Final Results - Part Two

Future PLC 29 November 2005 Section 2 - Financial statements for the 12 months ended 30 September 2005 and 9 months ended 30 September 2004 Group profit and loss account for the year ended 30 September 2005 --------------------- ----- --------- --------- --------- --------- 12 months 9 months ended ended 30 30 September September 2005 2004 Note Con- Acqui- Total Total tinuing sitions opera- tions Â£m Â£m Â£m Â£m --------------------- ----- --------- --------- --------- --------- Turnover 2,22 194.6 17.7 212.3 133.0 --------------------- ----- --------- --------- --------- --------- --------------------- ----- --------- --------- --------- --------- Operating profit/(loss) 3,22 --------- --------- --------- --------- Operating profit before exceptional items and amortisation and impairment of intangible assets 19.1 1.6 20.7 13.1 Exceptional items 4 (4.8) (2.4) (7.2) - Amortisation and impairment of intangible assets 10 (17.3) (6.2) (23.5) (12.7) --------- --------- --------- --------- --------------------- ----- --------- --------- --------- --------- Operating (loss)/profit (3.0) (7.0) (10.0) 0.4 Profit on disposal of 4 subsidiaries 2.1 0.2 --------------------- ----- --------- --------- --------- --------- (Loss)/profit on ordinary activities before interest (7.9) 0.6 --------------------- ----- --------- --------- --------- --------- Net interest payable and similar charges 6 (1.0) - --------------------- ----- --------- --------- --------- --------- (Loss)/profit on ordinary activities before tax 2 (8.9) 0.6 Tax on (loss)/profit on ordinary activities 7 (2.1) (1.3) --------------------- ----- --------- --------- --------- --------- Loss for the financial period 20 (11.0) (0.7) --------------------- ----- --------- --------- --------- --------- --------------------- ----- --------- --------- --------- --------- Dividends: - September 2005 proposed 8 (4.2) - - March 2005 paid (1.6) - - September 2004 paid - (4.9) --------------------- ----- --------- --------- --------- --------- Retained loss for the period 20 (16.8) (5.6) --------------------- ----- --------- --------- --------- --------- Earnings per 1p Ordinary share ------------------------------ ---------- --------- --------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Note pence pence ------------------------------ ---------- --------- --------- Basic loss per share 9 (3.4) (0.2) Adjusted basic earnings per share 9 5.1 3.6 Diluted loss per share 9 (3.4) (0.2) Adjusted diluted earnings per share 9 5.1 3.6 ------------------------------ ---------- --------- --------- Group statement of total recognised gains and losses for the year ended 30 September 2005 ------------------------------ --------- --------- --------- 12 months 9 months ended ended 30 30 September September 2005 2004 Note Â£m Â£m ------------------------------ --------- --------- --------- Loss for the financial period 20 (11.0) (0.7) Dividend - September 2005 proposed 8 (4.2) - Dividend - March 2005 paid 8 (1.6) - Dividend - September 2004 paid 8 - (4.9) ------------------------------ --------- --------- --------- Retained loss for the financial period (16.8) (5.6) Release of pre-acquisition loan - 1.0 Tax on release of pre-acquisition loan - (0.4) Unwinding of licensing obligation - 0.1 ------------------------------ --------- --------- --------- Total recognised loss relating to the period (16.8) (4.9) ------------------------------ --------- --------- --------- Group reconciliation of movements in shareholders' funds for the year ended 30 September 2005 ------------------------------- -------- --------- --------- 12 months 9 months ended ended 30 30 September September 2005 2004 Note Â£m Â£m ------------------------------- -------- --------- --------- Loss for the financial period 20 (11.0) (0.7) Dividend - September 2005 proposed 8 (4.2) - Dividend - March 2005 paid 8 (1.6) - Dividend - September 2004 paid 8 - (4.9) ------------------------------- -------- --------- --------- Retained loss for the financial period (16.8) (5.6) Issue of share capital during the period 18 0.1 - Premium on shares issued during the period 19 0.7 0.7 Release of pre-acquisition loan - 1.0 Tax on release of pre-acquisition loan - (0.4) Unwinding of licensing obligation - 0.1 ------------------------------- -------- --------- --------- Net movement in shareholders' funds (16.0) (4.2) Opening equity shareholders' funds 107.7 111.9 ------------------------------- -------- --------- --------- Closing equity shareholders' funds 91.7 107.7 ------------------------------- -------- --------- --------- Group balance sheet as at 30 September 2005 ---------------------------- -------- ------------ --------- 30 30 September September 2005 2004 Note Â£m Â£m ---------------------------- -------- ------------ --------- Fixed assets Intangible assets 10 135.8 108.4 Tangible assets 11 3.9 3.5 ---------------------------- -------- ------------ --------- 139.7 111.9 Current assets Stocks 13 6.2 5.0 Debtors 14 50.2 39.5 Investments 12 - 2.5 Cash at bank and in hand 10.7 12.0 ---------------------------- -------- ------------ --------- 67.1 59.0 Creditors: amounts falling due within one year 15 (80.9) (62.3) ---------------------------- -------- ------------ --------- Net current liabilities (13.8) (3.3) ---------------------------- -------- ------------ --------- ---------------------------- -------- ------------ --------- Total assets less current liabilities 125.9 108.6 ---------------------------- -------- ------------ --------- Creditors: amounts falling due after more than one year 16 (32.0) - Provisions for liabilities and charges 17 (2.2) (0.9) ---------------------------- -------- ------------ --------- Net assets 91.7 107.7 ---------------------------- -------- ------------ --------- Capital and reserves Called-up share capital 18 3.3 3.2 Share premium account 19 24.4 23.7 Merger reserve 21 109.0 109.0 Profit and loss account 20 (45.0) (28.2) ---------------------------- -------- ------------ --------- Equity shareholders' funds 91.7 107.7 ---------------------------- -------- ------------ --------- Group cash flow statement for the year ended 30 September 2005 ------------------------------- ---------- ---------- 12 months 9 months ended ended 30 30 September September 2005 2004 Â£m Â£m ------------------------------- ---------- ---------- Net cash inflow from operating activities 9.8 7.4 ------------------------------- ---------- ---------- Returns on investments and servicing of finance Interest received 0.5 0.5 Issue costs of new bank loan (0.4) - Interest paid (0.8) (0.4) ------------------------------- ---------- ---------- Net cash (outflow)/inflow from returns on investments and servicing of finance (0.7) 0.1 ------------------------------- ---------- ---------- Tax Tax paid (5.5) (4.0) Tax received 1.4 0.7 ------------------------------- ---------- ---------- Net tax paid (4.1) (3.3) ------------------------------- ---------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (1.8) (1.1) ------------------------------- ---------- ---------- Net cash outflow from capital expenditure and financial investment (1.8) (1.1) ------------------------------- ---------- ---------- Acquisitions and disposals Purchase of subsidiary undertakings (33.6) - Net cash acquired with subsidiary undertakings 0.8 - Disposal of subsidiary undertaking 2.1 0.2 Purchase of magazine titles (15.3) (4.0) Payment of deferred consideration (0.1) (0.7) ------------------------------- ---------- ---------- Net cash outflow for acquisitions and disposals (46.1) (4.5) ------------------------------- ---------- ---------- Dividends Equity dividends paid (6.5) (4.0) ------------------------------- ---------- ---------- Net cash outflow from payment of dividends (6.5) (4.0) ------------------------------- ---------- ---------- Management of liquid resources Decrease in short-term deposits with bank 2.5 6.3 ------------------------------- ---------- ---------- Net cash inflow in management of liquid resources 2.5 6.3 ------------------------------- ---------- ---------- Net cash (outflow)/inflow before financing (46.9) 0.9 ------------------------------- ---------- ---------- Financing Proceeds from issue of Ordinary share capital 0.8 0.7 Draw down of bank loans 53.6 - Movement in other loan - (0.5) Repayment of bank loans (8.7) (0.3) ------------------------------- ---------- ---------- Net cash inflow/(outflow) from financing 45.7 (0.1) ------------------------------- ---------- ---------- (Decrease)/increase in cash in the period (1.2) 0.8 ------------------------------- ---------- ---------- Notes to the Group cash flow statement for the year ended 30 September 2005 A. Cash flow from operating activities The reconciliation of operating (loss)/profit to net cash inflow from operating activities is as follows: ----------------------------------- ---------- ---------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ----------------------------------- ---------- ---------- Operating (loss)/profit (10.0) 0.4 Depreciation charge 1.5 0.9 Amortisation and impairment of intangible assets 23.5 12.7 Movement in provisions 1.0 (0.9) Increase in stocks (1.0) (1.5) (Increase)/decrease in debtors (7.9) 3.3 Increase/(decrease) in creditors 2.7 (7.5) ----------------------------------- ---------- ---------- Net cash inflow from operating activities 9.8 7.4 ----------------------------------- ---------- ---------- B. Analysis of net cash/(debt) ------------- ---------- -------- -------- ------------ ----------- At 1 Cash Acqui- Exchange At 30 October flow sitions movements September 2004 2005 Â£m Â£m Â£m Â£m Â£m ------------- ---------- -------- -------- ------------ ----------- Cash at bank and in hand 12.0 (2.4) 1.2 (0.1) 10.7 Debt due within one year (4.7) (15.1) (0.4) (0.2) (20.4) Debt due after more than one year - (29.8) - - (29.8) Liquid resources 2.5 (2.5) - - - ------------- ---------- -------- -------- ------------ ----------- Net cash/(debt) 9.8 (49.8) 0.8 (0.3) (39.5) ------------- ---------- -------- -------- ------------ ----------- C. Reconciliation of movement in net cash/(debt) -------------------------------- ----------- ----------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m -------------------------------- ----------- ----------- Net cash at beginning of period 9.8 13.4 (Decrease)/increase in cash (1.2) 0.8 Movement in deposits (2.5) (6.3) Movement in borrowings (44.9) 0.9 Overdrafts acquired with subsidiaries (0.4) - Non-cash movements - 1.0 Exchange movements (0.3) - -------------------------------- ----------- ----------- Net (debt)/cash at 30 September (39.5) 9.8 -------------------------------- ----------- ----------- Notes to the financial statements 1. Basis of preparation of accounts This preliminary statement of annual results for the 12 months ended 30 September 2005 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 2004. 2. Segmental reporting The Group is involved in one class of business, the publication of magazines and related websites. The analysis of turnover by type, geographical analyses of turnover, (loss)/profit before tax, and net assets by origin were as follows: a) Turnover by type ----------------------------- ----------- ----------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ----------- ----------- Circulation1 139.0 92.4 Advertising1 68.1 37.4 Other 5.2 3.2 ----------------------------- ----------- ----------- Total 212.3 133.0 ----------------------------- ----------- ----------- 1Included in the total circulation revenue for the 12 months ended 30 September 2005 is Â£7.8m relating to acquisitions. Acquisitions provided Â£9.1m of advertising revenue. b) Turnover by origin ----------------------------- ----------- ----------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ----------- ----------- United Kingdom2 118.4 70.5 United States2 55.5 36.0 Mainland Europe 39.7 27.5 Turnover between segments (1.3) (1.0) ----------------------------- ----------- ----------- Total 212.3 133.0 ----------------------------- ----------- ----------- 2Included in the UK turnover by origin for the 12 months ended 30 September 2005 is Â£14.9m relating to acquisitions. Acquisitions provided Â£2.4m of revenue in the US. Further information on the acquisitions during the year can be found in note 23. c) Turnover by destination ----------------------------- ----------- ----------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ----------- ----------- United Kingdom 99.4 59.0 United States 57.0 37.6 Mainland Europe 47.1 31.9 Rest of the world 10.1 5.5 Turnover between segments (1.3) (1.0) ----------------------------- ----------- ----------- Total 212.3 133.0 ----------------------------- ----------- ----------- d) (Loss)/profit on ordinary activities before tax by origin ----------------------------- ----------- ----------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ----------- ----------- United Kingdom (1.1) 5.3 United States (2.8) (1.5) Mainland Europe (1.4) (1.4) Central costs (3.6) (1.8) ----------------------------- ----------- ----------- Total (8.9) 0.6 ----------------------------- ----------- ----------- e) Net assets by origin ------------------------------- ----------- ----------- 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ----------- ----------- United Kingdom 113.2 85.4 United States 20.9 18.8 Mainland Europe 7.8 8.2 Interest-bearing liabilities (50.2) (4.7) ------------------------------- ----------- ----------- Total 91.7 107.7 ------------------------------- ----------- ----------- 3. Operating (loss)/profit ----------------- ------------- --------- ---------- --------- 12 months 9 months ended ended 30 30 September September 2005 2004 Continuing Acqui- Total Total operations sitions Â£m Â£m Â£m Â£m ----------------- ------------- --------- ---------- --------- Turnover 194.6 17.7 212.3 133.0 Cost of sales (130.5) (14.2) (144.7) (89.2) ----------------- ------------- --------- ---------- --------- Gross profit 64.1 3.5 67.6 43.8 Distribution costs (14.0) (0.4) (14.4) (9.9) ------------- --------- ---------- --------- Administration expenses (31.0) (1.5) (32.5) (20.8) Exceptional items (4.8) (2.4) (7.2) - Amortisation and impairment of intangible assets (17.3) (6.2) (23.5) (12.7) ------------- --------- ---------- --------- Total administration expenses (53.1) (10.1) (63.2) (33.5) ----------------- ------------- --------- ---------- --------- Operating (loss)/profit (3.0) (7.0) (10.0) 0.4 ----------------- ------------- --------- ---------- --------- 4. (Loss)/profit on ordinary activities before tax ------------------------------- ---------- ---------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ---------- ---------- (Loss)/profit on ordinary activities before tax is stated after charging: Staff costs (note 4) 50.2 29.7 Depreciation of owned assets (note 10) 1.5 0.9 Amortisation and impairment of intangible assets (note 9) 23.5 12.7 Hire of machinery and equipment 0.3 0.2 Other operating lease rentals 4.9 2.9 Exceptional items (see below) 7.2 - Profit on disposal of subsidiary (see below) 2.1 0.2 Net exchange loss on foreign currency borrowings less deposits - 0.3 ------------------------------- ---------- ---------- Included in administration expenses are the following exceptional items: ----------------- ------------- --------- ---------- --------- 12 months 9 months ended ended 30 30 September September 2005 2004 Continuing Acqui- Total Total operations sitions Â£m Â£m Â£m Â£m ----------------- ------------- --------- ---------- --------- Aborted bid costs 2.2 - 2.2 - Restructuring costs 0.8 1.8 2.6 - Property costs 1.8 0.6 2.4 - ----------------- ------------- --------- ---------- --------- Total exceptional items 4.8 2.4 7.2 - ----------------- ------------- --------- ---------- --------- The aborted bid costs relate to the external professional fees and other costs of the aborted bid for the entire issued share capital of Highbury House Communications plc during the first half of 2005. The restructuring costs relate to the costs incurred whilst integrating the acquisitions of Beach Magazines and Publishing Limited, A&S Publishing Company Limited and the various Highbury assets into the main Future businesses in the UK and the US. In addition there are some costs relating to subsequent restructuring within Future's ongoing businesses. The property costs relate to the integration of the acquisitions and in particular the move of Future UK's business in London to a larger single office following the substantial increase in London-based employees as a result of the Highbury acquisition which is set to be completed by the end of the first quarter of 2005. Profit on disposal of subsidiaries During the year the Group sold four wholly-owned subsidiary companies for a total consideration of Â£2.1m. After accounting for associated costs of disposal the profit on disposal of subsidiaries was Â£2.1m (2004:Â£0.2m). The companies disposed of contained capital tax losses which were surplus to Future's requirements. 5. Employees and Directors -------------------------------- ----------- ---------- Staff costs 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m -------------------------------- ----------- ---------- Wages and salaries 42.5 24.9 Social security costs 6.9 4.3 Other pension costs 0.8 0.5 -------------------------------- ----------- ---------- Total 50.2 29.7 -------------------------------- ----------- ---------- Average monthly number of people (including executive Directors) ----------- ---------- -------------------------------- Production 1,083 784 Administration 331 274 -------------------------------- ----------- ---------- Total 1,414 1,058 -------------------------------- ----------- ---------- At 30 September 2005 the actual number of people employed by the Group was 1,590 (30 September 2004: 1,120). 6. Net interest payable and similar charges ------------------------------- ---------- --------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ---------- --------- Interest receivable 0.5 0.5 Exchange losses - (0.3) ------------------------------- ---------- --------- Total interest receivable and similar items 0.5 0.2 ------------------------------- ---------- --------- Interest payable on bank loans and overdrafts (1.1) (0.2) Write-off of debt issue costs (0.4) - ------------------------------- ---------- --------- Total interest payable and similar charges (1.5) (0.2) ------------------------------- ---------- --------- Net interest payable and similar charges (1.0) - ------------------------------- ---------- --------- 7. Tax on (loss)/profit on ordinary activities (a) Analysis of tax charge in the period ------------------------------- ---------- --------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ---------- --------- UK corporation tax at 30% (2004: 30%) on (loss)/profit for the period 1.5 2.1 Adjustments in respect of previous years (0.2) (0.4) ---------- --------- 1.3 1.7 Overseas taxes 1.1 0.7 Adjustments in respect of previous years (0.4) (0.6) ---------- --------- Total current tax 2.0 1.8 Deferred tax origination and reversal of timing differences - Current period charge/(credit) 0.1 (0.5) - Prior year (credit)/charge - - ------------------------------- ---------- --------- Tax on (loss)/profit on ordinary activities 2.1 1.3 ------------------------------- ---------- --------- (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: ------------------------------- ----------- ---------- 12 months 9 months ended ended 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ----------- ---------- (Loss)/profit on ordinary activities before tax (8.9) 0.6 (Loss)/profit on ordinary activities at the standard UK tax rate of 30% (2.7) 0.2 Different tax rate applicable overseas 0.1 0.1 Profits relieved by capital losses (0.6) (0.1) Expenses not deductible for tax purposes 1.2 - Goodwill amortisation and impairment not deductible for tax purposes 3.9 2.5 Timing differences relating to goodwill amortisation deductible 0.7 0.5 Overseas losses generated 0.6 0.5 Capital allowances in excess of depreciation (0.1) (0.1) Other timing differences 0.3 0.1 Utilisation of brought forward losses (0.8) (0.9) Impact of adjustment to prior year current tax (0.6) (1.0) ------------------------------- ----------- ---------- Current tax charge for the period 2.0 1.8 ------------------------------- ----------- ---------- (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. 8. Dividends Equity dividends September 2005 March 2005 September 2004 ------------------------ ------------ --------- ----------- Number of shares in issue at end of period (million) 326.3 325.8 324.5 Dividend proposed/paid (pence per share) 1.3 0.5 1.5 ------------------------ ------------ --------- ----------- Dividend proposed/paid (Â£million) 4.2 1.6 4.9 ------------------------ ------------ --------- ----------- 9. 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 and impairment of intangible assets, exceptional items (including profit on disposal of subsidiaries) and any related tax effects of the exceptional items from the calculation as follows: Adjustments to loss on ordinary activities after tax ------------------------------- ----------- ---------- 12 months to 9 months 30 September ended 2005 30 September Â£m 2004 Â£m ------------------------------- ----------- ---------- Loss on ordinary activities after tax (11.0) (0.7) Add: exceptional items 7.2 - Add: amortisation and impairment of intangible assets 23.5 12.7 Less: profit on disposal of subsidiaries (2.1) (0.2) Less: tax effect of exceptional items (1.0) - ------------------------------- ----------- ---------- Adjusted profit on ordinary activities after tax 16.6 11.8 ------------------------------- ----------- ---------- In some territories the Group gains a tax deduction for the amortisation of intangible assets. The calculation of adjusted earnings as above does not take this into account. If a further adjustment is made for this effect the adjusted profit after tax is Â£14.9m. On this basis, basic and diluted adjusted earnings per share are 4.6 pence (2004: 3.5 pence). Weighted average number of shares outstanding during the period: 2005 2004 --------------------------------- --------- --------- - basic 325,468,072 323,612,453 - dilutive effect of share options 937,654 1,211,790 - diluted 326,405,726 324,824,243 Basic loss per share (in pence) (3.4) (0.2) Adjusted basic earnings per share (in pence) 5.1 3.6 Diluted loss per share (in pence) (3.4) (0.2) Adjusted diluted earnings per share (in pence) 5.1 3.6 --------------------------------- --------- --------- The adjustments to profit have the following effect: --------------------------------- --------- --------- 2005 2004 pence pence --------------------------------- --------- --------- Basic loss per share (3.4) (0.2) Exceptional items 2.2 - Amortisation and impairment of intangible assets 7.2 3.9 Profit on disposal of subsidiaries (0.6) (0.1) Tax effect of exceptional items (0.3) - --------- --------- Adjusted basic earnings per share 5.1 3.6 --------- --------- Diluted loss per share (3.4) (0.2) Exceptional items 2.2 - Amortisation and impairment of intangible assets 7.2 3.9 Profit on disposal of subsidiaries (0.6) (0.1) Tax effect of exceptional items (0.3) - --------- --------- Adjusted diluted earnings per share 5.1 3.6 --------------------------------- --------- --------- 10. Intangible fixed assets --------------------------------------- ----------- Group Goodwill Â£m --------------------------------------- ----------- Cost At 1 October 2004 324.8 Additions 50.3 Adjustments to fair value on prior year acquisitions 0.2 Exchange adjustments 0.7 --------------------------------------- ----------- At 30 September 2005 376.0 --------------------------------------- ----------- --------------------------------------- ----------- Amortisation At 1 October 2004 (216.4) Charge for the period (23.5) Exchange adjustments (0.3) --------------------------------------- ----------- At 30 September 2005 (240.2) --------------------------------------- ----------- Net book value at 30 September 2005 135.8 --------------------------------------- ----------- Net book value at 30 September 2004 108.4 --------------------------------------- ----------- 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. During the year the Directors performed impairment reviews on certain intangible assets within the Group. These reviews resulted in a provision being made against the remaining carrying value of the goodwill (Â£0.7m) relating to Spanish Homes Magazine acquired in 2004. This was due to the poor trading conditions experienced by this magazine since acquisition. 11. 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 October 2004 2.4 6.8 1.3 10.5 Additions - 1.5 0.3 1.8 Exchange adjustments - 0.1 - 0.1 -------------- ---------- ---------- ---------- ---------- At 30 September 2005 2.4 8.4 1.6 12.4 -------------- ---------- ---------- ---------- ---------- -------------- ---------- ---------- ---------- ---------- Depreciation At 1 October 2004 (0.8) (5.2) (1.0) (7.0) Charge for the period (0.1) (1.2) (0.2) (1.5) Exchange adjustments - (0.1) 0.1 - -------------- ---------- ---------- ---------- ---------- At 30 September 2005 (0.9) (6.5) (1.1) (8.5) -------------- ---------- ---------- ---------- ---------- -------------- ---------- ---------- ---------- ---------- Net book value at 30 September 2005 1.5 1.9 0.5 3.9 -------------- ---------- ---------- ---------- ---------- Net book value at 30 September 2004 1.6 1.6 0.3 3.5 -------------- ---------- ---------- ---------- ---------- Analysis of net book value of land and buildings ----------------------------- ------------ ---------- Group Group 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ------------ ---------- Leasehold: 1.2 1.3 Over 50 years unexpired 0.3 0.3 Under 50 years unexpired ----------------------------- ------------ ---------- Total 1.5 1.6 ----------------------------- ------------ ---------- 12. Investments a) Current asset investments ----------------------------- ------------ ---------- Group Group 30 September 30 September 2005 2004 Â£m Â£m ----------------------------- ------------ ---------- Short-term bank deposits - 2.5 ----------------------------- ------------ ---------- Total - 2.5 ----------------------------- ------------ ---------- 13. Stocks ------------------------------- ----------- ---------- Group Group 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- ----------- ---------- Raw materials 2.4 1.6 Work in progress 2.6 2.8 Finished goods 1.2 0.6 ------------------------------- ----------- ---------- Total 6.2 5.0 ------------------------------- ----------- ---------- 14. Debtors Group Group -------------------------- --------------- ----------- 30 September 30 September -------------------------- --------------- ----------- 2005 2004 Â£m Â£m -------------------------- --------------- ----------- Amounts falling due within one year: Trade debtors 37.9 31.0 Amounts owed by Group undertakings - - Corporation tax recoverable 2.3 2.0 Other debtors 3.0 2.9 Prepayments and accrued income 6.1 2.7 -------------------------- --------------- ----------- 49.3 38.6 Amounts falling due after more than one year: Other debtors 0.9 0.9 -------------------------- --------------- ----------- Total 50.2 39.5 -------------------------- --------------- ----------- Deferred tax At 30 September 2005 a deferred tax asset has been recognised within other debtors as follows: ---------------------------------- --------- ---------- Group Group 30 September 30 September 2005 2004 Â£m Â£m ---------------------------------- --------- ---------- Amounts falling due within one year 0.9 0.9 Amounts falling due after more than one year 0.8 0.9 ---------------------------------- --------- ---------- 15. Creditors: amounts falling due within one year ---------------------------------- --------- ---------- Group Group 30 September 30 September 2005 2004 Â£m Â£m ---------------------------------- --------- ---------- Bank and other borrowings 20.4 4.7 Trade creditors 20.2 16.5 Amounts owed to Group undertakings - - Corporation tax 0.3 2.1 Taxation and social security 3.3 3.0 Other creditors 7.1 6.3 Accruals and deferred income 25.4 24.7 Proposed dividend 4.2 4.9 Deferred consideration for acquisitions - 0.1 --------------------------------- --------- ---------- Total 80.9 62.3 --------------------------------- --------- ---------- The deferred consideration of Â£0.1m in the prior year related to the acquisition of Spanish Homes Magazine in 2004 and was paid during 2005. 16. Creditors: amounts falling due after more than one year ------------------------------- --------- --------- Group Group 30 September 30 September ------------------------------- --------- --------- 2005 2004 Â£m Â£m ------------------------------- --------- --------- Bank and other borrowings 29.8 - Other creditors 2.2 - ------------------------------- --------- --------- Total 32.0 - ------------------------------- --------- --------- Within creditors, the bank and other borrowings are repayable as follows: ------------------------------- --------- --------- Bank loans: unsecured* Group Group 30 September 30 September 2005 2004 Â£m Â£m ------------------------------- --------- --------- Due within one year 20.4 4.7 Due after more than one year 29.8 - ------------------------------- --------- --------- Total 50.2 4.7 ------------------------------- --------- --------- *The borrowings and interest are guaranteed by Future plc, Future Publishing Limited and Future Network USA, Inc. 17. Provisions for liabilities and charges ------------- ---------------- ------------- ------------- Property and Redundancy Total dilapidations provisions Â£m Â£m Â£m ------------- ---------------- ------------- ------------- At 1 October 2004 0.9 - 0.9 On acquisitions 0.1 0.2 0.3 Charge in the year 1.6 - 1.6 Utilised in year (0.4) (0.2) (0.6) ------------- ---------------- ------------- ------------- At 30 September 2005 2.2 - 2.2 ------------- ---------------- ------------- ------------- 18. Called up share capital ---------------------------------- --------- --------- Authorised share capital 2005 2004 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 2005 Ordinary shares of 1 pence each No. of Shares Â£m ---------------------------------- --------- --------- At 1 October 2004 324,476,926 3.2 Share options exercised 1,850,766 0.1 ---------------------------------- --------- --------- At 30 September 2005 326,327,692 3.3 ---------------------------------- --------- --------- 19. Share premium account ---------------------------------- --------- --------- Group 2005 2004 Â£m Â£m ---------------------------------- --------- --------- At beginning of period 23.7 0.2 Premium on shares issued during the period 0.7 0.7 Transfer of premium on share options exercised - 22.8 ---------------------------------- --------- --------- At end of period 24.4 23.7 ---------------------------------- --------- --------- During the previous period there was 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 was transferred to the share premium account. 20. Profit and loss account ----------------------------------------- --------- Group Â£m ----------------------------------------- --------- At 1 October 2004 - (deficit)/surplus (28.2) Loss for the financial period (11.0) Dividends paid and proposed (5.8) ----------------------------------------- --------- At 30 September 2005 (45.0) ----------------------------------------- --------- 21. Other reserves -------------------------------- ------------------ Group Merger reserve Â£m -------------------------------- ------------------ At 1 October 2004 109.0 -------------------------------- ------------------ At 30 September 2005 109.0 -------------------------------- ------------------ 22. Acquisitions The results for the year include the undernoted contribution from acquisitions: -------------- ------- --------- -------- -------- -------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited Â£m Â£m Â£m Â£m Â£m -------------- ------- --------- -------- -------- -------- Date acquired 30.11.04 03.12.04 24.01.05 26.01.05 12.05.05 Turnover 0.7 2.9 4.8 0.1 0.3 -------------- ------- --------- -------- -------- -------- Operating profit/(loss) before exceptional items and amortisation of intangible assets 0.3 (0.6) 1.0 (0.3) 0.3 Amortisation of intangible assets (0.7) (0.6) (1.4) (0.3) (0.7) Exceptional items - (0.1) (0.8) - - -------------- ------- --------- -------- -------- -------- Operating loss (0.4) (1.3) (1.2) (0.6) (0.4) -------------- ------- --------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Highbury Consoles The Games Other Total titles Plus Machine Â£m Â£m Â£m Â£m Â£m -------------- -------- -------- -------- -------- -------- -------------- -------- -------- -------- -------- -------- Date acquired 21.06.05 16.08.05 13.09.05 Turnover 8.5 0.1 0.3 - 17.7 -------------- -------- -------- -------- -------- -------- Operating profit before exceptional items and amortisation of intangible assets 0.8 - 0.1 - 1.6 Amortisation of intangible assets (2.4) - - (0.1) (6.2) Exceptional items (1.5) - - - (2.4) -------------- -------- -------- -------- -------- -------- Operating (loss)/profit (3.1) - 0.1 (0.1) (7.0) -------------- -------- -------- -------- -------- -------- The most recent pre-acquisition annual results of those acquisitions showed the undernoted estimated figures: ------------- ------- --------- -------- -------- ------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited Â£m Â£m Â£m Â£m Â£m ------------- ------- --------- -------- -------- ------- Year ended: 31.09.04 31.12.03 31.12.03 31.12.04 31.12.04 ------------- ------- --------- -------- -------- ------- Turnover 0.8 3.1 5.9 0.1 0.5 Operating profit/(loss) 0.2 0.2 0.1 (0.2) 0.4 ------------- ------- --------- -------- -------- ------- ------------- -------- -------- -------- -------- ------- Highbury Consoles The Games Other Total titles Plus Machine Â£m Â£m Â£m Â£m Â£m ------------- -------- -------- -------- -------- ------- Year ended: 31.12.04 31.03.05 31.12.04 ------------- -------- -------- -------- -------- ------- Turnover 34.1 1.2 3.0 - 48.7 Operating profit/(loss) 5.3 (0.4) 0.4 - 6.0 ------------- -------- -------- -------- -------- ------- The accounting polices applied by previous owners of acquired business differed from those applied by the Group and accordingly the pre-acquisition figures are not strictly comparable with those set out above for the year ended 30 September 2005. In addition, foreign exchange adjustments limit the comparability of the tables. The total consideration for acquisitions during the year ended 30 September 2005 was as follows: ------------- ------- --------- -------- -------- ------- What Beach A&S Snow Cheat Laptop Magazines Publishing board Planet & Company Journal Publishing Limited Limited Â£m Â£m Â£m Â£m Â£m ------------- ------- --------- -------- -------- ------- Cash 0.7 1.5 6.7 0.2 4.6 Associated costs - 0.1 0.2 - 0.1 ------------- ------- --------- -------- -------- ------- Total consideration 0.7 1.6 6.9 0.2 4.7 ------------- ------- --------- -------- -------- ------- ------------- -------- -------- -------- -------- ------- Highbury Consoles The Games Other Total titles Plus Machine Â£m Â£m Â£m Â£m Â£m ------------- -------- -------- -------- -------- ------- Cash 30.5 - 2.3 0.2 46.7 Associated costs 1.8 - - - 2.2 ------------- -------- -------- -------- -------- ------- Total consideration 32.3 - 2.3 0.2 48.9 ------------- -------- -------- -------- -------- ------- i) Acquisition of Highbury titles On 21 June 2005 the Group's wholly owned UK subsidiary Future Publishing Limited acquired certain assets and liabilities relating to 38 magazine titles and related businesses from Highbury House Communications plc, Highbury Lifestyle Limited and Highbury Entertainment Limited for a cash consideration of Â£30.5m. The consideration was funded by a combination of cash resources and bank debt. The purchase is being accounted for as an acquisition. The provisional fair values of the net liabilities acquired are set out below: ------------------ -------- --------- ----------- --------- Assets and liabilities Book value Revaluations Accounting Fair value acquired policy alignment Â£m Â£m Â£m Â£m ------------------ -------- --------- ----------- --------- Intangible fixed assets 0.7 - (0.7)1 - Tangible fixed assets 0.5 (0.4)2 (0.1)3 - Debtors 1.4 - (0.2)4 1.2 Cash at bank and in hand 0.1 - - 0.1 Other creditors (2.0) (0.2)5 - (2.2) ------------------ -------- --------- ----------- --------- Net assets/(liabilities) acquired 0.7 (0.6) (1.0) (0.9) ------------------ -------- --------- ----------- --------- Goodwill 33.2 ------------------ -------- --------- ----------- --------- Consideration ------------------ -------- --------- ----------- --------- Consideration satisfied by: Cash 30.5 Associated costs 1.8 ------------------ -------- --------- ----------- --------- Total consideration 32.3 ------------------ -------- --------- ----------- --------- Notes: The fair value adjustments comprise: 1. The write off of the capitalised value of publishing rights in line with the Group's accounting policies 2. The revaluation of fixed assets to reflect the market value at the date of acquisition 3. The revaluation of fixed assets to reflect the Group's accounting policies on depreciation 4. An additional provision for advertising debtors in line with the Group's accounting policies 5. An accrual relating to unrecorded liabilities at the date of acquisition in respect of software licences. Prior to the acquisition of these titles, they were owned by Highbury House Communications plc, Highbury Lifestyle Limited and Highbury Entertainment Limited. In the year ended 31 December 2004 turnover for these titles was Â£34.1m and estimated trading profit attributable to these titles was Â£5.3m. This profit is presented before corporate charges, interest and taxation and any financing items which were dealt with on a group basis by Highbury House Communications plc as a whole. As only certain assets and liabilities of the group were acquired, it is not practical to provide any details of post-tax profits or recognised gains or losses for the financial periods pre-acquisition. ii) Other acquisitions During the year, the following business combinations, which were all accounted for as acquisitions, also occurred: a) On 30 November 2004, the acquisition of the title What Laptop in the UK for a consideration of Â£0.7m. b) On 3 December 2004, the acquisition of 100% of the shares of Beach Magazines & Publishing Limited for a consideration of Â£1.5m. c) On 24 January 2005, the acquisition of 100% of the shares of A&S Publishing Company Limited for a consideration of Â£6.0m, plus an additional payment in respect of net assets acquired at the date of acquisition of Â£0.7m. d) On 26 January 2005, the acquisition of the title Snowboard Journal in the US for a consideration of Â£0.2m. e) On 12 May 2005, the acquisition of the computer games website Cheat Planet for a consideration of Â£4.6m. f) On 16 August 2005, the acquisition of the title Consoles Plus in France for a consideration of Â£0.0m g) On 13 September 2005, the acquisition of the titles The Games Machine and PC Action in Italy for a consideration of Â£2.3m h) In October 2004, the purchase in the UK of a trademark for a consideration of Â£0.2m. In addition, in relation to the acquisition of Beach Magazines and Publishing Limited, there is a deferred element of consideration up to a maximum of Â£1.5m, payable 12 months after the date of purchase, subject to the achievement of certain performance criteria. At 30 September 2005 it is considered unlikely that these criteria will be met and therefore no provision has been made for any payment of deferred consideration. The aggregate provisional fair values of the net assets acquired at the dates of these other acquisitions are shown below: ------------------ -------- --------- --------- ------ -------- Assets and Book value Revaluations Accounting Other Fair liabilities policy value acquired alignment Â£m Â£m Â£m Â£m Â£m ------------------ -------- --------- --------- ------ -------- Intangible fixed assets 0.2 - (0.2)1 - - Tangible fixed assets 0.3 (0.2)2 - - 0.1 Stocks 0.4 - (0.2)3 - 0.2 Debtors 1.6 (0.2)5 (0.2)4 - 1.2 Cash at bank and in hand 1.1 - - - 1.1 Bank overdraft (0.3) - - - (0.3) Other creditors (2.6) - - - (2.6) Provisions - - - (0.2)6 (0.2) ------------------ -------- --------- --------- ------ -------- Net assets acquired 0.7 (0.4) (0.6) (0.2) (0.5) ------------------ -------- --------- --------- ------ -------- Goodwill 17.1 ------------------ -------- --------- --------- ------ -------- Consideration ------------------ -------- --------- --------- ------ -------- Consideration satisfied by: Cash 16.2 Associated costs 0.4 ------------------ -------- --------- --------- ------ -------- Total consideration 16.6 ------------------ -------- --------- --------- ------ -------- Notes: The fair value adjustments comprise: 1. The write off of the capitalised value of publishing rights in line with the Group's accounting policies 2. The revaluation of fixed assets to reflect the market value at the date of acquisition 3. The revaluation of stock in line with the Group's accounting policies 4. An additional provision for advertising debtors in line with the Group's accounting policies 5. The write off of irrecoverable other debtor balances at the date of acquisition 6. A provision of Â£0.2m to reflect onerous employee contracts on the acquisition of Consoles Plus in France. Under French law certain classes of journalists have the right on the change of control of a company to demand favourable redundancy packages for an unlimited period after the change of control. The provision reflects the potential cost of those eligible to claim redundancy and as at 30 September 2005 less than Â£0.1m of the provision remained, with the remainder having been fully utilised. This information is provided by RNS The company news service from the London Stock Exchange

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