Interim Results - Part 2.
Future Network PLC
11 September 2000
Part 2
Consolidated Profit and Loss Account
for the six months ended 30 June 2000
(£'000)
Restated Restated
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 30 Jun 31 Dec 30 Jun 31 Dec
00 99 99 99 99
Note Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
Turnover
including share
of associate 110,954 61,760 173,960 86,195 198,511
Less: share of
associate - - - - -
Group Turnover 2 110,954 61,760 173,960 86,195 198,511
Cost of sales (84,040) (41,899) (114,807) (63,584) (135,331)
---------------------------------------------------------------------------
Gross profit 26,914 19,861 59,153 22,611 63,180
---------------------------------------------------------------------------
Distribution
costs (6,702) (2,243) (8,266) (4,905) (10,926)
Administrative
expenses (31,710) (14,791) (44,522) (25,188) (55,785)
Operating profit
excluding
amortisation of
intangible
assets 1,821 6,730 23,160 4,329 21,283
Amortisation of
Intangible
assets (13,319) (3,903) (16,795) (11,811) (24,814)
Group operating
(loss)/ profit (11,498) 2,827 6,365 (7,482) (3,531)
Share of
operating loss
of associate (267) - - - -
Operating
(loss)/profit
including
associate (11,765) 2,827 6,365 (7,482) (3,531)
Profit on
disposal of
fixed asset
investments - - 1,962 - 10,895
Net interest
payable and
similar charges (1,718) (9,188) (10,812) (1,663) (2,798)
---------------------------------------------------------------------------
(Loss)/profit on
ordinary
activities
before tax 2 (13,483) (6,361) (2,485) (9,145) 4,566
Tax on
(loss)/profit on
ordinary
activities 4 (519) 742 (3,530) (1,815) 6,829)
---------------------------------------------------------------------------
Loss for the
period (14,002) (5,619) (6,015) (10,960) (2,263)
---------------------------------------------------------------------------
ADJUSTMENTS TO RESULTS AFTER TAX
Loss on ordinary
activities after
taxation (14,002) (5,619) (6,015) (10,960) (2,263)
Add:amortisation
of intangible
assets 13,319 3,903 16,795 11,811 24,814
Less: profit on
sale of fixed
asset
investments - - (1,962) - (10,895)
---------------------------------------------------------------------------
Adjusted
(loss)/profit on
ordinary
activities after
tax (683) (1,716) 8,818 851 11,656
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Earnings per 1 Restated Restated
pence ordinary 6 mths 6 mths 12 mths 6 mths 12 mths
share to to to to to
30 Jun 30 Jun 31 Dec 30 Jun 31 Dec
Note 00 99 99 99 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
Basic loss per
ordinary share 3 (9.88) (8.75) (5.90) (8.02) (1.64)
Adjusted basic
(loss)/earnings 3 (0.48) (2.67) 8.65 0.62 8.44
per share
Diluted loss per
ordinary share 3 (9.88) (8.75) (5.90) (8.02) (1.64)
Adjusted diluted
(loss)/earnings
per share 3 (0.48) (2.67) 7.83 0.57 7.71
---------------------------------------------------------------------------
Group Activity Analysis
for the six months ended 30 June 2000
---------------------------------------------------------------------------
(£'000) 6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 30 Jun 31 Dec 30 Jun 31 Dec
00 99 99 99 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
Turnover by business unit
Magazine
United Kingdom 49,390 46,048 99,819 46,048 99,819
France 10,797 10,660 21,979 10,660 21,979
Italy 6,541 3,803 12,465 7,827 16,594
Germany 3,118 - 4,208 - 4,208
United States 38,712 1,119 34,090 21,212 54,189
---------------------------------------------------------------------------
108,558 61,630 172,561 85,747 196,789
Internet 2,396 130 1,399 448 1,722
---------------------------------------------------------------------------
Total 110,954 61,760 173,960 86,195 198,511
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(£'000) Restated Restated
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 30 Jun 31 Dec 30 Jun 31 Dec
00 99 99 99 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
Results by business unit
Magazine
United Kingdom 4,751 7,270 19,441 7,270 19,441
France (113) 359 1,864 359 1,864
Italy 1,180 497 2,667 1,547 3,803
Germany (3,027) (90) (2,123) (90) (2,123)
United States 3,744 181 6,391 (2,908) 3,906
---------------------------------------------------------------------------
6,535 8,217 28,240 6,178 26,891
Internet (3,569) (420) (3,035) (878) (3,563)
Central operating (1,145) (1,067) (2,045) (971) (2,045)
costs
---------------------------------------------------------------------------
Operating profit
excluding
amortisation of
intangible assets 1,821 6,730 23,160 4,329 21,283
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Turnover by category 6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 99 30 Jun 99 31 Dec 99
Actual Actual Actual Pro forma Pro forma
--------------------------------------------------------------------------
Circulation 59,685 43,916 111,039 56,494 123,806
Advertising 45,248 14,898 54,987 25,974 66,032
Internet 2,396 130 1,399 448 1,722
Other 3,625 2,816 6,535 3,279 6,951
--------------------------------------------------------------------------
Total 110,954 61,760 73,960 86,195 198,511
--------------------------------------------------------------------------
Other turnover arises primarily from licensing of the Group's titles and
income from exhibitions.
Consolidated Balance Sheet
at 30 June 2000
(£'000) Restated Restated
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Fixed assets
Intangible assets 284,482 294,860 292,563
Tangible assets 8,341 5,643 6,075
Investments:
Investments in associates 295 - -
Other investments 3,836 11,480 2,445
-------------------------------------------------------------------------
4,131 11,480 2,445
-------------------------------------------------------------------------
296,954 311,983 301,083
Current Assets
Stocks 9,063 5,258 5,872
Debtors 51,389 36,633 48,722
Investments 1,107 - 1,040
Cash 8,141 16,121 18,940
-------------------------------------------------------------------------
69,700 58,012 74,574
Creditors - Amounts
falling due within one
year (67,998) (41,343) (60,420)
Net current assets 1,702 16,669 14,154
-------------------------------------------------------------------------
Total assets less current
liabilities 298,656 328,652 315,237
-------------------------------------------------------------------------
Creditors - Amounts
falling due after more
than one year (36,220) (54,902) (39,910)
Provisions for liabilities
and charges (1,810) (1,088) (1,554)
-------------------------------------------------------------------------
Net assets 260,626 272,662 273,773
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital and Reserves
-------------------------------------------------------------------------
Called up share capital 1,422 1,367 1,413
Share premium account 135,922 134,766 135,582
Merger reserve 109,015 109,015 109,015
Other reserves 40,297 38,959 40,186
Profit and loss account (26,030) (11,445) (12,423)
-------------------------------------------------------------------------
Total equity shareholders'
Funds 260,626 272,662 273,773
-------------------------------------------------------------------------
Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2000
Restated
(£'000) 6 months to 6 months to 12 months to
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Loss on ordinary activities
after taxation (as
previously reported) (14,002) (5,619) (6,665)
Prior period adjustment (as
explained in note 1) - - 650
-------------------------------------------------------------------------
Loss on ordinary activities
after taxation as restated (14,002) (5,619) (6,015)
Translation differences on
foreign currency investments 479 (1,429) (2,011)
Reversion of rights
pertaining to investments
from departing employees 110 - 376
-------------------------------------------------------------------------
Total recognised losses in
the period (13,413) (7,048) (7,650)
Total gains and losses
recognised since last annual
report (13,413) (7,048) (7,650)
Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 June 2000
Restated
(£'000) 6 months to 6 months to 12 months to
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Loss attributable to
shareholders (as previously
stated) (14,002) (5,619) (6,665)
Prior period adjustment
(note 1 ) - 650
-------------------------------------------------------------------------
Loss attributable to
shareholders as restated (14,002) (5,619) (6,015)
Proceeds from issue of
ordinary shares 9 689 735
Premium on issue of ordinary
shares (net of expenses) 340 134,766 135,582
Adjustment to other reserves
to reflect the market price
of options issued in period (83) - -
Merger reserve arising in
the period - 108,211 108,211
Exchange adjustments offset
in reserves 479 (1,429) (2,011)
Other reserve movements
arising from the acquisition
of Imagine - 38,959 39,810
Reversion of rights
pertaining to investments
from departing employees 110 - 376
-------------------------------------------------------------------------
Net change in shareholders'
funds/(deficit) (13,147) 275,577 276,688
-------------------------------------------------------------------------
Opening shareholders'
funds/(deficit) as restated 273,773 (2,915) (2,915)
-------------------------------------------------------------------------
Shareholders' funds at end 260,626 272,662 273,773
of period
-------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the six months ended 30 June 2000
(£'000) Restated
6 months to 6 months to 12 months to
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Net cash inflow from 3,627 10,362 16,428
operating activities
-------------------------------------------------------------------------
Returns on investment and
servicing of finance
Interest received 328 - 516
Interest paid (1,791) (6,791) (9,720)
Issue costs of new bank loan - (1,575) (1,602)
-------------------------------------------------------------------------
Net cash outflow from
returns on investment and
servicing of finance (1,463) (8,366) (10,806)
-------------------------------------------------------------------------
Taxation paid (1,003) (1,326) (3,040)
-------------------------------------------------------------------------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (3,227) (924) (2,682)
Purchase of fixed asset
investments (963) - (1,185)
Sale of tangible fixed
assets 12 8 62
Sale of fixed asset
investments - - 11,328
-------------------------------------------------------------------------
Net cash (outflow)/inflow
for capital expenditure and
financial investment (4,178) (916) 7,523
-------------------------------------------------------------------------
Acquisitions
Purchase of subsidiary
undertakings (211) (1,695) (1,691)
Net cash acquired with
subsidiary undertakings - 305 319
Payment to acquire
investment in associate (547) - -
Payment of deferred
consideration - (14,735) (15,388)
Purchase of business (4,756) (16,457) (29,210)
-------------------------------------------------------------------------
Net cash outflow for
acquisitions (5,514) (32,582) (45,970)
-------------------------------------------------------------------------
Net cash outflow before use
of liquid resources and
financing (8,531) (32,828) (35,865)
-------------------------------------------------------------------------
Management of liquid
resources
Decrease in short-term
deposits - 1,000 1,000
-------------------------------------------------------------------------
Financing
Proceeds from issue of
ordinary share capital 267 149,091 150,131
Expenses of share issue - (11,313) (11,492)
Proceeds from issue of loan
notes - 9,716 9,716
Repayment of loan notes - (68,411) (68,411)
Drawdown of bank loans - 61,334 65,611
Repayment of loans (2,863) (96,736) (98,736)
-------------------------------------------------------------------------
Net cash (outflow)/ inflow (2,596) 43,681 46,819
from financing
-------------------------------------------------------------------------
(Decrease)/increase in cash
in the period (11,127) 11,853 11,954
-------------------------------------------------------------------------
Notes to the Consolidated Cash Flow Statement
For the six months ended 30 June 2000
A. Reconciliation of Movement in Net Debt
(£'000) Restated Restated
6 months to 6 months to 12 months to
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Net debt at start of period (25,637) (125,175) (125,175)
(Decrease)/increase in cash (11,127) 11,853 11,954
Borrowings net of short term
deposits acquired with
subsidiaries - (6,256) (6,256)
Movement in borrowings 2,863 90,370 91,932
Movement in liquid resources - (1,000) (1,000)
Interest accrued in 1998 and
subsequently waived during
the year - 690 690
Unamortised debt issue costs - (1,017) (1,094)
Exchange movements 81 4,631 3,312
-------------------------------------------------------------------------
Net debt at end of period (33,820) (25,904) (25,637)
-------------------------------------------------------------------------
B. Reconciliation of Operating Profit to Net Cash Flow from Operating
Activities
(£'000) Restated Restated
6 months to 6 months to 12 months to
30 June 2000 30 June 1999 31 Dec 1999
-------------------------------------------------------------------------
Operating (loss)/profit (11,765) 2,827 6,365
Depreciation charge 1,204 751 1,777
Goodwill amortisation 13,319 3,903 16,795
(Increase)/decrease in (2,959) (83) 343
stocks
(Increase)/decrease in (1,288) 2,737 (11,573)
debtors
Increase in creditors 5,116 227 2,721
-------------------------------------------------------------------------
Net cash inflow from 3,627 10,362 16,428
operating activities
-------------------------------------------------------------------------
Notes to the Interim Statement
1. Basis of the preparation of accounts
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 1999 statutory accounts except
for a change in accounting policy arising from the adoption of UITF 25
'National Insurance contributions on share option gains'. UITF 25 has
been adopted with effect from 1 January 2000, and requires that the
provision for National Insurance on share options should be spread over
the performance period of the options. Prior to 1 January 2000 the
group's accounting policy was to provide for the NI on share options in
full. The effect in the 6 months to 30 June 2000 was to increase the loss
before tax by £347,000 from £13,136,000 to £13,483,000.
The comparative information on an actual and pro forma basis is based on
the statutory accounts for the financial year ended 31 December 1999 as
restated for the adoption of UITF 25. These accounts, upon which the
auditors have issued an unqualified opinion, have been delivered to the
Registrar of Companies.
The pro forma comparative information for the six months to 30 June 1999
and twelve months 31 December 1999 is based on full six and twelve months
trading respectively for all companies which became part of the Group
before and at flotation, and assume that the capital and financing
structure of the Group at flotation applied throughout the respective
periods.
The comparative information for 30 June 1999 has been restated for the
reclassification of: deferred consideration from creditors due in less
than one year to other reserves since the consideration could have been
settled in either cash or shares at the Group's option; and, cash flow
movements relating to the bank and other loan financing that existed prior
to the flotation of the company.
The figures for the 6 months 30 June 1999 and 2000 are unaudited. The
preceding financial information does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985.
All the turnover and operating profits are generated from continuing
operations.
2. Segmental Reporting
The group is involved in one class of business, the publication of
magazines and internet websites.
The geographical analyses of turnover, profit/(loss) before tax and net
assets by origin, and turnover by destination were as follows:
(a) Turnover by origin
---------------------------------------------------------------------------
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 00 30 Jun 99 31 Dec 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
United Kingdom 50,302 46,423 100,822 46,423 100,944
France 10,797 10,660 21,979 10,660 21,979
Italy 6,541 3,803 12,465 7,827 16,594
Germany 3,121 - 4,226 - 4,226
United States* 40,595 1,119 35,076 21,530 55,498
Turnover between (402) (245) (608) (245) (730)
segments
---------------------------------------------------------------------------
Total 110,954 61,760 173,960 86,195 198,511
---------------------------------------------------------------------------
* The share options have a dilutive effect where earnings are positive.
(b) Profit/(loss) before tax by origin
---------------------------------------------------------------------------
(£'000) Restated Restated
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 00 30 Jun 99 31 Dec 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
United Kingdom 519 4,740 13,625 4,740 13,625
France (936) (465) 183 (465) 183
Italy 437 (367) 1,071 688 1,895
Germany (3,831) (90) (2,704) (90) (2,704)
United States (7,590) (125) (2,640) (11,777) (4,738)
Central Costs (2,082) (10,054) (12,020) (2,241) (3,695)
---------------------------------------------------------------------------
Total (13,483) (6,361) (2,485) (9,145) 4,566
---------------------------------------------------------------------------
(c) Net assets by origin
---------------------------------------------------------------------------
(£'000) Restated
6 mths to 6 mths to 12 mths to
30 Jun 00 30 June 1999 31 Dec 00
Actual Actual Pro forma
---------------------------------------------------------------------------
United Kingdom 105,871 134,770 116,839
France 32,061 35,966 31,928
Italy 19,336 805 18,783
Germany 7,378 (302) 7,185
United States 137,941 143,447 143,616
Interest bearing (41,961) (42,024) (44,578)
liabilities
---------------------------------------------------------------------------
Total 260,626 272,662 273,773
---------------------------------------------------------------------------
(d) Turnover by destination
---------------------------------------------------------------------------
(£'000) 6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 00 30 Jun 99 31 Dec 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
United Kingdom 46,512 41,466 90,114 41,466 90,236
France 9,843 9,855 20,329 9,855 20,329
Italy 6,617 4,133 13,177 8,263 17,306
Germany 3,179 104 4,381 104 4,381
United States 39,069 1,890 34,564 20,326 53,001
Rest of the world 5,956 4,557 12,003 6,426 13,988
Turnover between (222) (245) (608) (245) (730)
segments
---------------------------------------------------------------------------
Total 110,954 61,760 173,960 86,195 198,511
---------------------------------------------------------------------------
The results of the United States for the 6 months to 30 June 2000 include
losses of £271,000 and net assets of £261,000 related to an associate.
3. Earnings per ordinary share
Basic earnings per ordinary share are calculated using the weighted
average number of ordinary shares outstanding during the period. Diluted
earnings per ordinary share have been calculated by taking into account
the dilutive effect of shares that would be issued on conversion into
ordinary shares of warrants and options held under employee share schemes
and in respect of the deferred consideration arising on the Imagine
acquisition. The calculations are in accordance with Financial Reporting
Standard No. 14 'Earnings per Share'.
Earnings per ordinary share
---------------------------------------------------------------------------
Restated Restated
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 00 30 Jun 99 31 Dec 99
Actual Actual Actual Pro forma Pro forma
---------------------------------------------------------------------------
Earnings
(£'000) (14,002) (5,619) (6,015) (10,960) (2,263)
---------------------------------------------------------------------------
Adjusted
earnings
(£'000) (683) (1,716) 8,818 851 11,656
---------------------------------------------------------------------------
Weighted
average
number of
ordinary
Shares
outstanding
during the
period
- Basic 141,769,535 64,230,265 101,965,968 136,663,881 138,105,284
- Dilutive
effect of
share
options* 9,179,700 9,184,823 10,514,893 11,986,741 12,972,364
- Diluted 141,769,535 64,230,265 112,480,861 148,650,622 151,077,648
Basic loss
Per
ordinary
share
(pence) (9.88) (8.75) (5.90) (8.02) (1.64)
Adjusted
Basic
(loss)/earn
ings per
ordinary
share
(pence) (0.48) (2.67) 8.65 0.62 8.44
Diluted
loss per
ordinary
share*
(pence) (9.88) (8.75) (5.90) (8.02) (1.64)
Adjusted
Diluted
(loss)/earn
ings per
ordinary
share
(pence) (0.48) (2.67) 7.83 0.57 7.71
---------------------------------------------------------------------------
* The share options have a dilutive effect where earnings are positive.
The adjustments to profit on page 8 have the following effects on earnings
per ordinary share:
---------------------------------------------------------------------------
Restated Restated
6 mths 6 mths 12 mths 6 mths 12 mths
to to to to to
30 Jun 00 30 Jun 99 31 Dec 99 30 Jun 99 31 Dec 99
Actual Actual Actual Pro Pro
forma forma
---------------------------------------------------------------------------
Basic loss per
ordinary share
(pence) (9.88) (8.75) (5.90) (8.02) (1.64)
Amortisation of
intangible assets 9.40 6.08 16.47 8.64 17.97
Profit on sale of
fixed asset
investments - - (1.92) - (7.89)
---------------------------------------------------------------------------
Adjusted basic loss
per ordinary share
(pence) (0.48) (2.67) 8.65 0.62 8.44
---------------------------------------------------------------------------
Diluted loss per
ordinary share
(pence) (9.88) (8.75) (5.90) (8.02) (1.64)
Adjustment for
dilutive effect of
share options
(see* above) - - 0.54 0.73 0.14
Amortisation of
intangible assets 9.40 6.08 14.93 7.86 16.42
Profit on sale of
fixed asset
investments - - (1.74) - (7.21)
---------------------------------------------------------------------------
Adjusted diluted
(loss)/earnings per
ordinary share
(pence) (0.48) (2.67) 7.83 0.57 7.71
4. Tax
The tax charge for the six months ended 30 June 2000 is based on the
estimated effective rate of tax for the full year assessed on a country by
country basis.
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