Interim Results

RNS Number : 1333V

Future PLC

23 May 2008

 



23 May 2008                                        

FUTURE PLC

Interim results for the half-year ended 31 March 2008

Future plc (LSE: FUTR), the international special-interest media group, today announces its interim results for the half-year ended 31 March 2008. An analyst presentation will be held today at 10.00am at the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP.

Financial Summary:
	H1 08	H1 07
Revenue	£78.3m	£84.0m
Normalised revenue*	£78.3m	£79.2m
EBITAE **	£7.0m	£7.0m
EBITAE margin	8.9%	8.3%
Exceptional credit	-	£2.7m
Operating profit	£5.2m	£7.7m
Pre-tax profit	£4.1m	£6.2m
Earnings per share - Continuing (p)	0.8p	1.5p
Earnings per share - Total (p)	0.8p	2.3p
Adjusted earnings per share (p) ***	1.2p	1.2p
Dividends relating to the period (pence per share)	0.5p	0.5p

Financial headlines 

• Margin up despite additional online investment

• Pre-tax profit (excluding 2007 exceptional credit) up 17%

• Advertising revenue up 4% (in constant currency) and pacing ahead for full-year

• Online advertising up 31%, now representing 19% of advertising revenue (up from 15%)

• Revenue up 10% on top 15 UK titles 

• US circulation revenues up 12%

• All costs in line with budget

• Net debt since March 2007 reduced by 14% to £25.1m 

• Group continues to be strongly cash-generative

Operational highlights 

• Over 4m magazines sold per month 

• Now publishing Official games magazines for Microsoft, Nintendo and Sony on both sides of the Atlantic

• Over 11m unique website visitors per month

• Two major web properties launched in H1 - techradar.com and musicradar.com

• Nintendo (UK) licence extended to 2012

• 20% of UK magazine sales and 48% of Group magazine sales (by volume) came from subscriptions in the period

• Australian operating unit launched

Stevie Spring, Future's Chief Executive said:

'Our strategy remains firmly on track, and we have made good progress during the first half. 

'Our numbers are in line with expectations. Encouragingly, Future is proving resilient in these tough times because our consumers are passionate and committed. They invest in us, they spend time with us and they are loyal. They are 'prosumers'.  

'We are also encouraged by the progress of our organic business initiatives across all platforms - print, online and events. In print, we now publish the Official magazines for all three major games console manufacturers on both sides of the Atlantic. Online, we have launched techradar.com and musicradar.com which build on our successful GamesRadar and BikeRadar online networks. In events, we now run, or have planned, consumer or industry-facing events in each of our core sectors.

'Although we continue to take a cautious view of our markets, we expect a satisfactory outturn for the full year.'

Enquiries:

Future plc

Stevie Spring, Chief Executive                                                                                 Tel: [phone]

John Bowman, Group Finance Director                                                                   Tel: [phone]

Vicky Bacon, Head of Group Communications                                                        Tel: [phone]

Hogarth Partnership:

James Longfield / Ian Payne                                                                                    Tel: [phone]

* For 2007, normalised results are presented to reflect better the size and structure of the business. The normalised results are restated to exclude revenues and costs of activities closed or divested prior to 30 September 2007.

** EBITAE represents operating profit before exceptional items and amortisation of intangible assets.

*** Adjusted earnings per share are based on normalised results, but exclude exceptional items and amortisation of intangibles and related tax effects.

Chief Executive's Statement

Prosumers, partnerships, profits

The past six months have been about keeping our focus and ensuring we continue to deliver in what has been an uncertain market environment. What is clear to me, however, is that Future is proving its resilience in these tough times and I believe we are well-placed. Our numbers are solid and in line with expectations, but even more pleasing, we have continued to make excellent progress in line with our strategy.

Future's business is given additional resilience because we have an engaged demographic - our consumers are passionate and committed. We call them 'prosumers'. They invest in us, they spend time with us, and they are loyal.  We already have one of the highest subscription rates of any UK consumer publishing business, and we have invested in our subscriptions strategy to strengthen our position here.  Thanks to this we've seen a 9% year-on-year increase in subscriptions revenue in the UK. 20% of our UK circulation volume and 48% of our Group circulation volume now comes from subscriptions, up from 42% in H1 2007.  

So despite the challenging backdrop, we are pleased with our progress.  We've halted revenue decline - year-on-year our normalised revenues are stable; we've continued to invest in the business and we've further reduced our bank debt.  EBITAE in the half is the same as last year, despite accelerated levels of investment online. (Gross online investment is up 49% from £3.9m to £5.8m).

Advertising revenue is up 2% (4% in constant currency) driven by a 31% increase in online advertising, offsetting a 4% decline in print for the first half, but we are pacing ahead for the full year. Circulation revenues were slightly lower, a creditable performance in the current market, with some strong performances in each of our core sectors combating the generally tough newsstand and export conditions.  Revenues on our top 15 UK magazine titles were up 10% while US circulation revenues were up 12%.  Licensing and events made good progress with a 4% increase in revenues.

Strategically, we also have much to be pleased about.

Following the sale of our French and Italian businesses, we are now completely focused on English-language content. We have established a small Australian operation (taking back our four magazine licenses there) which ensures we can deliver a truly 24/7 English-language editorial service. This is particularly important to our digital offer which includes the provision of up-to-date news content.  

We are now the UK's biggest magazine exporter and licensor, with our 56 licensed magazines available in 66 countries worldwide and four million magazines exported annually. In the last 12 months, we have increased the number of licences by 14 and broken into five new territories. We believe the BRIC nations - Brazil, Russia, India, China - will provide further growth opportunity.

Our digital strategy, which attracts the lion's share of our investment in new product development, is at a very exciting stage. With the launch of MusicRadar and TechRadar networks earlier this year, we now have pillar online properties in each of our specialist sectors. Online revenue now accounts for 19% of total advertising revenue, up from 15% last year. GamesRadar, our most evolved web property, accounts for more than 30% of all our games advertising revenue. Across all of our websites, we are reaching over 11 million unique users per month.  That's more than fhm.com, menshealth.co.uk, monkeymag.co.uk, nme.com, nuts.co.uk, topgear.com and zoo.co.uk combined. 

Our approach online is not only about growing traffic and revenues today. It also aims to ensure we are well-placed to exploit emerging developments on the web.  Our technology teams are as important as our editorial and sales teams. So while most of our focus is on organic growth in our core sectors, we plan to invest further as we continue to experiment in the digital arena.  We believe our 'do and learn' approach - lots of manageable projects - will pay back more quickly than a slower 'learn and do' strategy.

Future's multi-platform approach - magazines, online, events - has enabled us to build powerful market positions in all of our specialist sectors. This is best evidenced in games, where we are in arguably our strongest ever position thanks to the commercial partnerships we have built and our reach across print, web and events. We have secured partnerships to publish Official magazine titles with each of the major console manufacturers - Microsoft, Nintendo and Sony - on both sides of the Atlantic, and now publish 16 monthly gaming magazines.  In the second half-year, we will be expanding our partnership with Sony online.  Gamesradar.com is still the number three games information website in the world with up to three million page views a day. This year, we are extending our programme of video gaming events into the UK, which already attract thousands of PC gamers in North America. And all this in an industry that is now worth globally at least $33 billion per annum and is predicted to grow to $47 billion by 2009 (source: DFC Intelligence, September 2007).  

Partnership publishing, which includes both Official partnerships and our customer publishing business, FuturePlus, accounts for around 23% of group revenue. Following strong growth in customer publishing in 2007 we have invested further here in H1, primarily to expand in the US.  Overall, partnership publishing revenue was up 6% for the period.

Future sells over four million magazines a month and publishes a further seven million a month under contract. By focusing on those specialist sectors that we know best - games, film, music, technology, cycling, automotive and crafts - and by micro-managing each of these specialist portfolios - we have achieved higher margins on lower revenues over the past two years.  

This focus has also helped us to withstand the pressures facing many magazines at newsstand. In the last six months we have redesigned a further eight titles and have secured double-digit circulation increases for Official Nintendo, Xbox 360: the Official Magazine, Digital Camera, .net, MacFormat, MacLife and Cycling Plus.  

Finally, and as importantly, we have continued to manage our cost base tightly and within budgeted levels.  

So while the general market uncertainties remain and we must keep focused to stay on track, we are confident but not complacent about the outlook for the second half-year.  

I would like to thank each and every one of the team at Future for their continuing creativity, commitment and hard work. Their passion is the cornerstone of our business. 

Stevie Spring

Chief Executive

23 May 2008

Interim statement

Statutory results for half-year to 31 March 2008

The statutory results for the Group are summarised below.  

First half-year revenue was £78.3m (2007: £84.0m) and the business generated EBITAE of £7.0m (2007: £7.0m) representing an improved EBITAE margin of 8.9% (2007: 8.3%).  

The half-year income statement includes no exceptional items (2007: exceptional credit of £2.7m), a smaller charge for amortisation of intangible assets of £1.8m (2007: £2.0m) and reduced net financing costs of £1.1m (2007: £1.5m), leading to a pre-tax profit of £4.1m (2007: £6.2m) for the period.  Excluding the impact of the exceptional credit in the prior half-year, pre-tax profit of £4.1m was up 17%.

Statutory results	2008 £m	2007 £m
Revenue	78.3	84.0
EBITAE	7.0	7.0
EBITAE margin	8.9%	8.3%
Exceptional credit	-	2.7
Amortisation of intangible assets	(1.8)	(2.0)
Operating profit	5.2	7.7
Net finance costs	(1.1)	(1.5)
Pre-tax profit	4.1	6.2
Earnings per share - Continuing (p)	0.8p	1.5p
Earnings per share - Total (p)	0.8p	2.3p
Dividends relating to the period (pence per share)	0.5p	0.5p

2007 half-year revenue of £84.0m includes £4.8m generated from activities which were closed or divested prior to 30 September 2007 and excluding these, normalised revenue in the prior half-year was £79.2m.

Normalised results for half-year to 31 March 2008

For 2007, normalised results are presented to reflect better the size and structure of the business. The normalised results are restated to exclude revenues and costs of activities closed or divested prior to 30 September 2007.

Normalised results	2008 £m	2007 £m
Revenue	78.3	79.2
EBITAE	7.0	6.9
EBITAE margin	8.9%	8.7%
Adjusted earnings per share (p)	1.2p	1.2p

Review of operations

The review of operations is based on a comparison of the half-year results for 2008 with the normalised results for 2007.  

Analysis of revenue for half-year to 31 March 

	% of	2008	2007	Change
	Group	£m	£m	%
Circulation	60%	46.6	47.3	- 1%
Advertising	32%	25.3	24.9	+ 2%
Customer publishing	4%	3.6	4.3	- 16%
Licensing, events & other	4%	2.9	2.8	+ 4%
Intra-group	-	(0.1)	(0.1)	-
Total revenue	100%	78.3	79.2	(1%)

It should be noted that Group revenue is flat when compared with normalised revenues in constant currencies for the first-half of last year. Expected softness in customer publishing was compensated for by growth in advertising and licensing revenue.

Geographical analysis of revenue for half-year to 31 March 

	% of	2008	2007	Change
	Group	£m	£m	%
UK	71%	55.9	57.2	- 2%
US	29%	22.5	22.1	+ 2%
Intra-group	-	(0.1)	(0.1)	-
Total revenue	100%	78.3	79.2	- 1%

The Group is managed primarily on a geographical basis. In running the business, management focuses on earnings before interest, tax, amortisation and exceptional items (EBITAE) and the result for the half-year is as follows.

Analysis of EBITAE for half-year to 31 March

			2008	2007	Change
			£m	£m	%
UK			7.2	7.5	- 4%
US			1.1	1.0	+ 10%
Central costs			(1.3)	(1.6)	- 19%
Total EBITAE			7.0	6.9	+ 1%

UK performance in half-year

	2008 £m	2007 £m	Change %
Circulation revenue	36.2	37.6	- 4%
Advertising revenue	14.4	14.6	- 1%
Customer publishing	2.7	2.7	-
Licensing, events & other	2.6	2.3	+ 13%
Total revenue	55.9	57.2	- 2%
EBITAE	7.2	7.5	- 4%
EBITAE margin	12.9%	13.1%

Overall, UK revenue for the half-year fell by 2%. While circulation revenue fell by 4%, within this subscription revenue was up 9% and export revenue grew 3%, both of which helped to offset the reduction of 9% in newsstand revenue in the period.  Non-UK-newsstand revenue now comprises the majority of total UK revenues, 60% (2007: 57%).   

Advertising revenue was 1% down while we achieved flat customer publishing revenue and a 13% increase in licensing, events & other revenue.

Within our four core magazine portfolios, weaknesses in certain areas (personal computing, consumer electronics and automotive) were offset by stronger performances in digital creative, cycling and Mac titles.

Increased online investment held back EBITAE for the period.

We have maintained our focus on operating and other costs, ensuring that we are within budget.

  US performance in half-year (shown in US Dollars)

	2008 $m	2007 $m	Change %
Circulation revenue	20.9	18.7	+ 12%
Advertising revenue	22.0	20.1	+ 9%
Customer publishing	1.7	3.1	- 45%
Licensing, events and other	0.7	0.9	-22%
Total revenue	45.3	42.8	+ 6%
EBITAE	2.2	1.9	+16%
EBITAE margin	4.9%	4.4%

US revenue for the half-year increased by 6%. Circulation revenue grew by 12% and within this subscriptions grew 17% and newsstand grew 9%.  

Having changed our magazine distributor in the UK last year, we have this year changed our magazine distributor in the US.  With effect from January 2008, Time Warner Retail distributes all of our US magazines. 

In the US the majority of our revenue is gained from advertising, which grew by 9% in the period.

Within our four core magazine portfolios, the strongest performance was from our Technology group. Games benefited from the launch of Official Nintendo magazine during the period. Customer publishing revenue (largely in games) was down in the period as a result of phasing.  

Reduced overhead costs also contributed to an increase in EBITAE of 16%.

Online

The UK and US segmental figures above include online revenue and operating costs. Online remains a key priority for the business and we have made good progress here, as explained earlier in this Report. The overall Group position for the period is as follows:

Group online revenue

		2008	2007	Change
		£m	£m	%
Advertising revenue		4.7	3.6	+ 31%
Other		0.2	-	-
Total online revenue		4.9	3.6	+ 36%

  Exceptional items

There were no exceptional items in the period.  Exceptional credits in the prior period totalling £2.7m related to property and other provisions and disposals.  

Taxation

The tax charge for the half-year was £1.4m (2007: £1.3m) which represents an estimated effective tax rate of 34% applied to profit before tax. This is the effective rate estimated to apply to taxable profits of the Group for the full financial year.  

Cash flow and net debt 

Net debt at 30 September 2007 was £24.3m. Future continues to be strongly cash-generative and during the period cash generated from operations amounted to £5.5m (2007: £6.9m).

During the period the Group paid out £1.9m (2007: £1.6m) in dividends, £1.2m in net tax paid (2007: received £0.7m), £1.9m (2007: £1.2m) in respect of capital expenditure and £1.0m (2007: £1.3m) in net interest payments.  

Net debt at 31 March 2008 was £25.1m, a reduction of 14% compared with the position at 31 March 2007.  Net debt of £25.1m represents 1.63 times bank EBITDA, well within the limit of 2.5 times under the terms of the Group's credit facility which runs to April 2010.

Interim dividend

An interim dividend of 0.5p per share (2007: 0.5p) will be paid on 3 July 2008 to all shareholders on the register on 6 June 2008. The ex-dividend date is 4 June 2008.

Key performance indicators

An updated set of key performance indicators is presented at the end of this statement.

Risks

The principal risks affecting the activities of the Group are those detailed in the section entitled 'Risks' on pages 22 and 23 of the Future plc 2007 Annual Report, a copy of which is available on our website www.futureplc.com.

Current trading and prospects

We have achieved our budgeted profit for the half-year and the Group's financial position is solid. Although we continue to take a cautious view of our markets, we expect a satisfactory outturn for the full year.

Roger Parry, Chairman

Stevie Spring, Chief Executive

John Bowman, Group Finance Director

Michael Penington, senior independent non-executive Director

Patrick Taylor, independent non-executive Director

John Mellon, independent non-executive Director
Seb Bishop, independent non-executive Director                    

23 May 2008

Consolidated income statement 

for the six months ended 31 March 2008

		6 months to 31 March 2008	6 months to 31 March 2007	12 months to 30 September 2007
	Note	£m	£m	£m
Continuing operations
Revenue	1	78.3	84.0	165.7
Operating profit before exceptional items and amortisation of intangible assets		7.0	7.0	14.0
Exceptional items	3	-	2.7	1.7
Amortisation of intangible assets	2	(1.8)	(2.0)	(3.6)
Operating profit	1, 2	5.2	7.7	12.1
Finance income	5	0.1	0.4	0.6
Finance costs	5	(1.2)	(1.9)	(3.5)
Net finance costs	5	(1.1)	(1.5)	(2.9)
Profit on ordinary activities before tax		4.1	6.2	9.2
Tax on profit on ordinary activities	6	(1.4)	(1.3)	(1.8)
Profit for the period from continuing operations		2.7	4.9	7.4
Discontinued operations
Profit for the period from discontinued operations	9	-	2.5	6.8
Profit for the period		2.7	7.4	14.2

Earnings per 1p Ordinary share

	Note	6 months to 31 March 2008 p	6 months to 31 March 2007 p	12 months to 30 September 2007 p
Basic earnings per share -Total Group	8	0.8	2.3	4.4
Diluted earnings per share -Total Group	8	0.8	2.3	4.3
Basic earnings per share - Continuing operations	8	0.8	1.5	2.3
Diluted earnings per share - Continuing operations	8	0.8	1.5	2.2

  Consolidated statement of changes in equity 

for the six months ended 31 March 2008

		Share capital	Share premium	Merger reserve	Treasury reserve	Retained earnings	Total equity
	Note	£m	£m	£m	£m	£m	£m
Balance at 1 October 2007		3.3	24.5	109.0	(0.7)	(61.6)	74.5
Profit for the period		-	-	-	-	2.7	2.7
Currency translation differences		-	-	-	-	0.4	0.4
Total recognised income for the period		-	-	-	-	3.1	3.1
Final dividend relating to 2007	7	-	-	-	-	(1.9)	(1.9)
Share option schemes  - Value of employees' services	4	-	-	-	-	0.3	0.3
Transfer between reserves		-	-	-	0.4	(0.4)	-
Balance at 31 March 2008		3.3	24.5	109.0	(0.3)	(60.5)	76.0
Balance at 1 October 2006		3.3	24.5	109.0	(1.1)	(72.1)	63.6
Profit for the period		-	-	-	-	7.4	7.4
Currency translation differences		-	-	-	-	(0.4)	(0.4)
Total recognised income for the period		-	-	-	-	7.0	7.0
Final dividend relating to 2006	7	-	-	-	-	(1.6)	(1.6)
Share option schemes  - Value of employees' services	4	-	-	-	-	0.6	0.6
Transfer between reserves		-	-	-	0.4	(0.4)	-
Balance at 31 March 2007		3.3	24.5	109.0	(0.7)	(66.5)	69.6
Balance at 1 October 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 income for the year		-	-	-	-	13.2	13.2
Final dividend relating to 2006	7	-	-	-	-	(1.6)	(1.6)
Interim dividend relating to 2007	7	-	-	-	-	(1.6)	(1.6)
Share option schemes  - Value of employees' services	4	-	-	-	-	0.9	0.9
Transfer between reserves		-	-	-	0.4	(0.4)	-
Balance at 30 September 2007		3.3	24.5	109.0	(0.7)	(61.6)	74.5

  Consolidated balance sheet

as at 31 March 2008

		31 March 2008	31 March 2007	30 September 2007
		£m	£m	£m
Assets
Non-current assets
Property, plant and equipment		4.9	5.7	4.9
Intangible assets - goodwill		105.2	104.1	104.8
Intangible assets - other		4.3	5.2	4.3
Deferred tax		3.0	3.4	2.9
Total non-current assets		117.4	118.4	116.9
Current assets
Inventories		5.0	5.0	3.1
Corporation tax recoverable		0.4	1.4	0.4
Trade and other receivables		30.7	34.8	30.2
Cash and cash equivalents		10.7	9.7	14.2
Total current assets		46.8	50.9	47.9
Total assets		164.2	169.3	164.8
Equity and liabilities
Equity
Issued share capital		3.3	3.3	3.3
Share premium account		24.5	24.5	24.5
Merger reserve		109.0	109.0	109.0
Treasury reserve		(0.3)	(0.7)	(0.7)
Retained earnings		(60.5)	(66.5)	(61.6)
Total equity		76.0	69.6	74.5
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings		16.8	23.8	21.8
Deferred tax		1.9	2.0	1.9
Provisions		1.3	2.1	1.4
Other non-current liabilities		2.5	2.5	2.4
Total non-current liabilities		22.5	30.4	27.5
Current liabilities
Financial liabilities - interest-bearing loans and borrowings		19.0	15.0	16.7
Trade and other payables		45.3	53.1	44.9
Corporation tax payable		1.4	1.2	1.2
Total current liabilities		65.7	69.3	62.8
Total liabilities		88.2	99.7	90.3
Total equity and liabilities		164.2	169.3	164.8

Consolidated cash flow statement

for the six months ended 31 March 2008

		6 months to 31 March 2008	6 months to 31 March 2007	12 months to 30 September 2007
		£m	£m	£m
Cash flows from operating activities
Cash generated from operations		5.5	6.9	14.0
Interest received		0.2	0.4	0.6
Tax received		-	1.5	2.5
Interest paid		(1.2)	(1.7)	(3.0)
Tax paid		(1.2)	(0.8)	(1.9)
Net cash generated from operating activities		3.3	6.3	12.2
Cash flows from investing activities
Purchase of property, plant and equipment		(1.0)	(0.8)	(1.3)
Purchase of magazine titles, websites and trademarks		-	(0.1)	(2.5)
Purchase of computer software and website development		(0.9)	(0.4)	(1.0)
Disposal of magazine titles and trademarks		-	0.3	0.5
Disposal of software		-	-	0.2
Disposal of subsidiary undertakings		-	0.7	6.0
Costs of business disposals		-	(0.3)	(0.3)
Net cash disposed with subsidiary undertakings		-	(0.6)	(2.7)
Net cash used in investing activities		(1.9)	(1.2)	(1.1)
Cash flows from financing activities
Proceeds from issue of Ordinary share capital		-	-	-
Draw down of bank loans		4.0	4.0	9.0
Repayment of bank loans		(7.0)	(17.5)	(22.5)
Rearrangement fees for bank loans		-	(0.2)	(0.2)
Equity dividends paid		(1.9)	(1.6)	(3.2)
Net cash used in financing activities		(4.9)	(15.3)	(16.9)
Net decrease in cash and cash equivalents		(3.5)	(10.2)	(5.8)
Cash and cash equivalents at beginning of period		14.2	20.0	20.0
Exchange adjustments		-	(0.1)	-
Cash and cash equivalents at end of period		10.7	9.7	14.2
Amount attributable to - Continuing operations		10.7	6.9	14.2
- Discontinued operations		-	2.8	-

Notes to the consolidated cash flow statement

for the six months ended 31 March 2008

A. Cash flows from operations

The reconciliation of operating profit to cash flows generated from operations is set out below:

	6 months to 31 March 2008 £m	6 months to 31 March  2007 £m	12 months to 30 September 2007 £m
Operating profit for the period - Continuing operations	5.2	7.7	12.1
- Discontinued operations	-	2.4	2.2
Operating profit for the period -Total Group	5.2	10.1	14.3
Adjustments for:
Depreciation charge	1.0	1.1	2.2
Profit on disposal of magazine titles and trademarks	-	(0.9)	(1.0)
Amortisation of intangible assets	1.8	2.0	3.6
Share option schemes - Value of employees' services	0.3	0.6	0.9
Operating profit before changes in working capital and provisions	8.3	12.9	20.0
Movement in provisions	-	(3.5)	(4.8)
(Increase)/decrease in inventories	(1.9)	(0.8)	0.5
(Increase)/decrease in trade and other receivables	(0.5)	(1.6)	2.3
(Decrease)/increase in trade and other payables	(0.4)	(0.1)	(4.0)
Cash generated from operations	5.5	6.9	14.0

B. Analysis of net debt

	At 1 October 2007 £m	Cash flows £m	Disposals £m	Non-cash changes £m	Exchange movements £m	At 31 March 2008 £m
Cash and cash equivalents	14.2	(3.5)	-	-	-	10.7
Debt due within one year	(16.7)	-	-	(2.0)	(0.3)	(19.0)
Debt due after more than one year	(21.8)	3.0	-	2.0	-	(16.8)
Net debt	(24.3)	(0.5)	-	-	(0.3)	(25.1)

 C. Reconciliation of movement in net debt

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to 30 September 2007  £m
Net debt at start of period	(24.3)	(32.8)	(32.8)
Decrease in cash and cash equivalents	(3.5)	(9.6)	(3.1)
Cash disposed with subsidiaries	-	(0.6)	(2.7)
Movement in borrowings	3.0	13.5	13.5
Exchange movements	(0.3)	0.4	0.8
Net debt at end of period	(25.1)	(29.1)	(24.3)

  Basis of preparation

Basis of preparation

This condensed interim financial information for the six months ended 31 March 2008 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as set out in our Annual Report for the year ended 30 September 2007, with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority.

The interim financial information contained in the Interim report should be read in conjunction with the Annual Report for the year ended 30 September 2007.

The Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 and has not been audited. A copy of the statutory financial statements for the year ended 30 September 2007 has been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified, it did not contain an emphasis of matter and did not contain any statement under section 237 Companies Act 1985. The auditors have carried out a review of the Interim Report and this is set out in the printed version of the Report.  

The accounting policies adopted are consistent with those set out in the Group's statutory accounts for the financial year ended 30 September 2007.

The Group has represented its income statement for the six months ended 31 March 2007 to reflect the presentation of Future France and Future Media Italy as discontinued operations in accordance with IFRS 5 'Non-current assets held for sale and discontinued operations'.

One new standard is mandatory for the first time for the financial year ending 30 September 2008, IFRS 7 'Financial Instruments Disclosures'. As the Interim Report contains only condensed financial statements, and as there are no material financial instrument transactions in the six months, full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures will be given in the 2008 Annual Report.

  Notes to the financial information

for the six months ended 31 March 2008

• Segmental reporting

The Group is organised and managed primarily by geographical segment which is based on the economic environment in which an entity operates.

a)     Revenue by segment

	6 months to  31 March 2008 £m	6 months to  31 March 2007 £m	12 months to  30 September  2007 £m
UK	55.9	59.5	118.4
US	22.5	24.6	47.6
Revenue between segments	(0.1)	(0.1)	(0.3)
Total continuing operations	78.3	84.0	165.7

b)    Operating profit by segment

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007 £m
UK	6.2	8.2	13.7
US	0.6	1.1	1.9
Central costs	(1.6)	(1.6)	(3.5)
Total continuing operations	5.2	7.7	12.1

Information regarding segment profit before tax would require arbitrary allocation and is therefore not provided. 

Additional analysis of the Group's revenue by type and destination is set out below:

i)    Revenue by type

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to 30 September 2007 £m
Circulation	46.6	49.7	99.3
Advertising	25.3	27.3	52.5
Customer publishing	3.6	4.3	7.6
Licensing, events and other	2.9	2.8	6.6
Intra-group	(0.1)	(0.1)	(0.3)
Total continuing operations	78.3	84.0	165.7

ii)     Revenue by destination

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007 £m
UK	44.6	49.2	95.3
US	25.1	26.3	51.8
Mainland Europe	4.5	4.5	10.5
Rest of the world	4.1	4.1	8.4
Turnover between segments	-	(0.1)	(0.3)
Total continuing operations	78.3	84.0	165.7

2.    Operating profit on continuing operations

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007 £m
Revenue	78.3	84.0	165.7
Cost of sales	(53.1)	(58.4)	(113.9)
Gross profit	25.2	25.6	51.8
Distribution expenses	(5.7)	(5.5)	(11.2)
Administration expenses (net of exceptional credits)	(12.5)	(10.4)	(24.9)
Amortisation of intangible assets	(1.8)	(2.0)	(3.6)
Operating profit on continuing operations	5.2	7.7	12.1

3.     Exceptional items on continuing operations

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007 £m
Property credit	-	1.8	1.7
Restructuring and redundancy costs	-	-	(0.9)
Other costs	-	-	(0.1)
Profit on disposal of magazine titles and trademarks	-	0.9	1.0
Total	-	2.7	1.7

The credit in relation to property costs during 2007 represents the release of vacant property provisions previously made in respect of office space in London and Bath.

Restructuring and redundancy costs in 2007 relate mainly to staff termination payments following the restructuring of the UK and US businesses in line with the Group's strategy.

The profit on disposals during 2007 is in respect of magazine titles and trademarks sold in the UK and US. 

4.     Employees 

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007 £m
Wages and salaries	20.7	22.9	46.8
Social security costs	2.6	3.6	6.9
Other pension costs	0.6	0.4	1.2
Share option schemes - Value of employees' services	0.3	0.6	0.9
Total	24.2	27.5	55.8

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 six months ended 31 March 2008 of £0.3m (2007: £0.6m) has been credited to reserves.

5.     Finance income and costs

	6 months to 31 March 2008 £m	6 months to 31 March 2007 £m	12 months to  30 September 2007  £m
Interest receivable	0.1	0.4	0.6
Total finance income	0.1	0.4	0.6
Interest payable on interest-bearing loans and borrowings	(1.2)	(1.7)	(3.2)
Foreign exchange losses	-	-	(0.1)
Rearrangement fees for bank loans	-	(0.2)	(0.2)
Total finance costs	(1.2)	(1.9)	(3.5)
Net finance costs on continuing operations	(1.1)	(1.5)	(2.9)

6.     Tax on profit

The tax charge for the six months ended 31 March 2008 is based on the estimated effective rate of tax for the Group for the full year to 30 September 2008. The estimated effective rate is applied to the profit before tax.

7.     Dividends

Equity dividends	6 months to 31 March 2008	6 months to 31 March 2007	12 months to  30 September 2007
Number of shares in issue at end of period (million)	326.8	326.5	326.6
Dividends paid in period (pence per share)	0.6	0.5	1.0
Dividends paid in period (£m)	1.9	1.6	3.2

In accordance with IFRS interim dividends declared are recognised in the period in which they are paid and final dividends are recognised in the period in which they are approved.

The dividend of £1.9m paid during the period ended 31 March 2008 relates to the final dividend of 0.6 pence per share declared for the year ended 30 September 2007.

The dividend of £1.6m paid during the period ended 31 March 2007 relates to the final dividend of 0.5 pence per share declared for the year ended 30 September 2006.

The dividends totalling £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 (£1.6m) and the final dividend declared for the year ended 30 September 2006 of 0.5 pence per share (£1.6m).

8.     Earnings per share

Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the period. 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	6 months to 31 March 2008	6 months to  31 March  2007	12 months to  30 September  2007
Profit after tax (£m)	2.7	7.4	14.2
Weighted average number of shares outstanding during the period:
- basic	326,444,054	324,447,025	324,645,517
- dilutive effect of share options	5,666,090	3,096,068	5,168,274
- diluted	332,110,144	327,543,093	329,813,791
Basic earnings per share (in pence)	0.8	2.3	4.4
Diluted earnings per share (in pence)	0.8	2.3	4.3

Continuing operations	6 months to 31 March 2008	6 months to  31 March  2007	12 months to  30 September  2007
Profit after tax (£m)	2.7	4.9	7.4
Weighted average number of shares outstanding during the period:
- basic	326,444,054	324,447,025	324,645,517
- dilutive effect of share options	5,666,090	3,096,068	5,168,274
- diluted	332,110,144	327,543,093	329,813,791
Basic earnings per share (in pence)	0.8	1.5	2.3
Diluted earnings (per share (in pence)	0.8	1.5	2.2

9. Assets held for sale and discontinued operations

(i) Disposal of Future Media Italy

During the year ended 30 September 2007 the Group disposed of its interest in Future Media Italy. The results of Future Media Italy were therefore presented as 'discontinued operations'. The business was sold for cash proceeds of £0.7m, resulting in a profit on disposal of £0.1m. Profits for the period totalled £0.1m, giving an overall profit from discontinued operations of £0.2m.

(ii) Disposal of Future France

During the year ended 30 September 2007 the Group disposed of its interest in Future France. The results of Future France were therefore presented as 'discontinued operations'. The business was sold for cash proceeds of £9.3m, resulting in a profit on disposal of £4.4m. Profits for the period totalled £2.2m, giving an overall profit from discontinued operations of £6.6m.

10. Property, plant and equipment 

During the six months ended 31 March 2008, property, plant and equipment additions totalled £1.0m (31 March 2007: £0.7m). The £1.0m is attributable to land and buildings £0.1m (2007: £0.1m), plant and machinery £0.8m (2007: £0.6m) and equipment, fixtures and fittings of £0.1m (2007: £nil).

The depreciation charge for the period totalled £1.0m (31 March 2007: £1.1m). The £1.0m is attributable to land and buildings £0.2m (2007: £0.2m), plant and machinery £0.7m (2007: £0.8m) and equipment, fixtures and fittings £0.1m (2007: £0.1m). 

11. Issued share capital

During the period, 229,544 Ordinary shares (year ended 30 September 2007: 84,007) with a nominal value of £2,295 (2007: £840) were issued by the Company for a total cash consideration of £4,436 (2007: £2,997), pursuant to the exercise of share options.

As at 31 March 2008 there were 326,803,197 ordinary shares in issue.

  Normalised results

for the six months ended 31 March 2008

		6 months to 31 March 2008	6 months to 31 March 2007	12 months to 30 September 2007
	Note	£m	£m	£m
Revenue	1,4	78.3	79.2	159.2
Operating profit before exceptional items and amortisation of intangible assets (EBITAE)	2,4	7.0	6.9	13.7
Adjusted basic earnings per share	3	1.2p	1.2p	2.5p

Normalised results for the six months to 31 March 2007 and the 12 months to 30 September 2007 are presented to reflect better the size and structure of the business. The normalised results are restated to exclude revenue and costs of activities closed or divested prior to 30 September 2007.

Adjusted earnings per share are based on normalised results and exclude exceptional items and amortisation of intangibles and related tax effects.

Notes to the normalised results 

for the six months ended 31 March 2008

1.    Reconciliation of statutory revenue to normalised revenue

		6 months to 31 March 2008	6 months to 31 March  2007	12 months to 30 September 2007
		£m	£m	£m
Statutory revenue - Continuing operations		78.3	84.0	165.7
Adjustment: UK closed and divested activities		-	(2.3)	(3.3)
Adjustment: US closed and divested activities		-	(2.5)	(3.2)
Normalised revenue		78.3	79.2	159.2

2.    Reconciliation of statutory operating profit before exceptional items and amortisation of intangible assets (EBITAE) to normalised EBITAE

		6 months to 31 March 2008	6 months to 31 March  2007	12 months to 30 September 2007
		£m	£m	£m
EBITAE - Continuing operations		7.0	7.0	14.0
Adjustment: UK closed and divested activities		-	0.2	0.3
Adjustment: US closed and divested activities		-	(0.3)	(0.6)
Normalised EBITAE		7.0	6.9	13.7

3.    Reconciliation of basic earnings per share to adjusted earnings per share

		6 months to 31 March 2008	6 months to 31 March  2007	12 months to 30 September 2007
		pence	pence	pence
Basic earnings per share - Continuing operations		0.8	1.5	2.3
UK closed and divested activities		-	-	0.1
US closed and divested activities		-	-	(0.1)
Basic earnings per share - Normalised		0.8	1.5	2.3
Amortisation of intangible assets		0.5	0.6	1.1
Exceptional items		-	(0.8)	(0.5)
Tax effect of the above adjustments		(0.1)	(0.1)	(0.4)
Adjusted basic earnings per share		1.2	1.2	2.5

4.    Normalised segmental reporting

a)     Revenue by segment

	6 months to  31 March 2008 £m	6 months to  31 March  2007 £m	12 months to  30 September  2007 £m
UK	55.9	57.2	115.1
US	22.5	22.1	44.4
Revenue between segments	(0.1)	(0.1)	(0.3)
Total normalised revenue	78.3	79.2	159.2

b)    EBITAE by segment

	6 months to 31 March 2008 £m	6 months to 31 March  2007 £m	12 months to  30 September 2007 £m
UK	7.2	7.5	14.4
US	1.1	1.0	2.8
Central costs	(1.3)	(1.6)	(3.5)
Total normalised EBITAE	7.0	6.9	13.7

Additional analysis of the Group's normalised revenue by type is set out below:

c)    Revenue by type

	6 months to 31 March 2008 £m	6 months to 31 March  2007 £m	12 months to 30 September 2007 £m
Circulation	46.6	47.3	96.1
Advertising	25.3	24.9	49.4
Customer publishing	3.6	4.3	7.6
Licensing, events and other	2.9	2.8	6.4
Intra-group	(0.1)	(0.1)	(0.3)
Total normalised revenue	78.3	79.2	159.2

Statement of Directors Responsibilities

The directors confirm that to the best of their knowledge the condensed interim financial information contained in the Interim Report has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union, and that the Interim Management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules.

On Behalf of the Board: 

Roger Parry, Chairman

Stevie Spring, Chief Executive

John Bowman, Group Finance Director

Michael Penington, Senior Independent Non -executive director

Patrick Taylor, Non-executive Director

John Mellon, Non-executive Director

Seb Bishop, Non-executive Director

KPI UPDATE 

Key performance indicators for the six months ended 31 March 2008:

Key performance indicators	Six months     To 31 March 2008	Year Ended 30 September 2007
Growth in revenue (normalised at constant currency)	Flat	Flat
EBITAE operating margin (as a %)	8.9%	8.4%
Absolute EBITAE (in Sterling)	£7.0m	£14.0m
Change in adjusted earnings per share (as a %)	Flat	+ 14%
Number of magazines sold per month	4.2m	4.0m
Proportion of magazines sold from total number printed	See notes 1-3	See notes 1-3
Proportion of Group's business derived from our brands              compared with partnership publishing	77:23 (note 4)	79:21 (note 4)
Number of unique users logging on to our websites per month	11m (note 5)	10m (note 5)
Growth in total advertising revenue (as a % normalised at constant currency)	+ 4%	+ 3%
Proportion of advertising revenue that is online (as a %)	19%	14%
Human Capital	See note 6	See note 6
Net bank debt	£25.1m	£24.3m

Notes

• The majority of magazines printed by the Group are sold, and those unsold are mainly recycled and used for newspaper production. The precise proportion sold at newsstand is a detailed KPI each month for every title. However, the Group believes that it is commercially sensitive to disclose these percentages, since competitors typically do not release this information. Magazines printed for subscription have no wastage.

• In the UK 80% of magazines (by volume) are sold at newsstand. Our overall UK average newsstand efficiency has improved further in 2008 by 2% compared with the first half of 2007. Future has increased the proportion of magazine volume sales derived from subscription rather than newsstand, from 18% to 20%. The majority of UK revenues for magazines are derived from cover price.

• In the US 27% of magazines (by volume) are sold at newsstand. The majority are sold by subscription at heavily discounted prices, and the majority of magazine revenues are gained from advertising.

• Partnership publishing represented 23% of normalised 2008 Group revenue for the first half of 2008. This category includes business from our Official magazines published for Microsoft (Xbox 360 and Vista), Sony (PlayStation) and Nintendo, plus customer publishing activities. The majority of the Group's revenue is generated from our own brands.

• For each of our websites we know the number of page impressions and we know the number of unique visitors to that website. We do not know how many unique visitors visit more than one of our websites. The number presented here is the simple total of each website's average monthly number of unique visitors.

• Human Capital is the Group's most important resource, with 1,250 employees. In the running of our business, the most important focal point is the publisher responsible for each magazine and website. We focus on retention of key employees to drive our business. Equally, we believe in refreshment of the team with new people and new ideas.

 

END

 

 

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