of 30% of profit before tax and exceptional items. 7. Dividends ------------------------------ --------- --------- ---------Equity dividends 6 months to 6 months to 12 months to 31 March 2007 31 March 2006 30 September------------------------------ --------- --------- 2006 ---------Number of shares in issueat end of period (million) 326.5 326.5 326.5Dividends paid in period(pence per share) 0.5 1.3 1.8------------------------------ --------- --------- ---------Dividends paid in period(£m) 1.6 4.2 5.9------------------------------ --------- --------- --------- In accordance with IFRS interim dividends are recognised in the period in whichthey are paid and final dividends are recognised in the period in which they areapproved. The dividend of £1.6m paid during the period ended 31 March 2007 relates to thefinal dividend of 0.5 pence per share declared for the year ended 30 September2006. The dividend of £4.2m paid during the period ended 31 March 2006 relates to thefinal dividend of 1.3 pence per share declared for the year ended 30 September2005. The dividends totalling £5.9m paid during the year ended 30 September 2006relate to the interim dividend for the six month period to 31 March 2006 of 0.5pence per share (£1.7m) and the final dividend declared for the year ended 30September 2005 of 1.3 pence per share (£4.2m). 8. Earnings per share Basic earnings per share are calculated using the weighted average number ofOrdinary shares outstanding during the period. Diluted earnings per share havebeen calculated by taking into account the dilutive effect of shares that wouldbe issued on conversion into Ordinary shares of options and awards held underemployee share schemes. ------------------------------ --------- --------- ---------Total Group 6 months to 31 6 months to 12 months to March 2007 31 March 30 September 2006 2006------------------------------ --------- --------- ---------Weighted average number of sharesoutstanding during the period:- basic 324,447,025 326,404,239 325,697,195- dilutive effect of share options 3,096,068 181,529 1,435,955- diluted 327,543,093 326,585,768 327,133,150Basic earnings/(loss)per share (in pence) 2.3 (3.6) (14.5)Dilutedearnings/(loss) pershare (in pence) 2.3 (3.6) (14.5)------------------------------ --------- --------- --------- ------------------------------ --------- --------- ---------Continuing operations 6 months to 31 6 months to 12 months to March 2007 31 March 30 September 2006 2006------------------------------ --------- --------- ---------Weighted average number of sharesoutstanding during the period:- basic 324,447,025 326,404,239 325,697,195- dilutive effect of share options 3,096,068 181,529 1,435,955- diluted 327,543,093 326,585,768 327,133,150Basic earnings/(loss)per share (in pence) 2.2 (0.4) (10.8)Dilutedearnings/(loss) pershare (in pence) 2.2 (0.4) (10.8)------------------------------ --------- --------- --------- The share options do not have a dilutive effect where there is a loss. 9. Assets held for sale and discontinued operations During the period the Group disposed of its interest in Future Media Italy andas such the results of Future Media Italy have been presented as 'discontinuedoperations'. The business was sold for cash proceeds of £0.7m, resulting in aprofit on disposal of £0.1m. During the period Future Media Italy reduced the Group's operating cash flows by£1.3m, paid £nil in respect of investing activities and paid £nil in respect offinancing activities. The results of the discontinued operations are set out below: ------------------------------ --------- --------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 £m £m £m------------------------------ --------- --------- ---------Revenue 2.3 7.7 13.2------------------------------ --------- --------- ---------Operatingprofit/(loss) 0.1 (10.5) (12.0)------------------------------ --------- --------- ---------Profit/(loss)on ordinaryactivitiesbefore tax 0.1 (10.5) (12.0)Tax on profit/(loss) on ordinary - - -activities ------------------------------ --------- --------- ---------Profit/(loss)after tax ofdiscontinuedoperations 0.1 (10.5) (12.0)------------------------------ --------- --------- --------- Gain on saleof operations 0.1 - -Tax on sale of operations - - ------------------------------- --------- --------- ---------Gain on saleof operationsafter tax 0.1 - ------------------------------- --------- --------- ---------Profit/(loss)fromdiscontinuedoperations 0.2 (10.5) (12.0)------------------------------ --------- --------- --------- An analysis of the assets and liabilities of Future Media Italy at the disposaldate of 1 December 2006 is set out below: £m----------------------- -------------Property, plant and equipment 0.1Inventories 0.6Trade and other receivables 3.3Cash and cash equivalents 0.6Trade and other payables (4.2)----------------------- -------------Net assets at disposal 0.4----------------------- ------------- 10. Intangible assets ----------------------- --------- --------- --------- --------- Goodwill Magazine Other Total related £m £m £m £m----------------------- --------- --------- --------- ---------CostAt 1 October 2006 363.6 15.1 2.5 381.2Additions - 0.1 0.4 0.5Disposals (22.8) (1.8) (0.2) (24.8)Exchange adjustments (1.0) (0.1) - (1.1)----------------------- --------- --------- --------- ---------At 31 March 2007 339.8 13.3 2.7 355.8----------------------- --------- --------- --------- --------- ----------------------- --------- --------- --------- ---------AmortisationAt 1 October 2006 (258.9) (9.0) (1.7) (269.6)Charge for the period - (1.6) (0.4) (2.0)Disposals 22.8 1.8 - 24.6Exchange adjustments 0.4 0.1 - 0.5----------------------- --------- --------- --------- ---------At 31 March 2007 (235.7) (8.7) (2.1) (246.5)----------------------- --------- --------- --------- --------- Net book amount at 31 March 2007 104.1 4.6 0.6 109.3----------------------- --------- --------- --------- ---------Net book amount at 30 September 2006 104.7 6.1 0.8 111.6----------------------- --------- --------- --------- --------- Normalised resultsfor the six months ended 31 March 2007 -------------------------- ------ -------- -------- --------- 6 months to 31 6 months to 31 12 months to 30 March 2007 March 2006 September 2006 Note £m £m £m-------------------------- ------ -------- -------- --------- Revenue 1,2 94.1 98.7 196.5-------------------------- ------ -------- -------- ----------------------------------- ------ -------- -------- ---------Operatingprofit beforeexceptionalitems,impairment andamortisationof intangibleassets(EBITAE) 7.7 6.9 15.1-------------------------- ------ -------- -------- --------- Adjusted earnings per 1p Ordinary share -------------------------- ------ -------- -------- --------- Note 6 months to 31 6 months to 31 12 months to 30 March March 2006 September 2006 2007 pence pence pence -------------------------- ------ -------- -------- ---------Adjusted basicearnings pershare 2 1.5 1.1 2.7-------------------------- ------ -------- -------- --------- Normalised results are presented to reflect better the current size andstructure of the business, which is consistent with how the business is managedand measured on a day-to-day basis. The normalised results exclude revenues andcosts of activities closed or divested between 1 October 2005 and 31 March 2007. Adjusted earnings per share are based on normalised results, but excludeexceptional items, impairment and amortisation of intangibles and related taxeffects. Notes to the normalised resultsfor the six months ended 31 March 2007 1. Normalised segmental reporting a) Revenue by segment ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 30 September £m 2006 2006 £m £m------------------------------ --------- --------- ---------United Kingdom 58.5 58.8 118.8United States 24.4 27.0 54.4France 11.5 13.6 24.4Revenue between segments (0.3) (0.7) (1.1)------------------------------ --------- --------- ---------Total normalised revenue 94.1 98.7 196.5------------------------------ --------- --------- --------- b) EBITAE by segment ------------------------------ --------- --------- --------- 6 months to 6 months to 12 months to 31 March 2007 31 March 30 September 2006 £m 2006 £m £m ------------------------------ --------- --------- ---------United Kingdom 7.3 7.0 14.5United States 1.1 0.4 2.8France 0.8 1.1 1.2Central costs (1.5) (1.6) (3.4)------------------------------ --------- --------- ---------Total normalised EBITAE 7.7 6.9 15.1------------------------------ --------- --------- --------- Additional analysis of the Group's normalised revenue by type is set out below: i) Revenue by type ------------------------------ --------- --------- --------- 6 months to 31 6 months to 12 months to March 2007 £m 31 March 30 September 2006 2006 £m £m ------------------------------ --------- --------- ---------Circulation 57.2 60.9 122.7Advertising 34.4 35.9 69.0Other 2.5 1.9 4.8------------------------------ --------- --------- ---------Total normalisedrevenue 94.1 98.7 196.5------------------------------ --------- --------- --------- 2. Reconciliation of statutory results to normalised results a) Reconciliation of statutory revenue to normalised revenue ------------------------------ --------- --------- --------- 6 months to 31 6 months to 12 months to 30 March 2007 September 2006 31 March 2006 £m £m £m------------------------------ --------- --------- ---------Statutoryrevenue -Continuingoperations 95.3 107.0 211.7Adjustment: UKclosed anddivestedactivities (1.0) (5.4) (9.5)Adjustment: USclosed anddivestedactivities (0.2) (2.9) (5.7)------------------------------ --------- --------- ---------Normalisedrevenue 94.1 98.7 196.5------------------------------ --------- --------- --------- b) Reconciliation of statutory operating profit before exceptional items,impairment and amortisation of intangible assets (EBITAE) to normalised EBITAE ------------------------------ --------- --------- --------- 6 months to 31 6 months to 12 months to 30 March 2007 September 2006 31 March 2006 £m £m £m------------------------------ --------- --------- ---------EBITAE -Continuingoperations 7.9 5.7 13.4Adjustment: UKclosed anddivestedactivities - 0.6 0.7Adjustment: USclosed anddivestedactivities (0.2) 0.6 1.0------------------------------ --------- --------- ---------NormalisedEBITAE 7.7 6.9 15.1------------------------------ --------- --------- --------- c) Reconciliation of basic earnings/(loss) per share to adjusted earnings pershare ------------------------------ --------- --------- --------- 6 months to 31 6 months to 12 months to 30 March 2007 September 2006 31 March 2006 pence pence pence------------------------------ --------- --------- ---------Basicearnings/(loss) per share -Continuingoperations 2.2 (0.4) (10.8)UK closed anddivestedactivities - 0.2 0.2US closed anddivestedactivities - 0.2 0.3Amortisationof intangibleassets 0.6 0.8 1.8Impairment ofintangibleassets - - 10.1Exceptionalitems (1.3) 1.1 2.8Tax effect ofthe aboveadjustments - (0.8) (1.7)------------------------------ --------- --------- ---------Adjusted basicearnings pershare 1.5 1.1 2.7------------------------------ --------- --------- --------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Future