Final Results - Year Ended 31 Dec 1999, Part 1

Future Network PLC
20 March 2000

Part 1

                      THE FUTURE NETWORK PLC
                                 
     Preliminary results for the period ended 31 December 1999

The Future Network plc (LSE: FNET), the international specialist
consumer magazine and online media company, today announces its
first annual results as a listed company following its flotation
on the London Stock Exchange in June 1999, which were approved by
the board on 17 March 2000.

Key financial highlights (on a pro forma basis)*:

*   Sales increase to £199m (1998: £160m) - up 24%
      
*   Adjusted operating profit of £22m (1998: £13m) - up 69%
      
*   Adjusted  profit before tax of £19.2m (1998: £10.4m) - up 85%
      
*   Underlying  Profits increase to £32.9m (1998: £25.7m) - up 28%
      
*   US sales increase to £55.5m (1998: £35.5m) - up 56%
      
Key operational highlights:

*   International operations expanded from two to six countries 
    during the year, with acquisitions in the US and Italy and
    new offices opened in Germany and Holland
      
*   New title launches and acquisitions increase regular
    magazines portfolio to 122 magazines, representing copy
    sales of 5.5m a month at December 1999
      
*   Four major Internet networks launched in the US and UK in
    1999 in the PC, games and music sectors
      
*   Internet properties currently attracting 4.6m monthly unique
    visitors.  Internet revenues increase 143% to £1.7m in 1999
      
*   Business 2.0, the US 'New Economy' magazine and website,
    exceeds all expectations
      
*   Investment to be increased from £10.9m to £25m in 2000 for
    Internet development, US magazine launches and the
    international roll out of Business 2.0
      

Commenting on the results Greg Ingham, Future's Chief Executive
said today:

'1999 has been an amazing year for Future.  In addition to our
successful flotation in June, we have overseen significant
international expansion of the business and continued the growth
of both our magazine portfolio and online activities.

'The demand for consumer information generated by the fast pace of
technological change is opening up new opportunities and our
success in exploiting these is borne out by these excellent
results. We're particularly pleased with our Internet progress
where Future has attracted 4.6million unique visitors at
relatively low cost.

'These are exciting times for media companies with few
restrictions on the potential to drive the business forward.
Exceptional growth opportunities exist across the business,
whether born of technology, geography or of dynamic new
specialisms.  This means we will be investing substantially in the
coming year. With the launch of Business 2.0 in Europe, the
arrival of PlayStation 2 in the autumn and continued roll-out of
our Internet networks and e-commerce partnerships in the months
ahead, we are confident and excited about the opportunities for
2000 and beyond.'

               ------------------------------------

The Company has been informed by Apax Partners & Co Ventures
Ltd, the venture capitalist which backed Future's MBO in 1998,
of its intention to place up to all of its remaining
shareholdings, representing approximately 12% of the equity,
through a placing this week co-ordinated by Morgan Stanley Dean
Witter.


For further information:

Greg Ingham, Chief Executive       Tel: [phone]
The Future Network plc

James Longfield/Harriet Keen       Tel: [phone]
Hogarth Partnership



*The Group has undergone many structural changes and to help the
understanding of our performance the following definitions have
been used throughout this announcement:

Pro forma results:            Results as if the business as
                              constituted at Listing, with its
                              associated new funding arrangements,
                              had existed from the beginning of
                              the year.  Except where stated the
                              Chief Executive's Review and Finance
                              Director's Report refer  to pro
                              forma figures.

Adjusted operating profit:    Operating profit adjusted for
                              amortisation of intangible assets
                              and employer taxes on options and
                              share related benefits.

Adjusted profit before tax:   Profit before tax adjusted for
                              amortisation of intangible assets,
                              before profit on disposal of fixed
                              asset investments, and before
                              employer taxes on options and share
                              related benefits.

Adjusted profit after tax:    Profit after tax adjusted for
                              amortisation of intangible assets,
                              before profit on disposal of fixed
                              asset investments, and before
                              employer taxes on options and share
                              related benefits.

Underlying Profit:            Operating profit excluding losses
                              from titles launched in the last two
                              years and losses on Internet
                              activity (both referred to as
                              Investments).

Adjusted earnings per share:  Earnings per share based on adjusted
                              pro forma profit after tax.



                      THE FUTURE NETWORK PLC
                                 
     Preliminary results for the period ended 31 December 1999


Chief Executive's Review

(All figures included in this Report are pro forma figures)

When The Future Network plc floated in June 1999 we set out our
vision for the Group. It would become a truly global media
enterprise. We would reinforce our position as a leading
technology media Group with strong growth of our existing
products. We would grow our core business of specialist magazines
by entering new markets and new territories. And we would leverage
our highly efficient Internet model to create significant Internet
properties at a very low cost. I am delighted to say that we have
taken great steps towards delivering those aims in 1999.

This substantial progress has been achieved through rigorously and
creatively applying the successful strategy that we have built up
over many years. Our strategy is simple. We identify specialist
audience groups - sometimes small, always active - who share a
common passion and a thirst for information about their interest.
Whether audiences are interested in video games, business,
technology, football, or other subjects, we meet their needs by
creating highly targeted, high-quality media that share and
reflect the passion of the readers. Through this approach, we have
built market-leading positions in our chosen markets with good
profitability.

We started the year with operations in the UK and France and ended
it a truly global media business. In March we acquired a former
licensee in Italy and set up new offices in Germany. In June we
acquired California-based Imagine Media, Inc. ('Imagine') which
became our US operation, and added a business in Holland in
December. Because of the acquisitions through the year, all
figures given in this Review are pro forma for the Group at 31
December 1999 unless otherwise stated.

We expanded our magazine portfolio during the year through new
title launches and by acquisitions and it now stands at 122
regular magazines across the Group. By the year end Future was
recording some 5.5m copy sales per month, and annual magazine
revenues were up 24% to £197m. One key contributor to this growth
was Business 2.0, the magazine of the New Economy, which
dramatically exceeded both copy sales and advertising revenue
forecasts, and is set for substantial further growth in 2000.

Our Internet activities made significant progress with the
continued roll out of our highly cost-efficient Affiliate Network
business model. Future now owns and operates eight web networks in
the US and UK, covering the games, PC, football and music sectors.
As we enter the year, we are already attracting 4.6m unique users
each month to our various specialist web networks, representing
some 58.5m page views. Further network launches are planned in
existing and new territories for this year. We anticipate
substantially expanding the number of e-commerce partnerships in
place during 2000, details of which will be announced in the
coming months.

We believe that Future is particularly well positioned to benefit
from the myriad of opportunities offered by the Internet - the
ultimate narrow-but-deep medium. With many of our readers already
online, we have found an eager and enthusiastic audience for our
specialist media content and have started to develop some of the
commercial opportunities that the medium offers. Far from
affecting magazine sales, the Internet is increasingly aiding
Future's portfolio - both in terms of subject matter and as a
promotional vehicle for copy sales and subscriptions.

It is a consequence of Future's rapid growth that the Underlying
Profitability of the majority of our business is obscured by the
investments we have made to develop both our magazine and Internet
publishing activities. To assist the review of the progress of our
strategy in 1999, we have separated out the Investment on new and
recently launched magazine titles and Internet to give visibility
to the Underlying Profit of the Group. The details of this are
given in the Finance Director's Report below.

These are dynamic, exciting times for media companies. There are
few givens any more and few restrictions on the potential to drive
the business forward. The world is opening up rapidly - and we're
determined to be a major global player. We are confident and
excited about the opportunities for 2000 and beyond.

Future's markets

Specialist magazines continue to grow as a proportion of all
magazine sales as consumer demand for greater relevance grows.
Future was confirmed as the UK's largest publisher of specialist
monthly magazines in 1999 (as measured by the ABC), and we believe
that we are one of the fastest-growing major publishers in the
world.

The excitement and demand for consumer information generated by
the fast pace of technological change is opening up opportunities
for new magazines across a range of special interest areas,
including consumer electronics, home computing and the Internet
itself. It has also led to the most significant publishing
development for the Group this year - the success in the US of
Business 2.0, the magazine of the New Economy. The pace of its
growth has been extraordinary, reflecting the need for informed
analysis of how the Internet is affecting business and creating
new business models. Business 2.0 will become the Group's single
biggest revenue earner in 2000 and, as well as doubling its
frequency in the US, it will be launched in the UK in the spring,
and Germany and France this autumn.

Because of its size and the nature of the UK magazine market -
which is highly conducive to new launches - Future UK is the test
bed for many of Future's products, which, if successful, are then
introduced into other territories. 1999 saw the launch of a number
of new titles in the UK including Internet Advisor, Internet
Investor, Computer Music, What DVD, Mobile Computer User, DC-UK
and Planet PC.

One of Future's key market sectors is the video games market, in
particular the Sony PlayStation, and we were delighted to announce
in February 2000 that our relationship in the UK with Sony
Computer Entertainment had been extended for a further two years
to the end of 2001.

The PlayStation market is evolving rapidly as PlayStation 2
launches in Japan ahead of a European and US launch in the autumn.
Annual sales of the PlayStation console stabilised in 1999 at 7.5m
units in Europe after a number of years of strong growth.
PlayStation 2 is due to be launched in Europe in the autumn and
games industry commentators are expecting consumer interest to be
massive. Initial sales in Japan have been remarkable, with over a
million units sold in the first week: 10 times the first week's
sales of PlayStation 1. We believe it will provide significant
opportunities for us, most particularly from 2001 onwards.

Review of operations

(All results included in the review exclude amortisation of
intangible assets but include the costs of employer taxes on
options and share related benefits).


United Kingdom

------------------------------------------------------------------
                                          1999    1998
£m (pro forma)      Magazine  Internet   Total   Total    % change
------------------------------------------------------------------
Revenues                99.8       0.4   100.2    88.6       13%
Operating profit/
(loss) before
amortisation of
intangible assets       19.2      (1.0)   18.2    12.8       42%
Underlying Profit       21.0         -    21.0    16.4       28%
------------------------------------------------------------------

Future's UK business, the largest part of the Group, has continued
its historically strong progress. Total magazine circulation
reached 2.4m per month and, through a combination of new title
launches and acquisitions, the total UK portfolio increased from
56 to 75 regular titles.

Operating profit before amortisation of intangible assets grew
strongly by 42% to £18.2m. Computing titles grew 20% to £15.8m and
significantly non-computing titles moved from a 1998 loss of £0.4m
to a profit of £3.4m, reflecting the development of the portfolio.
Considerable Investment in new titles continued, the Underlying
Profits being £2.8m higher than the operating result. The
Investment amount was however reduced from 1998 reflecting the
nature of the launches, which were largely in the Computing sector
rather than the concentration on other specialist areas in 1998.

Future has followed a strategy of establishing strong market-
leading magazines, combining premium-priced products with high
value for money, and then expanding to dominate markets by
launching and acquiring more focused magazines to form a market
portfolio. Our magazine market shares have risen in the
PlayStation sector (now at 62%), PC games (now at 46%) and monthly
home computing (now at 60%). The most remarkable growth has come
in the Internet magazine portfolio, where copy sales rose 89% year-
on-year.

As explained above, the relationship with Sony has prospered
during the year, and Future was pleased to be able to announce an
extension of the Official PlayStation Magazine contract into a
seventh year. Official PlayStation Magazine was named Specialist
Magazine of the Year in 1999 by the PPA, the magazine industry's
trade body.

Future holds market-leading positions in a number of other
lucrative specialist areas, such as mountain biking, music making,
football and crafts. Future's consumer specialist group overall
progressed strongly in 1999, with Underlying Profits growth second
only to the growth achieved by our US business. These non-
computing titles are also augmenting our international expansion
and several UK consumer specialist titles were published by other
parts of the Group. For example Computer Music was launched in
France in May 1999, T3 was launched in Germany in February 2000
and will be launched in the US in 2000 and Total Film is also to
be launched as Total Movie in the US.

During the year we acquired the rights to publish the Official
Manchester United and Chelsea Football Club magazines from Zone
Publishing and in January 2000 strengthened our position in the
home entertainment and music sectors with the purchase of Hi-Fi
Choice, Home Entertainment, Metal Hammer and Classic Rock
magazines and websites from Dennis Publishing.


United States

------------------------------------------------------------------
                                          1999    1998
£m (pro forma)      Magazine  Internet   Total   Total    % change
------------------------------------------------------------------
Revenues                54.2      1.3     55.5    35.5       56%
Operating profit/
(loss) before
amortisation
of intangible assets     3.5     (2.6)     0.9    (5.1)       -
Underlying Profit        6.9        -      6.9     1.9      263%
------------------------------------------------------------------

With revenues up 56% and Underlying Profits up 263%, Future's US
operations had an exceptional year. Growth has come across the
games and home computing portfolio, with magazine circulation
increasing 26% over 1998 to 1.77m per month by the year end.

The most significant success in the US has been Business 2.0,
which has exceeded both copy sales and advertising targets. Total
ad page count in 1999 was 1,280 pages and for the December issue
was up 191% year on year. The circulation base rose from 137,500
to 210,000 during the year and the magazine has won seven awards,
including the Folio Excellence Award. Business 2.0 is gaining a
reputation as one of America's most successful magazine launches
of recent years.

Significant further growth will come from Business 2.0 in 2000,
and this will be only in part due to the doubling of its frequency
from May. Its international reach is also set to grow, and plans
are in place for launching local editions in the UK, France and
Germany during 2000.

Future currently publishes 12 magazine titles in the US and has
market leadership of the lucrative PC games market thanks to its
350,000 circulation title PC Gamer.  Further growth came from a
strong debut for Official Dreamcast which recorded monthly sales
of 138,000 in December 1999 just four months after the
introduction of the Dreamcast system. Maximum PC has progressed
well and its website, maximumpc.com, has become an independent
fast-growing Internet network for PC users with significant
international potential - it has already been launched in the UK.

In 2000, Future will continue its diversification  with new
launches such as a magazine for music in the Internet age entitled
Revolution, US versions of Future UK's film and technology titles
(Total Film and T3) and a new digital photography title called
DigitalFoto. Linking all these launches is an innovative
publishing approach applied to technology-energised sectors. For
example, Total Movie will come with a cover-mounted DVD containing
film clips and Revolution will feature a unique CD featuring audio
tracks and MP3 music files. Both magazines will be supported by
Internet activities and will continue the successful Future
technique of integrating media in a differentiated way.

A combination of Business 2.0's frequency change, portfolio growth
and major new launches will see significant revenue growth in the
US, though Underlying Profits will be offset by the significant
investments in expanding the portfolio.

France

------------------------------------------------------------------
                                       1999      1998
£m (pro forma)                         Total     Total   % change
------------------------------------------------------------------
Revenues                                22.1      21.1       5%
Operating profit before
amortisation of intangible assets        1.9       3.0     (37%)
Underlying Profit                        3.1       3.9     (21%)
------------------------------------------------------------------

It's been a good, but not remarkable, year for Future's French
business that was acquired in 1998. Underlying Profits are ahead
of where they were expected to be for the year, but are down year-
on-year due largely to the PlayStation effect, together with
additional competitive activity that was referred to in the
Interim Report. Total revenues were up 5% to £22.1m in 1999, and
significantly higher growth is anticipated during 2000. Future
currently publishes 15 monthly magazine titles and 21 regular
specials in France with a total circulation of 477,500 per month.

Looking forward, the publishing infrastructure is now in place to
accelerate growth in 2000. New launches are planned for the year,
in particular the autumn launch of Business 2.0. Others will
include Future Music, as our French business continues its
diversification from computing and games along the same lines that
Future has already achieved in both the UK and US.


Italy

------------------------------------------------------------------
                                        1999     1998
£m (pro forma)                         Total     Total   % change
------------------------------------------------------------------
Revenues                                16.6      14.7      13%
Operating profit
before amortisation
of intangible assets                     3.8       2.5      52%
Underlying Profit                        4.0       3.6      11%
------------------------------------------------------------------

During 1999, Future has built on the acquisition in March of Il
Mio Castello, a former licensee of several Future magazines.
Revenues have grown well, by 13% to £16.6m, and operating profits
are up 52% to £3.8m. Future publishes 12 monthly magazines in
Italy and a series of one-shots with a total monthly circulation
of 481,400. Due to the importance of the computer games sector
within Future Italy's portfolio, the effect of the transition from
PlayStation 1 to PlayStation 2 is likely to be more significant
for this business than other parts of the Group and some softness
was experienced in the last quarter of 1999.

The integration of the business into Future is progressing well
and a new CEO was appointed at the end of 1999 following the
planned departure of the business's founder. The first half of
2000 is set to be a transitional period for Future Italy ahead of
the planned new launches in the autumn.


Germany

------------------------------------------------------------------
                                       1999      1998
£m (pro forma)                         Total     Total   % change
------------------------------------------------------------------
Revenues                                 4.2        -         -
Operating loss before
amortisation of intangible assets       (2.1)       -         -
Underlying Loss                         (1.4)       -         -
------------------------------------------------------------------

Future Verlag was a start-up business that commenced operations in
April 1999. The business was augmented in July by the acquisition
of the WEKA Group's games magazine portfolio. The business is at
an early stage of development and will require continued
investment over the next few years. Revenues of £4.2m were
achieved for the last six months of 1999.

During the year Future Verlag secured the rights to publish the
official Sega Dreamcast magazine, which was launched in October
1999. Offizielle Dreamcast Magazin has done well with an extremely
high market penetration, but lower than predicted hardware sales
have meant that financially it has not met expectations.

Growth in 2000 for Future Verlag will come from a number of
further launches as well as the effect of publishing the existing
titles for a whole year. Launches include T3, which debuted in
February, and most significantly plans are in place for the launch
of Business 2.0 in the autumn.

Other territories

Future continued its growth into other countries during 1999. In
December Future started operations in Holland, where we launched
PC Gamer and N64, and took over the publishing of our Dutch-
licensed title, Future Music. Other territories are also being
actively investigated.

In addition to wholly-owned operations, Future also licenses its
titles to other overseas publishers. Third party licensing
business in 1999 increased from 105 to 130 licences in a total of
30 countries. Results for these activities are included within
those for the UK.

Internet

Future's Internet activities are managed on a country by country
basis, however in order to give visibility to this important
aspect of our business, Internet activities have been separately
analysed for transparency.

------------------------------------------------------------------
                                            1999     1998      %
£m (pro forma)             USA    Europe   Total    Total   change
------------------------------------------------------------------
Revenues                   1.3      0.4     1.7       0.7   143%
Operating loss
before amortisation
of intangible assets      (2.6)    (1.0)   (3.6)     (0.2)     -
------------------------------------------------------------------

Future is able to create Internet properties of substantial size
at very low cost. This is due to a combination of factors. Our
existing magazines and Internet publications give us access to
many active Internet users for promotional purposes at an
extremely low marginal cost. Our Affiliate Network model allows us
to aggregate content from third parties extremely efficiently.
Further, we have existing relationships with both advertisers and
commercial partners in our core markets. The combined effect is to
give Future a low cost per eyeball-hour, and this in turn gives us
a healthy revenue to expenditure ratio.

The main focus during 1999 was developing our Affiliate Network
model - Future creates hub sites in its core markets, adds its own
magazine-related websites, and then partners with third parties to
create much larger, much more diverse, content-rich sites. Future
then sells the combined advertising inventory, and pays commission
to the affiliates and creates additional revenue opportunities by
attracting e-commerce partners. The key advantage to the model is
that Future can aggregate many millions of eyeballs at relatively
low cost. It can also be replicated in different subject areas and
in different countries.

Future today operates eight specialist web networks focusing on
the video games, PC, football and music sectors. Additionally it
has some 35 revenue-generating magazine related websites. The
average number of unique visitors to Future's online publishing
activities grew 358% in the second half of 1999 and now stands at
some 4.6m unique visitors per month, generating some 58.5 million
page views per month.

Total Internet revenues across the Group grew to £1.7m, with
fourth quarter revenue of £0.8m giving a run-rate of £3.2m.
Significant growth in Internet revenues is expected for 2000 as we
develop the e-commerce potential of our web networks.

In October Future's US gaming network, dailyradar.com, signed a
significant long-term e-commerce and promotional deal with US
video games retailer Babbages. This e-commerce partnership is
already generating revenues and the dailyradar.com model is being
rolled out in the UK and mainland Europe in 2000.  The number of e-
commerce partnerships in place will be substantially expanded
during 2000, details of which will be announced in the coming
months.

These results for Internet trading exclude online revenues for
magazine products. We have had increasing success in building
subscription revenues online in the UK and US.

Current trading & prospects

Trading in 2000 has continued the trends seen towards the end of
1999.

Our Internet activities are developing at an exponential rate and
we anticipate considerable progress in this area in the coming
year. On the magazine side, our US business continues to perform
strongly, driven primarily by Business 2.0, but also by the PC-
based computing magazines. Planned launches in 2000 will further
expand our reach in this important market. In the UK and Europe we
continue to make good progress, and the roll out of Business 2.0
will enhance revenues from the non-computing sector. The
transition in the PlayStation market will initially lead to a
lower level of growth in the games sector in the coming year;
however the launch of PlayStation 2 in the second half of the year
presents significant opportunities that will, we believe, result
in the development of a larger overall market for PlayStation. Our
non-computing titles will continue to grow, and their
international rollout will accelerate, especially with the US
launches of T3 and Total Movie.

Exceptional growth opportunities exist across the business in
2000, whether born of technology or of geography or of dynamic new
specialisms. The network structure of Future means that a proven
success in magazines or on the Internet can be rolled out swiftly
in other territories, and with technology providing so many
compelling opportunities in our market, that network effect is
dramatically magnified. We will be increasing our investment from
£10.9m in 1999 to approximately £25m in 2000 for Internet
development, US magazine launches and the international roll out
of Business 2.0. We anticipate substantial revenue growth for the
Group in the coming year, although the increased Investment means
that there will be a decline in headline Adjusted operating
profit. As always the goal is to create continued growth in
Underlying Profit and long term value.

We are confident and excited about the opportunities for 2000 and
beyond.


Finance Director's Report

(All figures included in this Report are pro forma figures)

What has become The Future Network plc began in 1999 as Future
Publishing Holdings Limited - the combined UK and French business
which was financed by venture capital and was significantly debt
leveraged. During the year Future has been transformed in both
size and scope by the acquisition of businesses in the US, Italy,
and Germany, and in capital structure with the issue of new shares
in connection with the US acquisition and the London Stock
Exchange Listing.

Our traditional core business of computer and video games
magazines has always been weighted towards the second half of the
year because of the holiday season. This second half weighting in
Adjusted operating profit terms has been significantly larger this
year because the business, especially in the US has been growing
so strongly overall.

Revenue has grown £38.6m (24%) but the strongest trend has been
the growth in the US and this is expected to continue in 2000. US
magazines now account for 28% of total revenue, up from 22% in
1998.

Revenues in the second half were 56% of the full year (1998: 56%)
and were 25% up on 1998. The effect on profits is even more
marked; Adjusted operating profit for the second half was 80% of
the full year (1998, 56%) up 144% on 1998. The US business has
progressed from investment into strong profit during the year,
outweighing the additional amounts invested in the Internet and in
building our business in Germany.

Our business has a high proportion of revenues derived from copy
sales, with advertising being primarily from endemic rather than
brand advertising. In 1999, 33% of our revenue is from
advertising, up from 28% in 1998 as the US part of our business,
which is more advertising based, has become a larger proportion of
the whole.

Adjusted operating profit before amortisation of intangible assets
has grown £9.0m (69%).  The Group's leadership of its core markets
in computing and videogames has historically driven its growth and
continues to do so - in 1999 on an international scale.  Adjusted
operating profit before amortisation of intangible assets in this
sector has grown 23% on revenues up 16%.

In addition there is very clear progress in the other special
interest markets we serve.  In the UK these markets are now
strongly profitable, and it is these magazines that are now being
launched elsewhere in the Group, primarily in 2000 in the US.
Business 2.0 is now profitable in the US and will launch in Europe
in 2000.

Underlying Profitability

For two principal reasons we manage Future on the key metric of
Underlying Profit - and we encourage investors to judge us on this
basis.

The first relates to our structure. Future's business is in
reality a portfolio of over 130 businesses - magazines and
Internet networks that operate financially on their own separate
revenues and profit streams. Our objective is to grow the core of
profitable titles - the Underlying Profit.

The second relates to growth. Future's fast growth is driven by
our ability to successfully invest in new projects. These
investments - often small, sometimes substantial - are targeted at
areas where we see the potential for future profitability. We
operate in high growth markets and invest now for future
Underlying Profit.

The Group's headline operating profit is net of the Investment in
launches, and in the short term obscures the view of the progress
made, being as much a factor of the scale of opportunity as the
core performance of the Group. The real measure of our Group is,
we believe, a combination of the growing core profit stream
delivered by the profitable businesses together with a judgement
on our ability to invest wisely in new projects.

We have adopted a definition that we believe achieves a clear and
fair measure for Underlying Profit - we exclude any titles less
than two years from their launch in which we are still Investing.
Magazines therefore have a maximum of two years of Investment,
before their losses impact our Underlying Profit, a short period
in magazine terms, particularly for US titles. It is a measure
that we will continue to apply in reporting our results. As a
result:



Underlying Profit

-----------------------------------------------------------------------
              Underlying                Investment       Total    Total
-----------------------------------------------------------------------
            1999    1998   Growth     1999       1998     1999    1998
           £'000   £'000             £'000      £'000    £'000   £'000
Magazine                                                                
UK        20,975   16,383     28%   (1,751)    (3,574)  19,224  12,809
US         6,855    1,868    267%   (3,304)    (7,056)   3,551  (5,188)
France     3,136    3,900    (20%)  (1,272)      (871)   1,864   3,029
Italy      4,026    3,590     12%     (223)    (1,045)   3,803   2,545
Germany   (1,368)       -      -      (755)         -   (2,123)      -
-----------------------------------------------------------------------
          33,624   25,741     31%   (7,305)   (12,546)  26,319  13,195
Internet       -        -      -    (3,563)      (173)  (3,563)   (173)
                                                                
Central     (718)       -      -         -          -     (718)      -
operating
costs
-----------------------------------------------------------------------
Total     32,906   25,741  28%      (10,868)  (12,719)  22,038  13,022
-----------------------------------------------------------------------



This approach gives greater clarity to the development of the UK
and US businesses and the pressures in mainland Europe. It also
shows that our recent launch activity, though similar in volume to
last year (25 titles as against 24 in 1998), tended to be in areas
requiring lower Investment. The 1998 Investment in the US was
driven by the launch of Business 2.0 and in the UK by launches
outside computing markets.  By 1999 these were feeding the growth
in Underlying Profit.

The loss before tax of £12.8m in 1998 has been turned into a
profit before tax of £3.9m for 1999, due both to operating and one
off factors described in more detail below. We have therefore
shown an Adjusted profit after tax to eliminate these items which
shows almost a threefold improvement from £4.3m Adjusted profit
after tax in 1998 to £12.4m Adjusted profit after tax in 1999.
Adjusted basic earnings per share has improved from 3.17p to
8.99p.

Factors affecting the results

The following items, including one-off or non-operating costs,
have been eliminated in arriving at the Adjusted profit shown in
the Group Activity Analysis below.

*      As the Group has been brought together by acquisition, the
       balance sheet contains significant goodwill requiring a
       significant amortisation charge in the profit and loss
       account amounting to £24.8m on a pro forma basis for 1999
       (1998: £23.2m). This charge has no impact on cashflow and
       management focus, and most of our analysis is of the pre-
       amortisation figures. An element of subjectivity is
       involved in setting asset lives of acquired businesses, and
       these have been decided on a case-by-case basis.
       Established magazine businesses such as those owned in
       Europe have been estimated to have a life of 20 years.
       Those which were not profitable at the time of acquisition,
       such as Imagine, or required investment to have a long term
       future, such as those acquired in Germany, have an
       estimated life of 10 years.
       
*      We have made a charge of £1.4m in the pro forma profit and
       loss account in 1999 (1998: £nil) for the employer taxes on
       options and share related benefits generated by the rise in
       market value of shares compared with the exercise price in
       line with the new accounting standard FRS12: Provisions,
       contingent liabilities and contingent assets.  The
       provision is driven in the short term by market events
       rather than trading, and is based on the year end share
       price. The actual cost incurred will depend on the share
       price at the time 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.
       
*      At the time of acquisition by the Group, Imagine held
       shares in America Online Inc, that company having
       previously acquired a company in which Imagine had held an
       investment. The Group sold 90% of its holding in September
       1999 generating a pro forma gain of £10.9m.


Dynamics of the business

The most significant risks for the business, should the strategy
not be successful, are assessed by management to be:

The Group operates primarily in high growth and competitive market
sectors, and has historically generated its growth as a result of
launching new titles, both to reflect development of existing
markets but also to enter new markets, launches carrying a higher
risk of failure than established titles. An expanded opportunity
now exists to launch titles which are successful in one territory
elsewhere within the Group and this will require increased
investment in the short term. Prime examples of this strategy are
seen in the launch of Business 2.0 in the UK, France, and Germany,
following its success in the US and the launch of the UK title T3
in Germany and the US.

The Group has specialised in the fast developing computer
entertainment market which has been subject to cycles associated
with new hardware launches, and will be affected by the
development of Internet-based products. These gaming markets are
now in a temporary transitional period and the Group is seeking to
build on its current success in the new hardware environment. Past
trends indicate that each successive phase of development has been
bigger than the previous one.

Investments

Principally through its Imagine subsidiary in the US, the Group
has made trade investments, or prior to acquisition spun-out
activities into separate companies whilst retaining an equity
share, with a view to maximising their value. At the balance sheet
date fixed asset investments were held at a cost of £2.4m (1998:
£nil).

In addition a gain of £10.9m has been made on the sale of a
shareholding in America Online Inc as described above. The
remaining investment, which is expected to be sold in 2000, is
held as a current asset and amounted to £1.0m at 31 December 1999
(1998: £nil).

Financing

In order to protect the Group from unexpected interest rate
fluctuations, £27m of the floating Sterling term debt is the
subject of swap contracts effectively fixing the interest rate at
7.15%. The Group does not trade in such instruments independent of
the operational requirements of the business. The Group has
considered its hedging requirements and concluded that, currently,
it does not need to be hedged against exchange rate fluctuations
as trading inflows, trading and interest costs are broadly aligned
within the UK, US, and Euro currency areas.

Acquisitions

The Group has made substantial acquisitions in connection with the
establishment of its activities in Italy and the US; these are
detailed in note 12.

Established businesses have been augmented by supplementary
acquisitions in the second half of the year:

*      The start-up business established in Germany in March 1999
       was augmented by the purchase of computer games titles from
       WEKA Firmengruppe in July 1999. These titles have required
       further investment since acquisition to improve their
       market position.
       
*      Late in 1999, Future acquired three football magazines from
       Zone Publishing, including the licence to publish Official
       Manchester United Magazine. Due to the timing and
       additional promotional spend on the magazines, they did not
       contribute significantly to 1999's profits. Future also
       acquired four technology and music magazines from Dennis
       Publishing in January 2000, and is actively seeking other
       opportunities.

Cash

The Group has undergone significant change to its balance sheet
during 1999, with the proceeds from the Listing (£135m net of
expenses) being used to reduce the level of corporate debt, which
had originally been established at the time of the leveraged
buyout of the UK and French companies.

On Listing the Group obtained a £100m secured debt facility of
which £42.5 m is drawn down, the balance being available for a
mixture of acquisition and working capital needs, subject to a
range of covenants. In addition the Group has cash of £18.9m
available arising from trading cashflow and the sale of America
Online Inc stock in September 1999. The business has a relatively
low working capital and capital expenditure requirement and as a
result is cash generative even in a period of significant growth.

The reduced debt level following the Listing has significantly
reduced interest costs but this can only be partially seen in the
actual interest charge reduction because the significant
indebtedness was first established in April 1998, and the new
corporate debt was only established at Listing in June 1999.

Dividend

As was indicated at flotation, in view of the scope for profitable
development of the business and the need to fund development spend
from cash flows, no dividend payment is proposed.

Earnings per share

Pro forma basic and diluted loss per share has improved from
(13.83p) in 1998 to (2.11p) in 1999 for a number of factors which
are discussed in the section on factors affecting results.
Adjusted basic earnings per share has improved from 3.17p to
8.99p, and from 2.88p to 8.22p on a diluted basis in 1998 to 1999
respectively.

Taxation

The pro forma profit before tax, after eliminating goodwill
arising on consolidation was £25.5m (1998: £8.7m) providing an
effective tax rate of 26.8% (1998: 69.7%).

The pro forma tax charge after eliminating goodwill arising on
consolidation was lower than the standard UK corporation tax rate
of 30.25% due primarily to the deductibility of costs in respect
of shares options, and the  availability of tax losses in Imagine
to offset its pre acquisition profits, including the substantial
gain on fixed asset investments amounting to £10.9m in the pro
forma profit and loss account. This was partially offset by non-
utilisation of tax losses in Germany and by higher rates of tax
payable in jurisdictions either than the United Kingdom.


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