Final Results - PART 1

Future Network PLC 07 December 2004 7 December 2004 THE FUTURE NETWORK PLC Preliminary results for the period ended 30 September 2004 The Future Network plc (LSE: FNET), the international special-interest consumer magazine group, today announces its preliminary results for the nine months ended 30 September 2004. These preliminary results also include pro forma results for the twelve months ended 30 September 2003 and 2004. An analyst presentation will be held at 10.00am at the offices of UBS, 2 Finsbury Avenue, London EC2M 2PP. Financial highlights Pro forma adjusted* results for 12 months Reported Constant Currency to 30 September 2004 compared with 2003 Change Change Turnover Â£190.4m (2003: Â£177.7m) Up 7% Up 11% Adjusted operating profit Â£23.6m (2003: Up 1% Up 6% Â£23.3m) Adjusted pre-tax profit Â£23.8m (2003: Up1% Up 6% Â£23.5m) Adjusted earnings per share 5.9p (2003: Up 13% Up 17% 5.2p) Final dividend of 1.5p per share Up 20% Up 20% *Definitions Adjusted results are presented to provide a better indication of overall financial performance and to reflect how the business is run on a day to day basis. The only adjustment made is to remove goodwill amortisation. Other highlights Circulation revenue up 6%; advertising revenue up 10% Magazines acquired in 2003 and 2004 make good progress Expansion continues by magazine development, launch and acquisition Re-energised UK business US business continues to thrive Excellent progress in Mainland Europe Proposed change of company name to 'Future plc' Statutory results for 9 months to 30 September 2004 Turnover Â£133.0m Operating profit Â£0.4m Pre-tax profit Â£0.6m Basic loss per share (0.2)p Final dividend of 1.5p per share Statutory results for year ended 31 December 2003 Turnover Â£182.7m Operating profit Â£9.5m Pre-tax profit Â£9.7m Basic earnings per share 0.8p Final dividend of 1.25p per share Commenting on the results, Greg Ingham, Future's Chief Executive said: 'I am delighted to report good trading progress, a successful change of financial year, and a 20% increase in the level of dividend. 'The year to 30 September 2004 has been a good one for Future. We have succeeded with a number of acquisitions, launched some interesting new titles, and refreshed and improved a number of existing titles. We have strengthened the management team in our largest business, the UK, where trading has exceeded our previous expectation. 'Current trading is encouraging: we have made a very promising start to the first quarter of our new financial year.' Enquiries: The Future Network plc Greg Ingham, Chief Executive Tel: 01225 442244 John Bowman, Finance Director Tel: 01225 732281 Hogarth Partnership James Longfield/Georgina Briscoe Tel: 020 7357 9477 Financial performance These are Future's first results based on our new financial year, ending on 30 September. For the 12 months to September 2004, the Group generated turnover of Â£190.4m and an adjusted operating profit of Â£23.6m, producing an operating margin of 12.4%. Adjusted earnings per share were 5.9p, readily enabling the Board to recommend an increased dividend of 1.5p per share. If approved at the Annual General Meeting to be held on 26 January 2005, the final-only dividend of 1.5p per share will be paid on 31 January 2005 to shareholders on the register on 31 December 2004. The ex-dividend date will be 29 December 2004. Strategy overview Future is a special-interest consumer magazine publisher serving a large number of targeted audiences, rather than being in the general-interest consumer publishing sector. This presents a huge opportunity as new communities of interest are always emerging and evolving. The Company has both the financial and management resources to acquire and launch new titles. When appropriate opportunities arise, we will continue to expand by both launch and acquisition. At 30 September 2004 Future had net cash balances of Â£9.8m and unused bank facilities of a further Â£22.0m. At present, our business comprises computing, games and entertainment titles. The Board is investigating a large number of possible new magazines, most of which would expand our portfolio in the entertainment sectors. Current trading and prospects The year to 30 September 2004 has been a good one for Future. We have succeeded with a number of acquisitions, launched some interesting new titles and refreshed and improved a number of existing titles. We have strengthened the management team in our largest business, the UK, where trading has exceeded our previous expectation. Current trading is encouraging: we have made a very promising start to the first quarter of our new financial year. Our prospects are excellent. We are optimistic that our shareholders' continued confidence in Future will be justified. Proposed change of company name We propose to shorten the Company's name to Future plc because we are so often known simply as 'Future'. A resolution to make this change will therefore be put to shareholders at the forthcoming Annual General Meeting. Growth plan This has been an important period of growth for Future - but not nearly as important as the growth we are planning for the next four years. We are focused on growing the business to enhance shareholder value. Our target is to double the sales and profits of the business. We have the strategy, financial capability, management strength and corporate desire to achieve that end. Since 2001, Future's business has grown from Â£143m revenues and Â£10m of adjusted operating profit to Â£190.4m and Â£23.6m for the year to September 2004. In less than four years, Future's revenues have thus grown 33% and profits 136%. This profit growth has been achieved largely organically. The cumulative spend on acquisitions during this period has been Â£22.4m, with revenues of Â£20.8m and profits of Â£2.4m coming in the year to September 2004. These acquisitions have been funded entirely through cash flow. The sum total of net launch spend within each of the years 2001 to date is just Â£1.4m. This strong growth places Future amongst the fastest-growing UK media companies during the period - and without spending any 'new' money. Given this track record, our strategic focus and our stated intention to use debt to help drive growth in our business, we are confident that our four-year growth target is achievable. In making this commitment, we would also draw attention to the great strength, quality and discipline of our Board. Future has generated a reputation in recent years for its ability to judge risk carefully, and we stress that this will continue to underpin how we evaluate opportunities. The only caveat is that a strategy which is in part based on acquisition is also inherently based on opportunity and availability of assets at sensible prices. Attractive assets are available and we believe will continue to be. 2004 performance The year to September 2004 saw Future continuing to grow both in terms of magazine sectors and internationally. In constant currency, revenues grew 11%, adjusted operating profits 6% and adjusted earnings per share by 17%. That growth has come through a combination of organic development, launches and acquisitions. Though we break out the figures for clarity, we stress that operationally each route to growth is important to us, whether driven by our creative ability with launches, redesigns and existing magazines; or by our financial firepower for portfolio development, new magazines and acquisitions. We continue to diversify Future. By subject matter and by revenue, our business is now split Games 44% (2003: 47%); Computing 30% (32%) and the 15-sector Entertainment 26% (21%). Geographically, Future's shape is: UK 52% (2003: 56%); US 27% (24%) and mainland Europe 21% (20%). In terms of expansion, the shape of our business underpins Future's ability to seek out new opportunities - whether by country (such as the US, in recent times for us) or by sector (such as in games - revenues up 56% in three years). We see growth drivers and growth opportunities across the business. Financial Review Future has generated more than Â£23m of adjusted operating profit during each of the last two years to 30 September. On average over that period, cash conversion of this profit has been over 90%. We have also benefited from a reducing tax charge. We have been able comfortably to pay our first dividend whilst confidently increasing our second. Statutory Results for 9 months to 30 September 2004 These show that we generated Â£133.0m of turnover; operating profit of Â£0.4m; pre-tax profit of Â£0.6m; and a basic loss per share of 0.2p. Adjusted operating profit was Â£13.1m and adjusted earnings per share were 3.7p. These results are slightly better than our expectation for the period. Statutory Results for year ended 31 December 2003 These showed Â£182.7m of turnover; operating profit of Â£9.5m; pre-tax profit of Â£9.7m; and basic earnings per share of 0.8p. Adjusted operating profit was Â£22.5m and adjusted earnings per share were 4.9p. Pro Forma Results for 12 months to 30 September 2004 We believe that these provide shareholders with more meaningful financial information, because they compare a full year to September 2004 with the full preceding year to September 2003. For the 12 months to 30 September 2004, Group turnover was Â£190.4m, 7% up on 2003 and 11% up in constant currency. Adjusted operating profit was Â£23.6m, up 1% on 2003 and 6% up in constant currency terms. The goodwill amortisation charge was Â£16.6m, up Â£4.9m because of recent acquisitions. Excluding the effect of this non-cash charge, adjusted earnings per share for the 12 months were 5.9p (2003: 5.2p), an increase of 13%. Analysis of Group pre-tax profit for 12 months ----------------------------------------- ------------ ------------ ---------- 12 months to 30 September 2004 2003 Change Â£m Â£m Â£m ----------------------------------------- ------------ ------------ ---------- UK 17.3 17.6 (0.3) US 5.6 8.0 (2.4) Mainland Europe 3.1 0.6 2.5 Central costs (2.4) (2.9) 0.5 ----------------------------------------- ------------ ------------ ---------- Adjusted operating profit 23.6 23.3 0.3 ----------------------------------------- ------------ ------------ ---------- Profit on disposal of fixed asset 0.2 0.1 0.1 investments Net interest receivable and similar items - 0.1 (0.1) ----------------------------------------- ------------ ------------ ---------- Sub-total 23.8 23.5 0.3 Goodwill amortisation (16.6) (11.7) (4.9) ----------------------------------------- ------------ ------------ ---------- Pre-tax profit 7.2 11.8 (4.6) ----------------------------------------- ------------ ------------ ---------- Structure and size of Group As at 30 September 2004, the Group published 96 special-interest consumer magazines. We operate subsidiary companies in the UK, US, France and Italy. In addition, the Group licensed local editions of its magazines in a further 30 countries. The Group's progress can be seen from the following information. ------------------------- ---------- ------------- ---------------------- 12 months to 30 September 2004 2003 Change ------------------------- ---------- ------------- ---------------------- Overseas subsidiaries 3 3 No change Headcount 1,120 1,033 Up 8% Net launch spend Â£2.0m Â£0.3m 22 titles in 24 months Acquisition spend Â£8.7m Â£13.7m Six deals in 24 months Net cash Â£9.8m Â£10.4m ------------------------- ---------- ------------- ---------------------- Magazine portfolio and launch activity During the 12 months to 30 September 2004, we launched six titles at a cost of Â£2.0m, of which Â£1.6m related to Mobile PC in the US. Performance of 2003 and 2004 acquisitions Over the last two years we spent Â£22.4m on six acquisitions. In the 12 months to September 2004 these acquired titles generated turnover of Â£20.8m and adjusted operating profit of Â£2.4m. The acquisitions have enhanced earnings and their trading performance is ahead of the Group's expectation. Currency effect on 12 month profits In constant currency terms, turnover growth was 11% and adjusted operating profits would have been Â£24.7m. The average value of the Dollar against Sterling weakened by 12%, impacting the reported results of our US business in particular. The average value of the Euro against Sterling also weakened by 0.5%. The Group impact of adverse currency movements held back operating profits by Â£1.1m. UK performance for 12 months to September 2004 2004 2004 2004 2004 2003 2003 2003 Turnover Contribution Margin % of Turnover Contribution Margin Â£m Â£m % turnover Â£m Â£m Â£m ---------- -------- ------------ ------- -------- -------- ------------ ------- Games 33.8 11.1 33% 34% 34.4 9.9 29% Computing 27.3 7.9 29% 27% 29.8 9.8 33% Entertainment 39.3 10.5 27% 39% 36.8 11.0 30% ---------- -------- ------------ ------- -------- -------- ------------ ------- 100.4 29.5 29% 100% 101.0 30.7 30% Overheads and other costs (12.2) (13.1) ---------- -------- ------------ ------- -------- -------- ------------ ------- Total 100.4 17.3 17% 101.0 17.6 17% ---------- -------- ------------ ------- -------- -------- ------------ ------- UK adjusted operating profit was Â£17.3m, representing an adjusted operating profit margin of 17% (2003: 17%) and trading towards the end of the period exceeded our previous expectation. In the UK, Robert Price was appointed as MD in March, having previously been Publishing Director of our largest division, Entertainment. Robert's brief was to galvanise the UK business, which has been strong in terms of margin but sluggish on growth. He is being encouragingly vigorous. We have a largely-new and highly effective operating Board in the UK; the existing portfolio is being overhauled and reinvigorated; active launching has recommenced; a new magazine distributor, Marketforce, is now handling our portfolio, and there have been four acquisitions since Robert's appointment. Magazines acquired during the 12 months to September were PSW, Xbox World, Spanish Homes Magazine, CVG and PC Zone. These titles have performed well, contributing turnover of Â£3.0m and adjusted operating profit of Â£0.8m. Since the end of September we have acquired What Laptop, Junior, Junior Pregnancy & Baby, Wedding Day and their associated websites. During September we launched Official Duel Masters, Hair Style & Beauty Magazine, Jetix and PaperCraft Inspirations. The impact of all these initiatives has already begun to have some effect and Future UK is well-placed to deliver double-digit growth in the coming year. Export and licensing activity UK exports totalled Â£11.0m (2003: Â£10.3m), an increase of 7%. The weakening of the US Dollar held back UK revenues by Â£0.5m, primarily in computing. International licensing revenue for the Group was Â£2.6m, up 19% on 2003. US performance for 12 months to September 2004 2004 2004 2004 2004 2003 2003 2003 Turnover Contribution Margin % of Turnover Contribution Margin $m $m % turnover $m $m Â£m ---------- -------- ------------ ------- -------- -------- ------------ ------- Games 52.1 15.3 29% 56% 50.6 15.8 31% Computing 22.8 2.2 10% 25% 18.7 5.0 27% Entertainment 18.0 3.7 21% 19% - - - ---------- -------- ------------ ------- -------- -------- ------------ ------- 92.9 21.2 23% 100% 69.3 20.8 30% Overheads (11.3) (8.0) ---------- -------- ------------ ------- -------- -------- ------------ ------- Total 92.9 9.9 11% 69.3 12.8 18% ---------- -------- ------------ ------- -------- -------- ------------ ------- US adjusted operating profit was $9.9m, representing an adjusted operating profit margin of 11% (2003: 18%). Average monthly magazine sales of Future's US portfolio rose 23% to 1,899,898 building on our position as the fastest growing publisher at newsstand in 2003 (source: Circulation Management magazine). Future US has continued to thrive under Jonathan Simpson-Bint's leadership. Through organic growth, launches and the full-year effect of our guitar acquisitions, in dollar terms revenue has been driven up 34% in the year - a very significant rise in an otherwise quiet year in US media. Profit has been impacted by the launch costs of Mobile PC ($2.9m) and also establishing a publishing base for our music-making titles in New York. The acquired guitar magazines generated $18.0m of turnover and $1.2m of adjusted operating profit. We have recently added cover-mounted discs to our key guitar titles, an innovation new to the US guitar magazine sector but one successfully pioneered by Future in the UK during the 1990s. We were delighted to announce in early July the significant extension to the Official Xbox Magazine contract with Microsoft. This means that Future has the exclusive, worldwide rights (excluding Japan) to publish official magazines for all Microsoft Xbox products until 31 December 2011. Copy sales of Official Xbox Magazine in the US increased 18% on 2003. We have announced two launches in the US. Future Music is a US version of our successful UK title, serving the electronic music-making sector. Later in the year, we will launch into the action sports sector with Future Snowboarding, which is a highly promising area for Future, given the young male-oriented magazines we successfully publish in the US. Mainland Europe performance for 12 months to September 2004 2004 2004 2004 2004 2003 2003 2003 Turnover Contribution Margin % of Turnover Contribution Margin â‚¬m â‚¬m % turnover â‚¬m Â£m â‚¬m ---------- -------- ------------ ------- -------- -------- ------------ ------- Games 32.6 7.0 21% 56% 27.2 7.1 26% Computing 25.1 7.5 30% 43% 25.5 5.2 20% Entertainment 0.8 (0.4) - 1% 0.2 (0.1) - ---------- -------- ------------ ------- -------- -------- ------------ ------- 58.5 14.1 24% 100% 52.9 12.2 23% Overheads (9.5) (11.3) ---------- -------- ------------ ------- -------- -------- ------------ ------- Total 58.5 4.6 8% 52.9 0.9 2% ---------- -------- ------------ ------- -------- -------- ------------ ------- Substantial progress has been made in Mainland Europe, with an adjusted operating profit of â‚¬4.6m representing an adjusted operating profit margin of 8% (2003: 2%). This result is also stated after the cost of intra-group licence fees of â‚¬1.8m (2003: â‚¬2.6m). France has been the group's star performer in 2004. Sari Zaimi has very capably led the business to good profitability, following the successful integration of the spring 2003 acquisition from Hachette; profit growth has come from both games and computing magazines. The titles acquired from Hachette generated â‚¬11.4m of turnover and â‚¬1.3m of adjusted operating profit, with cost savings in line with our forecasts. Our expanded business in France has experienced a good 12 months, with the enlarged operation better able to exploit economies of scale. There will be two Future launches in France this coming year in computing. The largest launches in the spring. Our Italian business has had flat profits year-on-year. This is a reasonable outcome, given considerable sector competition. Our team, led by Bernardo Notarangelo, has responded strongly in recent months: Giochi per Il Mio Computer, for example, had a strong increase in sales via creating an additional budget-priced offering. Maximum PC has just been launched, based on the highly-successful Future US title. Group operating profitability and operating margins Adjusted operating profit for the 12 months to 30 September 2004 was Â£23.6m (2003: Â£23.3m) representing an adjusted operating profit margin of 12% (2003: 13%). The business continues to target an adjusted operating profit margin of 15% in the mid-term. Tax The tax charge for the 12 months amounted to Â£4.7m which represents an effective tax rate for the 12 months of 20% (2003: 29%), ignoring goodwill amortisation. During the 12 months, Mainland Europe profits were effectively tax-free, reflecting the benefit of accumulated tax losses: this benefit should continue for some years. Quarterly performance The table below provides a quarterly analysis of the pro forma results for the 12 months to September 2003, together with the corresponding quarterly figures to September 2004. ------------------- ------------------- ---------------- --------------- -------------------- ------ Quarter to December Quarter to March Quarter to June Quarter to September Total Â£m Â£m Â£m Â£m Â£m ------------------- ------------------- ---------------- --------------- -------------------- ------ Turnover Year to 30 September 2003 52.9 38.9 41.7 44.2 177.7 Year to 30 September 2004 57.4 41.5 45.6 45.9 190.4 Adjusted operating profit Year to 30 September 2003 11.1 3.2 3.3 5.7 23.3 Year to 30 September 2004 10.5 2.4 4.7 6.0 23.6 ------------------- ------------------- ---------------- --------------- -------------------- ------ Half-yearly performance The table below provides an analysis of the pro forma results for the 12 months to September 2003 and 2004 split into our new half-years. ----------------- ------------------ ---------------------- ------ Half-year to March Half-year to September Total Â£m Â£m Â£m ----------------- ------------------ ---------------------- ------ Turnover Year to 30 September 2003 91.8 85.9 177.7 Year to 30 September 2004 98.9 91.5 190.4 Adjusted operating profit Year to 30 September 2003 14.3 9.0 23.3 Year to 30 September 2004 12.9 10.7 23.6 ----------------- ------------------ ---------------------- ------ Dividend policy and dividend cover As stated in our Annual Report 2003, the Board's intention is that dividends should be covered at least twice by adjusted earnings per share. The proposed final dividend of 1.5p per share is covered 2.4 times by adjusted earnings per share for the 9 months to September 2004 and 3.9 times by reference to adjusted earnings per share for the 12 months to September 2004. We intend to introduce an interim dividend in 2005. The first such interim dividend would be in respect of the six months to 31 March 2005. Business indicators for year to 30 September 2005 The Board's overall aim is to achieve growth in adjusted earnings per share. As part of that aim, in the new financial year we anticipate spending at least Â£2m on magazine launches; our budget anticipates capital expenditure of up to Â£2m; and we currently estimate an effective tax rate in the region of 20% compared with 20% for the 12 months to 30 September 2004. The estimated likely goodwill amortisation charge for 2005 is Â£17.8m. Summary We have successfully grown the business. Launch and acquisition activity has enhanced earnings and the expanded business is both demonstrably profitable and strongly cash-generative. After spending Â£2.3m on launches and Â£22.4m on acquisitions within the last two years and Â£4m on our first dividend, we still had almost Â£10m of net cash at the period end. The most recent 12 months to September have provided us with expanded dividend cover, and against this strengthened background we have been able to recommend a 20% increase in dividend, consistent with the dividend policy published in March and without restricting our ability to grow further. We are in good shape. Analysis of Group turnover for 12 months to September 2004 The tables below analyse the growth in Group turnover. All turnover was derived from the Group's principal activity of publishing special-interest consumer magazines. ------------- ------- ---------- --------- ---------- % of 2004 2003 Change Group Â£m Â£m % ------------- ------- ---------- --------- ---------- UK 52% 100.4 101.0 Down 1% US 27% 52.0 43.3 Up 20% Mainland Europe 21% 39.9 35.8 Up 11% Intra-group - (1.9) (2.4) - ------------- ------- ---------- --------- ---------- Group turnover 100% 190.4 177.7 Up 7% ------------- ------- ---------- --------- ---------- Analysis of turnover in constant currency ------------- ------- ---------- --------- ---------- % of 2004 2003 Change Group Â£m Â£m % ------------- ------- ---------- --------- ---------- UK 51% 100.9 101.0 - US 29% 58.0 43.3 Up 34% Mainland Europe 20% 39.6 35.8 Up 11% Intra-group - (1.9) (2.4) - ------------- ------- ---------- --------- ---------- Group turnover 100% 196.6 177.7 Up 11% ------------- ------- ---------- --------- ---------- Analysis of turnover by type ------------- ------- ---------- --------- ---------- % of 2004 2003 Change Group Â£m Â£m % ------------- ------- ---------- --------- ---------- Circulation 68% 129.8 122.6 Up 6% Advertising 30% 56.2 51.0 Up 10% Other 2% 4.4 4.1 Up 7% ------------- ------- ---------- --------- ---------- Group turnover 100% 190.4 177.7 Up 7% ------------- ------- ---------- --------- ---------- Analysis of turnover by half-year ------------- ------- ---------- ------- --------- ---------- 12 months to Sept 2004 2003 Change % Â£m % Â£m % ------------- ------- ---------- ------- --------- ---------- First half 52% 98.9 52% 91.8 Up 8% Second half 48% 91.5 48% 85.9 Up 7% ------------- ------- ---------- ------- --------- ---------- Group turnover 100% 190.4 100% 177.7 Up 7% ------------- ------- ---------- ------- --------- ---------- Analysis of turnover by segment ------------------- -------- -------- --------- ---------- Proportion of Group UK US Mainland Group Europe ------------------- -------- -------- --------- ---------- Games 18% 15% 11% 44% Computing 14% 7% 9% 30% Entertainment 20% 5% 1% 26% ------------------- -------- -------- --------- ---------- Total 52% 27% 21% 100% ------------------- -------- -------- --------- ---------- Profitability of each business segment The table below shows the profitability of each business segment (measured at the gross contribution level) as a proportion of turnover for the 12 months to 30 September 2004. ------------------- -------- -------- --------- ------------- Profitability UK US Mainland Profitability (gross contribution Europe of segment as a proportion of turnover) ------------------- -------- -------- --------- ------------- Games 33% 29% 21% 29% Computing 29% 10% 30% 25% Entertainment 27% 21% - 25% ------------------- -------- -------- --------- ------------- Profitability by territory 29% 23% 24% 27% ------------------- -------- -------- --------- ------------- Section 1 - Pro forma financial information for the 12 months to 30 September 2004 and 12 months to 30 September 2003 Pro forma Group profit and loss account for the 12 months to 30 September 2004 ---------------- ---------------- ---------- --------- --------- Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m ---------------- ---------------- ---------- --------- --------- Turnover Continuing operations 17 185.1 177.7 Acquisitions 5.3 - ---------------- ---------------- ---------- --------- --------- 2 190.4 177.7 ---------------- ---------------- ---------- --------- --------- Operating profit /(loss) Continuing operations --------- --------- Operating profit 22.7 23.3 before amortisation of intangible assets Amortisation of 9 (14.7) (11.7) intangible assets --------- --------- 8.0 11.6 Acquisitions --------- --------- Operating profit 17 0.9 - before amortisation of intangible assets Amortisation of 9 (1.9) - intangible assets --------- --------- (1.0) - ---------------- ---------------- ---------- --------- --------- Operating profit 3 7.0 11.6 Profit on disposal of fixed asset investments 0.2 0.1 ---------------- ---------------- ---------- --------- --------- Profit on ordinary activities before interest 7.2 11.7 Net interest receivable and similar items 5 - 0.1 ---------------- ---------------- ---------- --------- --------- Profit on ordinary activities before tax 2 7.2 11.8 Tax on profit on ordinary activities 6 (4.7) (6.7) ---------------- ---------------- ---------- --------- --------- Profit for the year 16 2.5 5.1 ---------------- ---------------- ---------- --------- --------- ---------------- ---------------- ---------- --------- --------- Dividend - December 2003 paid 7 (4.0) - ---------------- ---------------- ---------- --------- --------- Dividend - September 2004 proposed 7 (4.9) - ---------------- ---------------- ---------- --------- --------- Retained (loss)/profit for the year (6.4) 5.1 ---------------- ---------------- ---------- --------- --------- Earnings per 1p Ordinary share ------------------------------- --------- --------- --------- Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 pence pence ------------------------------- --------- --------- --------- Basic earnings per share 8 0.8 1.6 Adjusted basic earnings per share 8 5.9 5.2 Diluted earnings per share 8 0.8 1.6 Adjusted diluted earnings per share 8 5.9 5.2 ------------------------------- --------- --------- --------- Pro forma Group statement of total recognised gains and losses for the 12 months to 30 September 2004 ------------------------------ ------ ---------- ----------- Note Pro forma Pro forma 12 months to 12 months to 30 September 30 September 2004 2003 Â£m Â£m ------------------------------ ------ ---------- ----------- Profit for the year 16 2.5 5.1 Dividend - December 2003 paid 7 (4.0) - Dividend - September 2004 proposed 7 (4.9) - ------------------------------ ------ ---------- ----------- Retained (loss)/profit for the year (6.4) 5.1 Net exchange adjustments offset in reserves 16 - 1.3 Tax on exchange adjustments offset in reserves 16 - (0.2) Release of pre-acquisition loan 16 1.0 - Tax on release of pre-acquisition loan 16 (0.4) - Unwinding of licensing obligation 16 0.1 - ------------------------------ ------ ---------- ----------- Total recognised (loss)/gain relating to the year (5.7) 6.2 ------------------------------ ------ ---------- ----------- Pro forma Group reconciliation of movements in shareholders' funds for the 12 months to 30 September 2004 ------------------------------ ----- ----------- ---------- Note Pro forma 12 Pro forma 12 months to months to 30 30 September September 2003 2004 Â£m Â£m ------------------------------ ------ ----------- ---------- Profit for the year 16 2.5 5.1 Dividend - December 2003 paid 7 (4.0) - Dividend - September 2004 proposed 7 (4.9) - ------------------------------ ------ ----------- ---------- Retained (loss)/profit for the year (6.4) 5.1 Premium on shares issued during the year 16 0.9 0.1 Net exchange adjustments offset in reserves 16 - 1.3 Tax on exchange adjustments offset in reserves 16 - (0.2) Release of pre-acquisitio n loan 16 1.0 - Tax on release of pre-acquisitio n loan 16 (0.4) - Unwinding of licensing obligation 16 0.1 - ------------------------------ ------ ----------- ---------- Net movement in shareholders' funds (4.8) 6.3 Opening equity shareholders' funds 112.5 106.2 ------------------------------ ------ ----------- ---------- Equity shareholders' funds as at 30 September 107.7 112.5 ------------------------------ ------ ----------- ---------- Group balance sheet as at 30 September 2004 ------------------------- ------------- --------- --------- Note 30 September Pro forma 2004 30 September 2003 Â£m Â£m ------------------------- -------------- --------- --------- Fixed assets Intangible assets 9 108.4 115.9 Tangible assets 10 3.5 3.5 ------------------------- -------------- --------- --------- 111.9 119.4 Current assets Stocks 11 5.0 4.2 Debtors 12 39.5 36.0 Investments 13 2.5 9.0 Cash at bank and in hand 12.0 8.6 ------------------------- -------------- --------- --------- 59.0 57.8 Creditors: amounts falling due within one year 14 (62.3) (62.7) ------------------------- -------------- --------- --------- Net current liabilities (3.3) (4.9) ------------------------- -------------- --------- --------- Total assets less current liabilities 108.6 114.5 ------------------------- -------------- --------- --------- Provisions for liabilities and charges 15 (0.9) (2.0) ------------------------- -------------- --------- --------- Net assets 107.7 112.5 ------------------------- -------------- --------- --------- Capital and reserves Called-up share capital 16 3.2 3.2 Share premium account 16 23.7 - Merger reserve 16 109.0 109.0 Other reserves 16 - 21.8 Profit and loss account 16 (28.2) (21.5) ------------------------- -------------- --------- --------- Equity shareholders' funds 107.7 112.5 ------------------------- -------------- --------- --------- Pro forma Group cash flow statement for the 12 months to 30 September 2004 ------------------------------ --------- --------- Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m ------------------------------ --------- --------- Net cash inflow from operating activities 17.7 25.3 ------------------------------ --------- --------- Returns on investments and servicing of finance Interest received 0.6 0.5 Interest paid (0.4) (0.4) ------------------------------ --------- --------- Net cash inflow from returns on investments and servicing of finance 0.2 0.1 ------------------------------ --------- --------- Tax Tax paid (6.6) (7.6) Tax received 0.8 2.0 ------------------------------ --------- --------- Net tax paid (5.8) (5.6) ------------------------------ --------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (1.4) (1.4) Sale of tangible fixed assets - 0.2 Sale of fixed asset investments - 0.1 ------------------------------ --------- --------- Net cash outflow from capital expenditure and financial investment (1.4) (1.1) ------------------------------ --------- --------- Acquisitions and disposals Purchase of subsidiary undertakings (3.3) (3.7) Net cash acquired with subsidiary undertakings - 0.5 Disposal of subsidiary undertakings 0.2 - Purchase of magazine titles (5.6) (10.2) Purchase of subscription lists - (0.1) Payment of deferred consideration (0.7) (0.7) ------------------------------ --------- --------- Net cash outflow for acquisitions and disposals (9.4) (14.2) ------------------------------ --------- --------- Dividends Equity dividends paid (4.0) - ------------------------------ --------- --------- Net cash outflow from payment of dividends (4.0) - ------------------------------ --------- --------- Management of liquid resources Decrease/(incr ease) in short-term deposits with bank 6.5 (9.0) ------------------------------ --------- --------- Net cash inflow/(outflo w) in management of liquid resources 6.5 (9.0) ------------------------------ --------- --------- Net cash inflow/(outflo w) before financing 3.8 (4.5) ------------------------------ --------- --------- Financing Proceeds from issue of Ordinary share capital 0.9 0.1 Draw down of bank loans - 5.7 Movement in other loan (0.5) (0.1) Repayment of bank loans (0.3) - ------------------------------ --------- --------- Net cash inflow from financing 0.1 5.7 ------------------------------ --------- --------- Increase in cash in the year 3.9 1.2 ------------------------------ --------- --------- Notes to the pro forma Group cash flow statement for the 12 months to 30 September 2004 A. Cash flow from operating activities The reconciliation of operating profit to net cash inflow from operating activities is as follows: ---------------------------------- ----------- ---------- Pro forma Pro forma 12 months to 12 months to 30 September 2003 30 September Â£m 2004 Â£m ---------------------------------- ----------- ---------- Operating profit 7.0 11.6 Depreciation charge 1.5 1.2 Amortisation of intangible assets 16.6 11.7 Movement in provisions (1.2) (2.2) (Increase)/decrease in stocks (1.4) 1.0 (Increase)/decrease in debtors (1.6) 2.6 Decrease in creditors (3.2) (0.6) ---------------------------------- ----------- ---------- Net cash inflow from operating activities 17.7 25.3 ---------------------------------- ----------- ---------- B. Analysis of net cash ------------- -------- ----------- -------- --------- ------------- Cash flow Other non- Exchange At 30 September At 1 cash movements 2004 October changes 2003 Â£m Â£m Â£m Â£m Â£m ------------- -------- ----------- -------- --------- ------------- Cash at bank and in hand 8.6 3.9 - (0.5) 12.0 Debt due within one year (7.2) 0.8 1.0 0.7 (4.7) Liquid resources 9.0 (6.5) - - 2.5 ------------- -------- ----------- -------- --------- ------------- Net cash 10.4 (1.8) 1.0 0.2 9.8 ------------- -------- ----------- -------- --------- ------------- Other non-cash changes relate to the release of a pre-acquisition loan (see note 16). C. Reconciliation of movement in net cash ------------------------------------ --------- --------- Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m ------------------------------------ --------- --------- Net cash at 1 October 10.4 4.9 Increase/(decr ease) in cash 3.9 (4.5) Movement in deposits (6.5) 9.0 Movement in borrowings 0.8 (0.1) Non-cash movements (note 16) 1.0 - Exchange movements 0.2 1.1 ------------------------------------ --------- --------- Net cash at 30 September 9.8 10.4 ------------------------------------ --------- --------- Notes to the pro forma financial information 1. Basis of preparation of pro forma financial information In order to assist readers following the change of financial year end, pro forma financial information has been prepared for the 12 months to 30 September 2004 and 2003. These results are unaudited and do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. 2. Segmental reporting The Group is involved in one class of business, the publication of magazines. The analysis of turnover by type, geographical analyses of turnover and profit before tax were as follows: a) Turnover by type --------------------- ----------- ------------ Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m --------------------- ----------- ------------ Circulation 129.8 122.6 Advertising 56.2 51.0 Other 4.4 4.1 --------------------- ----------- ------------ Total 190.4 177.7 --------------------- ----------- ------------ b) Turnover by origin --------------------- ----------- ------------ Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m --------------------- ----------- ------------ United Kingdom 100.4 101.0 United States 52.0 43.3 Mainland Europe 39.9 35.8 Turnover between segments (1.9) (2.4) --------------------- ----------- ------------ Total 190.4 177.7 --------------------- ----------- ------------ c) Turnover by destination --------------------- ----------- ----------- Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m --------------------- ----------- ----------- United Kingdom 83.5 84.9 United States 53.6 45.9 Mainland Europe 46.0 43.2 Rest of the world 9.2 6.1 Turnover between segments (1.9) (2.4) --------------------- ----------- ----------- Total 190.4 177.7 --------------------- ----------- ----------- d) Profit on ordinary activities before tax by origin ------------------------------ ----------- ------------ Pro forma Pro forma 12 months to 30 12 months to September 2004 30 September 2003 Â£m Â£m ------------------------------ ----------- ------------ United Kingdom 11.4 12.5 United States 0.4 5.1 Mainland Europe (1.7) (2.8) Central costs (2.9) (3.0) ------------------------------ ----------- ------------ Total 7.2 11.8 ------------------------------ ----------- ------------ 3. Operating profit ----------------- ----------- ------------ Pro forma Pro forma 12 months to 30 12 months to 30 September 2004 September 2003 Â£m Â£m ----------------- ----------- ------------ Turnover 190.4 177.7 Cost of sales (126.3) (115.0) ----------------- ----------- ------------ Gross profit 64.1 62.7 Distribution costs (13.1) (10.7) ----------- ------------ Administration expenses (27.4) (29.0) Amortisation of intangible assets (16.6) (11.4) ----------- ------------ Total administration expenses (44.0) (40.4) ----------------- ----------- ------------ Operating profit 7.0 11.6 ----------------- ----------- ------------ 4. Employees and Directors -------------------------------- ----------- ----------- Staff costs Pro forma 12 Pro forma 12 months to 30 months to 30 September 2004 September 2003 Â£m Â£m -------------------------------- ----------- ----------- Wages and salaries 32.8 31.9 Social security costs 5.6 4.6 Other pension costs 0.7 0.6 -------------------------------- ----------- ----------- Total 39.1 37.1 -------------------------------- ----------- ----------- 5. Net interest receivable and similar items ------------------------------- ---------- ---------- Pro forma 12 Pro forma 12 months to 30 months to 30 September 2004 September 2003 Â£m Â£m ------------------------------- ---------- ---------- Interest receivable 0.6 0.5 Exchange (losses)/gains (0.2) 0.2 ------------------------------- ---------- ---------- Total interest receivable and similar items 0.4 0.7 ------------------------------- ---------- ---------- Interest payable on bank loans and overdrafts (0.3) (0.3) Other interest payable (0.1) (0.1) Amortisation of discount relating to property provisions - (0.1) Amortisation of discount arising on fair valuing of deferred consideration - (0.1) ------------------------------- ---------- ---------- Total interest payable and similar charges (0.4) (0.6) ------------------------------- ---------- ---------- Net interest receivable and similar items - 0.1 ------------------------------- ---------- ---------- 6. Tax on profit on ordinary activities The tax charges for the 12 months to 30 September 2004 and 12 months to 30 September 2003 are calculated using the weighted average effective rates for each 12 month period, derived from the Company's financial statements for the years 2002 and 2003, and the 9 months to 30 September 2004. 7. Dividends ------------------------------- ----------- ---------- Equity dividends September 2004 December 2003 ------------------------------- ----------- ---------- Number of shares in issue at end of period (million) 324.5 320.7 Final dividend proposed/paid (pence per share) 1.5 1.25 ------------------------------- ----------- ---------- Dividend proposed/paid (Â£million) 4.9 4.0 ------------------------------- ----------- ---------- The final dividend of 1.25p was the Company's first dividend, announced on 10 March 2004. The final dividend of 1.5p is the Company's second dividend, announced on 7 December 2004. No interim dividend has been paid in either 2003 or 2004. 8. Earnings per share Basic earnings per share are calculated using the weighted average number of Ordinary shares outstanding during the year. Diluted earnings per share have been calculated by taking into account the dilutive effect of Ordinary shares that would be issued on conversion into Ordinary shares of options held under employee share schemes. The adjusted earnings per share removes the effect of the amortisation of intangible assets from the calculation as follows: Adjustments to profit on ordinary activities after tax ------------------------------- ----------- ---------- Pro forma 12 Pro forma 12 months to 30 months to 30 September 2004 September 2003 Â£m Â£m ------------------------------- ----------- ---------- Profit on ordinary activities after tax 2.5 5.1 Add: amortisation of intangible assets 16.6 11.7 ------------------------------- ----------- ---------- Adjusted profit on ordinary activities after tax 19.1 16.8 ------------------------------- ----------- ---------- 2004 2003 --------------------------------- --------- --------- Weighted average number of shares outstanding during the period: - basic 323,215,690 321,247,818 - dilutive effect of share options 886,179 1,991,072 - diluted 324,101,869 323,238,890 Basic earnings per share (in pence) 0.8 1.6 Adjusted basic earnings per share (in pence) 5.9 5.2 Diluted earnings per share (in pence) 0.8 1.6 Adjusted diluted earnings per share (in pence) 5.9 5.2 --------------------------------- --------- --------- The adjustments to profit have the following effect: --------------------------------- --------- --------- 2004 2003 pence pence --------------------------------- --------- --------- Basic earnings per share 0.8 1.6 Amortisation of intangible assets 5.1 3.6 --------- --------- Adjusted basic earnings per share 5.9 5.2 --------- --------- Diluted earnings per share 0.8 1.6 Amortisation of intangible assets 5.1 3.6 --------- --------- Adjusted diluted earnings per share 5.9 5.2 --------------------------------- --------- --------- 9. Intangible fixed assets --------------------------------------- ----------- Pro forma Goodwill Group Â£m --------------------------------------- ----------- Cost At 1 October 2003 316.1 Additions 10.1 Adjustments to fair value on prior year acquisitions 0.1 Exchange adjustments (1.5) --------------------------------------- ----------- At 30 September 2004 324.8 --------------------------------------- ----------- --------------------------------------- ----------- Amortisation At 1 October 2003 (200.2) Charge for the year (16.6) Exchange adjustments 0.4 --------------------------------------- ----------- At 30 September 2004 (216.4) --------------------------------------- ----------- Net book value at 30 September 2004 108.4 --------------------------------------- ----------- Net book value at 30 September 2003 115.9 --------------------------------------- ----------- 10. Tangible fixed assets -------------- ---------- ---------- ---------- ---------- Pro forma Land and Plant and Equipment, Total buildings machinery fixtures and fittings Group Â£m Â£m Â£m Â£m -------------- ---------- ---------- ---------- ---------- Cost At 1 October 2003 1.9 5.7 2.9 10.5 Reclassificati on 0.4 1.1 (1.5) - Additions 0.1 1.0 0.3 1.4 Disposals (0.1) (0.9) (0.4) (1.4) Exchange adjustments 0.1 (0.1) - - -------------- ---------- ---------- ---------- ---------- At 30 September 2004 2.4 6.8 1.3 10.5 -------------- ---------- ---------- ---------- ---------- Depreciation At 1 October 2003 (0.6) (4.2) (2.2) (7.0) Reclassification (0.1) (0.7) 0.8 - Charge for the year (0.2) (1.2) (0.1) (1.5) Disposals 0.1 0.9 0.4 1.4 Exchange adjustments - - 0.1 0.1 -------------- ---------- ---------- --------- ---------- At 30 September 2004 (0.8) (5.2) (1.0) (7.0) -------------- ---------- ---------- ---------- ---------- Net book value at 30 September 2004 1.6 1.6 0.3 3.5 -------------- ---------- ---------- ---------- ---------- Net book value at 30 September 2003 1.3 1.5 0.7 3.5 -------------- ---------- ---------- ---------- ---------- 11. Stocks ------------------------------ ----------- ----------- 30 September Pro forma 30 ------------------------------ ----------- September ----------- 2004 2003 Â£m Â£m ------------------------------ ----------- ----------- Raw materials 1.6 1.5 Work in progress 2.8 2.2 Finished goods 0.6 0.5 ------------------------------ ----------- ----------- Total 5.0 4.2 ------------------------------ ----------- ----------- 12. Debtors --------------------- ---------- --------- 30 September Pro forma 30 --------------------- ---------- September --------- 2004 2003 Â£m Â£m --------------------- ---------- --------- Amounts falling due within one year: Trade debtors 31.0 27.2 Corporation tax recoverable 2.0 1.0 Other debtors 2.9 2.5 Prepayments and accrued income 2.7 4.4 --------------------- ---------- --------- 38.6 35.1 Amounts falling due after more than one year: Other debtors 0.9 0.9 --------------------- ---------- --------- Total 39.5 36.0 --------------------- ---------- --------- Deferred tax At 30 September 2004 a deferred tax asset has been recognised within other debtors as follows: ------------------------------ ---------- ---------- 30 September Pro forma 30 September 2004 2003 Â£m Â£m ------------------------------ ---------- ---------- Amounts falling due within one year 0.9 0.4 Amounts falling due after more than one year 0.9 0.9 -------------------------------- ---------- ---------- 13. Current asset investments --------------------- ---------- --------- 30 September Pro forma 30 --------------------- September --------- --------- 2004 2003 Â£m Â£m --------------------- ---------- --------- Short-term bank accounts 2.5 9.0 --------------------- ---------- --------- Total 2.5 9.0 --------------------- ---------- --------- 14. Creditors: amounts falling due within one year --------------------- ---------- --------- 30 September Pro forma 30 --------------------- ---------- September --------- 2004 2003 Â£m Â£m --------------------- ---------- --------- Bank and other borrowings 4.7 5.4 Trade creditors 16.5 16.5 Corporation tax 2.1 3.6 Other creditors including taxation and social security 9.3 9.0 Accruals and deferred income 24.7 27.5 Proposed dividend 4.9 - Deferred consideration for acquisitions 0.1 0.7 --------------------- ---------- --------- Total 62.3 62.7 --------------------- ---------- --------- 15. Provisions for liabilities and charges ------------------ ----------- ------------- ----------- Property and Restructuring Pro forma dilapidations Â£m Â£m Total Â£m ------------------ ----------- ------------- ----------- At 1 October 2003 1.6 0.4 2.0 Adjustments to fair value on prior year acquisitions - 0.1 0.1 Charge in the year 0.1 - 0.1 Utilised in year (0.8) (0.5) (1.3) ------------------ ----------- ------------- ----------- At 30 September 2004 0.9 - 0.9 ------------------ ----------- ------------- ----------- 16. Capital and reserves Called up share Share premium Merger reserve Other reserves Profit & loss Pro forma Total capital account account Â£m Â£m Â£m Â£m Â£m Â£m -------------- -------- -------- -------- -------- -------- --------- At 1 October 2003 3.2 - 109.0 21.8 (21.5) 112.5 Premium on exercise of share options - 0.9 - - - 0.9 Release of pre-acquisitio n loan - - - 1.0 - 1.0 Tax on release of pre-acquisitio n loan - - - - (0.4) (0.4) Transfer of premium on share options exercised - 22.8 - (22.8) - - Unwinding of licensing obligation - - - - 0.1 0.1 Profit for the year - - - - 2.5 2.5 Dividends - - - - (8.9) (8.9) -------------- -------- -------- -------- -------- -------- --------- At 30 September 2004 3.2 23.7 109.0 - (28.2) 107.7 -------------- -------- -------- -------- -------- -------- --------- During the period a pre-acquisition loan has been released to the other reserves in accordance with the 1999 US acquisition agreement. In addition there has been a transfer of Â£22.8m from other reserves to the share premium account. This amount represents the premium on shares issued pursuant to the exercise of share options granted as part of the consideration for the 1999 acquisition of the US business. All such options have now been fully exercised and accordingly, the total premium has been transferred to the share premium account. 17. Acquisitions The results for the 12 months to 30 September 2004 include the undernoted contribution from acquisitions made in the period: Guitar One Computec UK Spanish Homes PC Zone/CVG Other Total Â£m Â£m Â£m Â£m Â£m Â£m --------------- -------- --------- ---------- ---------- ------ ------ Date acquired 31.10.03 21.11.03 02.08.04 23.08.04 - --------------- -------- --------- ---------- ---------- ------ ------ Turnover 2.3 2.8 0.1 0.1 - 5.3 --------------- -------- --------- ---------- ---------- ------ ------ Adjusted operating profit 0.1 0.7 0.1 - - 0.9 Amortisation of intangible assets (0.5) (1.0) (0.1) (0.1) (0.2) (1.9) --------------- -------- --------- ---------- ---------- ------ ------ Operating loss (0.4) (0.3) - (0.1) (0.2) (1.0) --------------- -------- --------- ---------- ---------- ------ ------ The aggregate provisional fair values of the net assets acquired at the dates of these acquisitions are shown below: Liabilities acquired Book value Revaluations Fair value Â£m Â£m Â£m ---------------------- -------------- --------- ----------- Tangible fixed assets 0.1 (0.1) - Debtors 0.7 - 0.7 Other creditors (1.5) - (1.5) ---------------------- -------------- --------- ----------- Net liabilities acquired (0.7) (0.1) (0.8) ---------------------- -------------- --------- ----------- Goodwill 10.1 ---------------------- -------------- --------- ----------- Consideration 9.3 ---------------------- -------------- --------- ----------- Consideration satisfied by: Cash 8.6 Licensing obligation 0.3 Deferred consideration 0.1 Associated costs 0.3 ---------------------- -------------- --------- ----------- Total consideration 9.3 ---------------------- -------------- --------- ----------- Notes: 1. The fair value adjustments represent the revaluation of fixed assets to reflect the market value of assets acquired at the date of acquisition. 2. Licensing obligation - under the acquisition agreement of Computec UK, a subsidiary company of the Group will provide licensing and syndication rights for a 5 year period to Computec UK's former parent company, Computec AG. The value of this obligation has been fair valued with reference to the Group's existing licensing contracts and discounted at a rate equivalent to the Group's cost of capital. 3. The deferred consideration of Â£0.1m relates to the purchase of Spanish Homes Magazine and will be paid in the first half of 2005. During the last two years the Group has spent Â£22.4m on acquisitions. In the 12 months to September 2003 the results for the acquired businesses were as follows: HDP Guitar World Guitar One Computec UK Spanish Homes PC Zone/CVG Other Total Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m --------- ------- ------- -------- -------- ------- -------- ------ ------ Country France US US UK UK UK Date 28.04.03 10.09.03 31.10.03 21.11.03 02.08.04 23.08.04 - acquired ------- ------- -------- -------- ------- -------- ------ ------ --------- Turnover 2.8 - - - - - - 2.8 Adjusted operating profit (0.2) - - - - - - (0.2) Amortisation of intangible (1.0) (0.1) - - - - - (1.1) assets ------- ------- -------- -------- ------- -------- ------ ------ --------- Operating (1.2) (0.1) - - - - - (1.3) loss ------- ------- -------- -------- ------- -------- ------ ------ --------- In the 12 months to 30 September 2004 acquisitions contributed as follows: HDP Guitar World Guitar One Computec UK Spanish Homes PC Zone/CVG Other Total Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m --------- ------- ------- -------- -------- ------- -------- ------ ------ Country France US US UK UK UK Date 28.04.03 10.09.03 31.10.03 21.11.03 02.08.04 23.08.04 - acquired ------- ------- -------- -------- ------- -------- ------ ------ --------- Turnover 7.8 7.7 2.3 2.8 0.1 0.1 - 20.8 Adjusted operating profit 0.9 0.6 0.1 0.7 0.1 - - 2.4 Amortisation of intangible (2.4) (2.0) (0.5) (1.0) (0.1) (0.1) (0.2) (6.3) assets ------- ------- -------- -------- ------- -------- ------ ------ --------- Operating (1.5) (1.4) (0.4) (0.3) - (0.1) (0.2) (3.9) loss ------- ------- -------- -------- ------- -------- ------ ------ --------- In total, over the last two years, the results include the undernoted contribution from acquisitions: HDP Guitar World Guitar One Computec UK Spanish Homes PC Zone/CVG Other Total Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m --------- ------- ------- -------- -------- ------- -------- ------ ------ Country France US US UK UK UK Date 28.04.03 10.09.03 31.10.03 21.11.03 02.08.04 23.08.04 - acquired ------- ------- -------- -------- ------- -------- ------ ------ --------- Turnover 10.6 7.7 2.3 2.8 0.1 0.1 - 23.6 Adjusted operating profit 0.7 0.6 0.1 0.7 0.1 - - 2.2 Amortisation of intangible (3.4) (2.1) (0.5) (1.0) (0.1) (0.1) (0.2) (7.4) assets Operating (2.7) (1.5) (0.4) (0.3) - (0.1) (0.2) (5.2) loss ------- ------- -------- -------- ------- -------- ------ ------ --------- 18. Post balance sheet events On 30 November 2004 the Group's UK subsidiary Future Publishing Limited acquired the title and goodwill of What Laptop for Â£0.65m in cash. For the year ended 30 September 2004 turnover was Â£0.8m and the profit attributable to those assets was Â£0.2m. On 3 December 2004 Future Publishing Limited also acquired the entire issued share capital of Beach Magazines and Publishing Limited (Beach) for an initial cash consideration of Â£1.5m and a further Â£1.5m deferred for one year, subject to the business meeting certain revenue targets. Beach publishes three titles, Wedding Day, Junior and Junior Pregnancy & Baby. For the 12 months ended 31 December 2003 turnover for Beach was Â£3.1m and operating profit was Â£0.2m. This information is provided by RNS The company news service from the London Stock Exchange

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