Interim Results
Future Network PLC
04 September 2002
4 September 2002
THE FUTURE NETWORK PLC
Interim results for half-year ended 30 June 2002
The Future Network plc (LSE: FNET), the international games and specialist
consumer magazine group, today announces its interim results for the half-year
ended 30 June 2002.
Financial highlights
Turnover from continuing activities up 14% to £74.0m (2001: £64.8m)
EBITA from continuing activities £4.7m (2001: £2.2m)
Net interest receivable & similar items £0.4m (2001: £3.6m payable)
Amortisation charge £4.5m (2001: £83.0m including impairment write-downs)
Pre-tax profit £0.9m (2001: pre-tax loss £106.8m)
Group free of bank debt at 30 June 2002, with £5.0m of net cash
Operational highlights
First-half demonstrates important progress
All four businesses performing better in H1 2002 than in H1 2001
Circulation revenue up 24%, advertising revenue down 4%
Nine magazines launched in first half, performing satisfactorily
22% increase in circulation of computer games magazines in UK
Games magazine market share increases in UK and US
Business remains heavily reliant on second-half, particularly 4th quarter
Definition:
EBITA - operating profit before refinancing costs and amortisation and
impairment of intangible assets.
Commenting on the results, Greg Ingham, Future's Chief Executive said:
'The first half-year has been a period of important progress. The business is
debt-free, profitable and stable, having benefited from the restructuring
actions we took in 2001. All four of our businesses have performed better in
the first half of 2002 than they did in the first half of 2001. Future has
reported a modest profit and that it is free of bank debt, ahead of our
traditionally much stronger second half.
Trading conditions in computer games magazines have continued to improve, with
strong performances from our PlayStation 2 magazines. During the half-year, we
launched a further three Official Xbox magazines, following the US launch in
November 2001.
Across the Group, we have launched nine monthly magazines in the first half of
2002, with a further four due by year end. This compares with just two in the
whole of 2001. Our launches are performing satisfactorily.
Circulation revenue growth in computing and entertainment has substantially
offset advertising declines in these areas.
Circulation revenue now accounts for 70% of Group turnover and is expected to
continue to grow in the second half of this year, following year-on-year growth
in H1 of 24%. We expect advertising income in 2002 to be flat year-on-year.
Trading in July has been encouraging. However, because of the importance of Q4
it is still too early to estimate the full-year outcome with certainty.
Nonetheless, despite generally difficult economic circumstances, we are
cautiously confident that we will perform at least in line with market
expectations for 2002.'
A presentation to analysts will take place at 10am today at The Brewery,
Chiswell Street, London EC1Y 4SD. A copy of this presentation will be posted to
the Group's website, www.thefuturenetwork.plc.uk
Enquiries:
The Future Network plc
Greg Ingham, Chief Executive Tel: 01225 44 22 44
John Bowman, Group Finance Director
Hogarth Partnership
James Longfield/Georgina Briscoe Tel: 020 7357 9477
Interim Report
Summary
The first half-year has been a period of important progress. The business is
debt free, profitable and stable, having benefited from the restructuring
actions we took in 2001. As at 30 June 2002, the Group had net cash of £5.0m
and recorded a pre-tax profit for the half-year of £0.9m on sales from
continuing activities of £74.0m, up by 14% compared with the corresponding
period in 2001.
Financial results for half-year
Group turnover from continuing activities for the period was £74.0m, an increase
of 14% on the corresponding figure for the previous half-year.
EBITA of £4.7m represented an operating margin of 6% (2001: 3%) from continuing
businesses. After amortisation of purchased goodwill, and the inclusion of net
interest receivable and other financial items, the Group's pre-tax profit for
the half-year was £0.9m.
Group turnover
Group turnover from continuing activities for the half-year was £74.0m, an
increase of 14% on the corresponding figure for the previous half-year. All of
the turnover from continuing businesses was derived from the Group's principal
activity of publishing specialist magazines serving the computer games,
computing and entertainment sectors.
A comparison of continuing turnover by territory is shown below:
2002 2001 Change
% £m £m %
UK 60% 44.2 39.9 Up 11%
US 22% 16.7 13.8 Up 21%
Mainland Europe 18% 14.0 11.8 Up 18%
Intra-group - (0.9) (0.7) -
Group turnover 100% 74.0 64.8 Up 14%
Continuing turnover analysed by type is shown below:
2002 2001 Change
% £m £m %
Circulation 70% 51.5 41.3 Up 24%
Advertising 27% 20.0 20.8 Down 4%
Other 3% 2.5 2.7 Down 7%
Group turnover 100% 74.0 64.8 Up 14%
Continuing turnover analysed by sector is shown below:
2002 2001 Change
% £m £m %
Computer games 42% 31.6 21.6 Up 46%
Computing 35% 26.3 26.7 Down 1%
Entertainment 23% 17.0 17.2 Down 1%
Intra-group - (0.9) (0.7) -
Group turnover 100% 74.0 64.8 Up 14%
Within computer games turnover, circulation revenue grew by 56% and advertising
revenue by 30%.
Portfolio
The Group launched nine new magazines in the first half, including Official Xbox
magazines in the UK, France and Italy; the Official Windows XP Magazine in the
UK; and Official Nintendo magazines in France and Italy. By the end of the
period under review, the Group published 82 specialist magazines in four
countries, as follows:
Number of titles At 1 January Launches Disposals/closures At 30 June
published
UK 51 4 (2) 53
US 5 - - 5
France 11 2 - 13
Italy 10 3 (2) 11
Total 77 9 (4) 82
Analysis of Group pre-tax profit for half-year
£m
EBITA 4.7
Net interest receivable and profit on disposal of fixed asset investments 0.7
Sub-total of taxable profit 5.4
Amortisation of purchased goodwill (non-taxable) (4.5)
Pre-tax profit 0.9
Analysis of Group EBITA by territory
£m
UK 6.1
US (0.2)
Mainland Europe 0.3
Central costs (1.5)
Group EBITA 4.7
UK performance in first half-year
2002 2001 Change
Continuing Continuing %
£m £m
Turnover 44.2 39.9 11%
EBITA 6.1 5.7 7%
Turnover for the period amounted to £44.2m from continuing activities, an
increase of 11%. Circulation revenue increased by 22% compared with the same
period in 2001. Advertising revenue fell by 7% compared with the 6 months to
June 2001. The proportion of turnover derived from circulation revenues rose to
72% (2001: 66%).
During the half-year, in the UK Future launched the Official UK Xbox Magazine ('
OXM'); Xgamer, an unofficial games magazine; Official Windows XP Magazine, a new
magazine licensed from Microsoft and the 'Complete Guide' computing series. OXM
and Xgamer are published by a separate Future Network subsidiary, FXM
International. Sales of OXM have gradually increased since launch in February.
Computer games magazines had a strong first-half, with circulation volumes up by
22% for titles published during January-June 2002 compared with the previous six
months (source: ABC circulation statistics published in August 2002).
The half-year benefited from the increasing sales of Official PlayStation 2
Magazine, which is the fastest growing monthly consumer magazine in the UK, with
a 55% increase in the average monthly sales of this magazine to 195,000 for the
six months to June 2002. Overall, Future's UK market share of computer games
magazines rose from 55% for the six months to December 2001 to 65% for the six
months to June 2002.
Continuing turnover for the computing and entertainment sectors were broadly in
line with the previous half-year, up 2% and down 1% respectively. This was
achieved by circulation revenue growth offsetting advertising revenue decline.
In terms of UK sales, the split of continuing revenue for 2002 and 2001 by
division was:
2002 2001
Computer games 32% 26%
Computing 29% 31%
Entertainment 39% 43%
UK EBITA was £6.1m, including £0.3m from the disposal of one magazine, and
representing an operating profit margin of 14% from continuing activities, in
line with the six months to June 2001.
In June, subscriptions processing was outsourced to Customer Interface Limited,
which has taken on 26 former staff. Subscription revenue in the half-year
accounted for 10% of UK turnover.
We are relocating UK accounts staff to Bath from Somerton. This is expected to
result in a one-off cost of £0.7m for redundancy, recruitment and training and a
provision of £0.7m has been charged against continuing EBITA for the period, and
included in provisions in the Group balance sheet.
These changes have been implemented as part of the Group's continuing drive to
improve the quality and efficiency of its operations, rather than to reduce
cost.
Licensing
International licensing of Future's magazine portfolio has been further
developed during the period. The results for the half-year include £1.0m in
respect of licensing revenue external to the Group (2001: £1.1m).
The Group licenses local editions of its magazines in 25 countries, in addition
to those published in the UK, US, France and Italy. The number of local editions
published in those countries has risen from 65 to 71. T3 magazine is now the
Group's most licensed title, with local editions sold in 14 different countries.
Expansion of the Group's licensing activities remains a key strategic
objective.
Most recently, the Group has launched the Future Games Network, an alliance of
owned and licensed computer games magazines. This is designed to benefit from
global advertising deals and editorial exclusives, as well as to reinforce
Future's position as worldwide games market leader.
US performance in first half-year
2002 2001 Change
Continuing Continuing %
£m £m
Turnover 16.7 13.8 21%
EBITA (0.2) (1.1) -
Turnover for the period amounted to £16.7m from continuing activities, an
increase of 21% compared with the previous half-year. The US business publishes
three computer games magazines and two computing titles. All five magazines
performed satisfactorily during the period, including the Official Xbox Magazine
('OXM'), which was launched in November 2001. Of total US turnover, 54% comes
from circulation and 41% from advertising. Subscription revenue in the half-year
accounted for 27% of US turnover.
The US EBITA loss was £0.2m for continuing activities, significantly less than
incurred at the half-year stage last year, despite continuing early stage losses
in OXM. The US operation is expected to be profitable for 2002 overall.
Mainland Europe performance in first half-year
2002 2001 Change
Continuing Continuing %
£m £m
Turnover 14.0 11.8 19%
EBITA 0.3 (0.8) -
Combined turnover from France and Italy for continuing activities amounted to
£14.0m, an increase of 19% on the £11.8m achieved for the same period last year.
Approximately 75% of this derives from circulation sales and 25% derives from
advertising. Mainland Europe operations produced an EBITA of £0.3m. This is
stated after a number of restructuring costs totalling £0.5m, principally
relating to the business in France.
The French and Italian businesses now publish 13 and 11 magazines respectively,
principally in the computer games and computing sectors.
During the period, Future Media Italy launched a new unofficial publication,
PlayNation2, the previous Official Playstation 2 Magazine contract having come
to an end. In both France and Italy, local editions of the Official Xbox
Magazine were launched although initial sales volumes were slow. Future won the
right to publish Official Nintendo magazines in both France and Italy during the
period. Since 30 June, Official Windows XP Magazine was licensed from Microsoft
and is due to be launched this autumn in France.
Intra-group licence fees paid by Mainland Europe were £0.7m for the period (June
2001: £0.6m).
Operating profitability of continuing businesses
After taking account of central costs of £1.5m, EBITA for the period was £4.7m
(2001: £2.2m) on turnover of £74.0m (2001: £64.8m) representing an operating
profit margin of 6% (2001: 3%) from continuing businesses. Overall this is a
satisfactory result, although progress on the Official Xbox magazines has been
slower than originally anticipated.
Profit on disposal of fixed asset investments
As at 31 December 2001 the carrying value of all of the Group's investments had
been written down to zero. Following the disposal of the majority of these
investments, the Group received cash of £0.3m during the period, giving rise to
a gain on disposal of investments of £0.3m. There are no further significant
disposals to be made.
Net interest receivable / (payable) and similar items
Net interest payable arising on bank and other loans totalled £0.4m for the
half-year. Foreign exchange gains for the half-year totalled £0.8m, resulting in
a positive figure for the period. As the Group was free of net debt as at 30
June 2002, no net interest charge is now expected for the second half-year.
Tax
The tax charge for the period amounted to £1.7m. Ignoring goodwill
amortisation, which has no impact on taxation, the total effective tax rate for
the half-year was 32%. This is the Group's estimate of the effective tax rate
likely to apply to taxable profits for the financial year 2002 as a whole.
FRS 19 'Deferred tax' has been adopted in the period. Adoption of this
accounting standard does not have a material impact on the prior year profit and
loss account or balance sheet. As a result the comparatives have not been
restated.
Net cash and capital expenditure
The Group ended the half-year with net cash of £5.0m, having started the year
with net debt of £7.8m. The Group has maintained its £28m bank facility which
provides more than adequate headroom for the operational funding requirement of
current activities. On this basis it is unlikely that the Group would face a
net interest charge during the second half-year.
Capital expenditure during the half-year was £0.2m and it remains the Group's
view that for 2002 overall, capital expenditure is not expected to exceed £1.0m.
The Group's operations were significantly cash generative for the period.
Leasehold property
The consolidated balance sheet contains provisions totalling £3.4m (December
2001: £4.0m) representing provisions against onerous lease commitments in
respect of property in the US and UK. The property provision reduced during the
half-year mainly as a result of rental payments in respect of vacant properties.
During the half-year the Group paid a total of £1.9m in relation to leasehold
property, of which £1.2m was in respect of occupied property and £0.7m in
respect of unoccupied property.
Central costs and services
Central costs are running in line with the Board's expectation.
Board and management
On 29 May 2002 we announced the resignation from the Board of Elisabeth Murdoch,
who joined the Board as a non-executive director in September 2000. The Board
has reviewed the membership and balance of the Board, which now consists of four
non-executive and three executive directors and the Board is satisfied that it
has more than adequate non-executive representation.
Outlook
The first half-year has been a period of important progress. The business is
debt free, profitable and stable, having benefited from the restructuring
actions we took in 2001. All four of our businesses have performed better in
the first half of 2002 than they did in the first half of 2001. Future has
reported a modest profit and that it is free of bank debt, ahead of our
traditionally much stronger second half.
Trading conditions in computer games magazines have continued to improve, with
strong performances from our PlayStation 2 magazines. During the half-year, we
launched a further three Official Xbox magazines, following the US launch in
November 2001.
Across the Group, we have launched nine monthly magazines in the first half of
2002, with a further four due by year end. This compares with just two in the
whole of 2001. Our launches are performing satisfactorily.
Circulation revenue growth in computing and entertainment has substantially
offset advertising declines in these areas.
Circulation revenue now accounts for 70% of Group turnover and is expected to
continue to grow in the second half of this year, following year-on-year growth
in H1 of 24%. We expect advertising income in 2002 to be flat year-on-year.
Trading in July has been encouraging. However, because of the importance of Q4
it is still too early to estimate the full-year outcome with certainty.
Nonetheless, despite generally difficult economic circumstances, we are
cautiously confident that we will perform at least in line with market
expectations for 2002.
Roger Parry, non-executive Chairman
Greg Ingham, Chief Executive
John Bowman, Group Finance Director
Colin Morrison, Chief Operating Officer and Managing Director UK
Michael Penington, non-executive Director
Patrick Taylor, non-executive Director
Brendan Clouston, non-executive Director
4 September 2002
The Future Network plc Interim report 2002
Group profit and loss account
for the six months ended 30 June 2002
Note 6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Turnover
Continuing operations 74.0 64.8 142.9
Discontinued operations - 25.6 31.2
2 74.0 90.4 174.1
Operating profit/(loss)
Continuing operations
Operating profit before refinancing costs and
amortisation and impairment of intangible assets 4.7 2.2 10.0
Refinancing costs - (2.6) (3.8)
Amortisation and impairment of intangible assets 3,9 (4.5) (81.2) (117.3)
0.2 (81.6) (111.1)
Discontinued operations
Operating loss before amortisation and impairment
of intangible assets - (14.8) (15.7)
Amortisation and impairment of intangible assets 3 - (1.8) (3.3)
- (16.6) (19.0)
Operating profit/(loss) 3 0.2 (98.2) (130.1)
Share of operating profit from associate - 0.6 0.7
Total operating profit/(loss) including share of
associate 0.2 (97.6) (129.4)
Net exceptional (loss)/gain arising on sale or
termination of businesses 4 - (5.3) 15.4
Profit/(loss) on disposal of fixed asset 0.3 (0.3) (0.3)
investment
Write down of fixed asset investment - - (0.2)
Profit/ (loss) on ordinary activities before 0.5 (103.2) (114.5)
interest
Net interest receivable/(payable) and similar 6 0.4 (3.6) (6.5)
items
Profit/(loss) on ordinary activities before tax 0.9 (106.8) (121.0)
Tax on profit/(loss) on ordinary activities 7 (1.7) 5.4 (2.3)
Loss on ordinary activities after tax (0.8) (101.4) (123.3)
Loss for the financial period 17 (0.8) (101.4) (123.3)
Earnings per 1p Ordinary share
6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
Note pence pence pence
Basic loss per share 8 (0.26) (66.43) (69.56)
Adjusted basic earnings/(loss) per share 8 1.14 (12.06) (1.48)
Diluted loss per share 8 (0.26) (66.43) (69.56)
Adjusted diluted earnings/(loss) per share 8 1.14 (12.06) (1.48)
Statement of total recognised gains and losses
for the six months ended 30 June 2002
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
Note £m £m £m
Loss for the period (0.8) (101.4) (123.3)
Net exchange adjustments offset in reserves 17 0.3 - (0.1)
Tax on exchange adjustments offset in reserves 17 (0.3) - -
Reversion of rights pertaining to investments from
departing employees - - 0.3
Realised loss arising from the provision of advertising
in exchange for warrants to acquire unlisted
investments - - (0.1)
Total recognised loss relating to the period (0.8) (101.4) (123.2)
Reconciliation of movements in shareholders' funds
for the six months ended 30 June 2002
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
Note £m £m £m
Loss for the period (0.8) (101.4) (123.3)
Premium on shares issued during the period - 0.2 0.6
Proceeds from issue of shares as part of the Rights Issue - - 1.8
Premium on shares issued as part of the Rights Issue - - 32.9
Costs of the Rights Issue written off against share premium - - (1.7)
Net exchange adjustments offset in reserves 17 0.3 - (0.1)
Tax on exchange adjustments offset in reserves 17 (0.3) - -
Realised loss arising from the provision of advertising in
exchange for warrants to acquire unlisted investments - - (0.1)
Reversion of rights pertaining to investments from
departing employees - - 0.3
Net change in shareholders' funds (0.8) (101.2) (89.6)
Opening shareholders' funds 106.0 195.6 195.6
Shareholders' funds at end of period 105.2 94.4 106.0
Group balance sheet
As at 30 June 2002
Note 30 June 30 June 31 December
2002 2001 2001
£m £m £m
Fixed assets
Intangible assets 9 114.3 171.0 117.9
Tangible assets 10 3.5 6.9 4.4
Investments - 4.3 -
117.8 182.2 122.3
Current assets
Stocks 11 3.8 4.2 3.5
Debtors 12 30.7 42.8 42.7
Cash at bank and in hand 7.3 2.7 13.0
41.8 49.7 59.2
Creditors - amounts falling due within one 13 (47.9) (53.6) (49.1)
year
Net current (liabilities)/assets (6.1) (3.9) 10.1
Total assets less current liabilities 111.7 178.3 132.4
Creditors - amounts falling due after more
than one year 14 (2.4) (80.9) (21.8)
Provisions for liabilities and charges 15 (4.1) (3.0) (4.6)
Net assets 105.2 94.4 106.0
Capital and Reserves
Called up share capital 16 3.2 1.4 3.2
Share premium account 17 169.6 138.0 169.6
Merger reserve 17 109.0 109.0 109.0
Other reserves 17 21.8 21.9 21.8
Profit and loss account 17 (198.4) (175.9) (197.6)
Equity shareholders' funds 105.2 94.4 106.0
Group cash flow statement
for the six months ended 30 June 2002
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
Note £m £m £m
Net cash inflow/(outflow) from operating
activities A 12.8 (6.9) (6.5)
Dividends from associates - 0.6 0.7
Returns on investment and servicing of finance
Interest received 0.1 0.2 0.4
Interest paid (0.9) (3.0) (7.9)
Net cash outflow from returns on investment and
servicing of finance (0.8) (2.8) (7.5)
Tax received/(paid) 1.0 (0.7) (6.9)
Capital expenditure and financial investment
Purchase of tangible fixed assets (0.2) (0.5) (0.4)
Sale of tangible fixed assets 0.5 - 0.1
Sale of current asset investments 0.3 0.6 0.6
Net cash inflow for capital expenditure and
financial investment 0.6 0.1 0.3
Acquisitions and disposals
Purchase of subsidiary undertakings - - (4.0)
Net cash acquired with subsidiary undertakings - - 1.2
Cash proceeds on disposal of magazines - 1.3 45.5
Cash proceeds from disposal of subsidiary
undertaking - - 6.0
Net cash disposed of with subsidiary undertaking - - (1.4)
Purchase of subscription lists - - (0.1)
Payment of deferred consideration (0.6) (0.8) (0.8)
Receipt of deferred consideration - - 0.6
Net cash (outflow)/inflow for acquisitions and (0.6) 0.5 47.0
disposals
Net cash inflow/(outflow) before financing 13.0 (9.2) 27.1
Financing
Proceeds from issue of Ordinary share capital - 0.2 35.2
Expenses of share issue - - (1.7)
Drawdown of bank loans - 2.0 19.4
Movement on discounted bills 0.3 - (0.6)
Movement on shareholder loan 0.1 - (0.2)
Repayment of bank loans (18.9) (1.4) (78.3)
Net cash (outflow)/inflow from financing (18.5) 0.8 (26.2)
(Decrease)/increase in cash in the period (5.5) (8.4) 0.9
Notes to the Group cash flow statement
For the six months ended 30 June 2002
A. Net cash inflow/(outflow) from operating activities
The reconciliation of operating profit/(loss) to net cash inflow/(outflow) from
operating activities is as follows:
6 months to 6 months to 12 months to 31
30 June 2002 30 June 2001 December 2001
£m £m £m
Group operating profit/(loss) 0.2 (98.2) (130.1)
Cash flows on sale or termination of businesses - (5.2) (12.3)
Depreciation charge 0.8 1.4 2.8
Goodwill amortisation and impairment 4.5 83.0 120.6
Movement in provisions (0.5) - 3.5
(Increase)/decrease in stocks (0.3) 4.7 4.7
Decrease in debtors 10.8 22.7 20.0
Decrease in creditors (2.7) (15.3) (15.7)
Net cash inflow/(outflow) from operating
activities 12.8 (6.9) (6.5)
B. Analysis of net cash/(debt)
At 1 Cash Exchange Other non At 30
movements
January inflow cash June
£m
2002 £m changes 2002
£m £m £m
Cash at bank and in hand 13.0 (5.5) (0.2) - 7.3
Debt due after one year (20.7) 18.9 0.1 (0.1) (1.8)
Debt due within one year (0.1) (0.4) - - (0.5)
(7.8) 13.0 (0.1) (0.1) 5.0
C. Reconciliation of movement in net debt
6 months to 6 months to 12 months to 31
30 June 2002 30 June 2001 December 2001
£m £m £m
Net debt at start of period (7.8) (68.9) (68.9)
(Decrease)/increase in cash (5.5) (8.4) 0.9
Movement in borrowings 18.5 (0.7) 59.0
Amortisation of debt issue costs (0.1) - (0.1)
Exchange movements (0.1) 0.1 1.3
Net cash/(debt) at end of period 5.0 (77.9) (7.8)
Notes to the Interim statement
1. Basis of preparation of accounts
The results for the six months ended 30 June 2002 and 2001 are unaudited. The
figures for the year ended 31 December 2001 are taken from the statutory
accounts of The Future Network plc which have been delivered to the Registrar of
Companies and upon which an unqualified audit report was given. With the
exception of the adoption of FRS 19 'Deferred tax' (see below), the accounting
policies are as stated on pages 36 and 37 of the Annual Report for the year
ended 31 December 2001. This Interim Report does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985.
FRS 19 'Deferred tax' has been adopted in the current year. As a result the
Group's accounting policy is as follows: Deferred tax is provided in full on
all material timing differences. Deferred tax assets are recognised when their
recovery is considered more likely than not. Deferred tax assets and liabilities
have not been discounted.
The effect of the adoption of this policy on the profit and loss accounts and
balance sheets of prior years are not material. As a result the comparatives
have not been restated.
Within the Group profit and loss account the classification of continuing and
discontinued activities differs from that given in the Interim Report for the
six months ended 30 June 2001 due to the inclusion within discontinued
activities of those magazines closed in the second half of 2001.
2. Segmental reporting
The Group is involved in one class of business, the publication of magazines.
The geographical analyses of turnover, turnover by category and profit/(loss)
before tax by origin, and turnover by destination were as follows:
(a) Turnover by category
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
£m £m £m
Circulation 51.5 50.5 105.1
Advertising 20.0 35.9 61.8
Other 2.5 4.0 7.2
Total 74.0 90.4 174.1
(b) Turnover by origin
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
£m £m £m
United Kingdom 44.2 42.8 89.9
United States 16.7 29.1 49.4
Mainland Europe 14.0 19.2 36.6
Turnover between segments (0.9) (0.7) (1.8)
Total 74.0 90.4 174.1
(c) Turnover by destination
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
£m £m £m
United Kingdom 38.7 39.9 81.8
United States 16.7 28.7 39.9
Mainland Europe 15.7 18.7 48.2
Rest of world 3.8 3.8 6.0
Turnover between segments (0.9) (0.7) (1.8)
Total 74.0 90.4 174.1
(d) Profit/(loss) before tax by origin
6 months 6 months 12 months to
to 30 June to 30 June 31 December
2002 2001 2001
£m £m £m
United Kingdom 3.6 (6.1) 1.0
United States (1.1) (70.4) (84.4)
Mainland Europe (0.3) (23.2) (26.7)
Central Costs (1.3) (7.1) (10.9)
Total 0.9 (106.8) (121.0)
3. Group operating profit/(loss)
6 months 6 months 12 months
to 30 to 30 to 31
June June December
2002 2001 2001
Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
£m £m £m £m £m £m £m £m £m
Turnover 74.0 - 74.0 64.8 25.6 90.4 142.9 31.2 174.1
Cost of sales (49.6) - (49.6) (41.8) (33.9) (75.7) (90.3) (38.1) (128.4)
Gross profit 24.4 - 24.4 23.0 (8.3) 14.7 52.6 (6.9) 45.7
Distribution
expenses (4.6) - (4.6) (4.8) (1.9) (6.7) (11.4) (0.5) (11.9)
Administra-tion
expenses (15.1) - (15.1) (16.0) (4.6) (20.6) (31.2) (8.3) (39.5)
Refinancing
costs - - - (2.6) - (2.6) (3.8) - (3.8)
Amortisation and
impairment of
intangible
assets (4.5) - (4.5) (81.2) (1.8) (83.0) (117.3) (3.3) (120.6)
Total
administration
expenses (19.6) - (19.6) (99.8) (6.4) (106.2) (152.3) (11.6) (163.9)
Group operating
profit/(loss) 0.2 - 0.2 (81.6) (16.6) (98.2) (111.1) (19.0) (130.1)
4. Net exceptional (loss)/gain arising on sale or termination of
businesses
6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Profit on disposal of Magazine titles - - 30.2
Losses on sale or termination of businesses - (5.3) (12.3)
Losses on disposal of subsidiaries - - (2.5)
Net exceptional (loss)/gain - (5.3) 15.4
5. Staff costs
6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Wages and salaries 15.3 26.7 47.8
Social security costs 2.3 3.9 5.5
Other pension costs 0.3 0.4 0.6
17.9 31.0 53.9
Redundancy costs included in loss on sale or termination - 3.3 6.3
of businesses 17.9 34.3 60.2
6. Net interest (receivable)/payable and similar items
6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Interest payable on bank loans and overdrafts 0.3 3.7 7.1
Amortisation of issue costs of bank loan 0.1 0.1 0.1
Interest payable on other loans - - 0.4
Amortisation of discount relating to vacant property
provisions 0.1 - 0.2
Amortisation of discount arising on fair valuing of
deferred consideration 0.1 - 0.1
Total interest payable and similar charges 0.6 3.8 7.9
Interest receivable (0.2) (0.2) (0.4)
Exchange gains (0.8) - (1.0)
Total interest receivable and similar items (1.0) (0.2) (1.4)
Net interest (receivable)/payable and similar items (0.4) 3.6 6.5
7. Tax
The tax charge for the six months ended 30 June 2002 is based on the estimated
effective rate of tax for the full year. The effective rate is assessed on a
country by country basis and is applied to the profit before tax and
amortisation.
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 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 earnings/(loss) per share removes the effect of the amortisation of
goodwill and intangible assets from the calculation as follows:
Adjustment to loss on ordinary activities after tax 6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Loss on ordinary activities after tax (0.8) (101.4) (123.3)
Add: Amortisation and impairment of intangible assets 4.5 83.0 120.6
Adjusted profit/(loss) on ordinary activities after tax 3.7 (18.4) (2.7)
Restated
6 months to 6 months to 12 months to
30 June 2002 30 June 2001 31 December 2001
Weighted average number of Ordinary shares outstanding
during the period
- Basic 320,295,573 152,640,555 177,146,898
- Dilutive effect of share options 1,518,892 4,619,421 4,542,560
- Diluted 321,814,465 157,259,976 181,689,458
Basic loss per share (in pence) (0.26) (66.43) (69.56)
Adjusted basic earnings/(loss) per share (in pence) 1.14 (12.06) (1.48)
Diluted loss per share (in pence)* (0.26) (66.43) (69.56)
Adjusted diluted earnings/(loss) per share (in pence)* 1.14 (12.06) (1.48)
The adjustments to profit have the following effects on Restated
eps:
6 months to 6 months to 6 months to
30 June 2002 30 June 2001 31 December 2001
pence pence pence
Basic loss per share (0.26) (66.43) (69.56)
Amortisation and impairment of intangible assets 1.40 54.37 68.08
Adjusted basic earnings/(loss) per share 1.14 (12.06) (1.48)
Diluted loss per share (0.26) (66.43) (69.56)
Amortisation and impairment of intangible assets 1.40 54.37 68.08
Adjusted diluted earnings/(loss) per share 1.14 (12.06) (1.48)
* 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 2002 298.4
Exchange adjustments 1.3
At 30 June 2002 299.7
Amortisation
At 1 January 2002 (180.5)
Exchange differences (0.4)
Charge for the period (4.5)
At 30 June 2002 (185.4)
Net book amount at 31 December 2001 117.9
Net book amount at 30 June 2002 114.3
10. Tangible fixed assets
Equipment,
Land and Plant and fixtures and
buildings machinery fittings Total
Group £m £m £m £m
Cost
At 1 January 2002 2.3 5.0 2.8 10.1
Additions - 0.2 - 0.2
Disposals (0.4) (0.1) - (0.5)
At 30 June 2002 1.9 5.1 2.8 9.8
Depreciation
At 1 January 2002 (0.5) (3.2) (2.0) (5.7)
Charge for the period - (0.6) (0.2) (0.8)
Disposals 0.1 0.1 - 0.2
At 30 June 2002 (0.4) (3.7) (2.2) (6.3)
Net book value at 30 June 2002 1.5 1.4 0.6 3.5
Net book value at 31 December 2001 1.8 1.8 0.8 4.4
11. Stocks
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Raw materials 1.3 2.1 1.3
Work in progress 2.0 1.5 1.9
Finished goods 0.5 0.6 0.3
3.8 4.2 3.5
12. Debtors
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Amounts falling due within one year:
Trade debtors 19.5 27.7 24.4
Corporation tax recoverable 2.3 - 3.5
Other debtors 4.1 8.8 9.0
Prepayments and accrued income 3.8 4.3 4.6
29.7 40.8 41.5
Amounts falling due after one year:
Corporation tax recoverable - 2.0 -
Other debtors 1.0 - 1.2
30.7 42.8 42.7
At 30 June 2002 a deferred tax asset has been recognised within other debtors
falling due after more than one year as follows:
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Other 1.0 - 1.0
At 30 June 2001 a deferred tax asset of £4.7m was recognised within other
debtors falling due within one year and was utilised in the second half of 2001.
13. Creditors: amounts falling due within one year
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Bank and other borrowings 0.5 0.8 0.1
Trade creditors 14.2 17.1 16.6
Corporation tax 2.7 1.0 0.6
Other creditors including taxation and social
security 6.5 6.2 7.6
Accruals and deferred income 23.4 28.0 23.6
Deferred consideration for acquisitions 0.6 0.5 0.6
47.9 53.6 49.1
14. Creditors: amounts falling due after more than one year
30 June 2002 30 June 2001 31 December 2001
£m £m £m
Bank and other borrowings - 77.9 18.8
Shareholder loan 1.8 1.9 1.9
Deferred consideration for acquisitions 0.6 1.1 1.1
2.4 80.9 21.8
15. Provisions for liabilities and charges
Vacant property Restructuring Total
£m £m £m
At 1 January 2002 4.0 0.6 4.6
Charge in the period 0.2 0.7 0.9
Exchange adjustments (0.2) - (0.2)
Utilised in the period (0.7) (0.6) (1.3)
Amortisation of discount 0.1 - 0.1
At 30 June 2002 3.4 0.7 4.1
16. Called up share capital
Authorised share capital (Ordinary shares of 1p each) 2002
£m
At 1 January and 30 June 2002 6.0
2002
Allotted, issued and fully paid (Ordinary shares of 1p each) No. of Shares £m
At 1 January 2002 318,992,442 3.2
Share options exercised 1,650,295 -
At 30 June 2002 320,642,737 3.2
17. Capital and reserves
Called up Share Merger Other Profit & Total
share premium reserve reserves loss £m
capital account £m £m account
£m £m £m
At 1 January 2002 3.2 169.6 109.0 21.8 (197.6) 106.0
Net exchange adjustments offset in reserves - - - - 0.3 0.3
Tax on exchange adjustments offset in - - - - (0.3) (0.3)
reserves
Loss for the financial period - - - - (0.8) (0.8)
At 30 June 2002 3.2 169.6 109.0 21.8 (198.4) 105.2
Independent review report to The Future Network plc
Introduction
We have been instructed by the company to review the financial information which
comprises the consolidated profit and loss account, consolidated balance sheet,
statement of total recognised gains and losses, reconciliation of movements in
shareholders' funds, consolidated cash flow statement, notes to the consolidated
cash flow statement and notes to the interim statement. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
PriceWaterhouseCoopers
Chartered Accountants
Bristol
4 September 2002
Notes:
(a) The maintenance and integrity of The Future Network plc
website is the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have occurred to the
interim report since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
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