Final Results

Future PLC 28 November 2007 28 November 2007 FUTURE PLC Preliminary results for the year ended 30 September 2007 Future plc (LSE: FUTR), the international special-interest media group, today announces its preliminary results for the year ended 30 September 2007. An analyst presentation will be held today at 10.00am at the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP. Financial Summary: Statutory results 2007 2006 Revenue Â£165.7m Â£188.1m EBITAE * Â£14.0m Â£12.1m EBITAE margin 8.4% 6.4% Operating profit / (loss) Â£12.1m Â£(34.0)m Pre-tax profit / (loss) Â£9.2m Â£(36.7)m Earnings/(loss) per share - Continuing (p) 2.3p (10.7)p Earnings/(loss) per share - Total (p) 4.4p (14.5)p Dividends relating to the year (pence per share) 1.1p 1.0p Normalised results 2007 2006 Revenue Â£159.2m Â£163.9m EBITAE * Â£13.7m Â£13.4m EBITAE margin 8.6% 8.2% Adjusted earnings per share (p) 2.5p 2.2p Highlights: - 30% improvement in statutory EBITAE margin - US EBITAE margin % doubled - Annualised operational savings now almost Â£7m - Â£11.5m (Â£4.6m net) investment in online** - Online advertising up 50% to 14% of advertising revenues - Online Games advertising up 55% at 28% of total games advertising revenues - Customer publishing (non-newsstand) revenues up 59% - Sony, Nintendo partnerships extended to US - Sale of French and Italian businesses - Over 50 under-performing magazines closed or sold - Net bank debt reduced by 26% to Â£24.3m Stevie Spring, Future's Chief Executive said: 'The progress we have made in 2007 is very encouraging and has created a much firmer platform for future growth. 'We did what we said we would do. 'We have re-focused the business on its core and driven out costs, re-investing the savings in those parts of our business - online, core titles, US expansion and partnership publishing - which offer opportunities for above market growth in both sales and margins. 'We enter 2008 with a much healthier business, a stronger balance sheet and a re-invigorated team. We know there is more to do, but we are embracing the challenge with conviction, courage and confidence that Future is back on track.' Enquiries: Future plc Stevie Spring, Chief Executive Tel: 020 7042 4007 John Bowman, Group Finance Director Tel: 020 7042 4031 Vicky Bacon, Head of Group Communications Tel: 020 7042 4033 Hogarth Partnership: James Longfield / Ian Payne Tel: 020 7357 9477 * EBITAE represents operating profit before exceptional items, impairment and amortisation of intangible assets. ** Investment in online represents gross trading expenditure relating to online activities plus capital expenditure on web development and acquisitions. Normalised results are presented to reflect better the current size and structure of the business. The normalised results exclude revenues and costs of activities closed or divested between 1 October 2005 and 30 September 2007. A reconciliation of normalised to statutory results is provided at the end of this announcement. Adjusted earnings per share are based on normalised results, but exclude exceptional items, impairment and amortisation of intangibles and related tax effects. Strategy The Group is committed to a strategy of providing English-language content, by and for enthusiasts. Everything we do is based around communities - clusters of like-minded individuals - who are passionate about their interests: ranging from computer games to film, and from cycling to strumming. We provide all of these communities of interest with editorial services that inform, entertain and unite - in our magazines, online, via an increasing number of business partnerships, events, and by exporting and licensing our English-language content to more than 90 countries. Improved financial performance Our statutory results show Group revenue of Â£165.7m (2006: Â£188.1m). EBITAE was Â£14.0m (2006: Â£12.1m) representing an improved EBITAE margin of 8.4% (2006: 6.4%) despite an adverse currency impact of Â£0.7m; and before exceptional income of Â£1.7m (2006: exceptional costs of Â£7.3m), amortisation of Â£3.6m (2006: Â£5.8m) and impairment of Â£Nil (2006: Â£33.0m). After these and net financing costs of Â£2.9m (2006: Â£2.7m) the Group recorded a pre-tax profit of Â£9.2m (2006: pre-tax loss of Â£36.7m) and basic earnings per share were 4.4p (2006: loss per share of 14.5p). During the financial year, the Group sold its French and Italian subsidiaries, and these have therefore been classified as discontinued operations. In addition, 51 under-performing English-language titles were closed or sold and so we have also published 'normalised' results which exclude all revenues and costs of activities closed or divested between 1 October 2005 and 30 September 2007. Normalised revenue was Â£159.2m (2006: Â£163.9m) and normalised EBITAE was Â£13.7m (2006: Â£13.4m). Normalised revenues in constant currencies were stabilised in the UK and US. Margin improvement has been achieved through tight control of direct costs across the Group and strong margins in areas of growth, despite heavy investment, particularly online. Adjusted earnings per share were up 14% at 2.5p (2006: 2.2p). Dividend The Board proposes a final dividend of 0.6p per share, making a total of 1.1p per share for the year, an increase of 10% over 2006 yet comfortably covered by distributable profits in line with our dividend policy. If approved at the Annual General Meeting to be held on 29 January 2008, the final dividend of 0.6p per share will be paid on 30 January 2008 to shareholders on the register on 4 January 2008. The ex-dividend date will be 2 January 2008. Current trading outlook Our new financial year has begun satisfactorily. We expect to make further progress in 2008, but like most consumer-facing businesses, we continue to take a cautious view of our host markets. We aspire to achieve modest growth in revenues in the coming year, predominantly organic. We also plan to continue investing in new product development, particularly online and in partnership publishing. We enter 2008 with a much healthier business, a stronger balance sheet and a re-invigorated team. A more detailed review of the outlook for 2008 is contained below. CHIEF EXECUTIVE'S REVIEW (Extract from Annual Report) How time flies. I can't believe it's just 12 months ago that I set out to shareholders Future's new strategic direction and our near term priorities to strengthen, rationalise and redirect our core business. We have sold or closed over 50 magazines; sold our French and Italian businesses; achieved nearly Â£7m in annualised operational savings; re-invested these savings in improving our systems, our people and our offer online. At the same time we have made changes to the pricing, distribution or design of every one of our more than 100 magazines to make sure they are meeting readers' needs and operating as efficiently and profitably as possible. The benefits of these actions are evident in the improvement in our financial performance set out today. A return to profit, increased operating margins, a strong improvement in our US business and significant reductions in our debt levels - which are some 26% below 2006 levels, despite catch-up investment, particularly online - are all tangible signs that the recovery is working. We are by no means complacent, but we are pleased with what we've achieved. Future today feels like a different organisation from the one I joined in July 2006. It is more focused, leaner and profitable, with a much more manageable level of debt. We are committed to our strategy; the direction in which we are heading; and in our ability to exploit our market-leading positions. In addition, we are embracing the online challenge facing all media companies with confidence, courage and conviction. Without doubt, the progress we have made over the past year is a testament to the energy, creativity and commitment of everyone at Future. We still have more to do, but the platform we have established during 2007 is a much firmer one from which to develop. With the continued hard work and enthusiasm of the Future team, I am even more convinced today that our journey will be an exciting and rewarding one. What we have been doing I said last year that 2007 would be a year of transition as we directed our energies on improving returns by managing and developing our portfolio of brands more aggressively. There were to be no sacred cows and the portfolio was to be under continuous review. We have fixed where we needed to and invested the savings we have achieved in areas that we believe will deliver sustainable profitable growth. Good progress has been made during the year in each of our six key areas of focus. Focus on basics: No part of our business has been left untouched by our emphasis on driving operating efficiency and by constantly improving our products to ensure they retain their consumer and advertiser appeal. Every one of our magazines has been repositioned or redesigned in the last 18 months. In the last year, property, distribution, paper, print and covermount savings have all contributed to the cost savings we have secured for re-investment in the business. Newsstand efficiency has improved 6% across the UK portfolio. We operate now only in those enthusiast segments with attractive commercial partnership potential. Host sector advertising comprises the principal component of our advertising revenues, with volumes and rates closely aligned to the fortunes of the relevant sector rather than the health of the general advertising market or wider economy. For example, games advertising reflects what is going on in the computer games market (new console or games launches). These characteristics, together with our engaged and loyal readership, mean that the economics of Future are more comparable to those of a Business to Business publisher than those of a general Business to Consumer publisher. We are, arguably, a Business to 'Professional Consumer' - or 'Prosumer' - publisher. Focus on core: What Future does best is produce high quality English-language content that can be exploited across different platforms - in print, online and face-to-face. We have strong market positions in games, film and music, technology, and active pursuits like bikes, cars and crafts and these sectors have been our main areas of focus during the year. The titles we have sold or closed since July 2006 have enabled us to better allocate our time, effort and financial resource on strengthening our position in our core sectors. In games, we are now the world's no.1 multi-platform content provider thanks to the combined strength of gamesradar.com and our expanded games magazine portfolio in both the US and the UK. Essential to Future are our people, who are the lifeblood of any creative industry. Ten new senior management hires across all parts of our business, including four new directors in Online and a Chief Technology Officer, have brought a new perspective to the Group. Focus on audience: Future's core audience is young, or young-at-heart, men; a notoriously difficult audience group to reach, but one that is highly valued by advertisers. We know these readers. We interact with them every day - online, in print and face-to-face. We create marketplaces where these groups congregate to discuss their passions, review developments and, increasingly, transact with sellers of relevant products. Over the past year, every consumer touchpoint in our portfolio has been reviewed and revised to ensure we continue to meet the changing demands of our readers and to create more attractive, accessible propositions for advertisers. And we have become exponentially better at cross-platform, cross-product and cross-category selling: aggregating our audience to improve our overall order value and making us a more attractive proposition to an increasing number of non-endemic advertisers. Our non-endemic brand count quadrupled in 2007. Focus on geography: English is the 'lingua franca' of the web. Future's strength is as an English-language content producer, able to offer support and production from the UK and US, and more recently Australia. The breadth of our commercial relationships in the US in particular is a key component for future growth. The scale of opportunity is substantial and our established footprint should serve us well. Our content is internationally transferable through export, licensing and syndication. We now license 64 magazines in 33 countries worldwide and have strengthened our focus in the BRIC countries - Brazil, Russia, India and China. Russia is already our second-largest market. We also export magazines to 87 countries. This focus on English-language content led to the disposal of our European businesses in Italy and France during the year, which accounted for Â£23.2m in sales but just Â£0.8m in EBITAE. The strength of our content is evidenced by the fact that the purchasers of these businesses have chosen to continue taking licensed content from us for seven Future titles in France and eight in Italy. Focus on partnerships: We have further consolidated our position during 2007 as the publishing partner of choice for the computer games industry. We recently secured the licence to publish Official Magazines for both Nintendo and Sony in the US market. This means that Future is now the official publishing partner for all three global console manufacturers on both sides of the Atlantic. We also strengthened our relationship with Microsoft during the year with the launch of the Official Windows Vista magazine across 12 territories: the largest global magazine launch ever. Within partnership publishing, customer publishing (non-newsstand) revenues were up 59% year on year. New wins secured in 2007 included BT Vision, O2 and Odeon Cinemas, with retailers, media owners and other consumer-facing businesses increasingly recognising the value our design and editorial expertise can bring to their brands. This high margin business offers good balance to our newsstand driven revenues. Partnership publishing overall now represents approximately 21% of normalised Group revenues. We envisage that the majority of our revenues will still come from our own brands for the foreseeable future but that the proportion will reduce as our publishing partnerships expand. Focus online: We invested Â£11.5m (net Â£4.6m) in the business during the year online. This was more than we had planned and reflected the timing of recruitment of our key online hires, together with the anchor acquisitions of two cycling websites - bikely.com and cyclingnews.com - which formed part of the summer launch of BikeRadar, the world's largest network of cycling websites. This delivered over 5 million ad impressions in July 2007 and its Tour de France podcast coverage reached number 8 in the iTunes podcast chart. We are continuing to develop BikeRadar, including the launch of an e-commerce offer for users to buy products online from a selection of the UK's leading cycle retailers. Our most evolved web property, gamesradar.com, doubled revenues in the US year on year, helped by a number of innovative advertising initiatives such as the creation of an online game for Dodge. GamesRadar's monthly audience is now bigger than FHM.com, NME.com, Nuts.co.uk and Zoo.co.uk combined (source: ABCe). Our games online advertising revenue now represents 28% of our total games advertising. For Future as a whole, online advertising revenues were up 50% and now represent 14% of advertising revenues. We will continue to focus investment on online properties in the coming year, with new website launches in technology, design and music. Net online investment currently planned for 2008 is another Â£5m. Our new non-executive director, Seb Bishop, is a valuable critic of our online strategy and I am particularly pleased to have him on board. Change remains a constant The media market is going through a period of intense change. Newspapers are launching TV channels, radio stations are moving online, TV companies are buying travel guides and telecoms operators are entering the media market. All of us are grappling with the impact the web is having and will continue to have on existing and future business models. Audiences too are changing. They are more in control, more demanding and more fragmented, making them increasingly harder to reach and retain. This makes those who can attract them more valuable as a result. The prices that are being paid for nascent online properties with large audiences are truly staggering by all normal valuation metrics - particularly as you can't cash eyeballs at the bank! Future is well equipped to ride and exploit these trends. Our content is both valued by the communities we serve and valuable to advertisers and partners in establishing a connection with these large communities. We continue to develop innovative ways to bring buyers and sellers together and in the online world we are experimenting with new ways to maximise returns from this interaction. Furthermore, the size and potential of our core sectors is huge: just in games, the Halo3 video game grossed $170m within 24 hours of its release. We will continue to maintain the right balance between magazines and online in sectors with healthy endemic commercial opportunities, in order to meet the challenges presented by the ever-changing media market. We will not neglect our heritage and we remain committed to the unique role enthusiast magazines have in meeting consumer needs for as long as they are profitable. Until the day when electronic media delivers the same experience, magazines will continue to have an important role to play in fuelling people's passions. Already for 2008 we have launched four new magazines: in the UK, PhotoPlus and You Can Craft; in the US, Nintendo and Sony's official games titles. For 2008, the majority of our investment focus is, rightly, aimed at online properties although the majority of the cash to fund that investment will still come from specialist magazines. Outlook The progress we have made in 2007 has created a much firmer platform for future growth. We have re-focused the business on its core and driven out costs, re-investing the savings in those parts of our business - online, core titles, US expansion and partnership publishing - which offer opportunities for above market growth in both sales and margins. We enter 2008 with a much healthier business, a stronger balance sheet and a re-invigorated team. We know there is more to do, but we are up for the challenge and confident that Future is back on track and in a position to shape its own future. FINANCIAL REVIEW This financial review is based primarily on a comparison of our IFRS results for the year ended 30 September 2007 with those for the year ended 30 September 2006. Unless otherwise stated, growth percentages relate to a comparison of these two years. In running the business, Future management focuses on earnings before interest, tax, amortisation and impairment, and exceptional items. Profit on disposal of subsidiaries is also excluded. For convenience we refer to this as EBITAE. This year, we report both statutory results and normalised results. Statutory results state the results for 2007 compared with 2006, while normalised results focus on the shape of the group as it was at the year-end. This latter information may be more helpful to those looking forward to the outlook for the business in 2008. A reconciliation of normalised to statutory results is provided at the end of this announcement. Statutory results for year ended 30 September Revenue was Â£165.7m (2006: Â£188.1m) and the business generated EBITAE of Â£14.0m (2006: Â£12.1m) representing a strengthened EBITAE margin of 8.4% (2006: 6.4%). The income statement includes net exceptional credits of Â£1.7m (2006: exceptional costs Â£7.3m), a charge for amortisation of intangible assets of Â£3.6.m (2006: Â£5.8m) and impairment of Â£Nil (2006: Â£33.0m) and net financing costs of Â£2.9m (2006: Â£2.7m), leading to pre-tax profits of Â£9.2m (2006: loss of Â£36.7m) for the year. -------------- -------------- Year ended 30 September 2007 2006 Â£m Â£m -------------- -------------- Revenue 165.7 188.1 EBITAE 14.0 12.1 EBITAE margin 8.4% 6.4% Operating profit / (loss) 12.1 (34.0) ------------------------ -------------- -------------- Pre-tax profit / (loss) 9.2 (36.7) ------------------------ -------------- -------------- Earnings/(loss) per share - Continuing (p) 2.3p (10.7)p Earnings/(loss) per share - Total (p) 4.4p (14.5)p Dividends relating to the year (p) 1.1p 1.0p ------------------------ -------------- -------------- Normalised results are presented to reflect better the current size and structure of the business, which is consistent with how the business is managed and measured on a day-to-day basis. The normalised results exclude revenues and costs of activities closed or divested between 1 October 2005 and 30 September 2007. The Group discontinued its operations in France and Italy during the year. The revenue and EBITAE attributable to these businesses in 2007 was Â£23.2m and Â£0.8m respectively and the businesses were sold for gross proceeds of Â£10.0m and a profit on disposal of Â£4.5m. The Group also closed or sold 51 under-performing titles (in the UK and US) during the financial year (or the prior financial year). The revenue and EBITAE attributable to these titles in 2007 was Â£6.5m and Â£0.3m respectively and the titles were sold for an exceptional profit of Â£1.0m. Normalised results exclude both the discontinued business and the 51 titles described above. Normalised results for year ended 30 September ------------------ ------------- Year ended 30 September 2007 2006 Â£m Â£m ------------------ ------------- Revenue 159.2 163.9 EBITAE 13.7 13.4 EBITAE margin 8.6% 8.2% Adjusted earnings per share (p) 2.5p 2.2p ----------------------- ------------------ ------------- Dividend The Board's policy is that dividends relating to the year should be covered at least twice by adjusted annual earnings per share. In respect of the year ended 30 September 2007, adjusted earnings per share were 2.5p per share and the Board has recommended total dividends of 1.1p per share for the year. Review of operations (based on normalised results) Group revenue fell by 3% to Â£159.2m but was flat in constant currencies. Revenues in the UK and US were stabilised, with expected softness in some games, computing and performance car revenues partly compensated for by growth in online and customer publishing. Both UK and US operating margins improved with increasing co-operation and co-ordination between the two territories. Margin improvement has arisen from tight control of direct costs across the Group, and strong margins in areas of growth despite an aggressive investment programme. Analysis of revenue for year ended 30 September (normalised) ------------- --------- ---------- ------------- ------------- % of 2007 2006 Change Group Â£m Â£m % ------------- --------- ---------- ------------- ------------- UK 72% 115.1 116.0 - 0.8% US 28% 44.4 48.2 - 7.9% Intra-group - (0.3) (0.3) - ------------- --------- ---------- ------------- ------------- Total revenue 100% 159.2 163.9 - 2.9% ------------- --------- ---------- ------------- ------------- In constant currencies, group revenue was flat year-on-year. US revenues reported in sterling were adversely affected by the exchange rate for the US Dollar, which weakened by 9% against the pound. Analysis of EBITAE for year ended 30 September (normalised) ------------- ------------- ------------- ------------- 2007 2006 Change Â£m Â£m % ------------- ------------- ------------- ------------- UK 14.4 14.3 + 0.7% US 2.8 2.6 + 7.7% Central costs (3.5) (3.5) - ------------- ------------- ------------- ------------- Total EBITAE 13.7 13.4 + 2.2% ------------- ------------- ------------- ------------- UK performance for year ended 30 September (normalised) ------------- ------------- ------------- ------------- 2007 2006 Change Â£m Â£m % ------------- ------------- ------------- ------------- Circulation revenue 75.6 77.5 - 2% Advertising revenue 33.8 33.4 + 1% Licensing, events & other 5.7 5.1 + 12% ------------- ------------- ------------- ------------- Total revenue 115.1 116.0 - 1% EBITAE 14.4 14.3 - ------------- ------------- ------------- ------------- EBITAE margin 12.5% 12.3% ------------- ------------- ------------- ------------- 2007 2007 2007 2007 2006 2006 2006 Revenue Contribution Margin % of Revenue Contribution Margin Â£m Â£m % revenue Â£m Â£m % ------------- -------- -------- ------- ------- ------- -------- ------ Games 26.8 8.8 33% 23% 28.7 9.2 32% Music & Movies 24.5 6.5 27% 21% 23.0 6.4 28% Technology 34.4 10.4 30% 30% 33.7 11.1 33% Active 29.4 6.7 23% 26% 30.6 6.2 20% ------------- -------- -------- ------- ------- ------- -------- ------ Overheads 115.1 32.4 28% 100% 116.0 32.9 28% (18.0) (18.6) ------------- -------- -------- ------- ------- ------- -------- ------ EBITAE 14.4 13% 14.3 12% Exceptional items 2.2 (6.2) Amortisation and impairment (2.7) (27.3) ------------- -------- -------- ------- ------- ------- -------- ------ Operating profit/(loss) 13.9 (19.2) ------------- -------- -------- ------- ------- ------- -------- ------ Whilst normalised revenues were broadly flat year-on-year, this was achieved in a challenging market and in a year still impacted by some aspects of the transition to third-generation games consoles. A small reduction in circulation revenues was offset by increased advertising and other revenues as shown in the table above. Within circulation revenue, increases in subscription revenue partly offset a decrease in newsstand revenue. Advertising revenue grew, with a reduction in display advertising more than offset by a strong increase in online advertising revenues and in our customer publishing business, Future Plus. There was a decrease in revenues from those games titles focused around PlayStation, while titles relating to Microsoft and Nintendo consoles (which launched earlier) have performed well. Other notable performances this year included our digital creative, craft and digital camera titles. For the new financial year we have launched two new titles in growth areas, You Can Craft and Photo Plus. With effect from 1 May 2007 we moved distribution of all our UK magazines to Seymour, one of the specialist UK magazine distributors. As we reported at the half-year, this is expected to benefit the business from 2008. We have continued to focus hard on cost control to create flexibility for investment in faster-growing areas of the business, particularly online. US performance for year ended 30 September (normalised) 2007 2006 Change $m $m % ------------- ------------- ------------- Circulation revenue 40.4 42.6 - 5% Advertising revenue 45.2 42.8 + 6% Licensing, events & other 1.9 1.4 + 36% ------------- ------------- ------------- ------------- Total revenue 87.5 86.8 + 1% EBITAE 5.5 4.7 + 17% ------------- ------------- ------------- ------------- EBITAE margin 6.3% 5.4% ------------- ------------- ------------- ------------- 2007 2007 2007 2007 2006 2006 2006 Revenue Contribution Margin % of Revenue Contribution Margin Â£m Â£m % revenue Â£m Â£m % ------------- -------- -------- ------- ------- ------- -------- ------ Games 43.6 9.3 21% 50% 44.7 7.6 17% Music & Movies 19.5 4.6 24% 22% 18.1 5.6 31% Technology 17.6 5.1 29% 20% 17.9 4.8 27% Active 6.8 (1.0) - 8% 6.1 (0.1) - ------------- -------- -------- ------- ------- ------- -------- ------ Overheads 87.5 18.0 21% 100% 86.8 17.9 21% (12.5) (13.2) ------------- -------- -------- ------- ------- ------- -------- ------ EBITAE 5.5 6% 4.7 5% Exceptional items (1.0) (1.1) Amortisation and impairment (1.7) (20.6) ------------- -------- -------- ------- ------- ------- -------- ------ Operating profit/(loss) 2.8 (17.0) ------------- -------- -------- ------- ------- ------- -------- ------ Overall revenue increased by 1% in constant currencies in the US, with a decrease in circulation revenue offset by increases in online advertising revenue and customer publishing. The performance of www.gamesradar.com has been very encouraging and has contributed significantly to our US games margin improvement year-on-year. We took action during the year to restructure our New York-based music business, designed to improve operating performance. In technology, MacLife had a very successful launch and drove the year-on-year margin improvement in that area. With effect from 1 January 2008 we are moving distribution of all our US magazines to Time Warner Retail, one of the largest magazine distributors in the US. As with the UK we have kept the cost base under constant review. Group performance for year ended 30 September 2007 (normalised) 2007 2007 2007 2007 2006 2006 2006 Revenue Contribution Margin % of Revenue Contribution Margin Â£m Â£m % revenue Â£m Â£m % -------- -------- ------- ------- ------- -------- ------ Games 49.0 13.5 28% 31% 53.6 13.4 25% Music & Movies 34.3 8.8 26% 21% 33.0 9.5 29% Technology 43.3 13.0 30% 27% 43.6 13.8 32% Active 32.9 6.2 19% 21% 34.0 6.1 18% ------------- -------- -------- ------- ------- ------- -------- ------ 159.5 41.5 26% 100% 164.2 42.8 26% ------------- -------- -------- ------- ------- ------- -------- ------ Less: intra-group (0.3) (0.3) ------------- -------- -------- ------- ------- ------- -------- ------ Overheads 159.2 (27.8) 163.9 (29.4) ------------- -------- -------- ------- ------- ------- -------- ------ EBITAE 13.7 9% 13.4 8% Exceptional items 1.7 (7.3) Amortisation and impairment (3.6) (38.8) ------------- -------- -------- ------- ------- ------- -------- ------ Operating profit/(loss) 11.8 (32.7) ------------- -------- -------- ------- ------- ------- -------- ------ Exceptional items Net exceptional credits for the year totalled Â£1.7m (2006: exceptional costs of Â£7.3m). An exceptional credit of Â£1.7m reflects the release of previous property provisions. The largest element was in respect of the Group's previous office in London, where the Group negotiated a surrender of the entire lease, which was due to expire in 2012. The Group incurred costs relating to redundancy, restructuring and other costs totalling Â£1.0m. During the year, the Group realised a profit of Â£1.0m in relation to the disposal of English-language magazine titles and trademarks. Discontinued operations During the year, Â£6.8m of profit arose from discontinued operations in France and Italy. This comprises Â£4.5m profit on disposal, Â£0.8m of EBITAE and Â£1.4m of provisions released. The tax charge relating to this profit is Â£0.1m. Leasehold property and related balance sheet provisions All previously unoccupied property has now been either assigned, sub-let or the lease surrendered. Property provisions carried at 30 September 2007 totalled Â£0.3m (2006: Â£4.4m). Intangible assets The annual charge for amortisation of intangible assets was Â£3.6m (2006: Â£5.8m). The reduction reflects a number of intangible assets having been fully written down during the previous year. No impairment charge was required this year (2006: Â£33.0m). Taxation The Group's tax strategy is to minimise its liabilities to taxation, having regard to commercial circumstances, tax history, the risk of changing legislation, and delays in agreeing matters in certain territories. The tax charge for the year amounted to Â£1.8m (2006: tax credit of Â£1.9m), comprising a current tax charge of Â£1.8m and a deferred tax charge of Â£Nil. The Â£1.8m represents an effective tax rate of 24% as applied to profit before tax and exceptionals. The standard rates of corporation tax are 30% (UK, reducing to 28% from April 2008) and 41% (US). The Group benefits from the structuring of certain acquisitions and other planning steps. Earnings per share Basic earnings per share for the total group were 4.4p (2006: loss per share of 14.5p). Based on normalised results and after adjustments to exclude the impact of intangible amortisation and impairment and exceptional items (including any related tax effects), profit after tax amounted to Â£8.1m (2006: Â£7.2m). With a weighted average of 324.6m shares in issue, adjusted earnings per share were up 14% on last year at 2.5p per share (2006: 2.2p). Full details are set out in note 10 and note 3 to the normalised results. Group revenues (normalised) The tables below analyse Group revenues in sterling. Revenue by country % of 2007 2006 Change Group Â£m Â£m % --------------- ------- ----------- ----------- ------------- UK 72% 115.1 116.0 - 1% US 28% 44.4 48.2 - 8% Intra-group - (0.3) (0.3) - --------------- ------- ----------- ----------- ------------- Group revenue 100% 159.2 163.9 - 3% --------------- ------- ----------- ----------- ------------- Revenue by type % of 2007 2006 Change Group Â£m Â£m % --------------- ------- ----------- ----------- ------------- Circulation 60% 96.1 101.3 - 5% Advertising 36% 56.7 57.0 - 1% Licensing & events 4% 6.4 5.6 + 14% --------------- ------- ----------- ----------- ------------- Group revenue 100% 159.2 163.9 - 3% --------------- ------- ----------- ----------- ------------- Advertising revenue % of 2007 2006 Change Group Â£m Â£m % --------------- ------- ----------- ----------- ------------- Magazines 74% 42.0 47.5 - 12% Online 12% 6.9 4.6 + 50% Future Plus 14% 7.8 4.9 + 59% --------------- ------- ----------- ----------- ------------- Advertising revenue 100% 56.7 57.0 - 1% --------------- ------- ----------- ----------- ------------- Proportion of Group UK US Group ------------------- ------------- ----------- ------------- Games 17% 14% 31% Music & Movies 15% 6% 21% Technology 22% 5% 27% Active 18% 3% 21% ------------------- ------------- ----------- ------------- Total 72% 28% 100% ------------------- ------------- ----------- ------------- Currency effect on revenues and profits The Group impact of adverse currency movements was related to the US Dollar, which weakened by 9% against the pound. This held back total revenues by Â£4.6m and therefore normalised revenues in constant currencies were flat. Normalised EBITAE of Â£13.7m was similarly held back by Â£0.7m. Half-yearly performance The table below analyses the normalised business results during the last two years into first half and second-half performance. First Second Total Half-year to Half-year to March September Â£m Â£m Â£m --------- --------- ----------- Revenue Year to 30 September 2006 81.2 82.7 163.9 Year to 30 September 2007 79.2 80.0 159.2 EBITAE Year to 30 September 2006 5.7 7.7 13.4 Year to 30 September 2007 6.9 6.8 13.7 ------------------- --------- --------- ----------- During 2007, the second half-year saw the majority of our online spend. Balance sheet As is common in media companies, Future has a low capital base and its value is better measured from its strong cash flows rather than by returns on capital employed. The Group's net assets at 30 September 2007 amounted to Â£74.5m (2006: Â£63.6m) of which Â£109.1m (2006: Â£111.6m) related to intangible fixed assets. While the Group's net assets increased from Â£63.6m to Â£74.5m, the Group's net debt decreased from Â£32.8m to Â£24.3m. The Group's balance sheet is therefore stronger than a year ago. The Company's distributable profits at 30 September 2007 were Â£72.9m. Cash flow and net debt Net debt at 30 September 2006 was Â£32.8m. Future continues to be cash-generative and the major cash inflows during the year were cash generated from operations of Â£14.0m and net proceeds from disposals of Â£3.7m and Â£0.6m in net tax receipts. During the year the Group paid out Â£3.2m in dividends, Â£2.3m in respect of capital expenditure, Â£2.5m on acquisitions and Â£2.4m in net interest payments. The Group's net bank debt at 30 September 2007 was Â£24.3m, a reduction of 26% since 2006 and a reduction of more than 38% since 2005. Bank facility Future funds its operations through a mixture of operating cash flow generated by the business and bank debt. At 30 September 2007 the position at the year end is well within the bank covenants as set out in the following table. Bank covenants Year-end Bank covenant Net debt/ EBITDA 1.4 times Less than 2.5 times EBITDA / interest 7.5 times More than 3.5 times Business Outlook for 2008 The EBITAE outturn for 2007 exceeded the Group's budget. Given tough trading conditions and some sector-specific challenges, the Board believes that the business has developed significantly during the year. We expect to make further progress in 2008, but like most consumer-facing businesses, we think it prudent to take a cautious view of our markets. The business outlook for 2008 will be influenced by a number of issues. Some market segments have a more positive outlook than a year ago, while others remain challenging. Revenues may be impacted by the state of consumer confidence in the UK and US, which could impact advertising demand and magazine purchases; and by our ability to continue growing online advertising and customer publishing revenues. Nonetheless, our new financial year is ahead of budget and we aspire to achieve modest growth in total revenue in 2008, predominantly organic. We will continue to invest online and in partnership publishing. Our largest expenditure is on people costs, and most salaries have been reviewed at 1 October 2007 to reflect, on average, an inflationary increase. The majority of our direct costs (paper, print and discs) are underpinned by contracted rates applicable throughout the major part of the new financial year. We are seeking to improve the overall proportion of sold magazines to those printed, although this cannot be taken for granted. We have changed our principal magazine distributor in the UK (from May 2007) and will change in the US from January 2008. The majority of our EBITA profits are expected to be converted to cash. Cash outflows in 2008 are expected to include capital expenditure (not exceeding Â£2.9m), the net interest cost arising on our bank borrowings (which is likely to be readily affordable from profits before interest), business taxation and dividend payments. We do not anticipate any exceptional costs in 2008. Since the year-end the value of the US Dollar has declined further against the pound. Any weakening of the US Dollar below the average exchange rate of $1.96 = Â£1 (applicable to the last financial year) will reduce the size of US revenues and profits when reported in sterling. The phasing of our EBITA profit in 2008 is expected to reflect both intensity of investment in the first half and anticipated business activity levels in the second half. If we achieve our budget for 2008 then we will achieve progress against our performance indicators for the financial year as a whole. Consolidated income statement for the year ended 30 September 2007 2007 2006 Note Â£m Â£m ------ --------- --------- Continuing operations Revenue 1,2 165.7 188.1 -------------------------------- ------ --------- --------- Operating profit before exceptional items, impairment and 14.0 12.1 amortisation of intangible assets Exceptional items 5 1.7 (7.3) Impairment of intangible assets 4,13 - (33.0) Amortisation of intangible assets 4,13 (3.6) (5.8) -------------------------------- ------ --------- --------- Operating profit/(loss) 1,3 12.1 (34.0) Finance income 7 0.6 0.4 Finance costs 7 (3.5) (3.1) -------------------------------- ------ --------- --------- Net finance costs 7 (2.9) (2.7) -------------------------------- ------ --------- --------- Profit/(loss) before tax 4 9.2 (36.7) Tax on profit/(loss) 8 (1.8) 1.9 -------------------------------- ------ --------- --------- Profit/(loss) for the year from continuing 7.4 (34.8) operations Discontinued operations Profit/(loss) for the year from discontinued 11 6.8 (12.4) operations ------ --------- --------- -------------------------------- Profit/(loss) for the year 14.2 (47.2) -------------------------------- ------ --------- --------- Earnings per 1p Ordinary share Note 2007 2006 pence pence ------ --------- --------- Basic earnings/(loss) per share - Total Group 10 4.4 (14.5) Diluted earnings/(loss) per share - Total Group 10 4.3 (14.5) -------------------------------- ------ --------- --------- Basic earnings/(loss) per share - Continuing 10 2.3 (10.7) operations Diluted earnings/(loss) per share - Continuing operations 10 2.2 (10.7) -------------------------------- ------ --------- --------- Consolidated statement of changes in equity for the year ended 30 September 2007 Share Share Merger Treasury Retained Total capital premium reserve reserve earnings equity Note Â£m Â£m Â£m Â£m Â£m Â£m ----- ------ ------- ------- ------- ------- ------ Balance at 1 October 2005 3.3 24.4 109.0 - (19.2) 117.5 ----- ------ ------- ------- ------- ------- ------ Loss for the year - - - - (47.2) (47.2) Currency translation differences - - - - (0.4) (0.4) ----- ------ ------- ------- ------- ------- ------ Total recognised loss for the year - - - - (47.6) (47.6) Final dividend relating to 2005 9 - - - - (4.2) (4.2) Interim dividend relating to 2006 9 - - - - (1.7) (1.7) Share option schemes - Value of employees'services 6 - - - - 0.7 0.7 - Deferred tax on options 8 - - - - (0.1) (0.1) Treasury shares acquired - - - (1.1) - (1.1) New share capital subscribed - 0.1 - - - 0.1 ----- ------ ------- ------- ------- ------- ------ Balance at 30 September 2006 3.3 24.5 109.0 (1.1) (72.1) 63.6 ----- ------ ------- ------- ------- ------- ------ Profit for the year - - - - 14.2 14.2 Currency translation differences - - - - (1.0) (1.0) ----- ------ ------- ------- ------- ------- ------ Total recognised profit for the year - - - - 13.2 13.2 Final dividend relating to 2006 9 - - - - (1.6) (1.6) Interim dividend relating to 2007 9 - - - - (1.6) (1.6) Share option schemes - Value of employees' services 6 - - - - 0.9 0.9 Transfer between reserves - - - 0.4 (0.4) - ----- ------ ------- ------- ------- ------- ------ Consolidated balance sheet as at 30 September 2007 ------ --------- --------- 2007 2006 Note Â£m Â£m ------ --------- --------- Assets Non-current assets Property, plant and equipment 12 4.9 6.2 Intangible assets - goodwill 13 104.8 104.7 Intangible assets - other 13 4.3 6.9 Deferred tax 14 2.9 3.5 -------------------------------- ------ --------- --------- Total non-current assets 116.9 121.3 -------------------------------- ------ --------- --------- Current assets Inventories 15 3.1 4.9 Corporation tax recoverable 0.4 2.6 Trade and other receivables 16 30.2 36.8 Cash and cash equivalents 17 14.2 20.0 -------------------------------- ------ --------- --------- Total current assets 47.9 64.3 -------------------------------- ------ --------- --------- Total assets 164.8 185.6 -------------------------------- ------ --------- --------- Equity and liabilities Equity Issued share capital 3.3 3.3 Share premium account 24.5 24.5 Merger reserve 21 109.0 109.0 Treasury reserve 21 (0.7) (1.1) Retained earnings (61.6) (72.1) -------------------------------- ------ --------- --------- Total equity 74.5 63.6 -------------------------------- ------ --------- --------- Non-current liabilities Financial liabilities - interest-bearing loans and borrowings 19 21.8 25.8 Deferred tax 14 1.9 1.9 Provisions 20 1.4 5.6 Other non-current liabilities 2.4 2.6 -------------------------------- ------ --------- --------- Total non-current liabilities 27.5 35.9 -------------------------------- ------ --------- --------- Current liabilities Financial liabilities - interest-bearing loans and borrowings 19 16.7 27.0 Trade and other payables 18 44.9 58.9 Corporation tax payable 1.2 0.2 -------------------------------- ------ --------- --------- Total current liabilities 62.8 86.1 -------------------------------- ------ --------- --------- Total liabilities 90.3 122.0 -------------------------------- ------ --------- --------- Total equity and liabilities 164.8 185.6 -------------------------------- ------ --------- --------- Consolidated cash flow statement for the year ended 30 September 2007 ------- ------- 2007 2006 Â£m Â£m ------- ------- Cash flows from operating activities Cash generated from operations 14.0 24.0 Interest received 0.6 0.5 Tax received 2.5 0.2 Interest paid (3.0) (3.2) Tax paid (1.9) (0.9) ------------------------- ------- ------- Net cash generated from operating activities 12.2 20.6 ------------------------- ------- ------- Cash flows from investing activities Purchase of property, plant and equipment (1.3) (4.2) Purchase of magazine titles, websites and trademarks (2.5) (2.4) Purchase of computer software and website development (1.0) (0.9) Disposal of magazine titles and trademarks 0.5 - Disposal of software 0.2 - Disposal of subsidiary undertakings 6.0 - Cost of business disposals (0.3) - Net cash disposed with subsidiary undertakings (2.7) - ------------------------- ------- ------- Net cash used in from investing activities (1.1) (7.5) ------------------------- ------- ------- Cash flows from financing activities Proceeds from issue of Ordinary share capital - 0.1 Purchase of own shares by Employee Benefit Trust - (1.1) Draw down of bank loans 9.0 7.3 Repayment of bank loans (22.5) (4.0) Rearrangement fees for bank loans (0.2) - Equity dividends paid (3.2) (5.9) ------------------------- ------- ------- Net cash used in financing activities (16.9) (3.6) ------------------------- ------- ------- Net (decrease)/increase in cash and cash equivalents (5.8) 9.5 Cash and cash equivalents at beginning of year 20.0 10.7 Exchange adjustments - (0.2) ------------------------- ------- ------- Cash and cash equivalents at end of year 14.2 20.0 ------------------------- ------- ------- Amount attributable to - Continuing operations 14.2 20.0 - Discontinued operations - - ------- ------- Notes to the cash flow statement for the year ended 30 September 2007 A. Cash generated from operations The reconciliation of operating profit/(loss) to cash flows generated from operations is set out below: ------- ------- 2007 2006 Â£m Â£m ------- ------- Operating profit/(loss) for the year - Continuing operations 12.1 (34.0) - Discontinued operations 2.2 (12.4) ------- ------- Operating profit/(loss) for the year - Total Group 14.3 (46.4) Adjustments for: Depreciation charge 2.2 2.0 Profit on disposal of magazine titles and trademarks (1.0) - Amortisation of intangible assets 3.6 5.9 Impairment of intangible assets - 45.0 ----------------------------- ------- ------- Share option schemes 0.9 0.7 - value of employees' services ------- ------- Operating profit before changes in working capital and provisions 20.0 7.2 Movement in provisions (4.8) 3.4 Decrease in inventories 0.5 1.2 Decrease/(increase) in trade and other receivables 2.3 8.2 (Decrease)/Increase in trade and other payables (4.0) 4.0 ----------------------------- ------- ------- Cash generated from operations 14.0 24.0 ----------------------------- ------- ------- B. Analysis of net debt 1 October Cash flows Disposals Non-cash Exchange 30 September changes movements 2006 Â£m Â£m Â£m Â£m 2007 Â£m Â£m -------- -------- -------- -------- -------- -------- Cash and cash equivalents 20.0 (3.1) (2.7) - - 14.2 Debt due within one year (27.0) 13.5 - (4.0) 0.8 (16.7) Debt due after more than one year (25.8) - - 4.0 - (21.8) ---------------- -------- -------- -------- -------- -------- -------- Net debt (32.8) 10.4 (2.7) - 0.8 (24.3) ---------------- -------- -------- -------- -------- -------- -------- C. Reconciliation of movement in net debt -------- -------- 2007 2006 Â£m Â£m -------- -------- Net debt at start of year (32.8) (39.5) (Decrease)/Increase in cash and cash equivalents (3.1) 9.5 Cash disposed with subsidiaries (2.7) - Movement in borrowings 13.5 (3.3) Exchange movements 0.8 0.5 ---------------------------- -------- -------- Net debt at end of year (24.3) (32.8) ---------------------------- -------- -------- Basis of preparation This preliminary statement of annual results for the year ended 30 September 2007 is unaudited and does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The information contained in this statement is based on the statutory accounts for the year ended 30 September 2007. The statutory accounts have not yet been delivered to the Registrar of Companies nor have the auditors yet reported on these. The statutory accounts are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee's (IFRIC) interpretations as adopted by the European Union (EU) applicable at 30 September 2007, and those parts of the Companies Act applicable to companies reporting under IFRS. The accounting policies adopted are consistent with those set out in the Group's statutory accounts for the year ended 30 September 2006, with the exception of that noted below. The Group has adopted IFRIC 11 (IFRS 2: Group and Treasury Shares Transactions) which was not mandatory for this accounting period. The adoption of this interpretation did not have a material impact on the Group's results. Notes to the financial statements 1. Segmental reporting A geographical segment is based on the economic environment in which an entity operates. The Group's continuing operations are split geographically between the UK and the US. Future Media Italy and Future France, previously managed as part of the Mainland Europe segment were sold on 1 December 2006 and 28 September 2007 respectively. These are disclosed as discontinued operations (see note 11 for further details). The geographical analysis is stated on the basis of origin of operations. (a) Primary reporting format - Geographical segment Analysis by primary segment is shown below: (i) Revenue by segment --------- --------- 2007 2006 Â£m Â£m --------- --------- United Kingdom 118.4 128.3 United States 47.6 60.1 Revenue between segments (0.3) (0.3) ------------------------------------- --------- --------- Total continuing operations 165.7 188.1 ------------------------------------- --------- --------- Inter segment pricing is determined on an arms length basis. (ii) Revenue by destination The Group's primary segments are based on the geographical location of segment assets, which can differ from the geographical market in which the customer is located. An analysis by destination is shown below: --------- --------- 2007 2006 Â£m Â£m --------- --------- United Kingdom 95.3 104.2 United States 51.8 63.4 Mainland Europe 10.5 11.6 Rest of the world 8.4 9.2 Revenue between segments (0.3) (0.3) ------------------------------------- --------- --------- Total continuing operations 165.7 188.1 ------------------------------------- --------- --------- (iii) Operating profit/(loss) by segment --------- --------- 2007 2006 Â£m Â£m --------- --------- United Kingdom 13.7 (19.7) United States 1.9 (10.2) Central costs (3.5) (4.1) ------------------------------------- --------- --------- Operating profit/(loss) on continuing operations 12.1 (34.0) ------------------------------------- --------- --------- (iv) Assets and liabilities by segment Segment Assets Segment Segment Net Liabilities Assets 2007 2006 2007 2006 2007 2006 Â£m Â£m Â£m Â£m Â£m Â£m ------- ------- ------- ------- ------- ------- United Kingdom 133.4 135.9 (70.1) (80.4) 63.3 55.5 United States 31.4 36.2 (20.2) (26.0) 11.2 10.2 Discontinued Operations - 13.5 - (15.6) - (2.1) --------------------- ------- ------- ------- ------- ------- ------- Total 164.8 185.6 (90.3) (122.0) 74.5 63.6 --------------------- ------- ------- ------- ------- ------- ------- (v) Other segment information Capital Depreciation Impairment Exceptional expenditure and charges items Amortisation 2007 2006 2007 2006 2007 2006 2007 2006 Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m ------- ------- ------ ------ ------ ------- ------ ------- United Kingdom 3.9 3.2 4.0 5.7 - 22.8 (2.2) 6.7 United States 0.9 4.7 1.7 1.9 - 10.2 0.5 0.6 ------------- ------- ------- ------ ------ ------ ------- ------ ------- Continuing operations 4.8 7.9 5.7 7.6 - 33.0 (1.7) 7.3 Discontinued operations 0.1 0.1 0.1 0.3 - 12.0 (5.9) 1.9 ------------- ------- ------- ------ ------ ------ ------- ------ ------- Total 4.9 8.0 5.8 7.9 - 45.0 (7.6) 9.2 ------------- ------- ------- ------ ------ ------ ------- ------ ------- Other than the items disclosed above and a share-based payments charge of Â£0.9m (2006: Â£0.7m), there were no other significant non-cash expenses during the year. (b) Secondary reporting format - Business segment After geographical location, the Group is managed into four principal business segments. During the year, the Group revised its' principal business segments to better reflect the way in which the Group is managed. Comparative numbers are restated on this new basis. Each business segment comprises groups of individual magazines, websites, and shows, combined according to the market sector in which they operate. The Group considers that the assets within each segment are exposed to the same risks. (i) Revenue by segment --------- --------- 2007 2006 Â£m Â£m --------- --------- Games 49.0 53.6 Music & Movies 37.5 42.0 Technology 43.6 45.3 Active 35.9 47.5 Revenue between segments (0.3) (0.3) ------------------------------------- --------- --------- Total continuing operations 165.7 188.1 ------------------------------------- --------- --------- (ii) Gross profit by segment --------- --------- 2007 2006 Â£m Â£m --------- --------- Games 13.5 13.4 Music & Movies 9.2 9.8 Technology 13.0 13.9 Active 6.1 5.3 Add back: distribution expenses 11.2 13.7 ------------------------------------- --------- --------- Total continuing operations 53.0 56.1 ------------------------------------- --------- --------- Information regarding operating profit, total costs incurred during the year to acquire, and total carrying amount of, segment assets would require arbitrary allocation and is therefore not provided. 2. Revenue An additional analysis of the Group's revenue is shown below: --------- --------- 2007 2006 Â£m Â£m --------- --------- Circulation 99.3 111.9 Advertising 59.8 70.2 Other 6.6 6.0 ------------------------------------- --------- --------- Total continuing operations 165.7 188.1 ------------------------------------- --------- --------- 3. Operating profit/(loss) on continuing operations --------- --------- 2007 2006 Â£m Â£m --------- --------- Revenue 165.7 188.1 Cost of sales (112.7) (132.0) ------------------------------------- --------- --------- Gross profit 53.0 56.1 Distribution expenses (11.2) (13.7) Administration expenses (including exceptional items) (26.1) (37.6) Impairment of intangible assets - (33.0) Amortisation of intangible assets (3.6) (5.8) ------------------------------------- --------- --------- Operating profit/(loss) on continuing operations 12.1 (34.0) ------------------------------------- --------- --------- 4. Profit/(loss) before tax --------- --------- --------- --------- 2007 2007 2006 2006 Â£m Â£m Â£m Â£m Continuing Total Continuing Total --------- --------- --------- --------- Profit/(loss) before tax is stated after charging/(crediting): Employee costs (note 6) 49.2 55.8 51.3 60.2 Depreciation of owned assets (note 12) 2.1 2.2 1.8 2.0 Impairment of intangible assets (note 13) - - 33.0 45.0 Amortisation of intangible assets (note 13) 3.6 3.6 5.8 5.9 Hire of machinery and equipment 0.2 0.3 0.2 0.3 Other operating lease rentals 3.5 4.0 4.6 5.3 Exceptional items (credit)/charge (note 5) (1.7) (7.6) 7.3 9.2 Net exchange differences on foreign currency balances 0.1 0.1 - - ----------------------- --------- --------- --------- --------- The difference between continuing and total relates to items associated with discontinued operations. 5. Exceptional items on continuing operations --------- --------- 2007 2006 Â£m Â£m --------- --------- Property (credit)/charge (1.7) 4.0 Restructuring and redundancy costs 0.9 3.3 Other costs 0.1 - Profit on disposal of magazine titles and trademarks (1.0) - ------------------------------------- --------- --------- Total (1.7) 7.3 ------------------------------------- --------- --------- The property credit consists mainly of the reversal of provisions made in respect of leases on office space in London and Bath which were vacated in 2006. These leases have either been surrendered or assigned during 2007. Restructuring and redundancy costs relate mainly to staff termination payments following restructuring of the UK and US businesses in line with the Group's strategy. The profit on disposal is in respect of magazines titles and trademarks sold in the UK and US. 6. Employees 2007 2007 2006 2006 Â£m Â£m Â£m Â£m Continuing Total Continuing Total --------- --------- --------- --------- Wages and salaries 42.1 46.8 44.0 50.4 Social security costs 5.1 6.9 5.6 7.9 Other pension costs 1.1 1.2 1.0 1.2 ----------------------- --------- --------- --------- --------- Share option schemes 0.9 0.9 0.7 0.7 - Value of employees' services ----------------------- --------- --------- --------- --------- Total staff costs on continuing operations 49.2 55.8 51.3 60.2 ----------------------- --------- --------- --------- --------- Average monthly number of people for the total Group (including executive Directors) 2007 2006 No. No. --------- --------- --------- --------- Production 1,125 1,219 Administration 313 342 ----------------------- --------- --------- --------- --------- Total 1,438 1,561 ----------------------- --------- --------- --------- --------- At 30 September 2007, the actual number of people employed by the Group was 1,222 (2006: 1,577). In respect of our primary segments, 1,029 were employed in the UK and 193 in the US. IFRS 2 'Share-based payments' requires an expense for equity instruments granted to be recognised over the appropriate vesting period, measured at their fair value at the date of grant. The Group has used the Black Scholes model to value instruments with non market-based performance criteria such as earnings per share. For instruments with market-based performance criteria, notably total shareholder return, the Group has used a Monte Carlo model to determine the fair value. The expense for the year of Â£0.9m (2006: Â£0.7m) has been credited to reserves. 7. Finance income and costs --------- --------- 2007 2006 Â£m Â£m --------- --------- Interest receivable 0.6 0.4 ------------------------------------- --------- --------- Total finance income 0.6 0.4 ------------------------------------- --------- --------- Interest payable on interest-bearing loans and borrowings (3.2) (3.1) Exchange losses (0.1) - Rearrangement fees for bank loans (0.2) - ------------------------------------- --------- --------- Total finance costs (3.5) (3.1) ------------------------------------- --------- --------- Net finance costs on continuing operations (2.9) (2.7) ------------------------------------- --------- --------- 8. Tax on profit/(loss) The tax charged/(credited) in the consolidated income statement for continuing operations is analysed below: --------- --------- 2007 2006 Â£m Â£m --------- --------- UK corporation tax Current tax at 30% (2006: 30%) on the profit/(loss) for 2.0 (0.6) the year Adjustments in respect of previous years 0.1 (0.4) ------------------------------------- --------- --------- 2.1 (1.0) Foreign tax Current tax on the profit/(loss) for the year 0.2 0.6 Adjustments in respect of previous years (0.5) 0.7 ------------------------------------- --------- --------- Current Tax 1.8 0.3 ------------------------------------- --------- --------- Deferred tax origination and reversal of timing differences Current year charge/(credit) 0.3 (2.2) Adjustments in respect of previous years (0.3) - ------------------------------------- --------- --------- Deferred Tax - (2.2) ------------------------------------- --------- --------- Total tax charge/(credit) on continuing operations 1.8 (1.9) ------------------------------------- --------- --------- Tax on items charged to equity is analysed below: --------- --------- 2007 2006 Â£m Â£m --------- --------- Deferred tax - on share scheme notional gains charged to reserves - 0.1 ------------------------------------- --------- --------- The Group is awaiting the outcome of a claim in respect of losses incurred in EU based subsidiaries which, if successful, would give rise to a tax credit and repayment of an amount in the region of Â£1.5m. Due to the legal complexity and uncertainty of success, the claim has not been reflected in these financial statements. The tax assessed in each year differs from the standard rate of corporation tax in the UK for the relevant year. The differences are explained below: --------- --------- 2007 2006 Â£m Â£m --------- --------- Profit/(loss) before tax 9.2 (36.7) ------------------------------------- --------- --------- Profit/(loss) before tax at the standard UK tax rate of 2.8 (11.0) 30% Different tax rates applicable overseas 0.2 - Intangibles: differences relating to amortisation 0.1 (0.9) Intangibles: differences relating to impairment - 9.9 Tangibles: differences relating to depreciation (0.2) - Profit and loss: losses generated and unutilised - 0.3 Profit and loss: utilisation of brought forward losses - 0.2 Profit and loss: other allowable/disallowable items (0.2) (0.7) Profit and loss: profits relieved by capital losses (0.2) - Impact of prior year adjustments (0.7) 0.3 ------------------------------------- --------- --------- Total tax charge/(credit) on continuing operations 1.8 (1.9) ------------------------------------- --------- --------- 9. Dividends Equity dividends 2007 2006 ------------------------------------- --------- --------- Number of shares in issue at end of year (million) 326.6 326.5 Dividends paid in year (pence per share) 1.0 1.8 ------------------------------------- --------- --------- Dividends paid in year (Â£m) 3.2 5.9 ------------------------------------- --------- --------- In accordance with IFRS, interim dividends are recognised in the period in which they are paid and final dividends are recognised in the period in which they are approved. A dividend in respect of the year ended 30 September 2007 of 0.6 pence per share, amounting to a total dividend of Â£2.0m, is to be proposed at the Annual General Meeting on 29 January 2008. These financial statements do not reflect this dividend. The dividends totalling Â£3.2m paid during the year ended 30 September 2007 relate to the interim dividend for the six month period to 31 March 2007 of 0.5 pence per share (Â£1.6m) and the final dividend declared for the year ended 30 September 2006 of 0.5 pence per share (Â£1.6m). The dividends totalling Â£5.9m paid during the year ended 30 September 2006 relate to the interim dividend for the six month period to 31 March 2006 of 0.5 pence per share (Â£1.7m) and the final dividend declared for the year ended 30 September 2005 of 1.3 pence per share (Â£4.2m). 10. 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 shares that would be issued on conversion into Ordinary shares of options held under employee share schemes. Total Group 2007 2006 ------------------------------------ --------- --------- Profit/(loss) after tax (Â£m) 14.2 (47.2) ------------------------------------ --------- --------- Weighted average number of shares outstanding during the year: - basic 324,645,517 325,697,195 - dilutive effect of share options 5,168,274 1,435,955 - diluted 329,813,791 327,133,150 Basic earnings/(loss) per share (in pence) 4.4 (14.5) Diluted earnings/(loss) per share (in pence) 4.3 (14.5) ------------------------------------ --------- --------- The share options do not have a dilutive effect where there is a loss. Continuing operations 2007 2006 ------------------------------------ --------- --------- Profit/(loss) after tax (Â£m) 7.4 (34.8) ------------------------------------ --------- --------- Weighted average number of shares outstanding during the year: - basic 324,645,517 325,697,195 - dilutive effect of share options 5,168,274 1,435,955 - diluted 329,813,791 327,133,150 Basic earnings/(loss) per share (in pence) 2.3 (10.7) Diluted earnings/(loss) per share (in pence) 2.2 (10.7) ------------------------------------ --------- --------- The share options do not have a dilutive effect where there is a loss. Discontinued operations 2007 2006 ------------------------------------ --------- --------- Profit/(loss) after tax (Â£m) 6.8 (12.4) ------------------------------------ --------- --------- Weighted average number of shares outstanding during the year: - basic 324,645,517 325,697,195 - dilutive effect of share options 5,168,274 1,435,955 - diluted 329,813,791 327,133,150 Basic earnings/(loss) per share (in pence) 2.1 (3.8) Diluted earnings/(loss) per share (in pence) 2.1 (3.8) ------------------------------------ --------- --------- The share options do not have a dilutive effect where there is a loss. 11. Assets held for sale and discontinued operations The profit/(loss) for the year from discontinued operations is analysed below: --------- --------- 2007 2006 Â£m Â£m --------- --------- France 0.7 1.3 Italy 0.1 0.3 ------------------------------------- --------- --------- Operating profit before exceptional items, impairment and 0.8 1.6 amortisation of intangible assets Exceptional items 1.4 (1.9) Impairment of intangible assets - (12.0) Amortisation of intangible assets (0.1) ------------------------------------- --------- --------- Operating profit/(loss) 2.2 (12.4) Net finance income 0.2 0.1 ------------------------------------- --------- --------- Profit/(loss) on discontinued operations before tax 2.4 (12.3) Tax on profit/(loss) on discontinued operations (0.1) (0.1) ------------------------------------- --------- --------- Profit/(loss) after tax of discontinued operations 2.3 (12.4) ------------------------------------- --------- --------- Gain on sale of operations 4.5 - Tax on sale of operations - - ------------------------------------- --------- --------- Gain on sale of operations after tax 4.5 - ------------------------------------- --------- --------- Profit/(loss) from discontinued operations 6.8 (12.4) ------------------------------------- --------- --------- (i) Disposal of Future Media Italy During the year, the Group disposed of its interest in Future Media Italy and as such the results of Future Media Italy have been presented as 'discontinued operations'. The business was sold for cash proceeds of Â£0.7m, resulting in a profit on disposal of Â£0.1m. During the year Future Media Italy reduced the Group's operating cash flows by Â£1.3m, paid Â£nil in respect of investing activities and paid Â£nil in respect of financing activities. The results of Future Media Italy are set out below: --------- --------- 2007 2006 Â£m Â£m --------- --------- Revenue 2.2 12.8 ----------------------------- --------- --------- Operating profit before exceptional items, impairment and amortisation of intangible assets 0.1 0.3 Exceptional items - (0.2) Impairment of intangible assets - (12.0) Amortisation of intangible assets - (0.1) ----------------------------- --------- --------- Operating profit/(loss) 0.1 (12.0) ----------------------------- --------- --------- Profit/(loss) before tax 0.1 (12.0) Tax on profit/(loss) - - ----------------------------- --------- --------- Profit/(loss) after tax of discontinued operations 0.1 (12.0) ----------------------------- --------- --------- Gain on sale of operations 0.1 - Tax on sale of operations - - ----------------------------- --------- --------- Gain on sale of operations after tax 0.1 - ----------------------------- --------- --------- Profit/(loss) from discontinued operations 0.2 (12.0) ----------------------------- --------- --------- An analysis of the assets and liabilities of Future Media Italy at the disposal date of 1 December 2006 is set out below: Â£m ------------- Property, plant and equipment 0.1 Inventories 0.6 Trade and other receivables 3.3 Cash and cash equivalents 0.6 Trade and other payables (4.2) ----------------------- ------------- Net assets at disposal 0.4 ----------------------- ------------- (ii) Disposal of Future France During the year, the Group disposed of its interest in Future France and as such the results of Future France have been presented as 'discontinued operations'. The business was sold for cash proceeds of Â£9.3m of which Â£1.0m relates to licence income received in advance, resulting in a profit on disposal of Â£4.4m. Â£4.0m of the disposal proceeds is receivable subsequent to balance sheet date. During the year Future France increased the Group's operating cash flows by Â£0.3m, paid Â£0.1m in respect of investing activities and paid Â£nil in respect of financing activities. The results of Future France are set out below: --------- --------- 2007 2006 Â£m Â£m --------- --------- Revenue 21.0 24.0 ----------------------------- --------- --------- Operating profit before exceptional items, impairment and amortisation of intangible assets 0.7 1.3 Exceptional items 1.4 (1.7) ----------------------------- --------- --------- Operating profit/(loss) 2.1 (0.4) Net finance income 0.2 0.1 ----------------------------- --------- --------- Profit/(loss) before tax 2.3 (0.3) Tax on profit/(loss) (0.1) (0.1) ----------------------------- --------- --------- Profit/(loss) after tax of discontinued operations 2.2 (0.4) ----------------------------- --------- --------- Gain on sale of operations 4.4 - Tax on sale of operations - - ----------------------------- --------- --------- Gain on sale of operations after tax 4.4 - ----------------------------- --------- --------- Profit/(loss) from discontinued operations 6.6 (0.4) ----------------------------- --------- --------- An analysis of the assets and liabilities of Future France at the disposal date of 28 September 2007 is set out below: Â£m ------------- Intangible assets 0.9 Property, plant and equipment 0.2 Deferred tax asset 0.4 Inventories 0.6 Corporation tax receivable 0.5 Trade and other receivables 8.6 Cash and cash equivalents 2.1 Trade and other payables (10.1) Provisions (0.5) ----------------------- ------------- Net assets at disposal 2.7 ----------------------- ------------- 12. Property, plant and equipment --------- --------- --------- --------- Land and Plant and Equipment, Total buildings machinery fixtures and fittings Â£m Â£m Â£m Â£m --------- --------- --------- --------- Cost At 1 October 2005 2.4 6.6 1.6 10.6 Additions 1.6 2.0 1.0 4.6 Disposals - (4.1) (0.4) (4.5) Exchange adjustments (0.1) (0.1) - (0.2) ---------------------- --------- --------- --------- --------- At 30 September 2006 3.9 4.4 2.2 10.5 Additions 0.1 1.1 0.1 1.3 Disposals (0.4) (0.9) (0.2) (1.5) Exchange adjustments (0.1) (0.1) (0.1) (0.3) ---------------------- --------- --------- --------- --------- At 30 September 2007 3.5 4.5 2.0 10.0 ---------------------- --------- --------- --------- --------- ---------------------- --------- --------- --------- --------- Depreciation At 1 October 2005 (0.9) (4.9) (1.1) (6.9) Charge for the year (0.3) (1.4) (0.3) (2.0) Disposals - 4.1 0.4 4.5 Exchange adjustments 0.1 - - 0.1 ---------------------- --------- --------- --------- --------- At 30 September 2006 (1.1) (2.2) (1.0) (4.3) Charge for the year (0.3) (1.6) (0.3) (2.2) Disposals 0.3 0.8 0.1 1.2 Exchange adjustments - 0.1 0.1 0.2 ---------------------- --------- --------- --------- --------- At 30 September 2007 (1.1) (2.9) (1.1) (5.1) ---------------------- --------- --------- --------- --------- Net book value at 30 September 2007 2.4 1.6 0.9 4.9 ---------------------- --------- --------- --------- --------- Net book value at 30 September 2006 2.8 2.2 1.2 6.2 ---------------------- --------- --------- --------- --------- Asset lives and residual values are reviewed annually. Land and buildings at net book value comprise: --------- --------- 2007 2006 Â£m Â£m --------- --------- Leasehold: Over 50 years unexpired 1.0 1.0 Under 50 years unexpired 1.4 1.8 ------------------------------------ --------- --------- Total 2.4 2.8 ------------------------------------ --------- --------- 13. Intangible assets --------- --------- --------- --------- Goodwill Magazine & Other Total Website Â£m Â£m Â£m Â£m --------- --------- --------- --------- Cost At 1 October 2005 363.7 14.2 1.8 379.7 Additions through business combinations 1.4 1.0 - 2.4 Other additions - - 0.9 0.9 Adjustments to fair value on prior year acquisitions 0.1 - - 0.1 Disposals - - (0.2) (0.2) Exchange adjustments (1.6) (0.1) - (1.7) ---------------------- --------- --------- --------- --------- At 30 September 2006 363.6 15.1 2.5 381.2 Additions through business combinations 2.3 0.3 - 2.6 Other additions - - 1.0 1.0 Disposals (58.4) (2.7) (0.4) (61.5) Exchange adjustments (1.9) (0.2) (0.1) (2.2) ---------------------- --------- --------- --------- --------- At 30 September 2007 305.6 12.5 3.0 321.1 ---------------------- --------- --------- --------- --------- Amortisation At 1 October 2005 (216.4) (1.5) (1.6) (219.5) Charge for the year - (5.7) (0.2) (5.9) Impairment charges (43.1) (1.9) - (45.0) Disposals - - 0.1 0.1 Exchange adjustments 0.6 0.1 - 0.7 ---------------------- --------- --------- --------- --------- At 30 September 2006 (258.9) (9.0) (1.7) (269.6) Charge for the year - (3.0) (0.6) (3.6) Disposals 57.5 2.7 0.2 60.4 Exchange adjustments 0.6 0.1 0.1 0.8 ---------------------- --------- --------- --------- --------- At 30 September 2007 (200.8) (9.2) (2.0) (212.0) ---------------------- --------- --------- --------- --------- Net book value at 30 September 2007 104.8 3.3 1.0 109.1 ---------------------- --------- --------- --------- --------- Net book value at 30 September 2006 104.7 6.1 0.8 111.6 ---------------------- --------- --------- --------- --------- Magazine and website related assets have been recognised and relate mainly to trademarks, advertising relationships and customer lists. These assets are amortised over their estimated economic lives, typically ranging between one and five years. Any residual amount arising as a result of the purchase consideration being in excess of the value of identified magazine related assets is recorded as goodwill. Goodwill is not amortised under IFRS, but is subject to impairment testing either annually or on the occurrence of some triggering event. Goodwill is recorded and tested for impairment on a territory-by-territory basis. Other intangibles relate to capitalised software costs and website development costs. Impairment tests for goodwill and other intangibles The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill may be impaired. Other intangible assets with a definite life are tested for impairment only where there is an indication that an impairment may have occurred. The Group does not have any other intangible assets with indefinite lives. For the purpose of impairment testing, goodwill is allocated to the Group's cash generating units (CGU's) on a geographical basis: --------- --------- 2007 2006 Â£m Â£m --------- --------- UK 89.1 86.8 US 15.7 17.0 France - 0.9 Italy - - ------------------------------------ --------- --------- Total 104.8 104.7 ------------------------------------ --------- --------- The recoverable amount of a CGU is based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond five years are assumed to be constant. An appropriate discount rate of 13.4% (2006: 13.4%), representing the Group's current pre-tax cost of capital, has been applied to these projections. At 30 September 2007, the Group performed its annual impairment test on goodwill using the above discount rate for value-in-use calculations. These tests concluded that no impairment is required. The value-in-use calculations are sensitive to changes in the discount rate. If the assumed discount rate had been 18.3% for all CGUs, the goodwill allocated to our operations in UK and the US would have been impaired by Â£3.0m and Â£0.4m respectively. During 2006, the Group performed an impairment test on the goodwill and other intangible assets of its UK, US and Italian subsidiaries as a result of adverse trading performance particularly in respect of some of the acquired Highbury businesses in the UK. Consequently, an impairment charge of Â£22.8m was recognised in our UK segment, Â£10.2m was recognised in our US segment and Â£12.0m was recognised in relation to Italy. 14. Deferred tax assets and liabilities The following are the major deferred tax assets and liabilities recognised by the Group, and the movements thereon, during the current and prior year. Share- Depreciation Provisions Total Intangible based vs tax Tax and other assets payments allowances losses timing differences Â£m Â£m Â£m Â£m Â£m Â£m -------- -------- --------- ------- -------- ------- At 1 October 2005 (1.4) 0.2 0.5 0.7 (0.4) (0.4) (Charged)/credited to income statement -continuing 0.5 - 0.3 (0.2) 1.6 2.2 Charged to income statement -discontinued operations - - - (0.1) - (0.1) Charged to equity - (0.1) - - - (0.1) ---------------- -------- -------- --------- ------- -------- ------- At 30 September 2006 (0.9) 0.1 0.8 0.4 1.2 1.6 ---------------- -------- -------- --------- ------- -------- ------- (Charged)/credited to income statement -continuing (0.3) 0.2 0.3 - (0.2) - Disposals - - - (0.4) - (0.4) Exchange adjustments (0.1) - - - (0.1) (0.2) ---------------- -------- -------- --------- ------- -------- ------- At 30 September 2007 (1.3) 0.3 1.1 - 0.9 1.0 ---------------- -------- -------- --------- ------- -------- ------- Certain deferred tax assets and liabilities have been offset against each other where they relate to the same jurisdiction. The following is the analysis of deferred tax balances after offset for balance sheet purposes: --------- --------- 2007 2006 Â£m Â£m --------- --------- Deferred tax assets 2.9 3.5 Deferred tax liabilities (1.9) (1.9) ------------------------------------- --------- --------- Net deferred tax asset 1.0 1.6 ------------------------------------- --------- --------- The deferred tax asset of Â£2.9m (2006: Â£3.5m) is disclosed as a non-current asset of which the assets due within one year total Â£0.4m (2006: Â£1.3m). The deferred tax liability of Â£1.9m (2006:Â£1.9m) is disclosed as a non-current liability of which the liabilities due within one year total Â£0.2m (2006: Â£0.3m). The Group has unprovided deferred tax assets on tax losses totalling Â£1.5m (2006: Â£6.3m), of which Â£nil (2006: Â£4.2m) were held in Italy. The Group also has unprovided deferred tax assets on other temporary differences totalling Â£0.6m (2006: Â£4.4m) that are considered unlikely to be utilised in the foreseeable future due to uncertainty over the utilisation of losses and other deductions in certain tax jurisdictions. Deferred tax assets have been recognised in respect of tax losses and other temporary differences where it is probable that these assets will be recovered. No deferred tax is recognised on the un-remitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax liability in the foreseeable future. A number of changes to the UK Corporation tax system were announced in the March 2007 Budget Statement. Some were enacted in the 2007 Finance Act and have been taken account of in these financial statements. Other changes are expected to be enacted in the 2008 Finance Act. As these changes had not been substantively enacted at the balance sheet date they are not included in these financial statements. The effect of the changes enacted in the Finance Act 2007 was to reduce the deferred tax liability provided at 30 September 2007 by Â£0.1m in 2007. This decrease in deferred tax increased profit for the year by Â£0.1m. This decrease in deferred tax is due to the reduction in the corporation tax rate from 30 per cent to 28 per cent with effect from 1 April 2008. 15. Inventories --------- --------------- 2007 2006 Â£m Â£m --------- --------------- Raw materials 0.7 1.6 Work in progress 1.9 2.3 Finished Goods 0.5 1.0 ----------------------- --------- --------------- Total 3.1 4.9 ----------------------- --------- --------------- Inventory is stated after impairment of Â£nil (2006: Â£0.1m). The cost of raw material inventories recognised as an expense and included within cost of sales amounted to Â£15.2m (2006: Â£19.7m). 16. Trade and other receivables --------- --------- 2007 2006 Â£m Â£m --------- --------- Current assets: Trade receivables 21.9 31.2 Other receivables 4.5 1.4 Prepayments and accrued income 3.7 4.0 ----------------------- --------- --------- 30.1 36.6 Non current assets: Other receivables 0.1 0.2 ----------------------- --------- --------- Total 30.2 36.8 ----------------------- --------- --------- Trade receivables are shown net of a provision for impairment amounting to Â£1.4m (2006: Â£3.0m). The charge in the income statement was Â£nil (2006: Â£1.4m) for the year. 17. Cash and cash equivalents --------- --------- 2007 2006 Â£m Â£m --------- --------- Cash at bank and in hand 14.2 17.9 Short term bank deposits - 2.1 ---------------------- --------- --------- Cash and cash equivalents 14.2 20.0 ---------------------- --------- --------- The effective interest rate on short term deposits was 5.1% (2006: 4.1%). These deposits have an average maturity period of one day (2006: one day). 18. Trade and other payables --------- --------- 2007 2006 Â£m Â£m --------- --------- Trade payables 14.9 19.0 Other taxation and social security 1.2 3.0 Other payables 6.0 6.7 Accruals and deferred income 22.8 30.2 ---------------------- --------- --------- Total 44.9 58.9 ---------------------- --------- --------- 19. Financial liabilities - interest-bearing loans and borrowings Non-current liabilities Interest rate 2007 2006 at 30 Sept Â£m Â£m 2007 --------- -------- -------- Sterling term loan - unsecured 7.3% 21.8 25.8 --------------------- --------- -------- -------- Total 21.8 25.8 --------------------- --------- -------- -------- The Group has reduced its interest rate risk, with an interest rate swap on Â£15m of the outstanding debt under its committed facility, expiring October 2007. The swap has a fixed interest rate of 4.38%. Current liabilities Interest rate 2007 2006 at 30 Sept 2007 Â£m Â£m --------- -------- -------- Sterling term loan - unsecured 7.3% 4.0 4.0 Sterling revolving loan - unsecured 7.3% 3.9 12.8 US Dollar revolving loan - unsecured 6.4% 8.8 10.2 --------------------- --------- -------- -------- Total 16.7 27.0 --------------------- --------- -------- -------- The interest-bearing loans and borrowings are repayable as follows: 2007 2006 Â£m Â£m -------- -------- Within one year 16.7 27.0 Between one and two years 4.0 4.0 Between two and five years 17.8 21.8 ---------------------------- -------- -------- Total 38.5 52.8 ---------------------------- -------- -------- The borrowings and interest are guaranteed by Future plc, Future Publishing Limited and Future US, Inc. 20. Provisions Property and Redundancy Other Total dilapidations provisions Â£m Â£m Â£m Â£m -------------------------- --------- --------- ------ -------- At 1 October 2006 4.4 1.2 - 5.6 Charge in the year 0.1 - 1.1 1.2 Disposals - (0.5) - (0.5) Released in the year (1.9) (0.7) - (2.6) Utilised in the year (2.3) - - (2.3) -------------------------- --------- --------- ------ -------- At 30 September 2007 0.3 - 1.1 1.4 -------------------------- --------- --------- ------ -------- Following the significant acquisition activity that took place during 2005, the Group had obligations under short leasehold agreements on a number of vacant properties. The provision made represented the following: - The Directors' best estimate of the discounted future net cash flows arising from the net shortfall on the leases held. - The Directors' best estimate of dilapidation obligations on termination of specific leasehold agreements. During the year, the majority of these leases have been either assigned, sub-let or surrendered. At 30 September 2007 the total amount of provision was Â£0.3m (2006: Â£4.4m). The provisions have been discounted at a rate in line with the Group's cost of capital which is 9.5%. Other provisions relate to liabilities associated with disposals made during 2007. 21. Other reserves Treasury reserve The treasury reserve forms part of the retained earnings and represents the cost of shares in Future plc purchased in the market and held by the EBT to satisfy awards made by the trustees. 2007 2006 Â£m Â£m --------- --------- Balance at 1 October (1.1) - Utilised in the year 0.4 - Acquired in the year - (1.1) ------------------------------------- --------- --------- At 30 September (0.7) (1.1) ------------------------------------- --------- --------- During 2006, Future plc paid Â£1.1m to Abacus Corporate Trustees Limited as trustees of the EBT, which was used to purchase Future plc shares in the market to satisfy awards made by the trustees. The shares purchased represented 0.8% of the Company's issued share capital. The treasury reserve is non-distributable. During the year, the Group transferred Â£0.4m of shares to employees under the Restricted Share Plan. Merger reserve The merger reserve of Â£109.0m (2006: Â£109.0m) arose following the 1999 Group re-organisation and is non-distributable. Normalised results (unaudited) 2007 2006 Note Â£m Â£m ------ --------- --------- Revenue 1,4 159.2 163.9 -------------------------------- ------ --------- --------- Operating profit before exceptional items, impairment and amortisation of intangible assets (EBITAE) 2,4 13.7 13.4 -------------------------------- ------ --------- --------- Adjusted earnings per share 3 2.5 pence 2.2 pence -------------------------------- ------ --------- --------- Normalised results are presented to reflect better the current size and structure of the business, which is consistent with how the business is managed and measured on a day-to-day basis. The normalised results exclude revenues and costs of activities closed or divested between 1 October 2005 and 30 September 2007. Adjusted earnings per share are based on normalised results, but exclude exceptional items, impairment and amortisation of intangibles and related tax effects. Notes to the normalised results 1. Reconciliation of statutory revenue to normalised revenue 2007 2006 Â£m Â£m ----------------------------- --------- --------- Statutory revenue - Continuing operations 165.7 188.1 Adjustment: UK closed and divested activities (3.3) (12.3) Adjustment: US closed and divested activities (3.2) (11.9) ----------------------------- --------- --------- Normalised revenue 159.2 163.9 ----------------------------- --------- --------- 2. Reconciliation of statutory operating profit before exceptional items, impairment and amortisation of intangible assets (EBITAE) to normalised EBITAE 2007 2006 Â£m Â£m --------- --------- EBITAE - Continuing operations 14.0 12.1 Adjustment: UK closed and divested activities 0.3 0.6 Adjustment: US closed and divested activities (0.6) 0.7 ----------------------------- --------- --------- Normalised EBITAE 13.7 13.4 ----------------------------- --------- --------- 3. Reconciliation of basic earnings/(loss) per share to adjusted earnings per share 2007 2006 pence pence --------- --------- Basic earnings/(loss) per share - Continuing operations 2.3 (10.7) UK closed and divested activities 0.1 0.1 US closed and divested activities (0.1) 0.1 Amortisation of intangible assets 1.1 1.8 Impairment of intangible assets - 10.1 Exceptional items (0.5) 2.2 Tax effect of the above adjustments (0.4) (1.4) ----------------------------- --------- --------- Adjusted earnings per share 2.5 2.2 ----------------------------- --------- --------- 4. Normalised segmental reporting a) Revenue by segment 2007 2006 Â£m Â£m --------- --------- United Kingdom 115.1 116.0 United States 44.4 48.2 Revenue between segments (0.3) (0.3) ----------------------------- --------- --------- Total normalised revenue 159.2 163.9 ----------------------------- --------- --------- b) EBITAE by segment 2007 2006 Â£m Â£m --------- --------- United Kingdom 14.4 14.3 United States 2.8 2.6 Central costs (3.5) (3.5) ----------------------------- --------- --------- Total normalised EBITAE 13.7 13.4 ----------------------------- --------- --------- c) Revenue by type 2007 2006 Â£m Â£m --------- --------- Circulation 96.1 101.3 Advertising 56.7 57.0 Other 6.4 5.6 ----------------------------- --------- --------- Total normalised revenue 159.2 163.9 ----------------------------- --------- --------- This information is provided by RNS The company news service from the London Stock Exchange

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