30th Sep 2005 07:02
Future PLC30 September 2005 30 September 2005 Future plc Trading Update Summary for 2005 Further to our trading update on 14 June, Future announces that second-halftrading has continued at levels below expectations, mainly because of newsstandweakness in the UK and France, combined with a higher level of new productdevelopment expenditure. Subject to the trading performance in September, theBoard now expects profit (before exceptional items, interest, taxation andgoodwill amortisation) for the year to September 2005 to be around 10% belowthat for last year. Revenue growth For the eleven months to 31 August total group turnover has risen by 9% (3%excluding acquisitions) above the previous year. Like-for-like growth incirculation (two-thirds of group turnover) is up 2% and advertising revenue isup 5%, reflecting the more difficult newsstand trading conditions in the secondhalf. Circulation and advertising revenue growth in the half-year to 31 Marchwere +5% and +3% respectively; for the five months to 31 August circulationrevenue fell by 2%, whereas advertising growth was +8%. In both cases growth isexpressed in constant currency and on a like-for-like basis (excludingacquisitions made since 1 October 2004). UK In our last trading statement on 14 June, we indicated that the general weaknessin consumer spending on the high street was expected to have an impact ontrading, with 85% of Future's UK magazines sold at newsstand. This difficultretail environment has continued throughout the second half and, when combinedwith the near-term impact of increased launch activity and the acquisition of anumber of titles that are in the process of being developed, has held backprofit growth in the second half. We therefore expect UK adjusted operatingprofit for this financial year to be at a similar level to that for last year(including the contribution from Highbury titles for three months). Games titles have shown a slight increase in profit compared with last year;whereas computing magazines have continued to experience tough operatingconditions; entertainment titles, which represent the largest part of our UKportfolio, have increased profits. 2005 saw a significant period of acquisition and launch activity, with 48 titlesacquired and six launched. We now have a materially larger UK business, withconsequently a greater platform for profit growth over time. As announced, wewill be moving our various London operations into a single building inMarylebone in November. While these premises will add £0.7m to annual runningcosts, there is expected to be clear benefit in terms of improved management andefficiency of the enlarged business. US The overall performance of Future's US business is in line with forecasts, withlower operating profits compared with last year, reflecting the losses from ourinvestment in new launches and developing our internet activities. This year we have launched Future Music, Future Snowboarding and ScrapbookAnswers. Mobile, our wireless technology magazine launched in January 2004,continued to make losses throughout the second half and its lack of significantprogress resulted in the decision to close the title in September. Games titles are performing in line with expectations. The recently acquiredCheatplanet.com website is performing better than expected and our guitar titlescontinue to perform ahead of expectations. We are relocating our South San Francisco office (140 employees) in earlyDecember. The new premises will reduce annual running costs. Mainland Europe Although Future France and Future Media Italy enjoyed good profitability lastyear and in the first half to March 2005, second half trading is expected to beclose to break-even, before accounting for launch costs. In both countriesnewsstand sales have been under pressure, with computing titles facing moredifficult general trading than games titles, where our position is stronger. Micro Actuel was launched in France in March and is the Group's largest magazinelaunch in 2005. Despite the difficult trading environment it is performing toplan and operating losses are a little better than budget levels. As announced on 20 September, Future has acquired three further games titles inItaly and France. Factors impacting financial year 2006 In planning for the financial year 2006, the Board has taken into account anumber of factors that may impact trading, including an expectation of acontinued difficult UK retail environment, with its consequential impact on UKnewsstand sales. In 2005, we materially increased our spend on New Product Development(investment in early-stage launches and investment in the internet) and wecurrently plan a further significant increase in the new financial year. The Group is well-placed for the medium term following its recent expansion. Ithas a low level of debt and continues to be a highly cash-generative business,making it better able to withstand any continued disappointment in tradinglevels. Annual Results The Group's results for the year ending 30 September 2005 will be announced on29 November 2005 and a further trading update will be provided at that time. Enquiries: Future plcGreg Ingham, Chief Executive Tel: 01225 442244John Bowman, Finance Director Tel: 01225 732281 Hogarth PartnershipJames Longfield/Georgina Briscoe Tel: 020 7357 9477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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