20th Sep 2005 07:01
Centaur Holdings PLC20 September 2005 Centaur Holdings plc Preliminary Results for the year ended 30 June 2005 Centaur Holdings plc (Centaur), the specialist business publishing andinformation group, announces results for the year ended 30 June 2005. Centaur's premier brands include Marketing Week, Design Week, Creative Review,Money Marketing, Mortgage Strategy, The Lawyer, The Engineer, New Media Age andHomebuilding & Renovating and the online service Perfect Information. Highlights •Turnover up 6% to £72.2m (2004 (note 1): £68.3m) •EBITDA (note 2) up 38% to £12.2m (2004: £8.8m) •EBITDA margin strongly ahead at 17% after costs associated with Finance Week and Perfect Information (2004: 13%) •Underlying EBITDA (note 2) at £14.3m, giving a margin of 20% (2004: £9.7m; 14%) •Profit before tax ("PBT") of £2.6m compared to £3.4m in Pro Forma year ended 30 June 2004 due to full year impact of amortisation of goodwill •Adjusted profit before tax (note 3) up 60% to £10.2m (2004: £6.3m) •Continuing recovery in advertising with revenues up by 8% on 2004, led by recruitment advertising up 16% •Continued growth in exhibitions, including 4 new shows launched during the year •Fully diluted EPS before amortisation and exceptional items up 64% to 4.80p (2004: 2.93p) •Proposed final dividend of 1.2p per share (full year dividend of 1.7p compared with 1p in 2004) •Strong balance sheet and cash generation with net cash of £10.0m at 30 June 2005 (2004: £5.7m) •Positive start to new financial year Commenting on the preliminary results, Graham Sherren, Chairman and ChiefExecutive Officer of Centaur said: "I am pleased to announce that Centaur is reporting record profits in the 12months to 30 June 2005, with adjusted PBT, at the top end of expectations, up60% to £10.2m. Revenue, which grew 6% in the year, benefited from furtherrecovery in the advertising cycle and from the results of new and recentlylaunched products. This performance has resulted in a dramatic improvement inour reported ebitda margins to 17% (2004: 13%). Excluding our two major newdevelopment initiatives (Perfect Analysis and Finance Week) the margin achievedwas 20% (2004: 14%). "The recovery in the advertising cycle that started towards the end of 2003 iscontinuing. Our growth prospects continue to be well supported by our pipelineof new and recently launched products. Revenues in the first quarter are aheadof the same period last year. The outlook is encouraging and we expect 2006results to demonstrate further good progress." Notes 1. The Pro Forma 2004 ("2004") results are based on a full 12 monthstrading for the Centaur Communications Group that became part of CentaurHoldings plc on 10 March 2004. 2. Centaur's key internal measure of profit is earnings before interest,tax, depreciation and amortisation and excluding exceptionals (EBITDA). Inaddition, "underlying" results of continuing operations are presented to providea better indication of overall financial performance. The "underlying" resultsexclude the impact of recent acquisitions or disposals and of new launches intonew communities. 3. Adjusted PBT is profit before tax, excluding the impact of amortisationof intangibles and of exceptional items and amounts written off investments. Enquiries: Centaur Holdings plc Graham Sherren, CEO Tel: 020 7970 4000 Geoff Wilmot, CFOGavin Anderson & Company Richard Constant Tel: 020 7554 1400 Robert Speed Janine Brewis Chairman's Statement Introduction I am pleased to announce that Centaur is reporting record profits in the 12months to 30 June 2005, with adjusted PBT at the top of expectations up 60% to£10.2million. Revenues, which grew 6% in the year, benefited from further recovery in the advertising cycle and from the results of new and recently launched products. This year on year revenue growth was partially offset by theadverse impact of biannual engineering exhibitions held in the prior year and by our decision to reduce the number of conferences staged in the year to June 2005,which resulted in a corresponding improvement in margins from events. EBITDA increased by 38% to £12.2million, representing a dramatic improvement inmargin to 17% from 13% in the previous year. Meanwhile, underlying margins,after excluding the results of our major new development initiatives, FinanceWeek and Perfect Analysis, rose to 20% (2004: 14%). Profit before tax amounted to £2.6million compared with £3.4million in the yearended 30 June 2004. The 2005 result is stated after charging, withinadministrative expenses, £7.1million of goodwill amortisation (2004£2.4million), principally relating to the goodwill arising on the purchase ofthe Centaur Communications Group (CCG) by the Company on 10 March 2004. PBT inthe year to 30 June 2005 also included deductions of £0.5million of exceptionaladministrative costs associated with the move of the Company from AIM to theOfficial List in December 2004. Finally, cash balances at 30 June 2005, net ofloan note creditors, stood at £10.0million (2004: £5.7million). In light of this performance, the Board is recommending a final dividend of 1.2pper share, which will be paid to shareholders on the register as at 18 November2005. It is proposed that the dividend will be paid on 16 December 2005. TheCompany will not be proposing any Scrip Dividends or Dividend Reinvestment PlanOptions. The recovery in the advertising cycle that started towards the end of 2003continued through the year to June 2005, although certain business sectorsperformed more strongly than others. Nevertheless, total advertising turnoverduring the year increased by 8% over the equivalent prior year period. As in theprevious year, this recovery was led by growth in recruitment advertising, whichincreased by 16% on the previous year. We also continued to see promising growth in other areas of the business, inparticular our internet businesses and our exhibitions. This reflected thesuccess of the principal focus of our strategy in the past few years, which hasbeen to extend our major publishing brands into other media, notably events andonline. The Centaur Communications Group (CCG) has developed most of itsbusiness organically. Where acquisitions have been made, they have tended to beearly stage acquisitions, rather than the purchase of established businesses orproducts. This strategy continued in the year to 30 June 2005 and the keydevelopments and initiatives in the period are outlined in the Operating Review. The recovery in the advertising cycle is continuing and our growth prospectscontinue to be well supported by our pipeline of new and recently launchedproducts. Revenues in the first quarter are ahead of the same period last year.The outlook is encouraging and we expect FY 2006 results to demonstrate furthergood progress. Finally, my thanks to all my colleagues who as always have performed with greatenergy and enthusiasm. Operating Review Trading Review Centaur's rapid growth in the year continued to be supported by its pipeline ofnew and recently launched products. Overall, about 15% of revenues generated inthe last financial year were from products or events launched within the pastthree years and less than 2% of revenues were from businesses acquired withinthe same period. The bulk of these new launches have been in existingcommunities, exploiting and extending established leading brands. As a resultthese are already significantly profitable, generating an EBITDA margin in theyear of 10%. Losses from acquisitions were generated principally by the newproduct development costs in Perfect Information arising from the acquisition ofSynergy. Marketing, Creative & New Media Revenues in our largest market segment grew 3% in the year, but tight costcontrol, notably in conferences, enabled us to improve margins to 19% (2004:15%). The advertising recovery in this sector has been variable, partly reflecting theconsumer and retail slowdown experienced in the last year. Nevertheless,recruitment advertising in particular has held up reasonably well and ourleading magazines in this sector, Marketing Week, Design Week and CreativeReview all achieved modest revenue growth in the year as a whole. The directmarketing segment, for which we publish the weekly magazine Precision Marketing,remained weak. The Insight and InStore shows both delivered strong revenue and profits growth.The DM Show, run in September 2004, did not improve its results year on year andthe new show, the Total Motivation Show, operated close to break-even. Thesecond new marketing show, the Online Marketing Show, made a useful profitcontribution in its first year. As noted above, we reduced the number ofconferences, but improved the profitability of these events. Our internet portal, mad.co.uk, which serves the marketing, advertising anddesign communities, also had a successful year, delivering record profits andmargins. Legal & Financial This was our most successful market segment, reflecting the strength of theunderlying communities served. Revenue grew 12% year on year and we achieved amargin of 20% (2004:17%). If the results of the newly launched Finance Week wereexcluded, the margin would have been 27%. This division's two leading titles, Money Marketing and The Lawyer, each endedthe year strongly. Money Marketing recovered from a weak third quarter, and theimproved outlook also helped its sister title, Fund Strategy, to end the yearstrongly. The Lawyer, meanwhile, recorded its best performance ever. MortgageStrategy, launched in autumn 2001, continued to grow throughout the year. Finance Week revenues have been building steadily. Recruitment revenues grewmore slowly than anticipated, but are expected to be a major source of incomefor the magazine. We believe it is essential to provide the market with anelectronic job site alongside the printed medium. Having reviewed thepossibility of acquiring an existing financial job-site, we concluded that wewould achieve a higher return in the long run by building our own, which we havenow done. In exhibitions the previous year's partial replacement of small roadshow-styleevents by larger regional events resulted in revenues and profitabilityrecovering strongly. We also achieved further valuable contributions from theleading awards events run for each specialist community and from The Lawyer'sEuropean Summit. Revenues and profits from our three major internet businesses in this division(Money Marketing Online, TheLawyer.com and Headline Money) grew strongly andeach of these business units is now generating a good marginal contribution tocentral overheads. The first two sites noted above also successfully upgradedtheir technology platforms during the year and have significant potential forfurther growth. Construction & Engineering Despite the adverse impact of biannual exhibitions not scheduled during the yearto June 2005, revenues from this market segment grew by 6% and that, combinedwith continued cost reductions in the engineering portfolio, led to a doublingof the margin to 16%. The leading title in the engineering portfolio is The Engineer, which we havesuccessfully re-positioned as the news magazine for technology and innovation,published principally for those involved in the development of new applicationsand transferable technology. The magazine delivered over 10% revenue growth inthe period and traded profitably for the year and its associated web site alsotraded profitably in the fourth quarter. Although there has been a well-publicised slowdown in the housing market, themajor title in the Construction sector, the monthly publication Homebuilding &Renovating, delivered further growth in revenues. In addition, each of the sixestablished Homebuilding exhibitions generated further growth in revenues, andwere boosted by the successful launch of the Smart Homes Show, run alongside theNational Homebuilding Show in April 2005. Perfect Information Perfect Information's (PI) results continued to be held back by the effects ofthe trading losses and development costs of Perfect Analysis (PA). Thedevelopment programme, which is being conducted partly in cooperation with amajor investment banking client, is on track to be completed in early 2006. Asnoted in our interim accounts, we have taken steps to reduce the cost base ofPerfect Information, principally in respect of fixed costs taken on with theacquisition of Synergy. As a result, losses associated with PA weresubstantially reduced in the second half. The market for PI's corporate filings service improved during the year,supported by improving M&A activity. As a result, the company achieved a recordlevel of new subscriptions for its core product Perfect Filings. Thesecontracts, whose revenues are recognised over the life of the subscriptionperiod, were largely second half weighted. This factor, combined withrationalisation costs, held back underlying profitability in the year. However,the new financial year has started strongly, including the first newsubscription business in the US market. Other Overall our other products experienced a small increase in revenues, but amarked improvement in margin in the year to June 2005. Revenue growth was drivenprincipally by a strong performance by the Employee Benefits suite of products,offset to an extent by continued difficulties experienced within theinternational antique rugs market. Throughout the group we continued to focus on new business opportunities in theyear to 30 June 2005 and the key initiatives in the period are outlined below. Magazines In November 2004 we launched Finance Week, published for senior financeprofessionals working in the corporate sector. The magazine has been wellreceived by its readers and revenues are steadily building. As we anticipated, we have incurred substantial start-up operating losses on this project, amounting to £1.4m in the period to 30 June 2005. However, we believe that themagazine will be established as a leading information brand in its sector and its success will also present us with considerable opportunities for future growth through other media, again particularly through events and online. In October 2004 we launched Data Strategy, a monthly publication for dataprofessionals, published by the team behind our weekly periodical, PrecisionMarketing. The magazine made a useful profit contribution in the year andsupported a profitable related conference in the second half. Online The development of the Internet as an advertising and information medium istransforming the business opportunities available to Centaur. We have investedsteadily in our internet operations and they are now delivering high rates ofrevenue growth and in many cases are already generating higher profit margins. During the past year we upgraded the technology platforms of three of our fourlargest internet services, in order to enhance the robustness, scalability andcost-effectiveness of these operations, which we believe have high growthpotential. Investment to upgrade the technology platform of the fourth majorinternet service, mad.co.uk, has just been completed and the new servicere-launched in September 2005. The past year has also been a period of significant development activity withinour largest online business, Perfect Information. The major focus of thisdevelopment has been on its new equity research tool, Perfect Analysis (PA),based on technology acquired in the purchase of Synergy in the previous year. Wehave secured some new clients for this service during the year but our emphasishas been on delivering the major added-value improvements we have identified asnecessary to secure competitive advantage. The development programme is in itsfinal stages and we expect to launch the new completed version of PA in early2006. We have also during the year launched two new products in the PI portfolio- Perfect Debt (a fully text and clause-searchable tool for the debtprofessional) and Perfect Search (a new web-based interface for the US market).Both products have started to generate new sales for PI. Events We organised four new exhibitions during the year, bringing to 17 the totalnumber of new shows launched in the past 5 years. In September 2004 we organisedthe Business Travel Show in Dusseldorf for the first time. This show is thefirst of its kind serving the largest business travel market in Europe. Thelaunch show was well received by exhibitors and we achieved a high level ofre-booking for the following year's show, which has just run profitably inmid-September 2005. Also, in September 2004, we organised the first TotalMotivation Show at Olympia, a show designed for all those involved in theincentivisation of customers and staff. In April 2005, we organised the first Smart Homes Show alongside our NationalHomebuilding Show in the NEC, Birmingham, which attracted over 40,000 visitors.This was a great success and contributed to a record level of on-sitere-bookings by exhibitors. Its success also encouraged us to launch a secondSmart Homes show alongside our London Homebuilding Show in October 2005. Also inApril 2005, we organised a smaller version of the Subcon show, successfullyconverting what had previously been a biannual event into an annual exhibition.In June 2005, we organised the Online Marketing show, sponsored principally byour leading magazine New Media Age. This followed on from the success ofour new awards event, the Interactive Marketing Awards, launched in November2004 as a joint venture between Marketing Week and New Media Age. For Conferences, this was a year of consolidation. We organised 10% fewerconferences with a corresponding reduction in revenues from these events.However, this loss of revenue was more than compensated for by a markedimprovement in overall margins from Events, which increased to 18% (2004: 7%). Acquisitions Our acquisition strategy has been based principally on early-stage or in-fillacquisitions. In February 2005 we completed the acquisition of LogisticsManager, a monthly magazine with two related shows. The purchase price was £0.5mand the acquired assets had achieved a profit contribution in the 12 monthsbefore sale amounting to approximately £0.2m. This acquisition takes us into anew community. We believe this is a market with significant growth potential,driven by the increased impact of the internet on distribution and these assetsconstitute a good base from which to exploit that potential. Current Development Activity In the new financial year, we are continuing to develop new products at a steadypace. Most of our development effort will focus on extending our establishedbrands into new areas. Innovation is central to Centaur's culture and is analmost constant activity across the whole portfolio. In mid-September 2005 we organised the first Mortgage Summit, in Spain, whichmade a good first year contribution. In October 2005, we will be organising thesecond Smart Homes Show alongside our London Homebuilding Show in Excel, London,following the success of the initial event in April 2005. In March 2006, we willorganise the Scottish Financial Services Show for the first time, sponsored byMoney Marketing. Also in the Spring of 2006, we will hold the first FundStrategy Summit. In autumn 2005, we plan to publish the first issue of Modern Carpets andTextiles magazine, a bi-monthly magazine which will be published by the Haliteam. There is currently no specialist magazine dedicated to the editorial needsof the modern carpets and textiles industry and the Hali team is well qualifiedto meet those needs. Also in autumn 2005, we plan to publish a new specialistconsumer magazine entitled Move or Improve, a sister publication to thesuccessful monthly publication Homebuilding and Renovating. We are continuing to develop the Logistics Manager brand, acquired in February2005. We have redesigned the magazine, upgraded the circulation, launched a newweb-site to support the magazine and will launch a third regional exhibition inthe fourth quarter of the new financial year. Data Strategy will run a new awards event in October 2005. The Engineer will runa new awards event for the sector in April 2006 and will also publish a newAnnual, celebrating the 150th anniversary of the magazine. Finance Week has in the first quarter added a job-site to its internet site,financeweek.co.uk as an essential part of its strategy to be the market leadingrecruitment advertising medium in this sector. In early September 2005, Perfect Information (PI) released its Excel add-infacility for Perfect Analysis (PA). This is an important milestone in theoverall development of PA and delivers a number of attractive features for itscore equity research users. In early 2006, PI plans to complete its developmentof PA and release it as a fully web-based service. Notes 1. Centaur's key internal measure of profit is earnings before interest, tax,depreciation and amortisation and excluding exceptionals (EBITDA). In addition,"underlying" results of continuing operations are presented to provide a betterindication of overall financial performance. The "underlying" results excludethe impact of recent acquisitions or disposals and of new launches into newcommunities. Adjusted PBT is profit before tax, excluding the impact ofamortisation of intangibles and of exceptional items, including share-basedpayments. 2. Centaur's product portfolio currently comprises 9 weekly magazines, 1fortnightly magazine, 11 monthly magazines, 4 magazines of a quarterly orbi-monthly frequency, 2 monthly newsletters, 27 annuals, 19 online products, 25awards or other sponsored events, 25 exhibitions and 90 conferences. 3. Centaur reports its results within 5 distinct divisions, namely Marketingand Creative, Legal and Financial, Engineering and Construction, PerfectInformation and Other. The first 3 segments comprise principally the followingvertical business communities in which Centaur publishes market-leading magazinetitles: Marketing Services, Creative Services, New Media, Retail FinancialProducts, Legal Services, Engineering, Private Homebuilding. 4. It also enjoys strong positions in a number of other specialistcommunities, namely HR, Visual Arts Production, Construction, Antique Rugs andTextiles, Logistics and Public/Private Finance. In addition, it serves theBusiness Travel community with 3 leading trade shows in the UK and overseas. Consolidated profit and loss account for the year ended 30 June 2005 Actual Pro forma Actual Year ended Year ended 30 Oct 2003 30 June 30 June to 30 June 2005 2004 2004 --------------------------------------------- Note £'000 £'000 £'000 Turnover 1 72,215 68,254 25,493 Cost of sales (39,248) (38,017) (13,609)================================================================================Gross profit 32,967 30,237 11,884 Distribution costs (4,164) (4,287) (1,259)Administrative expenses (26,506) (22,468) (8,983)--------------------------------------------------------------------------------EBITDA before exceptional costs 1 12,202 8,823 4,905 --------------------------------------------------------------------------------Depreciation of tangiblefixed assets (2,368) (2,676) (987)Amortisation of goodwill (7,052) (2,437) (2,186)Exceptional administrative costs (485) (228) (90)-------------------------------------------------------------------------------- Operating profit 2,297 3,482 1,642 Share of associate'soperating profit 27 - -================================================================================Profit on ordinary activities beforeinterest 2,324 3,482 1,642Interest receivable and similar income 295 196 71Amounts written off investments - (274) -Interest payable and similarcharges (3) (7) (4)--------------------------------------------------------------------------------Profit on ordinary activities before taxation 2,616 3,397 1,709 Tax on profit on ordinaryactivities 2 (2,760) 1,222 (1,169)--------------------------------------------------------------------------------(Loss) / profit for the financial year (144) 4,619 540 Dividends (2,532) (1,480) (1,480) Retained (loss) / profitfor the period (2,676) 3,139 (940)================================================================================Earnings per share 3Basic (loss) / earningsper share (pence) (0.10) 3.12 0.79Fully diluted earningsper share (pence) - 3.00 0.73Adjusted earnings pershare (pence) 4.99 3.04 4.13Fully diluted adjustedearnings per share(pence) 4.80 2.93 3.80-------------------------------------------------------------------------------- Consolidated Balance Sheet at 30 June 2005 2005 2004 ------------------------------------ Note £'000 £'000 Fixed assetsIntangible fixed assets 132,062 138,701Tangible fixed assets 5,502 5,311Investments 212 185-------------------------------------------------------------------------------- 137,776 144,197Current assetsStocks 1,320 1,185Debtors 15,761 14,771Cash at bank and in hand 12,480 9,132-------------------------------------------------------------------------------- 29,561 25,088Creditors: amounts fallingdue within one year (24,621) (23,426)-------------------------------------------------------------------------------- Net current assets 4,940 1,662-------------------------------------------------------------------------------- Total assets less current liabilities 142,716 145,859 Provisions for liabilities and charges (2,500) (3,387)-------------------------------------------------------------------------------- Total net assets 140,216 142,472================================================================================ Capital and reservesCalled up share capital 15,012 14,879Share premium account 287 127,047Other reserves 1,486 1,486Profit and loss account 123,431 (940)-------------------------------------------------------------------------------- Equity shareholders' funds 140,216 142,472-------------------------------------------------------------------------------- Group cash flow statement for the year ended 30 June 2005 Actual Pro forma Actual Year ended Year ended 30 Oct 2003 30 June 30 June to 30 June 2005 2004 2004 --------- --------- --------- Note £'000 £'000 £'000 Net cash inflow from operatingactivities 9,646 7,153 4,937-------------------------------------------------------------------------------- Returns on investments and servicing offinanceInterest received 293 196 71Interest paid (49) (174) (61)================================================================================Net cash inflow from returns oninvestments and servicing offinance 244 22 10 Taxation (1,105) (671) (356)-------------------------------------------------------------------------------- Capital expenditure and financial investment Purchase of tangible fixed assets (2,564) (2,166) (667)Sale of tangible fixed assets 16 24 11Purchase of intangible fixed assets (565) (195) (120)================================================================================ Net cash outflow for capitalexpenditure and financialinvestment (3,113) (2,337) (776) Acquisitions and disposalsProceeds from the disposal ofsubsidiary undertakings 417 617 -Acquisition / disposal expenses paid - (2,921) (2,780) Cash at bank and in hand acquiredwith subsidiary undertakings - 58 6,274Purchase of subsidiary undertakings - (128,736) (127,634)================================================================================ Net cash inflow / (outflow) fromacquisitions and disposal ofsubsidiary undertakings 417 (130,982) (124,140) Equity dividends paid to shareholders (2,220) - -================================================================================ Net cash inflow / (outflow) beforefinancing 3,869 (126,815) (120,325) FinancingIssue of ordinary share capital 420 134,445 131,994Cash (repaid) / received in respectof loan notes (941) 3,429 3,429 Share capital issue costs - (5,968) (5,968)--------------------------------------------------------------------------------Net cash (outflow) / inflow fromfinancing (521) 131,906 129,455================================================================================ Increase in cash 3,348 5,091 9,130================================================================================ Basis of Preparation Actual The consolidated financial statements include all the Group's activities for theyear ended 30 June 2005. The company was incorporated on 30 October 2003 as a private limited company anddid not trade until 10 March 2004 when it acquired Centaur Communications Ltdand its subsidiaries ("the Centaur Communications Group"). As a result the actual comparative refers to the period 30 October 2003 to 30June 2004. Pro forma The Pro Forma results for 2004 are based on a full 12 months trading for theCentaur Communications Group that became part of Centaur Holdings plc on 10March 2004. Notes to the financial statements 1 Segmental analysis The Group is involved in the single activity of the creation and disseminationof business and professional information in the UK. There is therefore nosegmental reporting required. However, set out below are business analyses ofGroup turnover and EBITDA before exceptional costs ("EBITDA"). Analysis by division Actual Pro forma Year ended Year ended 30 June 30 June 2005 2004 -------------------------------------------------------- Turnover EBITDA Turnover EBITDA £'000 £'000 £'000 £'000 Marketing, Creative and New 24,670 4,686 23,911 3,624MediaLegal and Financial 22,049 4,447 19,677 3,385Construction and 13,320 2,129 12,530 967EngineeringPerfect Information 5,904 407 6,099 749Other 6,272 533 6,037 98-------------------------------------------------------------------------------- 72,215 12,202 68,254 8,823================================================================================ Analysis by source Actual Pro forma Year ended Year ended 30 June 30 June 2005 2004 ------------------------------------------ Turnover Turnover £'000 £'000 Recruitment advertising 11,587 9,989Other advertising 26,725 25,359Circulation revenue 5,267 5,108Online subscriptions 6,882 6,303Events 20,819 19,722Other 935 1,773-------------------------------------------------------------------------------- 72,215 68,254================================================================================ Analysis by product type Actual Pro forma Year ended Year ended 30 June 30 June 2005 2004 ------------------------------------------------------------- Turnover EBITDA Turnover EBITDA £'000 £'000 £'000 £'000 Magazines 39,356 7,163 37,224 6,432Events 20,819 3,754 19,722 1,338Online Products 10,672 907 9,981 894Other 1,368 378 1,327 159-------------------------------------------------------------------------------- 72,215 12,202 68,254 8,823================================================================================ Analysis by maturity Actual Pro forma Year ended Year ended 30 June 30 June 2005 2004 ----------------------------------------------- Turnover EBITDA Turnover EBITDA £'000 £'000 £'000 £'000 Existing communities-established products 60,538 13,256 55,560 7,948-new products 10,377 1,077 12,077 1,781 ------------------------------------------------ Underlying turnover and EBITDA 70,915 14,333 67,637 9,729 Acquisitions 1,077 (738) 617 (733)New communities - new products 223 (1,393) - (173)-------------------------------------------------------------------------------- 72,215 12,202 68,254 8,823-------------------------------------------------------------------------------- New product development is defined as any product launched in the last threeyears and is reported by reference to the three years preceding each reportingdate. A community is defined by reference to the consumers of the relevantproducts.A new community is defined as any group of consumers not previously served byany products in the three years preceding each reporting date.Acquisitions are also reported by reference to the three years preceding eachreporting date.Substantially all net assets are located and all turnover and EBITDA aregenerated in the United Kingdom. 2 Tax on profit on ordinary activities Actual Pro forma Actual Year ended Year ended 30 Oct 30 June 0 June 2003 to 30 2005 2004 June 2004 --------------------------------------------- £'000 £'000 £'000Analysis of charge in periodUK corporation tax at 30%- Current year 1,617 - -- under/(over)provision in previous periods 211 (156) --------------------------------------------------------------------------------- 1,828 (156) -================================================================================ Deferred taxation Current year (origination and reversalof timing differences) 185 (287) (96)Utilisation and(recognition) of tax losses 925 (779) 1,265Adjustment in respect of prior years (178) - --------------------------------------------------------------------------------- 932 (1,066) 1,169-------------------------------------------------------------------------------- Tax on profit on ordinary activities 2,760 (1,222) 1,169================================================================================ The factors affecting the tax charge for the period were: Profit on ordinary activitiesbefore tax 2,616 3,397 1,709 Profit on ordinary activities multiplied by standard rate of corporation tax in theUK 2005: 30% (2004: 30%) 785 1,019 513 Effects of: Expenses not deductible fortax purposes 2,161 972 656Capital allowances forthe period (in excess of) /less than depreciation (240) 722 219Utilisation of tax losses (925) (2,713) (1,388)Statutory deduction inrespect of non-capital R & Dexpenditure (164) - -Adjustments to tax charge inrespect of previous periods 211 (156) --------------------------------------------------------------------------------- Current tax charge /(credit) for period 1,828 (156) -================================================================================ 3 Earnings per share The calculations of earnings per share are based on the following profits andnumbers of shares: Actual Pro forma Actual Year ended Year ended 30 Oct 2003 30 June 30 June to 30 June 2005 2004 2004 -------------------------------------------- £'000 £'000 £'000 (Loss)/ profit for the financial year (144) 4,619 540 Amortisation of goodwill 7,052 2,437 2,186Amount written off investments - 274 -Exceptional deferred tax credit - (3,057) -Exceptional administrative costs 485 228 90--------------------------------------------------------------------------------Adjusted profit for the financialyear 7,393 4,501 2.816-------------------------------------------------------------------------------- Weighted average number of ordinaryshares 148,261,194 147,994,118 68,223,627Dilutive effect of share options 5,764,839 5,807,266 5,807,226-------------------------------------------------------------------------------- Weighted average number of shares inissue taking account of applicableoutstanding share options 154,026,033 153,801,384 74,030,853-------------------------------------------------------------------------------- (Loss)/ earnings per share (pence) (0.10) 3.12 0.79Diluted (earnings per share (pence) - 3.00 0.73Earnings per share (pence) usingadjusted profit for the financialyear 4.99 3.04 4.13Diluted earnings per share (pence)using adjusted profit for thefinancial year 4.80 2.93 3.80-------------------------------------------------------------------------------- The adjusted earnings per share have been provided in order that the effect ofgoodwill amortisation, the prior year exceptional deferred tax credit togetherwith the other items listed above can be fully understood.The exceptional deferred tax credit of £3,057,000 in the Pro Forma year ended 30June 2004 related to the exercise of share options in Centaur CommunicationsLtd. 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