RNS Number : 8485R
Future PLC
23 November 2012
 



23rd November 2012

FUTURE PLC

Preliminary results for the year ended 30 September 2012

Future plc (LSE: FUTR), the international media group and leading digital publisher, today announces its preliminary results for the year ended 30 September 2012. 

Financial Highlights


Statutory

Normalised*


2012

2011

Change

2012

2011

Change


£m

£m

%

£m

£m

%

Revenue

123.5

141.7

-13%

117.7

121.9

-3%

EBITDAE**

9.4

7.8

+21%

9.4

6.2

+52%

Operating profit pre exceptional items (EBITE)***

 

6.8

 

5.4

 

+26%

 

6.9

 

4.1

 

+68%

Exceptional items****

(3.6)

(21.9)


(4.7)

(18.3)


Adjusted earnings per share

(pence) *****

 

1.1

 

0.4

 

+175%

 

1.1

 

0.1

 

 

Net debt

14.1

11.8


N/A

N/A


Financial Highlights

·          Normalised operating profit (EBITE) up 68% at £6.9m

·          Group digital revenues up 30% to £20.6m, with digital advertising now 44% of total advertising

·          Normalised Group revenues down 3%, reflecting the restructure of the US business

·          Adjusted earnings per share at 1.1p

·          Net debt lower than expectation at £14.1m through tight capital management

Strategic Highlights

·          US on track to return to EBITDAE profitability in FY13

·          Gross revenues from digital edition sales now running at $1m per month

·          Visits to Future websites up 70%, to more than 50m global unique users per month

·          Resumption of dividend payments to be reviewed in 2013

 

Peter Allen, Future's Chairman, said: "The new senior executive management has succeeded in refashioning the business and demonstrated that it has the strategic and execution skills to achieve further progress in the year ahead."

 

Mark Wood, Future's Chief Executive, said: "This has been a year of substantial progress for Future and the Group is now well positioned to grow and diversify revenues as a global digital business. Our US operations have been restructured and are heading for profit in 2013. We are a leading publisher in tablet markets and our online audience has grown by 70% to more than 50 million unique users a month. These advances are opening new opportunities and we will accelerate Future's digital transformation in the year ahead."

 

 

 

 

 

 

 

 

Notes
* Normalised results are presented to better reflect the current size and structure of the business and give a better indication of the performance of the ongoing business. The normalised results exclude revenues and costs relating to activities closed or divested between 1 October 2010 and 30 September 2012, but include any new activities launched in that period. Closed or divested activities are not such that they fell to be classified as discontinued under IFRS. The analysis in this announcement is, except where it refers to statutory results, based on normalised results.

** EBITDAE represents earnings before interest, tax, depreciation, amortisation and impairment of intangible assets and exceptional items.

*** EBITE represents earnings before interest, tax, exceptional items and impairment of intangible assets.

**** Exceptional items for 2011 includes impairment of intangible assets

***** Adjusted earnings per share exclude exceptional items, impairment of intangible assets and related tax effects.

 

The most significant foreign currency affecting the Group is the US Dollar. The average exchange rate for the period was $1.5768=£1 (2011: $1.6066=£1), representing a 2% strengthening of the US Dollar against Sterling.

 

An analyst and investor presentation will be held today at 9am at the offices of Numis, 10 Paternoster Square, London EC4M 7LT.

 

Enquiries

Future plc
Mark Wood, Chief Executive                                                       Tel: 020 7042 4007
Graham Harding, Chief Financial Officer                                       Tel: 020 7042 4031/
01225 788101
Chris Taylor, Director of Communications                                     Tel: 020 7042 4033/07980 221942

Brunswick Group
Jon Coles / Andy Rivett-Carnac                                                   Tel: 020 7404 5959

 

 

About Future:

·      Future plc is an international media group and leading digital publisher, listed on the London Stock Exchange (symbol: FUTR). 

·      We have operations in the UK, US and Australia creating 200 publications, apps, websites and events. 

·      We hold market-leading positions in Technology, Entertainment, Music, Creative and Sport & Auto sectors. 

·      Future sells more than 24 million magazines every year, that's 45 magazines sold every minute. Our most well-known brands include T3, Total Film, Classic Rock and Official Xbox Magazine

·      We attract more than 50 million monthly global unique users to our websites, which include techradar.com, gamesradar.com, bikeradar.com and musicradar.com.

·      We deliver over 100 digital editions, selling over two million products in the last 12 months through Apple's Newsstand for iPad.

·      Future exports or syndicates over 200 publications to over 90 countries, making us the UK's number one exporter and licensor of magazine content.

·      Future is currently Consumer Digital Publisher of the Year for both the Association of Online Publishers and the Professional Publishers Association.

***



Chairman's Statement

The Board is pleased to report a successful year in which Future has delivered good results and made impressive progress in refocusing the business.

 

At the end of 2011 the Board took far-reaching decisions to reorganise the Group. We defined a clear set of objectives, including a recovery of the US operations and the implementation of a defined strategy for global growth as a digital business. These objectives have been met, despite difficult trading conditions in media and consumer markets.

 

We feel we now have a business structure which is fit for purpose. The new senior executive management has succeeded in refashioning the business and demonstrated that they have the strategic and execution skills to achieve further progress in the year ahead.

 

We are particularly pleased that the Group has established a powerful position at the centre of the tablet revolution. As technology giants such as Apple, Microsoft, Google and Amazon contend for market leadership, they will undoubtedly fuel demand for the tablet-friendly content in which Future excels. We also see further opportunity in the way Future has applied its unique tablet software skills to partner with other major content owners. This has great potential.

 

Future has demonstrated an ability to thrive in the global digital media market. It has achieved significant growth in its online traffic, not just in Technology, Games and Cycling, areas where it has leadership positions, but in markets such as Photography, Music, Film and Crafts.  Importantly, the Group has introduced efficient ways to localise its key digital properties in order to generate increased advertising revenues. This model has been a particular success in the US market.

 

The improvement in the Group's performance has created greater financial stability. Renewal of dividend payments will be reviewed in 2013, depending on trading conditions.

 

The Board is confident the Group is on track to sustain its digital growth in the period ahead. Future is fast becoming a new kind of business and in the past year has created a solid platform for growth in 2013 and beyond.

 

 

 

Peter Allen

Chairman

23 November 2012

 

 

 



Chief Executive's Statement (Extract from Annual Report)

Overview

 

This has been a year of substantial progress and Future is now well positioned to grow and diversify revenues as a global digital business. We are a leading force in the new tablet markets and our online audience has grown by 70% to more than 50 million unique users. These advances are opening new opportunities and we will accelerate Future's digital transformation in the year ahead.

 

Overall, we achieved a substantial improvement in the Group's financial performance in 2012 despite an unfavourable economic climate in many of our core markets. Normalised operating profit grew by 68% year-on-year and digital revenues have increased by 30% to £20.6m. The restructuring actions taken over the last 18 months have crystallised the £4.5m in annualised savings that we highlighted a year ago.

 

A key focus in 2012 was on turning round our US operations. We reduced losses, de-risked the print business and put the US on track to return to profitability in 2013. The UK business again showed resilience despite a challenging trading environment, producing a 13% operating profit improvement to £9.3m.

 

The main achievement was to advance our new business models which steadily reduce reliance on print markets and have opened new avenues for global expansion. We are aiming to generate more than half our revenues from digital markets within three to four years.

 

Framework for Growth 

 

Future has established a formidable position as a global leader in the fast-expanding tablet markets which were ushered in by Apple's iPad. The Group is among global leaders in digital content sales, with over 100 digital titles and gross revenues running at $1m a month. But the development of our unique tablet software − FutureFolio − offers further opportunities, enabling Future to partner with other content owners to broaden our suite of digital products. Our partnerships with the Jamie Oliver Magazine and Auto Trader pave the way.

 

In online markets we will continue to build on our fast expansion in audiences over the past year. Our primary focus is on growth markets where we are well positioned. These include our digital businesses in Technology, Cycling and Video Games - three verticals where Future is now a global leader.  But we are also developing our other verticals, including Music, Film, Photography, Crafts and Digital Design. We have a scalable model for international expansion following successful localisation of key online properties for the US market.

 

Future is diversifying the business in promising ways. In the US we have developed a Creative Solutions digital agency managing large-scale advertising campaigns for big brands. In the UK we are scaling up our events business to become a more significant revenue stream.

 

Future has a strong management team, dynamism, a track record of innovation and a hunger for success. Focusing that energy on commercial opportunities is enabling us to open new routes to growth at speed. Two of them are tablets and online.

 

·      Accelerating the Tablet Opportunity

 

Tablets − such as Apple's iPad − are creating a new global market in which consumers pay for content.  With the number of tablets in circulation estimated to be more than one billion by 2016, the opportunities for digital content sales continue to expand. There is also ample evidence that tablets are heavily used for leisure-time activities at home - which favours Future's own leisure products.

 

Future has close working relationships with Apple, Google, Amazon and Microsoft and is seen by these partners as a leader in digital innovation. We have generated gross sales of over £6m on Apple's Newsstand since its launch in October 2011. Our current global sales on all tablet devices are running at $1m (gross) a month. 

 

We have over 100 paid-for digital products on tablets and are launching new formats such as weekly digital magazines. Future's T3 is the top-selling tablet title in the UK, selling around 30,000 copies a month, while MacLife is the top technology title in the US with sales of around 65,000 a month. Around 90% of our digital edition sales are to new customers and 40% are outside our core UK and US markets, pointing to further global opportunities. More than 60% of new customers sign up for subscriptions and the renewal rate is running at over 60%, creating a high-quality long-term revenue stream.

 

Future has developed its own tablet software - FutureFolio - which enables us to produce highly interactive and video-rich tablet products.

 

This technology is opening new markets for Future. We are licensing FutureFolio to publishers in the UK, US, Germany, Spain, Portugal, Brazil and Taiwan. We are already signed up to produce 60 digital titles powered by FutureFolio software.

 

We also see substantial potential in combining Future's tablet software and production skills with other people's content. The launch of the highly interactive Jamie Oliver Magazine and Auto Trader's ignition magazine - both on iPad - are early examples. We have other partnerships in place and further launches are scheduled.

 

·      The Power of Online

 

We see similar potential for new revenue growth in online markets, where we have achieved significant traffic growth over the past year. 50 million unique users a month is a large global audience by any standard. We are finding new ways to engage and serve these valuable communities and diversify our revenues.

 

Future now draws over 25 million unique users a month to its Technology websites, putting it among global leaders in this dynamic market. We also have leading positions in Games (12m) and Cycling (5m). 

 

In 2012, we evolved a successful template for low-cost localisation of our key online properties so that we can grow and monetise them more efficiently in target markets. In April, we launched a US version of TechRadar, the news and reviews website which is our leading online business. TechRadar US more than doubled its traffic from 2.5m to 6m unique users in six months, becoming the fastest-growing US technology website. We are now able to sell US advertising around the content.

 

We followed with US versions of our BikeRadar and MusicRadar websites and Australian versions of TechRadar and BikeRadar. Our focus in 2013 will be on exploring opportunities outside English-language markets. We already have a low-cost and low risk translation model in place producing content for the German market.

 

All Future's websites are smartphone-optimised and we expect advertising revenues from mobile to expand steadily in 2013.

 

Future has digital know-how in its DNA. We build traffic using social media, advanced search engine management skills and the use of data analytics to allow modification of content in real time.

 

·      Diversifying Our Business

 

In 2012 Future has made progress in establishing global account management for major advertisers, building on the appeal of the whole Future digital audience. In the US we have developed a new business managing large-scale experiential marketing campaigns for retailers which have included auto maker Hyundai and games publishers Ubisoft and Square Enix. We have already secured significant new business in this area for 2013 and see substantial further potential.

 

We are expanding and developing our UK events-based business in the year ahead.  Planning is underway for business conferences and consumer shows related to our areas of expertise.

 

A major focus in 2013 will be on deepening relationships with e-commerce retailers and participating more effectively in online commerce beyond our current limited transaction share models.

 

·      Seeking New Opportunities in Print

 

Future sees high-quality, premium magazines having a long-term future as part of our product mix. Two new magazines launched in 2011 - Mollie Makes and N-Photo - were among our most successful and profitable magazines in 2012. We followed Mollie Makes with the launch of The Simple Things, a women's lifestyle magazine, in September. Mollie Makes has demonstrated Future's skills in developing new female-focused content and provides us with an opportunity to extend the range of products for this market in the year ahead.

 

We generated record UK export revenues for printed magazines in 2012, thanks in part to the production of high-value and timeless collectibles or 'bookazine' products. We will step up exports in 2013 as we pursue new market opportunities in the US and in Asia.

 

Against this backdrop our strategy of active portfolio management has seen Future close brands where audiences are in structural decline (PC Plus, What Laptop), and sell non-core brands (US music titles, Trucking and Truckstop News) as well as launching new titles. Where further opportunities emerge we will aim to crystallise them quickly.

 

Current Trading Outlook

 

Current trading is in line with the Board's expectations. Although economic conditions remain challenging, we believe that the Group is well positioned to build on the successes of the past year as digital device sales grow and online audiences continue to expand.

 

Mark Wood

Chief Executive

23 November 2012

 

 



Financial Review

Statutory results for the year ended 30 September 2012

 

 

Statutory results for the year

2012

£m

2011

£m

Revenue

123.5

141.7

EBITDAE

9.4

7.8

Depreciation charge

(1.1)

(1.2)

Amortisation of intangible assets

(1.5)

(1.2)

EBITE (Operating profit pre exceptional items)

6.8

5.4

Exceptional items and impairment of intangible assets

(3.6)

(21.9)

EBIT (Operating profit/(loss))

3.2

(16.5)

Net finance costs

(2.1)

(1.5)

Pre-tax profit/(loss)

1.1

(18.0)




Earnings per share (pence)

0.1

(5.9)

Adjusted earnings per share (pence)

1.1

0.4

Dividends relating to the year (pence per share)

-

0.5

 

As noted in the Interim Statement published in May and in the Basis of Preparation on page 18, the following changes have been made in the reporting period as follows:

 

·      We are focusing on EBITDAE and EBITE (as defined previously) rather than EBITAE from a profit perspective in recognition of the nature of depreciation and amortisation under IFRS being almost synonymous and treated together rather than separately.

·      The estimated useful life of web development expenditure has been increased to two years rather than one year, which has been used in prior years. This change reflects a more realistic period over which benefits are expected to accrue and is more consistent with market practice. The impact of the change in the current year is a reduction in the charge of £0.8m.

 

 

Normalised results for the year ended 30 September 2012

 

The normalised results for the Group, and a reconciliation to the statutory results above, are set out on pages 25 to 27.

 

Normalised results are presented to reflect better the current size and structure of the business and to give a better indication of the performance of the ongoing business. The normalised results exclude revenues and costs relating to activities closed or divested between 1 October 2010 and 30 September 2012, but include any new activities launched in that period.

 

 

Normalised results for the year

2012

£m

2011

£m

Revenue

117.7

121.9

EBITDAE

9.4

6.2

Depreciation charge

(1.1)

(1.1)

Amortisation of intangible assets

(1.4)

(1.0)

EBITE (Operating profit pre exceptional items)

6.9

4.1

Exceptional items and impairment of intangible assets

(4.7)

(18.3)

EBIT (Operating profit/(loss))

2.2

(14.2)

Net finance costs

(2.1)

(1.5)

Pre-tax profit/(loss)

0.1

(15.7)




Earnings per share (pence)

(0.2)

(5.1)

Adjusted earnings per share (pence)

1.1

0.1

 

 

Review of operations

 

The review of operations is based primarily on a comparison of normalised results for the year ended 30 September 2012 with those for the year ended 30 September 2011. Unless otherwise stated, change percentages relate to a comparison of these two periods. 

 

Key performance indicators

 

An update on the key performance indicators is given below:

 


2012

2011

Corporate KPIs



EBITDAE:

£9.4m

£6.2m

Year-on-year movement in EBITDAE

+52%

-21%

EBITE:

£6.9m

£4.1m

Year-on-year movement in EBITE

+68%

+8%

Digital KPIs



Year-on-year movement in digital revenues

+30%

+28%

Number of unique users logging onto our websites

51m

30m

Number of digital magazines sold per month (thousands)

239

33

Digital subscriber base (thousands)

235

44

Print KPIs



Number of magazines sold per month

2.1m

2.4m

Print subscriber base (thousands)

818

975

Copies sold as a percentage of copies printed (including subscriptions)

56%

57%

Year-on-year movement in print advertising revenues

-13%

-11%

 

The KPI trends noted above demonstrate the progress made in the year in digital and in the management of the overall profitability of the Group.

 

Analysis of revenue

 


2012

£m

2011

£m

Change

%

UK

96.4

96.0

-

US

22.0

26.4

-17%

Intra-group

(0.7)

(0.5)


Total revenue

117.7

121.9

-3%

 

The reportable segments for the Group are the UK-based business (which includes results for our Australian activities) and the US-based business, as set out in the table above. The revenues arising from the UK-based business, which now represents 81% of the Group in revenue terms, continued to be resilient in tough market conditions with increases in digital revenues offsetting the declines in print.

 

Revenue from the US-based business fell by 17% impacted significantly by the continuing decline in print related revenues arising from circulation and advertising. This decline has been managed effectively and efficiently in the context of the restructuring actions taken during the year and has been largely offset by corresponding reductions in the direct cost base and overheads.

 

In terms of digital and print, the table below sets out the year-on-year movements.

 


2012

£m

2011

£m

Change

%

Digital

20.6

15.8

+30%

Print

97.1

106.1

-8%

Total revenue

117.7

121.9

-3%

 

Whilst Group revenue overall fell by 3% (4% in constant currencies) to £117.7m, digital revenues generated from our UK and US based businesses continued to show strong growth and were up 30%, helped from a circulation perspective by the launch of Apple's Newsstand and from an advertising perspective from the continuing growth in our audience. Digital revenues of £20.6m represented 18% of the Group revenues with digital advertising now representing 44% of our total advertising revenues (up from 38% last year). In contrast, print based revenues continued to decline in the UK and the US.

 

 

Analysis of operating profit pre exceptional items (EBITE)

 


2012

£m

2011

£m

Change

%

UK

9.3

8.2

+13%

US

(2.4)

(4.1)

+41%

Total EBITE

6.9

4.1

+68%

 

Group operating profit increased by 68% with the most significant year-on-year improvement coming from the US based business. The UK based business also saw a smaller increase of £1.1m as it continued to demonstrate its resilience in what continues to be a challenging trading environment.

 

Further analysis of the key drivers of the increase in operating profit is provided in the table below which analyses the year-on-year variances across digital activities, print activities, overheads and depreciation and amortisation.

 


UK

£m

US

£m

Group

£m

Digital

+1.3

-

+1.3

Print

-1.2

+0.6

-0.6

Overheads

+1.3

+1.2

+2.5

Depreciation and Amortisation

-0.3

-0.1

-0.4

Change in EBITE

+1.1

+1.7

+2.8

 

The table above clearly illustrates the following:

 

·      The progress made in digital activities which is more than offsetting the overall declines in print.

·      The impact of the restructuring activities undertaken over the past 18 months across the UK and the US on the overhead base.

 

Further commentary on those movements is provided in the following sections.

 

 

UK based performance

 


2012

£m

2011

£m

Change

%

Circulation revenue

60.9

60.6

-

Advertising revenue

25.6

26.0

-2%

Customer publishing

4.9

4.7

+4%

Licensing, events and other

5.0

4.7

+6%

Total revenue

96.4

96.0

-

EBITDAE

10.8

9.4

+15%

EBITDAE margin

11%

10%


Depreciation

(0.8)

(0.8)

-

Amortisation

(0.7)

(0.4)

+75%

EBITE

9.3

8.2

+13%

EBITE margin

10%

9%


 

As noted above UK based activities continued to be resilient with revenue slightly up at £96.4m. Within this we saw digital revenues increase by 38% to £14.9m, offsetting the declines in print related revenues.

 

Circulation revenue was flat overall, with the largest negative impact arising from print newstrade which was down 7%. This decline was offset by increases in print subscriptions of 4%, and digital copy sales - which have increased from 1% of total circulation revenue to 5% of total circulation revenue in the year.

 

Advertising revenues overall were down 2%, with digital advertising revenues increasing by 11%, and print advertising revenues declining by 8%.

 

 

 

The increase of £1.4m in EBITDAE is driven by digital growth and net cost savings across the UK-based business, including the impact of the restructuring that commenced in the summer of 2011 and the senior management changes made in October 2011. Headcount in the UK at the end of September 2012 was 869, a reduction of 81 in actual terms from the end of September 2011.

 

UK performance by sector is set out in the table below:

 


2012

2012

2012

2012

2011

2011

2011


Revenue

Contrib'n

Margin

% of

Revenue

Contrib'n

Margin


£m

£m

%

Revenue

£m

£m

%

Entertainment

21.5

5.8

27%

22%

23.8

6.5

27%

Technology

18.9

5.5

29%

20%

20.2

6.6

33%

Music

18.3

4.4

24%

19%

17.5

4.1

23%

Creative

19.6

5.9

30%

20%

16.8

4.8

29%

Sport & Auto

18.1

5.0

28%

19%

17.7

4.5

25%


96.4

26.6

28%

100%

96.0

26.5

28%

Overheads


(15.8)




(17.1)


EBITDAE


10.8

11%



9.4

10%

 

We have five similar-sized segments in the UK business. Entertainment and Technology are down year-on-year, impacted by games market cyclicality and investment in digital. By contrast, Music, Creative and Sport & Auto have all shown both revenue and contribution growth as a result of launching new brands and growing existing digital products. The table above also highlights the significant reduction in overheads achieved as a result of headcount and property rationalisation.

 

 

US based performance

 


2012

$m

2011

$m

Change

%

Circulation revenue

14.3

19.0

-25%

Advertising revenue

14.3

15.7

-9%

Customer publishing

5.1

6.5

-22%

Licensing, events and other

0.9

1.2

-25%

Total revenue

34.6

42.4

-18%

EBITDAE

(2.2)

(5.1)

+57%

EBITDAE margin

(6%)

(12%)


Depreciation

(0.5)

(0.6)

-17%

Amortisation

(1.0)

(0.9)

+11%

EBITE

(3.7)

(6.6)

+44%

EBITE margin

(11%)

(16%)


 

The US-based activities have undergone a year of significant change including the sale of the New York Music titles, the rationalisation of a number of print products and a reduction in the number of senior management roles.

 

Circulation revenue overall fell by 25% with the largest negative impact arising from print newstrade which was down 31%. Print subscriptions were also down 27% as a result of the proactive elimination of unprofitable subscriptions. Advertising revenues were down 9%, with digital advertising up 14% and print advertising down 29%. Digital advertising in the US now represents 58% of total US advertising revenues.

 

The improvement of $2.9m in EBITDAE is driven by the revenue declines being more than offset by cost savings. Significant cost savings have been made to rebase the business, with headcount now at 144 people - a reduction of 78 in actual terms from the end of September 2011 - the majority of whom are now based on one floor in San Francisco.

 

Since the year end we have announced the closure of PlayStation: The Official Magazine and Nintendo Power as part of our continued active portfolio management.

 



US performance by sector is set out in the table below:

 

2012

2012

2012

2012

2011

2011

2011


Revenue

Contrib'n

Margin

% of

Revenue

Contrib'n

Margin


$m

$m

%

Revenue

$m

$m

%

Entertainment

21.2

3.4

16%

61%

26.9

3.2

12%

Technology

10.1

1.3

13%

29%

12.0

0.4

3%

Music

0.2

(0.2)

(100%)

1%

0.1

(0.4)

(400%)

Creative

1.6

(0.6)

(38%)

5%

2.1

-

-

Sport & Auto

1.5

0.1

7%

4%

1.3

-

-


34.6

4.0

12%

100%

42.4

3.2

8%

Overheads


(6.2)




(8.3)


EBITDAE


(2.2)

(6%)



(5.1)

(12%)

 

The above analysis illustrates the following:

·      A current focus on Entertainment and Technology in the US, where we have significantly improved margins year-on-year from cost savings and from leveraging more content from the larger UK business

·      The current size of our US Sport & Auto and Technology businesses and the opportunity to grow revenues in those sectors

·      The level of overhead savings in the past year.

 

Exceptional items and impairment of intangible assets

 

Exceptional items and impairment of intangible assets on a statutory basis can be split into the following elements:

 


2012

£m

2011

£m

Restructuring costs

2.1

2.4

Vacant property provision

2.7

1.5

Profit on sale of assets

(1.2)

-

Other costs

-

0.9

Impairment of intangible assets

-

17.1

Total exceptional items

3.6

21.9

 

The restructuring costs in the year arise from the changes to the executive team in October 2011 and changes to senior management, editorial, advertising and central service teams in the US and Australia.

 

As a result of the restructuring activities in the US, two properties became vacant during the second half of the year. We have been successful in the year in subletting the New York property to the end of the lease but we have provided for the cost of one floor of the San Francisco property to the end of the lease term, in December 2017.

 

In January 2012 the Group sold its New York-based music division for a consideration of $2.75m. In May 2012 the Group sold two UK-based trucking titles for a consideration of £1m.

 

 

Net finance costs

 

Net finance costs were £2.1m (2011: £1.5m) reflecting an increase in the average net debt over the period and the cost of restatement and amendment in November 2011.

 

Taxation

 

The statutory taxation charge for the year amounted to £0.9m (2011: £1.3m), comprising a current taxation charge of £1.2m (2011: £1.6m) and a deferred taxation credit of £0.3m (2011: £0.3m). The 2012 charge arises in the UK where the standard rate of corporation tax is 25%. In the US, the impact of the current year and brought forward tax losses means that there is no material taxation charge relating to the US.

 

Overall, the effective rate for the Group when applied to the profit before taxation was 82%.

 

Earnings per share ("EPS")

 

On a statutory basis, basic EPS for the Group were 0.1p (2011: loss of 5.9p) whilst adjusted EPS were 1.1p (2011: 0.4p). The adjusted calculations are based on the profit/(loss) after taxation which is then adjusted to exclude exceptional items, impairment of intangible assets and related tax effects. The adjusted profit after tax amounted to £3.5m (2011: £1.2m) and the weighted average number of shares in issue was 329.1m (2011: 327.5m).

 

Dividend

 

As announced in November 2012, there was no interim dividend and there will be no final dividend declared in respect of the year ended 30 September 2012. The Board will review the dividend position again during the year ending 30 September 2013.

 

Cash flow and net debt

 

Net debt at 30 September 2011 was £11.8m. During the period there was a cash inflow from operations before cash exceptional items of £6.5m (2011: cash inflow of £4.5m). In addition, there was a cash inflow from the sale of assets which amounted to £2.1m (2011: £nil).

 

During the year, cash outflows included the following items:

 

·      £1.6m (2011: £3.6m) in dividends paid in respect of the previous financial year

·      £4.4m (2011: £0.7m) in exceptional costs

·      £2.5m (2011: £3.6m) in respect of capital expenditure

·      £1.4m (2011: £1.2m) in net interest payments

·      £1.0m (2011: net receipt of £1.3m) in net taxation payments

·      £0.5m (2011: £nil) in respect of fees for the restatement of the credit facility

 

Exchange and other movements accounted for the balance of movements in net debt.

 

As a result of the above net debt at 30 September 2012 was £14.1m, an increase of 19% from September 2011, as expected.

 

Credit facility and covenants

 

The Group's credit facility was amended and restated in November 2011 to provide the necessary flexibility for the Group to complete the execution of the restructuring plans through the year ended 30 September 2012. It is due to mature in December 2013. Following the positive results achieved in the year to 30 September 2012 and initial discussions with our existing lenders the Board is confident of being able to agree a new credit facility in advance of the announcement of the Interim Results in May 2013.

 

Under the current credit facility interest is calculated as the cost of three month LIBOR plus an interest margin of between 2.5% and 3.75% dependent on the net debt/EBITDA covenant ratio. The key financial covenants are set out in note 9. The Group was in compliance with all of its covenants at 30 September 2012 as set out in the following table:

 

Covenant

30 September 2012

Limit

Net debt/EBITDA

1.51

Less than 2.0 times

EBITDA/Interest

6.58

More than 4 times

Cash flow cover

(0.09)

More than (1.06)

 

At 30 September 2012, following a year of tight working capital management, and based on the calculation of 2012 EBITDA for bank purposes, the Group had headroom of £4.7m over and above the level of bank debt. Based on the cash flow cover covenant the Group had headroom of £4.5m over and above the level of cash flow in the 12 months ended 30 September 2012. The agreement of the new credit facility will be a key priority for the Group in the first half of FY13.

 

 

 

 

 

 

 

Consolidated income statement

for the year ended 30 September 2012



2012

2011


Note

£m

£m





Revenue

1

123.5

141.7 





Operating profit before exceptional items and impairment of intangible assets

1

6.8

5.4 

Exceptional items

3

(3.6)

(4.8)

Impairment of intangible assets

7

-

(17.1)





Operating profit/(loss)

2

3.2

(16.5)

Finance income

4

0.2

-

Finance costs

4

(2.3)

(1.5)

Net finance costs


(2.1)

(1.5)

Profit/(loss) before tax

1

1.1

(18.0)

Tax on profit/(loss)

5

(0.9)

(1.3)

Profit/(loss) for the year attributable to owners of the parent


0.2

(19.3)

 

 

 

 

Earnings per 1p Ordinary share

 

 

 

 

 

Note

2012

2011


Note

pence

pence

Basic earnings/(loss) per share

6

0.1

(5.9)

Diluted earnings/(loss) per share

6

0.1

(5.9)

 

 

 

 

 

Consolidated statement of comprehensive income

for the year ended 30 September 2012



2012

2011



£m

£m

Profit/(loss) for the year


0.2

(19.3)





Currency translation differences


0.1

Cash flow hedges


0.1

Other comprehensive income for the year


0.2

Total comprehensive income/(loss) for the year attributable to owners of the parent


0.4

 

(19.3)

 



Consolidated statement of changes in equity

for the year ended 30 September 2012


 

 

Issued

share capital

Share premium account

 

 

Merger reserve

 

Treasury reserve

Cash flow hedge  reserve  

Accumulated losses

 

Total equity



£m

£m

£m

£m

£m

£m

£m

Balance at 1 October 2010


3.3 

24.5 

109.0 

-  

(0.1)

(50.5)

86.2 

Loss for the year


-  

-  

(19.3)

(19.3)

Other comprehensive income for the year


 

 

 

 

-  

 

-  

 

-  

 

-  

Total comprehensive loss for the year


 

 

 

 

-  

 

-  

 

(19.3)

 

(19.3)

Interim dividend relating to 2010


-  

-  

(1.6)

(1.6)

Final dividend relating to 2010


-  

-  

(2.0)

(2.0)

Share schemes









- Value of employees' services


-  

-  

0.4 

0.4 

- Deferred tax on share schemes


-  

-  

(0.1)

(0.1)

Treasury shares acquired


(0.3)

-  

-  

(0.3)

Balance at 30 September 2011


3.3

24.5

109.0

(0.3)

(0.1)

(73.1)

63.3 

Profit for the year


-

-

-

-

-

0.2

0.2

Currency translation differences


-

-

-

-

-

0.1

0.1

Cash flow hedges


-

-

-

-

0.1

-

0.1

Other comprehensive income for the year


-

-

-

-

0.1

0.1

0.2

Total comprehensive income for the year


-

-

-

-

0.1

0.3

0.4

Interim dividend relating to 2011


-

-

-

-

-

(1.6)

(1.6)

Share schemes









- Value of employees' services


-

-

-

-

-

0.2

0.2

New share capital subscribed


-

0.3

-

-

-

-

0.3

Balance at 30 September 2012


3.3

24.8

109.0

(0.3)

-

(74.2)

62.6

 


 

Consolidated balance sheet

as at 30 September 2012



2012

2011


Note

£m

£m

Assets




Non-current assets




Property, plant and equipment


2.8

3.4 

Intangible assets - goodwill

7

92.3

94.1 

Intangible assets - other

7

3.0

2.6 

Deferred tax


0.8

1.0 

Total non-current assets


98.9

101.1 

Current assets




Inventories


1.9

3.5 

Trade and other receivables


20.3

22.7 

Cash and cash equivalents

8

8.5

12.5 

Total current assets


30.7

38.7 

Total assets


129.6

139.8 

Equity and liabilities




Equity




Issued share capital


3.3

              3.3 

Share premium account


24.8

             24.5 

Merger reserve


109.0

            109.0 

Treasury reserve


(0.3)

(0.3)

Cash flow hedge reserve


-

(0.1)

Accumulated losses


(74.2)

(73.1)

Total equity


62.6

              63.3 

Non-current liabilities




Financial liabilities - interest-bearing loans and borrowings

9

1.7

5.1 

Financial liabilities - derivatives


0.2

0.4 

Deferred tax


1.3

1.8 

Provisions

10

4.1

2.1 

Other non-current liabilities


1.3

1.9 

Total non-current liabilities


8.6

11.3 

Current liabilities




Financial liabilities - interest-bearing loans and borrowings

9

20.9

19.2 

Financial liabilities - derivatives


0.2

0.3 

Trade and other payables


31.0

39.6 

Corporation tax payable


6.3

6.1 

Total current liabilities


58.4

65.2 

Total liabilities


67.0

76.5 

Total equity and liabilities


129.6

139.8 





 



Consolidated cash flow statement

for the year ended 30 September 2012


2012

2011


£m

£m

Cash flows from operating activities



Cash generated from operations

2.1

3.8 

Tax received

-

1.4 

Interest paid

(1.4)

(1.2)

Tax paid

(1.0)

(0.1)

Net cash (used in)/generated from operating activities

(0.3)

3.9 

Cash flows from investing activities



Purchase of property, plant and equipment

(0.5)

(1.2)

Purchase of magazine titles, websites and trademarks

(0.1)

-

Purchase of computer software and website development

(1.9)

(2.4)

Disposal of magazine titles and trademarks

2.7

-

Costs of business disposals

(0.6)

-

Net cash used in investing activities

(0.4)

(3.6)

Cash flows from financing activities



Proceeds from issue of ordinary share capital

0.3

-

Purchase of own shares by Employee Benefit Trust

-

(0.3)

Draw down of bank loans

17.9

10.0 

Repayment of bank loans

(19.3)

(7.2)

Fees for restatement of bank facility

(0.5)

-

Repayment of finance leases

(0.1)

-

Equity dividends paid

(1.6)

(3.6)

Net cash used in financing activities

(3.3)

(1.1)

Net decrease in cash and cash equivalents

(4.0)

(0.8)

Cash and cash equivalents at beginning of year

12.5

13.3 

Cash and cash equivalents at end of year

8.5

12.5 

 

 


Notes to the Consolidated cash flow statement

for the year ended 30 September 2012

 

A. Cash generated from operations

The reconciliation of profit/(loss) for the year to cash flows generated from operations is set out below:

 


2012

2011


£m

£m

Profit/(loss) for the year

0.2

(19.3)

Adjustments for:



Depreciation charge

1.1

1.2 

Amortisation of intangible assets

1.5

1.2 

Impairment of intangible assets

              -

17.1 

Profit on disposal of magazine titles and trademarks

(1.2)

-

Share schemes



- Value of employees' services

0.2

0.4 

Net finance costs

2.1

1.5 

Tax charge

0.9

1.3 

Profit before changes in working capital and provisions

4.8

3.4 

Movement in provisions

1.8

1.3 

Decrease/(increase) in inventories

1.6

(0.1)

Decrease in trade and other receivables

2.3

1.2 

Decrease in trade and other payables

(8.4)

(2.0)

Cash generated from operations

2.1

3.8 

 

B. Analysis of net debt

 


1 October 2011

Cash flows

Other non-cash changes

Exchange movements

30 September 2012


£m

£m

£m

£m

£m

Cash and cash equivalents

12.5 

(4.0)

-

-

8.5

Debt due within one year

(19.2)

1.5

(3.4)

0.2

(20.9)

Debt due after more than one year

(5.1)

-

3.4

-

(1.7)

Net debt

(11.8)

(2.5)

-

0.2

(14.1)

 

 

 C. Reconciliation of movement in net debt

 


2012

2011


£m

£m

Net debt at start of year

(11.8)

(7.4)

Decrease in cash and cash equivalents

(4.0)

(0.8)

Movement in borrowings

1.5

(2.8)

Finance leases entered into

-

(0.3)

Other non-cash changes

-

(0.3)

Exchange movements

0.2

(0.2)

Net debt at end of year

(14.1)

(11.8)


Accounting policies

 

Basis of preparation

This preliminary statement of annual results for the year ended 30 September 2012 is unaudited and does not constitute statutory accounts. The information contained in this statement is based on the statutory accounts for the year ended 30 September 2012. The statutory accounts have not yet been delivered to the Registrar of Companies nor have the auditors yet reported on these.

 

The statutory accounts are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee's (IFRIC) interpretations as adopted by the European Union, applicable as at 30 September 2012, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The going concern basis has been adopted in preparing these financial statements.

 

The accounting policies adopted, methods of computation and presentation are consistent with those set out in the Group's statutory accounts for the year ended 30 September 2011 with the following exceptions:

 

·      The Directors have decided to focus on normalised EBITDAE and EBITE (as defined previously) rather than EBITAE from a profit perspective in recognition of the nature of amortisation and depreciation under IFRS.

 

·      During the year, the estimated useful life of website development costs has been increased to two years, rather than one year which had been used in prior years. This change reflects a more realistic period over which benefits are expected to accrue and is more consistent with market practice.

 

If an estimated useful life of one year had been used, this would have increased the total amortisation charge from £1.5m to £2.3m in the current year.

 

 

Basis of consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.  Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.  The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

 

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, and includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.  Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.  The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.  Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred.  Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

 

 



 

Notes to the financial statements

 

1.   Segmental reporting

The Group is organised and arranged primarily by geographical segment.  The executive directors consider the performance of the business from a geographical perspective namely the UK and the US.  The Australian business is considered to be part of the UK segment and is not separately presented.

 

(a)  Reportable segment

(i)   Segment revenue


2012

2011


£m

£m

UK

99.1

103.4 

US

25.1

38.8 

Revenue between segments

(0.7)

(0.5)

Total

123.5

141.7 

 

Transactions between segments are carried out at arm's length.

 

(ii)  Segment EBITE


2012

2011


£m

£m

UK

9.7

9.7 

US

(2.9)

(4.3)

Total segment EBITE

6.8

5.4 

 

EBITE is used by the executive directors to assess the performance of each segment.

 

A reconciliation of total segment EBITE to profit/(loss) before tax is provided as follows:


2012

2011


£m

£m

Total segment EBITE

6.8

5.4

Exceptional items

(3.6)

(4.8)

Impairment of intangible assets

-

(17.1)

Net finance costs

(2.1)

(1.5)

Profit/(loss) before tax

1.1

(18.0)

 

 

(b) Business segment

After geographical location, the Group is managed into five principal business segments. Each business segment comprises groups of individual magazines, websites and events, combined according to the market sector in which they operate. The Group considers that the assets within each segment are exposed to the same risks.

 

(i) Revenue by segment


2012

2011


£m

£m

Entertainment

36.5

45.3

Technology

26.8

31.8

Music

20.3

26.1

Creative

21.0

19.2

Sport & Auto

19.6

19.8

Revenue between segments

(0.7)

(0.5)

Total

123.5

141.7 

  

 

1.  Segmental reporting (continued)

 

(ii) Gross profit by segment


2012

2011


£m

£m

Entertainment

8.2

9.3

Technology

6.4

7.5

Music

4.1

4.2

Creative

5.5

4.8

Sport & Auto

5.2

4.8

Add back: distribution expenses

9.6

11.2

Total

39.0

41.8

 

 

2.  Operating profit/(loss)


2012

2011


£m

£m

Revenue

123.5

141.7 

Cost of sales

(84.5)

(99.9)

Gross profit

39.0

41.8 

Distribution expenses

(9.6)

(11.2)

Administration expenses

(22.6)

(25.2)

Exceptional items

(3.6)

(4.8)

Impairment of intangible assets

-

(17.1)

Operating profit/(loss)

3.2

(16.5)

 

 

3.  Exceptional items


2012

£m

2011

£m

Property costs

2.7

1.5 

Restructuring and redundancy costs

2.1

2.4 

Profit on disposal of magazine titles and trademarks

(1.2)

                    -

Other costs

-

0.9 

Total

3.6

4.8 

 

The property costs relate to a vacant property provision made against surplus office space.

 

The restructuring and redundancy costs relate mainly to staff termination payments following restructuring of the UK and US businesses in line with the Group's strategy.

 

The profit on disposal relates to the sale of the New York Music titles on 12 January 2012 and two UK based titles, Trucking and Truckstop News, sold on 18 May 2012.

 

Other costs relate to ongoing commercial dispute resolution.

 

 

4.   Finance income and costs


2012

2011


£m

£m

Fair value gain on interest rate derivative

0.2

Total finance income

0.2

Interest payable on interest-bearing loans and borrowings

(1.5)

(1.1)

Amortisation of bank loan arrangement fees

(0.5)

(0.3)

Other finance costs

(0.3)

(0.1)

Total finance costs

(2.3)

(1.5)

Net finance costs

(2.1)

(1.5)

  

5.  Tax on profit/(loss)

The tax charged in the consolidated income statement is analysed below:

 


2012

2011


£m

£m

UK corporation tax



Current tax at 25% (2011: 27%) on the profit for the year

1.6

0.9 

Adjustments in respect of previous years

(0.4)

0.7 

Current tax

1.2

1.6 

Deferred tax origination and reversal of temporary differences



Current year charge

0.2

0.4 

Adjustments in respect of previous years

(0.5)

(0.7)

Deferred tax

(0.3)

(0.3)

Total tax charge

0.9

1.3 

 

 

6.  Earnings per share

Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year.  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 awards held under employee share schemes.

 

Adjusted earnings per share removes the effect of exceptional items, impairment and any related tax effects from the calculation as follows:

 

Adjustments to profit/(loss) after tax


2012

2011


£m

£m

Profit/(loss) after tax

0.2

(19.3)

Add: Exceptional items

3.6

4.8

Add: Impairment of intangible assets

-

17.1

Tax effect of the above adjustments

(0.3)

(1.4)

Adjusted profit after tax

3.5

1.2

 


2012

2011

Weighted average number of shares in issue during the year:



- Basic

329,101,739

327,526,863

- Dilutive effect of share options

3,751,837

6,070,662

- Diluted

332,853,576

333,597,525

Basic earnings/(loss) per share (in pence)

0.1

(5.9)

Adjusted basic earnings per share (in pence)

1.1

0.4

Diluted earnings/(loss) per share (in pence)

0.1

(5.9)

Adjusted diluted earnings per share (in pence)

1.1

0.4

The share options do not have a dilutive effect where there is a loss.

 

The adjustments to profit/(loss) have the following effect:


2012

2011

Basic earnings/(loss) per share

0.1

(5.9)

Exceptional items

1.1

1.5

Impairment of intangible assets

-

5.2

Tax effect of the above adjustment

(0.1)

(0.4)

Adjusted basic earnings per share

1.1

0.4




Diluted earnings/(loss) per share

0.1

(5.9)

Exceptional items

1.1

1.5

Impairment of intangible assets

-

5.2

Tax effect of the above adjustment

(0.1)

(0.4)

Adjusted diluted earnings per share

1.1

0.4

 

 

 

7. Intangible assets

 


Goodwill

Magazine  and website

Other

Total


£m

£m

£m

£m

Cost





At 1 October 2010

313.4

15.2

8.0

336.6

Additions

-

0.1

2.6

2.7

Disposals

-

-

(0.1)

(0.1)

Exchange adjustments

0.3

-

0.1

0.4

At 30 September 2011

313.7

15.3

10.6

339.6

Additions

-

0.1

1.9

2.0

Disposals

(1.7)

-

(0.2)

(1.9)

Exchange adjustments

(0.9)

(0.2)

(0.2)

(1.3)

At 30 September 2012

311.1

15.2

12.1

338.4






Accumulated amortisation





At 1 October 2010

(202.5)

(14.9)

(7.1)

(224.5)

Charge for the year

(0.2)

(1.0)

(1.2)

Impairment charge

(17.1)

-  

(17.1)

Disposals

-

0.1 

0.1 

Exchange adjustments

(0.1)

(0.1)

(0.2)

At 30 September 2011

(219.6)

(15.2)

(8.1)

(242.9)

Charge for the year

-

(0.1)

(1.4)

(1.5)

Disposals

-

-

0.1

0.1

Exchange adjustments

0.8

0.2

0.2

1.2

At 30 September 2012

(218.8)

(15.1)

(9.2)

(243.1)






Net book value at 30 September 2012

92.3

0.1

2.9

95.3

Net book value at 30 September 2011

94.1 

0.1 

2.5 

96.7 

Net book value at 1 October 2010

110.9 

0.3 

0.9 

112.1 

 

 

Impairment tests for goodwill and other intangibles

The breakdown of the goodwill balance at 30 September 2012 comprises:


2012

£m

2011

£m

UK

88.9

89.1

US

3.4

5.0

Total

92.3

94.1

 

In September 2012 the group performed its annual impairment test on goodwill. These tests concluded that no impairment was required. The estimated recoverable amounts for the UK and US businesses exceeded their carrying values by £42.1m and £2.5m respectively.

 

In September 2011 an impairment charge of £17.1m was taken against the carrying value of goodwill related to the US business. This reflected the trading patterns over the previous three years and the challenging economic and trading environment in which the restructuring activities for the business took place. No impairment was required in respect of the UK segment.

 

 

8. Cash and cash equivalents

 


2012

2011


£m

£m

Cash at bank and in hand

8.5

12.5

Cash and cash equivalents

8.5

12.5

 

 

 

9. Financial liabilities - loans and borrowings

 

Non-current liabilities


Interest rate at

Interest rate at




30 September

30 September

2012

2011


2012

2011

£m

£m

Sterling term loan

5.1%

3.7%

1.7

4.9

Obligations under finance leases

-

3.0% - 15.0%

-

0.2

Total



1.7

5.1

 

Current liabilities


Interest rate at

Interest rate at




30 September

30 September

2012

2011


2012

2011

£m

£m

Sterling term loan

5.1%

3.7%

3.2

2.9

Sterling revolving loan

4.1%

3.7%

15.7

4.0

US Dollar revolving loan

3.8%

3.2%

1.9

12.2




20.8

19.1

Obligations under finance leases

3.0%-15.0%

3.0%-15.0%

0.1

0.1

Total



20.9

19.2

 

 

The interest-bearing loans and borrowings are repayable as follows:

 


2012

2011


£m

£m

Within one year

20.9

19.2

Between one and two years

1.7

5.1

Total

22.6

24.3

 

The Group's credit facility was amended and restated in November 2011 to provide the necessary flexibility for the Group to complete the execution of the restructuring plans through the year ended 30 September 2012.  It is due to mature in December 2013.  As part of the amendment and restatement the Group granted security to the banks and gave additional covenants.  Fees relating to the amendment and restatement amounted to £0.5m and these are being amortised over the remaining term of the credit facility.

 

The bank borrowings and interest continue to be guaranteed by Future plc, Future Holdings 2002 Limited, Future Publishing Limited and Future US, Inc. The total facility available to the Group amounts to £29.7m and this can be drawn in sterling, US Dollars or Euros.

 

Interest payable under the current credit facility is calculated as the cost of three month LIBOR (currently approximately 0.5%) plus an interest margin of between 2.5% and 3.75%, dependent on covenant ratio.

 

The key covenants are as set out in the following table:

 

Bank covenant


Net debt/EBITDA

Periods from 31 December 2011 to 30 June 2012 - between  less than 2.55 and 2.8 times

Periods from 30 September 2012 onwards - less than 2.0 times

EBITDA/interest

More than 4.0 times

Cash flow cover

Ratios to be met on a quarterly basis measured against an agreed budget

(not tested 31 December 2012 and 31 March 2013)

Capital expenditure

115% of agreed annual budget

 

In addition to the above there was a limit of £1.9m on exceptional cash costs which could be excluded from the calculation of Bank EBITDA in the year ended 30 September 2012.

 

 

9. Financial liabilities - loans and borrowings (continued)

 

The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months and the covenant position at the year-end is set out in the following table:

 


30 September 2012

Covenant

Net debt/EBITDA

1.51

< 2.0 times

EBITDA/interest

6.58

> 4.0 times

Cash flow cover

(0.09)

> (1.06) times

 

The Group met its covenant for capital expenditure at 30 September 2012.

 

Based on the above calculations the Group had headroom of £4.7m over and above the level of bank debt at 30 September 2012.  Based on the cashflow cover covenant the Group had headroom of £4.5m over and above the level of cashflow in the 12 months ended 30 September 2012.

 

 

10. Provisions

 


Property

Other

Total


£m

£m

£m

At 1 October 2011

1.5

0.6

2.1

Reclassification of accrual

0.2

-

0.2

Charged in the year

2.7

-

2.7

Utilised in the year

(0.5)

(0.3)

(0.8)

Exchange adjustments

(0.1)

-

(0.1)

At 30 September 2012

3.8

0.3

4.1

 

The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property.  The increase in the provision in the current year is principally related to surplus office space in the US.  The vacant property provision is expected to be utilised over the next six years. The dilapidations provision is expected to be utilised on the expiry of property leases.

 

Other provisions as shown above relate to disposals made during 2007 and ongoing commercial dispute resolution. These are expected to be fully utilised or reversed over the next two years.

 

 

11. Related party transactions

The Group has no material transactions with related parties in 2012 or 2011 which might reasonably be expected to influence decisions made by users of these financial statements.

 



Normalised results (unaudited)

 



2012

2011


Note

£m

£m





Revenue

1,2

117.7

121.9





Operating profit pre exceptional items (EBITE)


6.9

4.1

 

 

 

Adjusted earnings per 1p Ordinary share (normalised)

 


 

Note

2012

pence

2011

pence

Adjusted basic earnings per share

2

1.1

0.1

 

 

Normalised results are presented to reflect better the current size and structure of the business, which is consistent with how the business is managed and measured on a day-to-day basis.  The normalised results exclude revenues and costs of activities closed or divested between 1 October 2010 and 30 September 2012, but include any new activities launched in that period.

 

Adjusted earnings per share are based on normalised results but exclude exceptional items, impairment of intangible assets and related tax effects.

 

 

Notes to the normalised results

 

1.        Normalised segmental reporting

 

a)          Revenue by segment

 

 

 

2012

£m

2011

£m

UK

96.4

96.0

US

22.0

26.4

Revenue between segments

(0.7)

(0.5)

Total normalised revenue

117.7

121.9

 

b)         EBITE by segment

 


2012

£m

2011

£m

UK

9.3

8.2

US

(2.4)

(4.1) 

Total normalised EBITE

6.9

4.1

 

 

Additional analysis of the Group's normalised revenue by type is set out below:

 

c)         Revenue by type

 


2012

£m

2011

£m

Circulation

69.9

72.4

Advertising

34.7

35.8

Customer publishing

8.1

8.8

Licensing, events and other

5.0

4.9

Total normalised revenue

117.7

121.9

 

 

Notes to the normalised results

 

2.        Reconciliation of statutory results to normalised results

 

a)         Reconciliation of statutory revenue to normalised revenue

 


2012

2011


£m

£m

Statutory revenue

123.5

141.7

Adjustment: UK closed and divested activities

(2.7)

(7.4)

Adjustment: US closed and divested activities

(3.1)

(12.4)

Normalised revenue

117.7

121.9

 

 

b)         Reconciliation of statutory operating profit pre exceptional items (EBITE) to normalised EBITE

 


2012

2011


£m

£m

EBITE

6.8

5.4

Adjustment: UK closed and divested activities

(0.4)

(1.5)

Adjustment: US closed and divested activities

0.5

0.2

Normalised EBITE

6.9

4.1

 

c)         Reconciliation of statutory basic earnings/(loss) per share to normalised adjusted earnings per share

 


2012

2011


pence

pence

Basic earnings/(loss) per share

0.1

(5.9)

UK closed and divested activities

(0.4)

(0.3)

US closed and divested activities

0.1

1.1

Exceptional items

1.4

1.4

Impairment of intangible assets

-

4.2

Tax effect of the above adjustments

(0.1)

(0.4)

Adjusted basic earnings per share

1.1

0.1

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange