RNS Number:5328H
Future Network PLC
20 March 2000
Part 2
Actual Group Profit and Loss Account
for the year ended 31 December 1999
Continuing Operations
---------------------
Acquisi- 1999 1998
tions Total Total
Note #' 000 #' 000 #' 000 #' 000
--------------------------------------------------------------------
Turnover 2 121,644 52,316 173,960 80,290
Cost of sales (77,784) (37,023) (114,807) (54,948)
--------------------------------------------------------------------
Gross profit 43,860 15,293 59,153 25,342
Distribution
expenses (4,200) (4,066) (8,266) (2,748)
Administrative
expenses (28,785) (16,387) (45,172) (15,955)
--------------------------------------------------------------------
Operating profit
excluding
amortisation of
intangible assets* 17,751 4,759 22,510 11,381
Amortisation of
intangible assets (6,876) (9,919) (16,795) (4,742)
--------------------------------------------------------------------
Operating
profit/(loss) 10,875 (5,160) 5,715 6,639
Profit on disposal
of fixed asset
investments 1,962 -
Net interest
payable and
similar charges 3 (10,812) (10,360)
--------------------------------------------------------------------
Loss on ordinary
activities before
taxation (3,135) (3,721)
Tax on loss on
ordinary
activities 4 (3,530) (1,000)
--------------------------------------------------------------------
Loss on ordinary
activities after
taxation (6,665) (4,721)
--------------------------------------------------------------------
Loss for the
financial year (6,665) (4,721)
--------------------------------------------------------------------
There is no difference between the loss on ordinary activities
before taxation and the loss for the financial year stated above
and their historical cost equivalents.
*Included within the operating result is a charge of #934,000
(1998: #nil) in respect of employer taxes for options and share
related benefits provided to employees.
Adjustments to results after taxation
1999 1998
#'000 #'000
--------------------------------------------------------------------
Loss on ordinary
activities after taxation (6,665) (4,721)
Add: amortisation of
intangible assets 16,795 4,742
Add: employer taxes on
options and share related 934 -
benefits
Less: profit on sale of
fixed asset investments (1,962) -
--------------------------------------------------------------------
Adjusted profit on
ordinary activities after
taxation 9,102 21
--------------------------------------------------------------------
Actual earnings per 1 p Ordinary Share
(in pence)
Note 1999 1998
--------------------------------------------------------------------
Basic loss per share 5 (6.54) (12.15)
Adjusted basic earnings
per share 5 8.93 0.05
Diluted loss per share 5 (6.54) (12.15)
Adjusted diluted earnings
per share 5 8.09 0.05
--------------------------------------------------------------------
Pro forma Group Profit and Loss Account
for the year ended 31 December 1999
Continuing Operations
---------------------
Acquisi- 1999 1998
tions Total Total
Note #' 000 #' 000 #' 000 #' 000
---------------------------------------------------------------------
Turnover 2 193,735 4,776 198,511 159,881
Cost of sales (129,756) (5,575) (135,331) (114,747)
---------------------------------------------------------------------
Gross profit/(loss) 63,979 (799) 63,180 45,134
Distribution
expenses (10,443) (483) (10,926) (8,392)
Administrative
expenses (55,164) (1,271) (56,435) (46,959)
---------------------------------------------------------------------
Operating profit
excluding
amortisation of
intangible assets* 22,799 (2,166) 20,633 13,022
Amortisation of
intangible assets (24,427) (387) (24,814) (23,239)
---------------------------------------------------------------------
Operating loss (1,628) (2,553) (4,181) (10,217)
Profit on disposal
of fixed asset
investments 10,895 -
Net interest payable
and similar charges 3 (2,798) (2,624)
---------------------------------------------------------------------
Profit /(loss) on
ordinary activities
before taxation 3,916 (12,841)
Tax on profit/(loss)
on ordinary
activities 4 (6,829) (6,060)
---------------------------------------------------------------------
Loss on ordinary
activities after
taxation (2,913) (18,901)
---------------------------------------------------------------------
Loss for the
financial year (2,913) (18,901)
---------------------------------------------------------------------
There is no difference between the profit/(loss) on ordinary
activities before taxation and the loss for the year stated above
and their historical cost equivalents
*Included within the operating loss is a charge of #1,405,000
(1998: #nil) in respect of employer taxes for share options and
share related benefits provided to employees.
Adjustments to pro forma results after taxation
1999 1998
#'000 #'000
Loss on ordinary
activities after taxation (2,913) (18,901)
Add: amortisation of
intangible assets 24,814 23,239
Add: employer taxes on
options and share related
benefits 1,405 -
Less: profit on sale of
fixed asset investments (10,895) -
---------------------------------------------------------------------
Adjusted profit on
ordinary activities after
taxation 12,411 4,338
---------------------------------------------------------------------
Pro forma earnings per 1 p Ordinary Share
(in pence)
Note 1999 1998
---------------------------------------------------------------------
Basic loss per share 5 (2.11) (13.83)
Adjusted basic earnings
per share 5 8.99 3.17
Diluted loss per share 5 (2.11) (13.83)
Adjusted diluted earnings
per share 5 8.22 2.88
---------------------------------------------------------------------
Actual Group Activity Analysis
for the year ended 31 December 1999
Turnover by business unit
-----------------------------------------------------------------------
6 months6 months Total 6 months 6 months Total
to to 12 months to to 12 months
30/6/99 31/12/99 30/6/98 31/12/98
#'000 #'000 #'000 #'000 #'000 #'000
-----------------------------------------------------------------------
Magazine
UK 46,048 53,771 99,819 15,078 48,686 63,764
France 10,660 11,319 21,979 5,031 11,441 16,472
Italy 3,803 8,662 12,465 - - -
Germany - 4,208 4,208 - - -
US 1,119 32,971 34,090 - - -
-----------------------------------------------------------------------
61,630 110,931 172,561 20,109 60,127 80,236
Internet 130 1,269 1,399 31 23 54
-----------------------------------------------------------------------
Total 61,760 112,200 173,960 20,140 60,150 80,290
-----------------------------------------------------------------------
Results by business unit
-----------------------------------------------------------------------
6 months 6 months Total 6 months 6 months Total
to to 12 months to to 12 months
30/6/99 31/12/99 30/6/98 31/12/98
#'000 #'000 #'000 #'000 #'000 #'000
------------------------------------------------------------------------
Magazine
UK 7,270 11,954 19,224 2,097 7,415 9,512
France 359 1,505 1,864 522 1,590 2,112
Italy 497 2,170 2,667 - - -
Germany (90) (2,033) (2,123) - - -
US 181 5,855 6,036 - - -
------------------------------------------------------------------------
8,217 19,451 27,668 2,619 9,005 11,624
Internet (420) (2,615) (3,035) (104) (139) (243)
Central
operating
costs (1,067) (1,056) (2,123) - - -
-----------------------------------------------------------------------
Operating
profit
excluding
amortisa-
tion of
intangible
assets 6,730 15,780 22,510 2,515 8,866 11,381
Add:
Employer
taxes on
options and
share
related
benefits* - 934 934 - - -
------------------------------------------------------------------------
Adjusted
operating
profit 6,730 16,714 23,444 2,515 8,866 11,381
------------------------------------------------------------------------
*The above table highlights the impact of additional employment
taxes provided for on the basis of the rise in market value of
shares to 31 December 1999 compared with the exercise price in
line with FRS12. The provision will fluctuate in the short term,
driven by market events rather than trading. The actual cost
incurred will depend on the share price at the time that options
are exercised, the number of options which vest on the basis of
performance criteria, and the number which lapse due to option
holders leaving our employment.
Pro forma Group up Activity Analysis
for the year ended 31 December 1999
Turnover by business unit
----------------------------------------------------------------------
6 months 6 months Total 6 months 6 months Total
to to to to
30/6/99 31/12/99 12 months 30/6/98 31/12/98 12 months
#'000 #'000 #'000 #'000 #'000 #'000
----------------------------------------------------------------------
Magazine
UK 46,048 53,771 99,819 39,722 48,664 88,386
France 10,660 11,319 21,979 9,783 11,463 21,246
Italy 7,827 8,767 16,594 6,377 8,329 14,706
Germany - 4,208 4,208 - - -
US 21,212 32,977 54,189 13,495 21,394 34,889
----------------------------------------------------------------------
85,747 111,042 196,789 69,377 89,850 159,227
Internet 448 1,274 1,722 309 345 654
----------------------------------------------------------------------
Total 86,195 112,316 198,511 69,686 90,195 159,881
----------------------------------------------------------------------
Results by business unit
----------------------------------------------------------------------
6 months 6 months Total 6 months 6 months Total
to to to to
30/6/99 31/12/99 12 months 30/6/98 31/12/98 12 months
#'000 #'000 #'000 #'000 #'000 #'000
----------------------------------------------------------------------
Magazine
UK 7,270 11,954 19,224 5,411 7,398 12,809
France 359 1,505 1,864 1,423 1,606 3,029
Italy 1,547 2,256 3,803 1,366 1,179 2,545
Germany (90) (2,033) (2,123) - - -
US (2,908) 6,459 3,551 (2,187) (3,001) (5,188)
----------------------------------------------------------------------
6,178 20,141 26,319 6,013 7,182 13,195
Internet (878) (2,685) (3,563) (247) 74 (173)
Central operating
costs (971) (1,152) (2,123) - - -
---------------------------------------------------------------------
Operating profit
Excluding
amortisation of
intangible
assets 4,329 16,304 20,633 5,766 7,256 13,022
Add: Employer
taxes on
options and
other share
related
benefits* - 1,405 1,405 - - -
----------------------------------------------------------------------
Adjusted
Operating
profit 4,329 17,709 22,038 5,766 7,256 13,022
----------------------------------------------------------------------
*The above table highlights the impact of additional employment
taxes provided for on the basis of the rise in market value of
shares to 31 December 1999 compared with the exercise price in
line with FRS12. The provision will fluctuate in the short term,
driven by market events rather than trading. The actual cost
incurred will depend on the share price at the time that options
are exercised, the number of options which vest on the basis of
performance criteria, and the number which lapse due to option
holders leaving our employment.
Actual Statement of Total Recognised Gains and Losses
For the year ended 31 December 1999
1999 1998
#'000 #'000
----------------------------------------------------------------------
Loss on ordinary activities after taxation (6,665) (4,721)
Exchange adjustments offset in reserves (2,147) 324
Reversion of rights pertaining to
investments from departing employees 376 -
----------------------------------------------------------------------
Total recognised losses for the year (8,436) (4,397)
----------------------------------------------------------------------
Actual Reconciliation of movements in group shareholders'
funds/(deficit)
For the year ended 31 December 1999
1999 1998
#' 000 #'000
---------------------------------------------------------------------
Loss attributable to shareholders (6,665) (4,721)
Proceeds from issue of shares 735 678
Premium on issue of shares
(net of expenses) 135,582 -
Merger reserve arising in the year 108,211 804
Exchange adjustments offset
in reserves (2,147) 324
Write-back on disposal of goodwill
previously written off to reserves 136 -
Other reserve movements arising
from acquisition of Imagine 39,810 -
Reversion of rights pertaining to
investments from departing employees 376 -
----------------------------------------------------------------------
Net change in shareholders'
funds/(deficit) 276,038 (2,915)
Opening shareholders' deficit as
previously reported by
Future Publishing Holdings Limited (2,915) -
----------------------------------------------------------------------
Shareholders' funds/(deficit)
as at 31 December 273,123 (2,915)
----------------------------------------------------------------------
Actual Balance Sheets
As at 31 December 1999
1999 1998
Note #' 000 #'000
----------------------------------------------------------------------
Fixed Assets
Intangible Assets 292,563 133,165
Tangible Assets 6,075 4,193
Investments 2,445 -
----------------------------------------------------------------------
301,083 137,358
----------------------------------------------------------------------
Current Assets
Stocks 5,872 2,211
Debtors 6 48,722 26,731
Investments 1,040 -
Cash at bank and in hand 18,940 7,131
----------------------------------------------------------------------
74,574 36,073
----------------------------------------------------------------------
Creditors: amounts falling
due within one year 7 (60,420) (45,799)
----------------------------------------------------------------------
Net current assets/(liabilities) 14,154 (9,726)
----------------------------------------------------------------------
Total assets less current
liabilities 315,237 127,632
Creditors: amounts falling
due after
more than one year 7 (39,910) (130,191)
Provisions for liabilities
and charges (2,204) (356)
----------------------------------------------------------------------
Net assets/(liabilities) 273,123 (2,915)
----------------------------------------------------------------------
Capital and reserves
Called-up share capital 1,413 678
Share premium account 135,582 -
Merger reserve 109,015 804
Other reserves 40,186 -
Profit and loss account (13,073) (4,397)
----------------------------------------------------------------------
Total equity shareholders'
funds/(deficit) 273,123 (2,915)
----------------------------------------------------------------------
Actual Group Cash Flow Statement
For the year ended 31 December 1999
1999 1998
Notes #'000 #'000
----------------------------------------------------------------------
Net cash inflow from
operating activities 8 16,428 9,735
----------------------------------------------------------------------
Returns on investments and
servicing of finance
Interest received 516
Interest paid (9,720) (3,176)
Issue costs of bank loans (1,602) (1,715)
----------------------------------------------------------------------
Net cash outflow from returns on
investments and servicing of finance (10,806) (4,891)
----------------------------------------------------------------------
Taxation paid (3,040) (3,638)
----------------------------------------------------------------------
Capital expenditure and financial
Investment
Purchase of tangible fixed assets (2,682) (939)
Purchase of fixed asset investments (1,185) -
Sale of tangible fixed assets 62 76
Sale of fixed asset investments 11,328 -
----------------------------------------------------------------------
Net cash inflow/(outflow) for capital
expenditure and financial investment 7,523 (863)
----------------------------------------------------------------------
Acquisitions
Purchase of subsidiary undertakings (1,691) (118,074)
Net cash acquired with
subsidiary undertakings 319 6,181
Payment of deferred consideration (15,388) -
Purchase of businesses (29,210) -
----------------------------------------------------------------------
Net cash outflow for acquisitions (45,970) (111,893)
----------------------------------------------------------------------
Net cash outflow before use
of liquid resources and financing (35,865) (111,550)
----------------------------------------------------------------------
Management of liquid resources
Decrease/(increase) in
short-term deposits 9 1,000 (1,000)
----------------------------------------------------------------------
Financing
Proceeds from issue of ordinary
share capital 150,131 1,444
Expenses of share issue (11,492) -
Proceeds from issue of loan notes 9 9,716 52,634
Repayment of loan notes 9 (68,411) -
Draw down of bank loans 9 65,611 72,923
Repayment of bank loans 9 (98,736) (8,400)
----------------------------------------------------------------------
Net cash inflow from financing 46,819 118,601
----------------------------------------------------------------------
Increase in cash in the period 11,954 6,051
----------------------------------------------------------------------
Notes to the preliminary announcement for the period ended 31
December 1999
1. Basis of announcement of results
The preliminary results for the period ended 31 December 1999 are
unaudited and do not comprise statutory accounts within the
meaning of section 240 of the Companies Act 1995. The actual
figures for the year ended 31 December 1998 are based on the
statutory accounts of Future Publishing Holdings Limited, (which
have been delivered to the Registrar of Companies and upon which
an unqualified audit report was given by PricewaterhouseCoopers,
the Company's auditors, in accordance with section 235 of the
Companies Act 1985 which report did not contain any statement made
under section 237(2) or (3) of that Act), as adjusted to reflect
the Group reorganisation in which the Company acquired the Future
Publishing Holdings Group.
The statutory accounts for the period 31 December 1999 will be
finalised on the basis of the financial information presented by
the Directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
Actual financial information
On 11 June 1999, as part of a group reorganisation, The Future
Network plc, which had been incorporated on 22 April 1999,
acquired Future Publishing Holdings Limited in exchange for the
issue of shares. Future Publishing Holdings Limited was
incorporated on 8 September 1997 and did not trade in the period
prior to 24 April 1998. It acquired Future Publishing Limited and
Edicorp Publications SA on 24 April 1998. On 22 March 1999, Future
Publishing Holdings Limited acquired the assets of the Il Mio
Castello Group through a subsidiary undertaking. On 25 June 1999
The Future Network plc acquired Imagine Media, Inc. ("Imagine") in
exchange for shares in the Company. On 1 July 1999 Future
Publishing Holdings Limited acquired, through a subsidiary
company, the shares of WEKA Consumer Medien GmbH ("WEKA") and the
assets relating to its Consumer Media business division. During
September and December 1999 further titles were acquired by Future
Publishing Limited. The actual consolidated financial statements
include the Future Publishing Holdings group activities for the
whole of 1998 and 1999 under merger accounting principles, and the
Imagine acquisition under acquisition accounting.
Actual financial information for the Group shows the trading up to
31 December 1999 of Future Publishing Holdings Limited's
subsidiaries in the United Kingdom and France for the period from
1 January 1999, the trading of the Il Mio Castello Group, which
business was acquired by Future Publishing Holdings Limited, for
the period since acquisition on 22 March 1999, for Imagine from 25
June 1999, and the WEKA titles from 1 July 1999.
Within this preliminary announcement, reference to 1998 means the
twelve month period from 1 January 1998 to 31 December 1998,
during which time the Group traded for the period 24 April 1998 to
31 December 1998, and reference to 1999 means the twelve month
period 1 January 1999 to 31 December 1999. The Future Network
plc's first period of trading is for the period ended 31 December
1999 and therefore there is no Company comparative financial
information.
Pro forma financial information
In order to assist readers pro forma results are shown have been
shown for the twelve months ended 31 December 1999 and 31 December
1998. They are based on a full twelve months trading for all
companies which became part of the Group before and at flotation,
and assume that the capital and financing structure of the Group
at flotation applied throughout the period. Acquisitions since
Listing, comprising the WEKA titles and titles acquired in
September and December 1999 by Future Publishing Limited, are not
adjusted to a full year basis but are shown separately and are
treated as acquisitions.
The 1998 comparatives are based on the pro forma figures, included
in the Listing Particulars dated 18 June 1999, restated to reflect
the actual annual charges (incorporating fair value provisions)
for amortisation of goodwill. The pro forma results have been
prepared using consistent accounting policies to the actual
results. More detailed information can be found in the Company's
Listing Particulars dated 18 June 1999.
2. Turnover by category
---------------------------------------------------------------------
Pro Pro Actual Actual
Forma forma
1999 1998 1999 1998
#' 000 #' 000 #'000 #'000
---------------------------------------------------------------------
Circulation 123,806 108,883 111,039 57,810
Advertising 66,032 44,826 54,987 19,167
Internet 1,722 654 1,399 54
Other 6,951 5,518 6,535 3,259
---------------------------------------------------------------------
Total 198,511 159,881 173,960 80,290
---------------------------------------------------------------------
Other turnover derives primarily from licensing of the Group's
titles and income from exhibitions.
3. Net interest payable and similar charges
Pro Pro Actual Actual
Forma forma
1999 1998 1999 1998
#' 000 #' 000 #'000 #'000
----------------------------------------------------------------------
Interest payable on bank
loans and overdrafts 2,017 1,878 3,620 5,243
Amortisation of issue costs
of bank loan 94 - 2,696 188
Interest payable on
other loans 1,060 - 4,462 4,502
Amortisation of discount
arising on fair valuing of
deferred consideration 150 1,254 550 760
---------------------------------------------------------------------
Total interest payable and
similar charges 3,321 3,132 11,328 10,693
Interest receivable (523) (508) (516) (333)
---------------------------------------------------------------------
Net interest payable and
similar items 2,798 2,624 10,812 10,360
---------------------------------------------------------------------
Actual interest charges represent financing costs comprising bank
loans and loan notes arising from the financing of the acquisition
of operations in the UK and France from Pearson plc in 1998 for
the period 24 April 1998 to 25 June 1999. The loan financing
balances at 31 December 1998 had amounted to #132,306,000. On 25
June 1999, coterminous with the Company's Listing, this debt was
repaid from the proceeds of the issue of share capital, and the
balance of funds required was replaced by new corporate debt
amounting to #40.0million.
Pro forma interest charges have been calculated on the basis that
the new corporate debt raised at the time of the Listing, existed
from 1 January 1999 in the case of the 1999 pro forma figures, and
from 1 January 1998 for 1998.
The pro forma interest charge for 1998 has been restated from the
interim report to reflect the reclassification of certain deferred
consideration from liabilities to other reserves as this item can
be settled in cash or the issue of shares. This has resulted in a
reduction of #1,017,000 in the 1998 pro forma interest charge as a
result of the elimination of the discount that had arisen on fair
valuing the deferred consideration.
4. Tax on profit/(loss) on ordinary activities
Pro Pro Actual Actual
Forma forma
1999 1998 1999 1998
#' 000 #' 000 #'000 #'000
---------------------------------------------------------------------
UK
Corporation tax at 30.25%
(1998: 31%) 4,690 3,364 2,411 -
Overseas
Current tax 1,331 2,934 687 1,000
Deferred tax 808 (238) 432 -
---------------------------------------------------------------------
6,829 6,060 3,530 1,000
---------------------------------------------------------------------
The Group made a loss before taxation of #3,135,000
(1998:#3,721,000) and a taxation charge of #3,530,000 (1998:
charge #1,000,000) for the year. Eliminating goodwill arising on
consolidation which has no impact on taxation, the profit before
taxation was #11,225,000 (1998: #1,021,000) providing an effective
tax rate of 31.4% (1998:98%). The principal components of the
difference between the actual effective rate and the standard rate
of 30.25% in 1999 are the result of higher overseas rates of tax ,
overseas tax losses not being available for relief, and timing
differences, being primarily offset by the utilisation of tax
losses carried forward from prior years.
The high effective rate of tax in 1998 is primarily due to the
timing differences arising between the significant accrual of
interest and its deductibility for tax purposes, a higher
proportion of profits being earned in France, where the tax rates
were higher than in the UK, and the deductibility of costs in
respect of share options.
The pro forma tax charges for 1998 and 1999 are discussed in the
Finance Director's Report.
5. Earnings per share
Basic earnings per share are calculated using the weighted average
number of ordinary shares outstanding during the period. Diluted
earnings per share have been calculated by taking into account the
dilutive effect of shares that would be issued on conversion into
ordinary shares of warrants and options held under employee share
schemes and in respect of the deferred consideration arising on
the Imagine acquisition.
Pro Pro Actual Actual
forma forma
1999 1998 1999 1998
----------------------------------------------------------------------
Weighted average number
of shares outstanding
during the period:
- basic 138,105,284 136,663,881 101,965,968 38,871,050
- dilutive effect
of shares options 12,972,364 14,151,076 10,514,893 2,081,761
- diluted 151,077,648 150,814,957 112,480,861 40,952,811
Basic loss per
share (in pence) (2.11) (13.83) (6.54) (12.15)
Adjusted basic
earnings per share
(in pence) 8.99 3.17 8.93 0.05
Diluted loss per
share (in pence)* (2.11) (13.83) (6.54) (12.15)
Adjusted diluted
earnings per share
(in pence) 8.22 2.88 8.09 0.05
----------------------------------------------------------------------
*The share options do not have a dilutive effect where there is a
loss.
The adjustments to profit noted on the face of the profit and loss
have the following effect on EPS:
----------------------------------------------------------------------
Basic loss per
share (in pence) (2.11) (13.83) (6.54) (12.15)
Amortisation of
intangible assets 17.97 17.00 16.47 12.20
Employer taxes on
options and share
related benefits 1.02 - 0.92 -
Profit on sale of
fixed asset investments (7.89) - (1.92) -
Adjusted basic earnings
per share (in pence) 8.99 3.17 8.93 0.05
Diluted loss per share
(in pence) (2.11) (13.83) (6.54) (12.15)
Adjustment for dilutive
effect of share options
(see * above) 0.19 1.30 0.61 0.62
Amortisation of
intangible assets 16.42 15.41 14.93 11.58
Employer taxes on options
and share related
benefits 0.93 - 0.83 -
Profit on sale of
fixed asset investments (7.21) - (1.74) -
Adjusted diluted
earnings per share
(in pence) 8.22 2.88 8.09 0.05
----------------------------------------------------------------------
6. Debtors
1999 1998
#' 000 #'000
----------------------------------------------------------------------
Amounts falling due within one year:
Trade debtors 43,029 24,356
Other debtors 1,646 1,219
Prepayments and accrued income 3,829 1,156
----------------------------------------------------------------------
48,504 26,731
Amounts falling due after one year:
Other debtors 218 -
----------------------------------------------------------------------
48,722 26,731
----------------------------------------------------------------------
7. Creditors: amounts falling due within one year
1999 1998
#' 000 #'000
----------------------------------------------------------------------
Bank and other borrowings 5,846 2,115
Shareholder loan 907 -
Trade creditors 23,084 13,650
Corporation tax 2,259 1,953
Other creditors including
taxation and social security 4,816 2,606
Accruals and deferred income 23,503 11,051
Deferred consideration 5 14,424
----------------------------------------------------------------------
60,420 45,799
----------------------------------------------------------------------
Creditors: amounts falling due after more than one year
1999 1998
#' 000 #'000
----------------------------------------------------------------------
Bank and other borrowings 36,171 71,496
Shareholder loan 1,653 -
Other loans - 58,695
Deferred consideration for acquisitions 2,086 -
----------------------------------------------------------------------
39,910 130,191
----------------------------------------------------------------------
8. Net cash flow from operating activities
The reconciliation of operating profit to net cash inflow from
operating activities is as follows:
1999 1998
Continuing operations #'000 #'000
----------------------------------------------------------------
Operating profit 5,715 6,639
Depreciation charge 1,777 871
Goodwill amortisation 16,795 4,742
Decrease/(increase) in stocks 343 (435)
(Increase) in debtors (11,573) (9,710)
Increase in creditors 3,371 7,628
----------------------------------------------------------------
Net cash inflow from operating
activities 16,428 9,735
----------------------------------------------------------------
9. Analysis of net debt
At 1 Cash Acquisit- Other Exchange At 31
Jan inflow/ ions non movements Dec
1999 (outflow) (exclud- cash 1999
ing changes
cash
and
over-
drafts)
#'000 #'000 #'000 #'000 #'000 #'000
-------------------------------------------------------------------
Cash at
bank and
in hand 6,131 11,954 - - 855 18,940
Debt due
after one
year (71,496) 33,398 (1,709) (404) 2,387 (37,824)
Loan notes
due after
more than
one year (58,695) 58,695 - - - -
Debt due
within one
year (2,115) (161) (4,547) - 70 (6,753)
Liquid
resources 1,000 (1,000) - - - -
-------------------------------------------------------------------
(125,175) 102,886 (6,256) (404) 3,312 (25,637)
-------------------------------------------------------------------
At flotation on 25 June 1999 the Group's existing loan notes and
principal borrowings were repaid, and new borrowings facilities
entered into. All bank borrowings outstanding at 31 December 1999
were under these new facilities.
10. Reconciliation of movement in net debt
1999 1998
#'000 #'000
------------------------------------------------------------------
Net debt at 1 January (125,175) -
Increase in cash 11,954 6,051
Borrowings net of short term deposits
acquired with subsidiaries (6,256) (8,400)
Movement in borrowings 91,932 (117,157)
Movement in liquid resources (1,000) 1,000
Loan notes issued other than for cash - (1,570)
Interest capitalised in 1998 and
subsequently waived during the year 690 (5,181)
Unamortised debt issue costs (1,094) 1,527
Exchange movements 3,312 (1,445)
------------------------------------------------------------------
Net debt at 31 December (25,637) (125,175)
------------------------------------------------------------------
11. Cash flow effect of acquisitions
#'000
---------------------------------------------------------------
Net cash inflow from operating activities 2,518
Net cash outflow from returns on investment and
servicing of finance (724)
Taxation paid (55)
Net cash inflow from financial investment 8,267
Net cash acquired from acquisitions 319
----------------------------------------------------------------
Net cash inflow from acquisitions 10,325
----------------------------------------------------------------
12. Acquisitions and disposals
Merger of Future Publishing Holdings Limited with the Company
As part of a group reorganisation on 11 June 1999, the
shareholders of Future Publishing Holdings Limited exchanged their
shares for a like number of shares in the Company. The transaction
has been accounted for using merger accounting.
Acquisition of the business of the Il Mio Castello Group
On 22 March 1999, the Group acquired the publishing business of
the Il Mio Castello Group for a total cash consideration of
#21,323,000 (including associated costs of #1,394,000, and
deferred consideration amounting to #3,349,000). The purchase is
being accounted for as an acquisition.
Acquisition of Imagine
On 25 June 1999 the Company acquired, by way of merger under US
law, the issued share capital of Imagine, a company solely owned
by Chris Anderson, the Company's Executive Chairman,. The purchase
is being accounted for using acquisition accounting. The aggregate
purchase consideration for Imagine was satisfied in full by the
issue of, or subscription for, 33,863,147 ordinary shares,
representing 30.2% of the ordinary share capital of the Company
(on a fully diluted basis) immediately prior to flotation.
The Company was granted an option, exercisable at any time on or
before 30 June 2000, to require Chris Anderson to purchase from
Imagine the business and assets of the title Business 2.0. In the
event that the Company does not exercise its option it is required
to pay Chris Anderson further consideration of #18,000,000 within
30 days after 1 July 2000. The Company may choose to satisfy this
consideration in cash or by the issue of ordinary shares.
Consequently the deferred consideration is included in other
reserves within shareholders' funds. At present the Company does
not intend to exercise its option to sell Business 2.0.
Other acquisitions
Other business combinations accounted for as acquisitions during
the year comprised:
i) In July 1999 the purchase by Future Verlag GmbH, a wholly owned
subsidiary of the Company of the shares of WEKA Consumer Medien
GmbH ('WCM') and the assets relating to the Consumer Media
business division of WCM's parent company, WEKA Firmengruppe GmbH
& Co. KG;
ii) In September 1999 the purchase by Future Publishing Limited of
the trade and assets of certain titles from Zone Limited;
iii) In December 1999 the acquisition in the US of a closed title
and its related subscription list by Imagine; and
iv) the purchase of the trade and assets of Future Music,
Holland, from Media Minded CV on 8 December 1999.
The aggregate provisional fair values of the net assets acquired,
and the consideration thereof is shown in the table below:
-------------------------------------------------------------
#'000
-------------------------------------------------------------
Fair value of net assets acquired (1,721)
Goodwill 181,131
-------------------------------------------------------------
Total consideration 179,410
-------------------------------------------------------------
13. Post balance sheet events
On 6 January 2000 a subsidiary of the Group purchased certain
trade and assets, including the magazines and websites from Dennis
Publications Limited.
14. Accounting policies
The Group's accounting policies are consistent with those
disclosed in the Company's Listing Particulars dated 18 June 1999.
END
FRCJMMFTMMBTMJM
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