Final Results - PART 2

Future Network PLC 07 December 2004 Section 2 - Financial statements for the 9 months ended 30 September 2004 Group profit and loss account for the nine months ended 30 September 2004 --------------- ---------------- ---------- --------- --------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Note Â£m Â£m --------------- --------------- ---------- --------- ---------- Turnover Continuing operations 132.8 182.7 Acquisitions 20 0.2 - --------------- --------------- ---------- --------- ---------- 1 133.0 182.7 --------------- --------------- ---------- --------- ---------- Operating profit/(loss) Continuing operations --------- ---------- Operating profit 13.0 22.5 before amortisation of intangible assets Amortisation of 9 (12.5) (13.0) intangible assets --------- ---------- 0.5 9.5 Acquisitions --------- ---------- Operating profit 20 0.1 - before amortisation of intangible assets Amortisation of 9 (0.2) - intangible assets --------- ---------- (0.1) - --------------- --------------- ---------- --------- ---------- Operating profit 2 0.4 9.5 Profit on disposal of fixed asset investments 0.2 0.1 --------------- --------------- ---------- --------- ---------- Profit on ordinary activities before interest 0.6 9.6 Net interest receivable and similar items 5 - 0.1 --------------- --------------- ---------- --------- ---------- Profit on ordinary activities before tax 2 0.6 9.7 Tax on profit on ordinary activities 6 (1.3) (7.0) --------------- --------------- ---------- --------- ---------- (Loss)/profit for the financial period 18 (0.7) 2.7 --------------- --------------- ---------- --------- ---------- --------------- --------------- ---------- --------- ---------- Dividend proposed 7 (4.9) (4.0) --------------- --------------- ---------- --------- ---------- Retained loss for the financial period (5.6) (1.3) --------------- --------------- ---------- --------- ---------- Earnings per 1p Ordinary share ------------------------------ ---------- --------- --------- Note 2004 2003 pence pence ------------------------------ ---------- --------- --------- Basic (loss)/earnings per share 8 (0.2) 0.8 Adjusted basic earnings per share 8 3.7 4.9 Diluted (loss)/earnings per share 8 (0.2) 0.8 Adjusted diluted earnings per share 8 3.7 4.8 ------------------------------ ---------- --------- --------- Group statement of total recognised gains and losses for the nine months ended 30 September 2004 ------------------------------------ ----- -------- ------- Note 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- ------ --------- ---------- (Loss)/profit for the financial period 18 (0.7) 2.7 Dividend proposed 7 (4.9) (4.0) -------------------------------- ------ --------- ---------- Retained loss for the financial period (5.6) (1.3) Net exchange adjustments offset in reserves - 0.8 Tax on exchange adjustments offset in reserves - 0.1 Release of pre-acquisitio n loan 19 1.0 - Tax on release of pre-acquisitio n loan 18 (0.4) - Unwinding of licensing obligation 18 0.1 - -------------------------------- ------ --------- ---------- Total recognised loss relating to the period (4.9) (0.4) -------------------------------- ------ --------- ---------- Group reconciliation of movements in shareholders' funds for the nine months ended 30 September 2004 ------------------------------------ ----- -------- ------- Note 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- ------ --------- ---------- (Loss)/profit for the financial period 18 (0.7) 2.7 Dividend proposed 7 (4.9) (4.0) -------------------------------- ------ --------- ---------- Retained loss for the financial period (5.6) (1.3) Premium on shares issued during the period 0.7 0.3 Net exchange adjustments offset in reserves - 0.8 Tax on exchange adjustments offset in reserves - 0.1 Release of pre-acquisitio n loan 18 1.0 - Tax on release of pre-acquisitio n loan 18 (0.4) - Unwinding of licensing obligation 18 0.1 - -------------------------------- ------ --------- ---------- Net movement in shareholders' funds (4.2) (0.1) Opening equity shareholders' funds 111.9 112.0 -------------------------------- ------ --------- ---------- Closing equity shareholders' funds 107.7 111.9 -------------------------------- ------ --------- ---------- Group balance sheet as at 30 September 2004 ------------------------- ------------- ---------- --------- Note 30 September 31 December 2004 2003 Â£m Â£m ------------------------- ------------- ---------- --------- Fixed assets Intangible assets 9 108.4 117.3 Tangible assets 10 3.5 3.3 ------------------------- ------------- ---------- --------- 111.9 120.6 Current assets Stocks 12 5.0 3.5 Debtors 13 39.5 42.4 Investments 11 2.5 8.8 Cash at bank and in hand 12.0 11.3 ------------------------- ------------- ---------- --------- 59.0 66.0 Creditors: amounts falling due within one year 14 (62.3) (73.0) ------------------------- ------------- ---------- --------- Net current liabilities (3.3) (7.0) ------------------------- ------------- ---------- --------- Total assets less current liabilities 108.6 113.6 ------------------------- ------------- ---------- --------- Provisions for liabilities and 15 (0.9) (1.7) charges ------------- ---------- --------- ------------------------- Net assets 107.7 111.9 ------------------------- ------------- ---------- --------- Capital and reserves Called-up share capital 16 3.2 3.2 Share premium account 17 23.7 0.2 Merger reserve 19 109.0 109.0 Other reserves 19 - 21.8 Profit and loss account 18 (28.2) (22.3) ------------------------- ------------- ---------- --------- Equity shareholders' funds 107.7 111.9 ------------------------- ------------- ---------- --------- Group cash flow statement for the nine months ended 30 September 2004 ------------------------------- ---------- ---------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ------------------------------- ---------- ---------- Net cash inflow from operating activities 7.4 22.6 ------------------------------- ---------- ---------- Returns on investments and servicing of finance Interest received 0.5 0.6 Interest paid (0.4) (0.4) ------------------------------- ---------- ---------- Net cash inflow from returns on investments and servicing of finance 0.1 0.2 ------------------------------- ---------- ---------- Tax Tax paid (4.0) (8.2) Tax received 0.7 1.5 ------------------------------- ---------- ---------- Net tax paid (3.3) (6.7) ------------------------------- ---------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (1.1) (1.4) Sale of fixed asset investments - 0.1 ------------------------------- ---------- ---------- Net cash outflow from capital expenditure and financial investment (1.1) (1.3) ------------------------------- ---------- ---------- Acquisitions and disposals Purchase of subsidiary undertakings - (7.0) Net cash acquired with subsidiary undertakings - 0.5 Disposal of subsidiary undertaking 0.2 - Purchase of magazine titles (4.0) (11.8) Purchase of subscription lists - (0.1) Payment of deferred consideration (0.7) (0.7) ------------------------------- ---------- ---------- Net cash outflow for acquisitions and disposals (4.5) (19.1) ------------------------------- ---------- ---------- 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 6.3 (2.6) ------------------------------- ---------- ---------- Net cash inflow/(outflo w) in management of liquid resources 6.3 (2.6) ------------------------------- ---------- ---------- Net cash inflow/(outflo w) before financing 0.9 (6.9) ------------------------------- ---------- ---------- Financing Proceeds from issue of Ordinary share capital 0.7 0.3 Draw down of bank loans - 6.3 Movement in other loan (0.5) (0.1) Repayment of bank loans (0.3) (0.6) ------------------------------- ---------- ---------- Net cash (outflow)/infl ow from financing (0.1) 5.9 ------------------------------- ---------- ---------- Increase/(decr ease) in cash in the period 0.8 (1.0) ------------------------------- ---------- ---------- Notes to the Group cash flow statement for the nine months ended 30 September 2004 A. Cash flow from operating activities The reconciliation of operating profit to net cash inflow from operating activities is as follows: ----------------------------------- ---------- ---------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ----------------------------------- ---------- ---------- Operating profit 0.4 9.5 Depreciation charge 0.9 1.4 Amortisation of intangible assets 12.7 13.0 Movement in provisions (0.9) (1.7) (Increase)/dec rease in stocks (1.5) 0.2 Decrease/(incr ease) in debtors 3.3 (7.5) (Decrease)/inc rease in creditors (7.5) 7.7 ----------------------------------- ---------- ---------- Net cash inflow from operating activities 7.4 22.6 ----------------------------------- ---------- ---------- B. Analysis of net cash ------------- -------- ----------- -------- --------- ------------- At 1 January Cash flow Other non-cash Exchange At 30 September changes movements 2004 2004 Â£m Â£m Â£m Â£m Â£m ------------- -------- ----------- -------- --------- ------------- Cash at bank and in hand 11.3 0.8 - (0.1) 12.0 Debt due within one year (6.7) 0.9 1.0 0.1 (4.7) Liquid resources 8.8 (6.3) - - 2.5 ------------- -------- ----------- -------- --------- ------------- Net cash 13.4 (4.6) 1.0 - 9.8 ------------- -------- ----------- -------- --------- ------------- Other non-cash changes relate to the release of a pre-acquisition loan (see note 19). C. Reconciliation of movement in net cash -------------------------------- ----------- ----------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- ----------- ----------- Net cash at 1 January 13.4 16.8 Increase/(decr ease) in cash 0.8 (1.0) Movement in deposits (6.3) 2.6 Movement in borrowings 0.9 (5.6) Non-cash movements (see note 19) 1.0 - Exchange movements - 0.6 -------------------------------- ----------- ----------- Net cash at end of period 9.8 13.4 -------------------------------- ----------- ----------- Notes to the financial statements Basis of preparation of accounts This preliminary statement of annual results for the nine months ended 30 September 2004 is unaudited and does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. Accounting policies The Group's accounting policies used in the preparation of this preliminary statement of results are consistent with those detailed in the Group's Annual Report for the year ended 31 December 2003. 1. 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, profit before tax, and net assets by origin were as follows: a) Turnover by type ----------------------------- ----------- ----------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ----------------------------- ----------- ----------- Circulation 92.4 125.5 Advertising 37.4 53.0 Other 3.2 4.2 ----------------------------- ----------- ----------- Total 133.0 182.7 ----------------------------- ----------- ----------- b) Turnover by origin ----------------------------- ----------- ----------- 9 months ended 12 months ended 31 December 30 September 2003 2004 Â£m Â£m ----------------------------- ----------- ----------- United Kingdom 70.5 100.3 United States 36.0 46.2 Mainland Europe 27.5 38.6 Turnover between segments (1.0) (2.4) ----------------------------- ----------- ----------- Total 133.0 182.7 ----------------------------- ----------- ----------- c) Turnover by destination ----------------------------- ----------- ----------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ----------------------------- ----------- ----------- United Kingdom 59.0 83.5 United States 37.6 47.5 Mainland Europe 31.9 44.9 Rest of the world 5.5 9.2 Turnover between segments (1.0) (2.4) ----------------------------- ----------- ---------- Total 133.0 182.7 ----------------------------- ----------- ---------- d) Profit on ordinary activities before tax by origin ------------------------------- ----------- ----------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ------------------------------- ----------- ----------- United Kingdom 5.3 12.4 United States (1.5) 4.1 Mainland Europe (1.4) (3.3) Central costs (1.8) (3.5) ------------------------------- ----------- ----------- Total 0.6 9.7 ------------------------------- ----------- ----------- e) Net assets by origin ------------------------------- ----------- ----------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ------------------------------- ----------- ----------- United Kingdom 85.4 86.3 United States 18.8 20.7 Mainland Europe 8.2 11.6 Interest-bearing liabilities (4.7) (6.7) ------------------------------- ----------- ----------- Total 107.7 111.9 ------------------------------- ----------- ----------- 2. Operating profit 9 months ended 12 months ended ------------------------------- 30 September 31 December 2004 2003 ----------- ----------- Turnover 133.0 182.7 Cost of sales (89.2) (116.0) ------------------------------- ----------- ----------- Gross profit 43.8 66.7 Distribution costs (9.9) (12.0) ----------- ----------- Administration expenses (20.8) (32.2) Amortisation of intangible assets (12.7) (13.0) ----------- ----------- Total administration expenses (33.5) (45.2) ------------------------------- ----------- ----------- Operating profit 0.4 9.5 ------------------------------- ----------- ----------- -------------------------------- ----------- ---------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- ----------- ---------- Profit on ordinary activities before tax is stated after charging/(crediting): Staff costs (note 4) 29.7 37.2 Depreciation of owned assets (note 10) 0.9 1.4 Amortisation of intangible assets (note 9) 12.7 13.0 Hire of machinery and equipment 0.2 0.3 Other operating lease rentals 2.9 3.4 Profit on disposal of subsidiary 0.2 - Net exchange loss/(gain) on foreign currency borrowings less deposits 0.3 (0.1) -------------------------------- ----------- ---------- 3. Fees paid to auditors ---------------------------------- --------- -------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- --------- ---------- Audit services - statutory audit 0.2 0.2 - other audit and related regulatory reporting 0.1 0.2 -------------------------------- --------- ---------- Total audit services 0.3 0.4 Further assurance services - due diligence 0.1 0.1 Tax services - compliance services 0.1 0.1 - advisory services 0.1 0.2 -------------------------------- --------- ---------- Total 0.6 0.8 -------------------------------- --------- ---------- 4. Employees and Directors ---------------------------------- --------- -------- Staff costs 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m -------------------------------- --------- ---------- Wages and salaries 24.9 31.2 Social security costs 4.3 5.3 Other pension costs 0.5 0.7 -------------------------------- --------- ---------- Total 29.7 37.2 -------------------------------- --------- ---------- Average monthly number of people (including executive Directors) --------- ---------- -------------------------------- Production 784 682 Administration 274 326 -------------------------------- --------- ---------- Total 1,058 1,008 -------------------------------- --------- ---------- At 30 September 2004 the actual number of people employed by the Group was 1,120 (31 December 2003: 1,033). 5. Net interest receivable and similar items --------------------------------- --------- --------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m --------------------------------- --------- --------- Interest receivable 0.5 0.6 Exchange (losses)/gains (0.3) 0.1 --------------------------------- --------- --------- Total interest receivable and similar items 0.2 0.7 --------------------------------- --------- --------- Interest payable on bank loans and overdrafts (0.2) (0.2) Other interest payable - (0.2) 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 (0.2) (0.6) --------------------------------- --------- --------- Net interest receivable and similar items - 0.1 --------------------------------- --------- --------- 6. Tax on profit on ordinary activities (a) Analysis of tax charge in the period --------------------------------- --------- --------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m --------------------------------- --------- --------- UK corporation tax at 30% (2003: 30%) on profits for the period 2.1 3.9 Adjustments in respect of previous years (0.4) 0.3 --------- --------- 1.7 4.2 Overseas taxes 0.7 3.3 Adjustments in respect of previous years (0.6) (0.8) --------- --------- Total current tax 1.8 6.7 Deferred tax origination and reversal of timing differences - Current period charge/(credit ) (0.5) 0.7 - Prior year (credit)/charg e - (0.4) --------------------------------- --------- --------- Tax on profit on ordinary activities 1.3 7.0 --------------------------------- --------- --------- (b) Factors affecting the tax charge for the period The tax assessed in each period differs from the standard rate of corporation tax in the UK for the relevant period. The differences are explained below: ----------------------------------- -------- ------- 9 months ended 12 months ended 30 September 31 December 2004 2003 Â£m Â£m ----------------------------------- -------- ------- Profit on ordinary activities before tax 0.6 9.7 Profit on ordinary activities at the standard UK tax rate of 30% 0.2 2.9 Different tax rate applicable overseas 0.1 0.6 Expenses not deductible for tax purposes - 0.1 Goodwill amortisation and impairment not deductible for tax purposes 2.5 2.9 Timing differences relating to goodwill amortisation deductible 0.5 0.1 Overseas losses generated 0.5 0.8 Capital allowances in excess of depreciation (0.1) (0.2) Other timing differences - - Utilisation of brought forward losses (0.9) - Impact of adjustment to prior year current tax (1.0) (0.5) ----------------------------------- -------- ------- Current tax charge for the period 1.8 6.7 ----------------------------------- -------- ------- (c) Factors that may affect future tax charges The main factors that will impact future tax charges for the Group are: i) The relative profitability and the differential in tax rates between the UK and the US, the two main territories in which the Group currently pays tax; ii) The profitability of Mainland Europe where there are significant unrecognised tax losses; and iii) The timing of any successful resolution of certain steps that the Group has taken to obtain value from historical tax losses. 7. Dividends --------- Equity dividends 9 months ended 12 months ended --------------------------------- 30 September 31 December 2004 2003 --------- --------- Number of shares in issue at 30 September 2004 (million) 324.5 322.5 Final dividend proposed (pence per share) 1.5 1.25 --------------------------------- --------- --------- Dividend proposed (Â£ million) 4.9 4.0 --------------------------------- --------- --------- 8. Earnings per share Basic earnings per share are calculated using the weighted average number of Ordinary shares outstanding during the period. 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 --------------------------------- --------- --------- 9 months ended 12 months ended 30 September 31 December 2004 Â£m 2003 Â£m --------------------------------- --------- --------- (Loss)/profit on ordinary activities after tax (0.7) 2.7 Add: amortisation of intangible assets 12.7 13.0 --------------------------------- --------- --------- Adjusted profit on ordinary activities after tax 12.0 15.7 --------------------------------- --------- --------- Weighted average number of shares outstanding during the period: 2004 2003 --------------------------------- --------- --------- - basic 323,612,453 321,564,888 - dilutive effect of share options 1,211,790 1,453,980 - diluted 324,824,243 323,018,868 Basic (loss)/earnings per share (in pence) (0.2) 0.8 Adjusted basic earnings per share (in pence) 3.7 4.9 Diluted (loss)/earnings per share (in pence) (0.2) 0.8 Adjusted diluted earnings per share (in pence) 3.7 4.8 --------------------------------- --------- --------- The adjustments to profit have the following effect: --------------------------------- --------- --------- 2004 2003 pence pence --------------------------------- --------- --------- Basic (loss)/earnings per share (0.2) 0.8 Amortisation of intangible assets 3.9 4.1 --------- --------- Adjusted basic earnings per share 3.7 4.9 --------- --------- Diluted (loss)/earnings per share (0.2) 0.8 Amortisation of intangible assets 3.9 4.0 --------- --------- Adjusted diluted earnings per share 3.7 4.8 --------------------------------- --------- --------- 9. Intangible fixed assets --------------------------------------- ----------- Group Goodwill Â£m --------------------------------------- ----------- Cost At 1 January 2004 321.3 Additions 4.1 Adjustments to fair value on prior year acquisitions 0.1 Exchange adjustments (0.7) --------------------------------------- ----------- At 30 September 2004 324.8 --------------------------------------- ----------- --------------------------------------- ----------- Amortisation At 1 January 2004 (204.0) Charge for the period (12.7) Exchange adjustments 0.3 --------------------------------------- ----------- At 30 September 2004 (216.4) --------------------------------------- ----------- Net book value at 30 September 2004 108.4 --------------------------------------- ----------- Net book value at 31 December 2003 117.3 --------------------------------------- ----------- The goodwill arising on acquisitions is being amortised on a straight-line basis over the estimated useful economic lives of the acquired businesses, being in the range one to 20 years. These periods are the periods over which the Directors estimate that the values of the underlying businesses acquired are expected to exceed the values of the underlying assets. Further details of the acquisitions during the year are given in note 20. 10. Tangible fixed assets -------------- ---------- ---------- ---------- ---------- Group Land and Plant and Equipment, Total buildings machinery fixtures and fittings Â£m Â£m Â£m Â£m -------------- ---------- ---------- ---------- ---------- Cost At 1 January 2004 2.2 6.1 1.2 9.5 Additions 0.1 0.8 0.2 1.1 Exchange adjustments 0.1 (0.1) (0.1) (0.1) -------------- ---------- ---------- ---------- ---------- At 30 September 2004 2.4 6.8 1.3 10.5 -------------- ---------- ---------- ---------- ---------- -------------- ---------- ---------- ---------- ---------- Depreciation At 1 January 2004 (0.7) (4.5) (1.0) (6.2) Charge for the period (0.1) (0.7) (0.1) (0.9) 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 31 December 2003 1.5 1.6 0.2 3.3 -------------- ---------- ---------- ---------- ---------- 11. Investments Current asset investments Group Group ------------------------------- ----------- ----------- 30 September 31 December 2004 2003 Â£m Â£m ------------------------------- ----------- ----------- Short-term bank deposits 2.5 8.8 ------------------------------- ----------- ----------- Total 2.5 8.8 ------------------------------- ----------- ----------- 12. Stocks Group Group ------------------------------- ----------- ---------- 30 September 31 December 2004 2003 Â£m Â£m ------------------------------- ----------- ---------- Raw materials 1.6 1.2 Work in progress 2.8 2.2 Finished goods 0.6 0.1 ------------------------------- ----------- ---------- Total 5.0 3.5 ------------------------------- ----------- ---------- 13. Debtors Group Group ------------------------------ ----------- ---------- 30 September 31 December 2004 2003 Â£m Â£m ------------------------------ ----------- ---------- Amounts falling due within one year: Trade debtors 31.0 34.1 Corporation tax recoverable 2.0 1.6 Other debtors 2.9 3.3 Prepayments and accrued income 2.7 2.5 ------------------------------ ----------- ---------- 38.6 41.5 Amounts falling due after more than one year: Other debtors 0.9 0.9 ------------------------------ ----------- ---------- Total 39.5 42.4 ------------------------------ ----------- ---------- Deferred tax At 30 September 2004 a deferred tax asset has been recognised within other debtors as follows: -------------------------------- ---------- ---------- Group Group 30 September 31 December 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 -------------------------------- ---------- ---------- 14. Creditors: amounts falling due within one year Group Group --------------------------- ----------- -------------- 30 September 31 December 2004 2003 Â£m Â£m --------------------------- ----------- -------------- Bank and other borrowings 4.7 6.7 Trade creditors 16.5 20.5 Corporation tax 2.1 2.7 Other creditors including taxation and social security 9.3 10.5 Accruals and deferred income 24.7 27.9 Proposed dividend 4.9 4.0 Deferred consideration for acquisitions 0.1 0.7 --------------------------- ----------- -------------- Total 62.3 73 --------------------------- ----------- -------------- 15. Provisions for liabilities and charges ----------- ------------- ----------- Property and Restructuring Total dilapidations Â£m Â£m Â£m ----------- ------------- ----------- At 1 January 2004 1.3 0.4 1.7 Adjustments to fair value on prior year acquisitions - 0.1 0.1 Charge in the period 0.1 - 0.1 Utilised in period (0.5) (0.5) (1.0) ------------------ ----------- ------------- ----------- At 30 September 2004 0.9 - 0.9 ------------------ ----------- ------------- ----------- 16. Called up share capital ---------------------------------- --------- --------- Authorised share capital 2004 2003 Ordinary shares of 1 pence each Â£m Â£m ---------------------------------- --------- --------- At beginning of period 6.0 6.0 Increase in the period - - ---------------------------------- --------- --------- At end of period 6.0 6.0 ---------------------------------- --------- --------- ---------------------------------- --------- --------- Allotted, issued and fully paid 2004 Ordinary shares of 1 pence each No. of Shares Â£m ---------------------------------- --------- --------- At beginning of period 322,487,585 3.2 Share options exercised 1,989,341 - ---------------------------------- --------- --------- At end of period 324,476,926 3.2 ---------------------------------- --------- --------- During the period 1,989,341 Ordinary shares with a nominal value of Â£19,893 were issued by the Company for a total cash commitment of Â£732,513 pursuant to the exercise of share options granted. 17. Share premium account ---------------------------------- --------- --------- Group 2004 2003 Â£m Â£m ---------------------------------- --------- --------- At beginning of period 0.2 169.6 Premium on shares issued during the period 0.7 0.3 Transfer of premium on share options exercised 22.8 - Cancellation of share premium account - (169.7) ---------------------------------- --------- --------- At end of period 23.7 0.2 ---------------------------------- --------- --------- During the period 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. 18. Profit and loss account ---------------------------------------- ---------- Group Â£m ---------------------------------------- ---------- At 1 January 2004 - deficit (22.3) Loss for the financial period (0.7) Dividend proposed (4.9) Tax on release of pre-acquisition loan (0.4) Unwinding of licensing obligation 0.1 ---------------------------------------- ---------- At 30 September 2004 (28.2) ---------------------------------------- ---------- 19. Other reserves --------------------------- ---------- ------- ---------- Group Group Group Merger Other reserves Total reserve Â£m Â£m Â£m --------------------------- ---------- ------- ---------- At 1 January 2004 109.0 21.8 130.8 Release of pre-acquisition loan - 1.0 1.0 Transfer of premium on share options exercised (note 17) - (22.8) (22.8) --------------------------- ---------- ------- ---------- At 30 September 2004 109.0 - 109.0 --------------------------- ---------- ------- ---------- During the period a pre-acquisition loan has been released to other reserves in accordance with the 1999 US acquisition agreement. 20. Acquisitions The results for the period include the undernoted contribution from acquisitions: ------------------------------- ---------- ------- ----- Spanish Homes PC Zone Total Â£m Â£m Â£m ------------------------------- ---------- ------- ----- Date acquired 02.08.04 23.08.04 ------------------------------- ---------- ------- ----- Turnover 0.1 0.1 0.2 ------------------------------- ---------- ------- ----- Adjusted operating profit 0.1 - 0.1 Amortisation of intangible assets (0.1) (0.1) (0.2) ------------------------------- ---------- ------- ----- Operating loss - (0.1) (0.1) ------------------------------- ---------- ------- ----- The most recent pre-acquisition annual results of those acquisitions showed the undernoted estimated figures: ------------------------------- ---------- ------- ------ Spanish Homes PC Zone Total Â£m Â£m Â£m ------------------------------- ---------- ------- ------ Year ended: 30.04.04 31.12.03 ------------------------------- ---------- ------- ------ Turnover 0.7 4.0 4.7 ------------------------------- ---------- ------- ------ Operating profit 0.4 0.5 0.9 ------------------------------- ---------- ------- ------ The accounting polices applied by previous owners of acquired business differed from those applied by the Group and accordingly the pre-acquisition figures may not be strictly comparable with those set out above for the 9 months ended 30 September 2004. Acquisition of Spanish Homes Magazine and PC Zone Magazine On 2 August 2004 the Group's wholly owned subsidiary, Future Publishing Limited, acquired the title Spanish Homes Magazine for a cash consideration of Â£1.5m, and on 23 August 2004 that company acquired the titles PC Zone, CVG and the computerandvideogames.com website for a cash consideration of Â£2.5m. The purchases are being accounted for as acquisitions. The aggregate provisional fair values of the liabilities acquired at the dates of these acquisitions are shown below: ---------------------------------- ---------------- Liabilities acquired: Book and fair value Â£m ---------------------------------- ---------------- Accruals and deferred income (subscription liabilities) - ---------------------------------- ---------------- Net liabilities acquired - ---------------------------------- ---------------- Goodwill 4.1 ---------------------------------- ---------------- Consideration 4.1 ---------------------------------- ---------------- Consideration satisfied by: Cash 3.9 Deferred consideration 0.1 Associated costs 0.1 ---------------------------------- ---------------- Total consideration 4.1 ---------------------------------- ---------------- The deferred consideration relates to the acquisition of Spanish Homes Magazine and will be paid in the first half of 2005. 21. Post balance sheet events On 30 November 2004 the Company'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 for the acquired assets 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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