RNS Number : 9687G
Future PLC
20 May 2011
 



20 May 2011

                                                                                                                                                                       

FUTURE PLC

Interim results for the half-year ended 31 March 2011

 

Future plc (LSE: FUTR), the international special-interest media group, today announces its unaudited interim results for the half-year ended 31 March 2011.  An analyst presentation will be held today at 10.00am at the offices of Numis, 10 Paternoster Square, London EC4M 7LT.

 

Results:

H1 11

H1 10






Revenue

£68.8m

£71.4m


EBITA *

£2.4m

£4.4m


EBITA margin

3.5%

6.2%


Operating profit

£1.8m

£3.0m


Reported Pre-tax profit 

£1.2m

£2.2m


Earnings per share (p)

0.2p

0.4p


Adjusted ** earnings per share (p)

0.4p

0.7p


Dividends relating to the period (pence per share)

0.5p

0.5p


 

Summary:

 

·     Revenue: H1 down 4%, flat excluding closures

·     Profit decline from accelerated investment in growth areas:

- Digital: revenue up 30%, profitable in aggregate

- Custom publishing: revenue up 27%

·     Cash generative, Net debt: £8.9m, down 23% year-on-year.

 

Outlook:

·     Macro environment remains challenging

·     Mobile developments accelerate adoption of digital consumption

·     Continuing commitment to New Product Development

·     Full year expected to be in line with expectations

 

Dividend:

·     Interim dividend maintained

 



Stevie Spring, Future's Chief Executive said:

 

"Trading in the first half was challenging, yet we've seen six months of an accelerating pace of change as the arrival of powerful mobile devices increases digital content consumption.  The decline in profits includes maintained planned investment, particularly in digital, as we continue to transition our business for the future.

 

Our digitised content revenues grew 30% in H1 and online now represents 34% of our commercial advertising and, with a tenfold increase in digital edition sales, an increasing percentage of our consumer circulation revenues.  Significantly, our digital activities were profitable for the first time this half.

 

Encouraged by that progress, the Board has maintained the interim dividend despite an expectation that the trading conditions for the rest of 2011 will remain challenging."

 

Enquiries:

 

Future plc

Stevie Spring, Group Chief Executive                                   Tel: 020 7042 4007

John Bowman, Group Finance Director                                Tel: 020 7042 4031

 

Financial Dynamics

Charlie Palmer                                                                           Tel: 020 7831 3113

 

Notes

 

* EBITA represents operating profit before amortisation of intangible assets.

 

** Adjusted earnings per share are based on statutory results, but exclude amortisation of intangibles and related tax effects.

 

The most significant foreign currency affecting the Group is the US Dollar.  The average exchange rate for the period was only marginally different at $1.59=£1 (H1 10: $1.60=£1).

 

About Future:

Future plc is an international special-interest media group, listed on the London Stock Exchange (symbol FUTR).  Founded in 1985 with one magazine, today we have operations in the UK, US and Australia creating over 180 special-interest publications, websites and events.  We hold market-leading positions in games, film, music, technology, cycling, automotive and crafts.  Our biggest-selling magazines include T3, Total Film, Classic Rock, Guitar World and Official Xbox Magazine.  Our websites include gamesradar.com, bikeradar.com, and techradar.com.  Future sells almost three million magazines each month; we attract more than 25 million unique visitors to our websites; and we host 27 annual live events.  In addition, Future exports or syndicates publications to 90 countries, making us the UK's number one exporter and licensor of monthly magazines.

 

Chief Executive's Statement

 

In our 2010 annual results statement, I quoted JFK who fifty years ago said "Change is the law of life".

 

In our first half-year of 2011, we have seen ample evidence of that. 

 

I am proud that, throughout our Group, our approach to anticipating and managing change continues to be determined, enthusiastic, and focused.  We are encouraged by the strong returns on previous investment that we are seeing from some of our digital and partnership products and we believe the Group will benefit from the accelerated investment in our business. 

 

Future's business is one of engagement with very special-interest audiences who are passionate about particular areas - from computer games to film, from cycling to music-making, from photography to fast cars.  Such passions drive our consumers to consume more about their interests - not less - through a variety of platforms and devices and in a multitude of different ways.  So whilst parts of our business (print advertising in particular) are in decline, other parts (digital and custom publishing) continue to grow strongly. 

 

Our digitised content revenues grew 30% in H1 and online now represents 34% of our commercial advertising revenues; and, with a tenfold increase in digital edition sales, an increasing percentage of our consumer circulation revenues.  Custom publishing - content we produce under contract on behalf of clients - also grew 27% including a doubling of this element of our business in the US.

 

Our overall position is robust, and we are agnostic as to how our consumers wish to consume our content. Customer focus underpins everything we do.  And our customers' almost professional commitment explains why we call them "prosumers". 

 

Our task is to create, curate, distribute and promote the compelling content that satisfies their interests, whilst at the same time providing commercial opportunities for our partners. 

 

Accelerating Change

 

The arrival of tablets has finally delivered on the promise of mobile accelerating digital consumption.

 

We now have a truly hospitable environment for our content with built-in, friction-free payment options. They give a better web-browsing experience, make digital replica magazines a viable addition to print, and open up global commercial opportunities to develop new applications for content whose appeal transcends geography.

 

Developing New Product

 

We continue to develop our portfolio of print product - but only in adjacent sectors showing clear growth. So far this year we have launched Tap! which targets the exploding Apple iOS market in the UK; Maximum Tech, a broader-based complement to our MacLife and Maximum PC US offers; Knitting Today in partnership with Coats, also in the US; as well as a number of specials and low risk one-offs to test new markets (Techradar Guides; iCAR, GamesMaster specials; and a number of bookazines).  We have also rolled out the successful trial of fan-packs that started with Slash, to pre-launch new albums for Motorhead, Hendrix, Whitesnake, and - next month - Blondie. These premium-priced (£14.99) collectibles use our large magazine distribution footprint to compensate for the reduction in traditional music retail outlets. We've also re-designed and re-positioned a number of our established titles - Digital Camera, for example, is up 25% on both sales and contribution since re-launch last year; and is now market leader.

 

We've increased our investment in research to support our commercial offer.  The Big Game survey showed that 16% of all full price game sales are attributable to our readers.  Our Techmonitor study showed how we increasingly influence the influencers; and our new syndicated US audience research has helped to demonstrate our reach to non-endemic advertisers.

 

But most of our product development focus has been in digital.  In making social, sharing, participative, interactive, accessible, relevant and connected new offers. We now have 60 replica magazine editions on iPad, as well as a fully interactive version of T3 - one of only a handful of 5-star media apps on the App Store, and, with over 100,000 downloads, the biggest-selling paid-for iPad UK magazine.

 

Digital replica sales have increased more than tenfold year-on-year. And we're now selling over £100k of retail sales per month from a 10m tablets base (predicted to reach 400m in just three years).  We've had two apps - Guitar World's Lick of the Day and MacLife - both exceed 500,000 downloads; and we have experimented with content, price, service and frequency across a range of 20 app tests, both own brand and for our clients.

 

On the web, we've upgraded all our Radar properties - particularly GamesRadar. We've improved mobile browsing and developed a new content management system for a continuous production and feedback cycle (not just monthly). We've invested further in short-form video production (where our new UK CEO, Mark Wood, has particular expertise); in e-commerce; in digital syndication capabilities, and in training our dedicated and talented team to create once and publish everywhere.

 

The short-term effect of these investments is to depress profits, but we're already seeing revenue growth from them ahead of expectation.

 

UK trading

 

Our portfolio, as ever, enjoyed mixed results as it reflected host sector fortunes as much as macro-economic factors: sales were up in photography, cycling and music - and, importantly, games ad revenue decline halted.  But overall, revenues fell 3%.

 

Our online advertising growth in the UK - some 44% - more than compensated for the continued decline in demand for print advertising. Overall advertising revenues grew year-on-year, with online's proportion up from 22% to 31%.

 

Our fastest-growing websites are now delivering over 30% contribution levels: our highest is 47%. Techradar exceeded 2m UK monthly uniques for the first time, and delivered revenues up 51% over the immediately preceding six months and the UK music websites' revenues were also up 53%.

 

Newsstand sales remained challenging although our efficiency levels (copies sold as a proportion of copies printed) were two full percentage points ahead of the market. And our subscribers - by definition our most loyal readership - now at 30% of circulation - are again at an all-time high on all key measures: yield, revenue and retention rates.

 

US trading

 

The US market is changing even more rapidly and revenues declined by 7%.  The 10%  further decline in our underlying circulation revenue reflected three things: fewer issues produced (not least the closure as planned of our Pregnancy titles); the active phasing-out of our low-yield subscribers; and a reduced retail footprint driven by bookstore closures and an increasing number of independents no longer stocking any magazines. This, coupled with a nearly 25% print advertising decline (notwithstanding fewer issues), has accelerated our commitment to transitioning to digital, where we have enjoyed some real success.

 

Music digital revenues were up 56% and GamesRadar ad revenues increased 31% (helped by the more than doubling of our non-endemic clients, attracted by engagement scores and dwell times which exceeded those of IGN, Gamespot and UGO).

 

Digital is now running at 36% of our ad revenues, and a substantial proportion of our Future Plus custom publishing contribution.

 

Future Plus doubled revenue in this half-year thanks to the launch of Knitting Today as well as growth from Best Buy's @Gamer launch and Blizzard's World of Warcraft. We also developed bespoke Apps for both Best Buy and Coats and Clark.

 

Outlook

 

We will continue to review and develop our content, the platforms we deliver on, frequency, pricing and interactivity, throughout the second half even though our expectation remains that the outlook for 2011 will continue to be challenging and we maintain a cautious outlook. 

 

Like all publishers, Future is managing fundamental structural changes in the print market but active portfolio management is mitigating the worst effects of those shifts. In terms of transformation to new business models, we are gaining traction with new products and making progress at a speed that puts us in the vanguard of those publishing businesses which are adapting most successfully to the new digital marketplaces.

 

A realistic outlook, a focussed business, a strong balance sheet and a talented, dedicated and creative team, all support the Board's confidence that we remain on plan for 2011 and as well-positioned to take advantage of the fast-changing media and technology landscape as we can be.

 

Stevie Spring,

Chief Executive, Future plc

20 May 2011

 

 

Interim statement

 

Statutory results for half-year to 31 March 2011

 

First half-year revenue was £68.8m (2010: £71.4m) and the business generated EBITA of £2.4m (2010: £4.4m).  The resultant EBITA operating margin was 3.5% (2010: 6.2%).  The half-year income statement includes a reduced charge for amortisation of intangible assets of £0.6m (2010: £1.4m), reflecting fully written-down acquired intangible assets and a reduction in 2010 of spend on web development costs which are amortised in the following year.  The period also benefited from lower net finance costs of £0.6m (2010: £0.8m), leading to a pre-tax profit of £1.2m (2010: £2.2m) for the period. 

 

Results for the period

2011

£m

2010

£m

Revenue

68.8

71.4

EBITA

2.4

4.4

EBITA margin

3.5%

6.2%

Amortisation of intangible assets

(0.6)

(1.4)

Operating profit

1.8

3.0

Net finance costs

(0.6)

(0.8)

Pre-tax profit

1.2

2.2




Earnings per share (p)

0.2p

0.4p

Adjusted earnings per share (p)

0.4p

0.7p

Dividends relating to the period (pence per share)

0.5p

0.5p

 

Group revenue fell 4%, and also 4% in constant currency reflecting only a minimal change in the average exchange rate with the US Dollar.  Analyses of revenue are provided below.

 

Group EBITA of £2.4m was lower than H1 2010.  In the UK, growth in contribution from digital activities largely compensated for decline in contribution from print.  In the narrower US portfolio, the decline in print advertising of 25% significantly impacted margin, as we maintained investment in growth areas to compensate.  Central costs remain firmly under control, after excluding one-off costs of project due diligence.  The impact of these factors is reflected in the following table:

 

Analysis of EBITA for half-year to 31 March

 




2011

2010

Change




£m

£m

£m

UK



5.5

6.1

(0.6)

US



(1.5)

(0.4)

(1.1)

Central costs



(1.6)

(1.3)

(0.3)

Total EBITA



2.4

4.4

(2.0)

 

The Group is managed primarily on a geographical basis. 

 

Review of operations

 

The review of operations is based primarily on a comparison of our half-year results for the six months ended 31 March 2011 with those for the six months ended 31 March 2010.  Unless otherwise stated, change percentages relate to a comparison of these two periods.  There has been no significant change to the geographical scope of the Group's activities; the Group continues to manage the structural shift in demand for content to be delivered on multiple platforms.

 

Analysis of revenue for half-year to 31 March

 






Group

%

2011
 £m

2010
 £m

Change

%

Circulation

58%

40.0

43.0

- 7%

Advertising

29%

20.4

21.2

- 4%

Custom publishing

9%

6.1

4.8

+ 27%

Licensing, events & other

4%

2.6

2.7

- 4%

Intra-group


(0.3)

(0.3)


Total revenue

100%

68.8

71.4

- 4%

 

Fifty-eight per cent of the Group's revenue is generated from consumer (predominantly circulation revenue) and forty-two per cent from client companies (primarily advertising).

 

Geographical analysis of revenue for half-year to 31 March

 






Group

%

2011
  £m

2010
 £m

Change

%

UK

71%

49.4

50.7

- 3%

US

29%

19.7

21.0

- 6%

Intra-group


(0.3)

(0.3)


Total revenue

100%

68.8

71.4

- 4%

 

In the UK, revenue fell by 3%.  In the US, Dollar revenue fell by 7% reflecting weakness in print advertising revenue and the closure of our Pregnancy group, which was not completely offset by growth in digital and custom publishing revenue.

 

 

UK performance in half-year

                                  


2011

£m

2010

£m

Change

%

Circulation revenue

31.2

32.5

- 4%

Advertising revenue

13.3

13.0

+ 2%

Custom publishing

2.9

3.2

- 9%

Licensing, events & other

2.0

2.0

-

Total revenue

49.4

50.7

- 3%

EBITA

5.5

6.1


EBITA margin

11%

12%


 

Overall, UK revenue for the half-year fell by 3%.

 

Circulation revenue fell by 4% but within this subscription revenue grew by 2%.  Domestic newsstand revenue declined 9% and export revenue was up 2%.

 

Advertising revenue grew 2%, because growth in online advertising exceeded the decline in print advertising.

 

The movements in other sources of revenue are shown in the table above.

 

The following table shows performance by sector.  During the period, the strongest performance came from Technology, driven by TechRadar. 

 

 

2011 Revenue £m

2011

Contribution

 £m

2011 Margin

%

2011

% of revenue

2010 Revenue £m

2010 Contribution

 £m

2010 Margin

%

Games

9.9

2.7

27%

20%

10.1

2.7

27%

Music & Movies

11.9

2.8

24%

24%

12.2

3.4

28%

Technology

14.8

4.8

32%

30%

15.4

4.6

30%

Active

12.8

3.2

25%

26%

13.0

3.2

25%

 

Overheads

49.4

13.5

(8.0)

27%

100%

50.7

13.9

(7.8)

27%

EBITA

49.4

5.5

11%

 

50.7

6.1

12%

 

Growth in profit contribution from digital activities was £1.1m, whilst the corresponding decline from print activities was £1.2m.  A £0.3m lower contribution from Custom Publishing phasing and a £0.2m increase in provision for ageing receivables explain the reduction in EBITA.    

 

We have maintained our control of operating costs.

 

US performance in half-year (shown in US Dollars)

 


2011

$m

2010

$m

Change

%

Circulation revenue

14.0

16.8

- 17%

Advertising revenue

11.2

13.2

- 15%

Custom publishing

5.2

2.6

+ 100%

Licensing, events & other

0.9

0.9

-

Total revenue

31.3

33.5

- 7%

EBITA

(2.3)

(0.6)


EBITA margin

- 7%

- 2%


 

US revenue for the half-year fell by 7%, reflecting the closure of our Pregnancy group, a 25% further decline in print advertising, and an underlying 10% reduction in sales at newsstand.    

 

Total advertising revenue fell by 15% for the half-year, as the growth in digital advertising was less than the reduction in print advertising.

 

Custom publishing revenue has once again recorded strong growth.

 

The following table shows performance by sector.  

 

 

 

2011 Revenue $m

2011

Contribution

 $m

2011 Margin

%

2011

% of revenue

2010 Revenue
$m

2010 Contribution

 $m

2010 Margin

%

Games

15.8

2.3 

15%

51%

15.3

2.2

14%

Music & Movies

6.5

-

-

21%

7.6

0.9

12%

Technology

7.0

0.7 

10%

22%

8.3

1.4

17%

Active

2.0

(0.4)

-20%

6%

2.3

(0.2)

- 9%

 

Overheads

31.3

2.6 

(4.9)

8%

100%

33.5

4.3
(4.9)

13%

EBITA

31.3

(2.3)

-7%

 

33.5

(0.6)

- 2%

 

In the US the growth in profit contribution from digital activities was $0.8m but the decline from print was $3.1m, consequent to the $5.2m decrease in print-derived revenue.

 

We have maintained our control of operating costs.

 

Digital

 

The UK and US segmental figures above include digital revenue and operating costs.  Digital development continues as a key focus for the business and Group digital revenue increased by 30% from £6.1m to £7.9m for the half-year.  The Group's digital operations are, in aggregate, profitable and growth in digital contribution is increasingly compensating for weakness in print.

 

Net finance costs

 

Net finance costs were £0.6m, 25% lower than the corresponding figure last year, reflecting a reduction of 25% in the average level of month-end net debt during the period.

 

Taxation

 

The tax charge for the half-year was £0.4m (2010: £0.7m) which represents an estimated effective tax rate of 34% (2010: 33%) applied to profit before tax.  This is the effective rate estimated to apply to taxable profits of the Group for the full financial year. 

 

Cash flow and net debt

 

Net debt at 30 September 2010 was £7.4m.  During the period cash generated from operations amounted to £2.1m (2010: £5.9m) reflecting phasing of cash collection at half-years.

 

During the period, cash outflows totalled £3.4m (2010: £1.6m) in respect of the following items: £1.6m (2010: £Nil) in dividends, £1.4m (2010: £0.7m) in respect of capital expenditure, £0.6m (2010: £0.8m) in net interest payments, and net tax receipts of £0.2m (2010: net tax payments of £0.1m).  Exchange and other movements accounted for the balance of cashflows.

 

Net debt at 31 March 2011 was £8.9m, a reduction of 23% since 31 March 2010. 

 

Bank covenants

 

Future funds its operations through a mixture of operating cash flow generated by the business and bank debt.  Since 2001 the Group has complied at all times with all covenants under its banking facilities.  The position at 31 March 2011 is within the bank covenants as set out in the following table. 

 

                                                31 March 2011            Bank covenant

 

Net debt/ EBITDA                   0.96 times                    Less than 2.0 times

                

EBITDA / interest                     7.88 times                    More than 4.0 times

                

Cashflow cover                         Not tested (see below)

 

 

The Group's credit facility was renewed in May 2009, and amended in October 2010 and May 2011.  The most recent amendment deleted the cashflow cover covenant from the Credit Agreement altogether, and reduced the maximum ratio of Net debt/EBITDA from 2.5 to 2.0 times for the remaining life of the Agreement, which is due to mature on 30 November 2012.  The Board considers that the level of the Group's net bank debt is acceptable.

 

Interim dividend

 

The Group remains profitable and has chosen to continue investing in the business to ensure it is well positioned to exploit digital developments.  Taking account of these factors, and the fact that the Group continues to be cash generative, the Board has decided on an unchanged interim dividend of 0.5p per share (2010: 0.5p) to be paid on 3 October 2011 to all shareholders on the register on 19 August 2011.  The ex-dividend date is 17 August 2011. 

 

Key performance indicators

 

An updated set of key performance indicators is presented at the end of this statement.

 

Risks

 

The principal risks and uncertainties that affect the Group on an ongoing basis are described in our Annual Report 2010 (on Page 24), which is available at www.futureplc.com

 

The three risks that may impact the Group's performance during the second half of the financial year are highlighted immediately below.  The impact of these risks could cause actual results to differ from expected and historical results.

 

Risks that may impact the second half of the financial year

 

Macro-economic environment

The macro-economic environment during 2009 and 2010 was the worst in the Company's history.  Both the UK and the US have emerged from recession but as explained earlier, general recovery has been patchy and 2011 trading conditions have remained tough.  Future has continued to prove remarkably resilient due to the Group's focus on areas of special-interest.  Nonetheless, the Group may be exposed to any significant or renewed downturn in consumer confidence.

 

Consumer behaviour

Consumers' propensity to spend money on magazines, digital editions, online shopping, events and other products is influenced by a number of economic factors, including general economic indicators.

 

58% of the Group's revenue is dependent on consumers actively purchasing magazines.  Such purchases depend on the normal, competitive publishing environment, which has been challenging since 2009, and on the macro-economic environment.  However, the out-of-pocket cost of magazines (print or digital) is low in comparison with many other items of consumer expenditure and research shows that magazines are often regarded by consumers as a low-cost treat.

 

Future believes that while its consumers are likely to seek information about their chosen area of interest through a variety of media, an increasing number of consumers are spending more time online, particularly on mobile devices.  This shift creates both a threat (in terms of potentially reducing magazine revenues) and opportunities. 

 

Advertiser behaviour

Advertising patterns continue to change and in the UK, internet advertising now accounts for a greater share of advertising expenditure than is allocated to television, radio, billboards, magazines or newspapers.

 

Advertising represents less than one-third of the Group's revenue and is subject to variation not only in relation to the strength of the Group's products but also in relation to shifts in macro-advertising trends.  However, over 90% of the Group's advertising revenue is tailored to areas of special-interest and is arguably, therefore, less susceptible to changes in levels of mainstream advertising, reflecting the advertising health of each sub-sector.

 

Other risks disclosed in the Annual Report 2010

 

Risk management

We operate a continuous process of identifying, evaluating and managing risk.  There are a number of general business risks to which Future is naturally exposed in the UK and US.  The range of risks faced by Future has not increased since last year.  Our internal controls seek to minimise the impact of such risks, as explained in our Corporate Governance report on page 39 of the Annual Report 2010.

 

Distribution and magazine costs

Future contracts out printing and distribution and is therefore reliant on the efficiency of suppliers of these services.  The cost of paper and printing generally reflects market conditions.  A significant minority of Future's magazines are sold with cover-mounted CDs or DVDs and these too are purchased from external suppliers.  Magazines are distributed by nominated distributors and there are many links in the chain to ensure that magazines, once printed, reach retail outlets on a timely basis.  The cost and efficiency of postal arrangements affects magazines sold by subscription, which is particularly significant for Future in the US, and increasingly so for the UK.

 

Regulatory

In addition to legislative constraints applicable to any business in the UK and US, Future is potentially constrained by competition regulation, and by other regulations affecting the content of our publications.

 

Sources of Intellectual Property

The majority of our Group revenues are built on our own brands (currently 77%).  A proportion of the Group's revenue and profits is derived from magazines which are branded 'Official' in accordance with contracts with major companies including Microsoft, Sony and Nintendo.  Although the loss of any such contract would constitute a loss of revenue, the Group has a long history of successful publishing partnerships with these and other companies.

 

Protection of Intellectual Property

As an English-language content provider, protecting and enforcing our intellectual property rights, particularly in an increasingly digital world where piracy is easier, is key.  We are developing best practice within our businesses and we are actively involved in the industry, Government and European efforts to protect and enforce these rights against worldwide piracy.  From time to time, the Group may be subject to disputes relating to these rights. Any such disputes are contested vigorously.

 

Financial

The Group is exposed to interest rate and foreign exchange risk, which it manages where appropriate by hedging arrangements.  Taxation and VAT arrangements impacting the business are different in each country and any adverse change in such arrangements could impact our business.

 

The Board

During the period we appointed two new directors to succeed two who stood down at the 2011 AGM, after having served more than nine years, as previously announced.

In October 2010 we were delighted to welcome Mark Whiteling as a non-executive Director: he now chairs the Audit Committee, succeeding Patrick Taylor. 

In February 2011 we were delighted to welcome Manjit Wolstenholme as a non-executive Director: she is now our senior independent director, succeeding Michael Penington.

Following more than a decade on the Board, Future's Chairman, Roger Parry, has informed the Board that he intends to stand down as a Director.  Accordingly we have started a process to identify a new Chairman with the intention of their being in place ahead of the next AGM.

 

Current trading and outlook

 

Trading in the first half was challenging, yet we've seen six months of an accelerating pace of change as the arrival of powerful mobile devices increases digital content consumption.  The decline in profits includes maintained planned investment, particularly in digital, as we continue to transition our business for the future.

 

Our digitised content revenues grew 30% in H1 and online now represents 34% of our commercial advertising and, with a tenfold increase in digital edition sales, an increasing percentage of our consumer circulation revenues.  Significantly, our digital activities were profitable for the first time this half.

 

Encouraged by that progress, the Board has maintained the interim dividend despite an expectation that the trading conditions for the rest of 2011 will remain challenging.

 

Roger Parry, Chairman

Stevie Spring, Chief Executive

John Bowman, Group Finance Director

Manjit Wolstenholme, senior independent non-executive Director

Seb Bishop, independent non-executive Director

Mark Whiteling, independent non-executive Director                                                 

20 May 2011

 

 

Consolidated income statement

for the six months ended 31 March 2011

 

 

 

 

6 months to 31 March 2011

6 months to 31 March 2010

12 months to 30 September
 2010

 

Note

£m

£m

£m

 

 

 

 

 

Revenue

1,2

68.8

71.4

151.5

 

 

 

 

 

Operating profit before amortisation of intangible assets

1

2.4

4.4

10.1

Amortisation of intangible assets

3

(0.6)

(1.4)

(2.7)

 

 

 

 

 

Operating profit

3

1.8

3.0

7.4

 

 

 

 

 

Net finance costs

5

(0.6)

(0.8)

(1.8)

Profit before tax

1

1.2

2.2

5.6

Tax on profit

6

(0.4)

(0.7)

(0.1)

Profit for the period

 

0.8

1.5

5.5

 

 

 

Earnings per 1p Ordinary share

 

 

 

6 months to 31 March 2011

6 months to 31 March 2010

12 months to 30 September 2010

 

Note

pence

pence

pence

Basic earnings per share

8

0.2

0.4

1.7

Diluted earnings per share

8

0.2

0.4

1.6

 

 

Consolidated statement of comprehensive income

for the six months ended 31 March 2011

 

 

 

 

6 months to 31 March 2011

6 months to 31 March 2010

12 months to 30 September 2010

 

 

£m

£m

£m

Profit for the period

 

0.8

1.5

5.5

 

 

 

 

 

Currency translation differences

 

(0.2)

0.6

0.1

Cash flow hedges

 

0.1

(0.1)

0.1

Other comprehensive income for the period

 

(0.1)

0.5

0.2

 

 

 

 

 

Total comprehensive income for the period

 

0.7

2.0

5.7

 

 

Consolidated statement of changes in equity

for the six months ended 31 March 2011

 

 

 

 

 

Share capital

Share

premium

Merger reserve

Treasury reserve

Cash flow hedge reserve

Retained earnings

Total equity

 

Note

£m

£m

£m

£m

£m

£m

£m

Balance at 1 October 2010

 

3.3

24.5

109.0

-

(0.1)

(50.5)

86.2

Profit for the period

 

-

-

-

-

-

0.8

0.8

Currency translation differences

 

-

-

-

-

-

(0.2)

(0.2)

Cash flow hedges

 

-

-

-

-

0.1

-

0.1

Other comprehensive income for the period

 

-

-

-

-

0.1

(0.2)

(0.1)

Total  comprehensive income for the period

 

-

-

-

-

0.1

0.6

0.7

Interim dividend relating to 2010

7

-

-

-

-

-

(1.6)

(1.6)

Final dividend relating to 2010

7

-

-

-

-

-

(2.0)

(2.0)

Share schemes

- Value of employees' services

4

 

-

 

-

 

-

 

-

 

-

 

0.2

 

0.2

Deferred tax on share schemes

 

-

-

-

-

-

(0.1)

(0.1)

Treasury shares acquired

 

-

-

-

(0.2)

-

-

(0.2)

Balance at 31 March 2011

 

3.3

24.5

109.0

(0.2)

-

(53.4)

83.2

 

 

 

 

 

 

 

 

 

Balance at 1 October 2009

 

3.3

24.5

109.0

(0.1)

(0.2)

(55.0)

81.5

Profit for the period

 

-

-

-

-

-

1.5

1.5

Currency translation differences

 

-

-

-

-

-

0.6

0.6

Cash flow hedges

 

-

-

-

-

(0.1)

-

(0.1)

Other comprehensive income for the period

 

-

-

-

-

(0.1)

0.6

0.5

Total comprehensive income for the period

 

 

-

 

-

 

-

 

-

 

(0.1)

 

2.1

 

2.0

Final dividend relating to 2009

7

-

-

-

-

-

(1.6)

(1.6)

Share schemes

- Value of employees' services

4

 

-

 

-

 

-

 

-

 

-

 

0.3

 

0.3

Balance at 31 March 2010

 

3.3

24.5

109.0

(0.1)

(0.3)

(54.2)

82.2

 

 

 

 

 

 

 

 

 

Balance at 1 October 2009

 

3.3

24.5

109.0

(0.1)

(0.2)

(55.0)

81.5

Profit for the year

 

-

-

-

-

-

5.5

5.5

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

 

5.6

 

5.7

Final dividend relating to 2009

7

-

-

-

-

-

(1.6)

(1.6)

Share schemes

- Value of employees' services

 

4

 

-

 

-

 

-

 

-

 

-

 

0.5

 

0.5

Deferred tax on share schemes

 

-

-

-

-

-

0.1

0.1

Transfer between reserves

 

-

-

-

0.1

-

(0.1)

-

Balance at 30 September 2010

 

3.3

24.5

109.0

-

(0.1)

(50.5)

86.2

 

 

Consolidated balance sheet

as at 31 March 2011

 

 

 

31 March 2011

31 March 2010

30 September 2010

 

Note

£m

£m

£m

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

9

3.0

3.6

3.2

Intangible assets - goodwill

 

110.6

111.9

110.9

Intangible assets - other

 

1.7

1.8

1.2

Deferred tax

 

1.4

0.4

0.9

Total non-current assets

 

116.7

117.7

116.2

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

4.6

4.4

3.4

Corporation tax recoverable

 

-

0.3

0.3

Trade and other receivables

 

20.8

20.7

23.8

Cash and cash equivalents

 

12.1

13.7

13.3

Total current assets

 

37.5

39.1

40.8

Total assets

 

154.2

156.8

157.0

 

 

 

 

 

Equity and liabilities

 

 

 

 

Equity

 

 

 

 

Issued share capital

10

3.3

3.3

3.3

Share premium account

 

24.5

24.5

24.5

Merger reserve

 

109.0

109.0

109.0

Treasury reserve

 

(0.2)

(0.1)

-

Cash flow hedge reserve

 

-

(0.3) 

(0.1)

Retained earnings

 

(53.4)

(54.2)

(50.5)

Total equity

 

83.2

82.2

86.2

 

 

 

 

 

Non-current liabilities

 

 

 

 

Financial liabilities - interest-bearing loans and borrowings

 

 

6.3

 

9.3

 

7.8

Financial liabilities - derivatives

 

0.3

0.6

0.4

Deferred tax

 

2.0

4.0

2.0

Provisions

 

0.4

1.0

0.8

Other non-current liabilities

 

2.5

2.6

2.4

Total non-current liabilities

 

11.5

17.5

13.4

 

 

 

 

 

Current liabilities

 

 

 

 

Financial liabilities - interest-bearing loans and borrowings

 

 

14.7

 

15.9

 

12.9

Financial liabilities - derivatives

 

0.3

0.5

0.3

Trade and other payables

 

40.1

40.5

40.8

Corporation tax payable

 

4.4

0.2

3.4

Total current liabilities

 

59.5

57.1

57.4

Total liabilities

 

71.0

74.6

70.8

Total equity and liabilities

 

154.2

156.8

157.0

 

 

Consolidated cash flow statement

for the six months ended 31 March 2011

 

 

 

 

6 months to 31 March 2011

6 months to 31 March 2010

12 months to 30 September 2010

 

 

£m

£m

£m

Cash flows from operating activities

 

 

 

 

Cash generated from operations

 

2.1

5.9

12.0

Tax received

 

0.3

-

1.4

Interest paid

 

(0.6)

(0.8)

(1.4)

Tax paid

 

(0.1)

(0.1)

(0.2)

Net cash generated from operating activities

 

1.7

5.0

11.8

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(0.3)

(0.3)

(0.8)

Purchase of magazine titles, websites and trademarks

 

 

-

 

(0.1)

 

(0.2)

Purchase of computer software and website development

 

 

(1.1)

 

(0.3)

 

(0.8)

Net cash used in investing activities

 

(1.4)

(0.7)

(1.8)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Purchase of own shares by Employee Benefit Trust

 

(0.2)

-

-

Draw down of bank loans

 

3.9

-

-

Repayment of bank loans

 

(3.6)

(5.6)

(9.9)

Equity dividends paid

 

(1.6)

-

(1.6)

Net cash used in financing activities

 

(1.5)

(5.6)

(11.5)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(1.2)

(1.3)

(1.5)

Cash and cash equivalents at beginning of period

 

13.3

14.6

14.6

Exchange adjustments

 

-

0.4

0.2

Cash and cash equivalents at end of period

 

12.1

13.7

13.3

 

 

Notes to the consolidated cash flow statement

for the six months ended 31 March 2011

 

 

A. Cash generated from operations

 

The reconciliation of operating profit to cash flows generated from operations is set out below:

 

 

 

 

6 months to 31 March 2011

6 months to  31 March

2010

12 months to 30 September 2010

 

 

£m

£m

£m

Operating profit for the period

 

1.8

3.0

7.4

Adjustments for:

 

 

 

 

Depreciation charge

 

0.6

0.8

1.6

Amortisation of intangible assets

 

0.6

1.4

2.7

Share schemes

- Value of employees' services

 

 

0.2

 

0.3

 

0.5

Operating profit before changes in working capital and provisions

 

 

3.2

 

5.5

 

12.2

Movement in provisions

 

(0.4)

(0.1)

(0.3)

Increase in inventories

 

(1.2)

(0.9)

(0.1)

Decrease/(increase) in trade and other receivables

 

2.9

2.6

(0.7)

(Decrease)/increase in trade and other payables

 

(2.4)

(1.2)

0.9

Cash generated from operations

 

2.1

5.9

12.0

 

 

B. Analysis of net debt

 

 

1 October

2010

Cash flows

Non-cash changes

Exchange movements

31 March 2011

 

£m

£m

£m

£m

£m

Cash and cash equivalents

13.3

(1.2)

-

-

12.1

Debt due within one year

(12.9)

(0.3)

(1.6)

0.1

(14.7)

Debt due after more than one year

(7.8)

-

1.5

-

(6.3)

Net debt

(7.4)

(1.5)

(0.1)

0.1

(8.9)

 

 

 C. Reconciliation of movement in net debt

 

 

6 months to 31 March 2011

£m

6 months to 31 March 2010

£m

12 months to 30 September 2010

£m

Net debt at start of period

(7.4)

(15.6)

(15.6)

Decrease in cash and cash equivalents

(1.2)

(1.3)

(1.5)

Movement in borrowings

(0.3)

5.6

9.9

Non-cash changes

(0.1)

(0.1)

(0.3)

Exchange movements

0.1

(0.1)

0.1

Net debt at end of period

(8.9)

(11.5)

(7.4)

 

 

Basis of preparation

 

This unaudited condensed interim financial information for the six months ended 31 March 2011 has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union, and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority.

 

The interim financial information contained in the Interim Report should be read in conjunction with the Annual Report for the year ended 30 September 2010.

 

The Interim Report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and has not been audited.  A copy of the statutory financial statements for the year ended 30 September 2010 has been filed with the Registrar of Companies.  The auditors' report on those accounts was unqualified; it did not contain an emphasis of matter and did not contain any statements under section 498(2) or section 498(3) of the Companies Act 2006.  The auditors have carried out a review of the Interim Report and their review report is set out on page 30. 

 

The accounting policies adopted, methods of computation and presentation are consistent with those set out in the Group's statutory accounts for the financial year ended 30 September 2010.

 

The following standards, interpretations and amendments to published standards are effective but not relevant for the Group's operations:

 

·      Amendment to IFRS2 'Share-based Payment' on group cash-settled share-based payment transactions.

 

·      Amendment to IAS32 'Financial Instruments: Presentation' on classification of rights issues.

 

·      IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments'.

 

 

 

Notes to the financial information

for the six months ended 31 March 2011

 

 

1.             Segmental reporting

The Group is organised and arranged primarily by geographical segment. The Board of Future plc considers 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 reported.

 

Segment revenue

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September

2010

£m

UK

49.4

50.7

105.9

US

19.7

21.0

46.2

Revenue between segments

(0.3)

(0.3)

(0.6)

Total segment revenue

68.8

71.4

151.5

Revenue from external parties is measured in a manner consistent with that in the income statement. Transactions between segments are carried out at arm's length.

 

Segment EBITA

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

UK

5.5

6.1

12.9

US

(1.5)

(0.4)

0.2

Central costs

(1.6)

(1.3)

(3.0)

Total segment EBITA

2.4

4.4

10.1

EBITA is used by the Board to assess the performance of each segment. Segment EBITA represents the EBITA earned by each segment without the allocation of central administration costs.

 

A reconciliation of total segment EBITA to profit before tax is provided as follows:

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

Total segment EBITA

2.4

4.4

10.1

Amortisation of intangible assets

(0.6)

(1.4)

(2.7)

Net finance costs

(0.6)

(0.8)

(1.8)

Profit before tax

1.2

2.2

5.6

 

 

2.            Revenue

An additional analysis of the Group's revenue is shown below:

 

6 months to 31 March 2011

£m

6 months to 31 March 2010

£m

12 months to

30 September 2010

£m

Circulation

40.0

43.0

88.7

Advertising

20.4

21.2

45.4

Customer publishing

6.1

4.8

11.6

Licensing, events & other

2.3

2.4

5.8

Total

68.8

71.4

151.5

 

 

3.             Operating profit

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

Revenue

68.8

71.4

151.5

Cost of sales

(48.1)

(49.0)

(104.2)

Gross profit

20.7

22.4

47.3

Distribution expenses

(5.6)

(5.8)

(12.0)

Administration expenses

(12.7)

(12.2)

(25.2)

Amortisation of intangible assets

(0.6)

(1.4)

(2.7)

Operating profit

1.8

3.0

7.4

 

 

4.             Employees

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

Wages and salaries

22.3

21.2

44.2

Social security costs

2.2

2.8

5.7

Other pension costs

0.5

0.5

1.1

Share schemes

- Value of employees' services

 

0.2

 

0.3

0.5

Total

25.2

24.8

51.5

 

IFRS 2 'Share-based Payment' requires an expense for equity instruments granted to be recognised over the appropriate vesting period, measured at their fair value at the date of grant.

 

The Group has used the Black-Scholes model to value instruments with non market-based performance criteria such as earnings per share.  For instruments with market-based performance criteria, notably total shareholder return, the Group has used a Monte Carlo model to determine the fair value.

 

The expense for the six months ended 31 March 2011 of £0.2m (2010: £0.3m) has been credited to reserves.

 

4.             Employees (continued)

 

Key management personnel compensation

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

Salaries and other short-term employee benefits

0.4

0.4

1.1

Post-employment benefits

0.1

0.1

0.1

Share schemes

- Value of employees' services

0.1

0.1

0.3

Total

0.6

0.6

1.5

 

Key management personnel are deemed to be the members of the Board of Future plc. It is this Board which has responsibility for planning, directing and controlling the activities of the Group.

 

 

 5.           Net finance costs

 

6 months to

31 March 2011

£m

6 months to

31 March 2010

£m

12 months to

30 September 2010

£m

Interest payable on interest-bearing loans and borrowings

(0.6)

(0.8)

(1.4)

Fair value gain/(loss) on interest rate derivatives

0.2

-

(0.1)

Exchange gains

-

0.1

0.1

Amortisation of bank loan arrangement fees

(0.2)

(0.1)

(0.3)

Other finance costs

-

-

(0.1)

Net finance costs

(0.6)

(0.8)

(1.8)

 

In line with the Board's policy of hedging interest rate risk, the Group entered into interest rate swaps. The valuation of these interest rate swaps at 31 March 2011 resulted in a gain for the six months ended 31 March 2011 of £0.2m (2010: £nil).

 

 

6.             Tax on profit

The tax charge for the six months ended 31 March 2011 is based on the estimated effective rate of tax for the Group for the full year to 30 September 2011.  The estimated effective rate is applied to the profit before tax.

 

 

7.            Dividends

 

 

Equity dividends

6 months to

31 March 2011

6 months to

31 March 2010

12 months to

30 September 2010

Number of shares in issue at end of period (million)

328.8

327.9

328.0

Dividends paid and payable in period (pence per share)

1.1

0.5

0.5

Dividends paid and payable in the period (£m)

3.6

1.6

1.6

 

Interim dividends are recognised in the period in which they are paid and final dividends are recognised in the period in which they are approved.

 

The dividends totalling £3.6m paid and payable during the period ended 31 March 2011 relate to the interim dividend paid for the six-month period to 31 March 2010 of 0.5 pence per share (£1.6m) and the final dividend declared for the year ended 30 September 2010 of 0.6 pence per share, which was approved on 9 February 2011 and paid on 1 April 2011.

 

For the period ended 31 March 2010 and the year ended 30 September 2010 the dividend payable/paid of £1.6m was the final dividend of 0.5 pence per share declared for the year ended 30 September 2009.

 

An interim dividend in respect of the six months ended 31 March 2011 of 0.5 pence per share, amounting to £1.6m, has been declared by the Board but is not reflected in this interim statement.

 

8.            Earnings per share

Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the period.  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.

 

The adjusted earnings per share removes the effect of the amortisation of intangible assets and any related tax effects from the calculation as follows:

 

Adjustments to profit after tax

 

6 months to 31 March 2011

£m

6 months to

31 March

2010

£m

12 months to

30 September

2010

£m

Profit after tax

0.8

1.5

5.5

Add: amortisation of intangible assets

0.6

1.4

2.7

Tax effect of the above adjustment

(0.1)

(0.5)

(0.3)

Adjusted profit after tax

1.3

2.4

7.9

 

 

8.            Earnings per share (continued)

 

 

6 months to 31 March 2011

6 months to

31 March

2010

12 months to

30 September

2010

Weighted average number of shares in issue during the period:

 

 

 

- Basic

327,649,671

327,122,804

327,314,532

- Dilutive effect of share awards

7,810,104

8,497,514

8,442,387

- Diluted

335,459,775

335,620,318

335,756,919

Basic earnings per share (in pence)

0.2

0.4

1.7

Adjusted basic earnings per share (in pence)

0.4

0.7

2.4

Diluted earnings per share (in pence)

0.2

0.4

1.6

Adjusted diluted earnings per share (in pence)

0.4

0.7

2.3

 

 

The adjustments to profit have the following effect:

 

6 months to 31 March 2011

pence

6 months to

31 March

2010

pence

12 months to

30 September

2010

pence

Basic earnings per share

0.2

0.4

1.7

Amortisation of intangible assets

0.2

0.4

0.8

Tax effect of the above adjustment

-

(0.1)

(0.1)

Adjusted basic earnings per share

0.4

0.7

2.4

 

 

 

 

Diluted earnings per share

0.2

0.4

1.6

Amortisation of intangible assets

0.2

0.4

0.8

Tax effect of the above adjustment

-

(0.1)

(0.1)

Adjusted diluted earnings per share

0.4

0.7

2.3

 

 

 

9. Property, plant and equipment

During the six months ended 31 March 2011, property, plant and equipment additions totalled £0.4m (31 March 2010: £0.3m). The £0.4m is attributable to land and buildings £0.1m (2010: £nil), plant and machinery £0.2m (2010: £0.3m) and equipment, fixtures and fittings of £0.1m (2010: £nil).

 

There were no commitments for capital expenditure contracted for but not provided at 31 March 2011 (31 March 2010: £nil).

 

The depreciation charge for the period totalled £0.6m (31 March 2010: £0.8m). The £0.6m is attributable to land and buildings £0.1m (2010: £0.2m), plant and machinery £0.4m (2010: £0.5m) and equipment, fixtures and fittings £0.1m (2010: £0.1m).

 

 

10. Issued share capital

During the period, 806,369 Ordinary shares (31 March 2010: 676,647) with a nominal value of £8,064 (2010: £6,766) were issued by the Company for a total cash commitment of £6,375 (2010: £nil), pursuant to share scheme exercises.

 

As at 31 March 2011 there were 328,786,172 Ordinary shares in issue (31 March 2010: 327,873,915).

 

 

11. Contingent assets and contingent liabilities

At 31 March 2011 there were no material contingent assets or contingent liabilities.

 

 

Statement of Directors' responsibilities

 

The Directors confirm that to the best of their knowledge the condensed interim financial information contained in the Interim Report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the Interim Management Report herein includes a fair review of the information required by the Disclosure and Transparency Rules.

 

The directors of Future plc are as listed in the Future plc Annual Report for 30 September 2010, with the exception of the following changes in the period: Mark Whiteling was appointed on 8 October 2010; Patrick Taylor and Michael Pennington resigned on 9 February 2011, and Manjit Wolstenholme was appointed on 9 February 2011.

 

On behalf of the Board

 

John Bowman

Group Finance Director

20 May 2011

 

Directors

Roger Parry

Chairman

Stevie Spring

Chief Executive

John Bowman

Group Finance Director

Manjit Wolstenholme

Senior independent non-executive Director

Seb Bishop

Independent non-executive Director

Mark Whiteling

Independent non-executive Director

 

Company Secretary and General Counsel

Mark Millar

 

 

The maintenance and integrity of the Future 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 financial statements since they were initially presented on the website.

 

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

 

Independent review report to Future plc

 

Introduction

We have been engaged by the Company to review the condensed interim financial information in the half-yearly financial report for the six months ended 31 March 2011, which comprises the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, Consolidated balance sheet, Consolidated cash flow statement, Notes to the consolidated cash flow statement, Basis of preparation and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed financial information.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in the Basis of preparation, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed interim financial information in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial information in the half-yearly financial report for the six months ended 31 March 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

 

PricewaterhouseCoopers LLP
Chartered Accountants
20 May 2011
London

 

 

Key performance indicators

for the six months ended 31 March 2011

 

 

 

6 months to 31 March 2011

6 months to 31 March 2010

12 months to

30 September 2010

Annual growth in revenue (at constant currency)

-4%

-5%

-1%

EBITA operating margin (as a %)

3.5%

6.2%

6.7%

Absolute EBITA (in Sterling)        

£2.4m

£4.4m

£10.1m

Change in adjusted earnings per share (as a %)

-43%

+17%

+33%

Number of magazines sold per month

2.9m

3.3m

3.4m

Proportion of magazines sold from total number printed

See notes 1-3

See notes 1-3

See notes 1-3

Proportion of Group's business derived from our brands compared with partnership publishing

77:23 (note 4)

77:23 (note 4)

76:24 (note 4)

Number of unique users logging on to our websites per month

25m (note 5)

27m (note 5)

23m (note 5)

Growth in total advertising revenue (as a % at constant currency)

-4%

-11%

-5%

Proportion of advertising revenue that is online (as a %)  

33%

24%

25%

Human Capital              

See note 6

See note 6

See note 6

Net bank debt

£8.9m

£11.5m

£7.4m

 

Notes

 

1.     The majority of magazines printed by the Group are sold, and those unsold are mainly recycled and used for newspaper production.  The precise proportion sold at newsstand is a detailed KPI each month for every title.  However, the Group believes that it is commercially sensitive to disclose these percentages, since competitors typically do not release this information.  Magazines printed for subscription have no wastage.

2.     In the UK 71% of magazines (by volume) are sold at newsstand.  Our overall UK average newsstand efficiency has remained the same as the first half of 2010.  Future has increased the proportion of magazine volume sales derived from subscription rather than newsstand, from 26% to 29%.  The majority of UK revenues for magazines are derived from cover price.

3.     In the US 30% of magazines (by volume) are sold at newsstand.  The majority are sold by subscription at heavily discounted prices.  Newsstand efficiency decreased by 4% in 2011 compared with the first half of 2010.

4.     Partnership publishing represents 23% of Group revenue for the first half of 2011.  This category includes business from our Official magazines and programmes published for Microsoft (Xbox 360 and Windows), Sony (PlayStation, FirstPlay and Qore), Nintendo, plus customer publishing activities.  The majority of the Group's revenue is generated from our own brands.

5.     For each of our websites we know the number of page impressions and the number of unique visitors to that website.  We do not know how many unique visitors visit more than one of our websites.  The number presented here is the simple total of each website's average monthly number of unique visitors.  The figures for March 2010 included 7m unique users relating to our aggregation websites (since closed).

6.     Human Capital is the Group's most important resource, with 1,213 employees (at 31 March 2011).  In the running of our business, we focus on retention of key employees and on refreshment of the team with new people and new ideas.

 

 


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