Final Results

Future Network PLC 19 March 2002 19th March 2002 The Future Network plc Preliminary Results for the year ended 31 December 2001 The Future Network plc (LSE:FNET), the international games and specialist consumer magazine publisher, today announces its Preliminary results for the year ended 31 December 2001. Highlights Financial highlights of the Group balance sheet Net debt reduced by 89% to £7.8m at year-end Significant improvement in working capital Provisions for vacant properties totalling £4.0m Year-end net assets now £106.0m (2000: £195.6m) Financial highlights of the Group profit and loss account Turnover from continuing activities £142.9m (2000 - £151.5m) Operating profit (EBITA) from continuing activities £10.0m (2000 - £10.8m) Operating losses (EBITA) from discontinued activities £15.7m (2000 - £13.3m) Net interest payable £6.5m and refinancing costs £3.8m Net exceptional gain of £15.4m from sales and closures Non-cash write-downs of £120.6m of intangible assets Group loss before tax of £121.0m (2000: £59.3m) Operational highlights Board considerably strengthened during year Smaller, more focused and stronger group, following substantial restructuring Strong pre-Christmas trading, particularly from Games magazines. Official PlayStation 2 Magazine sales tracking sales of Sony consoles in the UK Board encouraged by recent trading performance Definition EBITA - operating profit/(loss) before amortisation of goodwill and intangibles and refinancing costs. Greg Ingham, Chief Executive of The Future Network commented: 'We have emerged from the most difficult year in Future's history as a more robust and mature business, with a strong management team determined to restore our performance. The actions we have taken to reshape the Group and re-base our capital structure give us a good platform from which to build. 'Trading conditions for our games magazines continue to improve, reflecting the recovery in the games sector as a whole. In aggregate, our other special interest magazines have held up reasonably well in what has been a very tough year for the media sector. 'We will continue to keep a tight rein on costs, and our exposure to risk has been reduced through the corporate actions of 2001. 'The Board is encouraged by year-on-year growth in Group revenues from continuing operations for January and February. Our success for 2002 overall will be determined primarily by our ability to capitalise on the continued growth of the games market. In the past, Future has shown much stronger trading in the second half of the year and this trend is expected to apply for 2002. Overall, Future now has a smaller business, better systems, less debt, a lower cost base - and none of the wholesale restructuring and attendant issues which preoccupied it last year. All this leads us to believe that there will be a good performance in 2002.' For further information: The Future Network Tel: 0207 357 9477 (19.03.02) Greg Ingham, Chief Executive Tel: 01225 442 244 (thereafter) John Bowman, Finance Director Hogarth Partnership Tel: 0207 357 9477 James Longfield Georgina Briscoe Chairman's Statement During much of the year 2001 the Board of Future found itself preoccupied with reducing the rising levels of debt and trading losses which threatened the viability of the Group. So I am delighted to be able to report now that these problems are behind us. We ended the year with net debt of under £8m and falling, which is a considerable improvement on the peak debt level of some £78m we suffered during the year. Future is now a much smaller and more focused business and, I believe, far stronger for it. We currently publish 80 specialist magazines and have scaled back to four operations in the UK, USA, France and Italy. Headcount was reduced by 51% over the year. Our results for 2001 show the inevitable losses and write-offs associated with a fundamental retrenchment, restructuring and refinancing. However, the continuing business had sales of £142.9m and earned a modest EBITA of £10.0m. The focus of the management team is now on driving profitability. Future's unacceptably high level of debt resulted from a period of over-ambitious investment and expansion. During 2001 Future was variously affected by the introduction of the new generation of computer games platforms; adverse technology market trends; the aftermath of the dotcom fall-out; and by the world-wide reduction in advertising spending. The combination of rising debt and operational difficulties hit the Company hard. Apparent opportunities presented by the technology and New Economy boom of 2000 and early 2001 led many companies into becoming over-extended. Future was no exception. Our balance sheet was weakened and our operational and control systems struggled to cope. To bring ourselves back to earth we have been re-focusing on our core strengths. During the year several loss-making magazine titles and web sites were shut down; under-performing businesses were sold or closed; substantial office space vacated; and headcount reduced appropriately. The largest single transaction was the sale of Business 2.0 magazine to AOL Time Warner for £47.3m in July. These restructuring measures were concluded in November, when we successfully completed a Rights Issue to raise £33.5m of new cash to reduce bank debt further. We are grateful for the high level of support we received from shareholders in response to our Rights Issue, with a 96% take up of available rights. We also strengthened the Board and now have in place an experienced team. Our Chief Executive, Greg Ingham having experienced both boom and slump, applied his valuable knowledge in re-focusing the group on profitable areas. We were delighted to welcome to the Board in January 2001, Colin Morrison, a very well respected magazine publisher as Chief Operating Officer who has also been appointed as Managing Director of our UK business. The executive team was completed by the appointment in November of John Bowman as Group Finance Director who has a long track record of success in the UK media sector. I took over as chairman in September from Chris Anderson, Future's founder, who left the Board in November. I pay tribute to Chris's imagination and creative talent, without which the company would not have been formed or floated and its great publishing successes like Business 2.0 would not have happened. During the year, Patrick Taylor joined as a non-executive director. Patrick has extensive financial and media experience, and now chairs our Audit Committee. In addition, I would like, particularly, to thank Michael Penington, one of our non-executive directors who assumed the role of interim Finance Director when the effects of the market melt down were at their most intense and whose professionalism, energy and persistence was a key factor in ensuring the success of our restructuring and Rights Issue. Much of 2001 was extremely tough. It was a punishing experience but we have learnt from it and are now well positioned. Our strategy is to build upon the Group's proven strengths in specialist magazine publishing. The Group's survival would not have been secured without the invaluable support of shareholders late last year. To them and our business partners I offer our thanks. I equally pay tribute to our dedicated staff, whose enthusiasm and talent underpins the success of all our magazines. The Board is encouraged by year-on-year growth in Group revenues from continuing operations for January and February. Our success for 2002 overall will be determined primarily by our ability to capitalise on the continued growth of the games market. In the past, Future has shown much stronger trading in the second half of the year and this trend is expected to apply for 2002. Overall, Future now has a smaller business, better systems, less debt, a lower cost base - and none of the wholesale restructuring and attendant issues which preoccupied it last year. All this leads us to believe that there will be a good performance in 2002. I am optimistic that our shareholders' confidence in Future will prove justified in the years to come. Roger Parry Chairman 19 March 2002 Chief Executive's Review Overview We responded vigorously to the difficult market conditions we faced during 2001. We sold or closed 45 loss-making magazines; discontinued our operations in Germany and the Netherlands; sold our Polish operation and our US TED conference business; and restructured the balance of our activities to streamline the business and reduce operating costs. It was not an easy process for anyone connected with Future, and I am extremely grateful to all our staff for the professional way in which they responded to the challenges we faced. As a result of the actions taken, we ended the year with a more focused, lower risk business, which as of today, publishes 80 magazines and employs 1,002 staff in four countries - the UK, US, France and Italy. This reduced number of overseas subsidiaries was a key element in our strategy of reducing the risk profile of the business. We have maintained the opportunity to develop Future's international publishing by focusing on magazine licensing. Such licensing partnerships will be extended further, as we roll out our Official PlayStation 2 and Official Xbox magazines. We also ended the year in a considerably stronger financial position. The reduction in our net debt has been dramatic, and full details are set out in the operating and financial review. We achieved a reduction in our net debt to a more manageable £7.8m at the year-end, down from its June peak of £77.9m. This happened both by asset disposals during the year, most notably the £47.3m received from the sale of Business 2.0 magazine to AOL Time Warner, and by our successful Rights Issue in November, which raised £33.5m. It also happened despite the costs associated with the restructuring and the impact of loss-making magazines prior to their closure. These measures ensured that we enter 2002 with a much improved capital structure for the business, well within the terms of our five-year bank facility, which currently stands at £29m. Performance of continuing businesses The performance of the continuing businesses, on which our recovery is based, was encouraging given the continuing difficult market conditions for the media sector during 2001. Revenues of £142.9m were 6% below the £151.5m recorded in 2000, with the success of our newer games titles helping to offset the declining sales of some older format titles and continuing difficult conditions in the computing magazine sector. Operating profits of the continuing business were £10.0m at the EBITA level. For all the difficulties and corporate preoccupations of 2001, this was just £0.8m below the equivalent 2000 level. This profit included significant expenditure on the international rollout of our Official Xbox Magazine, which launched in the US in November and in Europe in February 2002. The overall 2001 level masks a better performance from the business in the second half of the year as the recovery began to take effect. Our second half improvement was driven primarily by the continued recovery of the computer games market. As the world's leading publisher of games magazines, and with increased market shares in the UK and US, Future is well placed to benefit from the continued, increasing interest in games consoles. Sales of Sony's PlayStation 2 (PS2) console are running at 200% higher than PS1 at the equivalent stage, with worldwide sales of 24.9m by the end of December 2001. Future has successfully published PlayStation magazines since 1995, and now produces 10 Official and unofficial titles directly, with a further 12 produced under licence to third parties. Microsoft's US November launch of its Xbox console reached the top-end expectation of 1.5 million units sold by the end of 2001. Future holds the licence for Official Xbox magazines worldwide, except for Japan. Official Xbox magazines have been launched in the US, UK, France and Italy and under licence in Spain and Australia. Computing magazines comprise 37% of continuing revenues. They faced challenging market conditions in 2001, as advertisers reduced their spending - though Future's market shares generally held. Significant headcount reductions and external cost-savings during 2001 will have a full year effect in 2002. Overall, the business is in good shape. Though caution prevails on advertising, circulation is now expected to represent an increasing proportion of revenues above the current 65%. UK performance The UK business is the heart of Future, representing 61% of the Group's continuing revenues and the clear majority of its profits. It publishes 54 magazines and employs 629 staff. It is also the most diversified business within the Group, covering Computer Games (11 magazines), Computing (15 magazines), and Entertainment (28 magazines). Continuing revenue split: 69% circulation, 25% advertising, 6% other (primarily licensing). The UK company held profits at £13.3m and increased margins from 14% to 15% despite a modest fall in revenue on the continuing business. This was due to significant restructuring measures undertaken during the year. The business was reorganised in July into three divisions - Games, Computing and Entertainment (which includes all other specialist titles). Each is run by a Publishing Director responsible for driving their magazine portfolio who report to Managing Director Colin Morrison. The new structure is working well. Revenues from our PlayStation 2 magazines are helping to offset the decline of the older format titles and the more difficult conditions experienced by our computing and Internet magazines. We were particularly encouraged by the second half 2001 ABC figures for our games magazines, which showed an increase in our share of the UK games market to 55% and confirmed Official PlayStation 2 magazine as the UK's fastest growing monthly consumer magazine, up 54% year on year. Historically on PS1, there has been a 1:10 relationship between sales of the Official magazine and the sales of the console in the preceding two years. The trend has continued for PlayStation 2. During last year, launch expenditure was concentrated on the Official Xbox Magazine, with costs expensed in 2001 for the February 2002 launch. Future has market-leading positions in the UK in a range of magazine sectors outside of computer games, including music-making, needlecraft, Internet, mountain biking, creative computing and home computing. Our strong Computing portfolio faced a more challenging market. Circulations declined overall, though Future's overall monthly magazine market share grew fractionally. One notable performance was PC Answers, which was up 10% year on year. Most recently, we have signed a formal agreement with Microsoft to publish the Official XP Magazine. The Entertainment division performed solidly, with 13 out of 19 titles showing year on year ABC growth. Strong performances from Future's Music titles (where four out of eight magazines recorded over 10% year on year growth) and a 9th successive circulation increase from Total Film, helped offset declines in other parts of the portfolio. Following the magazine closures and restructuring actions taken during the year we have achieved gross margin improvements across our continuing magazine portfolio as a whole, from 32% to 36%. The UK's advertising was down 20%, like-for-like. In addition to some effect from the well-documented general advertising malaise in 2001, we were also affected by specific sector issues, such as in games and computing. The UK business includes high margin revenues from licensing. In 2001, third party licensing revenues were £2.3m and intra-group, £1.4m. US performance The US business represents 23 per cent of the Group's Continuing revenues, publishing five magazines and employing 110 staff. The business is concentrated on the computer games and home computing sectors. Continuing revenue split: 49% circulation, 49% advertising, 2% other. Future US was the most extensively restructured part of the Group in 2001. This involved the closure of 5 early stage launch titles, the purge of Internet activities, the disposal of Business 2.0, and the loss of 354 jobs in all. The business was refocused on games and home computing, under the direction of its President, Jonathan Simpson-Bint who was promoted early in the year. Its performance since then has been a little above our expectations in a transitional year. The difficult market conditions in games and technology sectors in the US continued for most of the year, although there was a promising recovery in the games market towards the end of the year. Significant expenditure was incurred on the October launch of the Group's first edition of Official Xbox Magazine. Following the strong debut of the magazine, we have increased its guaranteed circulation ratebase from 250,000 to 325,000. There was a good performance by our unofficial PlayStation2 magazine PSM, which is now outselling the Official title. This means that Future now has the biggest-selling PC games, PlayStation and Xbox magazines in the US. Mainland Europe performance France and Italy are the two Future businesses in Mainland Europe and they represent 17 per cent of the Group's continuing revenues. They now publish 21 magazines and employ just over 240 staff. Virtually all of the activity is in the computer games and home computing sectors. Continuing revenue split: 69% circulation, 31% advertising. The continuing European business has undergone significant change during the year, following the first half closure of our German and Dutch businesses and the sale of our Polish company at the end of the year. Future's European business now comprises games and computing magazine publishing companies in France and Italy. Revenues of the continuing business remained broadly similar to last year, helped by the performance of the newer games titles, which offset the declines in computing and Internet titles in France. The French business has had a significant restructuring, including the closure of 7 titles and the loss of around 90 people. The much smaller Italian restructuring was largely related to the disposal of Business 2.0 and the closure of 2 magazines. New Managing Directors have recently been appointed to run both of these businesses. A lower cost-base, a rising games market and the new management will help improve performance in 2002. Greg Ingham Chief Executive Officer 19 March 2002 Operating and Financial Review When I decided to join Future as Group Finance Director it was because I believed that its financial problems would be resolved and that the core business was successful. The single most important financial achievement in 2001 has been the 89% reduction in net debt from £68.9m at the beginning of 2001 to £7.8m at the year-end. I am also pleased that in our core businesses our staff are focused on publishing good quality magazines. The management of working capital has improved and a great deal has been done in this regard over the last year. As at December 2001, the group balance sheet reflects the significantly reduced size of the group. And in reviewing our business plans for 2002, I have sought to ensure that our managers take a realistic view of their businesses. I play my full part in encouraging a more focused risk and control culture in the running of the business. Structure and reduced size of the group By the end of the year under review, the group published 80 specialist magazines and operated subsidiary companies in three countries. In addition, the group licensed local editions of its magazines in a further 22 countries. The year 2001 was marked by a number of considerable challenges, of which the most significant was the financial and capital structure of the group, which is now stable. Following a number of business disposals, a significant rights issue and the re-structuring of the group's banking facilities, the group ended the year smaller, more focused and stronger than at the previous year-end. The scale of the reduction in the group's activities can be seen from the following information. 2001 2000 Reduction Sales for the year £174.1m £254.0m 31% Magazines 80 120 33% Overseas subsidiaries 3 5 40% Internet headcount 17 160 89% Total headcount 1,002 2,047 51% Net debt £7.8m £68.9m 89% In this operating and financial review I review the results for the year, group cash flows and the group balance sheet, and our approach to certain financial risks. I also review the financial impact of the rights issue, re-structured bank facility and other key aspects of the results for the year. Review of the Group profit and loss account Group turnover Group turnover for the year was £174.1m, of which £142.9m or 82% came from continuing businesses. All of the turnover from continuing business was derived from the group's principal activity, of publishing specialist magazines serving the computer games, computing and entertainment sectors. Source of turnover from continuing businesses The £142.9m represents a small decrease of 6% compared with the previous year. A comparison of continuing turnover by territory is shown below: 2001 2000 £m £m UK 86.7 61% 92.6 61% US 32.6 23% 33.7 22% Mainland Europe 25.0 17% 26.1 17% 144.3 152.4 Intra-group (1.4) (1%) (0.9) - Total 142.9 100% 151.5 100% The split of continuing group revenue for 2001 was 38% computer games, 37% computing and 25% entertainment. 65% of continuing group revenue was circulation revenue with 32% coming from advertising. The top 20 magazine titles accounted for 58% of group revenues from continuing operations. Continuing and discontinued businesses by territory Business has been classified as discontinued if it relates to a business or magazine sold, or to a magazine or website closed. Each of the territories in which we continue to operate is reviewed below. UK £m 2001 2000 Continuing Discontinued Total Continuing Discontinued Total Revenues 86.7 3.2 89.9 92.6 18.6 111.2 EBITA 13.3 (3.0) 10.3 13.2 (2.8) 10.4 Turnover for the year amounted to £86.7m from continuing activities. Approximately 68% of this derives from circulation sales and 25% comes from advertising income. Continuing operating profit (EBITA) was £13.3m representing an operating profit margin of 15% from continuing activities. This compares with 14% in 2000. In terms of sales, the split of continuing revenue for 2001 and 2000 by division was as follows: 2001 2000 Computer games 29% 25% Computing 29% 32% Entertainment 42% 43% US £m 2001 2000 Continuing Discontinued Total Continuing Discontinued Total Revenues 32.6 16.8 49.4 33.7 65.4 99.1 EBITA 0.4 (8.1) (7.7) 2.2 (1.3) 0.9 The US business publishes five magazines, focused on the computer games sector with two titles serving the computing sector. Turnover for the year amounted to £32.6m from continuing activities. Approximately 49% of this derives from circulation sales and 49% comes from advertising income. Continuing operating profit (EBITA) was £0.4m which was reduced from the prior year mainly as a result of launch expenditure relating to the Xbox magazine incurred in 2001. Mainland Europe £m 2001 2000 Continuing Discontinued Total Continuing Discontinued Total Revenues 25.0 11.6 36.6 26.1 18.5 44.6 EBITA (0.6) (4.6) (5.2) (1.0) (9.1) (10.1) The French business publishes 11 magazines, focused on the computer games and computing sectors, whilst our Italian business publishes 10 magazines, focused on the same sectors. Combined turnover from Mainland Europe for continuing activities amounted to £25.0m. Approximately 68% of this derives from circulation and 32% derives from advertising. Taken together, these businesses made a continuing operating loss (EBITA) of £0.6m. After significant restructuring actions during the last year, notably in France, it is expected that greater focus on managing these businesses should assist the businesses to develop further. Central costs and intra-group adjustments Total central costs at the operating profit level (excluding refinancing costs) amounted to £3.1m for the year (2000: £3.0m) Adjustments at the continuing revenue level in respect of intra-group transactions amounted to £1.4m (2000: £0.9m). Re-financing costs Costs associated with re-financing amounted to £3.8m for the year. This represented bank facility fees totalling £2.9m, and £0.9m of costs paid to advisers in connection with the financial restructuring carried out during the year. Operating profitability of continuing businesses After taking account of these central costs, operating profit for the year (before amortisation and refinancing costs) was £10.0m (2000: £10.8m) on turnover of £142.9m (2000: £151.5m) representing an operating profit margin of 7% (2000: 7%) from continuing businesses. Carrying value of continuing businesses The results reflect non-cash write-downs of goodwill relating to the continuing business totalling £117.3m for the year, the majority of which was provided at the half-year stage. The write-downs represent the annual amortisation charge of £20.9m, together with impairment write-downs of £96.4m. These write-downs were determined following a thorough review of the carrying value of intangible assets, as required by Financial Reporting Standard 11, which included forecasting cash flows from continuing businesses for future years and discounting these by the Group's estimated Weighted Average Cost of Capital. The impairment write-downs are made up of £76.0m in respect of the US business; £16.3m in respect of mainland European businesses (France, £13.9m and Italy £2.4m); and £4.1m in respect of the UK business. Operating loss incurred on discontinued operations The results relating to discontinued operations include operating losses of £15.7m before amortisation and an amortisation charge of £3.3m. Significant restructuring occurred in the US and UK. The magazine titles Business 2.0 and a number of smaller titles were disposed of and a number of other titles were closed. In Mainland Europe, significant restructuring took place in France and Italy. The group's businesses in the Netherlands and Germany were closed in February and April and its subsidiary in Poland was sold in December. Group operating loss for year The group's operating loss for the year of £130.1m represents four key elements: £m Operating profit (EBITA) on continuing operations 10.0 Refinancing costs (3.8) Operating losses (EBITA) from discontinued operations (15.7) Non-cash write-downs of intangible assets (120.6) Group operating loss for year (130.1) Associated undertakings The group's equity share of operating profits from associated undertakings amounting to £0.7m relates to income from the TED Conferences business, which was an associated undertaking from 1 January to 24 August 2001. At that point the Group acquired the remaining 51% interest in the business pursuant to a put option exercised by the former owner. The business was subsequently sold on 19 November 2001. Net exceptional gain arising on sale or termination of businesses The Group realised a net exceptional gain arising on the sale or termination of businesses amounting to £15.4m, analysed as follows: £m Profit on disposal of Business 2.0 Magazine 30.2 Loss on sale or termination of operations (12.3) Loss on disposal of subsidiaries (2.5) Net exceptional gain 15.4 Profit on disposal of Business 2.0 Magazine In July 2001, the group disposed of its US-based magazine, Business 2.0, which at its peak in 2000 had been very profitable, to eCompany Now, Inc, a subsidiary of AOL Time Warner, Inc. The initial consideration was £47.3m, together with a five-year revenue sharing arrangement in the event of revenues exceeding certain levels. 2002 will be the first year potentially to benefit under the revenue-sharing arrangement and accordingly no account has been taken of this factor in the 2001 results. Loss on sale or termination of operations The £12.3m of losses on sale or termination of operations can be analysed as follows: £m Redundancy 6.3 Property provisions 4.3 Other 1.7 Total 12.3 Analysed by territory, the analysis is: £m United Kingdom 3.1 United States 6.6 Mainland Europe 2.6 Total 12.3 Loss on disposals of subsidiaries Losses of £2.5m represent the loss on the disposal of the TED Conference business, acquired earlier during 2001, offset by a small profit on the disposal of the group's subsidiary in Poland in December. Net interest payable and similar charges These totalled £6.5m for the year. Bank borrowings gave rise to interest payable of £5.5m. In addition, an interest charge on interest swap agreements, entered into during 1999 and 2000, amounted to £1.4m including an adjustment to recognise the fair value of the swaps as a liability at the end of the year. Interest payable on other loans amounted to £0.6m. Foreign exchange gains for the year totalled £1.0m. Taxation The tax charge for the year amounts to £2.3m (2000 - £1.5m). This arose mainly as a result of the taxable gain arising on the disposal of the Business 2.0 magazine in the US. This gain was offset to a degree by losses crystallising on the disposals of the TED Conferences business and the simultaneous disposal of the Group's investment in Balthaser.com in November. At 31 December 2001 there were significant tax losses being carried forward in Mainland Europe. Cash flow and funding Net debt and annual interest cost The group started the year with net debt of £68.9m. The group's net debt increased during the year, as a result of continuing operating losses in the first half year, and the cash impact of significant business restructuring. As at 30 June 2001 net debt was £77.9m. The two most significant cash movements during the year were: a) net amounts realised in cash from business disposals, totalling £47.0m, and b) the net funds raised by the rights issue, £33.5m. As at 31 December 2001 net debt had been reduced to £7.8m. At current interest rates and the margins applicable under the Group's existing facility the implied annual borrowing cost of this level of net debt is less than £0.5m. Hedging policy In 1999 and 2000 the Group took steps to protect itself from unexpected interest rate fluctuations. Part of its policy involved contracting certain interest rate swaps, which mature in December 2002. Based on interest rates prevailing at 31 December 2001, these swap arrangements are likely to result in cash losses of £0.8m, of which £0.8m has been provided at December 2001. In light of the significant reduction in the group's net debt, no significant new hedging arrangements are likely to be entered into during 2002. Capital expenditure Capital expenditure was significantly curtailed during the year. Total group capital expenditure was held to £0.5m, compared with £5.8m in 2000. For 2002 capital expenditure is not expected to exceed £1.0m. Rights Issue On 28 September the Company announced the terms of a fully underwritten rights issue, in terms of which six new ordinary shares of 1p each were issued for every five in issue. The Rights Issue raised £33.5m net of expenses and was completed on 9 November. Re-structured bank facility During the year the Company amended and restated its bank facility three times. The last such amendment and restatement occurred at the time of the Rights Issue in September. The Company entered into an agreement to amend and restate its existing multi-currency bank facility, which was conditional upon completion of the Rights Issue. The new bank facility provided a £33m multi-currency revolving credit facility, repayable over five years, at an annual borrowing cost of 2.75% over LIBOR and EURIBOR. As at 19 March 2002 the borrowing facility had been reduced to £29m (consequent to business disposals) and the current interest rate payable on sterling debt is 6.75% per annum. Review of the Group's balance sheet Most of the amounts on the Group's balance sheet were significantly lower at the end of 2001 than at the beginning, largely as a consequence of the reduced scale and size of the Group following the restructuring and disposals effected during 2001. Intangible fixed assets Intangible fixed assets at the year-end amounted to £117.9m, compared with £253.8m at the previous year-end. The most significant movements for the year arose from business disposals and from the review of the carrying value of intangible fixed assets described above. The annual charge for the year amounted to £23.0m while impairment write-downs totalled £96.4m. Tangible fixed assets The carrying value of the group's tangible fixed assets at the year-end was significantly reduced to £4.4m (2000: £9.3m). This reduction reflects modest capital expenditure of £0.5m, a depreciation charge of £2.8m, and disposals with a net book value of £2.8m. Working capital The group had stocks of paper and other raw materials at the year-end, and work-in-progress in relation to magazines scheduled for publication in 2002. The total of these amounts was £3.5m, compared with £8.8m in 2000. This represented both the downsizing in the group and tighter management of working capital. Group debtors at 31 December 2001 amounted to £42.7m (2000: £60.6m) and included trade debtors of £24.4m (2000: £50.6.m). At group level, trade debtors represented approximately 48 days debts compared with 75 days for the previous year. Net debt As at 31 December 2001 net debt had been reduced to £7.8m (2000: £68.9m). This represents bank loans of £18.9m; a shareholder loan of £1.9m; and cash balances totalling £13.0m. As at 28 February 2002 net debt was estimated not to exceed £5.0m. Provisions The Group balance sheet contains provisions totalling £4.6m (2000: £1.2m) mainly in respect of onerous property leases and further restructuring in our French subsidiary. Share capital and reserves The nominal value of the Company's share capital as at 31 December 2001 was £3.2m, representing 319 million ordinary shares of 1p each. Following the Rights Issue, the amount standing to the credit of the Company's share premium account increased from £137.8m to £169.6m as at 31 December 2001. Other reserves as at 31 December 2001 amounted to £130.8m. There was an adverse balance on the Group's profit and loss account amounting to £197.6m as at 31 December 2001 and the Company had no distributable reserves as at 31 December 2001. Management of working capital and financial risks During the year 2001, very significant changes were made to the operation of our business. As a result, it is now more tightly focused on core operations. Financially, there has been much greater focus on the management of working capital and on the assessment of business risk. Today, the Group's net debt is estimated not to exceed £5m, with an implied annual interest cost of less than £0.5m. This sum should be covered many times by the operating profit arising from continuing operations, even if no change from 2001 is assumed. This will not make the management team in any way complacent. We are committed to prudent financial management whilst seeking to drive operating profitability. John Bowman Group Finance Director 19 March 2002 Group Profit and Loss Account For the year ended 31 December 2001 2001 2000 Total Total Note £m £m Turnover Continuing operations 142.9 151.5 Discontinued operations 31.2 102.5 1 174.1 254.0 Operating loss Continuing operations Profit before 10.0 10.8 refinancing costs and amortisation and impairment of intangible assets Refinancing costs (3.8) - Amortisation and (117.3) (37.2) impairment of intangible assets 2,9,11 (111.1) (26.4) Discontinued operations Loss before mortisation (15.7) (13.3) and impairment of intangible assets Amortisation and (3.3) (9.8) impairment of intangible assets 2,9,11 (19.0) (23.1) Group operating loss 2 (130.1) (49.5) Share of operating profit/(loss) from associate 0.7 (0.5) Total operating loss including (129.4) (50.0) share of associate Net exceptional gain arising on 15.4 - sale or termination of businesses 3 Loss on disposal of fixed asset 11 (0.3) (0.1) investment Write down of fixed asset (0.2) (4.5) investment 11 Loss on ordinary activities (114.5) (54.6) before interest Net interest payable and similar 6 (6.5) (4.7) charges Loss on ordinary activities (121.0) (59.3) before tax 1,2 Tax on loss on ordinary (2.3) (1.5) activities 7 Loss on ordinary activities after (123.3) (60.8) tax Loss for the financial year 20 (123.3) (60.8) Earnings per 1 p Ordinary share (in pence) Restated 2001 2000 Basic loss per share 8 (69.56) (39.93) Adjusted basic loss per share 8 (1.48) (9.10) Diluted continuing loss per share 8 (69.56) (39.93) Adjusted diluted loss per share 8 (1.48) (9.10) Statement of Total Recognised Gains and Losses For the year ended 31 December 2001 2001 2000 Note £m £m Loss for the financial year (123.3) (60.8) Exchange adjustments offset in reserves 20 (0.1) (0.1) Reversion of rights pertaining to investments from departing employees 21 0.3 0.2 Realised (loss)/unrealised gain arising from the provision of 21 (0.1) 0.1 advertising in exchange for warrants to acquire unlisted investments Total recognised losses relating to the year (123.2) (60.6) Reconciliation of Movements in Shareholders' Funds For the year ended 31 December 2001 2001 2000 Group Group Note £m £m Loss for the financial year (123.3) (60.8) Premium on shares issued during the year 19 0.6 1.9 Proceeds from issue of shares as part of the Rights issue 18 1.8 - Premium on shares issued as part of the Rights Issue 19 32.9 - Costs of the Rights Issue written off against share premium 19 (1.7) - Refund of costs on issue of shares previously offset against share 19 - 0.4 premium Exchange adjustments offset in reserves 20 (0.1) (0.1) Deferred consideration not settled by issue of shares - (18.0) Realised loss/unrealised gain arising from the provision of advertising 21 (0.1) 0.1 in exchange for warrants to acquire unlisted investments Adjustment for shares issued under share option schemes through share option trust - (0.1) Reversion of rights pertaining to investments from departing employees 21 0.3 0.2 Net movement in shareholders' funds (89.6) (76.4) Opening shareholders' funds 195.6 272.0 Shareholders' funds as at 31 December 106.0 195.6 Group Balance Sheet As at 31 December 2001 Group Group 2001 2000 Note £m £m Fixed Assets Intangible assets 9 117.9 253.8 Tangible assets 10 4.4 9.3 Investments 11 - 5.7 122.3 268.8 Current Assets Stocks 12 3.5 8.8 Debtors 13 42.7 60.6 Cash at bank and in hand 13.0 10.8 59.2 80.2 Creditors: amounts falling due within one year 14 (49.1) (102.3) Net current assets/(liabilities) 10.1 (22.1) Total assets less current liabilities 132.4 246.7 Creditors:amounts falling due after more than one year 15 (21.8) (49.9) Provisions for liabilities and charges 17 (4.6) (1.2) Net assets 106.0 195.6 Capital and reserves Called-up share capital 18 3.2 1.4 Share premium account 19 169.6 137.8 Merger reserve 21 109.0 109.0 Other reserves 21 21.8 21.9 Profit and loss account 20 (197.6) (74.5) Total equity shareholders' funds 106.0 195.6 Group Cash Flow Statement For the year ended 31 December 2001 2001 2000 Note £m £m Net cash outflow from operating activities A (6.5) (1.6) Dividends from associates 0.7 - Returns on investments and servicing of finance Interest received 0.4 0.7 Interest paid (7.9) (3.3) Net cash outflow from returns on investments and servicing of finance (7.5) (2.6) Tax paid (6.9) (2.2) Capital expenditure and financial investment Purchase of tangible fixed assets (0.4) (5.3) Purchase of fixed asset investments - (2.8) Sale of tangible fixed assets 0.1 0.1 Sale of current asset investments 0.6 1.5 Net cash inflow/(outflow) for capital expenditure and financial investment 0.3 (6.5) Acquisitions and disposals Purchase of subsidiary undertakings (4.0) (2.3) Net cash acquired with subsidiary undertakings 1.2 - Purchase of associates - (5.4) Cash proceeds on disposal of associate - 0.4 Cash proceeds on disposal of magazines 45.5 - Cash proceeds from disposal of subsidiary undertakings 6.0 - Net cash disposed of with subsidiary undertakings (1.4) - Purchase of subscription lists (0.1) - Payment of deferred consideration (0.8) (18.0) Receipt of deferred consideration 0.6 - Purchase of businesses - (4.6) Net cash inflow / (outflow) for acquisitions and disposals 47.0 (29.9) Net cash inflow/(outflow) before financing 27.1 (42.8) Financing Proceeds from issue of ordinary share capital 35.2 0.4 Expenses of share issue (1.7) - Refund of expenses of share issue - 0.4 Draw down of bank loans 19.4 41.0 Movement on discounted bills (0.6) (0.6) Repayment of shareholder loan (0.2) (1.0) Repayment of bank loans (78.3) (6.0) Net cash (outflow)/inflow from financing (26.2) 34.2 Increase/(decrease) in cash in the year 0.9 (8.6) Notes to the Group Cash Flow Statement For the year ended 31 December 2001 A. Cash flow from operating activities The reconciliation of operating loss to net cash inflow from operating activities is as follows: Group Group 2001 2000 £m £m Group operating loss (130.1) (49.5) Cash flows on sale or termination of operations (12.3) - Depreciation charge 2.8 2.7 Goodwill amortisation and impairment 120.6 47.0 Movement in onerous lease provisions 3.5 - Decrease /(increase) in stocks 4.7 (2.6) Decrease/(increase) in debtors 20.0 (10.9) (Decrease)/increase in creditors (15.7) 11.7 Net cash outflow from operating activities (6.5) (1.6) Included in the net cash outflow from operating activities above is an amount of £0.1m inflow (2000: £0.7m outflow) in respect of acquisitions during 2001 and an amount of £0.1m inflow (2000: nil) in respect of disposals. B. Analysis of net debt At 1 January Cash inflow Exchange movements Other non cash At 31 December 2001 changes 2001 £m £m £m £m £m Cash at bank and in 10.8 0.9 1.3 - 13.0 hand Debt due after one year (48.2) 27.6 - (0.1) (20.7) Debt due within one (31.5) 31.4 - - (0.1) year (68.9) 59.9 1.3 (0.1) (7.8) Other non cash changes are the amortisation of bank finance costs. C. Reconciliation of movement in net debt 2001 2000 £m £m Net debt at 1 January (68.9) (26.9) Increase/(decrease) in cash 0.9 (8.6) Movement in borrowings 59.0 (33.6) Amortisation of debt issue costs (0.1) (0.2) Exchange movements 1.3 0.4 Net debt at 31 December (7.8) (68.9) Basis of preparation of accounts The preliminary results for the year ended 31 December 2001 are unaudited and do not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2001 are expected to be mailed to shareholders in April and the Company's Annual General Meeting is expected to be held on 29 May 2002. Accounting policies The Group's accounting policies are consistent with those disclosed in the Company's Annual Report for the period ended 31 December 2000. FRS18 'Accounting Policies' has been adopted in the current year but this has not resulted in any required change in the Group's accounting policies. FRS17, 'Retirement Benefits' has also been adopted in the current year, but this has not resulted in any impact on the Group's accounting policy in respect of the defined contribution schemes operated. Segmental reporting The Group is involved in one class of business, the publication of magazines. The geographical analyses of turnover, profit/(loss) before tax, and net assets by origin, and turnover by destination were as follows: a) Turnover by category Turnover by category 2001 2000 £m £m Circulation 105.1 127.8 Advertising 61.8 117.5 Other 7.2 8.7 Total 174.1 254.0 b) Turnover by origin Continuing operations Discontinued Total Turnover Total Turnover operations 2001 2001 2001 2000 £m £m £m £m United Kingdom 86.7 3.2 89.9 111.2 United States 32.6 16.8 49.4 99.1 Mainland Europe 25.0 11.6 36.6 44.6 Turnover between segments (1.4) (0.4) (1.8) (0.9) Total 142.9 31.2 174.1 254.0 c) Loss on ordinary activities before tax by origin Continuing operations Discontinued operations Total Total Profit/(Loss) Profit/(Loss) Before tax before tax 2001 2001 2001 2000 £m £m £m £m United Kingdom 3.9 (2.9) 1.0 2.9 United States (91.0) 6.6 (84.4) (21.8) Mainland Europe (19.8) (6.9) (26.7) (33.7) Central costs (7.1) (3.8) (10.9) (6.7) Total (114.0) (7.0) (121.0) (59.3) d) Turnover by destination 2001 2000 £m £m United Kingdom 81.8 100.9 United States 39.9 99.2 Mainland Europe 48.2 42.5 Rest of world 6.0 12.3 Inter-segmental (1.8) (0.9) Total 174.1 254.0 e) Net assets by origin Total Total 2001 2000 £m £m United Kingdom 82.2 107.2 United States 33.6 136.1 Mainland Europe 9.1 31.4 Interest bearing liabilities (18.9) (79.1) Total 106.0 195.6 2. Group operating loss 2001 2000 Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Turnover 142.9 31.2 174.1 151.5 102.5 254.0 Cost of sales (90.3) (38.1) (128.4) (99.2) (97.6) (196.8) Gross profit 52.6 (6.9) 45.7 52.3 4.9 57.2 Distribution (11.4) (0.5) (11.9) (11.4) (4.0) (15.4) expenses Administration (31.2) (8.3) (39.5) (30.1) (14.2) (44.3) expenses Refinancing costs (3.8) - (3.8) - - - Amortisation and (117.3) (3.3) (120.6) (37.2) (9.8) (47.0) impairment of intangible assets Total (152.3) (11.6) (163.9) (67.3) (24.0) (91.3) administration expenses Group operating (111.1) (19.0) (130.1) (26.4) (23.1) (49.5) loss Actual Actual 2001 2000 £m £m Loss on ordinary activities before tax is stated after charging/(crediting): Staff costs (note 5) 53.9 62.3 Depreciation of owned assets (note 10) 2.8 2.7 Amortisation of intangible assets (note 9) 23.0 26.8 Impairment of intangible assets (note 9) 96.4 19.5 Amortisation of associated undertakings goodwill (note 11) 1.2 0.7 Hire of machinery and equipment 0.6 0.9 Other operating lease rentals 5.3 3.6 Net exchange (gain)/loss on foreign currency borrowings less deposits (1.2) 0.1 3. Net exceptional gain arising on sale or termination of businesses 2001 2000 £m £m Losses on sale or termination of businesses (12.3) - Profit on disposal of Magazine titles 30.2 - Losses on disposal of subsidiaries (2.5) - Net exceptional gain 15.4 - 4. Fees paid to Auditors 2001 2000 £m £m Statutory audit 0.2 0.2 Reporting accountants work in respect of shareholder circulars 1.2 0.1 Taxation and other services 0.4 0.6 Total 1.8 0.9 5. Employees and Directors Staff costs 2001 2000 £m £m Wages and salaries 47.8 52.4 Social security costs 5.5 9.2 Other pension costs 0.6 0.7 53.9 62.3 Redundancy costs included in loss on sale or termination of businesses 6.3 - 60.2 62.3 Average monthly number of people (including executive Directors) Production 1,022 1,368 Administration 381 460 Total 1,403 1,828 6. Net interest payable and similar charges 2001 2000 £m £m Interest payable on bank loans and overdrafts 7.1 4.6 Amortisation of issue costs of bank loan 0.1 0.2 Interest payable on other loans 0.4 0.5 Amortisation of discount relating to vacant property provisions 0.2 - Amortisation of discount arising on fair valuing of deferred consideration 0.1 0.1 Total interest payable and similar charges 7.9 5.4 Interest receivable (0.4) (0.7) Exchange gains (1.0) - Total interest receivable and similar items (1.4) (0.7) Net interest payable and similar items 6.5 4.7 7. Tax on loss on ordinary activities 2001 2000 £m £m UK Current year corporation tax at 30% (2000: 30%) 0.1 1.4 Prior year corporation tax at 30% (0.6) - Deferred tax (note 17) (1.1) - Overseas Current year tax 4.2 - Deferred tax (note 17) (0.3) 0.1 2.3 1.5 The Group made a loss before tax of £121.0m (2000 : £59.3m) and has a tax charge of £2.3m (2000 : charge £1.5m) for the year. Eliminating the impact of the annual goodwill amortisation charge, goodwill impairment and the goodwill disposed of, which has no impact on taxation, the profit before tax was £22.9m (2000: loss £12.3m) providing an effective tax rate of 10.0% (2000: negative effective tax rate of 12.1%). The principal reasons for the difference between the actual effective rate and the UK standard rate of 30% in 2001 is relief obtained for previously unrecognised tax losses arising in the US in earlier years. This has been offset by tax losses arising in European subsidiaries which cannot be offset against taxable profits in the UK and the US. 8. Earnings per share Basic earnings per share are calculated using the weighted average number of ordinary shares outstanding during the period. This has been adjusted in 2001 and 2000 to take into account the effect of the shares issued as a result of the Rights Issue in November 2001, which were issued at a discount to the market price. 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 loss per share, removes the effect of the amortisation of goodwill and intangible assets from the calculation as follows: Adjustments to loss on ordinary activities after tax 2001 2000 £m £m Loss on ordinary activities after tax (123.3) (60.8) Add: amortisation and impairment of intangible assets 120.6 47.0 Adjusted loss on ordinary activities after tax (2.7) (13.8) Restated 2001 2000 Weighted average number of shares outstanding during the period: - basic 177,146,898 152,177,814 - dilutive effect of share options 4,542,560 8,041,314 - diluted 181,671,458 160,219,128 Basic loss per share (in pence) (69.56) (39.93) Adjusted basic loss per share (in pence) (1.48) (9.10) Diluted loss per share (in pence)* (69.56) (39.93) Adjusted diluted loss per share (in pence)* (1.48) (9.10) The adjustments to profit have the following effects on EPS: 2001 2000 Basic loss per share (in pence) (69.56) (39.93) Amortisation and impairment of intangible assets 71.04 30.83 Adjusted basic loss per share (in pence) (1.48) (9.10) Diluted loss per share (in pence) (69.56) (39.93) Amortisation and impairment of intangible assets 71.04 30.83 Adjusted diluted loss per share (in pence) (1.48) (9.10) *The share options do not have a dilutive effect where there is a loss. 9. Intangible fixed assets Goodwill Group £m Cost At 1 January 2001 321.9 Exchange adjustments (0.6) Goodwill arising on acquisition of subsidiary 7.7 Acquisition of subscription list 0.1 Disposal of magazine title (18.0) Disposal of subsidiary undertakings (12.0) Adjustment to fair value of consideration paid (0.7) At 31 December 2001 298.4 Amortisation At 1 January 2001 (68.1) Exchange differences 0.3 Disposal of magazine title 3.6 Disposal of subsidiary undertakings 3.1 Charge for the year (23.0) Impairment write down (96.4) At 31 December 2001 (180.5) Net book amount at 31 December 2001 117.9 Net book amount at 31 December 2000 253.8 10. Tangible fixed assets Land and buildings Plant and Equipment, fixtures and machinery fittings Total £m £m £m £m Group Cost At 1 January 2001 2.9 7.8 2.8 13.5 Reclassification - (1.8) 1.8 - Exchange adjustments - - 0.2 0.2 Additions 0.1 0.3 0.1 0.5 Disposals (0.7) (1.3) (2.1) (4.1) At 31 December 2001 2.3 5.0 2.8 10.1 Depreciation At 1 January 2001 (0.3) (2.9) (1.0) (4.2) Reclassification 0.9 (0.9) - Charge for the year (0.2) (1.8) (0.8) (2.8) Disposals - 0.6 0.7 1.3 At 31 December 2001 (0.5) (3.2) (2.0) (5.7) Net book value at 31 December 2001 1.8 1.8 0.8 4.4 Net book value at 31 December 2000 2.6 4.9 1.8 9.3 Analysis of net book value of land and buildings Group Group 2001 2000 £m £m Freehold 0.4 0.4 Leasehold: Over 50 years unexpired 1.4 2.0 Short term lease - 0.2 Total 1.8 2.6 11. Investments Group 2001 2000 Interests in Associate at cost £m £m At 1 January net liabilities (0.1) - goodwill 5.5 - Additions -net assets - 1.3 -goodwill - 5.5 Adjustment in respect of acquired associate -net liabilities 0.1 - -goodwill (5.5) - Disposals -net assets - (1.4) At 31 December -net liabilities - (0.1) -goodwill - 5.5 - 5.4 Amortisation of goodwill At 1 January (0.8) - Adjustment in respect of acquired associate 2.0 - Charge for year (1.2) (0.8) At 31 December - (0.8) Net book amount at 31 December - Net liabilities - (0.1) - Goodwill - 4.7 - 4.6 Other Investments at cost At 1 January 1.1 2.4 Exchange differences (0.1) 0.2 Additions in year 0.2 3.0 Disposals (1.0) - Write down of investments (0.2) (4.5) At 31 December - 1.1 Total fixed asset investments - 5.7 Company 2001 2000 Shares in Group undertakings £m £m At 1 January 43.5 43.3 Additions in year 0.1 0.2 Write down of fixed asset investments (22.8) - At 31 December 20.8 43.5 12. Stocks Group Group 2001 2000 £m £m Raw materials 1.3 5.1 Work in progress 1.9 3.2 Finished goods 0.3 0.5 3.5 8.8 13. Debtors Group Company Group Company 2001 2001 2000 2000 £m £m £m £m Amounts falling due within one year: Trade debtors 24.4 - 50.6 - Amounts owed by Group undertakings - 129.5 - 182.9 Corporation tax recoverable 3.5 - 1.2 - Other debtors 9.0 0.1 1.7 3.0 Prepayments and accrued income 4.6 - 5.1 - 41.5 129.6 58.6 185.9 Amounts falling due after one year: Other debtors 1.2 - 2.0 - 42.7 129.6 60.6 185.9 14. Creditors: amounts falling due within one year Group Company Group Company 2001 2001 2000 2000 £m £m £m £m Bank and other borrowings 0.1 - 31.5 30.9 Trade creditors 16.6 - 29.1 - Amounts owed to Group undertakings - 27.3 - - Corporation tax 0.6 - 1.5 - Other creditors including taxation and social security 7.6 - 7.4 - Accruals and deferred income 23.6 2.1 32.2 2.4 Deferred consideration for acquisitions 0.6 - 0.6 - 49.1 29.4 102.3 33.3 15. Creditors: amounts falling due after more than one year Group Company Group Company 2001 2001 2000 2000 £m £m £m £m Bank and other borrowings 18.8 18.8 46.4 46.4 Shareholder loan 1.9 - 1.8 - Deferred consideration for acquisitions 1.1 - 1.7 - 21.8 18.8 49.9 46.4 16. Bank and other borrowings i) Due within one year Group Company Group Company 2001 2001 2000 2000 £m £m £m £m Bank loans Secured - - 30.9 30.9 Unsecured 0.1 - 0.6 - Total 0.1 - 31.5 30.9 ii) Due after more than one year Group Company Group Company 2001 2001 2000 2000 £m £m £m £m Bank loans: Secured 18.8 18.8 46.4 46.4 Shareholder loan: Unsecured 1.9 - 1.8 - Total 20.7 18.8 48.2 46.4 The bank loans are secured by a fixed charge over The Future Network plc, Future Publishing Holdings Limited, Future Media Italy SpA, Imagine Media, Inc and Future Publishing Limited's land and buildings, intellectual property and goodwill and a floating charge over the remainder of their assets. The Company incurred total issue and facility costs in 1999 of £1,216,000 in respect of the post flotation bank loans of which facility costs of £687,000 were written off immediately to the profit and loss account in 1999. The remainder of the costs are being charged to the profit and loss account over the term of the facilities at a constant rate on the carrying amount. The amounts are stated net of unamortised issue costs of £0.1m (2000: £0.2m). 17. Provisions for liabilities and charges Group Deferred tax Vacant Restructuring Other Total property £m £m £m £m £m At 1 January 2001 0.4 0.3 - 0.5 1.2 Transfer (to)/from profit and (0.4) 4.3 0.6 (0.5) 4.0 loss account in the period Utilised in year - (0.8) - - (0.8) Amortisation of discount - 0.2 - - 0.2 At 31 December 2001 - 4.0 0.6 - 4.6 The Company had no provisions for liabilities and charges at 31 December 2001 (2000: £ nil). Deferred tax Group Group Provision for deferred tax comprises: 2001 2000 £m £m Other - 0.4 At 31 December 2001 a deferred tax asset has been recognised within other debtors falling due after more than one year as follows: Group Group 2001 2000 £m £m Other 1.0 - The recognised amount relates to short term timing differences at 31 December 2001 which will reverse in the foreseeable future. The unprovided amounts of deferred taxation assets are as follows: Group Group 2001 2000 £m £m Accelerated capital allowances 0.4 0.2 Other 11.9 11.0 Total 12.3 11.2 The Company had no unprovided deferred taxation at 31 December 2001 (2000: Nil) Other deferred tax assets not provided include £7.5m (2000 : £8.1m) in respect of overseas tax losses carried forward and the balance is in respect of other short term timing differences which are considered unlikely to be utilised in the foreseeable future. 18. Called up share capital Authorised share capital 2001 2000 £m £m At 1 January (Ordinary shares of 1p each) 2.5 2.0 Increase in the period 3.5 0.5 At 31 December 6.0 2.5 A resolution was passed at an Extraordinary General Meeting on 15 October 2001 to increase the authorised share capital by 3,500,000 Ordinary shares of 1p each to give a total of 6,000,000 Ordinary shares of 1p each. Allotted, issued and fully paid No. of Shares 2001 Ordinary shares of 1p each £m At 1 January 2001 142,954,916 1.4 Share Options Exercised 1,373,861 - Other 1,245,650 - Rights Issue 173,418,015 1.8 At 31 December 2001 318,992,442 3.2 On 9 November 2001 the Company completed a Rights Issue to qualifying shareholders on the basis of 6 new Ordinary shares for every 5 existing Ordinary shares at a price of 20p per share. A total of 173,418,015 new shares were issued. During the year 1,373,861 ordinary shares were issued by the Company for a cash commitment of £0.2m pursuant to the exercise of share options granted. In addition, 195,652 shares were issued to a Director in lieu of a signing on bonus and 1,049,998 shares were issued to members of the Group's banking syndicate in lieu of fees payable on the restatement of the Group's Banking facility in November 2001. 19. Share premium account 2001 2000 Group and Company £m £m At 1 January 137.8 135.6 Refund of costs on issue of shares on Listing - 0.4 Premium on shares issued during the year 0.6 0.5 Premium on shares issued during Rights Issue 32.9 - Premium on issue of shares to acquire interest in associated undertaking - 1.3 Write off of costs associated with the Rights Issue (1.7) - At 31 December 169.6 137.8 20. Profit and loss account Group Company £m £m At 1 January 2001 - deficit (74.5) (11.0) Net exchange adjustments (0.1) - Transfer from other reserves 0.3 - Loss for the financial year (123.3) (78.0) At 31 December 2001 - deficit (197.6) (89.0) 21. Other reserves Group Group Group Company Merger Other reserves Total Other reserves reserve £m £m £m £m At 1 January 2001 109.0 21.9 130.9 21.8 Transfer to profit and loss reserve - (0.3) (0.3) - Unrealised gain arising from the provision of advertising in exchange for warrants to acquire unlisted investments - (0.1) (0.1) - Reversion of rights pertaining to investments from departing employees - 0.3 0.3 - At 31 December 2001 109.0 21.8 130.8 21.8 Directors: Roger Parry, Non Executive Chairman Greg Ingham, Chief Executive Officer John Bowman, Group Financial Director Colin Morrison, Chief Operating Officer & UK Managing Director Elisabeth Murdoch, Non Executive Director Michael Penington, Non Executive Director Patrick Taylor, Non Executive Director Brendan Clouston, Non Executive Director -------------------------- This information is provided by RNS The company news service from the London Stock Exchange

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