Preliminary Results
26th November 2009
FUTURE PLC
Preliminary results for the year ended 30 September 2009
Future plc (LSE: FUTR), the international special-interest media group, today announces its preliminary results for the year ended 30 September 2009. An analyst presentation will be held today at 11.00am at the offices of Numis, 10 Paternoster Square, London EC4M 7LT.
|
Financial Summary: |
2009 |
2008 |
Change |
|
|
|
|
|
|
Revenue |
£153.1m |
£162.9m |
-6% |
|
EBITA* |
£10.1m |
£14.9m |
-32% |
|
EBITA margin |
6.6% |
9.1% |
|
|
Reported Pre-tax profit |
£3.7m |
£9.5m |
-61% |
|
Adjusted ** Pre-tax profit |
£7.6m |
£12.9m |
-41% |
|
Reported earnings per share (p) |
0.9p |
2.1p |
-57% |
|
Adjusted** earnings per share (p) |
1.8p |
2.8p |
-36% |
|
Dividend relating to the year (pence per share) |
0.9p |
1.1p |
-18% |
|
Net debt |
£15.6m |
£21.9m |
Reduced 29% |
Stevie Spring, Future's Chief Executive said:
"The scale, intensity and complexity of the challenges of 2009 were unprecedented. Given these factors, Future's performance was remarkably resilient compared to its media sector peers: testament to the strength of our special-interest business and our clear operational focus.
The year was a tale of two markets. Our larger UK business out-performed the market, increasing profits despite a relatively modest revenue decline. Our US business experienced a very difficult year - hit by a general advertising market in freefall and unprecedented disruption at newsstand.
But we dealt with everything the economic maelstrom threw at us and we responded in a proportionate way. Furthermore, the Group made good progress in its strategy; we continued to invest appropriately in new commercial opportunities and in new talent; and we made milestone progress in reducing bank debt. These factors will serve us well in the future.
Our immediate priorities in 2010 are to carry through the measures we've introduced to strengthen our US business, and to navigate the near-term global economic challenges. Trading for the new financial year has continued to be challenging, both in the UK and the US and we expect conditions to remain difficult in 2010. So we're taking a cautious view.
But our flexibility in the face of changing market dynamics, the robustness of our portfolio business and continued progress in our strategy, all give me confidence that Future is as well-positioned as it can be to see out the continuing storm and to benefit from recovery."
- ends -
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/ 07940 530 424 |
Financial Dynamics:
Charles Palmer /Tim Spratt /Nicola Biles Tel: 020 7831 3113
Notes
* EBITA represents operating profit before amortisation of intangible assets.
** Adjusted profit before tax and earnings per share are based on statutory results, but exclude amortisation of intangibles and related tax effects.
About Future:
Future plc is an international special-interest media group that is listed on the London Stock Exchange (symbol FUTR). Founded in 1985 with one magazine, today we have operations in the UK, US and Australia creating over 180 special-interest publications, websites and events for people who are passionate about their interests. We hold strong market positions in games, film, music, technology, cycling, automotive and crafts. Our biggest-selling magazines include T3, Total Film, Digital Camera, Fast Car, Classic Rock, Guitar World, Official Xbox Magazine, Official Playstation Magazine, Nintendo Power, Maximum PC and MacLife. Our websites include gamesradar.com, bikeradar.com, techradar.com, photoradar.com and musicradar.com. Future sells nearly four million magazines each month; we attract more than 27 million unique visitors to our websites; and we host 27 annual live events that attract hundreds of thousands of enthusiasts. In addition, Future exports, syndicates or licenses its publications to 90 countries internationally, making us the UK's number one exporter and licensor of monthly magazines.
Summary
This last year was extraordinary. Against a backdrop of unprecedented economic uncertainty, we have come through the year with a robust result for our UK business. Although results were supported by exchange rates, the underlying strength of the special-interest model and our clear operational focus were the key factors driving this strong performance. In contrast, our smaller business in the US faced huge challenges during 2009, which combined to turn a growing and profitable business into one which, this year, incurred a trading loss. While we cannot yet say that we are through the storm, we are confident that we have the right strategy in place to overcome these immediate challenges and are well-positioned for the mid-term.
Strategy
Future provides English-language content for communities of enthusiasts: clusters of like-minded individuals whose interests range from computer games to guitars, from photography to film. We are multi-platform, producing magazines, websites, events and an increasing range of multi-media services for commercial partners and we export and license our English-language content to more than 90 countries.
It is important to look at Future's performance in the context of our three-year plan, and not just the recession. From 2006 to 2008 and following the appointment of Stevie Spring as Chief Executive, we re-focused our business, creating cost savings which were re-invested in the business, particularly to develop our digital offering, whilst at the same time significantly reducing bank debt.
Financial performance
Our 2009 results show Group revenue of £153.1m (2008: £162.9m) and EBITA of £10.1m (2008: £14.9m) representing a reduced operating margin of 6.6% (2008: 9.1%). As previously announced, the most significant factor in these results was the swing from profit to loss in our US business, reflecting reduced advertising revenue and disruption to retail distribution. More detail is set out below.
The income statement includes an amortisation charge for intangible assets of £3.9m (2008: £3.4m) and net financing costs of £2.5m (2008: £2.0m), including £0.5m in respect of interest rate swaps. Pre-tax profit after all these items was £3.7m (2008: £9.5m) for the year. Cash generation remains strong and we have reduced net debt by 29%.
Whilst basic earnings per share were 0.9p (2008: 2.1p) adjusted earnings per share for the year were 1.8p (2008: 2.8p).
Current trading outlook
Without question, in 2009 we faced the toughest economic conditions in Future's history.
Given these external factors, Future again proved resilient, which reflects the underlying strength of our special-interest model and our operational focus. The Group made good progress in its strategy and continued to invest appropriately in new products.
Since 30 September, trading has continued to be challenging and for this reason we take a cautious view.
During 2010 we will focus on carrying through measures to improve results in our US business and more broadly we will continue to protect our business, so that it is in as strong a position as possible at the end of the downturn. We will invest in our brands; and foster our hard-working teams, so they continue to engage with and excite the consumers and companies who together provide our sources of revenue.
Dividend
The Board recommends reducing the final dividend to 0.5p (2008: 0.6p). Together with the interim dividend of 0.4p (2008: 0.5p), this brings total dividends for the year to 0.9p (2008:1.1p) per share. This is consistent with the Company's long-standing policy that dividends are to be covered at least twice by adjusted earnings per share. In doing so, the Board believes the business has more flexibility to take on the immediate challenges it faces, while enabling it to continue to implement its strategy.
If approved at the Annual General Meeting to be held on 18 March 2010, the final dividend of 0.5p per share will be paid on 1 April 2010 to all shareholders on the register on 12 March 2010. The ex-dividend date is 10 March 2010.
Chief Executive's statement (Extract from Annual Report)
What a difference a year makes
2009 should have been the third year of our "Fix, Focus, Forward" strategy. We should have been reaping the benefits of having taken our corporate medicine early: divesting geographically and segmentally; re-engineering the business to take out significant cost and investing in our digital future. And we should have been leveraging the particular progress we had made in the US: launching official magazines for both Sony and Nintendo; launching the world's first "on console" HD magazine, "Qore"; using our Ballhype acquisition as a trojan horse for the final piece of our web strategy to attract significant non-endemic advertising clients to our Radar networks.
Instead, like many others, we were hit by the post-Lehman market meltdown.
This time last year, we said we were in the best shape we could be to face the challenges of 2009. The scale, intensity and complexity of those challenges have been unprecedented: consumer confidence has been at an all-time low; we've seen client partner bankruptcies and payment terms stretched; advertising budgets challenged in many sectors and generic advertising budgets slashed to the point where investments in discretionary inventory trended towards zero; and disruption to the magazine distribution system in North America which devastated the newsstand route to market through February and March, and led to a subsequent overhaul of distribution arrangements in this market.
I am confident that the strategy we are implementing will deliver; however the disruption experienced this year, together with our increased exposure to advertising revenue in the US, meant that one of the toughest years in living memory for the global media sector was really a more complex tale of two markets for Future.
A tale of two markets: the UK
During 2009 our UK and international licensing business, which comprises 69% of Group revenue, achieved EBITA improvement of 5% on revenue down 8% to £106.5m (2008: £115.6m). This performance against all the odds is testament to the underlying resilience of our special-interest business, our ability to mitigate revenue disappointments swiftly, and the advantage of having refocused and invested in our business over the previous two years.
Our broad portfolio of cross-platform products enables us to adjust to the ebb and flow of our host markets. This year, for example, we recorded weaker comparative performances in Games (2008 was a very strong year for must-have software releases) and personal computing, but stronger performances in cycling and crafts, in digital creative and consumer technology and across our Music & Movies group. This is reflected in NPD, where our strategy is to launch only into vibrant adjacent sectors. We published two new magazines: Triathlon Plus and The Knitter, as well as launching photoradar.com online.
We've continued to benefit from the close relationships we have with our "prosumer" - or professional consumer - audience across the business. Along with our operational focus - we run, in effect, a portfolio of one hundred mini profit centres - this is helping us to drive more value from the business. In a year when the UK's top 100 magazines saw an average 12% circulation decline (ABC data Dec 07- Dec 08), many of our key titles maintained or improved their circulation. Our biggest titles like T3, Classic Rock and Total Film all recorded increases in circulation during their last ABCs.
Subscriptions are one of the most sensitive barometers of commitment to a favourite magazine. So I'm very pleased that in 2009 we not only maintained our subscription renewal rates, but grew subscriptions revenue by 7% thanks to a rigorous focus on yields. We've even successfully introduced cover price increases on 15 of our magazines during a year of consumer bargain-hunting. The average cover price for our UK magazines is now over £5.
In advertising, we reported an 11% decline in revenues, against UK advertising market decline of 14% (AA forecast September 2009). No mean feat. And testament to our relentless drive to protect our advertising yields. All of our experience says that it's much easier to recoup volumes than yields when recovery does return.
So overall, our UK business delivered well ahead of the media marketplace.
A tale of two markets: the US
On the other side of the Atlantic our US business, which comprised 31% of Group revenue, recorded a revenue decline of 22%, swinging EBITA from a healthy and growing profit to a trading loss.
But without doubt, 2009 was a truly exceptional year.
The two key trading reasons for this disappointing performance were the level of our exposure to a general advertising market in freefall and the impact of recession-driven disruption to magazine distribution arrangements at newsstand.
In the US, 44% of our revenue is derived from advertising. In the prior year (2008), we'd focused our efforts successfully on growing general advertising as a proportion of our overall advertising revenues. We were a victim of our own success here, particularly in gaming, which comprises 50% of total US revenue, because by 2009 general advertising had been hit hardest by the recession. Equally, in the games advertising market, which is typically driven by developments in hardware and, increasingly, software, 2009 marked a year of slow hardware sales (following strong 2008 sales) and comparatively few major software launches. So even the host sector suffered tough comparisons.
Over a quarter of our US revenues are from magazine sales at newsstand, and in 2009 we saw unparalleled levels of disruption across the US publishing industry. This began with a dispute between magazine wholesalers and distributors in late January and resulted in a complete overhaul of wholesaling and distribution arrangements across the entire industry, the hangover of which is still being felt. You can read more about the US magazine distribution model, and the impact of this disruption to our own business, in the Financial Review.
Even today it's difficult to be absolute on the lasting effect on newsstand sales of this disruption and the subsequent shake-up in distribution arrangements. However the resultant loss of presence at retail has contributed significantly to Future's US newsstand sales falling by 32% year on year.
Despite these considerable hurdles, we have introduced a number of decisive measures that will help us to overcome the ongoing challenges at newsstand and in advertising.
In management, we've appointed a new President of the business, John Marcom Jr, who brings extensive multi-platform content experience - international, commercial and creative - from previous roles at Yahoo!, the Financial Times, Time Inc., Forbes and the Wall Street Journal. I'm delighted to welcome him to Future.
In product development, we launched a new print title, Guitar Aficionado, as well as announcing an international partnership with Blizzard Entertainment to publish a new official title, World of Warcraft: The Magazine. This subscription-only magazine targets the 11.5 million paying subscribers of the world's biggest online multi-player game and is our first consumer paid-for "publish on demand" product.
And in online, we made further progress, increasing web traffic across our sites by 50%.
So although the net result for our US operation was a blow, particularly as it followed a near doubling of EBITA over the previous two years, we made significant headway in introducing measures that will set the business back on track. We took early action to reduce fixed costs; we reduced variable costs proportionately throughout the year; we maintained two-thirds of our planned online investment; continued with print NPD (Guitar Aficionado) and invested in advance of the launch of our World of Warcraft magazine.
Strategic progress
During the year, we made very significant progress in implementing our strategy: balancing our portfolio to exploit new sources of revenue; reaching and engaging our prosumer audiences, cross-platform; and strengthening our commercial partnerships.
Much of our effort in the last three years has been on diversifying revenue streams beyond the traditional print-based model - fully exploiting our "must have" versus "nice to have" content. This is reflected in the 7% increase in subscription revenues and the 7% growth in customer publishing revenues.
Our myriad of experiments with paid-for content have already met with success and offer real potential for the future: from collectable bookazines and special-editions; to online video tutorials from our experts on Guitar World; to exclusive distribution deals with major music artists on Classic Rock.
And our cross-platform offer continues to grow. In online, advertising now comprises 23% of Group advertising, up from 19% in 2008. Our total web traffic across the Group stands at more than 27 million unique users a month, up from 18 million.
Although our online advertising revenue growth did slow during the year, it considerably out-performed the market, so we continue to fine tune our commercial digital strategy - applying our "do and learn" approach - to ensure we stay ahead of the game and exploit the commercial potential of digital at every opportunity. With huge growth in online inventory and a retraction in display advertising budgets, commercial partners are responding to our offer not just of reach but of engagement with key audiences. We're strengthening the offer across our web properties, driving "dwell time" (time spent on site) not just page impressions; via forums, newsletters, social networking and iPhone applications. BikeRadar users now spend an average of nearly ten minutes per site visit; we have more than 180,000 followers on Twitter and we're adding 13,000 new followers every month; we've developed iPhone applications for Metal Hammer, Computer Arts and Ballhype. All of these help to give us the edge over our competitors in the stampede for a share of digital budgets.
For 2010, we'll continue to focus on developing profitable new opportunities for developing and distributing content - whether this is online, on-console, on-mobile or print-to-order - that have revenue potential from both users and advertisers.
Commercial partnerships are our key differentiator, critical to Future's success, and during 2009 we have continued to strengthen these. We've announced plans to extend our partnership with Sony in developing Europe's first fully navigable on-console digital magazine, following the 2008 US launch of Qore, the world's first on-console digital programme. Our customer publishing business, FuturePlus, has developed publishing partnerships with new companies including Best Buy, Blackberry and Coats & Clark and increased revenue 7% year on year. Partnership publishing revenue accounted for 24% of Group revenue over the past year.
Our nascent Australian business now publishes six regular magazines in-market, including official Nintendo and Xbox product, as well as being an important pillar for 24-hour English language web input.
Managing the business
As I've said before, 2009 was a very difficult year for both the media sector generally and for Future as we tackled the diverse challenges that the economic maelstrom threw at us. Importantly, we've dealt with these challenges in a proportionate way. Cost-cutting measures to mitigate revenue shortfalls have been managed so as not to limit our ability to benefit from market recovery in the mid-term. We've continued to invest, where we think appropriate, in new commercial opportunities, in new technology and in new talent.
I am especially grateful to our team of nearly 1,200 people who have remained loyal, creative and pragmatic during these testing times. It's thanks to their hard work that we continue to move forward as a company. On behalf of the Board and shareholders, I'd like to thank them for their efforts.
Future is a much healthier business with a much brighter future than the one I joined three years ago. We've no contingent liabilities, finance is in place for the next three full fiscal years and we have made milestone progress in reducing bank debt. But we expect the economic and structural pressures on our business to continue in 2010, so the outlook for the near-term remains cautious. However, our flexibility in the face of changing market dynamics, the robustness of our special-interest business and continued progress in our strategy all give me the confidence to reiterate my belief that Future is as well-positioned as it can be to see out the current storm and return to growth.
Stevie Spring
Chief Executive
26 November 2009
Financial Review
This financial review is based primarily on a comparison of our IFRS results for the year ended 30 September 2009 with those for the year ended 30 September 2008. Unless otherwise stated, change percentages relate to a comparison of these two years. There has been no significant change to the scope of the Group's activities.
In running the business, Future management focuses on earnings before interest, tax and amortisation. For convenience we refer to this as EBITA.
Statutory results for year ended 30 September
Revenue was £153.1m (2008: £162.9m) and the business generated EBITA of £10.1m (2008: £14.9m) representing an EBITA margin of 6.6% (2008: 9.1%).
The income statement includes an amortisation charge for intangible assets of £3.9m (2008: £3.4m) and net financing costs of £2.5m (2008: £2.0m) including £0.5m in respect of interest rate swaps. Pre-tax profit after all these items was £3.7m (2008: £9.5m) for the year.
|
Year ended 30 September |
2009 £m |
2008 £m |
|
Revenue |
153.1 |
162.9 |
|
EBITA |
10.1 |
14.9 |
|
EBITA margin |
6.6% |
9.1% |
|
Amortisation of intangible assets |
(3.9) |
(3.4) |
|
Operating profit |
6.2 |
11.5 |
|
Net finance costs |
(2.5) |
(2.0) |
|
Pre-tax profit |
3.7 |
9.5 |
|
Earnings per share (p) |
0.9p |
2.1p |
|
Adjusted earnings per share (p) |
1.8p |
2.8p |
|
Dividends relating to the year (p) |
0.9p |
1.1p |
Dividend
The Board recommends reducing the final dividend to 0.5p (2008: 0.6p). Together with the interim dividend of 0.4p (2008: 0.5p), this brings total dividends for the year to 0.9p (2008:1.1p) per share. This is consistent with the Company's long-standing policy that dividends are to be covered at least twice by adjusted earnings per share. In doing so, the Board believes the business has more flexibility to take on the immediate challenges it faces, while enabling it to continue to implement its strategy.
If approved at the Annual General Meeting to be held on 18 March 2010, the final dividend of 0.5p per share will be paid on 1 April 2010 to all shareholders on the register on 12 March 2010. The ex-dividend date is 10 March 2010.
Half-yearly performance
The table below analyses the business results during the last two years into first-half and second-half performance.
|
|
|
First Half-year to March |
|
Second Half-year to September |
Total |
|
|
|
£m |
|
£m |
£m |
|
Revenue |
|
|
|
|
|
|
Year to 30 September 2008 |
|
78.3 |
|
84.6 |
162.9 |
|
|
|
|
|
|
|
|
Year to 30 September 2009 |
|
76.6 |
|
76.5 |
153.1 |
|
|
|
|
|
|
|
|
EBITA |
|
|
|
|
|
|
Year to 30 September 2008 |
|
7.0 |
|
7.9 |
14.9 |
|
|
|
|
|
|
|
|
Year to 30 September 2009 |
|
4.6 |
|
5.5 |
10.1 |
Review of operations
Group revenue decreased 6% to £153.1m and Group EBITA decreased 32% to £10.1m. In constant currency, Group revenue decreased 13% to £142.1m and Group EBITA decreased 43% to £8.5m. Both revenue and EBITA were impacted by a strengthened US Dollar. The Group results are best understood by reviewing US and UK results separately.
Currency effect of US Dollar
The most significant foreign currency affecting the Group is the US Dollar. The average exchange rate for the year was $1.55 = £1, compared with $1.97 for the previous year, representing a 21% weakening in Sterling against the US Dollar.
Analysis of revenue for year ended 30 September
Group revenues
The tables below analyse Group revenues in Sterling.
|
Revenue by country |
% of |
2009 |
2008 |
Change |
CC* |
|
|
|
|
|
|
Change |
|
|
Group |
£m |
£m |
% |
% |
|
UK |
69% |
106.5 |
115.6 |
-8% |
-9% |
|
US |
31% |
47.0 |
47.7 |
-1% |
-22% |
|
Intra-group |
- |
(0.4) |
(0.4) |
- |
- |
|
Group revenue |
100% |
153.1 |
162.9 |
-6% |
-13% |
|
Revenue by type |
% of |
2009 |
2008 |
Change |
CC |
|
|
|
|
|
|
Change |
|
|
Group |
£m |
£m |
% |
% |
|
Circulation |
60% |
91.2 |
97.8 |
-7% |
-13% |
|
Advertising |
30% |
46.9 |
51.0 |
-8% |
-17% |
|
Customer publishing |
5% |
7.6 |
7.1 |
+7% |
-1% |
|
Licensing, events & other |
5% |
7.4 |
7.0 |
+6% |
+1% |
|
Group revenue |
100% |
153.1 |
162.9 |
-6% |
-13% |
|
Advertising revenue |
% of |
2009 |
2008 |
Change |
CC |
|
|
|
|
|
|
Change |
|
|
Group |
£m |
£m |
% |
% |
|
Magazines |
77% |
36.3 |
41.4 |
-12% |
-20% |
|
Online |
23% |
10.6 |
9.6 |
+10% |
- |
|
Advertising revenue |
100% |
46.9 |
51.0 |
-8% |
-17% |
|
Proportion of Group |
UK |
US |
Group |
|
Games |
16% |
15% |
31% |
|
Music & Movies |
15% |
7% |
22% |
|
Technology |
20% |
7% |
27% |
|
Active |
18% |
2% |
20% |
|
Total |
69% |
31% |
100% |
*CC denotes constant currency
Analysis of EBITA for year ended 30 September
The following table summarises the change in EBITA.
|
|
|
2009 |
2008 |
Change |
|
|
|
£m |
£m |
% |
|
UK |
|
15.9 |
15.1 |
+ 5% |
|
US |
|
(3.3) |
3.4 |
From profit to loss |
|
Central costs |
|
(2.5) |
(3.6) |
- 31% |
|
Total EBITA |
|
10.1 |
14.9 |
- 32% |
In constant currency the same analysis of EBITA would be:
|
|
|
2009 |
2008 |
Change |
|
In constant currency |
|
£m |
£m |
% |
|
UK |
|
13.6 |
15.1 |
- 10% |
|
US |
|
(2.6) |
3.4 |
From profit to loss |
|
Central costs |
|
(2.5) |
(3.6) |
- 31% |
|
Total EBITA |
|
8.5 |
14.9 |
- 43% |
The table above shows the extent to which the UK has benefited from foreign exchange gains;
and that the US loss is made worse when reported in Sterling.
UK performance for year ended 30 September
|
|
|
2009 |
2008 |
Change |
|
|
|
£m |
£m |
% |
|
Circulation revenue |
|
69.3 |
74.8 |
-7% |
|
Advertising revenue |
|
26.1 |
29.2 |
-11% |
|
Customer publishing |
|
4.9 |
5.2 |
-6% |
|
Licensing, events & other |
|
6.2 |
6.4 |
-3% |
|
Total revenue |
|
106.5 |
115.6 |
-8% |
|
EBITA |
|
15.9 |
15.1 |
+ 5% |
|
EBITA margin |
|
14.9% |
13.1% |
|
Future's UK and international licensing business (comprising 69% of Group revenue) remained resilient in challenging conditions. Despite a decline of 8% in total revenue, EBITA rose to £15.9m representing an improved operating margin as shown above.
This performance is particularly encouraging in a media sector that continues to experience very significant advertising and newsstand challenges and reflects the underlying strength of our special-interest business, our continuing focus on operating performance in each segment and our ability to mitigate revenue disappointments swiftly.
Circulation revenue fell by 7% and within this subscription revenue grew by 7%, domestic newsstand revenue declined 14% and export revenue declined by 2%.
Advertising revenue was down 11% while there was a small decrease in other sources of revenue as shown in the table above.
The table below shows performance by segment. Advertising weakness impacted across the portfolio. We have maintained our focus on operating and other costs.
|
|
2009 Revenue £m |
2009 Contribution £m |
2009 Margin % |
2009 % of revenue |
2008 Revenue £m |
2008 Contribution £m |
2008 Margin % |
|
Games |
23.9 |
8.2 |
34% |
23% |
27.7 |
10.5 |
38% |
|
Music & Movies |
23.4 |
6.8 |
29% |
22% |
23.7 |
5.6 |
24% |
|
Technology |
31.2 |
10.0 |
32% |
29% |
35.0 |
10.7 |
31% |
|
Active |
28.0 |
7.6 |
27% |
26% |
29.2 |
6.9 |
24% |
|
Overheads |
106.5 |
32.6 (16.7) |
31% |
100% |
115.6 |
33.7 (18.6) |
29% |
|
EBITA |
|
15.9 |
14.9% |
|
|
15.1 |
13.1% |
|
Amortisation |
|
(1.7) |
|
|
|
(2.4) |
|
|
Operating profit |
|
14.2 |
|
|
|
12.7 |
|
US performance for year ended 30 September
|
|
|
2009 |
2008 |
Change |
|
|
|
$m |
$m |
% |
|
Circulation revenue |
|
33.8 |
45.4 |
-26% |
|
Advertising revenue |
|
32.4 |
42.9 |
-24% |
|
Customer publishing |
|
4.2 |
3.8 |
+11% |
|
Licensing, events & other |
|
2.6 |
2.0 |
+30% |
|
Total revenue |
|
73.0 |
94.1 |
-22% |
|
EBITA |
|
(5.1) |
6.6 |
From profit to loss |
|
EBITA margin |
|
(7.0%) |
7.0% |
|
Our smaller US business had a very challenging year, ending with revenue down 22% and EBITA having swung from profit to loss.
Revenue decreased due to shortfalls in both advertising (particularly non-endemic, general advertising) and in newstrade magazine sales. EBITA moved from a positive $6.6m in 2008 to a loss of $5.1m in 2009.
Circulation revenue fell by 26%, reflecting decreases of 31% in newstrade and 14% in subscriptions revenue. Subscriptions revenue benefited from an increase in yields, as we continued to increase subscription prices. The business model in the US is very different from that in the UK and the notes below explain the disruption to newstrade experienced this year.
Advertising revenue this year fell for two reasons. The largest element of this drop was the reduction in general advertising; but we also experienced a reduction in games advertising, during a year when there were fewer major new games and when hardware sales slowed.
The table below shows performance by segment. Advertising is a significantly greater portion of our US business than is the case in the UK, and weakness in advertising impacted the portfolio. We have maintained our focus on operating and other costs.
|
|
2009 Revenue $m |
2009 Contribution $m |
2009 Margin % |
2009 % of revenue |
2008 Revenue $m |
2008 Contribution $m |
2008 Margin % |
|
Games |
36.2 |
3.8 |
10% |
50% |
48.7 |
9.1 |
19% |
|
Music & Movies |
16.2 |
0.3 |
2% |
22% |
21.9 |
4.7 |
21% |
|
Technology |
15.6 |
2.2 |
14% |
21% |
17.9 |
4.7 |
26% |
|
Active |
5.0 |
(0.1) |
(2%) |
7% |
5.6 |
(0.4) |
(7%) |
|
Overheads |
73.0 |
6.2 (11.3) |
8% |
100% |
94.1 |
18.1 (11.5) |
19% |
|
EBITA |
|
(5.1) |
(7.0%) |
|
|
6.6 |
7.0% |
|
Amortisation |
|
(3.4) |
|
|
|
(2.0) |
|
|
Operating (loss) |
|
(8.5) |
|
|
|
4.6 |
|
Underlying overheads have been reduced by 12%, despite our increase in FuturePlus headcount in advance of our World of Warcraft magazine launch, but are inflated by the inclusion of our additional provision against ageing receivables.
Newstrade disruption experienced in the US during 2009
Newsstand sales suffered significantly this year, as a result of disruption early in 2009 and subsequent effects. In the US, magazines are printed, then via our distribution contract (with Time Warner Retail) they are collected by a number of individual wholesalers who transport them to retail outlets. Once there, a further contractor visits the retail outlet to unpack the magazines for display. Our distributor provides initial sales estimates when magazines come "off-sale". These estimates may subsequently be updated based on returns.
In February and March, there was an industry-wide dispute following a request by two of the largest wholesalers who sought to increase carriage charges. This was not agreed. One of the wholesalers subsequently exited the wholesale market, whilst the other has continued to operate. Whilst the dispute was ongoing, distribution of up to 40% of our newsstand magazines effectively came to a halt.
Approximately 25% of retail outlets subsequently had to re-negotiate with a new wholesaler, and the largest retail outlets were signed up first. However, by the end of September, a significant number of retail outlets (estimated at 5,000 out of 150,000) had still to sign up with any wholesaler.
During the second half of the financial year, levels of returns from larger retail outlets equipped with EPOS (electronic point of sale) data were largely as expected. However, when the rest of non-EPOS returns information came through via our distributor in September, it became clear that there had been significantly greater than expected returns as a result of the disruption: because returns had been delayed; copies had not been delivered or merchandised; or sales in smaller stores had under-performed against larger (EPOS) stores.
For historical reasons to do with the vast geography of the US, it is normal practice for adjustments to be permitted to previous distributor returns estimates for extended periods of up to 180 days (for monthly magazines) and up to 240 days (for 'specials' which are not time-sensitive). In previous financial years, the level of prior issue adjustments has been immaterial from month to month. By 30 September 2009, the level of these adjustments was significant and we have therefore reviewed our returns estimates in our year-end results conservatively.
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. Group online revenue increased by 10% from £9.6m to £10.6m (flat in constant currency).
Group performance for year ended 30 September 2009
Although this year's results are better understood by examining the UK and US separately and in local currency, the Group result presented in sterling is as undernoted:
|
|
2009 Revenue £m |
2009 Contribution £m |
2009 Margin % |
2009 % of revenue |
2008 Revenue £m |
2008 Contribution £m |
2008 Margin % |
|
Games |
47.2 |
10.7 |
23% |
31% |
52.4 |
15.1 |
29% |
|
Music & Movies |
33.8 |
7.0 |
21% |
22% |
34.8 |
8.0 |
23% |
|
Technology |
41.3 |
11.4 |
28% |
27% |
44.1 |
13.1 |
30% |
|
Active |
31.2 |
7.5 |
24% |
20% |
32.0 |
6.7 |
21% |
|
|
153.5 |
36.6 |
24% |
100% |
163.3 |
42.9 |
26% |
|
Less: intra-group |
(0.4) |
- |
|
|
(0.4) |
- |
|
|
Overheads |
153.1 |
36.6 (26.5) |
|
|
162.9 |
42.9 (28.0) |
|
|
EBITA |
|
10.1 |
6.6% |
|
|
14.9 |
9.1% |
|
Amortisation |
|
(3.9) |
|
|
|
(3.4) |
|
|
Operating profit |
|
6.2 |
|
|
|
11.5 |
|
Intangible assets
The annual charge for amortisation of intangible assets was £3.9m (2008: £3.4m), the increase reflecting full amortisation of website development costs capitalised during the previous year.
No impairment charge against intangible assets has been required since 2006.
Net finance costs
These were as follows:
|
|
2009 £m |
2008 £m |
|
Net interest payable |
1.8 |
2.1 |
|
Fair value adjustment on interest rate swaps |
0.5 |
- |
|
Exchange losses/(gains) |
0.2 |
(0.1) |
|
Net finance costs |
2.5 |
2.0 |
Net finance costs include a provision of £0.5m in respect of interest rate swaps contracted by the Group in 2007, at a time when UK interest rates were many times higher than they have been during 2009.
Cash flow and net debt
Net debt at 30 September 2009 was £15.6m, a reduction of more than 50% during the last three years. Future continues to be cash-generative and the major cash inflow during the year was cash generated from operations of £14.5m.
During the year the Group paid out £3.3m in dividends, £3.1m in respect of capital expenditure and £1.3m in net interest payments.
New Credit Facility
As announced on 6 May 2009 the Group successfully re-financed its bank facilities ahead of expiry in April 2010. The new facility became effective on 6 May 2009 and matures on 30 November 2012. The total facility is for £42m, comprising a term loan of £15m and a revolving credit facility of up to £27m.
Arrangement and other fees related to the new facility totalled £1.0m (to be amortised over the term). Interest payable is to be calculated as the cost of 3-month LIBOR (currently approximately 0.6%) plus an interest margin of between 2.5% and 3.25%, dependent on covenant ratio (i). The key bank covenants are that: (i) net debt is not to exceed 2.5 times Bank EBITDA; (ii) net interest payable is to be covered at least 4 times by Bank EBITDA; (iii) cashflow is to cover the cost of debt service costs by specified ratios. These covenants are tested quarterly on the basis of rolling figures for the preceding twelve months.
Since September 2006 the Group has reduced its net bank debt by more than half and has complied at all times with all covenants under the previous and the current banking facility.
Bank covenants
Future funds its operations through a mixture of operating cash flow generated by the business and bank debt. The position at the year-end is well within the bank covenants as set out in the following table.
|
|
Year-end |
Bank covenant |
|
|
|
|
|
Net debt/ EBITDA |
1.36 times |
Less than 2.5 times |
|
|
|
|
|
EBITDA / interest |
7.63 times |
More than 4.0 times |
|
|
|
|
|
Cashflow cover |
2.51 times |
More than 1.3 times |
Additionally, based on the calculation of 2009 EBITDA for bank purposes, the Group has headroom of £14m, over and above the level of bank debt at 30 September 2009.
The Board therefore considers that the Group's net bank debt is acceptable.
Approximately three-quarters of Future's net bank debt is in Sterling; year-end net debt denominated in US Dollars amounted to $5.4m.
Consistent with policy published in previous years, the Group hedges between 25% and 50% of the gross bank debt above £10m. As at 30 September 2009 the Group has hedged (a) £5m subject to an interest rate collar such that the interest rate cannot fall below 4.65% and cannot exceed 6%. This collar lasts for seven years from October 2007 and is cancellable by the bank after four years; (b) $8m at an interest rate of 4.67% that expired in October 2009; (c) £5m at an interest rate of 1.91% for two years from October 2009.
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 £0.9m (2008: £2.7m), comprising a current tax charge of £1.4m and a deferred tax credit of £0.5m. The £0.9m represents an effective tax rate of 24% as applied to profit before tax.
The standard rates of corporation tax are 28% (UK) and 40% (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 0.9p (2008: 2.1p). Adjusted earnings per share were 1.8p (2008: 2.8p) and these are based on the audited results which are adjusted to exclude amortisation of intangibles and related tax effects. Adjusted profit after tax amounted to £5.8m (2008: £9.1m). The weighted average number of shares in issue was 326.3m (2008: 325.7m). Full details are set out in note 9.
Leasehold property and related balance sheet provisions
All of the Group's property is either occupied or assigned, sub-let or the lease surrendered. Property provisions carried at 30 September 2009 totalled £0.2m (2008: £0.3m).
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 2009 amounted to £81.5m (2008: £79.6m) of which £113.6m (2008: £113.0m) related to intangible fixed assets.
While the Group's net assets increased as shown above, the Group reduced its net debt by 29% from £21.9m to £15.6m. The Group's balance sheet is therefore stronger than a year ago.
The Company's distributable profits at 30 September 2009 were £54.4m.
Key performance indicators
An updated set of key performance indicators is presented at the end of this statement.
Risks
Risk management
We operate a continuous process of identifying, evaluating and managing risk. There are a number of general business risks to which Future is naturally exposed in the UK and US, but the range of risks faced by Future has increased compared with last year, due to the particular trading risks which have crystallised in the US during the recession. Our internal controls seek to minimise the impact of such risks.
Macro-economic environment
The macro-economic environment during the last year has been the worst in the Company's history, with both the UK and US in recession, as explained earlier. Against this backdrop and while trading conditions remain tough, Future has continued to prove remarkably resilient in the UK, which reflects the Group's focus on areas of special-interest. Nonetheless the Group may be exposed to any significant or extended downturn in consumer confidence.
Consumer behaviour
60% of the Group's revenue is dependent on consumers actively purchasing magazines. Such purchases depend on the normal, competitive publishing environment, which has been challenging during 2009, and on the macro-economic environment. However, the out-of-pocket cost of magazines is low in comparison with many other items of consumer expenditure and research shows that its magazines are often regarded by consumers as a low-cost treat.
Future believes that while its consumers are likely to seek information about their chosen area of interest through a variety of media, an increasing number of consumers are spending more time online. Advertising growth patterns continue to change and in the UK, internet advertising now accounts for a greater share of advertising expenditure than is allocated to television, radio, billboards, magazines or newspapers.
Consumers' propensity to spend money on magazines, online shopping, events and other products is influenced by a number of economic factors, including general economic indicators.
Advertiser behaviour
Advertising represents less than one third of the Group's revenue and is subject to variation not only in relation to the strength of the Group's products but also in relation to shifts in macro-advertising trends. However, over 90% of the Group's advertising revenue is tailored to areas of special-interest and is arguably, therefore, less susceptible to changes in levels of mainstream advertising, reflecting the advertising health of each sub-sector.
Distribution and magazine costs
Future contracts out printing and distribution and is therefore reliant on the efficiency of suppliers of these services. The cost of paper and printing generally reflects market conditions. Approximately half of Future's magazines are sold with cover-mounted CDs or DVDs and these too are purchased from external suppliers. Magazines are distributed by nominated distributors and there are many links in the chain to ensure that magazines, once printed, reach retail outlets on a timely basis. The cost and efficiency of postal arrangements affects magazines sold by subscription, which is particularly significant for Future in the US, and increasingly so for the UK.
Regulatory
In addition to legislative constraints applicable to any business in the UK and US, Future is potentially constrained by competition regulation, and by other regulations affecting the content of a small number of our publications.
In the UK, the Office of Fair Trading announced in September 2009 that it would not refer the newspaper and magazine distribution sector to the Competition Commission.
Sources of Intellectual Property
The majority of our Group revenues and profits are built on our own brands. A proportion of the Group's revenue and profit is derived from magazines which are branded 'Official' in accordance with contracts with major companies including Microsoft, Sony and Nintendo. Although the loss of any such contract would constitute a loss of revenue, the Group has a long history of successful publishing partnerships with these and other companies.
Financial
The Group is exposed to interest rate and foreign exchange risk, which it manages where appropriate by hedging arrangements. Taxation and VAT arrangements impacting the business are different in each country and any adverse change in such arrangements could impact our business.
Going concern
The directors are required to make an assessment of the Group's ability to continue to trade as a going concern. Because of the difficult prevailing market conditions this assessment has been subject to more uncertainties than are usual. The directors have given this matter due consideration and have concluded that it is appropriate to prepare the Group financial statements on a going concern basis. The two main considerations were as follows:
i) Strength of the group's cash flow
The Group has generated £14.5m of cash in 2009 from its operations, representing more than 100% of reported EBITA. The nature of the Group's operations is highly cash-generative and during the last three years the ratio of cash generated from reported EBITA has been close to 100%. Most of the Group's operating expenditure is cash expenditure, and the majority of the group's revenue is collected from magazine distributors and from advertising agencies.
ii) Continued support of the group's banks
We maintain a regular and constructive dialogue with our banking syndicate to keep them informed of how the Group is performing. Two important issues to consider in relation to our banks are the renewal of facilities and covenant compliance.
Facilities - At 30 September 2009 the Group had headroom of £14m on its bank facility, which was renewed in May 2009 and runs until maturity on 30 November 2012, which is more than three years after the date of these financial statements. During that period repayments are due to be made of £2m in October 2009 and £1.6m in April 2010 and at six-monthly intervals thereafter.
Covenant compliance - Our bank facility has three key covenants. Under these, (i) net debt is not to exceed 2.5 times bank EBITDA and at 30 September 2009 this ratio was 1.36 times; (ii) net interest payable is to be covered at least 4 times by bank EBITDA and at 30 September 2009 this ratio was 7.63 times; (iii) cashflow is to cover the cost of debt service costs by specified ratios and at 30 September 2009 the requirement was at least 1.3 times and at that date the actual ratio was 2.51 times. The ratio of 1.3 reduces to 1.15 at March 2010 and to 1.0 from June 2010.
The covenants are sensitive to reductions in EBITDA. We have estimated that bank EBITDA, as calculated for covenant purposes, would have to fall by approximately 25% in the year ending 30 September 2010 before either the net debt or cashflow covenants would be in breach. This estimate is made before any other actions that management could take to improve the EBITDA position.
These covenants are tested quarterly on the basis of rolling figures for the preceding 12 months. Given the cash inflows that have already been achieved to date and our expectations in relation to revenues, profits and cashflows for the year to 30 September 2010, the directors are confident that, in the absence of unforeseen circumstances, these covenants will be met at the next four testing points: 31 December 2009, 31 March 2010, 30 June 2010 and 30 September 2010.
Business Outlook for 2010
Without question, in 2009 we faced the toughest economic conditions in Future's history.
Given these external factors, Future again proved resilient, which reflects the underlying strength of our special-interest model and our operational focus. The Group made good progress in its strategy and continued to invest appropriately in new products.
Since 30 September, trading has continued to be challenging and for this reason we take a cautious view.
During 2010 we will focus on carrying through measures to improve results in our US business and more broadly we will continue to protect our business, so that it is in as strong a position as possible at the end of the downturn. We will invest in our brands; and foster our hard-working teams, so they continue to engage with and excite the consumers and companies who together provide our sources of revenue.
Directors' Responsibility Statement
We confirm to the best of our knowledge that:
a) the condensed set of financial statements, which has been prepared in accordance with the
applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial
position and profit of the Company and the undertakings included in the consolidation as a whole;
and
b) the management report includes a fair review of: (i) the important events that have occurred
during the financial year and their impact on the condensed set of financial statements; and (ii) the
principal risks and uncertainties that the Company faces.
By order of the Board
John Bowman
Finance Director
Consolidated income statement
for the year ended 30 September 2009
|
|
|
2009 |
2008 |
|
Continuing operations |
Note |
£m |
£m |
|
|
|
|
|
|
Revenue |
1,2 |
153.1 |
162.9 |
|
|
|
|
|
|
Operating profit before amortisation of intangible assets |
|
10.1 |
14.9 |
|
Amortisation of intangible assets |
4,11 |
(3.9) |
(3.4) |
|
|
|
|
|
|
Operating profit |
1,3 |
6.2 |
11.5 |
|
Finance income |
6 |
0.1 |
0.3 |
|
Finance costs |
6 |
(2.6) |
(2.3) |
|
Net finance costs |
6 |
(2.5) |
(2.0) |
|
Profit before tax |
4 |
3.7 |
9.5 |
|
Tax on profit |
7 |
(0.9) |
(2.7) |
|
Profit for the year |
|
2.8 |
6.8 |
Earnings per 1p Ordinary share
|
|
|
2009 |
2008 |
|
|
Note |
pence |
pence |
|
Basic earnings per share |
9 |
0.9 |
2.1 |
|
Diluted earnings per share |
9 |
0.8 |
2.1 |
Consolidated statement of changes in equity
for the year ended 30 September 2009
|
|
|
Share capital |
Share premium |
Merger reserve |
Treasury reserve |
Cash flow hedge reserve reserve |
Retained earnings |
Total equity |
|
Group |
Note |
£m |
£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 year |
|
- |
- |
- |
- |
- |
6.8 |
6.8 |
|
Currency translation differences |
|
- |
- |
- |
- |
- |
1.2 |
1.2 |
|
Total recognised profit for the year |
|
- |
- |
- |
- |
- |
8.0 |
8.0 |
|
Final dividend relating to 2007 |
8 |
- |
- |
- |
- |
- |
(1.9) |
(1.9) |
|
Interim dividend relating to 2008 |
8 |
- |
- |
- |
- |
- |
(1.6) |
(1.6) |
|
Share option schemes - Value of employees' services Transfer between reserves |
5 20 |
- - |
- - |
- - |
- 0.4 |
- - |
0.6 (0.4) |
0.6 - |
|
Balance at 30 September 2008 |
|
3.3 |
24.5 |
109.0 |
(0.3) |
- |
(56.9) |
79.6 |
|
Profit for the year |
|
- |
- |
- |
- |
- |
2.8 |
2.8 |
|
Currency translation differences |
|
- |
- |
- |
- |
- |
2.3 |
2.3 |
|
Total recognised profit for the year |
|
- |
- |
- |
- |
- |
5.1 |
5.1 |
|
Final dividend relating to 2008 |
8 |
- |
- |
- |
- |
- |
(2.0) |
(2.0) |
|
Interim dividend relating to 2009 |
8 |
- |
- |
- |
- |
- |
(1.3) |
(1.3) |
|
Share option schemes - Value of employees' services |
5 |
- |
- |
- |
- |
- |
0.4 |
0.4 |
|
Treasury shares acquired |
|
- |
- |
- |
(0.1) |
- |
- |
(0.1) |
|
Transfer between reserves |
20 |
- |
- |
- |
0.3 |
- |
(0.3) |
- |
|
Cash flow hedge - fair value loss |
20 |
- |
- |
- |
- |
(0.2) |
- |
(0.2) |
|
Balance at 30 September 2009 |
|
3.3 |
24.5 |
109.0 |
(0.1) |
(0.2) |
(55.0) |
81.5 |
Consolidated balance sheet
as at 30 September 2009
|
|
|
2009 |
2008 |
|
|
Note |
£m |
£m |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10 |
4.1 |
4.9 |
|
Intangible assets - goodwill |
11 |
110.8 |
108.3 |
|
Intangible assets - other |
11 |
2.8 |
4.7 |
|
Deferred tax |
12 |
0.4 |
1.3 |
|
Total non-current assets |
|
118.1 |
119.2 |
|
Current assets |
|
|
|
|
Inventories |
13 |
3.3 |
3.9 |
|
Corporation tax recoverable |
|
0.2 |
1.3 |
|
Trade and other receivables |
14 |
23.1 |
28.4 |
|
Cash and cash equivalents |
15 |
14.6 |
8.4 |
|
Total current assets |
|
41.2 |
42.0 |
|
Total assets |
|
159.3 |
161.2 |
|
Equity and liabilities |
|
|
|
|
Equity |
|
|
|
|
Issued share capital |
|
3.3 |
3.3 |
|
Share premium account |
|
24.5 |
24.5 |
|
Merger reserve |
20 |
109.0 |
109.0 |
|
Treasury reserve |
20 |
(0.1) |
(0.3) |
|
Cash flow hedge reserve |
20 |
(0.2) |
- |
|
Retained earnings |
|
(55.0) |
(56.9) |
|
Total equity |
|
81.5 |
79.6 |
|
Non-current liabilities |
|
|
|
|
Financial liabilities - interest-bearing loans and borrowings |
17 |
10.8 |
14.8 |
|
Financial liabilities - derivatives |
18 |
0.5 |
- |
|
Deferred tax |
12 |
3.4 |
2.1 |
|
Provisions |
19 |
1.1 |
1.3 |
|
Other non-current liabilities |
|
2.5 |
2.6 |
|
Total non-current liabilities |
|
18.3 |
20.8 |
|
Current liabilities |
|
|
|
|
Financial liabilities - interest-bearing loans and borrowings |
17 |
19.4 |
15.5 |
|
Financial liabilities - derivatives |
18 |
0.2 |
- |
|
Trade and other payables |
16 |
39.8 |
43.0 |
|
Corporation tax payable |
|
0.1 |
2.3 |
|
Total current liabilities |
|
59.5 |
60.8 |
|
Total liabilities |
|
77.8 |
81.6 |
|
Total equity and liabilities |
|
159.3 |
161.2 |
|
|
|
|
|
Consolidated cash flow statement
for the year ended 30 September 2009
|
|
|
2009 |
2008 |
|
|
|
£m |
£m |
|
Cash flows from operating activities |
|
|
|
|
Cash generated from operations |
|
14.5 |
14.0 |
|
Interest received |
|
0.2 |
0.3 |
|
Tax received |
|
0.9 |
0.5 |
|
Interest paid |
|
(1.5) |
(2.4) |
|
Tax paid |
|
(0.2) |
(1.0) |
|
Net cash generated from operating activities |
|
13.9 |
11.4 |
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(1.1) |
(1.4) |
|
Purchase of magazine titles, websites and trademarks |
|
(0.2) |
(0.3) |
|
Purchase of computer software and website development |
|
(1.8) |
(2.0) |
|
Purchase of subsidiary undertaking |
|
- |
(1.7) |
|
Net cash used in investing activities |
|
(3.1) |
(5.4) |
|
Cash flows from financing activities |
|
|
|
|
Purchase of own shares by Employee Benefit Trust |
|
(0.1) |
- |
|
Draw down of bank loans |
|
17.9 |
8.5 |
|
Repayment of bank loans |
|
(18.7) |
(18.1) |
|
Rearrangement fees for bank loans |
|
(0.8) |
- |
|
Equity dividends paid |
|
(3.3) |
(3.5) |
|
Net cash used in financing activities |
|
(5.0) |
(13.1) |
|
Net increase/(decrease) in cash and cash equivalents |
|
5.8 |
(7.1) |
|
Cash and cash equivalents at beginning of year |
|
8.4 |
14.2 |
|
Exchange adjustments |
|
0.4 |
1.3 |
|
Cash and cash equivalents at end of year |
|
14.6 |
8.4 |
Notes to the cash flow statement
for the year ended 30 September 2009
A. Cash generated from operations
The reconciliation of operating profit to cash flows generated from operations is set out below:
|
|
|
2009 £m |
|
2008 £m |
|
Operating profit for the year |
|
6.2 |
|
11.5 |
|
Adjustments for: |
|
|
|
|
|
Depreciation charge |
|
1.8 |
|
1.9 |
|
Amortisation of intangible assets |
|
3.9 |
|
3.4 |
|
Share option schemes - value of employees' services |
|
0.4 |
|
0.6 |
|
Operating profit before changes in working capital and provisions |
|
12.3 |
|
17.4 |
|
Movement in provisions |
|
(0.2) |
|
(0.1) |
|
Decrease/(increase) in inventories |
|
1.0 |
|
(0.6) |
|
Decrease/(increase) in trade and other receivables |
|
6.9 |
|
(1.3) |
|
Decrease in trade and other payables |
|
(5.5) |
|
(1.4) |
|
Cash generated from operations |
|
14.5 |
|
14.0 |
B. Analysis of net debt
|
|
1 October 2008 £m |
Cash flows £m |
Non-cash changes £m |
Exchange movements £m |
30 £m |
|
Cash and cash equivalents |
8.4 |
5.8 |
- |
0.4 |
14.6 |
|
Debt due within one year |
(15.5) |
1.3 |
(3.6) |
(1.6) |
(19.4) |
|
Debt due after more than one year |
(14.8) |
0.4 |
3.6 |
- |
(10.8) |
|
Net debt |
(21.9) |
7.5 |
- |
(1.2) |
(15.6) |
C. Reconciliation of movement in net debt
|
|
|
2009 £m |
|
2008 £m |
|
Net debt at start of year |
|
(21.9) |
|
(24.3) |
|
Increase/(decrease) in cash and cash equivalents |
|
5.8 |
|
(7.1) |
|
Movement in borrowings |
|
1.7 |
|
9.6 |
|
Exchange movements |
|
(1.2) |
|
(0.1) |
|
Net debt at end of year |
|
(15.6) |
|
(21.9) |
Accounting Policies
Basis of preparation
This preliminary statement of annual results for the year ended 30 September 2009 is unaudited and does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The information contained in this statement is based on the statutory accounts for the year ended 30 September 2009. 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 2009, and those parts of the Companies Act 2006 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 2008.
Basis of consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
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 operations are split geographically between the UK and the US. 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
|
|
2009 £m |
2008 £m |
|
UK |
106.5 |
115.6 |
|
US |
47.0 |
47.7 |
|
Revenue between segments |
(0.4) |
(0.4) |
|
Total |
153.1 |
162.9 |
Inter segment pricing is determined on an arm's 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:
|
|
2009 £m |
2008 £m |
|
UK |
81.0 |
91.4 |
|
US |
51.2 |
52.7 |
|
Mainland Europe |
10.5 |
10.2 |
|
Rest of the World |
10.8 |
9.0 |
|
Revenue between segments |
(0.4) |
(0.4) |
|
Total |
153.1 |
162.9 |
(iii) Operating profit/(loss) by segment
|
|
2009 £m |
2008 £m |
|
UK |
14.2 |
12.7 |
|
US |
(5.5) |
2.4 |
|
Central costs |
(2.5) |
(3.6) |
|
Operating profit |
6.2 |
11.5 |
(iv) Assets and liabilities by segment
|
|
Segment assets |
Segment liabilities |
Segment net assets |
|||
|
|
2009 |
2008 |
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
UK |
123.5 |
120.2 |
(55.5) |
(55.6) |
68.0 |
64.6 |
|
US |
35.8 |
41.0 |
(22.3) |
(26.0) |
13.5 |
15.0 |
|
Total |
159.3 |
161.2 |
(77.8) |
(81.6) |
81.5 |
79.6 |
1. Segmental reporting (continued)
(v) Other segment information
|
|
Capital expenditure |
Depreciation and amortisation |
||
|
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
UK |
1.3 |
2.8 |
2.8 |
3.6 |
|
US |
1.2 |
4.4 |
2.9 |
1.7 |
|
Total |
2.5 |
7.2 |
5.7 |
5.3 |
Other than the items disclosed above and a share-based payments charge of £0.4m (2008: £0.6m) 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. Each business segment comprises groups of individual magazines, websites, and events, 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
|
|
2009 £m |
2008 £m |
|
Games |
47.2 |
52.4 |
|
Music & Movies |
33.8 |
34.8 |
|
Technology |
41.3 |
44.1 |
|
Active |
31.2 |
32.0 |
|
Intra-Group revenue |
(0.4) |
(0.4) |
|
Total |
153.1 |
162.9 |
(ii) Gross profit by segment
|
|
2009 £m |
2008 £m |
|
Games |
10.7 |
15.1 |
|
Music & Movies |
7.0 |
8.0 |
|
Technology |
11.4 |
13.1 |
|
Active |
7.5 |
6.7 |
|
Add back: distribution expenses |
12.5 |
11.8 |
|
Total |
49.1 |
54.7 |
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:
|
|
2009 £m |
2008 £m |
|
Circulation |
91.2 |
97.8 |
|
Advertising |
54.5 |
58.1 |
|
Licensing, events and other |
7.4 |
7.0 |
|
Total |
153.1 |
162.9 |
3. Operating profit
|
|
2009 £m |
2008 £m |
|
Revenue |
153.1 |
162.9 |
|
Cost of sales |
(104.0) |
(108.2) |
|
Gross profit |
49.1 |
54.7 |
|
Distribution expenses |
(12.5) |
(11.8) |
|
Administration expenses |
(26.5) |
(28.0) |
|
Amortisation of intangible assets |
(3.9) |
(3.4) |
|
Operating profit |
6.2 |
11.5 |
4. Profit before tax
|
|
|
2009 £m |
2008 £m |
|
Profit before tax is stated after charging: |
|
|
|
|
Employee costs (note 5) |
|
50.8 |
51.2 |
|
Depreciation of owned assets (note 10) |
|
1.8 |
1.9 |
|
Amortisation of intangible assets (note 11) |
|
3.9 |
3.4 |
|
Hire of machinery and equipment |
|
0.2 |
0.2 |
|
Other operating lease rentals |
|
3.2 |
3.2 |
|
Net exchange differences on foreign currency balances |
|
0.2 |
0.1 |
5. Employees
|
|
|
2009 |
2008 |
|
|
|
£m |
£m |
|
Wages and salaries |
|
43.6 |
44.3 |
|
Social security costs |
|
5.7 |
5.2 |
|
Other pension costs |
|
1.1 |
1.1 |
|
Share option schemes - Value of employees' services |
|
0.4 |
0.6 |
|
Total staff costs |
|
50.8 |
51.2 |
|
Average monthly number of people (including executive Directors) |
|
2009 No. |
2008 No. |
|
Production |
|
990 |
1,015 |
|
Administration |
|
221 |
247 |
|
Total |
|
1,211 |
1,262 |
At 30 September 2009, the actual number of people employed by the Group was 1,189 (2008: 1,253). In respect of our primary segments 991 (2008: 1,044) were employed in the UK and 198 (2008: 209) in the US.
IFRS 2 'Share-based Payment' 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 £0.4m (2008: £0.6m) has been credited to reserves.
6. Finance income and costs
|
|
2009 £m |
2008 £m |
|
Interest receivable |
0.1 |
0.3 |
|
Total finance income |
0.1 |
0.3 |
|
Interest payable on interest-bearing loans and borrowings |
(1.6) |
(2.4) |
|
Fair value loss on interest rate swaps |
(0.5) |
- |
|
Exchange (losses)/gains |
(0.2) |
0.1 |
|
Amortisation of bank loan arrangement fees |
(0.2) |
- |
|
Other finance costs |
(0.1) |
- |
|
Total finance costs |
(2.6) |
(2.3) |
|
Net finance costs |
(2.5) |
(2.0) |
7. Tax on profit
The tax charged in the consolidated income statement is analysed below:
|
|
2009 £m |
2008 £m |
|
UK corporation tax |
|
|
|
Current tax at 28% (2008: 28%) on the profit for the year |
1.1 |
2.2 |
|
Adjustments in respect of previous years |
0.3 |
(1.4) |
|
|
1.4 |
0.8 |
|
Foreign tax |
|
|
|
Current tax on the loss for the year |
- |
- |
|
Adjustments in respect of previous years |
- |
(0.1) |
|
Current tax |
1.4 |
0.7 |
|
Deferred tax origination and reversal of timing differences |
|
|
|
Current year charge |
2.4 |
1.0 |
|
Adjustments in respect of previous years |
(2.9) |
1.0 |
|
Deferred tax |
(0.5) |
2.0 |
|
Total tax charge |
0.9 |
2.7 |
During the year, the Group recognised a portion of its historic losses resulting in a tax credit of £2.9m in these financial statements. The Group has recognised these losses due to an increased probability that the value will be realised.
The tax assessed in each period differs from the standard rate of corporation tax in the UK for the relevant period. The differences are explained below:
|
|
2009 £m |
2008 £m |
|
Profit before tax |
3.7 |
9.5 |
|
Profit before tax at the standard UK tax rate of 28% (2008: 28%) |
1.0 |
2.7 |
|
Different tax rates applicable overseas |
(0.7) |
0.2 |
|
Intangible assets: differences relating to amortisation |
- |
(0.1) |
|
Tangible assets: differences relating to depreciation |
0.2 |
0.1 |
|
Losses created/utilised |
2.2 |
- |
|
Other allowable/disallowable items |
0.8 |
0.3 |
|
Impact of prior year adjustments |
(2.6) |
(0.5) |
|
Total tax charge |
0.9 |
2.7 |
8. Dividends
|
Equity dividends |
2009 |
2008 |
|
Number of shares in issue at end of year (million) |
327.2 |
326.9 |
|
Dividends paid in year (pence per share) |
1.0 |
1.1 |
|
Dividends paid in year (£m) |
3.3 |
3.5 |
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 2009 of 0.5 pence per share, amounting to a total dividend of £1.6m, is to be proposed at the Annual General Meeting on 18 March 2010. These financial statements do not reflect this dividend.
The dividends totalling £3.3m paid during the year ended 30 September 2009 relate to the interim dividend for the six month period to 31 March 2009 of 0.4 pence per share (£1.3m) and the final dividend declared for the year ended 30 September 2008 of 0.6 pence per share (£2.0m).
The dividends totalling £3.5m paid during the year ended 30 September 2008 relate to the interim dividend for the six month period to 31 March 2008 of 0.5 pence per share (£1.6m) and the final dividend declared for the year ended 30 September 2007 of 0.6 pence per share (£1.9m).
9. Earnings per share
Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue 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.
The adjusted earnings per share removes the effect of the amortisation of intangible assets and any related tax effects from the calculation as follows:
Adjustments to profit after tax
|
|
2009 £m |
2008 £m |
|
Profit after tax |
2.8 |
6.8 |
|
Add: amortisation of intangible assets |
3.9 |
3.4 |
|
Tax effect of the above adjustment |
(0.9) |
(1.1) |
|
Adjusted profit after tax |
5.8 |
9.1 |
|
|
2009 |
2008 |
|
Weighted average number of shares in issue during the year: |
|
|
|
- Basic |
326,261,814 |
325,711,398 |
|
- Dilutive effect of share options |
7,528,758 |
4,638,434 |
|
- Diluted |
333,790,572 |
330,349,832 |
|
Basic earnings per share (in pence) |
0.9 |
2.1 |
|
Adjusted basic earnings per share (in pence) |
1.8 |
2.8 |
|
Diluted earnings per share (in pence) |
0.8 |
2.1 |
|
Adjusted diluted earnings per share (in pence) |
1.7 |
2.8 |
The adjustments to profit have the following effect:
|
|
2009 pence |
2008 pence |
|
Basic earnings per share |
0.9 |
2.1 |
|
Amortisation of intangible assets |
1.2 |
1.0 |
|
Tax effect of the above adjustment |
(0.3) |
(0.3) |
|
Adjusted basic earnings per share |
1.8 |
2.8 |
|
|
|
|
|
Diluted earnings per share |
0.8 |
2.1 |
|
Amortisation of intangible assets |
1.2 |
1.0 |
|
Tax effect of the above adjustment |
(0.3) |
(0.3) |
|
Adjusted diluted earnings per share |
1.7 |
2.8 |
10. Property, plant and equipment
|
|
Land and buildings £m |
Plant and machinery £m |
Equipment, fixtures and fittings £m |
Total £m |
|
Cost |
|
|
|
|
|
At 1 October 2007 |
3.5 |
4.5 |
2.0 |
10.0 |
|
Additions |
0.1 |
1.5 |
0.2 |
1.8 |
|
Exchange adjustments |
0.1 |
0.2 |
0.1 |
0.4 |
|
At 30 September 2008 |
3.7 |
6.2 |
2.3 |
12.2 |
|
Additions |
0.1 |
0.6 |
0.1 |
0.8 |
|
Disposals |
- |
(1.1) |
- |
(1.1) |
|
Exchange adjustments |
0.1 |
0.3 |
0.2 |
0.6 |
|
At 30 September 2009 |
3.9 |
6.0 |
2.6 |
12.5 |
|
Depreciation |
|
|
|
|
|
At 1 October 2007 |
(1.1) |
(2.9) |
(1.1) |
(5.1) |
|
Charge for the year |
(0.3) |
(1.3) |
(0.3) |
(1.9) |
|
Exchange adjustments |
(0.1) |
(0.1) |
(0.1) |
(0.3) |
|
At 30 September 2008 |
(1.5) |
(4.3) |
(1.5) |
(7.3) |
|
Charge for the year |
(0.3) |
(1.2) |
(0.3) |
(1.8) |
|
Disposals |
- |
1.1 |
- |
1.1 |
|
Exchange adjustments |
- |
(0.3) |
(0.1) |
(0.4) |
|
At 30 September 2009 |
(1.8) |
(4.7) |
(1.9) |
(8.4) |
|
|
|
|
|
|
|
Net book value at 30 September 2009 |
2.1 |
1.3 |
0.7 |
4.1 |
|
Net book value at 30 September 2008 |
2.2 |
1.9 |
0.8 |
4.9 |
Asset lives and residual values are reviewed annually.
Land and buildings at net book value comprise:
|
|
2009 £m |
2008 £m |
|
Leasehold: |
|
|
|
Over 50 years unexpired |
0.9 |
1.0 |
|
Under 50 years unexpired |
1.2 |
1.2 |
|
Total |
2.1 |
2.2 |
11. Intangible assets
|
|
Goodwill £m |
Magazine and website £m |
Other £m |
Total £m |
|
Cost |
|
|
|
|
|
At 1 October 2007 |
305.6 |
12.5 |
3.0 |
321.1 |
|
Additions through business combinations |
1.7 |
- |
- |
1.7 |
|
Other additions |
- |
1.4 |
2.3 |
3.7 |
|
Exchange adjustments |
2.5 |
0.3 |
0.1 |
2.9 |
|
At 30 September 2008 |
309.8 |
14.2 |
5.4 |
329.4 |
|
Other additions |
- |
0.2 |
1.5 |
1.7 |
|
Disposals |
- |
- |
(0.1) |
(0.1) |
|
Exchange adjustments |
3.4 |
0.6 |
0.3 |
4.3 |
|
At 30 September 2009 |
313.2 |
15.0 |
7.1 |
335.3 |
|
Amortisation |
|
|
|
|
|
At 1 October 2007 |
(200.8) |
(9.2) |
(2.0) |
(212.0) |
|
Charge for the year |
- |
(2.2) |
(1.2) |
(3.4) |
|
Exchange adjustments |
(0.7) |
(0.2) |
(0.1) |
(1.0) |
|
At 30 September 2008 |
(201.5) |
(11.6) |
(3.3) |
(216.4) |
|
Charge for the year |
- |
(1.6) |
(2.3) |
(3.9) |
|
Disposals |
- |
- |
0.1 |
0.1 |
|
Exchange adjustments |
(0.9) |
(0.5) |
(0.1) |
(1.5) |
|
At 30 September 2009 |
(202.4) |
(13.7) |
(5.6) |
(221.7) |
|
|
|
|
|
|
|
Net book value at 30 September 2009 |
110.8 |
1.3 |
1.5 |
113.6 |
|
Net book value at 30 September 2008 |
108.3 |
2.6 |
2.1 |
113.0 |
Magazine and website related assets 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 finite 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 infinite lives.
For the purpose of impairment testing, goodwill is allocated to the Group's cash generating units (CGUs) on a geographical basis:
|
|
2009 £m |
2008 £m |
|
UK |
89.1 |
89.1 |
|
US |
21.7 |
19.2 |
|
Total |
110.8 |
108.3 |
The recoverable amount of a CGU is based on value-in-use calculations. These calculations use cash flow projections based on financial forecasts approved by management covering a five year period. Cash flows beyond five years are assumed to be at a zero growth rate. EBITDA margins of between 1% and 17% from years one to six have been used. An appropriate discount rate of 13.6% (2008: 13.6%), representing the Group's current pre-tax cost of capital, has been applied to these projections.
At 30 September 2009 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 (2008: nil). Recoverable amounts for the UK and US businesses exceeded the carrying values by £6.8m and £1.2m respectively.
The value-in-use calculations are sensitive to changes in the discount rate and cash flows. The value in use of the UK and US businesses would be equal to the carrying value of assets if the discount rates were 1.1% and 0.6% higher respectively or if forecast cash flows were 7.8% and 8.0% lower respectively.
12. 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 years.
|
|
Intangible assets £m |
Share-based payments £m |
Depreciation vs tax allowances £m |
Tax losses £m |
Provisions and other timing differences £m |
Total £m |
|
At 1 October 2007 |
(1.3) |
0.3 |
1.1 |
- |
0.9 |
1.0 |
|
Charged to income statement |
(0.8) |
(0.1) |
(0.2) |
- |
(0.9) |
(2.0) |
|
Transfers |
(0.3) |
- |
0.3 |
- |
- |
- |
|
Exchange adjustments |
0.2 |
- |
- |
- |
- |
0.2 |
|
At 30 September 2008 |
(2.2) |
0.2 |
1.2 |
- |
- |
(0.8) |
|
(Charged)/credited to income statement |
(0.2) |
- |
(0.5) |
1.4 |
(0.2) |
0.5 |
|
Transfers |
- |
- |
(0.2) |
(2.9) |
0.2 |
(2.9) |
|
Exchange adjustments |
- |
- |
0.1 |
0.1 |
- |
0.2 |
|
At 30 September 2009 |
(2.4) |
0.2 |
0.6 |
(1.4) |
- |
(3.0) |
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:
|
|
2009 £m |
2008 £m |
|
Deferred tax assets |
0.4 |
1.3 |
|
Deferred tax liabilities |
(3.4) |
(2.1) |
|
Net deferred tax liability |
(3.0) |
(0.8) |
The deferred tax asset of £0.4m (2008: £1.3m) is disclosed as a non-current asset of which the assets due within one year total £0.4m (2008: £0.4m). The deferred tax liability of £3.4m (2008: £2.1m) is disclosed as a non-current liability of which the liabilities due within one year total £nil (2008: £0.2m).
The Group has unprovided deferred tax assets on tax losses totalling £4.1m (2008: £1.5m).
The Group has £1.0m unprovided deferred tax assets on other temporary differences (2008: £nil).
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 unremitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax liability in the foreseeable future.
13. Inventories
|
|
2009 £m |
2008 £m |
|
Raw materials |
0.8 |
1.5 |
|
Work in progress |
2.1 |
2.2 |
|
Finished goods |
0.4 |
0.2 |
|
Total |
3.3 |
3.9 |
Inventory is stated after impairment of £0.1m (2008: £nil).
The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £13.9m (2008: £14.1m).
14. Trade and other receivables
|
|
|
2009 £m |
|
2008 £m |
|
Current assets: |
|
|
|
|
|
Trade receivables |
|
20.8 |
|
25.3 |
|
Provisions for impairment of trade receivables |
|
(1.3) |
|
(1.0) |
|
Trade receivables net |
|
19.5 |
|
24.3 |
|
Other receivables |
|
0.2 |
|
0.3 |
|
Prepayments and accrued income |
|
3.2 |
|
3.7 |
|
|
|
22.9 |
|
28.3 |
|
Non-current assets: |
|
|
|
|
|
Other receivables |
|
0.2 |
|
0.1 |
|
Total |
|
23.1 |
|
28.4 |
Trade receivables are shown net of a provision for impairment amounting to £1.3m (2008: £1.0m).
15. Cash and cash equivalents
|
|
|
2009 £m |
|
2008 £m |
|
Cash at bank and in hand |
|
14.6 |
|
8.4 |
|
Cash and cash equivalents |
|
14.6 |
|
8.4 |
The effective interest rate on short-term deposits was 0.8% (2008: 4.4%). These deposits have an average maturity period of one day (2008: one day). The carrying amount of these assets approximates their fair value.
The Group has a number of authorised counterparties with whom cash balances are held in the countries in which the Group operates. Credit risk is minimised by considering the credit standing of all potential bankers before selecting them by the use of external credit ratings. At 30 September 2009 all short term deposits were rated according to Standard and Poor's as A-1+ (2008: A-1+).
16. Trade and other payables
|
|
|
2009 £m |
|
2008 £m |
|
Trade payables |
|
15.6 |
|
16.3 |
|
Other taxation and social security |
|
1.1 |
|
1.1 |
|
Other payables |
|
1.3 |
|
2.1 |
|
Accruals and deferred income |
|
21.8 |
|
23.5 |
|
Total |
|
39.8 |
|
43.0 |
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period for trade purchases is 42 days (2008: 43 days). The Group has financial risk management policies in place to ensure all payables are paid within the agreed credit terms.
The Directors consider that the carrying amount of trade payables approximates their fair value.
17. Financial liabilities - interest-bearing loans and borrowings
Non-current liabilities
|
|
Interest rate at 30 Sept 2009 |
|
2009 £m |
|
2008 £m |
|
Sterling term loan - unsecured |
3.8% |
|
10.8 |
|
14.8 |
|
Total |
|
|
10.8 |
|
14.8 |
Current liabilities
|
|
Interest rate at 30 Sept 2009 |
|
2009 £m |
|
2008 £m |
|
Sterling term loan - unsecured |
3.8% |
|
3.5 |
|
4.0 |
|
Sterling revolving loan - unsecured |
3.8% |
|
7.8 |
|
- |
|
US Dollar revolving loan - unsecured |
3.4% |
|
8.1 |
|
11.5 |
|
Total |
|
|
19.4 |
|
15.5 |
The interest-bearing loans and borrowings are repayable as follows:
|
|
|
2009 £m |
|
2008 £m |
|
Within one year |
|
19.4 |
|
15.5 |
|
Between one and two years |
|
3.0 |
|
14.8 |
|
Between two and five years |
|
7.8 |
|
- |
|
Total |
|
30.2 |
|
30.3 |
The borrowings and interest are guaranteed by Future plc, Future Holdings 2002 Limited, Future Publishing Limited and Future US, Inc.
18. Financial liabilities - derivatives
Non-current liabilities
|
|
|
|
2009 £m |
|
2008 £m |
|
Interest rate swaps |
|
|
0.5 |
|
- |
|
Total |
|
|
0.5 |
|
- |
The fair value loss for the year of £0.5m on interest rate swaps has been included within finance costs in the income statement.
Current liabilities
|
|
|
2009 £m |
2008 £m |
|
Forward foreign exchange contracts |
|
0.2 |
- |
|
Total |
|
0.2 |
- |
The fair value loss for the year of £0.2m on forward foreign exchange contracts has been recognised directly in equity.
19. Provisions
|
|
Property and dilapidations £m |
Other £m |
Total £m |
|
At 1 October 2008 |
0.3 |
1.0 |
1.3 |
|
Utilised in the year |
(0.1) |
(0.1) |
(0.2) |
|
At 30 September 2009 |
0.2 |
0.9 |
1.1 |
The provision for property and dilapidations relates to an obligation under a short leasehold agreement on vacant property. The provision has been discounted at a rate in line with the Group's post tax cost of capital which is 9.5%.
Other provisions relate to liabilities arising associated with disposals made during 2007.
All of the above provisions will potentially be utilised or will reverse during the next five years.
20. 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.
|
|
2009 |
2008 |
|
|
£m |
£m |
|
Balance at 1 October |
(0.3) |
(0.7) |
|
Acquired in the year |
(0.1) |
- |
|
Utilised in the year |
0.3 |
0.4 |
|
At 30 September |
(0.1) |
(0.3) |
During the year, the Group transferred £0.3m (2008: £0.4m) of shares to employees under Restricted Stock Awards.
During the year, Future plc paid £0.1m to Abacus Corporate Trustees Limited as trustees of the EBT, which was used to purchase Future plc shares in the market.
The treasury reserve is non-distributable.
Cash flow hedge reserve
The cash flow hedge reserve forms part of the retained earnings and represents the fair value of forward foreign exchange contracts at 30 September.
|
|
2009 |
2008 |
|
|
£m |
£m |
|
Balance at 1 October |
- |
- |
|
Fair value loss |
(0.2) |
- |
|
At 30 September |
(0.2) |
- |
Merger reserve
The merger reserve of £109.0m (2008: £109.0m) arose following the 1999 Group reorganisation and is non-distributable.
Key Performance Indicators
|
Key performance indicators for year ended 30 September |
2009 Annual |
2008 Annual |
|
Growth in revenue (at constant currency) |
-13% |
+2% |
|
EBITA operating margin (as a %) |
6.6% |
9.1% |
|
Absolute EBITA (in Sterling) |
£10.1m |
£14.9m |
|
Change in adjusted earnings per share (as a %) |
-36% |
+12% |
|
|
|
|
|
Number of magazines sold per month |
3.6m |
4.3m |
|
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 |
76:24 (note 4) |
76:24 (note 4) |
|
|
|
|
|
Number of unique users logging on to our websites per month |
27m (note 5) |
18m (note 5) |
|
Growth in total advertising revenue (as a % at constant currency) |
-15% |
+3% |
|
Proportion of advertising revenue that is online (as a %) |
23% |
19% |
|
|
|
|
|
Human Capital |
See note 6 |
See note 6 |
|
Net bank debt |
£15.6m |
£21.9m |
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 77% of magazines (by volume) are sold at newsstand. Our overall UK average newsstand efficiency has decreased by 2% compared with 2008. Future has increased the proportion of magazine volume sales derived from subscription rather than newsstand, from 20% to 23%. 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.
-
Partnership publishing represents 24% of 2009 Group revenue. This category includes business from our Official magazines and programmes published for Microsoft (Xbox 360 and Windows), Sony (PlayStation and Qore), 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 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 1,189 employees (at 30 September 2009). In the running of our business, we focus on retention of key employees and in refreshment of the team with new people and new ideas.
This information is provided by RNS
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